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$984,970 verdict for National Guard member
June 20, 2007 by Ross Runkel at LawMemo
A federal jury in Portland, Oregon awarded almost a million dollars to a National Guard member who lost his job at Target Corp. [Portland Oregonian report.]
James Patton came back from two weeks of active military duty in June 2003. He had been demoted. He told co-workers and also sought help from the National Guard. On July 14, Target fired Patton, telling him that he sent an e-mail to co-workers that was unprofessional and disruptive.
Patton sued claiming a violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA) and wrongful discharge under state law.
The newspaper says: "Jurors agreed with Target officials who said the demotion of Patton had nothing to do with his military service. But they decided that company officials retaliated against him for asking the National Guard to intervene."
The jury awarded $84,970 in back pay plus $900,000 in punitive damages. Under Oregon law 60 percent of the punitive damages goes into a state fund for crime victim assistance, so Patton's share is $360,000.
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Supreme Court takes ERISA fiduciary case
June 18, 2007 by Ross Runkel at LawMemo
LaRue v. DeWolff, Boberg & Associates. The US Supreme Court granted certiorari June 18, 2007. [Briefs and details]
LaRue was a participant in a 401(k) plan administered by DeWolff. LaRue's suit claimed that DeWolff breached its fiduciary duty by failing to implement his investment strategy, and sought recovery of the amount by which his account would have appreciated had DeWolff followed his instructions.
The 4th Circuit upheld judgment on the pleadings in favor of DeWolff, holding that (a) ERISA Section 502(a)(2) provides remedies only for entire plans and not for individuals, and (b) ERISA Section 502(a)(3) does not apply because LaRue was not seeking "equitable relief." The US Supreme Court granted certiorari to review the 4th Circuit judgment, and will schedule oral arguments for the Fall of 2007.
The "Questions Presented" by the certiorari petition:
1. Section 502(a)(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1132(a)(2), provides that a "civil action may be brought * * * by a participant * * * for appropriate relief under section 1109 of this title." 29 U.S.C. 1109 states that "a fiduciary with respect to a plan who breaches any * * * duties imposed upon fiduciaries * * * shall be personally liable to make good to such plan any losses to the plan resulting from each such breach."The First Question Presented is:
Does § 502(a)(2) of ERISA permit a participant to bring an action to recover losses attributable to his account in a "defined contribution plan" that were caused by fiduciary breach?
2. Section 502(a)(3) of ERISA, 29 U.S.C. 1132(a)(3), provides that a "civil action may be brought * * * by a participant * * * to obtain other appropriate equitable relief * * * to redress * * * violations" of the statute.
The Second Question Presented is:
Does § 502(a)(3) permit a participant to bring an action for monetary "make-whole" relief to compensate for losses directly caused by fiduciary breach (known in pre-merger courts of equity as "surcharge")?
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Union loses "opt-in" agency fee case
June 14, 2007 by Ross Runkel at LawMemo
It does not violate the First Amendment for a State to require its public-sector unions to receive affirmative authorization from a nonmember before spending that nonmember’s agency fees for election-related purposes.
So says a unanimous US Supreme Court in Davenport v. Washington Education Association, decided June 14, 2007.
Washington State allows public-sector unions to charge nonmembers an agency fee equivalent to membership dues and to have the employer collect that fee through payroll deductions. An initiative approved by state voters (§760) requires a union to obtain the nonmembers’ affirmative authorization before using their fees for election-related purposes. The Washington Supreme Court thought this "opt in" requirement was an unconstitutional burden on the union's first amendment rights.
The US Supreme Court recognized that the state was creating a content-based speech regulation. However, the Court upheld §760 by applying precedents dealing with election campaign finance restrictions.
The basic reasoning:
- The union has this money only because the state granted to the union "the power to tax" members of the bargaining unit.
- "As applied to public-sector unions, §760 is not fairly described as a restriction on how the union can spend “its” money; it is a condition placed upon the union’s extraordinary state entitlement to acquire and spend other people’s money."
