an election year in review update on labor …...46th annual conference on labor relations and...

46th Annual Conference on Labor Relations and Employment Law

September 29-October 1, 2016

Richmond Omni Hotel, Richmond, VA

An Election Year in Review – Update on Labor

& Employment Law Developments

Annual Update

VIRGINIA BAR ASSOCIATION SECTION ON LABOR RELATIONS AND EMPLOYMENT LAW: ANNUAL EMPLOYMENT LAW CASE UPDATE

October 2016

John M. Bredehoft Zachary A. Kitts Kaufman & Canoles, P.C. K&G Law Group, PLLC Norfolk, Virginia Fairfax, Virginia [email protected] [email protected]

October 1, 2015 through October 1, 2016

I. BOWMAN CLAIMS

Bocock v. Specialized Youth Services, Inc., Civil Action 5:14cv0050 (W.D. Va. Oct. 14, 2015).

This is really a case about federal civil procedure. Plaintiff brought a three count complaint against defendants. Counts one and two were for violations of the ADA and count three was a Bowman claim. Plaintiff sought voluntary dismissal without prejudice under Fed. R. Civ. P. 41(a)(1), which defendants resisted.

At issue in this case is the ambiguity in the Fourth Circuit test as to the degree of prejudice to a defendant sufficient to deny a motion for voluntary dismissal. The court begins the analysis by listing the things that are not sufficiently prejudicial—the prospect of a subsequent lawsuit, the possibility that the plaintiff will gain a tactical advantage, the fact that a Motion for Summary Judgment has been filed and/or the fact that extensive fact discovery has taken place.

Plaintiff argued, in part, that she was entitled to dismissal because defendants had deleted emails that could be relevant to the case and this was not learned until late in the discovery process. The court did not find this totally persuasive; it did however find merit in plaintiff’s argument that the Bowman claim would be better off re-filed in a state court given that such claims are unique creatures of Virginia common law.

The court granted plaintiff’s motion with conditions – (1) that all discovery in the case may be used in the event the Bowman claim is refiled and (2) that Bocock must pay one-third of the taxable costs incurred by defendants through the filing of her motion for voluntary dismissal.

Ingelson v. Burlington Medical Supplies, Inc., 2015 WL 6443098 (E.D.Va. Oct. 22, 2015)

Plaintiff’s Bowman claim – alleging that she was terminated for her refusal to aid and abet adultery with her married supervisor – survived a Motion to Dismiss. Like roughly 20 other states, adultery remains a misdemeanor crime in Virginia. Va. Code § 18.2-365. It is also illegal to aid and abet a crime by sharing the criminal intent of another person.

mailto:[email protected]

mailto:[email protected]

Annual Update Page 2 of 26 October 2016 JMB/ZAK

A second Bowman claim – based on plaintiff’s refusal to engage in fornication – did not survive, because the Virginia Supreme Court has held that the statute prohibiting fornication violated the 14th Amendment.

The owner of the company had previously been sued by EEOC in 2008 for more or less identical behavior towards a number of female employees. Accordingly, plaintiff also included a negligent retention claim. Judge Davis held that to state a claim for negligent retention, a plaintiff must allege serious and significant physical harm. Because plaintiff here could make no such allegation, her negligent retention claim was dismissed.

Blanchard v. Capital One Services, LLC, 2015 WL 9274067 (Fairfax Oct. 26, 2015)

Plaintiff brought a Bowman claim alleging that he was terminated after he sought payment of an earned bonus. Plaintiff alleged that his termination was in violation of the public policy enunciated in Va. Code § 40.1-29, which protects employees' payroll and wages from being improperly deducted or withheld. Central to the ruling was whether plaintiff had exhausted – or needed to exhaust – his administrative remedies by filing a claim with the “Virginia Employment Commission” seeking his unpaid bonus prior to his termination, like the plaintiff in Millsap v. Synon, Inc., 19 Va. Cir. 261 (Va. Cir. Ct. 1990).

The Court held that an administrative filing with the “Virginia Employment Commission” is not required prior to bringing a Bowman claim for violations of Va. Code § 40.1-29. Presumably this would also mean it is not necessary to file an administrative claim with the Commissioner of the Department of Labor and Industry, which is the actual agency of the Commonwealth in charge of such claims.

Johnston v. William E. Wood & Associates, Inc., 292 Va. 222 (2016)

The typical formulation of the at-will employment presumption runs as follows: “either party is free to terminate the employment relationship at any time and for any reason with reasonable notice to the other party.” Many folks wondered just what the notice requirement entailed – we now have a definitive statement from the Supreme Court of Virginia.

Brenda Johnston worked at William E. Wood & Associates, a real estate services firm, for 17 years. She was at all times an employee at-will. After she was terminated she sued on that basis, arguing that she was entitled to some sort of notice.

Yeah, right.

Resolving a split among the various circuit and federal courts to have considered the issue, the Court held that “reasonable notice” required for termination of an employee has no temporal element. The issue is not whether an employee has been given two-weeks’ notice, or whether a 30-year employee is somehow entitled to a longer notice of termination. Rather, the only requirement imposed by Virginia law is that the notice is “effectual notice that the employment has been terminated.”


Brooks v. Babcock & Wilcox Power Generation Group, Inc., 2016 WL 4250491 (W.D.Va.

2016).

Plaintiff was employed by BWXT for more than 23 years and was a participant in a defined-benefit pension plan of the type rarely offered today. She was fired for signing a co-worker’s name on a shipment of nuclear waste; plaintiff alleges that the reason for her termination was pretexual and that she was actually terminated in violation of § 510 of ERISA. Plaintiff also brought Bowman claims alleging that she was terminated unlawfully for exercising rights established under Va. Code § 40.1-51.2:1 (filing a health and safety complaint) and § 18.2-172 (prohibiting forgery).

The Bowman claims were dismissed on a 12(b)(6) motion. Plaintiff did not allege that she had actually filed a health and safety complaint that would trigger the rights guaranteed under Va. Code § 40.1-51.2:1; her second Bowman claim (based on the forgery statute) was also dismissed because she had in fact signed the waste shipment with a name other than her own. Her § 510 ERISA claim survived however.

II. OTHER COMMON LAW CLAIMS

A. NEGLIGENT RETENTION AND HIRING

[Unknown v. Unknown] (Fairfax County Circuit Court) (Oct. 19, 2015).

A negligent hiring and retention case settled for $3 million in the Circuit Court for Fairfax County in October of 2015. The defendant trucking company knowingly hired a long-haul truck driver who had previously been convicted of murder as a teenager. The defendant driver learned about the job because his father – himself a felon – also drives for the company.

This settlement arose out of a road-rage incident on I-81, with one party refusing to allow the other party to merge. After much back and forth over the radio, the two drivers pulled over to sort out their differences in person. The defendant driver bludgeoned the plaintiff with a hammer and left him unconscious. The plaintiff’s injuries were such that he had to re-learn basic motor skills like tying his shoes, etc.

It is interesting to note that the defendant and his father are not the only felons working for this particular trucking company. The owner of the company makes a point of hiring felons – including, according to his deposition testimony, one convicted of felony sex crimes, one convicted of felony domestic violence and one who “cut somebody up with a knife” – because “every man deserves a second chance.”

The owner of the company is true to his word about these second chances – the attacker in this case was terminated and is currently serving a decades-long prison sentence, but his employee file was marked “eligible for re-hire.”


B. NON-COMPETE AGREEMENTS The Reading and Language Learning Center v. Charlotte Sturgill, Case No. CL-2015-10699

(Fairfax August 4, 2016).

In this case, Judge Tran declined to enforce a covenant restricting an independent contractor’s post-engagement competition, on the grounds that the employment agreement containing the covenant misclassified the worker as an employee. The Court held that public policy would be offended by enforcement of the agreement, even if the misclassification had been inadvertent. Since the Court also quickly, and properly, held the covenant unenforceable for violating the “janitor defense,” perhaps this holding is dicta.

