Showing posts with label litigation. Show all posts
Showing posts with label litigation. Show all posts

Thursday, April 28, 2016

Let’s not forget about damages when litigating our cases

When employers are sued, they do not put enough thought into damages. The typical response is, “We didn’t discriminate; we aren't liable.” But, the reality is, unless you win a case on summary judgment (sadly, an unlikely result), you need to think about what a case is potentially worth and how much a plaintiff can potentially cover. For starters, it will drive settlement discussions. Moreover, and more importantly, if a case does not settle, you will want to whittle that number down as low as possible to limit the potential exposure at (gasp) trial.

Wednesday, November 18, 2015

The cost to defend a discrimination lawsuit (and can you do anything about it)

Two and a half years ago I asked, How much does it cost to defend an employment lawsuit? My answer:

The reality is that defending a discrimination or other employment lawsuit is expensive. Defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000.

Oh, how I love to be right.

Wednesday, July 8, 2015

Be conscious of inequities when gauging litigation

Four years ago, in Wal-Mart v. Dukes, the U.S. Supreme Court held that it was inappropriate to certify a nationwide class of 1.5 million female Wal-Mart employees allegedly denied pay and promotions because of a corporate-wide "policy" of sex discrimination. SCOTUS’s Dukes decision ended a decade of litigation over the propriety of the attempted nationwide class action.

More than a year after the Dukes decision, Cheryl Phipps, Bobbi Millner, and Shawn Gibbon launched a similar lawsuit in federal court in Tennessee, but instead seeking a region-wide sex-discrimination class. Wal-Mart alleged that the claims, more than a decade old, were time barred. Yesterday, in Phipps v. Wal-Mart Stores [pdf], the 6th Circuit formally disagreed.

For civil procedure geeks (like myself), the case is a fascinating read on the theory of statutes of limitations and equitable tolling. That analysis, however, is well beyond the scope of what I hope to accomplish with my little slice of the Internet.

Here’s the practical take-away. Employers favor certainty, knowing that if an employee fails to file a lawsuit 90 days after the EEOC issues its right-to-sue letter, for example, the employee waived the right to assert federal discrimination claims. Courts, however, favor equities, and try to avoid inequitable results. Sometimes, these ideals clash. When this happens, employers cannot assume victory, and should brace themselves accordingly.

Monday, June 23, 2014

Is it ethical to check jurors’ social media accounts?

Every jury trial starts with what is called voir dire—a question-and-answer session between the lawyers and the pool of potential jurors. As lawyers, we are trying to deselect those jurors whom we feel would be unfairly biased against our case or our client. It is much more an art than a science, and the more information we can gather about potential jurors, the more educated of a decision we can make that a juror is not the right fit for our case. 

Recently, the American Bar Association made this information gathering a little bit easier. In an ethics opinion (h/t: ABC News), the ABA gave lawyers the green light to view jurors’ and potential jurors’ publicly available Internet information, which, for example, could include their Facebook or Twitter musing. 

The Internet is a treasure trove of information about jurors. You could learn their political leanings, religious background, and all about their jobs and families. In short, you could learn the entire backstory of a “connected” juror.

But, do you want to? Just because this information gathering is ethical does not mean it’s strategically wise. By using the Internet as a basis for questions about a potential juror, you will clue the entire pool of jurors in on the fact that you’ve been trolling online for information about them. They might view your ethical conduct as a creepy invasion of their privacy. Voir dire is as much about you learning about the jury as it is about the jury learning about you. In other words, you don’t want to piss off the jury during voir dire. If you lose credibility before the trial even starts, what chance do you have to win the case?

So, lawyers, my take is that Facebook-ing potential jurors presents more of a risk to damaging your credibility with the jury than any benefit you will receive from learning information to help with the inexact science of voir dire. And, if you choose to research jurors online, keep that choice private, and don’t let the jury know you’ve been trolling them. It’s not worth the risk of the jury punishing you for it from the privacy of their deliberations.

Wednesday, March 12, 2014

Don't Bieber your deposition

Three years ago, I wrote a post entitled, 10 tips for preparing for your deposition, in which I offered some ideas for how to best prepare to give a deposition in case in which you are a witness. The tips includes the common sense (tell the truth), to the more esoteric (beware leading questions).

Today, I’m updating that top-10 list with an 11th tip: Don’t be a Bieber. Earlier this week, TMZ leaked the video of the highlights (or lowlights, depending on your perspective) of the deposition Justin Bieber gave in a case in which a photographer claims Bieber ordered his bodyguard to attack him. This deposition might go down as the worst performance ever given under oath.

It is rare that you will win a case during your deposition. The person asking the questions is not your friend. The inquisitor is looking for opportunities to trip you up, put words in your mouth, and make you look bad. Yet, while you can’t win a case during your deposition, you certainly can lose it. You can make admissions that you don’t need to make, or you can come off looking like Bieber did in his video—like an a-hole.

The video is entertaining, but it’s also instructive. If you are being deposed, don’t play games. Don’t feign fake ignorance. Don’t get smart or act smarmy. Yes, it’s an unpleasant experience to be under oath. Don’t make it worse by giving a Bieber-like performance.

