A Canadian Perspective on Social Media and Concerted Activity

The British Columbia Labour Relations Board recently issued a decision permitting the termination of two employees for Facebook comments during and immediately following a unionization drive, though the comments were substantially more inflammatory and threatening than those described above.  On October 22, 2010, in Lougheed Imports, Ltd. d/b/a West Coast Mazda v. United Food and Comm’l Workers Int’l Union, 2010 CanLII 62482 (B.C. L.R.B. 2010), the British Columbia Labour Relations Board upheld the termination of two employees for comments that they posted on Facebook about their employer.  During and immediately after the drive to establish a union, the two employees involved in the unionization effort posted offensive, and potentially threatening, comments on their Facebook pages.  In one post, one of the terminated employees wrote “If somebody mentally attacks you, and you stab him in the face 14 or 16 times… that constitutes self defence [sic], doesn’t it????” Lougheed Imports, 2010 CanLII 62482 at par. 17 (ellipses in original).  The employer began building a file on one of these employees, the most active union supporter in the shop, on the same day that the union applied for certification, and, despite the provocative nature of his posts, kept its concern secret from the employee until the date of his termination on October 7.  Despite largely agreeing with the union that the employer’s behavior was “puzzling” and “suspicious,” the Board sided with the employer, relying primarily on the egregious nature of the postings and the employer’s alleged uncertainty as to how to address misconduct on Facebook.

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Canadian Perspective on Defamation on Anonymous Internet Message Board

In Warman v. Wilkins-Fournier, 2010 ONSC 2126 (CanLII May 30, 2011), the Plaintiff-Respondent commenced an action against the operators of an internet message board, and eight anonymous posters, for defamation in connection with comments made by those posters.  The Divisional court had heard an earlier appeal in this matter on May 3, 2010, when it held that the motions judge erred by not considering the anonymous posters’ right of freedom of expression, noting that the commenters’ decision to remain anonymous gave rise to a reasonable expectation of privacy.  The court also expressed concern with the potential “chilling effect on freedom of expression” resulting from disclosure.  The court remitted the case to a different motion judge for reconsideration.

Upon remittance, the new motions judge applied a four-part test developed by the Divisional court: 

1) whether the unknown alleged wrongdoer could have a reasonable expectation of anonymity in the particular circumstances; 2) whether the respondent has established a prima facie case against the unknown alleged wrongdoer and is acting in good faith; 3) whether the Respondent has taken reasonable steps to identify the anonymous party and has been unable to do so; and 4) whether the public interests favouring disclosure outweigh the legitimate interests of freedom and right to privacy of the persons sought to be identified if the disclosure is ordered. Warman v. Wilkins-Fournier, 2010 O.J. No. 1846 (CanLII May 3, 2010).

Relying on the terms of membership to the website to which the anonymous posters posted allegedly defamatory material, the motions judge on remittance found that the mere use of pseudonyms did not create a reasonable expectation of privacy.  The terms of membership stated, in pertinent part, that “[i]f you post libelous or defamatory material, you are on your own” and that “[y]our FC alias is no protection.”  The motions judge went on to find that a prima facie case of defamation had been established and that any remaining privacy interests were outweighed by the need to address potential defamatory postings, noting that the privacy intrusion in providing e-mail addresses, registration information, and IP addresses was for the “limited purpose” of effecting service.

The Warman court’s decision to require a prima facie showing of the underlying claim before allowing a plaintiff to discover the identity of an anonymous online speaker comports with the tact taken by several courts in the United States, including the 9th Circuit.  In In re Anonymous Online Speakers, 2011 U.S. App. LEXIS 487 (9th Cir. Jan. 7, 2011), the 9th Circuit opined that “[a] number of courts have required plaintiffs to make at least a prima facie showing of the claim for which the plaintiff seeks the disclosure off the anonymous speaker’s identity.” The Court also noted that, in each case it reviewed, the initial burden rested on the party seeking discovery.  While U.S. courts have applied varying levels of showing, the lowest being “good faith,” the bar that must be cleared is tied to the nature of the speech at issue, and is unaffected by the fact that it occurs online. Id. at *15 - *18.  The dispute before the 9th Circuit, much like the dispute in Warman was over the propriety of using a particular standard on the facts presented.  In Warman, the original motions judge used a “good faith” standard, which is the lowest possible, and was reversed by the Divisional court.  Examining the unsettled nature of the law, 9th Circuit declined to find “clear error” in the District Court’s use of the highest standard, which requires plaintiff to survive a hypothetical motion for summary judgment before becoming entitled to information revealing the speaker’s identity, though the 9th Circuit did note that such a standard was not appropriate in the instant case.

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A Canadian Perspective on Social Media Discovery

In Sparks v. Dube, 2011 NBQB 40 (CanLII Feb. 4, 2011), a personal injury lawsuit tried to the Court of Queen’s Bench of New Brunswick, the defendant retained an investigator to find and review plaintiff’s personal websites.  The investigator discovered photographs on the public portions of plaintiff’s Facebook website that were potentially inconsistent with plaintiff’s claimed injuries.  Defendant requested an ex-parte order to compel plaintiff to download and preserve the contents of all social network sites.  The defendant further requested that the downloading be accomplished without prior notice to the plaintiff.  The court granted defendant’s request, and ordered plaintiff’s lawyer to set a meeting with plaintiff to accomplish the downloading, without informing plaintiff of the purpose of the meeting until plaintiff arrived.  The downloading was to be performed under the supervision of a second lawyer to certify that the order was strictly complied with.  The contents of the download were then sealed pending defendant’s motion for production of information with a “semblance of relevance.”

