An MDV Roundup

On the day when we get a report blasting our intelligence agencies for their findings on WMDs, let me take a shot on some recent reports of MDV's, or million dollar verdicts in employment cases.

The first stop could be subtitled, Same Song, Second Verse, Could Have Been Better, But Instead It Got Worse. That would pretty much sum up the feelings of the Lawrence Livermore National Laboratory which was ordered to pay $2.1 million to a former employee who was fired shortly after testifying against the Lab in a sexual harassment suit. The first time around, a jury awarded her $1 million, but the award was overturned on appeal. You can check out a press release from the first trial in a google cached version here.

Winning on appeal and with new trial counsel, the Laboratory would have hoped for a better outcome than, Jury again sides with lab whistle-blower, awards her $2.1 million, according to the headline from the Oakland Tribune. And what was it that the Laboratory claimed led to her termination: "using her lab computer to convert some files for a friend's business and for making $4.30 in personal phone calls." The best quote -- from a juror in the 2nd trial: "I think in this instance common sense didn't prevail."

Moving from the left coast to the Big Easy (where I will be later next month checking out Jazz Fest), more public money was being put at risk, this time because of a newly elected DA's decision to terminate 53 of the 77 white non-lawyers in his office. The New York Lawyer headline, Jury Says New Orleans Prosecutor Discriminated Against Whites, tells what happened and the body of the story gives the body -- make that money count, $1.8 million dollars. The DA, who still feels he was right and will appeal says his office doesn't have the money to pay.

Moving north to Milwaukee, it may be a little premature to put the verdict of 17 white police officers denied promotions in the million dollar category since the jury has to come back to make the damage findings next week, but the headline, Milwaukee could pay millions to cops who won discrimination suit, probably justifies its inclusion.

The flaw in the case, according to some analysis by lawyers familiar with the trial was the testimony (and actions) of the Chief himself. Called as the very first witness by the plaintiffs (always a bad sign):

Jones freely admitted that his criteria for choosing captains was highly subjective. Most choices, he admitted, were made without consulting the supervisors' evaluations he mistrusted, the résumés he felt didn't explain a person's aptitudes, or the department's own personnel records. Nominations were made, Jones said frequently during his testimony, "because I felt that they were the best qualified person."

4/5/05 Update: The case did qualify for the MDV summary, Jury awards $2.2 million to officers in discrimination case.

7/27/07 Update: It appears as the case will end in a total settlement of $2.65 million. Police lawsuit settlement: $2.65 million

Three million dollar + verdicts in three different parts of the country. Makes my speech topic at my firm's annual client seminar, How Employers Make Juries Mad -- And Pay For It With Big Verdicts, seem pretty timely.

Rara Avis - A Plaintiff's Summary Judgment

Summary judgment is an employer's favorite method of seeing a case resolved (absent that even rarer species, a voluntary dismissal). Primarily because it is rarely something an employer has to worry about happening to it. But today's exception that proves the rule is Polkey v. Transtecs Corp. (11th Cir. 3/29/05) [pdf]. If there is a statute that is a likely candidate for plaintiff's summary judgment it is the one Ms. Polkey's claim was brought under -- the Employee Polygraph Protection Act. Even then, it took an unusual procedural posture to bring the case to the circuit court.

Athough purporting to allow polygraphs in the workplace under certain narrow circumstances, in fact the EPPA has almost eliminated what was once a common practice. It seems highly unlikely that the management of Transtecs, which provided mailroom services for the Department of Defense in Pensacola, knew about the law since there was no attempt to comply with the many procedural hurdles that EPPA requires.

The problems started when Polkey discovered some opened mail discarded in the trash and reported it to her supervisor. A brief investigation followed and the most likely suspect had already tendered his resignation. He was ultimately polygraphed and showed "deception". Nevertheless, Transtecs management determined it needed to polygraph all six employees at the facility to protect itself against claims of wrongdoing in case the DOD pursued the ultimate perpetrator.

Polkey refused to take the test and within a week was terminated. She sued making two separate claims under EPPA - (i) an unlawful polygraph exam request under §2002(1); and (ii) a discharge based on her refusal to submit to a polygraph exam, in violation of § 2002(3)(a).

After her suit was brought, Transtecs did its best to squeeze into the requirements of EPPA, but to no avail. Among the many things that it was caught on was the inability to make a case that it had a reasonable suspicion that Polkey was involved, which would at least have laid a foundation for the use of the "on going investigation" exemption. It also struck out on the national defense exemption because by its express terms it is applicable only to the federal government, not its contractors.

Its last argument was that merely requesting an employee to take a polygraph examination was not a violation since she never took it. The trial court granted summary judgment in favor of Polkey on her "request" claim.

That was when the unusual procedural move came about. According to a footnote, the parties settled the termination claim and stipulated to nominal damages for the "request" claim allowing it to be appealed to the circuit court. It sounds as if one or both of the parties thought this was a good opportunity to "make some law" under an Act that gets very little judicial attention. I don't know whose idea it was, but it was a better one for the plaintiff. The Circuit Court agreed with the trial court -- the mere asking an employee to take a polygraph examination alone is a violation, absent an applicable exemption. The Court also upheld plaintiff's argument that the company could not establish either of the two exemptions it had advanced.

The success of the EPPA in eliminating polygraphs from the workplace has been so complete that it may actually set a trap for many unwary employers. Since there is little or no discussion about them anymore, I could see an employer stumbling into thinking there must be nothing wrong with using them or even, as this decision shows, merely asking an employee to take a lie detector test. It is a little harder to explain how any polygraph examiner would be unfamiliar with the law, but that would seem to have been the case here.

2nd Round of the Day to the Old Folks As Well

According to the AP, the elderly in the workforce, fresh off establishing a right to "adverse impact lite" under the ADEA, see my earlier comment here, pick up a trial court victory as well, Judge strikes down regulation on retiree health care. The ruling blocks the EEOC from going forward with a proposed regulation that would have allowed employers to differ medical benefits to retirees based on whether or not the former employee was eligible for medicare.

