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February 4th, 2012
The First Circuit recently refused to overturn a jury’s finding of retaliation under the Age Discrimination in Employment Act (“ADEA”) despite the defendant’s claims that the plaintiff had not established a prima facie case. In Munoz v. Sociedad Espanola de Auxilio Muto Y Beneficiencia De Puerto Rico, the Plaintiff was a cardiologist who was terminated by the defendant-Hospital one day after the Plaintiff was deposed in a lawsuit against the hospital for age discrimination. The Plaintiff then promptly filed a second suit against the Hospital claiming that he was terminated in retaliation for his pending age discrimination suit. The jury agreed with the Plaintiff and awarded him nearly $2 million. On appeal, the Hospital argued that its renewed motion for judgment as a matter of law should have been granted with respect to the Plaintiff’s retaliation claim because the Plaintiff had failed to establish a prima facie case of retaliation or any evidence of a causal connection between his protected conduct and his termination.
The First Circuit rejected the Hospital’s argument that judgment as a matter of law should be granted for the Plaintiff’s failure to make out a prima facie case on the grounds that it was “not the correct focus at this juncture.” The McDonnell-Douglas framework that requires the plaintiff to prove a prima facie case before putting the burden of proof on the defendant “is not a religious rite” but “merely a sensible, orderly way to evaluate the evidence in light of common experience as it bears on the critical question of retaliation.” Once the question of retaliation has been submitted to the jury “backtracking serves no useful purpose.” The First Circuit therefore held that its correct focus on appeal was whether a jury reasonably could have inferred by a preponderance of the evidence that the Plaintiff was terminated because of his protected conduct.
The First Circuit went on to reject the Hospital’s argument that the Plaintiff had failed to establish the causal connection required to prove retaliation on the grounds that the evidence presented at trial was sufficient to support the finding, even if the determination was not “inevitable.” The Hospital’s argument hinged on the fact that Hospital decided to terminate the Plaintiff three weeks before the Plaintiff was deposed in his age discrimination case, claiming that the causal element of retaliation was therefore lacking in the Plaintiff’s claim. Although the Court agreed with the Hospital that an adverse employment action pre-dating the protected activity generally cannot support a retaliation claim, it found that the remainder of the evidence presented at trial supported the jury’s finding. Accordingly, the First Circuit affirmed the trial court’s decision.
Tags: Age Discrimination in Employment Act, Causal Connection, Judgment as a Matter of Law, McDonnell Douglas Framework, Prima Facie Case, retaliation
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January 26th, 2012
For the second year in a row, there were a record number of private sector discrimination claims lodged in the EEOC in 2011, breaking the record set in 2010 by a small margin. The EEOC also announced that relief to workers in the form of settlements and as a result of litigation exceeded $455 million. This number exceeds the relief from 2010 by over $50 million and continues an upward trend in settlement and litigation awards to workers alleging discrimination. The EEOC itself filed 300 lawsuits and obtained over $90 million in awards to workers, reflecting another increase in the money recovered by the EEOC’s own litigation efforts.
For the second straight year, retaliation claims represented the largest single category of allegations of discrimination. This represents only the second time, along with 2010, that retaliation claims have constituted the largest category. Allegations of race and sex discrimination decreased, while allegations of disability and age discrimination increased. Age discrimination claims also represented the category of allegations resulting in the largest amount of money awarded, increasing my almost $30 million dollars. The largest subset of disability claims were made up of back impairments.
This was also the first full year that the EEOC has enforced the Genetic Information Nondiscrimination Act. This Act seeks to prevent discrimination based upon the genetic information of employees, which includes genetic diseases in their family histories. The EEOC received 245 charges under this Act, but none have yet proceeded to litigation.
The clear trend over the past few years reflects an increase in allegations of workplace bias and discrimination to record levels. These increases provide new challenges for employers as they attempt to navigate through this difficult economy. In any event, it provides a very real warning that employers must take workplace discrimination laws seriously, and enact workplace policies to prevent such conduct.
Tags: discrimination, EEOC, employment law, employment policy, legal trends
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January 20th, 2012
The Massachusetts Department of Public Health and the Department of Fish and Games Division of Marine Fisheries recently announced that they are considering using DNA testing to prevent fish mislabeling and are launching a pilot program in partnership with Legal Sea Foods that would trace seafood using barcodes. The announcement follows the results of the Boston Globe’s five month investigation revealing extensive seafood misrepresentation at Boston area restaurants. Seafood mislabeling puts consumers at risk by violating dietary restrictions, permitting customers to ingest chemicals banned in the United States, and increasing the potential for customers to suffer allergic reactions. The pilot programs will enhance trace-back procedures by using barcoding to follow fish products through the production system. The pilot programs will be accompanied by a statewide education and outreach effort by the Department of Public Health that will be aimed at alerting local officials and industry partners about the laws related to the sale of fish and fish products.
Tags: Boston Globe Seafood Investigation, DNA Testing, Fish Barcodes, Seafood Mislabeling, Trace-Back Procedures
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December 30th, 2011
Last month, Massachusetts Governor Deval Patrick signed a new transgender equal rights bill, making Massachusetts the sixteenth state to prohibit discrimination based on gender identity. The bill goes into effect on July 12, 2012.
The bill prohibits discrimination based on gender identity in the areas of employment, education, housing, and credit. It also categorizes violence against transgendered individuals as a hate crime. “Gender identity” is defined in the bill as gender-related identity, appearance or behavior whether or not it is different from that “traditionally associated with the person’s physiology or assigned sex at birth.”
Connecticut also passed a transgender rights bill earlier this year. New Hampshire will now be the only New England state that does not prohibit discrimination based on gender identity.
