Recent Employment Law

ALI-ABA Course oI Study
Current Developments in Employment Law:

The Obama Years at Mid-Term
July 28 - 30, 2011
Santa Fe, New Mexico
Cutting Edge Employment Law Issues
By
Robert B. Fitzpatrick
Robert B. Fitzpatrick, PLLC
Washington, D.C.
2011 Robert B. Fitzpatrcik, PLLC.
All Rights Reserved.
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Copyright 2011, Robert B. Fitzpatrick, PLLC, Washington, D.C. All Rights
Reserved
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TABLE OF CONTENTS
DEFINITION OF EMPLOYEE UNDER ANTI-DISCRIMINATION LAWS ...........................4

DISABILITY DISCRIMINATION..................................................................................2
GENDER DISCRIMINATION......................................................................................4
RELIGIOUS DISCRIMINATION...................................................................................5
FAMILY AND MEDICAL LEAVE ...............................................................................6
BANKRUPTCY DISCRIMINATION .............................................................................6
RETALIATION.........................................................................................................7
ADVERSE EMPLOYMENT ACTIONS.........................................................................9
NON-COMPETE AGREEMENTS AND TRADE SECRETS .......................................... 10
WARN ACT ......................................................................................................... 11
WAGE AND HOUR............................................................................................... 12
NLRB CASES ....................................................................................................... 15
SOCIAL MEDIA.................................................................................................... 16
CLASS AND COLLECTIVE ACTIONS .................................................................... 16
FOREIGN CORRUPT PRACTICES ACT................................................................... 19
ATTORNEYS FEES .............................................................................................. 19
CHOICE OF LAW / FORUM.................................................................................. 20
DISPARAGEMENT / DEFAMATION....................................................................... 23
CONFIDENTIALITY............................................................................................... 27
DISCOVERY......................................................................................................... 28
RICO ................................................................................................................... 31
PROCEDURE ........................................................................................................ 32
PLEADING........................................................................................................... 34
EVIDENCE / PROOF............................................................................................. 36
COMPUTER FRAUD AND ABUSE ACT.................................................................. 37
USERRA .............................................................................................................. 37
COMMUNICATIONS DECENCY ACT...................................................................... 38
PRIVACY ACT ..................................................................................................... 38
IIED..................................................................................................................... 39
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LOSS OF CONSORTIUM....................................................................................... 39
DUE PROCESS ..................................................................................................... 39
ARBITRATION ..................................................................................................... 40
CRIMINAL BACKGROUND CHECKS....................................................................... 42
EMPLOYEE SAFETY............................................................................................. 42

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Cut t ing Edge Employment Law Issues

by Robert B. Fitzpatrick

DEFINITION OF EMPLOYEE UNDER ANTI-DISCRIMINATION LAWS

Third Circuit Finds Law Firm Shareholder Not Employee Under Federal
and St at e Ant i-Discriminat ion Laws:

In Kirleis v. Dickie, McCamey & Chilcote, P.C., 2010 U.S. App. LEXIS 14530 ( 3d
Cir. J uly 15, 2010) , J udge J ane Roth, writing for a panel of the Third Circuit,
held that the plaintiff, a Class A Shareholder-Director of Pittsburgh-based law
firm DMC, was an employernot an employeeunder Title VII, the Equal Pay
Act, and the Pennsylvania Human Rights Act; and thus she was outside the
protection of the employment discrimination laws.
In so holding, the court examined the plaintiffs shareholder-director status in
light of Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440
( 2003) . In Clackamas, the Court adopted the following six-factor test, to
determine whether one is an employer or an employee entitled to invoke the
antidiscrimination laws:

1. Whether the organization can hire or fire the individual or set the rules and
regulations of the individuals work;
2. Whether and, if so, to what extent the organization supervises the
individuals work;
3. Whether the individual reports to someone higher in the organization;
4. Whether and, if so, to what extent the individual is able to influence the
organization;
5. Whether the parties intended that the individual be an employee, as
expressed in written agreements or contracts; and
6. Whether the individual shares in the profits, losses, and liabilities of the
organization.

Id. at 449-50 ( quoting 2 Equal Employment Opportunity Commission
Compliance Manual 605.0009 ( 2000) ) . The Clackamas Court noted
further that the touchstone of the inquiry is control, which depends on
all of the incidents of the relationship . . . with no one factor being
decisive. Id. at 449, 451 ( quoting Nationwide Mut. Ins. Co. v. Darden,
503 U.S. 318, 324 ( 1992) ) .

