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Bill would curb mandatory arbitration under FAA

February 5th, 2016  |  Pamela Wolf  |  Add a Comment

Senator Patrick Leahy (D-Vt.) has introduced a bill that would curb mandatory arbitration in employment disputes, civil rights cases, and other lawsuits. The Restoring Statutory Rights Act is aimed at restoring “the rights of Americans who too often are forced into mandatory arbitration,” as Leahy put it. Senator Al Franken (D-Minn.) is the lead cosponsor of the legislation.

Introduced on February 4, the bill would ensure that when Congress or the states have created rights and remedies for injured victims, victims are able to enforce those rights and remedies in court, according to its sponsors. The legislation would clarify also that when states take action to address forced arbitration, like Vermont and other states have tried to do, federal law should not interfere.

The problem. The proposed legislation, S. 2506, takes issue, among other things, with recent court decisions, namely the Supreme Court’s AT&T Mobility v. Concepcion and American Express Co. v. Italian Colors Restaurant, which “have interpreted the Federal Arbitration Act to broadly preempt rights and remedies established under substantive State and Federal law.” As a result, business entities are able “to avoid or nullify legal duties created by congressional enactment, resulting in millions of people in the United States being unable to vindicate their rights in State and Federal courts,” the proposal explains.

“This problem has meaningful, real-world implications for Americans’ ability to seek justice,” Leahy said in a prepared statement. “When victims are forced into private arbitration, their cases proceed without public record. The cases cannot serve as precedent for future injustices, and the plaintiffs—hardworking consumers—cannot obtain a meaningful appeal. An arbitrator is selected by the corporate defendant, creating incentives that favor repeat corporate players. In many cases, forced arbitration stops victims’ legal actions altogether: by requiring victims to waive their legal right to join with other victims in a class action, arbitration clauses often remove the crucial tool that plaintiffs need to afford pursuing their claims.”

The solution. The bill would solve the problem by clarifying that “congressionally established rights and remedies may not be waived prior to the institution of a dispute by the party intended to be protected by such statute.” The legislation is also intended to “reinstate and reaffirm existing rights and remedies of the people of the United States enacted since the enactment of the Federal Arbitration Act regarding access to the courts that have, or may have been, abrogated or diminished.”

Violations of state and federal law or constitutions. The Restoring Statutory Rights Act would amend the FAA, 9 U.S.C. Section 2, to exclude enforcement of a written provision that mandates arbitration of a claim for damages or injunctive relief that is brought by an individual or small business concern (as defined in Sec. 3 of the Small Business Act), in either an individual or representative capacity, that arises from an alleged violation of a state or federal statute, U.S. Constitution, or a state constitution, unless the written arbitration “is entered into by both parties after the claim has arisen and pertains solely to an existing claim.” (Emphasis added)

Grounds for revocation. The bill would also clarify that reasons for not enforcing an arbitration agreement, “grounds as exist at law or in equity for the revocation of a contract,” include a state or federal statute, or a state or federal court finding “that prohibits the agreement to arbitrate on grounds that the agreement is unconscionable, invalid because there was no meeting of the minds, or otherwise unenforceable as a matter of contract law or public policy.”

Who decides validity and enforcement? Notably, S. 2506 leaves the determination of whether the arbitration agreement is valid and enforceable under the FAA to the courts, rather than arbitrators, “irrespective of whether the party resisting arbitration challenges the agreement to arbitrate specifically or in conjunction with other terms of the contract containing such agreement.”

“When Americans sign cell phone agreements, rent an apartment, or accept a contract for a job, most of us focus on the service we are about to receive or that we are about to provide,” Leahy said. “What Americans do not realize—until it is too late—is that too often we are also signing away crucial legal rights. Legal fine print tips the scales against us. It is forcing consumers into private arbitration, denying us of our Constitutional right to protect ourselves in court.”

Praise. The measure immediately garnered praise from the National Employment Lawyers Association: “Introduction of the Restoring Statutory Rights Act affirms that access to the courts by employees to seek resolution of employment disputes is fundamental to achieving fairness and justice in the workplace. Indeed, employees whose workplace rights are violated by their employers should not also be robbed of their day in court by employer-imposed forced arbitration clauses.”

Additional cosponsors of the Restoring Statutory Rights Act include Senators Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), and Sheldon Whitehouse (D-R.I.).

