HealthSouth on the MDV Employment Law Docket

Not sure whether I missed this, or it wasn't reported until someone picked it up from an SEC filing last week end. HealthSouth which has seen its share of litigation in the last few years, disclosed one more adverse result, when it reported a $1.9 million dollar verdict last October favoring its former head of security and the body guard of its former CEO, Richard Scrushy.

The Everything Alabama website has the story, Ex-security chief wins suit, which indicates that the basis for the former state trooper James Goodreau's claim was "a lifetime job guarantee." The job, but obviously not the claim, ended when he was terminated, along with Scrushy, after the Board of Directors took control of the company.

According to the report the case is now on appeal to the Alabama Supreme Court. Without seeing more, I can only guess that somehow the statute of frauds is involved somewhere.

Discrimination Survives, Retaliation Fails - 5th Circuit

We have become so use to talking about cases where an employer wins the discrimination claim but loses on retaliation that it is almost shocking to see the reverse. But that's one of the "great things" about employment law — almost anything can happen.

Which is probably what the folks at Dr. Pepper are thinking after reading today's opinion from the 5th Circuit in Burrell v. Dr. Pepper/7 Up Bottling Group (5th Cir. 3/20/07) [pdf].

When Burrell was passed over for the position as Vice President of Purchasing, even though having served well as what the 5th Circuit called the "stopgap vice president" until a new VP was brought on board, he felt as if perhaps the decision was based on his race.

In fact he shared with his superior a copy of the book, Roberts v. Texaco: A True Story of Race and Corporate America, and two articles detailing the class action lawsuit brought against Coca Cola, saying he felt his experiences at Dr. Pepper mirrored those of the plaintiffs in those cases. Still he continued with the job, earning not only a raise, but a bonus and an invitation to an annual meeting of high achieving employees.

But when the new VP arrived, so did problems between the two of them. It culminated in a lengthy review of Burrell's performance, done at his request, to which he wrote a lengthy 3 page rebuttal. According to the 5th Circuit:

The performance evaluation response authored by Burrell begins by characterizing Koester's [the new VP] initial evaluation as an inappropriate and unprofessional attack and questions Koester's ability to give an accurate evaluation. The response goes on to attribute the negative review to Koester’s “biased perception” of Burrell’s on-the-job performance. Throughout his response, Burrell accuses Koester of being ill informed and unqualified to critique his performance.

While the response includes significant supporting facts and examples, Burrell made clear his lack of respect for Koester's authority, asserted no responsibility for their bad relationship, and made no provisions for future changes. Both the evaluation and the response demonstrate the failed working relationship between Burrell and Koester. Notably, neither document contains any mention of a racial or retaliatory basis for their disagreements.

On the same day that rebuttal was delivered, Burrell was terminated.

In the suit that followed, the district court granted summary judgment for Dr. Pepper on both the discrimination claim for failing to select Burrell as the new VP of Purchasing and retaliatory termination for his protected activity.

Today's result — summary judgment on retaliation, affirmed; summary judgment on discrimination on the promotion claim, reversed.

Although the result — retaliation losing, while discrimination wins - is unusual, more attention will probably be directed to the discrimination claim as the Court explains what it was that led it to believe that Burrell had established a triable issue on pretext. The Court gives its views of how the evidence, including what it believed to be shifting explanations for the hire, gave rise to a triable issue of fact.

One thing that caught my eye is the importance the court attributed to consistency of the company's explanation:

While Dr. Pepper offers an explanation for the difference between the reason for promoting Koester over Burrell it offered to the EEOC (“purchasing experience”) and the one offered to this court (“purchasing experience in the bottling industry”), its brief does not attempt to explain how either explanation is consistent with its arguments to the district court which were framed in terms of Burrell’s insufficient “bottling” experience.

Although you can see the difference, there is also a lot of similarity in those three phrases:

• purchasing experience,
• purchasing experience in the bottling industry,
• Burrell’s insufficient “bottling” experience

While the Court gives additional reasons for its holding, when you consider the number of times that you could be potentially be called upon to explain the reason for a termination -

• to the employee,
• unemployment proceedings,
• EEOC or state agency,
• district court pleadings and discovery
• and appellate briefing

the potential chance of damage caused by a lack of precision or a subtle change of emphasis are enough to get an employer's attention.

While Burrell's discrimination claim may still be alive, it is not to say it didn't take a hit as well. Given a now legitimized termination, it would seem at a minimum that even assuming that liability could be established, which of course is by no means certain, a large element of economic damages, would seem to have gone disappeared along with the retaliation claim.