Update: The Eastern District of Pennsylvania (an impressive website) has now posted Judge Brody's decision in AARP v. Equal Employment Opportunity Commission (E.D. Pa 3/30/05) [pdf]

Supreme Court - 'Adverse Impact Lite' Theory Available Under the ADEA

The most significant labor case on this year's Supreme Court docket was handed down this morning, with a somewhat muddled result. In its primary holding the Supreme Court reverses the 5th Circuit's absolute rejection of an adverse impact theory under the Age Discrimination Act. Justice Stephen's opinion for the Court is at Smith v. City of Jackson(U.S. 3/30/05)[pdf].

However, not all disparate impact theories are created equal, and the ADEA version is in fact less than an adverse impact theory under Title VII. The Court identified two reasons for that difference, first the presence of a clause in the ADEA not found in Title VII that permits an employer to act on an otherwise impermissible basis "where the differentiation is based on reasonable factors other than age." In addition to the RFOA clause, as the Supreme Court named it, the fact that the ADEA was not covered in the amendments to Title VII in 1991 following the Supreme Court's decision in Ward Cove, means that it is the pre-1991 version of Title VII's adverse impact theory that is applicable to the ADEA.

All of that is a considerable mush of legal arguments that will take some time for the lower courts (and me) to absorb, but while we do have adverse impact under the ADEA, it is fair to call it "adverse impact lite". Not terribly palatable to employers, but certainly more so than the full weighted version which could have been forthcoming.

Does it make a difference? Well it did to the employees suing the City of Jackson as the Supreme Court concluded that they had not stated a case of adverse impact under the newly announced theory and thus affirmed the holding of the 5th Circuit, although not its reasoning.


Update: The link to the full set of opinions is now available, see above. The opinion by Justice Stephens is for himself and three other members of the Court, and is decisive only because Justice Scalia joined on the basis of deference to the EEOC. Some cynics might see this as more in the "campaign" for the Chief Justice chair. Justice O'Connor, joined by Justice Thomas and Justice Kennedy dissented finding there is no basis for disparate impact under the ADEA. The current Chief Justice did not participate in the decision. Certainly his vote would not have made a difference, but one wonders whether the weight of his opinion could have.

And A Good Day for Whistleblowing in the 2nd Circuit

If the Supreme Court was reaching to find a cause of action for retaliation in Title IX, the 2nd Circuit was stretching the word "inquiry" in § 510 of ERISA to keep alive a claim for retaliation based on an internal complaint to the company president. The facts were fairly straightforward, even if the law, at least as ultimately decided in Nicolaou v. Horizon Media, Inc. (3/29/05) [pdf] is not.

Nicolaou was hired as the H.R. Director for Horizon and quickly determined that the company had for a number of years been underpaying overtime to workers in its New York City and Los Angeles offices. That underpayment would also have meant an underfunding of 401(k) plans. When she pointed this out to the CFO and Controller she was told to keep it to herself. Approaching the firm's outside counsel, who confirmed her findings, she met with better results as he suggested a meeting with the President of Horizon.

That meeting did not go as well as hoped as soon thereafter Nicolaou found not only was the problem not remedied, but she herself was replaced and "professionally trashed." After her termination, Nicolaou sued raising retaliation claims under both the FLSA and ERISA § 510. She was unsuccessful on both at the trial court, losing on summary judgment.

On appeal, she dropped the FLSA retaliation claims, probably because of the 2nd Circuit's prior holding, Lambert v. Genesee Hospital, 10 F.3d 46 (2d Cir. 1993) holds that informal complaints are not sufficient under the FLSA. Instead she cast her lot with ERISA's § 510:

It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this chapter . . . .

Since a decent case could be made that this section calls for a formal proceeding as well, in order to sustain a cause of action the Court puts its laser like focus on the word "inquiry." And even then one might have a little trouble with its reading:

We agree with the Secretary of Labor's assertion here that "[w]whatever level of formality is implied by the term 'proceeding' in FLSA," the use of the somewhat less formal term "inquiry" in ERISA is indicative of an intent "to ensure protection for those involved in the informal gathering of information." Congress manifested such an intent when it chose, in drafting Section 510, to conjoin to the term "proceeding," found in FLSA Section 15(a)(3), the additional term "inquiry," which is not contained in Section 15(a)(3) and which has a distinct definition. While "proceeding" refers to the progression of a lawsuit or other business before a court, agency, or other official body, "inquiry" refers broadly to any request for information.

Sure.

And the stretching was not quite over, because the Court still needed help to keep the cause of action alive. It found it in a most unusual place:

We believe that certain allegations made in the amended complaint are ambiguous, and only became less so when supplemented by assertions made by Nicolaou's counsel during oral argument on this appeal. Thus, upon remand, we direct the district court to afford Nicolaou the opportunity to file a revised amended complaint which will serve to eliminate these ambiguities.

Hard to read this one as anything other than (yet) another court that thinks whistleblowing is important, important enough to stretch for. Although it should be noted in both the Supreme Court and the 2nd Circuit it was also the Executive Branch appearing in support of the whistleblowing position.

And to add a somewhat lengthy post-script, even though the majority had stretched the ERISA retaliation provision to the point of breaking, the concurring opinion felt it had not gone far enough given Nicolaou's role as a fiduciary. While noting that ERISA itself did not specifically provide the protection she would extend, Judge Pooler nevertheless would have found:

In light of Nicolaou's status as an ERISA fiduciary, I believe that the allegations of the amended complaint set forth 'reasonable efforts' on her part, within the meaning of 29 U.S.C. §1105(a)(3), to see that Horizon's 401(k) plan was operated in accordance with the regulatory program set forth in ERISA. I also believe that it is reasonable to conclude that such efforts fall within the protection of Section 510 from the point at which Nicolaou began to conduct her own inquiry into the alleged underfunding of the Plan, and not merely from the point at which Nicolaou and [the outside lawyer] met with [the President.] As stated by the Secretary of Labor, appearing here as amicus curiae:

If fiduciaries do not receive Section 510's protection during the initial stages of an internal investigation, and have reason to fear that they may lose their jobs if they raise or attempt to address concerns about the plan [they administer], they may be hesitant to vigorously carry out [their] essential and mandated fiduciary functions.

