AT&T Corp. v. Hulteen, 07-543; 498 F.3d 1001 (9th Cir. 2006)

On January 22, 2008 the Court invited the Solicitor General to submit a brief in this case as to whether or not the Court should take cert. The issue in this case is whether Title VII permits an employer, when setting retirement benefits, to discriminate between those employees who took pregnancy disability leave before the Pregnancy Discrimination Act came into effect and other employees who took any other kind of temporary disability leave during that same period.

Centerior Energy v. Mikulski, 07- ; 501 F.3d 555 (6th Cir. 2007)

A petition for cert was filed this past Friday in this case which involves interesting questions regarding federal jurisdiction predicated on a state law claim that turns on a disputed issue of federal law. The Federal Circuit in Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d 1281 (Fed. Cir. 2007) held that arising under jurisdiction extends to any case in which the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims. In Immunocept the plaintiff brought a state law malpractice claim based on alleged errors in the prosecution of a patent. The case required resolution of a dispute over the scope of a patent claim. The Federal Circuit held that the case arose under federal law because federal law was a necessary element of the state law claim, and the federal law question thus was substantial. The court also noted that litigants will benefit from federal judges who are used to handling these complicated rules.

Allison Engine Co., Inc. v. United States ex rel. Sanders, 07-214; 2007 U.S. LEXIS 11916 (2007).

In the past few days, a raft of briefs have been filed in this case which is a False Claims Act case presenting the so-called Totten presentment issue. See, U.S. ex rel. Totten v. Bombardier Corp., 363 U.S. App. D.C. 180, 380 F.3d 488, 496 (D.C. Cir. 2004). (Roberts, J.). Ted Olsen filed on behalf of petitioners: (http://www.abanet.org/publiced/preview/briefs/pdfs/07-08/07-214_Petitioner.pdfSCOTUS cite).
The United States filed an amicus brief supporting respondents (http://www.taf.org/opinions/07-214bsacUnitedStates.pdf); Senator Grassley filed an amicus brief (http://grassley.senate.gov/public/releases/2008/01222008.pdf) and Taxpayers Against Fraud filed an amicus brief (http://www.taf.org/opinions/Taxpayers%20Against%20Fraud%20amicus%20brief.pdf). This case is scheduled for oral argument on February 26, 2008.


Class Action Employment Litigation

Seyfarth Shaw LLP has issued its "Annual Workplace Class Action Litigation Report: 2008 Edition," which analyzes some 508 class action rulings on a circuit-by-circuit and state-by-state basis. The 468-page report is available free from the firm at seyfarthshaw@seyfarth.com.


Virginia Worker's Compensation Act Does Not Trump "Horseplay" Personal Injury Claim

On January 11, 2008, the Virginia Supreme Court issued its decision in Hilton v. Martin, 2008 Va. LEXIS 18 (Va. Sup. Ct. January 11, 2008) which was a personal injury action resulting from the death of Ms. Rhoton as a result of an assault by a fellow employee "in the course of" their mutual employment with Highlands Ambulance Service, Inc. As one of the company's ambulances was returning, after lunch, to the company office, defendant Martin took a cardiac defibrillator, and accidentally struck Ms. Rhoton, shocking her, leading to a seizure. Ms. Rhoton never regained consciousness and died of the electrocution and cardiac arrest caused by the charged defibrillator. The Virginia Supreme Court found that the assault was personal to the employee and not directed against her as an employee or because of her employment, and that therefore her resulting death did not arise out of her employment, and thus the worker's compensation exclusivity doctrine did not preclude the claim. The court rejected the so-called "positional risk" test, and adhered to the "actual risk" test, under which the injury comes within the Worker's Compensation Act only if there is a causal connection between the employee's injury and the conditions under which the employer causes the work to be done.