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In applying the above factors, in Kirleis, the court found that the plaintiff
was not a mere employee of DMC, but rather an employer, as she has
the ability to participate in DMCs governance, the right not to be
terminated without a 3/4 vote of the Board of Directors for cause, and
the entitlement to a percentage of DMCs profits, losses, and liabilities.
Kirleis, 2010 U.S. App. LEXIS, at *4 ( citing Solon v. Kaplan, 398 F.3d 629,
633 ( 7th Cir. 2005) ( termination only by 2/3 vote of general partners,
access to financial information, participation in firm governance, and a
share in profits and losses distinguished a law firm partner from
associates and rendered him an employer) ; Schmidt v. Ottawa Med. Ctr.,
P.C., 322 F.3d 461, 467-68 ( 7th Cir. 2003) ( a shareholder in a
professional corporation who possesses the right to vote on matters put
before the board and the opportunity to share in profits is an employer
for the purposes of the anti-discrimination laws) .

Tip of the hat to the New J ersey Employment Law Blog and the Lawffice Space
blog for calling this decision to our attention.
DISABILITY DISCRIMINATION

ADA-Doct or s Not e:

The Sixth Circuit in Lee v. Columbus, Ohio, 636 F.3d 245 ( 6th Cir. Feb. 23,
2011) , held that the city did not violate the Rehabilitation Act by requiring
employees to give their supervisors a note from their doctor disclosing the
nature of their illness after they had used sick leave. The Sixth Circuits
decision differs from the Second Circuits decision v. Conroy v. N.Y. State
Department Correction Services, 333 F.3d 88 ( 2nd Cir. 2003) , where that
Court held that the employers general request for a diagnosis upon an
employees return from sick leave tended to reveal a disability and thus
constituted a prohibited disability-related inquiry under the ADA. The Sixth
Circuit distinguished Conroy in finding that, unlike the ADA, the Rehabilitation
Act expressly prohibits discrimination solely on the basis of disability.

ADA-Drug Testing:

In Lopez v. Pacific Maritime Association, 636 F.3d 1197 ( 9
th
Cir. Mar. 2, 2011) ,
a rehabilitated drug addict was denied employment as a longshoreman because
he had tested positive for marijuana use some seven years earlier during a pre-
employment drug screen with the same employer. The Court, in affirming
summary judgment, held that the provision of the collective bargaining
agreement which contained a one-strike rule did not violate the ADA. J udge
Graber, writing for J udge Ripple, sitting by designation from the 7th Circuit, and
herself, held that it was lawful for Defendant to eliminate applicants who were
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using drugs when they applied to be longshore workers [ and] was likewise
lawful for defendant to disqualify those applicants permanently. J udge
Pregerson partially dissented, stating that Plaintiff had put forward sufficient
evidence to establish a prima facie case of adverse impact on the protected
class.

ADA Regarded As Disabled:

In Miller v. Illinois Dept of Transport., 2011 U.S. App. LEXIS 9534 ( 7th
Cir. May 10, 2011) , the Seventh Circuit, J udge Hamilton writing for the
panel, held that a reasonable jury could conclude that the employer
regarded the plaintiff, a bridge worker, as disabled because of his fear of
heights. The Court held as follows:

After the March 23, 2006 panic attack above the Mississippi
River, Miller was formally diagnosed with acrophobia. IDOT
immediately precluded him from performing any task required
of the bridge crew, even tasks that could be performed from
the ground let alone from a secure, unexposed height. IDOT
forced him on nonoccupational disability leave and
exaggerated the relatively modest effects of the acrophobia.
Even after two psychiatrists cleared him for work without any
significant restrictions, IDOT continued to preclude Miller
from returning to any and all tasks performed by the bridge
crew. According to the record, those tasks included
everything from the maintenance and operation 14 of
vehicles and equipment to spreading salt and gravel,cutting
grass, and directing traffic. In other words, IDOT treated
Miller as though he was unable to perform awide range of
jobs. A reasonable jury could find from this evidence that
IDOT regarded Miller as disabled by his acrophobia under the
law before the 2008 amendments.

