Thursday, July 18, 2019

Discovery of current employment records by former employer in litigation

If employees sue their former employers, can the former employer subpoena (or request via party discovery) the employees' records from their current employer?

I took a quick look at this issue here in the Middle District of Pennsylvania under the Federal Rules of Civil Procedure. Short answer? It is generally discouraged, but may be appropriate where the current employment records are specifically relevant to an issue in the litigation. Even then, the court may direct the employee to obtain the records rather than having a subpoena go out to his or her employer.

Here is an interesting opinion from Magistrate Judge Mehalchick in Zeller v. South Central Emergency Medical Services, Inc. She highlighted the concerns (with some nice research and citations to boot):
M.D. Pa. in Scranton
Individuals have "a legitimate privacy interest in information regarding [their] subsequent employment". E.E.O.C. v. Princeton Healthcare Sys., 2012 WL 1623870 (D.N.J. May 9, 2012); citing Warnke v. CVS Corp., 265 F.R.D. 64, 66 (E.D.N.Y.2010); see also Mirkin v. Winston Res., LLC, 2008 WL 4861840 (S.D.N.Y.2008). "[C]ourts . . . have recognized that because of the direct negative effect that disclosures of disputes with past employers can have on present employment, subpoenas in this context, if warranted at all, should be used only as a last resort". Warnke, 265 F.R.D. at 69; see also Conrod v. Bank of New York, 1998 WL 430546 (S.D.N.Y.1998); Gambale v. Deutsche Bank AG, 2003 WL 115221 (S.D.N.Y.2003); Mirkin, 2008 WL 4861840 . . . . Further, a plaintiff may have "a legitimate concern that a subpoena sent to her current employer under the guise of a discovery request could be a tool for harassment and result in difficulties in her new job. Graham v. Casey's Gen. Stores, Inc., 206 F.R.D. 251, 256 (S.D.Ind.2002).
But, that is not the end of the analysis. The records may be relevant to the litigation and discoverable despite the employee's privacy concerns. More citations! I realize this makes it less readable, but readers (and, frankly, I) sometimes come back to these entries to help with research, so I include the citations:
The Court finds that Plaintiff's post-termination employment records are relevant as to the issue of mitigation of damages, and specifically, the amount that Plaintiff could have earned with reasonable diligence. The employment records sought by Defendants from Plaintiff's current and prospective employers are likely to contain the information sought by Defendants, and a request for these documents thus is reasonably calculated to lead to the discovery of admissible evidence on the issue of mitigation. See Noble v. Ruby Tuesdays Restaurants, Inc., 2007 WL 3125131, at *2 (S.D.Ohio Oct.23, 2007) (in Title VII employment action, "[e]mployment records are relevant to the issues of mitigation and damages[.]"); E.E.O.C. v. Woodmen of World Life Ins. Soc., 2007 WL 649298, at *5 (D.Neb. Feb.1, 2007) (in Title VII employment action, court found that "although the plaintiffs have provided certain financial information, the employment records sought [from plaintiff's employers for whom plaintiff worked subsequent to her employment with defendant] . . . may contain information relevant to [plaintiff's] mitigation of damages. Additionally, [plaintiff's] general job performance records reasonably bear on the defendant's stated reason for [plaintiff's] demotion[.]"); Walker v. Northwest Airlines Corp., 2002 WL 32539635, at *2 (D.Minn. Oct.28, 2002) ("[B]oth past and post-termination wage and employment records are highly relevant to the issue of mitigation and to the computation of damages in this case . . . . [O]ther types of employment information such as disciplinary records, resumes, and applications . . . are reasonably calculated to lead to admissible evidence.").
The end result was that the plaintiff was afforded 30 days to produce the information sought by the defendant's subpoenas. That strikes me as a happy medium - the employer can get the information that is relevant to the case, and the employee does not have the uncomfortable situation of his employer getting hit with a subpoena relating to him.

