Individual Claim in Large Scale RIF Leads to MDV

Many employers, and their lawyer's including this one, sometimes feel that there is less exposure to individual claims when there are large, economy driven layoffs. If nothing else it feels less "personal," at least in terms of being singled out. Still as this Newsday story from earlier in the week, Ex-Nassau worker 'delighted' with $1M verdict shows, that is not always the case.

Roberta Miller was one of 2,600 employees of Nassau County who was laid off during a "budget crisis" in 1992. However, she argued that she was selected because she was a "token Democrat" in a Republican department and that her termination was because of her political views and activity. This week, a New York State Supreme Court jury agreed.

Besides a good reminder that individual claims can be filtered out of large scale, economic based layoffs, it's also a reminder of how long employment law cases can take. Miller is now 72, and as we all know, a jury verdict which was just now obtained 17 years after her termination, is by no means the end of the road.

What a Great Time to Be a Labor/Employment Lawyer!

All of us who work in the labor/employment law arena know that for most of the time our niche of the world is very important to those who are focused on it, but generally pretty much an unknown to the larger public. Well that hasn't changed, it's still pretty much an unknown, but with the introduction of the Employee Free Choice Act into Congress and the ensuing media blitz, we are certainly getting our day(s) in the spotlight.

The media coverage refreshes a lesson I first learned as a young lawyer about how news coverage works. I was involved in a well publicized trial in Laredo in 1980. At the time, even that small town had two daily newspapers. Both papers staked out positions on the trial and reported at length on each day's court room activities in lengthy front page stories.

Not too surprisingly given their viewpoints, what was reported in the two stories often sounded like very different trials. What was surprising was how neither even came close to accurately capturing what was actually happening. It was not really the reporters fault, it is is very hard for someone who is not an expert on a particular case, or a particular subject matter, to really appreciate the nuances of a situation. And almost by definition any trial, or any legal matter such as EFCA is a very nuanced subject matter.

The truth of that lesson has been repeated every time I have had a case that got news media attention and is now being re-enforced as I listen/read much of the reporting/commenting on EFCA.

Yesterday I was in Houston and as a channel flipper, caught an early morning segment on Fox News with an interview with a representative of Change to Win. On my drive back to Austin, I caught a conservative radio talk show, pointofview.net, which was devoted for the entire afternoon to EFCA. This morning on my drive in to work, it was an NPR story with another Change to Win advocate.

Unfortunately, much of the rhetoric on both sides was often not quite accurate and too quickly jumped to ad hominem attacks, which is never an encouraging signal that intellectual exchange is going to follow.

Although I would be shocked if the current level of discussion of EFCA will be sustained much beyond the current news cycle, clearly it is going to remain an important topic until is finally addressed by Congress. When that date will be is a moving target, but seems to be sliding further away rather than closer.

A few more random thoughts as we move ahead on this issue --

• I think that the proponents of EFCA are making a mistake in not taking on a much bigger issue -- should our national labor policy continue to be that having employees represented by unions for the purpose of collective bargaining is the preferred and government encouraged means for employer/employee relations? I understand why proponents of EFCA want to accept that as a given; however, with most American's lack of familiarity with unions, understandable given the decades long decline of union membership, I think that is the underlying debate that is really going on, even if many of those opposing EFCA give lip service to their agreement. I understand why even conceding that this is an issue is problematic; but if I am right and there is truly not a consensus on this point, ignoring it as opposed to showing why it should be the agreed starting point, is not designed to lead to a good result.

• I think the opponents of EFCA are making a mistake focusing so much on card check. How a union is formed is important, and my belief is that the secret ballot is far superior to card check. However, in my view the most radical change contained in EFCA is binding arbitration for the first contract. The current national policy, which as mentioned above, is that collective bargaining is the preferred way of organizing the workplace, also is founded on the principle that an employer while required to bargain in good faith, was never forced to concede or agree to any point. To "force" concessions, unions have the economic power to withhold their labor, strike. If EFCA is passed as introduced, for first contracts this would no longer be true. If agreement is not reached, a solution will be imposed, which will require an employer (and employees) to be bound for two years. It represents a total reversal of the current policy, and so far is getting relatively little attention. If that continues, what will happen is that a "compromise" will be reached that retains secret ballot elections (albeit it with major changes designed to make it easier for unions to organize) but keeping binding arbitration for first contract. That would mean that one of the underlying principles of our current system will have been changed, with little discussion or my guess, is little understanding that it is even happening.

