Agreements To Maintain Confidential Information

In News America Marketing In-Store, LLC v. Emmel, 2011 U.S. App. LEXIS 11810 (11th Cir. June 8, 2011), the defendant former employee, Robert Emmel, while still employed with the plaintiff former employer, News America, felt that the News America was engaged in various unlawful activity.  He reported the alleged wrongdoing to U.S. Senator Sarbanes and to the SEC, and sent both the senator and the SEC a number of News America company documents to support his claims.  Later, but before News America discovered Emmel’s external disclosures of company documents, the relationship between Emmel and News America soured, and News America terminated Emmel.  Emmel was offered a job with another employer, and needed a letter from News America certifying that he was not bound under any non-compete agreement.  News America agreed to provide such a letter, but only in exchange for Emmel signing a nondisclosure agreement (NDA), which provided that:

Emmel agrees that he will not disparage, denigrate or defame the Company and/or related persons, or any of their respected business products, practices, or services.  Emmel further agrees that he will maintain in complete confidence, and not discuss, share, reveal, disclose or make available to any third party or e  ntity any “Confidential Information” of the Company.”

Emmel signed the NDA on December 21, 2006, but only after he mailed a number of additional News America company documents to a staffer for the U.S. Senate’s Finance Committee on December 20, 2006 – one day before he signed the NDA.  News America later learned of Emmel’s various disclosures of company documents to outside parties and sued Emmel for breach of contract.

News America made two arguments – (1) that certain documents in place when Emmel was employed by News America created non-disclosure obligations – such as News America’s “Standards of Business Conduct Policy”; and (2) that Emmel breached the December 21, 2006 NDA by virtue of the mailing Emmel sent out on December 20, 2006.

Both the District Court and the Eleventh Circuit rejected News America’s first argument, and held that the employment documents in question did not impose contractual nondisclosure obligations on Emmel.

But, the District Court agreed with News America’s second argument, granted News America summary judgment on that aspect of News America’s contract breach claim, and issued a permanent injunction barring Emmel from making any further disclosures of News America’s confidential information.  The court reasoned that, while Emmel mailed out the documents in question the day before he signed the NDA, it was undisputed that the recipient did not receive the package until after Emmel had signed the NDA.  The court found it “significant” that Emmel didn’t do anything to prevent the disclosure after he had signed the NDA – for example, he did not warn the recipient not to view the documents.  The court reasoned that Emmel thereby breached the NDA.

The Eleventh Circuit reversed, based on the verb tense which was used in the NDA.  That is, the NDA provided that Emmel “will not disparage…” – i.e., it was written in the future tense, and therefore did not cover any of Emmel’s past conduct which predated his signature of the NDA.  The court reasoned that nothing indicated that the parties intended the agreement to apply retroactively, or to provide any assurances about past actions.  The court ultimately agreed with Emmel’s arguments that “[t]o capture his pre-contract conduct… the promises would have needed to be phrased in the present perfect tense – i.e., ‘Emmel agrees he has not disparaged… and that he has maintained in complete confidence’ News America’s confidential information,” and that the District Court’s ruling “disregards the basic rule that a contract operates only prospectively from execution absent language of retroactive effect.”

Needless to say, the decision vividly highlights the paramount importance of careful drafting when it comes to writing contracts, employment agreements, employment policies, settlement agreements, and other such documents.
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Tenth Circuit follows Gardner-Denver, finding that 14 Penn Plaza does not trump the plaintiff.

In Mathews v Denver Newspaper Agency LLP, No. 09-1233 (May 17, 2011 10^th Cir.), a panel of the Tenth Circuit issued its revised opinion. Its earlier opinion of March 16, 2011 is found at 2011 U.S. App. LEXIS 5142. Judge Murphy, writing for the panel, concludes that plaintiff's statutory employment discrimination and retaliation claims maybe litigated despite a prior ruling by an arbiter on plaintiff’s contractual claims which were coterminous with his statutory claims.

The collective bargaining agreement provides as follows:

The Employer and the Union acknowledge continuation of their policies of no discrimination against employees and applicants on the basis of age, sex, race, religious beliefs, color, national origin or disability in accordance with and as required by applicable state and federal laws.