Monday, July 1, 2019

SCOTUS adds two new #emplaw cases to docket

The Supreme Court granted certiorari on Friday in two new employment law cases. Of course, we all know what the big one will be next year. But, for the die hards, here are the two new, not-quite-as-hot, topics:

ADEA

First up, Babb v. Wilkie, in which SCOTUSblog describes the issue as:
Whether the federal-sector provision of the Age Discrimination in Employment Act of 1967, which provides that personnel actions affecting agency employees aged 40 years or older shall be made free from any “discrimination based on age,” 29 U.S.C. §633a(a), requires a plaintiff to prove that age was a but-for cause of the challenged personnel action.
Shades of Gross v. FBL in this one (holding that the private sector provisions require "but for" causation).

ERISA

Second up, and again relying on SCOTUSblog for the issues, is Thole v. U.S. Bank, N.A.:
(1) Whether an ERISA plan participant or beneficiary may seek injunctive relief against fiduciary misconduct under 29 U.S.C. § 1132(a)(3) without demonstrating individual financial loss or the imminent risk thereof; 
(2) whether an ERISA plan participant or beneficiary may seek restoration of plan losses caused by fiduciary breach under 29 U.S.C. § 1132(a)(2) without demonstrating individual financial loss or the imminent risk thereof. CVSG: 05/21/2019; and 
(3) whether petitioners have demonstrated Article III standing.
Wow, ERISA and standing in the same case? Will anyone be able to stay awake past the first two pages of the opinion? We'll find out next term.

Thursday, June 27, 2019

SCOPA on Work Product Doctrine and Attorney-Client Privilege

The Supreme Court of Pennsylvania (SCOPA) published a decision addressing the work product doctrine and the attorney-client privilege - BouSamra v. Excela Health. More specifically, the Court analyzed whether a hospital waived either of those protections by forwarding an email from its outside counsel to its "public relations and crisis management consultant." The emails related to an internal investigation of one of the doctors.

It turns out that the two protections require different analysis in this case. Disclosure to a third party does not necessarily waive the work-product doctrine. Instead, SCOPA concluded that
[T]he attorney work product doctrine is not waived by disclosure unless the alleged work product is disclosed to an adversary or disclosed in a manner which significantly increases the likelihood that an adversary or anticipated adversary will obtain it.
The Court then remanded the case back to the trial court to apply this newly articulated standard.

 The attorney-client privilege is different - disclosure to a third party generally does waive that privilege. There are, however, exceptions. Disclosure to certain agents is protected. For example, disclosure to an expert consultant, accountant, or third party interpreter might not waive the privilege.
[If] the client is a corporation, the attorney-client privilege extends to communications between its attorney and agents or employees authorized to act on the corporation’s behalf . . . . [T]he attorney-client privilege is [generally] waived when a confidential communication is shared with a third party . . . . [T]he critical [issue is whether] the third-party’s presence was either indispensable to the lawyer giving legal advice or facilitated the lawyer’s ability to give legal advice to the client.
SCOPA concluded that forwarding the email to a PR firm neither "facilitated [n]or improved the lawyer’s ability to provide legal advice." Thus, the privilege was waived (but, see above, possibly still protected by attorney work product doctrine).

Two important issues for civil litigation attorneys to keep in mind.

Wednesday, June 12, 2019

Well, at least compensatory and punitive damages are capped in discrimination cases, right? Not so fast, Pennsylvania employers!

What's the worst case scenario in a discrimination claim? In terms of liability, federal discrimination claims under the ADA and Title VII have a statutory cap for compensatory damages (like emotional distress) and punitive damages combined. See, 42 USC s1981a.

It depends on the size of the employer:
  • <101 employees: $50,000
  • 101 - 200 employees: $100,000
  • 201-500 employees: $200,000
  • >500 employees: $300,000
In Pennsylvania (and I suspect other jurisdictions as well), plaintiffs can get around that cap by allocating damages to a state discrimination statute.
Not official use.

