California Business Litigation Blog

In what may be a critical landmark in the struggle for employee rights, the National Labor Relations Board (NLRB) heard a case involving an arbitration agreement requiring employees of a homebuilder to agree to give up their right to join in a class action suit and deemed it an unfair labor practice. The decision comes as a surprise to some, in light of last year’s Supreme Court ruling in AT&T Mobility v. Concepcion that struck down a California rule blocking class action waivers.

The case, D.R. Horton, Inc. and Michael Cuda, was initiated by Cuda, a superintendent at D.R. Horton, who had tried to initiate class action arbitration on his own behalf and that of other superintendents who worked for the builder.

The NLRB ruled that class action waivers have no place in the workplace and employers who make them a condition of employment are engaging in an unfair labor practice. The decision read, in part, "Clearly, an individual who files a class or collective action regarding wages, hours, or working conditions, whether in court or before an arbitrator, seeks to initiate or induce group action and is engaged in conduct protected by Section 7…Such conduct is not peripheral but central to the act's purposes."

The current case had been likened to the case involving AT&T Mobility, with many predicting that the previous case would influence the NLRB’s ruling in the current case. However, the NLRB stated that the AT&T case was about consumer class action suits and had no relevance to D.R. Horton, which the NLRB considered a case about workplace rights that employees are entitled to by the National Labor Relations Act. "Furthermore, AT&T Mobility involved a conflict between the FAA and state law, which is governed by the Supremacy Clause, whereas the present case involves the argument that two federal statutes conflict," according to the ruling.

The decision is expected to be reviewed by the U.S. Court of Appeals.

Although Twitter may have started out as a social networking tool, more and more businesses are using it as a marketing tool. A lot of people have Twitter accounts that they think of as a tool to promote their own careers. Sometimes, in the process of promoting their careers, they may do a little cross-promotion for their employer. After all, if it’s good for the company, it’s good for the employee, usually. “A rising tide lifts all boats,” to quote John F. Kennedy. But if you use your Twitter account to promote your company as well as yourself, then who owns the account?

A current legal case filed with the US District Court in the Northern District of California involving a private individual who used his Twitter account to boost his employer seeks to answer this question. PhoneDog, a mobile products website, is suing its former employee, Noah Kravitz, for $340,000.

PhoneDog says that Kravitz was “given use of” a Twitter account while he worked there, and that he continued to use the account after he left the firm, constituting theft of trade secrets and damage to the PhoneDog’s “business, goodwill, and reputation.”

PhoneDog says that the Twitter account @PhoneDog_Noah was used by Kravitz to “disseminate information and promote PhoneDog's services on behalf of PhoneDog." Kravitz counters that he created the account, linked it to his email address and used it to tweet the things that mattered to him personally, including tweets related to his career and PhoneDog, as well as sports and food, among other subjects.

In fact, says Kravitz, the account wouldn’t work as well if it didn’t combine both personal and career elements. "It's this melding of personal and professional which is why I've gained a modest following," he said in an interview, "Because it's not just the dry headline and link to something."

PhoneDog claims in the lawsuit that it asked Kravitz to drop the account when he left the company. Instead, it claims, he kept the account but changed the handle. Kravitz tells a different story. He says PhoneDog didn’t ask any such thing. Instead, he says, it gave him a green light to keep using the account and even to mention the company. "At no point until July of this year, a good 8 months after we parted ways, did they ask for the twitter account or claim in was their property."

In the lawsuit, PhoneDog claims that Kravitz’ post-employment use of the account is an attempt “…to discredit PhoneDog and destroy the confidence that PhoneDog's users have in PhoneDog."

According to Henry J. Cittone, an intellectual property attorney, the crucial question is going to be whether Kravitz was paid to create the account and to send Tweets. “They said they hired him to create this feed for them. That is the way the company could dislodge a Twitter feed from its owner."

Continue reading "Who Owns Your Twitter Account?" »

We at Sylvester Oppenheim & Linde would like to take a moment to wish our clients, family and friends (including our blog readers), a very joyous and happy Thanksgiving.

Whether you are celebrating with a small gathering, or preparing for what is shaping up to be dinner for a small country, we wish you and yours all the very best.

The Fontana Unified School District is the subject of a lawsuit filed by the teachers union in the San Bernardino County Superior Court. The suit is demanding that the school district reinstate counselors that the district laid off. The teachers union alleges the counselors should be allowed to return to work on the basis of seniority.

The teachers union claims that the Fontana Unified School District has violated the California Education Code. According to the lawsuit, the district let 68 counselors go after the 2010-2011 school year, then created two new job titles for what was essentially the same position and attempted to hire 42 new counselors.

According to Pat Mazzulli, president of the Fontana Teachers Association, the new counselor positions are “substantially similar” to the old counseling positions. “Rather than follow procedure in the Education Code, the FUSD made reduction in force counselors reapply and interview for their jobs. FUSD attempted to hire outside the district as well," Mazzulli said. According to Mazzulli, the California Education Code requires that the laid-off counselors be given the opportunity to accept or refuse substitute slots before the jobs are offered to new applicants.

The Fontana Unified School District denies any wrongdoing and insists the new counseling positions are entirely different from the old ones. William Wu, assistant superintendent of human resources for the school district, said in an interview that "the district reviewed the comprehensive counseling program, tailored it to the needs of the district and then created new district positions to provide better and different student services…They are not the same as the comprehensive counseling program." Furthermore, said Wu, “The district is not in the business of violating peoples' rights. We are in the business of serving children, but we are not in the business of violating peoples' rights in the process.”

However, the school board has postponed plans to hire applicants for the new positions. According to Mazzulli, no trial date has been set.

Continue reading "Lawsuit Alleges: New Positions a Ruse to Hire New Counselors " »

A second-grade teacher at Hillcrest Elementary School in San Francisco who sued the San Francisco Unified School District in 2006 for employment discrimination and was awarded a $60,000 settlement has gone back to court, this time claiming that officials at the school are retaliating against her for the original lawsuit.

Margaret Reyes filed federal court documents alleging that the school has made unfounded accusations against her and placed her under disciplinary review. Among other things, she claims she was disciplined for letting a student go outside without a jacket and “mishandling” paperwork.

Court papers describe a difficult working environment in which Reyes was denied restroom breaks and forced to teach in a flooded classroom. According to Reyes, the school’s principal, Richard Zapien, taunted the teacher and later refused to come to her assistance when a troubled student got violent and held Reyes and a classroom full of students hostage.

In her suit, Reyes claims that she is being harassed because she took the district to court after the school’s principal suggested that she should leave the district and seek work in a school associated with her religion. Her suit also alleges that Reyes has been discriminated against because of her gender and age as well as her religion.

Richard M. Rogers, attorney for Reyes, stated, “There was a budget crunch. People were getting pink slips. She’s Catholic, and (the principal) made the comment that she should get a job at a Catholic school to open a spot for someone else.”

Rogers also accused the district of not complying with the court’s order in the earlier case, although he said a confidentiality clause prevented him from being more specific.

Continue reading "Second-Grade Teacher Sues School District for Retaliation" »

A former Illinois college staff member is suing her ex-employer. Discrimination and retaliation are the dual legal bases of a lawsuit filed by former Richland Community College registrar JoAnn Wirey.

The current legal controversy began over four years ago when Wirey was diagnosed with mononucleosis. The debilitating blood disorder is characterized by lethargy and chronic fatigue.

Despite medical documentation of health contraindications, Wirey was charged with “insubordination” for failing to work on Saturdays. Consequently, she invoked the protective legal provisions of the Americans with Disabilities Act (“ADA“). This federal law requires employers to make “reasonable accommodations” for disabled workers.

Shortly after filing suit, Wirey was disciplined for posing in a picture alongside an adult male student whose abdomen was partially exposed. Next, she was sanctioned for stating that foreign students needed American sponsorship to avert another 9/11 catastrophe.

Wirey initiated formal grievances immediately after both incidents. Soon afterward, she was suspended for allegedly advising a student’s mother that the pupil’s grades were “none of [the mother’s] business.”

While suspended, Wirey was accused of grade altering. One month later, she was finally dismissed after refusing to waive her right to appeal the disciplinary actions.

Wirey further alleged that the college provided a derogatory job reference to the school district. Legal pleadings posit that this action was retaliatory and resulted in Wirey’s rejection for a teaching position. Court documents disclose that Wirey received consistently positive employee performance evaluations prior to the litigation.

