Never Darken My Door Clause Stricken by Federal Court

            On January 6, 2016, U.S. District Court Judge Lorna G. Schofield of the Southern District of New York rejected a proposed FLSA settlement agreement which contained a no-rehire clause.  Reyes v. HIP at Murray Street, LLC, S.D.N.Y. Jan. 6, 2016 (unreported online; copy attached tothis blog). 

            The Court found that the clause precluding future employment was “a highly restrictive provision in strong tension with the remedial purposes of the Fair Labor Standards Act (‘FLSA’)…”  In so holding, the Court relied on Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), cert. denied No. 15-605, 2016 U.S. LEXIS 356 (Jan. 11, 2016).  See Jessica Perry, Kathryn Mantoan, and Clayton Flaherty, “Please Pass the Settlement”, Employment Law and Litigation Blog (Dec. 7, 2015) (available at: http://blogs.orrick.com/employment/2015/12/07/please-pass-the-settlement-second-circuit-widens-split-over-stipulated-flsa-dismissals/).

            Cheeks described various other cases that had found various clauses of proposed FLSA settlements to be offensive.  For example, in Lopez v. Nights of Cabiria, LLC, a proposed FLSA settlement included a confidentiality provision, a global release, and a clause establishing that the plaintiff’s attorney would receive between 40% and 43.6% of the total settlement payment without adequate documentation to support such a fee award. 96 F. Supp. 3d 170 (S.D.N.Y. March 30, 2015) (Kaplan, J.).  In Lopez, Judge Lewis A. Kaplan disapproved the settlement.  The Court similarly found that the “highly restrictive confidentiality provisions…are in strong tension with the remedial purposes of the FLSA.”  Id. at 177.  While criticizing many aspects of the confidentiality provisions, the Court took particular aim at those provisions which would “bar plaintiffs from openly discussing their experiences litigating this wage-and-hour case.”  Id.  While recognizing the parties’ interest in confidentiality to encourage settlement, the Court nonetheless concluded “the congressional purposes underlying the FLSA change the calculus in cases like these.  The FLSA evinces ‘Congress’ intent…both to advance employees’ awareness of their FLSA rights and to ensure pervasive implementation of the FLSA[.]’”  Id. at 179-180.

The Court in Nights of Cabiria further held that global releases were inappropriate in the context of FLSA settlements, remonstrating that “[t]he Court will not countenance employers using FLSA settlements to erase all liability whatsoever in exchange for partial payment of wages allegedly required by statute.”  Id. at 181.  As to the attorneys’ fees, Judge Kaplan explained that “[i]t may be that counsel’s fee request is entirely commensurate with the amount of time that the lawyers spent on this case.  But such determinations require evidence, and plaintiff’s counsel has provided none.  The fee request therefore cannot be approved.”  Id. at 182.

            In Guareno v. Vincent Perito, Inc., Judge William H. Pauley of the United States District Court for the Southern District of New York also rejected a proposed FLSA settlement.  No. 14-cv-01635, 2014 U.S. Dist. LEXIS 144038 (S.D.N.Y. Sept. 26, 2014).  In Guareno, the Court listed numerous concerns with the proposed settlement agreement, but appeared particularly concerned about the presence of an unethical agreement that the plaintiff’s attorney would not represent, in the future, any person bringing similar claims against the defendant.  Id. at *3-*4.  Finding that such a restriction “contravenes the FLSA’s intent to permit plaintiffs to bring suit on behalf of themselves and ‘other employees similarly situated[,]’” the Court noted that “[s]uch a provision raises the specter of defendants settling FLSA claims with plaintiffs, perhaps at a premium, in order to avoid a collective action….from other employees whose rights have been similarly violated.”  Id. at *4. 

            In Nall v. Mal-Motels, Inc., the Court first determined that the principle in Lynn’s Food applied to settlements involving former employees, in addition to those involving current employees.  723 F.3d 1304, 1306-07 (11th Cir. 2013).  The Court went on to reject the settlement, focusing on concerns regarding inequalities in bargaining power between current or former employees and employers.  Id.  In Nall the settlement was reached between the defendant and the plaintiff, apparently without the “knowledge or participation” of plaintiff’s counsel.  Id. at 1308.  In rejecting the settlement, the Court reasoned that the FLSA’s protections were “mandatory” and “not subject to negotiation or bargaining between employers and employees.”  Id. at 1307 quoting Lynn’s Food, 679 F.2d at 1352.  Finally, the Court reasoned that “[a]llowing the employer to escape liquidated damages by simply giving an employee the wages she was entitled to earn in the first place – or in some cases, less than that – would undermine the deterrent effect of the statutory provisions.”  Id.