Hair Club for Men LLC v. Ehson, ___ F. Supp. 2d ___ (E.D. Va. Aug. 31, 2016).

On cross-motions for summary judgment in the case of a departing employee, Judge O’Grady entered summary judgment for the plaintiff employer on breach of contract/non-compete and breach of fiduciary duty claims, and entered summary judgment in favor of the employee on a claimed violation of a nonsolicitation agreement.

The decision is important because it rejects the janitor defense: the non-compete agreement prohibited the employee from working in the hair-replacement business or becoming “interested” in such a business, “directly or indirectly, as an individual, partner, stockholder, director, officer, clerk, principal, agent, employee,” or any other capacity. Judge O’Grady held the clause was nevertheless valid, because the employee had full information respecting the employer’s clients, proprietary information, and techniques. The employee also solicited clients before she left her employer and – while the Court found the non-solicitation clause overbroad (because the company would not necessarily be aware of all former clients of The Hair Club), the pre-departure solicitation constituted a breach of fiduciary duty.

C. CONTRACTS AND ESTOPPEL

Butler v. Fairfax County School Board, ___ Va. ___, Record No. 150150 (Va. Dec. 17, 2015).

An interesting case in which the Court held Va. Code § 22.1-296.1(A) authorized the dismissal of a teacher who had been licensed for 15 years and had been teaching for over eight years. The Code section requires an applicant for a teaching position to certify that he had no felony convictions. When she was hired, Ms. Butler accurately disclosed a felony drug offense for which she was convicted in 1992; the Board hired her anyway. When this was drawn to the Board’s attention many years later, she was fired. The Court held that the statute actually prohibited the Board from hiring anyone who did not make the proper certification (even though the section was titled, “data collection”), and that the Board lacked authority to hire Ms. Butler in the first place. The Court rejected Ms. Butler’s estoppel argument because she was unable to show detrimental reliance on the Board’s action in hiring her.


III. COLLECTIVE BARGAINING/LABOR RELATIONS

Groves v. Comm. Workers of Am. 2016 WL 908882 (4th Cir. Mar. 10, 2016)

Plaintiffs alleged that AT & T breached their collective bargaining agreement by wrongfully terminating their employment and that CWA and Local 3702 breached their duty of fair representation by failing to inform Plaintiffs of a settlement offer for that termination. Plaintiffs were terminated by accident when an administrative software error showed that they had not met certain sales goals. No terminated employee filed a grievance with the union. AT&T later contacted the union to apologize for this error and offered a settlement payment to each terminated employee. The union did not contact its members to inform them of the settlement offer – because, again, no employee had filed a grievance – and the offer expired. Normally an employee who wishes to sue her employer for violations of a collective bargaining agreement must exhaust the contractual remedies provided for in that agreement. However, where plaintiffs bring a so-called “hybrid action” against both the union and the employer under 29 U.S.C. § 185, the employee can forego the administrative remedies by showing both that the employer breached the collective bargaining agreement and that the union breached its duty of fair representation. The central question in this appeal was whether a hybrid action can be properly used to challenge union conduct that, while unflattering and dilatory, did not contribute to the employees’ failure to exhaust their contractual remedies. The Fourth Circuit – speaking to the issue for the first time – held that although an employee is not required to exhaust his contractual remedies before filing a hybrid action, there must be some causal link between the union’s failure to provide fair representation and the employee’s failure to exhaust contractual remedies.

IV. FAIR LABOR STANDARDS ACT

A. SPECIFIC STATUTORY EXEMPTIONS FROM OVERTIME

Encino Motorcars LLC v. Navarro, ___ U.S. ___, No. 15-415 (June 20, 2016). Since the mid-1960s, the FLSA has contained an exemption from overtime for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at a covered dealership. The Department of Labor issued a regulation implementing the amendment. Under the regulation, “service advisors,” who sell repair and maintenance services but not vehicles, were not covered by the exemption. A number of courts disagreed, and DOL issued an opinion letter in 1978, reversing its position and holding that service advisors were exempt under the statute (a view that was incorporated into the WDH Field Service handbook in 1987). However, in 2011 the Department again reversed field, returning to its previously-abandoned 1970 position that service advisors were not covered by the exemption. In a suit by service advisors for unpaid overtime, the dealership successfully convinced the district court that service advisors were exempt, but the 9th Circuit reversed, affording Chevron deference to the DOL’s 2011 abandonment of that position. The Supreme Court disagreed, engaging in a fairly detailed analysis of the DOL’s regulatory actions to conclude that they were ill-supported, and without a reasoned explanation for the


change – rendering them arbitrary and capricious and unworthy of Chevron deference. The Court reversed and remanded to the Court of Appeals for an interpretation of the statute itself, giving no deference to the DOL position that it did not apply to service advisors. [Your esteemed CLE materials author thinks the discussion of Chevron and the requirements for deference to agency pronouncements may well be a factor when the Court considers an appeal from the Fourth Circuit decision on transgender bathroom access in the Gloucester County case, which after all was decided based on deference to the Department of Education interpretation of Title IX rather than any independent evaluation of the merits of the claim.]

B. COLLECTIVE ACTION ISSUES

Tyson Foods, Inc. v. Bouaphakeo, ___ U.S. ___ (March 22, 2016). The Court upheld the use of statistical sampling to determine the gross amount of overtime owed to a class in an FLSA collective action, rejecting a challenge to the use of sampling methodology under Wal-Mart. The Court distinguished Wal-Mart by noting that the individual employees were not similarly situated, and that none of them could have prevailed in an individual suit based on evidence of discrimination against other members of the suit. In this case, a donning-and-doffing claim, the single statistical study “could have been sufficient to sustain a finding as to hours worked if it were introduced in each employee’s individual action.” The Court noted that the workers toiled in the same facility, doing similar work, under the same policy. However, the Court did not reach the question of how to allocate the jury’s award based on a statistical sampling, deeming it premature.

Feamster v. CompuCom Systems, Inc., 2016 WL 722190 (W.D.Va. Feb. 19, 2016).

Plaintiffs – who work as field service technicians – brought a collective action alleging off-the- clock work and other violations of the FLSA. Defendants filed a motion to dismiss arguing that plaintiffs signed contracts waiving their right to participate in a collective action and attaching contracts signed by the three name plaintiffs. The court concluded as a matter of law that employees could waive their rights to participate in a collective action under the FLSA, and directed the parties to engage in limited discovery about whether the specific waiver in the contract was enforceable. This one is worth keeping an eye on because it brings about the possibility of a circuit split – in 2014 the Sixth Circuit specifically found such employment clauses invalid in Killion v. KeHE Distributors, 761 F.3d 574 (6th Cir. 2014).

Amaya v. Power Design, Inc., ___F.3d ___, No. 15-1691 (4

th Cir. Aug. 15, 2016).

This was a collective action for unpaid wages under the Fair Labor Standards Act. The district court granted summary judgment in favor of the defendant employer, and the Court of Appeals reversed. The issue arose from the government-contract context in which the employees worked: they were employees of a subcontractor which worked for another subcontractor which worked for the prime contractor, which worked for the Navy. Each of the contracts and subcontracts incorporated the Davis Bacon Act and the Contract Work Hours and Safety Standards Act; there was no express incorporation of the FLSA. The district court held that neither the DBA nor the CWHSSA provided for a private right of action (but only for enforcement of the standards they


impose, by the Department of Labor), and that the workers could not “circumvent those statutes by bringing claims under the” FLSA. Not so, said the Court of Appeals; the statues do not expressly pre-empt each other and there was no argument that compliance with the FLSA would lead necessarily to non-compliance with the other statutes.

D. STATUTE OF LIMITATIONS/WILLFUL OR NON-WILLFUL

Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111 (4th Cir. 2015).