Patience is a virtue in academic, pecuniary, and altruistic contexts alike. College officials may have been well advised to wait and “bide time.” Even if entirely appropriate, disciplinary actions can have devastating impact by creating inaccurate impressions and negative perceptions.

Avoiding every appearance of impropriety is often more prudent than taking immediate remedial measures. Effective administrators must accurately assess and act in accordance with the totality of all relevant circumstances.

The Ninth Circuit Court of Appeals recently overruled a lower court’s dismissal of a lawsuit filed by a former school district employee who had been fired for sitting next to her boss in public.

In 2004, the Washoe County School Board publicly convened in Reno, Nevada to announce its decision to terminate the employment of general counsel Jeffrey Blanck. Providing moral support, administrative assistant Katherine Nichols sat stoically beside him without uttering a single word.

The next day, Nichols was offered a difficult choice: demotion or early retirement. After accepting the latter "option," she filed suit. In dismissing her case, a federal District Court reasoned that the district had a legitimate interest in preventing "disruptive" employee conduct.

Last month, the Ninth Circuit Court of Appeals reinstated Nichols' lawsuit. Judge Margaret McKeown noted the absence of any evidence of possible disloyalty or disruption that sitting next to one's boss in public portends.

The court ruled that actual disruption or its reasonable anticipation is the only permissible grounds for disrupting public employment.

In a related opinion released in June, the US Supreme Court espoused restricted First Amendment rights for outspoken public servants who openly complain about workplace issues.

The Court recognized an exception for speech that pertains to matters of vital public import, however. In fact, the entire legal basis of Nichols' original claims rested upon this "public interest" immunity against official reprisals.

This type of employment controversy lies within the proper definition of "speech." Can tacit actions such as taking a certain seat constitute "speech”? Just how far should the concept of “expression” be extended? What constitutes valid grounds to terminate public employment?

This case is a prime example of why private and public employers, especially school districts which often manage and make decisions by committee need to tread carefully.

Continue reading "Court of Appeals Reinstates Nevada School Administrator’s Lawsuit" »

Earlier this month, a former Bourne, Massachusetts firefighter filed suit against the Town and municipal administrator, his former employer and a municipal administrative official in a Boston federal court. Former firefighter Richard Doherty alleged that the defendants violated his First Amendment rights by terminating his employment after he posted certain comments on Facebook.

The 47-year-old Mattapoisett resident had been a Bourne Fire Department paramedic and firefighter for 16 years prior to his dismissal last February.

Doherty was quoted as having posited that recovering his employment and reputation were his primary motivations for commencing the litigation. Doherty’s grim observation that “[I] have a family to take care of” also echoed apparent pecuniary considerations. Doherty’s claims include back pay, reinstatement, legal fees, and compensation for emotional distress.

The main point of contention in the case seems to center around the alleged retaliatory motive underlying Doherty’s discharge. Per court pleadings, Town officials allegedly violated Doherty’s First Amendment free speech rights by firing him in retaliation for private postings he made on his personal Facebook page.

Ostensibly, Doherty’s remarks were highly critical of various practices and issues of concern within fire department. A representative speaking on behalf of Doherty’s attorney likened such commentary to a worker who vents by steam about his or her employment conditions while visiting a local bar. The lawyer observed quite aptly that such utterances have traditionally constituted legally protected speech.

The Town’s termination ruling found that Doherty’s posts “ridiculed and disparaged” various police and fire department officials. Doherty says that he was mainly concerned about his fellow firemens’ safety and welfare, as the department took a lackadaisical approach to such issues.

This case is reminiscent of the old adage, “I may disagree with what you say, but I will defend to the death your right to say it.”

Historically, First Amendment Free Speech rights have been the “holiest of holies” in American jurisprudence. Courts have been justifiably reluctant to limit the free expression of diverse ideologies and opinions.

Some contexts do constitute legally valid prior restraints on free speech, however. A famous example is a man’s false scream of “fire” in a crowded theater.

Case law analysis portends that the ultimate outcome of this case will likely hinge upon the court’s factual findings of Doherty’s true motivation for the disputed postings.

If the court finds his primary motivation to have been legitimate concern over vital matters of public interest, he will likely prevail. If, however, it finds his motivations were personal, he may be left without legal recourse.

Michele Vulcano Hall is currently fighting to keep her case against the Easton Area (PA) School District alive in Federal District Court. The school district’s attorneys have asked the court to dismiss Vulcano Hall’s claims on the grounds that she has failed to prove the violation of any legally-protected right.

In August of 2008, Vulcano Hall was engaged in a practical skills workshop internship when the district offered her a full-time teaching job. She was fired one year later. In her lawsuit, Vulcano Hall alleged she was dismissed in retaliation for her father’s position as a vocal school board member.

In response, the district denied any retaliatory motive. Further, it alleged that Vulcano Hall’s employment was a 10-month temporary position. The district admits, however, that its primary motive for terminating Vulcano Hall’s employment was her failure to attain full certification.

Currently, Vulcano Hall works as a substitute teacher for the district. Although she does not possess full teaching certification, her current credentials are sufficient for substitute teaching. During her prior 10-month teaching tenure in the district, Vulcano Hall taught subjects in multimedia/study skills.

The entire case appears to turn upon two primary points of contention: 1) Whether or not Vulcano Hall’s former teaching position was permanent or temporary employee; and, 2) The true motive for her eventual termination.

Hall’s attorney argued that her client had received written and verbal assurances of 2 to 3-year extension of time to earn full teaching certification. The district had purportedly made an exception to this policy for Vulcano Hall, as she has several long-term learning disabilities.

The Americans with Disabilities Act (“ADA”) requires employers to make “reasonable accommodation” for disabled workers. Felker also invoked a Pennsylvania statute that requires prior unsatisfactory job ratings as a condition precedent for terminating public employment. Allegedly, Vulcano Hall consistently received positive evaluations.
Hall’s attorney asked that the court allow the modification of original pleadings if it finds that they do not sufficiently set forth Vulcano Hall’s legal claims. The Federal Rules of Civil Procedure allows judges to permit the amendment of complaint documents in such instances.

Continue reading "Former Schoolteacher Determined to Take School District to Task" »

Employment law as it pertains to public employees in Wisconsin is set to undergo a significant transformation if and when the state Senate passes Governor Scott Walker's controversial Budget Repair Bill. The specifics of the legislation were made public in early February, with the Assembly approving the bill on February 25. It remains unclear when the proposed law will be subject to a vote in the Senate.

No matter which side of the aisle one sits, it is indisputable that the proposed legislation is poised to drastically alter how public sector unions function. Employers impacted by the potential changes will be need time to adjust their practices to adapt to a new employment law landscape, though certain portions of the legislation would necessitate almost immediate changes for public sector unions and their membership.

The Governor maintains that the bill offers the only hope of preventing significant pubic employee layoffs resulting from the state's growing financial instability. While Mr. Walker has provided a great deal of information intended to support his party's position on the proposed legislation, opponents and public sector union s have disputed the bill's necessity and have organized large-scale demonstrations at the capitol over the past few weeks. The Wisconsin Employment Relations Commission (WERC) estimates that upwards of 200,000 individuals represented by 2,000 collective bargaining units in Wisconsin could be affected.

Among the possible change for public employees (with the exception of some public safety personnel) are:

Limitations on collective bargaining, including a prohibition on bargaining over issues not under the umbrella of the Wisconsin Municipal Employment Relations Act would be enacted. Preliminary certification elections would occur in April 2011 to decide if bargaining unit members desire continued union representation, or else face decertification. Union contracts would be limited in duration, dues could no longer be required for union membership, and collection of dues through salary deduction would become illegal.

Covered employees would pay one-half of retirement contributions as prescribed by the Employee Trust Fund Board, and it would no longer be permissible for most public sector employers to make employee-required contributions on their behalf.

Employer categories affected by the legislation would no longer be permitted to pay greater than 88 percent of the average cost of group insurance plans falling into the cheapest employee premium tier.

The employers specified in the law would be permitted to fire public sector employees taking part in strikes, work stoppages or other organized protests, or those missing work without prior authorization for a period exceeding three days.

Because of the substantial potential changes embodied in the proposed legislation, public sector employers are well advised to monitor developments in the capitol as they continue to unfold.

Continue reading "Wisconsin's Budget Repair Legislation's Potential Impact on Collective Bargaining" »

The lawsuit filed by former teacher Sandra Brody against the Fort Worth Independent School District has been settled. The settlement was approved in January and the district will be required to pay $41,500.The teacher claimed administrators retaliated against her after concerns were reported about the school’s handling of P.E. classes. Brody worked as a teacher during the 2008-2009 school year at Clifford Davis Elementary School. She reported that the time allotted for physical education classes were being used to prep students for state math tests.

