Another VIctory For Working Moms

Gender Stereotyping Constitutes Sex Discrimination

Every once in a while, everything goes right for the employee in a fight to get employment claims heard by a jury. The case of Nancy Falco Chedid, M.D. vs. Children’s Hospital & others is one such example. Here’s what happened in this recent illuminating decision involving the hot issue of caregiver discrimination.

Facts Of The Case

Dr. Nancy Falco Chedid worked at Children’s Hospital and the Boston Plastic and Oral Surgery part time as a plastic surgeon beginning in 2005. At that time, she re-entered her practice after taking six years off for the birth and caretaking of her three children. 

In August of 2006, Chedid’s boss, and Chief of Plastic Surgery, was replaced by Dr. John Meara. Shortly after his arrival Chedid had a meeting with Meara.

At that time, Chedid stated that she worked a reduced hours position and had family responsibilities. Meara expressed displeasure with her part time status and told her that there were certain subspecialties -- like dermatology -- which were more amenable to a part-time arrangement than plastic surgery.

He also said that he wanted to rid the department of plastic surgery of all the “part timers.” According to Chedid, when she asked Meara if he was pushing her out he nodded “yes” and that he did so without getting to know her or her abilities.

Because of her concern regarding Meara’s intention to push her out, Chadid met with the hospital’s Director of the Office of the Faculty Development, Dr. Jean Emans. Part of Emans’ job was to act as a problem solver for faculty with issues related to career advancement.

Emans explained that Children’s had a large number of part-time physicians and that with regard to work and family balance some chiefs “get it” and others do not.  Chedid stated that she would be willing to increase her hours if it meant saving her job.

Chedid sent a letter to Meara on November 8, 2006 and met with him eight days later. They also exchanged e-mails. Chedid made a number of proposals and explained to him how she could fit into his vision for the department. He assured her that he was not pushing her out, but then stated his intention to hire a full time surgeon in 2007, which might mean that Chedid would have to leave. She reiterated her desire to stay including her willingness to work more hours.  Meara again stated that Chedid would not have an indefinite position given his vision and goals for the department. Without Chedid, the department would be all male.

In the months that followed, Chedid continued to address her concern to hospital administrators including the COO and Vice President of Human Resources --- specifically her concern that Meara was pushing her out because she was a woman with childcare responsibilities. They explained that they believed what she was saying, but stated that Meara, as department head, had a right to eliminate part-time positions from the department.

In March or 2007, Emans and Stewart informed Chedid that Meara would only allow her to work through June. Emans explained that Meara wanted someone with special pediatric training in the department and that Chedid should obtain the special training and reapply in the future.  She asked why she had to apply when a co-worker was invited to join the Foundation without an application and another doctor was hired with far less experience. In addition, Chedid, who had pediatric training, offered to work full time.

Stewart became exasperated and angry at Chedid’s offer, but said that she would draft a memo of the meeting and discuss matters with Meara. The memo was never circulated.

On March 23, 2007, Meara informed Chedid that her employment with the Foundation would end on June 30th of that year. After learning that Chedid had been terminated, several of her colleagues circulated a petition to protest the termination.  As stated in the opinion, the record contains not a word of criticism about Dr. Chedid’s abilities as a physician and surgeon.

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Employee Rights Short Takes: Race Discrimination, 5.8 Milllion Dollar Verdict, Breach of Contract Damages And More

Here are a few short takes about some employment cases worth noting this month:

EEOC Files Lawsuit Against Kaplan Higher Education Corp. Claiming Race Discrimination

The EEOC announced last week that it filed a class action race discrimination case against Kaplan Higher Education Corp. The suit alleges that since at least 2008, Kaplan rejected applicants based on their credit history and that this practice has an unlawful discriminatory impact because of race. The EEOC further claims that the practice is neither job-related nor justified by business necessity and therefore violates Title VII of the Civil Rights Act of 1964.