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The European Union: The Right to be Forgotten

The European Union is considering adding a “right to be forgotten” as part of a planned update to bring the 1995 Data Protection Directive in line with new technologies.  The controversial right would give individuals the right to withdraw their consent to data processing.  This means that, for example, an individual could withdraw their consent to Facebook retaining or sharing a photograph of themselves.  According to a spokesman for Viviane Reding, the EU Justice Commissioner, “after you have withdrawn your consent, there shouldn’t even be a ghost of your data left in some server somewhere.  It’s your data and it should be gone for good.”  Leigh Phillips, “EU to Force Social Network Sites to Enhance Privacy”, The Guardian (March 16, 2011).

The precise shape of this right remains unclear.  It seems likely that it will contain a requirement that individuals “opt-in” to allow data processing, as opposed to the current “opt-out” regime.  Matt Warman, “EU Proposes Online Right “To Be Forgotten”, The Telegraph (Nov. 5, 2010). It is also probable that data processors will face additional restrictions on the type of data which they can process and the length of time for which they can maintain it.  While it may be that the right will do little more than heighten already-extant consent requirements in the 1995 Data Protection Directive, a recent request by the Spanish government to Google illustrates that such a right could have wide-reaching implications.  John Hendel, “In Europe, a Right to Be Forgotten Trumps the Memory of the Internet”, New York Times (Feb. 3, 2011).  On January 19, 2011, Google refused a request from Spain to remove 90 links.  Id.  Most of the links were to newspaper articles and other public information which portrayed individual Spanish citizen plaintiffs in an unfavorable manner.  Id.  For example, one request came from a domestic violence victim whose address can be found on the search engine.  Another is from a woman, reports about whose criminal activity as a teenager are available online.  Ravi Mandalia, “Google Receives Data Deletion Request from Spanish Government” ITProPortal, (August 12, 2011).  Google argued that Spain’s request could do serious harm to freedom of speech and that responsibility for removing content rested with the publishers linked to, not Google.    Google is currently fighting several lawsuits related to the removal of these links under the “right to be forgotten” in Spain’s National Court.  The publications which maintain the data, primarily newspapers and other media sources, were not asked by Spain to remove the information Google linked to from their websites – presumably due to concerns about censorship or freedom of the press. 

The outcome of the battle over this case has potentially wide-reaching implications for the shape of social media websites throughout the world.  Ms. Reding has explicitly stated that “[p]rivacy standards for European citizens should apply independently of the area of the world in which their data is being processed,” and that “[t]o enforce the EU law, national privacy watchdogs shall be endowed with powers to investigate and engage in legal proceedings against non-EU data controllers whose services target EU consumers.”  Ben Rooney, “Non-EU Websites Must Operate Under EU Privacy Laws”, The Wall Street Journal TechEurope Blog (March 16, 2011).  If investigations into the procedures used by social media websites in handling personal data become common, providers could be faced with the choice of conforming their entire operation to comply with EU privacy regulations or somehow segregating accounts used by European citizens for different treatment – potentially a daunting task.

Civil rights organizations have taken a mixed view of any potential right to be forgotten.  The American Civil Liberties Union (“ACLU”) has, in the past, advocated a potentially more limited “right to delete” which would “generally encompass the deletion only of any association with a given record, not necessarily the entire record itself,” except when such disassociation is impossible as for example, when a person’s face is captured by a security camera.  Chris Conley, “The Right to Delete” AAAI Spring Symposium Series (March 23, 2010). This is a more limited right than that which appears to be under consideration in Europe.  The ACLU also proposes safeguards to balance this right against rights of free speech and press by providing various exceptions, including exceptions for “newsworthy” content, but the ACLU acknowledges that the “right to delete” presents difficult issues in this regard.  In the United Kingdom – already facing criticism for not complying fully with the 1995 Data Protection Directive – Mr. Kenneth Clarke, Secretary of State for Justice, has criticized the notion of a broad “right to be forgotten.”  “Kenneth Clarke Warns on EU Data Protection Rules”, May 26, 2011.

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The NLRB and "Facebook Firings"

Since President Obama’s appointees to the National Labor Relations Board constitute a majority, the NLRB has taken an aggressive approach to employer work rules and policies which, in the NLRB’s view, restrict employees in the exercise of protected concerted activity on social media sites.  In tandem with this aggressive approach to enforcement, the NLRB has advanced a very broad view of when employees’ social media activity constitutes “protected concerted activity.”  

On August 18, 2011, the NLRB published a Report of the Acting General Counsel Concerning Social Media Cases.  Anne Purcell, “Report of the Acting General Counsel Concerning Social Media Cases”, Office of the General Counsel, Division of Operations-Management, Mem. OM 11-74 (August 18, 2011).  This report described selected NLRB actions related to social media.  Among the common features of the actions were that the employee conversations, however offensive, occurred in a broader context of a discussion relating to working conditions.  Id.  Another common feature was that the posts all involved discussions between multiple employees, either online or offline, even if the online post did not result in a discussion.  Id.  A third common element was the lack of a social media policy, or the perceived over breadth of an existing social media policy.  Id.