"Labor lawyers see gray storm gathering" — Great Headline, Not Much More

The Dallas Business Journal has one of the better headlines I have seen recently, unfortunately, the story doesn't add much. The article describes the coming "perfect storm" (a now well overused cliché) as follows:

• Baby boomers, whose ages range from about 42 to 60, make up the largest group in the workplace, with 77 million men and women in the United States, nearly double the population of Gen X, which makes up 44 million and whose members are just beginning to hit their 40s.
• As baby boomers climb the corporate ladder, they become more expensive to employ.
• As employers look at ways to keep costs down, they'll look at reducing their biggest expense: people.

And an obligatory quote that juries are sympathetic to older workers because they can identify with people who look like them. Yawn.

But just because there is not a lot of substance to the story, doesn't mean there is not a lot of truth to it. And you have to agree, it is a great headline.

Some Lessons to Be Learned from the Brits on a Minimum Wage Law

As talk of a new minimum wage continues to rumble through Congress, the Brits have acted. See the BBC News story, Minimum wage up to £5.52 an hour. While there is no talk of raising the U.S. rate that high, there is at least one way we should emulate the British.

Namely — lower rates tied to age. Although the new top British rate is the equivalent of $10.60 an hour, there are separate rates for those aged 18-21 ($8.80) and 16-17 ($6.57). That bright line makes much more sense than the half-hearted attempts to achieve something similar under the FLSA.

One thing the Brits don't do that we should — tie the rate to a reasonable index to avoid these periodic lurches that don't do anyone any good except for politicians who get have a partisan issue to rally around and an opportunity to "look good" in the eyes of their constitutents by "giving them" a raise.

The Brits at least remove it from the political process by a half step, putting it in the hands of the government's "Low Pay Commission," a name that you have to admire regardless of your point of view.

The Case of A Different Decision Maker — A Lesson Reinforced

Even after a court adopts a new standard it takes awhile for the nuances to play out. Late in 2005, the 4th Circuit found that there were certain times when a discrimination plaintiff would be excused from meeting the standard 4th element of a prima facie case, that he or she was replaced by someone outside the protected category. This "exception" exists when there are different decision makers. See 4th Circuit Alters 4th Prong of Prima Facie Case . There, even though a female plaintiff was replaced by a female, the exception came into play because it was a different management team.

18 months later, the 4th Circuit had a different variation. Female plaintiff was replaced by a male, however the replacement choice was made by a new management team. The court noted the district judge, who had granted summary judgment because of the plaintiff's failure to establish a prima facie case, was correct in finding in its earlier decision the

"implicit understanding that the sex (here, male) of the person chosen by a second decisionmaker to fill the female plaintiff’s vacant position does not assist in creating a presumption of gender bias on the part of the first decisionmaker, who fired the plaintiff."

But, and here it was a decisive but, the district court erred in not recognizing that the different decision maker completely relieved the plaintiff from the obligation of meeting the 4th element of the prima facie case. Lettieri v. Equant, Inc. (4th Cir. 3/5/07)[pdf].

An Unbiased Academic Look at Mandatory Arbitration

Well maybe not — given that the topic for presenters to the January 2008 Section to Contracts of the Association of American Law Schools is entitled: How Bad Are Mandatory Arbitration Terms?”. Check out the full details at the ContractsProf Blog if you are interested in presenting.

I would never say that there are not two sides to the question of mandatory arbitration, but it does seem that the ivory tower types are not being asked to approach the issue with an open mind.

A hat tip to the good Professor Ross Runkel at his Ross' Arbitration blog which is, as usual, up to the minute on the latest developments in arbitration.

MDV in Oklahoma - $61 Million Worth

A hat tip to the Daily Labor Report which alerted me to a substantial Oklahoma City verdict in February. A claims manager for Progressive Halcryon Insurance brought a claim for hostile environment, gender discrimination and retaliation. The jury must have viewed them equally — finding $350,000 in compensatory for each of the three claims, which alone would have qualified it as an MDV. But the jury wasn't through — topping it with a $60 million punitive damage award. The reports I found, see Jury says a Tulsa deserves millions [sic]from the Tulsa News World and Tulsan Wins Gender Discrimination Lawsuit from KOTV, don't have the sort of facts that sometimes jump out in these cases, although it was clear that there were some credibility questions such as whether she declined a lower position that was offered to her.

There may well have been some other factors that inflamed the jury, but it's a good reminder that when you lose on liability in an employment case, that means you have lost the credibility battle, and too often that in at least one jury's eyes you stand doubly condemned — not only are you a discriminator, but a liar. And that's a volatile combination.

The stories make the good point that the maximum that can be awarded out of that $61 million of damage is $300,000 because of the caps on Title VII recovery. However, counsel for plaintiff is optimistic that there is $200,000 in back pay, $600,000 in front pay to go with the $300,000 and of course attorneys fees. As we have seen it also could be that it will ultimately end up to be nothing, which still still doesn't remove the lesson.