Tuesday, April 30, 2013

Lawffice Links - Noel Canning Hits SCOTUS

Were President Obama's NLRB recess appointments constitutional? We're one step closer to an answer from SCOTUS! Let's taste some Lawffice Links on the subject:
I think SCOTUS will take this one, but you never know.

Friday, April 26, 2013

SCOTUS Hears "Mixed Motive" Retaliation Case - COTW #140

On Wednesday, in the last oral arguments of the season, the Supreme Court heard Univ. of Texas Sw. Med. Ctr. v. Nassar (transcript here). The issue is whether Gross or Price Waterhouse applies to Title VII retaliation claims.

If you're not familiar with those cases, generally Price Waterhouse allows a "mixed motive" discrimination claim where a plaintiff shows that discrimination was a "motivating factor" in an adverse employment action. The "mixed motive" theory was expressly adopted by Congress in 1991 with amendments to Title VII. Then, in Gross v. FBL, the Supreme Court said (paraphrasing), "hey, nobody amended the ADEA (age discrimination) to include mixed motive . . . so I guess it doesn't exist under the ADEA and plaintiffs must therefore establish "but for" causation (a higher standard)."

The defendants argument here is pretty straightforward:
Under Gross, [Plaintiff] must prove that retaliation was the but-for cause of the challenged employment action unless Congress has specifically relieved him of that burden by authorizing a mixed motive claim. In -- in the 1991 amendments, however, Congress authorized mixed motive treatment only for Title VII claims that challenge -- that challenge discrimination based on membership in a protected class.
I think the conservative bloc is on board with this, and will view this as a simple case that was all-but-decided when they issued their opinion in Gross.

The liberal bloc clearly appeared skeptical. Justice Kagan repeatedly expressed concerns about "divorcing" the discrimination standard from the retaliation standard within the same statute. This seems like a pretty weak argument - why is it a problem to apply different standards to different sections of a statute using different language?

The stronger arguments (in my opinion) of the liberal bloc are that the Supreme Court has previously held that retaliation is a form of discrimination. So when Congress amended the statute to include  mixed motive discrimination, they thought they were including retaliation. Also, the language of the mixed motive subsection refers to "unlawful employment practice" and the section on retaliation calls retaliation an "other unlawful employment practice."

That said, does this sound like it is meant to encompass the "other unlawful employment practice" of retaliation:
[A]n unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice, even though other factors also motivated the practice.
See Sec. 2000e-2(m). Couldn't Congress have just thrown in "retaliation under sec. 2000e-3" if they wanted to make sure retaliation was covered? I think it's a close call. And (just my best guess here), the man who will make that call is Justice Kennedy.

My prediction: Kennedy sticks with his Gross v. FBL pals in the conservative bloc. 5-4 that Title VII requires "but for" causation.

Thursday, April 25, 2013

NLRB Eases Up on Confidential Workplace Investigations . . . Sort Of

A few months ago, I blogged about the NLRB's opposition to confidentiality provisions in workplace investigation policies. Now, the NLRB has issued a new advice memorandum briefly addressing the issue.

The key takeaway here is that:
[T]he Employer cannot maintain a blanket rule regarding the confidentiality of employee investigations, but must demonstrate its need for confidentiality on a case-by-case basis.
One nice thing about this memo is that it actually provides an example of what would be a lawful policy (in the NLRB's eyes). First, they ok'd the portion of the employer's policy providing that:
[Employer] has a compelling interest in protecting the integrity of its investigations. In every investigation, [Employer] has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up.
The advice memo scrubs the remainder of the employer's policy because it included a blanket confidentiality provision under threat of termination. Instead, the memo says to try something like this:
[Employer] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [Employer] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.
So, employers, there's your roadmap. Just one more thing . . . in my post linked above, I noted that the EEOC is also taking aim at confidential investigations. Does the NLRB's advice memo pass EEOC muster? I tell ya, nothin's ever easy.

