Jottings By An Employer's Lawyer

Friday, January 31, 2003

The Texas Legislature - Picking Up Steam

Since the latest report on Tuesday, there has been the first initial action on a couple of the bills and more bills have been introduced.

Two bills have been referred to committee after an initial reading. S.B. 137 which would prohibit the so called 'dead peasants insurance' has been referred to the State Affairs Committee. H.B. 50 which would allow employees time off to meet with certain school officials has been referred to the Economic Development Committee.

New legislation filed includes:

H.B. 624 Menendez (D - San Antonio). Basically a refined version of Representative Moreno's H.B. 281 which prohibits use of mobile phones while driving. This version has more definitions, some exceptions for emergency calls, and a range of fines that increases if the violation occurs in a school zone.
H.B. 643 Wohlgemuth(R - Burleson) A technical amendment to the punitive damages cap. Currently, the cap is not applicable where the defendant engages in certain criminal activity. The amendment would require a conviction before the cap would not be applicable. Under the current law, plaintiffs are able to argue that certain conduct should be outside the cap because it meets the literal language of the current statute, even though there has been no criminal prosecution.
S.B. 328 West (D - Dallas) Requires an arbitrator and/or arbitration services provider to file a public disclosure within 30 days of the entry of the award by the arbitrator. Failure to do so could result in a fine, and multiple failures could result in the arbitrator being barred from court ordered arbitrations and being listed on a public list maintained by the Office of Court Administration. The disclosure would require the names of the parties, the general nature of the claim and the relief sought, the award by the arbitrator and the costs charged by the arbitrator and the arbitration services provider. It is designed to be a supplement to existing arbitration laws, including the Federal Arbitration Act.

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Thursday, January 30, 2003

Fee Splitting and Arbitration - 6th Cir. En Banc View

The 6th Circuit issues its en banc decision today, Morrison v. Circuit City, (6th Cir. 1/30/03) setting forth their standard on how courts should determine whether or not a fee splitting provision in an arbitration clause precludes it from being enforced. Surveying the approach of other circuits, they set forth their own standard to ensure that the courts are looking at the effect not only of the provision on the individual before the court, but also of the 'chilling impact' on other individuals. Under their new standard, Circuit City's plan initially strikes out as being too costly and improperly limiting remedies. Ultimately, however, it is bailed out by the Court's holding that the two offending provisions are severable. There is a dissent, mainly complaining of the complexity introduced by the Court's creation of a "pre-arbitration quasi-class action litigation". I note that my friend from law clerking days, Judge R. Guy Cole, sided with the majority. Thanks to Howard Bashman's How Appealing for the quick notice on the decision.


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Letter of Intent = Fact Question, Not a Contract

The First Court of Appeals has an interesting discussion of the difficulty of finding a contract as a matter of law when there are disputed writings, particularly when one is called a letter of intent. See Electronic Bankcard Systems, Inc. v. Retriever Industries, Inc. (Ct. App. - Houston [1st] 1/30/03).

The Court also dealt with two other issues: 1) finding a fact question as to the existence of a contract for one year, that had continued to operate as the basis for the parties agreement for a number of years without a formal renwal, and 2) refusing to apply the continuing tort doctrine to keep a claim of tortious interference from being barred by the statute of limitations.

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Non-Compete Covenant Not Up to Light v. Centel Cellular Standard

Although recognized by every court as the standard for determining the validity of a covenant not to compete, the application of Light v. Centel Cellular [pdf] is not always that easy to follow. In Strickland v. Medtronic, Inc. (Ct. App. - Dallas 1/29/03) decided yesterday, the Dallas Court of Appeals makes the standard clear.

Importantly, it also rules on a question that comes up repeatedly, holding that general language about providing confidential information will not be enough to constitute a non-illusory promise (and therefore is not enough to support a covenant not to compete). Even if such general language were an implied promise (which the court finds it is not), it would still not be sufficient because it would require that the employee work for a certain period of time. Since the court found the employee relationship to be at will, any promise conditioned on a period of employment would be illusory.


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Wednesday, January 29, 2003

It Could Be Worse - Costs of Employment Laws in Britain

It's a day for reporting on studies. Startups has the report of a survey of British businesses and their concerns with the increasing costs of complying with various employment laws.