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December 20th, 2011
In Farris v. Shineski, the plaintiff, a former employee of the Department of Veteran’s Affairs (“the VA”), claimed that the VA discriminated against her based on disability when it terminated her employment. She originally complained to the VA’s EEO counselor. She then underwent an unsuccessful formal mediation through the VA’s Office of Resolution Management. After the mediation failed, the VA Office of Resolution Management sent her a letter advising her of the deadline to file a complaint with the EEOC. Plaintiff promptly informed her attorney of the deadline, and her attorney assured her that the filing would be made on time. Although the deadline was January 2, 2009, plaintiff’s attorney filed the complaint on January 13, 2009, requesting that she be permitted to file the complaint late as the attorney inadvertently missed the original filing date due to the “holiday rush.”
Last month, the U.S. District Court for the First Circuit affirmed dismissal of plaintiff’s disability discrimination complaint due to the untimely filing. The court rejected the plaintiff’s “equitable tolling” argument – i.e. that “circumstances beyond [plaintiff’s] control precluded a timely filing.” The court noted that the plaintiff “is deemed bound by the acts of [her] lawyer-agent” and therefore, the plaintiff is bound by her lawyer’s error.
The deadline would likely have been tolled if (1) plaintiff had received inadequate notice of the statute of limitations; (2) plaintiff was awaiting the result of a motion for appointment of counsel and equity would justify tolling the deadline until the motion was acted upon; (3) the court led the plaintiff to believe that she had done everything required of her; or (4) affirmative misconduct on the part of a defendant lulled the plaintiff into inaction. In this instance, the employer properly advised plaintiff of the correct deadline to file her EEOC complaint. Thus, plaintiff’s complaint was properly dismissed as untimely, leaving her to possibly seek relief from her attorney rather than her employer.
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December 15th, 2011
John Ingalls, a long time store manager for Walgreens, thought he was untouchable because he had the goods on his employer. In 2006, the roof of a Walgreens store partially collapsed during a rain storm. Mr. Ingalls claims that his district manager asked him to transfer inventory from that store to other stores for sale without telling anyone. Mr. Ingalls further claims that his employer was committing insurance fraud by declaring the store with the damaged roof “a total loss” when, in fact, there was inventory left to be sold to the public. In addition, the transfer of pharmaceutical and tobacco products allegedly violated certain state and federal laws.
Mr. Ingalls did not say a word about these alleged violations by his employer until three years later, when Walgreens lowered the amount of his bonus. In the course of complaining about this change, Mr. Ingalls stated that if Walgreens punished him for complaining, he would report them to the ATF and IRS.
Shortly after making this statement, Walgreens learned that Mr. Ingalls failed to ensure that employees under his supervision completed certain training sessions required by law and by Walgreens policy. It also emerged that Mr. Ingalls encouraged employees to work “off the clock” in violation of wage-and-hour laws, and even altered timecards in order to avoid paying overtime.
During the investigation into his conduct, Mr. Ingalls said, “I can’t believe this. Walgreens commits insurance fraud and you’re investigating me for this.” Mr. Ingalls was terminated and then filed reports against Walgreens with the ATF and IRS. He also filed suit for wrongful termination under New Hampshire law and for intentional infliction of emotional distress. The wrongful termination claim was based on a theory that he was terminated for engaging in an act that public policy would encourage.
In Ingalls v. Walgreen Eastern Co., Inc., the United States District Court for the District of New Hampshire granted summary judgment in favor of Walgreens because the undisputed facts established that Mr. Ingalls had not been terminated for an act that public policy would encourage. As the court stated: “Public policy may support the right of an employee to be free from retaliation for exposing his employer’s fraudulent conduct. It does not, however, support the right of an employee to keep quiet about the fraudulent conduct for three years and then to threaten exposure as a bargaining chip in an effort to keep his job.” Public policy is generally determined by “the interests of society and . . . the morals of the time,” but in this case, the evidence established that Mr. Ingalls’s “actions were not designed to protect any interests other than his own.”
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December 9th, 2011
Three sales managers sued their former employer, a chain of banquet facilities that host high-end social functions, for overtime pay under the Fair Labor Standards Act (FLSA) in Hines v. State Room, Inc. The banquet facilities stated that the sales managers were exempt from the overtime requirement because they were administrative employees under FLSA, 29 U.S.C. §213(a)(1).
The FLSA’s administrative employees exemption applies to employees who: (1) make more than $455 a week exclusive of room and board; (2) perform office or non-manual work relating to the management or general business operations of the employer; and (3) have a primary duty that includes the exercise of discretion and independent judgment with respect to matters of significance. The sales managers did not dispute that the first two parts of the test applied to them. With respect to the third part of the test, they claimed that they did not have sufficient discretion or independent judgment to be considered administrative employees.
The sales managers’ role was to secure event business by cold calling potential clients and maintaining relationships with past clients, to serve as the primary client contacts, and to ensure the success of client’s events. The sales managers also engaged in broader marketing efforts such as representing the company at the Chamber of Commerce convention. In performing their role, the sales managers had discretion as to which cold calls to make, what to say to clients and potential clients in marketing the facility, how to help clients figure out the most appropriate venue and time for an event, how to counsel clients as to minimum charges, how to manage client expectations, and how to assist clients in designing the menu and other details for an event.
The sales managers stressd that they had no authority to make financial decisions or policy for the company. They were bound by price schedules. In addition, their management had final approval authority over client contracts. The sales managers were not supervisors and had no direct authority over staff, although they would at times convey the details of an event to the staff.
