Employee Rights Short Takes: Scalia's Impartiality Questioned, Two Punitive Damage Awards, Disability Discrimination And More

Here are a few employee rights Short Takes worth noting:

Scalia Says Due Process Clause Does Not Prohibit Sex Discrimination

For those who may have missed it, Justice Antonin Scalia recently expressed his view that neither women nor gays are protected against discrimination under the 14th amendment of the Constitution. The statement was made in an interview this month published in the California Lawyer.

While it’s newsworthy because of the shock value alone, Scalia has expressed this view before. All one has to do is read the 1996 decision of  United States v. Virginia,  in which Scalia was the only justice to dissent from the Supreme Court’s decision to end the Virginia Military Institute’s 157 year old state supported practice of only accepting male students.

Not surprisingly, Scalia’s recent remarks angered liberals and was criticized by many legal scholars. Marcia Greenberger, founder and co-President of the Women’s Law Center, as reported in the Huffington Post, called  Scalia’s comments “shocking in light of the decades of precedents and the numbers of justices who have agreed that there is protection in the 14th Amendment against sex discrimination, and struck down many, many laws in many, many areas on the basis of that protection."

Scalia’s comments stem from his view that the 14th amendment , when written, was not intended to ban sex discrimination. As to Scalia’s originalist view, Eric Segall, a professor at Georgia State College of Law, had this to say in his letter to the editor published in the New York Times:

On issues of affirmative action, gender rights, gun control and campaign finance reform, among most other controversial constitutional law questions, Justice Scalia does not truly use an originalist methodology. Much more of his judicial style can be gleaned from looking at the Republican Party Platform than at the drafters of either the original Constitution or the 14th amendment.

For Justice Scalia, it is about results, not process, no matter how much he protests otherwise.

In the same vein, Scalia also also made news with the announcement of his role as a featured speaker at  Michele Bachmann's tea party / "Constitutional Conservative Caucus" later this month. For more about questions raised regarding Justice Scalia's impartiality, read Nan Aaron here.

EEOC Settles Disability Discrimination Case For 3.2 Million

Jewel –Osco’s parent company Supervalu  Inc. has agreed to pay $3.2 million to settle a federal lawsuit claiming that the company discriminated against its disabled employees.

The suit, filed by the EEOC, alleged that Jewel-Osco fired employees with disabilities at the end of their leaves rather than bringing them back to work with reasonable accommodations.

According to the EEOC, roughly 1000 employees at Jewel-Osco stores were fired under this policy. One employee who will benefit from the settlement is Rosemary Bednarek who is representative of the class.

Bednarek injured her back lifting boxes of chicken at a Jewel-Osco store in 2004. When she was able to return to work, her doctor advised that she should not lift more than 20 pounds but the company would not accommodate the restriction. Bednarek re-injured her back and was fired a year later.

This is a great settlement that will not only benefit the plaintiffs in the case, but also serve to remind employers of their obligations under the Americans with Disabilities Act (ADA) to accommodate employees with disabilities -- including those who are injured on the job.

Two New Decisions On Punitive Damages

We do not often see employment law decisions in which punitive damages are addressed, so to see two in the last few weeks is worth talking about.

Generally speaking, punitive damages are available in some cases in which the defendant engaged in a deliberate or reckless disregard of the rights of others.

The jury, in determining the amount of the punitive damage award, is permitted to consider a number of factors, including a sum of money that would discourage the defendant from engaging in the conduct in the future as well as the income and assets of the defendant. Some large punitive damage awards are challenged on grounds that they violate the Due Process Clause of the Fourteenth Amendment of the Constitution.

Here's a brief synopsis of the cases:

Hamlin v Hampton Lumbar Mills, Inc.:  Plaintiff Ken Hamlin was injured while working at the Hampton Lumbar Mills. When he was released to return to work, the defendant falsely asserting that he was a “safety risk" and refused to to reinstate him as required by Oregon law.

The case went to trial and the jury awarded lost wages of $6000 and punitive damages in the amount of $175, 000. On appeal, the Court of Appeals held that the punitive damage award was "grossly excessive" under the Due Process Clause of the United States Constitution and reduced it to a sum equivalent to four times the amount of the compensatory damages.

In an instructive review of the case law on punitive damages, the Oregon Supreme Court reversed holding that a punitive damage award may exceed a single digit multiplier of a compensatory damage award without violating due process or being “grossly excessive.”

The case is an excellent reference point for anyone briefing an argument for punitive damages in an employment case.

