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August 2004

August 2004

Tuesday, August 31, 2004

The circuits continue to clash over the standard for proving an "adverse employment action" in the context of a Title VII retaliation case, with decisions ranging all over the map (see, for example, Weeks v. N.Y. State (Div. of Parole), 273 F.3d 76, 85 (2d Cir.2001); Von Gunten v. Maryland, 243 F.3d 858, 864-65 (4th Cir.2001); Mattern v. Eastman Kodak Co., 104 F.3d 702 (5th Cir.1997); White v. Burlington Northern & Santa Fe R. Co., 364 F.3d 789 (6th Cir. 2004) (en banc); Ray v. Henderson, 217 F.3d 1234, 1240-44 (9th Cir. 2000)).

In Hillig v. Rumsfeld, No. 02-1102 (10th Cir. Aug. 27, 2004) (available on the Tenth Circuit website), the court (in a 2-1 decision) set a generous, pro-employee standard. It held that any act that causes more than de minimis impact on a plaintiff's future employment opportunities may be actionable as retaliation. The panel here found that the plaintiff, a former employee of the Defense Finance Accounting Service (DFAS) -- who had won a $25,000 verdict that was vacated on a motion for judgment as a matter of law -- presented a jury issue on "adverse employment action" with evidence that she was turned down for work at another federal agency (the Department of Justice, or "DOJ") because of negative feedback from her former managers:

"Hillig claims she did not receive this position because of negative recommendations from her supervisors at DFAS. An EEO investigation revealed that the DOJ was provided two negative evaluations of Hillig by her supervisors at DFAS, with one supervisor giving 'very strong negative feedback.' Id. at 165. One of her supervisors, Reusch, who had been the subject of Hillig's EEO complaint, testified that she had told a DOJ representative that Hillig had performance problems at work. Id. at 143-44. Reusch also admitted characterizing Hillig as a 'shitty employee' to Samilton, an EEO investigator with DFAS. Id. at 146. According to Wooden, such negative information would have disqualified a candidate for the DOJ job. Id. at 106."

The panel concluded that it was unnecessary for the plaintiff to prove further that the negative comments in fact caused her to lose the job, finding it sufficient that "[t]he negative references Hillig received were communicated to the DOJ, a potential employer, and would likely preclude her from obtaining employment there in the future. . . . The extent of the harm to her future employment prospects, i.e., whether her employment prospects with all potential employers were harmed, affects the 'issue of damages, not liability.'" Acknowledging the split in the circuits, it nevertheless found its decision in harmony with the majority of courts considering the issue of poor, retaliatory references under Title VII.

Monday, August 30, 2004

Sometimes advocacy in employment cases can come down to few well-chosen words, as illustrated by the Eighth Circuit's rehearing decision last Friday in Jackson v. Flint Ink North American Corp., No. 03-2189 (8th Cir. Aug 27, 2004) .

In the original decision (reported at 370 F.3d 791, 93 FEP 1612 (8th Cir. 2004)), the panel split 2-1 over whether to remand for trial a Title VII racial harassment case dismissed on summary judgment. Judge Morris Sheppard Arnold authored a panel opinion (joined by Judge Riley) affirming the district court, finding that the utterance of half a dozen racial slurs and two instances of "KKK" graffiti over eighteen months were insufficiently severe or pervasive to constitute harassment. The majority admitted that the graffiti -- in a bathroom, which included a burning cross --presented a "closer case," but concluded on the record presented that it was generic in quality and not directly menacing to plaintiff. Judge Gibson authored a persuasive dissent, citing nearly identical facts in Reedy v. Quebecor Printing Eagle, Inc., 333 F.3d 906, 93 FEP 133 (8th Cir. 2003) (also authored by Judge Morris S. Arnold), that substantiated reversal of summary judgment.

On rehearing, and (apparently) with a refocused presentation of the record, the majority flipped and reversed summary judgment:

"We have, however, reexamined the record to determine whether Mr. Jackson's evidence was sufficient to survive summary judgment, and we now conclude that it was. We refer particularly to Mr. Jackson's deposition testimony (which neither party pointed us to directly) that his name was written in a shower at his workplace and that there was an arrow connecting his name with a burning cross and a KKK sign. We think that an objective observer would regard this combination of figures as a threat of serious bodily harm if not death to Mr. Jackson; and when this threat is combined with all of the other incidents that Mr. Jackson complained of, and which we detailed at length in our previous opinion, . . ., we conclude that the present case is governed by [Reedy]."