The First Circuit was not impressed with the sales manager’ lack of financial authority and lack of authority for final approval of contracts. First, the court noted that the lack of financial authority is only one factor that may be considered and is not dispositive. Second, the regulations provide that an employee’s discretionary actions (such as initial contract approval) need not “have a finality that goes with unlimited authority and a complete absence of review.” The court concluded that the sales managers were administrative employees, with the requisite discretion, because their role was integral as the face of the employer’s business, and based on the independent judgment they exercised as to “how best to represent the employer and to develop a proposal that would attract the prospective client to a contract with the venues.” Thus, court affirmed the lower court’s summary judgment order, ruling that the sales managers were not entitled to overtime under the FLSA.
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November 22nd, 2011
By Christopher T. Vrountas
I was privileged to moderate a round table discussion, hosting 4 prominent businesspeople in the hospitality industry, at the New Hampshire Lodging and Restaurant Association’s Annual Expo and Awards dinner held at the Grappone Center in Concord, NH on November 9, 2011. We had a lively and enlightening discussion worth sharing with everyone who runs a business during these challenging times.
The roundtable discussion was entitled “How do they do it? Success stories in challenging times.” Panelists included Alex Ray, owner and founder of The Common Man Family of Restaurants; Tom Boucher, owner of Great NH Restaurants (Cactus Jack’s, T Bones, and The Copper Door); Dave Roedel, owner of Roedel Companies; and Rusty McLear, owner of the Inns & Spa at Mill Falls.
The panelists talked about the economy, the casual dining market, the challenges to running a hospitality business in the current climate, and their recipes for success. The repeated themes centered on the economy generally, the impact of national chains, the importance of a strong corporate culture, the need for a well-defined value proposition for customers, the negative effects of over-regulation, and the benefits of social media. Here is the brief run-down of what they had to offer:
The Economy:
Everybody agreed the economy has been a major challenge these last three years. Rusty McLear mused that these days, it pays to have the benefit of the perspective of history. He said he’d “been around a while” and had been through “a lot of recessions.” He said, “We look forward, but remember the past” and that Recessions are times to “get a good deal.” He explained that slow times are times to take advantage of low prices and low borrowing costs. Importantly, however, strong relationships with vendors, and particularly with the bank, will be the key to one’s ability to take these opportunities and to thrive in a recessionary environment.
Dave Roedel also said that slow times are times when one can “buy low.” He also warned not to make cuts where it matters when trying to save on costs during tough times. Rather than cutting on employee salaries, or on lighting, or on service generally, find a way to deliver service more efficiently. He discussed for example how he reduced fuel costs for one of his hotels by scheduling van runs to the airport more efficiently, saving money while not compromising on customer service or employee compensation. Strict controls of inventory can also provide the same benefits.
The Chain Invasion:
The panelists noted that the casual dining market in particular was and perhaps still is oversaturated. That in part has to do with national chains flooding into the region. Alex Ray remembered that in the early to mid-1990’s there were no chains in Concord, NH. Now, 21 years later, he sees a glut of chains challenging local business and crowding out the share of the market each participant can take.
Tom Boucher agreed that the word “chain” has become a dirty word in New Hampshire, symbolizing lack of distinctiveness and specialized service, but he noted that the national chains do some things right, like managing for consistency in the eyes of a customer. A successful chain with a record of consistency instills confidence in a customer who can be sure he or she knows what to expect when walking into the chain restaurant, anywhere in the country.
Dave Roedel reminded the audience that most national chains are franchised, which usually means local owners. He noted that “every sale is local.”
The Culture Connection:
The discussion regarding the response to the “Chain Invasion” began to center on culture and service. While the chains have known brands, the local independents can create equally strong brands locally by creating a strong corporate culture that produces high quality customer service.
Tom Boucher, for example, said that owners should make it a priority to reinvest into their business rather than to take early profits, and to be flexible for employees in scheduling and other matters to encourage loyalty and teamwork, which in the end translates to better service to customers. He described his company’s concept of “the 3 legged stool.” Very simply, a business stands on three constituencies like a three legged stool stands on three legs, i.e., employees, customers, and profits. Tom explained that you cannot favor any one of these legs or else the stool becomes unstable. In 2008, to bring customers back during the recession, Tom explained that his business made pricing and other decisions that favored the customers over the other constituencies. Employees agreed to take a moratorium on benefits, owners took a hit, and the company kept prices low for otherwise reluctant customers. The result was to stabilize the traffic flow, but that approach was obviously unsustainable. Now that the economy has improved somewhat over the last 12 to 18 months, the business has limited the discounting and has begun to “rebalance” the stool. The main point, however, was to recognize the employees as an equally critical leg to the business as customers and profits.
Alex Ray agreed that his employees were the core of his business, and he noted that his culture is key to his branding and his resulting competitive edge. He said, “I’m proud to be New Hampshire. The customers own our brand. That comes from differentiation, which is the absence of indifference. Take your employees. They need to have the passion to care for the customer and to understand the need to satisfy their needs efficiently. It can’t just be business as usual.” In short, it’s about having a culture that teaches employees and serves customers.
Rusty McLear noted that his business’s market is truly the world and that customers can go anywhere for vacation or special get-a-away. He said that, “we need to entice people to come here, and we need good people here to perform at that [world class] level.” He gave some specific economic incentives for attracting and keeping the kind of people he needs to run his business, such as a 20% end of year performance bonuses. He said his turnover has been rather low, with an average employee tenure of 14 years, and he attributes that success in part to the economic incentives as well as to a culture that recognizes employee achievements which encourages a “pride of authorship.”
The Value Proposition:
The discussion of culture then turned to what good culture produces, i.e., good value for the customer. The panelists all agreed that value is not the same as cheap, and it does come from a culture focused on delivering it to the customer. Alex Ray explained that in the restaurant industry, value is delivered from the attitude of the employee. “We don’t just sell food,” he said, “We are not Market Basket. It’s about the guest experience. By achieving balance in the company that truly appreciates the employee, accommodates his or her reasonable needs and respects his or her achievements, you create a culture that forms your marketing brand and your mechanism for delivering value to the guest.”