In the NLRB’s view, an employee’s social media activity is protected as “concerted action” so long as it touches on a term or condition of employment, and falls short of making a physical threat.  This view was largely endorsed recently by the recent decision in Hispanics United of Buffalo, Inc. v. Ortiz, No. 3-CA-27872 (NLRB Sept. 2, 2011).  Hispanics United dealt with the termination of five employees for postings to one of the terminated employee’s Facebook pages.  That employee had posted a comment naming a co-worker who believed that her department did not do enough to serve their clients and soliciting input from her co-workers.  The employee added that she had “about had it!”  Id. at 4.  The employees who participated in this discussion were terminated three days later, purportedly for violating the employer’s anti-harassment policies.  In Hispanics United, Administrative Law Judge Arthur Amchan concluded that the employees’ Facebook discussions were protected because they represented the “first step towards taking group action.”  Id. at 8.  The ruling was based on the employees’ right “to discuss matters affecting their employment amongst themselves.”  Hispanics United, No. No. 3-CA-27872 at 9.

Neither did the sometimes-vulgar nature of the discussion make it so “opprobrious” as to take it outside the protections of the National Labor Relations Act.  While some posts lapsed into profanity – “what the f. .. Try doing my job I have 5 programs” or “Tell her to come do [my] fucking job n c [and see] if I don’t do enough, this is just dum [sic.]” – the NLRB characterized it as “objectively quite innocuous” in a Memorandum dated August 18, 2011.  Anne Purcell, “Report of the Acting General Counsel Concerning Social Media Cases”, supra.  ALJ Amchan appeared to substantially agree with the NLRB’s assessment, finding that simply mentioning an employee’s name together with these comments did not transform the conversation into harassment.  ALJ Amchan accordingly found that the employer’s anti-harassment policy was not violated and that the employer had no rational basis for concluding that it had been. 

This discussion of employer policies is typical of the NLRB’s focus in other social-media related actions that it has initiated.  One of the NLRB’s primary concerns has been with what it views as “overbroad” restrictions by employers contained in their social media policies.  The NLRB repeatedly targeted policies which might be interpreted to restrict employees’ ability to engage in protected concerted activity through the use of social media.  While it would be premature at this time, based on the dearth of decisions on this subject, for employers to undertake a wholesale restructuring of their social media policies, it is certainly advisable that employers ensure that their social media policies are tailored to target only social media usage that implicates legitimate business interests.  Employers may also want to consider including a clause carving social media activities that qualify as concerted activity out of any restrictions they place on social media usage.  Preferably, these steps would be taken together – a truly overbroad policy is unlikely to be saved by a limited carve out, and a narrow policy which nonetheless restricts concerted activity may still attract attention. 

This focus on social media policies may portend an attempt by the NLRB to effect wider-reaching changes to employers’ ability to control the use of their electronic resources.  In late April, 2011, the NLRB’s Hartford Regional Director participated in a panel discussion for the Connecticut Bar Association.  During that discussion, the Regional Director revealed that the NLRB is preparing to set the stage to reverse the NLRB’s December 2007 decision in Register Guard.  In that case, the NLRB held that an employer can ban employee use of corporate e-mail systems for non-business reasons as long as the policy is enforced in a non-discriminatory manner.  The Guard Publishing Co. d/b/a The Register-Guard, 351 NLRB No. 70 (2007).  If reversed, employers’ ability to limit the use of social media by employees on employer electronic resources could be severely undermined.

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Monday, September 26th, is the Supreme Court’s “Long Conference”

While I have my eyes on a number of cert. petitions pending before the Court, today, let me call readers’ attention to Magner v. Gallagher, No. 10-1032, petition for cert. pending from 619 F.3d 823 (8th Cir. 2010), reh’g denied, No. 09-1209, No. 09-1528, No. 09-1579, 2010 U.S. App. LEXIS 27066 (8th Cir. Nov. 15, 2010) (Colloton, J. dissenting from denial of reh’g en banc), rev’g 595 F. Supp. 2d 987 (D. Minn 2008) (Ericksen, J.).  Magner is not an employment case, but rather a Fair Housing Act (FHA) case.  The questions presented in the city of St. Paul’s petition are:

1.       Are disparate-impact claims cognizable under the FHA?

2.       If disparate-impact claims are cognizable, should they be analyzed under:

a.   The burden-shifting approach used by the Fourth, Sixth, and Tenth Circuits, Smith v. Town of Clarkton, N.C., 682 F.2d 1055, 1065 (4th Cir. 1982); Betsy v. Turtle Creek Assocs., 736 F.2d 983, 989 n.5 (4th Cir. 1984); Arthur v. City of Toledo, Ohio, 782 F.2d 565, 574-75 (6th Cir. 1986); Mountainside Mobile Estates P’ship v. Sec’s of Hous. & Urban Dev., 56 F.3d 1243, 1252 (10th Cir. 1995); Buckeye Cmty. Hope Found. v. City of Kuyahoga Falls, 263 F.3d 627, 640 (6th Cir. 2001), rev’d in part and vacated in part, 538 U.S. 188 (2003); Reinhart v. Lincoln Cnty., 482 F.3d 1225, 1229 (10th Cir. 2007);

b.   The modified burden-shifting framework adopted by the Eighth and Ninth Circuits, Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th Cir. 1999); Darst v. Webbe Tenant Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902-03 (8th Cir. 2005); or

c.   The hybrid burden-shifting and balancing test adopted by the First and Second Circuits, Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 934 (2d Cir. 1988); Langlois v. Abbington Hous. Auth., 207 F.3d 43, 49 (1st Cir. 2000)?