Plaintiff was demoted and grieved the demotion. Apparently, the initial grievance referenced state and federal discrimination and retaliation laws. That initial grievance was amended to remove any reference to said statutes, and the question of discrimination was stated, by agreement of the parties, to the arbiter as follows: “[D]id GRIEVANT’S demotion violate contractual provisions prohibiting discrimination?” The arbiter ruled against Mathews and, thereafter, Mathews sued under Title VII among other statutes. The district court found that the arbiter’s decision was preclusive, relying on the Supreme Court’s decision in 14 Penn Plaza LLC v. Pyette, 129 S. Ct. 1456 (2009). The district court’s ruling can be found at 2009 U.S. Dist. LEXIS 37697 (D. Colo. May 4, 2009). The soTenth Circuit reversed, holding the fact that “Mathew’s contractual rights and statutory rights were coterminous is of no moment: As the Supreme Court has recently reaffirmed, ‘[b]ecause the collective-bargaining agreement gave the arbitrator “authority to resolve only questions of contractual rights,” his decision could not prevent the employee from brining the Initial Title VII claim in federal court “regardless of whether certain contractual rights are similar to, or duplicative of, the substantive rights secured by Title VII.” Fourteen Penn Plaza, 129 S.Ct. at 1467 (emphasis added) (quoting Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974)).”

The Tenth Circuit panel went on to affirm summary judgment on plaintiff’s discriminatory demotion claim, finding that plaintiff was judicially estopped from being able to establish his qualifications for the position in question. The court, applying Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. (1999), found that plaintiff’s unequivocal testimony in a SSA disability milieu that he was totally disabled was “a paradigmatic case for judicial estoppel.” For a different take on this issue, see Solomon v. Vilsack, 628 F.3d 555 (D.C. Cir. 2010).

In contrast, the court denied summary judgment on plaintiff’s retaliatory demotion claim, refusing to adopt the “strong evidence” standard articulated by the Second Circuit in Collins v. N.Y. City Transit Authority, 305 F.3d 113, 119 (2d Cir 2002) wherein that court held that for a plaintiff to survive a motion for summary judgment following an adverse decision from an arbiter, the plaintiff “must present strong evidence that the decision was wrong as a matter of fact - e.g. new evidence not before the tribunal – or that the impartiality of the proceeding was somehow compromised.” Instead of adopting the Second Circuit’s “strong evidence” standard, the Tenth Circuit rejected such a per se standard for a case-by-case evaluation, including an evaluation of the “degree of procedural fairness in the arbitral forum, adequacy of the record with respect to the issue of discrimination, and the special competence of particular arbitrators.” Barrentine v. Arkansas-Best Freight Sys, Inc., 450 U.S. 728, 743 n.22 (1981) (quoting Gardner-Denver 450 U.S. at 60 n.21).

The petition for rehearing filed by defendant Denver Newspaper Agency LLP was directed at the ongoing debate regarding the elements of a prima facie case of retaliation. The Tenth Circuit followed the three-part showing required by Timmerman v. U.S. Bank, 483 F.3d 106, 1122-23 (10^th Cir. 2007) which requires a showing that (1) plaintiff engaged in protected activity; (2) plaintiff suffered an adverse employment action;* (3) there is a causal connection between the protected activity and the adverse action. The debate on rehearing was whether in a retaliation case, the Tenth Circuit panel would reject Timmerman and adopt a standard that some circuits have used which requires, in addition to the three elements above, that plaintiffs demonstrate that they are “qualified for the position at issue, or, if already employed, [had] met the employer’s legitimate work expectations.” Volosek v. Wis. Dep’t of Agric., Trade & Consumer Prot., 344 F.3d 680, 692 (7^th Cir. 2003). See also contrasting decisions on this question from the Fifth Circuit: Holtzclaw v. DSC Commc’ns Corp., 255 F.3d 254, 259-60 (5^th Cir. 2001) (finding that qualification for the job is an element of a prima facie case of ADEA retaliation); EEOC v. Dunbar Diagnostic Servs., Inc., 92 F. App’x 83, 84-85 (5^th Cir. 2004) (refusing to require plaintiff to demonstrate qualification for the position as part of prima facie case in a wrongful discharge case), the appellee’s petitioned panel for rehearing and appellant’s response to same contain citations to and discussion of all of the many court decisions that have addressed this cutting edge debate.

Judge Murphy, who wrote for the panel, was joined by Judges McKay and O’Brien.

For more discussion on this topic, see Garland’s Digest, Paul Mollica’s Daily Developments in EEO Law, Nelson Cary’s post at Vorys on Labor, and Richard Renner at the Whistleblowers Protection Blog. For a discussion of the District Court’s ruling see the Workplace Prof Blog.

*While the court described Timmerman as requiring an “adverse employment action,” undoubtedly the court merely used the incorrect phraseology, and would require adherence to the Supreme Court’s holding in Burlington Northern & Santa Fe Ry. v. White, 548 U.S. 53 (U.S. 2006) where the court requires in a retaliation case, not an adverse action, but rather “a materially adverse action.” In Shaw v. Tulsa Dynaspan Arrow Concrete, 2001 WL 263205 at *4 (10^th Cir. Jan. 28, 2001), the Tenth Circuit held that the prima facie case of retaliation requires a showing that a reasonable employee would have found the challenged action materially adverse, quoting Haynes v. Level 3 Communications, LLC, 456 F.3d 1215, 1228 (10^th Cir. 2006).