See also: Jon Hyman's NLRB Offers Further Guidance on Confidential Workplace Investigations; and WinWinHr's Internal Investigations: NLRB Suggests Confidentiality Language.

Image: NLRB seal used in commentary on NLRB. Not official use.

Wednesday, April 24, 2013

Fired for What!? - News Anchor's Tough Start

Today's Fired for What!? is a little different in that I have secured an exclusive interview with the fire-ee, A.J. Clemente (actually, it's all fake using his publicly available tweets - in case that wasn't obvious).

So A.J., I understand that you think you're ready to anchor the news. What do the News Director and GM think?

Sounds great! I can't wait to see you on the air. Let's see how it goes (warning: includes profanity) . . .

(Click here to view video online if embedded video does not display). Wow . . . A.J., I'm actually not sure if that could possibly have gone any worse. What do you think?

Yeah, that's what I just said. Did I hear you call someone "gay"?

Well, I guess that's one good thing, right? Do you think this will impact your career at KFYRTV?

Ouch. I guess it will probably be awhile before you get back on television, huh?

The Today Show!? Well, I guess all's well that ends well. Thanks for your time A.J., and good luck.

HT: My mom via email.

Tuesday, April 23, 2013

Do FLSA Settlements Require Court Approval?

Does the Fair Labor Standards Act require judicial (or Department of Labor) approval of private settlements? When you think about it, private settlements could work to effectively contract around the FLSA provisions, rendering them almost worthless.

For example, take minimum wage. An employer could just pay an employee $2.00/hour and then settle their claims each week for an extra dollar an hour. This is just contracting to blatantly violate the FLSA by paying an employee less than half the minimum wage, right?

But enough of my hypothesizing, what do the courts have to say? Judge Conner of the Middle District of Pennsylvania (my home district) issued a memorandum opinion covering this issue in Deitz v. Budget Innovations and Roofing, Inc. (available here). Judge Conner noted some precedent from other courts, and provided a rundown of Third Circuit law, before reaching his own conclusion:
The Third Circuit has not addressed whether FLSA lawsuits claiming unpaid wages may be settled privately without court approval. Several cases from the District of New Jersey and the Eastern District of Pennsylvania have . . . assumed that judicial approval is necessary . . . . The Third Circuit has, in dicta, indicated that bona fide disputes over the facts leading to liability may be settled without court approval. See Coventry v. U.S. Steel Corp., 856 F.2d 514, 521 n.8 (3d Cir. 1988)(observing that a employee cannot generally waive his rights under FLSA, but that he may be able to release a factually disputed claim); Watkins v. Hudson Coal Co., 151 F.2d 311, 314 (3d Cir. 1945) (noting that a private agreement over the amount of wages owed by an employer “may, under proper circumstances, be upheld.”)) . . . . The undersigned concurs with the majority of courts . . . for the premise that bona fide disputes of FLSA claims may only be settled or compromised through payments made under the supervision of the Secretary of the Department of Labor or by judicial approval of a proposed settlement in a FLSA lawsuit.
Read the opinion for more citations and discussion of additional case law on this topic.

This remains a gray area, but if you're settling an FLSA claim you should check for precedent in your jurisdiction requiring approval.

HT: Janine Gismondi. I found the opinion linked from Pennsylvania Requires Court Approval for Enforcement of Wage/Hour Settlements Under FLSA.

Image: Middle District of Pennsylvania courthouse in Harrisburg, PA. Image from the Court's website, public domain as work of federal government.

Friday, April 19, 2013

SCOTUS, ERISA, and Equitable Rules - COTW #139

Earlier this week, the Supreme Court released its opinion in U.S. Airways v. McCutchen. Before we get to the holding, it's important to understand the background:

- Employee is involved in a bad car accident
- Employee has ERISA health plan that pays for $65,000 in damages
- Employee files lawsuit and settles it for $100,000
- Employee's lawyer takes a 40% contingent fee of $40,000
- Plan has a reimbursement clause and demands that the employee, who just settled for $100,000, use $65,000 of that to reimburse the plan*

The problem? The employee will be at -$5,000 ($100,000 settlement; minus $40,000 attorney's fees; minus $65,000 reimbusement) despite having a health plan that supposedly covers his damages and getting a favorable settlement of $100,000. This seems unfair.

