Lord of the pants - When is the right time to countersue?

This morning's USA Today is reporting that famed Irish dancer Michael Flatley has won an $11 million judgment against a woman who had accused him of raping her in a Las Vegas hotel room. According to the article, the woman threatened to sue Flatley unless he agreed to a "seven figure" settlement. When he refused, she sued him, but the case was dismissed. Flatley responded with a lawsuit against the woman and her lawyer, alleging extortion, intentional infliction of emotional distress, and defamation.

While the Flatley case does not involve an employer/employee relationship, it is nevertheless interesting to look at in relation to the Ohio Supreme Court's decision last week in Greer-Burger v. Temesi. I cautioned that employers should tread lightly in filing lawsuits against employees who have engaged in protected activity. Flatley illustrates one situation where it might make sense to file a lawsuit against an employee - where the value of one's personal reputation is harmed by the mere filing of the employee's claim. For example, a CEO or celebrity accused of sexual harassment has a lot to lose even by having a meritless claim alleging sexual misconduct filed against him or her. Another example that comes to mind, although not implicated by the Flatley case, is where an employee has stolen trade secrets. In those examples, the individual or the company has something of value to gain other than mere retribution.

The decision of whether to file a claim against an employee or ex-employee is not an easy one, and should not be undertaken without careful thought, a clear strategy of the goals to be achieved, and consideration of whether those goals are worth the risk of defending against a likely retaliation claim or the perception in court that the counter-suit is merely retaliatory. For Michael Flatley, the decision was a no-brainer, as he was being accused of rape and being extorted. For your company, the decision should be of the same degree of certainty before a similar decision is reached.

The Fox who cried wolf: 6th Circuit finds that mere discussions of a pending lawsuit does not amount to protected activity

If an employee files a charge of charge of discrimination, and then openly discusses with others his strong desire to sue the company for discrimination, do those discussions constitute "protected activity" under the anti-retaliation provisions of the employment discrimination statutes. According to the 6th Circuit's ruling late last week in Fox v. Eagle Distributing Co., the answer is no.

After being passed over for a promotion, James Fox filed a charge of discrimination. After filing that charge, he repeatedly told co-workers and customers that the company was out to get him, and that he was going to sue the company for $10 million. Other than his charge of discrimination, however, he never told anyone that he believed he was the victim of age discrimination. When the company found out that he had been complaining to customers, it fired him for a "poor attitude" which impeded the company's ability to develop good customer relations. Fox then claimed that he was being retaliated against. The only protected conduct he alleged was his boasts that the company was out to get him and that he was going to sue the company.

The 6th Circuit affirmed the trial court's dismissal of Fox's retaliation claim. It reasoned that Fox had not engaged in protected activity because he had never complained that he had been discriminated against. According to the 6th Circuit, to qualify as protected activity, the opposition must be tied to a violation of a specific statute, and not merely generalized grievances.

We conclude that Fox’s discussion with Poplin is not protected activity under the ADEA and, therefore, Fox has failed to establish a prima facie claim of retaliation. Specifically, we hold that Fox’s statements to Poplin are not protected because they did not amount to opposition to an unlawful employment practice by Eagle. In order to receive protection under the ADEA, a plaintiff’s expression of opposition must concern a violation of the ADEA.... Here, the record does not contain any evidence that Fox specifically alleged discriminatory employment practices in his discussion with Poplin. In her affidavit, Poplin states that Fox mentioned suing Eagle and "that he had made comments about not getting promoted to a pre-sell position.... Although Fox’s lawsuit against Eagle alleged age discrimination, Poplin did not state – either in her affidavit or as recounted in the personnel memo – that Fox alleged that he was denied the promotion due to age discrimination or that Eagle engaged in any unlawful employment practices."

In other words, a vague charge that management is out to get an employee, and discussions of a pending lawsuit without specific reference to alleged discrimination are insufficient to constitute opposition of an unlawful employment practice and does not merit protection.