Claus v. Intrigue Hotel, LLC:  In this age discrimination case, the jury awarded $50,000 in actual damages and $150,000 in punitive damages in a bifurcated trial. The defendant appealed. The Court of Appeals affirmed the verdict in a decision issued late last month.

In brief, Glenda Claus worked for Intrigue Hotels (including its predecessor) since 1984. Her last position was housekeeping supervisor. In 2007, Claus was fired and replaced by a 31 year old employee. 

Claus, 63 at the time, testified that she was completely blindsided by the news of her termination. With a record of positive job performance evaluations, a failure to admonish Claus regarding job deficiencies, and replacement with a 31 year old employee with performance issues, the Court of Appeals held that the jury could have rejected Intrigue’s after the fact rationale that Claus was fired for poor performance.

In addition, there was evidence that her new supervisor (Galaviz ) stated he wanted employees who would be at the hotel for the “long haul” and that Claus was “resistant to change.” The Court held that the jury could have reasonably taken these statements to mean that Galaviz did not want older employees and that Claus’s age was a factor in her firing.

The evidence also showed that Galaviz had been engaged as a human resources consultant and had an extensive knowledge of employment law at the time he made these comments and fired Galaviz.

Worth noting is the Court's statement that the same evidence which supported Claus’s substantive claim for age discrimination also supported her claim for punitive damages  As the Court pointed out,  both Copidas (the owner of the hotel) and Galaviz:

  • knew it was against the law to fire an employee because of age
  • fired a 63 year old employee with a spotless record
  • replaced her with a 31 year old with documented performance problems
  • promoted several younger employees with performance issues
  • altered its rationale for firing Claus several times and created pretextual reasons for firing her

In sum, the Court concluded that the jury’s award of punitive damages was supported by the evidence. The case was remanded to the trial court for an award of reasonable attorney’s fees and costs -- a great victory for Claus and her lawyer.

This case is a good example of the kind of evidence which supports a claim for age discrimination as well as a claim for punitive damages. As stated above, since we don't often see decisions affirming a punitive damage award, these cases are worth noting.

images: newsimg.bbc.co.uk  www.pryers-solicitors.co.uk  www.beachvillaresort.com 

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: Don't Ask, Don't Tell, 8 Million Dollar Verdict For Cancer Victim, Race Discrimination And More

Here are a few short takes about discrimination cases that made the news this week:

Don’t Ask Don’t Tell Is Unconstitutional

United States District Court Judge Virginia Phillips ruled last week that “Don’t Ask, Don’t Tell”  (DADT) is unconstitutional because it violates both the first amendment free speech and fifth amendment due process rights of gay and lesbian service members. Judge Phillips is expected to issue an injunction that would bar the federal government from enforcing DADT though government lawyers contend that Phillips does not have the authority to do so. For a good NY Times editorial about it  read here. For the opinion, read here. 

Goldman Sachs Sued For Gender Discrimination

Three former female employees at Goldman Sachs sued the investment bank claiming that it is guilty of systematic discrimination against women. The lawsuit alleges that Goldman discriminates in pay and promotion and that a persistent pattern of bias has resulted in the underrepresentation of women in the firm’s management ranks. Sex discrimination violates Title VII of the Civil Rights Act of 1964. For more about the case read here.

Wall Street has had an ongoing problem with sex discrimination. Morgan Stanley settled two class action lawsuits brought by thousands of employees for more than $100 million dollars in 2004 and 2007. Smith Barney paid out $33 million in settlement of a case two years ago.

Earlier this year, Goldman and CitiGroup were sued over allegations that the banking firms discriminated against working mothers. Unfortunately, I don’t think we have come close to the end of reading about these kinds of cases in this particular industry.

Roadway Express Settles Racial Harassment Case For $10 Million

The EEOC announced on Wednesday that a federal magistrate in Chicago granted preliminary approval of a 10 million dollar,  five-year consent decree which will settle a race harassment and discrimination case filed against Roadway Express and YRC, Inc. Race discrimination and race harassment violate Title VII of the Civil Rights Act of 1964.

The suit included allegations that the company subjected black employees at its Chicago Heights and Elk Grove Village facilities to a racially hostile work environment and racial discrimination including multiple incidents of hangman's nooses (unbelievable that this still goes on) racist graffiti, racist cartoons, and racist comments.

The EEOC also planned to present evidence that black employees were subjected to harsher discipline and scrutiny that their white counterparts and given more difficult and time-consuming work assignments than white employees.

According to the EEOC, black employees complained over a number of years about all of these conditions but the company failed to take any corrective action.