In the retaliation lawsuit, she claimed that students were not receiving state required physical activity. She felt an obligation to also notify parents of the activities. In Brody’s suit, she also alleged that her teaching contract was not renewed as a result of her report. Brody began her career with the district in 2006 when she worked as a teacher’s aide. In the summer of 2007, she became certified to teach. Brody said she became concerned during the 2008-2209 school year when she became aware that the students were not having recess and that physical education classes were being used to prepare for the Texas Assessment test. The Texas State law has a requirement of 30 minutes of moderate or vigorous physical activity each day. The law does not specify that the activity has to be in a formal P.E. class. According to the Texas Education Agency, the activity can be offered in a number of ways.

Brody also claimed that the central administrator, who has since retired, reinstated the physical education classes after the concerns were reported. According to Brody, when she continued to report her concerns, she started to receive threats of losing her job. During this time, she had been written up regarding concerns of her job performance. There is a stipulation in the settlement that neither party in the suit has admitted to any illegal activity. The school board will rescind Brody’s termination proposal and acknowledge her letter of resignation.

District officials disputed her claim that retaliation was an issue in the case and in the district as a whole. Clint Bond, district spokesman, has declined to comment on the specifics of the retaliation lawsuit. There are currently at least three pending lawsuits against the district where retaliation is claimed. Another suit was brought about by an employee who claims that she was terminated for making a report regarding payroll problems. The third school district lawsuit was filed by a former assistant principal, who claimed that district officials sought to fire him after he made a report regarding problems at Arlington Heights High.

Continue reading "School District Settles Retaliation Lawsuit Filed by Teacher" »

The Sarasota (Florida) County School District has reached a settlement over a lawsuit filed by a student alleging mistreatment. The district will pay $52,500 to settle the claim. The claim comes from a developmentally disabled student who states that she was mistreated by her teacher, Diana O'Neill, from Venice Elementary School. The teacher no longer works for the school.

The parents of the girl will drop the lawsuit against the district but still can file additional lawsuits against the teacher. All school board members and the district have agreed to settle the claim.

However, all is not in the clear for the school district since three other students have come forward alleging further abuse. They have sent letters of intent to sue to the district.

The current settled lawsuit states that the teacher pinched, poked, slapped and shoved the disabled student and called her a "fat ass" and a "waste of air." This occurred when the student did not respond to the teacher. The student is missing half of her brain, which was surgically removed as an infant. The student is unable to talk, see or walk. According to the lawsuit, the day the student was abused, she came home with bruises.

The student's attorney, states that the student was unable to communicate her abuse to the parents since she does not communicate. The parents state that they sent the child to school daily without any idea of the child's poor handling.

O'Neill did not comment on the settlement. The amount of the settlement was reached through mediated session.

The teacher was arrested in 2008 on charges that she abused the disabled students in her care. She was acquitted of those charges. She kept her job in the school district but does not work as a teacher, but rather works in the record's department. It is possible that she could lose her teaching certificate. A state administrative judge is scheduled to hear the case against O'Neill later this month, and will then make a recommendation about revoking her teaching certificate.

The Education Practices Commission will then vote whether to accept the judge's recommended order. If the commission revokes her teaching certificate, the district would be able to fire O'Neill since she would no longer be qualified for her $78,000/year job.

Continue reading "School District Pays $52,500 to Settle Student Mistreatment Claim" »

The National Labor Relations Board (NRLB) has filed a lawsuit against American Medical Response (AMR) of Connecticut claiming the company illegally fired an employee after the employee complained about AMR on the social media site Facebook. This may be the first case in which the board has come forward to argue for the worker, claiming that the remarks on the social networking site are protected activities. Employers, they claim, are violating law if they punish workers for such comments.

The alleged activity involves the firing of a medical technician on the grounds of violating company policy by depicting the company on Facebook.

According to NLRB acting general counsel Lafe Solomon, the employee has the right to talk about working conditions, including the supervisor, which is what occurred in this case. The law in question gives workers the right to discuss working conditions or unionization without fear of punishment by the employer. The board says that the company’s policy in regards to the Facebook page was “overly broad.”

In addition to this, the board also stated that other company policies may also be out of line, including those that stop employees from making disparaging or discriminatory comments when discussing the company, supervisors or the coworkers involved.

American Medical Response of Connecticut denies the allegations made by the labor board. It stated that the employee was discharged for multiple incidents and serious complaints. The employee, according to the company, was also fired due to repeated offenses against other employees.

The employee in question is Dawnmarie Souza. According to the allegations, the employee was required to prepare a response to a customer’s complaint about her work, and complained that the company did not allow the Teamster Union to do this for her. She then mocked the supervisor on Facebook.

Allegedly, she stated, “love how the company allows a 17 to become a supervisor” referring to a 17 as a term for a psychiatric patient. These comments drew support from coworkers on the site.

The hearing is to be held in January to determine the merits of the case. Finding the line of where employees are stepping over their protected rights is likely to be the foundation of the hearing and the ruling to come from it.

Continue reading "NLRB Faces Off With AMR of Connecticut Over Facebook Firing" »

In a lawsuit filed in Federal Court in 2008, City of Detroit employee Susan McBride complained she was "chemically sensitive" and suffered migraines, nausea and coughing caused by a co-worker’s perfume and room deodorizer. McBride also stated that it became difficult for her to breathe and do her job.

The city settled for $100,000. Detroit city employees in the three buildings where McBride works are being cautioned not to wear fragrant products, including colognes, aftershave, perfumes, and deodorants. Additionally, employees are no longer allowed to use candles and air fresheners.

The employee handbook and Americans with Disabilities Act training given to all city employees also will bear warnings.

Because this case did not go to trial, it sets no legal precedent. That is unlikely to deter others from filing similar lawsuits in the near future.

The lawsuit filed claims that McBride’s supervisor didn’t respond to her complaints. Had the supervisor taken action to resolve her complaints, such as communicating with the “scented” employee in search of a solution, all of this may have been avoided.

Let this be a warning to all employers. If/when an employee complains about any condition causing substantial interference with that employee’s ability to perform in the workplace, action must be taken promptly to resolve the complaint.

Continue reading "City Employee Settles for $100,000 in Scented Lawsuit" »

The New York State's highest court declined to hear the motion of television anchor Dan Rather, who has tried to unsuccessfully sue his former employer, CBS for $70 million. He alleges that the company was in breach of his contract and made accusations of fraud against the company. The state appellate court dismissed the case in September, but the Court of Appeals denied the motion without comment.

The ruling from the appellate court states that the pay or play clause in his contract allowed the network to take the actions they did. Further, the ruling stated that Rather failed to show support for his claims that CBS has hurt his future earning potential in the case.

Rather was with the company for 44 years. This motion was the final move the newsman could make in the case, which proved to be an expensive and ugly battle. Rather sued CBS first in 2007, when he stated that his treatment from the company in the aftermath of a controversial report issued about George W Bush's service in the Texas Air National Guard was released.

The lawsuit stems from a 60 Minutes II piece in which Rather reported that Bush received preferential treatment during his Vietnam era service in the National Guard. Rather states that there were documents obtained by CBS written by Bush's commanding officer at the time. However, the validity of the documents came under scrutiny and the network conceded that the documents could not be authenticated.

After he filed suit, some of his colleagues publically denounced him saying that he trying to deflect some of the blame for allowing the story, which had not been properly vetted, onto the news program. However, the lawsuit, claims Rather, is meant to take on political interests and business interests that he believes are affecting the news organizations.

Rather was quoted as saying the following in regards to the lawsuit and his claims, "I believed then and I believe now that its' important the public understand how much influence in collusion big government and big business can have in affecting how the news is handled." The remarks were made on Tuesday after his motion was declined.

CBS declined to comment on the ruling, stating that they will let Rather have the final word.
After the airing of the controversial piece, Rather says that he was pushed out of the anchor chair and then placed in the news division until he was prematurely released. He believes that the actions of the network damaged his reputation and made it difficult for the anchor to find work after that point.

In a ruling on Dec 29, former Deloitte partner, Thomas Flanagan, from Chicago, was found liable for violating the accounting firm's conflict of interest policies. These policies extend for stock and options trading of the firm's clients. Clients of the company include Motorola Corp, Allstate Corp and Walgreen Co. Flanagan who was a 30 year employee of the company, was also found to have concealed these trades from Deloitte.