• Those who claim to have some specific knowledge in this area have a special duty to engage in discussions that are more than just the easy sound bites, so that if anyone really wants to get a more nuanced view, it is available. Obviously, I write with a viewpoint, but hopefully in the months ahead as I write on the subject, I will adhere to what I have recommended for others and not resort to sound bites nor ad hominem attacks. This is only the second time in my 30 + year career in this area that there has been a serious discussion on these issues. The first time in 1977, I was way too junior to understand what was at stake, much less contribute. My hope, this time, is that I can offer more to a meaningful debate.

Although for the first couple of years of this blog's life, there were only a handful of others focused on labor and employment law, there are now more than fifty. I think our community can bring a lot to the debate and I would encourage others to join in with their own viewpoints. I would particularly encourage comments to my thoughts, particularly those who might disagree with my viewpoints.

Update: 3.16.09 - Rick Bales at Workplace Prof Blog, was kind enough to link to this post, and his post has some interesting comments which I would suggest others check out. One by Professor Dennis Nolan of USC has heard other rumors about what might happen, and offers his own thoughts:

Fox's speculation about a compromise is the exact opposite of a rumor I heard, that unions would be willing to sacrifice the compulsory arbitration provisions in order to get card check through. Of the two possibilities, that one makes much more sense. Without card check, unions won't have any significant number of new first-contract disputes that might need arbitration. The fact that the sponsors haven't fleshed out the bill's arbitration provisions also suggests that they don't expect it to pass. If they did expect compulsory arbitration to be in the final law, they would surely have provided more guidance about arbitrators, procedures, and standards. Without any standards to control arbitral decisions, the law would be begging for a constitutional challenge.

I wonder, though, if both rumors could be wrong and if unions are willing to put the whole package to an up or down vote. The provisions are complementary --- arbitration is useless without new bargaining units, and new bargaining units wouldn't be able to get contracts out of anti-union employers without either a credible strike threat (unlikely in this economy) or compulsory arbitration.

Thanks to Professor Bales for calling these comments to my attention and to Professor Nolan for his thoughts.

The Future of Employment Law Activity, Part II.

From MSNBC's web site, a visual depiction of things to come based on the following:

Job discrimination claims rise to record levels

In wake of recent layoffs, complaints for 2008 up 15 percent

Just for the record, it was over 95,000 in the EEOC's fiscal year which ended September 30, 2008. See the EEOC's press release here. Since the economic crises was just getting warmed up, it's quite possible that next year's numbers will be even more impacted.

Here was my earlier post, The Future of Employment Law Activity , based on record levels of new unemployment claims. This week, the DOL reported another increase in new unemployment claims, up to 654,000.

What this means -- several months out, employers can anticipate a wave of new employment litigation.

"Manifest Disregard of Law " Now History in 5th Circuit

Although it is not an employment case, last week's decision in Citigroup Global v. Bacon (5th Cir. 3/5/09) [pdf] is important because it makes clear that the 5th Circuit will no longer reverse an arbitrator's decision on the basis of manifest disregard of the law. Judge Jolly's decision for a panel consisting of one of the most senior and the most junior of 5th Circuit judges, Judge Catharina Haynes, held that Hall Street Associates LLC v. Mattel, Inc. (Supreme Court 2008) makes clear that the exclusive grounds for vacating a decision must be found in the Federal Arbitration Act.

It makes prescient a comment on Workplace Prof's post on the Hall Street decision, Hall Street v. Mattel and the Future of Arbitration, just after it was handed down last March:

I'm no labor and employment lawyer, but another important facet of the case is whether it does away with all non-statutory grounds for vacatur, including "manifest disregard of the law" and "violation of public policy," the latter of which has been used to vacate arbitration awards in the employment context. The sweeping language used in the majority opinion arguably throws those babies out with the bathwater.

