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January 2005

| Jan 18, 2005 | Daily Developments in EEO Law |

Daily Developments in EEO Law
by Paul Mollica (c) 2005

January 2005

Monday, January 31, 2005

If the EEOC picks up an employee’s federal ADEA claim, loses it in the district court and later abandons it on appeal, what becomes of the employee’s parallel state law claim? Under the wrong circumstances, as two plaintiffs discovered last Friday, it could be extinguished by res judicata. In Vines v. University of Louisiana, No. 03-31172 (5th Cir. Jan. 28, 2005), two plaintiffs filed federal law challenges (to the university’s policy of barring re-employment of retirees, and paying them less than younger staff) under the ADE and a supplemental claim under Louisiana state law.

While their federal case was pending,Kimel v. Florida Board of Regents, 528 U.S. 62 (2000), brought an end to private, federal damage actions against state employers for age discrimination. The district court dismissed their ADEA claims, and declined to exercise supplemental jurisdiction over their Louisiana state law age discrimination claims, which the plaintiffs then refiled in state court. Fortunately for plaintiffs, the EEOC had brought its own action challenging the same policies, naming the two plaintiffs as aggrieved parties. But the Commission lost the case and declined to prosecute an appeal. Thereafter, the university sought to have the plaintiffs’ state law claims dismissed on claim preclusion grounds. Failing before the Louisiana Second Circuit Court of Appeal to dismiss the suit (which held there was no privity between the plaintiffs and the EEOC), the university then filed in the federal district court under the Anti-Injunction Act to preclude continued litigation on the state law claims. This district court denied the injunction and the university appealed.

On this fourth round, the university finally succeeded at killing the state lawsuit. First, the Fifth Circuit held that the state court of appeals decision on res judicata was interlocutory only, and thus not entitled to preclusive effect. Second, it distinguished this case from other precedent involving Title VII by holding that the EEOC AdEaction extinguished the employee’s right to bring his or her own action by operation of 29 U.S.C. § 626(c)(1). Third, it held that the EEOC never abandoned the employees’ interests until after the final judgment, and that the state law provided no greater substantive protection than the ADEA. Ultimately, “the EEOC acted with due diligence and reasonable prudence. They conducted and participated in discovery, filed motions for summary judgment, and responded to motions filed by ULM. The EEOC did not inadequately represent Vines and McGraw simply because it made a calculated decision to voluntarily dismiss its appeal.”

Wednesday, January 26, 2005

The Federal Rules of Civil Procedure are forgiving in many ways, but woe betide the lawyer who forgets at the close of the evidence to state all of the grounds in the Rule 50(a) motion for judgment as a matter of law (JMOL). In Miller v. Eby Realty Group LLC, No. 03-3307 (10th Cir. Jan. 25, 2005) , the defendant in an ADEA trial remembered to timely move for JMOL on liability, but not on “willfulness” (which triggers double damages). On appeal, defendant challenged the sufficiency of the evidence on willfulness; plaintiff argued that it was procedurally barred. The plaintiff (with the able assistance of the EEOC Appellate Division) prevailed on this point:

“Here, Eby made two oral motions for JMOL before the case was submitted to the jury. In both motions the company argued there was insufficient evidence to support a finding of age discrimination based on the evidentiary requirements for proving an ADEA claim discussed above; however, neither motion asserted that (assuming the motion was denied) the evidence still was insufficient to support a finding of willfulness under the ADEA.”

The panel also held that the willfulness issue was not subsumed by the liability issue: “This evidentiary showing is distinct from the prima facie case and pretext standards discussed above. Therefore, by failing to challenge willfulness directly, Eby did not alert Mr. Miller as to a possible evidentiary deficiency on this issue, and Mr. Miller was not afforded an opportunity to correct such problem before the case was submitted to the jury, if one existed.” Lesson: Plaintiffs’ lawyers need to pay close attention to the record, as counsel obviously did here, to dodge the JMOL bullet.

