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.

Please be sure to visit our website at http://RobertBFitzpatrick.com

James v. Metro Government of Nashville

Someone asked if I would set out the citations that reflect the circuit split on this issue - the issue being whether the judge or the jury decides whether the facts support a claim that the retaliatory act could have deterred protected conduct. In our post of Friday, we provided the Fourth, Sixth and D.C. Circuit authorities on this issue.

The Fifth Circuit has held that judges, not juries determine whether the fact-bound Burlington Northern standard has been met. See DeHart v. Baker Hughes Oilfield Operations, Inc., 214 Fed. Appx. 437 (5th Cir. 2007). The Eleventh Circuit so held in Collins v. Board of Trustees of University of Alabama, 211 Fed. Appx. 848 (11th Cir. 2006). The Eighth Circuit goes with courts, not juries. See Higgins v. Gonzales, 2007 WL 817505 at *8-*9 (8th Cir., March 20, 2007). The Seventh Circuit in at least six cases since Burlington Northern has held that judges are to decide the question. See Roney v. Illinois Dept. of Transportation, 474 F.3d 455, 459 (7th Cir. 2007); Phelan v. Cook County, 463 F.3d 773, 781 n.3 (7th Cir. 2006); Szymanski v. County of Cook, 468 F.3d 1027, 1031 (7th Cir. 2006); Thomas v. Potter, 2002 Fed. Appx. 118 (7th Cir. 2006); Novak v. Nicholson, 2007 WL 1259054 at *5 (7th Cir., Apr. 12, 2007); Schmidt v. Canadian National Railway Corp., 2007 WL 755171 at *4 (7th Cir., Mar. 13, 2007).

In addition to the D.C. Circuit, three other circuits have held that juries, not judges, determine the question. The Third Circuit has so decided in at least three cases. See Hare v. Potter, 2007 WL 841031 at *11 (3d Cir., Mar. 21, 2007); Ridley v. Costco Wholesale Corp., 217 Fed. Appx. 130, 1325 (3d Cir. 2007); Moore v. City of Philadelphia, 461 F.3d 331, 347 (3d Cir. 2006). The Second Circuit has aligned itself in favor of juries. See Kessler v. Westchester County Department of Social Services, 461 F.3d 199, 209-10 (2d Cir. 2006); Wrobel v. County of Erie, 211 Fed. Appx. 71, 73 (2d Cir. 2007); Zelnik v. Fashion Institute of Technology, 464 F.3d 217, 227 (2d Cir. 2006). And, the Tenth Circuit has joined the Second, Third and District of Columbia Circuits in holding that the application of the Burlington Northern standard to the circumstances of a case is a matter for a jury. See Williams v. W.D. Sports, 2007 WL 2254940 at *10 (10th Cir., Aug. 7, 2007).

False Claims Act

On January 22, 2008, the U.S. Supreme Court denied cert in U.S. ex rel. Bly-Magee v. Premo, Case No. 05-55556 (9th Cir. Dec. 13, 2006). The Ninth Circuit's opinion is at 470 F.3d 914. In Bly-Magee, the Ninth Circuit ruled that non-federal reports, audits, and investigations qualify as a source of public disclosure under 31 U.S.C. section 3730(e)(4)(A). This represents yet one more split in the circuits, for the Third Circuit limits this provision to federal reports, audits, investigations. See U. S. ex rel. Dunleavy v. County of Delaware, 123 F.3d 734, 745 (3d Cir. 1997). The Eighth Circuit, on the other hand, agrees with this Ninth Circuit decision. See Hays v. Hoffman, 325 F.3d 982, 988 (8th Cir. 2003).

FLSA Settlements

If you settle an FLSA claim and have it supervised by the US Department of Labor, pursuant to 29 U.S.C. Section 216(c), the settling employee may end up signing off on a government form entitled WH-58 "Receipt for payment for lost or denied wages, employment benefits, or other compensation." In a recent opinion, the Ninth Circuit teaches us that the language contained in that form can either extinguish a claim or merely extinguish some portion of a claim.

In Dent v. Cox Communications Las Vegas, Inc., 502 F.3d 1141 (9th Cir. 2007), Mr. Dent signed a WH-58 which acknowledged receipt of payment of unpaid wages for the period beginning with the workweek ending May 4, 2002 through the workweek ending October 11, 2003. Thereafter Dent claimed unpaid wages for a time period prior to May 4, 2002. The district court dismissed his claim, accepting the employer's argument that the unpaid overtime wage claim had been settled in full. The Ninth Circuit reversed, finding that his claim was released only with regard to the time period specified in the WH-58.

Two New New Jersey Employment Statutes

New Jersey has amended its Law Against Discrimination and expanded it to require that employers reasonably accommodate sincerely held religious beliefs unless to do so would impose an undue burden. The statute now defines "undue hardship" as an accommodation requiring unreasonable expense or difficulty, unreasonable interference with the safe or efficient operation of the workplace or a violation of a bona fide seniority system or a violation of any provision of a bona fide collective bargaining agreement. Further, the statute states that, in determining whether an accommodation constitutes an undue hardship, the factors considered shall include:

• The identifiable cost of the accommodation, including the costs of loss of productivity and of retaining or hiring employees or transferring employees from one facility to another, in relation to the size and operating cost of the employer.