This is surely a result to be avoided.

Apparently even if Congress itself did not choose to do so.

Whistleblowing in the Supreme Court, A Good Day

With not only the men's, but also the women's Final Four barreling down on us, today's decision by the Supreme Court finding an implied cause of action for retaliation in Title IX was nothing if not timely. Jackson v. Birmingham Board of Education (U.S. 3/29/05) [pdf]. And that it was the complaints of the unequal treatment of his team by the male coach of a girl's basketball team that led to today's decision is nothing but a touch of irony.

Although hailed as an important case for women and women's sports, the decision is also a testament to the esteem in which many courts, including clearly the Supreme Court, hold the act of whistleblowing. So much in this case that without it the majority felt the noble purposes of Title IX itself would not be obtained. As Justice O'Connor noted in her majority opinion:

We agree with the United States that [these objectives] "would be difficult, if not impossible, to achieve if persons who complain about sex discrimination did not have effective protection against retaliation." .... If recipients were permitted to retaliate freely, individuals who witness discrimination would be loathe to report it, and all manner of Title IX violations might go unremedied as a result.

And it was not any disagreement with the Court's view of whistleblowers that caused problems for the minority. What they objected to was the expansion of the statute beyond what they read as the clear Congressional intent. As Justice Thomas wrote:

By crafting its own additional enforcement mechanism, the majority returns this Court to the days in which it created remedies out of whole cloth to effectuate its vision of congressional purpose. In doing so, the majority substitutes its policy judgments for the bargains struck by Congress, as reflected in the statute’s text. The question before us is only whether Title IX prohibits retaliation, not whether prohibiting it is good policy.

Given the role of whistleblowers in recent times, and in the view of many, the number of whistles that still need blowing, today's decision is not terribly surprising. And employers would do well to remember the sound, long after the din of March Madness has faded away.

Another Reason to Not Like Class Actions, Particularly in the 9th Circuit

Because nominal damages, means nominal damages to each class member. And as Local 1000 of the Service Employees Union found, that can be a substantial hit in the pocket. In this case means the difference between the $7 awarded by the district court to the 7 class representatives and the $37,000 the union will have to shell out to the 37,000 class members. It may be nominal to each class member, but a pretty good size check for the union to write. Cummings v. Connell (9th Cir. 3/29/05) [pdf].

The suit over the improper withholding of agency fees from non-union members is another victory for the National Right to Work Legal Defense Foundation, Inc., which represented the plaintiffs as part of their on-going campaign for the rights of employees who choose not to be union members.

Hitting Targets - A Problem in Waiting

One of my common themes in speeches is that the hardest job in America is first line supervisor. There are a lot reasons for this, but one is that they get "numbers" crunched from above that they have to meet. But meeting those numbers requires working through real people, who have real problems --- child care that is not reliable, elderly parents who are making demands, girlfriends who are upset etc. Today's follow up story in the WSJ Career Journal to an earlier story Meeting Targets Isn't A Strategy, just points out that those number crunched targets, especially the ones that are forever increasing have other consequences as well.

The End to Age Discrimination?

Well hardly, but certainly there are employers who are now actively seeking older workers. And it's enough of a trend to merit a story in today's NYT, More Help Wanted: Older Workers Please Apply. While it's unlikely to mark the demise of age discrimination complaints, such articles might well condition juries to be less receptive to the idea that a terminated employee in their 50's is washed up, and thus should be compensated until their anticipated normal retirement date.

Thanks to Workers Comp Insider for the heads up. You should check out their post, Older Workers Wanted:The Good News and the Bad, which combines not only a link to the Times story, but also to Employing older workers and controlling workers’ compensation costs discussing safety issues that can go hand in hand with an aging workforce.
I can also identify with Jon Coppelman, the author of the post, "Speaking as an older worker, I applaud this effort to expand the workforce ... "

6th Circuit Continues to Blaze Law of Sexual Stereotypes

Last year in Smith v. City of Salem I noted here that the 6th Circuit might have opened a new fault line of social debate as it upheld a claim for gender discrimination based on sexual stereotyping. In that case it was a fireman, in today's decision, Barnes v. City of Cincinnati (6th Cir. 3/22/05) [pdf] a police sergeant. Barnes was living as a pre-operative male to female transsexual when he failed the probationary period required to become a sergeant in the Cincinnati police department.

While Salem was only at the pleading stage, the Barnes decision affirms a jury verdict where he was awarded $320,511 (plus over $500,000 in attorneys fees.) Among the problems that Barnes allegedly had was his "lack of command presence," which his expert said was a subjective phrase that could be used for stereotyping. Other evidence of sexual stereotyping included comments by one of his supervisors that he was not sufficiently masculine and his practice of dressing as a woman outside of work was both well known and talked about within the department. Holding the jury was free to believe or disbelieve the evidence, the court found no reason not to affirm its verdict.

In addition to removing any doubt that gender stereotyping is a viable cause of action under Title VII, at least in the 6th Circuit, the Court also approved the following mixed motive jury instruction:

Your verdict will be for plaintiff if you find that plaintiff demonstrated by a preponderance of the evidence that plaintiff's failure to conform to sex stereotypes was a motivating factor in defendant's decision to demote plaintiff, even if other factors . . . also motivated defendant's decision. However, if you find that defendant's treatment of plaintiff was motivated by both plaintiff's failure to conform to sex stereotypes and lawful reasons, you must decide whether plaintiff is entitled to damages. Plaintiff is entitled to damages unless defendant proves by a preponderance of the evidence that defendant would have demoted plaintiff even if plaintiff's failure to conform to sex stereotypes had played no role in the decision. Remember that plaintiff is not obligated to show that defendant's legitimate reasons played no role in the decision to demote plaintiff, nor does plaintiff need to show that the prohibited factor was the sole or principal reason or the true reason.

