Daily Developments in EEO Law
by Paul Mollica (c) 2006
Monday, July 31, 2006
Here's a hair-raising opinion for any employment plaintiffs' counsel who have suffered a difficult client: Amlong & Amlong v. Denny's Inc., No. 04-14499 (11th Cir. July 31, 2006). On a 2-1 split, the panel reverses an $400,000-plus sanctions award under 28 U.S.C. § 1927 against a well-regarded plaintiffs' firm that (it was alleged) prolonged a Title VII harassment claim beyond the point of hopelessness. A 45-page majority opinion, methodically raking over the record, finds that the district court erred in awarding sanctions while (1) rejecting the findings of the magistrate judge who heard the witnesses, and (2) failing to conduct its own live hearing. A determined 52-page dissent examines the same record and finds no error.
During a two-month discovery campaign in January and February 1996, the opinion reflects that ten witness depositions failed to corroborate the employee's story. Counsel hired a polygraph expert at this stage, who found she tested truthful on her core allegations of abuse. Counsel also produced and served an errata sheet running 63 pages (with 868 changes to the testimony).
In response to what it deemed an abuse of the deposition mechanism, the district court ordered the employee on August 26, 1996 to attend a second deposition, pay the costs of reopening the deposition, and submit an appendix detailing all changes to her testimony. This deposition commenced September 1996, but the employee performed so erratically that the defendant called off the deposition and eventually obtained a dismissal as a sanction against the employee for failing to obey the August 26 order.
There then ensued a hearing on attorneys' fees for the defendant. The magistrate judge assigned to conduct the hearing held that only the plaintiff should be liable for fees under Title VII, 42 U.S.C. § 2000e-5(k), while finding that her counsel did not engage in bad faith litigation and therefore rejecting a section 1927 sanction award.
The district court judge rejected the magistrate judge's report and recommendation as to the Amlongs, and -- without conducting its own hearing, found that by the time that the lawyers filed the errata sheet, it had become clear that the case was meritless. It held the Amlongs responsible for the cost of reopening the deposition (with 10% interest on top) and $389,739.07 to cover defense attorneys' fees, costs and expenses after the service of the errata sheet.
The majority, in an issue of apparent first impression for the circuit, held that under section 1927
"a district court may impose sanctions for egregious conduct by an attorney even if the attorney acted without the specific purpose or intent to multiply the proceedings. That is not to say the attorney's purpose or intent is irrelevant. Although the attorney's objective conduct is the focus of the analysis, the attorney's subjective state of mind is frequently an important piece of the calculus, because a given act is more likely to fall outside the bounds of acceptable conduct and therefore be unreasonable[e] and vexatious' if it is done with a malicious purpose or intent."
Thus, although an attorney's subjective bad (or good) faith may be relevant, it was not determinative. Recklessness, but not negligence, by counsel is enough.
The magistrate and district court judges came to different conclusions about the errata sheet; the magistrate held (following a four-day hearing) that it was a good faith attempt to tell an accurate story, while the district court judge held that it was filed "to cover up flaws and inconsistencies in the plaintiff's account of events." The panel found the district court's decision to reject the magistrate's finding an abuse of discretion, because -- under 28 U.S.C. § 636(b) -- the court could only reject findings regarding the credibility of witnesses by holding a new hearing to review the demeanor of the witnesses:
"The district court's order in this case flatly violated the rule. The magistrate judge made clear that his findings turned on his evaluation of the credibility and believability of the testimony given at the evidentiary hearing; indeed, he stated that his findings were based on 'hearing the testimony from plaintiff's counsel concerning their representation of plaintiff in this case.' The magistrate judge's evaluation required him to make finely tuned assessments of various witnesses' credibility as they testified about their states of mind, beliefs, motivations, and actions at each critical stage of the litigation. It is clear that the witnesses' demeanor and credibility at the evidentiary hearing played a critical role in the magistrate judge's findings about the Amlongs' purpose and intent and his conclusion regarding their objective conduct. The demeanor of the witnesses at the evidentiary hearing plainly influenced the magistrate judge's determinations about whether the Amlongs and the plaintiff's other attorneys arranged the polygraph examinations as a stratagem for creating a facade of diligence or, rather, as a genuine effort to discern whether the plaintiff was telling the truth."
The case was remanded to the district court judge, with a mandate either to accept the report and recommendation exonerating the Amlongs, or else conducting a new hearing to make new credibility findings. The sanction of paying costs for reopening the deposition, likewise, was reversed.
The dissent rejected the panel majority's legal formulation of the test for awarding sanctions, holding that the movant need only show objectively reckless conduct, with no consideration of the lawyer's subjective intent, and so a remand for a hearing on the employee lawyers' state of mind was unnecessary. "No amount of good intentions can legitimize otherwise forbidden litigation conduct. If what counsel has done transgresses permissible bounds, counsel may not plead good faith in doing it. Were that not so, counsel who knows that his client ought, in justice, win the case could claim good faith in suborning perjury to achieve that success."