• The number of individuals who will need the particular accommodation for a sincerely held religious observance or practice.


• For an employer with multiple facilities, the degree to which the geographic separateness or administrative or fiscal relationship of the facilities will make the accommodation more difficult or expensive.

The other statute concerns employment protections for employees on military leave in time of war or emergency.

Insurance Coverages for Federal Employees

There was an interesting article in one of the newspapers in the last few days about insurance coverages provided to federal employees who might be sued, and presumably not otherwise protected by immunity doctrines. Wright & Company, a Virginia-based insurance company, writes coverages. The article indicated that it provides $200,000 for legal fees incurred in an administrative proceeding, an additional $100,000 in fees for criminal investigations, and up to $1,000,000 for damages incurred in civil litigation. See: http://www.wrightandco.com/wmspage.cfm?parm1=23.

Corporate Social Responsibility

The January 19, 2008 issue of The Economist has a special report on corporate social responsibility. Reprints of the report are available. See www.economist.com/rights. A list of sources can be found at www.economist.com/specialreports and an audio interview with the author can be found at www.economist.com/audio.

For those who are interested, there is an ABA corporate social responsibility committee. If you should be interested in joining, please let me know and I will forward your name to the committee chair.

Hangman's Nooses

In the past week we have observed first Kelly Tilghman making an utter fool of herself on the Golf Channel when she said that the way to defeat Tiger Woods was to take him out and lynch him. That merited only a two week suspension. Then to add fuel to the fire, Golfweek distributes this past week's issue with a cover image of a noose for an article about Ms. Tilghman's idiocy. That thankfully merited the discharge of Dave Seanor, the editor.

Some of the obvious questions raised by these two incidents, other than being dumbfounded that supposedly intelligent people still just don't get it, would be the following:

• How come it took two days to apologize? You would have thought that within seconds after Ms. Tilghman uttered her stupidity, that she or someone associated with the channel, would have realized that what she said was over the top, and an apology should have issued within moments after she said what she said. Makes you wonder whom, in addition to Ms. Tilghman, at the Golf Channel simply doesn't get it.


• Makes you also wonder what the hiring practices are at the Golf Channel. I would assume that if there were African-Americans on the production team, that one of them would have spoken up immediately and demanded that she apologize on the air. I sure would like to see the Golf Channel's hiring statistics.


• That takes me to Golfweek magazine, the cover page, I am told, was vetted by a committee. So, it isn't just Mr. Seanor who doesn't get it, there are many others at the magazine who are simply clueless or worse than that, closet racists who took pleasure in insulting millions of our citizens. So, one wonders why Mr. Seanor is the only person who was disciplined. Yes, "the buck stops here", and the boss takes the fall, but the others ought not to go scot free.


• Finally, the incident, like the Golf Channel incident, has to raise questions about the hiring practices at Golfweek. Again, I sure would like to see some data.
  

The EEOC recently obtained a $2.5 million settlement on behalf of an African-American electrician who claimed he was harassed daily, including the display of nooses, at Lockheed-Martin. This was the largest settlement filed by EEOC on behalf of an individual. See: http://www.diversity.com/public/2919.cfm
http://www.eeoc.gov/press/1-2-08.html

Since Fiscal Year 2001, the EEOC has filed more than 30 lawsuits that involve the displaying of hangman’s nooses on the job. It recently settled for $290,000 such a claim against Helmerich & Payne International Drilling in Jackson, Mississippi, for $390,000 against Pemco Aeroplex in Birmingham Alabama, for $600,000 against AK Steel in Butler, Pennsylvania, and for more than $1,000,000 against Commercial Coating Service of Conroe, Texas. Tresa Baldas, EEOC Targets Workplace ‘Noose” Cases, National Law Journal, November 5, 2007. Available at: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1193735026861. See Stephanie Armour, “Racial Bias Suits Climb in Workplaces,” Asbury Park Press, Oct. 29, 2007, available at http://www.app.com/apps/pbcs.dll/article?AID=/20071029/BUSINESS/710290307/1003.

For additional coverage of the Golf week debacle see:

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/19/AR2008011902439.html?sub=AR

http://www.nytimes.com/2008/01/19/sports/golf/19magazine.html?_r=1&scp=1&sq=golfweek+fires+editor&st=nyt&oref=slogin