While that may be a legally acceptable jury instruction, it certainly is not one that many defendants (or their lawyers) will appreciate or be happy about.

As far as the nature of the cause of action, two cases is not a flood, but one suspects there may be more, perhaps much more, of this new type of litigation coming.

1-800-669-4000 - The EEOC Call Center Is In Business

Check out the story in Federal Times. The reason for the center staffed by 36 private sector employees -- to answer the more than 1 million calls the EEOC gets each year. Calls, which according to Chairwoman Cari Dominguez :

previously were fielded by mediators, investigators and other EEOC employees, who often took days, weeks or even months to return the calls.

No word on whether they are starting fresh or picking up the backlog.

Outsourcing and the Law - Or Is that Lawyers?

New law.com blogger, Bruce MacEwen, has an interesting post at his blog, Adam Smith, Esq. -- Moore's Law vs. Flesh & Blood, linking to a Wall Street Journal article on developments that are much more substantive than just outsourcing the back room functions of law firms.

But the quote that caught my eye, and might of many employer's lawyers:
Next up: Cisco and DuPont, together with FMC and Clorox, are developing a 'virtual lawyer' to provide automated online responses to routine legal questions concerning, for example, human resource policies. And lest you think they're all alone out there on the early-adopter curve, they plan to license this tool to all comers.
Although many may comfort themselves with the thought that they don't handle "routine legal questions," it is hard not to hear the drumbeat of change in the way legal information is delivered.

A Sign of the Times - Job Safety Training in Spanish

I am fairly certain they are not the first, but the South Carolina Department of Labor is starting job-safety training in Spanish. The State.com home page has the story and one of the unfortunate reasons for the training. In 2003 1/3 of the workers killed on the job were Hispanic.

Waiver of Arbitration for Court, Not Arbitrator to Decide

The ultimate holding in this case is one of those in the "it would have been a surprise if it went the other way" department -- an employer does not waive its right to insist on arbitration even though it did not raise it in the administrative process after an EEOC charge was filed. Marie v. Allied Home Mortgage Corp. (1st. Cir. 3/16/05) [pdf].

After Waffle House any other outcome would have been a shock, but the real reason for the 34 page decision was not the outcome, but the issue of who should decide, the court or the arbitrator. That is the reason the Court describes the case as:

deal[ing] with important issues both for Title VII law and for the division of labor between courts and arbitrators after the Supreme Court's decisions in Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002), and Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003).

The Court noted these two cases reaffirmed the rule of thumb that substantive matters remain the province of the courts, while procedural issues are normally for the arbitrator. But the Supreme Court also recognized the differing expertise of the two, so even though waiver is a procedural issue, the Court holds it should decide it, not the arbitrator. One of the reasons for the lengthy opinion may be because it discerns that there is a split on this issue between the 8th and the 5th Circuit. In siding with the 5th, the Court took the opportunity to make its case for its position.

This Is Prevailing Wage Rate Legislation With A Real Bite

Sometimes when describing criminal penalties in legislation, I call them the "bring your toothbrush" section, based on an experience as a young associate when I was sent to domestic relations court to pursue child support owed to the niece of the partner I worked for. The non-paying dad was dutifully hauled into court and since he clearly was delinquent was asked by the Court whether he had or would pay. When he responded he hadn't and couldn't, the Court asked if he needed any time to take care of personal matters before going to jail. "Nope", was his somewhat smart alecky reply, "I rode the bus and brought my toothbrush." That always gets a chuckle and usually the crowd pays at least some attention to the particular statute in question. But rarely are there examples of where people actually do go to jail for employment law violations, but today's article in the Rochester Democrat & Chronicle, Employer Gets Jail for wage offenses really would get their attention.

An excavation contractor who failed to pay the prevailing wages on a job will be spending 16 week ends in jail and five years probation for failing to properly pay the prevailing wage. He had earlier pled guilty to a felony of third degree larceny and a misdemeanor of failing to pay the proper wage rate. Given one last chance to substantially reduce his jail time by making payment, the contractor said he couldn't because the state had frozen all payments to him because of charges he had violated state labor laws. (Anyone having done construction work with a government agency will be able to identify with that sort of problem.) It is not quite clear given the felony larceny charge that there might not be more going on here than just a prevailing wage rate violation, but still it should be enough to get anyone thinking of fudging a little bit on a prevailing wage rate to pay attention.

Employee Blog, HIPAA Violations = A Huge Black Eye for Kaiser Permanente

Although there have been lots of articles recently about blogging and work, that subject seemed covered well by others, for e.g. check out this article in George's Employment Blog, but this note in beSpacific, Medical Record Privacy Breach Controversy Involving Blog, caught my eye. And so did the original story detailing a dispute between one of the larger healthcare providers, Kaiser Permanente and one of its former employees over who posted private healthcare information on the web. The self styled, Diva of the Disgruntled, claims they did and she just pointed out the mistake after complaining to appropriate officials. But from the article, 140 Kaiser patients' private data put online on the SiliconValley.com website, it sounds as if the ex-employee is going to have some serious explaining to do, even if she is right that KP goofed first.

All those HIPAA penalties, including criminal ones, you have been hearing (and forgetting) about -- may come into action here. And somehow, I don't think her self description is apt to play too well to a jury if it should come to that.

