Defining Appropriate Law Enforcement Authority

Sarbanes-Oxley's criminal retaliation statute requires a report to a law enforcement official, an undefined term. The Texas Whistleblower statute has somewhat similar language (although it requires that it be an appropriate authority), but provides a detailed definition in §554.002. Even with a definition you can see the kind of issues that it leads to. The Texas Supreme Court took a narrow view in Texas Dept. of Transportation v. Needham which required an en banc reversal of a panel decision by the 14th Court of Appeals. City of Houston v. Kallina (Tex. App. - Houston [14th]) (11/21/02).

No ERISA Loophole for the Ban on Waiver of Unemployment Benefits

Texas, like all 49 other states and the District of Columbia, prohibits the waiver of claims for unemployment compensation. The plaintiffs in this case accepted a voluntary package, which included a waiver of all claims against the company. When they filed for unemployment for the time period between and beginning of the retirment pay, the company asked them to withdraw the claims, citing the waiver. When they didn't, the Company challenged the mandatory non-waiver under state law saying it was pre-empted by ERISA. The 5th Circuit reversed the trial court holding it was not preempted under the federal savings clause. It noted the requirement that a state ban waiver was necessary for a state's employers to get a lower unemployment tax rate. Mitchell Energy & Development Corp. v. Fain (5th Cir. 11/19/02) [pdf]. Even though the federal mandate is technically voluntary, the Court didn't think that was enough to take it out of the federal savings clause which excludes preempting any law or regulation under federal law. Bottom line, no waiver of unemployment benefits, regardless.

A New Board and Why It Matters

For the first time since August 2000, the NLRB has its full five member complement. And for the first time ever, they were nominated and approved as a package deal. The members and their terms of service are as follows:



Robert J. Battista, designated chairman. December 2007, fomer management labor lawyer with considerable experience in NLRA.



Peter C. Schaumber, August 2005, labor arbitrator, active in Presidential campaign for Bush, not a tremendous amount of NLRA work experience.



R. Alex Acosta, August 2003, young lawyer currently at DOJ, member of the Federalist Society.



Wilma R. Liebman, August 2006, the only current Board member before the approval of the package.



Dennis P. Walsh, December 2004, returning to the Board. Formerly served a one year term as a recess appointment of Clinton until December, 2001.



The first three are Republicans, the second two Democrats. The Detroit Free Press, the hometown paper for the new Chairman, has a story about him in their on-line publication.



Although unclear whether it is a trend, union issues may be more of a factor in these tough economic times. On December 6th the NLRB will hold an election for the 70 banquet workers at the Westin La Cantera according to a story in the San Antonio Express News. If it is successful it will be the first unionized hotel in San Antonio.

Class Action Denied in Wal-mart Oral Contract Claim

The Court of Appeals reverses the trial court's certification of a class of as many as 350,000 employees. The plaintiffs' claim was a "common oral contractual obligation to provide rest and meal breaks and to pay hourly employees for all work performed' and a breach of that contract. The Court held that the individual formation and breach of each contract would predominate over any common issues. In addition, the court rejected the novel attempt of the plaintiffs to use the 'pattern or practice' method of proving their claim of working off the clock. Allowing it would have permitted the plaintiffs to prove the claim on a 'class' basis based on statistics and surveys resulting in a presumption of liability for each individual. The court found that such a method which has been used for Title VII discrimination cases was not appropriate in a contract case. Finally, the court found that the plaintiffs did not show that a class action was the superior method for adjudication of the controversy. Instead, the court noted the availability of the Texas Payday Act for such claims. Wal-mart Stores, Inc. v. Lopez (Ct. App. - 14th 11/14/02).

Arbitration is Supposed to Be Simple

But there are endless ways that it can end up being complicated. For example: when does a party arbitrator become a neutral and need to make appropriate disclosures to the other side? Apparently, when there is an unequivocal declaration that the party arbitrators are now neutrals, or at least that's the view of one Texas Court of Appeals. J.D. Edwards v. Estes, Inc. (Ct. App - Fort Worth)(11/14/02) [pdf]. Even before that, the court had to deal with an interesting jurisdictional issue, finding they had jurisdiction because the lower court set aside an arbitration award, but didn't order a new hearing. The Court found it had jurisdiction, affirmed throwing out the award because of the failure of a party, turned neutral, arbitrator to make proper disclosures. The court didn't order a new arbitration hearing, so what happens next? Stay tuned I suppose.