Although GEICO lost its exemption defense on summary judgment, it was able avoid liquidated damages and a three-year statute of limitations in this case by generating evidence that is actions were not willful. The specific question in this case was whether fraud investigators in GEICO’s Special Investigations Unit were exempt from the minimum wage and overtime requirements of the FLSA under the administrative exemption. That exemption covers employees 1) who are compensated at a rate of not less than $455 per week; 2) whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or its customers; and 3) whose primary duty includes the exercise of discretion and independent judgment on matters of significance. The district court awarded summary judgment to plaintiffs because the defendants were unable to meet the third prong of this test; the Fourth Circuit affirmed this ruling by the district court. GEICO had obtained a significant victory in the district court, however, when it obtained summary judgment on the issue of willfulness. Evidence showed that GEICO had undertaken two reviews of the job descriptions for SIU investigators, once in 2004 and then again in 2007. Both reviews involved lawyers and executives at the highest levels. The evidence further showed that its executives and others discussed the issues and made a reasoned decision that the employees were truly exempt. This was sufficient evidence to show that GEICO’s actions were in good faith such that it could avoid liquidated damages and a three-year statute of limitations.

D. INDEPENDENT CONTRACTORS

Foster v. Gold & Silver Private Club, Inc., 2015 WL 8489998 (W.D.Va. Dec. 9, 2015)

This opinion regarding the status of independent contractors under the Fair Labor Standards Act incorporates a very broad definition of “employee” for FLSA purposes. The case involves dancers at a private club who were hired as independent contractors. Among the factors Judge Conrad found persuasive in holding they were actually employees, was the fact that they were required to obey the rules of the club – no swearing, no fighting, no boyfriends – which (in the opinion of this CLE presenter) would be a factor common to every single worker in all workplaces. The case is also important to attorneys suing or defending small employers: the Court determined that it did not need to decide whether the Club’s revenues or other operations placed it in “interstate commerce” for purposes of the FLSA, since the dancers danced to music provided over the


Internet – surely interstate, and standing alone a sufficient jurisdictional nexus. V. FAMILY MEDICAL LEAVE ACT

Duong v. Bank of America, N.A., 2016 WL 899273 (E.D.Va. March 2, 2016).

Plaintiff claimed that Bank of American interfered with her protected rights under the FMLA when it refused her request to permanently transfer to Laguna Niguel, California. (This request followed an earlier request by the plaintiff to transfer to Northern Virginia from Southern California). Plaintiff was unable to articulate how a transfer to California would have implicated the FMLA, even though her father was ill in that city.

Plaintiff’s Title VII claim fared no better. Plaintiff alleged that she was discriminated against based on her race when B of A “racially steered” her towards the Annandale B of A branch (as opposed to the Alexandria office) because it was perceived that she would be able to better connect with the Korean community in Annandale. Summary judgment for the employer.

Vannoy v. Federal Reserve Bank of Richmond, 827 F.3d 296 (4

th Cir. 2016)

Vannoy filed suit against her employer for interference and retaliation in violation of the FMLA and for discriminatory discharge (and failure to accommodate) in violation of the ADA. Summary judgment was granted by district court on all claims. Continuing a generally pro-plaintiff trend in the circuit, the Court of Appeals reversed summary judgment in this FMLA case, and in the process provided us with a valuable discourse on the difference between an FMLA “retaliation” claim, and an FMLA “interference” claim. While the Court of Appeals affirmed the district court’s grant of summary judgment under the ADA and for the FMLA retaliation claim, it remanded the FMLA interference claim: the employee had been provided a defective notice that omitted notice of a right to reinstatement after the conclusion of medical leave.

VI. TITLE VII OF THE CIVIL RIGHTS ACT OF 1964

A. NATIONAL ORIGIN DISCRIMINATION

Guessous v. Fairview Property Investments, LLC, 828 F.3d 208 (4th

Cir. 2016).

If, like many lawyers, you remember cases by a catch-phrase, you might remember this one as follows: “Like my buddy says ... not all Muslims are terrorists, but most are.” The Fourth Circuit’s opinion addresses several important issues and reverses the District Court’s decision on each of them. One is the proper application of the “continuing violation” theory when the alleged acts of harassment fall outside the 300-day period, but an alleged discriminatory result – here, the removal of the plaintiff’s assignments and the termination of her employment – fall within the 300-day period.


The second and more important issue involves the grant of summary judgment to the defendants on her Title VII and Section 1981 hostile environment claims, both of which were based on race. The District Court held that the plaintiff had no hostile environment claim because only a single statement made by the employer “could be construed as a negative race-based statement.” That comment was a reference to individuals from Dubai as “just a bunch of camel people.” (This statement was made more than 300 days prior to the filing of the complaint, but within the four-year statute of limitations under 42 U.S.C. 1981.) Both of these holdings, so far as they go, are undoubtedly correct; a single race-based comment in four years would almost never constitute conduct sufficiently severe and pervasive as to create an actionable hostile environment. Worth noting, however are the many comments not treat as race-based derogatory comments by the district court but rather described as mere “distasteful . . . references to and questions about Islam and Moroccan culture.” The district court had been misled into following governing Fourth Circuit caselaw from before 2015! The Fourth Circuit determined that these “distasteful” statements could have been construed as racially disparaging to a reasonable person. Such comments include, for example: (i) plaintiff’s supervisor sharing his view that Middle Eastern and Arab individuals “are all a bunch of crooks and con men, who will stop at nothing to rip you off;” (ii) after a news report of a terrorist attack, the supervisor and the plaintiff had a conversation that started with the inquiry, “Why do Muslims hate America?” and progressed through the statement, “[L]ike my buddy says, not all Muslims are terrorists, but most of them are;” (iii) the supervisor’s statement that “poor Israelis are being killed every day by terrorist Muslim Palestinians,” coupled with a demand that the plaintiff “explain that;” (iv) when the plaintiff commented that Islam and Christianity were similar because they were both monotheistic, Abrahamic religions, the supervisor said “No, Monica! We are not the same, you might think we are, but we are not! We do not believe in the same God!;” (v) when the plaintiff wished the supervisor a happy birthday, his response was to say, “Thanks; every year I am reminded of the terrorist attack by Muslims” because his birthday is September 11; (vi) when the supervisor was displeased with the plaintiff’s progress on a project, he snapped his fingers at her and said, “This is not Moroccan time, Monica. You need to work faster;” (vii) the supervisor asked the plaintiff, “what is up with Egypt and why are the Muslims killing people? . . . You are from the same culture and all, so I thought I would ask you;” (viii) when plaintiff suggested that a restaurant serve non-pork dishes to expand its clientele, noting that Muslims do not eat pork, the supervisor responded that “[w]e are not interested in that kind of clientele at the moment.” The Fourth Circuit ruled that the district court erred when it took an overly cramped view of what constitutes race-based conduct and failed to consider the totality of circumstances, as it must when determining whether unwelcome conduct is severe or pervasive. VI. ISSUES OF SPECIAL CONCERN TO PUBLIC EMPLOYEES OR EMPLOYERS

Green v. Brennan, 136 S.Ct. 1769 (2016).

This case has more general application as a constructive discharge statute of limitations case,

but it was filed as a federal-employee case under Title VII, so that’s where it goes in the outline. Those cases are governed by a 45-day rule in which the employee must initiate contact with the EEOC. The Court held that the 45-day period begins to run in a constructive discharge case at the


time of the employee’s resignation. Justice Sotomayor reasoned that the fact of an actual resignation was part of the cause of action for constructive discharge, so the time period in which a claim must be asserted cannot begin to run until the date of the resignation. (Actually, the court held the date the employee gives definitive notice of her intent to resign governs, not the effective date of the resignation.) One sees no reason not to apply this reasoning to constructive discharge cases involving private employers.

Lawson v. Union County Clerk of Court, 828 F.3d 239 (4

th Cir. 2016).

