Thursday, June 4, 2009

Whistleblower Emmel Seeks to Lift Bankruptcy Stay to Pursue Appeal of Injunction

Robert Emmel, a whistleblower who has previously testified against News America Marketing, has moved to lift a stay that is currently preventing him from pursuing an appeal of an injunction against him. The injunction bars him from sharing confidential News America information, and may prevent his participation as a live witness in lawsuits brought by Valassis and Insignia Systems against News America Marketing.

According to court filings, when Mr. Emmel was employed at News America Marketing, he learned that News America was engaged in anti-competitive activities, which he has subsequently sought to expose. After he was fired, Mr. Emmel sent documents to officials in Congress, testified about News America's activities in a lawsuit brought by Floorgraphics, and is a potential witness in lawsuits brought by Valassis and Insignia against News America.

Based on a non-disclosure agreement that Mr. Emmel signed after he was terminated by News America, a federal district court issued an injunction against him, finding that he had improperly disclosed confidential information when he sent it to officials in Congress. Mr. Emmel has filed a notice of his intention to appeal that ruling, but his recent bankruptcy filing caused an automatic stay of those proceedings.

Mr. Emmel has asked the bankruptcy court to lift the stay, which News America opposed in a filing yesterday. News America argues that "Emmel's desire to expend the limited assets of his bankrupt estate to challenge an injunction that merely requires him to comply with an agreement that he signed preventing his disclosure of News America's confidential information does not constitute 'cause' for lifting the automatic stay."

Exhibits to News America's filing include e-mails from Mr. Emmel to government officials, including a December 2006 e-mail to a Congressional staffer, expressing concern that "this Non-Disparagement document could . . . be strategically serving the purpose of News America to preclude my testimony to support the aforementioned charges."

Even if the stay were lifted, an appeal of the injunction would take many months to resolve, by which time the Valassis and Insignia trials will have already occurred.

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