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Wake Up Call For Employers - Report of Current Employee Attitude

Towers & Perrin, the large consulting firm, and Gang & Gang, their research partner, today release a study of employees' view of their work which should be a wake up call for employers. One of the money quotes, "Right now, emotion about the current work experience is extremely negative." Interestingly, it is not related to a crises of trust, as you might expect given the focus of the last year, but questions of competence of those leading the companies. And, again repeating what most in the h.r. business have known all along, it is not really about money, but about recognition and fairness. All in all, a somber reminder that almost every company's self avowed "most important asset", their employees, are uneasy, at best. Go here to see the report, Working Today:Exploring Employee's Emotional Connection to Their Jobs [pdf].

And for those of us who try lawsuits involving employment law issues, it is a not too subtle message that juries, made up primarily of employees who bring their own workplace feelings with them to the jury box, are apt to start with a less than favorable view of the employer that stands before them accused of wrongdoing.

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Tuesday, January 28, 2003

Two More Legislative Offerings - Including Sexual Orientation Discrimination

Two more representatives have filed bills that would have applicability to a broad group of Texas employers.

H.R. 570 Fred Brown Bryan - R For non-subscribers to workers compensation, the bill would cap liability at $250,000 for work place injuries to employees. In order to qualify for the cap, the employer must have insurance meeting certain limits.

H.R. 574 Jessica Farrar Houston - D. Would amend the TCHRA, to prohibit discrimination against individuals on the basis of their sexual orientation or gender identity. It would also protect anyone treated differently because of the sexual identity of individuals with whom the employee associates. Based on the make up of the legislature, this would seem almost certain to be a non-starter. However, most bills which would implement major changes are often introduced with no success for a number of years. The Texas effort is probably behind that on the national level on this issue.

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Monday, January 27, 2003

The Blawgistan Times - Even for the Techno Challenged

Since one of my goals in starting this blawg was to learn more about the technical side of the internet, I thought I should try to join the community of blawgers now gathering in the magic land of Blawgistan. If you are reading these words in the Blawgistan Times, then you should know that technical ineptitude is not a bar to getting there.

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First Million Dollar Verdict of the Year?

Maybe not, but it's the first one I have caught. The Birmingham News has the report of Friday's verdict of $3.8 million dollars in a sex discrimination claim by a former manager, Lily Ledbetter, against a unit of Goodyear Tire. She claimed that she was paid less than her male counterparts and was aided by the testimony of two female co-workers who also held the position. Although employers often feel that federal court juries are less likely to run away than state court juries, this case was in federal district court in Anniston, Alabama.

Update: I know that I have been doing this blog a long time when a MDV has run the appellate gamut all the way through the United Sates Supreme Court. Although the verdict first went away at the 11th Circuit, the string officially ended for this MDV when the Supreme Court held the claim was barred by Ledbetter's failure to file it in a timely fashion on May 29, 2007 . See Payday Blues at the Supreme Court.


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Arbitration - New Focus May Be Enforcement

As courts adopt to the pro-arbitration views of both the U.S. and Texas Supreme Courts there seems to be a new focus reviewing arbitration awards. In Houston Village Builders, Inc. v. Falbaum (Ct. App - Houston [14th] 1/23/03), an arbitration award in favor of Village Builders was set aside for failure of the arbitrator to adequately disclose his background. In this case the key failure was that he had a long standing relationship as an attorney for a trade association, of which Village Builders was a member (along with over 1,300 other companies). The court also rejected several avenues which would have placed a burden of discovery of this information on the plaintiff.

A dissent by Justice Kern Thompson Frost points out some of the problems that could be caused by what he sees as an over strict standard.

For arbitrators (and parties selecting arbitrators) who are currently engaged in an active legal practice, this case if widely followed, could create substantial problems. Little of the value of an expedited procedure is maintained if it is subject to being set aside for grounds that are truly unrelated to the merits of the case.


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San Antonio Court of Appeals - Pro Arbitration

The San Antonio Court of Appeals has been a strong enforcer of arbitration agreements and its latest opinion does not stray from that path. In Ambulance Billings Systems, Inc. v. Gemini Ambulance Services, Inc. (Ct. App. - San Antonio 1/22/03), the Court reversed a district court's refusal to order arbitration. Although not an employment case, the opinion deals with several of the key contract formation issues that are present in all arbitration cases. First, the court found the TAA, not the FAA, applicable. However, it did so on grounds of no evidenced, and relied on two cases which set a relatively low bar for for applicability of the FAA. (This is important because of the FAA pre-emption provision. If legislation introduced in the Texas House this term prohibiting arbitration of TCHR claims passes, the applicability of the FAA would be critical for employers.)