            In Walker v. Vital Recovery Servs., the Court declined to accept offers of judgment because “the record [was] presently insufficient to perform the judicial review required by Lynn’s Food.  300 F.R.D. 599 at 604 (M.D. Ga. 2014).  The Court also noted that the offers of judgment were, for the most part, of $100.00, compensated plaintiffs for only one of several of their theories of recovery, and that many of the accepting plaintiffs “are unemployed and desperate for any money they can find.”  Id.

            In most cases, the Plaintiff is free to voluntarily dismiss his suit, without court order, by “entering a stipulation of dismissal signed by all parties who have appeared.”  Fed. R. Civ. P. 41(a)(1)(A)(ii).  This avenue has long been unavailable to FLSA plaintiffs.  See Lynn’s Food, 679 F.2d at 1353 (citing D.A. Schulte, Inc. v. Gangi, 328 U.S. 108 n.8 (1944)).  The issue in Cheeks was whether, and when, the courts or the U.S. Department of Labor must review and approve FLSA settlements and attendant stipulated dismissals of FLSA claims.  In Cheeks, the parties attempted to settle their FLSA claims by filing a stipulation of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii).  In so doing, they argued that FLSA actions may be settled by stipulation without court review.  The Rule provides that actions may be dismissed without a court order “[s]ubject to…any applicable federal statute”.  In other words, Rule 41 recognizes that some actions (those subject to an “applicable federal statute”) may not be dismissed by stipulation without a court order.  The Court in Cheeks solicited the view of the Department of Labor and it opined that the Fair Labor Standards Act falls within the “applicable federal statute” exception.  In Cheeks, Judge Pooler joined by Judges Parker and Wesley, found that the FLSA is an “applicable federal statute” within the meaning of Rule 41, and that, therefore, the settlement needed to be reviewed and approved by the district court.  Other courts have similarly so held.  Lynn’s Food Stores, Inc. v. United States Dept. of Labor, 679 F.2d 1350, 1354-55 (11th Cir. 1982); Copeland v. ABB, Inc., 521 F.3d 1010, 1014 (8th Cir. 2008); Taylor v. Progress Energy, Inc., 415 F.3d 364, 374 (4th Cir. 2005) aff’d 493 F.3d 454, 460 (4th Cir. 2007) superceded by regulation on other grounds as stated in Whiting v. Johns Hopkins Hosp., 416 Fed. Appx. 312 (4th Cir. 2011); Walton v. United Consumers Club, Inc., 786 F.2d 303, 306 (7th Cir. 1986).

            This area has remained unaddressed by the Supreme Court for decades.  The Court has noted, for example, that:

Our decision of the issues raised [in liquidated damages waiver cases] has not necessitated a determination of what limitation, if any Section 216(b) of the Act places on the validity of agreements between an employer and employee to settle claims arising under the Act if the settlement is made as the result of a bona fide dispute between the two parties, in consideration of a bona fide compromise and settlement.

Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 714 (1945).  See also D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 113 n.8, 116 (1946) (holding that “neither wages nor the damages for withholding them are capable of reduction by compromise of controversies over coverage,” but drawing a distinction in dicta between a settlement agreement and a stipulated judgment entered in the adversarial context of an employee’s suit for FLSA wages). 

Although courts are generally agreed that settlement is permissible when there is a bona fide dispute over liability, there is disagreement over whether, and when, the settlement must be reviewed by a court to make that determination.  See, e.g., Jarrard v. Se. Shipbuilding Corp., 163 F.2d 960, 961 (5th Cir. 1947) (holding that the Supreme Court’s decisions in O’Neil and Schulte regarding settlements did not prohibit approval of a “solemn and binding stipulated judgment entered upon disputed issues of both law and fact” in an FLSA suit brought by employees); Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982) (“When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.”) (citing Schulte, 328 U.S. at 113 n.8; Jarrard, 163 F.2d at 961).

