Showing 89 posts from 2011.

Punitive Damages Award not Upheld Against Employer when Amount is Considered Excessive

After suffering multiple work-related injuries to his shoulder, a package-car driver was released to work with restrictions by the company doctor. A company labor manager said the work restrictions meant that the employee could no longer work as a package driver. A specialist gave the employee the same diagnosis but made the work restrictions permanent. The employee’s own doctor said the employee could return to work without any restrictions. The employee was then re-examined by the company doctor and cleared to work. After a conversation with the company’s occupational health manager, however, the company doctor changed his opinion to match that of the specialist. As a result, the employee was barred from returning to work. The employee filed a grievance under the subject collective bargaining agreement, and a fourth doctor was asked to examine the employee. That doctor requested to run a functional capacity exam to test the strength of the employee’s shoulder but was told that the company would not pay for any testing. Thus, the fourth doctor made his evaluation based on the employee’s medical records alone and concluded that the employee could not perform the essential functions of his job. Ultimately, the employee was fired and he sued the employer for retaliation. A jury awarded the employee $630,307 in compensatory damages and $2 million in punitive damages. The U.S. Court of Appeals for the Tenth Circuit found that the evidence presented supported a reasonable inference in support of the employee’s retaliation claim. The court ultimately concluded, however, that the jury’s $2 million punitive damage award was excessive and violated the employer’s federal due process rights. Employers must ensure that adverse action is never based on an employee exercising his or her right to file a claim based on a work-related injury.

Jones v. United Parcel Serv. Inc., No. 09-3275 (10th Cir. Oct. 24, 2011)

Plan Fiduciaries Entitled to a Presumption of Reasonableness in Employer Stock Drop Cases

Continuing a long string of rulings in employer “stock drop” litigation, the U.S. Court of Appeals for the Second Circuit found that a fiduciary in an Employee Retirement Income Security Act (ERISA) retirement plan was entitled to a “presumption of reasonableness” in continuing to offer plan participants the option to invest in employer stock. Plaintiffs were a putative class of participants in a 401(k) plan sponsored by a large bank. The employer (which was also the plan sponsor for the 401(k) plan) maintained an administrative committee to operate the plan and an investment committee to choose which investments would be available to plan participants.One of the investment options offered to participants was a fund designed to invest in the common stock of the employer/plan sponsor. During the financial crisis of 2007-2009, the stock price of the employer dropped significantly. Plaintiffs sued, alleging that the plan sponsor and the committees administering the plan had breached their respective fiduciary duties by continuing to allow the stock fund to be an investment option. The Second Circuit, adopting the standard used in Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995), held that the plan’s fiduciaries were entitled to a presumption that offering the employer’s stock fund as an investment option under the plan was reasonable. The Moench standard presumes that a plan fiduciary’s investment decisions are prudent, a presumption that may be rebutted by showing that the fiduciary had abused its discretion. Absent evidence of such an abuse of discretion, a plaintiff’s claim of a fiduciary breach cannot survive a motion to dismiss. A companion case issued the same date reached a similar conclusion. Plan fiduciaries should regularly document their actions to protect against claims that they have acted imprudently.

In re Citigroup ERISA Litigation (Gray v. Citigroup Inc.), No. 09-3804 (2nd Cir. Oct. 19, 2011);

Gearren v. McGraw-Hill Cos., No. 10-792 (2nd Cir. Oct. 19, 2011)

Ninth Circuit Enjoins new Hospital Owner from Refusing to Bargain

A company purchasing a hospital required the seller to reject a collective bargaining agreement with a nurse’s union as a condition to the purchase. After the purchase, the company refused to recognize and bargain with the union despite having received a letter from the union indicating that the new owner was a successor employer. The National Labor Relations Board’s (NLRB’s) Regional Director petitioned the district court for and was granted injunctive relief under the National Labor Relations Act (NLRA), resulting in an order for the company to cease and desist from refusing and failing to bargain in good faith. The U.S. Court of Appeals for the Ninth Circuit upheld the injunction, noting that the district court did not abuse its discretion. First, there was a likelihood of success on the merits of the underlying interference and failure-to-bargain allegations. The consistency in the staff before and after the sale created a continuity of operation that established that the successor employer had a duty to bargain. At the time that the new owner declared the hospital “fully staffed,” a majority of the nurses on staff were union incumbents. Second, absent injunctive relief, it was likely that the union would suffer irreparable harm because a delay in bargaining following such a transition in ownership threatens industrial peace and discredits the union in the eyes of employees. Third, these harms outweighed the financial and administrative costs the company would accrue if compelled to engage in good faith bargaining. Finally, the strong showing of likelihood of success on the merits and irreparable harm demonstrated that preliminary relief was in the public interest. Successor employers should carefully consider the number of employees necessary to conduct business operations in normal or substantially normal fashion upon acquiring a new business. This number, which should not be based on uncertain staff expansion contingent upon business growth, is critical to determining whether a union enjoys incumbent status following a change in ownership.