So, thank Biebs. You provided me the perfect instructional tool for me to show my witnesses before they are deposed, so they don’t act like you.

[Hat tip: Eric Meyer and Phil Miles]

Wednesday, February 26, 2014

Why we put plaintiffs to their proof

Because of the relative newness of the issue, it always seems newsworthy when the NLRB issues a social-media decision. World Color (USA) Corp. (NLRB 2/12/14), however, is much ado about nothing, but nevertheless reminds us of the importance of the process of litigation to the outcome of litigation.

John Vollene, a press room operator at World Color and member of his union’s bargaining committee, made several posts on his personal Facebook page critical of his employer. Vollene was Facebook friends with several co-workers, including his shift supervisor, Arvil Bingham. Shortly after Vollene’s posts, World Color’s employees voted to decertify the union. Shortly thereafter, the company reassigned Vollene as part of a restructuring of its pressroom operators. When Vollene asked Bingham why he was being reassigned, Bingham implied that management knew about his Facebook posts.

The NLRB concluded that Vollene had not proven that he had not been reassigned in retaliation for his Facebook posts, which could have constituted protected concerted activity:

However, the record here does not include a printout of Vollene’s posts, and it provides scant evidence regarding their nature. It reveals neither that the posts concerned terms and conditions of employment, nor that the posts were intended for, or in response to, Vollene’s coworkers. The testimony indicates only that Vollene posted unspecified criticisms of the Respondent and unspecified comments about the Union over a period of 5 or 6 months, and that he responded to another person’s initial post. The record does not identify that individual either by name or as a coworker. Based on this limited evidence, we will not infer that Vollene’s posts amounted to protected concerted activity. That Bingham’s statement implied that the Respondent had reacted adversely to critical posts is insufficient to bridge the evidentiary gap here.

Do not read too much into this decision. An employee’s Facebook posts critical of his or her employer can constitute concerted activity protected by section 7 of the NLRA. In this case, however, the NLRB concluded that because there was no evidence presented of the specific posts at-issue, or how Vollene’s co-workers responded to them. Thus, Vollene had not proven his case.

I have little doubt that if Vollene had put on evidence of the specific posts, and his co-workers reaction to them, this case could have turned out differently. This case serves as a good reminder of why we, as employers and their lawyers, put plaintiffs to their proof. A lawsuit is merely a collection of unproven facts. No law has been violated until a plaintiff  proves those facts through evidence. If the plaintiff doesn’t have the evidence to support the alleged facts, the plaintiff loses. That’s what happened here, which illustrates the importance of the litigation process to the outcome of cases.

Wednesday, August 21, 2013

Where’s Waldo? She’s teaching you a lesson on the high cost of sexual harassment

While employed as an electrical line worker for Consumers Energy Company from 2001 through 2005, Theresa Waldo claimed that she suffered the following incidents of sexual harassment, about which she complained to her supervisor, union rep, and HR manager, each of whom allegedly ignored her:

  1. She was repeatedly called derogatory and demeaning names, such as “bitch” and “wench.”
  2. Coworkers threw her purse out of a work truck and into the dirt, telling her that “there were no purses allowed in these trucks.” When she responded by carrying a smaller purse in her pocket, she was called a “dike.”
  3. Her coworkers refused to let her travel to a bathroom, instead telling her that if she “wanted to work a man’s job,” she had “to pee like a man.”
  4. Coworkers locked her in a porta-potty with duct tape.
  5. Coworkers isolated her at work sites by excluding her from lunch trips and forcing her to walk instead of riding in trucks with the male employees.
  6. There were sexually explicit pictures on the work trucks.

Based on the foregoing, a jury awarded Waldo $400,000 in compensatory damages and $7,500,000 in punitive damages on her sexual harassment claim. Applying Title VII’s damage caps, the trial judge reduced those awards to a combined $300,000. In addition to the capped damage award, the judge also awarded Waldo $684,506 in attorney’s fees, which the 6th Circuit affirmed.

Who wins these cases? According to Judge Sutton’s dissenting opinion, it’s the lawyers, not the litigants:

I join all sections of the majority’s opinion save one: its decision to uphold the district court’s award of $684,506 in attorney’s fees—all but $1,000 of the fees requested by Waldo’s attorney without any additional reduction for time or rate, including for all work incurred to lose the first jury trial, all work incurred to lose six of the seven claims (four of them state law claims) and for all work incurred to win $300,000 in the second jury trial. One can be forgiven for thinking that Waldo’s two attorneys, not Waldo, were the true winners. This is good work if you can get it.

Harassment takes a toll. It exactly a high emotional cost on the victim. It exacts a steep legal cost on the company defending a lawsuit that can be salacious and unpopular. Yet, as this case illustrates, the people that often win are the lawyers. It may sound odd for a lawyer to argue against litigation. Yet, as I’ve heard one of my partners espouse more than once, “When you’re litigating you’re losing.” This case is the perfect example. From start to finish, Theresa Waldo spent more than 8 years of her life (from June 2005 until August 2013) litigating. For that time and aggravation, not to mention the on-the-job harassment that she suffered, she was awarded $300,000. Her lawyers, on the other hand, pocketed more than double that amount.