For some startling discussion of the use of nooses as a form of racial discrimination in the workplace see:

http://query.nytimes.com/gst/fullpage.html?res=9804E3DF1238F933A25754C0A9669C8B63&scp=1&sq=nooses%2C+symbols+of+race+hatred&st=nyt

http://www.cnn.com/2007/US/11/01/nooses/index.html

http://www.washingtonpost.com/wp-dyn/content/article/2007/11/07/AR2007110702700.html

http://www.businessweek.com/magazine/content/01_31/b3743084.htm?chan=search

Sunrise Senior Living Sued by Former CFO

The former CFO of Sunrise Senior Living filed suit back in September in Fairfax County Circuit Court in Virginia, claiming that he was fired in retaliation for uncovering improper accounting practices. Sounds like a snooze, but, trust me it has gotten real interesting. In recent court filings, Sunrise disclosed that it had discovered "more than 25,000 unique pornographic images" on a company-owned computer used by the former CFO. That disclosure raises interesting issues regarding the former CFO's attempt to delete material from laptops provided to him by Sunrise. Sunrise alleges that the former CFO returned one of two laptops after deleting all active electronic files, and that only after a forensic examination did it find the evidence of pornography on parts of the hard drive that had not been wiped clean. The former CFO's attorney has asked the court to strike all references to the pornography, arguing that Sunrise's instructions regarding retention of materials related to accounting activities under investigation and did not require the retention of the "adult materials". We hope to obtain more information about this interesting case and report further in the future.

Baseball

General Sherman supposedly once said: "If I owned Texas and Hell, I would rent Texas and live in Hell." Quite obviously, Roger Clemens is betting that the good citizens of Harris County, Texas will prove the good general wrong. In what, in retrospect, may well be viewed as a serious blunder, Brian McNamee's lawyers threatened to sue Clemens if he went on 60 Minutes. Presumably, that lawsuit would have been filed in a more favorable venue than Harris County, Texas. But Rusty Hardin beat McNamee's lawyers to the punch, and filed a fourteen page complaint for defamation in Harris County before McNamee could file elsewhere. The complaint can be found at http://i.cnn.net/si/2008_images/2008.01.06_Clemens_Original_Petition.pdf.

I am beginning to get that itch that starts about this time every year - the itch to go south for spring training. Many players that I would love to go observe. Will Elijah Dukes get through spring training before he gets arrested yet again? How will D Train (Dontrelle Willis) do in the American League? And who is this latest deportee from Japan, Yosuke Kukudome, who will play right field for the Cubbies?

Damages

Put this under the category of crass commercialism. I co-chair a two day CLE conference sponsored by ALI-ABA on damage issues in employment cases which will be held February 7-8 at Georgetown Law School in Washington, D.C. If you are interested in registering, just contact ALI-ABA at 1-800-CLE-NEWS.

The Iowa Caucus


A Simple Prayer

by

Robert B. Fitzpatrick

Mine eyes have seen . . .
Medgar, dead at the hand of hate,
Ross’ grocery store in Port Gibson, and the voices of hope,
Unita in Mayersville, Eddie Ford, Roosevelt and Pauline, and most especially, our Ms. Daisy, Ms. Minnie Ripley,

Mine eyes have seen . . .
Martin, dead at the hand of hate,
Tut gone forever, but Rosie at Head Start with the sparkling eyes of a child,
Then hope again, Bobby,

Mine eyes have seen . . .
Anna Walentynowicz in Gdansk, and,
The Philosopher King, Václav Havel,
And death yet again, Fr. Popieluszko, but hope alive at St. Stanislas Kostka,

Mine eyes have seen . . .
The smile, the erect bearing, and those wonderful shirts – after Robbin Island, and,
Lucky Dube voicing the hope,
And then death again this last fall as we killed our own, Lucky,

Mine eyes have seen . . .
And, my back straightened with pride this morning,
I thought I saw beyond the horizon,
Or, was it but a dream,

Protect your son, Oh Lord,
Work your will,
And let us see,
Whether the refrain is complete.


Is A Constructive Discharge Claim A Continuing Violation And If So, Who Cares?


In response to my post regarding the opinion in Mayers of the D.C. Court of Appeals,
there has been some discussion that, for example, if a former employee, who alleges that he/she was constructively discharged as a result of an accumulation of intolerable acts, on the 365th day after the resignation/constructive discharge, the former employee's complaint might be time barred if the last of the series of intolerable acts that precipitate the resignation occurred 366 or more days before the filing. Frankly, while that is intellectually interesting, I doubt if any Judge would give the time of day to such an argument. The culminating event, the resignation/constructive discharge, has to be an actionable event even though, in a sense, all of the wrongs that lead the employee to quit Suders-like preceded resignation and, in some cases, could be all outside the one year statute of limitations.

On a nearly silly tangent, I have to assume that Maryland, even after Hass, in a constructive discharge circumstance where the person announces their resignation on day X to be effective on X plus two weeks, the statute of limitations begins to run from the announcement date, not the effective date of the constructive termination.

Having said the above, the discussion regarding my initial post, has led me to revise my conclusion that whether or not the courts denominate constructive termination cases as akin to Morgan - cumulative wrong cases is indeed of significant value to Plaintiffs. Let me explain my thinking.

If constructive termination is viewed as a cumulative wrong, then the entire string of events that eventually "breaks the camel's back" and culminates in a resignation called a constructive termination, under Morgan, so long as there is no break in the chain, the entire chain/string of events is actionable and all of the wrongs committed during the chain are compensable, not just the events that occurred within the one year D.C. Human Rights Act statute of limitations. So, if it is death by a thousand cuts over more than a year, the events before the year before filing are not only evidence, under Morgan they are liability events.