The PHRA does not allow for punitive damages. Hoy v. Angelone, 720 A.2d 745, 749 (Pa. 1998) But, it allows for unlimited emotional distress damages. Let's say a jury verdict in a sex discrimination case includes:
  • $2 million in emotional distress; and 
  • $300,000 in punitive damages.
The employer has more than 500 employees. Now, the employer hopes that the $2.3 million gets knocked down to $300,000 (the statutory cap), right! What a relief that would be!

Not so fast! The Court could allocate the emotional
distress to the PHRA claim, and the punitive damages to the Title VII claim. The result would be $2 million for emotional distress under the PHRA, and $300,000 (the statutory cap) in punitive damages under Title VII. Instead of a $300,000 total, the employer is still getting hit with the full $2.3 million total! 

This plaintiff-friendly allocation method received the express approval of the Third Circuit Court of Appeals in Gagliardo v. Connaught Labs., 311 F.3d 565 (3d Cir. 2002). Suddenly, that cap is not quite as useful as many employers think it is.  

Monday, June 3, 2019

SCOTUS: Title VII charge process is procedural, not jurisdictional

Before would-be plaintiffs file employment discrimination lawsuits under Title VII (race, color, sex, religion, and national origin), they must first exhaust their administrative remedies. Put another way, they must go to the U.S. Equal Employment Opportunity Commission (EEOC) and file a charge first.

Today, the Supreme Court issued a unanimous decision, with an opinion from Justice Ginsburg ("Notorious RBG" as the cool kids call her) in Fort Bend County v. Davis:
Is Title VII’s charge-filing precondition to suit a “jurisdictional” requirement that can be raised at any stage of a proceeding; or is it a procedural prescription mandatory if timely raised, but subject to forfeiture if tardily asserted? We hold that Title VII’s charge-filing instruction is not jurisdictional . . . Prerequisites to suit like Title VII’s charge-filing instruction are . . . properly ranked among the array of claim-processing rules that must be timely raised to come into play.
Great. What does that mean?

In short, it means that an employer-defendant in a Title VII case can waive the requirement by not raising it fast enough. In this particular case, the plaintiff had not included "religion" on its EEOC charge, but did include other types of claims (retaliation and sexual harassment). The plaintiff filed a lawsuit based on religious discrimination, retaliation, and sexual harassment. After litigating the case for 3-4 years, all of the claims were dismissed . . . except the religion claim, which was remanded from the appellate court back down to the trial court.

The defendant asked the trail court to dismiss the religion claim because it had never gone through the EEOC charge process. Too late!* The plaintiff can proceed with the religious discrimination claim despite not including it in the EEOC charge. That's the bottom line of today's ruling. 

This sets a particularly tricky trap for employers here in the Third Circuit. On the one hand, Title VII plaintiffs are not required to plead administrative exhaustion with particularity. On the other hand, as of today, defendants can be held to have waived a failure to exhaust administrative remedies defense by not raising it soon enough. Do you see why that creates a problem for employers?

This also creates some side issues, that I have not yet looked into (but probably will have to now!):

  • How specific does a defendant need to be to preserve this defense? Does a generic affirmative defense in an Answer ("Plaintiff failed to exhaust administrative remedies") sufficient?
  • How late is too late to raise the issue?

 * Actually, the trial court did dismiss the claim, but the 5th Circuit reversed and today SCOTUS sided with the 5th Circuit.

Wednesday, May 29, 2019

Attorney-Client privilege in internal sexual harassment investigations

Here's an interesting case out of the Southern District of New York, dealing with attorney-client privilege in internal investigations. The case is Barbini v. First Niagara Bank (HT: The Legal Intelligencer, Ruling Highlights Narrow Path in Defending Sexual Harassment Complaints).

The plaintiffs claimed that they complained about sexual harassment, and then their employer merely warned the harasser while firing them. The employer claims it fired them for notary law violations.