The issue? Can courts use "equitable principles" to override the contracts reimbursement clause? For example, the employee argues unjust enrichment - that the plan received the benefit of the employee paying $40,000 to the attorney without incurring any costs. Can the Court make the plan share in the attorney's fees?

The holding? It's unanimous! The entire court agrees that equitable principles can not override the express terms of the plan, which is a binding contract construed under ERISA. Even though it may be unfair, the Court can not just override the plan's terms.

Well, another case is in the books . . . wait . . . what? There's more!? Justice Kagan (plus the rest of the liberal bloc and Kennedy, J.) goes on to address another issue. She notes that "[t]he plan is silent on the allocation of attorney’s fees" (that sound you hear is plan-writers everywhere screaming "the plan doesn't say anything about attorney's fees because it doesn't pay for any attorney's fees!!!"). The Court deems this a "gap" in the contract.

Per the majority, the Court can fill in gaps in the plan. So, Justice Kagan fills in the "gap" with the common fund doctrine ("a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole."). So, the employee wins after all - despite unanimously losing on the issue actually before the Court.

Justice Scalia (joined by the conservative bloc) penned a short two-page dissent calling out Justice Kagan for answering a question that wasn't asked:
[W]e granted certiorari on a question that presumed the contract’s terms were unambiguous—namely, “where the plan’s terms give it an absolute right to full reimbursement.” Pet. for Cert. i . . . . In their brief in opposition to the petition they conceded that, under the contract, “a beneficiary is required to reimburse the Plan for any amounts it has paid out of any monies the beneficiary recovers from a third-party, without any contribution to attorney’s fees and expenses.” Brief in Opposition 5 (emphasis added). All the parties, as well as the Solicitor General, have treated that concession as valid . . . . The Court thus has no business deploying against petitioner an argument that was neither preserved . . . nor fairly included within the question presented.
Thus, Scalia and the dissenters would have stopped after deciding that equitable principles can not override the terms of the plan, and not searched for gaps to fill with the Court-preferred common fund clause.

That sound you hear now? Plan-writers furiosuly drafting clauses expressly addressing attorney's fees in their reimbursement clauses.

* To keep it simple to follow, I changed some of the numbers and left out some details (for example, some recovery came from another motorist and some from an insurer).

Thursday, April 18, 2013

Fired for What!? - Trayvon Target Practice?

A single Fired for What? to start the day. A police officer was fired for bringing Trayvon Martin-looking targets to a firing range. The targets were faceless black silhouettes of someone wearing a hoodie and holding a beverage and a pack of skittles. In his defense, the police officer posted a video on YouTube claiming he was using the targets as "no-shoot training aids."

As someone who played a lot of shooting range video games growing up - I find this possible. The games would have targets pop up of angry guys in camo holding machine guns and you were supposed to shoot them . . . but be careful because some of the targets would be people holding flowers (or something like that) and you would lose points for shooting them. Whether that's what the officer was really using the targets for . . . I have no idea.

Tuesday, April 16, 2013

SCOTUS Decides FLSA Pick-Off Case

Moments ago, the Supreme Court issued its opinion in Genesis Healthcare Corp. v. Symczyk. You may recall my previous coverage of this case as the "FLSA Pick-Off Case."

In short, an employee filed a FLSA wage and hour claim intended to be a collective action. The defendant made a Rule 68 offer of judgment that would have given the plaintiff everything she could possibly have obtained through the lawsuit, effectively mooting her claim (more on that later) before any more employees joined the collective action. The district court dismissed the case because it was moot as to the only plaintiff.