A judicial semiotics of racist graffiti emerges: the plaintiff must not only describe the graffiti, but must artfully set forth the context. With the benefit of the first panel opinion, Jackson's lawyer finally put this across on rehearing. Better that wisdom came (nearly too) late to plaintiff's counsel than not at all.

Friday, August 27, 2004

Ever since the Supreme Court sanctioned arbitration for employment discrimination claims in Gilmer, civil rights lawyers have forecast doom and demise for discrimination lawsuits. So do you wonder why employers haven't all streamed toward arbitration as a cure-all for their legal woes with workers? Turns out that arbitration can have pitfalls for the mighty as well as the meek, as yesterday's decision in Stark v. Sandberg, Phoenix & von Gontard, P.C., No. 03-2366 (8th Cir. Aug. 26, 2004) reveals.

This case involved a federal Fair Debt Collection Practices Act claim by a married couple who borrowed some $57,000 against their home, and one year later declared bankruptcy. The mortgage company, EMC -- which had been advised by the Starks' attorney that the debtors were represented by counsel -- made ten contacts (in person, by mail and on the phone) with the Starks to collect the debt. It also forcibly entered their home while they were absent.

The Starks arbitrated their claim against EMC and its counsel. The arbitrator struck the bar on punitive damages in the contract (finding it ambiguous, in contradiction to other provisions in the agreement, in violation of Missouri public policy, and therefore unenforceable). It then awarded a married couple $1000 each in statutory damages, $1000 each in actual damages, $22,780 in attorneys fees, and $9300 for the cost of the arbitration. The arbitrator then found the mortgage company's behavior "reprehensible and outrageous and in total disregard of plaintiff's [sic] legal rights" and awarded $6,000,000 in punitive damages against EMC.

While the district court vacated the punitive damage award, the Eighth Circuit ordered that it be reinstated. EMC had argued successfully below that the arbitrator exceeded his powers in awarding punitive damages, which were expressly disclaimed in the arbitration agreement. But the panel held that Missouri law barred parties from prospectively releasing future liability for intentional or grossly negligent torts. Thus, whether under the plain meaning of the agreement or because of ambiguity in its terms, the panel found that a waiver of punitive damages could not be enforced in accordance with the forum law. And because of the stringently limited review of arbitration awards allowed by the Federal Arbitration Act, the panel could neither remit nor vacate the award based on manifest disregard of the law.

Ironically, had the case proceeded in federal court, the punitive damage award -- and its 1:1500 actual-to-punitive damage ratio -- would have been reviewable under State Farm Mutual Auto Ins. Co. v. Campbell.

Thursday, August 26, 2004

Graduate student assistants are among the most abused workers toiling in academia; here's one who tried to fight back. In Cuddeback v. Florida Board of Education, No. 03-12634 (11th Cir. Aug. 25, 2004), in an issue of first impression for the circuit, the panel found that a student may also be an "employee" for Title VII purposes under the "economic realties" test. Plaintiff was a female graduate student who worked in a lab, supervised by a professor. The lab work counted toward Ms. Cuddeback's academic requirements while earning her a stipend and benefits. There eventually came a dispute between the professor and student, the relationship terminated (although the precise circumstances were subject to dispute) and Ms. Cuddeback was replaced by a male student.

Plaintiff then filed a Title VII lawsuit against the school and other defendants. Defendant initially argued that the plaintiff was not an employee at all. But the panel applied the "economic realities" test and affirmed the district court's finding that Ms. Cuddeback was an employee, citing the following conditions of her relationship with the university:

"(1) she received a stipend and benefits for her work; (2) she received sick and annual leave; (3) a comprehensive collective bargaining agreement governed her employment relationship with the University; (4) the University provided the equipment and training; and (5) the decision not to renew her appointment was based on employment reasons, such as attendance and communication problems, rather than academic reasons. Although the record does not indicate the amount that she was paid for the year in which she was terminated, the record does demonstrate that she was paid during that year, and was also paid $15,000 in her first year with Dr. Wang."

Then, reaching the merits, the court sided with defendants -- finding (in spite of arguable inconsistencies in the record) that plaintiff had been on notice for five months about performance deficiencies, and that she had left the lab without notice. But despite the null result for Ms. Cuddeback, graduate student assistants across the country have cause for cheer.