Thus, the jury can consider all of the events no matter how far back in time the chain of events goes, in assessing the amount of the jury's award. So, while maybe a bit esoteric, conceiving of constructive termination as a cumulative wrong is helpful for closing argument and for shutting down arguments that the events prior to the one year period unduly swayed the jury and affected inappropriately the amount of their award.

Also, viewing constructive terminations as cumulative wrongs shuts down arguments by the defense that the events occurred within one year before the resignation in toto do not amount to sufficient intolerability to justify an employee, like the police woman in Suders, saying "enough is enough", and having her resignation viewed as a fit response to the intolerable acts.

What Claims Are Cognizable When Plaintiff Fails To Allege The Existence Of A Work-Sharing Agreement?

In Mayers v. Laborers' Health & Safety Fund of North America, 478 F.3d 364 (D.C. Cir. 2007), the Court of Appeals limited the plaintiff's claims to only those claims that occurred within 180 days prior to the filing of plaintiff's EEOC charge even though the District of Columbia is a deferral jurisdiction. The panel reasoned that the failure of the plaintiff to allege the existence of a work-sharing agreement between EEOC and the deferral agency, here the D.C. Office of Human Rights, should result in plaintiff not being permitted to seek relief with respect to claims that accrued between the 300th and 180th day prior to the filing of the EEOC administrative charge. The Court, in a brief per curiam opinion merely states the following: "Although EEOC regulations extend the deadline for filing to 300 days when it has a worksharing agreement with a state or local agency, . . . Mayers does not allege the existence of such an agreement nor does she dispute the applicability of the 180-day deadline to her case."

One must wonder why the panel chose to not take judicial notice of the fact that the District of Columbia is a deferral jurisdiction and that there is a work-sharing agreement between EEOC and the Office of Human Rights. My assumption is that the Court chose not to take judicial notice because plaintiff's counsel, as the Court noted, did not dispute the applicability of the 180-day deadline. I assume that this is a one time only decision. Obviously, best practice would be to henceforth allege the existence of a work-sharing agreement and to allege that the charge filed with EEOC was properly deferred to the deferral agency in accordance with the terms of the work-sharing agreement.

Now, having said that, one must take note of the disturbing opinion of the District of Columbia Court of Appeals in Griffin v. Acacia Life Ins. Co., 2007 D.C. App. LEXIS 266 (D.C., May 24, 2007) in which the Court of Appeals questioned whether the deferral had been properly effectuated.

Is A Constructive Discharge Claim A Continuing Violation And If So, Who Cares?

The panel in Mayers also, at the end of its brief opinion, suggests that it is an open issue for decision at a later date as to whether a constructive discharge case, after National Railroad Passenger Corp. v. Morgan, 536 U.S. 101 (2002), can be amenable to continuing violation analysis because, like a hostile work environment claim, a constructive discharge claim by its very nature involves repeated conduct. Morgan, 536 U.S. 115. While the question is intellectually interesting, one wonders why the Court saw it to be of any possible significance. After all, as Morgan teaches us, there must be one act within the limitations period that is a part of a chain of events culminating, in the case of a constructive termination, in the plaintiff-former employee's resignation which he/she alleges to be a constructive termination. Would not, in all events, the one act be the resignation, and therefore what possible difference could it make whether a court viewed the alleged constructive termination to be a Morgan-type continuing violation or merely a discreet act of discrimination.

SOX's Preliminary Order Of Reinstatement Is Dealt A Setback

The DOL's Administrative Review Board (ARB) in Windhauser v. Trane, ARB Case No. 05-127, 2007 DOL SOX LEXIS 82 (Oct. 31, 2007) held that the Administrative Law Judges did not have the power to sanction an employer that declines to obey the ALJ's order to reinstate the complainant in a SOX section 806 case. Instead, any enforcement remedies are reserved for the Federal District Court to impose.

Here the employer terminated Windhauser, who thereafter filed a complaint with DOL, alleging a violation of section 806 of SOX. After investigation, the agency issued its findings and a preliminary order of reinstatement. The employer then, among other things, requested a stay of the preliminary order of reinstatement, and the ALJ issued an order denying the employer's motion for a stay. Thereafter, the employer filed a petition for review with the ARB which was viewed as an interlocutory appeal. Thereafter, the parties settled and the ALJ requested briefing on the consequences of the employer's refusal to comply with the preliminary order of reinstatement. The ALJ then issued an order imposing monetary sanctions against the employer, which then petitioned the ARB to review the ALJ's imposition of monetary sanctions.

The ARB held that, absent statutory authority, the DOL had no power to impose monetary sanctions, indicating that the appropriate forum would be the Federal District Court.