These kinds of discrimination lawsuits are known as “disparate impact” cases and are often the legal foundation upon which class action discrimination cases are premised. The claim arises when an employer’s practice or policy, though neutral on its face, has a disparate impact on a group which is protected under one or more of  the civil rights statutes. For more about disparate impact cases, see here.

There has been much discussion about the use of credit history as a prerequisite for hiring and its disparate impact on minorities though we haven’t seen many lawsuits challenging the practice.

It will be interesting to follow this litigation and see how Kaplan justifies its policy to check credit history as a job related business necessity. The outcome of this litigation could have a significant impact on future higher practices nationwide. For more about the case, read the NY Times article here.

El Paso Employee Wins 5.8 Million Dollar Discrimination Verdict

An El Paso, Texas jury awarded Mark Duncan, a white benefits supervisor, 5.8 million dollars in a discrimination case against his former employer, El Paso Electric.

According to the El Paso Times, Duncan worked for El Paso Electric for six years and had a good employment history with no record of discipline. He was fired in December of 2007 after his life was threatened during an altercation with a company human resources manager.

 Even though Duncan was cleared of any wrongdoing the company fired him along with the human resource manager.

Duncan claimed he was fired because the company feared a lawsuit from the Hispanic human resource manager and that it got rid of him ("the white guy") to create a defense.

The jury agreed with Duncan and awarded him $129,913 in past lost wages; $699,196 in future lost earnings; $5000 in compensatory damages; and 5 million in punitive damages. El Paso Electric plans to file motions to set aside and reduce the verdict according to newspaper reports.

It certainly looks like whoever made the decision to fire Duncan either forgot or didn’t know that white employees can be victims of race discrimination too.

Two Decisions Worth Noting

In Helpin v.Trustees of the University of Pennsylvania, the Supreme Court of Pennsylvania addressed an issue of damages which can be very helpful to other employees down the road.

Mark Helpin, a dentist and professor, won a lawsuit for breach of contract against the University of Pennsylvania and an award of over four million dollars.

Helpin claimed that he was constructively discharged without “just cause” in violation of his contract and that Penn had improperly failed to continue to pay him 50% of the Children’s Hospital of Philadelphia dental clinic profits to which he was entitled. In a great discussion of future earnings, lost business profits, and the propriety of the “total offset approach” to the calculation of those damages, the Supreme Court of Pennsylvania affirmed the award.

Under the total offset approach, it is assumed that the effect of the future inflation rate will completely offset the interest rate, thereby eliminating the need to discount an award to present value. It has been adopted by some, but not most courts, but I expect so see more of its application in opinions to come.

For anyone involved in a case with a large future damages component, this opinion is both interesting and important and one worth sharing with any expert economists prior to his or her testimony.

In Quinlan v. Curtisss-Wright Corp. the New Jersey Supreme Court issued an extremely important and helpful decision which addresses the situation in which an employee takes company documents which bolster his or her  discrimination claim.

Joyce Quinlan was the Executive Director of Human Resources for Curtiss-Wright. She filed a lawsuit claiming that she was passed over for a promotion because of gender discrimination.

Quinlan copied files -- over 1800 documents -- which supported her claim and gave them to her lawyers.

The company found out during discovery in her pending case  that she copied the documents and and fired her (although it did not fire her right away). It claimed that she stole company property in violation of the company's code of conduct and therefore the discharge was justified.

Quinlian amended her lawsuit to add a retaliation claim. The case was tried and the jury awarded her more that 5.4 million dollars in compensatory damages and over 4.5 million dollars in punitive damages.

The case went to New Jersey Supreme Court which ruled in her favor this month. It upheld the trial court’s determination that Quinlan’s copying and retaining the company’s documents was not “protected conduct” and affirmed the jury’s finding that her firing was retaliatory.

In line with several federal court decisions, it adopted a “flexible totality of the circumstances approach” which sets forth seven factors to be considered in determining whether an employee is permitted to take and use documents belonging to his or her employer.

While this is a very good decision for employees, those who feel their employment rights may have been violated still need to be very cautious about taking company documents in violation of a company policy, even if the documents bolster their claims.  The law is tricky and changing, and it's  best to seek counsel and get advice before it’s too late.