Who really won, and what does this case teach us about the benefit of evaluating the risk of cases and resolving those that have merit.

Monday, August 12, 2013

6th Circuit rejects contract that shortens statute of limitations for wage claims

Twice in the last three years, the 6th Circuit has signed off on contracts between an employer and employee that shortened the time for an employee to bring a discrimination claim (here and here). 

Last week, however, that same court reversed course and refused to recognize a contractual clause that limited an employee’s right to file a wage and hour claim.

In Boaz v. FedEx (6th Cir. 8/6/13) [pdf], the 6th Circuit reviewed the following clause in an employment agreement:

To the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit, whichever expires first.

Boaz sued FedEx in 2009—both for wage and hour violations and violations of the Equal Pay Act—that she alleged occurred between 2004 and 2008. FedEx moved to dismiss the lawsuit, claiming that the six-month limit in her employment agreement barred her claims.

The 6th Circuit disagreed:

An employment agreement “cannot be utilized to deprive employees of their statutory [FLSA] rights.” That is precisely the effect that Boaz’s agreement has here. Thus, as applied to Boaz’s claim under the FLSA, the six-month limitations period in her employment agreement is invalid.…

Congress enacted the Equal Pay Act as an amendment to the FLSA. By then the Supreme Court had already held that employees cannot waive their FLSA claims for unpaid wages and liquidated damages. We therefore presume that, by folding the Equal Pay Act into the FLSA, Congress meant for claims under the Equal Pay Act to be unwaivable as well.

FedEx argued to the 6th Circuit that this holding establishes a split among the statutory limitations periods that employers can contractually limit.

FedEx responds that courts have enforced agreements that shorten an employee’s limitations period for claims arising under statutes other than the FLSA—such as Title VII. And FedEx argues that the discrimination barred by Title VII (i.e., racial discrimination) is just as bad as the discrimination barred by the FLSA, and hence that, if an employee can shorten her Title VII limitations period, she should be able to shorten her FLSA limitations period too. 

The 6th Circuit rejected FedEx’s argument for two reasons. 

     First, unlike claims under the FLSA, employees can waive their claims under Title VII. 

     Secondly, an employer that violates the wage and hour laws gains a competitive advantage that does not exist by violating the FLSA.

Despite this case, I still believe that agreements that lessen statutes of limitations are an important tool to limit risk, especially in a state like Ohio, which has a six-year statute of limitations for discrimination claims (except age). If nothing else, you can limit your risk for discrimination and other employment claims, even if your wage-and-hour risk might carry forward longer. 

Thursday, July 18, 2013

Ohio Supreme Court strikes blow to class action lawsuits

In recent terms, the U.S. Supreme Court has shown some hostility to class action lawsuits. 
  • In Wal-Mart v. Dukes, the Court concluded that a district court must examine the underlying merits of a claim to determine if class certification is appropriate, and that a class must have some glue binding disparate decisions to justify certifying all of those decisions for consideration in one class. 
  • In Comcast v. Behrend, the Court expanded upon Dukes by concluding that a class that requires individualized proof to establish damages for each class member cannot survive as a class action.
The impact of these two decisions might to send class litigants, if possible, to state court. Dukes and Comcast are federal decisions under Federal Civil Rule 23. If a state’s class-action-certification rules are more lenient, then the class’s attorney will do whatever it takes to keep the class in state court. 

Yesterday, however, the Ohio Supreme Court made this strategy much more difficult. Stamcco, LLC v. United Telephone Co. of Ohio [pdf], is not an employment case. It involves allegations of cramming — claims that the defendant added unauthorized charges the class members’ telephone bills. Yet, this case has huge implications for how all class actions are litigated under Ohio law, including classes alleging, for example, violations of Ohio’s employment discrimination or wage and hour laws.

With extensive citations to, and discussion of, Dukes, the Court held:
At the certification stage in a class-action lawsuit, a trial court must undertake a rigorous analysis, which may include probing the underlying merits of the plaintiff’s claim, but only for the purpose of determining whether the plaintiff has satisfied the prerequisites of Civ.R. 23.
Implicitly adopting the logic of Comcast, the Court also held:
We now recognize that the need for individualized determinations is dispositive in concluding that the class does not comport with Civ.R. 23.
Rejecting the plaintiff’s claim that a court could apply a simple formula to data provided by the defendant to determine each member’s claim, the Court concluded that this case cried out for individualized determinations:
Unauthorized third-party charges are better resolved on an individual basis with the third party or UTO. UTO’s phone bills identify third-party charges, the entity responsible for the charge, and a toll-free number for billing inquiries. Moreover, UTO claims that it has a policy of removing third-party charges for the purpose of maintaining good will with its clients. Finally, for larger charges or where the charge cannot be resolved over the phone, small-claims court is also an option. Accordingly, because ascertaining whether third-party charges are authorized will require individualized determinations, common issues do not predominate.
One could apply the same logic to wage and hour claims. If an employer has, for example an open-door policy, and will consider providing redress to employees on a case-by-case basis for complaints about missing wages, one cannot apply a simple formula to calculate class-wide damages. Moreover, while the plaintiffs’ bar will lose their minds over the idea of small-claims court, it remains a viable option for employees to inexpensively litigate their right to missing wages. The $3,000 limit for small claims will cover the vast majority of individual wage and hour claims.

