Monday, December 10, 2007

Blog #2

Huber v. Wal-Mart Stores

Friday, we reported that the Supreme Court has agreed to hear this case. Interestingly, Justice Breyer, who holds Wal-Mart stock, has recused himself, lessening the possibility that the Court will rule in favor of the Plaintiff's point of view in the case.

Seawright v. American General Financial Services, Inc., 2007 U.S. App. LEXIS 26328 (6th Cir., Nov. 13, 2007).

In Friday's post regarding this case, I neglected to include the best part, that is, the dissent's reliance on Homer Simpson. As you may recall, this is the arbitration case where the employee did not in any way signal that she truly accepted the arbitration regime being unilaterally imposed by her employer. Judge Boyce F. Martin, Jr., dissenting, says in a footnote that the majority's finding a binding contract without a signal that the Plaintiff - Employee understands that a contract is being made, is analogous to the following colloquy between Homer Simpson and God: "Here's the deal: you freeze everything as it is, and I won't ask for anything more. If that is OK, please give me absolutely no sign. [ no response] OK, deal. In gratitude, I present you this offering of cookies and milk. If you want me to eat them for you, please give me no sign. [ no response] Thy will be done." The Simpsons: And Maggie Makes Three (FOX television broadcast, Jan. 22, 1995).

False Claims Act - Public Disclosure - United States Ex Rel. Rost v. Pfizer, Inc., 2007 U.S. App. LEXIS 26486 (1st Cir., Nov. 15, 2007).

The False Claims Act requires that the Relator be the "original source" and is barred from proceeding if there has been a "public disclosure". In United States Ex Rel. Rost, it was argued by the Defendant - Corporation that its self-disclosure to the federal government constituted a "public disclosure" under 31 U.S.C. Section 3730(e)(4)(A) barring the action. The District Court, Judge Joseph L. Tauro, rejected that argument (446 F.Supp. 2d 6 (D. Mass. 2006)), and the First Circuit, Judge Lynch writing for the unanimous panel, affirmed, holding that Pfizer's confidential disclosures to the HHS and DOJ were not "public disclosures" that would trigger the False Claims Act's jurisdictional bar. In doing so, the Court said: "In our view, a 'public disclosure' requires that there be some act of disclosure to the public outside of the government. The mere fact that the disclosures are contained in government files someplace, or even that the government is conducting an investigation behind the scenes, does not itself constitute public disclosure." Later, the Court says, "If providing information to the government were enough to trigger the bar, the phrase 'public disclosure' would be superfluous." The Court noted that the Ninth, Tenth and Eleventh Circuits agree; whereas the Seventh Circuit in United States Ex Rel. Mathews v. Bank of Farmington, 166 F.3d 853, 861 (7th Cir. 1999), reached a contrary result.

Confidentiality of Personnel Files

In a 7-0 opinion, the Supreme Court of Missouri in State Ex Rel. Delmar Gardens North Operating, LLC v. Gaertner, 2007 Mo. LEXIS 167 (Mo., Dec. 4, 2007), the lower court ordered the employer, a skilled nursing facility, to produce the entire personnel file of a non-party employee. The employer challenged the trial court's order, seeking a writ of prohibition directing that the trial court quash its order.

The order had issued after a certified nurse's aide had reported observing the son of one of the facility's residence in the room of another resident who was on a feeding tube, the aide observing the son's hand under the bedsheet of the resident. After receiving the report, the facility sought and obtained a TRO prohibiting the son from entering the premises. In proceedings to determine whether the injunction should be made permanent, the son sought the production of the "whistleblowing" aide's entire personnel file.

A unanimous Missouri Supreme Court held that the employer had standing to object to production of its employee's personnel file on the grounds, among others, that its disclosure could subject it to liability under Missouri law. The Court recognized a right of privacy in the personnel files that was described as "fundamental" and held that to permit "discovery of a witness' entire personnel file solely for a collateral matter such as impeachment would eviscerate the right of privacy that employees enjoy as to those records." Finding that the trial court's order was overly broad, the Court found the order a clear abuse of discretion.

When counsel for the requesting party, at oral argument, attempted to refine the request to what might arguably be relevant, the Court stated: "That is not what he requested, however, nor what Respondent ordered Delmar Gardens to produce. 'The discovery process was not designed to be a scorched earth battlefield upon which the rights of the litigants and the efficiency of the justice system should be sacrificed to mindless, overzealous representation of plaintiffs and defendants.' (Citation omitted)."

RICO Suits Against Unions For Corporate Campaigns

Fairly recently, several employers have counter-attacked against Unions, using the federal RICO (Racketeer Influenced and Corrupt Organizations Act) statute. In one such lawsuit, Wackenhut sued the Service Employees International Union in Federal District Court in New York, alleging that the Union and its associates have infiltrated and disrupted public and other corporate events; distributed false and disparaging newsletters to Wackenhut customers; interfered with the company's contract-bidding process; solicited plaintiffs to file suits and charges against Wackenhut, and staged "street theater" events to disparage the company in public. The Wackenhut complaint can be viewed at See also the Smithfield Foods lawsuit against the United Food and Commercial Workers Union, filed in U.S. District Court in Richmond, Virginia. (Complaint can be viewed here:

Trade Secrets

The South Carolina Supreme Court in The Atwood Agency v. Black, 374 S.C. 68, 646 S.E.2d 882 (S.C. 2007), held that a customer list that is available through other proper means, is not protected as a trade secret. The Plaintiff, a vacation rental business, argued that its homeowners list and its renters list had been misappropriated by a former property manager, and were being used to solicit business to another rental agency, arguably in violation of the South Carolina Trade Secrets Act. Two Justices concurred, indicating that they could not agree that the list of renters did not qualify as a trade secret. The majority reasoned that the renters list was not a trade secret because some of the renters had contacted the former property manager and because some renters provided personal contact information in guestbooks or directly to homeowners. The concurring Justices contended that this evidence did not undercut the trade secret contention because the renters list, taken as a whole, in their judgment, qualified as a trade secret. The fact that some renters chose to contact the property manager and because some renters left contact information did not make the entire renters list "readily ascertainable."