N.B. This spectacle has expanded to Jardyce v. Jardyce proportions. The sanctions issue has been pending for nearly a full decade (having first been raised in the district court January 1997). It is highly likely that one or both sides will seek rehearing of the parts of the majority opinion adverse to them, leading to more delay. Rehearing en banc is a distinct possibility, as the proper standard for section 1927 sanctions is an important legal issue and the Eleventh Circuit apparently has yet to address it head-on. The Amlongs meanwhile face another hearing on their eventually remand (presumably in front of the same district court judge) regarding sanctions, with another appeal likely to follow no matter who prevails. Is ther any judge wise enough to hack through all of this?
Friday, July 28, 2006
FRIDAY SPECIAL UPDATE 1:15 p.m.
The Seventh Circuit issued a blockbuster opinion today in Doe v. Oberweis Dairy, No 04-3680 (7th Cir. July 28, 2006) (a case in which I co-authored an amicus brief in support of the plaintiff). In a nutshell, the employee (then, a teen scooper in a Chicago-area ice cream shop) alleged that the adult shift supervisor harassed her. The panel summarized:
"[The shift supervisor] regularly hit on the girls (most of the employees were teenage girls) and young women employed in the ice cream parlor. He would, as one witness explained, 'grope,' 'kiss,' 'grab butts,' 'hug,' and give 'tittie twisters' to these employees, including the plaintiff. These things he did in the store, but he would also invite the girls to his apartment. He had sexual intercourse in the apartment with two of them, one of them a minor, before it was the plaintiff's turn. He was 25 when he had intercourse with her."
As a minor, intercourse with Doe was felonious under Illinois law, for which the manager was imprisoned. The plaintiff sued the employer on a claim of Title VII sex harassment
Judge Posner's opinion (running an uncharacteristically-long 24 pages) reversing summary judgment for the employer settled several important legal issues concerning sex harassment cases in the Seventh Circuit:
1. Although a complainant must cooperate with the EEOC, including by participating in a fact-finding conference with Commission staff (29 C.F.R § 1601.15(c)), failure to comply does not bar a subsequent civil action. On this issue, the Seventh Circuit split with the Tenth Circuit, which last year held (in an ADEA) case that cooperation was a prerequisite to suit (Shikles v. Sprint/United Mgmt. Co., 426 F.3d 1304 (10th Cir. 2005)). Indeed, the panel cast doubt on the commonly-repeated assumption that "exhaustion" is a precondition to a civil action against a private employer under Title VII: "Title VII does not incorporate anything like the full apparatus of exhaustion, an apparatus designed as we have noted for cases in which judicial review of an adjudication or a rule is sought." The panel contrasted a private-sector employee's duties to true exhaustion required of federal employees under Title VII, 42 U.S.C. § 2000e-16.
2. The court held that for purposes of evaluating the "welcomeness" of sexual intercourse under Title VII sex harassment law, the state law "age of consent should thus be the rule of decision in Title VII cases." Thus, consent is not an employer defense to liability. Nevertheless, "this does not mean that the conduct of the plaintiff can never be used to reduce the defendant's damages in such a case." Such conduct might bear on emotional distress, for instance: "If Doe was sneaking around behind her mother's- and her employer's-back and thus facilitating [the shift supervisor's] behavior, the employer may be able to show that the harm she suffered that was caused by its violation of Title VII (if such a violation is found on remand), rather than by [the shift supervisor], was minimal."
3. "Workplace" harassment can take place after a shift and off the premises, under the right conditions. While the acts of harassment at the shop leading up to the sex (as summarized above) may or may not have been sufficiently severe or pervasive to fix Title VII harassment liability, the sex definitely transgressed the line. Does it matter that the sex was at the shift supervisor's apartment, rather than the ice cream shop? The standard that the panel announces is whether the harassment was "an episode in a relationship that began and grew in the workplace."
4. Whether the shift supervisor in this case was a "supervisor" for purposes of Faragher-Ellerth -- imposing vicarious liability on the employer, subject to an affirmative defense -- was an issue of fact for the jury. The panel noted that "[h]e had supervisory responsibility in the sense of authority to direct the work of the scoopers, and he was even authorized to issue disciplinary write-ups, but he had no authority to fire them. He was either an elevated coworker or a diminished supervisor." But importantly, the panel stated that if "forced to choose," it would be inclined to conclude he was a supervisor, as he was often the only supervisor in the shop, and his personnel recommendations would most likely be followed, even if he lacked the power individually to carry them out. This marks an erosion, if not an outright retreat, from earlier cases in the same circuit requiring that a "supervisor" carry actual hiring, firing or comparable authority (e.g., Hall v. Bodine Electric Co., 276 F.3d 345, 355 (7th Cir. 2002)).
5. Even if the shift supervisor were deemed a co-worker, the fact that he had charge of (minor) teenage employees meant that the employer had an enhanced duty of due care to prevent possible sexual contact. "An employer of teenagers is not in loco parentis, but he acts at his peril if he fails to warn their parents when he knows or should know that their children are at substantial risk of statutory rape by an older, male shift supervisor in circumstances constituting workplace harassment."
