Merry Christmas to All and to All A Good Night!
I hope every one is enjoying time with family and friends. Off for a week with mine and Lorna's. Depending on the vagaries of internet connections, egg nog and snow conditions, it may well be next year before I jot again!
Time Honors Whistleblowers as Persons of the Year
Lest we forget what the major story in 2002 was, Time's naming of three female whistle blowers from Enron, FBI and Worldcom as its "Persons of the Year" is a good reminder. BBC has the story. Although some may argue that the three were really not whistleblowers in the truest (and most risky) sense, that is not the point. Rather the fact that 6 of 10 Americans find whistleblowers heroes, makes it clear for all who practice in the employment law area that the protection of whistleblowing, and its first cousin, anti-retaliation statutes, are going to be prominent long after the current headlines and magazine covers are gone.
Dangerous Precedent with Punitive Damages
Although not an employment law case, Friday's decision by the Ohio Supreme Court on punitive damages, caught my eye. Dardinger v. Anthem Blue Cross & Blue Shield(Ohio 12/20/02). The story itself is a sad one, with the denial of a request for an experimental cancer fighting drug being delivered the day after the insured's funeral. The Indianapolis Star has the story, and its headline has it right, calling it an 'historic ruling'.
Unfortunately, punitive damages, and particularly the threat of them is a driving force in many employment law cases. What the Ohio Supreme Court did was to affirm a large punitive damage award ($30 million) but the historical act was to specify that $20 million should go for cancer research at a state medical institution. Although a number of states have statutory mechanisms to divide punitive damages between plaintiffs and the state, this if the first time that a court has accorded itself such powers under common law. The dissent talks about the dangers of a court assuming such power.
In addition to taking on a clearly legislative function, for which it could be argued that courts are not particularly well suited, it increases the risk of potential defendants when juries think that they are empowered to fund civic needs out of 'punitive damages'. The court made clear that attorneys fees would be awarded out of the whole of the punitive damage award, so there will probably be little outcry from that quarter. In the on-going debate over punitive damages, this seems one idea that should not survive.
Unfortunately, punitive damages, and particularly the threat of them is a driving force in many employment law cases. What the Ohio Supreme Court did was to affirm a large punitive damage award ($30 million) but the historical act was to specify that $20 million should go for cancer research at a state medical institution. Although a number of states have statutory mechanisms to divide punitive damages between plaintiffs and the state, this if the first time that a court has accorded itself such powers under common law. The dissent talks about the dangers of a court assuming such power.
In addition to taking on a clearly legislative function, for which it could be argued that courts are not particularly well suited, it increases the risk of potential defendants when juries think that they are empowered to fund civic needs out of 'punitive damages'. The court made clear that attorneys fees would be awarded out of the whole of the punitive damage award, so there will probably be little outcry from that quarter. In the on-going debate over punitive damages, this seems one idea that should not survive.
When Workers Can't Get Along - Who Pays?
Ms. Robel, a short term employee of a Fred Meyer deli brought a large number of claims including disability harassment, workers compensation retaliation, intentional infliction of emotional distress and defamation. Although one would hope that the facts that were found were not all that common, many employers may feel uncomfortable that they strike a little too close to home, especially when the facts are reported from the dissent's viewpoint. The majority of the Washington Supreme Court found the following facts:
A divided Washington Supreme Court, almost 18 months after hearing oral argument, held those facts sufficient to uphold her claim for all but defamation. Robel v. Roundup Corp. dba Fred Meyer, Inc.(Wash. 12/13/02). In order to do so, the majority said these facts were sufficient to both state a cause of action for disability harassment and to create a fact question as to whether the conduct was outrageous. The Court noted the latter fidning required that the conduct meet the high standard of the Restatement that it is so "outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." This is the same standard Texas courts require for intentional infliction of emotional distress.
What is most disturbing is how these same facts can be viewed in a different context, that will be all too familiar too employers. As the dissent noted, the real problem here was not the company, but personal animosities between employees:
In a statement all too many employers can identify with, the dissent cautioned that the truly culpable, in this case the co-employees, should bear the responsibility, not just the 'deep pockets' of the employer.'
On July 14 Robel sustained a workplace injury and filed a workers' compensation claim. In late July, she was given a light-duty assignment, a four-hour shift during which she stood 'at a display table outside the deli area offering samples of food items to customers. On August 1, as Robel worked at the display table, two deli workers 'laughed' and 'acted out a slip and fall,' as 'one of them yelled 'Oh, I hurt my back, L&I, L&I!'' [L&I is a reference to the Labor and Industries Dept. of the state of Washington]. They "audibly called her a 'bitch' and 'cunt.'' .
In journal entries for August 2, 3, 10, and 11,Robel wrote that the assistant deli manager, Smith, and others made fun of her, laughed, pointed, and gave her 'dirty looks.' On August 13, Smith and other deli workers would 'stare at {her}, whisper out loud, & laugh, pretend to hurt their backs & laugh.' Robel reported the incidents to her union representative, Banka, who met with the store director on August 16. After the brief meeting, Banka stopped by the deli and told Robel that the store director was convening a meeting of all deli employees on August 19.
At that meeting, the store director warned the employees that future harassment could result in termination. On August 22, deli workers 'laughed and audibly admonished each other not to harass Robel. On August 28 and 30, Robel noted in her journal that co-workers were talking about her and laughing at her, and she recorded that on September 2, the assistant manager and other workers 'had a great time making fun of her, pretending to hurt their backs & yelling L&I."
On September 13, 1996, Robel secured a two-week work release from her doctor and gave it to the assistant manager, Smith. Before Robel left the deli, she overheard Smith comment to other deli employees, ''Can you believe it, Linda's gonna sit on her big ass and get paid.'' Robel again contacted Banka, who in turn contacted the store director. On September 28, Wissink terminated one employee. Robel never returned to work at Fred Meyer.
A divided Washington Supreme Court, almost 18 months after hearing oral argument, held those facts sufficient to uphold her claim for all but defamation. Robel v. Roundup Corp. dba Fred Meyer, Inc.(Wash. 12/13/02). In order to do so, the majority said these facts were sufficient to both state a cause of action for disability harassment and to create a fact question as to whether the conduct was outrageous. The Court noted the latter fidning required that the conduct meet the high standard of the Restatement that it is so "outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." This is the same standard Texas courts require for intentional infliction of emotional distress.
What is most disturbing is how these same facts can be viewed in a different context, that will be all too familiar too employers. As the dissent noted, the real problem here was not the company, but personal animosities between employees:
Linda Robel began work at Fred Meyer in the deli department in December 1995. The following month, Robel and co-worker Tiffany Ware had a falling out over Ware's relationship with Robel's son. Unfortunately for Robel, Ware was a close friend of the deli's assistant manager, Amy Smith. The unhappy result of this situation was that the mutual animosity between Robel and Ware inevitably spilled over into the workplace, subjecting Robel to various verbal taunts and tricks by her co-workers. Robel was distressed by her co-workers' abusive behavior, but that behavior was clearly the result of a personality conflict, not action by or on behalf of her employers. Nor, as Robel claims, was the behavior caused by her back injury or her filing a workers' compensation claim--in fact, much of the offensive behavior predated both of these events. This clash, no matter how distasteful, is insufficient to support a claim for outrage or negligent infliction of emotional distress against Robel's employer. In fact, once the responsible agent of her employer became aware of the situation, action was taken. Ultimately, Robel's 'harasser' was fired. Therefore, I respectfully dissent from the majority's holdings as to disability discrimination, retaliation, and outrage.
In a statement all too many employers can identify with, the dissent cautioned that the truly culpable, in this case the co-employees, should bear the responsibility, not just the 'deep pockets' of the employer.'
E-mail Policies and Generation X (and the rest of us too!)
Dana Knight in the Indanapolis Star has a good reminder of the problems that e-mail can cause an employee in E-mail jokes not so funny if they end up getting you fired. Almost every human resource professional and employment law attorney is beginning to gather a collection of computer related termination stories.
Wal-mart Loses Wage and Hour Class Action
An Oregon jury found that Wal-mart had a practice of making employees work 'off the clock' in violation of wage and hour laws. The AP story in the Austin American Statesman gives a few of the details. Damages will be decided in a subsequent trial. The size of potential awards, and the difficulty of defending against such claims in a class action proceeding, have made this type of claim one of the most dangerous for employers this decade.
Winning the Lottery, the Jury Way - Another Million Dollar Verdict
The Courier Journal has the story of a husband and wife's 4.3 million jury verdict last night for their wrongful termination from the Kentucky Lottery Corp. After 10 years of employment, they were both fired on charges of misconduct, but only shortly after the wife testifed on behalf of a blind colleague in a discrimination claim. The wife testified she was pressured to testify falsely at an unemployment hearing for the colleague. This is clearly a case that boiled down to a credibility call. The jury, although not unaminously, went for the former employees. The lesson it teaches is that where there is a clear cut credibility issue, especially over inflammatory facts, and the employer loses, the damages awarded are likely to reflect not only the loss of the plaintiffs, but the anger of the jury over being 'lied to' as well.
New Union Leader, Not Exactly Great for Image
Obviously, not all unions or all union leaders are bad, but you still see stories that make you just stop and wonder, why? The Herald Tribune in Southwest Florida ran the AP's story of the election for International Longshoremen's Local 1408. The newly elected pres, will take office the day before his scheduled court hearing on a felony witness tampering charge. The case he allegedly 'tampered' with, involved the trial of his brother, who was sentenced to life for rape and armed kidnapping. In the union's defense, at least it was a close election, 350-331.
Sexual Orientation Discrimination to be Banned in New York
New York is poised to become the 13th state to outlaw discrimination in employment, housing and eduction on the basis of sexual orientation. See the story at Advocate.com.
The New York Senate passed the law today. It had earlier been passed by the Assembly, so now only needs Governor Pataki's signature, which has been promised.
Sexual orientation is defined as "heterosexuality, homosexuality, bisexuality or
asexuality, whether actual or perceived. However, nothing contained
herein shall be construed to protect conduct otherwise proscribed by
law." S. 720.
The New York Senate passed the law today. It had earlier been passed by the Assembly, so now only needs Governor Pataki's signature, which has been promised.