The Court also took a narrow view of when a court rather than the arbitrator should decide a question that the arbitration clause has been waived or abandoned. If it is only the arbitration clause that is at issue, it is the court's to determine; but if, as here, the waiver is of the whole contract, then that is properly the province of the arbitrator.


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Thursday, January 23, 2003

They're Back! 78th Texas Legislature Is In Session

The first couple of weeks have been taken up with formalities of organization, inaugurations, and probably NOT thinking about the huge budget deficit facing the lawmakers. But even among all the fun, some of the law makers have managed to author more than a few bills which would impact employment practices throughout Texas. For the first batch, check my earlier post.

Since then, here are the new offerings, at least through yesterday:

H.R. 181 Jessica Farrar (D - Houston) Would control the status of deferred adjudications under certain circumstances. It actually passed last session, but was vetoed by Governor Perry. Here is a description of the legislation from Representative Farrar's biography:
She unanimously passed legislation that was subsequently vetoed by Governor Perry that would clear the criminal records of persons utilizing the deferred adjudication process. This process is utilized for certain defendants such as first-time minor offenses that some youth find themselves committing under a lapse of judgement. If a person completed all terms of the deferred adjudication and maintained a clean record for five years on a misdemeanor and ten years on a felony charge, then their records would have been cleared so that person could pursue housing and job opportunities without fear that their applications would be rejected because of a previous criminal charge. At the present time, qualified defendants enter a plea of deferred adjudication thinking that their records will be clear upon completion of the terms of the court, but soon find this not to be true when their housing or job applications are rejected because of the previous charge. Such persons can currently have their records expunged, but only through a complicated and costly process that most defendants are unable to pursue. When a defendant is unable to obtain employment, such legal costs remain prohibitative. She has re-filed this legislation as H.B. 181 for the upcoming 78th Legislative Session.

H.R. 281 Paul Moreno D - El Paso This is not technically an employment bill, but likely to be one of the most talked about, contested bills of this legislature, at least of those non-financial pieces of legislation. This would make it a misdemeanor, subject to a $100 fine for using a mobile phone when driving, unless the car is stopped, or it is operated without the use of either hand. Since HR folks (and their lawyers) tend to need to talk, this one will be one a lot of us will be watching.

H.R. 328 Warren Chisum R - Pampa An attempt to allow employers the opportunity to obtain information from applicants about prior workers compensation claims and injuries. The legislation modifies the TCHRA, but unfortunately can't shield employers from the Americans with Disabilities Act.

H.R. 355 and H.R. 356 Harold Dutton D - Houston These are two education leave bills, similar to some of the additions that have been suggested for the FMLA. One would give time off to meet with teachers, counselors or principals; the other to attend certain school activities. They would also create new causes of actions against employers.

H.R. 359 and H.R. 371 Harold Dutton D - Houston. Attempt to limit the use of mandatory arbitration. The first would prohibit arbitration of TCHR or Title VII claims, the 2nd would prohibit mandatory arbitration until and employee had worked for an employer for at least 90 days. If the agreement were covered by the Federal Arbitration Act, these restrictions would be pre-empted. Most, but not necessarily all employment relationships will be covered by the FAA.

H.R. 379 Harold Dutton D - Houston. Would require employers to allow employees to review their personnel files. Similar legislation has been offered for several sessions. It does have have some intrinsic appeal, so is one that could gain some traction. This would make a failure to comply by the employer an unfair employment practice, which is treated like a violation of the TCHRA.

Amazingly, there have been no new Senate bills filed relating to employer's practices since the first report in mid December.

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California Supreme Court to Decide on Customer Harassment

The appellate court's decision in Salazar v. Diversified Paratransit, Inc. which was heavily criticized, will now be considered by the California Supreme Court. You can read about the background of the case as well as the decision to take the case up here. The issue turns on the responsibility of an employer for the actions of customers who are sexually harassing an employee. It is quite likely the Supreme Court will place more burdens on the employer than the appellate court did. For a professor's critique of the decision and my, perhaps prescient view, check the earlier note.