Cancer Survivor Wins $8.1 Million Verdict For Wrongful Discharge

Lawyers USA reported news of an $8.1 million dollar verdict earlier this month in a case against Michaels Stores, Inc for a Florida woman who was fired after taking time off to get treatment for cancer. Yes, getting fired because of cancer is still a somewhat regular occurrence I am sorry to report.

(Discrimination because of cancer violates the Americans with Disabilities Act. (“ADA”).Employees who work for companies with 50 or more employees are entitled to leave under the Family and Medical Leave Act.)

According to the article, Kara Jorud was viewed as an exemplary manager until she went out for double mastectomy surgeries. After that, she received a number of calls from her supervisor urging her to come back to work even though she was projected to need nine to ten weeks of recovery time.

Her job was threatened four days after she returned to work in August of 2008, and within thirty days she was fired. Jorud was accused of a variety of petty offenses. She showed, with evidence from more than twenty co-employees, that others committed similar offenses and were not fired.

The jury awarded Jorud $4 million for pain and suffering, $100,000 in back pay, and $4 million dollars in punitive damages. The court will also be awarding attorneys fees and costs.

It’s not only illegal to fire someone with cancer, it’s a stupid business decision that can obviously offend the sensibilities of many potential jurors. A full and complete damage award –which can often mean a sizable verdict -- is not a surprising outcome in this kind of case.

 image: www.ajsgarage.com   www.topnews.in   www.appliedplanning.com

Employee Rights Short Takes: Hostile Work Environment, GINA, FMLA And More

Here are a few Short Takes worth sharing:

Sex Bias Case Ends With Huge Punitive Damages Award

The drug maker Novartis was hit with $250 million in punitive damages last week because of discrimination against thousands of female sales representatives. Issues involved discrimination in pay, promotion and pregnancy. The punitive damages award represented 2.6 of the company’s 2009 $9.5 billion revenue. Earlier in the week, the jury awarded $3.3 million dollars in compensatory damages to 12 of the women who testified. The case is reported to be the largest discrimination verdict ever.  

Genetics Discrimination

Complaints were filed against MX Energy, a Connecticut natural gas retailer, under Title II of  Genetic Information Nondiscrimination Act of 2008 (GINA), which prohibits genetic information discrimination in employment. The new federal law took effect on November 21, 2009.

GINA prohibits discrimination against employees or applicants because of genetic information. GINA also restricts acquisition of genetic information by employers and other entities covered by Title II, and strictly limits the disclosure of genetic information.

The charging party Pamela Fink, claims that her employer fired her, despite years of glowing evaluations, after learning she tested positive for the breast cancer gene. Fink filed complaints against her employer with the Connecticut Commission on Human Rights and Opportunities and the federal Equal Employment Opportunity Commission. About 90 GINA-related complaints have been filed nationwide since the law went into effect. This should be an interesting case to follow. For more about genetic discrimination, read here.

Rights Of Undocumented Workers

With all the talk about illegal immigration, one might wonder what the rights are of the over eight million undocumented workers in this country. Carolina Nunez, a law professor at Brigham Young University's Reuben Clark Law School, wrote an interesting article about the topic which you can read here.  The piece appeared in the Spring 2010 issue  of the Clark Memorandum, a publication of BYU's J. Reuben Clark Law School.

Should undocumented workers enjoy the same workplace protections that authorized workers enjoy? When and how much should immigration status matter? Does being here count for anything? It is no surprise that the answers are less than clear.

Recent Cases Of Interest From The Circuits

Plaintiff Wins FMLA Appeal: In Goelzer v. Sheboygan County, Wisconsin  Dorothy Goelzer was fired from her administrative job with the county government after 20 years. Her supervisor told her about the termination decision two weeks before she was scheduled to begin two months of leave under the Family and Medical Leave Act.

Goelzer had taken a significant amount of authorized FMLA during the four preceding years to deal with her own health issues as well as those of her husband and mother. The defendants claimed she was fired because they wanted to hire someone with a “greater skill set.” The district court granted judgment against Goelzer.

The Seventh Circuit Court of Appeals reversed this month stating that comments suggesting frustration with her use of leave, Goelzer’s favorable performance reviews, and the timing of her termination could lead a jury to conclude that Goelzer was fired because she exercised her right to take FMLA. This is a very good case for those who are claiming an interference or retaliation claim under the FMLA.

Employers Liable For Third Party Harassment: In Beckford v. Department of Corrections, Melanie Beckford, and thirteen other female employees, claimed that the Florida Department of Corrections failed to remedy the sexually offensive conduct of inmates  -- including the frequent use of gender-specific abusive language and pervasive gunning, the notorious practice of inmates openly masturbating toward female staff. The jury found in favor the plaintiffs and awarded each $45,000 in damages.