6. While the employer was entitled in discovery to obtain the employee's psychotherapy records, it was barred for obtaining portions of the records that referred exclusively to her mother and sister.
This is a really useful decision for employers (who now know what's expected of them when they rely on a teen workforce) and employees, whether teen or adult, who will benefit from the wider definition of a "supervisor."
All we have in the hopper today is Treadwell v. Office of the Secretary of State, No. 05-1524 (7th Cir. July 27, 2006), a fairly routine retaliation case. I noted here recently (see entry of July 13, 2006) that in Sylvester v. SOS Children's Villages Illinois, Inc., No. 05-4219 (7th Cir. July 12, 2006), the Seventh Circuit repudiated dicta in Stone v. City of Indianapolis Public Utilities Div., 281 F.3d 640 (7th Cir. 2002), that appeared to require "direct evidence" to use the direct-case method to prove retaliation. Sylvester clarified that circumstantial evidence would do as well. This adjustment in the retaliation case law earned the plaintiff in that case reversal and a remand.
This case also reviews a district court summary judgment decision that likewise relied on the Stone dicta. But the bottom-line result for Mr. Treadwell is affirmance of summary judgment. Reanalyzing the case under the proper test, the court finds that "Mr. Treadwell points to no evidence, direct or circumstantial, of a causal connection between the statutorily protected activity-his filing of discrimination complaints-and the adverse employment action-his transfer to the warehouse." Examined under the indirect, McDonnell Douglas method, the court arrives at the same place, because the only evidence of similarly-situated employees revealed that a co-worker who did not complain of discrimination was treated the same way. "Mr. Treadwell's co-worker, Leslie Harris, never had filed an EEOC complaint, and yet was subject to the same adverse employment action that Mr. Treadwell had suffered. As the district court noted, Harris and Mr. Treadwell both were transferred to the same warehouse, where they both were subjected to the same working conditions, treatment from supervisors and low-level work assignments. Because he and Harris were treated equally, Mr. Treadwell cannot maintain that only he, and not a similarly situated employee who did not complain of discrimination, was subjected to the adverse employment action of which he complains." End of case, end of discussion.
Thursday, July 27, 2006
The Sixth Circuit gives us Wright v. Murray Guard, Inc., No. 05-5301 (6th Cir. July 26, 2006) , a case where the same panelist (Judge Karen Nelson Moore) writes both the panel opinion and a special concurrence. A race and sex discrimination case under Title VII, § 1981 and Tennessee law, the court affirms summary judgment -- applying the McDonnell Douglas-Burdine framework -- in a case where an employee was fired on the following record of alleged misconduct:
"(a) Wright's performance problems; (b) an anonymous letter alleging that Wright sexually harassed several women employees; (c) [co-worker] Bradley's allegations, supported by incident reports, that Wright sexually harassed her, [co-worker] Bennett, and other women employees; and (d) Bennett's allegation that Wright touched her in a sexual manner and pressured her into performing oral sex on him at the Nike facility and that she felt that her job would be in jeopardy if she did not have sex with him."
The court also notes that Wright purported to advance circumstantial evidence that if credited would prove that the employer made race or sex a motivating factor in the decision, thus placing the case within a mixed-motive Desert Palace framework (42 U.S.C. § 2000e-2(m)). But without pausing to consider how that approach might affect the bottom-line analysis, the panel majority finds that the circumstantial evidence is too weak to support the discriminatory inference.
Judge Moore, in her separate concurrence, urges the circuit to harmonize its various mixed-motive decisions and hold (post-Desert Palace) that a plaintiff proceeding under this section must simply present evidence sufficient to "demonstrate" that a protected classification was a motivating factor. She analyzes in detail the various methods used around the other circuits, concluding that the various circuits' attempts to revive or modify McDonnell Douglas-Burdine in the mixed-motive context had failed. Judge Moore also notes -- in an area of continuing confusion -- that "an employee need not label his or her claims as single of mixed motive from the outset of the case," an issue that is ultimately reserved for trial and the jury charge.
Also today, we have Hill v. Borough of Kutztown, No. 05-1356 (3d Cir. July 26, 2006), reversing (in part) an order dismissing the complaint for failure to state a claim. The case pits a city manager (Hill) against the city and its mayor, charging a plethora of constitutional and statutory violations. The EEO part of the case, an ADE and Pennsylvania state law claim, involves a claim of constructive discharge. Hill alleged that the mayor engaged in series of "harassing, intimidating and oppressive confrontations" with the employee and stirred up a rumor campaign against him until he quit, whereupon he was replaced by someone 15-16 years younger. The district court held that the employer (the city) could not be found liable under the ADEA because the "independently elected" mayor (who lacked the power to fire Hill directly) was not under the control of the city counsel, and his behavior could not be imputed to it. The Third Circuit finds that the allegations of the complaint hold out the possibility that the mayor, though he may "lack the power to terminate a subordinate's employment may nonetheless . . . constructively discharge the subordinate, provided that he . . . exercises some power over the employee." So back to the district court for discovery.