- The state placed a reasonable, viewpoint-neutral limitation on the use of these funds.
- The state did not impermissibly distort the marketplace of ideas.
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"Me too" case at the Supreme Court
June 11, 2007 by Ross Runkel at LawMemo
Ellen Mendelsohn claimed Sprint fired her because of her age during a company-wide reduction in force. She lost a jury trial. Mendelsohn claims that the trial court improperly excluded testimony from other former Sprint employees that they experienced similar discrimination during the same reduction in force.
The 10th Circuit held that because this evidence was excluded, Mendelsohn did not have a full opportunity to present her case to the jury. Therefore, the 10th Circuit ordered a new trial.
The US Supreme Court granted certiorari on June 11, 2007 to review the 10th Circuit's judgment. Sprint/United Management Company v. Mendelsohn. [Details; certiorari briefs]
The Question Presented by the certiorari petition:
This case presents a recurring question of proof in employment discrimination cases: whether a district court must admit "me, too" evidence - testimony, by non-parties, alleging discrimination at the hands of persons who played no role in the adverse employment decision challenged by the plaintiff.The Tenth Circuit panel majority held that a court commits reversible error by excluding "me, too" evidence. This decision conflicts with those of other circuits. Specifically, four circuits have held "me, too" evidence wholly irrelevant. Five circuits have that "me, too" evidence may be excluded under Federal Rule of Evidence 403. Granting certiorari will resolve the conflict between the circuit courts of appeals on this important question of law.
Oral arguments will be scheduled for October 2007 or later.
Paul Secunda at Workplace Prof Blog is predicting that Sprint will win this one.
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ERISA sponsor wins fiduciary argument
June 11, 2007 by Ross Runkel at LawMemo
What are the fiduciary duties when an ERISA plan sponsor terminates the plan?
If a company's union proposes merging the to-be-terminated plan into a pre-existing multi-employer plan, does the sponsor have a fiduciary duty to give this fair consideration? No, according to Beck v. PACE International Union, decided by a unanimous Court on June 11, 2007.
The reason is simple: Merger is not a permissible method of terminating a plan. The ERISA statute, as interpreted by the Pension Benefit Guaranty Corporation, does not permit merger as a method of termination because merger is an alternative to (rather than an example of) plan termination.
My view: I thought it would come out this way, but was not expecting such reliance on the Pension Benefit Guaranty Corporation's interpretation. Just another example of the Court granting strong deference to the interpretation of a federal administrative agency.
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Home care workers lose FLSA case
June 11, 2007 by Ross Runkel at LawMemo
Home care workers don't get overtime or minimum wage coverage under the Fair Labor Standards Act (FLSA) due to an old regulation put out by the federal Department of Labor.
Today the US Supreme Court upheld the validity of that regulation. Long Island Care at Home Ltd v. Coke.
The regulation provides an exemption FLSA for workers who are “companionship” workers “employed by an … agency other than the family or household using their services.”
The Court said that the Labor Department's power to administer a congressionally created program necessarily requires the making of rules to fill any “ ‘gap’ ” left, implicitly or explicitly, by Congress. This is the rule established by Chevron USA Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 . When an agency fills such a gap reasonably, and in accordance with other applicable (e.g., procedural) requirements, that result is legally binding.
My view: This case is consistent with the Chevron USA approach. It reinforces the importance of regulations adopted by federal agencies.
The message is that changes have to come from the agencies themselves rather from the courts. And the agencies are in the hands of the executive branch. You know, the President.
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NLRB: Calculating backpay for salters
June 05, 2007 by Ross Runkel at LawMemo
NLRB has changed the rules for proving how much back pay to award in "salting" cases.
Here is the full NLRB press release, with a link to the decision:
Tuesday, June 5, 2007
NLRB ANNOUNCES NEW EVIDENTIARY STANDARDS FOR ESTABLISHING DURATION OF BACKPAY PERIOD IN CERTAIN DISCRIMINATION CASES
In Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118, the National Labor Relations Board has announced new evidentiary standards for determining the duration of the backpay period when the discriminatee is a “salt.”
