Jottings By An Employer's Lawyer

Wednesday, January 28, 2004

One of The Rising Complaints of Discrimination - Pregnancy


At least that's the premise of this Buffalo New story, Reports of bias related to pregnancy are rising. Although the article quotes an EEOC spokesperson saying many women are confused or don't know about their rights, that does not seem to be the case of most employers.


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Tuesday, January 27, 2004

Electronic Document Retention Policies - Why You May Need One


Thanks to Sabrina at be Spacific for this link to an article by Oregon based forensic consultant Paul French, Electronic Document Retention Policies. From an employment lawyer's perspective, I shudder to think at what often can be found in e-mail, a way too often a way of recording one's ill-formed and sometimes uninformed thoughts. Although it can work both ways, plaintiffs use e-mail too. Still hiding one's head in the sand and hoping you won't be asked to produce electronic documents in the future seems somewhat unrealistic. And if you can't, French talks about the potential perils.


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Sunday, January 25, 2004

Evidentiary Hearing Required On Motion to Compel Arbitration Where Facts Are Disputed


Although not recommended, the employer who filed a controverting affidavit only 22 minutes before a scheduled motion to compel arbitration, was successful in obtaining mandamus when the court failed to give it an evidentiary hearing. The court noted that there is no statutory deadline for filing affidavits in a motion to compel arbitration and no exceptions that it could find (although you get the feeling that they would like to) to when an evidentiary hearing is required when there are controverted facts. Rogers v. Maida (Tx. Ct. App. - Beaumont 1/22/04).

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Drafting Error? - 7th Cir. No Compensatory or Punitive Damages for ADA Retaliation Claim


In what it calls a case of first impression at the circuit level, the 7th Circuit somewhat surprisingly relies on and adopts an opinion of a district court from the 8th Circuit:
The district court’s analysis in Brown v. City of Lee’s Summit is thorough and particularly persuasive. We agree with that court’s conclusion that “a meticulous tracing of the language of this tangle of interrelated statutes reveals no basis for plaintiff’s claim of compensatory and punitive damages in his ADA retaliation claim.” 1999 WL 827768, at *3.
Kramer v. Banc of America Securities (7th Cir. 1/20/04) [pdf]. Although not yet having traced (meticulously or otherwise) the tangled web, my guess would be this is a congressional oversight. And if so, one that is likely to be corrected.

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White Employee Who Complains About Black Supervisor Survives Summary Judgment


A white employee, Ware, who was vocal about his black supervisor, Smith, to other employees, including making the claim that he was hired only because he was black, was terminated within 10 days of making his complaint to a senior vice president about a "black coalition that was hiring and promoting their friends." In reversing a summary judgment on the retaliation claim, Judge Prado found that the timing alone was enough to shift the burden to CLECO give a legitimate reason. But he found problems with the articulated rationale:
Smith acknowledged that his decision to recommend terminating Ware was based, at least partially, on Ware's attitude towards Smith, and Ware's effect on department morale. These highly subjective judgments, could easily be pretext for retaliation. See Rowe, 457 F.2d at 358. Smith's influence on the decision to fire Ware also contributes to showing a retaliatory motive because Ware had complained to Powell and Scroggs about Smith. See Gee, 289 F.3d at 346. As a result, a genuine issue of material fact exists about whether CLECO retaliated against Ware in violation of Title VII ...
Ware v. CLECO (5th Cir. 1/21/04) (unpublished) [pdf].

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An Appropriate Case For Intentional Infliction of Emotional Distress


The tort of intentional infliction of emotional distress is not a favorite of mine, and absent tight judicial control that can easily turn into a code of civility, of the type that courts so frequently note does not exist. Nevertheless, there are rare fact situations where even I would be hard pressed to deny that such a claim might exist. Gantt v. Security, USA, Inc. (4th Cir. 1/23/04) [pdf] is such a case.