The Fifth Circuit stands in conflict on this issue with most other courts to have considered this question.  In Martin v. Spring Break ’83 Prods., LLC, the Fifth Circuit held that private settlement of FLSA claims is permissible when either the settlement “gave employees everything to which they are entitled under the FLSA at the time the agreement is reached[,]” or, more significantly, when “there exists a bona fide dispute as to liability.”  688 F.3d 247, 255 (5th Cir. 2012) quoting Martinez v. Bohls Equip. Co., 361 F. Supp. 2d 608, 633-34 (W.D. Tex. 2005) (bona fide dispute) and Thomas v. Louisiana, 534 F.2d 613, 615 (5th Cir. 1976) (full relief).  In Martin, the Court approved a private settlement agreement containing a release of FLSA claims which had not been submitted for review and approval by the district court or the Department of Labor, and found that the employees had effectively waived their rights.  Martin, 688 F.3d at 255.

Furthermore, even in cases where courts have required court review and approval of FLSA settlements, it is not entirely clear what standard should be followed in conducting such a review.  Some courts have held that District Courts may enter a stipulated judgment approving the settlement of FLSA claims only after the court has scrutinized the settlement for fairness and reasonableness, and has expressly approved the settlement as fair and reasonable.   See, e.g., Lynn’s Food Stores, 679 F.2d at 1353-55 (“When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.”) (citing Schulte, 328 U.S. at 113 n.8; Jarrard, 163 F.2d at 961).  See also Mosquera v. Masada Auto Sales, Ltd., No. 09-CV-4925 (NGG), 2011 U.S. Dist. LEXIS 7476, at *2-*3 (E.D.N.Y. Jan 25, 2011) (requiring an evaluation of FLSA settlements for fairness and reasonableness); Lee v. Timberland Co., No. C 07-2367 JF, 2008 U.S. Dist. LEXIS 108098, at *4-*5 (N.D. Cal. June 19, 2008) (same); Boone v. City of Suffolk, 79 F. Supp. 2d 603, 605 n.2 (E.D. Va. 1999) (“Because the FLSA was enacted to protect workers from sub-standard wages or oppressive working conditions, employees cannot waive their right to overtime wages unless such a settlement is overseen by the Department of Labor or approved for fairness and reasonableness by a district court.”) (citing Lynn’s Food Stores, 679 F.2d at 1355).

Some courts have further defined this fairness test by setting forth a list of factors that courts should consider.  For example, the United States District Court for the Eastern District of Virginia has held that:

To determine whether a proposed settlement is fair and reasonable under the FLSA, courts should consider: “(1) the extent of discovery that has taken place; (2) the stage of the proceedings, including the complexity, expense and likely duration of the litigation; (3) the absence of fraud or collusion in the settlement; (4) the experience of counsel who have represented the plaintiffs; . . . and ([5]) the probability of plaintiffs’ success on the merits and the amount of the settlement in relation to the potential recovery.”

Belcher v. CHA Cos., Inc., No. 3:10cv420, 2011 U.S. Dist. LEXIS 39063, at *2 (E.D. Va. Mar. 16, 2011) (quoting Lomascolo v. Parsons Brinckerhoff, Inc., No. I:08cv1310 (AJT/JFA), 2009 U.S. Dist. LEXIS 89129, at *10 (E.D. Va. Sept. 28, 2009)).

Until the Supreme Court might rule otherwise – unless you are in the Fifth Circuit – counsel should assume the following:

·         A private FLSA settlement agreement must be approved by a district court or the Department of Labor. 

·         After Reyes, assume that a no-rehire clause, colloquially known as a “do not darken my door again” clause, will be increasingly subject to attack.

·         Attorneys’ fees in any such settlement must be justified.  In the District of Columbia, after the Circuit’s recent opinion in Eley v. District of Columbia, the District’s bench is increasingly requiring substantial justification of hourly rates.  See 793 F.3d 97 (D.C. Cir. 2015) (Laffey matrix and affidavit that counsel’s rates charged clients were within the Laffey matrix found to be insufficient evidence to demonstrate that the requested rates were the rates prevailing in the community for similar services); see also Collins v. District of Columbia, No. 15-cv-00136, 2015 U.S. Dist. LEXIS 159890 (D.D.C. Nov. 30, 2015) (Judge Jackson adopts MJ Kay’s report and recommendations regarding Fee Award in the wake of Eley); Devore on behalf of A.M. v. District of Columbia, 89 F. Supp. 3d 113 (D.D.C. 2015) (plaintiff could have done more to meet her burden to establish the reasonableness of rates); Briggs v. District of Columbia, 73 F. Supp. 3d 59 (D.D.C. 2014) (Laffey rates are presumptive maximum rates for complex federal litigation); Robinson v. District of Columbia, 61 F. Supp. 3d 54 (D.D.C. 2014) (Laffey-matrix is appropriate starting point for the “case by case analysis”); Brighthaupt v. District of Columbia, 36 F. Supp. 3d 1 (D.D.C. 2014) (Laffey rate can be used as “an appropriate starting point for determining rates of reimbursement for attorneys…” but Court declines to award Laffey rates because plaintiff failed to demonstrate that such rates are the prevailing market rate); McAllister v. District of Columbia, 21 F. Supp. 3d 94 (D.D.C. 2014) (affidavits did not provide sufficient information for the Court to determine whether the Laffey rates represented the market rate).

