Bullying As a Cause of Action - One Large Step Closer

As long time readers may remember, I have for a long time been concerned about a proposed cause of action for bullying. My first post about bullying goes all the way back to January 12, 2003, Newest Workplace Problem? Bullying?

But later that year, my first mention of it as a cause of action was a post about a case decided in England, Can't Wait For "Bullying" Cause of Action to Cross the Atlantic. Four days later though, I had found mention of a proposed statute that would make bullying a cause of action, You Thought I Was Kidding About A Cause of Action For Bullying. 

So I have been writing about bullying almost as long as I have been blogging. Still, I have been remiss in reporting on a major development.
 
And the reason is simply that I am stunned and discouraged.
 
I really thought that it would be sometime before the Healthy Workplace Act, the model bill drafted by Professor David Yamada would advance through even one side of a state legislature. But thanks to the New York State Senate's action on May 12th, that threshold has been crossed. See, Anti-Bullying Legislation Passes NY Senate.

Discussion of that act has gotten some media attention which hopefully is a good thing. Professor Yamada has taken some of it on in a recent post, Why the Healthy Workplace Bill is not a "job killer".

Because David and I have engaged in a back and forth on this topic in our respective blogs, I am taking the liberty of setting forth his arguments in that article in full and giving my view on why I think his arguments miss the key point.

David's has five points in his rebuttal (in fairness to David, he was replying to a specific article and so I don't mean to say that these may be his only five points):

1. High standard for proving a case — The HWB requires an individual to prove that the bullying behavior was malicious and harmful to physical and/or mental health. By legal standards, that’s a high threshold.

2. Damage cap for lesser claims — In cases where the bullying did not include a negative employment decision such as a demotion or termination, emotional distress damages are limited to $25,000 and no punitive damages are allowed. In other words, the HWB blocks runaway jury verdicts for comparatively modest claims.

3. Preserves management prerogatives — The HWB expressly maintains traditional management prerogatives to evaluate employees. It does not do away with the rule of at-will employment.

4. Incentives — The HWB imposes liability on employers, but it provides them with incentives to reduce or avoid liability by taking adequate preventive and responsive measures toward bullying.

5. Notice – The New York version of the HWB requires employees to put employers on notice of bullying behavior as a pre-condition for filing a lawsuit.

Here is the problem. The limitations above are for the most part only defenses against liability or limitations on the ultimate damages that an employer may have to pay to if an employee sues.

What that ignores is the most basic principle of employment law litigation. Once an employer is sued, they have lost.

I can not over emphasize this point. Once an employer has been sued, they have lost.

Lawsuits once filed go away only one of four ways --

1. voluntary dismissal (unlikely or it would not have been filed in the first place);
2. by summary judgment (obtainable only after substantial discovery has been involved);
3. settlement (only by payment of some sum that the plaintiff and his or her counsel will accept and rarely before substantial defense costs have been incurred); and
4. at the conclusion of a trial and all appellate processes when a final judgment is entered.

As a practical matter, there is no recourse for the employer. While winning by summary judgment or trial is sometimes emotionally satisfying, it never comes close to matching either the hard dollar costs (the biggest component which is likely to be fees to law firms, including mine) or the "hidden" costs of employee time and stress that the human beings defending an employer's decision undergo over the course of litigation, which at a minimum is likely to extend over months, and where it goes all the way through the process, over years.

Here's a graphic way of saying basically the same thing that appeared as part of an April 23, 2007 cover  story in Business Week.

Although legal standards may allow under certain circumstances employers to recover their attorneys' fees, as a practical matter the chance is so slim as to not exist.

Although creating a bullying cause of action would be bad enough, it is made even worse because courts will be hard pressed to grant summary judgment.  Ask any plaintiff's employment lawyer what is their single biggest interim goal in any employment lawsuit, and they will tell you to avoid summary judgment. If they can force a trial on the merits, they know that the settlement value of the cases goes up substantially.

So, when you create yet another cause of action, this time based on conduct that is so subjective, you will have opened the door for almost any employee in any environment to bring a lawsuit, and worse, a law that is written in a manner so that summary judgment is almost impossible, it is in my view both a very dangerous and certainly very costly step.