Gantt, a security guard obtained a restraining order against her boyfriend. Her week-end supervisor who also was her boyfriend's supervisor at another security company during the week, sent her to a job assignment knowing that she would be exposed to her boyfriend. Even after he called and threatened Gantt, the supervisor refused to remove her. After Gantt was kidnapped, raped and held captive for 6 hours by the boyfriend, she sued the company for among other things, the intentional infliction of emotional distress. The facts seem to me to be the very narrow exception that the tort was designed to cover. Even here the company may, and perhaps under the law of Maryland should, escape liability. The claim might fail because of the workers' comp bar as interpreted by Maryland courts, or the supervisor might not be at a sufficient level to bind the company vicariously, both are mentioned as possibilities in the opinion. But just on the question of whether the underlying facts state a cause of action, this one does not offend. At least not me.


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Friday, January 23, 2004

The Fox in the Henhouse So To Speak


Walter Olson at Overlawyered: Harassment: do as we say? catches the irony of a $500,000 jury verdict for sexual harassment against Cook County, based on the actions of the individual who at the time was the County's chief investigator of sexual harassment allegations. Do as we say, indeed.

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MLK Day Reflections On An Employers' Lawyer's Role


On Monday while I was chasing around west Texas preparing witnesses for trial, George Lenard, both a fellow blogger and management side employment lawyer was much more philosophically engaged. His comments on both the power of the rhetoric of Dr. King and the role that we as lawyers on this side of the docket play in those issues to which he dedicated his life are certainly worth checking out at George's Employment Blawg.

I share George's sentiments, although I doubt that I would have articulated them nearly as well as he does. My experience mirrors his in having had extremely few clients who, certainly as an institution, engaged in purposeful discrimination. There is no question that the work place is far better today than it was in the distant past, and even significantly better than when I started practicing almost 29 years ago, particularly for minorities and women. Some, although by no means all, of the credit goes to legislation regulating the employer/employee relationship. But it is also true that too often those laws are used for purposes other than that for which they were intended.


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Thursday, January 22, 2004

More West Employment Law News - Dispute With Founder of FindLaw


Since West is such a prominent name in most lawyer's lives, at least at some point in their career, employment law related issues about them always seem to catch my eye, including this in depth report on the the dispute between West and one of the co-founder's of the legal portal, FindLaw. The pointer to West Publishing Fires and Sues FindLaw Co-Founder Tim Stanley is courtesy of beSpacific.

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Tales From the Panhandle of Texas


The absence of reports since last Friday was not because of an extended MLK holiday, but rather a call to trial in the Northern District of Texas, Amarillo division. And even though Monday was a federal holiday, I was making a circuit of Amherst, Muleshoe and Dimmitt for final witness preparation!

All is well that ends well however, as after only 30 minutes the 8 person jury returned a complete defense verdict. The claims were age and race discrimination as well as failure to pay overtime. The latter claim turned on whether the company properly administered a fluctuating work week method of payment. Judge Mary Lou Robinson who is the sole federal judge sitting in Amarillo is nearing her 50th year on the bench, having been a long time state court judge before her 1979 appointment to the federal court. It is clear that she still enjoys trying cases.

The trial also marked the third step in the odd personal goal of mine of trying a jury trial on all four corners of Texas. I now have tried employment law jury cases in El Paso (actually 2), Texarkana and Amarillo. And although I have handled numerous cases down in the Valley over the years, I am still waiting for a jury trial to make the 4th leg.

In any event, sorry for those of you who showed up for employment law news and found nothing, or now this report, but more substantive reports should soon follow in due course.


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Friday, January 16, 2004

New Bush Immigration Proposal


A lot has been written about Bush's new proposal and no doubt more will be as it begins to wend its way through the legislative process. If you just want a succinct overview, try this one prepared by Andrew Galeziowski , one of our shareholders who specializes in immigration, :

---- No amnesty/legalization or immediate path to a green card
---- Forgiveness for prior violations of immigration laws provided to those entering the program
---- Temporary Worker status available for three years, with the potential for renewal.
---- Workers can apply for a green card under existing rules (no new green card program)
---- Workers must pay a one-time fee to register for the program
---- I-9 enforcement to increase
---- US employers must prove unavailability of US workers - suggested methodology will be similar to current H-2B program

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OFCCP Position On Use of 2000 Census Information


The OFCCP has issued a policy statement that it will begin using the 2000 census data to determine availability on January 1, 2005. Employers are required to use it for their 2005 plans. The position statement is on the OFCCP website.