Major SOX Opinion on Scope of Protected Conduct

With permission, set forth below is a summary of the Fifth Circuit's decision from Tuesday of this week in Allen v. Administrative Review Board, 2008 U.S. App. LEXIS 1236 (5th Cir. 2008) prepared by Jason Zuckerman, a plaintiff's attorney:

On January 22, 2008, the Fifth Circuit issued an opinion providing significant guidance about the parameters of protected conduct under Section 806 of the Sarbanes-Oxley Act. See Allen v. Administrative Review Board, (5^th Cir. Jan. 22, 2008). Affirming the ARB’s decision that the plaintiff did not engage in protected conduct, the Fifth Circuit established the following standards for assessing whether a SOX whistleblower engaged in protected conduct:

• “Reasonable Belief’ Standard Protects a Mistaken Belief That an Employer Violated an SEC Rule. Consistent with the plain meaning of Section 806, which requires a plaintiff to demonstrate only a “reasonable belief” that there was a violation of one of six enumerated categories of protected conduct (not an actual violation), the Allen Court held: “Importantly, an employee’s reasonable but mistaken belief that an employer engaged in conduct that constitutes a violation of one of the six enumerated categories is protected.” This is significant because it counters a popular defense contention that a SOX whistleblower must demonstrate that shareholders have been harmed by the SEC violation or other misconduct about which the whistleblower complained.

• “Objective Reasonableness” is Not Solely a Question of Law. In Welch v. Cardinal Bankshares Corp., 2003-SOX-15 (ARB May 31, 2007), the ARB erroneously held that objective reasonableness is a question of law. That decision is pernicious because it encourages ALJs who lack knowledge of securities law to determine prior to trial whether a SOX whistleblower engaged in protected conduct. The Allen Court, however, has held that while the objective reasonableness of an employee’s belief can be decided as a matter of law in some cases, “the objective reasonableness of an employee’s belief cannot be decided as a matter of law if there is a genuine issue of material fact . . . . [and if] reasonable minds could disagree on this issue,” the objective reasonableness of an employee’s belief should not be decided as a matter of law.”

• SOX Protects a Disclosure About a Reasonably Perceived Violation of “Any Rule or Regulation of the SEC”. Although the plain language of Section 806 protects an employee who provides information to a person with supervisory authority over the employee related to a violation of “any rule or regulation of the SEC,” many employers continue to argue that protected conduct is limited to disclosures about shareholder fraud. The Fifth Circuit has rejected that tortured construction of SOX, holding that a disclosure about a violation of any SEC rule is protected.

• Consult a Securities Law Expert Before Engaging in Protected Conduct. Unfortunately, the Fifth Circuit appears to be requiring SOX complainants to become experts in securities law in order to engage in protected conduct. In particular, the Fifth Circuit held that because the plaintiff was a licensed CPA, “the objective reasonableness of [plaintiff]’s belief must be evaluated from the perspective of an accounting expert” and she therefore should have known that internal consolidated financial statements need not be compliant with SAB-101, which prohibits publicly-traded companies from recognizing sales revenue before they deliver merchandise to the customer. Under this decision, complaining to management about internal accounting reports overstating gross profit is not protected conduct because the relevant SEC rule does not technically apply to internal financial statements. This aspect of the Allen Court’s holding completely misses the point of Section 806. As Judge Levin pointed out in Morefield v. Exelon Servs., Inc., 2004-SOX-2 (ALJ Jan. 28, 2004), Section 806 “is largely a prophylactic, not a punitive measure” designed to encourage employees to “head off the type of ‘manipulations’ that have a tendency or capacity to deceive or defraud the public. By blowing the whistle, they may anticipate the deception buried in a draft report or internal document, which if not corrected, could eventually taint the public disclosure.” Section 806 is not a private right of action to enforce SEC rules, but instead is a retaliation action designed to ensure that employees can disclose accounting fraud and reasonably perceived violations of SEC rules without fear of reprisal, before shareholders are defrauded. Blowing the whistle on deceptive or inaccurate draft financial statements should be protected because if left uncorrected, the draft statements will be distributed to shareholders. If an employee is retaliated against for blowing the whistle on misleading internal financial statements, then the employee will not take the risk of blowing the whistle on publicly-filed financial statements. Finally, a SOX whistleblower should not need to consult a securities lawyer in order to engage in protected conduct.

Although Section 806 of SOX has been narrowed by some courts, it continues to afford robust protection to whistleblowers and does not require proof of an actual violation of an SEC rule. The lesson of Allen is that SOX whistleblowers need to plead protected conduct in detail and be prepared to establish a strong link between their disclosure and a reasonably perceived violation of an SEC rule, which in some cases will require expert witness testimony.