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Do Twombly and Iqbal Apply to Affirmative Defenses?

This blog visited this issue back on July 21, 2010. Recently, Judge Cacheris of the Eastern District of Virginia issued a thoughtful opinion on this issue, diverging from the unanimous view of all other reported district court decisions within the Fourth Circuit, holding that Twombly and Iqbal do not apply to affirmative defenses. In Lopez v. Asmar’s Mediterranean Food, Inc., 2011 U.S. Dist. LEXIS 2265 (E.D. Va. Jan. 10, 2011) Judge Cacheris, predicated his decision on a reading of the Civil Rule at issue. The Judge notes that Twombly and Iqbal are predicated on the Supreme Court’s construction of Civil Rule 8(a)(2); whereas the rule governing affirmative defenses is contained in Civil Rule (8)(b)(1)(A), the language of which is significantly different than the language of 8(a)(2). Civil Rule 8(a)(2) requires that “claims for relief,” including complaints, contain

a short and plain statement of the claim showing that the pleader is entitled to relief.

(emphasis added). In contrast, Civil Rule 8(b)(1)(A) governing civil defenses requires that a responding party

state in short but plain terms its defenses to each claim asserted against it.

As Judge Cacheris notes, Civil Rule 8(b)(1)(A) omits the language requiring a “showing that the pleader is entitled to relief.” The absence of that language led the court in Lopez to conclude that Twombly and Iqbal’s reasoning does not and ought not apply to affirmative defenses. The Court notes that, of course, the plaintiff can explore whatever factual detail supports the affirmative defenses by propounding interrogatories, for example.

In a footnote, the court notes that the Lopez opinion will be the decidedly minority view amongst the district judges in the Fourth Circuit who have addressed this issue. See e.g., Racic v. Dominion Law Assocs., --- F.R.D. ---, 2010 WL 3928702 (E.D.N.C. Oct. 6, 2010); Francisco v. Verizon South, Inc., No. 3:09cv737, 2010 WL 2990159, 2010 U.S. Dist. LEXIS 77083, at *7-8 (E.D. Va. July 29, 2010)(collecting cases); Bradshaw v. Hilco Receivables, LLC, 725 F. Supp. 2d 532, at *3 (D. Md. July 27, 2010); Palmer v. Oakland Farms, Inc., No. 5:10cv00029, 2010 WL 2605179, 2010 U.S. Dist. LEXIS 63265, at *5 (W.D. Va. June 24, 2010). In a follow-on footnote, Judge Cacheris notes that a number of other district judges, outside of the Fourth Circuit, have reached the same conclusion that he does. See e.g., Ameristar Fence Prods., Inc. v. Phoenix Fence Co., No. CV-10-299, 2010 WL 2803907, at *1 (D. Ariz. July 15, 2010); McLemore v. Regions Bank, No. 3:08cv0021, 2010 WL 1010092, at *13 (M.D. Tenn. Mar. 18, 2010); Holdbrook v. SAIA Motor Freight Line, LLC, No. 09-cv-02870, 2010 WL 865380, 2010 U.S. Dist. LEXIS 29377, at *2 (D. Colo. Mar. 8, 2010); Charleswell v. Chase Manhattan Bank, N.A., No. 01-119, 2009 WL 4981730, 2009 U.S. Dist. LEXIS 116358, at *4 (D.V.I. Dec. 8, 2009); Romantine v. CH2M Hill Eng'rs, Inc., No. 09-973, 2009 WL 3417469, 2009 U.S. Dist. LEXIS 98699, at *1 (W.D. Pa. Oct. 23, 2009); First Nat'l Ins. Co. of Am. v. Camps Servs., Ltd., No. 08-cv-12805, 2009 WL 22861, 2009 U.S. Dist. LEXIS 149, at *2 (E.D. Mich. Jan. 5, 2009).

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Upcoming Speaking Engagements

Here is a list of my upcoming speaking engagements:

May 4, 2011 - American Bar Association, Federal Service Labor and Employment Law Committee Midwinter Meeting, Social Media and Privacy in the Workplace

June 10, 2011 - Maryland State Bar Association, Labor and Employment Section, Social Media in the Workplace

July 28-30, 2011 - ALI-ABA, Practitioner Planning Chair, Current Developments in Employment Law: The Obama Years at Mid-Term

July 28, 2011 – ALI-ABA, Current Developments in Employment Law, U.S. Supreme Court Employment Law Developments

July 29, 2011 – ALI-ABA, Current Developments in Employment Law, New Federal Retaliation and Whistleblower Claims (Speakers: Robert B. Fitzpatrick, Robert B. Fitzpatrick, PLLC (Washington, D.C.); Frank C. Morris, Jr., Epstein Becker & Green, P.C. (Washington, D.C.))