Arguments can be made that cost is present in any employment law and in any event is justifiable. The first part of that is true.

Some causes of action do justify the costs. Discrimination tied to certain characteristics for example, passes that test. I do not believe bullying or in the words of the Healthy Workplace Bill, protection against an "abusive work environment," does, or even comes close.

Many will say that I am overstating how big a problem permitting employees to file suits based on "bullying behavior" will be. 

Check out the language from S.1823B passed in a 45-16 vote by the New York Senate. You tell me how hard it would be to initiate a lawsuit under this bill or to get past summary judgment.

The way the statute works, it is is illegal for an employer to "subject an employee to an abusive work environment." An abusive work environment is one where"abusive conduct" causes the employee to suffer physical or psychological harm.

Then look at the definition "Abusive conduct" and notice how many "fact questions" exist.  It means:

• conduct, with malice,
• taken against an employee by an employer or another employee in the workplace, that a reasonable person would find to be hostile, offensive and unrelated to the employer's legitimate business interests.
• In considering whether such conduct is occurring, the trier of fact should weigh the severity, nature and frequency of the conduct.
• Abusive conduct shall include but not be limited to, repeated infliction of verbal abuse, such as the use of derogatory remarks, insults and epithets; verbal or physical conduct that a reasonable person would find threatening, intimidating or humiliating; or the gratuitous sabotage or undermining of an employee's work performance.  A single act shall not constitute abusive conduct unless the trier of fact finds such act to be especially severe or egregious.  

Although it goes without saying that I deplore bullying behavior both as a moral matter, because it is bad business and because it puts employers at risk for numerous other adverse consequences, I remain adamant that it would be a disaster for the legislation to pass, in New York or anywhere else.

My thanks to my friend Jeff Polsky, who had one of the best headlines in reporting on this, The meek shall inherit their own protected category, at California Employment Law where he posts, for prompting me to finally respond.

Update: This is my quickest update ever. Probably before anyone has read it and that's because I had not checked my RSS reader or I could have linked to David Yamada's latest, New York workplace bullying legislation is in the news. In that post, he points out a number of negative comments about the New York bill and notes that many of them focus not on the employees who have been injured, but on litigation costs etc.
But there are times when those costs are so high and the disruption so great, that it can not be discounted so lightly. This is one of those times.

ARB Needs Your Help on SOX Coverage of Subsidiaries

Well, that may be a bit of an overstatement, but the Administrative Review Board, which gets the final appellate say at the administrative level of Sarbanes Oxley claims has asked the Assistant Secretary of OSHA and the SEC, and it appears other amici, to submit briefs addressing four specific questions:

1. Is a subsidiary categorically covered under §806 (e.g., Morefield/Walters)? If so, does the level of ownership of the subsidiary play a factor in that coverage?
2. Under SOX's whistleblower protection provision, must a nonpublicly held subsidiary respondent be an agent of a publicly held company? What are the factors under a §806 agency test?
3. Is the integrated enterprise test applieable to §806?  If so, should the Board consider the "centralized control of labor relations" the most appropriate factor?
4. Is there any other theory under which you contend that subsidiaries would be covered under §806? If so, explain.

The Order Requesting Additional Briefing by the Parties and the Amici Curae all comes in the context of an actual case, Johnson v. Siemens Building Technologies, ARB Case No. 08-32, ALJ Case No. 2005-SOX-015.

This all comes about because of the way Congress drafted the Whistleblower section of SOX, originally §806 and now recodified as 18 U.S.C. §1541A:

Whistleblower Protection for Employees of Publicly Traded Companies.— No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l), or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o (d)), or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee—

When I was drafting the SOX chapter (28) of the Texas Association of Business Texas Employment Law Book, I mentioned that since most publicly held companies were holding companies with few employees, it was possible that arguments would be made that whistleblowers who worked for non-public subsidiaries might not be covered, which would of course have been a major loop hole. And I was at least right that the argument has been made, not terribly successfully I am afraid.