Sexual orientation is defined as "heterosexuality, homosexuality, bisexuality or
asexuality, whether actual or perceived. However, nothing contained
herein shall be construed to protect conduct otherwise proscribed by
law." S. 720.
More Million Dollar Verdict Lessons - From Iowa to Alabama
A female researcher whose work once was critically acclaimed, has now obtained a 1.3 million dollar verdict on her sex discrimination claim. You can read the story in the Ames Tribune. Problems arose when her work was challenged by her superiors and she was prevented from attending conferences to present it. Even the limited facts in the newspaper point out a couple of good lessons. One, it is not just termination cases that result in large jury awards. Here the plaintiff was employed during all of the litigation and plans on staying there for two more years until she can retire with full benefits. Also, although the legal claims that made it to trial were sex discrimination and retaliation, the real complaint seems much more directed to her professional pride and reputation. I would not be surprised if this were a case with weak facts on sex discrimination and retaliation, but where the jury really felt she was wronged with respect to the treatment of her work. The only way to find for her was on the legal questions related to sex discrimination and retaliation. As is often said by plaintiffs' lawyers, once you get past summary judgment, it's ALL about fairness. At least until the post-trial motions and appeal.
In Alabama, the story was also a familiar one. An injured miner, can't return to work in his old job. (In this case for certainly understandable reasons.) When no other job can be found, he is terminated, or so he says. The employer says not really, his job is waiting for him when he can return and he is still receiving benefits from the company. Timing is bad as he was ordered back to his old job shortly after filing his workers compensation claim. Jury's verdict: 1.5 million against Jim Walter Resources for workers compensation retaliation as reported in The Birmingham News. Separating, or like here failing to separate, from injured workers is often a tricky question.
Both of these cases just re-enforce another belief held by many defense trial lawyers, that you shouldn't be trying these type of cases close to Christmas.
In Alabama, the story was also a familiar one. An injured miner, can't return to work in his old job. (In this case for certainly understandable reasons.) When no other job can be found, he is terminated, or so he says. The employer says not really, his job is waiting for him when he can return and he is still receiving benefits from the company. Timing is bad as he was ordered back to his old job shortly after filing his workers compensation claim. Jury's verdict: 1.5 million against Jim Walter Resources for workers compensation retaliation as reported in The Birmingham News. Separating, or like here failing to separate, from injured workers is often a tricky question.
Both of these cases just re-enforce another belief held by many defense trial lawyers, that you shouldn't be trying these type of cases close to Christmas.
H1-B Challenge - The New Claim Du Jour Against High Tech Companies?
CNET's Ed Frauenheim has the story on yesterday's administrative law hearing on the claim of a former Sun employee who is alleging favoritism was given to H1-B employees during the lay offs at Sun, and that he was retaliated against when he challenged the practice. The Department of Labor denied his claim, but he appealed to the administrative hearing stage. The administrative law judge excluded the testimony of his expert witness, Norman Matloff, a professor at University of California Davis who has been a long time opponent of the H1-B program. According to an out of work programmer, who runs an anti-H1-B website, there are more legal challenges on the way. Just what the high tech industry needs right now.
Another Million Dollar Verdict (MDV) - Dallas
This one actually closer to home, and a couple of weeks ago while I was on vacation. Dallas jury awards a Mary Kay representative or employee (that was one of the battles), $11.2 million dollars. Just a review of the facts lets you see how the plaintiff could weave a sympathetic tale. Stellar performer, fired when she had cancer, even though she battled to work while sick. Obviously, the company had another story, but also was relying heavily on a legal point that she was not an employee but an independent contractor. This may be a classic example of a 'bad facts, good law point' case. The employer may ultimately win, but there can be considerable pain and discomfort before that stage rolls around. See the story on law.com.
Covenants Not To Compete - Pro-enforcement holding
The trial court refused to grant a temporary injunction because he found there was no proof of irreparable injury or lack of adequate remedy at law, which are traditionally required for a temporary injunction. The First Court of Appeals, relying on its earlier opinion in Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 795 (Tex. App.—Houston [1st Dist.] 2001, no pet.), reversed finding the trial court abused its discretion in denying the injunction on those grounds. The money language is as follows:
The plaintiff still might not prevail as the Court sent it back for a further hearing. However, at least in the First Court of Appeals, the traditional injunction requirements seem to be trumped by Section 15.52.
Section 15.52, entitled “Preemption of Other Law,” provides, “The criteria for enforceability of a covenant not to compete provided by section 15.50 of this code and the procedures and remedies in an action to enforce a covenant not to compete provided by Section 15.51 of this code are exclusive and preempt any other criteria for enforceability of a covenant not to compete or procedures and remedies in an action to enforce a covenant not to compete under common law or otherwise.” Tex. Bus. & Com. Code Ann. § 15.52 (Vernon Supp. 2002); Butler, 51 S.W.3d at 795. Thus, a showing by the promisee of an irreparable injury for which he has no adequate legal remedy is not a prerequisite for obtaining injunctive relief under the Covenants Not to Compete Act. Tex. Bus. & Com. Code Ann. §§ 15.50, 15.51(a); Butler, 51 S.W.3d at 795.Norlyn Enterprises, Inc. v. APDP, Inc.
The plaintiff still might not prevail as the Court sent it back for a further hearing. However, at least in the First Court of Appeals, the traditional injunction requirements seem to be trumped by Section 15.52.
Senate Bills for Next Legislature
Senators have pre-filed many fewer bills that would require changes in employment law practices than their House counterparts. To date, only three have been filed.
SB 61 Judy Zaffirini D - Laredo. Modifies the existing law on criminal background checks for nursing home employees and applicants.
SB 33 Judy Zaffirini D - Laredo. Establshing a right to leave to attend certain school functions for employees.
SB 137 - Rodney Ellis - D- Houston. Preventing 'dead peasant's insurance.'
SB 61 Judy Zaffirini D - Laredo. Modifies the existing law on criminal background checks for nursing home employees and applicants.
SB 33 Judy Zaffirini D - Laredo. Establshing a right to leave to attend certain school functions for employees.
SB 137 - Rodney Ellis - D- Houston. Preventing 'dead peasant's insurance.'
How much is enough to create a hostile environment?
The facts were simple: plaintiff meets with her boss, the President of the company. In that one meeting he requests sex three times: a request for oral sex, that she participate in a threesome, and that she call him for phone sex. She refused all three. The district court finds that the conduct, occurring only within a few minutes and one time, was not pervasive enough to create a hostile environment and grants summary judgment. The Seventh Circuit reversed, sending it back for a jury trial. It points out that the test is 'severe or pervasive', either one will do, both are not required. It also held that although "infrequent, [President's] alleged outright solicitation of numerous sex acts from [plaintiff] is considerably more "severe" than the type of "occasional vulgar banter, tinged with sexual innuendo" that has previously been deemed to fall short of the hostile workplace standard." Quantock v. Shared Marketing Services, Inc. (7th Cir. 12/12/02) [pdf] Clearly, there is less than a bright line for judges and litigants to follow.
Race in Hiring: What's in a Name? Perhaps Plenty if You're a Job Seeker
With Trent Lott making racial issues the headline of the day, this is a reminder that not all is necessarily well in the employment field. And the problems are not limited to the South. Check out the story in today's NYTimes on a recent study.
Wondering How to Explain No or Low Raises to the Troops?
The magazine CFO story, cleverly titled: Raises? Get Out the Microscope at least offers some cover.
No Right to Sue Letter Required for Age Claim - Fifth Circuit
The plaintiff filed an EEOC charge alleging age discrimination, and then amended his lawsuit to add his age claim within 2 years of the allegedly discriminatory act. What he did not have, at any time, was a right to sue letter for his age discrimination claim. Defendant argued this deprived the court of jurisdiction. Neither the district court, nor the Fifth Circuit bought the argument. Finding the language of the age act different from Title VII, the Court found a right to sue letter is not required under the ADEA. The window for suing under the ADEA runs from 60 days after filing the charge to 90 days after receipt of a right to sue letter, if one is received. Julian v. City of Houston (5th Cir. 12/11/02). This is the second time in the past 2 years, the Fifth Circuit has had to deal with procedural issues involving the ADEA. Last summer, the Fifth Circuit made the opposite finding: merely having a right to sue letter from the EEOC is not sufficient, when the plaintiff never filed a charge. Steve Mierl, one of my colleagues here in Austin, was instrumental in making sure that the EEOC practice of issuing a right to sue letter to an individual who had not filed his own charge of discrimination was shot down and that the Court did not apply the piggyback rule where the one party who filed a charge, never filed a lawsuit. Bettcher v. Brown Schools (5th Cir. 2001).
In Julian, the City not only lost its jurisdictional argument, but it also suffers the possible loss of front pay as the Fifth Circuit sent the case back to the lower court to consider whether or not instatement to the position he had been denied a promotion too was feasible, and if not, whether front pay would be appropriate. Among the court's rulings were that the mere fact that his position would be at will was no reason alone to deny front pay, and that even though any award was somewhat speculative, that risk was to be borne by the discriminating party, not the employee.
In Julian, the City not only lost its jurisdictional argument, but it also suffers the possible loss of front pay as the Fifth Circuit sent the case back to the lower court to consider whether or not instatement to the position he had been denied a promotion too was feasible, and if not, whether front pay would be appropriate. Among the court's rulings were that the mere fact that his position would be at will was no reason alone to deny front pay, and that even though any award was somewhat speculative, that risk was to be borne by the discriminating party, not the employee.
Million Dollar Verdicts - ADA case in California
Over the years, I have kept a file of reports of $1,000,000 plus jury verdicts in employment law cases. I hoped that I could learn something from them, thus avoiding having my name ever mentioned prominently in such a story. Jottings seems a perfect place to collect those reports and quite often, the stories give a sense of what did go wrong at trial or with the case. Here's the latest involving a 59 year old employee, a long time 'temporary employee' who had apparently been doing the job for some time, but couldn't pass a physical agility test to become a permanent employee, which would have provided benefits. You can read the initial story here.
Cash Balance Plans To Get Green Light
The Department of Labor has issued proposed regulations that would give guidance (and clearance) for employers wishing to convert to so called cash balance benefit plans. You can read the New York Times story here or check out the actual proposed regulations [pdf].