The city’s petition approaches the cognizability of disparate-impact claims under the FHA using a textualist’s approach.  The petition notes that, when the Supreme Court recognized disparate-impact claims under the Age Discrimination in Employment Act (ADEA) in Smith v. City of Jackson, Miss., 544 U.S. 228 (2005), the Smith Court explained that the text of Title VII and the text of the ADEA justified disparate-impact treatment.  Section 703(a)(2) of Title VII and Section 4(a)(2) of the ADEA have identical language proscribing activities that would “adversely affect” a person because of a protected characteristic.  By contrast, the Fair Housing Act has no such language.  Rather, the text of 42 U.S.C. § 3604(a) makes it unlawful to “… make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.”  The petition notes that the aforesaid language is similar to the language in Section 4(a)(1) of the ADEA, which the Supreme Court in Smith noted would not support a claim of disparate-impact liability. 544 U.S. at 236 n.6. (plurality opinion).  Finally, in Alexander v. Sandoval, 532 U.S. 275, 280-81 (2001) the Court refused to find disparate-impact liability because Title XI of the Civil Rights Act forbids only intentional discrimination and does not prohibit actions taken with a non-discriminatory motive that has a disparate impact. See 42 U.S.C. § 2000(d).

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Fifth Circuit Holds that a Hostile Work Environment Claim May Be Brought Under the ADEA

Hostile work environment claims are typically brought under Title VII, which is to say that such claims typically arise out of the plaintiff’s membership in one or more of Title VII’s protected classes – race or color, national origin, gender (including pregnancy), and/or religion.  However, the question is not entirely settled as to whether hostile work environment claims may be brought under the ADEA – that is, where the alleged hostile work environment is based on the fact that the plaintiff is 40 or older.  The Fifth Circuit, considering this issue as a matter of first impression, recently answered the question in the affirmative in Dediol v. Best Chevrolet, Inc., No. 10-30767, 2011 U.S. App. LEXIS 18819 (5th Cir. Sept. 12, 2011) (Stewart, J, decided by quorum before Judges Stewart and Smith, due to the death of Judge Garwood in July of 2011).

In Dediol, the Court noted that, while it had never before held that Title VII can be extended to address a claim for hostile work environment based on age, on at least two prior occasions, it had heard cases involving hostile work environment claims brought under the ADEA. See Mitchell v. Snow, 326 Fed. Appx. 852, 854 (5th Cir. 2009); McNealy v. Emerson Elec. Co., 121 Fed. Appx. 29, 34 n.1 (5th Cir. 2005).  However, in both Mitchell and McNealy, the Court affirmed the district courts’ grant of summary judgment in favor of the employer, and did not reach the question of whether hostile work environment claims could be brought under the ADEA.  The Mitchell and McNealy Courts simply held that, even assuming such claims were available, the plaintiffs had nevertheless failed to satisfy their burdens of production.  The Dediol Court further noted that both the Seventh and Ninth Circuits had considered such cases, but that those cases had also not expressly ruled upon the issue in question. See Sischo-Nownejad v. Merced Cmty Coll. Dis., 934 F.2d 1104, 1109 (9th Cir. 1991); Young v. Will Cty. Dep’t of Pub. Aid, 882 F.2d 290, 294 (7th Cir. 1989).

In holding that there is indeed such a claim – that plaintiffs can bring a hostile work environment claim based on age discrimination under the ADEA – the Fifth Circuit in Dediol adopted the reasoning of the Sixth Circuit in Crawford v. Medina General Hosp., 96 F.3d 830, 834-35 (6th Cir. 1996):

In Crawford, the Sixth Circuit held that a claim for hostile work environment is cognizable under the ADEA. 96 F.3d at 835. The Crawford Court reasoned that the ADEA and Title VII share common substantive features and also a common purpose: “the elimination of discrimination in the workplace.” Id. at 834. The Sixth Circuit explained its decision this way: “the broad application of the hostile-environment doctrine in the Title VII context; the general similarity of purpose shared by Title VII and the ADEA; and the fact that the Title VII rationale for the doctrine is of equal force, all counsel” the result that a claim for hostile work environment based on age is recognized under Title VII. Id. We adopt the Sixth Circuit's reasoning here.

We now hold that a plaintiff’s hostile work environment claim based on age discrimination under the ADEA may be advanced in this court. A plaintiff advances such a claim by establishing that (1) he was over the age of 40; (2) the employee was subjected to harassment, either through words or actions, based on age; (3) the nature of the harassment was such that it created an objectively intimidating, hostile, or offensive work environment; and (4) there exists some basis for liability on the part of the employer. Id. at 834-35.

In addition to the Fifth and Sixth Circuits, at least one other Circuit (the First) has also held that hostile work environment claims can be brought under the ADEA.  See Collazo v. Nicholson, 535 F.3d 41, 44 (1st Cir. 2008); Rivera-Rodriguez v. Frito Lay Snacks Caribbean, 265 F.3d 15, 24 (1st Cir. 2001).  But, there is still an important distinction between hostile work environment claims which are brought under the ADEA as opposed to Title VII – the damages which are available under the two statutes are not completely identical.  As the First Circuit noted in Collazo:

