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New Jersey company settles expensive wrongful termination case

On July 7, a New Jersey company that makes medical devices reached a settlement with its former chairman and CEO regarding allegations of wrongful termination. The case centered on whether Echo Therapeutics was required to extend severance benefits to its former CEO, who is also a doctor, as part of a corporate restructuring that involved the termination of about a dozen of its employees.

The former CEO said that the medical device company should have extended the severance benefits to him because they let him go without cause. Echo steadfastly denied any obligation to the doctor regarding the severance benefits. The doctor also made claims in his wrongful termination lawsuit that Echo had defamed him through disclosures the company made in filings to the Securities and Exchange Commission. Echo maintained that those disclosures were legally required.

As part of the terms of the settlement agreement, Echo will pay the doctor $150,000. He will also receive some undisclosed additional payments from Echo’s insurers as part of that overall settlement. News of the settlement came to light after Echo filed documents with the SEC. In those documents, Echo claimed that it had resolved their disputes with the doctor in terms which it described as mutually agreeable. The lawsuit has since been dismissed with prejudice (cannot be filed again).

There are a few things you should know if you have recently experienced a wrongful termination of your employment. Generally, New Jersey companies are barred from firing employees as retaliation for their whistleblowing or bringing attention to some form of wrongdoing. Wrongful terminations can also occur when companies terminate employees who are under contract.

You also need to know that having an attorney experienced in New Jersey’s employment laws can be particularly helpful. That’s because New Jersey has very strong legal protections for employees. In fact, some of New Jersey’s laws regarding employment are actually stronger than the federal protections in some cases. An attorney can pursue damages on your behalf related to back pay, emotional distress, pain and suffering and even punitive damages in some situations.

Source: Philadelphia Business Journal, “Medical-device manufacturer settles wrongful termination lawsuit with ex-CEO,” John George, July 08, 2015



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