July 29, 2011 – ALI-ABA, Current Developments in Employment Law, Emerging Employment Issues Under State Law

July 30, 2011 – ALI-ABA, Current Developments in Employment Law, Moderator, Cutting-Edge Employment Law Issues (Speakers: Judge Ann D. Montgomery, U.S. District Court (Minneapolis, Minnesota); Charlotte Fishman, Pick Up the Pace (San Francisco, California); Richard T. Seymour, The Law Office of Richard T. Seymour, PLLC (Washington, D.C.))

October 5, 2011 – D.C. Bar, Update on Virginia employment cases

I hope you can make it to at least one.

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Can an Employer in the Employment Application Shorten the Statute of Limitations for Anti-Discrimination Claims?

The answer, rather uniformly, is affirmative. Recently, in Dunn v. Gordon Food Services, Inc., 2011 U.S. Dist. LEXIS 13387 (W.D. Ky. Feb. 10, 2011), Chief Judge Russell upheld the employer's shortening of the statute of limitations where the employment application with Ms. Dunn, on its last page, had eleven clauses to which the applicant had to agree as a condition of being considered for employment, and the fourth clause stated that the applicant agreed "that any action or suit against [the employer] arising out of any employment or termination of employment, including but not limited to claims arising under the State or Federal civil rights statutes, must be brought within one year of the event giving rise to the claim or be forever barred."  This clause went on to state that the applicant "waive[d] any statute of limitations to the contrary."  The Court, citing a plethora of authorities, both inside and outside the Sixth Circuit upholding such provisions, sustained the defense motion for summary judgment based on that clause.  See also Ravenscraft v. BNP Media, Inc., No. 09-C-6617, 2010 U.S. Dist. LEXIS 37919, 2010 WL 1541455, at *1 (N.D. Ill. Apr. 15, 2010); PSC Info Group v. Lason, Inc., 681 F. Supp. 2d 577, 587 (E.D. Pa. 2010); Cole v. Federal Exp. Corp., No. CV-06-3485, 2008 U.S. Dist. LEXIS 71431, 2008 WL 4307090, at *9 (E.D. Pa. Sept. 19, 2008); Vincent v. Comerica Bank, No. H-05-2302, 2006 U.S. Dist. LEXIS 28613, 2006 WL 1295494, *5-6 (S.D. Tex. May 10, 2006); Badgett v. Federal Express Corp., 378 F. Supp. 2d 613 (M.D.N.C. 2005); Fink v. Guardsmark, LLC, No. CV 03-1480-BR, 2004 U.S. Dist. LEXIS 16970, 2004 WL 1857114, at *1 (D. Or. Aug. 19, 2004); Johnson v. DaimlerChrysler Corp., No. C.A. 02-69 GMS, 2003 WL 1089394, at *1 (D. Del. Mar. 6, 2003).

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Virginia Supreme Court Rejects Damages for Breach of Nondisparagement Agreement

The Virginia Supreme Court recently reaffirmed the rule that a breach of contract does not allow recovery of damages based on humiliation or injury to feelings. 

In Isle of Wight County v. Nogiec and Small v. Nogiec, 704 S.E.2d 83 (Va. 2011), the Court affirmed the trial court's reversal of two plaintiff's verdicts based on statements made by a county official in violation of a nondisparagement clause in the plaintiff's severance agreement.  As part of Alan Nogiec's decision to retire early from his position as director of the Parks and Recreation Department for the Isle of Wight County, he entered a severance agreement with the County providing that the parties would "refrain from making any disparaging comments or statements, whether written or oral, about the other or any member of the County's Board of Supervisors, administrators, or employees."  Id. at 84. 

Two months later, Patrick Small, a witness before the Board, testified that the previous Parks and Recreation director (that is, Nogiec) had made significant mistakes, and indeed, had taken action that "border[ed] on negligence."  Id. at 85.  Nogiec brought suit against the County for breach of contract, and against Small for defamation.  After trial, the court entered verdicts for Nogiec against both defendants.

The Virginia Supreme Court reversed the judgment against the County. The evidence of harm resulting from the breach, which the Court described as "embarrassment and humiliation," was not recoverable for a breach of contract.  Id. at 86.  The Court based his holding on the rule that "tort damages are not recoverable for breach of contract under the circumstances of this case."  Id. at 87.  Evidence of pecuniary damages was necessary, and Nogiec did not provide it.  The Court also pointed out that if Nogiec were permitted to prevail on both his breach of contract and defamation claims, he would have been recovering twice based on the same evidence.  Nogiec testified that he "believed" that Small's statements adversely affected his ability to find new employment, but failed to present any evidence other than the fact that he was not invited for job interviews for any of the positions for which he applied during a two-month period following Small's report to the Board.  