Wednesday, July 26, 2006
All's been quiet on the EEO front this week. On the benefits beat, we have Chuck v. Hewlett Packard Co., No. 04-36094 (9th Cir. July 25, 2006), which asks the question "whether ERISA's statute of limitations may bar a claim for benefits notwithstanding a plan's failure to fulfill its disclosure and review obligations under ERISA § 503, 29 U.S.C. § 1133"? The answer is generally yes -- a shot across the bow at plan administrators who sometimes take a leisurely approach to their duties -- but (holds the Ninth Circuit) not in this particular case.
Chuck complained that he was denied full retirement benefits in his lump-sum payment in 1980, challenging the plan's recalculation of his benefits after it discovered a gap in his service dates. Although ERISA § 503 requires plan administrators to "provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant," HP's last (partially) complying communication with Chuck occurred in 1981. On later inquiry, in 1992, the plan sent Chuck a letter denying any further benefits. When Chuck revived the issue once again in 2001, the plan did not respond or provided mandate disclosures (such as the reasons for the denial).
So what effect did this lapse have on the accrual of the six-year limitations period (borrowed from state law) that applied to his claim? It is certainly "highly relevant" in an ordinary case, holds the panel:
"It is indisputable that the clarity and apparent finality of a benefits denial are easily affected by whether the plan discloses its justifications for the denial and by whether there has been a reasonable opportunity for full and fair review of that denial. In this vein, for example, it is clear that the statute of limitations does not begin to run if a plan's disclosure was so inadequate that a claimant did not even have reason to know about the denial."
On the other hand, Chuck had sufficient personal knowledge of the accrual of the claim, that the plan's failure to provide legally mandated notice was deemed outweighed. Notice to Chuck included his subjective awareness that the employer calculated his service eligibility differently than he did back in 1980, HP's consistent communications to that effect, Chuck's notice in 1980 that acceptance of his lump-sum payment was irrevocable, Chuck's acceptance of the lump-sum payment, and a plan denial letter in 1992. The panel affirmed that these circumstances "leave little doubt" that Chuck knew the decision was final at least a decade earlier. Hence, the six years expired long before Chuck filed his civil action.
Monday, July 24, 2006
Here's an age discrimination case unlikely to repeat itself: a justice of a state Supreme Court, age 83, accuses his colleagues (the "defendant-appellants") of meeting without him to change the 60-year-old practice of rotating the Chief Justiceship, to deprive him of the center chair. Opala v. Watt, No. 05-6261 (10th Cir. July 21, 2006). The plaintiff was Vice-Chief Justice, who (without the rule change) would have been next in line for promotion to Chief. Justice Opalaccuses the other justices of violating his federal due process and equal protection rights by amending the rule. He seeks a declaratory judgment that the change in the rotation rule violates the U.S. constitution.
Now you know this guy is going to lose, right (despite that the district court somehow managed to deny a motion to dismiss)? So, which of the several doctrines of immunity, comity or federal jurisdiction do you think trumps this suit? Close your eyes and guess! Think hard!
The panel skips over the obvious possibilities, in favor of . . . the furthest reaches of Ex Parte Young, 209 U.S. 123 (1908). Ex Parte Young is the storied fiction that for a century has allowed a citizen to sue a state agent in federal court for injunctive relief, thus avoiding the constitutional immunity states enjoy under the Eleventh Amendment. But a lesser known facet to that doctrine is that even injunctive relief is limited: it must be prospective, and yet "capable of redressing the alleged injury." Here, because Justice Opala had already ceased serving as "Vice-Chief Justice of the Oklahoma Supreme Court when he filed suit, and because the equitable powers of the federal courts are limited to providing prospective equitable relief," the court found that there was no relief it could award that would redress his injury: "We simply cannot make Justice Opala Vice-Chief Justice again. This is precisely the type of retroactive equitable relief prohibited under the Ex Parte Young doctrine. "
Friday, July 21, 2006
The Ninth Circuit has ordered rehearing en banc in Hulteen v. AT&T Corp., No. 04-16087 (9th Cir. Mar. 8, 2006), previously criticized at this site (see my March 9, 2006 entry), which found that there is no Pregnancy Discrimination Act violation in awarding pension benefits calculated upon service dates that award pre-1979 pregnancy leave time less credit than comparable disability leave. The court had previously held in Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), that an employer's comparable ratification of pre-Act discrimination violated the PDA. This decision may be endangered: all There panelists in Hulteen, including the dissenter (Judge Pamela Rymer) either distinguished Pallas or urged its reconsideration in light of the intervening retroactivity decision, Landgraf v. USI Film Prods., 511 U.S. 244 (1994).
While off my beat, I also notice victories by employees in two wage, hour and benefit cases. In the Sixth Circuit, a panel affirms a bench verdict for a plaintiff in an FMLA case, Killian v. Yorozu Automotive Tennessee, Inc, No. 04-6202 (6th Cir. July 20, 2006). Employment discrimination claimants take note: the employee beat back challenges both to mitigation and front pay awards. The opinion notes that the terminated employee, who formerly occupied a "high-paying first-shift factory job," suffered eight months unemployment but was diligent enough in her job search (she ultimately opted for cosmetology school) to avoid the employer's mitigation defense. The court also affirmed a five-year front pay award (the difference between her old factory wage and her earnings as a hairstylist).