In Eaddy v. City of Bridgeport, 2011 U.S. Dist. LEXIS 39853 ( D. Conn.
Apr. 12, 2011) , a former probationary police officer claimed that her
employment was terminated for lack of fitness for duty, and claimed that
her employer regarded her as disabled because the police chief allegedly
described her behavior as irrational, irate, and uncooperative as well as
paranoid. The district court granted the citys motion for summary
judgment, using the old ADA standards, finding that plaintiff had to show
that her employer regarded her as having an impairment that would be
significantly limiting to the average person in the population. The court
found that the police chief did not use the terms irrational or paranoid
in a clinical sense, and found that a reasonable jury would not have found
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those statements to suggest that plaintiff suffered from paranoid
delusions in the psychiatric sense.

ADA Violated When Employer Responds to State Subpoena and
Discloses Former Employee s Medical Records:
In Bennett v. Potter, 2011 WL 244217 ( EEOC J an. 11, 2011) , the EEOC held
that the confidentiality of medical records requirement of the ADA is violated
when an employer discloses a current or former employees medical records in
response to a state court subpoena absent the employees release or some
other exception under the ADA.

Sixt h Circuit Panel Cont inues t o Reject Mot ivat ing Fact or Test for
Causat ion in ADA Cases:

In Lewis v. Humboldt Acquisition Corp., Inc., 2011 U.S. App. LEXIS 5313 ( 6th
Cir. Mar. 17, 2011) , a panel of the 6th Circuit again held, given that the panel
was powerless to overrule Circuit precedent, that the motivating factor ( or a
substantial cause) test did not apply in ADA cases. Rather, the panel adhered
to Circuit precedent ( Monette v. Elec. Data Sys. Corp., 90 F.3d 1173, 1178
( 6th Cir. 1993) ) that adopted the solely causation standard for ADA claims
from the Rehabilitation Act of 1973, which expressly requires sole causation.
See 29 U.S.C. 794( a) . Other than the 6th Circuit, only the 10th Circuit
adheres to the solely standard in ADA cases. See Fitzgerald v. Corr. Corp. of
Am., 403 F.3d 1134, 1144 ( 10th Cir. 2005) ; Williams v. Widnall, 79 F.3d 1003,
1005 ( 10th Cir. 1996) . All other Circuits that have addressed the issue have
adopted the motivating factor test. See, e.g., Pinkerton v. Spellings, 529
F.3d 513, 518-19 & n.30 ( 5th Cir. 2008) ( collecting cases) . While J udge
Merritt writing for the unanimous panel, did not expressly signal a belief that the
solely standard was erroneous and that the en banc 6th Circuit ought to
reverse that standard, J udge Griffin, concurring, made plain his opinion that the
solely test, was erroneous and should be set aside.

However, the Court recently agreed to rehear the Lewis case en banc, 2011
U.S. App. LEXIS 11941, and so it will be worthwhile to keep an eye on this case
for further developments.
GENDER DISCRIMINATION

Lilly Ledbet t er Fair Pay Act:

In Groesch v. Springfield, Illinois, 635 F.3d 1020 ( 7th Cir. Mar. 28, 2011) , the
Court held that the Ledbetter Act removed the Supreme Courts Ledbetter
decision as an obstacle to applying the paycheck accrual rule to discrimination
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claims in employee compensation, and held that the paycheck accrual rule
applies to pay discrimination claims under Section 1983.
RELIGIOUS DISCRIMINATION

3rd Circuit Affirms Workplace Head Scarf Ban:

On August 2nd, the Third Circuit, in EEOC v. GEO Group, Inc., 616 F.3d 265 ( 3rd
Cir. Aug. 2, 2010) ( available here) , held that a private contractor running a
Pennsylvania prison could ban khimars, head coverings worn by some of its
female Muslim employees.

According to the company, the ban on khimars, was necessitated by safety and
security concerns including the ability to smuggle items into the prison under
the khimar, the possibility that a khimar could be used to strangle the employee
wearing it, and the possibility of misidentification of the person wearing the
khimar.

The employees argued that GEOs stated reasons for banning the khimar were
meritless; GEO did not offer reasonable alternatives for accommodating khimar-
wearers; and that there is no legitimate safety concern due to employees
wearing khimars within the secure perimeter of the prison.