Melanie Lawson was employed as deputy clerk in a South Carolina county with the unlikely name of “Union”, for roughly ten years. After she declared her candidacy for her boss’s position, she was placed on unpaid leave for the duration of her campaign. After losing the election, her employment was terminated. Lawson filed suit arguing that her termination was in violation of her first amendment rights to freedom of speech. The District Court Judge (with the unlikely name of “Tim Kaine”) ruled against her and entered summary judgment, finding that the Clerk was entitled to terminate Lawson under the Elrod-Branti exception.

The Fourth Circuit overturned the District Court, finding that Elrod-Branti test had not been met by Gault. With regard to the other potential test, known as the Pickering exception, the court ruled that the record offered insufficient evidence on whether the that exception could be met. The Fourth Circuit remanded the case to the District Court. A spirited dissent, however, argued that the Fourth Circuit should have reversed the judgment, as opposed to simply vacating the judgment and remanding it to the District Court.

Leuenberger v. Spicer, 2016 WL 355090 (W.D.Va. Jan. 28, 2016).

Plaintiff, a former Assistant Commonwealth’s Attorney in Frederick County, filed an EEOC charge against the “Office of the Commonwealth’s Attorney Frederick County” alleging discrimination and retaliation claims under the Equal Pay Act and Title VII. When the EEOC failed to complete its investigation after 180 days, plaintiff filed suit against Spicer and Frederick County; both parties moved to dismiss the complaint on various grounds, including Fed. R. Civ. P. 12(b)(1) (lack of subject matter jurisdiction, (b)(2) (lack of personal jurisdiction) and (b)(6) (failure to state a claim).

The court found that it did not have jurisdiction over the Title VII claim against Frederick County because she had not named Frederick County as a defendant in her EEOC charge. The court did have jurisdiction over the claims against Spicer, however, because although plaintiff named only the “Office of the Commonwealth’s Attorney Frederick County” in her EEOC complaint, Mr. Spicer and his Office were legally identical. Her Title VII claims were dismissed under Fed. R. Civ. P. 12(b)(6) because the Mr. Spicer did not have 15 employees and, more importantly, his office and Frederick County could not be deemed joint employers of plaintiff for purposes of reaching the 15 employee threshold. Her EPA claims, however, survived the motion to dismiss.


Ross v. Franklin County Dept. of Social Services, No. 4:14-cv-00512 (W.D. Va. May 11, 2016).

The plaintiff, who was the first African-American supervisor in the Franklin County Department of Social Services, has sufficiently identified the respondent in her EEOC Charge, despite the appropriate employer being the Franklin County Board of Public Welfare. The court found that there was substantial identity between the entities, and that since the right-to-sue was issued before any substantial conciliation efforts, the Board was not disadvantaged by the failure to name the correct entity

Fox v. Leland Vol. Fire/Rescue Dept. Inc., No. 15-1364 (4

th Cir. May 5, 2016).

The plaintiff was the first female lieutenant in the department. She claimed hostile environment sexual harassment (largely based on comments from her subordinates) as well as First Amendment and Equal Protection claims, all of which failed on summary judgment. However, although the district court also granted summary judgment on her retaliatory discharge claim, the Court of Appeals reversed. The court agreed that the conduct of her subordinates was “discourteous, insubordinate, and perhaps at times boorish, but not demonstrative of sexual animus.” The actual comments are not, unfortunately, included in the opinion. However, the court reinstated the discharge claim, reasoning that “different explanations for termination, provided at different times, is in and of itself, probative of pretext.”

VII. HOSTILE ENVIRONMENT

Whittaker v. David's Beautiful People, Inc., 2016 WL 429963 (D. Md. Feb. 4, 2016).

A number of recent cases demonstrate the lengths to which District Courts are going to explain their reasoning following the Boyer-Liberto opinion, even where summary judgment is granted for defendants. In this case, plaintiff Irina Whittaker is a white woman of Ukrainian descent who became friends with a co-worker named Mahshid Hosseini, who happens of be of Iranian descent. David Cohen (i.e. the “David” in “David’s Beautiful People”) is described as a white male.

Plaintiff alleged Ms. Hosseini subjected her to constant “vile and vicious insults and abuse.” According to Plaintiff, Ms. Hosseini called her, among other things, a “Russian whore,” a “golddigger,” and a “bitch.” Ms. Hosseini also sent two text messages to Plaintiff, one which read, “You are nothing but a ****ing Russian whore go[l]d digger [ ]!! So disgusted by you!!” The other read, “You really deserve a spit to ur face!”

Plaintiff informed David that she was having trouble working with Ms. Hosseini; she also showed him the text message attacking her on her (mistaken) ethnicity, sex, and her (again mistaken) national origin. Ostensibly, Ms. Hosseini lodged a similar complaint, because David told the two ladies to stay away from each other and focus on their work.

Things continued to simmer until a physical altercation broke out in the salon. Details on who started the fight are murky, but it is clear that one party refused to cede the right of way when passing each other in a hallway. After speaking with the police, with a customer, and with each fight participant, David made the decision to terminate Whittaker. Whittaker filed an EEOC


charge alleging a slew of claims, most relevant here are her Title VII claims of unlawful discrimination, hostile work environment, and retaliation.

Defendants successfully obtained summary judgment, but only just. Sifting through the nuanced facts of the case, the Court found that plaintiff had generated enough evidence of harassment based on a protected trait and that she had engaged in protected activity by complaining about the text messages. Plaintiff’s claims failed to get to a jury however because she could not show that the legitimate, non-discriminatory reason for firing her was a lie.

Martin v. MCAP Christiansburg, LLC, No. 7:14cv464 (W.D. Va. Oct. 28, 2015).

This decision denying summary judgment in a hostile environment case is noteworthy as one of the few opinions that discusses the “unwelcomeness” element of hostile environment. The plaintiff apparently had an on-again, off-again relationship with the alleged harasser, who gave her gifts, cards, flowers, and lunches. The plaintiff testified she found the attention unwelcome, but nevertheless went to the alleged harasser’s home on a number of occasions. Despite this, the Court found the evidence sufficiently in conflict to deny summary judgment on the issue.

McKinnish v. Brennan, 2015 U.S. App. LEXIS 19417 (4th

Cir. Nov. 6, 2015). The Court of Appeals upheld summary judgment for the employer in a Title VII action, largely because the employee had not reported the offensive text and photo messages. The employee claimed she was afraid she would be looked at as a troublemaker, but the court found that explanation insufficient. The Court also held that there was no tangible employment action sufficient to create liability; a change in routes and schedules was “only a scintilla” of evidence, since this was a regular occurrence in the workplace.

VIII. AGE DISCRIMINATION IN EMPLOYMENT ACT

Taylor v. Millennium Corp., 2016 WL 927185 (E.D. Va. March 4, 2016).

Plaintiff – who was hired in 2005 – brought claims against her former employers for violations of Title VII, § 1981 civil rights claims, ADEA, and Equal Pay Act. Her claims arose at various times, beginning in 2010 and ending with her termination. Her EEOC complaint was filed on June 2, 2014, and she received a right to sue letter in 2015. Plaintiff alleged a wide-variety of potential discriminatory acts, many of which took place from 2010 to 2012. The Lilly Ledbetter Fair Pay Act of 2009 essentially makes each paycheck a new violation of the law for purposes of the Equal Pay Act. Thus, each new paycheck received by an aggrieved employee triggers a new 300-day period to file an EEOC charge. Plaintiff thus made a creative run at extending the statute of limitations for discrimination claims other than EPA.

In a ruling of first impression in the Fourth Circuit, Judge O’Grady followed other circuits to address the issue and held that the Fair Pay Act only applies to discriminatory compensation decisions, and not to other potentially discriminatory practices. Thus plaintiff could pursue her claims only to extent those decisions applied to discrimination in her compensation.


Mayo v. Smith, 2016 WL 2894871 (E.D. Va. May 16, 2016).