Calculation Of Front Pay

In Hagman v. Washington Mutual Bank, Inc., Case No. 2005-SOX-0073, 2006 DOL SOX LEXIS 130 (Dec. 19, 2006), the ALJ had to decide what amount of front pay to award in a SOX section 806 case. The complainant's expert had testified that the complainant would never recover her career track and earnings potential in her lifetime. The expert alternatively calculated complainant's front pay as though she would recover her career track and earnings potential within ten years. The ALJ found the assumption that Ms. Hagman would never recover her career track and earnings potential as not credible, and instead found that the ten year assumption was reasonable and persuasive, resulting in a front pay award of $642,941. The ALJ relied heavily on the line of cases regarding front pay referenced in the District of Columbia Circuit's opinion in Peyton v. DiMario, The Public Printer of the U.S., 287 F.3d 1121 (D.C. Cir. 2002).

Is There A Private Right Of Action Under Section 304 Of SOX

Recently, Judge Woodlock of the District of Massachusetts in In re Ibasis Inc. Derivative Litigation, 2007 U.S. Dist. LEXIS 89989 (D. Mass., Dec. 4, 2007), a stock option grant date manipulation case, held as have apparently all courts that have addressed the issue, that section 304 of SOX does not provide a private right of action. Judge Woodlock adopted the analysis of this question articulated by Judge Dalzell in Neer v. Pelino, 389 F.Supp. 2d 648 (E.D. Pa. 2005) where the Court relied heavily on the fact that section 306 explicitly provides for a private right of action, suggesting, by implication that as section 304 is silent in that regard, that Congress did not intend to provide for a private right of action under section 304.

May The Public Policies Codified In SOX Be Used As The Basis For A State Common Law Wrongful Termination Claim?

In Willis v. Comcast of Oregon II, Inc., 2007 U.S. Dist. LEXIS 79927 (D. Ore., Oct. 25, 2007), Judge Aiken, focusing on the language of SOX which states that "nothing in [ the remedies] section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law . . . " 18 U.S.C. Section 1514A(d), held that SOX did not provide an adequate statutory remedy to preclude plaintiff's common law wrongful discharge claim. Even though SOX provides for "all relief necessary to make the employee whole" and even though Oregon law precludes a common law wrongful discharge claim where a statutory remedy exists, the plaintiff argued that SOX is not an adequate remedy because punitive damages are not allowed. The Court stated that "Congress may be said to have expressed an intent to provide for adequate remedies by detailing specific types of remedies in a comprehensive fashion." Nonetheless, the Court found that the Congress had explicitly not abrogated or superseded common law remedies , and therefore found that SOX does not provide an adequate statutory remedy to preclude plaintiff's common law wrongful discharge claim.

While I appreciate that the District of Oregon is in the Ninth Circuit, nonetheless, one must seriously question the reasoning of the District Judge. Applying this reasoning would permit those federal anti-discrimination and labor standards laws that state that they are not intended to displace or preclude even more comprehensive protections as potentially the basis for "sky's the limit" wrongful discharge litigation. In effect, decisions like the Willis decision, transform federal claims into state law claims, allowing plaintiffs to escape from federal court and to escape from federal limitations on damages. Decisions like this would seem to raise some questions regarding federalism.

Montgomery County Maryland Outlaws Employment Discrimination Against Individuals Based On Gender Identity, Including The Transgendered

Effective February 20, 2008, Montgomery County, Maryland's Human Rights Act has been amended to prohibit discrimination on the basis of gender identity which is defined in section 27-6 as follows: "Gender identity means an individual's actual or perceived gender, including a person's gender-related appearance, expression, image, identity, or behavior, whether or not those gender-related characteristics differ from the characteristics customarily associated with the person's assigned sex at birth." Montgomery County Bill 23-07, Non-Discrimination - Gender Identity Act, (available at http://www.montgomerycountymd.gov/content/council/pdf/bill/2007/23-07.pdf).

Drivers Of Light-Weight Vehicles - MCA Exemption To The FLSA

The Motor Carrier Act exempts from the FLSA certain employees transporting property by commercial motor vehicle. The exemption was amended in 2005 by provisions of the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which provided in section 49 U.S.C. 31132 that a commercial motor vehicle is defined as a vehicle with a gross vehicle weight of at least 10,001 lbs. Thus, the courts have recognized that SAFETEA-LU narrowed the coverage of the MCA exemption to the FLSA and that after August 10, 2005 employees, driving vehicles weighing less than 10,000 pounds are no longer exempt from the FLSA. See, e.g., Kautsch v. Premier Communications, 502 F. Supp. 2d 1007, 2007 WL 1459694 (W.D. Mo., May 16, 2007), summary judgment denied in 2007 U.S. Dist. LEXIS 82856 (W.D. Mo., Nov. 7, 2007); O'Neal v. Kilbourne Medical Lab., 2007 U.S. Dist. LEXIS 22620 (E.D. Ky., Mar. 28, 2007); King v. Asset Appraisal Services, Inc., 2006 U.S. Dist. LEXIS 94937 (D. Neb., Oct. 23, 2006); Musarra v. Digital Dish, Inc., 454 F.Supp. 2d 692 (S.D. Ohio, 2006); Dell'Orfano v. Ikon Office Solutions, Inc., 2006 U.S. Dist. LEXIS 61563 (M.D. Ga., Aug. 29, 2006). See also, Field Assistance Bulletin, No. 2007-2, DOL, Wage and Hour (May 23, 2007), available at http://www.dol.gov/esa/whd/FieldBulletins/FieldAssistanceBulletin2007_2.pdf.