In affirming the district courts granting of summary judgment to the defendant
employer, the Third Circuit held that, even though the khimars presented only a
small safety risk, they did present a threat which is something that GEO is
entitled to attempt to prevent.

The dissent, by J udge A. Wallace Tashima ( visiting from the Ninth Circuit) ,
focuses on several areas of material fact that made summary judgment
inappropriate and argues that the majoritys legal analysis allows an employer to
engage in religious discrimination so long as it can come up with a post-hoc
safety rationale for its decision not to accommodate its employees religious
practices.

The issues of khimars in the workplace was also considered by the Seventh
Circuit in EEOC v. Kelly Services, Inc., 598 F.3d 1022 ( 8th Cir. Mar. 25, 2010)
( available here) . In that case, the EEOC filed suit against an employment agency
for failing to refer a khimar-wearing employee to an employer printing company
that had a policy banning loose fitting clothing because of safety concerns
involving the heavy, rotating equipment employees used at the job site. The
Seventh Circuit ruled in favor of the defendant holding that there was no
evidence of discrimination by the employment agency because the printing
companys policy was a valid, non-discriminatory reason for not referring the
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employee to that company.

The GEO Group court cited to the Kelly case when it discussed what exactly a
khimar is. " The EEOC never introduced a khimar into evidence. Although
khimars may come in different shapes and sizes we note the description
adopted by a sister circuit that stated ' A khimar is a traditional garment worn
by Muslim women that covers the forehead, sides of the head, neck shoulders,
chest and sometimes their waist,' EEOC v. Kelly Servs., 598 F.3d 1022, 1023
n.1 ( 8th Cir. 2010) ( quotation and citation omitted) , a description similar to
that provided in the EEOC' s complaint.

Although this case stands for the principle that safety concerns can outweigh
an employers duty to provide religious accommodations, tip of the hat to Philip
Miles at Lawffice Space for pointing out that since most workplaces are
significantly different than prisons, employers should not consider this a green
light to ban head scarves. Also, a tip of the hat to As Paul Mollica at Daily
Developments in EEO Law points for his post on this case.

Religious Discriminat ion Failure t o Accommodat e:

In Maroko v. Werner Enterprises, Inc., 2011 U.S. Dist. LEXIS 40865 ( D. Minn.
Apr. 14, 2011) , the District Court denied summary judgment where a Seventh
Day Adventist had lost his truck-driving job after his employer refused to
accommodate his Sabbath observances. The District judge found that whether
an employer offered a reasonable accommodation or faced undue hardship
ultimately boils down to whether the employer has acted reasonably, and these
questions cannot be answered as a matter of law at summary judgment.
FAMILY AND MEDICAL LEAVE

FMLA Burden of Proof On Reinst at ement:

In Sanders v. Newport, Oregon, 2011 U.S. App. LEXIS 5263 ( 9th Cir. Mar. 17,
2011) , the Court held that the employer carried the burden of proof to
establish that it had a legitimate reason to deny an employees reinstatement.
BANKRUPTCY DISCRIMINATION

Bankrupt cy Discriminat ion St at ut e:

In Myers v. TooJ ays Management Corp., 2011 U.S. App. LEXIS 9947 ( 11th Cir.
May 17, 2011) , the Court held that the provisions of the bankruptcy code
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relating to discrimination against job applicants who had previously filed for
personal bankruptcy only applied to government employers. Section 525( a)
provides that a government unit may not deny employment to, terminated
the employment of, or otherwise discriminate against a person who has filed for
bankruptcy; whereas Section 525( b) bars private employers from firing or
otherwise discriminating against an individual who has filed for bankruptcy.
Section 525( b) does not contain the phrase deny employment to that is
contained in Section 525( a) .

J ob Applicant Not Hired By Private Employer Because Bankruptcy Has
No Discrimination Claim Under the Bankruptcy Code:
Both the 3rd and 5th Circuits have held that the plain language of the
bankruptcy code ( 11 U.S.C. 525( b) ) , which applies to private employers, does
not prohibit the employer from denying employment because the job applicant
had filed for bankruptcy, contrasting that statutory language with 11 U.S.C.
525( a) , which applies to public employers and expressly prohibits such action.
See Rea v. Federated Investors, 627 F.3d 937 ( 3rd Cir. Dec. 15, 2010) ; In re
Burnett, 635 F.3d 169, 2011 WL 754152, at *2 ( 5th Cir. 2011) . See also
J ason Shinn, Can an Employer Reject a J ob Applicant Based on a Previous
Bankruptcy? , Michigan Employment Law Advisor ( Mar. 31, 2011) ,
http://www.michiganemploymentlawadvisor.com/employee-background-credit-
checks/can-a-company-reject-a-job-applicant-based-on-a-previous-bankruptcy/.
RETALIATION

Does Gross Apply t o Tit le VII Ret aliat ion Claims?