·         Confidentiality clauses may well be stricken.  See Weismantle v. Jali, No. 2:13-cv-01187, 2015 U.S. Dist. LEXIS 53435 (W.D. Pa. April 23, 2015) (“What can be gleaned from this prevailing, if not overwhelming, caselaw trend is that, absent something very special in a very specific case which generates a very good reason above and beyond the desire of the parties to keep the terms of an FLSA settlement out of the public’s view, if the parties want the Court to approve the substance of an FLSA settlement agreement, it cannot be filed under seal”); Baker v. Dolgencorp, Inc., 818 F. Supp. 2d 940 (E.D. Va. 2011) (Judge Henry Coke Morgan, Jr.).

·         Certainly, not only FLSA settlements, but no settlement, should ever have a restriction on counsel’s availability to represent future clients against the defendant.  See, e.g., D.C. R. Prof. C. 5.6(b) (A lawyer shall not participate in offering or making…[a]n agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a controversy between parties.”)

The Continued “Employee” versus “Volunteer” Debate: Categorization of Volunteer Firefighters under the FMLA and FLSA

Image courtesy of fireandrescuedecals.com

In Mendel v. City of Gibraltar, No. 12-1231, 2013 U.S. App. LEXIS 16922 (6th Cir. Aug 15, 2013), the Sixth Circuit recently held, in a 2-1 decision, that a group of volunteer firefighters who receive a substantial hourly wage for responding to calls whenever they choose to do so, are “employees” within the meaning of the FLSA and FMLA.  In doing so, the Court reversed the judgment of Judge Roberts of the United States District Court for the Eastern District of Michigan, which had concluded that the firefighters were “volunteers” for the purposes of the two statutes.  Chief Judge Batchelder wrote the Sixth Circuit opinion, in which Judge Merritt joined, and Judge Kethledge wrote a separate dissenting opinion. 

The terms “employ” and “employee” have the same definition under both the FLSA and the FMLA. See 29 U.S.C. § 2611(3) (providing that for the purposes of the FMLA, the terms “employ” and “employee” have the same meaning as given in 29 U.S.C. § 203(e) and (g), the definitions section of the FLSA).  Thus, the Mendel decision focused exclusively on the definition of those terms under the FLSA.  In applying the Supreme Court’s “economic reality” test set forth in Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947), and upon consideration of “the ‘striking breadth’ of the FLSA’s expansive definition of ‘employ’”, the Sixth Circuit concluded that the firefighters “fall within the FLSA’s broad definition of employee,” as they “are suffered or permitted to work… and they even receive substantial wages for their work.”

The court considered a 1986 amendment to the FLSA’s definition of “employee”, 29 U.S.C. § 203(e), which provides that individuals who volunteer to perform services for a public agency are not “employees” for the purposes of the statute.  However, that exception only applies where the worker in question “receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered.” Id.  Thus, the operative question was whether the monies paid to the firefighters constituted “compensation”, or whether it was instead just a “nominal fee”.  As the Court noted in its opinion with regard to this particular question:

The official regulations provide guidance at this juncture. The regulations define ‘volunteer’ as ‘[a]n individual who performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered.’ 29 C.F.R. § 553.101(a); see also 29 C.F.R. § 553.104(a) (employing similar language). The regulations proceed to recognize, ‘Volunteers may be paid expenses, reasonable benefits, a nominal fee, or any combination thereof, for their service without losing their status as volunteers.’ 29 C.F.R. § 553.106(a).  The specific provision addressing nominal fees provides, in part, ‘A nominal fee is not a substitute for compensation and must not be tied to productivity. However, this does not preclude the payment of a nominal amount on a 'per call' or similar basis to volunteer firefighters.’ 29 C.F.R. § 553.106(e). Finally, the regulations caution, ‘Whether the furnishing of expenses, benefits, or fees would result in individuals’ losing their status as volunteers under the FLSA can only be determined by examining the total amount of payments made (expenses, benefits, fees) in the context of the economic realities of the particular situation.’ 29 C.F.R. § 553.106(f).

