Business Monday

A look at Magic Leap’s bold strategy against angry ex-employee

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Most employment defense attorneys have heard it plenty of times: “I’d rather pay you thousands (or hundreds of thousands or millions) than give them a penny.”

You’ve got to love a client like that.

It’s understandable. Who wouldn’t react with anger and a desire to hit back when a snarky letter from some lawyer representing the ingrate ex-employee you fired hits your desk? She threatens a lawsuit, she says her case is airtight, that you’re a terrible person, and she’s just the jurist to drag you through the mud on the way to taking every dime you’ve got.

However, in the cold light of the financial morning, after the anger has cooled and the beans have been counted, that desire usually fades. It’s cheaper and less embarrassing to settle.

Sometimes the employer nonetheless prefers to duke it out rather than pay it off. The usual strategy is to play Russia to the plaintiff’s Napoleon and let the long winter of litigation grind him and his limited resources into the mud. Once in a great while, however, the employer wants a quick Waterloo instead of a slow Moscow and tells its lawyer to come out guns blazing.

Taking the offensive appeals to the aggressive spirit of an entrepreneur CEO – it’s often how he got where he is. He understands it and it appeals to him.

A great example has played out recently involving Broward tech startup Magic Leap. Allegedly, one of those threatened lawsuits was delivered to the company late last year. Who knows whether it was accompanied by a snarky lawyer’s letter, but it’s a safe bet that nobody in the C-suite was smiling about it.

CEO & Founder Rony Abovitz didn't tell the audience quite what his company will be making but he did get excited about the new headquarters in Plantation. Magic Leap describes its work as "developing a new mixed reality computing platform that wi

According to court filings, Magic Leap’s head of security sent his bosses a “draft” complaint claiming that he had blown the whistle on alleged violations of law. There also was talk of an age discrimination charge.

This all came to light, not when the employee sued, but when Magic Leap made a preemptive strike by filing its own lawsuit in federal court in Texas.

Blitzkrieg.

Magic Leap’s suit asked the court to declare that it had not violated Florida state or federal law as alleged by the employee in his “draft complaint” or other communications.

Why might it be a good idea to take the offensive this way? Being the plaintiff gives company the initiative. At least initially, it chooses the location of the court, the timing, and the cause of action. It can make the employee realize he has some real skin in the game. Being sued is no fun. There’s a definite psychological aspect and the employer may want to land that first punch.

Being the plaintiff may also help if public relations is a concern. The plaintiff is essentially saying, “I’ve been wronged. I deserve justice.” This can be a better look than a defendant who is spluttering, “This is all hooey. There’s nothing illegal about what I did.”

This could be the case for Magic Leap, which is expected to roll its augmented reality system this year and has been talking to investors, including a recent injection of $400 million from a Saudi Arabian fund. Bad buzz would be the last thing a company in such a position would want.

On the other hand, the aggressive strategy could backfire. It’s easy for one of the “little people” to paint a company as a big, bad, and mega-wealthy bully. Waiting for most employment lawsuits is a jury box filled with “little people.” Plus, the plaintiff has the burden to prove its case. All the defendant has to do is knock out one brick and the whole wall tumbles down.

Still, there might be something to this best offense is a good defense idea. Less than a month after filing its suit, Magic Leap reached a settlement with the employee.

David Miller is a partner at the national law firm Bryant Miller Olive P.A. He is board certified in Labor and Employment Law by The Florida Bar. For more information about David, visit www.bmolaw.com/lawyer/david-c-miller. To contact him, call 305-374-7349 or email dmiller@bmolaw.com.

This is an opinion piece written for Business Monday’s “My View” space in the Miami Herald. The views expressed do not necessarily reflect those of the newspaper.

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