Administrative Actions under Sarbanes-Oxley

The Department of Labor has begun to take steps to implement Sarbanes-Oxley. The Secretary of Labor has issued an order designating OSHA as the agency responsible for handling claims under the civil Whistleblower Act created by Sarbanes-Oxley. The DOL has also published interim regulations for handling of notices and other procedures for the trading blackouts on 401(k)'s. The regulations were published in the Federal Register of 10/21/02.



I will be talking about these developments as well as the law itself at the UH CLE program Employer-Side Employment Law on December 5-6 in Houston and repeated in Dallas on December 12-13.

Alabama Supreme Court Knocks Out Arbitration Agreement Because No Class Actions Permitted

One of the greatest dangers to arbitration programs being established by employers is reaction to use of arbitration clauses in consumer agreements. If there is ever Congressional action it is apt to be because the two issues, employment and consumer transactions, are linked. The Alabama Supreme Court has just shown their unhappiness with arbitration in what they deemed 'a contract of adhesion' for termite services. The plaintiffs argument, adopted by the Court, was that because of the cost of arbitration and the relatively small amount of the individual claim, heightened by a clause limiting the type of damages they could recover, the only meaningful way to pursue the claim was small claims court or a class action. Since both avenues were foreclosed by arbitration, the Court found the agreement unconscionable and refused to enforce it. Leonard v. Terminix (Ala. 10/18/02). Although the same logic is not likely to extend to most employment claims, the underlying principle and the potential linkage arbitration in consumer transactions and arbitration in employment, should remain a concern to those who support arbitration in the employment area.

Closing The Plant Not Always Enough To Cut Off Damages and Those Dangerous Attorneys Fees

At least that was the case in Haggar Apparel Company v. Leal (Ct. App. - Corpus Christi) decided last week. Haggar argued that damages for back wages should be stopped at the time it closed the plant where the successful ADA claimant worked. The Court held even if that date were established, it was not enough, as Haggar had several plants in South Texas and others who worked in her plant had been transferred to other sites.



Even more important, particularly from a dollars standpoint was the way attorneys fees were handled. The company argued the plaintiff had waived her claim to attorneys fees by not submitting it to the jury. The Court held however that in a TCHRA claim, the judge was the appropriate party to make the award so it need not be submitted. In this case, even though the award to the plaintiff totaled about $55,000 the Court awarded $158,000 to newly elected State Representative Aaron Pena.

EEOC Suit Based on Obesity as Perceived Disability

Today's HR Daily News has the story of the EEOC's lawsuit filed on behalf of a 400 lb truck driver who was discharged even though he had passed his DOT physical. With the increased difficulty of establishing an actual disability under the ADA's definition as construed by the courts, we can anticipate more attempts to use the 'perceived as' prong, which is the basis for the Commission's claim against Watkins Motor Lines.

California Gets It Wrong on 3rd Party Sexual Harassment

Or at least that is the position taken by Prof. Joanna Grossman of Hofstra University in a Findlaw article. The case is Salazar v. Diversified Paratransit, Inc., decided by an intermediate appellate court on 10/30/02. The court based its decision on a statutory interpretation of the California FEHA. Without trying to discern the niceties of the California statute vs. Title VII, I think Professor Grossman has a point on the overall policy issue.

Vicarious liability - an issue that needs resolving

I was at a seminar planning conference last week and one topic discussed was vicarious liability, where an employer is charged with liability for conduct of an employee that seems so clearly to outside the course and scope of employment as to be a 'no-brainer'. But the suits keep coming. A recent example reported in the Odessa American is a claim against Airborne Express, by the family of a woman killed by her ex-husband, who happened to be employed by Airborne. I suppose there could be facts to make such a case plausible, but it seems hard to imagine what they would be.

Denver Jury Tags Yellow Freight for 3.3 Million for Retaliation

A twice fired employee, re-instated by the efforts of his union, was successful in convincing a Denver jury that he had been mistreated sufficiently to entitle him to punitive damages. The Rocky Mountain News story has comments from two of the jurors as well as the lawyers for the parties.

No Attorneys Fees for Sabine Pilot Cause of Action

The 5th Circuit makes clear that attorneys fees are not recoverable in a successful Sabine Pilot action. Garcia v. Sunbelt Rentals, Inc. [pdf] (11/2/02).