Mendel, 2013 U.S. App. LEXIS 16922 at *12-13.

In concluding that the monies paid to the firefighters was compensation rather than a nominal fee, the Court noted that:

The firefighters do not receive ‘a nominal amount on a 'per call' or similar basis.’ 29 C.F.R. § 553.106(e). Rather, they render services with the promise, expectation, and receipt of substantial compensation. See 29 C.F.R. §§ 553.101(a), 553.104(a). Each time a firefighter responds to a call, he knows he will receive compensation at a particular hourly rate—which happens to be substantially similar to the hourly rates paid to full-time employed firefighters in some of the neighboring areas. Essentially, the Gibraltar firefighters are paid a regular wage for whatever time they choose to spend responding to calls. These substantial hourly wages simply do not qualify as nominal fees.

Id. at *13.  

The Court recognized the seemingly counter-intuitive conclusion that so-called volunteer firefighters could be classified as “employees” rather than as “volunteers”.  But, the Court chalked that result up to “[t]he fact that the FLSA’s categories of ‘employee’ and ‘volunteer’ do not necessarily match the common use of those terms or popular perception in general.” Id. at *17.

In his dissent, Judge Kethledge noted that the firefighters had to perform a great number of tasks (152 hours of training, passing an examination, and then completing an additional 73 hours of training each year) for which they were not compensated, and that, taking only the annual training into account, that amounted to the firefighters receiving “little more than minimum wage.” Id. at *20.  Judge Kethledge indicated that he would thus hold that the firefighters are volunteers.  Further, Judge Kethledge noted that the FLSA defines “employ” in 29 U.S.C. § 203(g) to mean “to suffer or permit to work”, and that the Supreme Court had defined “work” for those purposes, in Tenn. Coal, Iron, & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944) as meaning “physical or mental exertion” that is “controlled or required by the employer.”  He reasoned that here, the city “neither controls nor requires the firefighters’ efforts’, as the firefighters generally worked without supervision, and were not required to respond to fires at all if they chose not to.  He concluded that “[p]ersons that need a Family and Medical Leave Act are presumably persons who need leave not to show up for work.  That description does not apply to the City of Gibraltar’s firefighters.  I respectfully dissent.”

In contrast to the Mendel case, the Eleventh Circuit held last year, in a per curiam opinion in Freeman v. Key Largo Volunteer Fire & Rescue Dep’t, Inc., 494 Fed. Appx. 940 (11th Cir. 2012), argued before Judges Hull, Martin, and Cox, that a volunteer firefighter was a volunteer, rather than an employee, under the FLSA.  As in Judge Kethledge’s dissenting opinion in Mendel, the Eleventh Circuit based its decision, in part, on a finding that the fire district in question did not supervise the plaintiff, and did not set the plaintiff’s schedule. Freeman, 494 Fed. Appx. at 943.  The Court also noted that (a) the fire department / fire district contract made a clear distinction between volunteers and employees; (b) volunteers were paid $5.00 per hour while employees were paid between $16.83 and $20.04 per hour; (c) the most that the plaintiff volunteer firefighter could earn in a month was $1,200 regardless of the number of hours he spent at the fire station or the number of emergency calls he responded to; (d) the fire department needed permission from the fire district to hire paid employees; (e) the plaintiff’s schedule varied depending on his availability; (f) the district did not mandate standard operating guidelines for volunteer firefighters; (g) the plaintiff’s individual rate of pay was not set by the fire department or fire district; and (h) besides W-2 forms, the fire department did not provide any employment records to the plaintiff, and the plaintiff did not allege that the fire district had any employment records for him. Id. at 943-44.  The Court concluded that based on the above factors, “the economic reality is that Freeman is not an employee of the Department or the District.”

Whether the Mendel and Freeman cases represent a circuit split on this issue, or whether they are instead distinguishable on their facts, is not entirely clear.  According to Judge Kethledge’s view of the Mendel case, both cases involved a lack of supervision, schedules which varied according to the individual workers’ availabilities and which were not controlled by the fire departments or districts, and pay which (at least when considering time spent training and taking examinations without compensation in the Mendel case) was near or below minimum wage.  However, the cases also appear to differ factually in some respects.  At least with regard to the time spent actually responding to calls, and excluding Judge Kethledge’s consideration of unpaid time spent training and taking exams, the rate of pay in the Mendel case was $15 per hour – three times the $5 per hour in the Freeman matter.  And, the Freeman opinion speaks of a monthly cap on volunteers’ earnings, while no such cap is discussed in either the Mendel majority opinion or dissent.  Whether these and the other factual differences between the two cases are sufficient to explain the difference in the two holdings, one can only surmise.