Small v. Avanti Health Systems LLC, No. 11-55563 (9th Cir. Oct. 31, 2011) 

Employer need not Disclose Result of Psychological Aptitude Tests to Union

A union requested copies of the results of a pre-hire psychological aptitude test administered by the employer as part of an investigation relating to a bargaining unit dispute. The employer refused to provide the results without the applicants’ consent, arguing that disclosing the aptitude test results would violate the applicants’ reasonable expectations of privacy because the employer had told applicants that the results would generally be treated as private. The union filed an unfair labor practice charge, alleging that the National Labor Relations Act (NLRA) required disclosure of the records. The U.S. Court of Appeals for the First Circuit found that the applicants retained a legitimate expectation of privacy in the test results because the written notice that results could be disclosed in certain situations “could not eliminate all expectations of confidentiality in employee test results.” Employers should be aware that an exception allowing disclosure of sensitive information to a union in compliance with the NLRA does not necessarily require disclosure of such information in all circumstances once a demand is made by the union. Employers should review their policies and practices to identify records containing private or sensitive employee information and assess on a request-by-request basis whether such information should be disclosed to unions.

NLRB v. USPS, Case No. 11-1225 (1st Cir. Oct. 27, 2011)

Employee Not Subjected to "Materially Adverse" Action to Allow Retaliation Claim

A security officer complained to his employer that he was being sexually harassed by the employee in charge of training him to use firearms. In response to the security officer’s complaints, the employer staged an internal investigation and took action to prevent any further harassment. During the same period of time, the employer investigated the security officer’s excessive use of sick leave and his failure to check in equipment. The employer also required the security officer to attend a meeting on his day off without first informing him that the subject of the meeting was his alleged sexual harassment. Additionally, the employer threatened the security officer with termination, singled him out at an employee meeting by “staring” at him, and switched the security officer from day to night shift after he requested the change. The officer resigned and then sued the employer, alleging that he was retaliated against in violation of Title VII of the Civil Rights Act of 1964, as amended. The U.S. Court of Appeals for the Second Circuit found that the officer was never subjected to “materially adverse” action that would “dissuad[e] a reasonable worker from making or supporting a charge of discrimination.” Consequently, the court rejected the officer’s retaliation claim. Specifically, the court found that the investigations into the officer’s sick leave and misuse of equipment were warranted and were not disciplinary in nature. Additionally, requiring the officer to attend a meeting concerning his own sexual harassment complaints is not something that would dissuade a worker from making or supporting a charge. Finally, a shift change requested by the employee himself is not an adverse action, and without more, personality conflicts and verbal threats are “trivial harms” that also do not constitute materially adverse actions. While the employee’s retaliation claim failed in this case, employers must continue to ensure that an employee never becomes the target of adverse action because he or she has filed complaints of discrimination or harassment.

Tepperwien v. Entergy Nuclear Operations, Inc., Case No. 10-1425 (2nd Cir. Oct. 31, 2011)

NLRB Issues new rules Affecting Elections

On November 30, 2011, the National Labor Relations Board (NLRB) decided, by a 2-1 vote, to revise several sections of its Rules & Regulations in an attempt to expedite the election process. The NLRB majority stated that their interest was to end what they referred to as unnecessary litigation. A summary of the changes are as follows:  (1) hearing officers can limit the evidence introduced at pre-election hearings to the issue of whether an election should be held; (2) hearing officers can limit the filing of briefs; (3) appeals of a hearing officer’s decisions will be heard after the election is conducted; (4) elections will not be delayed pending an appeal; (5) requests for special permission to appeal will only be granted in extraordinary circumstances; and (6) the NLRB would have discretion on which appeals to hear. Although these rules are not as favorable to union organizing efforts as the Employee Free Choice Act or the initially proposed rule changes, non-union employers should be vigilant because unions have recently demonstrated increased organizing activities.