The Third Circuit reversed, but the Supreme Court sided with the district court. The effect is that employers can "pick-off" the lead plaintiff in a collective action and avoid the collective action entirely.

Not so fast though! The majority assumed without deciding that the Rule 68 offer did in fact moot the lead plaintiff's claim. The liberal bloc dissented with Justice Kagan calling the majority's assumption "bogus" and resulting in the majority opinion having "no real-world meaning or application" (ouch). Justice Kagan argues that the offer in this case was never accepted and therefore the plaintiff's case was never mooted (i.e. the plaintiff was never effectively picked off).

So, if you ever have a pick-off case, be prepared to argue over whether a Rule 68 offer of judgment for full relief does in fact moot the individual's claim.

Monday, April 15, 2013

SCOTUS Grants Cert. in ERISA Statute of Limitations Case

Earlier today, the Supreme Court granted certiorari in Heimeshoff v. Hartford Life Insurance. Per the Court's Order, SCOTUS will only hear question one. Per the Court's Questions Presented, question one is:
When should a statute of limitations accrue for judicial review of an ERISA disability adverse benefit determination?
The case is on appeal from the Second Circuit, 496 F. App'x 129, which enforced a contractual agreement to shorten the statute of limitations to three years for a claim brought under ERISA where the normal state contract statute of limitations was six years. The contract further provided that the limitations period began to run when the employee's proof of loss was due, not upon the final denial of request for benefits.

As you can see, the Court has a few different directions it could go in here. SCOTUSblog hasn't posted a copy of the Petition for Writ of Certiorari yet (and I haven't located it anywhere else), so I'm not sure what angle the parties are pressing yet. It will also be interesting to see what impact (if any) the Court's decision will have on contractual agreements to alter limitations periods in other contexts.

Friday, April 12, 2013

Segregated Law Firm? - COTW #138

The ABA Journal reports a Dallas lawyer filed a lawsuit alleging her law firm had a policy that prohibited male attorneys from being alone with female attorneys. As another article explains, the law firm's website indicates that they have 33 male attorneys and only five female attorneys. Obviously, the effect of the rule is that women have a much smaller "circle" to interact with than men.

Apparently, the complaint acknowledges that the firm no longer has this rule, but claims there remain lingering effects. The law firm issued a statement denying any allegations of discrimination. I'd be interested in knowing why such a rule was implemented in the first place (assuming there was such a rule).

HT: Heather Bussing via Twitter.

Thursday, April 11, 2013

Adams County Added to Pennsylvania Courthouses Photo Album

This past weekend I attended the Pennsylvania Bar Association Civil Litigation Section Retreat in Gettysburg, PA. We stayed at the historic Gettysburg Hotel, which happens to be just a block or two away from the Adams County Courthouse, so I grabbed some pictures for the Pennsylvania Courthouses Photo Album.

The courthouse includes a classic-looking section attached to a more modern (and plain) section. A plaque with the Ten Commandments hangs to the right of the entrance. Enjoy!

Wednesday, April 10, 2013

Guest Post: Rutgers, Whistleblowers, and Extortion

By Stephanie Sautter
Ms. Sautter is a 2L at Catholic University and Lead Articles Editor of the Catholic University Law Review

Just about everyone has seen the video of recently fired Rutgers University basketball coach Mike Rice abusing his players, both physically and verbally. The video, which ESPN aired last week, showed clips of Rice throwing basketballs at his players, kicking them, and shoving them. Less than 24 hours after it aired, Rice had been fired. Eric Murdock, the former Director of Player Development, compiled the video footage. Murdock gained public sympathy when he said that he tried to take steps to end the abuse, but was fired for doing so on July 2, under the false pretense that his contract was not being renewed.

The Whistleblowing Claim

Given the allegations, it was not too surprising when Murdock filed a wrongful termination suit in state court on April 5 (complaint can be seen here). He names several defendants, including Rutgers University, the current and former presidents of the university, Mike Rice, and former Athletic Director Timothy Penetti.