This issue has also been litigated under state and local statutes.  See, e.g., City of Ft. Calhoun v. Collins, 500 N.W.2d 822, 826 (Neb. 1993) (a volunteer fire department is not an employer within the meaning of the state fair employment practices act).  And, the above cases certainly do not represent the first time that similar issues have been litigated with regard to volunteer firefighters. See, e.g., Bryson v. Middlefield Volunteer Fire Dept., Inc., 656 F.3d 348 (6th Cir. 2011) (reversing District Court’s holding that that plaintiff volunteer firefighter had to receive “significant renumeraction” in order to be considered an employee for the purposes of her Title VII claims, and holding that compensation is only one of a number of factors that should be considered in making that determination); Haavistola v. Community Fire Co., 6 F.3d 211 (4th Cir. 1993) (holding that the issue of whether a volunteer firefighter was an employee, for the purposes of her Title VII sex discrimination claim, involved fact-intensive determinations on which the trial court was not equipped to rule on the basis of a summary judgment record alone).  Indeed, these cases are only part of the larger longstanding debate over the proper characterization of workers as employees versus volunteers, whether certain workers can rightfully be characterized as unpaid interns or externs, and the similar issue as to whether workers should be categorized as employees as opposed to independent contractors.  For several of our firm’s prior publications on those topics, see, e.g.:

• The Department of Labor’s Internship Test under the FLSA, available here;
• Misclassification of Employees as Independent Contractors, available here; and
• FLSA Developments: Missclassification as Independent Contractors, Unpaid Interns, the Status of DOL Opinion Letters, and the Meaning of Clothes Under Section 3(o), available here.

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

Observations Regarding the Latest Supreme Court Decisions

There has been a spate of opinion activity from the Court since the holidays.  There follows some observations regarding some of these opinions and a case the Court will consider at its conference today.  

1.     The “Ministerial Exception” Case 

Hosanna-Tabor Lutheran Church and Sch. v. EEOC, No. 10-553, 2012 U.S. LEXIS 578 (S.Ct. Jan. 11, 2012) is the much-discussed unanimous opinion adopting a “ministerial exception” to the anti-discrimination laws.  Rather than repeat here what has been said in many other blogs about the opinion, I note that the Chief Justice, in the final footnote of his opinion states: “District Courts have power to consider [discrimination] claims in cases of this sort, and to decide whether the claim can proceed or is instead barred by the ministerial exception.”  Id. at *40-*41 n.4.  

2.      Is the Court Fixated on Causation?

In a non-employment case issued Wednesday, January 11, 2012, the Court, in Pac. Operators Offshore v. Valladolid,  No. 10-507, 2012 U.S. LEXIS 577 (S.Ct. Jan. 11, 2012), , interpreting a section of the Outer Continental Shelf Lands Act, Justices Scalia and Thomas resumed their debate over the appropriate articulation of “but-for” causation.  As this blog has noted in the past, Justice Thomas appears to have a more “liberal” view on the subject; whereas Justice Scalia seems steeped in the mire of traditional tort law debates about proximate cause and cause-in-fact.  In the Court’s RICO causation jurisprudence, this debate between the two Justices first reared its head.  See ANZA v. Ideal Steel Supply Corp., 547 U.S. 451 (2006).

In Pac. Operators Offshore v. Valladolid, the Court was addressing the statutory phrase “resulting from”.  Justice Thomas rejected an interpretation from the Third Circuit in Curtis v. Schlumberger Offshore Serv., Inc., 849 F.2d 805 (3d Cir. 1988), which had adopted a version of “but-for” causation.  Rather than embracing “but-for” causation, Justice Thomas articulated a “substantial nexus” test.  Justice Scalia, in a concurring opinion, criticized Justice Thomas’ test and stated that the standard used in negligence cases for proximate cause was the “substantial factor” test.  

One can but wonder whether this rather dry debate will someday be of meaningful significance to practitioners.  Nonetheless, it provides some insights into the Court’s thinking on causation issues, and such issues abound in employment cases, particularly after Gross. 