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Discontent at the TCHR

Just because you are charged with enforcing the state law against discrimination, doesn't mean you aren't subject to the charges brought against any employer; the accusations may just be a little more embarrassing. The San Antonio Express News has the story of charges and counter-charges between management and some employees at the state agency.

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Wednesday, January 22, 2003

A Story Of Incentive Compensation and Undercover Taping

An article in makes a good point about the dangers of incentive compensation plans that are not well written, explained or administered. Particularly when a participant decides to go undercover and 'wear a wire'. Put this one down under the heading of a cautionary tale that Idea Integration Corp. wished had been visited on someone else.

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Home of Inevitable Disclosure Backs Off

Going on memory, which is often a dangerous thing, I believe NY was where the doctrine of inevitable disclosure was born. If not some sharp reader will surely add a comment. Inevitable disclosure works as a short cut for employers wanting to prevent a former employee from competing. If the position is similar enough to the former job, the doctrine is based on the inference that the employee would necessarily use protected information in the new position. In any event, an appeals court in the Empire state, has taken a step back from the use of that doctrine. You can read about it here in

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Sunday, January 19, 2003

Religious Discrimination - An Issue on the Rise

Adam Geller of the AP has a story about risiing religous tensions in the work place. You can read it in Boulder's The Daily Camera.

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Saturday, January 18, 2003

Sloppy Drafting Nullifies Arbitration Agreement

The trial court denied a motion to compel arbitration and the Court of Appeals denied a mandamus. In Re: C & H News (Tx. Ct. App. - Corpus Christi 1/16/03). The rationale was that the language of the agreement incorporated the employee handbook. Unfortunately, the handbook had language which allowed it to be modified at will by the employer.To be binding there must be consideration or mutuality of obligation, neither of which was present here because of the employer's ability to change at its will the scope of arbitration. The court refused to grant mandamus. One small jurisdictional note: the court had earlier held that the Federal Arbitration Act was not applicable and neither party objected. Under those circumstances, the appropriate remedy would have been appeal, not mandamus; although the court did not reject it on that ground.


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Unsworn Complaint to TCHR Starts 2 Year Statute Running

The statute of limitations issue under the TCHR is complicated. One definitive is that no claim may be brought "later than the second anniversary of the date the complaint relating to the action is filed." Tex. Lab. Code Ann. § 21.256 (Vernon 1996). In
Vu v. ExxonMobil (Tx. Ct. App. - Houston [1st], 1/16/03), the court holds that an unsworn complaint filed with the EEOC and forwarded to the TCHR started the 2 year statute running, since the later verified charge related back. In this case, the law suit was filed 2 years after the TCHR acknowledged receipt, meaning the court did not have to decide whether the time started running from the date the unsworn complaint was filed with the EEOC or received by the TCHR.

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Friday, January 17, 2003

White House Brief Takes Cautious Stand in Race Case

The University of Michigan affirmative action case is not technically an employment case, but then neither was the Bakke decision involving admission to a state medical school. Nevertheless, since affirmative action is also a concept that arises in the employment law context, it was interesting to see the New York Times description of the difference between President Bush's public position and the actual brief filed by the Solicitor General. See White House Briefs Take Cautious Stand in Race Case. The most frequent debate of affirmative action in employment law was over how far Executive Order 11246, which regulates government contractors, could be pushed. For a long time now, the OFCCP which enforces the Executive Order, has backed off on trying to aggressively push affirmative action in terms of what were colloquially known as "quotas" and instead is primarily another agency enforcing more traditional discrimination theories.

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Thursday, January 16, 2003

Whistleblowing Can Pay Top Dollar, Or Not

Or at least that's the allegation made by the state of California, when a computer consultant who first alerted state law enforcement officials to a problem with certain Hewlett Packard disk drives, switched to assisting Hewlett Packard in its defense against such claims. Yahoo! News, among others, indicates that for his work, the erstwhile whistleblower pocketed a cool $27+ million. A hearing over whether documents related to the dispute should be posted on the internet is being heard this afternoon in a Beaumont court room in a related Texas case. You can read about it here.

The HP consultant made out significantly better than a former Warren, Michigan city employee who was awarded $854,000 yesterday in his whistle blower claim against the city by a Detroit federal jury. After a political shake up and his testimony to a grand jury, he lost his position and his former subordinate, now boss, allegedly told him, "'Your job is to sit at this desk and count ceiling tiles. I have orders to harass you until you quit or are fired." You can read the rest of the story, including the city's version of what really happened.