Rusty McLear agreed, and said that “value is about service. Employees need to be interested, not just act interested.” He said that a guest can have the best hotel room, the best food, the best facilities, but that one surly server can completely turn the guest experience and adversely affect the customers’ perception of value.
Tom Boucher also agreed that value was not just about low price. He said it was “the entire package, a balanced three legged stool.” In fact, when pricing the menu, he said he never asks about food cost. Rather, he simply tastes the item and assesses what it’s worth. He also discussed value pricing without discounting, such as half sized portions for essentially half price. He explained that a business should reevaluate and change its marketing plan every year.
The Regulation Strangulation:
There was an equal amount of agreement about the effect of undue regulation. Simply put, the panelists viewed much of recent government regulatory activity as unnecessary, idiosyncratic, harmful to business, and sometimes flatly unfair.
Alex Ray made the initial point that New Hampshire generally is friendly to business, but he encouraged members of the audience to let their government know how undue regulation hurts business. Tom Boucher noted that government oversight has reached onerous levels. He gave many examples, including how newly constructed restaurants must use LED lighting, which are less attractive and less inviting for customers, while older restaurants can continue with regular lighting and thereby maintain yet another competitive advantage in an industry where the details count.
Social Media:
The panelists briefly spoke about social media. Tom Boucher in particular noted that social media venues like FaceBook, MySpace, blogs, chatrooms, or basic websites can be effective or ineffective, based on how they are used. Simply put, if you use these media to talk about yourself, they are one-way and boring. If you use these media to reach out and engage the customers, pose questions and to have them start thinking about your market and your service, you create awareness, interest and potentially brand loyalty.
Tags: culture, economy, national chains, over-regulation, social media, value
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October 28th, 2011
The First Circuit recently revisited the requirements for establishing claims for hostile work environment and retaliation under Title VII of the Civil Rights Act in Bhatti v. Trustees of Boston University. To establish a hostile work environment claim, the plaintiff must produce evidence that the facts and circumstances of their employment were so “severe” “pervasive” and “abusive” as to “alter the conditions of her job.” In making this determination, courts consider several factors including “the frequency of the discriminatory conduct, its severity, whether it’s physically threatening or humiliating, or a mere offensive utterance, and whether it unreasonably interferes with an employee’s work performance.
The First Circuit found that the plaintiff’s situation was not severe enough to be considered abusive. In Bhatti, the plaintiff was a Black dental hygienist at Boston University’s Dental Health Center who claimed that she had been subject to a hostile work environment based on her race. She claimed that she was required to work harder than her white counterparts, that workplace rules were selectively enforced against her alone, and that her white co-workers were permitted to leave early if they had completed their duties whereas she was not. The First Circuit found that this conduct was “far from severe, never physically threatening, generally conducted in private so as not to be humiliating and never overtly offensive.” In addition, the Court held that the fact that the plaintiff had sought psychological counseling was “evidence of subjective offense at best.” Accordingly, the plaintiff was not entitled to damages on her hostile work environment claim.
Similarly, the Bhatti court determined that the plaintiff had not established a claim for retaliation under Title VII of the Civil Rights Act. To prove retaliation, a plaintiff must show that the employer took some objectively and materially adverse action against them because of their opposition to a practice forbidden by Title VII. The plaintiff in Bhatti claimed that she was repeatedly reprimanded because she had complained of discrimination. The First Circuit found that although reprimands could potentially be considered adverse employment actions, they were not actionable in this circumstance because they did not carry consequences with them. Consequently, the plaintiff’s retaliation claim failed as a matter of law.
Tags: Hostile Work Environment, Materially Adverse Action, Racial Discrimination, Reprimands, retaliation, Title VII
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October 14th, 2011
The District Court of New Hampshire recently awarded damages for breach of contract to a Middle Eastern food products manufacturer whose order had been repeatedly postponed in favor of larger more expensive shipments. In Yorgo Foods v. Orics Indus. Inc., Yorgo Foods entered into a contract in December of 2006, for the creation of a machine that could package both flowable products like hummus, and non-flowable products like tabbouleh. The agreement between the parties was amended in July 2007 to include an additional filler and scale. Following the amendment, Yorgo Foods frequently inquired into the status of the machine and was repeatedly assured that it was would be forthcoming. On October 28, 2008, Yorgo Foods filed suit against Orics for failing to produce the machine or return its down payment.
Under Sections 1-205 and 2-309 of the Uniform Commercial Code, a seller has a “commercially reasonable time” to deliver goods before breaching the contract. The period of a commercially reasonable time varies on a case-by-case basis depending on the “nature, purpose, and circumstances of the transaction, including… the usages of trade in the pertinent industry.” After hearing expert testimony, the court determined that a reasonable period of time for the manufacture of a food-packaging machine was 6 to 8 months. Furthermore, the Court held that Orics had exceeded the reasonable time period not due to any legitimate reasons, but because it had received a larger order that it prioritized above that of Yorgo Foods. Accordingly, Yorgo Foods was entitled to damages resulting from Orics’ breach of contract.
Although the Court found that Orics had breached its contract, it further held that this breach was not alone sufficient to give rise to a claim under the New Hampshire Consumer Protection Act. To recover under the New Hampshire Consumer Protection Act, the defendant’s behavior must “attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce.” Even though Orics’ conduct was reprehensible, the Court found that repeated assurances of future performance by merchants “are not unknown in the rough and tumble world of commerce.” As a result, Yorgo’s claim did not rise to the level of rascality necessary to support a cause of action under New Hampshire’s Consumer Protection Act.