Wednesday, August 25, 2004

Although the Supreme Court is poised next term to decide whether disparate impact analysis applies to federal ADEA cases (in Smith v. City of Jackson), the panel in Meacham v. Knolls Atomic Power Laboratory, No. 02-7378 (2d Cir. Aug. 23, 2004) (available on the Second Circuit webpage) jumped ahead of the High Court, affirming a jury verdict for plaintiffs in a collective action that challenged the procedures applied in an involuntary reduction in force (IRIF). The court slipstreamed the foundational issue presented in Smith , holding alternatively that (1) defendant waived the argument by not briefing it in the trial memorandum or Rule 50 motion; (2) prevailing circuit authority allowed ADEA disparate impact cases; and (3) the New York Human Rights Law independently supported an older-age, disparate impact theory.

The Second Circuit affirmed the verdict over a welter of admissibility and sufficiency of the evidence arguments (most found to have been forfeited in the district court). One argument that the panel addressed at length was the seemingly untenable jury finding that the employer failed to produce a legitimate business justification for the layoff. The panel wrestled over the portion of the trial record clearly setting forth an economic justification for paring the workforce. It thus became the plaintiffs' burden under Wards Cove Packing Co. v. Antonio to shed doubt on this justification or present the jury with an alternative procedure to conduct the layoff with less adverse impact on older employees. The panel affirmed the district court's ultimate finding that plaintiffs met their burden by challenging the subjective :

"Faced with the need to cut its workforce and simultaneously to retain employees with critical skills, [defendant] KAPL undertook a multi-step workforce reduction plan that included a [voluntary separation plan], transfers, retraining, a limitation on new hiring to candidates with critical skills, and-finally-the IRIF. Employers are free to decide that layoffs are necessary; and 'criticality' and 'flexibility' may be appropriate criteria to use in making a termination decision. But if a particular criterion is subjective (as 'flexibility' and 'criticality' are, and if (as here) evidence shows that (i) the subjectivity disproportionately impacted older employees; (ii) the employer observed that the disproportion was gross and obvious; and (iii) the employer did nothing to audit or validate the results, then an employer may be liable for discrimination if equally effective alternatives to the challenged features of the employment practice are available."

The decision thus supports the age-old (though seldom expressed) proposition that an employer can be held liable for discrimination when it acts in knowing disregard of a risk that a RIF may have a disparate impact on a protected group, at least if the standards are as vaporous as the ones the employer used here. The employer's good faith belief that process selects out the right employees for termination will not insulate the company from liability.

Tuesday, August 24, 2004

A silver lining for retaliation claimants (and a cautionary note about the limits of Reeves) may be found in the Fourth Circuit's recent summary-judgment affirmance in Price v. Thompson, No. 03-2184 (4th Cir. Aug 18, 2004). The case presents a Title VII, failure-to-hire retaliation claim. Price was twice turned down for employment at National Institutes of Health. After the first rejection, he filed Title VII EEO charge with the agency (the basis of which was undisclosed in the panel opinion). Months later, when the same plaintiff applied unsuccessfully for a second position with the same decision-maker, he was again turned down in favor of an allegedly superior candidate.

The panel dismantled the district court's holding that plaintiff failed to muster a prima facie case -- and it is here where the opinion may do future plaintiffs some good. The parties agreed that Price established two elements (that his EEO complaint was protected activity, and that the agency's failure to hire him was an adverse action), but both clashed over the causation element. The panel found that the record presented two genuine issues of material fact -- (1) whether there was sufficient circumstantial evidence that the decision-maker knew that plaintiff filed the EEO complaint and, if so; (2) whether the nine- to ten-month gap between the filing of the charge and the failure to hire broke the chain of causation. Although the decision-maker denied any knowledge of the EEO charge, the panel found that "a reasonable factfinder could elect not to credit fully the testimony supportive of Robbins in favor of the circumstantial evidence tending to show that Robbins knew or strongly suspected that Price was the complainant."

Thus, a plaintiff lacking direct evidence of the decision-maker's knowledge -- or experiencing a months' long delay in suffering an adverse action -- might cite this authority to roll a case past summary judgment.