And a former Mattel whistleblower, has an even more tragic (from her viewpoint) tale concerning the rewards of whistleblowing. As the Economist notes, rather than an exciting tale of undercover investigations and great rewards, what she got was an unsuccessful lawsuit (now on appeal) and disillusionment that perhaps 2002 was not really the year of the whistleblower, Time magazine not withstanding.

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Settlement of "Conduct Not Becoming His Gender" Case

Although settlements mean nothing in the way of legal precedent, the fact that a substantial employer (Babies "R" Us) is willing to pay a significant sum (just over $200,000) often has the actual effect of causing others to consider bringing such cases. has the story. The putative plaintiff was an 18 year old who quit after seven months claiming he was harassed because "he did not conform to societal stereotypes of how a man should look or behave." As often in employment law, one can see a slippery slope once those kinds of arguments become meaningful in terms of successful causes of action. Employer's concerns should be heightened since it was the EEOC which obtained the settlement.

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Monday, January 13, 2003

Actually Even More Exciting Than I Thought - Class Action Arbitration Case Also Added

Although not an employment case, the Supreme Court Friday also granted certiorari in an important consumer arbitration case. In Bazzle v. Green Tree Financial Services, Inc., the South Carolina Supreme Court held that in the absence of language to the contrary, a court could impose class wide arbitration on an agreement to arbitrate. In two cases which were combined, the class arbitration had resulted in awards against Green Tree of approximately $10 and $9 million dollars. Obviously, the decision in this case could also be applied to class action type litigation under employment law arbitration schemes. The tenor of the case is that the dispute could have been avoided if the language of the agreement made it clear that class actions were not applicable. The dollars alone make this an interesting case, but it also is another indication of how important the law of arbitration is to this Supreme Court.


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This Term of the Supreme Court Just Got A Lot More Interesting for Employment Lawyers

Up until this point, the Supreme Court's employment law docket was mainly ho-hum for employment law cases. That changed last Friday with granting of cert in three cases, all of which could have a significant impact. The three are:
1. Costa v. Desert Palace, Inc. The 9th Circuit en banc held that a plaintiff was entitled to a mixed motive instruction, which is a lower standard of proof, even without direct evidence of discrimination. If the Supreme Court affirms the 9th Circuit, it would make Title VII cases much easier to win for plaintiffs. For employers, the good news is that the 9th Circuit has a terrible record in employment cases before the Supreme Court.
2. Breuer v. Jim's Concrete. The 11th Circuit held that a case under the FLSA filed in Florida state court could be removed to the federal district court under federal question jurisdiction. Much to my surprise it noted that there was authority in the 8th Circuit that such cases could not be removed. The argument is that the FLSA says a case 'may be maintained' in any state or federal court of competent jurisdiction, and so the plaintiff argued once begun in state court, it should stay there. The 11th Circuit followed the 1st Circuit which also allows removal, but called on either the Congress or the Supreme Court to clarify the issue. The Supreme Court has taken them up on it. Since this Supreme Court seem to like states rights and all federal courts seem to like limiting their dockets, this is one definitely to watch.
3. Black & Decker Disability Plan v. Nord Another 9th Circuit case. The plan denied a disability claim, notwithstanding the testimony of three threating physicians that the individual could not do the job. The question was the appropriate standard of review and the deference that must be given to the treating physician. The employee argued for substantial deference, Black & Decker says not, and that numerous other circuits agree with it. The 9th Circuit agreed with the employee and the Supreme Court will now decide. Again, the 9th Circuit record is not good.


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Sunday, January 12, 2003

How Big Judgments, Even Though Often Reversed, Impact Litigation

Walter K. Olson is a frequent writer on the excesses of litigation. You can check out his website, Overwlawyered, where I picked up this link. Reason: Courting Stupidity: Why smart lawyers pick dumb jurors Here is his money quote, explaining why big verdicts, even though frequently reversed, still have a powerful impact on litigation:
But the mere possibility that an extreme outcome will emerge from the process, and perhaps survive review and appeal, gets factored into negotiations in the majority of cases that are settled before a final verdict. With breast implants, asbestos, and many other mass tort episodes, a rash of arrestingly high verdicts helped educate recalcitrant defendants about the need to pony up substantial settlements.

If you've ever participated in settlement negotiations, you know it is true.