And in Davis v. Mountaire Farms Inc, No. 05-3982 (3d Cir. July 20, 2006), crew leaders as a chicken processing plant win a reversal of summary judgment finding them exempt under 29 U.S.C. § 213(a)(1) (persons employed in a "bona fide executive capacity"). The crew leaders, who supervised "catchers" (who crated the chickens), had "no responsibility for recruiting catchers, no responsibility for making recommendations on the hiring or termination of individuals, and no power to hire or fire an employee, even within restricted guidelines." (But in a bad portent for the employees, the court drops a footnote that the relevant regulation (Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 69 Fed. Reg. 22122 (April 23, 2004)) that applied to their claim was not retroactive, possibly endangering most of their claim for damages.)
Thursday, July 20, 2006
There cases of note from yesterday --
1. In the Second Circuit, here is the unusual case where an employee is held to have exhausted administrative remedies despite checking the wrong theory of liability on the EEOC charge form, where the facts alleged in the charge clearly indicate a discrimination (rather than retaliation) claim. Williams v. N.Y.C. Housing Authority, No. 04-2531 (2d Cir. July 19, 2006) (on Second Circuit website) .
2. Parties may petition the federal courts of appeals for interlocutory appeals of Rule 23 class action certification decisions, but the rule (Fed. R. Civ. P. 23(f)) does not extend to non-class collective actions, such as those under the FLSA or the ADEA. In Comer v. Wal-Mart Stores, Inc., No 05-1761 (6th Cir. July 19, 2006), the employer -- facing a There-state FLSA overtime case involving potentially 1200 employees -- tried to head off notice to the class by taking a "collateral order" appeal (Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 545-46 (1949)).
No dice, held the Sixth Circuit. The order to send notice of pendency to the employees flunks the first element of such an appeal, the requirement that the order "conclusively determines a disputed question": "When viewed through the appropriate lens, the district court's order clearly fails to satisfy the Cohen test. The order describes itself as conditional and temporary, and there is no reason our court could not, following an appeal from final judgment, determine that part or all of the plaintiff group was improperly deemed to be similarly situated and therefore improperly notified and included by opt-in. We see no obstacle to our court's later review of this issue. The true disputed issue is ultimately the size and nature of the representative group. From the vantage point of this issue, the district court's ruling fails the highly important first part of the Cohen test."
3. Also in the Sixth Circuit, an attempt to shoehorn a "regard-as" sexual orientation, hostile work environment claim into the evolving Title VII "sex stereotyping" case law flames out, Vickers v. Fairfield Medical Center, No. 04-3776 (6th Cir. July 19, 2006), but picks up a vote in dissent.
Wednesday, July 19, 2006
The Seventh Circuit -- in Smith v. Castaways Family Diner, No. 05-3467 (7th Cir. July 18, 2006) -- clears up a misunderstanding the aftermath of Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440 (2003), about who may count as an "employer" when counting the fifteen-employee minimum under 42 U.S.C. § 2000e(b). The defendant was a pocket-sized family restaurant operated as a sole proprietorship (defendant Carrol Gonzalez), the employees subsisting on the margins of the working world. ("There is a high turnover among Castaways employees. Evidently it is not uncommon for individuals to work for the restaurant for a matter of weeks or even days, in some cases just long enough for them to pay their rent or buy groceries.") Smith alleged sex, race an national origin harassment.
A conflict arose at the summary judgment stage about who were to be counted as employees. Effectively, by the time the case reached the appeal, the dispute centered on whether two persons who were family to the owner (mother Phyllis Foust and husband Ricardo Gonzales) ought to count. Each was found to exercise day-to-day management of the operation and (in Ricardo's case) to share in profits and losses. The district court found the two to be "employers" rather than "employees," applying the multi-factored definition in Clackamas Gastroenterology , and entered judgment for the employer.
The Seventh Circuit reversed summary judgment. It found that the Clackamas Gastroenterology standard, while applied properly to business owners (i.e. principals, including shareholders, partners, directors and officers), may not extend to their agents no matter how much authority they wield:
"Those who own an interest in and/or hold office with the business are the individuals who may amount to 'employers' in this sense, for they potentially have the right to dictate the decisions of the business and control the actions of its workers that a mere 'employee' would not have. Of course, ownership or office can be nominal. Someone can be a called a 'partner,' for example, yet in fact lack any authority to make decisions for the firm; he might be just as much at the mercy of those who really run the firm as a clerk would be."