Texas Legislature - Proposed House Bills
The legislative session doesn't open until January 3, 2003, but many of the Representatives-elect have already begun to pre-file legislation. Among the bills that would impact employment practices are the following:
HB 50 Sylvester Turner D - Houston. Mandatory leave for employees to attend school conferences, and penalties against retaliation for exercizing that right.
HB 105 Norma Chavez, D - El Paso. Would allow unemployment benefits, without charge to an employer's account, if an employee is forced to leave employment because of domestic violence.
HB 126 Lonnie Burnam D - Fort Worth. Requires parity for mental illness in disability policies sold in state of Texas.
HB 145 Burt Solomons R - Carrollton. Provides for modification to enforcement of interlocutory orders of the Texas Workers Compensation Commission.
HB 152 Ron Wilson D - Houston. Placing limitations on an employer's ability to obtain so called 'dead peasants insurance' [pdf] which has led to substantial litigation.
HJR 18 Suzanna Hupp R - Lampasas. A constitutional amendment to grant a broad right of privacy.
A look at the pre-filed Senate legislation will be forthcoming.
HB 50 Sylvester Turner D - Houston. Mandatory leave for employees to attend school conferences, and penalties against retaliation for exercizing that right.
HB 105 Norma Chavez, D - El Paso. Would allow unemployment benefits, without charge to an employer's account, if an employee is forced to leave employment because of domestic violence.
HB 126 Lonnie Burnam D - Fort Worth. Requires parity for mental illness in disability policies sold in state of Texas.
HB 145 Burt Solomons R - Carrollton. Provides for modification to enforcement of interlocutory orders of the Texas Workers Compensation Commission.
HB 152 Ron Wilson D - Houston. Placing limitations on an employer's ability to obtain so called 'dead peasants insurance' [pdf] which has led to substantial litigation.
HJR 18 Suzanna Hupp R - Lampasas. A constitutional amendment to grant a broad right of privacy.
A look at the pre-filed Senate legislation will be forthcoming.
Forbes Points Out Rise In Wage & Hour Class Action Suits
Yesterday's article focuses on a procedural step in an on-going case against C.H. Robinson to add a class of 3,000 employees, but goes on to note the growing trend of such suits. Although suits under California's more pro-employee wage and hour law are the most common, more and more suits are being brought under the Fair Labor Standards Act which applies to employers in all states.
Basic Employment Law Fact - Judges Fly Too
Over the years I have noted that in employment law cases involving airlines, particularly if flight safety might be involved, the plaintiff often loses. I have attributed this to the fact that judges also fly. Nothing in yesterday's decision in Frank v. Delta Airlines (5th Cir. 12/3/02) challenges that rule. An aircraft mechanic's urine sample showed traces of an adulterating substance. Delta treated it as a refusal to take a drug test, terminated him and reported him to the FAA. He sued for negligence, intentional infliction of emotional distress and defamation. Fortunately for Delta, the 5th Circuit found that all the common law claims were pre-empted by the comprehensive drug testing scheme implemented by Congress in the Transportation Employee Testing Act and subsequent FAA regulations. Any recourse would be an administrative one, not through common law causes of action. So once again, air safety prevails! Now if they could just do something about the tape on United's planes.
SOA Confidential Reporting Requirement - An Internet Solution?
Probably not the last, but one company is out to provide an internet solution for the Sarbanes-Oxley requirement that audit committees of publicly traded companies establish a "confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters." Interestingly, the executive team of Ethicspoint includes a former Deloitte partner and the former General Counsel of Ernst & Young.
Cell Phone Use - Employer's Next Liability?
The news the last couple of days has been full of cell phone stories. First, a Harvard survey is being reported as having concluded that 6% of all U.S. auto accidents are caused by drivers talking on their cell phones. Nedra Pickler's AP story was picked up by the Washington Post among others. And then Jonathan Glater of the NY Times weighs in with how employers are the deep pockets those 6% are pursuing. There are already some big settlements, which means more suits are sure to come. Glater gets some different views on the pro's and con's of having a policy about cell phone use. (First, let's start by banning them in restaurants!)
HR Nightmare: Special Diversity Program, Successful OFCCP Audits, but Now A Certified Class of 2500 Black Employees
Nothing would be worse for an HR Director than to have implemented a long running diversity program, come through several OFCCP audits, including a glass ceiling one in good shape, and still find yourself the subject of a class action for racial discrimination. Even more chilling were the words of the District Judge in certifying the class of over 2500 current and former employees:
Plaintiffs have made a 'significant showing' . . . that Sodexho's lack of uniform promotion policy or guidelines has had a disparate impact on the promotion of African-American employees, and has enabled or even fostered an environment at the company in which officials intentionally discriminate against blacks by denying them promotions to upper-level managerial positions.A large number of companies' promotion practices, might be found to be less than uniform. The details of the case were laid out by Neely Tucker in a Washington Post article this past week end.
Alabama Supreme Court Enforces Arbitration Agreement
Overruling a lower's court refusal to compel arbitration, the Court found that at will employment can be a satisfactory basis for an arbitration agreement, that the fact the employment has ended does is not a sufficient ground to avoid the arbitration and in determining whether or not interstate commerce is involved, and thus the FAA is applicable, the focus is on the scope of the employment not the dispute. Ameriquest Mortgage Co., Inc. v. Bentley, No. 1011791 (Ala. 11/27/2002).
Arbitrator's Power to Sanction Lawyer Limited by Maryland Court
Courts are becoming more concerned about the pervasiveness of arbitration agreements, particularly in employment and consumer settings. A Maryland court noted those concerns as it set aside an arbitrator's award of attorneys fees and sanctions. MCR America v. Greene (Md. Ct. of Spec. Appeals 11/26/02) [pdf]. The agreement between the parties did not allow the award of attorneys fees, so the arbitrator was acting outside the scope of the agreement to award them. And there were numerous grounds for setting aside sanctions against one of the parties' counsel, including that he was not a party to the arbitration agreement. As, or perhaps if, arbitration becomes more common, courts will be faced with more questions about the scope of an arbitrator's power and the interaction with judicial oversite.
Post-Thanksgiving Announcement
Turning blogging rituals backwards, rather than announce a future period of no postings, since the last posting of 11/21 I have been on a wonderfully relaxing trip to San Francisco and the Wine Country, ending up with a 3 day stay at The Inn at Occidental. The innkeeper, Jack Ballard, a former legal administrator has clearly gone to a higher calling! And if you are headed that way, I couldn't recommend his Inn or the trip highly enough. In fact, even if you weren't planning on heading that way, I would suggest you do so.
Defining Appropriate Law Enforcement Authority
Sarbanes-Oxley's criminal retaliation statute requires a report to a law enforcement official, an undefined term. The Texas Whistleblower statute has somewhat similar language (although it requires that it be an appropriate authority), but provides a detailed definition in §554.002. Even with a definition you can see the kind of issues that it leads to. The Texas Supreme Court took a narrow view in Texas Dept. of Transportation v. Needham which required an en banc reversal of a panel decision by the 14th Court of Appeals. City of Houston v. Kallina (Tex. App. - Houston [14th]) (11/21/02).
No ERISA Loophole for the Ban on Waiver of Unemployment Benefits
Texas, like all 49 other states and the District of Columbia, prohibits the waiver of claims for unemployment compensation. The plaintiffs in this case accepted a voluntary package, which included a waiver of all claims against the company. When they filed for unemployment for the time period between and beginning of the retirment pay, the company asked them to withdraw the claims, citing the waiver. When they didn't, the Company challenged the mandatory non-waiver under state law saying it was pre-empted by ERISA. The 5th Circuit reversed the trial court holding it was not preempted under the federal savings clause. It noted the requirement that a state ban waiver was necessary for a state's employers to get a lower unemployment tax rate. Mitchell Energy & Development Corp. v. Fain (5th Cir. 11/19/02) [pdf]. Even though the federal mandate is technically voluntary, the Court didn't think that was enough to take it out of the federal savings clause which excludes preempting any law or regulation under federal law. Bottom line, no waiver of unemployment benefits, regardless.
A New Board and Why It Matters
For the first time since August 2000, the NLRB has its full five member complement. And for the first time ever, they were nominated and approved as a package deal. The members and their terms of service are as follows:
Robert J. Battista, designated chairman. December 2007, fomer management labor lawyer with considerable experience in NLRA.
Peter C. Schaumber, August 2005, labor arbitrator, active in Presidential campaign for Bush, not a tremendous amount of NLRA work experience.
R. Alex Acosta, August 2003, young lawyer currently at DOJ, member of the Federalist Society.
Wilma R. Liebman, August 2006, the only current Board member before the approval of the package.
Dennis P. Walsh, December 2004, returning to the Board. Formerly served a one year term as a recess appointment of Clinton until December, 2001.
The first three are Republicans, the second two Democrats. The Detroit Free Press, the hometown paper for the new Chairman, has a story about him in their on-line publication.
Although unclear whether it is a trend, union issues may be more of a factor in these tough economic times. On December 6th the NLRB will hold an election for the 70 banquet workers at the Westin La Cantera according to a story in the San Antonio Express News. If it is successful it will be the first unionized hotel in San Antonio.
Robert J. Battista, designated chairman. December 2007, fomer management labor lawyer with considerable experience in NLRA.
Peter C. Schaumber, August 2005, labor arbitrator, active in Presidential campaign for Bush, not a tremendous amount of NLRA work experience.
R. Alex Acosta, August 2003, young lawyer currently at DOJ, member of the Federalist Society.
Wilma R. Liebman, August 2006, the only current Board member before the approval of the package.
Dennis P. Walsh, December 2004, returning to the Board. Formerly served a one year term as a recess appointment of Clinton until December, 2001.
The first three are Republicans, the second two Democrats. The Detroit Free Press, the hometown paper for the new Chairman, has a story about him in their on-line publication.
Although unclear whether it is a trend, union issues may be more of a factor in these tough economic times. On December 6th the NLRB will hold an election for the 70 banquet workers at the Westin La Cantera according to a story in the San Antonio Express News. If it is successful it will be the first unionized hotel in San Antonio.