Nevertheless, the panel went on to affirm summary judgment on an alternative ground -- that the record did not support a finding of retaliation, even though the agency offered arguably inconsistent explanations for its decisions. The court noted that while the agency presented four reasons for its decision not to hire plaintiff, plaintiff could at most show that two of those reasons were mistaken in fact or inconsistent. Two reasons went unrebutted altogether. The panel held that Reeves did not require such a case to go to trial, despite the prima facie case and evidence that some of the agency's reasons were doubtful: "when this Court has applied the Reeves methodology to sustain a verdict or to allow a plaintiff to survive summary judgment, it appears to have done so only in cases where the plaintiff had a substantially stronger case than Price has in the case at bar."

Friday, August 13, 2004

As plaintiffs' attorneys, must we hire flying billboards to tell employees -- "if you don't complain about workplace harassment, there is nothing we can do to help you"?

For the latest miscarriage, take a look at McPherson v. City of Waukegan, No. 03-2738 (7th Cir. Aug. 11, 2004). In a nutshell, Ms. McPherson's supervisor over time escalated his behavior from occasional crude comments, to placing his hands on and inside of her blouse, and finally to sexual assault. Ms. McPherson never officially complained to the city or filed a union grievance, but after the assault she arranged a lunch with the mayor's daughter and a city attorney to tell what happened. At once, the supervisor was called in to his boss's office and threatened with instant suspension. (He resigned on the spot, and later plead guilty in criminal proceedings to attempted criminal assault.) The city conferred a 30-day paid leave on the plaintiff, which she then tried unsuccessfully to extend to 90 days. The village hired a temp to fill the plaintiff's job and packed her belongings, but encouraged her to come back to work. She instead resigned.

The panel found (upon review of summary judgment for the village) that a hostile work environment did not exist until physical touching first occurred (holding that the various comments about her clothes and miscellaneous sexual innuendo were not severe or pervasive under the circuit's Baskerville standard). Thereafter -- when the touching began -- the court found (in substance) that it was up to plaintiff to do something to help herself, either through the union or the city's anti-harassment policy: under Faragher/Ellerth, an "employer cannot be considered to have knowledge of sexual harassment unless the employee makes a concerted effort to inform the employer that a problem exists" (quotation marks omitted). Tragically, for whatever reason (plaintiff's personal reserve, trauma or fear of retribution), Ms. McPherson didn't complain until after the worst already happened.

I do wonder whether a prompt and effective anti-harassment policy requires that employees learn the consequences (for any potential legal action) of not reporting harassment.

Thursday, August 12, 2004

For class action practitioners, a potentially unsettling new case from the Eleventh Circuit (Reynolds v. McInnes, No. 03-13682 (11th Cir. Aug. 10, 2004) ) holds, in an issue of first impression there, that intervenors have standing to enforce contempt remedies under a Title VII consent decree. The panel set forth, as follows, the procedural history of the appeal:

"This case is the latest in a long line of appeals stemming from a 1985 employment discrimination lawsuit brought by a class of African-American employees and applicants against the Alabama Department of Transportation ('ALDOT'). In January 1994, a group of white ALDOT employees moved to intervene for purposes of challenging the race-conscious aspects of a proposed consent decree between the African-American plaintiffs and ALDOT. The district court granted the motion and subsequently certified an additional class consisting of non-African-American ALDOT employees (the 'Adams intervenors). In March 1994, the district court signed a consent decree that incorporated certain race-neutral provisions insisted upon by the Adams interveners and accepted by both plaintiffs and ALDOT ('the Consent Decree'). Disputes over the enforcement of this decree have spawned continuing litigation in the decade since 1994."

The intervenors sought to enforce compliance with certain race-neutral reclassification provisions said to benefit the non-African-Americans. The court of appeals, finding no precedent specifically disapproving of this procedure, concluded in a brief opinion that the intervenors had standing to enforce with contempt proceedings those decree provisions applicable to white ALDOT employees.

The foreseeable problem: Parties that enter into injunctive decrees normally have a built-in incentive to hold their fire (the parties must function in concert to manage the decree, and can either work out or tolerate trifling matters). Intervenors have no such restraint. They can seize on the provisions that pertain to their parochial interests and play them to the hilt. And then, unless provision is made in the decree for attorneys fees, who compensates the parties' counsel for defending the operation of the decree? The opportunities for mischief are limitless.