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Stretching the boundaries of federal discrimination laws

February 2nd, 2016  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

Religious accommodation of an atheist employee, protecting a male employee against sexual harassment, and prohibiting discrimination against white employees, are just a few recent examples of the broad reach of our federal anti-discrimination laws. Those laws may have developed in reaction to injustices against particular groups of individuals (e.g., African-Americans), but the law today is more focused on categorical discrimination (e.g., discrimination based on race—any race). Moreover, those categories, including race, gender, religion, disability, and more, are expanding. Some recent examples:

Atheist employee fired for taping over religious message on ID badge. An atheist employee, who was fired after refusing to remove the tape covering an employer’s religious mission statement on the back of his company ID badge, can proceed to trial on his Title VII and state law failure-to-accommodate and retaliation claims, ruled a federal district court in Pennsylvania. Whether the accommodation would impose an undue hardship on the employer will be determined at trial (Mathis v. Christian Heating and Air Conditioning, Inc.).

Male victims of sexual harassment. Recent cases indicate male employees are not taken as seriously as female employees when they complain of sexual harassment, but courts interpret Title VII to afford them the same protections. For example, when a male mechanic repeatedly complained that a male coworker followed him into the restroom, made sexually inappropriate comments, discussed homosexual sex acts, and touched him physically, his supervisor treated the complaint as a joke. The mechanic then complained to HR, which encouraged him to “do what was right for the company,” especially considering how a complaint over “gay rights” would appear. Perhaps unsurprisingly, a federal court sent his hostile work environment claim under Title VII to trial (Davis v. Gregory Poole Equipment Co.).

In another case, when a male maintenance worker complained that a female manager made unwanted advances, remarked on his looks, and sexted him, a safety director suggested the texts were meant for someone else and told the worker to confront her and work things out himself. After he was fired and filed suit, the director admitted he might have reacted differently if the alleged victim of harassment had been female. Though the employee’s sexual harassment claim failed because the misconduct wasn’t severe or pervasive, his retaliation claim survived summary judgment to the extent it was based on his complaint to the director, that had he been female and the harasser male, the employer would have reacted differently. The employer failed to oppose this argument (Gilley v. Kelly & Picerne, Inc. dba Alabaster Bay Apartment Homes).

Sexual harassment by wannabe mother-in-law. In one rather unusual case, a court found that a TV station employee stated a plausible sexual harassment claim where she alleged not a single sexual advance. Instead, she claimed that a female supervisor had her fired after she rejected the ongoing attempts by the supervisor to get the employee marry her son, who was also the company’s CEO. At one point, on a business trip, the supervisor said “I’m going to be your mother one way or another. Either you will marry [the CEO] or I will marry your father and be your stepmother” (Allen v. TV One, LLC).

White employee fired for policy violation while minorities were not. An employee at an early education center claimed her employer violated Title VII by firing her because she is white. She had asked an African-American coworker, who was also a student’s grandmother, to ask her daughter to call the school about substituting Almond Milk for regular milk with respect to the student. The employee was fired for allegedly discussing private information with someone other than a parent or guardian. Finding triable issues of fact on her race discrimination claim, the court noted evidence that African-American employees also violated policy but were not fired, and that the employee’s conduct may not actually have violated confidentiality requirements (Callaway v. Region 10 Education Service Center).

Associational discrimination – disability. Another type of discrimination recognized under federal laws involves bias against an employee based on close association with someone who falls within a protected category (e.g., partner, child, other family member). These types of cases often occur under the ADA, which specifically prohibits discrimination against a qualified individual because of the disability of an individual with whom he or she is known to have a relationship or association. In one case, a senior VP’s note that an employee was “given special consideration” and her supervisor’s remark about her “retarded brother” suggested that her relationship with her blind and severely autistic brother-in-law was a factor in the decision to fire her, so her association discrimination claims would go to trial (Smith v. First Tennessee Bank, N.A.). In another case, an employee who alleged he was fired after missing several weeks to care for his ailing wife, who had spinal meningitis, stated a plausible claim for relief under the ADA’s discrimination by association provision (Pollere v. USIG Pennsylvania, Inc.).

