Supreme Court Update

January 4th Conference

There are no employment cases on the Justices' plate tomorrow at their Friday conference, but there are three cases that may be of interest. The first is Bridge v. Phoenix Bond & Indemnity Co., which is a RICO civil action raising the question whether false statements made to third parties can establish proxmiate cause where the plaintiffs did not rely on the statements but were nonetheless harmed by the statements.

The second case is WKB Associates v. Fair Housing Council which is a Fair Housing Act case raising two questions, the first being whether incurring pre-litigation expenses in investigating a potential claim satisfies the injury component of Article III standing and the second question is whether the statute of limitations runs from the sale date of each separate unit in the housing complex or runs from the sale of the final unit.

Finally, Sprint Communications Co. v. APCC Services is another Article III standing case, which raises the question whether a plaintiff who has assigned to it the right to pursue a legal claim, and stands to gain no proceeds from the outcome of the litigation, has standing to sue.

For the opinions, briefs, and petitions for cert., see http://www.scotusblog.com/wp/uncategorized/petitions-to-watch-conference-of-1408/.

January 11th Conference

The Justices meet in private conference on Friday, January 11th. There are at least three important employment cases on their plate at that conference in which they might accept cert.

The first is Crawford v. Metro. Gov't of Nashville & Davidson County, 211 Fed. Appx. 373, 2006 U.S. App. LEXIS 28280 (6th Cir. 2006) (petition for cert. available at http://www.scotusblog.com/movabletype/archives/06-1595_pet.pdf). The 6th Circuit held that the anti-retaliation provisions of Title VII were not violated by the employer’s allegedly retaliatory discharge of plaintiff who had cooperated in the employer’s internal investigation of a co-worker’s sexual harassment allegations against a supervisor, where there was no pending charge with the EEOC.

The second is Taylor v. Progress Energy, Inc., 493 F.3d 454 (4th Cir. 2007), re-aff’g 415 F.3d 364 (4th Cir. 2005, vacated and remanded by 2006 U.S. App. LEXIS 15744 (4th Cir. June 14, 2006), petition for cert. filed on October 22, 2007, available at http://www.scotusblog.com/wp/wp-content/uploads/2007/10/progresspetitionappendix.pdf. The Fourth Circuit, on rehearing and now with the benefit of an amicus brief from the Department of Labor, which disagreed with the Court’s interpretation of a DOL regulation prohibiting waivers of FMLA claims, nonetheless reaffirmed its earlier ruling. Judge Duncan dissented. The Fourth Circuit, disagreeing with the Fifth Circuit’s holding in Faris v. Williams WPCI, Inc., 332 F.3d 316 (5th Cir. 2003), held DOL regulation that prohibits waivers of FMLA claims absent DOL or court approval should be upheld. The Fifth Circuit had held that the regulation only barred the prospective waiver of substantive FMLA rights; whereas the Fourth Circuit held that the regulation applied to all waivers, both retrospective and prospective. In addition, the Fourth Circuit held that the regulation applies to all FMLA rights, both substantive and proscriptive, the latter preventing discrimination and retaliation.

The third is James v. Metropolitan Gov't of Nashville, 2007 U.S. App. LEXIS 14945 (6th Cir., June 20, 2007) (petition for cert. available at http://www.scotusblog.com/movabletype/archives/07-367_pet.pdf). The issue presented is: Whether under Burlington Northern & Santa Fe Railway v. White, a jury or a judge is responsible for determining whether an employer has violated the retaliation provisions of Title VII.

If Dual-Role Constitutes Conflict Of Interest, What Is The Standard Of Review Of A Benefit Determination?

Yesterday, we discussed the Solicitor General's invitation-brief recently filed in MetLife v. Glenn, No. 06-923, a petition for cert. from the Sixth Circuit's decision, 461 F.3d 660 (6th Cir. 2006).

The courts have struggled with the delineation of a meaningful standard ever since Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). As a commentator noted in the fall 2007 issue (vol. 37, no. 1) of The Brief, the publication of the Tort Trial & Insurance Practice Section of the ABA, "This sliding scale approach is hopelessly imprecise . . . " See Teresa S. Renaker, "State Regulation of Discretionary Clauses In Insured ERISA Plans," The Brief, Fall 2007, page 51. Ms. Renaker's fascinating article called my attention to developments occurring at the state regulatory and state legislative levels regarding discretionary clauses, like the one at issue in MetLife. The National Association of Insurance Commissioners and several states have moved to disallow discretionary clauses in certain insurance policies. On December 5, 2004, NAIC voted unanimously to adopt model legislation banning the use of discretionary clauses in disability insurance policies. This model legislation amended the NAIC's Model Act 42 of 2002, which banned discretionary clauses in health insurance policies, expanding it to reach disability policies as well. The article points out that the Federal District Courts are now grappling with the effect in those states that have by regulation banned discretionary clauses, on the standard of review in ERISA cases like MetLife. Some courts have found discretionary clauses invalid, and have applied de novo review. Other courts have continued to apply discretionary review. And, some courts have held that the states do not have the authority to regulate in the area of discretionary clauses.