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Wednesday, January 14, 2004

Oops! Sometimes The Defense Is So Good The Obvious Gets Overlooked


On appeal, the question seemed simple: was the district court's determination that a surgeon, whose privileges were revoked by a hospital, failed to state a prima facie case of age and national origin discrimination and failed to create a genuine factual issue regarding his claim that the hospital's stated reason for the action was pretextual, correct? But even simpler was the question raised by the 6th Circuit itself:
The first issue we must address—remarkably, one not raised by either party—is whether Shah’s relationship with [the hospital], employee or independent contractor, qualifies him for the statutory relief he seeks. We directed counsel to address the issue at oral argument and they did so. We conclude that: (1) the record discloses that Shah did not make a prima facie case showing that he was an employee at [the hospital]; (2) that, as such, the employment discrimination statutes upon which Shah relies do not apply; and (3) [the hospital] is entitled to judgment as a matter of law.
Shah v. Deaconess Hospital (6th Cir. 1/14/04). As the Court notes, in order to fall within the protection of either the ADEA or Title VII one must be an employee not an independent contractor, and it now joins three of its sister circuits in holding explicitly :
that a physician denied hospital privileges is not protected by the federal employment discrimination statutes if he or she is an independent contractor. See, e.g., Cilecek v. Inova Health Sys. Servs., 115 F.3d 256, 261-63 (4th Cir. 1997); Alexander v. Rush North Shore Med. Ctr., 101 F.3d 487, 493-94 (7th Cir. 1996); Diggs v. Harris Hosp.-Methodist, Inc., 847 F.2d 270, 272-73 (5th Cir. 1988). For example, in Alexander, 101 F.3d 487, the Seventh Circuit held that a physician whose hospital privileges had been revoked was not an employee within the meaning of Title VII because the hospital did not have “‘the right to control’” the physician. Id. at 493-94 (citation omitted).
The Court affirmed the summary judgment of the trial court, although on the different grounds that plaintiff failed to show that there existed an employer/employee relationship.

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Employer Gets Second Shot At Enforcing Arbitration, Albeit With Different Selection Mechanism


Developing the contours of arbitration and arbitration agreements in the employment law context continue to occupy the courts. Clearly the courts as a general rule are following the pro-arbitration direction of the U.S. Supreme Court. In today's example, the 6th Circuit modifies its earlier decision throwing out an arbitration agreement because it left the selection of the pool of potential arbitrators solely to the employer. Specifically the selection clause provided:
Once an arbitration hearing is requested, the [policy] grants [the employer] the right to unilaterally select a pool of at least five potential arbitrators, each of whom must be: (1) an attorney, (2) unemployed by and unaffiliated with the company, (3) generally recognized as a neutral and experienced labor and employment arbitrator, and (4) listed on the rosters of the Federal Mediation and Conciliation Service (FMCS) or the AAA, as well as other arbitration rosters.(2) Then, counsel for the company and the aggrieved employee mutually select an arbitrator from that pool by alternatively striking names until only one remains.
McMullen v. Meijer, Inc. (6th Cir. 1/14/04). On request for rehearing, rather than tossing the agreement entirely the Court remands to the district court for consideration of whether or not the arbitration agreement should be enforced, absent the offending arbitrator selection clause. While noting that the intent of the parties is the primary consideration in making the decision on whether the offending clause can be severed, the Court notes somewhat enigmatically that
... in this context, intent is not the only consideration. Federal policy favoring arbitration may figure into the analysis, see Morrison, 317 F.3d at 675, 679-80, as may the interplay between state law and that federal policy, see id. In addition, as Morrison indicates, reliance on Chattanooga Mailers’ Union is still appropriate in cases concerning the severability of arbitration contract provisions. 317 F.3d at 678 n.22.
Clearly, a court willing to give arbitration a second shot, much as the Texas Supreme Court did in its New Year's eve decision discussed in this earlier post.