Interracial couples and associational discrimination. Another type of associational discrimination involves interracial couples. In one recent Title VII case, two employees were treated differently after they started dating because one was black and the other was white. They were told by their supervisors that their relationship was “disgusting” and “sickening” and supervisors started enforcing rules against them (like no personal calls at work, and no eating lunch at another employee’s work station) but did not enforce those rules against others (Autrey v. State of Maryland). In another case, a Native American employee who was dating an African-American man will have a jury decide whether her supervisors subjected her to a hostile work environment based on her association with her boyfriend. She claimed they repeatedly engaged in offensive and threatening behavior, including calling biracial couples “n***er lovers” and biracial kids “half n***er” (Maddox v. Grimmer Realty).

Age discrimination as between two older employees. Under the ADEA, it is unlawful to discriminate based on someone’s older age (age 40 and over, to be specific) but not against someone who is younger than 40. In that respect, there really is no “reverse” age discrimination under the ADEA. However, the Act is still flexible in that, as between two employees who are both over the age of 40, employers cannot unlawfully favor the younger of the two if the age difference is “substantial” (most courts find 10 years or more to be significant). Yet difference in ages is not the only consideration. In one case, a border patrol agent in his mid-50’s who was denied a promotion given to four individuals in their 40’s did not have an age difference of more than 10 years, but other factors suggested age was considered, including the decisionmaker’s questions on the employee’s plan for retirement and an expressed preference for hiring “young, dynamic agents” for the new positions (France v. Johnson).

Sex stereotyping. Discrimination based on a failure to conform to the stereotype of masculine and feminine is considered sex discrimination. In one case, evidence that harassment such as being threatened, physically restrained, punched, and poked in the anal region was directed at male employees of an oil and gas company crew who were considered “less manly” was enough to send one harassed employee’s Title VII claims to the jury (Arredondo v. Estrada). In another case, a federal court in Oregon held that a jury should decide the sex discrimination claims of a medical technician who alleged that her employment contract was not renewed because she was considered a “strong woman” who wanted to do things “her way” (Tornabene v. Northwest Permanente, P.C.). Similarly, a federal court in Michigan found triable issues of fact on a hotel housekeeper’s Title VII claim that she was terminated because she failed to conform to traditional gender stereotypes. Specifically, the supervisor allegedly said the housekeeper was too “mannish” and that the supervisor didn’t want to work with her because she “acted too manly” (Reed v. South Bend Nights, Inc. dba Best Western Hospitality Hotel).

Transgender discrimination. Some interesting issues are emerging in discrimination cases by transgender employees. In one case, the Eleventh Circuit reversed summary judgment on a Title VII claim, finding that comments by a company owner that he was “very nervous” about a auto mechanic’s gender transition and the “possible ramifications” that it might affect business, as well as the imposition of discipline only after the mechanic announced her gender transition, raised triable questions on whether gender bias was a motivating factor in the decision to terminate the mechanic (Chavez v. Credit Nation Auto Sales, LLC). In another case involving claims that an employer fostered a hostile work environment by demanding an employee provide overly intrusive personal information on his anatomical changes, among other actions, the employer sought the same kind of information in discovery, including details on the employee’s surgeries and hormone therapy. Finding the requests “grossly out of proportion” to what the employer legitimately needed for its defense, the court denied its motion to compel production of the evidence (Roberts v. Clark County School District).

What about sexual orientation? One question that crops up repeatedly is: Why do courts consider it to be sex discrimination to treat someone unfavorably because they do not fit sexual stereotypes, yet most courts don’t consider discrimination against homosexual individuals to be discrimination “based on sex?” Recently, the EEOC filed an amicus brief with the Eleventh Circuit in Burrows v. College of Central Florida, asserting that sexual orientation is equal to sex discrimination because: 1) it necessarily involves sex stereotyping; 2) it amounts to gender-based associational discrimination; and 3) Title VII generally bars sex-based considerations in employment and sexual orientation discrimination necessarily requires consideration of an individual’s gender.

I think the EEOC has it right in this case and, given the ways in which federal anti-discrimination laws have been interpreted in recent years, courts will likely adopt its reasoning. Interestingly, one federal court agreed with the EEOC while addressing a case under a New York City law, and it noted that a “change towards federal protection has been primarily a result of [the EEOC’s] sensitivity to the problem.” In the case at bar, the court refused to overturn a $100,000 award to a lesbian UPS employee who endured years of harassment due to her sexual orientation. It explained that appeals to the Bible could not justify management’s condoning the harassment and, noting the company’s “cavalier” attitude toward the employee’s repeated complaints, the court found plenty of evidence to support the verdict in the employee’s favor under the New York City Human Rights Law (Roberts v. United Parcel Service, Inc.).