The Court upheld, by contrast, the verdict against Small for defamation.  Though it acknowledged that Small's testimony was entitled to a qualified privilege for reporting his duties to the Board, the Court pointed out that the circuit court had given the jury a proper instruction about malice (the necessary showing to overcome the privilege). 

In light of these holdings, lawyers drafting severance agreements should not presume that a nondisparagement clause will provide their clients with complete compensation for nonpecuniary damages.  As long as the law refuses to grant recovery of emotional distress or other tort-like damages, drafters must pay close attention to which remedies the law will actually permit.  Presumably, the parties to a severance/settlement agreement can agree, by contract, that emotional distress and humiliation, resulting from a breach of a nondisparagement clause, is compensable.  But, what employer would ever agree to such a provision?  One approach is to provide in the nondisparagement clause that proof of a breach alone without necessarily proof of actual damage, is compensable, and that the jury can determine the damages to be awarded.  Or, one could provide that proof of a breach automatically results in an award of a fixed amount of liquidated damages.  Bottom line, the Virginia Supreme Court's decision underscores the need for counsel to carefully craft nondisparagement clauses so that they have teeth and hopefully deter each side from badmouthing the other.  While the Nogiec case involves an employee being disparaged, in my experience, oftentimes nondisparagement clauses are of vital importance to management.  I would be interested in the suggestions of others on how to craft more meaningful nondisparagement clauses.

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Sixth Circuit Panel Continues to Reject Motivating Factor Test for Causation in ADA Cases

In Lewis v. Humboldt Acquisition Corp., Inc., 2011 U.S. App. LEXIS 5313 (6th Cir. Mar. 17, 2011), a panel of the 6th Circuit again held, given that the panel was powerless to overrule Circuit precedent, that the “motivating factor” (or a “substantial cause”) test did not apply in ADA cases.  Rather, the panel adhered to Circuit precedent (Monette v. Elec. Data Sys. Corp., 90 F.3d 1173, 1178 (6th Cir. 1993)) that adopted the “solely” causation standard for ADA claims from the Rehabilitation Act of 1973, which expressly requires sole causation.  See 29 U.S.C. § 794(a).  Other than the 6th Circuit, only the 10th Circuit adheres to the “solely” standard in ADA cases. See Fitzgerald v. Corr. Corp. of Am., 403 F.3d 1134, 1144 (10th Cir. 2005); Williams v. Widnall, 79 F.3d 1003, 1005 (10th Cir. 1996).  All other Circuits that have addressed the issue have adopted the “motivating factor” test.  See, e.g.,  Pinkerton v. Spellings, 529 F.3d 513, 518-19 & n.30 (5th Cir. 2008) (collecting cases).  While Judge Merritt writing for the unanimous panel, did not expressly signal a belief that the “solely” standard was erroneous and that the en banc 6th Circuit ought to reverse that standard, Judge Griffin, concurring, made plain his opinion that the “solely” test, was erroneous and should be set aside.  We will keep our eyes out for a decision from the 6th Circuit on the inevitable en banc petition.

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Supreme Court Holds that a Verbal Complaint Constitutes "Filing" Under the FLSA in a 6-2 Majority (Kagan, J., not participating)

In Kasten v. Saint-Gobain Performance Plastics Corp., No. 09-834, 563 U.S. ___ (March 22, 2011), the Supreme Court held that the anti-retaliation provision of the Fair Labor Standards Act (FLSA) applies to both oral and written complaints.  In an opinion written by Justice Breyer, the Court found that 29 U.S.C. § 215 (a)(3) of the FLSA, its anti-retaliation provision, should be broadly construed to protect an employee who "has filed any complaint" . . . under or related to [the Act] . . ." Slip op. at 1. Justice Scalia, with whom Justice Thomas joined, vigorously dissented.

In so holding, Justice Breyer states: ". . . The phrase 'filed any complaint' contemplates some degree of formality, certainly to the point where the recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand the matter as part of its business concerns." Slip op. at 11.  This frames a new jury instruction to ask jurors to determine whether Justice Breyer's "formality" test has been satisfied.  Following the articulation of that test, Justice Breyer states: "And it is difficult to see how an employer who does not (or should not) know an employee has made a complaint could discriminate because of that complaint." Id.

Finally, Justice Breyer states that the Court agrees with the government's statement at oral argument that a complaint is "filed" when "a reasonable, objective person would have understood the employee" to have "put the employer on notice that [the] employee is asserting statutory rights under the [Act]."  Id. at 12.  Do I hear Justice Breyer again framing the jury instruction?  Justice Breyer goes on to say the following: "To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection."  Id.  More fodder for jury instructions.