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Damage Phase of Wal-Mart Overtime Class Action Starts in Oregon - And a NYT Surprise


The AP story about the second phase of the Oregon class action suit against Wal-Mart for unpaid overtime gives an inkling of the tough road ahead for Wal-Mart and its counsel. Having long ago served as an appointed special master by the late United States District Judge Hippo Garcia, to hear the damage phase of a Title VII class action, I have some idea of the difficulty of going forward when you have already lost. At least here, as was true when I served as the special master, Wal-Mart is getting a different trier of fact as a new jury has been empaneled. But just from one quote from the opening statement of Wal-Mart's lawyer, "Off the clock is not necessarily evil,'' lets you know it is is not going to be great fun for the employer's side of the table.

What was even more interesting about this link to the NYT business page (registration required) were the advertisements that appeared at the bottom. One was from the law firm of Stueve Helder Siegel, LLP announcing their recently filed collection (sic) action on behalf of stylists and store managers of Regis Corporation's Smart Style Division for unpaid wages and overtime, and another from Lieff Cabraser Heimann & Bernstein, LLP which describes itself as
one of the leading law firms in the United States that represents only plaintiffs, including employees in class action lawsuits seeking overtime pay and remedies for overtime law violations.
I suppose in today's world there is nothing wrong with it from either the standpoint of the firms or the NYT, both just trying to make a buck where they can. It certainly is a good example of context advertising. But I must say, when I first started practicing labor and employment law in 1975, among the many things I would have never foreseen was that on the business page of the New York Times would be advertisements for firms boasting of their prowess at taking major businesses to task.


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Tuesday, January 13, 2004

Thought of the PATCO Strike Lately?


Although of importance to some controllers ultimately rehired, today's opinion, Harris v. Federal Aviation Administration (D.C. Cir. 1/13/04) [pdf] served as more of a reminder how much time has passed since one of more dramatic moments in modern day labor history. On August 3, 1981 after long negotiations broke down, the air traffic controllers went on strike and then President Ronald Reagan gave them 48 hours to return or be fired. Almost 11,000 didn't and true to his word, were fired and banned from ever being rehired.

The ban was ultimately lifted 12 years later, but even then restrictions were placed on the level into which they could be re-hired. Today's decision affirmed a trial court ruling that litigation challenging the restriction on the level at which they could be re-hired as arbitrary was untimely brought. Perhaps, the last legal chapter on the PATCO matter, but somehow I doubt it.

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No Per Se Rule Against Working At Home As A Reasonable Accommodation, But Unlikely - Including This Case


The ADA can present some touching circumstances, and this is one. A former postal worker who witnessed the murder of several of her fellow postal employees in the so called Edmond Post Office massacre, developed post traumatic stress syndrome and was no longer able to work for the Postal Service. She was subsequently employed as a service coordinator for Avaya working out of a call center in Oklahoma City. At the center, although not in her presence, a co-employee pulled a knife on a fellow worker. After learning of the incident, she continued to work as long as he was suspended but when he was allowed to return to work she called in sick. When the company refused her request to relocate the knife pulling employee and she remained unable to return to work after a year, she was administratively terminated. She sued under the ADA claiming that a reasonable accommodation would have been to allow her to work at home. The 10th Circuit engaged in a detailed survey of cases under the ADA involving a request to work at home, almost all of which have been unsuccessful, and concluded here as well it was not a reasonable accommodation since she could not perform the essential functions of her position from home. Mason v. Avaya Communications, Inc. (10th Cir. 1/13/04).

Primarily, the court found that she could not be adequately supervised and could not perform the 'teamwork' aspects of the job, such as covering for fellow employees in what she recognized as a sometimes hectic work environment. One thing that I was proud to see the court do was strike a blow for common sense, and for those of us who were somewhat appalled by the rush to add "regular attendance at work" or some other such phrase to job descriptions in the early days of the ADA.