In Smith v. Xerox. Corp., 602 F.3d 320 ( 5th Cir. Mar. 24, 2010) , a divided panel
of the Fifth Circuit, J udge J olly dissenting, held that mixed-motive analysis still
applies in Title VII retaliation cases.

Ret aliat ion: Aggregat ion of Event s:

In J ohnson v. The Advertiser Co., 2011 US Dist LEXIS 33236 ( M.D. Ala. Mar. 28,
2011) , the court held that an employers actions against an employee may be
evaluated cumulatively, that is, the disciplinary letters in this case combined
with the PIP constitute adverse employment action independent and apart from
the termination of plaintiffs employment. The court, following Leatherwood v.
Annas Linens Co., 384 F. Appx. 853, 858 ( 11th Cir. 2010) ( holding that
multiple counseling notices coupled with negative evaluations and temporary
employment probation constitute adverse employment action) , found here that
the disciplinary letters and the initiation of the PIP, when viewed in the
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aggregate, crossed the threshold into adverse employment action that would
dissuade a reasonable employee from making or supporting a charge of
discrimination. See also Smith v. Vilsack, 2011 U.S. Dist LEXIS 60846 ( D. Md.
J une 2, 2011) ; Test v. Holder, 614 F. Supp. 2d 73, 84 ( D.D.C. 2009) ( based
upon the combined effect of alleged events, a reasonable worker could be
dissuaded from engaging in protected activity) ; Caldwell v. J ohnson, 2009 WL
2487850 at *10 n.13 ( M.D.N.C. Aug. 13, 2009) ( collecting cases) .

Ret aliat ion Because of Filing EEOC Charge: Does a New Charge Need
t o be Filed?

In Edlebeck v. Trondent Dev. Corp., 2011 U.S. Dist. LEXIS 24711 ( N.D. Il.
Mar. 8, 2011) , the court held that the complainants failure to include his
retaliation claim in his EEOC charge did not preclude him from pursuing
such a claim in federal court, and did not amount to a failure to pursue
administrative remedies in connection with that claim, because the
retaliation charge arose out of the events that occurred after he filed his
EEOC charge. The court noted:

" Generally, a Title VII plaintiff may bring only those claims
that were included in her EEOC charge . . . or that are like or
reasonably related to the allegations of the charge and
growing out of such allegations." McKenzie v. Illinois Dep' t of
Transp., 92 F.3d 473, 481 ( 7th Cir. 1996) ( internal
quotation marks omitted) . Where, however, a plaintiff alleges
that his employer retaliated against him after he filed his
EEOC charge, the plaintiff need not exhaust the retaliation
claim at the administrative level. Swearnigen-El v. Cook Cnty.
Sheriff' s Dep' t, 602 F.3d 852, 864 n.9 ( 7th Cir. 2010)
( citing Steffen v. Meridian Life Ins. Co., 859 F.2d 534, 545
n.2 ( 7th Cir. 1988) ) .

In Noland v. Alburquerque, 2011 U.S. Dist. LEXIS 43974 ( D.N.M. Apr. 2,
2011) , the court held that each discrete incident must be exhausted,
that is, alleged retaliation following the filing of an EEOC charge must be
the subject of a new or amended charge. See Martinez v. Potter, 347
F.3d 1208, 1211 ( 10th Cir. 2003) ( Tenth Circuits decisions have
unambiguously recognized Morgan as rejecting application of the
continuing violation theory.)

Ret aliat ion Claim Against a Lawyer:

In Suchite v. Kleppin, 2011 U.S. Dist. LEXIS 48211 ( S.D. Fla. May 5, 2011) , the
court held that a lawyers conversation with a district judge and a dismissal
motion filed by the lawyer constituted adverse employment actions, but the
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court, finding that the plaintiffs failed to demonstrate pretext, granted
summary judgment. The lawyer, who had represented a defendant company in
an FLSA case filed by undocumented workers had suggested to the judge that
the plaintiffs be criminally investigated and had inquired about their immigration
status during depositions. While the court found the conversation with the
judge, suggesting that plaintiffs be referred for criminal investigation to be an
adverse action, the court found the deposition questions did not amount to an
adverse action.