Justice Breyer and Justice Scalia (with Justice Thomas opting out of Justice Scalia's sarcastic footnote number 6 about Skidmore deference) cross swords over whether any deference should be given to the fact that the Secretary of Labor had consistently construed the statute to encompass oral complaints.  Justice Breyer finds the agency views to be reasonable, consistent with the statute, to reflect careful consideration rather than post hoc rationalization, and to consequently "add force" to the Court's ultimate ruling.

Interestingly, even though a violation of the anti-retaliation provision of the FLSA can subject the violator to criminal prosecution, see 29 U.S.C. § 216(a), Justice Breyer refuses to apply the "rule of lenity" that applies to the interpretation of criminal statutes, finding that the statute does not "remain[] sufficiently ambiguous to warrant application of the rule of lenity here."  Id. at 14.  This holding by the Court may very well be transported into civil litigation under the Computer Fraud and Abuse Act, which from its inception was a criminal statute and only later a civil statute also.

The Court, of course, declines to address the underlying, unresolved issue in this case, that is, whether internal corporate complaints are entitled to protection in any event.  So, bottom line, we know for certain that oral complaints that satisfy Justice Breyer's "formality" test are protected under the FLSA, but given the deep division that exists within the federal courts, we do not know whether complaints, whether they be oral or written, within a company about FLSA violations constitute protected activity under the anti-retaliation provisions of the FLSA.  That issue remains for another day, and Justice Scalia makes it unequivocally plain that he would find internal corporate complaints to not be encompassed by the statute.  Certainly, in those circuits that have held internal corporate complaints to be protected, employers will now need to institute procedures to receive oral complaints and to alert the chain of supervision to advise management of oral complaints.

While I am only beginning to think through the implications of the opinion, it seems to me that it would be wise for employers to put in writing in its employee handbook where and how one can orally complain within the company.  One would think that if the company has articulated a specific process and specific persons to whom one can and should complain, alleged oral complaints outside of that process may not meet Justice Breyer's "formality" rule and thus may not be entitled to protection under the FLSA.

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Employees' Use of Medical Marijuana

Background:

Employers increasingly are being confronted with the question of how to deal with employees who use medical marijuana, in states where its use has been legalized by the state legislature.

Jurisdictions with Medical Marijuana Statutes:

Fifteen states (Alaska, Arizona, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington), as well as the District of Columbia, have statutes allowing for the use of medically prescribed marijuana, or allowing for possession of small amounts of marijuana.  

For details about the laws in these 16 jurisdictions, as well as links to the underlying legislation for each jurisdiction, see ProCon.org, 15 Legal Medical Marijuana States and DC: Laws, Fees, and Possession Limits, http://medicalmarijuana.procon.org/view.resource.php?resourceID=000881 (last updated on Jan. 27, 2011).

Employment Cases Involving Medical Marijuana:

Where employers terminate employees for use or possession of medically prescribed marijuana, in states where such possession or use has been legalized by the state legislature, the terminated employees have in some cases brought disability discrimination claims against the employer.  So far, courts appear to be trending towards ruling in favor of the employer in such cases.  See, e.g.:

Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, 348 Ore. 159 (2010). The Supreme Court of Oregon held that despite Oregon’s medical marijuana statute’s silence on the issue of employment discrimination, an employer was not required to accommodate an employee's use of medical marijuana.

Ross v. Ragingwire Telecommunications, Inc., 42 Cal. 4th 920 (2008). The Supreme Court of California held that employers were not obligated to accommodate the use of prescribed marijuana, that drug testing was legal, and that terminating an employee for marijuana use was not discrimination.

Ethical Implications of Advising Clients Regarding State Medical Marijuana Laws:

On July 7, 2010, the Board of Overseers of the Bar of the state of Maine issued an ethics opinion (Opinion # 199) on advising clients concerning Maine’s Medical Marijuana Act.  The issue presented in the opinion involves “the role which Maine attorneys may ethically play because of the interplay of Maine’s new law with the Federal prohibition against the distribution of marijuana.” 

The opinion examined M. R. Prof. Conduct 1.2(e), which states:

A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of the proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

Based on that rule, the Board concluded that “[w]hile attorneys may counsel or assist a client in making good faith efforts to determine the validity, scope, meaning, or application of the law, the Rule forbids attorneys from counseling a client to engage in the business [of violating the federal prohibition against marijuana distribution] or to assist a client in doing so.”

The full opinion can be found at http://www.maine.gov/tools/whatsnew/index.php?topic=mebar_overseers_ethics_opinions&id=110134&v=article.