3.      When is Jurisdiction Jurisdictional?

In another non-employment case, the Court’s majority provided practitioners with some assistance in determining which requirements are jurisdictional in the sense that if one fails to fulfill the requirement, the case may be dismissed at any time.  And, the Court provided some significant guidance as to what are not jurisdictional requirements in that sense, but rather “non-jurisdictional claim-processing rules”.  In Gonzalez v. Thaler, No. 10-895, 2012 U.S. LEXIS 574 (S.Ct. Jan. 10, 2012) an Anti-Terrorism and Effective Death Penalty Act case, Justice Sotomayor, writing for the majority, stated that the “Court has endeavored in recent years to bring some discipline to the use of the term jurisdictional” and to make a “stricter distinction between truly jurisdictional rules” and “non-jurisdictional claim-processing rules.”  Justice Sotomayor proceeded to paint a “clear statement” from the legislature rule as a potential bright line in such disputes.  

Justice Scalia, in a dissent worth reading if only for his colorful rhetoric, mocks the majority’s assertion that the Court has sought to “bring some discipline to the use of the term jurisdictional,” stating that “[i]f that is true, discipline has become a code word for eliminating inconvenient statutory limits on our jurisdiction.”  Justice Scalia goes on to state: “[w]hat began as an effort to bring some discipline to the use of the term jurisdictional…shows signs of becoming a libertine, liberating romp through our established jurisprudence.”  And then, in a quite obvious swipe at Justice Breyer, whose new book Making Democracy Work, a Judge’s View, advocates a purposivist theory of statutory interpretation, Justice Scalia, in a footnote, states that “[t]he Court’s free-wheeling purposivism defies textual analysis.”  

4.      Arbitration Redux

On Tuesday, the Supreme Court handed down its opinion in CompuCredit Corp. v. Greenwood, No. 10-948, 2012 U.S. LEXIS 575 (S.Ct. Jan. 10, 2012), in which Justice Scalia wrote the opinion for an 8 Justice majority.  In CompuCredit, the Court reversed, yet again, the Ninth Circuit in yet another pre-dispute arbitration agreement case.  Here, the case involved arbitration of claims under the Credit Repair Organization Act, an act which contains a provision barring waiver of the cause of action.  That provision is probably the only difference between the statute at issue in this case and the statutes at issue in Gilmer (ADEA), McMahon (RICO), or Mitsubishi Motors (Clayton Act).  The majority, speaking through Justice Scalia, had no difficulty, despite the provision barring a waiver, in finding that claims under this statute may be subject to a pre-dispute arbitration agreement.  Justice Scalia’s answer to the waiver bar was stated as follows: “[I]f a cause-of-action provision mentioning judicial enforcement does not create a right to initial judicial enforcement, the waiver of initial judicial enforcement is not the waiver of a ‘right of the consumer’” sentences like the foregoing can only give all of us lawyers a bad name.  I think it is nothing but circular logic, which I would have thought was anathema to Justice Scalia.  

Justice Ginsburg wrote a dissent, in which she recognizes that the Federal Arbitration Act, “standing alone,” favors the enforcement of arbitration agreements, but argued that no “unmistakably clear” statement by the legislature is necessary to proscribe the arbitration clause that CompuCredit sought to enforce.  

Justice Sotomayor, joined by Justice Kagan, wrote a concurring opinion in which the two found that the statutory debate between the Justice Scalia majority and Justice Ginsburg in dissent was a draw, articulated as being “in equipoise.”  As the arguments were equally compelling, Justice Sotomayor justified joining the majority on the ground that “opponents of arbitration…bear the burden of showing that Congress disallowed arbitration.”  

5.      No Bivens Remedy Implied Where State Tort Law Authorizes Adequate Alternative Damages

In Minneci v. Pollard, No. 10-1104, 2012 U.S. LEXIS 573 (S.Ct. Jan. 10, 2012), on Tuesday, the Supreme Court, Justice Breyer writing for an 8 Justice majority, held that there was no need to extend Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388 (1971) to an Eighth Amendment-based damages action against employees of a privately operated federal prison as state tort law authorizes adequate alternative damages actions that will provide both significant deterrence and compensation.  The Court refrained from providing a new and free-standing remedy in damages, even though state tort law may sometimes prove less generous than would a Bivens action, holding that the state remedy “need not be perfectly congruent.”  The Court further noted that “Bivens actions, even if more generous to plaintiffs in some respects, may be less generous in others.”  In general, the Court found that state tort law remedies provide “roughly similar incentives for potential defendants to comply with the Eighth Amendment while also providing roughly similar compensation to victims of violations.”  Finally, the Court stated that “we can decide whether to imply a Bivens action in a case where the Eighth Amendment claim or state law differs significantly from those at issue here when and if such a case arises.  The possibility of such a different future case does not provide sufficient grounds for reaching a different conclusion here.”  