The White Collar Regulation Fallout Continues

Today's National Law Journal article, New overtime rules bring suits, doesn't answer what I said was one of the the critical questions - are more employees eligible for overtime now than they were before the revised regulations. See my post here. However, it does point out another aspect of the new regulations, raised awareness -- on the part of employees and perhaps more importantly the plaintiffs' bar.

The quote from Miami lawyer Norman Davis, of Steel, Hector & Davis, is right on the money as far as I am concerned:

I don't think the new regs are all that profound. The changes have been relatively minor. What they did is they made the overtime issue much more visible, and I think for that reason we've seen a rise in overtime lawsuits.

The article also cites figures from the Administrative Office of the U.S. Courts saying that overtime class actions involving the FLSA increased from 73 in 2000 to 138 in 2004. I am not sure exactly how the latter figure was derived, but my own unofficial count of suits filed as potential collective actions under the FLSA for calendar year 2004 in Texas alone is 109. Although we like to think that Texas pretty much is the world, I have my doubts that we had 80% of the putative FLSA collective actions filed last year, so I think if anything the increase may be substantially larger than even the article suggests.

The Boeing Affair: The Other Shoe Drops

In all the hoopla over the Stonecipher affair (bad pun acknowledged), the human side sometimes get overlooked. The NYT headline probably does not say it all, but it says enough:
Wife of Ousted Boeing Chief Seeks Divorce After 50 Years.

While I Was Concentrating on the Public Health Danger of Smoking ..

I completely missed the fuss over a similar story brewing in Atlantic City over a decree that "Borgata Babes" not gain more than 10% weight, or face a 90 day unpaid suspension while they tried to sweat it off. Not sure how I missed this story, maybe I was distracted by the Weyco ban on smoking I reported on here.

In addition to the basic premise, the NYT story, Casino Aims to Keep Workers Slim, but Heavy Publicity Hasn't Hurt, talks about the publicity bonanza this has turned out to be for the Atlantic City casino. It just re-enforces the old saw, there is no such thing as bad publicity. As one who has to have one of the coolest jobs in America today is quoted:

Put it this way," said Robert J. Thompson, a professor of popular culture at Syracuse University. "Before this, I had never heard of the Borgata, and I had not heard of their babes."

Is is legal? Since they have a "valid medical reason" exemption, it is hard to see what the legal theory would be. But I am sure someone will be giving this a lot more thought than I am.

Marines v. UAW Over Parking Spaces

According to the Detroit News Auto Insider story, Marines driven out of UAW lot, members of the 1st Battalion 24th Marines, a reserve unit, have often used Solidarity House's (UAW headquarters office) parking lot when working at a base on Jefferson Avenue in Detroit.

But the UAW has pulled the plug for those Marines with foreign made vehicles or Bush stickers. According to a union statement on Friday:

While reservists certainly have the right to drive nonunion made vehicles and display bumper stickers touting the most anti-worker, anti-union president since the 1920s, that doesn't mean they have the right to park in a lot owned by the members of the UAW.
And the Marines response:
"You either support the Marines or you don't," said Lt. Col. Joe Rutledge, commanding officer of the battalion's active duty instructors. "I'm telling my Marines that they're no longer parking there."
Thanks to Unions-Firms-Markets for the link to the story. My guess is that the union would have preferred a different battle since this is probably not the best pr for the UAW. However, putting political correctness aside, (almost always a good thing to do), their position seems pretty defensible to me, even though I disagree with its underlying sentiments.

He Aged A Lot In Two Weeks

When you are fired within 2 weeks of being hired, it just seems a stretch that you are a victim of age discrimination. But the erstwhile manager of the Gramercy Park outpost of the Heartland Brewery, Mostaf Ahmed is making that claim according to this story in the New York Post.

Although there may well be more to the story than this, and in fact almost certainly is, many courts would be inclined to employ the "same actor" inference, and assume that someone doesn't go from hiring to firing someone because of their age in a two week period.

Lawyer Negligence Does Not Extend Plan Deadlines for Disability Claim

When plaintiff's disability benefits were stopped after 2 years because of medical information, she was informed she had 180 days to file an appeal. She hired counsel which apparently normally referred such matters to another firm. The referral did not happen, no appeal was filed and in the subsequent law suit seeking equitable tolling it was conceded her claim "fell through a crack." Unfortunately for plaintiff, she had no luck in her request to extend the deadlines through equitable tolling. As the Court noted, its reluctance to:

... resort to equity does not spring from miserliness. Rather, equitable tolling "must be guarded and infrequent, lest circumstances of individualized hardship supplant the rules of clearly drafted statutes."

Ditto for ERISA plans as well. Gayle v. United Parcel Service (4th car. 3/9/05) [pdf].

Although getting nowhere with the plan, the Court was willing to give frequent hints that Gayle might indeed have a remedy. Among those hints:

the statement of the question - "we consider whether attorney negligence justifies equitable tolling sufficient to excuse the lack of compliance with the plan?s appeal procedure."

a blunt statement of what caused the appeal to be missed - "The attorney?s negligence alone caused her appeal to become untimely."

restating her argument - "Gayle?s argument boils down to a request that we relieve her of her counsel?s negligent failure to observe required procedure."

pointing out how the tort system works - "The law has always, and necessarily, held people responsible for innocent mistakes. The tort system, for example, is premised on penalizing innocent yet negligent mistakes. Many attorney mistakes are innocent in that they involve oversights or miscalculations attributable in some part to the sheer press of business."

And if she didn't get the hint before, the penultimate sentence:

Any remaining dispute must be resolved between the plaintiff and her lawyers.

Ouch.




Toyota Does Have Limits - Trial Required On Cerebral Palsy Disability Claim

Although Toyota sets a high bar for showing an individual is disabled as that term is used in the ADA, it does not mean that no individuals can meet the standard. In Emory v. Astrazeneca Pharmaceuticals LP (3rd Cir. 3/11/05) [pdf], the appellate court found one where the trial court had not. After 25 years as a custodian, plaintiff had never ceased trying to move up and it was his efforts and lack of success in doing so that led to his disability discrimination claim.