The Court's conclusion is pretty blunt:

The question before us now is whether, under the FAA, manifest disregard of the law remains valid, as an independent ground for vacatur, after Hall Street. The answer seems clear. Hall Street unequivocally held that the statutory grounds are the exclusive means for vacatur under the FAA. Our case law defines manifest disregard of the law as a nonstatutory ground for vacatur. [cites omitted] Thus, to the extent that manifest disregard of the law constitutes a nonstatutory ground for vacatur, it is no longer a basis for vacating awards under the FAA.

In reaching its decision the Court surveyed what its sister circuits had done post-Hall Street and seemed to agree that a very limited version of "manifest disregard" as adopted by the 2nd Circuit might survive.

In Stolt-Nielsen SA v. AnimalFeeds Int’l Corp, (2d Cir. 2008) that Court wriote:

We must therefore continue to bear the responsibility to vacate arbitration awards in the rare instances in which “the arbitrator knew of the relevant [legal] principle, appreciated that this principle controlled the outcome of the disputed issue, and nonetheless willfully flouted the governing law by refusing to apply it.” Westerbeke, 304 F.3d at 217. At that point the arbitrators have “failed to interpret the contract at all,” Wise, 450 F.3d at 269, for parties do not agree in advance to submit to arbitration that is carried out in manifest disregard of the law. Put another way, the arbitrators have thereby “exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C § 10(a)(4).

But the 5th Circuit emphasized how narrow that holding was and also made clear that even the phrase "manifest disregard" as a term of "legal art, is no longer useful in actions to vacate arbitration awards." Translation --- don't use it.

Turning Up the Heat on the Immigration Issue in the Texas Legislature

Those who follow Texas legislature know it is not really until April and May that the legislative process really kicks into high gear. Although it meets in regular session only five months every 2 years, most voting on substantive legislation occurs in that two month period. Highly contentious matters that take a lot of legislative time can block others from consideration.

My guess is that the legislative calendar just got a lot "tighter" as the state attorney general, Greg Abbott issued an opinion that two controversial measures that would crack down on employer's for hiring illegal aliens would not be pre-empted by the federal immigration law.

The question presented was:

"If Texas legislation (1) provided for the suspension or revocation of the business licensure of employers of unauthorized aliens; (2) relied solely upon a federal determination of immigration status; and (3) did not impose civil or criminal sanctions, would the law be permissible under the U.S. Constitution?"

Attorney-General Abbott was not having to go too far out on a limb since he only opined that if the closely followed an Arizona law that did the same and the 5th Circuit Court of Appeals followed the 9th Circuit's holding in Arizona Contractors Association, Inc. v. Candelaria the law would be permissible. (GA-0695).

The Texas legislature has a host of bills dealing with immigration. Among them are:

• HB 48, Relating to the suspension of certain licenses held by employers for the knowing employment of persons not lawfully present in the United States;
• HB 254, Relating to restricting illegal immigrants to certain geographic regions;
• HB 261, Relating to the enforcement of state and federal laws by certain governmental entities;
• HB 266, Relating to regulating the provision of benefits and services to, and the verification of the employment status of, immigrants and to enforcing laws relating to immigrants; providing civil and criminal penalties;
• HB 276, Relating to the requirement that state agencies report the cost of services and benefits provided to unlawful immigrants;
• HB 404, Relating to the enforcement of state and federal laws governing immigration by certain governmental entities;
• HB 416, Relating to a requirement that a recipient of money from the Texas Enterprise Fund participate in a federal work eligibility verification program;
• HB 622, Relating to the suspension of certain licenses held by employers for the knowing employment of persons not lawfully present in the United States;
• HB 658, Relating to requiring governmental entities to participate in the federal electronic verification of work authorization program;
• HB 1061, Relating to the requirement of citizenship or lawful presence in the United States for issuance or renewal of certain occupational licenses, driver's licenses, and identification certificates;
• HB 1278, Relating to the proof of identity and residency required of an applicant for a driver's license or personal identification certificate;
• HB 2222, Relating to a prohibition on law enforcement inquiries regarding the nationality or immigration status of a victim of or witness to a criminal offense;
• SB 357, Relating to a prohibition against the knowing employment of persons not lawfully present in the United States and the suspension of licenses held by certain employers for the knowing employment of those persons;
• SB 358, Relating to the enforcement of state and federal laws governing immigration by certain governmental entities.