In cases of this kind, a union has sent members to seek employment from a nonunion employer with the intent of obtaining employment and then organizing the employer’s employees. Those members are commonly referred to as “salts.” Under the law, if the employer discharges or refuses to hire the salt because of his union affiliation or activity, the employer’s conduct is unlawful.
In this decision, the Board found unanimously that the employer, Oil Capitol Sheet Metal, Inc., violated Section 8(a)(3) and (1) of the National Labor Relations Act by refusing to hire a salt. The Board split, however, over the remedy to be ordered. The decision is signed by Chairman Robert J. Battista and Members Peter C. Schaumber and Peter N. Kirsanow. Members Wilma B. Liebman and Dennis P. Walsh dissented in regard to the remedy. The decision is posted on the Board’s website at www.nlrb.gov.
Prior to this decision, the remedy for an unlawful discharge or refusal to hire included the employer’s payment of backpay to the employee for the period from the unlawful act until the employer made a valid offer of reinstatement (or instatement, in the case of an unlawful refusal to hire). The Board applied a presumption that, if hired, the “salt” would have stayed on the job for an indefinite period. If the job was a construction job, the Board applied a further presumption that the employer would have transferred the employee to other jobsites when the job from which he was discharged (or for which he should have been hired) came to an end.
The Board majority declined to continue to apply those presumptions. The Board reasoned that they are inconsistent with the reality of salting. The reality is that salts, when hired, stay on the job until they succeed in their organizational effort or reach the point where such efforts are unsuccessful. In either situation the union typically then sends the salt to seek to organize the employees of another nonunion employer.
The Board recognized that this will not always be the case. There may be instances where the union will permit a member to work for the targeted employer for an indefinite period.
However, the Board majority view is that the union is in the better position to explain its intentions, and thus the burden to establish the fact should be on the union. The burden should not be on the employer to prove the contrary.
In its opinion, the majority stated:
The traditional presumption that the backpay period should run from the date of discrimination until the respondent extends a valid offer of reinstatement loses force both as a matter of fact and as a matter of policy in the context of a salting campaign. Indeed, as discussed below, rote application of the presumption has resulted in backpay awards that bear no rational relationship to the period of time a salt would have remained employed with a targeted nonunion employer. In this context, the presumption has no validity and creates undue tension with well-established precepts that a backpay remedy must be sufficiently tailored to expunge only actual, not speculative, consequences of an unfair labor practice, and that the Board’s authority to command affirmative action is remedial, not punitive.
In reaching its conclusions, the majority relied in part on the Fourth Circuit’s decision in Aneco v. NLRB, 285 F.3d 326, where the court deemed “indefensible” the Board’s assumption that the hired salt would have worked for the respondent employer for 5 years.
The majority acknowledged that the parties to the case before it had not sought a reversal of Board law. However, the Board said that it was its responsibility to ensure that its remedies are compensatory and not punitive.
The majority also held that instatement to the job would not be ordered where the “salt” would have left the job prior to the Board’s decision.
In dissent, Members Liebman and Walsh criticized the majority for overturning Board precedent endorsed by two appellate courts and rejected by none, without any party having raised the issue, without the benefit of briefing, and without any sound legal or empirical basis. The dissent would have continued to treat salts as the Board treats all other employees who are subjected to employment discrimination. The dissent stated that, in backpay cases, it is fundamental that the Board resolves factual uncertainties against the wrongdoer, the employer. This approach is not unique to the Board. Rather, as the Supreme Court stated in Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265 (1946), the “most elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own
wrong has created.” In the view of the dissenting members, the majority’s new approach not only violates that well-established principle of resolving remedial uncertainties against the wrongdoer, but it treats salts “as a uniquely disfavored class of discriminatees, notwithstanding the Supreme Court’s ruling that salts are protected employees under the National Labor Relations Act. NLRB v. Town & Country Electric, Inc., 516 U.S. 85 (1995).”