The panel drew further support from the courts' practice under Title VII and comparable employment statutes not to draw a distinction between managers/supervisors and other employees, assuming both sides of the labor-management divide to be covered. Moreover, the panel found, the law distinguishes between "the power that a supervisor or manager exercises as of right and the power that he exercises by delegation." A supervisor exercises:
"discretion and authority at the pleasure of the business owner; he has no inherent right, as the owner does, to control the business. In that respect, his position is no different from that of any other worker: he could be overruled (and, depending on the terms of his employment contract, fired) just as summarily as the lowest ranked employee. By contrast, the owner of a business, even if he chooses not to exercise it, always has the right to control the direction and operation of the business."
The district court erred, the district court found, by not considering the source of Foust and Ricardo's authority:
"The court instead looked at the day-to-day authority over the restaurant that Foust and Ricardo exercise, without asking whether they exercise that power by right, as a partner of Gonzalez's might, or rather at her delegation and discretion. Similarly, the court found it significant that Gonzalez does not supervise their work and that they do not report to her, overlooking the point that as the sole owner of the business, she of course has the right to exercise such oversight. So far as the record reveals, Foust and Ricardo's ability to run the business is dependent upon Gonzalez's willingness to acquiesce to their actions. They have no status comparable to hers as an owner that would convey an independent right to participate in decisions affecting the business."
Friday, July 14, 2006
Randolph v. Ohio Dep't of Youth Services, No. 04-3468 (6th Cir. July 13, 2006) exposes an all-too-common tactic of management lawyers in Title VII harassment cases -- talking district court judges into disaggregating record facts in to snippets. Here, the tactic worked below, but led to reversal on appeal when the panel reassembled the pieces.
The employee, a female kitchen employee at a youth correctional institution was (according to the summary judgment record) subjected to gross verbal and physical abuse by the inmates employed there, culminating in multiple physical assaults. Her reports of the abuse went unheeded up the chain of command, then eventually led to disciplinary action against the plaintiff (i.e., the employee being falsely accused of having sexual relations with an inmate) after she persisted in her complaints.
The district court's first error was to hold that because the employee's EEOC charge listed a date of May 1, 1996 for the first known event, all evidence of incidents prior to that date were time-barred.
"First, the actions prior to May 1, 1996, are not beyond the scope of the EEOC complaint, as the EEOC could reasonably be expected to investigate those actions notwithstanding the date listed on the face of Randolph's complaint. See EEOC v. Roadway Express, Inc., 261 F.3d 634, 642 (6th Cir. 2001) ('[T]he Supreme Court has held that Title VII gives the EEOC very broad powers of investigation and affords the EEOC access to 'virtually any material which might cast light on the allegations against the employee' (quoting EEOC v. Shell Oil Co., 466 U.S. 54, 68-69 (1984))). Second, the ongoing nature of hostile-work-environment sexual harassment claims undergirds our 'totality of the circumstances' review of these claims. See Jackson v. Quanex Corp., 191 F.3d 647, 658-59 (6th Cir. 1999). As noted above, this case is no exception, and the imposition of an artificial cut-off of May 1, 1996, would exclude evidence relevant to the totality of the circumstances."
Second, the court erroneously evaluated the record of harassment in false separate categories of physical and verbal abuse.
"The district court found that, while the verbal abuse and rumors of which Randolph complained were not 'because of sex' as required by Title VII, the physical abuse-specifically the choking incident, the attempted sexual assault, the completed sexual assault, and the physical contact accompanied by Thereats-was sufficiently gender-based to satisfy the third prong. Differentiation between verbal and physical harassment violates the principle that the "totality-of-the-circumstances examination should be viewed as the most basic tenet of the hostile-work-environment cause of action."
Third, the court rejected the holding below that the employee -- who (after all) worked in a prison -- could not reasonably expect better behavior from the inmates, and thus could not establish "hostility" (citing Slayton v. Ohio Dep't of Youth Servs., 206 F.3d 669, 677 (6th Cir. 2000)): "The Slayton principle that corrections personnel have accepted the probability of deviant behavior is not without limit, however. Randolph's allegations are so serious that they satisfy the hostile work environment prong despite the mitigating consideration of the prison work environment."
Fourth, the court found that the prison had more than sufficient actual and constructive knowledge to impute liability to the employer, even if the employee did not carry out the formal notifications procedures set out in the staff's harassment training book.
To top things off, the court returned Randolph's retaliation claim for trial as well. The judge had found no liability as a matter of law because the employee -- though terminated -- was eventually reinstated with back pay. In the wake of Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. ___, No. 05-259 (2006), the court concluded that the temporary deprivation of pay presented an adverse employment action.
Thursday, July 13, 2006
Judge Richard Posner of the Seventh Circuit finds himself in Sylvester v. SOS Children's Villages Illinois, Inc., No. 05-4219 (7th Cir. July 12, 2006) tweaking dicta from a couple of his prior Title VII opinions, Stone v. City of Indianapolis Public Utilities Div., 281 F.3d 640 (7th Cir. 2002) andTroupe v. May Department Stores Co., 20 F.3d 734 (7th Cir. 1994). The employee (Sylvester) was one of several women who co-signed a letter complaining about the male CEO (West) and his repeated use of the word "bitch." At a meeting of the board of directors with Mark Roth, a lawyer who serves on the board, they decided at once to terminate two co-signers (Elstad and Ryan) who had checkered employment histories. The board also decided that Sylvester -- whose performance did not justify immediate termination -- would be reprieved. Instead, she was invited the next day to meet with West (after the firings were announced). Then, because Sylvester challenged West's candor in the aftermath of the termination, she herself was fired for alleged insubordination. She brought a discrimination and retaliation case, and though the former was deemed meritless on appeal, the court reversed summary judgment on retaliation.