Tuesday, January 25, 2005

I am cheered that even the most conservative federal appellate judges are coming around to the conclusion that strong circumstantial evidence of discrimination may warrant a trial, even when the plaintiff cannot otherwise establish pretext. In Machinchick v. PB Power, No. 04-20418 (5th Cir. Jan. 24, 2005), Judge Higginbotham (writing for the panel) reversed summary judgment for an executive in an ADEA/state law age discrimination case. The plaintiff suffered termination under the company’s new “cradle-to-grave” business plan, which required business development personnel to both scout new business prospects and “shepherd those prospects through the sales process to closing and beyond.” Plaintiff’s newly-appointed boss, Jim Knowlton, thought that Machinchick (in spite of plaintiff’s spotless record) would not be up to the new regime.

“In his e-mail [to human resources] describing Machinchick’s shortcomings, Knowlton claimed that Machinchick had a ‘[l]ow motivation to adapt’ to change. Knowlton expounded upon this claim in his deposition, describing Machinchick as ‘inflexible,’ ‘not adaptable,’ and possessing a ‘business-as-usual attitude.’ We have found that purely indirect references to an employee’s age, such as comments that an employee needed to look ‘sharp’ if he were going to seek a new job, and that he was unwilling and unable to ‘adapt’ to change, can support an inference of age discrimination. Thus, Knowlton’s description of Machinchick in both his e-mail and deposition gives rise to an inference that Machinchick was terminated because of his age.”

Moreover, “Knowlton sent an e-mail to several PB Power employees discussing his intent to go forward with his plan to ‘strategically hire some younger engineers and designers.'”

While the district court granted summary judgment on the ground that plaintiff failed to create a genuine issue of material fact about the truth of the above-stated reasons proffer for his termination, the panel reversed. It held (citing Rachid v. Jack in the Box, Inc., 376 F.3d 305, 309 (5th Cir. 2004)) that the age stereotyping implicit in these remarks, and the e-mail about hiring younger engineers and designers, was sufficient to shift the burden under Price Waterhouse to the employer to prove that plaintiff would have been fired even in the absence of the discriminatory motive. So the plaintiff would get not only a trial under this decision, but a jury instruction shifting the burden to the employer. A truly excellent result!

Monday, January 24, 2005

A word about what the Supreme Court held, and did not hold, today in Commissioner of Internal Revenue v. Banks (Jan. 24, 2005). The Court unanimously declined to rescue taxpayers who paid contingent fees to the lawyers in employment discrimination cases prior to the recent enactment of the Civil Rights Tax Relief provision of the American Jobs Creation Act (effective after October 22, 2004). The contingent fees for those unfortunates remain fully taxable as “income.” On the other hand, the Court declined to rule on whether fees awarded by a court under a fee-shifting statute would be governed by the same rule:

“Banks settled his case, the fee paid to his attorney was calculated solely on the basis of the private contingent-fee contract. There was no court-ordered fee award, nor was there any indication in Banks’ contract with his attorney, or in the settlement agreement with the defendant, that the contingent fee paid to Banks’ attorney was in lieu of statutory fees Banks might otherwise have been entitled to recover. Also, the amendment added by the American Jobs Creation Act redresses the concern for many, perhaps most, claims governed by fee-shifting statutes.”

Taxpayers who received a court-ordered fee award (or a settlement agreement that mimicked such an award) may thus have another argument to wield against the IRS.

Friday, January 21, 2005

The Eighth Circuit addresses a discomfiting set of facts, in a less-than-frank fashion, in LeGrand v. Area Resources for Community and Human Services (ARCHS), No. 04-1284 (8th Cir. Jan. 20, 2005) (available on Eighth Circuit website). The plaintiff alleged same-sex harassment — in the form of repeated, overt propositions for sex — by a priest who served on the board of the defendant and co-chaired a project that the plaintiff worked on, as well. After the first invitation (to watch porn and masturbate together), the plaintiff complained to his supervisors. Two more incidents followed:

“After the first incident, Leg rand tried to avoid Father Nutt. However, in November, LeGrand encountered Father Nutt at the ARCHS office after Father Nutt had a meeting with Potts and Walton. LeGrand contends Father Nutt (1) mentioned the pornographic movies again; (2) suggested LeGrand would advance in the company, if he watched ‘these flicks’ and ‘jerk[ed Father Nutt’s] dick off’; (3) ‘kissed [LeGrand] in the mouth’; (4) grabbed LeGrand’s buttocks; and (5) ‘reached for [LeGrand’s] genitals.’ LeGrand pushed Father Nutt in the chest and said, ‘You motherfucker.’ Father Nutt later admitted hugging and kissing LeGrand, but Father Nutt believed the ‘peck on the lips’ was ‘mutual.’ Father Nutt also admitted to ‘brush[ing LeGrand’s] crotch with the back of my hand [, . . . b]ecause it seemed that [LeGrand] was stimulated by the hug.’ The third incident allegedly occurred in December, when Father Nutt briefly gripped LeGrand’s thigh while each were seated at a table during a meeting at the ARCHS office.”

On these facts, the Eighth Circuit affirmed summary judgment on the grounds that the activities were not severe or pervasive enough to constitute actionable harassment. The Court held:

“None of the incidents was physically violent or overtly threatening. There can be no doubt Father Nutt’s actions, admitted and alleged, ranged from crass to churlish and were manifestly inappropriate; however, the three isolated incidents, which occurred over a nine-month period, were not so severe or pervasive as to poison LeGrand’s work environment.”

After reading hundreds of sex harassment appellate decisions, I’ve gotten used to a certain lack of sensitivity by some judges to the workplace realities of harassment. But really, this decision takes the cake. The employee was pawed twice, grabbed in the crotch and forcibly kissed in the mouth. Of course, this was physically threatening. In many jurisdictions, the priest’s behavior would constitute misdemeanor sexual assault, if not worse. To find the activities not “severe or pervasive” as a matter of law is just astounding.

Thursday, January 20, 2005

I am back on the case after a holiday and trial hiatus. We prevailed in a Title VII trial in Milwaukee against Piper Jaffray Companies, for a woman stockbroker (Kathryn Lane) who lost out on some $3 million of business after she filed an EEOC charge about her branch manager. The jury returned a verdict of $40,000 compensatory damages and $175,000 punitive damages. The trial took seven days; the jury was out for a full day. The crux of the punitive damage claim was whether the jury would credit Piper Jaffray’s defense of good faith under Kolstad.

Coincidently, our Seventh Circuit issued a decision on the related subject of due care (the Title VII standard for co-worker harassment) the very day that our jury heard closing arguments in our case. Loughman v. Malnati Organization, Inc., No. 04-1564 (7th Cir. Jan. 18, 2005). In that case, a teen woman who worked for a pizza restaurant alleged that she was sexually assaulted in a walk-in cooler by two co-workers, and later fondled by a third employee. (In the background was a history of humiliating sexual taunts by the staff.) Also, two other women on staff had also been assaulted. The district court held on summary judgment that the Restaurants took reasonable care to prevent and promptly correct harassment by employees by issuing verbal warnings, transferring one harasser and firing another. The court of appeals, though, held that a jury might take a different view of the record: “[Manager] Gros testified that she talked to the kitchen workers between 10 and 20 times about how to treat female employees, often in response to complaints from the female employees about inappropriate comments made to them. While a reasonable jury could view such diligence as evidence of Malnati’s commitment to preventing harassment, it might also think the frequency of the discussions suggests that a different approach was needed. A jury could determine that, at some point ,the management at Malnati’s needed to stop merely issuing warnings and start taking disciplinary action against the offending employees.”

So the case goes back for trial.

 

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Stiefel v. Bechtel Corp., No. 09-55764 (9th Cir. Nov. 1, 2010); Kepas v. eBay Inc., No. 09-4200 (10th Cir. Nov. 2, 2010)

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Newberry v. Burlington Basket Co., No. 09-3082 (8th Cir. Sept. 28, 2010)

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