Stamcco is a huge victory for Ohio businesses. It is now that much harder to establish a class action, confirming that Ohio’s class-action rules fall in line with their federal counterparts.

Tuesday, July 16, 2013

The one thing you can never release in a settlement agreement

Legal disputes end in one of two ways—either with a judgment by a court or an agreement between the parties. The vast majority of cases follow the latter course.

When parties enter an agreement to settle a dispute—either in a settlement agreement ending litigation or a severance agreement ending one’s employment—the goal is to release all claims brought, or that could have been brought. An employer is paying the employee, in part, for the certainty that the employee will not file other claims against it in the future for past acts. Thus, these agreements typically contain general releases, along with covenants not to sue.

Do not, however, make the mistake of including in your agreement a covenant forbidding the employee from filing a discrimination charge with the EEOC or other agency. The EEOC will view such a provision as retaliatory under Title VII.

Last week, the Agency announced that it had reached a settlement with Baker & Taylor over claims that the company “violated Title VII by conditioning employees’ receipt of severance pay on an overly broad, misleading and unenforceable severance agreement that interfered with employees’ rights to file charges and communicate with the EEOC.” The EEOC alleged that the company required employees “to sign a release agreement that could have been understood to bar the filing of charges with the EEOC and to limit communication with the agency” in order to receive their severance pay.

The offending provisions (taken from the EEOC’s Complaint) were as follows:
  • “I further agree never to institute any complaint, proceeding, grievance, or action of any kind at law, in equity, or otherwise in any court of the United States or in any state, or in any administrative agency of the United States or any state, country, or municipality, or before any other tribunal, public or private, against the Company arising from or relating to my employment with or my termination of employment from the Company, the Severance Pay Plan, and/or any other occurrences up to and including the date of this Waiver and Release, other than for nonpayment of the above-described Severance Pay Plan.”
  • “I agree that I will not make any disparaging remarks or take any other action that could reasonably be anticipated to damage the reputation and goodwill of Company or negatively reflect on Company.  I will not discuss or comment upon the termination of my employment in any way that would reflect negatively on the Company. However, nothing in this Release will prevent me from truthfully responding to a subpoena or otherwise complying with a government investigation.”
How could this problem have been avoided, while still providing the employer relative certainty that it will not have future legal dealings with the releasing employee? A simple disclaimer tacked onto the back-end of the release language, stating that nothing in agreement prevents, or is intended to prevent, the employee from filing a charge of discrimination with the EEOC, or with a state or local civil rights agency. You can couple that language with a covenant providing that in the event that the employee files such a charge, the employee disclaims the right to seek or recover money damages from such a filing.

With this language, the employee retains the right to file a charge (minus damages), the EEOC retains the right to seek redress of civil rights violations, and the employer retains peace of mind that the employee has signed as strong of a release as Title VII allows.

Monday, July 8, 2013

Why Paula Deen loves gay marriage

Lost amid the news of salacious allegations of workplace misconduct, historically bad depositions, a food empire going down in flames, and the meaning of the N-word in 2103 American society is the fact that the employee suing Paula Deen and accusing her of racial harassment is White. 

The fact a White employee is complaining about harassment against African-Americans, in and of itself, does not bar the plaintiff’s harassment claim. As the 6th Circuit held in Barrett v. Whirlpool Corp., a White employee can bring a lawsuit asserting racial harassment against an African-American co-worker, but only if the employee claiming the harassment was also discriminated against because of his or her race.  In other words, it’s not enough for the plaintiff in the Paula Deen case to show that Ms. Deen created a racially hostile work environment in her restaurant. She must also prove that Ms. Deen discriminated against her because of her race (White).

Last week, Ms. Deen’s lawyers supplemented an earlier-filed motion seeking the dismissal of, among other claims, the racial harassment claim. They claim that the plaintiff cannot seek the protections of Title VII because she is not claiming that she was discriminated against, but merely that a racially hostile work environment existed targeting other races.

In support of this argument, Ms. Deen cites to Hollingsworth v. Perry, the recent U.S. Supreme Court case that dismissed, on the basis of a lack of standing, the challenge to the illegality of California’s gay marriage ban. Ms. Deen claims that per Hollingsworth, the plaintiff lacks standing to claim racial harassment. Per Hollingsworth:

Article III of the Constitution confines the judicial power of federal courts to deciding actual “Cases” or “Controversies.” One essential aspect of this requirement is that any person invoking the power of a federal court must demonstrate standing to do so. This requires the litigant to prove that he has suffered a concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision…. In other words, for a federal court to have authority under the Constitution to settle a dispute, the party before it must seek a remedy for a personal and tangible harm. “The presence of a disagreement, however sharp and acrimonious it may be, is insufficient by itself to meet Art. III’s requirements.”

In other words, Paula Deen argues that a White employee lacks standing to claim racial harassment against her African-American co-workers because she is not seeking a remedy for a harm personally against her.