In fact in the last edition, after noting that the entity often registered with the SEC is the holding company, with only a small number of employees, I had to say:

Although some of the initial decisions by the Administrative Law Judges adopted this view, the Administrative Review Board has taken a broader approach, finding such companies liable under an agency theory. The only Circuit Court to address the issue has adopted a similar view.

But from their request for help, what's clear is that the ARB is still puzzled as to what the right rationale for answering the question is.

Not to be a cynic, it's an interesting question, but it's sort of like asking a condemned man if he has a preference for his method of execution. Polite to be sure, but it's highly unlikely to change the ultimate outcome.

Opening the Door to Facebook: Severe Emotional Distress May be the Key

A well reasoned opinion by Magistrate Judge Debra McVicker Lynch of the Southern District of Indiana dealing with a request for information from what she dubs Social Networking Sites (SNS) should be a starting point for anyone who is seeking (or opposing) information from an employment law plaintiff's facebook or myspace profile. The 13 page decision in EEOC v. Simply Storage Management that was issued on May 11, 2010 is a textbook example of what a good discovery ruling should be.

Regardless of whether you agree or disagree with how she decided, there is no doubting that the Judge understood the dispute, did not seem irritated by it, balanced the defendant's legitimate need for discovery and plaintiff's right to privacy, within the context of a premise of broad discovery and drew limits. Even better, she noted that the limits themselves might need further interpretation and provided some additional guidance.

Here's how the suit started according to the EEOC press release last October.

The discovery dispute arose when defendants requested Facebook and MySpace profiles, plus related communications and photos and videos, of two individuals on whose behalf the EEOC brought the sexual harassment claim.
The heart of the Court's ruling was as follows:

the court determines that the appropriate scope of relevance is any profiles, postings, or messages (including status updates, wall comments, causes joined, groups joined, activity streams, blog entries) and SNS applications for claimants .... for the period from April 23, 2007, through the present that reveal, refer, or relate to any emotion, feeling, or mental state, as well as communications that reveal, refer, or relate to events that could reasonably be expected to produce a significant emotion, feeling, or mental state.

Additionally the Court held that third party communications to the claimants should be produced if "they place these claimants’ own communications in context."

With respect to videos and photographs, the Court applied the same test but gave more direction:

For example, pictures of the claimant taken during the relevant time period and posted on a claimant’s profile will generally be discoverable because the context of the picture and the claimant’s appearance may reveal the claimant’s emotional or mental status. On the other hand, a picture posted on a third party’s profile in which a claimant is merely “tagged,” is less likely to be relevant. In general, a picture or video depicting someone other than the claimant is unlikely to fall within the definition set out above.

A few other points (but you really should read the whole opinion):

• Judge Lynch was quick to emphasize the limits of the Order, "This Order is directed toward two claimants who have alleged severe emotional distress, including post-traumatic stress disorder; it does not address the proper scope of discovery for “garden variety emotional distress claims.”
• Although not explained, in connection with photos and videos the use of the verb "taken" during the applicable time frame stood out, although later the court did refer to "posted" in the context of third party pictures;
• Although noting that the precision was not as precise as the lawyers might like, the Court also added that the EEOC should err on the side of production.
• There was no mention of the additional dimension in this case. Because it was brought by the EEOC, it is possible that the claimants whose information is now being discovered might in fact be unwilling to sacrifice their privacy for the right to keep the suit alive. Given how carefully crafted the opinion is, I have no doubts if that were an issue (or at least if the Court were aware that it was an issue) it would have been addressed.
• It is clear that Judge Lynch is much more comfortable with the internet world than those who currently sit at the top of her chain of command, see Sexting Case Befuddles Supreme Court: 'What's The Difference Between Email And A Pager?' and also
• Unlike some on the Supreme Court she has no qualms about seeking assistance from jurisdictions out of United States as she discusses two Canadian decisions dealing with the same issue.