Class Action Denied in Wal-mart Oral Contract Claim
The Court of Appeals reverses the trial court's certification of a class of as many as 350,000 employees. The plaintiffs' claim was a "common oral contractual obligation to provide rest and meal breaks and to pay hourly employees for all work performed' and a breach of that contract. The Court held that the individual formation and breach of each contract would predominate over any common issues. In addition, the court rejected the novel attempt of the plaintiffs to use the 'pattern or practice' method of proving their claim of working off the clock. Allowing it would have permitted the plaintiffs to prove the claim on a 'class' basis based on statistics and surveys resulting in a presumption of liability for each individual. The court found that such a method which has been used for Title VII discrimination cases was not appropriate in a contract case. Finally, the court found that the plaintiffs did not show that a class action was the superior method for adjudication of the controversy. Instead, the court noted the availability of the Texas Payday Act for such claims. Wal-mart Stores, Inc. v. Lopez (Ct. App. - 14th 11/14/02).
Arbitration is Supposed to Be Simple
But there are endless ways that it can end up being complicated. For example: when does a party arbitrator become a neutral and need to make appropriate disclosures to the other side? Apparently, when there is an unequivocal declaration that the party arbitrators are now neutrals, or at least that's the view of one Texas Court of Appeals. J.D. Edwards v. Estes, Inc. (Ct. App - Fort Worth)(11/14/02) [pdf]. Even before that, the court had to deal with an interesting jurisdictional issue, finding they had jurisdiction because the lower court set aside an arbitration award, but didn't order a new hearing. The Court found it had jurisdiction, affirmed throwing out the award because of the failure of a party, turned neutral, arbitrator to make proper disclosures. The court didn't order a new arbitration hearing, so what happens next? Stay tuned I suppose.
Administrative Actions under Sarbanes-Oxley
The Department of Labor has begun to take steps to implement Sarbanes-Oxley. The Secretary of Labor has issued an order designating OSHA as the agency responsible for handling claims under the civil Whistleblower Act created by Sarbanes-Oxley. The DOL has also published interim regulations for handling of notices and other procedures for the trading blackouts on 401(k)'s. The regulations were published in the Federal Register of 10/21/02.
I will be talking about these developments as well as the law itself at the UH CLE program Employer-Side Employment Law on December 5-6 in Houston and repeated in Dallas on December 12-13.
I will be talking about these developments as well as the law itself at the UH CLE program Employer-Side Employment Law on December 5-6 in Houston and repeated in Dallas on December 12-13.
Alabama Supreme Court Knocks Out Arbitration Agreement Because No Class Actions Permitted
One of the greatest dangers to arbitration programs being established by employers is reaction to use of arbitration clauses in consumer agreements. If there is ever Congressional action it is apt to be because the two issues, employment and consumer transactions, are linked. The Alabama Supreme Court has just shown their unhappiness with arbitration in what they deemed 'a contract of adhesion' for termite services. The plaintiffs argument, adopted by the Court, was that because of the cost of arbitration and the relatively small amount of the individual claim, heightened by a clause limiting the type of damages they could recover, the only meaningful way to pursue the claim was small claims court or a class action. Since both avenues were foreclosed by arbitration, the Court found the agreement unconscionable and refused to enforce it. Leonard v. Terminix (Ala. 10/18/02). Although the same logic is not likely to extend to most employment claims, the underlying principle and the potential linkage arbitration in consumer transactions and arbitration in employment, should remain a concern to those who support arbitration in the employment area.
Closing The Plant Not Always Enough To Cut Off Damages and Those Dangerous Attorneys Fees
At least that was the case in Haggar Apparel Company v. Leal (Ct. App. - Corpus Christi) decided last week. Haggar argued that damages for back wages should be stopped at the time it closed the plant where the successful ADA claimant worked. The Court held even if that date were established, it was not enough, as Haggar had several plants in South Texas and others who worked in her plant had been transferred to other sites.
Even more important, particularly from a dollars standpoint was the way attorneys fees were handled. The company argued the plaintiff had waived her claim to attorneys fees by not submitting it to the jury. The Court held however that in a TCHRA claim, the judge was the appropriate party to make the award so it need not be submitted. In this case, even though the award to the plaintiff totaled about $55,000 the Court awarded $158,000 to newly elected State Representative Aaron Pena.
Even more important, particularly from a dollars standpoint was the way attorneys fees were handled. The company argued the plaintiff had waived her claim to attorneys fees by not submitting it to the jury. The Court held however that in a TCHRA claim, the judge was the appropriate party to make the award so it need not be submitted. In this case, even though the award to the plaintiff totaled about $55,000 the Court awarded $158,000 to newly elected State Representative Aaron Pena.
EEOC Suit Based on Obesity as Perceived Disability
Today's HR Daily News has the story of the EEOC's lawsuit filed on behalf of a 400 lb truck driver who was discharged even though he had passed his DOT physical. With the increased difficulty of establishing an actual disability under the ADA's definition as construed by the courts, we can anticipate more attempts to use the 'perceived as' prong, which is the basis for the Commission's claim against Watkins Motor Lines.
California Gets It Wrong on 3rd Party Sexual Harassment
Or at least that is the position taken by Prof. Joanna Grossman of Hofstra University in a Findlaw article. The case is Salazar v. Diversified Paratransit, Inc., decided by an intermediate appellate court on 10/30/02. The court based its decision on a statutory interpretation of the California FEHA. Without trying to discern the niceties of the California statute vs. Title VII, I think Professor Grossman has a point on the overall policy issue.
Vicarious liability - an issue that needs resolving
I was at a seminar planning conference last week and one topic discussed was vicarious liability, where an employer is charged with liability for conduct of an employee that seems so clearly to outside the course and scope of employment as to be a 'no-brainer'. But the suits keep coming. A recent example reported in the Odessa American is a claim against Airborne Express, by the family of a woman killed by her ex-husband, who happened to be employed by Airborne. I suppose there could be facts to make such a case plausible, but it seems hard to imagine what they would be.
Denver Jury Tags Yellow Freight for 3.3 Million for Retaliation
A twice fired employee, re-instated by the efforts of his union, was successful in convincing a Denver jury that he had been mistreated sufficiently to entitle him to punitive damages. The Rocky Mountain News story has comments from two of the jurors as well as the lawyers for the parties.
No Attorneys Fees for Sabine Pilot Cause of Action
The 5th Circuit makes clear that attorneys fees are not recoverable in a successful Sabine Pilot action. Garcia v. Sunbelt Rentals, Inc. [pdf] (11/2/02).
EEOC Active in West Texas - Two Large Settlements
The EEOC has settled two multi-plaintiffs cases in Midland and Amarillo. In Midland, one African American employee and four of his white co-workes at TMBR were allegedly subjected to a hangman's noose and Nazi symbols. The five will share the $859,000 settlement. Further north, in Amarillo six employees of Ron Clark Ford will split $140,000. The EEOC contended the men were "subjected to lewd, inappropriate comments of a sexual nature and had their genitals and buttocks grabbed against their will by males managers" while the dealership said it was just horseplay.
HIV positive employee not disabled under any of the 3 prongs of ADA disability definition
The 5th Circuit upholds Judge Fitzwater's grant of summary judgment when he found that an HIV positive employee was not disabled under the ADA. Although HIV status effects reproduction, when the employee had already disavowed the desire for any future children, it was not a major life impairment. The Court also ruled out 'working' as an a substantial impairment. The employee was able to do a variety of jobs, he just could not return to his former position as a residential CSR because of the stress. Blanks v. Southwestern Bell Communications [pdf] (5th Cir. 11/04/02)l
The danger of the 'Reply to All' button -
One can sympathize with a lawyer whose firm is now being sued for defamation because of his inadvertent use of the reply to all feature of his email program. His rather negative opinion of another lawyer who had written the firm, which was obviously intended only for internal consumption, was mistakenly re-directed to the lawyer when he 'replied to all'. Lawyers and technology --- a volatile mix. The American Lawyer has all the details including the important legal defense raised by the defendant firm as to whether or not the internal communication is sufficient 'publication' for Georgia defamation law.
Valuing Stock - Important Texas Supreme Court decision
In Miga v. Jensen (Tex. 10/31/02), handed down one year and one week after it was argued, the Texas Supreme Court waded into territory that was of paramount interest during the internet bubble. Plaintiff had been promised an option to purchase stock. When he attempted to exercize the option, the defendant breached the obligation and refused to sell. The question was simple, but important: when do you value the stock? In this case, if valued at the time that the contract was breached, the value was approximately $1,000,000. If valued at the time of trial, it would have been almost $18,000,000. Instead of allowing the plaintiff a risk free investment, the Court limited the damages to the value at the time of breach, plus pre-judgment interest. Before reaching the bottom line question, the Court dealt with the question of mootness following an unusual procedural step by the appellant. For those representing employers involved in disputes over stock options, this has to be considered good news; unless of course the market has gone down.
12 million jury verdict for 26 year employee for taking family leave
Just from a brief newspaper article with only the barest of facts you can sense some of the things that might have been problems in this case: a long term employee, at one time selected as employee of the year, terminated (it sounds like it might have been close to the time he was selected employee of the year), for a reason that a jury could empathize with, taking leave to take care of his elderly parents. If either management or counsel for the hospital came across as arrogant or deceptive, it would have been an almost perfect example of the types of factors that can cause a jury to really "go south on you" as trial lawyers like to say. In this case it was a Chicago federal jury, but it could have been anywhere. A $10 million punitive damage award was under the intentional infliction of emotional distress claim.
Hooray! Threatening HR a Terminable Offense
Ms. Romero chose to take an early retirement package with enhanced benefits if she remained employed through the fourth quarter. She asked that her last day of work be the last day of the year. Instead, the company scheduled it to be October 3rd, but still within the fourth quarter, thus preserving her benefits.
Seeming not to understand, Ms. Romero told an HR employee that she would not be attending a company dinner where the HR Director would be present because she didn't know what her husband would do when he saw "that man". She also added that she "hoped someday somebody puts a bullet in that man", although she said it wouldn't be her because she "wouldn't go to jail for that man". When the fellow employee asked her if she meant it, she replied affirmatively. Having thought about, she left a voice mail saying she didn't want the employee to think if anything happened to the HR Director that she had anything to do with it. But she did re-iterat that if some one else did something she would "shed no tears and be happy". In other words she said, "her hands are clean [although] her mind isn't."