Both of these cases represent significant victories for the the plaintiffs and their lawyers.

 images: www.choirboysmctx.org  www.insidehighered.com static.howstuffworks.com

Employee Rights Short Takes: Age Discrimination Cases In The News

Here are two Short Takes about some interesting age discrimination cases that made the news this month:

Forced Retirement At Age 70 Is Illegal

Nini v. Mercer County Community College: Rose Nini was a Dean at Mercer Community College from 1982 until 2005 when her contract expired and was not renewed. She was 73 years old at the time.

According to Nini, the college President, Dr. Robert Rose:

  • complimented her on her performance but “made it very clear to [her] that he thought [she] had no right to be working at [her] age”
  • said that employees of her age were considering retirement and suggested she should consider taking early retirement too
  •  told her that people who have been in a job for twenty-five years "lose their effectiveness." 
  • told her that it was her last chance to get an early retirement and leave with dignity.
  • held meetings with department heads in which he made jokes about getting rid of older employees
  • held meetings where several people discussed “age and incompetence and being dead wood”

Nini also stated that she heard from another employee that College Human Relations Director Vanessa Wilson said the College had to "get rid of old-timers and bring in new blood."

The lower court granted judgment in favor of the college holding that the college did not violate the New Jersey Law Against Discrimination because the statute allows an employer to refuse to renew an employment contract of an employee over seventy years of age. The Court of Appeals reversed and the the New Jersey Supreme Court affirmed in an opinion issued on June 1st holding that refusing to renew contracts for employees over the age of 70 because of their age violates the New Jersey’s age discrimination laws.

In other words, the failure to renew a contract because of age is equivalent to a termination -- not a failure to hire --according to the New Jersey Supreme Court. This case is good news for the many employees who are employed with contracts that are renewed year to year, or at the end of a certain term, particularly in states with statutory exceptions in discrimination laws similar to New Jersey’s.

Employees Replaced By Younger Individuals Can Prove Age Discrimination In Workforce Reduction Case

Equal Employment Opportunity Commission v. Tin, Inc.:  The EEOC announced last week that Tin, Inc., a manufacturing plant in Glendale, Arizona will pay $250,000 to settle a discrimination case filed by three employees who claimed they were fired because of their age in violation of the Age Discrimination in Employment Act.(ADEA).

The settlement follows a Ninth Circuit Court of Appeals decision in October that reversed summary judgment in favor of Tin and sent the case back to the district Court for trial.

According to the opinion, one of the plaintiffs, Neal, was replaced by an individual 15 years younger as plant manager. The EEOC provided evidence that Neal never received a negative performance review and in fact was told by his supervisors that they were satisfied with his performance.

The company contended that Neal’s younger replacement was better qualified because a facility he had run was profitable.

Interestingly, the Court stated that “the fact that a facility was profitable under one manager and not another does not mean that the two managers qualifications differed.” In addition, according to the Court, there was little evidence of the replacement's success at the plants in question. Therefore, the Ninth Circuit held, the district court erred in granting summary judgment against Neal since material facts were in dispute.

The other two plaintiffs, McGraw and Vanecko, positions were terminated because their positions were eliminated according to Tin.  In order to establish an inference of discrimination in this type of case, the Court stated,  the plaintiff is entitled to show “that the employer had a continuing need for the employee’s skills and services in that his various duties were still being performed.”

The evidence showed that McGraw’s logistics manager duties were redistributed to the production manger and sales manager who were 20 and 23 years younger. It also showed that  Vanecko’ s plant controller duties were given to someone 24 years younger.

In addition, the EEOC presented evidence that the two supervisors with decision making authority over all three plaintiffs made comments from which a jury could find “that they harbored animus towards older workers.” Therefore, the Court concluded that the EEOC provided sufficient evidence from which a jury could find that age was the “but –for” cause of the terminations.

The opinion helps explain the kind of evidence that is useful in proving age discrimination in the often difficult cases of job elimination and workforce reduction.