The case has already received considerable comment. My hat tip for catching it is Jon Hyman's post at The Ohio Employer's Law Blog, but following his hat tip leads to others, including some by non-lawyer bloggers:

• Facebook can be used against you in court, by Robert Iafolla;
• Social Network Discovery and Discovery Regarding Past Employers, by Robert Fitzpatrick which covers the 2nd part of Judge Lynch's ruling about employment records from past employers (basically not automatically discoverable, must show some particular relevance);
• Court Rules Facebook Is Fair Game in Discovery, from the Baker & Daniels law firm; and
• Employers beware: Social network comments can be used in court by Cath Everett writing at the HR Zone.

It's Not EFCA, But for Some Cities It Might Be Worse

Because today, Senate Majority Leader offered the Public Safety Employer-Employee Cooperation Act as an amendment to the Supplemental Appropriations Act that is being considered by the Senate. The amendment (number 4147) could be voted on as early as tomorrow.

Here is the Heritage Foundation' summary of the bill:

The Public Safety Employer-Employee Cooperation Act (PSEEC) would require all state and local governments to collectively bargain with public safety employees'--police officers, firefighters, and emergency medical personnel--by creating a federalized collective bargaining system for public safety officers.

PSEEC allows the Federal Labor Relations Authority (FLRA) to determine whether a state's collective bargaining arrangements meet the standards as defined by the act.

• States and localities must collectively bargain with public safety employees.
• They must permit bargaining over wages, hours, and all terms and conditions of employment.
• They must provide a dispute resolution mechanism, such as binding arbitration.
• The FLRA will have considerable authority to enforce the act, including:
• Determining the appropriateness of units for labor organization representation;
• Conducting hearings and resolving complaints of unfair labor practices; and
• Supervising or conducting elections to determine whether a labor organization has been selected as an exclusive representative by a voting majority of the employees.
• States would be granted the authority to pass laws more expansive than those the federal government imposed.
• States would not, however, be allowed to pass narrower laws than those contained in the act.

For more on the reasons why the Heritage Foundation thinks this is a bad idea, go here.

A more supportive view, not surprisingly, comes from the International Association of Fire Fighters, an AFL-CIO affiliate.

My quick review of the bill did not indicate that size of the governmental entity makes any difference. Here is the key definition for coverage:

"The terms `employer' and `public safety agency' mean any State, or political subdivision of a State, that employs public safety officers."

In Texas, many of the major cities already have the obligation to bargain (often not very successfully) with their police, fire and emergency medical personnel, although they will still have to be certified as meeting the national standards.

Many other Texas cities do not. But if this passes the current Texas procedure (which is in itself several complicated pieces of legislation) will be set aside if the Federal Labor Relations Authority does not deem them equal to the new federal standard. In tough economic times, not a financial burden that many governments are going to be excited about taking on.

For those not too concerned about Public Sector labor relations, the legislative tactic might be a precursor to see how other labor and employment legislation may be moved through this Congress. By attaching the bills to "must pass" legislation, such as an appropriations bill, we may soon see just how filibuster proof this Congress is when it comes to employment and labor matters.

Update May 25, 2010: Labor Relations Today covers the same topic and closes with the following:

On March 10, 2010, the House Education and Labor Committee held hearings on the bill, transcripts of which are available here. Seeing as there were at least five GOP co-sponsors to Sen. Gregg’s similar bill, it is highly likely that this amendment will pass and become part of the Supplemental.

Ouch.

Update May 29, 2010:  Senator Reid pulled the PSEEC from the Supplemental Appropriations bill in light of a parliamentary challenge that it was non-germane. The Supplemental passed without it, although the bill itself remains pending in both houses. Thanks for Labor Relations Today for the update.

463 to 1 Vote in House on Mine Safety Investigation

A story in the Daily Labor Report that the House of Representatives voted 463-1 to give authority to House Education and Labor Committee staff members to take depositions as part of the investigation into the Massey Energy Company mine accident of April 5th raised my curiosity about the one no vote.

I must admit that I was not surprised when I double checked the Roll Call 289 on H RES 1363 and found that the lone dissent was Congressman Ron Paul of Texas.

No matter what you think of him, there clearly is no doubt that he does not feel obligated to go his own way, regardless of popular sentiment. 