Tags: Breach of Contract, Commercially Reasonable Time, Food Industry, New Hampshire Consumer Protection Act
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October 6th, 2011
The First Circuit recently held in Velazquez-Ortiz v. Vilsack, that a federal employee claiming sex discrimination under Title VII of the Civil Rights Act of 1964 must exhaust all administrative remedies before filing suit in federal court. A federal employee may sue in federal court, but must first seek relief in the agency that allegedly discriminated against them. A federal employee’s “failure to exhaust the administrative process” in this manner, will “bar the courthouse door.”
In Velazquez-Ortiz, the plaintiff was employed at the Department of Agriculture for a period of thirty years. During that time, she filed two relevant Equal Employment Opportunity (EEO) complaints and one informal grievance with her union. The plaintiff filed her first EEO complaint in 1997, alleging that the department’s decision to give a promotion to a male worker constituted gender discrimination. In 2003, the plaintiff made an informal grievance with her union claiming mistreatment and workplace harassment by a male supervisor, but the grievance did not explicitly allege sex-based harassment or discrimination. The plaintiff filed her second EEO complaint in 2004 claiming discrimination on the basis of age and retaliation as a result of the agency’s decision to promote two younger employees. The 2004 EEO complaint mentioned the plaintiff’s two previous complaints, but did not specifically allege sex discrimination. In 2008, the plaintiff filed suit in federal court claiming discrimination on the basis of age and sex.
The Court found that the plaintiff’s previous complaints did not adequately exhaust the administrative process. The fact that a complainant has filed an EEO complaint does not open the courthouse door to all claims of discrimination. Instead, it only opens the door for complaints that “bear some close relation” to the EEO complaint. The purpose of the administrative requirement is to give the involved agency notice of the issue and to create an early opportunity for resolution. This may only be achieved if the EEO complaint alleges the facts that form the basis of the complainant’s federal court complaint. In Velasquez, the Court determined that the plaintiff’s previous complaints did not sufficiently allege sex discrimination, but instead only mentioned the sex discrimination as part of her complaint for retaliation. Consequently, the First Circuit affirmed the District Court’s finding that the plaintiff’s Title VII claim was barred for failure to exhaust her administrative remedies.
Tags: Administrative Exhaustion, Administrative Remedy, Age Discrimination, Federal Employee, Public Employee, Sex Discrimination, Title VII
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October 3rd, 2011
The Equal Employment Opportunity Commission filed an action today against Texas Roadhouse in the United States District Court for the District of Massachusetts. The lawsuit alleges that Texas Roadhouse has been avoiding hiring people over 40 years of age for their more publicly-visible positions, such as wait staff, bartenders, and hosts, since at least 2007. The lawsuit alleges that Texas Roadhouse specifically trained managers to emphasize youth in its hiring practices, and ensured that all images in its training manuals are of younger people.
The lawsuit also alleges that Texas Roadhouse used language indicative of discriminatory animus in refusing employment to workers over 40 years of age. Specifically, the EEOC claims that unsuccessful applicants were told some of the following:
- “There are younger people here who can grow with the company”;
- “You seem older to be applying for this job”;
- “Do you think you would fit in?”;
- That the restaurant was “a younger set environment”;
- “We are looking for people on the younger side… but you have a lot of experience”; and
- “How do you feel about working with younger people?”
Before filing suit, the EEOC sought to settle the case. Now, the EEOC seeks money damages for all of the applicants allegedly denied employment on account of their age, and additionally seeks to compel Texas Roadhouse to institute policies and procedures to prevent future occurrences of age discrimination. It also seeks new training procedures for managers to avoid impermissible emphasis on age.
The EEOC press release can be found here.
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September 23rd, 2011
On September 19, 2011, the US Department of Labor announced that it had reached agreements to share information with several states and the IRS in an attempt to deter the misclassification of employees as independent contractors. This is part of the DOL’s prioritization of wage and hour law enforcement since Labor Secretary Hilda Solis took office with the Obama administration. The stated goal of this new policy is to increase the severity of punishment by making the employer subject to multiple fines, instead of just one. The states signing on to the DOL agreement are Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah, and Washington, with New York and Illinois indicating their intent to soon follow suit.
Previously, an employer caught misclassifying employees as independent contractors by a state agency would usually pay a fine only to that agency. Under the new agreements, however, an employer in one of the signatory states will not only pay a fine to the state agency, but will be reported to both the DOL and the IRS. The Department of Labor may seek its own fines and penalties from the offending employer. The IRS may pursue action against the employer for unpaid back taxes.
The DOL has hired 300 additional investigators to pursue these so-called “wage theft” complaints. The DOL has also indicated that the restaurant industry is one of the main industries they will target.
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September 16th, 2011
In a recent decision, the National Labor Relations Board ruled that employers may not terminate employees criticizing their working conditions using Facebook under certain circumstances. The ruling stems out of the termination of five employees at Hispanics United of Buffalo. One of the employees had posted comments from a co-worker relating to fellow employees on Facebook, and then commented that this individual was not providing enough help to Hispanics United’s clients. The employee also asked her coworkers to give input on the situation. Several comments followed, many of which related to the working conditions at Hispanics United, including excessive workloads. Some comments also contained profanity. The employee who had made the original comments regarding her fellow employees considered the postings to be “cyber-bullying.” Hispanics United fired the employee who made the Facebook post, and four other employees who had commented on the post, claiming that the posts had constituted harassment.
An administrative law judge for the NLRB ruled, however, that the Facebook discussion was considered protected conduct under the National Labor Relations Act. Section 7 of that Act protects the discussions of workers about the terms and conditions of employment. This means that certain employee criticisms of their employers on social networking sites like Facebook and MySpace are protected by law. Terminating an employee for posting such criticism on social networking sites may also lead to liability for employers. This is not, however, to say that any posting about an employer constitutes protected conduct. Posting confidential business or client information is not protected conduct, and an employee posting such information may be subject to termination. Employees also may not defame management or the company. Protected conduct is limited to discussions of the terms and conditions of employment.