A further hearing has been set to determine the extent of the penalty held against Flanagan, but reports indicate that the company is seeking monetary damages which may include Flanagan's retirement benefits. Flanagan has not made a statement regarding the case. He has said that some of his investments were allowed by the SEC, such as those in which he did not have specific interactions with client's or those clients that were not from the Chicago office where he was employed.

Flanagan, a senior partner and Vice Chairman for the company embarrassed the company and left the company vulnerable to a variety of liability exposures from clients. In addition, the company is now shaken because of the additional regulatory scrutiny about the independence of the auditor. Within the accounting industry, there are strict rules about trading simply because employees have so much access to the private information of their clients that they could affect the pricing of the client's securities. Numerous times during the trial, Flanagan invoked his Fifth Amendment rights.

Many of the company's clients have had to do their own investigation to determine the involvement of Flanagan with their individual accounts. Walgreens, USG Corp and Allstate have conducted investigation that have found that Flanagan did not have involvement with their specific audits.

The company, Deloitte, says that Flanagan made investments into the company's audit clients and others more than 300 times between the period of 2001 to 2008. In some of those transactions, evidence showed that Deloitte was trading on non public information which is illegal. As of yet, the US Securities and Exchange Commission has not brought charges in the case.

Flanagan's involvement in such transactions was detailed numerous times in the case. One instance poses Flanagan attending a meeting of Allstate's audit committee in which a draft of the company's second quarter earnings statement was circulated. The company planned to announce significant increases in full year earnings at that time. This occurred on July 17, 2006. The following day, Flanagan purchased call options in Allstate stock. He later sold them on July 20th, the day after Allstate's earnings went public and the price of the stock purchased rose considerably. The stock saw an 85 percent gain in those days.

Flanagan is also charged with concealing his holdings from the company. The company requires individuals to report investments they or their immediate families own. In numerous instances, Flanagan would record unauthorized holdings into the company's computer tracking but would go back later the same day to correct such entries indicating that he had disposed of holdings when in fact he had not.

According to reports, Deloitte did not know of Flanagan’s wrongdoing until August of 2008. At that time, the SEC contacted Deloitte in regards to an audit for Walgreens in 2007. Flanagan purchased stock in Option Care Inc a week before Walgreens announced that it would buy the company in July of 2007. Flanagan did serve as an advisory partner on that audit. Flanagan resigned from his position with Deloitte as soon as the company contacted him regarding the SEC inquiry.

Continue reading "Deloitte Wins Lawsuit...Former Partner Loses" »

A teacher from Dayton found not guilty of charges of having sex with a 16-year-old student is now suing the prosecutor who brought the charges. The teacher, Nicole Howell, and her attorney, Eric Deters, filed the claim in U.S. District Court against Rob Sanders, Kenton Commonwealth's attorney. Sanders released a statement saying that the lawsuit was baseless and without merit.

Sanders commented that he was simply another high profile person to be sued by Deters, a reference to the Deters suits against the New England Patriots and Chad Ochocinco. In addition, he commented on Deters radio career saying Deters was "a publicity seeking radio personality with a law license."

Under law, a prosecutor cannot be sued as they have immunity. However, Deters claims that the actions prior to the charges being filed are not included in that immunity. Although Sanders says that a judge determined there was probable cause to arrest Howell, Deters argues that "when a prosecutor violated the public trust, those destroyed in the wake of the abuse of power deserve their remedy."

In the state of Kentucky, only a judge can issue an arrest warrant. Kenton Circuit Judge Gregory Bartlett determined there was probable cause and sent the case on to the grand jury, where 12 members found that there was sufficient evidence to send the case on further, to the jury.

It took juries only 70 minutes to find Howell not guilty of first degree sexual abuse. Howell says she is suing the attorney because she doesn't want someone else to face the same level of wrongful prosecution. She claims her reputation and her teaching career are over due to the lawsuit.

The lawsuit claims that Howell's previous attorney, Patrick Moeves, was told by Sanders that he did not care about the privately administered polygraph test that Howell passed. He wanted her arrested. Assistant Commonwealth's Attorney Stephanie Kastner made statements to Moeves that she did not want any part of the case, however had to act as Sanders requested. Moreover, it claims that Sanders knew numerous facts that would dispute the minor’s claims. These facts include the polygraph test passage, the minor being unable to identify a tattoo on Howell's back, rumors about the incident at school, and that the minor denied the rumors first before going forward.

Sanders, however, says that the minor did describe the layout of Howells apartment and could describe details of that apartment.

Interestingly, Howell's case was the first prosecuted under a more-stringent state law that makes it a felony for a person in authority to have even consensual sexual relations with someone under 18. In all other instances in Kentucky, the age of consent is considered to be 16.

Two University of Phoenix enrollment counselors filed a lawsuit in 2003 alleging that their raises and prizes awarded to them where done based on the number of students they enrolled in the school. They filed a lawsuit against the school. The corporate executives in charge during this period of time are now at different schools, but the case is left unsettled, as of yet.

It is possible that the University of Phoenix parent, Apollo Group Inc, will seek a settlement in the case, before the case is set to be heard in a court of law in March of 2010. The company has not disclosed any terms of a settlement, but some experts believe it could be as high as $250 million, which equates to 25 times the record fine the school had to pay the U.S. Department of Education in 2004, on similar charges.

The school will likely seek out a settlement in the hope of avoiding a very public trial and to dismiss any allegations that similar practices are still occurring. The school is known for its aggressive recruiting tactics. In a time where the American consumer is unwilling to forgive big business corruption, the school would be foolish, some say, to go to trial.

The University of Phoenix is an incredibly sized school. Since it became a for profit school in 1976, it has been an ideal share to own on the stock market. In addition, it has over 420,000 students and its annual revenue is now near $4 billion. It is the largest recipient for federal financial aid to the tune of $3.2 billion in one school year alone.

The case came to head in 2003, when two enrollment counselors filed a lawsuit, on behalf of the federal government, charging that the school defrauded the government by paying recruiters salaries based on the number of students enrolled. Federal law bans schools from offering this type of incentive.

The school itself fought the charges and claimed that the two employees were disgruntled former employees trying to make something small into something big. A judge ruled in 2004 to dismiss the case, but it was restated two years later on appeal. The case is similar to one filed by the U.S. Department of Education in 2004. At that time, the school was fined $9.8 million based on their recruitment practices. In that case, the University of Phoenix did not admit any wrong doing.

Continue reading "University of Phoenix Case Settlement May Be Near" »

On August 31, 2009 in New York, New York, it was reported that a former attorney for Toyota was suing the company for their involvement and for their supposed hiding and destruction of implicating documents. The primary item that is being discussed are the results that one fond from roll over tests and the damage that could truly be incurred.

The suit has been filed by a Mr. Biller who worked for Toyota from 2003-2007. He claims that not only did he see the items that he is claiming that the company withheld, but in some cases went so far as to destroy the items and to go and have them not included in findings that would negatively impact the company.

The problem with a lawsuit such as his is the fact that it creates a sense of doubt no matter what may have really occurred. If this is the case, then there is the possibility of old cases that had been dismissed or found to not have any merit, to possibly be reopened. This is because there were so many people who were injured in rollover accidents involving Toyota vehicles.

If any of the accusations that have been made by Mr. Biller are true, you will see a large influx of items and cases pertaining to the roll over accidents. There are accusations that the company was even withholding information in regards to results as well as how quickly corrective action could be taken from the auto manufacturer.

One thing that some may take into consideration is the fact that Mr. Biller ended up quitting his job at Toyota claiming he was suffering from psychiatric problems while he was at the job. In 2008 he went to work for the District Attorney in San Francisco where he was let go after several months. He received a negative mark upon his release from the office.

No matter which group has the bigger issues in all respects, someone is going to end up not looking good at all, and a shadow of doubt has been cast on the Toyota Company no matter how the court finds in the case.

Continue reading "Toyota Accused of Concealing Evidence in Rollover Lawsuits" »

The Ninth Circuit Court of Appeals rendered an opinion clarifying what a plaintiff must show to establish a whistleblower claim under the Sarbanes Oxley Act (SOX). In the opinion (HERE) by Judge Jay S. Bybee the Court found that plaintiffs did not have to "prove the existence of fraud before suggesting the need for an investigation." They only had to demonstrate they believed fraud had occurred to prompt the employer’s obligation to investigate.

This complicated story involves married intellectual property attorneys Shawn and Lena Van Asdale working for International Game Technology (IGT) as associate general counsel. One or both of them discovered documents which lead them to believe that an investigation into a patent held by Anchor Gaming should be started. Anchor was a former competitor of IGT before the 2 companies merged.