Firing Because Of Bankruptcy Is Illegal

Employee Terminated Because Of Bankruptcy Gets Right To Trial In Federal Court

I must admit that I don’t ever remember seeing a case involving bankruptcy discrimination --- so when I ran across a recent federal court case out of Florida on the subject, it struck me as one well worth talking about.

The case,  Myers v. TooJay's Management Corporation, is important because there are so few cases on the topic and because bankruptcy affects so many people. The case also highlights some flaws in the statute which could really use a Congressional fix.

 What Happened In The Case

Plaintiff Eric Myers filed for Chapter 7 bankruptcy in January of 2008. Around the same time, Myers moved his family to Florida to live with his parents. His debts were fully discharged in May of 2008.

At some point, Myers heard about an opening at one of Defendant TooJay’s restaurants in Sumter County, Florida for a management position.  He called the company contact, Tom Thornton, about the position. Thornton interviewed Myers and the interview went well.

Myers was then scheduled for a two day on the job evaluation which was held at on July 31st and August 1st. During those two days, for which he was paid,  Myers shadowed various employees.became familiar with restaurant procedures.

At the end of the second day, Thornton told Myers that he had performed well and according to Myers, offered him a job.  He was told that he was supposed to start work on August 18, 2008 at a salary of between $50,000 and $55,000 for a 40 hour week.

Thornton contended that he never told Myers he was officially hired, never discussed hours, salary, or a start date.

Thornton contended  he told Myers that any offer of employment was contingent on a background check.

There was no dispute that Thornton photocopied Myers' drivers license and social security card and had Myers complete and sign several employment forms including :

  • an IRS withholding W-4 form
  • an order form for TooJay’s uniform and shoes
  • a food employee reporting agreement
  • an assistant manger trade secret non-disclosure agreement
  • an I-9 employment eligibility verification form.

Thornton also gave Myers a copy of TooJay’s employee handbook and sexual harassment policy, and directed Myers to sign forms indicating that he received copies. On each form, Myers signed in the blank listed for “employee signature.

Myers was also asked to sign a document which permitted TooJay to conduct a background check and consumer credit report check.

After that, Myers notified his then employer that he was resigning so that he could start at TooJay’s.

A little more than a week later, Myers received a letter from TooJay’s stating that it was rescinding its previous offer of employment because of the credit report. He called the Vice President of Human Resources and was told that he was not hired because he had filed for bankruptcy and that TooJay’s, as a matter of corporate policy, did not hire individuals who had a bankruptcy on their credit report.

Myers went back to his prior employer and asked for his job back but it was too late. His work hours had already been distributed to other employees, and he was told that he could only be rehired at a reduced schedule.

According to Myers no one told him that his employment at TooJay’s was contingent on a satisfactory credit report.

Myers filed a complaint in the United States District Court in Florida claiming bankruptcy discrimination in violation of 11 U.S.C s. 525(b).

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Dan Rather Wins Round In Fraud Case Against CBS

Important Win for Employee in Fraud Case Against Employer

It's not often that employees sue their employers for fraud, but that's what Dan Rather did when he sued CBS in 2007. The news is that  he had a significant victory this week in his case. 

The Lawsuit

As some of you may recall, Rather filed a lawsuit claiming that his career was irreparably damaged because CBS intentionally mishandled a 2004 story about Bush's National Guard service.

The story had to do with Bush's allegedly going AWOL during his National Guard Service in 1972. The story was aired on CBS's Sixty Minutes II  during the 2004 election.

According to Rather's lawsuit, the broadcast reported that:

  • political influence was used to get Bush into the TexANG so he wouldn't have to go to Vietnam
  • after being trained as a fighter pilot in 1972, Bush failed to appear for a required physical examination
  • high level political influence was again engaged to avoid military discharge from the military

As Jackson Williams from the Huffing ton Post put it:

[E]vidence (from the Boston Globe and others) strongly suggests that George W. Bush literally bailed on his Guard duty, got a transfer to Alabama, and then disappeared for at least the final 12 months of his military commitment, perhaps up to 17 months. Some have a lost weekend; he had a lost year.