This was a claim involving allegations of discrimination, harassment, and retaliation under, among other statutes, the ADEA. Summary judgment for the defendant. Among other things, plaintiff testified at deposition that he had no basis to believe he was better qualified than the successful candidates for the positions he wanted, and that he “had no clue” as to why he was not selected. The opinion is noteworthy for the poor deposition testimony of the plaintiff, as well as for Judge Hilton’s discussion of the method to show pretext by proving the plaintiff was substantially more qualified than the successful candidate for a position. Mere denial of a training opportunity is not an actionable adverse action.

IX. JOINT EMPLOYER DOCTRINE

Wright v. Mountain View Lawn Care, LLC, 2016 WL 1060341 (W.D. Va. March 11, 2016).

At issue in this case is whether a franchisor/franchisee relationship between Mountain View Lawn Care, LLC and U.S. Lawns, Inc., qualified the two as joint employers for purposes of Title VII liability under recent Fourth Circuit precedent in Butler v. Drive Automotive Industries of America, Inc. Plaintiff appears to have argued that the franchisor held enormous power and influence over the franchisee; however, the main question is not whether the franchisor has influence and power over the franchisee, but rather how much influence and power the franchisor has over the individual employee at issue. The evidence suggested no such power and influence existed and thus U.S. Lawns was dismissed from the case.

Crump v. U.S. Dept. of the Navy, C.A. 2:13cv707 (E.D. Va. March 3, 2016).

This tightly-written opinion by Judge Davis comprises a good summary of the hot-topic issue of joint-employer liability, including the jury instruction given during a trial this year and the Court’s reasoning behind the jury instruction. The instruction reads:

A ‘joint employer’ relationship does not create liability in the co-employer for actions taken by the other employer; that is, each employer is only liable to the employee for its own actions, not for each other’s actions. However, a ‘joint employer’ is liable if it participates in the co-employer’s discrimination or if it knew or should have known about the co-employer’s discrimination and failed to undertake prompt corrective measures within its control.

(Emphasis added.) The opinion is must-reading for counsel confronting a joint employer relationship at trial or on summary judgment. See also Crump v. TCoomes & Assoc., LLC, 2015 U.S. Dist. LEXIS 128160 (E.D. Va. Sept. 22, 2015) (earlier decision in case).


Greene v. Harris Corp., No. 14-1601 (4th

Cir. June 22, 2016).

An interesting case out of the District of Maryland with an interesting, albeit unpublished, opinion by former Virginia Supreme Court Justice Keenan. The court of appeals affirmed the district court’s dismissal of the “joint employer” claims under federal law, because the Complaint failed sufficiently to allege that the plaintiff was an “employee” of the alleged joint employer.

The plaintiff was a janitorial worker who allegedly was fired by her employer when its client, Harris Corp., complained about her; that termination allegedly was based on a Harris manager’s discovery that the plaintiff was a lesbian. After a new cleaning company was retained, the plaintiff went to work for the new company – and was discovered by the same manager of the client, who immediately had her fired. (The gravamen of the claim was under the Howard County code, which prohibits discrimination based on, inter alia, personal appearance or sexual orientation.) The Court of Appeals was unpersuaded that the contract between the client and the employer gave the client sufficient control over the terms and conditions of employment to constitute a joint employer (the definition of employer tracked generally the language of Title VII, and the Court followed the analysis of its opinion in Butler v. Drive Automotive.) Chief Judge Traxler wrote a convincing dissent.

Taylor v. Cardiology Clinic, Inc., Case No. 4:14-cv-00046 (W.D. Va. July 19, 2016).

Judge Kiser engaged in a detailed analysis to determine that neither of the two related defendant entities, separately or together, constituted an employer for Title VII purposes, because they had too few employees. The opinion is noteworthy due to the emphasis placed by the court on the companies’ VEC reports; the conclusion that the owner of the staffing company (who also managed the other company) was a non-employee owner with respect to one company but an ordinary employee with respect to the other, and the conclusions the court reached regarding anecdotal evidence of other workers, some of whom showed up on occasional schedules, but who did not appear on formal payrolls.

X. AMERICANS WITH DISABILITIES ACT

A. CAUSATION STANDARD

Gentry v. East West Partners Club Management Co., F.3d , No. 14-2382 (4th Cir.

March 4, 2016)

The Court of Appeals held that the “motivating factor” standard of causation applicable to Title VII claims does not apply to cases under the ADA. The Court affirmed a district court decision confirming a $20,000 verdict for the plaintiff in a “disability” case, against challenge by the plaintiff of the jury instructions and the magnitude of the verdict. The plaintiff was terminated a month after settling her workers’ compensation claim for a foot injury. The company claimed cost-savings motivated the move, and the evidence was disputed. After a week-long trial, the jury awarded $10,000 for workers comp retaliation and two $5,000 verdicts for tortious interference with employment. The jury held for the employer on the ADA claims, and the employee appealed, arguing that the district court improperly instructed the jury that the ADA incorporated a “but-for”


standard for causation, instead of an appropriate “motivating factor” standard. The Court of Appeals ruled for the defendant: “the 1991 Act that added the ‘motivating factor’ standard to Title VII ‘contemporaneously amended’ provisions of the ADA but did not add that standard.”

B. REASONABLE ACCOMMODATION

Stephenson v. Pfizer, Inc., 2016 WL 806071 (4th

Cir. March 2, 2016)

Plaintiff – who began working for Pfizer in 1985 – is one of the most successful pharmaceutical sales reps in the history of Pfizer. In 2000, she was inducted into the Pfizer Hall of Fame, an honor bestowed on less than 100 sales reps in the history of the company. She also suffers from a degenerative eye disorder that rendered her incapable of operating a car in November of 2011. Like most sales reps, Stephenson did not have an office at a Pfizer facility; instead most of her work was performed in meetings with doctors and most of her work days was spent either in doctor’s offices or travelling between offices. Her ability to attend these meetings was an essential function of the job; at issue in this case is how she gets there.

When her vision deteriorated such that she was unable to drive, she made three requests for accommodation: (1) for software that would magnify her computer screen, (2) for tools that would magnify paper documents she had to read, and (3) for a driver (or some similar service) to take her to and from various sales meetings. Pfizer approved the first two requests and declined the third, reasoning that it was the ability to drive – as opposed to the mere ability to travel to meetings – that was an essential function of her job as a sales rep.

It is important to note that Stephenson’s job description said nothing at all about driving and a number of job listings for sales reps at Pfizer do not include driving as an essential duty.

The district court entered summary judgment for Pfizer and the Fourth Circuit vacated the judgment, reasoning that there is a genuine dispute of material fact as to whether it is essential for Stephen to drive to her meetings or simply to travel. The Fourth Circuit also noted that there is a genuine dispute of material fact as to whether it would be a reasonable accommodation to hire a driver or otherwise provide transportation for Stephenson.

Smith v. Loudoun Cty. Pub. Sch., 2016 WL 659786 (E.D. Va. Feb. 18, 2016)

A deaf special-education teacher survived summary judgment on her reasonable accommodation claim but lost on her claims of wrongful discharge and retaliation.

Smith, who has been profoundly deaf since birth and is fluent in American Sign Language (“ASL”), was hired by Loudoun County schools to teach several students who are also deaf or hard of hearing. Smith required – and Loudoun County at first provided – several accommodations, such as a video-relay phone and a live interpreter when necessary.


Smith’s work at the school exceeded the expectations of her employers for the first 18 months or so. When the school system elected to change to a “total communication approach” for deaf students, which emphasized multiple communications tools for students including, but not limited to, ASL, Smith was not happy with the decision.

Shortly thereafter, Smith submitted an accommodation request for a full-time ASL interpreter; the school began an inquiry into whether this was feasible or required. Following this first accommodation request, the school moved Smith’s video-relay phone from her classroom into a locked equipment room in the library. Smith then submitted a renewed request for an accommodation, this time including a video-relay phone in her classroom.

After the usual tussling, Smith was terminated from her position. Following her termination she filed an EEOC charge alleging retaliation, wrongful termination, and failure to accommodate. Summary judgment was entered for the school system on her wrongful discharge and retaliation claims, largely on the basis of Jones v. Am. Postal Workers Union, 192 F.3d 417 (4th Cir. 1999) which held that unprofessional behavior is a legitimate basis for a termination, even if it is related to a disability.