Typically, companies should treat employees who have alleged discrimination with kid gloves. The lesson to take away from this case is that no employee is protected from termination merely because he or she files a charge of discrimination or a lawsuit. Eagle got off because Fox did not complain in the right way, These issues, however, operate in very gray areas, and companies would be wise to move cautiously if deciding whether to fire an employee like James Fox - a disgruntled employee with a history of crying discrimination.

Some shameless self-promotion

I'm quoted in an article in Business Insurance Magazine on the Greer-Burger vs. Temesi Ohio Supreme Court retaliation decision:

Jonathan T. Hyman, an employer attorney with Kohrman Jackson & Krantz P.L.L. in Cleveland, said the decision was correct.

The court “was basically balancing employees’ right against retaliation against anybody’s right under the First Amendment of the Constitution to petition the court and file a lawsuit,” said Mr. Hyman, who was not involved the case. “When you’re balancing degrees of importance, the Constitution is going to, and should, trump” the employee’s right against retaliation.

He added, though, that employers should “think long and hard” before filing such suits against employees. The employee’s attorney would likely allege that such a suit is retaliatory, he said.

Employers “face an uphill battle in the courtroom anyway” because those who serve on juries are more likely to be employees than employers, said Mr. Hyman.

To read the full article, click here.

What else I'm reading this week #9

Not surprisingly, another active week across the blogosphere. Please support my fellow bloggers by checking out some of these links.

We'll start out with a couple of wage and hour issues. The Pennsylvania Employment Law Blog cautions companies that there are tricks and traps involved in holiday and year-end bonuses, and to watch out for wage and hour mistakes. Meanwhile, the Evil HR Lady answers a question on the legality and advisability of making deductions from the salary of an exempt employee for time away from work (hint, don't do it, as I advised back in June).

John Phillips, at The Word on Employment Law, has posted the 1st half of a 6-part series on the art of firing employees. (Part I, Part II, and Part III). The highlights so far - fairly evaluate performance, use progressive discipline, be consistent, and document everything. Good, basic, sound advice for all companies to follow. John tells me that Parts IV, V, and VI will be posted in the coming days, so keep an eye out for them.

HR World asks the question, "Are you pregnancy-friendly?", and suggests that such an approach is needed to prevent the loss of talented employees to motherhood.

Finally, Kris Dunn, The HR Capitalist, reports on the proposed Healthy Families Act, which would require employers with more than 15 employees to offer full-time employees seven days of paid sick leave.

House passes expansion of FMLA for military families

By an overwhelming vote of 370-49, the House yesterday approved legislation that would, among other things, expand FMLA leave rights for the families of wounded service members. President Bush will be hard-pressed to veto a bill that also authorizes $696 billion in military programs. If enacted, the legislation will amend the FMLA and provide up to 6 months of leave to family members (i.e., spouse, son, daughter, or parent) of combat-injured service members to care for their loved ones. Click here for the text of section 675 of the National Defense Authorization Act for Fiscal Year 2008.

Hat tip to The FMLA Blog.

The year's worst employees

It's the time of year when everyone is putting out their year-end best of lists, and the employment realm is no exception. Careerbuilder.com has published its list of the year's worst employees. If you thought your company had some doozies, check out the list, available here: Worst Employees of the Year.

My personal favorite:

An off-duty airline employee was arrested on assault charges after he sat down next to a woman trying to sleep and allegedly touched her inappropriately, according to an affidavit filed with a complaint from the woman. The employee was charged with simple assault and was suspended from the airline until further review of the incident.

Feel free to comment with your best employee horror story from the past year.

Ohio Supreme Court holds that an employer's lawsuit against an employee who has engaged in protected activity is not per se retaliation

This morning, the Ohio Supreme Court issued a significant retaliation decision, Greer-Burger v. Temesi, which holds that "an employer is not barred from filing a well-grounded, objectively based action against an employee who has engaged in protected activity." In so ruling, the Court stated that it is balancing "the statutory right of an employee to seek redress for claims of discrimination without retaliation against the constitutional right of an employer to petition courts for redress."