E-Discovery

So, you are headed to a Federal Civil Rule 26(f) "meet and confer" conference regarding e-discovery. How do you prepare and what should be discussed? Craig Ball has an excellent piece in Law Technology News entitled "Ball In Your Court: Ask The Right Questions", which can be found at http://www.lawtechnews.com/r5/survey.asp (subscription only). Craig has 50 questions to consider asking.


Off-label False Claims Act Cases

In the last few days, I have made several mentions of off-label FCA cases. There is an interesting off-label Rule 9(b) decision from Judge Kennelly in U.S. Ex Rel. Kennedy v. Aventis Pharmaceuticals, Inc., 2007 WL 2681701 (N.D. Ill., Sept. 13, 2007) and a subsequent denial of a motion for reconsideration found at 2007 WL 3145010 (N.D. Ill., Oct. 23, 2007). In essence, the Judge ruled that an off-label pharmaceutical case survives Rule 9(b) scrutiny even though the complaint did not detail an individual claim that was actually submitted to the government. And, in denying Aventis' motion for reconsideration, the Judge also declined a request for an immediate interlocutory appeal, distinguishing U.S. Ex Rel. Clausen v. Laboratory Corp. of America, Inc., 290 F.3d 1301 (11th Cir. 2002) and U.S. Ex Rel. Russell v. Epic Health Care Management Group, 193 F.3d 304 (5th Cir. 1999).

Disparate Impact

The other day, we wrote about the Supreme Court's request of the Solicitor General for briefing on the testing issues in N.Y. City Board of Education v. Gulino. See http://robertfitzpatrick.blogspot.com/2007/12/board-of-education-of-new-york-city.html. The EEOC has issued a fact sheet on testing which can be found at http://www.eeoc.gov/policy/docs/factemployment_procedures.html, indicating EEOC's continuing interest in challenging tests that have a disparate impact on the basis of race.

While I am not yet prepared to fully dissect the opinion, there is potentially a very important decision from the Sixth Circuit regarding disparate impact and the stringency of the business-necessity defense. The Sixth Circuit's case arises not in an employment context, but in a Fair Housing Act case. Nonetheless, its analysis, and the debate among the judges may well carry over into continuing debates regarding disparate impact and the business-necessity doctrine in employment cases. See Graoch v. Louisville-Jefferson County Metro Human Relations Commission, 2007 U.S. App. LEXIS 26883 (6th Cir., Nov. 21, 2007).

Section 8 Voucher Program

The Graoch case involved the Section 8 voucher program, which is a voluntary program through which the federal government provides rent subsidies to eligible low-income families who rent from participating landlords. While at a later date, I will discuss Graoch's analysis of the business-necessity defense, Graoch is interesting also because it is the second case this month involving the Section 8 program. In Graoch, a landlord, in essence, has been prohibited from withdrawing from a so-called voluntary federal program. In a case before the Maryland Court of Appeals, the landlord was required to participate in the Section 8 program on the ground that a refusal to participate would constitute "source of income" discrimination under the Montgomery County, Maryland anti-discrimination law, MCC, Ch. 27, §§ 27-1 through 27-63. See Montgomery County v. Glenmont Hills Assoc., 2007 Md. LEXIS 719 (Md. 2007).

Ad Damnum Clause

Last week, we summarized the holding in Hoang v. Hewitt Avenue Associates, LLC (see http://robertfitzpatrick.blogspot.com/2007/12/there-is-lots-going-on-at-end-of-week.html). As promised, a few thoughts regarding the implications of this decision. At first blush, one sympathizes with the litigant whose judgment of $1.89 million is reduced to a mere $100,000 because the ad damnum clause in the original complaint sought damages "in excess of $100,000." But, sympathy begins to erode when one sees that the victorious plaintiff never once sought to amend the ad damnum clause to advise the defendant that the plaintiff sought not a mere $100,000, but far, far more. The simple best practice tip to be taken away from this Maryland case is that one should timely amend the ad damnum clause. The Court of Appeals seems to indicate that timely amendments that do not blindside the defense ought to be routinely granted.

Layoffs and ERISA Section 510 Claims

Recently, the Supreme Court denied cert. in Eichom v. AT&T Corp., 484 F.3d 644 (3d 2007). See also the prior opinion in Eichom I of the Third Circuit at 248 F.3d 131 (3d 2001).