Wednesday, August 11, 2004

Wise plaintiff's attorneys know to analyze a case from the remedy backwards to liability. Because we habitually assume perfidy and malice by employers, it is too tempting to take cases with good liability facts and no remedy.

Exhibit A is the Seventh Circuit's recent decision in a diversity contract case, Haslund v. Simon Property Group Inc., No. 03-3658 (7th Cir. Aug. 6, 2004). The employer (a dot-com startup, "clixnmortar.com") promised Haslund in writing compensation of "$175,000 plus 1% equity in clixnmortar.com, structure to be determined." The district court found, and the Seventh Circuit affirmed, that this term was enforceable despite a lack of crystal clarity about how to calculate the 1% figure, what form the equity would take and whether there would be any restrictions on its transfer.

But Haslund sacrificed her $537,634.41 verdict because the panel held that she failed to prove that equity in the company would have had any value at all, as the company never turned a profit and eventually busted. The district court calculated the figure based on a presumed corporate net worth of $54 million -- derived from two other transfers of blocks of shares valued at roughly comparable amounts -- despite that (according to the panel) "when Haslund was fired (indeed at all times) clixnmortar had not shown a profit on the basis of which a capital value could be estimated by conventional methods, and apparently had no assets whose value could be appraised."

The panel condemned the district court's findings on damages as lacking evidentiary support in the record, rejected alternative theories of calculating damages and concluded in despair -- "But, surely, it will be replied, she could have gotten something for her equity interest-if only a few hundred dollars. No doubt. But if that is all she could have gotten, she would have held on to the stock in the hope that clixnmortar would succeed-in which event she would have been holding fairy dust when the company failed."

Net result -- a judgment for plaintiff, but nominal damages. Well, at least she gets her costs under Fed. R. Civ. P. 54.

Tuesday, August 10, 2004

In a classic "good-news, bad-news" opinion, the Eighth Circuit in Williams v. ConAgra Poultry Co., No. 03-2976 (8th Cir. Aug. 6, 2004) (available on Eighth Circuit website) affirmed a race discrimination and harassment verdict of $1,373,156 on behalf of a plaintiff, but squelched most of a $6,063,750 punitive damage award. The two sides of the opinion, on liability and damages, appear moreover to be at war with each other about the admissibility of "other harassment" evidence.

Plaintiff, a black male supervisor at a poultry plant, was terminated allegedly for fighting with a co-worker. At trial, Williams claimed that he was instead fired because of race, and had suffered racial harassment besides. The race harassment evidence at trial included incidents both witnessed and not witnessed directly by the plaintiff, including numerous racist remarks, nooses left at the stations of black employees, exposure to KKK fliers and selective sexual harassment of African-American women. On the discrimination claim, the jury awarded $927,788.90 compensatory damages and $6,063,750 in punitive damages (remitted by the judge to $173,156 compensatory and $600,000 punitive damages). On the harassment claim, the jury awarded a $1,001,397.40 compensatory award, plus an additional $6,063,750 in punitive damages (the same amount as the termination claim). Here, the judge remitted compensatory damages to $600,000, but left the $6 million punitive award intact.

On appeal, the employer took issue with the admissibility of various harassing events not witnessed by plaintiff. The panel affirmed admissibility on three alternative grounds -- that the evidence was relevant (1) to bolster the credibility of plaintiff's testimony, (2) as evidence of racial animus for termination claim and (3) to prove willfulness for punitive damages.

Yet when the panel set upon reviewing the punitive damage award, it held (citing State Farm Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003)) that the district court erred in allowing the jury to award punitive damages based on events not witnessed or suffered by plaintiff personally. It also held that the award was vastly out of proportion with the Title VII cap of $300,000 -- thus (covertly) importing the legislative compromise of the 1991 Civil Rights Act into the Bill of Rights. And so the panel held, in the final analysis, that the punitive award ought to be remitted to $600,000 because ... well ... "[s]ix hundred thousand dollars is a lot of money." That being enough reason, I suppose, to take away three-quarters of the plaintiff's total damages.

Monday, August 9, 2004

I took a weekend jaunt to Atlanta to speak at the ABA Annual Convention. There I ran into Kathryn Dickson, a valued colleague from Oakland, California, who informed me that Gov. Schwarzenegger just signed into law last Saturday a remarkable bit of budgetary legerdemain (my word, not hers) that, on balance, may help plaintiffs who win punitive damages.