Some of these will no doubt be among the heated issues being fought at the end of the session.

Hat tip to DLR ($) for the story on the AG's opinion.

EFCA - Strongarm Majority Leader Reid?

Last week I spent Thursday and Friday at a seminar sponsored by my firm and a number of trade associations in DC about the Obama administration and Congress as it impacts labor and employment law. Obviously, one of the key topics addressed by a number of speakers and panelists was the Employee Free Choice Act, affectionately known as EFCA. The seminar was unique in that it had representatives from both sides of the aisle, government officials like Wilma Liebman, now the chair of the NLRB (who did not take a position on EFCA), congressional staffers and journalists.

Clearly everyone at the conference sees EFCA as a major issue that will be a major fight between organized labor and the business community when it is brought to the floor. Caught in the middle are the Obama administration, which supports EFCA but has plenty on its plate and really would like to avoid a huge, bitter fight with the business community if it could avoid it, and certain Democratic senators who are beginning to feel the squeeze put on them between their conservative constituents and organized labor. Another Senator on the spot is Arlen Spector (R - PA) who is faced with a threat from the Republican right if he votes for cloture as he did in the last Congress. See David Yglesias suggestion for a novel way out, Specter’s Dilemma.

The consensus, and that probably is too strong a word, seems to be that the business community has done a better job than expected of organizing opposition to EFCA and that right now is probably ahead, but it's a long term fight and still could go either way. A compromise bill remains a distinct possibility and something that the Administration, at least, would likely welcome. But I don't think anyone is betting their share of TARP money, or even lesser sums, on what may ultimately happen.

Since returning to Texas the stories I have read, albeit in the blogosphere, have re-enforced those views, with an article in the Huffington Post quoting Andy Stern:

"In the end, we have to pass this bill in the House and the Senate. I'm not a congressional strategist," he said, "[but] I would say that in the end both houses are going to get to vote. And whatever way makes sense -- where it starts and where it ends is really not that important, as long as in the end everybody understands the importance of getting this job done. Which I believe they do."

in what some viewed as an indication he is settling in for a longer term fight. Several other stories about labor fearing it is losing some of the Democratic senate votes it will need, added to that view. See Worry Grows Over Dem Defections on EFCA and Boulder Democrats. (Everyone agrees that the fight is over cloture in the Senate, which will take 60 votes. The bill will pass the House, will pass the Senate if you can get over cloture, and will be signed by Obama if it passes both Houses of Congress.)

Then in today's Huffington Post is an article by David Sirota which advocates labor giving Senator Harry Reid an ultimatum: either schedule a vote and corral the 59 Democratic votes for cloture, or face a labor funded candidate that would ensure his defeat in his 2010 re-election bid, even though it meant allowing a Republican Senator to win. Threatening to End Reid's Career in 2010: The Best Chance to Pass EFCA.

Although I don't know where Sirota ranks in the supporters of EFCA, to even see such an idea floated makes me think that there really is some truth to the softness of support for the bill on the Democratic side.

MDV in the Garden State

It's been a long time since I commented on a million dollar verdict (MDV). But some things never change: retaliation is still the claim that seems to crop up most frequently and more often than not, the employer is a public agency. That was the case in last week's award of 1.5 Million to the NJ Transit Police's first female lieutenant, who claimed that after she complained of sex discrimination she was retaliated against by the Police Chief Joseph Bober.

The award was $449,000 in lost wages and benefits, although it is not clear from the news story that Theresa Frizalone lost her job. The jury tacked on a cool $1 million in punitive damages. The attorneys' fees, not yet awarded may be another $500,000.

According to the newspaper article this suit was only the first of a series of retaliation cases brought against the agency based on the conduct of Bober.

Even though the jury's verdict has a long way to go before it turns into a payment to Frizalone, it definitely has had an impact. One day after the verdict Chief Bober, became a former Chief and employee of the NJ Transit Police. NJ Transit ousts police chief accused in discrimination case