The facts of the case are as follows. In 1998, Tammy Greer-Burger filed a sexual harassment suit against Lazlow Temesi. The case proceeded to trial, at which Temesi prevailed. Thereafter, Temesi filed suit against Greer-Burger seeking to recover the $42,334 in attorneys fees and costs he had incurred defending against the harassment suit, plus compensatory and punitive damages. In response to Tamesi's lawsuit, Greer-Burger filed a charge of discrimination with the OCRC, claiming that Temesi's lawsuit was retaliation for her protected conduct, the prior sexual harassment suit. Based solely on the fact that Temesi had filed suit, the OCRC found that Tamesi's lawsuit was prohibited retaliatory conduct, and ordered Temesi to immediately cease and desist from pursuing his lawsuit and to pay Greer-Burger the $16,000 she claimed to have expended in defending against it. The common please court and appellate court both affirmed the OCRC's decision.

In reversing the lower courts, the Supreme Court started and ended its analysis with the First Amendment's fundamental right to petition and seek redress in the courts. Despite the fundamental nature of that right, the Court recognized that the right to access courts is not absolute. The First Amendment does not protect "sham" litigation, that is, an objectively baseless lawsuit such that no reasonable litigant could expect success on the merits. To find that the mere act of filing a lawsuit is per se retaliatory, in the words of the Supreme Court, would "undermine the right to petition for redress by giving an administrative agency the power to punish a reasonably based suit filed in court whenever it concludes ... that the complainant had one motive rather than another.... This danger is further highlighted when the only evidence of the complainant's retaliatory motive is the simple act of filing a lawsuit." (internal quotations and citations omitted).

Because of the McDonnell Douglas burden shifting analysis used in retaliation cases, the Court placed the burden on the employer to demonstrate, as its legitimate non-retaliatory reason, that an alleged retaliatory lawsuit is not objectively baseless:

Instead, we find it more prudent to permit an employer the opportunity to demonstrate that the suit is not objectively baseless. In determining whether the employer’s action has an objective basis, the OCRC administrative law judge should review the employer's lawsuit pursuant to the standard for rendering summary judgment.... Thus, an employer needs to show his lawsuit raises genuine issues of material fact. If the employer satisfies this standard, the suit does not fall under the definition of sham litigation. The suit, therefore, shall proceed in court while the proceedings before the OCRC shall be stayed. The procedure outlined above falls within the jurisdiction of the OCRC as provided for in R.C. 4112.04 and promotes judicial economy because the employer's lawsuit will not have to be fully litigated in the trial court before the OCRC can make its determination as to the reasonableness of the suit. In this way, the OCRC essentially shall vet the action to ensure it is not sham litigation. (internal quotations and citations omitted)

The majority opinion concluded by recognizing the stigma of being falsely accused as a discriminator, and the importance of being able to seek legal redress to remedy that misclassification:

An employee's right to pursue a discrimination claim without fear of reprisal is a laudable goal entitled to considerable weight. The OCRC's position in this case, however, has the potential to give employees a carte blanche right to file malicious, defamatory, and otherwise false claims. As the concurring opinion of the appellate court astutely noted, the per se standard advocated by the OCRC does not advance the goal of Chapter 4112 when it "permits a claimant to engage in any kind of slander or defamation, and possibly even perjury, without consequence," and then precludes "those falsely accused of being discriminators from seeking legal redress." Greer-Burger, 2006-Ohio-3690, ¶ 38 (Corrigan, J., concurring).

Just because employees do not have carte blanche right to file malicious, defamatory, or otherwise false claims, does not mean that employers should rush into court to clear their names. Instead, employers should be wary in using Greer-Burger v. Temesi as carte blanche for filing lawsuits against unsuccessful discrimination plaintiffs. As the concurring opinion correctly points out, "the majority's 'not objectively baseless' test sets a very low threshold...." Merely because this case gives companies the apparent right to file a claim does not mean ultimate success on that claim. Indeed, the decision whether to pursue a claim against an employee or ex-employee who has brought a discrimination claim must be carefully thought out, and not merely filed as a knee-jerk reaction to being sued.