Although we have recognized hostile work environment claims under the ADEA, see Rivera-Rodriguez v. Frito Lay Snacks Caribbean, 265 F.3d 15, 24 (1st Cir. 2001),  it is well-established that the statute does not allow compensatory damages for pain and suffering, Vazquez v. E. Air Lines, Inc., 579 F.2d 107, 109 (1st Cir. 1978); see also Comm’r of Internal Revenue v. Schleier, 515 U.S. 323, 326, 115 S. Ct. 2159, 132 L. Ed. 2d 294 (1995) (noting unanimity among the circuits on this principle). Modeled after the Fair Labor Standards Act of 1938, the remedy provisions of the ADEA allow awards for “only those pecuniary benefits connected to the job relation,” including unpaid wages or overtime compensation. Kolb v. Goldring, Inc., 694 F.2d 869, 872 (1st Cir. 1982) (internal quotation marks omitted); see also 29 U.S.C. § 626(b); McKennon, 513 U.S. at 357. Aside from monetary relief, federal courts may also grant “such legal or equitable relief as may be appropriate to effectuate the purposes of the Act,” including reinstatement or promotion, if warranted. 29 U.S.C. § 626(b).

535 F. 3d at 44-45 (footnotes omitted).  By contrast, the Collazo Court noted that:

Title VII permits claims for compensatory damages for emotional distress and pain and suffering arising from a discriminatorily hostile or abusive work environment. 42 U.S.C. § 1981a(a)-(b); see Villescas v. Abraham, 311 F.3d 1253, 1260 (10th Cir. 2002)  (“Congress had another opportunity to enlarge the remedies available under the federal employee ADEA when it amended Title VII and other Acts in the Civil Rights Act of 1991 to permit compensatory damages, subject to caps, and it conspicuously chose not to do so for ADEA claims.”).

535 F. 3d at 44 n.3.

This distinction in the availability of pain and suffering and emotional distress damages begs an important question –what is there to gain from bringing a hostile work environment claim under the ADEA?  It is typically difficult to demonstrate that a plaintiff suffered any significant amount of economic damages (for example, lost wages) as a result of being subjected to a hostile work environment.  The primary harm which arises from such claims is typically of the non-economic sort (pain and suffering, emotional distress, and the like). In Dediol, the plaintiff was able to get around this hurdle by claiming that he had been constructively discharged (a claim which would entitle him to lost wages), and the Fifth Circuit specifically held that he had presented a triable issue of fact as to whether he had been constructively discharged.

It will be interesting to see what the outer limits will be in terms of the other contexts in which hostile work environment claims will be allowed.  It appears that the main issue which will be relevant to the resolution of that question will be the level of similarity between Title VII and the other statutes which plaintiffs attempt to use as a basis for bringing hostile work environment claims.  As noted above, the Crawford and Dediol opinions were based primarily on the observation that Title VII and the ADEA “share common substantive features and also a common purpose.” 

Similarly, in holding that the ADA creates a cause of action for hostile work environment harassment, the Fourth Circuit based its reasoning primarily on similarities between the language and purposes of Title VII and the ADA.  Fox v. Gen. Motors Corp., 247 F.3d 169, 175-176 (4th Cir. 2001).  In terms of the similarities in language, the Fox Court noted in particular that both Title VII and the ADA prohibit discrimination as to the “terms, conditions, [and/or] privileges of employment,” and that “[t]he Supreme Court has expressly held that [this] language creates a cause of action for hostile work environment under Title VII.” 247 F.3d at 175.  Note also that the same language is contained in the ADEA.

By contrast, in Carder v. Continental Airlines, 636 F.3d 172 (5th Cir. 2011), the Court held that the statutory language of USERRA did not cover hostile work environment claims, noting differences between the language of USERRA prohibiting the denial of “benefits of employment,” versus Title VII’s prohibition of discrimination with respect to “terms, conditions, and privileges of employment.”  The Carder Court concluded that the USERRA language would not permit a hostile work environment claim absent a denial of a tangible benefit. 

So, in determining whether any given statute will allow for a cause of action for hostile work environment, it appears that the language and purpose of the relevant statute will be of paramount importance.

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Three Circuits, In Addition to the Fourth Circuit, Reject Defense Efforts to Decapitate FLSA Collective Actions and/or Class Actions

Yesterday, we discussed the 4th Circuit’s recent rejection of a defense effort to decapitate an FLSA collective action in Simmons v. United Mrtg. & Loan Inv., LLC, 634 F.3d 754 (4th Cir. 2011).  The 4th Circuit is not alone by any means in rejecting defense efforts to “pick off” the plaintiff(s) in FLSA collective actions, either by tendering full relief or by conveying a Rule 68 offer of judgment that provides for full relief.  

In Symczyk v. Genesis HealthCare Corp., No. 10-3178, 2011 U.S. App. LEXIS 18114 (3d Cir. Aug. 31, 2011), the 3rd Circuit, with Judge Scirica writing for the panel, reversed the District Court’s holding that the plaintiff’s FLSA action was mooted by the defendants’ Rule 68 offer of judgment.  Defendants’ offer of judgment provided for all of plaintiff’s alleged damages, “plus attorneys’ fees, costs, and expenses as determined by the court,” was made prior to plaintiff’s motion for preliminary certification, and was rejected by plaintiff.  Id. at *2 (quotations omitted); Symczyk v. Genesis HealthCare Corp., No. 09-5782, 2010 U.S. Dist. LEXIS (E.D. Pa. May 19, 2010).  In finding that the Rule 68 offer did not moot the case, Judge Scirica was plain-spoken in his disdain for the defense tactic of “picking off” the plaintiff(s) in order to prevent  a collective action from proceeding.  Judge Scirica noted that Rule 68 was designed to “encourage settlement and avoid litigation” but that, in the case of representative actions, it could be “manipulated to frustrate rather than to serve these salutary ends.”  Symczyk, 2011 U.S. App. LEXIS 18114 at *17-*18.  Later, Judge Scirica dismissed defendants’ argument that plaintiff’s case could be mooted by a Rule 68 offer before other plaintiffs “opted-in” to the suit, stating that “[a]lthough defendants’ logic has some surface appeal, reliance on the watershed event of an opt-in to trigger application of the special mootness rules that prevail in the representative action context incentivizes the undesirable strategic use of Rule 68 that prompted our holding in [Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004)].”  Id. at *28.  In Weiss v. Regal Collections, then-Chief Judge Scirica held that a Rule 68 offer of judgment does not moot the claims of a class representative under Civil Rule 23.  Weiss, 385 F.3d at 339.