The fellow employee was, understandably, upset, not to mention the Director of HR. Ms. Romero summoned to a disciplinary meeting refused to talk without her lawyer and soon found herself an ex-employee, without the benefits of the enhanced severance package. Her ensuing litigation was unsuccessful. HR folks often feel they are an endangered species, but it's nice to know at least someone cares! Romero v. Smithkline Beacham [pdf] (3rd Cir. 10/30/02).
Seeming not to understand, Ms. Romero told an HR employee that she would not be attending a company dinner where the HR Director would be present because she didn't know what her husband would do when he saw "that man". She also added that she "hoped someday somebody puts a bullet in that man", although she said it wouldn't be her because she "wouldn't go to jail for that man". When the fellow employee asked her if she meant it, she replied affirmatively. Having thought about, she left a voice mail saying she didn't want the employee to think if anything happened to the HR Director that she had anything to do with it. But she did re-iterat that if some one else did something she would "shed no tears and be happy". In other words she said, "her hands are clean [although] her mind isn't."
The fellow employee was, understandably, upset, not to mention the Director of HR. Ms. Romero summoned to a disciplinary meeting refused to talk without her lawyer and soon found herself an ex-employee, without the benefits of the enhanced severance package. Her ensuing litigation was unsuccessful. HR folks often feel they are an endangered species, but it's nice to know at least someone cares! Romero v. Smithkline Beacham [pdf] (3rd Cir. 10/30/02).
One not two year SOL for business related defamatory statements by a fellow employee
A clever attempt to avoid the 1 year statute of limitations for defamation, claiming that a defamatory statement by a fellow employee that cost an employee his job, was 'business disparagement' with a 2 year SOL, was fortunately for the employer unsuccessful. Brod v. Newman, (Tx Ct. App - Houston [1st]) (10/17/02).
Legislative fever
Although the election for the entire group of Senators and Representatives who will serve in the next term of the Texas legislature is three weeks away, it is not too early to begin thinking about legislative schemes that may already be forming in some legislator's mind. As an example, New York has just passed a law broadening the religious accomodation obligation of Empire state employers. Although not a likely candidate for adoption in Texas, it does show the type of issues that can crop up on the state level. The bill, signed by Governor Pataki on October 13th, was jointly approved by the Governor, the legislative leadership and the Attorney General as it was submitted to the legislature as bill A-7340.
Oral COBRA notice is sufficient
Although not recommended, the 8th Circuit holds that oral notice following an employee's termination is sufficient to meet an employer's COBRA obligations. Chesnut v. Montgomery[pdf]. (8th Cir. 10/8/02) Obviously, relying on oral notice clearly leads to a tough factual issue.
Trucking company arrangement upheld
A driver who owned his truck leased it to a company and entered into a separate employment agreement. The latter allowed him to obtain medical insurance. The issue was whether he had been defrauded because the employment agreement said the employer would pay the employer's share of social security etc. and the effect of the lease agreement was to pass those costs to him. The court upheld summary judgment for the trucking company. Bridges v. Andrews Transport, (Beaumont 10/10/2002).
Legal issues surrounding temps
A couple of University of Pennslyvania lawyers have a good summary of various issues that can arise when you utilize temporary employees, either directly or through an agency in a Workforce Week article.
No Class Action For Determining Validity of Covenants Not To Compete
Although in the past class actions were primarily a creature of federal courts, more parties are turning to state courts to bring such actions. A group of insurance agents who sought to represent a large class of such agents in an effort to declare the covenants not to compete contained in employment agreements were invalid succeeded in convincing a trial judge that they should be allowed to do so. The Beaumont Court of Appeals felt otherwise, finding that the individual determinations of reasonable geographical scope and the requirement to revise each agreement if were not, make it unsuitable for class treatment. American National Insurance v. Cannon (Beaumont 9/26/02).
Admissibility of EEOC letters of determination - judge's discretion
A recent 3rd Circuit case, Coleman v. Home Depot [pdf] discussed a split in the circuits over whether an EEOC letter of determination can be excluded by the trial judge under FRE 403, which permits otherwise admissible evidence to be excluded because of its prejudicial effect, that it would cause undue delay, is duplicative and other delineated reasons. The 3rd Circuit held that it was within the judge's discretion to do so. Interestingly it cited an early 5th Circuit case as one that arguably provided less discretion to the trial judge. That is not the case, as the 5th Circuit's subsequent view is that the determination of admissibility is within the Court's discretion. Cortes v. Maxus.
Land fill dumping worth 2,000,000, but female wrestler's sexual harassment claim thrown out of the ring
While large jury verdicts often get reversed they are still good indicators of how serious juries take firings. One type of case that seems to resonate strongly is the termination of an injured employee. An Indiana jury awarded almost 2 million to a land fill employee who suffered the most severe job ever at the workplace and was terminated 8 days after he returned to work. Forguson v. National Serv-All.. But there are clearly cases that juries don't buy. That happened to Nicole Bass, a 6 ft 2 inches, 230 pound female wrestler who took on World Wrestling Entertainment, Inc. seeking $120 million for sexual harassment, but found herself bounced by a Brooklyn jury. Bass v. WWE, Inc.
Wisconsin law of consideration for arbitration agreement
For a similar decision to the Texas view of consideration for an arbitration program set forth in In Re Halliburton [pdf], and a good description of the successful implementation of a mandatory arbitration program without getting signatures, see the Seventh Circuit's decision in Tinder v. Pinkerton Security. [pdf].
Release of everything, means everything
It is nice when the courts provide clarity. In today's decision of Chaplin v. NationsCredit [pdf], the 5th Circuit did just that. Following a disputed claim for benefits, a payment was made in return for a release which included the following language:
"[Plaintiffs] hereby agree to release NCDF from any and all claims, suits, demands, or other causes of action of any kind . . . arising at any time in the unlimited past . . . [including] all claims arising by reason of or in any way connected with [plaintiffs’] employment relationship with NCDF. . . .”
In seeking to reverse a summary judgment, plaintiffs argued that the language was insufficient since it did not specifically mention ERISA. The Court noted: "It would be an odd public policy that favored settlements and releases, but then forced employers to scour the United States Code and the state statutes and reports to identify every possible cause of action." Thankfully, by its holding that a release of all claims, means all claims, unless there is a specific statutory prohibition, the Court provided a bright line for all litigants.
And congratulations to my partner, Bill Strock, who argued it on September 4th.
"[Plaintiffs] hereby agree to release NCDF from any and all claims, suits, demands, or other causes of action of any kind . . . arising at any time in the unlimited past . . . [including] all claims arising by reason of or in any way connected with [plaintiffs’] employment relationship with NCDF. . . .”
In seeking to reverse a summary judgment, plaintiffs argued that the language was insufficient since it did not specifically mention ERISA. The Court noted: "It would be an odd public policy that favored settlements and releases, but then forced employers to scour the United States Code and the state statutes and reports to identify every possible cause of action." Thankfully, by its holding that a release of all claims, means all claims, unless there is a specific statutory prohibition, the Court provided a bright line for all litigants.
And congratulations to my partner, Bill Strock, who argued it on September 4th.
Another way to blow the arbitration agreement
With mandatory arbitration clearly the law of the land, we are now down to those cases where specific flaws in the program render them unenforceable. One failure recognized by several courts is where the employer (usually as a result of poor drafting) retains the right to change the arbitration program at any time. Dumais v. American Golf Corp. decided in August by the 10th Circuit is another example.
How far can an arbitration agreement go?
Not far enough to protect a law firm accused of giving bad legal advice to a reporter for WFAA. After having been told it was permissible to tape wireless phone conversations, a reporter and WFAA were sued by the individuals taped, resulting in a settlement of over $5,000,000. The reporter then sued the law firm. In discovery the firm obtained his employment agreement with WFAA which had an arbitration agreement. As do many, it contained broad language covering:
all disputes between you and [WFAA] . . . which relate to, or arise from the employment relationship, the parties agree to forego litigation . . . and the parties consent to the final and binding arbitration of all claims and disputes which may arise between the parties including, but not limited to, disputes arising from your employment and the termination of your employment. Such claims and disputes will include any claims or disputes that [WFAA] may have against you, as well as those that you might have against [WFAA], its parent corporation, owners, affiliates, officers, directors, employees, and/or agents.
Relying on the extension of the contract to agents of WFAA, the law firm argued that when it gave advice it was acting as the agent of WFAA, citing established case law that attorneys are the agents of their clients. The employee argued, and the Dallas Court of Appeals agreed, that the language was intended to cover only those parties for whom WFAA would be vicariously liable for their conduct. Since both parties agreed that WFAA was not liable for legal advice given by the law firm, the arbitration agreement did not apply and the motion to compel arbitration was properly denied. Jenkens & Gilchrist v. Riggs (9/17/02)
all disputes between you and [WFAA] . . . which relate to, or arise from the employment relationship, the parties agree to forego litigation . . . and the parties consent to the final and binding arbitration of all claims and disputes which may arise between the parties including, but not limited to, disputes arising from your employment and the termination of your employment. Such claims and disputes will include any claims or disputes that [WFAA] may have against you, as well as those that you might have against [WFAA], its parent corporation, owners, affiliates, officers, directors, employees, and/or agents.
Relying on the extension of the contract to agents of WFAA, the law firm argued that when it gave advice it was acting as the agent of WFAA, citing established case law that attorneys are the agents of their clients. The employee argued, and the Dallas Court of Appeals agreed, that the language was intended to cover only those parties for whom WFAA would be vicariously liable for their conduct. Since both parties agreed that WFAA was not liable for legal advice given by the law firm, the arbitration agreement did not apply and the motion to compel arbitration was properly denied. Jenkens & Gilchrist v. Riggs (9/17/02)
Davis vetoes arbitration ban
Governor Gray Davis vetoed S.B. 1538 which would have prohibited employers from requiring that employees agree to arbitrate employment disputes as a term of employment. With the demise of Duffield, arbitration agreements seem to now be the law of the land.