To plug a hole in the state budget, California joined eight other states that commit the lion's share of punitive awards to the state treasury. Now, 75% of all punitive awards must be turned over to a state trust fund (see the new legislation at pp. 26-27, ftp://www.leginfo.ca.gov/pub/bill/asm/ab_2101-2150/ab_2116_bill_20040727_amended_sen.pdf ), which then (after the award becomes final) distributes the funds to the state treasury. As the price to pay for this reform, the California Assembly added these provisions:

"(f) Notwithstanding any other provision of law, any attorney's fees paid to an attorney from the plaintiff's share of the award shall be deemed to be the income of the attorney and not income to the plaintiff for state and local taxation purposes."

In a high tax jurisdiction like California, this is no small matter to plaintiffs. And:

"(g) A jury shall not be informed that any portion of a punitive damages award will be paid to a government fund, and no argument or inference shall be made to a jury that a punitive damages award would result in a windfall to the plaintiff or plaintiffs. However, nothing in this section shall be construed to affect a punitive damages award if a juror or jurors had independent knowledge that a portion of a punitive damages award will be paid to a government fund."

This takes away one of the most popular closing argument devices in defense counsel's arsenal, and (because the rule is legislative rather than court-made) probably cannot be swept rug-under by a "harmless error" analysis. Finally:

"(d) Upon deposit in the Public Benefit Trust Fund of proceeds from a final judgment punitive damages award, the plaintiff 's attorney in the action giving rise to those proceeds shall be entitled to 25 percent of the proceeds received by the fund from the punitive damages award in that action. Notwithstanding Section 13340 of the Government Code, the plaintiff's attorney's share of the proceeds shall be continuously appropriated to pay those attorney's fees, provided that any claim for payment by the plaintiff 's attorney shall be paid by the fund on July 1 of the next fiscal year."

Thus, the attorney's fee is protected.

It might also be expected that judicial awareness of this law may retard the use of remittitur to cut down jury awards. Or, if my optimism proves unfounded, the act sunsets in 2006.

Friday, August 6, 2004

In the arenas of Title VII, ADA and ADEA, it is a commonplace that to trigger coverage under anti-retaliation sections, a plaintiff need only complain of discrimination or harassment based on a good faith (if erroneous) belief that the activity violates federal law. Comes the Eleventh Circuit in Walker v. Elmore County Bd. of Ed., No. 02-16509 (11th Cir. Aug. 5, 2004) to remind us that this line of authority does not necessarily extend to the FMLA. Here, the plaintiff school teacher informed her principal that when she became eligible under the FMLA to take maternity leave at her one-year anniversary, she intended to do so (she was pregnant at the time). Critically, as it turned out, she would not make her one-year anniversary until six days after her delivery date. At the principal's direction, plaintiff directed her leave request to the school board in writing. Instead of obtaining leave, she learned that the board refused to renew her contract.

While the district court found grounds for a FMLA retaliation claim (though ultimately granting summary judgment on the merits), the Eleventh Circuit panel affirmed on the ground that plaintiff lacked even a prima facie case of retaliation, because she would not have been an eligible employee at the time the leave commenced. "Here, Walker would not have been eligible for leave even at the time her leave was to begin. Instead, Walker's request was for leave that would begin several days before she would have become eligible had her contract been renewed. There can be no doubt that the request-made by an ineligible employee for leave that would begin when she would still have been ineligible-is not protected by the FMLA." Although the plaintif contended that she could have plugged the six-day gap with unused sick days, the panel did not budge. "This argument misses the point, however, because the determination of whether an employee has been employed for at least twelve months for FMLA eligibility 'must be made as of the date leave commences.' 29 C.F.R. § 825.110(d)."

The panel could apparently have side-stepped this harsh result by affirming on the grounds actually reached by the district court (that the employee failed to present a genuine issue of material fact on the seven reasons the Board presented for its failure to renew the contract).

Thursday, August 5, 2004

Just how little evidence ought to trigger a trial on a retaliation claim? The Eighth Circuit finds "close" but triable (and thus reverses summary judgment upon) the record facts set forth in Bainbridge v. Loffredo Gardens, Inc., No. 03-3192 (8th Cir. Aug. 4, 2004) . Plaintiff, a warehouse manager, complained that the company owners (the Loffredos -- this was a family-owned and operated business) repeatedly used racial slurs about customers, competitors or other employees. Six days after his last complaint, he was fired (while on vacation) supposedly because of his poor interpersonal skills.