About three weeks prior to the 3rd Circuit’s ruling in Symczyk, the 9th Circuit addressed these issues in Pitts v. Terrible Herbst, Inc., No. 10-15965, 2011 U.S. App. LEXIS 16368 (9th Cir. Aug. 9, 2011).  In Pitts, plaintiff brought a state-law class action alongside a collective action under the FLSA.  Before plaintiff moved for certification of the class and collective actions, defendant presented plaintiff with an offer of judgment pursuant to Rule 68 for $900 (plaintiff claimed only $88.00 in damages for himself) “plus costs and a reasonable attorney’s fee.”  Id. at *3.   Plaintiff refused defendant’s offer and defendant moved to dismiss plaintiff’s claims as moot.  Id.  The District Court held that defendant’s offer of judgment mooted the action because plaintiff had failed to timely seek class certification, and entered judgment in favor of plaintiff for $900, with $3,500 for plaintiff’s attorney.  Id. at *4; Pitts v. Terrible Herbst, Inc., No. 09-00940 (D. Nev. April 1, 2010).  On appeal to the 9th Circuit, Judge Bybee, writing for the panel, held that defendant’s unaccepted offer of judgment did not moot plaintiff’s case because plaintiff’s claim was “transitory in nature and may otherwise evade review.”  Pitts, 2011 U.S. App. LEXIS 16368 at *20.  The 9th Circuit explained that subsequent certification of the class by the District Court would relate back to the filing of the complaint, seeing no reason to restrict the relation-back doctrine to cases involving inherently transitory claims.  Id. at *20.  Judge Bybee elaborated that “[w]here, as here, a defendant seeks to ‘buy off’ the small individual claims of the named plaintiffs, the analogous claims of the class – though not inherently transitory – become no less transitory than inherently transitory claims.”  Id. at *20-*21 (emphasis in original).

On March 31, 2011, the 10th Circuit also addressed these issues in Lucero v. Bureau of Collection Recovery, Inc., 639 F.3d 1239 (10th Cir. 2011).  In Lucero, the plaintiff had filed a Rule 23 class action complaint alleging violations of the Fair Debt Collection Practices Act and certain state laws.  At the same time defendant served its answer, it also served plaintiff with a Rule 68 offer of judgment, offering damages plus “reasonable attorneys’ fees and costs incurred to that date.”  Id. at 1241.  Prior to the close of discovery on the issue of class certification, defendant moved to dismiss for lack of subject matter jurisdiction.  Id.  After defendant’s motion to dismiss, but prior to the District Court’s ruling, plaintiff filed his motion for class certification.  Id.; Lucero v. Bureau of Collection Recovery, Inc., 716 F. Supp. 2d 1085 (D.N.M. 2010).  The District Court granted defendant’s motion to dismiss, concluding that “jurisdiction is not present over a case where no class has been certified but the defendant has satisfied the plaintiff’s demand for relief.”  Lucero, 639 F.3d at 1241 (internal quotations omitted); Lucero, 716 F. Supp. 2d 1085.  On appeal, the 10th Circuit reversed, holding that “a named plaintiff in a proposed class action for monetary relief may proceed to seek timely class certification where an unaccepted offer of judgment is tendered in satisfaction of the plaintiff’s individual claim before the court can reasonably be expected to rule on the class certification motion.”   Lucero, 639 F.3d at 1250.  Judge Kelly, writing for the unanimous panel, relies, in part, on Justice Rehnquist’s concurrence in Deposit Guaranty Nat’l Bank v. Roper, 445 U.S. 326, 341 (1980), in which Justice Rehnquist stated as follows:

The distinguishing feature here is that the defendant has made an unaccepted offer of tender in settlement of the individual putative representative's claim. The action is moot in the Art. III sense only if this Court adopts a rule that an individual seeking to proceed as a class representative is required to accept a tender of only his individual claims. So long as the court does not require such acceptance, the individual is required to prove his case and the requisite Art. III adversity continues. Acceptance need not be mandated under our precedents since the defendant has not offered all that has been requested in the complaint (i.e., relief for the class) and any other rule would give the defendant the practical power to make the denial of class certification questions unreviewable. Roper, 445 U.S. at 341 (Rehnquist, J. concurring) (emphasis in original).