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Wolters Kluwer News: Publication opportunity for current law students

February 2nd, 2016  |  Joy Waltemath  |  Add a Comment

The Wolters Kluwer Legal Scholar program, in its third year, allows current law students to compete for the chance to have their work published in a Wolters Kluwer publication. Wolters Kluwer will accept submissions through Friday, April 1, 2016.

One submission per category may be submitted by any student currently enrolled in an ABA-accredited law school. Categories for submission are:

  • Employment law (including wage/hour, labor, and discrimination)
  • Health law (including Medicare, Medicaid, life sciences, and health reform)
  • Cybersecurity (including banking and financial privacy, securities, health care, and insurance)
  • Products liability and consumer safety

Depending on the number of entries, one to two winners per category will be selected and published in a Wolters Kluwer publication, to be determined based on the submission’s topic.

Winners will be notified by April 22, 2016. The winning submissions will be featured in a Wolters Kluwer publication the week of April 25, 2016, along with a biographical paragraph about the author.

For information and full contest rules, visit Legal Scholars.

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No employer liability for ‘despicable’ Facebook post about customer

February 1st, 2016  |  Kathy Kapusta  |  Add a Comment

Despite the “indisputably despicable” comments about a customer that an employee posted on Facebook, which made light of violence, used a racist term, and ridiculed the customer’s sexual orientation—and a supervisor’s knowledge of a prior post by the employee—a federal district court in Hawaii tossed the customer’s lawsuit against the company asserting negligent supervision, retention, and training. Granting the employer’s motion for summary judgment, the court found the customer failed to show it foresaw or should have foreseen the danger posed by the employee and should have been more closely supervising his Facebook use or should have fired him earlier.

The posts. After the customer patronized the rental car’s Maui Airport location, the employee allegedly posted on his Facebook page: “I seen Maurice’s bougie ass walking kahului beach road . . . ni**a please!” He also stated that the customer was “a broke ass faka who act like he get planny money,” prompting a coworker to post “run that faka over!!! lol.” The employee then replied, “. . . i was tempted too, but nah, i had a white car, neva like u guys scrub da blood off.” He further posted “now he knows we got Mercedes, he’s gunna drive those. it’s too bad his CC declines all the time.” There was also a comment alluding to his sexual orientation.

Upon learning of the posts, the customer complained to the employee’s supervisor, who had previously been notified several years earlier about a comment the employee had posted on Facebook that made light of her after she almost walked into a tree. The employee and several coworkers who participated in the customer posts were all fired or resigned. Alleging that he suffered post-traumatic stress disorder as a result of the Facebook posts, that he was forced to sell his business, and that he was financially damaged prior to selling his business because he lost customers as a result of the post regarding his credit card, the customer sued for, among other things, negligent supervision, retention, and training.

Duty of care? He argued that the company owed him and other customers a duty of care to prevent the employee from posting harmful social media content at work. While he asserted that the supervisor was aware of the employee’s prior “nasty and demeaning” post about another customer, the supervisor disputed this and there was no evidence in support of his contention. Nor was it reasonable to infer that she knew about the prior post just because other employees did, said the court, noting that the coworkers were his Facebook friends and had direct access to his posts while the supervisor had no Facebook account of her own.

Also rejected was the customer’s assertion that the harm he suffered was foreseeable based on the supervisor’s knowledge of the prior post about her. Although she considered that post to be “fairly innocuous,” she counseled the employee at the time not to post anything on Facebook regarding the company. “However imprudent the prior post may have been,” its content gives no indication that the employee would later make a racist, homophobic, or threatening post about a customer, or that he would post financial nonpublic information about him, said the court.

Handbook. And while the company had a handbook that addressed safeguarding customer information, the court pointed out that the law does not impose strict liability on an employer every time an employee steps out of line. The employer’s acknowledgment of possible dangers in its handbook did not suffice by itself to establish a duty of care running from it to the customer. It is reasonable and proper for employers to warn against possibilities, said the court, finding nothing in Hawaii law that equated the recognition of possibilities, without more, with the establishment of a duty. Thus, the customer’s negligent hiring and retention claims failed.