Plaintiff filed Title VII, section 1981 and Iowa state law claims of harassment and retaliation. On summary judgment and on appeal, all of the claims fell away (although Judge Richard Arnold dissented on dismissal of the harassment claim), save for section 1981 retaliation. There the panel unanimously reversed summary judgment.

"Although the issue is close, we hold Bainbridge has enough circumstantial evidence to get his retaliation claim to a jury. . . . In this case, Bainbridge left immediately on vacation after his last complaint, and was fired just six days later, before he returned to work. In addition, although there are documents and testimony produced immediately before or after Bainbridge's termination, Bainbridge had no extensive disciplinary record, despite Loffredo Gardens's claim that it had problems with Bainbridge from the beginning. Loffredo Gardens contends it demoted Bainbridge during his employment, but Bainbridge asserts he merely assumed the tasks of a subordinate in addition to his usual duties after the subordinate's termination. Because Bainbridge consistently received raises during his employment indicating more than satisfactory performance, and the record indicates no change in his job title, we give Bainbridge the benefit of the inference on this issue. A reasonable jury could infer Loffredo Produce tried to paper Bainbridge's file to justify his termination. Contrary to Loffredo Gardens's assertion that the supervisors made unsolicited threats to quit if Bainbridge remained employed, the record shows Loffredo Gardens may have sought out the supervisors to justify Bainbridge's termination. In responding to Bainbridge's claim for unemployment benefits, Bainbridge's direct supervisor, David Dennis, told the Iowa Workforce Development Center that "[when Mr. Bainbridge went on vacation we got the warehouse managers together [and] heard [Bainbridge] tugged at shirts, yell[ed] at warehouse staff, et cetera." From these circumstances, a jury could reasonably conclude by a preponderance of the evidence that Loffredo's stated reason for firing Bainbridge was pretextual." [Citations omitted]

A good case for plaintiffs to cite, in a Circuit not normally regarded as hospitable to employees.

Wednesday, August 4, 2004

The Second Circuit has joined the Seventh Circuit in its siege on sealed court files and overly broad protective orders. In Gambale v. Deutsche Bank AG, No. 03-7621 (2d Cir. Aug. 2, 2004) (available at the Second Circuit website), after dismissal of a Title VII case, the district court judge published to the public file, sua sponte, unflattering summary judgment exhibits (such as an internal diversity study) that had been filed under seal. The judge also released a court transcript disclosing terms of the final settlement, including a reference to the financial terms being in the "multi-million" dollar range. Defendant appealed all of the above, the plaintiff declined appearance and the Second Circuit appointed amicus counsel to support the district court's order.

In the end, the panel substantially affirmed the district court, though it criticized as error the disclosure of the financial settlement terms. Individual financial settlements are ordinarily private and there is no compelling interest in exposing them to sunlight, the court found. The only reason that the settlement became part of the court record was that the judge, apparently under assurances of confidentiality, asked the parties to disclose the terms on the record. While the hearing transcript was presumptively public, the court found:

"that the presumption, such as it was, was a weak one under these circumstances: The amount of the settlement was confidential, the parties articulated the reasons for such confidentiality, and the amount made its way into the transcript only in response to the court's apparently casual questioning of counsel in the course of proceedings addressing the settlement, not the adjudication, of litigation. Without some further showing of public interest in the disclosure of the settlement amount, the Bank's reasons for maintaining the confidentiality easily overcome the markedly weak presumption of access here."

Yet recognizing that the judge's statements had already circulated on proprietary legal research sites, Westlaw and Lexis, the panel concluded that "however confidential it may have been beforehand, subsequent to publication it was confidential no longer. . . . We simply do not have the power, even if were we of the mind to use it if we had, to make what has thus become public private again. "

So far as the summary judgment exhibits were concerned, though, the panel found the district court on solid ground.

"Here, the Bank relied in the district court entirely on its position, with which, as we have explained, we disagree, that the district court had no jurisdiction to modify the protective order thereby unsealing the summary judgment documents. As we have noted, these documents, which related to the court's ruling on a motion for summary judgment, were presumptively subject to public access. The Bank made no effort to rebut that presumption by establishing that there was a continuing compelling reason to require that the documents remain under seal."