The slot machine patent in question was a major asset of Anchor and if not valid, could have fraudulently overvalued Anchor before the merger.

Shawn expressed concern to his bosses that an older Bally machine may have a valid patent which had not been disclosed before the merger. His belief was that IGT had been intentionally misled about Anchor's value. The Van Asdales both raised the issue again with IGT's general counsel (Anchor's former top lawyer), stating they believed the nondisclosure of the Bally machine was suspicious and there was a potential of fraud.

The Van Asdales were terminated within a short time following those meetings.

The couple sued, asserting a whistleblower claim under the SOX, contending they were terminated for reporting potential shareholder fraud in connection with the IGT / Anchor merger. The Nevada-based federal trial court sided with the employer and granted its summary judgment motion, finding the Van Asdales had not shown they had discussed the suspected fraud specifically enough with IGT before they were terminated.

The Ninth Circuit Court of Appeals disagreed and reversed, vacated and remanded the trial court’s decision. While this decision may clarify what a plaintiff must do to establish a whistleblower claim, it may expand the use of privileged information by in house counsel, which was previously constrained under “attorney/client privilege”.

Continue reading "New Standard for Whistleblower Claims Determined by Ninth Circuit Court of Appeals" »

In a disturbing case, Terry Williams, a 17 year veteran flight attendant for American Airlines, is alleging that the plane's flaws lead to her exposure to toxic exposure to chemicals that lead to her ailments. Since December of 2008, she has had a constant migraine. In addition, she is facing balance and vision problems, the inability to remember childhood memories, tremors in her arm, and a prickly sensation in her feet.

The event in question happened on April 11. 2007 when she says she was on Flight 843. As the plane taxied into place in Dallas, Texas, she claims she saw a misty type of haze come into the cabin. The "fume event" as it is being termed, is what she blames for her illnesses. She states that as she was leaving the plane she felt as if she had a cold coming on and experienced a neon green discharge from her nose.

Williams has filed a product liability lawsuit against Boeing and McDonnell Douglas, the aircraft manufacturers. The claim she has is that there was a lack of filters and sensors to protect her from such an incident.

In particular, the concern is the chemical tricresyl phosphate. This is a chemical that is used in nerve agents and pesticides. There is a lot of dispute over how often these types of events occur, though they are said to happen. The National Research Council reported in 2002 that four out of 1000 flights have such a fume event. This data was collected from three Canadian airlines. The FAA does not dismiss the potential of fume events happening and has promised to look into the events. At the same time, the FAA reports that the symptoms are also found in other neurological conditions. They are working to determine the amount of exposure to chemicals in aircraft.

New technologies in plane design, such as those found in the Boeing 787 Dreamliner no longer use the same methods to cooling the engine, which is being blamed for the event. The FAA Reauthorization Act of 2009 which has passed the House and is now in the Senate calls for research and the development of filters and sensors for removing oil based containments from the bleed air, the problem that could have lead to Williams' condition.

The Clark County School District in Las Vegas, is now facing a lawsuit in which they are charged with failing to protect a parent from a teacher, one of the school district's employees.

The teacher in question, Ken McFate, has been found to have an extensive history of harassing women and stalking. The claim filed against the school district claims that the school district knew of the problems with McFate but did nothing about it.

In a court of law, attorney Dan O'Brien, Clark County School District Assistant General Counsel, made the statement, "This is a case about a parent who decided to have an affair with a teacher and then it didn't go well." According to Las Vegas Now, he continued with, "She now wants the district to give dating advice to married parents." The statement was seen as surprising.

The judge in the case, Judge Kathleen Delaney, stated that the comment was disturbing and then denied the school board's motion to have the case dismissed.

What Actually Happened?

The lawsuit stems from an incident involving McFate and Andreana Leonard, who was a classroom volunteer at Bilbray Elementary School. During her time working there, she developed a relationship with the teacher. When a fall out between the two occurred, Leonard states she was forced to get a restraining order to keep McFate away from her. In doing so, she learned she was not the first person to do so.

According to records, there have been several people to file restraining orders against McFate, and many of the occurrences happened at the school. Leonard's attorney, Richard Segerbloom made a statement stating that what is truly disturbing is that the school knew about the charges and problems, allegedly, and did nothing about it, nor does the school have a policy on how to deal with such incidents.

Leonard is seeking monetary damages and the requirement of policies to be put in place to protect individuals in circumstances like this. McFate retired in 2008.

A lawsuit which seeks class action status was filed against Costco Wholesale Inc. claiming violations of California wage and hour laws. Mary Pytelewski, a full time employee at a San Diego area Costco store for over 10 years filed the suit.

Pytelewski alleges that Costco company policy requires employees to clock out and then remain locked in the store for 15 minutes while managers close the store each night. In addition to wage and hour violations, her attorneys state that Costco’s practice of locking the employees inside the store after they clock out is the equivalent of false imprisonment. The lawsuit seeks $50 million in damages.

When Pytelewski complained about the practice she was "rebuffed and ridiculed at every turn." Then she was given a negative evaluation, and a supervisor was assigned to her cash register at closing time to watch her.

Her attorney David Sanford stated "Costco makes the false claim that locking these employees inside its warehouses until store managers and supervisors complete their closing routines is necessary for store security."

By my calculations, IF Ms. Pytelewski was a full time employee who was prevented from leaving 15 minutes a day, 5 days per week, 50 weeks per year for 10 years that would equal 37,500 minutes. That is 625 hours, or the equivalent of over 78 eight hour workdays without hourly or overtime pay.

If the allegations are true, I wonder how many other Costco employees will join the lawsuit, in California as well as other states.

Recently the U.S. Equal Employment Opportunity Commission released a comprehensive document designed to reduce confusion related to the performance and conduct of employees protected by the Americans with Disabilities Act.

Employers will be pleased to see that this document clearly answers many ADA related performance and conduct questions. The document includes 30 questions with answers using 48 examples of actual cases, documented by 90 footnotes.

For your convenience, you will find the Table of Contents below, including direct links to each section. You will find the entire document HERE. As always, if you have questions related to employment lawsuits, feel free to contact me.

TABLE OF CONTENTS

I. Introduction

II. Basic Legal Requirements

III. Application of ADA Legal Requirements to Performance and Conduct Standards

A. Performance standards

B. Conduct standards

C. Questions pertaining to both performance and conduct issues

D. Seeking medical information when there are performance or conduct problems

E. Attendance issues

F. Dress codes

G. Alcoholism and illegal use of drugs

H. Confidentiality issues arising from granting reasonable accommodation....

I. Legal enforcement

In case you missed the latest EEOC religious discrimination guidelines, you can read about them HERE.

In 2000 Elizabeth Raymond was hired as an executive assistant by Larry Flynt Publications Inc. (L.F.P.). Raymond signed an agreement to the terms of her employment as outlined in the L.F.P. employee handbook. That handbook contained a provision in which Raymond agreed that any dispute for sexual discrimination or harassment would be submitted for arbitration.

When Raymond was fired in 2002, she filed suit alleging sexual harassment in violation of the Fair Employment and Housing Act. L.F.P. filed a motion to compel arbitration, which was granted.

The arbitrator found L.F.P. liable for creating/maintaining a hostile work environment and awarded Raymond $175,000 in compensatory damages and punitive damages of $500,000 against Larry Flynt and $250,000 against L.F.P.

The arbitration agreement signed by Raymond also contained the following judicial review clause: “Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award. The court shall review the arbitration award, including the ruling and findings of fact, and shall determine whether they are supported by competent evidence and by a proper application of law to the facts. If the court finds that the award is properly supported by the facts and law, then it shall enter judgment on the award; if the court finds that the award is not supported by the facts or the law, then the court may enter a different judgment (if such is compelled by the uncontradicted evidence) or may direct the parties to return to arbitration for further proceedings consistent with the order of the court.”

Los Angeles Superior Court Judge Kenneth R. Freeman’s found the “Judicial Review” clause unenforceable and upheld the $925,000 award in favor of Elizabeth Raymond. Larry Flynt and L.F.P appealed.

The Court of Appeal ruled yesterday in favor of Judicial Review, reversed Judge Freeman’s ruling and remanded the case for consideration of the Flynt defendants’ legal challenges to the award.

The Court of Appeal’s opinion may be found HERE.