Since the employer was able to establish to the trial court's satisfaction that plaintiff was not disabled, issues of reasonable accommodation are not discussed. What is were the limitations that plaintiff faced in his daily life:

Emory cannot tie his shoes or a tie, roll his sleeves, close buttons, or put on a belt. In addition, among other tasks, he is unable to cut his fingernails or toenails, screw
the top on a toothpaste tube, cut his own meat, open a jar, pull heavy dishes and pans in or out of the oven, change diapers, carry his children up the stairs, hold a pen or pencil in his right hand, or perform certain basic household chores and repairs.

Emory also was hampered in learning, the Court noting that:

[His] math, reading and cognitive skills are far below those possessed by average persons in the general population – test results reveal poor calculation and computational abilities, literacy skills which place him in the bottom of the first percentile according to one test, and a deficient learning curve.

The EEOC filed an amicus brief saying basically, if Emory is not covered by the ADA, no one is.

The trial court seemed largely impressed by what Emory had accomplished notwithstanding his disability. Among his accomplishments (in addition to 25 years employment) was being a member of a voluntary fire department, being a mediator in a local justice program, active membership in the Shriners including developing his own character, Stumbles the Clown for performances, and starting his own small part-time cleaning business.

The real key to the decision reversing the summary judgment was what the trial court's focus:
The focus is not on whether the individual has the courage to participate in the major life activity despite [his] impairment, but, rather, on whether [he] faces significant obstacles when [he] does so.
Simply put, the issue is not what he had accomplished but the hurdles he had to overcome to do so. Pretty hard to argue with either the Court or the EEOC's view on this one.

Pharmacists Are Professionals - First Impression at the First Circuit

A little hard to believe, but the 1st Circuit notes it is the first court of appeals to address whether or not a pharmacist is an exempt employee under the Fair Labor Standards Act. Probably not so surprising, since only in the last few years, when almost anything seems to be a possible wage and hour violation, most would not have challenged the idea that a pharmacist is in fact a professional. (I have heard that pharmacists often consider themselves considerably overtrained, or more accurately substantially under used by our healthcare system which is so doctor-centric.) But when given a chance, the Court (under the old rules) did not confound conventional wisdom - pharmacists are exempt. Jesus-Rentas v. Baxter Pharmacy Services Corp. (1st Cir. 3/9/05) [pdf].

The real fight was over whether or not their work "required the consistent exercise of discretion and judgment." The pharmacist plaintiffs argued that since they were required to follow Baxter's Standard Operating Procedures, it did not. The Court undercut that argument in at least 3 ways. Most importantly, the pharmacist remained ultimately responsible for the health of the patient, including when to not follow the SOP, and also to follow up with the physician if the prescription were contraindicated for the particular patient. Secondly, they themselves had input into the SOP, and the very act of giving such input required the exercise of discretion and judgment. Finally, they supervised others, while not being closely supervised themselves.

Although no fellow court had ruled on the issue of pharmacists, the Court found comfort in the 5th Circuit's decision in Owsley v. San Antonio Indep. Sch. Dist., 187 F.3d 521, 526 (5th Cir. 1999) which held that athletic trainers met the professional standard. At the time of that decision, I thought it pushed the outer boundry of the professional exemption, but apparently the 1st Circuit had no such concerns.

Paying the H-1B Bill

Computech, a Bingham Farms, Michigan computer staffing company is dealing with an H-1B bill, but it doesn't have anything to do with extending or amending lesiglation, it's more the old fashioned "now due" variety. The Department of Labor is pursuing the company for allegedly underpaying workers it brought to the U.S. for short term assignments. According to the Detroit Free Press story, Computer staffing firm billed for back wages, the tab is over $6 million. The company denies the charge and the whole matter is headed for an administrative hearing.

No More Sarbanes in Sarbanes-Oxley

Actually the name of the legislation won't change, but the Maryland Senator who was the Senate sponsor (and more importantly the Committee Chair) for the historic corporate governance legislation (which has its significant employment aspects as well) has announced he will not seek re-election according to the New York Times story, Maryland Democrat Won't Seek to Retain Senate Seat in 2006.

Having such high profile legislation is a way to be remembered long past your period of active service; whether that will be for good or bad in this case is probably in the eye of the beholder. What is certain is that we will not really have enough case law to have a true feel for the impact of the legislation, at least in its employment law aspects, by the time Senator Sarbanes seat is filled by another.

Taking One's Lumps - While Winning the Appeal Anyway - Life in the 7th Circuit

When the opinion includes the line,

"Despite wasting our time with a bad argument, Northrop Grumman is entitled to prevail on this appeal,"

one might suspect one were in the 7th Circuit, where the Court feels free to not only pass on the merits of the case, but grade the papers of counsel (and sometimes lower courts) as well. Torry v. Northrop Gruman Corp. (3/4/05) [pdf].

Here, the court's ire was apparently raised by Northrop's insistence that the plaintiff had waived her racial discrimination claim by not including it in her complaint, even though it was clearly argued in the case. Northrop insisted plaintiff had a duty to amend her complaint to include the race claim. The trial court disagreed with that argument, but ruled for Northrop on the merits. When plaintiff appealed, Northrop again raised its argument that she was required to amend, which would mean the the appeals court need not address the merits of her claim.

That set Judge Posner off on a 3 1/2 page rant on the use of arguments labeled "constructive", including the one arguably relevant here, constructive amendment, which he found to be maybe the most "otiose"* of all "constructive" doctrines. Concluding all that was needed to resolve the case was to look at Rule 15(b), which, (quoting the Court again), "in language that could not be clearer" provides that '“when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.”

And then just to dispel any doubt, the opinion quotes the next sentence of the Rule:

Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues.” (emphasis added).