Her reasonable accommodation claim, however, survived. Defendants had no evidence regarding the cost of a full-time, live translator and the video-relay phone not only started out in her classroom before being moved but was provided by a federal grant and was thus free to the school.

XI. EMPLOYMENT RETALIATION

[Since the principles underlying retaliation, particularly retaliatory discharge, are broadly cross-applicable to claims under Section 1981, Section 1983, Title VII, the ADA, and other statutes, we have collected a number of those cases from varying statutes under this heading.]

Heffernan v. City of Patterson, 136 S.Ct. 1412 (2016).

This is a fascinating public employee First Amendment case. As argued to the Court, the plaintiff was demoted due to his employer’s belief that the employee supported and campaigned for an opposing candidate for mayor. However, despite that belief and the reasonableness of it, the plaintiff did not in fact support the opposing candidate and had not in fact done any campaigning for the opposing candidate. Can a municipality be liable under Section 1983 to a plaintiff in a First Amendment case where the plaintiff expressly disclaims having undertaken any protected activity? Justice Breyer answered this question for the Court in the affirmative, holding that the employer’s motive – and, apparently, not the plaintiff’s membership vel non in any protected class – is the touchstone for imposing liability.

Reardon v. Herring, ___ F. Supp. 2d ___ (E.D. Va. Aug. 23, 2016).

Judge Payne held that an assistant attorney general suing for retaliatory discharge under the Equal Pay Act sufficiently alleged retaliation, despite a ten-week delay between her last incident of protected activity and her discharge. This decision may be more important because of what it did


not hold: that, despite the fact that neither the Fourth Circuit nor the Eastern District of Virginia have set a bright-line test for temporal proximity needed to allow an inference of retaliation, the ten weeks at issue here is “sufficiently long so as to weaken the inference of causation” between the complaint and the termination. The employee alleged that her employer required her to continue working on the job for ten additional weeks in order to complete her role in two ongoing prosecutions. Judge Payne analyzed existing precedent and found the Third Circuit’s “valid reason” test persuasive: where the plaintiff has alleged a “valid reason” for the employer’s delay between protected activity and adverse action, the presumption of a causal link is re-established (for purposes of a motion to dismiss), despite the somewhat lengthy delay.

Clarke v. Virginia State Univ., 2016 WL 521528 (E.D. Va. Feb. 5, 2016)

Clarke applied for at least ten open positions with VSU during 2013 and 2014. He was interviewed for two of those positions, but was not hired for either one. In April of 2014 he filed an EEOC charge alleging that VSU discriminated against him by refusing to hire him based on his age and also based on “Title VII of the Civil Rights Act of 1964.” Following his EEOC charge, he applied for another position with VSU. Again he was not hired.

Clarke then filed this lawsuit alleging that VSU's repeated failures to hire him constituted unlawful discrimination; additionally, Clarke claims that VSU unlawfully retaliated against him by refusing to hire him after he filed his EEOC charge. One must admit a certain logic applies here. The ADEA claim was dismissed on a 12(b)(6) motion however because plaintiff failed to allege any circumstances that would give rise to an inference of unlawful discrimination, as is required for those plaintiffs lacking direct evidence of age discrimination. His Title VII claim was dismissed because he totally failed to allege that he was a member of any protected group under Title VII.

Farmer v. Eagle Systems and Services, Inc., No. 15-1124 (4

th Cir. July 1, 2016).

This case involved a claim for retaliation under the False Claims Act, 31 USC 3730(h)(1). The employee observed a supervisor and a co-worker steal government-owned night vision goggles. Farmer provided a written report of the theft, which was revealed to the miscreant supervisor (as was Farmer’s name as the author of the report).

Farmer claims his working environment became unbearable, rife with false disciplinary actions, until he left. The Court of Appeals held that the report of the theft was not protected activity: it was not an act “in furtherance of an action” under the FCA, nor was it an “effort to stop” an FCA violation – the latter provision having been added only in 2009 and, accordingly, not having previously been interpreted by the Fourth Circuit.

While the employee reported the theft, any connection with an “effort to stop” false claims – such as tighter inventory controls – could only be reached by speculation. It is important to remember that the federal False Claims Act does not reach every kind of wrongdoing under the sun – for example, theft from a warehouse -- but only those kinds of wrongdoing prohibited by the seven categories of conduct found in 31 U.S.C. § 3729(a)(1)(A)-(G).


Two interesting things are worthwhile to note. First, the only type of prohibited conduct that might even remotely pertain to this case is 31 U.S.C. § 3729(a)(1)(E), which makes it unlawful for “any person who … is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true.”

The second is that that provision has been present in the FCA for 153 years without a single reported decision interpreting what Congress meant with those words.

Brickey v. Hall, ___ F.3d ___, No., 14-1910 (4th Cir. July 8, 2016).

This is an interesting Section 1983 First Amendment retaliation claim. A police officer was terminated because of comments he made as a candidate for town council that were critical of his employer (the police department and its chief). The chief had previously told Brickey that he was fine with the idea of Brickey running for town counsel, so long as he did not campaign in uniform or disparage the department in violation of departmental policy. Brickey, however, made public statements suggesting mis-management in police department budgets, and that “the police department needs to be more professional” and aggressive on drug trafficking. An independent investigation concluded that these statements violated policy, and he was terminated.

The issue before the court was whether the claim was barred by qualified immunity. The district court held it was not: it was clearly established that employees’ speech regarding government misconduct was well-established, as was the right not be terminated for that speech. The Court of Appeals reversed, holding that (as of 2012, when the termination occurred), the results of the required balancing test – whether Brickey’s interest in speaking upon the matter of public concern outweighed the government’s interest in providing effective services – was not clearly established. “The clearly established principles . . .did not put the outcome of the Pickering balancing in this case ‘beyond debate.’” This case is one of a series of cases across the nation exemplifying a trend to perform the “clearly established” examination at an increasingly detailed level of particularity.

Fox v. Leland Vol. Fire/Rescue Dept. Inc., No. 15-1364 (4

th Cir. May 5, 2016).

The plaintiff was the first female lieutenant in the department. She claimed hostile environment sexual harassment (largely based on comments from her subordinates) as well as First Amendment and Equal Protection claims, all of which failed on summary judgment. However, although the district court also granted summary judgment on her retaliatory discharge claim, the Court of Appeals reversed. The court agreed that the conduct of her subordinates was “discourteous, insubordinate, and perhaps at times boorish, but not demonstrative of sexual animus.” The actual comments are not, unfortunately, included in the opinion. However, the court reinstated the discharge claim, reasoning that “different explanations for termination, provided at different times, is in and of itself, probative of pretext.”


Property Damage Specialists, Inc. v. Rechichar, ___ Va. ___, 2016 WL 4727255 (Sept. 8,

2016). The Court held that a whistleblower making a statutory retaliation claim under Va. Code § 40.1-55.1.2:2 was not entitled to recover punitive damages. The Court found persuasive the fact that one of the alternative methods of enforcement established by the statute (the other being a private cause of action such as this case was the filing of a complaint by the Commissioner or Labor and Industry, which could result in relief to the employee to eliminate any economic harm the employee suffered (but which did not expressly authorize the imposition of punitive damages). The Court also noted that the statute did not include any mention of punitive damages, and accordingly held that a civil action for “appropriate relief,” the statutory term, did not include the right to recover punitive damages.

Liverette v. Torres Advanced Enterpr. Sol. LLC, Case 1:16-cv-339 (E.D. Va. June 28, 2016).

This case involved an FLSA claim by an employee-plaintiff working for the employer in Kosovo. Among other interesting claims, the employee claimed that that the employer was “engaged in a scheme to misclassify its employees as independent contractors in order to avoid paying the minimum and overtime wages to which these employees are due.” (The more interesting issue was a claim of tax fraud: Judge Ellis held that the provision of a 1099 when a W-2 should have been provided is false with respect to the plaintiff’s employment status but not fraudulent with respect to the amount of the payments made.)