No Faragher defense, but no punitive damages
The possibility that an employer could prove unsuccessful in establishing the Faragher affirmative defense, but prevail on the issue of punitive damages under Kolstad is borne out in today's ruling by the Fifth Circuit. In Hatley v. Hilton Hotels [pdf] the Court found that a jury verdict that the company had not established the affirmative defense was supported by evidence that the complainants were not separated from the harassers, that the harassment continued, that a prior complaint of sexual harassment reported to the same person had 'fallen through the cracks' and that others had previously complained about the two harassing supervisors. However, since the company did have an announced policy and did attempt to investigate the claim, it was enough to meet the Kolstad standards and so the court's decision not to instruct the jury on punitive damages was appropriate. Although, there is not a lot of discussion, it is a good recognition of the difference in the two standards.
Duffield gone by a split decision
Apparently tired of being the only circuit to hold that Title VII claims were not subject to arbitration agreements, two judges of the 9th Circuit hold that the Supreme Court's decision in Circuit City implicitly overruled Duffield. The vehicle for this decision is EEOC v. Luce, Forward, Hamilton & Scripps [pdf]. A legal secretary who had refused to agree to arbitration had been terminated and the lower court had enjoined the practice based on Duffield.
Of course some in California just can't let it go, including not only the dissenting judge, but the California legislature. It recently sent S.B. 1538, prohibiting mandatory arbitration under the FEHA, the state equivalent to Title VII, to the Governor for his signature. Watch now for a request for en banc consideration for Luce, Forward, what the governor does with S. B. 1538, and if he signs it, for the quick challenge that it is pre-empted by the FAA.
What would we do without California?
Of course some in California just can't let it go, including not only the dissenting judge, but the California legislature. It recently sent S.B. 1538, prohibiting mandatory arbitration under the FEHA, the state equivalent to Title VII, to the Governor for his signature. Watch now for a request for en banc consideration for Luce, Forward, what the governor does with S. B. 1538, and if he signs it, for the quick challenge that it is pre-empted by the FAA.
What would we do without California?
More Sarbanes-Oxley speeches!
Also on tap in the not too distant future is a speech for the Longview Partnership Employment Law Update on October 1st, and a panel discussion at the 7th Annual Advanced Employment Issues Symposium in Chicago on October 10 on post-Enron developments.
UH Law School Foundation Speech
September is a busy month for speeches. First up is the University of Houston Law Foundation Employment Law Seminar. Spoke last Thursday and again next Thursday in Dallas. Actually will be switching times, but not topics, with Gregg Rosenberg. Talking about the impact of Sarbanes-Oxley on employers. Seemed to get a lot of interest Thursday, more notes than normal being taken. Not sure many have focused on the employment law aspects of Sarbanes-Oxley.
The new whistle blower cause of action is potentially a big issue for publicly traded companies, and their officers and employees, although of more general interest and perhaps trouble is the criminalization of whistle blowing. The potential impact and how we got that particular section of the Act are probably worth a post of their own.
The new whistle blower cause of action is potentially a big issue for publicly traded companies, and their officers and employees, although of more general interest and perhaps trouble is the criminalization of whistle blowing. The potential impact and how we got that particular section of the Act are probably worth a post of their own.
Negligent investigation, not a cause of action in Texas
Although the Texas Supreme Court has been a reliable haven for employers, the intermediate courts of appeal are not always so. In Texas Farm Bureau Mutual Insurance v. Sears, decided on August 30th, the Court reversed a lower court's decision that could have proved enormously troublesome to employers. The fired employee had won because the lower appeals court held that an employer, even in the context of an at will employee, has a duty of ordinary care in conducting an investigation as to the employee's misconduct. Finding that such a duty would prove to be the total undoing of the long established and treasured 'employment at will' doctrine, the Supreme Court rejected it, finding that no such duty exists.
Arguably, the Court found that any negligence type claim tied to a termination will not be valid. ("Engrafting a negligence exception on our at-will employment jurisprudence would inevitably swallow the rule.")
The Court was also once again forced to substitute its opinion of what is outrageous conduct in denying the employee's intentional infliction of emotional distress claim. This time, a unaminous Supreme Court had to overturn a decision that certain conduct was outrageous. That decision was made by a jury, the trial judge and the court of appeals. That such decisions have to be made, quite often, argues strongly for the abolition of the intentional infliction of emotional distress, at least in the employment context. It too runs the risk of being the exception that swallows the at will rule. The Court will perhaps have its chance, or at least a chance to limit its reach in sexual harassment cases, in Roche v. Zeltwanger, currently pending before the Court.
Arguably, the Court found that any negligence type claim tied to a termination will not be valid. ("Engrafting a negligence exception on our at-will employment jurisprudence would inevitably swallow the rule.")
The Court was also once again forced to substitute its opinion of what is outrageous conduct in denying the employee's intentional infliction of emotional distress claim. This time, a unaminous Supreme Court had to overturn a decision that certain conduct was outrageous. That decision was made by a jury, the trial judge and the court of appeals. That such decisions have to be made, quite often, argues strongly for the abolition of the intentional infliction of emotional distress, at least in the employment context. It too runs the risk of being the exception that swallows the at will rule. The Court will perhaps have its chance, or at least a chance to limit its reach in sexual harassment cases, in Roche v. Zeltwanger, currently pending before the Court.
No state wide forum shopping under Title VII
The Fifth Circuit issued a writ of mandamus where a defendant's motion to transfer venue in a Title VII case was denied. Although both parties, almost all witnesses, the records and all of the acts occurred in the Western District of Louisiana, the suit was filed in the Middle District. Rather than being heard in Shreveport, it would have been heard in Baton Rouge, more than 220 miles away, making most of the witnesses outside the 100 mile subpoena range. The Court was clearly not pleased with either the result below or the fact that it had taken over 13 months to rule on the motion. In rejecting the plaintiff's argument that it basically got its choice of any district within a particular state, the Court eliminated what could have been substantial amounts of forum shopping if the case had gone the other way. In Re Horseshoe Entertainment [pdf](9/10/02).
Labor Day Hype or A True Shift?
A poll commissioned by the AFL-CIO has shown that for the first time ever (or at least, 1984, the first year employees were asked by the AFL-CIO) half the workers who don't already have a union say they would join one now if they had a chance. This is an 8% increase over last year's 42%. Not surprisingly, and probably linked, the same poll also reflected an increase in the negative view of those surveyed of corporations, with 39% having a negative view opposed to 30% who have a positive view. A 'whopping' (AFL CIO's word choice) 58% have a negative view of CEO's. For more see the AFL-CIO's press release. If those facts are really what people are believing, and there is certainly an anecdotal basis for them, then it seems that much more attention will need to be paid to traditional labor issues than in the near past.
Merger on the horizon?
For a short, simple list of practical suggestions on how to make a merger of two entities work, see Workforce's Best Practices of Mergers and Acquisitions..
No Waffles at the DOL?
Eugene Scalia, the Solicitor of Labor and son of Justice Scalia of the United States Supreme Court, has issued an interesting directive on how the DOL will handle cases where an employee has agreed to arbitrate disputes with their employer. In commenting on the Supreme Court's Waffle House decision at the ABA convention, Scalia noted "saying that the government need not defer to arbitration is not the same as saying the government must not defer."
In his August 9th directive, Scalia makes it clear that in many cases the DOL should in fact defer to such arbitration agreements. One area most appropriate for deferral is matters involving individual claims for relief in the form of back pay and reinstatement, such as various whistle blower statutes. He does single out wage and hour claims as likely to not be good subjects for deferral.
It will be interesting to see how the directive will interact with the new whistle-blower claim created by Sarbanes-0xley.
Obviously, this is very much a pro-arbitration position. It will be interesting to see what sort of reaction it gets, if any, from the anti-arbitration element in Congress. My guess is that particularly given who it is coming from, it will definitely get some attention.
Just as an example of some who might harbor such feelings, Senator Leahy from Vermont, the current chair of the Senate Judiciary Committee offered a version of a whistle-blower bill, that fortunately was ultimately not accepted in Sarbanes-Oxley, which would have prohibited the new whistle blower claims from being arbitrated, unless consent were given after the claim arose.
Probably not likely to see much more than rhetoric in the remainder of this Congressional session, although who knows what will happen as election time gets nearer. However, I think those interested in arbitration as a viable method for dispute resolution should keep their eyes carefully tuned to what is going on in Congress in the future.
In his August 9th directive, Scalia makes it clear that in many cases the DOL should in fact defer to such arbitration agreements. One area most appropriate for deferral is matters involving individual claims for relief in the form of back pay and reinstatement, such as various whistle blower statutes. He does single out wage and hour claims as likely to not be good subjects for deferral.
It will be interesting to see how the directive will interact with the new whistle-blower claim created by Sarbanes-0xley.
Obviously, this is very much a pro-arbitration position. It will be interesting to see what sort of reaction it gets, if any, from the anti-arbitration element in Congress. My guess is that particularly given who it is coming from, it will definitely get some attention.
Just as an example of some who might harbor such feelings, Senator Leahy from Vermont, the current chair of the Senate Judiciary Committee offered a version of a whistle-blower bill, that fortunately was ultimately not accepted in Sarbanes-Oxley, which would have prohibited the new whistle blower claims from being arbitrated, unless consent were given after the claim arose.
Probably not likely to see much more than rhetoric in the remainder of this Congressional session, although who knows what will happen as election time gets nearer. However, I think those interested in arbitration as a viable method for dispute resolution should keep their eyes carefully tuned to what is going on in Congress in the future.
A distinction with a difference: using words that have legal significance in their every day sense
There was recently a discussion on one of the boards I occasionally peruse (the High-tech.net group of SHRM) about whether or not a person who was yelled at regularly by their supervisor was a victim of a hostile environment. The original poster of the question, had replied, I think correctly, not necessarily.
My response, which didn't get posted due to a technical glitch was as follows:
I think part of the problem with this issue is the use of a term in its every day sense, without being sensitive to its legal meaning. Certainly working in an environment where a supervisor yells at you daily is clearly a hostile environment as defined in a dictionary (not offering a pleasant or sustaining environment). However, if the question is: is it a hostile work environment as prohibited by Title VII of the Civil Rights Act of 1964 and similar statutes?. The answer is no; unless it can be shown that the reason the supervisor is yelling is because of the employee's sex, race, age, disability or some other protected category.