Murdock is alleging that his employment with Rutgers was terminated in direct response to his complaints about Rice’s offensive behavior. Essentially, he is saying that the employment decision was a result of illegal retaliation. Murdock is suing under New Jersey’s Conscientious Employee Protection Act, which created a cause of action for retaliatory discharge. Terminating an employee in response to the filing of an internal complaint is actionable retaliatory discharge under the Act. Therefore, Murdock’s complaints about Rice are protected, and Rutgers may be held liable if its actions were taken in response to the complaints. The issue may come down to whether Murdock can establish that he filed a complaint before the decision about his contract was made. He says this is the case, but has not yet provided evidence (failing to provide evidence seems to be a consistent problem for Murdock – Rutgers says he also made allegations about NCAA violations, including paying players, but did not provide any supporting evidence).

Rutgers has stated that Murdock’s contract was simply not renewed, which Murdock claims is not true. Rather, Murdock claims that his contract was actually renewed (although there is no evidence of this) and Rutgers’ contract renewal explanation is merely pretext. So far, Rutgers has not offered much justification for their decision other than a dispute Murdock had with Rice regarding missing 35 minutes of basketball camp – but that reason seems pretty flimsy. Odds are, Rutgers has compiled a laundry list of Murdock’s misconduct that they will say influenced their employment decision, but the court may determine that it was actually retaliation.

Extortion Investigation

Soon after filing his suit, however, information surfaced that was far less sympathetic to Murdock: he may have tried to extort Rutgers out of almost one million dollars. This week, the media obtained a 2-page letter, dated December 27, 2012, from Murdock’s attorney, Barry A. Kozyra to Rutgers University’s attorney, John K. Bennett (entire letter can be seen here). The letter requested a $950,000 “settlement” of Murdock’s (not yet filed) wrongful termination claim. Murdock’s salary with Rutgers was $70,000 - less than a 1/10 of the “settlement offer.” I’m admittedly not well versed in the art of extortion, but I’m guessing “don’t send a signed and dated extortion letter” is pretty high on the list of things not to do if you want to get away with it. Unfortunately for Murdock, though, his “settlement offer” was signed and dated, which might explain why F.B.I. Special Agent James Tareco visited the Rutgers campus. Murdock’s lawyer called the extortion claim “nonsense,” and said that the letter was a standard request to settle before filing suit.

What’s more, Murdock compiled the 30-minute video by painstakingly editing hundreds of hours of video footage, which he obtained pursuant to New Jersey’s freedom of information statute. Obviously this video is horrible no matter what, but the way in which Murdock went about creating it, along with his leaking it to ESPN rather than just filing his wrongful termination suit, does make it look a bit like extortion.

The Impact of an Extortion Attempt on his Whistleblowing Claim

Although settlement offers are not usually admissible in trial, evidence of an FBI investigation may be. An extortion attempt does not necessarily change the legality of Rutgers’ employment decision, but may still be helpful to Rutgers in determining damages or a settlement amount. If Murdock was taking steps in preparation of an extortion attempt while he was still employed, Rutgers could use evidence of the misconduct to severely limit the relief available to Murdock. The “after-acquired evidence” doctrine allows relief to be limited to back-pay based on evidence obtained after the retaliatory action, if the evidence would have been a legitimate basis for terminating the employee had the employer known about it at the time.

This means that Rutgers could benefit by obtaining evidence that Murdock was taping practices or discussions with or of Rutgers officials that he then used to extort Rutgers. Murdock certainly would have been fired for any known preparation of an attempt to extort Rutgers.