Justice Scalia, joined by Justice Thomas, wrote a separate, concurring, opinion in which they stated that the Court had abandoned the power to create implied claims in the statutory field, citing Alexander v. Sandoval, 532 U.S. 275, 287 (2001), and then stating that the Court should do the same in the constitutional field, “where (presumably) an imagined ‘implication’ cannot even be repudiated by Congress.”  Justice Scalia refers to Bivens, as he did in Corr. Servs. Corp. v. Melsko, 534 U.S. 61, 75 (2001) (Scalia, J., Concurring), as “a relic of the heady days in which this Court assumed common-law powers to create causes of action”.  

Justice Ginsburg wrote a dissenting opinion. 

6.      FLSA Tip-Credit May Go To The Supreme Court

Today, the Court has its first Friday the 13th conference of 2012 (there are three Friday the 13th’s this year – April 13 and July 13), and one of the petitions which it may take certiorari on is Applebee’s Int’l, Inc. v. Fast, Doc. No. 11-425, petition for cert. pending from 638 F.3d 872 (8th Cir. 2011).  The dispute in the case revolves around the tip credit rule set forth in 29 U.S.C. § § 203(m),(t) which permit employers to take a “tip-credit” towards their minimum-wage obligation for “tipped employees” engaged in an “occupation” in which they customarily and regularly receive more than $30/month in tips.  The U.S. Department of Labor has internal guidance that an employer loses the benefit of the tip credit if a tipped employee performs duties that, while related to such employee’s occupation, are not by themselves purportedly directed towards producing tips if such time exceeds more than 20% of the employee’s total work time. 

 
Here, the Eighth Circuit deferred to the DOL’s informal interpretation.  In contrast, the Eleventh Circuit in Pellon v. Bus. Representation Int’l, Inc., 291 Fed. Appx. 310 (11th Cir. 2008) (per curiam) rejected the 20% rule.

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

Court Enforces Arbitration of FLSA Claims Where Arbitration Agreement is Contained Within 51-Page Employee Handbook

In Brown v. Luxottica Retail N. Am., Inc., 2010 US. Dist. LEXIS 104642 (N.D. Ill. September 29, 2010), Judge Gottschall granted the defense motion to compel FLSA claims. Defendants had a 51-page employee handbook, which contained within it, commencing on page 27 and consisting of five pages, a Dispute Resolution Agreement. That Agreement, among other terms, provided as follows:

1. That the employee would not file, join, participate or intervene in a class action;
2. That arbitration of any claim on a class or collective basis was prohibited;
3. That all legal disputes, including claims under the FLSA, had to be submitted to binding arbitration before the AAA;
4. That the employee would be required to pay a filing fee to the AAA only up to the amount required to file a lawsuit and that the employer would pay any difference;
5. That the employer would pay all of the arbitration fees and costs;
6. That, to the extent authorized by applicable law, either the employee or the employer could seek an award of attorney’s fees from the other; and 
7.  That the Dispute Resolution Agreement was not offered on a take-it-or-leave-it basis, but rather the employee could opt out of the Agreement within 30 days of receipt of the Agreement, by completing an opt-out form attached to the Agreement.

The court found the Agreement to be neither procedurally or substantively unconscionable. The court rejected plaintiff’s argument that the dispute resolution agreement was “buried” in the handbook and that its language and format was confusing such that a reasonable worker could not understand it. The court found the Agreement to begin in a large, bold font; the text to be in a regular font; that there was “a dearth of legalese”; and, while single-spaced, was easily readable. The court stated that “[t]here is nothing hidden or buried about this Agreement, as long as an employee reads the Handbook”. The court further found that it was “written in easily readable type and about as plain as a legal agreement can be.” The court went on to state that “the law does not protect persons who choose not to read documents given to them.” Finally, the court stated unequivocally as follows:

“Nothing in the FLSA precludes an agreement to arbitrate a FLSA claim, even when the arbitration agreement is part of an employee handbook and whether or not the employee signs the agreement or the handbook.”

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

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. 

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.

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.