Continue reading "Court of Appeal Reverses Discrimination Award Against Larry Flynt Publications" »

In Varisco v.Gateway Science and Engineering, the California Court of Appeals upheld a Los Angeles Superior Court ruling which determined that Al Varisco was in fact an "Independent Contractor", not an employee of Gateway. Plaintiff Varisco alleged that the “at will” clause in his contract with Gateway established employee status.

From the opinion, which can be found HERE:

"Appellant Al Varisco sued respondent Gateway Science and Engineering for wrongful termination of employment and similar causes of action, all of which depended on the allegation that he had been Gateway's employee. Gateway moved for summary judgment on the ground that Varisco was not an employee, but an independent contractor. The trial court found for Gateway, and we affirm. All the undisputed facts add up to an independent contractor relationship. A single clause in the parties' letter
agreement which allowed either party to terminate at will did not transform that relationship into an employment relationship."

The Court of Appeals reviewed the following to before affirming Varisco’s status as an “Independent Contractor”.

Control is the principal factor in determining whether an individual worker is an employee or an independent contractor. "An independent contractor is 'one who renders service in the course of an independent employment or occupation, following his employer's desires only in the results of the work, and not the means whereby it is to be accomplished.' Thus, the most significant question in the independent contractor/employee determination is "'whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.

Case law has identified secondary indicia of the nature of the relationship. These are:

(a) whether the one performing services is engaged in a distinct occupation or
business;

(b) the kind of occupation, with reference to whether, in the locality, the work is
usually done under the direction of the principal or by a specialist without supervision;

(c) the skill required in the particular occupation;

(d) whether the principal or the worker
supplies the instrumentalities, tools, and the place of work for the person doing the work;

(e) the length of time for which the services are to be performed;

(f) the method of payment, whether by the time or by the job;

(g) whether or not the work is a part of the regular business of the principal;

(h) whether or not the parties believe they are creating the relationship of employer-employee."

Related Citations may be found in the opinion document. If you have questions related to employment law problems, feel free to contact Sylvester, Oppenheim & Linde.

Please Note: While the above information can be beneficial for the purpose of employment law, the IRS definition of Independent Contractor status remains to be a question best answered by a Certified Public Account (CPA) or Tax Law professional.

After being terminated by Sun Constructors (Sun) in 2006, Juan Morales filed a wrongful termination lawsuit. Sun claimed that Morales was bound by an arbitration clause in the employment agreement signed upon his employment. Morales claimed that since the agreement was in English, he did not understand its terms when he signed it, thus he could not be bound by it since he does not speak or understand English. The District Court agreed with Morales. Sun appealed.

According to the opinion written by Judge Michael A. Chagares of the US Court of Appeals Third Circuit, when Morales was hired in 2004 he passed a written exam in English and attended a 2 ½ hour orientation which explained the employment agreement. Sun provided a bilingual employee to translate for Morales during the orientation. The bilingual employee testified that he did not specifically explain the arbitration clause to Morales.

Judge Chagares ruled in favor of Sun, and remanded the case back to District Court with instructions to enter a stay pending arbitration. In his opinion, Judge Chagares cited an 1875 US Supreme Court decision, Upton v. Tribilcock that said: "It will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained."

Judge Chagares continued “Morales, in essence, requests that this Court create an exception to the objective theory of contract formation where a party is ignorant of the language in which a contract is written. We decline to do so. In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable.”

On August 7, 2008, the California Supreme Court unanimously ruled in Edwards v. Arthur Andersen that the state legislature effectively restricted the ability of employers to prevent employees from working for competitors.

The Opinion States: “We conclude that Andersen’s noncompetition agreement was invalid. As the Court of Appeal observed, “The first challenged clause prohibited Edwards, for an 18-month period, from performing professional services of the type he had provided while at Andersen, for any client on whose account he had worked during 18 months prior to his termination. The second challenged clause prohibited Edwards, for a year after termination, from ‘soliciting,’ defined by the agreement as providing professional services to any client of Andersen’s Los Angeles office.” The agreement restricted Edwards from performing work for Andersen’s Los Angeles clients and therefore restricted his ability to practice his accounting profession.”

With a few exemptions primarily related to the sale of a business, the court essentially voided all California non-competition agreements.

California Business and Professions Code Section 16600 states:

Except as provided in this chapter, every contract by which
anyone is restrained from engaging in a lawful profession, trade, or
business of any kind is to that extent void.

Still in effect are the protections for the employer in the Uniform Trade Secrets Act which prevent employees from “stealing” the employer’s client list.

This case also takes on issues related to “employee release” agreements often signed upon termination of employment.

The Supreme Court held that employee release agreements in which the employee releases the employer from “any and all” claims do not waive statutory protections provided to the employee in Labor Code Section 2802.

Continue reading "California Supreme Court Rejects Validity of Most Non-Competition Agreements" »

David McNary suffers from Diabetes and Graves’ Disease. He worked for Schreiber Foods as a sanitation employee on its dairy equipment. His co-workers knew of these conditions and would occasionally pitch in to help when he needed it. He was free from any work restrictions related to his health.

In September 2005, while cleaning trash compactors, McNary felt dizzy and light headed. He left the compactor area, put his feet up on a table and closed his eyes.

Two supervisors found him with his head back, his mouth open, and his eyes shut. McNary explained his medical conditions and denied he was sleeping. The Company subsequently terminated him for sleeping on the job.

In January, 2006 McNary filed a complaint against Schreiber alleging a violation of the Americans with Disabilities Act (ADA). McNary claimed discrimination based on his physical condition. He also claimed to have informed management and co-workers about his conditions and need to take brief breaks to relieve eye pain and dizziness.

Following discovery, The District Court found that Schreiber provided a legitimate nondiscriminatory reason for McNary’s termination; sleeping on the job in violation of company policy and granted Schreiber’s motion for Summary Judgment.

McNary appealed.

The United States Court of Appeals for the Eighth Circuit stated “We review de novo the district court's grant of summary judgment to [Schreiber]. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.”

Notably, the Court of Appeals added,

"[F]ederal courts do not sit as a super-personnel department that reexamines an entity's business decisions." One reason we emphasize this point is that a number of plaintiffs present a sympathetic situation in which the employer's judgment in imposing discipline may appear poor or erroneous to outsiders. It is tempting to think that the role of the federal courts is to offer a remedy in that sort of case. Whether we might believe that [Schreiber] was unduly harsh in its treatment of [McNary], however, is not a matter to be considered in deciding this appeal. Our authority is to determine only whether there is a genuine issue for trial on the question whether [Schreiber] discharged [McNary] because of his [disability].

It could be inferred from that statement that McNary might have seen a better result if he had claimed that Schreiber failed to provide reasonable accommodation for his disability. But, he sued for wrongful termination and lost in District Court and on appeal.

McNary v. Schreiber Foods, Inc. (8th Cir. 8/1/08)

The EEOC reports that discrimination claims, including those based on religion, are on the rise. New guidelines for religious discrimination went into effect July 22, 2008. The following information is directly from the new Section 12 of the EEOC compliance manual.

The entire “Directives Transmittal” is available HERE. The transmittal also contains 14 examples of what constitutes discrimination and what does not. Reading through it would be a great refresher for employers and HR staff.

Directives Transmittal Dated 7/22/08

SUBJECT: EEOC COMPLIANCE MANUAL

PURPOSE: This transmittal covers the issuance of Section 12 of the new Compliance Manual on “Religious Discrimination”. The section provides guidance and instructions for investigating and analyzing charges alleging discrimination based on religion.

EFFECTIVE DATE: Upon receipt

DISTRIBUTION: EEOC Compliance Manual holders

OBSOLETE DATA: This Section of the Compliance Manual replaces Section 628: Religious Accommodation, EEOC Compliance Manual, Volume II and its Appendices: Appendix A, Policy Statement on Ansonia Board of Education v. Philbrook and Religious Accommodation; Appendix B, Policy Guidance On ‘New Age’ Training Programs Which Conflict With Employees’ Religious Beliefs; and Appendix C, Religious Objections to Unionism. It also replaces the following policy documents: Religious Organizations that Pay Women Less than Men in Accordance with Religious Beliefs; Religious Organization Exemption Under Title VII of the Civil Rights Act of 1964, as amended; and Policy Statement on Goldman v. Weinberger (Accommodation of the Wearing of Religious Dress).

The Commission’s Guidelines on Discrimination Because of Religion, 29 C.F.R. Part 1605, remain in effect.