XII. AN INTERESTING NON-EMPLOYMENT CASE FROM ZACH

Integrated Direct Marketing LLC v. May, 2016 WL 3582065 (E.D.Va. June 28, 2016)

Dispute between competitive marketing companies. Court sanctioned the former defendant employee for false statement in an affidavit stating that he had not kept any of plaintiff firm's proprietary information but awarded partial amount of plaintiff's attorneys' fees and only partial amount of plaintiff's expert fees. Court granted IDM's motion for sanctions solely for May's submission of the false statement. Merkle's motion for summary judgment was granted in its entirety, May's motion for summary judgment granted in part.

XIII. SARBANES-OXLEY

Puffenbarger v. Engility Corporation, 2015 WL 9686978 (E.D.Va, Dec. 31, 2015).

Plaintiff brought suit alleging that her former employer engaged in unlawful discrimination in violation of the anti-retaliation provisions of the Sarbanes-Oxley Act 18 U.S.C. § 1514A by making an unauthorized paid time off cash payment to another employee in the amount of $856.

She failed to meet the first prong of the required prima facie test, however, which requires her to have both a “subjective” and an “objectively reasonable” belief that the activity she reported was fraud.


Plaintiff contends she believed the cash out constituted bank fraud and wire fraud, as well as a violation of the SOX requirement that publicly traded companies must devise and maintain a system of internal accounting controls; ostensibly such systems do not involve random, off-the- books cash payments to employees. Defendants prevailed by showing that other employees had received emergency hardship cash payments to cash out their PTO and, perhaps most important, the company had an internal control threshold of $7.6 million in unauthorized transactions – that is to say, a transaction for less than that amount would not affect the company’s reporting obligations. The emergency hardship payout of $856 fell well below that. Finally, plaintiff’s Dodd-Frank claim failed also because she did not first report her allegations to the SEC as required by 15 U.S.C. § 78u-6. Judgment for the defendant.

XIV. TRIAL PRACTICE AND FEDERAL PROCEDURE

A. MOTION TO STRIKE ALLEGATIONS IN A PLEADING

Childress v. Richardson-Wayland Elec. Corp., 2016 WL 308809 (W.D. Va. Jan. 25, 2016).

Defendants' filed a motion seeking to strike portions of Plaintiff's complaint pursuant to Rule 12(f) of the Federal Rules of Civil Procedure, which allows a court to strike from a pleading any redundant, immaterial, impertinent, or scandalous matter. Paragraphs 15-18 include allegations related to another former employee who sued Defendants for racial discrimination and a hostile work environment leading to his constructive termination in 2007 based on his status as an African American.

Defendants argued that the complaint could be offered into evidence and for that reason the allegations should be struck. Plaintiffs agreed not to offer the complaint into evidence and the matter was resolved.

B. ATTORNEY'S FEE AWARDS

Salim v. Dahlberg, No. 1:15-cv-468 (E.D. Va. May 18, 2016).

Judge Brinkema sharply reduced the attorney’s fees awarded in this action, which involved a $350,000 jury award to a Somali-born Muslim taxi driver. The court awarded just over $150,000 in fees, a reduction from the $407,000 sought plus $8,500 for producing the fee petition. The experienced and competent plaintiff’s counsel sought $550 per hour, which the court characterized as close to the $585 termed “exorbitant” by the Fourth Circuit. The court took plaintiff’s counsel to task for block billing and the interjection of unnecessary complexity in the case by alleging battery, and certain discovery issues. Judge Brinkema also noted that “the accuracy of the submitted time sheets is dubious;” a paralegal’s detailed sheets shows meetings that counsel’s do not, for example. A first-year associate was awarded time at the hourly rate of $125. Overall, the fee was cut by 2/3.


CRST Van Expedited, Inc. v. EEOC, 136 S.Ct. 1642 (2016).

The Court held, in an unusual context, that a favorable ruling on the merits of a case is not a prerequisite for a defendant to be a “prevailing party” for an award of attorneys’ fees under Title VII. Here, the EEOC made a reasonable cause finding against the company and discussed conciliation, but were unable to reach an agreement. EEOC brought suit, which was dismissed by the district court, finding that EEOC had “abandoned” its statutory duty to conciliate. The district court eventually awarded the company about $4 million. On appeal, the Eighth Circuit reversed the dismissal of two of the individuals’ claims, and vacated the fee award. After remand, EEOC settled one, and dismissed the other, of the remaining claims. The district court again awarded $4 million in fees, holding the EEOC’s failure to investigate and conciliate was unreasonable. The Eighth Circuit again reversed, holding that the dismissal of claims for failure to investigate and conciliate was not a favorable judicial determination on the merits. The Supreme Court reversed, noting that three other circuits (including the 4th Circuit) disagreed. The Court held that rebuffing a plaintiff’s challenge, by whatever means, would be sufficient for a plaintiff to prevail. After reminding the lower courts of the “frivolous, unreasonable, or groundless” standard of Christiansburg Garment, the Court remanded for a determination as to fees. (The decision was unanimous, although Justice Thomas wrote separately to express his continuing disapproval of the “dubious” standard of Christiansburg Garment.)

C. JURISDICTION IN FEDERAL COURT

Commonwealth ex rel. Hunter Laboratories, LLC v. Laboratory Corporation of America, ___

F.3d ___ (4th Cir. July 7, 2016).

This was an appeal of an action under the Virginia Fraud Against Taxpayers Act, discussing the interplay of the federal and state qui tam statutes. The case was filed in the Circuit Court for Fairfax County, alleging that certain medical laboratories had submitted false claims to the Commonwealth for reimbursement. The defendants removed the action to the Eastern District of Virginia, after which certain of the defendants settled with the Commonwealth. Judge Lee awarded a portion of the proceeds to the relators, and the relators appealed that award as insufficient under the statute.

Oops. The Court of Appeals vacated and remanded with orders to remand the matter to state court, since the federal court lacked subject matter jurisdiction. The removal had been premised on the theory that the claims, which alleged an overcharge of Medicaid reimbursements, independently required proof of violation of the federal anti-kickback law. The Court of Appeals requested supplemental briefing on jurisdiction and rejected the Commonwealth’s position that claims of Medicaid fraud necessarily involved federal issues, since it is a joint federal-state program. The Court, applying the well-pleaded complaint rule, found no federal cause of action.


D. FEDERAL APPELLATE PROCEDURE

Goode v. Central Virginia Legal Aid Society, 807 F.3d 619 (4th Cir. Dec. 9, 2015) Plaintiff was a Senior Managing Attorney for Central Virginia Legal Aid Society until his position was eliminated in 2013. Plaintiff brought suit alleging discrimination on the basis of sex, race, and age and defendants filed a motion to dismiss pursuant to Fed. R. Civ. 12(b)(6). The court granted the motion to dismiss without prejudice and Goode timely filed a notion of appeal. Federal Appellate Courts may exercise jurisdiction only over final orders (pursuant to 28 U.S.C. § 1291) and certain interlocutory and collateral orders (pursuant to 28 U.S.C. § 1292). An order dismissing a case without prejudice is not, however, a final order under § 1291 if the plaintiff can still amend his complaint. Appeal dismissed.

James v. City of Boise, 136 S.Ct. 685 (2016).

This case was more a matter of the Supremacy Clause than anything else – that and a dog bite. An action under Section 1983 was brought in Idaho state court after plaintiff was bitten by a police dog. The defendant prevailed, and state courts held the prevailing defendant was entitled to attorney’s fees under Section 1988 – even without a determination that the claim was “frivolous, unreasonable, or without foundation,” the standard for awarding fees to a prevailing defendant in federal court since the 1980 decision in Hughes v. Rowe. See Christiansburg Garment. The Supreme Court reversed down the Idaho Supreme Court, holding that the federal courts’ interpretation of the standard for an award of attorneys’ fees to a prevailing defendant under Section 1983 was binding on the state court – citing the venerable case of Martin v. Hunter’s Lessee (1816).