Just because it is not actionable under a specific statute, does not necessarily mean that there may not be some way to bring a successful law suit. For example, if the conduct is severe enough, it might rise to the level of intentional infliction of emotional distress, or the tort of outrage as it is known in some states. A classic example is the case of the retired drill sergeant who should have been permanently retired. GTE Southwest, Inc. v. Bruce (Tex. 1998).
The confusion of every day words and legal terms would not normally make a difference as employers should make it clear that unpleasant working conditions, legal or not, will not be tolerated. However, it does make a difference when you are being sued and you wish to make the legal distinction.
One way that employers frequently hurt themselves is by using the legal term "sexual harassment" when the conduct, no doubt inappropriate, may not rise to a level that meets the legal standard, or at least the employer wants to make that argument. If in their documentation, the employer had used the term 'inappropriate conduct' or something similar, it would still clearly connotes that it was not acceptable, without passing judgment on whether it is legal or not. Without a flat statement that the conduct was sexual harassment, the employer would be in a much better position to argue that the conduct while not acceptable under the company's standards, was nevertheless not conduct for which it should be liable in damages.
My response, which didn't get posted due to a technical glitch was as follows:
I think part of the problem with this issue is the use of a term in its every day sense, without being sensitive to its legal meaning. Certainly working in an environment where a supervisor yells at you daily is clearly a hostile environment as defined in a dictionary (not offering a pleasant or sustaining environment). However, if the question is: is it a hostile work environment as prohibited by Title VII of the Civil Rights Act of 1964 and similar statutes?. The answer is no; unless it can be shown that the reason the supervisor is yelling is because of the employee's sex, race, age, disability or some other protected category.
Just because it is not actionable under a specific statute, does not necessarily mean that there may not be some way to bring a successful law suit. For example, if the conduct is severe enough, it might rise to the level of intentional infliction of emotional distress, or the tort of outrage as it is known in some states. A classic example is the case of the retired drill sergeant who should have been permanently retired. GTE Southwest, Inc. v. Bruce (Tex. 1998).
The confusion of every day words and legal terms would not normally make a difference as employers should make it clear that unpleasant working conditions, legal or not, will not be tolerated. However, it does make a difference when you are being sued and you wish to make the legal distinction.
One way that employers frequently hurt themselves is by using the legal term "sexual harassment" when the conduct, no doubt inappropriate, may not rise to a level that meets the legal standard, or at least the employer wants to make that argument. If in their documentation, the employer had used the term 'inappropriate conduct' or something similar, it would still clearly connotes that it was not acceptable, without passing judgment on whether it is legal or not. Without a flat statement that the conduct was sexual harassment, the employer would be in a much better position to argue that the conduct while not acceptable under the company's standards, was nevertheless not conduct for which it should be liable in damages.
Paid family leave, let's let California try it....
Even when first passed, those who supported the Family Medical Leave Act, the Clinton administration's only employment legislative legacy, admitted it was only the first step. What was really desired, and needed, to be equal to most other industrial nations, was to have paid leave. The attempt to use the national unemployment compensation system for partial payment seems to have fizzled, but now a major battle is underway in California. The Paid Family and Medical Leave Act is working its way through the California legislative process.
Many states rights enthusiasts, George Will comes to mind, believe that the states are great testing grounds for initiatives, offering a way to see if the ideas work, before inflicting them on the nation as a whole. (Obviously, that is posed in the most negative fashion, as such initiatives could prove to be a good idea. On this one I have my doubts.)
The arguments are being formulated, but I am game to let California have a go at it. Let's see if it benefits workers as a whole, as opposed to those individuals who may, at least in the short term, get the paid leave. For views pro and con, see E. Kay Trimberger's piece in the Mercury News and the the California Chamber of Commerce's position paper.
The impact of employment legislation is widespread and often brings into play the law of unintended consequences. I think particular care should be given when it is entitlement employment legislation. Even if it has no other effect (and it will), at a minimum it diminishes the abilities of a superior employer who wishes to distinguish itself for the purposes of retention and competition for talent from setting itself apart from other employers by being unique in providing such benefits.
Even when first passed, those who supported the Family Medical Leave Act, the Clinton administration's only employment legislative legacy, admitted it was only the first step. What was really desired, and needed, to be equal to most other industrial nations, was to have paid leave. The attempt to use the national unemployment compensation system for partial payment seems to have fizzled, but now a major battle is underway in California. The Paid Family and Medical Leave Act is working its way through the California legislative process.
Many states rights enthusiasts, George Will comes to mind, believe that the states are great testing grounds for initiatives, offering a way to see if the ideas work, before inflicting them on the nation as a whole. (Obviously, that is posed in the most negative fashion, as such initiatives could prove to be a good idea. On this one I have my doubts.)
The arguments are being formulated, but I am game to let California have a go at it. Let's see if it benefits workers as a whole, as opposed to those individuals who may, at least in the short term, get the paid leave. For views pro and con, see E. Kay Trimberger's piece in the Mercury News and the the California Chamber of Commerce's position paper.
The impact of employment legislation is widespread and often brings into play the law of unintended consequences. I think particular care should be given when it is entitlement employment legislation. Even if it has no other effect (and it will), at a minimum it diminishes the abilities of a superior employer who wishes to distinguish itself for the purposes of retention and competition for talent from setting itself apart from other employers by being unique in providing such benefits.
Day to day violence, on whose nickel?
There seem to be an increasing number of cases that deal with an employer's responsibility when employees are injured on the job by the intentional acts of others, including fellow employees. Although Texas law is fairly clear, that an employee who claims such an injury but elects to receive workers compensation is barred from any other action against the employer, it is not so clear in other states. Medina v. Herrera, 927 S.W.2d 597 (Tex. 1996).
Most recently, the Mississippi intermediate court addressed a case with these allegations:
On or about the 10th day of October, 1997, Defendant Oye, in his office on the premises of Defendant Pioneer, Inc. wilfully assaulted and battered Plaintiff Robert Davis by lunging across his desk, grabbing the Plaintiff at his throat and slinging Plaintiff against a wall.
Plaintiff was the Manager of Information Systems and the 'flinger' was the Company Comptroller. Just as an aside, isn't it fairly ludicrous to say "on or about October 10th"? No matter how many of us have been frustrated with the IT department, surely it is still rare enough that one will remember precisely the date they were flung "against said wall." (Said with tongue in cheek.)
In any event, the Mississippi court held that even though the injured employee had received workers comp benefits, he could proceed with his suit against the employer. It may be the correct ruling under Mississippi precedent, but it seems indicative of a growing trend to hold employers liable for the intentional acts of others. There may be cases where a good argument can be made for that, although I think the whole area of employer responsibility for such conduct, the interactions of various theories of liability such as vice-principal, and the reach of the workers compensation exclusivity bar is ripe for review.
I did note that, although not writing the opinion, a law school classmate, Leslie Southwick was on the panel that heard the case.
Most recently, the Mississippi intermediate court addressed a case with these allegations:
On or about the 10th day of October, 1997, Defendant Oye, in his office on the premises of Defendant Pioneer, Inc. wilfully assaulted and battered Plaintiff Robert Davis by lunging across his desk, grabbing the Plaintiff at his throat and slinging Plaintiff against a wall.
Plaintiff was the Manager of Information Systems and the 'flinger' was the Company Comptroller. Just as an aside, isn't it fairly ludicrous to say "on or about October 10th"? No matter how many of us have been frustrated with the IT department, surely it is still rare enough that one will remember precisely the date they were flung "against said wall." (Said with tongue in cheek.)
In any event, the Mississippi court held that even though the injured employee had received workers comp benefits, he could proceed with his suit against the employer. It may be the correct ruling under Mississippi precedent, but it seems indicative of a growing trend to hold employers liable for the intentional acts of others. There may be cases where a good argument can be made for that, although I think the whole area of employer responsibility for such conduct, the interactions of various theories of liability such as vice-principal, and the reach of the workers compensation exclusivity bar is ripe for review.
I did note that, although not writing the opinion, a law school classmate, Leslie Southwick was on the panel that heard the case.
It's Not Just About Money
Although frequently having made this point in union prevention training (mainly on the basis of a study quoted by a former partner, but personally never seen), it is good to see that some one actually did a study to show that when it comes to what is really important to employees, it is not all about money. As Andrew Sullivan is fond of saying in his blog, this is the money paragraph:
Myth No. 5: It’s all about money.
Fact: When employees ranked what was most important, money finished out of the money - it was only the fifth most important value. The most important values were, in order, the ability to balance work and outside life, the meaningfulness of work, trust among employees and the employees’ relationship with their supervisor or manager
The survey is by DDI, a human resource consulting firm and here's the rest of the story about employee retention and the data behind the survey.
Firestone does make a difference!
Although straying into the area of employee benefits and ERISA is something that seems to happen more frequently to employment lawyers these days, one of the most critical issues has to occur at the drafting of the plan, long before we generally are allowed to meddle. Any first year law student knows that there is considerable difference whether or not a decision is reviewed for an abuse of discretion vs. a de novo review. The difference -- between winning and losing. If you are the decision maker, you clearly favor the the former which will cut you some slack; if you are the one whose claim has been denied, you want a fresh, independent look.
The Supreme Court clearly set out the rules for ERISA plans in Firestone Tire Rubber v. Bruch, 489 US 101 (1989), with the basic rule being de novo, but allowing any drafter to avoid the rule by using appropriate language. A concept ERISA lawyer Michael McKuin discusses in his cleverly titled, When the Exception Becomes the Rule and the Rule Becomes the Exception, of What Value Is the Rule?
In any event, the 9th Circuit, the favorite of every employee in employment related matters, recently showed the difference those few words can make. Discussing a practice which has drawn more judicial attention than one might think, the court in a 2-1 decision awarded life insurance benefits because it found that death by autoerotic asphyxiation was barred neither by the suicide or intentionally inflicted self-injury clauses. Padfield v. AIG, decided May 17, 2002.