Hinshaw Attorneys Obtain Complete Defense Verdict in Seven-Week Jury Trial

Plaintiff, an elementary school teacher, filed suit in Los Angeles Superior Court, Downtown Los Angeles, against her private school employer. The suit alleged age discrimination, wrongful termination and related claims. Plaintiff, a 37-year founding teacher, claimed her working hours and those of other older teachers were systematically reduced in a scheme to replace older teachers with younger ones. Plaintiff relied primarily on statistical evidence and testimony of other teachers. Defendant denied any plan or scheme, demonstrating that most of the teachers were in the protected age category and that this was consistent over time. Defendant further demonstrated that Plaintiff had workplace performance difficulties and that she was not a good fit for teaching younger grades. Plaintiff's total claimed damages were more than $3 million. The case was tried to a jury for over seven weeks. The jury returned a defense verdict for the school on all causes of action, providing the school with the right to recover its costs. Plaintiff recovered nothing. According to California's state enforcement agency, the Department of Fair Employment and Housing(DFEH), age discrimination charges make up roughly 19% of the charges filed, which is a substantial percentage. Some estimates for discrimination cases in Los Angeles Superior Court indicate Plaintiffs are successful at trial approximately 57% of the time with median verdicts in age cases approaching $1 million exclusive of attorneys' fees and costs. While long jury trials are rare for these types of claims, this case demonstrates that employers need not succumb to the demands of complainants.

Employee’s ADA Claim Fails due to Inability to Establish that she was a “Qualified Individual”

An employee sued her employer claiming that she was: (1) discriminated against based upon her disability, (2) retaliated against, and (3) subjected to a hostile work environment when the employer failed to provide her with a disabled-access parking spot. The employee suffered from fibromyalgia and other health problems, which ultimately led to her taking considerable time off of work. In at least one year, she was absent for 59 percent of the time. In response to her claim, the employer indicated that the employee’s attendance was entirely unpredictable and that she rarely gave advance notice of her absences. The U.S. Court of Appeals for the First Circuit determined that the employee’s claim failed from the inception because she was unable to establish that she was a qualified disabled individual, or, more specifically, that she was able to perform the essential functions of her job. The provision of a disabled parking space was not determinative, because it was questionable whether the space would have enabled her to perform the essential functions of her job. Because being present at her workplace was an essential function, and the employee’s history of absences demonstrated that she was incapable of regularly being at work, she could not overcome this initial hurdle. The court similarly determined that the employee was unable to establish a hostile work environment or retaliation based upon the same facts. Disability discrimination claims are on the rise. Employers must ensure that their policies and practices comply with the ADA and/or corresponding state anti-discrimination laws.

Colon-Fontanez v. San Juan, No. 10-1026 (1st Cir. Oct. 12, 2011)

Court Rejects "But For" Standard in Federal Sector age Discrimination Claim

An employee who had worked for her government employer for more than 30 years did not receive a promotion that she had sought. The position was instead given to a younger employee. The employee sued her employer, alleging age discrimination, sex discrimination and retaliation. The employee claimed that she was not only deprived of the position due to her age and gender, but that she was also retaliated against because she was not given the promotion due to her prior complaints of discrimination. The U.S. Court of Appeals for the First Circuit held that the employee had failed to meet the burden of establishing her claims. Specifically, although the employee based her claim of age discrimination on a memorandum in which the employer referenced a need for “new blood,” that was not dispositive of age discrimination. Further, the employee failed to overcome the fact that the younger employee received the promotion because he had performed more favorably during the interview and had more experience in the industry at issue. Notably, the court applied the “mixed-motive” analysis, and not the more stringent “but for” standard recently applied by the U.S. Supreme Court in Gross v. FBL Financial Services, Inc., 129 S. Ct. 2343 (2009). The court held that the employee did not have to show that age was the “but for” cause of her failure to receive the promotion because that standard did not apply to federal sector workers. In age discrimination cases, different standards of liability may therefore apply to different employers, depending upon whether the employer is in the private or public sector.

Velazquez-Ortiz v. Vilsack, No. 10-1787 (1st Cir. Sept. 22, 2011)

Court Allows Employee’s Harassment Claim to Proceed to Jury to Determine Causation

During a business dinner, a member of the organization’s board of directors told an employee that he “fantasized about making love to her on a dance floor and wanted to take her to Las Vegas and other places around the world.” The employee declined the board member’s advances, and complained to the human resources department about the harassment. Shortly thereafter, the employer underwent personnel changes, which included the hiring of a new president. In this process, the employee was notified that her position was being eliminated. She sued, alleging sex discrimination, harassment and retaliation under Title VII of the Civil Rights Act of 1964, as amended. With respect to the sex harassment claim, the U.S. Court of Appeals for the Seventh Circuit held that the single sexual advance by the board member did not rise to the requisite level of “severe and pervasive” harassment. However, as to the remainder of the claims, the court found that there existed sufficient questions of fact such that the claims should go to the jury. For instance, the court indicated that the jury should make the determination of whether or not the employee’s termination was causally related to the making of her harassment complaint, particularly given the fact that four new employees were hired at or around the time the employee was terminated. As best practice, employers should ensure that all employees — particularly management-level employees — receive training in anti-discrimination and anti-harassment policies. Employees must be made aware that their conduct, even during off-site or off-duty events, may constitute harassment.

Egan v. Freedom Bank, No. 10-1214 (7th Cir. Oct. 6, 2011)