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Making Sure the FAA Is Applicable

The United States Supreme Court's decision in Circuit City made it clear that under the Federal Arbitration Act, agreements that employers require employees to sign are valid. What this recent decision by the Alabama Supreme Court, Potts v. Baptist Health System, Inc. (Ala. 12/20/02) shows the factual hurdles you must jump (at least in some states) to show that the transaction involved 'substantially affects interstate commerce', the test for the applicability of the FAA.


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Challenge to Requiring FCRA Consent

A plaintiff who was allegedly fired for refusing to sign a consent to her employer obtaining a report under the Fair Credit Reporting Act has survived a motion to dismiss her complaint according to a story in the Harrisburg, PA Patriot News. Depending on the scope of the request and the ultimate outcome of the case, employers could end up in a catch 22, since any information obtained from a third party in the business of gathering such information requires the employee's consent. Plaintiff's counsel is Clifford A. Rieders, the former President of the Pennsylvania Trial Lawyers Association and the counsel for the Defendant, Vincent Candiello, is the chair of the Labor and Employment Law Section of the Pennsylvania Bar Association. This is one to stay tuned to.

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Newest Workplace Problem? Bullying?

Maybe it didn't all end in grade school according to a report in the Star Tribune. According to Mike Meyers' story, employers are or should be more aware of the cost of bullying among its employees. It is getting academic attention as data from a study being done for the Veterans Administration was presented at a conference of the American Economic Association.


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Saturday, January 11, 2003

Dangers of Attorney Fees

The Odessa American has the sad story of an employer who went to trial and lost only $500 in actual damages, but then found itself faced with a $90,000 attorneys fee bill that it owed the plaintiff's attorney. The suit arose over the right to wear a union button and a 3 day suspension. The ultimate outcome may be different, but it serves as a good reminder that a decision to take a case all the way to trial brings into play two elements of damage, attorneys fees and pre-judgment interest, which are sometimes overlooked.


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Friday, January 10, 2003

Texas Courts Back At Work

Yesterday, there were several employment related decisions by the Texas Courts of Appeal. Among the decisions was Bauer v. Bob Thomas (Ct. App. - Fort Worth, 1/9/03) [pdf]. The parties had entered into a venture to open a new office for a logistics company. The agreement contained a statement that "under no circumstances would the [defendant] be required to continue this agreement if the [office] experiences a loss of $100,000 or more." After losing $37,000, the defendant shut the office down. Four employees sued alleging that there was an employment agreement that altered their at will status because of the statement, and for fraudulent inducement. The Court held that the statement was not sufficient to alter the at will status, and that there was no proof of fraudulent statements.

In Laredo Medical Group v. Lightner (Ct. App - San Antonio, 1/8/03), the Court again declined to find a covenant of good faith and fair dealing in the employer/employee relationship. In this case, the jury had been allowed to find such a relationship exists. The Court noted the Supreme Court's holding to the contrary in City of Midland v. O'Bryant, 18 S.W.3d 209 (Tex. 2000). The result in this case was to throw out a five plus million dollar award to the employee, which included over four million in punitive damages.

The same court also threw out an injunction based on misuse of trade secrets as being overbroad. Since the plaintiff had insisted on the broad wording and had not identified a lesser scope, the court found vacating the injunction rather than modifying it to be the appropriate step. Southwest Research Institute v. Keraplast Technologies, Ltd., (Ct. App - San Antonio 1/8/03).

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Thursday, January 09, 2003

The latest workplace perk: limitless time off

The Glasgow Herald has a story about a new workplace perk, limitless time off, that it attributes as an American invention. You can check out the story here. While I agree it does not fit with the stereotypical Scot, and American employers at time have come up with some pretty wild retention schemes, it certainly doesn't seem likely to be in place in these times. Sounds more like a clever Scottish worker trying to pull a fast one to me. My question after reading the story (now answered) is: what is a duvet day?

And for a different look at what real perks might work, see the Seattle Times editorial commending the 1,300 employee Yakima Valley Hospital on making Fortune's list of the top 100 places to work, and how they did it with relatively few resources.

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Wednesday, January 08, 2003

How Many Times Will We Talk About the FLSA This Year? 4.1 million?