Judge Kelly’s opinion in Lucero also provides a good discussion of the applicable Supreme Court jurisprudence bearing on these issues, i.e., Sosna v. Iowa, 419 U.S. 393 (1975) (once a class has been certified, the expiration of a named plaintiff’s claim will not moot the action on appeal); Gerstein v. Pugh, 420 U.S. 103 (1975) (Court extends its rationale to the pre-certification context); Roper, 445 U.S. 326 (Court holds that an offer of judgment to a named plaintiff made while a certification motion is pending will not moot the action); and U.S. Parole Comm’n v. Geraghty, 445 U.S. 388 (1980) (Court holds that a named plaintiff, released from prison while a certification motion is pending, may appeal a denial of class certification despite the mootness of his individual claim).

We will continue our discussion on the decapitation tactic in tomorrow’s blog.

Fourth Circuit Rejects Defense Attempt to Decapitate FLSA Collective Action

In Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754 (4th Cir. 2011), the Fourth Circuit faced the question of whether the contents of a letter from defense counsel to plaintiffs’ counsel, clarified by a follow-up letter, rendered moot plaintiffs’ claims for unpaid overtime wages in an FLSA collective action.  The District Court found the case to be moot, and the Court of Appeals vacated and remanded that decision.  Here, defense counsel sent a letter to plaintiffs’ counsel in which he stated that he was authorized “without admitting legal liability or fault, to offer each opt-in plaintiff full relief in this case.”  The letter went on to state:

Each opt-in plaintiff will be compensated fully upon receipt of an affidavit stating the dates on which overtime was worked, the total hours they worked each week of their employment up to the date of their termination, the total amount of back pay they claim is owed to them, and a statement explaining how the calculation of overtime amounts claimed was done. My clients will also pay taxable costs and reasonable attorney's fees supported by time records properly describing the work done and the hours reasonably worked which can be either agreed upon by the parties or submitted to the Court for resolution.

This offer requires that the parties enter a settlement agreement specifying that all claims will be waived and released, this action will be dismissed with prejudice, the settlement will be kept confidential and there will be no admission of liability or disclosure of the settlement terms. I will provide you with the information my client has that is necessary to prepare the affidavits.

This offer of full relief moots this case since there no longer remains any active case or controversy between the parties. This offer remains open for five days after receipt on May 23, 2008. Thereafter, if this offer is not accepted, I will file a motion to dismiss the case as moot.  Simmons, 634 F.3d at 760-61.

            Based upon the blanket nature of the defendants’ offer, the District Court held that the action was moot.  On appeal, plaintiffs argued that the defense letter did not comply with Civil Rule 68 regarding offers of judgment.  The Court of Appeals agreed with plaintiffs that the letter did not constitute a Rule 68 offer of judgment because an offer of judgment, if accepted, is to be public and not sealed; whereas the letter required the plaintiffs to keep the fact of settlement and the terms of settlement confidential. 

            Having found that the correspondence did not constitute a Rule 68 offer of judgment, the Court of Appeals went on to state that the doctrine of mootness is constitutional in nature and, therefore, not constrained by the formalities of Rule 68.  Nonetheless, the Court held that the defendants’ settlement offer did not render the plaintiffs’ FLSA claims moot. 

            The first basis for the court’s holding was that the offer of “full relief in this case” did not offer that judgment be entered against the defendants, but rather only offered for the parties to enter into a settlement agreement.  The Court recognized that a judgment is preferable to a contractual promise, such as a settlement agreement, as the District Courts have inherent power to compel defendants to satisfy judgments, but lack the power to enforce the terms of a settlement agreement absent jurisdiction over a breach of contract action for failure to comply with the agreement.   

            The second basis for the Appellate Court’s reversal was the conditional nature of the offer.  The correspondence conditioned the offer upon the plaintiffs submitting affidavits stating “the dates on which overtime was worked, the total hours they worked each week of their employment up to the date of termination, the total amount of back pay they claim is owed to them, and a statement explaining how the calculation of overtime amounts claimed was done.”  In addition, the offer stated that the defendants would provide the plaintiffs the information the defendants possessed “that is necessary to prepare the affidavits.”  The Court found that the unspecified information raised many unanswered questions, which made the offer ambiguous, and thus ineffective at mooting the plaintiffs’ FLSA claims. 

            Finally, the Court based its decision upon the defendants’ offer being predicated on a requirement of confidentiality, noting that if the plaintiffs litigated the case to judgment, they would be entitled to an unsealed judgment in their favor, without obligation on their part to keep the facts of such judgment confidential.

            Later this week, we will discuss the response of other courts to defense attempts to decapitate FLSA collective actions. 

Retired Associate Justice Souter Underscores the Importance of Careful Drafting of Non-Competes

In EMC Corp. v. Arturi, No. 11-1001, 2011 U.S. App. LEXIS 17834 (1^st Cir. August 26, 2011), retired Associate Justice Souter authored the panel’s opinion in this diversity action in which the employer sought a preliminary injunction against its former employee, to enjoin competition with EMC, solicitation of its customers and remaining employees, and possession and use of confidential business information gained while employed. The underlying agreement restricted the former employee’s activities for one year. As the one year period had elapsed before an injunction could be issued, the District Court, while granting relief as to the confidential information, denied an injunction with respect to competition and solicitation on the ground that the one year period had elapsed.

The panel affirmed, relying on a decision from the Commonwealth of Massachusetts’ highest court in All Stainless, Inc. v. Colby, 364 Mass. 773, 308 N.E.2d 481, 485 (1974) as well as its own 1978 decision in A-Copy Inc. v. Michaelson, 599 F.2d 450, 452 (1^st Cir.) in which it reversed an order enjoining competition by a former employee where said order had been issued after the expiration of a one-year period of restriction set forth in the employment contract. In A-Copy, the court stated that “when the period of restraint has expired, even when the delay was substantially caused by the time consumed in legal appeals, specific relief is inappropriate and the injured party is left to his damages remedy.” Id. at 452 (citing All Stainless).