Regardless of how the court decides this issue, employers should not use the standing issue as carte blanche to ignore certain harassment complaints. When an employer handles a harassment complaint, the race, gender, religion, national origin, etc. of the employee complaining should not matter. An employer should still investigate and take prompt and appropriate remedial measures to ensure that any harassment that occurred ceases.

The Constitutional argument raised by Paula Deen’s legal team is a nice weapon to have once you are in the thick of litigation, but following my practical tip will help keep you out of litigation in the first place.

Hat tip: Deadline

Tuesday, May 14, 2013

How much does it cost to defend an employment lawsuit?

Last Friday I had the pleasure of appearing on Huffington Post Live, in a segment entitled, “You’re Fired! No really.” We discussed the current state of employment at-will, and whether American workers need greater protections from being terminated without just cause.If you’ve read my blog for any length of time, you know what I have some pretty strong feelings on this topic. Heck, I’ve even written an entire book on this issue of employer rights.

If you missed the show, you can watch it here, or in the imbedded video below:

Following my appearance, Texas plaintiff-side employment lawyer Chris McKinney tweeted that he was surprised at my statement that it could cost a company $250,000 to defend an employment lawsuit:

Chris was responding to my comment that the myriad laws that already protect employees from arbitrary or capricious terminations (Title VII, ADA, ADEA, FMLA, etc.), coupled with the threat of defending an expensive lawsuit, serve as enough of a deterrent to most reasonable employers from firing an employee without a good reason.

The reality is that defending a discrimination or other employment lawsuit is expensive. Defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000. If an employer loses summary judgment (which, much more often than not, is the case), the employer can expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial.

Most employers, if acting rationally, will chose to retain an employee instead of assuming the risk of a $250,000 legal bill with an uncertain outcome. Moreover, employers cannot avoid this risk simply by settling every claim that is filed, lest the company risk the perception of being an easy mark by every ex-employee.

If you must terminate an employee, however, the safest, most prudent course of action is to offer a severance package—but only in exchange for a waiver and release of claims, and covenant not to sue—for all terminated employees except those terminated for some egregious or intentional misconduct. By offering severance in exchange for a release, you are capping your exposure and buying off the risk of a costly, time consuming, and burdensome lawsuit.

Tuesday, April 30, 2013

The legal and ethical issues of the class action “pick off”

Have you heard that the new owner of the Cleveland Browns has gotten himself into a bit of legal trouble? It’s alleged that Jimmy Haslem’s other business, Pilot Flying J, defrauded trucking companies of fuel rebates. In an effort to head-off a stream of civil lawsuits, Mr. Haslam has been meeting with customers to settle the alleged missing rebates. One such customer sought a temporary restraining order to stop such meetings because, according to the Wall Street Journal, Pilot was “obtaining releases, and settling claims before the potential class members even know the full extent of their claims.” Yesterday, the court denied the restraining order, permitting Haslem’s company to continue attempting to settle these claims.

Recall that just two weeks ago, the Supreme Court decided a case involving the pick-off named plaintiffs in wage and hour collective actions. In the Genesis Healthcare case, however, the employer communicated the offer to the plaintiff through her attorney. What happens, however, if the employer communicates directly with un-represented and un-named members of a yet-to-be-certified class? Is there anything prohibiting an employer from contacting them directly in an effort to obtain settlements of their potential claims? It depends.

There is nothing inherently unethical in defense counsel contacting putative class members at the pre-certification stage. According to ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 07-445 (2007) [pdf], communications between defense counsel and putative class members does not violate the Models Rules of Professional Responsibility because there is no attorney-client relationship between plaintiffs’ counsel and members of an un-certified, putative class.

Yet, a court still might limit such communications if they are designed to confuse or coerce.

In Gulf Oil v. Bernard (1981), the U.S. Supreme Court rejected the argument that defense counsel are per se prohibited from contacting putative class members before a class is certified. Instead, a court can only limit pre-certification communications to address communications that misrepresent the status or effect of the case or that have an obvious potential for confusion, and must be based on “a specific record showing by the moving party of the particular abuses by which it is threatened.”

In accordance with the Supreme Court’s Bernard decision, federal district courts have routinely refused to exercise their supervisory authority over communications with putative class members in situations where the complaining party cannot demonstrate actual abuses. Such abuses that would justify a gag order include communications that coerce putative members into excluding themselves from the class, undermine cooperation with or confidence in plaintiffs’ counsel, or suggest retaliation for participating in or assisting the class.

For example, in Parks v. Eastwood Ins. Servs. (C.D. Cal. 2002), the named plaintiffs brought a collective action against their employer for unpaid overtime under the Fair Labor Standard Act. Prior to sending a court-approved notice to putative class members, the employer sent a memorandum to its employees asking them to contact the company’s general counsel if they had any questions regarding the case. The court concluded that a curative communication was unnecessary because the at-issue memorandum was not coercive and did not suggest that any employee would be retaliated against for joining the class.

There are significant strategic decision that companies and their attorneys must make when defending class action lawsuits. Pre-certification communications with potential class members carries a big upside, albeit with the potential of significant risk.