For a defense perspective on the Allen decision see:

http://employerslawyer.blogspot.com/

Intentional Infliction of Emotional Distress

The District of Columbia Circuit on Tuesday, January 22, issued a significant intentional infliction of emotional distress (IIED) decision in Kassem v. Washington Hospital Center (2008 U.S. App. LEXIS 1174 (D.C. Cir. January 22, 2008). The complaint alleged that defendant made false statements about the plaintiff to the Nuclear Regulatory Commission with the intent of inducing the NRC to initiate disciplinary action against him. After the NRC completed an investigation and hearing, it dismissed charges against plaintiff who had worked as a nuclear medical technologist at the defendant hospital. Plaintiff sued, alleging, among other claims, an IIED claim which the trial court dismissed on the ground that his allegations were based on "purely occupational concerns with purely occupational consequences,"which the district court found did not satisfy the elements of the tort of IIED under DC law.

Judge Garland, writing for the panel, reversed, relying on Carter v. Hahn, 821 A.2d 890, 895 (D.C. 2003) where the D.C. Court of Appeals held that reporting false information to the police can constitute outrageous conduct for the purpose of stating an IIED claim. Defendant hospital argued that Kerrigan v. Britches of Georgetown, Inc., 705 A.2d 624 (D.C. 1997) precluded the IIED claim. In Kerrigan the plaintiff had alleged that his employer "targeted him for a sex harassment investigation, manufactured evidence against him in order to establish a false claim of sexual harassment, leaked information form the investigation to other employees, and unjustifiably demoted him to the position of store manager in order to promote a woman to his position." 705 A.2d at 628. The Court of Appeals found that those allegations did not rise to the level outrageous conduct sufficient to state an IIED claim. Judge Garland distinguished on the grounds that that case did not involve a false report to government authorities, but rather concerned exclusively actions that took place within the workplace. In Kassem in contract, defendant hospital, after it fired plaintiff, intentionally filed a false charge against him with this NRC -- a charge that could have prevented him from working as a nuclear technologist and could have subjected him to criminal penalties.

Anonymous Blogger

Tip of the hat to the Electronic Frontier Foundation (EFF) which successfully moved to quash a subpoena in the superior Court for Monmouth County, New Jersey in a case where the plaintiff Township had issued a subpoena to Google demanding the identity of an anonymous critic who blogged as "datruthsquad", along with datruthsquad's contact information, blog drafts, emails, and any and all information related to the blog. On December 21, 2007 Superior Court Judge Terance Flynn granted EFF's motion to quash. See:
http://www.blogger.com/Mikulski%20v.%20Centerior%20Energy%20Corp.,%20501%20F.3d%20555%20(6th%20Cir.%202007)


GLBT Discrimination

For employers who are considering putting in place a corporate non-discrimination policy, banning discrimination against gays, lesbians, bisexuals and the transgendered, see Dupont's policy a copy of which can be found at:
http://www.dupontbglad.com/Policies/SAFE_SPACE.pdf


Hi-Ho, Hi-Ho, Its Off to Work We Go!

With apologies to Walt Disney, we report that some 41 District of Columbia employees have been fired or suspended after visiting pornographic websites, using their office computers on office time. Of the fired employees' estimated 200 workdays per year, the city's investigation that allegedly they had visited pornographic websites 100 times per day. One wonders what the numbers would have been like were it not for coffee and lunch breaks. The investigation by the Office of the Chief Technology Officer revealed 20,000 hits from pornographic websites on the 9 fired employees' computers in 2007 alone.

I heard someone once say that one of the few perks for underpaid federal judges was "having" to review alleged pornographic material in order to make judgments as to whether or not it crossed the line. So, I guess some administrative judge at the Office of Employee Appeals of the District of Columbia will be singing: "O Joy, O Rapture unforeseen" when the examiner is "required" to review this material.

And, it brings back memories of representing a soon-to-be hall of fame pitcher in arbitration, and billing at my hourly rate research in Baseball Today and Baseball America. I now imagine the lucky lawyer who gets to view all this stuff and bill at the same time.

For the Washington Post story see:
http://www.wtopnews.com/?nid=25&sid=1331641

Comical Statistics

The January 28th issue of Newsweek has a brief blurb about the number of African-American cartoonists. There are more than 200 syndicated comic strips in U.S. newspapers, and some 15 feature regular African-American characters drawn by African-American cartoonists. On February 10th, a little more than one-half of the 15 will engage in a protest against alleged discrimination against African-American cartoonists. The protesters will each draw a version of the same comic strip in order to underscore their point that allegedly readers and editors view all of their work alike. One interesting allegation is that there is a pattern in the news media that whenever an African-American strip is eliminated, it is then replaced by another African-American strip, the allegation being that there is a limit to the number of such strips.