One final dig:

The words that we have italicized show that Northrop Grumman’s insistence that the plaintiff had to amend the complaint to add a charge of racial discrimination is frivolous.

But the merits of the plaintiff's claim --- dismissed in one paragraph.

*Otiose (yep, I had to look it up too) 1. Lazy; indolent; 2. Of no use; 3. Ineffective; futile.

Did You Post Your USERRA Poster Yesterday?

March 10th was the 90th day following President Bush's signature to the Veterans Benefits Improvements Act, which among other things required employers to post notice about employees rights under the Uniformed Services Employment and Reemployment Act, better known (thankfully) as USERRA. One of its requirements is that on the 90th day following the signing of the bill, employers are to post a USERRA notice, which the DOL has just in the nick of time posted on its website. For Secretary Chao's comments on the new posting check out the DOL news release.
Update: If you are an auditory learner you can get the DOL's audio release here.

Haven't Read Enough About Class Actions Lately? Professor Posner Has Another Lesson

With the recent enactment of the Class Action Fairness Act of 2005 most have had their annual fill of class action information. But just in case the recent outpouring of information has only whetted your appetite, check out Judge Posner's articulation on the differences between 23(b)(2) and 23(b)(3) classes in In Re: Allstate Insurance Company (7th Cir. 3/28/05) [pdf].

The issue, described by Judge Posner as both interesting and important is:
whether certification under Rule 23(b)(2) is proper when, though injunctive or declaratory relief is sought rather than damages, individual hearings may be necessary to determine causation and hence liability.
The case arose as a challenge by former Allstate agents who quit, allegedly under pressure as Allstate was trying to convert from sales agents to independent contractors. The class was seeking a finding that Allstate had a policy of harassing agents to get them to quit to keep them from getting benefits they would have been entitled to under an ERISA plan if they had been fired.

If the answer is important to you, you really need the opinion, but for those looking for the quick answer, the Court ultimately dismissed the class certification which had been granted under Rule 23(b)(2), saying if class certification were proper it would be under Rule 23(b)(3). The reason - under Rule 23(b)(3) members can opt out if they choose to go it on their own, an option not available under Rule 23(b)(2). Since what was really being sought was declaratory relief about Allstate's policy, the Court found when:
the suit is for declaratory relief, the effect of the declaration on individual class members will vary with their particular circumstances, they should be given notice of the class action so that they can
decide whether they would be better off proceeding individually.
That would require a Rule 23(b)(3) procedure or a bastardized version of Rule 23(b)(2) and although some courts had suggested the possibility of such a proceeding, this Court found no need to go there when such a proceeding would be "complicated and confusing—unnecessarily so, given the ready availability of the 23(b)(3) procedure."

American Airlines Jumps the Gun on Medical Inquiries in Violation of ADA

Since the passage of the ADA, employers' ability to ask medically related questions is prohibited until it has made a "real" offer of employment. When American Airlines made job offers conditioned on passage of a background check and a pre-employment physical, but conducted the physical first, the 9th Circuit now says they jumped the gun, reversing summary judgment in their favor. Leonel v. American Airlines, Inc. (9th Cir. 3/4/04) [pdf].

The three plaintiffs were all applicants for flight attendant positions who having passed an initial screening were flown to Dallas for interviews. Following successful interviews each received an offer, "contingent upon your successful completion of a drug test, a medical examination, and a satisfactory background check." After receiving the letter, each was instructed to go immediately to the company's medical department for examinations, which included a detailed medical questionnaire and a blood test. Although warned about the importance of correct answers, none of the three disclosed that they were HIV positive or taking medications.

The blood work of all three showed elevated CBC counts. When contacted for explanation, each disclosed their HIV positive status. Thereafter, the offer of employment was rescinded:

Unfortunately, I have been informed by our Medical Department that you failed to be candid or provide full and correct information. Consequently, I am withdrawing our conditional offer of employment due to your inability to fulfill all conditions.

The letter went on to stress AA's strict compliance with the ADA:
Because American Airlines strictly adheres to the requirements of the [ADA], I have not been informed of your particular situation. American Airlines will consider for employment any qualified individual if they can safely perform the essential functions of the job . . . . However, the Company will not tolerate willful omissions of fact on its employment applications . . . .
Although the district court apparently agreed with AA's view of its compliance with the ADA, the 9th Circuit was less charitable. Finding that the ADA prohibits medical inquiries until all other contingencies to the job offer have been eliminated, the Court reversed summary judgment for AA. It did not accept AA's argument that its timing in conducting the physicals was excused because it was more convenient for the applicants or that waiting to complete the background check would have disadvantaged it in the competition for employees.

And since it was California, the court also found that there was a possible violation of California privacy laws based on the blood test. Back to the trial court for further proceedings.

Certainly not a good result for AA, but also a concern to any employee who is vulnerable to a charge that an extended job offer is less than "real" because it conditions the offer on anything other than the medical examinations. Given the need for quick action in hiring and the timing of background checks, there may be many companies falling into this trap, if in fact other courts agree it is a proper one.

Outsourcing Protests: A New Beginning or Closer to the End?

Apparently you can outsource almost anything these days, including protests. At least that's the impression you get from a story in the Business Journal of Phoenix,Union's hired 'protesters' disrupting business, detailing the concerns of a number of business being subjected to union demonstrators "brandishing signs and shouting slogans" in front of their businesses. Often the relationship of the targeted businesses to the hiring of union labor is remote. For example, an upscale art gallery because it is a tenant in a building that was buitl with non-union labor.

According to the article, the local Carpenters Union hires non-union labor (at far below union wage rates) to do its organized protesting in front of the building. (Is there not some irony here? Or maybe this will spawn a new union, the PPA -- Professional Protesters of America, that's one way for the labor movement to grow!)

Ironic or not, the tactic is a problem for business and police who are fielding complaints by those not enamored with the idea. Charges are being filed with the NLRB in some cases. Over the long haul, it will be interesting to see if this is a method that works, and if it does, grows. No doubt organized labor needs to think out of the box, but whether this is a viable tactic or the death throes of a dying movement is the real question.