In the money quote the Court held:
Here, the only evidence Mason proffered in support of her argument that she could perform the essential functions of her job from home, other than her own self-serving testimony, was the absence of attendance, supervision, and teamwork from the service coordinator job description. We are not persuaded the absence of those functions from the job description demonstrates those functions were non-essential. As common sense suggests, Avaya probably did not even consider informing its employees that they were actually required to show up at the workplace and work with co-employees under supervision when it drafted the service coordinator job description --- that is a given. Consequently, we find the omission of physical attendance, teamwork, and supervision from the job description entirely unremarkable.


The Court, wisely given the guidance of the Supreme Court, did eschew any per se rule against at home work as a reasonable accommodation, but also made it clear that it would be the rare situation where a plaintiff could demand it.

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Monday, January 12, 2004

9th Cir. Won't Allow Wage and Hour Dispute Pled As RICO Claim


The 9th Circuit does not always accept the invitation of employees seeking to further their interests at the expense of their employers, thank goodness. In this example, a salaried employee, who apparently believed that he had been denied overtime in a conspiracy of high ranking employees of his employer, who knew he was entitled to overtime. Rather than just an overtime claim, he sought to recover under RICO. The argument was that the repeated mailing of his paycheck twice a month, without paying him the overtime that the employer knew or should have known was owed was mail fraud, thus forming the predicate necessary for a RICO claim. Miller v. Yokahoma Tire Co. (9th Cir. 1/12/04) [pdf]. Although taking a somewhat circuitous route to get there, holding it could not be fraud because it was merely an opinon on domestic law, the 9th Circuit ultimately affirmed the district court's dismissal for failure to state a claim on which relief can be granted.

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Employer Takes (Double) Hit In Commission Case


Even though frequently involving large amounts of money, commissions often are handled rather informally. Frequently, what starts out as a clear agreement muddles through some modifications so in the end not everyone is clear what is supposed to happen. Inevitably, disagreements do. Commission cases can be some of the most difficult to defend as an executive search company found when it was held liable for commissions to an individual who brought a client to the firm. When the client fell out with the employee, but continued to use the firm, the firm didn't do a good enough job of changing the commission scheme. Net result, employee obtains a jury verdict for commissions on the contracts even though he did no work on them, and in fact did not even know about some of them. Smith v. Chase Group, Inc. (8th Cir. 1/12/04) [pdf]. And to add insult to injury, a jury finding that the commissions were willfully not paid resulted in a 100% penalty under a Kansas statute, that the appellate court re-instated.

All in all not a good day for the employer, and a good reminder that keeping tabs on commission agreements and any changes is an important part of doing business.


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Thursday, January 08, 2004

Diversity Posters OK; Opposition Posters With Anti-Gay Scriptural Verses Are Not


So sayeth the 9th Circuit which upheld summary judgment in a religious discrimination case. Peterson v. Hewlett-Packard Co. (9th Cir. 1/6/04) [pdf]. Earlier this year, in this post I suggested a possible theme in 2004 might be the tension in the workplace caused by those with strong religious opinions. This could be exhibit A. According to the opinion,
The undisputed evidence shows that Hewlett-Packard carefully developed its campaign during a three-day diversity conference at its Boise facility in 1997 and subsequent planning meetings in which numerous employees participated. The campaign’s stated goal —and no evidence suggests that it was pretextual—was to increase tolerance of diversity. Peterson may be correct that the campaign devoted special attention to combating prejudice against homosexuality, but such an emphasis is in no manner unlawful. To the contrary, Hewlett-Packard’s efforts to eradicate discrimination against homosexuals in its workplace were entirely consistent with the goals and objectives of our civil rights statutes generally.
The campaign resulted in posters depicting various employees, with labels such as "old, hispanic, gay" with the label "Diversity is our strength."