XV. OTHER INTERESTING CLAIMS AND CASES

A. COMPUTER FRAUD AND ABUSE ACT/COMPUTER TORTS

Tech Sys., Inc. v. Pyles, 2015 WL 7273637 (4th Cir. Nov. 18, 2015).

Defendant was Director of Human Resources for Plaintiff Tech Systems Inc. At issue in this case was exactly how a person violates the Computer Fraud and Abuse Act in the Fourth Circuit and the distinction between claims under the CFAA and claims for breach of fiduciary duty in Virginia.

Here, Ms. Pyles was accused by her former employer of (a) compromising the secure server room at Tech Systems's offices and physically disconnecting many of the components and (b) accessing the finance server and changing the BIOS boot-up information and altering the start-up sequence so that the server would not load properly. These acts disrupted the company's computer systems. TSI terminated Ms. Pyles for these incidents and directed her to return her company-issued Blackberry.


After her termination, Ms. Pyles forwarded emails containing TSI's confidential information to other employees, vendors, and customers that she received in her role as HR Manager. TSI alleged that Ms. Pyles then deleted these emails and other information from her Blackberry before returning it to TSI, where such information, had it not been deleted, would have contained evidence of incriminating emails sent from the device. TSI brought suit alleging one count under the CFAA, one count under the ECPA, and one claim for breach of fiduciary duty. A jury found for TSI on all counts and Pyles appealed, arguing among other things that the CFAA does not apply to activities alleged here.

Unlike the Seventh Circuit, the Fourth Circuit interprets the terms “without authorization” and “exceeds authorized access” narrowly, which is to say that if a person is authorized to access information on a computer system, the CFAA has nothing to say about what they do with the information once they have it. Along those lines, it is worth noting that the common law tort of breach of fiduciary duty very nicely covers those actions by Ms. Pyles that are not covered by the CFAA, and that is exactly what the CFAA was designed for.

B. USERRA

Huff v. Winston, 2016 WL 4743470 (Va. Sept. 8, 2016).

The Court adopted a narrow reading of a returning employee’s rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA). The Court rejected claims that USERRA called in all circumstances for a two-year convalescence period, and also held that an employer’s duty to re-employ, and to comply with the USERRA escalator clause, was complete upon reemployment. The central issue in the case was that the employee was unqualified for return in the same full-time, full-duty position, after having been rehired in that position.

C. ERISA

Gobeille v. Liberty Mut. Ins. Co., 136 S.Ct. 936 (2016).

The Court held that the collection and reporting of information on insured and benefit payments was a core function of ERISA. Accordingly, the broad ERISA preemption principles displaced Vermont’s state-level system requiring public and private agencies that pay for health care services to report information to the state, which would compile it into a comprehensive database regarding health care utilization and costs. Some twenty states have similar schemes that may be affected by the decision.


D. ARBITRATION

Craddock v. LeClairRyan, PC, C.A. No. 3:16-cv-11 (E.D. Va. April 12, 2016), appeal dismissed, No. 16-1423 (4

th Cir. Aug. 26, 2016).

This action sought to litigate Title VII class and individual sex discrimination claims, and was brought by a former shareholder of the law firm in federal district court. The standard shareholders’ agreement used by the firm contained an arbitration provision, and the firm actually had initiated an arbitration prior to the court filing. The plaintiff argued that the arbitration provision could not be enforced against her, because she had not signed the agreement upon becoming a shareholder. The firm argued that she had indicated her assent to the shareholder agreement in a number of other ways, including accepting shareholder compensation and benefits, holding herself out as a shareholder, and voting at shareholder meetings. Judge Payne held the plaintiff had accepted the agreement, and granted the motion to compel arbitration or dismiss. The somewhat idiosyncratic relationship between the order and the title of the motion led to an appeal by the plaintiff, which however was dismissed for want of jurisdiction, as an interlocutory order.

XVI. REGULATORY AND STATUTORY MATTERS

A. EEOC GUIDANCE ON RETALIATION

EEOC Guidance: Enforcement Guidance on Retaliation and Related Issues (August 25, 2016).

This voluminous document supersedes the 1998 Compliance Manual Section on Retaliation. The Guidance constitutes an excellent précis on retaliation law, reiterating familiar principles. However, some of the assertions in the document may not accord with Fourth Circuit case law. For example, at one point, the Guidance states that a five-year lag between protected activity and adverse action may not be too long to support an inference of retaliatory intent, a contention one feels the Fourth Circuit would have trouble supporting. Although retaliation claims are present in almost half of all EEOC Charges, the Guidance might result in EEOC Staff recommending still more individuals assert a claim for retaliation.

B. EEOC GUIDANCE ON LEAVE AS AN ACCOMMODATION

EEOC Guidance: Employer-Provided Leave and the Americans with Disabilities Act (May 9,

2016):

This Guidance was issued ostensibly to clarify the EEOC’s position that additional leave is a reasonable accommodation. The Guidance requires, unexceptionably, equal access to leave. It also requires that employers extend leave to disabled employees if needed as a reasonable accommodation.


“An employer must consider providing unpaid leave to an employee with a disability as a reasonable accommodation if the employee requires it, and so long as it does not create an undue hardship for the employer. . . . That is the case even when:

The employer does not offer leave as an employee benefit; The employee is not eligible for leave under the employer’s policy, or The employee has exhausted the leave the employer provides as a benefit (including leave

exhausted under a workers’ compensation program, or the FMLA or similar state or local laws).”

The Commission also points out that “100% Healed” policies – the requirement that a returning employee be completely recovered, rather than simply able to perform the essential functions of the position with or without reasonable accommodation – are unlawful. Some older handbooks and policies still incorporate similar provisions.

C. THE DEFEND TRADE SECRETS ACT OF 2016

The DTSA was into law on May 11, 2016 and became effective immediately. This statute should be of interest not only because most of us also litigate trade secrets cases, but also for the impact it has on written employment agreements. Found at 18 USC § 1836, the DTSA amends the Economic Espionage Act of 1996 to include a federal private right of action for misappropriation of trade secrets:

Covers trade secrets used or to be used in interstate or foreign commerce Definition of trade secret is based on the UTSA but is broader in important ways:

The federal definition includes “all forms and types of financial, business, scientific,

technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing”

Also includes “intangible” information

There are two important immunity provisions -- only the immunity provisions preempt state law; otherwise, litigants have a choice of whether to go with a state statute or the federal statute. Possible remedies – injunctive relief, actual damages plus liquidated damages in an amount equal to the actual damages in cases of willful and malicious misappropriation, plus attorney’s fees. Attorney’s fees may be awarded against a plaintiff who brings a claim of misappropriation in bad faith.

SOL is three years.


15104925v1

Trade Secrets defined broadly – but must have taken “reasonable measures” to protect the trade secret; “reasonable measures” is an element of the burden of proof for a plaintiff Many interesting and powerful features, including:

the right to apply for an ex parte seizure order to prevent imminent disclosure or

to prevent a litigant from fleeing the United States authorizes filings under seal in federal court to prevent the disclosure of trade

secrets All employers must provide “notice of the immunity … in any contract or agreement with an employee that governs the use of trade secret or other confidential information.” This notice provision applies to all such agreements drafted or updated after May 11, 2016. The term “employees” is defined broadly to include contractors and consultants. If an employer fails to give notice, it can still bring a claim against the employee, but is barred from seeking exemplary damages or attorney fees against an employee who did not receive notice. The immunity provisions protect “employees” in the following scenarios:

When individual discloses information in confidence to law enforcement solely for the purpose of reporting or investigating a suspected violation of the law;

When an individual may disclose a trade secret in a filing under seal; this provision also specifically covers anti-retaliation actions.

an election year in review update on labor …...46th annual conference on labor relations and...

Documents