Ret aliat ion Part icipat ion or Opposit ion:

In Perry v. Kappos, 2011 U.S. Dist. LEXIS 22285 ( E.D. Va. Mar. 2, 2011) , J udge
Cacheris holds that an informal, internal complaint of discrimination is protected
under the opposition prong of Section 704( a) of Title VII, and not protected as
participation activity under Title VIIs anti-retaliation provisions. Opposition
activity is protected only to the extent that the employee reasonably believes
that the employers actions are unlawful; whereas participation activity is
protected regardless of whether plaintiffs beliefs respecting discrimination are
reasonable. See also Bell v. Gonzales, 398 F. Supp. 2d 78, 94-95 ( D.D.C. 2005)
( court concluded that where a federal employee had initiated pre-complaint
contact with an EEO counselor, the employee is participating in a Title VII
proceeding) .

SOX Ret aliat ion:

In Tides v. Boeing Corp., 2011 U.S. App. LEXIS 8980 ( 9th Cir. May 3, 2011) ,
the Court concluded that the discharge of two Boeing employees after they had
provided a Seattle newspaper with allegations of fraud, were not entitled to
protections under SOX. J udge Silverman, writing for the panel, concluded that
the plain meaning of the statutory language [ 1514( A) ( a) ( 1) ] excludes the
expansive interpretation advanced by the plaintiffs, thus concluding that the
company was within its rights to terminate the plaintiffs for violating company
policy prohibiting unauthorized disclosures of Boeing information to the media.
ADVERSE EMPLOYMENT ACTIONS

Materially Adverse Rule:
In Goring v. Board of Supervisors of Louisiana State University and Agricultural
and Mechanical College, 2011 U.S. App. LEXIS 2352 ( 5
th
Cir. Feb. 4, 2011) , the
Fifth Circuit found that a reasonable employee would not have expected to be
insulated from review of her questionable job performance simply because she
had filed a prior complaint of discrimination.
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Must an Adverse Employment Action be tangible?
In EEOC v. Chrysler Group, LLC, 2011 U.S. Dist. LEXIS 16850 ( E.D. Wis. Feb. 17,
2011) , the district court, in denying the defense motion for summary judgment
to dismiss EEOCs retaliation claim, held that an adverse employment action
need not be tangible and held that a reasonable trier of fact could decide that
the charging parties suffered a materially adverse action based on the threat of
termination.
NON-COMPETE AGREEMENTS AND TRADE SECRETS

Third Circuit Preliminarily Enjoins Company Vice President from
Working For Compet it or Based on Concerns Regarding Disclosure of
Trade Secret s:
In Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 ( 3rd Cir. J uly 27, 2010)
( copy available here) Bimbo Bakeries sued Chris Botticella, Bimbo' s former vice
president of operations, after Botticella accepted a job offer with Hostess, a
competitor. Bimbo sought to preliminarily enjoin Botticella under the
Pennsylvania Uniform Trade Secrets Act ( PUTSA) from starting work for
Hostess, on the grounds that there was a high likelihood that Botticella would
disclose Bimbo' s trade secrets to Hostess. The U.S. District Court for the
Eastern District of Pennsylvania ( J udge R. Barclay Surrick) granted the
preliminary injunction, and on appeal, a panel of the Third Circuit ( J udges Smith,
Fisher, and Greenberg) affirmed.

The Third Circuit' s opinion was based in part on the holding that Botticella' s new
employment would likely result in the disclosure of Bimbo' s trade secrets.
Under the PUTSA, the relevant consideration in determining whether to grant
such an injunction is whether there is a sufficient likelihood or substantial threat
of disclosure of trade secrets. The Court held that there were sufficient facts
for the District Court to have found that this standard was met. For example,
during the time period between when Botticella accepted Hostess' job offer and
when he ceased working for Bimbo, he continued to have executive-level access
to Bimbo' s confidential and proprietary information, and in fact accessed a
number of highly sensitive files during his final days at Bimbo.