As pointed out by guest blogger Colleen Medill in the Workplace Prof blog, "Eichom is symbolic of a new genre of Section 510 claims where the claim of interference is not made by a lone individual who allegedly was targeted for retaliation, but rather stems from a corporation restructuring where employee benefits (most notably, their costs) are a factor in how the reorganization is structured." So, with the possibility of recession looming on the horizon, and the inevitable increase in layoffs, plaintiff and defense lawyers both need to be mindful, as always, of age discrimination claims under both federal and state law, WARN Act claims, challenges to releases under OWBPA, and now this new genre of claim - - a Section 510 ERISA claim.

Mind-reading To Prove Racial Bias

The American Psychological Association (I note using federal grant money from the National Institute of Mental Health) has issued a report entitled "Functional Magnetic Resonance Imaging: A New Research Tool" in which it states at the outset: "A brain scanning technology called functional magnetic resonance imaging (fMRI) isn't quite a mind-reader, but it comes close." The article goes on to opine that the results of fMRI may be able to demonstrate racial prejudice. The report states that: "Even though all of the participants [in research performed by a psychologist] said they weren't prejudiced, their brains told a different story."

Having decades ago fought the good fight over the use of the so-called lie detector in the workplace, one is saddened to see an organization like the APA suggesting that a brain scan might reveal prejudice. With this report in hand, let me count the days before a plaintiff's attorney argues to the court that the alleged discriminating official should have a fMRI administered in a racial prejudice case. Such nonsense can only make those who pine for the good ol' days of the STASI and the gulag happy. Many, in the wake of the pendulum swinging too far to prohibit conduct as sex harassment, have joked about the "sex police". Now, will the race robocops attach scans to our brains to ferret out those who need to be sent to reeducation camps. Garbage like this from the APA belongs one place only - - the trash can. And, NIMH, or at least the taxpayers, should be aghast that our scarce resources are being wasted on garbage like this.

Attention Deficit Disorder

Attention Deficit Disorder, many times called Attention Deficit Hyperactivity Disorder, has been the subject of much litigation under the ADA, both in the employment and educational contexts. Recently, Judge Oliver of the Northern District of Ohio in Braud v. Cuyahoga Valley Career Center, 2007 U.S. U.S. Dist. LEXIS 72123 (N.D. Ohio, Sept. 27, 2007), held that ADHD is not a disability within the meaning of the Americans with Disabilities Act, finding that ADHD did not substantially limit him in any major life activity. In doing so, Judge Oliver opined that the courts "have viewed with skepticism the claims of plaintiffs that have been diagnosed with ADHD who claim to be disabled." See the opinions of Judge Lamberth in Steere v. The George Washington University, et al., 2005 U.S. Dist. LEXIS 4313 (D.D.C., Mar. 22, 2005) and Steere v. The George Washington University School of Medicine and Health Sciences, 2006 U.S. Dist. LEXIS 46671 (D.D.C., July 12, 2006).

Retaliation - Protected Activity

For employers, it is often times difficult to draw the line between what constitutes "protected activity" and what is simply unacceptable bellyaching that can be the basis for termination. Recently, the Sixth Circuit addressed this recurring issue in Fox v. Eagle Distributing Co., 2007 U.S. App. LEXIS 28887 (6th Cir., Dec. 14, 2007). The employee in Fox had filed a charge of discrimination with EEOC, which is clearly protected activity. Thereafter, he repeatedly told co-workers and customers that his employer was out to get him and that he was going to sue the company for millions. In his complaints to customers, he never claimed that his employer was discriminating against him. When the company was informed of what he had been saying to customers, he was fired for a "poor attitude". Not surprisingly, Fox contended that his termination was retaliatory. The Sixth Circuit held that he had not engaged in protected activity because he had not complained to customers that he was a victim of discrimination by his employer.

Clearly, Eagle Distributing Co. is the courageous exception to the rule. Ask yourself - - if you were asked to advise the employer in these circumstances where an EEOC charge has already been filed, and the employee is complaining to customers, would you recommend that your client terminate, and run the risk of the inevitable retaliation claim. Tip of the hat to Eagle Distributing Co.

There is lots going on at the end of the week, and I will try to touch on some of the major developments.

Supreme Court Update

Yesterday, a petition for cert. was filed in Murphy v. IRS, 493 F.3d 170 (D.C. Cir. 2007)(rehearing denied en banc, 2007 U.S. App. LEXIS 22173 (D.C. Cir., Sept. 14, 2007)). This is the tax case that attracted so much attention this year. Initially, the D.C. Circuit held that it was unconstitutional to tax compensatory damages for non-physical injuries, holding that it was not taxable income. This extraordinary decision was challenged on petition for rehearing, and the panel that originally issued the decision did a complete flip, and held that such damages are taxable. Ms. Murphy is represented by David K. Colapinto, General Counsel of the National Whistleblower Center. You can go to their website and click on the petition filed yesterday with the Court. See http://www.whistleblowers.org/.