This Section of the Compliance Manual is designed to be a practical resource for employers, employees, practitioners, and EEOC enforcement staff on Title VII’s prohibition against religious discrimination. The Section defines religious discrimination, discusses typical scenarios in which religious discrimination may arise, and provides guidance to employers on how to balance the needs of individuals in a diverse religious climate.[10] The Section is organized by legal topic, as follows:

I - Coverage issues, including the definition of “religion” and “sincerely held,” the religious organization exception, and the ministerial exception.
II - Disparate treatment analysis of employment decisions based on religion, including recruitment, hiring, promotion, discipline, and compensation, as well as differential treatment with respect to religious expression; customer preference; security requirements; and bona fide occupational qualifications.
III - Harassment analysis, including religious belief or practice as a condition of employment or advancement, hostile work environment, and employer liability issues.
IV - Reasonable accommodation analysis, including notice of the conflict between religion and work, scope of the accommodation requirement and undue hardship defense, and common methods of accommodation.
V - Related forms of discrimination, including discrimination based on national origin, race, or color, as well as retaliation.

Continue reading "With Claims Rising EEOC Releases New Religious Discrimination Guidelines" »

Today the U.S. Supreme Court made it more difficult for employers to defend lawsuits based on the Age Discrimination Employment Act (ADEA). In Meacham v. Knolls Atomic Power Laboratory, the Supreme Court ruled that the burden of proving that any termination having a disparate impact on older workers was based on reasonable factors, falls on employers.

From page one of the opinion:

When the National Government ordered its contractor, respondent Knolls, to reduce its work force, Knolls had its managers score their subordinates on “performance,” “flexibility,” and “critical skills”; these scores, along with points for years of service, were used to determine
who was laid off. Of the 31 employees let go, 30 were at least 40 years old. Petitioners (Meacham, for short) were among those laid off, and they filed this suit asserting, inter alia, a disparate-impact claim under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U. S. C. §621 et seq. To show such an impact, Meacham relied on a statistical expert’s testimony that results so skewed according to age could rarely occur by chance; and that the scores for “flexibility” and “criticality,” over which managers had the most discretionary judgment, had the firmest statistical ties to the outcomes. The jury found for Meacham on the disparate-impact claim, and the Second Circuit initially affirmed. This Court vacated the judgment
and remanded in light of its intervening decision in Smith v. City of Jackson, 544 U. S. 228. The Second Circuit then held for Knolls, finding its prior ruling untenable because it had applied a “business necessity” standard rather than a “reasonableness” test in assessing the employer’s reliance on factors other than age in the layoff decisions, and because Meacham had not carried the burden of persuasion as to the reasonableness of Knolls’s non-age factors.

Continue reading "U.S. Supreme Court Intensifies Burden on Employers Defending Age Discrimination Lawsuits" »

Earlier this month the California Supreme Court ruled on 2 issues related to the California Family Rights Act (CFRA) and the Family Medical Leave Act (FMLA) regarding the termination of hospital employee Antonina Lonicki.

Lonicki claimed she was suffering major depression and work related stress. On advice of her physician she requested medical leave and stopped coming to work. Lonicki’s request for medical leave was denied, but she was told she could take paid time off.
She was also told to return to work by a certain date or face termination.

Lonicki sought the opinion of a psychiatrist who documented her depression and recommended another 30 day medical leave. Her employer Sutter Health Central terminated her. She sued her former employer for violating the CFRA by firing her and by failing to follow CFRA procedures when questioning the validity of her sick leave.

Defendant (Sutter Health) moved for Summary Judgment. Sutter’s argument was that plaintiff was not entitled to medical leave under the CFRA because, in the period for which she sought medical leave, she had a part-time job at a different hospital (Kaiser) where her tasks were substantially similar to those she was hired to perform at defendant’s hospital in Roseville. Sutter further asserted that Lonicki’s part time job showed that she did not have a “serious health condition” as required for medical leave under CFRA and FMLA.

The Trial Court granted the Motion for Summary Judgment and upheld the termination. Lonicki appealed and the California Court of Appeal also upheld the termination and Summary Judgment. Lonicki appealed to the California Supreme Court.

The Supreme Court refused to hold that working in a comparable job was "conclusive" evidence no serious health condition justified leave. This Supreme Court opinion paves the way for a trial in which Lonicki’s termination and rights under FMLA and CFRA will be determined.

In 2003 twelve San Francisco Police Officers sued the Police Department alleging that black officers were being favored for promotions to lieutenant. While the city admitted no wrongdoing, a settlement was reached 2 years ago. The settlement was delayed by the City’s approval process and decisions about how to split the proceeds among the plaintiffs.

From 1999 to 2003 thirty-nine lieutenant promotions were made after testing. The suit claimed that 5 black officers were promoted to lieutenant while better qualified officers had been passed over.

Lawyers for the plaintiffs - nine white officers, two Latinos and an Asian American – claimed that such results were statistically impossible without preferential treatment.

San Francisco Police officials have said that race was not a factor in the questioned promotions, all of which were made under acting Chief Alex Fagan who is no longer with the department.

After attorneys fees, one officer will receive $200,000, eight will receive $100,000 each and three will receive $50,000 each.

Alexis Thompson, spokeswoman for City Attorney Dennis Herrera said “This settlement puts to rest old challenges to a series of old promotions under an old administration."

This case in not unique. In Jacksonville Florida four lieutenants in the Fire Department claimed their promotions to Captain were blocked by Fire Chief Ray Alfred. A jury sided with the firefighters and awarded $220,000.

Last year, New Orleans District Attorney Eddie Jordan resigned after a judge found his office liable for $3.7 Million in a reverse discrimination lawsuit. Jordan was accused of firing 35 white employees and hiring black employees to replace them.

Continue reading "San Francisco Police Department Reverse Discrimination Lawsuit Settled for $1.6 Million" »

Before Gary Ross was hired by Raging Wire Telecommunications Inc., he was honest about his off the job use of marijuana for medicinal purposes. He even provided Raging Wire a copy of his doctor’s note. Days after he started, Raging Wire fired him, citing his off site drug use.

Since the Compassionate Use Act of 1996 was passed, California employers have been confused about how the act applied to employment laws. In a 5 to 2 decision, the California Supreme Court finally provides clarity.

The Court concluded that the Compassionate Use Act gives gives medical marijuana users a defense against criminal prosecution in state court -- but provides no additional rights under employment law.

After affirming that marijuana remains an illegal drug under federal law, majority author Justice Kathryn Mickle Werdegar wrote that the California Fair Employment and Housing Act "does not require employers to accommodate the use of illegal drugs”.

Justices Carlos Moreno and Joyce Kennard issued a joint opinion that concurred on some points but mostly dissented.

The bottom line is that this opinion by the California Supreme Court was very pro business and provided long overdue clarity for California employers. Here is Raging Wire’s Press Release about the decision.

Continue reading "California Supreme Court Gives OK to Fire Medical Marijuana Users" »

American Apparel CEO Dov Charney is accused of taking meetings in his underwear, verbally disparaging women and generally creating a hostile work environment according to the lawsuit plaintiff Mary Nelson. Based on this msnbc story, calling Charney a colorful character would be an understatement. Photo of Charney is courtesy of American Apparel.

Charney contends that he has built a workplace where freedom and creativity are critical to the success of American Apparel. He admits to running around his office in underwear while designing a new line, and even to being his own underwear model.

But Mary Nelson’s lawsuit is not his first. Which brings me to the topic of this post.

Sexual harassment is wrong, and it is clearly against the law. If your company has had one harassment lawsuit, that is one too many. Every employment lawsuit filed against a company makes it easier for any employee to file the next one, and the next one and the one after that.

Every problem related to harassment, discrimination, hostile work environment, etc. needs to be addressed and resolved promptly. Next, steps must be taken to insure that the problem never happens again to any employee.

Lawsuits will happen to every employer. Maybe you don’t take meetings in your underwear but if your company is doing anything else which might be inviting lawsuits, today would be a good day to make some changes.

In November 2002 Zachary Casella was hired by Southwest Dealer Services, Inc. On April 3, 2003 Casella’s employment was terminated. Casella had been a representative for Southwest Dealer Services, a company which provides aftermarket products for car dealers. Casella claims he had been required to track dealer practices which he felt were illegal and/or unethical. After he complained to Eric Hamann, President of Southwest Dealer Services, he was fired.

Casella sued Southwest Dealer Services for wrongful termination. A jury returned a special verdict in favor of Casella on each of his claims against defendants, and awarded Casella a total of $480,003, including punitive damages.

Southwest Dealer Services appealed. Their basis for appeal? Southwest Dealer Services claimed that the practice of “payment packing” (described in detail in the decision) was not illegal when they terminated Casella’s employment.