So, if you represent a client in a benefit determination case, in addition to keeping your eye on MetLife, you need to determine what, if any, action the applicable state insurance commissioner has taken in light of NAIC's model legislation.


Emotional Distress Award Held To Be Excessive

In a non-employment case, Sloane v. Equifax Info. Servs., LLC, 2007 U.S. App. LEXIS 29805 (4th Cir., Dec. 27, 2007), the Fourth Circuit, Judge Motz writing for a panel including Judges Niemeyer and Michael, reduced a $245,000 award under the Fair Credit Reporting Act for mental anguish, humiliation, and emotional distress to a maximum of $150,000. While some might consider the "takeaway" of $100,00 as a defeat, in my judgment, a reading of Judge Motz's opinion says to me that this is largely a victory for Ms. Sloane. At every turn in her opinion, Judge Motz rejects the arguments being made by Defendant Equifax, which contended that the award should be no more than $25,000, a dollar number that Equifax, as Judge Motz underscored in her opinion, had taken "out of the air." Judge Motz also rejects Equifax's reliance on a line of employment discrimination cases and the low award FCRA cases that Equifax cherry picked for presentation to the Court.

There is excellent language in the opinion regarding the role of the courts in reviewing awards of compensatory damages. In rejecting Equifax's "out of the air" $25,000 argument, Judge Motz has the following to say: "Not only is such an unprincipled approach intrinsically un-sound, but it also directly contravenes the Seventh Amendment, which precludes an appellate court from replacing an award of compensatory damages with one of the Court's own choosing (citations omitted)."

Judge Motz finds that the plaintiff's proof is not merely "conclusory statements", but rather the Court finds that plaintiff "'sufficiently articulate[s]' true 'demonstrable emotional distress (citation omitted).'" She then analyzes the Plaintiff's evidence and finds that there is "substantial, if not overwhelming, objective evidence [that] supports an emotional distress award." Then, after a fascinating riff regarding identity theft and the citation by the Court of breathtaking statistics regarding the amount of data inputted every month by the "Big Three" credit reporting agencies (two billion items of information every month) and the number of credit reports that they issue each day (two million), the Court discusses the range of awards in FCRA cases and awards in defamation cases, the Court finding that "some guidance can be gained from case law concerning defamation." The Court says that its review of FCRA cases "suggests that approved awards more typically range between $20,000 and $75,000 (citations omitted)." Then, looking at defamation awards for emotional distress, the Court says that "courts frequently sustain emotional distress awards in the range of $250,000 in defamation cases (citations omitted)." Finally, stating that the panel does not believe that this case involves actual defamation and that there is almost no evidence to suggest harm to her reputation, the Court finds the maximum award supported by the evidence must be "significantly less than these defamation awards." And then, the Court awards a maximum of $150,000, and in the next breath states: "We recognize that even this amount is appreciably more than that awarded for emotional distress in most other FCRA cases. But, as explained earlier, the case at hand differs significantly from those cases."

As stated, in my judgment, this is a big win for Ms. Sloane and a big win for plaintiffs seeking significant awards of emotional distress, whether it be in FCRA cases, defamation cases, or employment discrimination or wrongful termination cases.

Fallout From Griffin v. Acacia Life Insurance Co.

Judge Robert E. Morin of the Superior Court of the District of Columbia had occasion in Le v. Interstate Management Co., LLC, civil case no. 2006 CA 008572 B (D.C. Sup. Ct., July 31, 2007), to apply the D.C. Court of Appeals holding in Griffin v. Acacia Life Insurance Co., 925 A.2d 564, 2007 D.C. App. LEXIS 266 (D.C., May 24, 2007). In Le, like Griffin, the EEOC forwarded the plaintiff's charge to the D.C. Office of Human Rights, and the Office of Human Rights automatically deferred its jurisdiction to the EEOC, thus raising the question whether, in light of Griffin, OHR's automatic deferral of its jurisdiction constituted a dismissal of the plaintiff's charge. Plaintiff argued that a 2001 amendment to the local law permitted the Court to distinguish Le from Griffin, an argument rejected by the Court on the ground that the amendment was merely designed to address the peculiar circumstances of D.C. Government employees. Thus, the Le Court found that the OHR's deferral of its jurisdiction in favor of an EEOC investigation after EEOC had cross-filed with it, constitutes a termination of OHR proceedings and would re-start the running of the one year statute of limitations which would have been tolled by the cross-filing.