Peterson, countered by posting his own scriptural posters:
One of Peterson’s postings was taken from Corinthians 10:12. The other featured the following passage from Isaiah:The shew of their countenance doth witness against them; and they declare their sin as Sodom, they hide it not. Woe unto their soul! For they have rewarded evil unto themselves. Isaiah 3:9 ... Subsequently, Peterson posted a third scriptural passage. This time he chose the well-known and highly controversial passage from Leviticus: If a man also lie with mankind, as he lieth with a woman, both of them have committed an abomination; they shall surely be put to death; their blood shall be put upon them. Leviticus 20:13
When he refused to take down his posters unless Hewlett-Packard would remove its diversity posters, he was terminated for violating the anti-harassment policy, which prohibited "Any comments or conduct relating to a person’s race, gender, religion, disability, age, sexual orientation,or ethnic background that fail to respect the dignity and feeling [sic] of the individual are unacceptable."

There was no question, Peterson intended to offend, saying without truth there could be no correction and he hoped the gay and lesbian employees would read the passages, repent and be saved.

Although the Court's discussion on religious discrimination law does not seem to break new ground, it certainly points up yet another battleground for the social divide that is present in the country.

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7th Cir. Holds Refusal To Give Promised Consulting Work To Terminated Employee Is Actionable


Although the Recording Industry Association of America's recent course of litigation may have been successful in dramatically reducing the amount of music being downloaded, did not fare as well this week in the 7th Circuit. In Flannery v. RIAA (7th Cir. 1/6/04) [pdf] the Court not only reversed the trial court's grant of judgment on the issue of timeliness, but found that the failure of the RIAA to follow through with consulting work that had been promised as part of his termination package could be retaliation for filing a charge of discrimination. The District Court had found that the consulting work was as an independent contractor, thus not covered by Title VII. Disagreeing, the 7th Circuit focused on his status as an ex-employee, which of course can be protected.

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Cat's Paw Theory Limited by 4th Circuit En Banc Decision


Nothing must be more satisfying to a district court judge who has granted summary judgment, seen it reversed by a 3 judge panel, than to have the en banc court affirm the decision. That is precisely what happens in Hill v. Lockheed Martin Logistics Management, Inc. (4th Cir. 1/5/04) [pdf]. Here, the Court explored the ramifications of the mixed motive case following Costa, finding in this case it made no difference to the ultimate outcome. Additionally, it examined in detail the so called 'cats paw' line of cases, where the formal decision maker has only rubber stamped the decision of some one who has exhibited prejudice. Here the situation was different. The formal decision makers did not rubber stamp the decision, although there was input from a non-decision maker which could be considered biased. The gist of the decision is perhaps only slightly overstated by the dissent:
[T]he majority holds that when a biased subordinate with no decisionmaking authority exercises substantial influence over an employment decision, the subordinate’s bias cannot be imputed to the formal decisionmaker who acts for the employer. [internal cite omitted] This puts us at odds with virtually every other circuit, and it puts us at odds with the language of the statutes, which impose liability when an adverse employment decision is taken "because of" sex or age discrimination, see 42 U.S.C. § 2000e-2(a)(1); 29 U.S.C. § 623(a)(1). After today in this circuit, an employer is off the hook for a discriminatory employment decision that is motivated by the bias of a subordinate who lacks decisionmaking authority. That is wrong.
In reaching its conclusion, the Court declined to follow the recommendation of the EEOC which filed an amicus brief and "made her day" for District Judge Margaret Seymour, of the District Court of South Carolina.


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Wednesday, January 07, 2004

5th Cir. Finds For Employee in "Dead Peasant" Insurance Case


Because of tax advantages for deductions of premiums, Wal-Mart and a substantial number of other companies bought life insurance policies on their employees. There has been a recent wave of legal challenges to such COLI (company-owned life insurance policies) policies, with the plaintiffs contending that the company had no insurable interest and the proceeds should go to the employee's estate rather than the company which had named itself as a beneficiary. Given that the employees were often lower paid, the litigation has sometimes been derisively referred to as 'dead peasant' litigation.

Today the 5th Circuit handed Wal-Mart a severe setback when it found that Texas law did govern, refused to certify the question of whether or not the company had an insurable interest in the employee's life to the Texas Supreme Court, and held that the company did not have such an interest. Mayo v. Hartford Life Insurance Company (5th Cir. 1/7/04) [pdf].