In sum: The age of agreed protective orders, with their attendant evils and compromises, may thankfully be coming to an end.

Tuesday, August 3, 2004

Here's a recent opinion that presents a potential roadblock to employees seeking redress for discrimination within an organized workforce: Local Union No. 12004 v. Commonwealth of Massachusettes, No. 03-2352 (1st Cir. July 30, 2004) . The case began in 1996, when the employer (ComGen) locked out its union and called in management employees to fill the ranks. Peter McGrath, a ComGen supervisor who was gay, went to work with a crew that was picketed by the local union. Picketers hurled anti-gay invective at McGrath that was crude, humiliating and threatening, in reaction to what the union deemed unfair labor practices. McGrath filed a complaint against the union and some of the picketers with the Massachusetts Commission Against Discrimination (MCAD), alleging a hostile work environment. The union, seeing McGrath's action as a threat to its right to organize (and as a Trojan horse, paid for by ComGen management), responded with a declaratory and injunctive action suit in federal district court, claiming that the state administrative proceeding was preempted by the National Labor Relations Act. The federal district court initially dismissed the claim for lack of subject matter jurisdiction.

The First Circuit reversed, finding in turn that (1) the district court had jurisdiction over a claim for declaratory and injunctive relief on Supremacy Clause grounds, either as an implied right of action or under 42 U.S.C. § 1983; and (2) on remand, the district court would have to consider whether to abstain under the Younger doctrine during the MCAD administrative proceeding. The court noted that in spite of the importance of the state interest in enforcing civil rights, that interest might have to give way to right to picket "arguably protected" by the NLRA. The panel's implicit suggestion is that if the picketer is motivated by the union's interest to organize, he or she is privileged to abuse opponents with racist, sexist or homophobic slurs. A decision calculated to stir up resentment during the next strike or lockout at a unionized employer.

Monday, August 2, 2004

Last Tuesday (July 27), I noted a recent Ninth Circuit case (Elvig v. Calvin Presbyterian Church, No. 02-35805 (9th Cir. July 23, 2004) ) that opened a breach in the judicially-created "ministerial" exception under the federal anti-discrimination laws. Although Title VII and its analogues do not expressly exempt churches or other religious institutions as "employers," every circuit confronting the issue has held -- to avoid a conflict between Title VII and the Free Exercise and Establishment Clauses of the First Amendment -- that employment decisions involving "ministerial" employees may not be challenged.

Not that such employers are entirely off the hook, because non-"ministerial" employees of religious institutions continue to enjoy protection under the anti-discrimination statutes. There is a finely-grained case law distinguishing between non-"ministerial" (e.g., secretaries, custodians) and "ministerial" (not only church and temple leaders, but counsellors, teachers, liturgical staff, and anyone else responsible for propagating the faith).

Elvig carried the analysis in a new direction, holding that where the claim did not require analysis of the church's avowed reason for its action -- in Elvig, it was a hostile work environment case -- there was no First Amendment conflict presented even if the employee was incontestably a church minister. (Elvig relied on a prior en banc decision, Bollard v. California Province of the Society of Jesus, 196 F.3d 940 (9th Cir. 1999).)

Cases against religious employers seem to be something of a specialty in the Ninth Circuit, for just one week later, we now have Werft v. Desert Southwest Annual Conference of the United Methodist Church, No. 03-15545 (9th Cir. July 30, 2004), a decision more in the mainstream of these cases. Here is the essence of the claim, quoted from the opinion:

"A pastor and minister of the Vista de la Montaña United Methodist Church ('the Church') in Tucson, Arizona, Andrew E. Werft ('Werft') alleges that despite having Attention Deficit Disorder ('ADD'), dyslexia, and certain heart problems, he was able to perform his ministerial duties with minor accommodations. The Church, however, refused to make any accommodations and instead 'forced him to resign from his pastoral position . . . .'"

The claim presented both constructive discharge and hostile work environment claims. Though filed in state court, the church removed to federal court and succeeded at having the case dismissed at the pleading stage. The Ninth Circuit affirmed in a per curiam opinion. The panel opinion expounds at length upon the history and rationale for the "ministerial" exception, yet oddly does nothing to square itself with Elvig (other than to cite it).

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