Thanks for the advice. Its good to know about my rights and options available.
[1] I know this is BS, but it's reality. Your reputation shouldn't be affected with your response to unethical former employers, but as someone entering a new community (i.e. bay area startups), you don't want to make it any more difficult than it has to be.
In fact, if the offers are unaffected, he doesn't have much of a case because there aren't damages, at least not from that.
By "sue", I mean that he should seek a settlement if he can get a fair one. The company doesn't want a lawsuit either, but he can't look like he'll roll over and play dead. Actually going to court over this is a last resort.
it would damage your reputation.
It depends on what he sues them for, how connected they are, what they say, and how the case plays out. If he sues for emotional distress, then it looks like a frivolous lawsuit (and his odds aren't good). If he sues for detrimental reliance and can prove that he incurred expenses or lost job offers, it's less damaging. It hurts your reputation to sue if (a) the suit can be made to look frivolous (which doesn't mean that it is so; see "Hot Coffee") or (b) embarrassing material would come into the public, as usually happens in a termination suit (even if the employee is in the right).
The reputation risk involved in a wrongful termination suit isn't mainly the fact that the suit occurred. (That's part of it.) It's also the fact that the company is going to have ex-colleagues testifying ("character witnesses", still employed by the firm being sued) and saying that the plaintiff's work wasn't any good. That's sleazy on the company's part, but extremely common in a Wrongful T.
Also, side note: I really enjoy your writing and read all of your blog posts. Keep it up.