The Department appealed and contended that it could not be liable under Title VII unless its staff actively encouraged or participated in the harassment. The Eleventh Circuit affirmed the verdict and concluded that the jury was entitled to find the Department liable because it unreasonably failed to remedy the sexual harassment by its inmates. The Court said:

It is well established that employers may be liable for failing to remedy the harassment of employees by third parties who create a hostile environment. …It makes no difference whether the person whose acts are complained of is an employee, an independent contractor, or for that matter a customer.

Employees are often harassed at work by individuals who are not employees. This case, which holds that employers are liable for harassment by third parties, is an important affirmation of this particular aspect of employer liability under Title VII.

images: www.hivplusmag.com      charityrisk.squarespace.com

Employee Rights Short Takes: Wage Discrimination, Race Discrimination, Sexual Harassment And More

Here are a few Short Takes worth sharing:

Sex Discrimination

Ninth Circuit Certifies Wal-Mart Class Action: In Dukes v. Wal-Mart, a decision from the Ninth Circuit Court of Appeals on April 26th, the Court certified a class in a Title VII lawsuit involving 1.5 million women seeking compensation for back pay. The Court remanded the case to the district court for a determination regarding punitive damages based upon several factors set forth in the decision. The next step is most likely a request for the Supreme Court to hear the case. For more about the case, see the California Punitive Damages Blog.  For an interesting story about Betty Dukes, the Wal-Mart greeter and lead plaintiff  see the article here from the Huffington Post. This case is reported to be the largest class action in history.

Sexual Harassment

EEOC Collects $471,000 In Sex Harassment Case: The EEOC reported last week that Everdry Marketing and Management paid $471,096 in damages, plus $86,581 in post-judgment interest to 13 victims of sexual harassment. The payout stems from a four week jury trial in Rochester, New York and a Second Circuit Court of Appeals decision which affirmed the award in favor of the plaintiffs. The case involved a prolonged period of physical and verbal sexual harassment of mostly teenage telemarketers by male managers and co-workers at Everdry’s Rochester, N.Y. location including demands for sex, groping, sexual jokes and constant comments about the bodies of women employees. The story presents another example of the widespread problem of teenage sexual harassment in the U.S

Has The Sixth Circuit Had An Attitude Adjustment?

Two cases last month out of the Sixth Circuit  Court of Appeals made me think that attitudes on employment discrimination cases may be shifting.

Summary Judgment Reversed In Race Discrimination Case: In Thompson v UHHSS Richmond Heights Hospital, Inc, the plaintiff was terminated from her position as a food production supervisor when she was told that her position was eliminated in a restructuring. Thompson believed  that she was selected for termination because of her race and filed a lawsuit. The district court granted summary judgment against her. The Sixth Circuit reversed finding that evidence of Thompson’s superior qualifications in comparison to the employee who assumed most of her job duties showed that she was replaced and also showed pretext. In addition, evidence that a supervisor said to “get rid of” certain black employees whom he called “troublemakers,"  which the district court gave “little weight," corroborated accusations of discriminatory behavior according to the Court.

Sexual Harassment Verdict Affirmed On Appeal: In West v. Tyson Foods,Inc. the Court affirmed a sexual harassment award including $750,000 for past and future mental distress, and $300,000 in punitive damages. In addition to great language on damages, the Court also addressed the sufficiency of reporting sexual harassment to one supervisor as constituting “notice” and a “missing evidence” jury instruction from which the jury is entitled to draw a negative inference. The plaintiff, an assembly line worker, was subjected to a barrage of verbal and physical harassment – 10 to 15 times per shift -- during her five weeks of employment at the Tyson Foods plant in Robards, Kentucky. The jury awarded more in damages that West's lawyer requested which the Sixth Circuit both addressed and confirmed.


 images: www.hickmankytourism.com


Court Upholds $1.9 Million Dollar Verdict In Gender Discrimination Case Against Wal-Mart

Female Pharmacist Wins Appeal Including Punitive Damages and Huge Front Pay Award

It’s one thing to prove discrimination. It’s an altogether different thing to prove damages which occurred as a result of it.

In the recently published gender discrimination case of Haddad v Wal-Mart Stores Inc,*, the  Supreme Court Court ("SJC") of Massachusetts affirmed a jury verdict which included $733,000 for 19 years of front pay (future economic loss) and $1 million dollars in punitive damages – and that’s big news.