The Court of Appeal disagreed.

The decision names numerous automobile dealerships and dealer groups in Southern California, but specifically alleges “Payment Packing “ at only one; Spreen Honda. Is it a good business decision to expose your client’s questionable business practices to the public in a lawsuit just to defend a wrongful termination lawsuit? When you lose, do you want to further expose your client during an appeal? Do you suppose Spreen Honda or any or the other dealers mentioned are still clients of Southwest Dealer Services?

This is a great example of the type of thinking that creates business litigation cases. Winning lawsuits are based on good business decisions and successful legal strategies.

The Walt Disney Co., the world's largest theme-park operator, has been sued by three people who allege that the company's ban on Segway personal transporters at its theme parks is in violation of federal disability laws.

No one seems to be claiming that they were denied access to Walt Disney World or any other Disney Theme Park. The allegations seem to be that they (disabled guests who can stand but not walk long distances) could not use their Segways.

While not commenting on the lawsuit, Disney Spokesperson Jacquee Polak stated "Our primary concern is the safety of all our guests and our cast members. We have a long history of being a leader in creating accessible experiences for our guests with disabilities."

Depending on model and equipment, most Segways weigh between 110 and 120 pounds. Add the weight of a small rider at 140 pounds and you have a total weight of 250 pounds and above.

Imagine the injuries to Disney guests if a Segway traveling at a speed 10 to 12 mph accidently hit one or more guests.

Disney welcomes the use of manual and electric wheelchairs and 4 wheel power chairs by disabled guests. Disney even has them available for rental.

With the utmost respect for all people with disabilities, I agree with Disney on this issue. The safety of Disney guests is more important than the wishes of a few who want to see Disneyland on a Segway. Wheelchairs and powerchairs are far more safe in crowded venues.

If you have ever wondered why so many employees at your bank carry the title of Vice President, the decision in Ramanathan v. Bank of America could shed some light. The California Court of Appeals reversed a trial court decision, which will allow Padmanabhan Ramanathan to move forward with his wrongful termination suit against Bank of America.

The banks position was that the National Banking Act Sec. 24(Fifth) of the bank act bestows the power “[t]o elect or appoint directors, and by its board of directors to appoint a president, vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places.”

The most entertaining part of the decision was found in the footnotes…… At oral argument, the Bank’s counsel argued that if the Bank chose to designate all of its employees, “including janitors, maintenance workers, everyone” as “vice presidents,” then they too would all be covered by the provisions of the NBA. The judge labeled this a “startling assertion”.

In spite of such a sound “legal” argument, Superior Court Judge Jeffrey W. Horner, writing on assignment for the Court of Appeal gave more weight to Ramanathan’s declaration that he had no employees working under his supervision, had no control over anyone else’s employment, was primarily involved in the design and development of software applications, and had nothing to do with banking operations or customer service.

Continue reading "Court of Appeals to Bank of America: When is a Vice President not a Vice President?" »

We regularly receive requests to explain the process of litigation, which we always communicate (using dialog NOT monologue) to prospective clients during our initial consultation. We hope you will find our lawsuit synopsis helpful. Feel free to forward it to others and remember to contact us with any questions about any business or employment lawsuit.

The litigation process generally involves four (4) phases. The length of each phase varies with the legal and factual complexities of each case.

The initial phase takes place before anything is filed in court. The attorney meets with the client to determine the facts of the claim being advanced by the client or the client's defense to a claim brought by another. In either case, it is essential that the client meet with the attorney at the earliest opportunity as valuable rights may be lost by delay. Once the attorney meets with the client, the attorney will review any documents relevant to the matter, research the applicable law and possibly speak to witnesses in order to chart a course which is in the best interest of the client.

The next phase involves the filing of an initial pleading in court. Typically, this is the filing of a Complaint or an Answer to a Complaint. The discovery process begins, which may include serving the other side with written questions, called Interrogatories, obtaining evidence which may be in the possession of the adversary or some other party and taking depositions, the oral questioning of parties and witnesses.

Once this phase has been completed, the case is ready to be tried. A trial may be in front of a Jury or a Judge and can vary in length depending upon the number of witnesses and quantity of exhibits offered. Under our system of jurisprudence, the plaintiff has the burden of proof. The plaintiff's case goes first. The defendant then has an opportunity to respond to the plaintiff's case with witnesses and evidence to support the defense. If the defendant has brought a Cross-Complaint, it is tried in the same manner. Otherwise, the plaintiff has an opportunity to put on a rebuttal case to counter the evidence offered by the defendant and, on occasion, a defendant may offer a sur-rebuttal to reply to the evidence offered by plaintiff in the rebuttal case.

The final phase of litigation involves the post-trial matters including motions to vacate or correct the judgment, appeals and efforts to collect on the judgment.

In Madden vs. Del Taco, Patrick Madden claimed he fell from his wheelchair and was injured when he attempted to pass a concrete trash barrel on a ramp leading to an entrance to a Del Taco restaurant. The obstruction had forced him to navigate his wheelchair to enter the restaurant. Unfortunately, the walkway was too narrow with the addition of the trash barrel and Plaintiff’s wheelchair went off the curb. Madden fell over and out of the chair, injuring himself as a result. Del Taco moved for summary judgment and, in so doing, claimed that the trash barrel was merely a temporary obstruction which was moved to a wider portion of the ramp immediately following the incident. In addition, the store had another entrance which presented no obstructions. Based upon this showing, the trial court granted summary judgment in favor of Del Taco.

The Court of Appeal reversed. It found the presence of the trash container to be a prima facie violation of the Americans with Disabilities Act (ADA) which provides that no individual may be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation. Such a violation was also a violation of the Unruh Act (Civil Code § 54) which guarantees individuals with disabilities to have the same right as the general public to the full and free use of public places.

The Court of Appeal observed the requirements of ADA extend beyond the initial construction or alterations of existing structures. Indeed, it imposes a duty to remove any barrier to access, where removal is readily achievable. The ADA does not make any distinction between temporary or permanent obstructions to access hence, the placement of a concrete trash barrel, even if temporary, is a prima facie violation of ADA and the Unruh Act where a disabled person is hindered in his or her access to the premises.

Continue reading "As Del Taco and Other Public Establishments Have Learned Obstructions, Even Temporary Ones May Give Rise to ADA and Unruh Act Liabliity" »

The U.S. Equal Employment Opportunity Commission (EEOC) today announced the settlement of a discrimination lawsuit against GLC Restaurants, Inc. (GLC) for $550,000 and substantial remedial relief on behalf of a class of teenage workers who were sexually harassed by a middle-aged male supervisor, including unwanted touching and lewd comments.

Flagstaff based GLC is a franchisee doing business as McDonald’s Restaurants in California and Arizona.

The EEOC maintained in the suit that the male supervisor in question was a repeat offender who subjected eight young women, who were part-time crew members, to a sexually hostile workplace at the McDonald’s run by GLC in Cordes Junction, Ariz. Previously, the same male manager allegedly harassed teen female employees at a GLC-owned McDonald’s Restaurant in Camp Verde, Ariz. The EEOC said that GLC knew of this manager’s earlier conduct but failed to take appropriate action to prevent him from repeating the unlawful behavior at another of its restaurants. The EEOC also alleged that the working conditions for one teenager in Cordes Junction were so intolerable that she was forced to resign.

In addition to paying $550,000 to the eight young women, the EEOC settlement by consent decree requires GLC to provide training and other relief aimed at educating its employees about sexual harassment and their rights under Title VII of the Civil Rights Act. Under additional terms of the settlement, Prescott attorney Milton W. Hathaway, Jr, the private lawyer for four of the young women, will apply to the court for an award of attorney fees up to $400,000.00.

The EEOC filed the suit in U.S. District Court for the District of Arizona after investigating multiple charges of discrimination and exhausting its efforts to reach a voluntary settlement (EEOC v. GLC Restaurants, Inc., d/b/a McDonald’s Restaurant, Civil Action No. CIV- 05-0618-PCT-DGC).

If you are an employer with a problem employee, think twice about reassigning him or her within your company. Effective, well documented lawful termination might be a less costly alternative. Further, employee problems seldom get better with time. The phrase “nip it in the bud” is right on target here.

Lastly, if the EEOC comes knocking, do absolutely everything possible to reach a voluntary settlement instead of waiting for a lawsuit to be filed. Our federal government is a powerful adversary with deep pockets. Follow these simple suggestions and you just might keep them out of yours!