Wednesday, April 17, 2013

SCOTUS: Picking off individual plaintiffs moots wage and hour collective action


The pickoff is one of the most dramatic defensive plays in baseball. It can single-handedly kill a rally. The tying run on first? One deft move by the pitcher to first base, coupled with a lead that’s one step too cocky? Rally over.

We love baseball in part because it can be a metaphor for much that happens in our lives. Today, it’s a metaphor for wage and hour law.

The issue the Supreme Court faced in Genesis Healthcare Corp. v. Symczyk (4/16/13) [pdf] was whether a case becomes moot when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims. Last December, I predicted an employer loss in this case (the link also provides all the case background you’ll need).

I’m happy to report that my prediction was very wrong. In a partisan 5-4 decision, the Court held as follows:

Because respondent had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness, her suit was appropriately dismissed for lack of subject-matter jurisdiction.

In other words, because there was nothing left for the plaintiff to litigate after the rejected offer of judgment, the plaintiff had no right to pursue the remaining collective claims.

Here’s the money quote from the Court:

In this case, respondent’s complaint requested statutory damages. Unlike claims for injunctive relief challenging ongoing conduct, a claim for damages cannot evade review; it remains live until it is settled, judicially resolved, or barred by a statute of limitations. Nor can a defendant’s attempt to obtain settlement insulate such a claim from review, for a full settlement offer addresses plaintiff’s alleged harm by making the plaintiff whole. While settlement may have the collateral effect of foreclosing unjoined claimants from having their rights vindicated in respondent’s suit, such putative plaintiffs remain free to vindicate their rights in their own suits. They are no less able to have their claims settled or adjudicated following respondent’s suit than if her suit had never been filed at all.

There is perhaps no greater threat facing employers than the risk of a wage and hour collective action—both because of the difficulty in complying with the FLSA’s maze of anachronistic rules and regulations, and because of the expense incurred in defending such a claim. Genesis Healthcare confirms that employers have a powerful weapon at their disposal to cut these dangerous claims off at their knees—a Rule 68 offer of judgment.

Much like a baserunner failing to anticipate a deft pitcher’s move to first base, the Court confirmed that a valid offer of judgment can catch your opponent off-guard and end their hopes of a successful collective action.

For more analysis of this decision, please read the thoughts of some of my fellow bloggers:

photo credit: Chicago Man via photopin cc

Thursday, March 28, 2013

A cautionary tale on what happens when you botch a litigation hold

All the way back in October 2010, I provided 10 tips for issuing an effective litigation hold. What happens, however, if your litigation hold is not effective, or, worse yet, not issued in the first place? EEOC v. JP Morgan Chase Bank (S.D. Ohio 2/28/13) should be required reading for any company on the serious consequences that can occur from a botched litigation hold.

In this Title VII litigation, the EEOC claimed that the bank removed female employees from a mortgage call center queue and instead directed the more lucrative calls to male employees. In support of this claim, the EEOC sought the production of certain records that would show which calls an employee should have received based on their level of skill. According to the EEOC, a statistical analysis of that data would show sex discrimination. When the bank refused to produce the records, the EEOC filed a motion to compel, which the court granted for a limited period. The bank, however, could not produce certain of the records, as it had already destroyed them as the result of its routine purging of electronic records.

The court concluded that the bank’s admitted destruction of evidence was inexcusable:

Plaintiff provided Defendant with notice on numerous occasions of the need to retain the destroyed data…; these notices came immediately prior to the destruction of relevant data from the three years prior. This data likely would inform Plaintiff’s claims and Defendant’s defense….

Defendant’s failure to establish a litigation hold is inexcusable. The multiple notices that should have triggered a hold and Defendant's dubious failure if not outright refusal to recognize or accept the scope of this litigation and that the relevant data reaches beyond the statutory period present exceptional circumstances….

Defendant’s destruction of evidence under the auspices of routine purging has hampered the ease of if not the ability to uncover exactly what if anything impermissible has transpired here.

As a sanction, the court denied the bank’s motion for summary judgment and provided the EEOC with an instruction that the jury could draw an inference adverse against the bank based on its document destruction.

The importance of this lesson cannot be overstated. As soon as you reasonably anticipate litigation, you have an absolute duty to implement a written litigation hold that both instructs employees to preserve paper and electronic records relevant to the case, and suspends any automated processes that otherwise might result in the destruction of such records. If your lawyer is not having this conversation with you, it’s time to find a new lawyer. As JP Morgan Chase illustrates, the penalties for non-compliance can devastate your case.

Thursday, March 7, 2013

Fight or flight? When an employee sues you, should you litigate or settle?

Two weeks ago, the New York Times’s You’re the Boss Blog asked the following question:

How do you handle employee litigation?

Do you dig in your heels and fight, settle, or some combination of the two?

The NYT’s blog post recounted the story of one small business owner who chose to stand his ground and assume the risk of taking an employment case to trial. As a result the employee dropped his settlement demand to a nuisance value, $10,000.

The reality, however, is that there is no easy answer to the question of how your company should respond to a lawsuit by an employee. You must weigh all of the following factors to come to the right decision for your business in each case.