This whole area has been yet another cottage industry for mass litigation as evidenced by the August 16, 2002 article in the Houston Chronicle. Although sent back to the trial court for "further proceedings not inconsistent with this opinion", there will no doubt be motions for rehearing, rehearing en banc and certiorari petitions before this case actually makes it back to the trial court.

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EEOC Changing The Rules - From 5 to 62


Potential classifications for employees that is. Every year each employer with more than 100 employees gets to file an EEO-1 reporting on the statistical breakdown of its work force in broad job groupings by sex and race. Currently, that breakdown was among five racial groups. Questions about what to do with multi-racial employees has caused the EEOC to consider options. Their initial conclusion, let's divide employees into 62 groups, with the possibility that some may be included in more than one group. Concerns from employers, many of which are set out in the article from the Kansas City Business Journal have caused a 90 day delay and perhaps reconsideration on the part of the EEOC. It may be yet another example of how a good idea sometimes ends up distorted as it wends its way through the bureaucracy.

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Saturday, January 03, 2004

Payback - Literally, for Sexual Harassment Claim


A nice way to end the year. On Christmas Eve a journalist spotted Lee County (FL) Property Appraiser with his former deputy, which would not necessarily have been big news except that she had resigned in March of 2002 and later claimed he had used his position to force a sexual relationship with her. A settlement was reached of her claim, which included $10,000 for her mental anguish. The happy ending however came in the form of a reimbursement to the taxpayers of $36,200 in the form of checks from the two. Along with a request for the press to respect their private life. The Southwest Florida paper, the News-Press has all the details, but the Daily Hampshire Gazette has the better headline -- An affair to reimburse.

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Texas Supreme Court - Careful Drafting A Must On Arbitration Programs


More than one year after the case was argued, a divided Texas Supreme Court holds an agreement to arbitrate intermixed with other personnel related language, coupled with a retention of the right to unilaterally terminate or modify any personnel policy without prior notice, is ambiguous and must be sent back to the trial court for a factual determination as to whether the reservation is applicable to the arbitration agreement. J.M. Davidson, Inc. v. Webster (Tx. 12/31/03) [pdf]. Justice Jefferson takes the occasion to note that while a strong presumption exists in favor of arbitration, that presumption arises only after a valid agreement to arbitrate has been established. In a footnote he perhaps foreshadows what the court below should find if it finds the clause is applicable to the arbitration agreement, noting that "most courts" hold that the ability to unilaterally modify or terminate an agreement to arbitrate is illusory and unenforceable. What Justice Jefferson makes clear is enforceable is an agreement which allows modification only after a period of notice that does not apply to any pre-existing claim, such as the one approved by the court in Halliburton.

Justice Schneider in his dissent, joined by Justice O'Neill, would find the agreement not ambiguous and clearly illusory. Justice Smith in his dissent would have found the agreement not ambiguous and enforceable. Justice Jefferson wryly notes that the division in both the Court of Appeals and the Supreme Court of the meaning of the agreement is evidence of the ambiguity.




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Review of Arbitration Decisions - Statutorily Limited or the Parties Discretion?


An article in the New York Law Journal focuses on two decisions by the 2nd and 9th Circuits, which from different perspectives, each hold that the courts are bound by the strict rules of the FAA in reviewing arbitration decisions, rather than by party imposed terms. Although neither of these is an employment decision, since many employers have opted for mandatory arbitration as a condition of employment, how this issue is ultimately determined could impact those programs. Particularly where employers have hoped for the best of both worlds, non-jury trials, but full judicial review. Such a program is currently clearly enforceable in the 5th Circuit and others, but not in the 9th Circuit. The 9th Circuit had earlier been frequently cited as allowing such expanded review, but reversed its position in a second ruling in the same case. Kyocera Corp. v. Prudential-Bache Trade Services, Inc., 341 F.3d 987 (9th Cir. 2003).

Given the split in the circuit courts, it seems inevitable that this ultimately will have to be sorted out by the Supreme Court. How and when should be on the watch list for employers.

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