Maryland Wage Payment & Collection Act

Yesterday, the Maryland Court of Appeals has granted the petition for cert. in Hoffeld v. Shepherd Electric, 2007 Md. App. LEXIS 127 (Md. Ct. Spec. App., Sept. 24, 2007)(case No. 106, Sept. Term 2007 in Maryland Court of Appeals). The Court will now review the decision of the Maryland Court of Special Appeals which rejected the claim of a salesman who contended that he had been denied commissions in violation of the Maryland Wage Payment and Collection Law. The salesman argued that he was due commissions on sales that he had made before his termination. The court distinguished the fact situation in Hoffeld from that in Medex v. McCabe, 811 A.2d 297 (Md. 2002). The court found that in McCabe the employee had done all the work necessary to earn the commission, and had been denied the commission solely because he was not employed on the scheduled payment date. In distinguishing that case, the court stated: “Unlike Medex, commissions in this case were not linked to the arbitrary factor of employment, but to a reasonable job requirement.” In the instant case, while the salesman had made the sale prior to his departure, the salesman also was responsible for handling change orders and resolving problems for clients before and after orders shipped. Under the company’s unwritten policy, commissions were not considered to have been “earned” until the shipment/invoice date. The company explained that its policy was based on the fact that sometimes orders were modified before shipment, and clients were permitted to cancel orders before shipment.


Ad Damnum Clauses In Maryland

Last Friday, December 7, 2007, the Maryland Court of Special Appeals in Hoang v. Hewitt Avenue Associates, LLC, 2007 Md. App. LEXIS 152 (Md. Ct. Spec. App., Dec. 7, 2007)
(CSA #1048, Sept. Term 2005), held that a damage award of $1.89 million must be reduced to $100,000 because Plaintiff's ad damnum clause stated that he sought damages "in excess of" $100,000. Rule 2-305 states that "a demand for a money judgment shall include the amount sought." The Court held that the ad damnum clause in this case did not satisfy the plain language of the rule.

We will discuss the implications of this case at length next week.

D.C. Federal Court Orders Defendant To Restore Backup Tapes

In Disability Rights Council of Greater Washington v. Washington Metro. Area Transit Auth., 242 F.R.D. 139, 2007 U.S. Dist. LEXIS 39605, 2007 WL 1585452 (D.D.C. June 1, 2007), an ADA case, Magistrate Judge Facciola granted Plaintiff's motion, and ordered the Defendant to restore and search backup tapes for discoverable information. The Defendant's email system was programmed to automatically delete all emails after 60 days. Subsequently to the filing of the lawsuit, the Defendant's failed to take steps to prevent the deletions. In response to Plaintiff's motion, WMATA argued that for it to do so would impose an undue burden and expense.

Magistrate Judge Facciola, in rejecting that argument, stated: "It reminds me too much of Leo Kostens' definition of chutzpah: 'that quality enshrined in a man who, having killed his mother and his father, throws himself on the mercy of the court because he is an orphan.'" (footnote omitted). The Court granted Plaintiff's motion and held that while the amendments to the Rules "initially relieve a party from producing electronically stored information that is not reasonably accessible because of undue burden and cost, I am anything but certain that I should permit a party who has failed to preserve accessible information without cause to then complain about the inaccessibility of the only electronically stored information that remains."

Chemical Sensitivity and The Americans With Disabilities Act

McBride v. City of Detroit, 2007 U.S. Dist. LEXIS 87391 (E.D. Mich., Nov. 28, 2007). In this case, Judge Zatkoff denied Defendant's motion to dismiss an ADA case where the Plaintiff claimed that she suffered from chemical sensitivity to perfume, body lotion, aftershave, cologne, deodorant and hairspray, among others. She claimed that exposure caused headaches, nausea, chest tightness, cough and rhinitis (to wit, a runny nose). She alleged that chemical sensitivity is a physiological disorder and is thus a physical impairment. She alleged that the chemical sensitivity substantially limited her major life activities of breathing, engaging in social activities and reproduction. She requested, as a reasonable accommodation, that the Defendant, City of Detroit, implement and enforce a " no scent policy", prohibiting the wearing of scents or perfumes in the workplace.

One can only imagine what the offices at City Hall in Detroit would smell like if Plaintiff were to win this case and force this accommodation upon the City.

Query: Does this case make any sense?

In contrast, District Judge Motz, back in 2000 in Comber v. Prologue, Inc., 2000 U.S. Dist. LEXIS 16331 (D.Md., Sept. 28, 2000), held that Plaintiff's evidence in an ADA case of her "multiple chemical sensitivity syndrome" was inadmissible, because it did not meet the Daubert standard for the admissibility of scientific evidence, relying upon holdings of the Fourth, Seventh and Tenth Circuits that evidence of MCSS was inadmissible. Apparently, the City of Detroit, did not call these authorities to the attention of Judge Zatkoff.

Federal Legislative Update

Trade and Globalization Assistance Act (H.R. 3920)

The House of Representatives on October 31, 2007 passed H.R. 3920 by a vote of 264-157. The text of the bill can be found at http://www.govtrack.us/congress/bill.xpd?bill=h110-3920. The proposed legislation amends the WARN Act to require 90 days of notice to employees, instead of the current 60 days, of impending job layoffs due to plant closings and mass layoffs as a result of globalization. The bill also provides to impacted employees more time to receive continuation of their health care coverage under COBRA.