So, the issue then became whether the failure of OHR to inform the Plaintiff of its decision to defer its jurisdiction provided any solace. First, Judge Morin reminded us that the District of Columbia does not recognize the concept of equitable tolling. Nonetheless, relying on Small v. D.C. Office of Human Rights, 768 A.2d 994 (D.C. 2001), and the fact that prior to Griffin all of the decisional law in circumstances like Griffin's and Le's, had deemed the statute to be tolled, the Court denied the defense motion for summary judgment on the ground that the Court could not say as a matter of law that the tolling of the statute of limitations had discontinued in these particular circumstances.

In my view, Judge Morin arrived at the correct result. There is a crying need for the City Council to resolve this mess. It is disgraceful that, after over four decades of anti-discrimination law, for plaintiffs to end up mired in arcane disputes involving cross-filing and deferral. This is just the sort of travesty that infuriated the Supreme Court in Holowecki v. Fed. Express Corp., 440 F.3d 558 (2d Cir. 2006), cert. granted, 2007 U.S. LEXIS 6823 (June 4, 2007). See transcript of Oral Argument at http://www.supremecourtus.gov/oral_arguments/argument_transcripts/06-1322.pdf.

Continuing Vitality Of McLaughlin v. Murphy, 436 F.Supp. 2d 732 (D. Md. 2005), Aff'd By Unpublished Per Curiam Opinion On Other Grounds, 2007 WL 1875933, 2007 U.S. App. LEXIS 15560 (4th. Cir., June 29, 2007)

As we pointed out in an earlier blog, the Maryland Court of Appeals has accepted cert. in Hoffeld v. Shepherd Electric Co., Inc., 2007 Md. LEXIS 744 (Md., Dec. 13, 2007). It would appear that the Court will be called upon to either embrace or reject the reasoning of Judge Blake of the Federal District bench in McLaughlin. McLaughlin was a mortgage loan salesman who was paid by commissions and who was terminated by his employer for cause. McLaughlin's commission contract provided that commissions were "earned" on any mortgage loan transaction that he originated when he submitted a "complete application form" for the loan, with the proviso that the commission was to be paid only if the loan "is subsequently funded, settled and not rescinded while the employee is still employed." Judge Blake determined that this contractual requirement did not transgress the Maryland wage collection and payment law (MWCPL).

In Hoffeld, the plaintiff also was a commissioned employee, and his employer provided in the commission plan that he would forfeit a commission earned for work performed prior to his termination, if the employer had not calculated the commission prior to the employee's termination. The trial court in Hoffeld, relying on McLaughlin, held that the plan did not transgress the MWCPL and the Court of Appeals' decision in MedEx v. McCabe, 811 A.2d 297 (2002) where the Court held that a contractual provision which conditioned payment of an employee's compensation for work already performed on his continued employment with the employer is void and unenforceable as against the public policy expressed in the MWCPL.

New EEOC Regulation That It Is Not Age Discrimination For Employers To Reduce Or Eliminate Health Benefits For Retirees When They Turn 65 And Become Eligible For Medicare


A copy of the regulations can be found at 29 C.F.R. 1625 and 1627.

Arbitration - Collective Bargaining Agreements Waiver Of Judicial Forum For State Anti-Discrimination Claims

In Sum v. Tishman Speyer Properties, Inc., 2007 N.Y. App. Div. LEXIS 1657 (N.Y. App. Div. Feb. 15, 2007); 2007 N.Y. LEXIS 3792 (N.Y. 2007) the Court of Appeals of New York has granted leave to the Plaintiff to appeal where the lower court enforced the CBA's arbitration provision which included arbitration of New York City's anti-discrimination law. A variation of this issue was recently decided by the Second Circuit in Pyett v. Pennsylvania Building Co., 498 F.3d 88 (2d Cir. 2007) in which Judge Cabranes, writing for the panel, held that a union-negotiated waiver of statutory rights in the CBA was unenforceable in light of the Supreme Court's decision in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). The Fourth Circuit, several years ago, in E. Associated Coal Corp. v. Massey, 373 F.3d 530, 533 (4th Cir. 2004) held that "a union-negotiated CBA may waive an employee's statutory right to litigate his employment discrimination claims in a judicial forum."

Cleaning Workers - New Contract

Local 32 BJ's Bargaining Committee announced Thursday, December 27th, that there was a tentative agreement on new contracts for commercial cleaners in Washington, D.C., Montgomery County, and Baltimore with the Commercial Building Cleaning Contractors Association. The new four-year contracts, according to the Local's statement, provide for significant wage increases, employer-paid family prescription drug coverage for all employees, and significantly improved medical insurance benefits for full-time employees. These contracts would apply to nearly 7,000 office cleaners.