What Happened In The Case

Cynthia Haddad worked as a pharmacist at Wal-Mart for ten years (seven of those in the Pittsfield, Massachusetts store) mostly as a staff pharmacist..Throughout her time at Wal-Mart, she received excellent evaluations.  

Towards the end of her employment, Haddad accepted the position of pharmacy manager.

During that time, she received less pay than any male pharmacy manager which she consistently complained about.

On April 14th, 2004, Haddad was questioned by three Wal-Mart managers about abut two fraudulent prescriptions.

One of the prescriptions was written in 2002 while Haddad was on duty, and another was written in 2004 while a male pharmacist was on duty.

Haddad told the managers that she did not know anything about the fraudulent prescriptions.

She did admit that the 2002 fraudulent prescription could have been written when she briefly left the pharmacy area to buy a soda at a nearby counter, or when she was in the restroom, eating lunch, or talking to customers.

Haddad’s employment was terminated that same day.

She was told that the reason for her termination was based on her statement during the interview that she failed to secure the pharmacy and left Baran (the technician) unattended in the pharmacy area. Baran, who admitted that she falsified the prescription,was also terminated.

The other pharmacist involved -- Richard Blackbird -- was on duty the day the fraudulent 2004 prescription was written. That prescription contained his initials.

In a clear case of unequal treatment, neither Blackbird, nor any other pharmacist was questioned about or disciplined for the 2004 fraudulent prescription.

In stark contract to the treatment Haddad received,  Blackbird was appointed to be pharmacy manager at the time of Haddad's departure.

In addition, Blackbird testified that he commonly left the pharmacy area unsecured to talk to a customer, go the restroom, or get a snack – and that he was unaware of any policy prohibiting this practice.

Haddad filed a lawsuit alleging unequal compensation and termination of employment in violation of Massachusetts laws against discrimination. ( M.G.L. c. 151B, s.4) The complaint also stated a claim for defamation.

The jury found in Haddad’s favor and awarded $922,774 in compensatory damages which included:

  • $17,700 in special damages
  • $125,000 for emotional distress
  • $95,000 in back pay
  • $733,000 in front pay

The jury also awarded $1 million dollars in punitive damages.

Continue Reading...

Punitive Damages Go To Jury In Pregnancy Discrimination Case

Awareness of Pregnancy Discrimination Law Sets Stage For Punitive Damages

When you litigate a discrimination case, you never know for sure when you’re going to recover punitive damages. For those of us who represent employees, the Eighth Circuit Court of Appeals -- in the case of  EEOC v. Siouxland Oral Maxillofacial Surgery Assoc., L.L.P. decided last week -- made that job far easier.

What Happened In The Case

The case involves two women and their experiences at Siouxland, a medical clinic in South Dakota specializing in oral and maxillofacial surgery. 

The First Pregnancy Discrimination Victim

Richelle Dooley, was hired in December of 2001 and started work in January 2002. The day after she began, she filled out health benefit forms.

At that time, she told her supervisor that she was pregnant and that her baby was due in July. "Don't worry," the supervisor said, "we can hire a temp. while you're out."

The supervisor told two of the partners including the managing partner, Dr. Harvey Lee Akerson, about Dooley's pregnancy. Akerson decided that Dooley had to be terminated.

According to Kathy Fjellestad, Siouxland's business manager, this is what he said:

[T]he young lady we just hired is going to have a baby this summer. She isn't going to be available to work. It doesn't make any sense to begin training her.. when she won't be able to work the summer ... [W]e are going to have to let her go.

Fjellestad informed Akerson that Siouxland could not terminate Dooley because of her pregnancy. Akerson decided to fire her anyway.

He told Dooley that "her baby was going to be born during our busy season" and if they had known she was pregnant they would not have hired her.'"

The Second Pregnancy Discrimination Victim

In March of 2002, Angie Gacke interviewed for a position at Siouxland. During the interview she told the interviewers : "I don't know if this is going to be a problem or not, but I'm four months pregnant."

Shererena Kost, supervisor of  Siouxlands's surgical staff said:

Yes, it's a problem. Your are just going to end up causing more work for everybody else than you will be helping them.

One of the other interviewers recalled Kost saying:

Because of her pregnancy occurring at the time it was going to be occurring, that it would be best if she just continue her pregnancy, have the baby, have her maternity leave, and then we would talk.

Kost wrote on her resume that she was:

  • overqualified for job
  • needed insurance
  • "4 months pregnant!"

Kost informed Gacke later that day that she did not get the job. As set forth in the opinion:

Kost was aware throughout this process that discriminating on the basis of pregnancy was illegal.

Continue Reading...

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.

Continue Reading...

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
Continue Reading...