Negligent training. Because Hawaii appellate law has not explicitly defined the contours of a negligent training claim, the court turned to other jurisdictions holding that an employer has a duty to train an employee when a particular job task poses a foreseeable risk of harm if performed without adequate training. These cases make it clear that a plaintiff may not assert that an employer has a general duty to train its employees, the court noted, finding that the customer’s claim that the company had a duty to properly train its employees to conduct themselves in a lawful manner in their interactions with their customers and the public failed to identify any specific aspect of the employee’s or supervisor’s job that posed a risk of danger to customers as a result of its failure to train.

Nor did a letter written by the company’s CEO stating that the company’s commitment to its employees was to offer periodic training so that they would better understand the handbook’s requirements establish a contractual duty to train. While the customer contended that he was a third-party beneficiary of this purported contract, thereby transforming the alleged contractual duty between employer and employee into an independent tort duty running to him, the court found that he ignored the distinction between tort and contract, which have differing purposes that give rise to differing duties. Even if he established that the company owed its employees a contractual duty to train, this did not translate into a tort duty to train that flowed to him.

Finally, even if the company was under a duty to train the employee and others to prevent the harm allegedly suffered by the customer, there was no evidence that the duty was breached. According to the supervisor, she previously told the employee not to post anything related to the company on Facebook, and he told her he understood and would not post anything in the future. The customer made no attempt to describe what additional training the company should have provided.

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CEO’s mom prompts lawsuit with overzealous matchmaking

January 29th, 2016  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

I admit it, I have met a few young adults who I found charming enough to have an errant thought that they might make a good spouse for one of my adult children. But I never acted on those notions (much to my kids’ relief I’m sure). And I can’t be the only parent to have had those thoughts and to refrain from acting on them—this case is a good reason not to:

“I’m going to be your mother.” In a lawsuit that presents our “what not to do” example, the plaintiff was the director of talent relations and casting at a Maryland TV station. Among other duties, she booked talent for “TV One-on-One,” a show hosted by the station’s founder, the CEO’s mother. According to the plaintiff, the CEO’s mom subjected her to sex discrimination by repeatedly trying to get her to start a romance with the CEO. On a business trip, the mom said “I’m going to be your mother one way or another. Either you will marry [the CEO] or I will marry your father and be your stepmother.” A while later, after similar encounters, the CEO’s mom sternly asked why the employee was not yet married to the CEO and thereafter said the employee was “old and that her babies would likely be ‘retarded.’”

Personal attacks, rumors. Once the CEO’s mother realized the employee was not going to marry her son, she allegedly began to baselessly attack the employee’s job performance. She publicly berated the employee; started false rumors; and demanded the employee’s termination. Meanwhile, the workplace rumor mill spread tales that the employee was only hired because she was having sex with the CEO, and that she was still romantically involved with him. She complained directly to the CEO, who responded “[A]t least the rumor makes me look good” but otherwise did nothing. The rumors intensified when the CEO’s mom publicly declared on multiple occasions that she wanted the employee and her son to marry.

Employee fired. According to the employee, eventually, her advancement opportunities at the station dried up despite her “stellar work performance and proven success.” By July 2011, the COO warned her that the CEO’s mom was “strategizing” to get her fired. And due to the mom’s “mercurial, volatile, disruptive and abusive behavior,” the employee began to seek therapy to cope with stress and anxiety. She complained repeatedly to supervisors, the legal department, and to HR, to no avail. She was fired in June 2014, after a dispute with the CEO’s mother over the stage to which a musical group should be assigned during a festival.

Sex discrimination. Refusing to dismiss the employee’s sexual harassment claim, the court explained that she did not have to allege “sexual advances or propositions” to show harassment based on gender. It was sufficient that she claimed that the CEO’s mother persistently urged her to marry the CEO; that she was humiliated, publicly chastised, and berated; and that she was subject to workplace rumors. Put simply, “but for her status as a woman,” she would not have been subjected to the alleged harassment. Moreover, the employee plausibly claimed the harassment was “severe and pervasive” because it went on for years and she felt humiliated and degraded to the point that she sought therapy.

Retaliation. The court also refused to dismiss the employee’s retaliation claim, because her complaints to Human Resources and others constituted “protected activity” under federal anti-discrimination law and she suffered an adverse employment action. Indeed, the fact that she was fired only three days after complaining to HR suggested a causal relationship.

So take it to heart, parents and supervisors . . . Whether you call it overzealous matchmaking or “extreme” helicopter parenting, it is a BAD idea to bring those errant I-want-you-for-my-in-law thoughts to the workplace.

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