Articles:

For articles on the topic of medical marijuana in the workplace, see:

Anna M. Dailey and Jeffrey A. Foster, Medical Marijuana and the Workplace, Dinsmore & Shohl, LLP (Sept. 8, 2010), http://www.jdsupra.com/post/documentViewer.aspx?fid=75d08a35-70ed-415c-af40-d86c4b1dd91a.

Shelly K. Schwartz, The Drug-Free Workplace vs. Medical Marijuana, CNBC.com (Apr. 20, 2010), http://www.cnbc.com/id/36179669/The_Drug_Free_Workplace_vs_Medical_Marijuana

My Fox Phoenix.com, Medical Marijuana and the Workplace, Dec. 1, 2010, http://www.myfoxphoenix.com/dpp/money/job_news/medical-marijuana-and-the-workplace-12-1-2010.

Jon Coppelman, Medical Marijuana in the Workplace: Dude, Lock Me Out!, Workers’ Comp Insider (Feb. 7, 2011), http://www.workerscompinsider.com/2011/02/medical-marijua.html.

Jessica Pieklo, Medical Marijuana and the Workplace: Wal-Mart Suit Tests Some Limits, Care2.com, http://www.care2.com/causes/civil-rights/blog/medical-marijuana-and-the-workplace-wal-mart-suit-tests-some-limits/.

Eric B. Meyer, Can an Employee be Fired for Using Medicinal Marijuana? The Employer Handbook (Feb. 22, 2011), http://www.theemployerhandbook.com/2011/02/employee-medicinal-marjiuana-fired.html.

Recent Employment / Labor Case Involving Non-Prescribed Marijuana:

Consolidation Coal Co. v. Local 9909, 2010 U.S. Dist. LEXIS 89035 (N.D. W. Va. 2010). The United States District Court for the Northern District of West Virginia held that an arbitrator did not exceed her authority by ordering reinstatement of a coal miner who was discharged after testing positive for marijuana.

See also Mitchell H. Rubinstein, Reinstatement of Coal Miner Who Tested Positive for Marijuana Upheld, Adjunct Law Prof Blog (Aug. 25, 2010), http://lawprofessors.typepad.com/adjunctprofs/2010/08/reinstatement-of-coal-miner-who-tested-positive-for-marijuana-upheld.html.

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Staub v. Proctor Hospital

With Justice Scalia writing for a six justice majority, the Supreme Court on Tuesday, March 1, 2011, issued its much-heralded “cat’s paw” decision. The opinion has been summarized on many other sites – see, for example, the article on Philip Miles’ Lawffice Space (here), Jon Secrest’s post on Roetzel & Andress’ Labor & Employment Blog (here), Ed Hopson’s Posting on the Wyatt Employment Law Report (here), and Richard Renner’s post on the Whistleblowers Protection Blog (here) – just to name a few. Thus, my purpose is not to summarize the holding, but rather to share some initial observations about the opinion.

1.    Despite the fact that many plaintiff employment lawyers are ballyhooing this decision as a huge victory for plaintiffs in employment discrimination cases, I have a very contrarian view. This opinion is not the cat’s meow; it is not, by any means, a blowout for plaintiffs. Indeed, years from now, the defense bar may look back at this opinion and give it a tip of the hat. Why do I make such an extraordinary statement?

2.    Justice Scalia’s opinion is predicated on a determination that these claims sound in tort, and that accordingly traditional tort law principles of causation apply. Indeed, littered within the opinion are citations to some of the Court’s most recent jurisprudence on causation, drawn particularly from RICO and False Claims Act cases. A close review of that jurisprudence indicates that there are significant differences among the justices on proximate cause issues, which will undoubtedly be fodder for future disputes in employment discrimination cases.

3.    An apt example is the division articulated by Justice Kennedy in Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (RICO), wherein the majority discusses the requirement of a “direct causal connection” between the alleged violation and the plaintiff’s injuries. In Anza, the majority (Justices Kennedy, Stevens, Scalia, Souter, Ginsburg, Alito, and Chief Justice Roberts) found the plaintiff had failed to establish a “direct causal connection”; whereas Justice Thomas in a scholarly concurrence and dissent sharply criticizes the majority for imposing a “stringent proximate-causation requirement,” contending that the Court, in essence, had misapplied its holding in Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (1992) (RICO). Justice Thomas argued that Holmes “simply held that one reason that indirect injuries should not be compensable is that such injuries are difficult to ascertain . . . We did not adopt the converse proposition that any injuries that are difficult to ascertain must be classified as indirect for purposes of determining proximate causation.” Suffice it to say that the Staub Court’s reference to Anza at page nine of its slip opinion may signal that such disputes about proximate-causation will continue in future cases.