After the story aired, according to the complaint, the broadcast was attacked by conservative political elements supportive of the Bush Administration. 

In turn, CBS announced that it was going to conduct a thorough independent investigation into the story of the broadcast and its production.

Instead, according to Rather:

Its intention was to conduct a biased investigation with controlled timing and predetermined conclusions in order to prevent further information concerning Bush’s TexANG service from being uncovered.

The complaint further alleges that CBS:

1.     planned to and did use Rather as a scapegoat to pacify the White House

2.     coerced Rather into publicly apologizing and taking personal blame for errors which were a )never established and b) not Rather’s fault

3.     breached its employment contract with Rather by terminating him as anchor on the CBS evening news and thereafter giving him few assignments, little staff, little air time, and basically nothing to do 

The Fraud Case

Generally speaking, in cases of fraud, an individual must prove:

  1.  a material representation of a presently existing or past fact,
  2.  made with knowledge of its falsity and
  3.  with the intention that the other party rely on it,
  4.  resulting in reliance by that party
  5.  to his or her detriment

While there is no set way in which fraud claims come up in the employment setting, they are often seen when an employer lures an employee away from a secure position to a new job based on representations which turn out to be false.

They also come up when an employer makes false representations to employees to get them to stay on the job after they announce an intention to leave.

The meat of these cases show that representations were made (either spoken or written) which were known to be false with the purpose of inducing the person to rely on them.

The second part of the proof involves a showing that the person did in fact rely on the false statement(s), and that he or she was damaged as a result.

In Rather’s case, it is claimed that CBS, as well as individually named defendants, made false representations, which they knew to be false at the time they were made, and which they had no intention of fulfilling, including the following:

  • CBS intended to conduct a fair and impartial investigation of the broadcast
  • CBS would at all times take all necessary steps to preserve Rather’s reputation
  • CBS intended to fully utilize Rather’s experience
  • If Rather refrained from retained a private investigator to investigate the story underlying the broadcast, CBS would retain one and make the findings available to Rather 
  • CBS was going to extend his contract

All of these representations were false, according to Rather, and made so that Rather would refrain from making public statements concerning the Bush broadcast in order to defend himself and preserve his reputation

As a result,  according to his compliant, his career were irreparably damaged, he was ostracized, and he gave up significant employment opportunities.

(There appears to be an amended complaint which may have more detail but that’s the gist of what’s I could find)

What happened this week is that the fraud claim, which was previously dismissed, was reinstated by the Court of Appeals in New York -- a big victory for Rather and his lawyers. It also, in theory, gives Rather the opportunity to get punitive damages awarded against the defendants.

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Breach of Employment Contract Makes for Huge Win

Technology Company Hit With Billion Dollar Award

There isn't anything particularly interesting or novel about  Paul Chester's case as far as the law goes. It looks like a straightforward breach of contract case.

What  made me gasp when I read about the case was the size of the award: $4.1 billion !!!!! It's both amazing and unheard of. It's just  SO big.  


The Case

Here's what happened in the case according to the press release from Chester's lawyers.

Paul Thomas Chester was hired by iFreedom Communications, a provider of VoIP and WiFi technology, as its Chief Marketing officer in June of 2004.

The company promised Chester commissions and overrides on gross revenues, as well as the right to receive company stock and other compensation commensurate with Chester's experience in building marketing organizations.

When the time came to pay, iFreedom refused so Chester filed suit. The defendants moved to compel arbitration based on a provision in the employment contract which provided for arbitration in the event of a dispute.

Chester worked for iFreedom until the end of September, 2005 for a total of 15 and a 1/2 months of employment.


The Award

The arbitrator, a retired judge, heard the case and found:

  • the defendants obtained Chester's services by means of false pretenses and fraud
  • Chester was entitled to unpaid salary, commissions, travel expenses, compensation for unissued company stock and unreturned intellectual property
  • the defendants were liable for statutory penalties, interest, attorney's fees, and punitive damages equal to three times the compensatory award

The total was 4.1 billion dollars.