Mr. Botticella attempted unsuccessfully to argue that Bimbo had to meet a
higher standard of proof in order to be entitled to such an injunction. In
particular, rather than only having to show a sufficient likelihood or substantial
threat of disclosure of trade secrets, Botticella argued that Bimbo should have
to show that disclosure of trade secrets would be inevitable - i.e., that it would
be " virtually impossible" for him to do his job for Hostess without disclosing
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Bimbo' s trade secrets. The Third Circuit rejected this argument and held that
the " sufficient likelihood or substantial threat" test was the proper standard
under the PUTSA.

The Court further rejected Botticella' s attempt to distinguish between the
disclosure of technical vs. non-technical trade secrets, and held that trade
secrets do not have to be technical in nature in order to be covered by the
PUTSA.

A tip of the hat to the following authors & firms for their insightful articles on
this case:
Morgan Lewis, Third Circuit Clarifies Availability of Preliminary Injunction to
Prevent Former Employee from Working for a Competitor, Labor and
Employment Lawflash, J uly 30, 2010 ( available here) .
Andy Arnold, A Bimbo By Any Other Name: Third Circuit Upholds
" Inevitable Disclosure" Injunction, Beat Your Non-Compete Blog, August 2,
2010 ( available here) .
J ames McNairy, Bimbo Bakeries v. Boticella: Man vs. Muffin, Muffin Wins
Injunction, Trading Secrets Blog, August 3, 2010 ( available here) .
WARN ACT

WARN Act Replacement Workers:

In Sanders v. Kohler Co., 2011 U.S. App. LEXIS 11562 ( 8th Cir. J une 8, 2011) ,
the Court held that the discharge of temporary workers hired to replace striking
workers did not constitute a mass layoff as the 123 discharged temporary
workers were replaced by 103 original striking employees who were reinstated
under a settlement agreement. The Court reasoned that discharged employees
who are replaced cannot be considered to be a part of a RIF and therefore
ought not be counted as part of the aggregate number of employee layoffs
that must be met to satisfy the numerosity thresholds of the WARN Act. The
Court counted the RIF as being only 20 employees and that that number did not
trigger the WARN Acts notice requirement.

WARN Act Right t o J ury Trial:

In Bledsoe v. Emery Worldwide Airlines, Inc., 635 F.3d 836 ( 6th Cir. Feb. 16,
2011) , the Court held that because the WARN Act provides equitable
restitutionary relief, rather than damages, Plaintiffs did not have a constitutional
right to jury trial.
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WAGE AND HOUR

Assistant Store Managers Found to Be Exempt Under the FLSA:
In Re Dollar General Stores FLSA Litigation v. Dolgencorp, Inc., 2011 U.S. Dist. LEXIS
5048 (E.D. N.C. J an. 19, 2011, the Court granted summary judgment to the
employer, holding that the lead plaintiffs, assistant store managers, in this
consolidated multi-district litigation were properly classified as exempt.
FLSA Collective Action on Behalf of Assistant Managers Rejected:
In Aquilino v. Home Depot USA, Inc., 2011 U.S. Dist. LEXIS 15759 (D.N.J . Feb. 15,
2011), the Court decertified a conditional collective action of assistant store
managers after finding that the plaintiffs failed to meet their burden of establishing
that they were similarly situated to some 1,500 opt-ins who had joined the
litigation.
Sealing of FLSA Settlement Agreements

Several courts have rejected proposed FLSA settlement agreements containing
confidentiality provisions, on the grounds that such provisions conflict with the
remedial purposes behind the FLSA. For example, in a recent opinion for the Middle
District of Florida, the Court reasoned that:

[ A] confidentiality provision [ in an FLSA settlement] furthers
resolution of no bona fide dispute between the parties; rather,
compelled silence unreasonably frustrates implementation of the
"private--public" rights granted by the FLSA and thwarts Congress's
intent to ensure widespread compliance with the statute By
including a confidentiality provision, the employer thwarts the
informational objective of the notice requirement by silencing the
employee who has vindicated a disputed FLSA right.