Note from Phil Miles: First, I'd like to thank Ms. Sautter for contributing this post. I would like to offer a few counterpoints in defense of Mr. Murdock. It is not unusual for an ex-employee to make a settlement demand prior to filing suit and as someone who does a lot of defense work, ridiculously high settlement demands are likewise not that unusual. The media "leak" does cause a little concern though. I also wanted to note that he has only filed a complaint so the lack of evidence at this stage is not a problem - although it may be down the road. I'd love to get some feedback on the line between settlement demands and extortion - so drop a comment!

Image: Rutgers logo used in commentary on matter of public interest. Not official use.

Friday, April 5, 2013

Facebook Discovery and Spoliation - COTW #137

Last week, a federal court in our circuit (D.N.J. in the 3d Cir.) issued a spoliation order with analysis of destruction of evidence on Facebook: Gatto v. United Airlines.

The parties attended a settlement conference on December 1, 2011, where the plaintiff agreed to set his Facebook password to 'alliedunited' for "the purpose of accessing documents and information from Facebook." There is some dispute about whether defense counsel was supposed to directly access the page (why would they get the password if not?), and the plaintiff claims he was concerned by a subsequent Facebook notice regarding an unusual access attempt.

So, he "deactivated" his account on December 16, 2011. Some interesting notes about shutting down your Facebook account:

  • Facebook itself explains that there is a difference between deactivating and deleting your account; and
  • If you delete your account, Facebook apparently deletes it permanently after 14 days (at least they did as of December 2011).
It turns out that the plaintiff didn't "deactivate" his account but permanently deleted it . . . as in forever. 

This is a pretty easy spoliation case for the Court to resolve. The plaintiff knew the Facebook information was the subject of discovery, and permanently deleted it. The Court held that an adverse inference instruction will be given to the jury.

See additional coverage: Molly DiBianca's Spoliation of Facebook Evidence.

Thursday, April 4, 2013

College Degree and Experience Required for McDonald's Cashier Job

This just in . . . there aren't a lot of jobs out there right now. Need a sign of the times? The Washington Examiner reports that a job posting for a McDonald's cashier requires a college degree and 1-2 years of experience! I looked all over the article for signs of satire (like maybe it was an Onion article) . . . but I didn't see any.

While we've been adding jobs, it has barely been enough to keep up with population. Employment-population ratio:

Tuesday, April 2, 2013

Obama NLRB "Recess" Appointments Hit 3rd Circuit

You may recall that the DC Circuit recently ruled President Obama's NLRB "recess" appointments were not recess appointments at all and were therefore unconstitutional. The result being that the NLRB was rendered powerless in the DC Circuit. As I blogged previously, it's kind of a big deal because (among other reasons) parties can appeal NLRB decisions to the D.C. Circuit even if they aren't in the D.C. area. The NLRB has vowed a Supreme Court appeal.

Well, now the issue has also reached the Third Circuit (my home circuit). Barbara Mishkin blogs, Third Circuit Hears Oral Argument in Another NLRB Case Challenging Recess Appointments. This could potentially widen the circuit split on the recess appointments issue, and/or create another "dead zone" of NLRB inactivity. This will likely place additional pressure on the Supreme Court to take the issue up on appeal.

Image: Third Circuit seal used in commentary on Third Circuit. Not official use.

Monday, April 1, 2013

Obamacare for Employers in 87 Minutes

The Patient Protection and Affordable Care Act (aka PPACA aka Obamacare) - it's a couple thousand pages of legislation. And, it frequently cross-references existing legislation, so it's not like you can sit down and "just" read the 2,000 pages and have any clue what's going on. Oh, and throw another 10,000+ pages of regulations on top of that.

As you can imagine, most of us are waiting for folks who have dedicated their lives over the past year to figuring this stuff out to break it down into plain English for the rest of us. Finding good (and free) resources has been a challenge but I found the video embedded below to be extraordinarily helpful (click here to view online).

It's perfect for those of you who are overwhelmed and have no clue where to begin. Will you be an expert? No. But it does provide a great overview and introduction. I will note that some of it is Texas-centric, but I think it is still helpful. Enjoy!