EEOC Active in West Texas - Two Large Settlements

The EEOC has settled two multi-plaintiffs cases in Midland and Amarillo. In Midland, one African American employee and four of his white co-workes at TMBR were allegedly subjected to a hangman's noose and Nazi symbols. The five will share the $859,000 settlement. Further north, in Amarillo six employees of Ron Clark Ford will split $140,000. The EEOC contended the men were "subjected to lewd, inappropriate comments of a sexual nature and had their genitals and buttocks grabbed against their will by males managers" while the dealership said it was just horseplay.

HIV positive employee not disabled under any of the 3 prongs of ADA disability definition

The 5th Circuit upholds Judge Fitzwater's grant of summary judgment when he found that an HIV positive employee was not disabled under the ADA. Although HIV status effects reproduction, when the employee had already disavowed the desire for any future children, it was not a major life impairment. The Court also ruled out 'working' as an a substantial impairment. The employee was able to do a variety of jobs, he just could not return to his former position as a residential CSR because of the stress. Blanks v. Southwestern Bell Communications [pdf] (5th Cir. 11/04/02)l

The danger of the 'Reply to All' button -

One can sympathize with a lawyer whose firm is now being sued for defamation because of his inadvertent use of the reply to all feature of his email program. His rather negative opinion of another lawyer who had written the firm, which was obviously intended only for internal consumption, was mistakenly re-directed to the lawyer when he 'replied to all'. Lawyers and technology --- a volatile mix. The American Lawyer has all the details including the important legal defense raised by the defendant firm as to whether or not the internal communication is sufficient 'publication' for Georgia defamation law.

Valuing Stock - Important Texas Supreme Court decision

In Miga v. Jensen (Tex. 10/31/02), handed down one year and one week after it was argued, the Texas Supreme Court waded into territory that was of paramount interest during the internet bubble. Plaintiff had been promised an option to purchase stock. When he attempted to exercize the option, the defendant breached the obligation and refused to sell. The question was simple, but important: when do you value the stock? In this case, if valued at the time that the contract was breached, the value was approximately $1,000,000. If valued at the time of trial, it would have been almost $18,000,000. Instead of allowing the plaintiff a risk free investment, the Court limited the damages to the value at the time of breach, plus pre-judgment interest. Before reaching the bottom line question, the Court dealt with the question of mootness following an unusual procedural step by the appellant. For those representing employers involved in disputes over stock options, this has to be considered good news; unless of course the market has gone down.

12 million jury verdict for 26 year employee for taking family leave

Just from a brief newspaper article with only the barest of facts you can sense some of the things that might have been problems in this case: a long term employee, at one time selected as employee of the year, terminated (it sounds like it might have been close to the time he was selected employee of the year), for a reason that a jury could empathize with, taking leave to take care of his elderly parents. If either management or counsel for the hospital came across as arrogant or deceptive, it would have been an almost perfect example of the types of factors that can cause a jury to really "go south on you" as trial lawyers like to say. In this case it was a Chicago federal jury, but it could have been anywhere. A $10 million punitive damage award was under the intentional infliction of emotional distress claim.

Hooray! Threatening HR a Terminable Offense

Ms. Romero chose to take an early retirement package with enhanced benefits if she remained employed through the fourth quarter. She asked that her last day of work be the last day of the year. Instead, the company scheduled it to be October 3rd, but still within the fourth quarter, thus preserving her benefits.



Seeming not to understand, Ms. Romero told an HR employee that she would not be attending a company dinner where the HR Director would be present because she didn't know what her husband would do when he saw "that man". She also added that she "hoped someday somebody puts a bullet in that man", although she said it wouldn't be her because she "wouldn't go to jail for that man". When the fellow employee asked her if she meant it, she replied affirmatively. Having thought about, she left a voice mail saying she didn't want the employee to think if anything happened to the HR Director that she had anything to do with it. But she did re-iterat that if some one else did something she would "shed no tears and be happy". In other words she said, "her hands are clean [although] her mind isn't."



The fellow employee was, understandably, upset, not to mention the Director of HR. Ms. Romero summoned to a disciplinary meeting refused to talk without her lawyer and soon found herself an ex-employee, without the benefits of the enhanced severance package. Her ensuing litigation was unsuccessful. HR folks often feel they are an endangered species, but it's nice to know at least someone cares! Romero v. Smithkline Beacham [pdf] (3rd Cir. 10/30/02).