Language in the two cases cited above seemed at first to stand in the way Sylvester's retaliation claim, but Judge Posner worked it out in the end. First, the Stone opinion appeared to require "direct evidence" for a retaliation case instead of the more-typical order of proof under McDonnell Douglas. Held the court:
"Read literally, the passage just quoted from Stone would defeat Sylvester's use of the 'direct' method because the passage says that the method requires 'direct evidence,' defined in the passage as 'evidence that establishes [a proposition] without resort to inferences from circumstantial evidence.' This is a misleading dictum. What is true is that the direct method does not utilize the specific circumstantial evidence that the plaintiff presents when he uses the indirect method of establishing discrimination. But if he can prove by means of circumstantial evidence 'that he engaged in protected activity (filing a charge of discrimination) and as a result suffered the adverse employment action of which he complains,' that is fine . . . ."
Second the panel revisited Troupe's reference to a "convincing mosaic of circumstantial evidence" to avoid summary judgment, holding that this figure of speech had been misunderstood:
"A mosaic is a work of visual art composed of a large number of tiny tiles that fit smoothly with each other, a little like a crossword puzzle. A case of discrimination can likewise be made by assembling a number of pieces of evidence none meaningful in itself, consistent with the proposition of statistical theory that a number of observations each of which supports a proposition only weakly can, when taken as a whole, provide strong support if all point in the same direction: 'a number of weak proofs can add up to a strong proof.' Mataya v. Kingston, 371 F.3d 353, 358 (7th Cir. 2004). But it was not the intention in Troupe to promulgate a new standard, whereby circumstantial evidence in a discrimination or retaliation case must, if it is to preclude summary judgment for the defendant, have a mosaic-like character. There is no rich mosaic of circumstantial evidence of retaliation in this case, but there is enough (though maybe barely enough) to preclude summary judgment."
Wednesday, July 12, 2006
Little courtesies sometimes matter, as in Robinson v. Potter, No. 05-3858 (8th Cir. July 11, 2006). Losing at trial (on a Rehabilitation Act claim), the plaintiff appeals and argues (among other things) that the district court erred in denying a pre-trial motion to compel discovery. Without addressing the subject matter of the request, the panel affirms solely on the ground that the employee failed to establish that the parties engaged in good-faith consultation under Fed. R. Civ. P. 37: "The district court refused to compel discovery because the parties did not appear to have made an effort to resolve the issue informally prior to asking the court's assistance, as is required under Federal Rule of Civil Procedure 37(a)(2)(A) and District of South Dakota Local Rule 37.1. Before the court can rule on a motion, the parties must demonstrate they acted in good faith to resolve the issue among themselves. Fed. R. Civ. Pro. 37(a)(2)(A); see also Naviant Mktg. Solutions, Inc. v. Larry Tucker, Inc., 339 F.3d 180, 186 (3d Cir. 2003) (noting the difference between 'an attempt to confer' and a 'good faith attempt to confer'). Because Robinson cannot show the parties attempted to confer in good faith to resolve the discovery request, the district court did not abuse its discretion in denying the motion."
Monday, July 10, 2006
The U. S. military services remain among the few redoubts of lawful discrimination: by gender, by age, by disability, and by sexual orientation. But a long-pending action in the District of Columbia is to keep hope alive for Naval chaplains of the non-liturgical Protestant stripe (e.g., Baptists, Evangelicals, Pentacostals and Charismatics), who claim that a secret religious quota system has disadvantaged them in promotion, in violation of the Establishment Clause.
Chaplaincy of Full Gospel Churches v. England, No. 05-5143 (D.C. Cir. July 7, 2006) reviewed the denial of a preliminary injunction aimed at trimming the rolls of seven Catholic chaplains who allegedly overstayed their age-60 retirement dates, presumably to open space for more promotions. While the district court denied the relief, the D.C. Circuit reversed. It rejected the Navy's argument, successful in the court below, that violations of the Establishment Clause are not irreparable. The panel opinion (authored by Judge Janice Rogers Brown) finds Establishment Clause litigation to present inherent irremediable harm: "[B]ecause of the inchoate, one-way nature of Establishment Clause violations, which inflict an "erosion of religious liberties [that] cannot be deterred by awarding damages to the victims of such erosion," [cite], we are able to conclude that where a movant alleges a violation of the Establishment Clause, this is sufficient, without more, to satisfy the irreparable harm prong for purposes of the preliminary injunction determination." The case is remanded for further consideration of injunctive relief (likelihood of success on the merits, no substantial injury to other interested parties, public interest).