Not official use.
Not surprisingly, the employer consulted with its in-house counsel on the harassment issue and the notary issues. Is that protected by attorney-client privilege? The Court says, yes. While recognizing the dual-role that in-house counsel sometimes serves (attorney and business consultant), the Court held:
Communicating legal analysis to the person ultimately deciding whether to fire and employee is precisely the type of legal advice that is protected by the attorney-client privilege. (internal citations and quotations omitted). 
But wait, there's more!

Here, however, the Court also concluded that the employer waived the privilege. How? The employer did not directly raise an "advice of counsel" defense - but it did raise the Faragher/Ellerth defense.* Deposition testimony from an HR rep also established implied reliance of the advice of in-house counsel on the harassment and notary issues.

This goes straight to the heart of the employer's defense - that it looked into the harassment claims and concluded that termination was not necessary for the alleged harasser, and in reliance on advice from counsel concluded that the complainants/plaintiffs had violated New York notary laws. As the Court stated:
Defendants cannot have their cake and eat it too. There is virtually no way for any decisionmaker or adversary to assess the veracity of Defendants’ defense if the documents and conversations related to both investigations are concealed.
Frankly, I'm not sure that every court would reach this same conclusion. This case serves as a cautionary tale though - attorney-client communications (even legal advice) will not always be protected by a court. Particularly, privilege may be waived where the employer attempts to rely on the advice and investigation of its counsel as a defense.

* The Faragher/Ellert defense is an affirmative defense requiring employers to establish "(1) the employer exercised reasonable care to prevent and correct any-harassing behavior and (2) that the plaintiff unreasonably failed to take advantage of the preventative or corrective opportunities that the employer provided."

Monday, May 20, 2019

Uber Drivers: Employees or Independent Contractors? NLRB GC weighs in.

You may recall that the NLRB recently held that employee/independent contractor classification is now resolved using an employer-friendly version of the common law test (SuperShuttle). Now, the NLRB Office of General Counsel has used that new test to recommend dismissal of several charges brought by Uber drivers.

You can read the advice memo here (ht: Bloomberg Law).  The Conclusion really does a nice job of summarizing the NLRB GC's position:
Not official use.
Considering all the common-law factors through “the prism of entrepreneurial opportunity” set forth in SuperShuttle, we conclude that UberX drivers were independent contractors. Drivers’ virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber, provided them with significant entrepreneurial opportunity. On any given day, at any free moment, UberX drivers could decide how best to serve their economic objectives: by fulfilling ride requests through the App, working for a competing rideshare service, or pursuing a different venture altogether. The surge pricing and other financial incentives Uber utilized to meet rider demand not only reflect Uber’s “hands off” approach, they also constituted a further entrepreneurial opportunity for drivers. Although Uber limited drivers’ selection of trips, established fares, and exercised less significant forms of control, overall UberX drivers operated with a level of entrepreneurial freedom consistent with independent-contractor status. In addition, drivers’ lack of supervision, significant capital investments in their work, and their understanding that they were independent contractors also weigh heavily in favor of that status. Although Uber retained portions of drivers’ fares under a commission based system that may usually support employee status, that factor is neutral here because Uber’s business model avoids the control of drivers traditionally associated with such systems and affords drivers significant entrepreneurial opportunity. The other factors supporting employee status—the skill required and our assumption that drivers operated as part of Uber’s regular business, and not in a distinct business or occupation—are also of lesser importance in this factual context. Accordingly, we conclude that UberX drivers were independent contractors.
The memo goes on to reach the same conclusion for UberBLACK drivers.

Of, course, this comes with the usual caveats:

  • Different courts, agencies, and jurisdictions use different classification tests depending on the underlying law at issue; and
  • NLRB precedent is only as binding as the current makeup of the NLRB - and this isn't even an NLRB decision, it's just an advice memo.