  • Is the plaintiff a current or former employee?
  • How much can you afford to spend, and will litigation now impede your ability to fund a settlement later?
  • Do you have employment practices liability insurance coverage?
  • Is there a risk that a settlement will incent other employees to bring claims, or will long, protected litigation deter copycat claims?
  • What is your tolerance for the distractions of litigation—responding to discovery, gathering documents, dealing with the hassles of electronic discovery, attending depositions, and attending court dates?
  • Do you want to subject your managers, supervisors, and other employees to depositions?
  • What is the reputation of the plaintiff’s attorney—is s/he going to make the case more difficult and expensive than necessary?
  • What is the likelihood the assigned judge will grant a summary judgment motion and dismiss the case?
  • How tight or loose are juries in your jurisdiction?

How you answer these question will dictate whether you litigate or offer a settlement, and, if it’s the latter, when you make that offer. Keep in mind, however, that even if you choose to offer a settlement, no case resolves without two willing parties. If the other side is not willing to meet you at a fair and reasonable value for the claim, then the choice has been made for you, lest you become an easy mark for every disgruntled employee.

This post originally appeared on The Legal Workplace Blog.

Wednesday, November 14, 2012

In compelling discovery, court likens social media account to “Everything About Me” folder

Courts are all over the map on whether to order the disclosure of an employee’s social media accounts during discovery in employment cases. The seminal case—EEOC v. Simply Storage Management, decide more than two and a half year ago—ordered the broad discovery of an employee’s social media accounts when the case alleges something more than “garden-variety” emotional distress. Since Simply Storage Management, however, some courts have begun to retract from that broad position, finding that despite the non-private nature of most social media, employees nevertheless enjoy some right not to have their personal lives ripped apart without some showing of relevancy to the issues in the case.

This month, however, brings us EEOC v. The Original Honeybaked Ham Co. (D. Col. 11/7/12) [pdf], which presents one of the most liberal views of the discovery of employees’ social media accounts since Simply Storage Management.

Honeybaked Ham involves allegations of sexual harassment brought by the EEOC on behalf of a class of two dozen female employees. The employer sought discovery of “numerous categories of documents” related to the class members’ emotional and financial damages, credibility, and bias, including the contents of their social media accounts.

The court concluded that there was “no question” that the company had established that “the documents it seeks contain discoverable information.” The court went on to make the following broad-based comment about the role of social media accounts in discovery:

If all of this information was contained on pages filed in the “Everything About Me” folder, it would need to be produced. Should the outcome be different because it is on one’s Facebook account? There is a strong argument that storing such information on Facebook and making it accessible to others presents an even stronger case for production, at least as it concerns any privacy objection. It was the claimants (or at least some of them) who, by their own volition, created relevant communications and shared them with others.

This case is but one in the evolving landscape of social media discovery in employment cases. Part of the struggle we face in seeking discovery of employees’ social media accounts is educating the judges who decide the motions to compel. The reality, however, upon which the Honeybaked Ham court seized, is that while the medium of communication might be different, the rules of the road are same. Discoverable information is discoverable information, whether it’s a paper record or an electronic diary.

The image of an “Everything About Me” folder is a powerful one. I love that analogy, and I am certain I will be using it in future motions to compel to help educate as to why a Facebook or other social media accounts should be discoverable.

[Hat tip: Electronic Discovery Law]

Monday, November 5, 2012

What skeletons are you unearthing by suing an ex-employee?

Before you bring suit against an ex-employee, you might want to consider whether their exist any skeletons in your employment closet that could come back to haunt you in the litigation. Case in point—Automotive Support Group, LLC v. Hightower [pdf], decided yesterday by the 6th Circuit.

Automotive Support Group sued two ex-employees for breaching the non-competition provisions in their employment agreements. One of the sued employees, Don Ray McGowan, counterclaimed in the lawsuit for unpaid wages and severance owed under his employment agreement.

The appellate court affirmed the trial court’s dismissal of the company’s claims. It also affirmed the trial court’s judgment for McGowan on his unpaid wage and severance claims. How much did the employee win? $70,501.31—$750 in unpaid wages (trebled under the applicable South Carolina wage payment statute), $2,500 in severance pay, and $65,751.31 in attorneys’ fees. Add to that $70,000 whatever the company paid its own lawyers to litigate this case.

There are two lessons for employers that leap to mind:

  1. Unclean hands. Non-competition cases are often decided on equitable bases. In addition to money damages, you are likely asking a court to award you an injunction enforcing the agreement and precluding the employee from working for a competitor. To obtain an injunction, however, one must have what is called “clean hands.” Clean hands means that the party seeking an injunction has not acted inequitably or unfairly toward the party it is seeking to enjoin. Refusing to pay wages raises the possibility of a court refusing to issue an injunction because of your unclean hands. The better practice: pay the wages (you owe them anyway), and then file suit.

  2. Sometimes you get what you ask for. Would McGowan have started a lawsuit over $3,250? Probably not. Once he was sued, did have anything to lose by raising those issues as a counterclaim? Again, probably not. If you are going to bring a lawsuit against an ex-employee, make certain that you are not creating an environment to incent that individual to file a claim that otherwise might stay buried and never see the light of day.