The Los Angeles County Superior Court confirmed the award about ten days ago against iFreedom Communications International Holdings Limited, and it's founder, Timothy Ringgenberg and entered judgment against them.

Here's the breakdown from the court if you you want to look at it and copies of the opinions and awards. Thanks to the Dennis Westlind at World of Work for bringing it to us and for answering this question -- how did this guy get all of this money?

The employment agreement guaranteed him a salary of $12,000 a month plus commissions of 5 percent of gross sales; if he was fired without cause, he would continue to receive commissions. iFreedom also was supposed to provide Chester with 1.1 million shares of common stock upon hiring and another 600,000 shares if he met certain sales targets . Apparently, iFreedom did really, really well. Sales, stock and interest added up, and in a big way.

That's how it happened. The company was earning tons of money, much of it due to Chester -- and it refused to pay him what he was clearly entitled to receive. They also lied to him and stole from him.  It's pretty simple stuff  with very large numbers.

(For more about the case, you may  also want took at  Phillip Loree's article. He makes the point that the Arbitration Fairness Act of 2009, if passed, would render pre-dispute agreements which require arbitration of employment disputes --such as Mr. Chester’s dispute with iFreedom -- unenforceable. It's a good point, but  I have no reason to believe that the outcome in this case would have been any different.)


Lessons To Be Learned

So what can we say about this case?  What lessons can we learn? How about this:

  • Chester was smart to have a really good employment contract
  • iFreedom failed to fulfill its promises when it terminated Chester without cause which entitled Chester to the compensation promised in the contract
  • iFreedom engaged in "a pattern of  despicable conduct" regarding Chester, including fraud and conversion, according to the arbitrator
  • Despicable conduct can result in punitive damages -- whether it's awarded by a judge, jury or arbitrator  
  • Successful companies can do really stupid things

It's not rocket science. It's just the way it is.

Image: http://www.freeclipartnow.com

Employer Gets Whacked For $17.5 M For Stealing Employee's PC

I opened up this month's Lawyer USA to find a stunning piece about a swiped PC leading to a $17.5 million dollar verdict. From what's reported, here's what happened in the case of Trealoff v. Forest River Inc. out of the Superior Court of San Bernardino County, California.

Dallen Trealoff, an experienced RV salesman, was hired in 1995 as a sales manager by a start-up company called Forest River Inc., an Indiana based company.

Trealoff  worked out of the company's Rialto, California warehouse and was in charge of developing a sales network in eleven Western states according to a P.E.com story.

The company did not provide a computer so Trealoff used his personal laptop.     

Trealoff claimed that he:

  •  was hired to help a fledgling company 
  • took a pay cut in reliance on a promise that he would be compensated later at a higher rate

 According to Trealoff's lawyer, the raise never materialized:

It took him about five years to realize they were not going to give him the raise.  That's when he started to look for other employment and then they fired him.

Before Trealoff got fired, the company president Peter Liegl took Trealoff's laptop, stole the hard drive and deleted thousands of files.

During the time he worked for Forest River, Trealoff used his spare time to develop a software program which kept track of sales data. That information was on the computer as was Trealoff's personal financial information.

Trealoff got the computer back and tried to restore some of the files. None of it was usable.

Liegl claimed he took Trealoff's computer because he suspected that Trealoff was stealing company information and going to start his own company.

In 2003, Trealoff and his wife did start their own company called Eclipse Recreational Vehicles.

In 2005, Forest River was bought out by Warren Buffet's  Berkshire Hathway Inc.

Trealoff sued Liegl and Forest River alleging:

  • breach of contract
  • fraud
  • conversion
  • violation of a California statutory claim  for improperly accessing a computer without the owner's permission

Forest River counter sued alleging that Trealoff took proprietary information in order to start his own business.

It's important to note these points in the context of the case:

  1. Trealoff had no written agreement with Forest River regarding the terms of his employment.
  2. Forest River did not have a non disclosure agreement signed by Trealoff
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