There may often be a fine line between what constituted protected employee discussion of the terms and conditions of employment, and what might be outside of the zone of protection and subject to employer discipline. In such cases, it is critical to approach the situation with caution in order to avoid potential liability.
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August 23rd, 2011
The EEOC’s class action claim for sex discrimination against Bloomberg, L.P. failed in the Southern District of New York when Judge Loretta A. Preska dismissed the class action alleging a “pattern of discrimination” and emphasized that “the law does not mandate ‘work life balance.’” As Judge Preska explained, “In a company like Bloomberg, which explicitly makes all-out dedication its expectation, making a decision that preferences family over work comes with consequences.” Apparently, such consequences do not include a sex discrimination claim against the employer.
The individual plaintiffs remain in the case and will continue to press their claims against the company. But their theory of a claim on behalf of a class of women who have chosen to balance “life” with “work” has been sternly rejected as having no legal basis. While quotable, the opinion is not surprising. Life choices de-emphasizing career are made by men and women all the time in the work place, and trade-offs are constantly made as a result. The law does not mandate accommodation for a balanced life with family. Rather, it simply requires that men and women face substantially similar trade-offs if in substantially similar circumstances when those decisions are made. You can find the decision here http://www.nytimes.com/interactive/2011/08/17/nyregion/17bloomberg-eeoc-ruling.html?ref=nyregion
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August 19th, 2011
On August 15, 2011, the Massachusetts Attorney General’s Office announced that it was bringing suit against Peggy O’Neil’s Pub and Grille in Dorchester, accusing the pub of engaging in a pattern of discriminatory behavior by refusing to admit minority individuals. The suit seeks money damages, penalties, and the creation of antidiscrimination policies and employee training.
In the suit, the Attorney General’s Office cites to two separate refusals to admit people of African-American, Hispanic, and Cape Verdean descent during a birthday celebration in December 2010. The individuals were not admitted to the pub despite the attempted intercession of the woman celebrating her birthday, who is Caucasian. The suit alleges that the owner, Caron O’Neil, asked the group whether it was their first time there. She also said: “We don’t want any trouble tonight. I don’t know you guys, and you should try to find another place to go.’’ The friends then left the area.
Shortly thereafter, another group of friends of several racial backgrounds arrived as part of the same birthday celebration. The suit alleges that they were denied entry once the bouncers discovered that they did not know the owner. The suit further alleges that several Caucasian patrons were admitted despite not knowing the owner, being dressed more casually, and appearing intoxicated. According to the suit, the owner told them that “We don’t like people of your kind here. We’ve been doing this for a while and it’s been working fine and we don’t want any problems . . . I’m not letting you people in.’’
The suit also alleges that a group of African-American women were denied entry to the pub in April 2011.
Assuming that Peggy O’Neil’s Pub and Grille refused entry to these potential patrons for reasons other than their race, this lawsuit should serve as a reminder that refusing admittance to potential customers can be a risky business. A bar, pub, or club must balance important considerations of both customer safety, such as refusing to admit patrons wearing gang colors or who appear to be excessively intoxicated, with caution as to who is denied entry. If you refuse entry to members of one race for a certain reason, it must be clear that you refuse entry to members of all races for that same reason. Otherwise, you could find yourself on the wrong side of a discrimination lawsuit, even if you never intended to discriminate against anyone.
The original story as reported by the Boston Globe appears here.
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August 18th, 2011
On Monday, August 15, 2011, the Massachusetts Appeals Court affirmed a jury verdict in favor of the plaintiff in the case of Monteiro v. City of Cambridge. The Appeals Court found no reason to disturb the jury verdict in favor of the plaintiff, Malvina Monteiro, who alleged that she was fired in retaliation for filing a discrimination complaint with the Massachusetts Commission Against Discrimination. The jury originally awarded her more than $4.5 million dollars in compensatory and punitive damages, and with interest and fees the total award has already reached $7.6 million dollars. With the likelihood of an award of attorney’s fees for the decade-plus of litigation leading up to this decision, the City of Cambridge may face a total bill of over $10 million dollars.
This case brings two critical issues into sharp relief. First, take complaints of discrimination seriously, and make sure all of your employees, from the top to bottom, understand that taking retaliatory action in response to a complaint of discrimination is not only illegal, but extremely bad business. Second, understand that what might initially appear to be a lawsuit for thousands of dollars can, if not handled correctly, become a lawsuit that costs you millions. Although you might not always be able to avoid an employee acting in a discriminatory manner, seeking experienced legal counsel as soon as you are threatened with a charge of discrimination can help you to minimize any damage that might result.
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August 16th, 2011
Last week, the 11th Circuit Court of Appeals ruled the individual mandate in the Obama Health Care Law unconstitutional. It did not, however, strike down the entire law. (The opinion can be found here.) In January, a federal district court in Florida had found the mandate, which requires citizens to buy health insurance, was unconstitutional and struck down the entire law because it did not have a savings clause. The 11th Circuit affirmed part of that decision—i.e., that the mandate is unconstitutional.
A divided three-judge panel of the 11th Circuit sided with 26 states that filed a lawsuit to block President Obama’s signature domestic initiative. The panel said that Congress exceeded its constitutional authority by requiring Americans to buy insurance or face penalties. In particular, it stated the mandate to be “a wholly novel and potentially unbounded assertion of congressional authority.”
