Investigative Work Resolves Tabloid-Worthy Litigation in Blue Shield’s Favor

Health insurance executives aren’t usually front-page tabloid news, but when Blue Shield of California was facing $14 million in liability after terminating its jet-setting chief technology officer, Aaron Kaufman, it turned to Manatt to rewrite the headlines in its favor. The inciting incident began when Kaufman’s then-girlfriend, actress Tara Reid (“Sharknado”), splashed racy photos of herself online while attending a company-hosted party. That scandal was just the tip of the iceberg.

Blue Shield terminated Kaufman after he racked up more than $100,000 in personal expenses on his company credit card. Kaufman sued for wrongful termination, claiming he was about to blow the whistle on the company’s chief information officer for allegedly accepting bribes from a vendor. Kaufman also wanted a purported $450,000 bonus to which he felt entitled. On behalf of Blue Shield, Manatt countersued for breach of fiduciary duty and fraud. Two years of aggressive discovery ensued, including depositions from Reid and a hard-to-land deposition from former Apple CEO John Sculley.

One of Kaufman’s submitted corporate expenses was a trip to Australia, where he claimed Sculley had personally invited him to speak at the healthcare portion of the G20 summit in Brisbane, supposedly sponsored by the Australian Medical Association (AMA). Even before Manatt deposed Sculley, we deposed AMA officials and learned there was no healthcare portion of the G20. Reid, however, had a nearby film premiere at the same time. Sculley, under oath, admitted he had no idea who Kaufman was and never extended an invitation of any sort.

After proving most of Kaufman’s other expenses were fraudulent, Manatt set its sights on disproving his unlawful termination case. Our smoking gun was the Blue Shield laptop Kaufman turned over at the time of his dismissal. Kaufman said it contained a “gold mine” of evidence against the company and accused Blue Shield of wiping it clean to destroy valuable evidence of Kaufman’s whistleblowing. The laptop was indeed wiped—but by whom? Through digital forensic science and subpoenas of Apple, Southwest Airlines and the airline’s Wi-Fi provider, Manatt proved Kaufman intentionally wiped the Apple hard drive remotely while on a Southwest flight after he had turned over the laptop.

At the close of the plaintiff’s case, the court granted the Manatt trial team’s motion for nonsuit as to all of Kaufman’s claims except for the failure to pay an earned bonus, and the jury rejected Kaufman’s claim for a bonus. The jury also found in favor of Blue Shield on its claims against Kaufman for fraud and breach of fiduciary duty, and found that Blue Shield was harmed by Kaufman’s behavior, but refused to award Blue Shield damages. Kaufman appealed the trial court’s grant of nonsuit, and Blue Shield appealed the jury’s inconsistent finding of harm but refusal to award damages.

The appellate court, handing our client a well-deserved total victory, affirmed the trial court’s grant of Blue Shield’s successful nonsuit motion against Kaufman and reversed the jury’s failure to award damages, ordering a retrial to allow Blue Shield to recoup damages from Kaufman.

Client

Blue Shield of California

Service Type

Employment / Labor Litigation, Healthcare Litigation, Trial / Arbitration

Industry

Healthcare, Insurance & Managed Care

Court

California Court of Appeal, 2nd District

Office

San Francisco

Judge

Mark Mooney