The benefits had been denied by the plan administrator and the district court. Unfortunately, the plan lacked the magic Firestone words. Thus rather than being required to give the administrator's decision deference, the 9th Circuit was free to supply its own rationale. Finding the cases applying these two clauses to deaths of autoerotic asphyxiation split, the court noted that reasonable men could disagree, which would meet the standard for upholding the administrator's decision under Firestone. But alas, for the lack of a few words ....
Although straying into the area of employee benefits and ERISA is something that seems to happen more frequently to employment lawyers these days, one of the most critical issues has to occur at the drafting of the plan, long before we generally are allowed to meddle. Any first year law student knows that there is considerable difference whether or not a decision is reviewed for an abuse of discretion vs. a de novo review. The difference -- between winning and losing. If you are the decision maker, you clearly favor the the former which will cut you some slack; if you are the one whose claim has been denied, you want a fresh, independent look.
The Supreme Court clearly set out the rules for ERISA plans in Firestone Tire Rubber v. Bruch, 489 US 101 (1989), with the basic rule being de novo, but allowing any drafter to avoid the rule by using appropriate language. A concept ERISA lawyer Michael McKuin discusses in his cleverly titled, When the Exception Becomes the Rule and the Rule Becomes the Exception, of What Value Is the Rule?
In any event, the 9th Circuit, the favorite of every employee in employment related matters, recently showed the difference those few words can make. Discussing a practice which has drawn more judicial attention than one might think, the court in a 2-1 decision awarded life insurance benefits because it found that death by autoerotic asphyxiation was barred neither by the suicide or intentionally inflicted self-injury clauses. Padfield v. AIG, decided May 17, 2002.
The benefits had been denied by the plan administrator and the district court. Unfortunately, the plan lacked the magic Firestone words. Thus rather than being required to give the administrator's decision deference, the 9th Circuit was free to supply its own rationale. Finding the cases applying these two clauses to deaths of autoerotic asphyxiation split, the court noted that reasonable men could disagree, which would meet the standard for upholding the administrator's decision under Firestone. But alas, for the lack of a few words ....
Carswell redux?
Interesting to note that the NAACP is opposing the nomination of Naomi Churchill Earp, a career government worker, to the EEOC. (One small irony is that Earp is African American.) One of the complaints raised in an edition of the federal eeo advisor is that she has cost the government nearly half a million in settlements and awards of federal EEOC charges filed against her.
Borrowing from Senator Roman Hruska's famous endorsement of Supreme Court nominee, G. Harrold Carswell ("Even if he is mediocre there are a lot of mediocre judges and people and lawyers. They are entitled to a little representation, aren't they, and a little chance? We can't have all Brandeises, Cardozos, and Frankfurters, and stuff like that there."): Aren't those accused of discrimination entitled to a little representation on the Commission as well?
Interesting to note that the NAACP is opposing the nomination of Naomi Churchill Earp, a career government worker, to the EEOC. (One small irony is that Earp is African American.) One of the complaints raised in an edition of the federal eeo advisor is that she has cost the government nearly half a million in settlements and awards of federal EEOC charges filed against her.
Borrowing from Senator Roman Hruska's famous endorsement of Supreme Court nominee, G. Harrold Carswell ("Even if he is mediocre there are a lot of mediocre judges and people and lawyers. They are entitled to a little representation, aren't they, and a little chance? We can't have all Brandeises, Cardozos, and Frankfurters, and stuff like that there."): Aren't those accused of discrimination entitled to a little representation on the Commission as well?
More than just for the financial types ... Sarbanes-Oxley of 2002
As soon as President Bush attaches his signature to it, Congress will have created a new cause of action for employees and thrown criminal penalties into the mix for employers considering terminations under certain circumstances. No doubt there will be a lot more talk about it in the future, but for a first look try checking out Employment Obligations -- How the New Corporate Accountability Law Will Impact Employment Law Practices.
Sign ... or else
Not sure that I would recommend this strategy, but it does provide an answer to the question that gets asked frequently of speakers at employment law programs: What do I do if an employee refuses to sign? From Ron Lehman, the employer's representative on the Texas Workforce Commission, comes the idea of making it a condition of employment. For the rationale and suggested wording see p. 10 of the Spring/Summer 2002 Texas Business Today.
Was it the kettle to the pot?
As Congress is on its high horse about corporate accounting shenanigans this interchange was amusing:
From Inside Politics, July 22, 2002:
Credibility gap
Rep. Tom DeLay, in an interview on CNN's "Saturday Edition," was asked by host Jonathan Karl if Congress doesn't have a "credibility problem" when it lectures corporate America, given its own track record "with its own books."
Mr. Karl offered the following examples of slick federal accounting and appropriations practices:
"Congress, in the last budget last year, classified $4.5 billion for the census as emergency spending. We've been doing a census since 1790. They also shifted a military payday from the first day of 2001 to the last day of 2000, creating savings of $2.3 billion that wasn't there. And they also shifted a corporate tax deadline from the end of 2000 to the beginning of 2001. That move created an extra $23 billion in mythical income for the federal government."
Mr. Karl said those practices are "almost exactly the kind of thing Enron and WorldCom are accused of, this kind of moving of numbers around to make one year look better than the other." Mr. DeLay did not disagree, and he readily acknowledged "those kinds of actions cause a credibility problem." "But we're trying to stop them. We fight every day against the big spenders in Congress to stop the cooking of the books, to stop playing games as you described. In most cases, we're able to stop them," said the Texas Republican, the House's third-in-command.
Are Whistleblowers Bad?
With the legislative correction to the evils of the corporate world barreling down the tracks like a runaway train, one thing that is almost certain to come out of it is more litigation caused by new causes of action for corporate whistle-blowing. While there is some irony (see post supra) in Congress rising to fix ethical issues in companies, it is difficult for the corporate world to seriously contest the need given the recent publicity. And while certainly there is a good case to be made for the dangers of creating new causes of action that will undoubtedly be misused and shortly even abused by some, we should not lose sight of the value that the value that those pointing out wrongdoing can provide. For a good look at the 'other side' of whistle-blowing' see a recent Workforce article.
With the legislative correction to the evils of the corporate world barreling down the tracks like a runaway train, one thing that is almost certain to come out of it is more litigation caused by new causes of action for corporate whistle-blowing. While there is some irony (see post supra) in Congress rising to fix ethical issues in companies, it is difficult for the corporate world to seriously contest the need given the recent publicity. And while certainly there is a good case to be made for the dangers of creating new causes of action that will undoubtedly be misused and shortly even abused by some, we should not lose sight of the value that the value that those pointing out wrongdoing can provide. For a good look at the 'other side' of whistle-blowing' see a recent Workforce article.
The Supreme Court's Faragher/Ellerth standard holds employers strictly liable for sexual harassment committed by their supervisory personnel, unless they can establish a two pronged affirmative defense: establishment of an effective plan to preclude sexual harassment, and the failure of the plaintiff to reasonably avail themselves of that plan. The purpose of the affirmative defense was to provide an incentive for employers to establish effective mechanisms to prevent sexual harassment and an incentive for employees to report sexual harassment, with the underlying assumption that once reported it would be corrected.
However there is an important proviso to the affirmative defense, it is unavailable if the plaintiff has suffered a 'tangible employment action'. The last four years have seen the courts struggle to define what is a 'tangible employment action.' Given the consequence, strict liability, it is not a small stakes fight. Much of the fighting has been over whether acts against those who remain employed, a lateral move, an unsatisfactory evaluation etc. are sufficient to meet the standard.
There is no question that termination is a tangible job action. However, allowing one particular form of termination, constructive discharge, to serve as a bar to the use of the affirmative defense seems contrary to the underlying incentive the Supreme Court was trying to create. Last week, the 8th Circuit with little discussion took that approach. It approved the trial court's conditioning instruction to the jury that it could not consider the affirmative defense if it found that the employee had been 'constructively discharged.' Jaros v. Lodgenet Entertainment.
Although the facts in the Jaros case do not really raise the issue since the plaintiff did in fact complain, this central question of whether or not constructive discharge will block use of the affirmative defense, seems to be a question worth considerable more scrutiny. It remains an open question in at least the 3rd Circuit, Cardenas v. Massey, 269 F.3d 251 (3d Cir. 2001) and the 7th Cir. Wolf v. Northwest Indiana Symphony Society, 250 F.3d 1136 (7th Cir. 2001).
If the 8th Circuit approach is followed, the net result is that an employee without filing a complaint, can quit, and if he or she can overcome the admittedly higher bar of showing constructive discharge, impose strict liability on an employer who had no notice of the misconduct. Perhaps the higher bar that must be met to show constructive discharge, or the underlying philosophy of the Supreme Court that strict liability is appropriate in the first place because employers are the one who control the selection and supervision of their managerial personnel, is sufficient to prevent abuse in this area. It would seem that an approach more designed to avoid 'game playing' and to bolster the incentive to report acts of harassment, would be to hold that constructive discharge, which by its definition is at least on the surface self initiated, is not a tangible employment action.
For lack of a green card .....
No, not the kind typically associated with immigration issues, but the kind that accompanies certified mail and is used to prove when an item is received. Some time ago, the EEOC (at least where I practice) quit sending right to sue letters by certified mail. Since the time for filing a lawsuit is tied not to the date of the right to sue letter, but the date of receipt, it is easy to see the kind of problems that were certain to arise. Rather than having government certified (or quasi-government, depending on your view of the U.S. Postal Service's status) proof that the right to sue letter was received on a date certain it is now open to speculation. The 5th Circuit Court of Appeals has added its voice to other courts to at least provide a partial answer. When the date of receipt is uncertain or disputed, the Court will use a statutory presumption that it was received between 3 to 7 days after its date. In this case the court didn't need to be more certain since the suit was untimely regardless of which standard the court applied. Taylor v. Books A Million decided 7/15/02.
The argument for the three days is the period applied in the Federal Rules of Civil Procedure for service of documents by mail. That would make sense, and hopefully will be the standard applied when the Court is forced to decide that issue.
The argument for the three days is the period applied in the Federal Rules of Civil Procedure for service of documents by mail. That would make sense, and hopefully will be the standard applied when the Court is forced to decide that issue.
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