Another announced class action settlement for wage and hour violations. has the story on Aydin Corp.'s 4.1 million dollar settlement involving 83 employees classified as exempt, who successfully claimed overtime because of the company's practice of docking them for when they worked less than 40 hours in a week. Although much discussed several years ago, some companies still fall afoul of the relatively complicated rules on when it is permissible to dock exempt employees. Basic rule of thumb: when you start to dock exempt employees, stop; before proceeding, check and make sure it comes within the acceptable rules. Failure to do so can cost you much more than just overtime for the one employee, since in the worst case, it could destroy the validity of your exemption for all employees in that class.


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Tuesday, January 07, 2003

Employee Handbook Creates Jury Question of Contract - Vt View

In what appears to be a throwback to the judicial rulings of 10 years ago, the Vermont Supreme Court has held that a specific disciplinary proceeding established in a company handbook, coupled with the employer's normal practice of following it, creates a jury question as to whether or not there is a contract. Dillon v. Champion Jogbra (Vt. 12/27/02). This is true notwithstanding a specific disclaimer that the employee remains at will and the disciplinary procedures are only guidelines to be followed. Interestingly, the opinion quotes a mid-90's University of Texas Law Review article that it finds indicates that at will employment relationships have 'fallen into disfavor'. It also cites the Michigan Supreme Court decision of Toussaint v. Blue Cross, a 1980 decision, from which the Michigan courts seem to have retreated with such decisions as Lytle v. Malady, 579 N.W.2d 906, 914 (Mich. 1998) which held that an express disclaimer in a handbook was sufficient to maintain the at will status of employees.

The viewpoint expressed by the 3-2 majority opinion, which seems destined to make it very difficult for Vermont employers to have both a handbook and maintain a clear at will status for their employees , along with the actions of Vermont's two senators, Patrick Leahy and Jim Jeffords, plus its former governor and now Democratic presidential candidate, Howard Dean, makes one wonder whether Vermont is seeking to become the 'east coast California' for employers. It is one way to slow economic growth and keep Vermont pristine for its current residents.

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Monday, January 06, 2003

Wage and Hour - Paying for All the Time

Doffing and donning cases hit the red meat and later the poultry industries. Usually the issue was the time spent putting on and taking off protective gear. But even time spent taking on and off a plain white uniform, can lead to problems as Honda found out. The Lakeland, Florida Ledger has the story of Honda's change in policy and 1.2 million dollar settlement with the DOL.

This is just more evidence of the trend of large wage and hour claims, often brought in a collective action. Brent Hunsberger in the Portland Oregonian has a good story about the numbers filed in Oregon, where Wal-mart was recently tagged and a look at how such actions are growing nationally. Any time there are big dollars in a particular cause of action, you can be sure that more will follow.

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Sunday, January 05, 2003

Catching Up On Arbitration Decisions

An early Christmas present for the accounting firm of BDO Seidman came in the form of a decision upholding their arbitration scheme with a departing partner. Under the accounting firm's program, the pool of arbitrators was limited to partners in the firm. The intermediate appellate court in Connecticut used a standard requiring more than the appearance of bias, but less than actual bias. Hottle v. BDO Seidman (Conn. App. 12/24/02).


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Friday, January 03, 2003

Are Your Employee's Complaints Getting Better?

The internet is now the portal to knowledge, so it is not surprising that employees will often go there for information regarding what may be happening to them at work. And if they do a little work, they will find articles that could be truly helpful like lawyer Tim Willoughby's site regarding Missouri Employment Law. In one helpful (to employees) article, Making Complaints, he explains the importance of, and gives details on how to make, a valid complaint. The number of times employers will "luck out" because their employees don't know what their rights are, or how to protect them, are being reduced by such sites. Since I hope to do the same for employers with these comments, hard to argue against the approach!

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Thursday, January 02, 2003

Even Doctors Can Be Sympathetic Plaintiffs

Usually when it comes to million dollar jury verdicts and doctors, it is complaints of run away juries and rising malpractice premiums. However, at least one doc probably has a different viewpoint after a Florida jury awarded him over $30 million for defamation and negligent supervision. You can read the story from the Saratoga Herald Tribune.

Although it is logical to think it would take a long trial to result in a big award, this was a 3 day trial. Even though it was not his legal claim, there was an element of whistle blowing, as he had contacted OSHA to complain about dangerous conditions at the defendant hospital. Even though these verdicts rarely stand in full, juries repeatedly show that the right set of circumstances can cause an immense negative reaction to the actions of employers. And that whistle blowers are, at least for the moment, the latest American hero.


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