Another Texas View from the Other Side of the Docket: Texas Employee Rights Blog

A long time friend, and sometimes adversary, Danny Wash of Waco,  has entered the world of employment law blogging with Texas Employee Rights. He joins at least two others that I follow that also write from the employee's perspective, both oddly enough from the city where I practiced law for more than 20 years, San Antonio --  Chris Mckinney's HR Lawyers Blog and  and Tom Crane's San Antonio Employment Law Blog.

Besides adding some geographical diversity, I know Danny also has an interest in technology and if we are lucky will mix that in as well. For example, probably unknown to him, he is the reason that rather than use two monitors (which I tried and was not very pleased with) I moved to one very large monitor and with the program Splitview, found I accomplished the same thing, much better.
Much different than when I started this blog, there are many more voices in this particular niche of the blogosphere. I can't think of any better way to stay current in our field.

The Note From the Jury That You Didn't Want

At least if you are on the defense side: Novartis Jury Asks About 'Range' of Damages . The note comes in a sex discrimination case brought by twelve named plaintiffs againt Novartis.

Although it does indicate that the jury is beyond liability, any one who has been waiting (im)patiently in a court room while a jury deliberates, knows that it is quite difficult to tell what is going on based on just a single request.

Some of it depends on the wording of the charge. If the questions are not predicated, then a damage question may or may not mean anything on damages.

And you never know, the range they could be contemplating could be from zero to $1,000. Or not.

In any event, although not that easy to do, the basic answer is to wait and see.

Updated 4:44 p.m. CDST:  Yep, it was not a particularly good sign. According to the report from Bloomberg, Novartis Must Pay Punitive Damages in Sex-bias Case, $3.4 million for the 12 named plaintiffs. This case has a lot of procedural steps still to resolve including a punitive damage hearing which I think will be tomorrow, and a second finding of compensatory damages on behalf of the class. Where in those steps the appeal, which Novartis has already promised, comes I don't know.

Updated May 25, 2010S: A little late to the party on reporting this, but by now everyone is probably well aware that the punitive damage award was $250 million. The NYT story is here. As it notes, the company still has to deal with claims for compensatory damages from almost 6,000 class members. Bloomberg Businessweek quotes the plaintiffs' counsel as saying they believe that figure could ultimately reach close to one billion dollars.

Unlike many trials, the actual tactics and trying of this lawsuit have gotten a fair amount of attention and press, including a link to the defense counsel's final argument at the liability phase.  See for example, I’d Like Some Sex With That Drug Order, by Ann Woolner at Bloomberg.com and ‘Beyond Tone Deaf’: A Scathing Look at Novartis’s Defense Strategy, from the WSJ law blog. 


I don't have a category for multi-million dollar verdicts, and of course this is a class case, but still I think it clearly belongs in the MDV category.
 
Although it should go without saying, these are at this point verdicts, and there are still many hurdles before Novartis will be foreced to pay the first dollar to any of the named plaintiffs or class members.

The Employment Law Decisions of Supreme Court Nominee Elena Kegan

President Obama's nomination of Elena Kegan to the Supreme Court is the fourth since Jottings was started in the summer of 2002.

In the past I have published links to the employment and labor law decisions of the nominees. See,

First Obama Supreme Court Nominee - Sonia Sotomayor

Now on First - Samuel Alito -- Let the Feeding Frenzy Begin

A More Complete List of Judge John Roberts' Labor and Employment Related Decisions

And now for soon to be Justice Kegan:


Yep, that's it, zero -- nada -- nothing.

For the first time since President Nixon nominated Lewis Powell and William Rehnquist on the same day, President Obama has nominated for the Court an individual who has not previously served as a judge. Of the two, Kegan's background is much more similar to Rehnquist than Powell. Powell had been in private practice as a corporate lawyer. Rehnquist had been a government lawyer for the bulk of his career.

Kegan has been a government lawyer but also an academic, serving in her last stint as Dean of the Harvard law school.

In any event, her first Supreme Court opinion on a labor and employment law matter will be her first judicial opinion on a labor and employment lawyer.

A non-judge has been desired by many, me included,  although I would have actually preferred someone with more extensive private sector experience.   Since confirmation seems to be likely, barring something unforeseen, it is likely that we will have an opportunity to see if that was a good or bad thing.