Thursday, October 18, 2012

Major reform to Ohio’s discrimination laws introduced in state senate

Ohio’s employment discrimination laws leave a lot to be desired. They expose employers to claims for up to 6 years, render managers and supervisors personally liable for discrimination, contain no less than 4 different ways for employees to file age discrimination claims—all with different remedies and filing periods, and require no filing with the state civil rights agency as a prerequisite for filing a civil lawsuit.

Yesterday afternoon, Senate Bill 383 was formally introduced in the Ohio Senate. It is a business-friendly attempt at comprehensive reform of Ohio’s employment discrimination statute.

Among its key reforms and amendments, S.B. 383:

  • Creates a universal 365-day statute of limitations for all employment discrimination claims.

  • Clarifies that the inclusion of “religion” as a protected class does not include those working in a ministerial capacity.

  • Unifies the filing of age discrimination claims to the same procedures and remedies as all other protected classes.

  • Requires individuals to elect between filing an administrative charge with the Ohio Civil Rights Commission, or filing a discrimination lawsuit in court, and making clear the the election of one bars the other.

  • Prioritizes mediation and conciliation for all charges filed with the OCRC.

  • Establishing an affirmative defense to claims not alleging an adverse, tangible employment action, when 1) the employer exercised reasonable care to prevent or promptly correct the alleged unlawful discriminatory practice or harassing behavior, and 2) the employee failed to take advantage of any preventive or corrective opportunities provided by the employer or to otherwise avoid the alleged harm.

  • Eliminates individual liability for managers and supervisors.

  • Caps noneconomic and punitive damages based on the size of the employer.

This bill presents a tangible opportunity to fix a broken law. Ohio’s current employment discrimination statute is so different from both its federal counterpart and the similar laws of other states that it places Ohio at a competitive disadvantage. By paralleling much of the federal employment discrimination statutes, S.B. 383 restores balance and predictability for Ohio employers.

Focusing on the elimination of individual liability for discrimination claims, the Ohio Employment Lawyers Association, a vocal group of plaintiff-side employment lawyers, has already labeled this legislation as “protecting sexual predators.” Nothing could be further from the truth. The legislation leaves intact all common remedies employees have if they are subjected to predatory behavior in the workplace—assault, battery, intentional infliction of emotional distress, invasion of privacy, and criminal sanctions. S.B. 383 merely brings Ohio in line with federal law and the law of most states on this issue.

Now comes the hard part—getting this bill passed. If you believe S.B. 383 presents the necessary reform of a broken system, call and email your state senator and urge him or her to support this bill. Getting S.B. 383 passed will be an uphill battle, but it is a battle worth fighting to bring meaningful reform to a broken statute.

Thursday, July 12, 2012

When defending employment cases, chasing attorneys’ fees is a snipe hunt

My summer reading list includes Joel Stein’s Man Made: A Stupid Quest for Masculinity. The book recounts the self-proclaimed effete Stein’s journey to become more masculine in the wake of the birth of his son. In one chapter, Stein spends a weekend with a boy scout troop to learn how to camp. The troop’s hazing includes sending Stein on a snipe hunt. For the uninitiated, a snipe hunt is a practical joke played on inexperienced campers, who are sent to hunt an imaginary bird or animal (the snipe).

Believe it or not, snipe hunts have something to do with defending discrimination cases. Often, I hear this outrage from clients: “I can’t believe we’re being sued for this. I want to counter-sue to collect our attorneys’ fees!” Yes, there are statutes and rules in place that permit a defendant, in certain and extreme circumstances, to collect their attorneys’ fees from the plaintiff. But, there are few cases that will meet this high threshold for recovery. In reality, the likelihood of a judge ordering that a plaintiff-employee pay the defendant-employer’s attorneys’ fees under one of these fee-shifting mechanisms is on par with winning the lottery.

If you want to take any solace from this loser-doesn’t-pay system, consider these words, published yesterday by the 6th Circuit Court of Appeals, in Gibson v. Solideal USA, Inc. [pdf]:

As an initial general proposition, we are not entirely unsympathetic to Solideal’s position. Statutes designed to empower employees in the vindication of their rights may, at times, be used as bases on which a plaintiff asserts claims that are later determined to be without merit. Undeniably, large employers may be forced to incur significant litigation expenses in defending against such claims. However, if this Court were to follow the course now advocated by Solideal, it would effectively hold that a plaintiff who elects to forgo formal discovery and whose claims are unable to withstand summary judgment is responsible for paying all fees and costs the defendant incurred in connection with the litigation. This is a bridge too far.

Litigation is time consuming and expensive. Some cases (such as the one discussed yesterday by Dan Schwartz, at his Connecticut Employment Law Blog) can go on for a decade. We all have principles. We don’t like to pay money to an undeserving plaintiff when we know that we are right. And, when we prove that we are right, we think the plaintiff should pay us for our grief and aggravation. The system, however, is not set up to reward even the most deserving of employers in this way. The sooner employers realize that chasing reimbursement of their attorneys’ fees is a litigation snipe hunt, the sooner they can focus their efforts on the task at hand, concluding the case as quickly and cost-effectively as possible.