4.    I note also Justice Scalia’s concurrence in Anza in light of the decision in Thompson v. North American Stainless, 2011 U.S. LEXIS 913 (2011), in which Justice Scalia, writing for the Court, articulates a “zone of interest” test for standing in Title VII cases. In his Anza concurrence, he joins the Court’s opinion and notes that, for him, it is “inconceivable” that the injury alleged in that case is within the “zone of interests” protected by the RICO statute, referring back to his concurrence in Holmes at 503 U.S. at 286-90. This reference should merely remind all of us that the supposed victory for plaintiffs in North American Stainless may be largely a Pyrrhic victory given the Court’s adoption of a “zone of interest” test drawn from the jurisprudence of the Administrative Procedure Act.

5.    Also of note in Staub is Justice Scalia’s reference to the supposed split among the circuits on the question whether scienter can be established by aggregation of the states of mind of multiple individuals within the corporation. While the Court does not pass on the question, it is noteworthy that Justice Scalia gratuitously references the supposed split, citing two decisions from the D.C. Circuit, as well as a Fifth Circuit opinion, expressing “a good deal of skepticism about corporate intent theories that rely on aggregating the states of mind of multiple individuals.” United States v. Science Applications Int’l Corp., 626 F.3d 1257, 1274 (D.C. Cir. 2010) (Tatel, J.). Justice Scalia follows those cites with citations to a First Circuit and Fourth Circuit decisions supposedly embracing the “collective intent” theory. A close reading of Judge Tatel’s opinion in U.S. v. SAIC, suggests that it would be a misreading of both of these opinions, United States ex rel. Harrison v. Westinghouse Savannah River Co., 352 F.3d 980 (4th Cir. 2003) (False Claims Act) and United States v. Bank of New England, 821 F.2d 844 (1st Cir. 1987) (Currency Transaction Reporting Act).

6.    Justice Scalia’s citation to Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) (Federal Tort Claims Act) in Staub is also of interest, as Justice Souter in Sosa discusses the fact that proximate cause is “causation substantial enough and close enough to the harm to be recognized by law, but a given proximate cause need not be, and frequently is not, the exclusive proximate cause of harm.” I note that Justice Scalia’s citation to Sosa is really an indirect citation to his opinion discussing the fact that “in the ordinary case there may be several points along the chain of causality.” See Beattie v. United States, 244 U.S. App. D.C. 70, 756 F.2d 91, 121 (D.C. Cir. 1984) (Scalia, J., dissenting), cited with approval by Justice Souter in Sosa.

7.    Also, Staub, in all likelihood, is not the last word from the Court this term on proximate cause. The Court still has for decision a Federal Employee Liability Act (FELA) cases, CSX v. McBride, 598 F.3d 388 (7th Cir. 2010), cert. granted, 2010 U.S. LEXIS 9272 (Nov. 19, 2010), in which the Court is presented with the question of whether FELA requires proof than an employer’s negligence was the proximate cause of an employee’s injury or whether a showing that the negligence played some part in causing the injury is sufficient for liability.

8.    Numerous questions abound as a result of the Staub opinion, including the following:

a.     If there is an internal grievance / complaint procedure, and it is not mere “window dressing,” and it is not used by the plaintiff, is that an affirmative defense? In footnote 4, Justice Scalia notes that as a potential issue for another day.

b.    Of probably greatest significance is Justice Scalia’s repeated use of italics to highlight the fact that the discriminator must intend to cause the adverse employment action that is visited upon the plaintiff. So, it is presumably plaintiff’s burden to not only establish that someone other than the ultimate decisionmaker had a discriminatory intent, and that individual’s input was relied upon by the ultimate decisionmaker, plaintiff also must establish that the discriminating actor “designed and intended” to produce the adverse action, in Staub, termination. In Staub, the evidence was that the discriminating supervisor was “out to get” Staub.

c.     The Court also leaves for another day whether the employer would be liable if the discrimination emanated from a co-worker rather than a supervisor. See fn.4.

9.      Presumably, Hill v. Lockheed Martin Logistics Mgmt., 354 F.3d 277 (4th Cir. 2005), Furline v. Howard Univ., 953 A.2d 344 (D.C. 2008), and Ginger v. District of Columbia, 527 F.3d 1340 (D.C. Cir. 2008), are all no longer good law.

10.     Finally, the opinion has a rather slapdash quality to it, as though it were hastily written. One reference in the opinion that hopefully was not intended as an insult, but rather is merely a hallmark of some sloppy writing, is Justice Scalia’s footnote one where he refers to Judge Richard Posner of the Seventh Circuit merely as “Posner.”

 These are just some preliminary thoughts based on my initial reading of the opinion. I am still mining some of the cases cited by Justice Scalia, as well as the briefs and oral argument, to see what other signals might be discerned.

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