Broad Evidence Mandated By 9th Circuit in Pattern and Practice Case

The employer's lawyer had done a good job in a race case - convinced the court to exclude a statistical survey, prohibited a comment with racial overtones and avoided the dreaded mini-trials within a trial - by keeping out the anecdotal testimony of three others who also claimed to have been discriminated against on the same basis. The result, a trial victory. But, taking a much different view was the 9th Circuit holding that all of three areas of testimony should have been admitted. Obrey v. Johnson (9th Cir. 3/4/05) [pdf].

The key - that plaintiff had brought his case as a 'pattern and practice' one. In each case the court found the problems with the evidence were ones for rebuttal rather than exclusion.

Additionally, the Court also sorted out confusing 9th Circuit precedent - holding that the correct reading is that where evidence is erroneously excluded it is presumed to be prejudicial.

Arbitration: NASD Rules v. California Ethical Standards for Neutral Arbitrators

Appearing in the 9th Circuit is this battle of titans - in one corner the arbitration rules of the NASD that all brokerage employees are required to agree to versus the California Ethics Standards for Neutral Arbitrators in Contractual Arbitration promulgated by the California Judicial Council. Although if you really enjoy such issues you should check out the full 61 pages of the majority and concurring opinions in Credit Suisse First Boston Corp. v. Grunwald (9th Cir. 3/1/05) [pdf], here's a short hand rendition of what happened.

Ethical Standards are promulgated by the California Judicial Council which require strict disclosures that NASD doesn't agree to. In reaction, NASD actually stops all NASD arbitrations in California rather than comply, then gets it own rules changed to require NASD registered employees to agree to waive the California rules or go outside California to arbitrate. Caught in this fight is employee Grunwald who would prefer to arbitrate in California under the California ethical standards. The issue ends up before the 9th Circuit. Who wins?

The smart money would be on Mr. Grunwald given the Court's general hostility to arbitration. But in this case the smart money would be wrong. According to the 9th Circuit, with one reluctantly concurring member, the NASD statutory scheme pre-empts the California standards.

One interesting, but unanswered, question raised by Grunwald - is an individual entitled to a "speedy and expeditious" arbitration under the FAA? Thank goodness the Court had the good sense not to answer that one unnecessarily.

Arbitration and ERISA - Another Thing to Worry About?

Any time you throw benefits law into the mix, things just seem to get more complicated. Although most now feel fairly comfortable with the contours of mandatory arbitration, the interaction between ERISA and the FAA is still somewhat murky, at least in some circuits. Check out the BenefitsBlog take on a recent 6th Circuit decision, and some helpful guidance when you are trying to mesh the FAA and the various parts of ERISA.

Small Town Setting, Big Time Legal Issues - Updated

Update: Yikes, how embarrassing. After just yesterday reading a commentary by well known blogger Dennis Kennedy about the dangers of blogging on the same subject as a fellow blogger without giving credit, I wrote the following post. Then, I checked Lisa Stone's great legalbogwatch column and found that my fellow law.com blogger Michael Cernovich at Crime and Federalism was way ahead of me (not to mention more involved) on this one. So check out Michael's comments, Poor Betty Lou and the follow up comments, Congratulations Maren and Don't Be Modest Mike, detailing his role.

Loomis, Nebraska may only have a population of 397, but when a local bank teller criticized the School Board and Superintendent at a school board meeting, and the School District just happens to be the Bank's biggest customer, you have the potential for big problems. Sure enough when some of the School Board members and the Superintendent voiced their concerns to Bank officials, the teller found herself on the wrong end of a pink slip. In a letter, she was told she was being terminated because of ?comments made by [her] during a meeting on January 15, 1998, which were negative about our local school board and superintendent, thereby reflecting poorly on our community and placing at risk substantial customers of the Bank.?

And then things got interesting. Suing the Bank, but not the School Board under §1983 for retaliating against her because of her exercise of her freedom of speech, a jury awarded Sue Dossett, $1,555,678.76, precisely $1.5 million more than the stipulated amount of back pay. The amount, a million more than even Dossett's attorney asked for, was too much. The District Court, on its own motion, granted a new trial finding that the award was a product of "passion and prejudice." In the second trial, the bank won. All of which made for a most interesting medley of issues for the appellate court to resolve in Dossett v. First State Bank, Loomis, Nebraska (8th Cir. 2/28/05) [pdf].

And just as at the trial court, both sides won, and lost, on appeal. For the Bank, the Court upheld the court's grant of a new trial on both liability and damages following the $1.5 million verdict. For the plaintiff, the Court found that the jury instruction in the second trial was erroneous and that the Bank's alternative argument that a private employer could not be jointly liable with a state actor under §1983 was wrong. (A word to the wise for private sector employers and their counsel who automatically reject any thought of responsibility for §1983 action. Conspiring with a state actor might be enough to get you on the hook.) The net result of the 8th Circuit decision -- back to the district court for a new trial before the same judge, not withstanding the request of plaintiff to recuse him.

I must say I have never had the experience of being before a judge after trying to have him or her removed from a case -- can't be the best of feelings.

Impact of Prior Order Felt in $7.5 MDV Against Wal-mart

Many disability cases are dismissed on summary judgment, but the dangers when they are not is pretty clearly shown in last week's $7.5 million jury verdict against Wal-mart in federal court in Long Island, NY. Patrick Brady a 21 year old with cerebral palsy was hired for a job as a pharmacy assistant but after one day was put to collecting shopping carts and picking up trash. See the Newsday story.

One added ingredient according to Brady's lawyer, Douglas Wigdor, was the impact of an earlier court order on Wal-mart requiring it to provide sensitivity training about the ADA. Probably something to remember when resolving a lawsuit involves a consent decree.

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