The dissent also stated that the majority’s reasons for adopting its new evidentiary approach were “dubious at best,” and that it was unreasonable to presume that salts would leave employment at some fixed point in time, known by a union in advance. For those same reasons, the dissenters found that there was no justification for the majority’s departure from the presumption that a salt, like any other employee at a construction site, would have been transferred to one of the employer’s other projects upon completion of the project at the site where the discrimination occurred.
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For comments on this case:
A Little Less Salt in the Wound, NLRB Changes Presumption on Salt Backpay, from Jottings By an Employer's Lawyer.
NLRB Changes Standard for Proving Damages in Salting Cases, from Workplace Prof Blog.
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EEOC intake questionnaire at the Supreme Court
June 04, 2007 by Ross Runkel at LawMemo
Can an EEOC intake questionnaire be treated as a formal "charge"?
The US Supreme Court granted certiorari on June 4, 2007 in Federal Express Corporation v. Holowecki, which will answer that question. The case will be briefed and argued in October 2007 or later.
In order to file a suit under the Age Discrimination in Employment Act (ADEA), a plaintiff must first file a "charge" with the Equal Employment Opportunity Commission (EEOC).
The 2nd Circuit held that plaintiff Patricia Kennedy satisfied the requirement of filing a "charge."
What she filed was an EEOC Intake Questionnaire plus a four-page verified affidavit detailing her claims of age discrimination. The EEOC did not assign a case number, did not investigate or attempt to resolve the matter, and did not notify the employer.
The 2nd Circuit held that Kennedy's filing (1) contained the information required by the statute and by the EEOC's interpreting regulations, and (2) demonstrated Kennedy's intent to activate the EEOC's administrative process.
The formal Question Presented by the petition for certiorari:
Whether the Second Circuit erred in concluding, contrary to the law of several other circuits and implicating an issue this Court has examined but not yet decided, that an "intake questionnaire" submitted to the Equal Employment Opportunity Commission ("EEOC") may suffice for the charge of discrimination that must be submitted pursuant to the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. ("ASEA"), even in the absence of evidence that the EEOC treated the form as a charge or the employee submitting the questionnaire reasonably believed it constituted a charge.
There is a significant split of authority among the federal circuit courts as to exactly what it means to file an EEOC "charge."
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ADA: Qualifications trumps reassignment right
June 01, 2007 by Ross Runkel at LawMemo
Does the ADA require reassignment to a vacant position when another employee is more qualified?
Or, as the 8th Circuit stated the issue: "whether an employer who has an established policy to fill vacant job positions with the most qualified applicant is required to reassign a qualified disabled employee to a vacant position, even though the disabled employee is not the most qualified applicant for the position."
Circuit courts are split on this issue, and the 8th Circuit is now in the "No" column. Huber v. Wal-Mart (8th Cir 05/30/2007)
In the 10th Circuit, the reassigned disabled employee is automatically awarded the position regardless of whether other better qualified applicants are available - and regardless of an employer's policy to hire the best applicant.
In the 7th Circuit, the ADA does not require an employer to reassign a qualified disabled employee to a job for which there is a more qualified applicant, when the employer has a policy to hire the most qualified applicant.
The 8th Circuit opted for the 7th Circuit's approach, saying that the ADA "is not an affirmative action statute." The 8th Circuit also reasoned that its decision was "bolstered" by US Airways v. Barnett, 535 US 391 (U S Supreme Court 2002), which held that an employer is not ordinarily required to give a disabled employee a higher seniority status to enable the employee to retain his or her job, when another qualified employee is entitled to that position pursuant to the employer's seniority system.
My view: The decision is correct. The ADA seeks to level the playing field, not to give an advantage to disabled employees.
However, there is a stupid rule being followed in many circuits that could make "level playing field" a hollow slogan. At the pretext stage, many courts require the plaintiff to prove that his or her qualifications were so much greater than the other person's that no reasonable employer would have promoted the other employee. That rule reverses the normal burden at the summary judgment stage. I'd like to see the Supreme Court fix that one because it is so clearly wrong.
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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