The panel further stated, “[T]he individual mandate contained in the Act exceeds Congress’s enumerated commerce power. . . . The power that Congress has wielded via the Commerce Clause for the life of this country remains undiminished. Congress may regulate commercial actors. It may forbid certain commercial activity. It may enact hundreds of new laws and federally-funded programs, as it has elected to do in this massive 975- page Act. But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”
The panel also concluded, “It cannot be denied that the individual mandate is an unprecedented exercise of congressional power. As the CBO observed, Congress ‘has never required people to buy any good or service as a condition of lawful residence in the United States.’ . . . . “Never before has Congress sought to regulate commerce by compelling non-market participants to enter into commerce so that Congress may regulate them. The statutory language of the mandate is not tied to health care consumption—past, present, or in the future. Rather, the mandate is to buy insurance now and forever. The individual mandate does not wait for market entry.”
The decision is a major setback for President Obama. The federal government had appealed the ruling by the federal district judge who struck down the entire law in January. The case, however, is clearly headed to the U.S. Supreme Court, which will have the final say. In fact, it is now more likely that the Supreme Court will hear the case. The fact the 11th Circuit and 6th Circuit are at odds with each other in their respective rulings increases the likelihood that the Court will decide this issue.
What is particularly notable about this decision is that it overturned the district court’s severability ruling—i.e., it held that, regardless whether the mandate is unconstitutional, the rest of the law remains intact. If the Supreme Court rules that way too, it will mean the rest of ObamaCare will remain intact and good law even after the mandate is stricken. This outcome, however, will not have been intended. As news reports indicated last year, the whole reason the mandate exists in the first place is so that insurers have a large new pool of premiums flowing in to help offset the costs they will incur from now having to cover people with preexisting conditions, etc. If that pool disappears, the whole arrangement theoretically becomes financially unsustainable.
As stated above, the Supreme Court will likely combine this decision and the Sixth Circuit’s decision from just two months ago and ultimately resolve once and for all the issue of whether the individual mandate in the Obama health care law is constitutional and, perhaps, whether the rest of the law itself can remain in effect without a savings clause.
Tags: individual mandate, individual mandate in obama health care, individual mandate in obama health care law, obama care, obama health care, obama health care law, obamacare
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August 2nd, 2011
The rising tide of patent litigation is now affecting the hospitality industry in surprising and substantial ways. How? We can list two very real examples: For one, what café or hotel does not offer wi-fi to customers these days? For another, how many restaurant or retail businesses use search locator software on their websites to help customers find them? You may yourself have installed a free wi-fi service for your customers so they can use their laptops and tablets while sitting in your restaurant. Or you may have a service that provides a search engine on your website to help customers find your location. If so, you might be surprised to receive a letter in the mail from a company you’ve never heard of, telling you that your locator service and wi-fi might infringe on their patents. You might be even more surprised when you read the demand for you to fork over a monthly licensing fee or a substantial lump sum payment, or face a lawsuit. In that event, you’ve been snared by the net of a patent troll, and you need to develop a strategy to deal with it.
What is a patent troll? The very term conjures a Grimm Fairy Tale image of a hunched and hungry monster who lays in wait under a bridge to catch unsuspecting and innocent passers-by. Indeed, the Grimm image is often not far from the fact. Typically, a patent troll is a company that purchases patents from bankrupt entities or other companies that hold patents but no longer actively use them. The patent troll does not intend to put the inventions claimed in its patents into practice or to make anything. Rather, the troll’s business model is simply to threaten litigation against potential infringers and to collect royalties they can extract through such threats. Upon assembling its patent portfolio, the troll will send out demand letters to a host of businesses, alleging that they may be infringing on the troll’s patents. Often, these demand letters are short on specifics, make very broad claims, and are accompanied by an offer to reach a “reasonable” agreement with the business, which typically includes a “reasonable” licensing fee in the form of either monthly payments or a lump sum amount. In many cases, refusal to pay the licensing fee can result in a potentially expensive patent infringement lawsuit.
If you want to know more about patent trolls, you can just ask one of over three hundred retail and hospitality industry defendants sued by Geotag, Inc., a patent troll company. Some of these defendants include Starbucks, Barnes and Noble, Best Buy, and McDonald’s, and are scattered throughout the entire United States. They, like many other patent infringement defendants, have been forced to defend themselves in the Eastern District of Texas against Geotag’s claim that the store locator services the various defendants allegedly provide on their respective websites infringe a patent Geotag holds concerning web search technology. The defendants have been sued despite the fact that most of them buy their locator search engines from service providers that include, for example, Google and Microsoft. Both Google and Microsoft have entered the fray by filing a separate declaratory judgment action against Geotag in Delaware seeking, among other things, to invalidate the patent at issue, but the infringement cases against most of the original defendants are still pending in the Eastern District of Texas.
Another example of patent troll litigation against the hospitality industry includes a string of lawsuits filed by Innovatio IP Ventures, another patent troll company, against multiple defendants including Panera Bread and Best Western Hotels. Innovatio essentially claims that all businesses providing wireless networking capability to customers infringe on a series of patents it claims to hold. Innovatio has also been engaged in a letter-writing campaign, sending threatening letters with demands for quick payment of licensing fees to many other businesses. Similar to the Geotag pattern, the large providers of the service or product at issue (in this case Cisco and Motorola) have filed suit against the patent troll in another court seeking, among other things, to invalidate the patent at issue, but the case against Best Western continues for now. There are still numerous cases pending against businesses sued by Innovatio.