Friday, July 7, 2006
Two courts of appeals arrive at two different conclusions on a defense of claim preclusion.
In Tartt v. Northwest Community Hospital, No. 04-3939 (7th Cir. July 6, 2006), the employee (both pro se and by counsel) filed two separate Title VII actions naming different arrays of defendants, allowed one to come to judgment first (dismissed because the district court thought it duplicative of the parallel suit) and failed to timely appeal the adverse ruling. The second suit was dismissed for failure to state a claim and want of prosecution. While the district court granted the employee leave to reinstate the first suit, the employer successfully moved to dismiss it on res judicata grounds owing to the judgment in the second case. That dismissal is affirmed on appeal. The lawyer behind this bizarre (ultimately fatal) weaving between the two cases -- the Seventh Circuit reports in a footnote -- was ultimately suspended from practice by the Illinois Supreme Court for one year (shades of yesterday's Stokes v. Potter case).
In Stone v. Dep't of Aviation, No. 04-1019 (10th Cir. July 6, 2006), a more fortunate employee lives to see another day. A pending state court case concerned administrative review of claims under state-law civil service. In that case, the employing agency was seeking review, and the employee was the defendant. While that case was pending, the employee received a right-to-sue under the AD and filed a separate action in federal court as a plaintiff. The employer prevailed on a motion for summary judgment in the federal case on res judicata grounds; the federal district court held that the ADA claim should have been filed by the employee as a compulsory counterclaim under state law in the state court proceeding. On appeal, the Tenth Circuit reverses, finding under Colorado law that the ADA claim had not yet ripened to the point where it could have been filed as a compulsory counterclaim: "In this case, then, we must determine whether, at the time Stone filed his answer in the state-court action, he had a 'matured' ADA claim which he could have asserted against the City. At the time he filed his answer, however, Stone had not yet received a right-to-sue letter from the EEOC on his ADA claim. Without that right-to-sue letter, Stone's ADA claim would have been subject to dismissal by the state court. It seems axiomatic that a party does not have a matured claim, sufficient to be deemed a compulsory counterclaim, if that claim is subject to dismissal because all the conditions precedent to asserting it have not yet occurred."
Thursday, July 6, 2006
The Seventh Circuit joins six other circuits in holding that a debtor in bankruptcy who fails to list a legal claim (here, a Rehabilitation Act claim against the Postal Service) in her petition forfeits that claim after the bankruptcy ends, by operation of judicial estoppel. Cannon-Stokes v. Potter, No. 05-4605 (7th Cir. July 5, 2006). The circumstances were particularly egregious. The lawyer who advised Ms. Cannon-Stokes to omit the claim from her petition "was indicted on multiple counts of perjury committed in the course of his bankruptcy practice, and in 2003 he resolved that proceeding by pleading guilty to contempt of court," leading to disbarment. Bad lawyering notwithstanding, the employee was bound by her own declaration. "Whether the bankruptcy fraud was Martin's suggestion, some other lawyer's, or Cannon-Stokes's own bright idea does not matter in the end. The signature on the bankruptcy schedule is hers. The representation she made is false; she obtained the benefit of a discharge; she has never tried to make the creditors whole; now she wants to contradict herself in order to win a second case. Judicial estoppel blocks any attempt to realize on this claim for her personal benefit."
Wednesday, July 5, 2006
This site often counsels that plaintiffs' attorneys must begin valuing the client's claim the moment he or she walks through the door. An error in valuing a Family and Medical Leave Act (FMLA) claim at trial compels a remand in Lubke v. City of Arlington, No. 04-11213 (5th Cir. June 30, 2006). In this case, tried to a jury, a fire department battalion chief failed to appear at work for a shift on December 31, 1999, on the cusp of the feared-Y2K meltdown (remember that thing?!). The plaintiff, a 22-year veteran, lost his job supposedly over his non-appearance -- said to be in dereliction of duty. There were disputed issues of fact over whether instead the termination was motivated by Lubke's need to take off FMLA time owing to his wife's incapacity.
The jury found for Lubke, and the panel affirmed the liability verdict. But it vacated the award for lost wages and benefits ($395,394), liquidated damages ($300,000), attorney fees ($305,292), and court costs ($9,576). Two errors, the panel found, infected the verdict. First, the court overvalued the damages for lost health insurance. Instead of awarding the plaintiff the premiums that would have been paid on his behalf, the court held (analogizing to the ADEA) "that the correct measure of damages for lost insurance benefits in FMLA cases is either actual replacement cost for the insurance, or expenses actually incurred that would have been covered under a former insurance plan. The lost 'value' of benefits, absent actual costs to the plaintiff, is not recoverable." Second, the panel held that the employer was entitled to a setoff for that portion of retirement pay that the employer paid which was returned to Lubke: "we hold that an offset should be allowed for the employer's portion of Lubke's retirement plan payout at his termination."
Although the court vacated the award, it allowed that "the entire damage award must be revised or retried" (emphasis in original). Thus, it is open to the district court to simply conform the judgment to the mandate without the need of a trial.