Justice Souter did note that an employer might be able to distinguish All Stainless if the employee had taken affirmative steps to conceal his acts of breach, citing Exeter Group Inc. v. Sivan, No. 0628-BLS2, 2005 WL 1477735, 2005 Mass. Super. LEXIS 257 (Mass. Super. Ct. March 24, 2005). But, the facts here did not support such an affirmative defense.

Most telling is Justice Souter’s observation that “EMC could have contracted, as the district judge noted, for tolling the term of the restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach.” Unfortunately, the underlying agreement here contained no such language.

In contrast with the law of Massachusetts, see Homan, Inc. v. A1 AG Servs., 175 Ohio App. 3d 51, 58 (Ohio Ct. App. 2008), holding that “a covenant not to compete may not expire while the enforceability of that contract is being litigated.”

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Second Circuit Rejects New Haven’s Post-Ricci Argument that Justice Kennedy’s One Sentence of Dicta Established a Symmetrical Companion, that is, an Employer May Defeat a Disparate-Impact Claim if it had a “Strong Basis in Evidence” that it Would Have Been Subject to Disparate-Treatment Liability

On August 15, 2011, a panel of the Second Circuit in Briscoe v. City of New Haven, 2011 U.S. App. LEXIS 16834 (2d Cir. Aug. 15, 2011), rejected the City’s argument that Justice Kennedy’s language in Ricci v. DeStefano, 129 S. Ct. 2658, 174 L. Ed. 490 (2009) established a symmetrical companion to Ricci’s holding that a disparate-treatment claim is avoidable based upon concerns about disparate-impact liability only if there was a “strong basis in evidence” of such liability.  Ricci, 129 S. Ct. at 2677.  The City had seized upon the following sentence in Justice Kennedy’s opinion:

Our holding today clarifies how Title VII applies to resolve competing expectations under the disparate-treatment and the disparate-impact provisions.  If, after it certifies the test results, the City faces a disparate-impact suit, then in light of our holding today it should be clear that the city would avoid disparate-impact liability based on the strong basis in evidence that, had it not certified the results, it would have been subject to disparate-treatment liability.  Ricci, 129 S. Ct. at 2681.

Relying on that sentence, the City argued in Briscoe, that Ricci’s “strong basis in evidence” test for a disparate-treatment claim applies equally to a disparate-impact claim.  As stated, the panel rejected the argument.  The Briscoe opinion was written by Chief Judge Jacobs, who, interestingly, was among the dissenters from the Second Circuit’s denial of rehearing in Ricci.  503 F.3d 88 (2d Cir. June 12, 2008).  It was that strong dissent that many believe captured the Supreme Court’s attention, resulting in the grant of certiorari, and ultimately the reversal of the Second Circuit and District Judge Arterton.  

            Presumably, yet another petition for rehearing will be filed, now in Briscoe, and it remains uncertain whether the full Court will adopt the Briscoe panel’s decision.  Earlier this year, another panel of the Second Circuit, in United States v. Brennan, 2011 U.S. App. LEXIS 9455 (2d Cir. May 5, 2011) held that they need not consider Justice Kennedy’s dicta and the potential contours of the doctrine.  Circuit Judge Raggi concurred, but cautioned that “majority opinion…yields an abundance of dicta that could confuse future consideration of judgments actually based on Ricci.”  Id. at *218-19.  Indeed, the panel in Briscoe, citing Judge Raggi’s concurrence, noted that they had “no need to consider, much less invite adherences to, the extended dicta as to the potential contours of the doctrine for a disparate-treatment claim offered in [United States v. Brennan].”  Briscoe, 2011 U.S. App. LEXIS 16384 at *13 n.6 citing Brennan, 2011 U.S. App. LEXIS 9455 at *123-137, *168-88 (2d Cir. May 4, 2011); Id. at *218-19 (Raggi, J. concurring in the judgment).

            On September 20, 2011, the Third Circuit will hear oral argument on another case implicating the “reverse Ricci” defense, NAACP v. North Hudson Regional Fire & Rescue, 742 F. Supp. 2d 501 (D.N.J. Sept. 21, 2010) appeal docketed Nos. 10-3965, 10-3983 (3d Cir. 2011).  In North Hudson, NAACP argues that the Third Circuit should adopt the reasoning of the Briscoe panel, and affirm the lower court opinion of Judge Debevoise.  The North Hudson litigation focuses on that jurisdiction’s residency requirement for initial employment in its paid fire department.  In North Hudson, the district court found that, when one combined the population of North Hudson with three neighboring counties, there was a statistically significant adverse impact that could not be justified under the statutory business necessity test.  The City argued that North Hudson is a “reverse Ricci” case, that is, it should be permitted to defend against the NAACP’s adverse-impact claim by contending that there is a “strong basis in evidence” of disparate treatment liability if it eliminated the residency requirement.  The expert testimony seemingly established that elimination of the residency requirement would significantly reduce the representation of Hispanics in North Hudson’s fire department and, while increasing the representation of African Americans, it would also significantly increase the representation of Caucasians.  The NAACP has argued on appeal that Briscoe governs, contending, in part, that the language of Title VII precludes the adoption of a symmetrical companion to Ricci in defense of a disparate-impact claim.