How does one respond when caught in the troll’s snare? When a company receives one of these demand letters, it should make several calls immediately. First, it should call its lawyers, inform them of the letter, and get them a copy of the letter quickly. Then it should call its insurance providers to notify them of the claim. If applicable, the company should inform its provider of the allegedly infringing product or service and seek cooperation from them, and potentially indemnification depending on your vendor contract. With the assistance of counsel, and perhaps with technical assistance as well and input from your vendor, you can examine the patent claims and compare them to the product or service you offer to determine whether you have an argument that you do not infringe. You can also, again with the help of counsel, research what prior art may exist that could serve to invalidate the patent at issue. You can also review your insurance policies and your vendor contracts to determine whether you may have a third party source to help pay for your legal defense. Additionally, you may investigate whether there exists similarly-situated businesses that may be interested in pooling resources and forming a defense group which could help defray legal and expert fees and expenses.
Patent claims can be very expensive, time consuming and fraught with risk. When faced with a demand, seek counsel and develop a strategy that works for you, considering both your legal and economic positions. Then you can move forward in a rational manner and minimize the risk to you and your business.
About the authors:
Christopher T. Vrountas is a partner at Nelson Kinder + Mosseau PC. He chairs the firm’s Employment Litigation and Counseling Group as well as the firm’s Food and Hospitality Practice Group and its IP Trial Practice Team. Chris is a member of the New Hampshire Lodging and Restaurant Association as well as the Academy of Hospitality Industry Attorneys. He and the firm are “preferred providers” of legal services to the members of the NHLRA. Chris regularly publishes in the NHLRA’s “The Dish” and edits the firm’s LegalBites blog which can be found at www.nkms.com/legalbites/and which covers various legal issues affecting the hospitality industry.
Richard S. Loftus is an associate at Nelson Kinder + Mosseau PC. He works in the areas of commercial, employment, construction, and IP litigation. He has worked on many complex civil litigation cases in state and federal court, including arguing successfully before the New Hampshire Supreme Court. He has also worked in complex international litigation. Before joining the firm, he served as judicial law clerk for the Honorable Andre Gelinas of the Massachusetts Appeals Court.
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June 20th, 2011
This morning, the Supreme Court issued its opinion in the Wal-Mart v. Dukes class action lawsuit that alleged discrimination of female employees.
The Court held 9-0 that a class of over one and a half million plaintiffs (current and former female employees of Wal-Mart) was improperly certified. The Court was split 5-4, however, in how it reached this decision. The majority—comprised of Justices Scalia, Roberts, Alito, Thomas, and Kennedy—concluded the class lacked commonality under Federal Rule of Civil Procedure 23(a)(2).
By contrast, Justice Ginsburg, who dissented in part—and was joined by Justices Breyer, Sotomayor, and Kagan—agreed the class action should not have been certified, but she states she would have ruled on a narrower ground than the majority. Although she agrees with the majority that the class should not have been certified under Rule 23(b)(2) (a provision in the Rule that allows requests for injunctive or declaratory relief and does not allow claims for monetary relief where such relief, as in this case, is not incidental to the injunctive or declaratory relief sought), Ginsburg indicates the lower court’s finding of commonality was correct. Instead, she hints that “[a] putative class of this type may be certifiable under Rule 23(b)(3),” and she would remand the case to determine whether the class meets those requirements.
In the case, the plaintiffs alleged that the discretion exercised by their local supervisors over pay and promotion matters violates Title VII by discriminating against women.
The Majority Opinion
Writing for the majority, Justice Antonin Scalia held that, under Federal Rule of Civil Procedure 23, to certify a class, a plaintiff must do more than ask broad questions of the class to satisfy the requirements of the Rule. Instead, a court must perform a rigorous analysis (as stated time and again) and, sometimes, that analysis may require that the court explore the claims of the plaintiffs more than usual. (As the Court stated, “that ‘rigorous analysis’ will entail some overlap with the merits of the plaintiff ’s underlying claim. That cannot be helped.”)
In particular, the plaintiffs did not allege that Wal-Mart had any express corporate policy against the advancement of women; rather, they claimed their local managers’ discretion over pay and promotions was exercised disproportionately in favor of men, leading to an unlawful disparate impact on female employees. The plaintiffs claimed this discrimination was common to all Wal-Mart female employees. Their theory alleged that a strong and uniform “corporate culture” permits bias against women to infect, perhaps subconsciously, the discretionary decision-making of each one of Wal-Mart’s thousands of managers—thereby making every woman at the company the victim of one common discriminatory practice.
The Court stated “the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate-impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once.” Rather, “[t]heir claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor.” Moreover, “[t]hat common contention . . . must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”
Here, the Court noted the crux of a Title VII inquiry is “the reason for a particular employment decision,” and the plaintiffs wished to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, the Court stated, it would be impossible to say that examination of all the class members’ claims would produce a common answer to the crucial discrimination question.
Scalia further dismissed the statistical and anecdotal evidence filed by the plaintiffs, stating “Wal-Mart’s ‘policy’ of allowing discretion by local supervisors over employment matters” was “just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.” Scalia also relied on the fact that Wal-Mart has a written policy of non-discrimination.
Justice Ginsburg’s Concurrence and Dissent
Ginsburg took the opposite view. She agreed the class action should not have been certified under Rule 23(b)(2), but she indicates the lower court’s finding of commonality was correct. Moreover, she states a class might be certifiable under Rule 23(b)(3).
She argued Wal-Mart’s non-discrimination policy has a disparate impact: she noted that, at Wal-Mart, women fill approximately 70% of the hourly retail jobs, but only 33% of management positions. The reason, she argues, may be the subjective “tap on the shoulder process” that allows certain subjective standards, influenced by gender bias, to prevail when it comes to selecting employees deemed “management material.” She further wrote, “The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware. The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.”
What Does This Mean For Employers?
The Court’s decision in the Wal-Mart v. Dukes class action lawsuit is good news for employers because it sets a new higher standard for defining a class, which will likely make it difficult in the future for other class action claims against large companies based on discrimination to be certified.
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