Furthermore, Section 15(a)(3) of the FLSA proscribes an employer's
retaliating against an employee for asserting rights under the FLSA. If
an employee covered by a confidentiality agreement discusses the
FLSA with fellow employees or otherwise asserts FLSA rights, the
employer might sue the employee for breach of contract. The
employer's most proximate damages from the employee's breach are
the unpaid FLSA wages due other employees who learned of their
FLSA rights from the employee who breached the confidentiality
agreement. A confidentiality agreement, if enforced, (1) empowers an
employer to retaliate against an employee for exercising FLSA rights,
(2) effects a judicial confiscation of the employee's right to be free
from retaliation for asserting FLSA rights, and (3) transfers to the
wronged employee a duty to pay his fellow employees for the FLSA
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wages unlawfully withheld by the employer. This unseemly prospect
vividly displays the inherent impropriety of a confidentiality agreement
in settlement of an FLSA dispute.

A confidentiality provision in an FLSA settlement agreement both
contravenes the legislative purpose of the FLSA and undermines the
Department of Labor's regulatory effort to notify employees of their
FLSA rights The district court should reject as unreasonable a
compromise that contains a confidentiality provision, which is
unenforceable and operates in contravention of the FLSA.

Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1242-43 (M.D. Fla. 2010) (internal
footnotes omitted). See also Moreno v. Regions Bank, 729 F. Supp. 2d 1346 (M.D.
Fla. 2010) (denying as unreasonable a proposed FLSA settlement as unfair,
because it contained a pervasive release of claims with unbounded scope).

Similarly, J udge Moon, writing for the Western District of Virginia in refusing to
approve an FLSA settlement with a confidentiality provision, in a case in which
J udge Moon had also denied a motion to seal the settlement agreement, recently
held that:

The Court cannot approve these [ confidentiality] terms of the
Settlement Agreement. The provision that "confidentiality is a material
term of [ the] Agreement" is in conflict with the Court's [ past]
opinions which held that the parties had not identified significant
interests to outweigh the public interest in access to judicial records,
and required the proposed Settlement Agreement be made publicly
available on the docket. Furthermore, a confidentiality provision in an
FLSA settlement agreement undermines the purposes of the Act, for
the same reasons that compelled the Court to deny the parties'
motion to seal their Settlement Agreement. See e.g., Valdez v.
T.A.S.O. Prop., Inc., No. 8:09-cv-2250, 2010 U.S. Dist. LEXIS 47952,
2010 WL 1730700, at *1 (M.D. Fla. Apr. 28, 2010); Dees v.
Hydradry, Inc., F.Supp.2d, 2010 U.S. Dist. LEXIS 40900, 2010 WL
1539813, at *9 (M.D. Fla. 2010) ("A confidentiality provision in an
FLSA settlement agreement both contravenes the legislative purpose
of the FLSA and undermines the Department of Labor's regulatory
effort to notify employees of their FLSA rights.") The Court cannot
approve of a settlement agreement which includes these terms.

Poulin v. Gen. Dynamics Shared Res., Inc., 2010 U.S. Dist. LEXIS 47511 at *5-*7
(W.D. Va. 2010). See also Glass v. Krishna Krupa, LLC, 2010 U.S. Dist. LEXIS
110139 at *2-*4 (S.D. Ala. 2010) (citing Dees in rejecting an FLSA settlement
agreement as unreasonable because it contained a confidentiality provision); Scott
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v. Memory Co., LLC, 2010 U.S. Dist. LEXIS 119832 (D. Ala. 2010) (striking
confidentiality provision from FLSA settlement agreement).

Courts have rejected parties motions to seal FLSA settlements, on the grounds
that to do so would, like a confidentiality provision in such agreements, violate the
statutory purposes of the FLSA. For example, in denying a joint motion to seal an
FLSA settlement, J udge Morgan of the Eastern District of Virginia recently noted
that:

As this Court previously held in Boone v. City of Suffolk, Va., the
common law right of access to judicial records and documents is
implicated in a motion to file an FLSA settlement agreement under
seal. See 79 F. Supp. 2d at 608 ("This right of access has been
grounded in the democratic process itself and in a 'citizen's desire to
keep a watchful eye on the workings of public agencies.'") (quoting
Nixon v. Warner Comm'n, Inc., 435 U.S. 589, 598, 98 S. Ct. 1306, 55
L. Ed. 2d 570 (1978)). It is undisputed that an FLSA settlement
agreement, submitted to a court for judicial approval, is a judicial
record that triggers the common law right of public access. Put simply,
the public has an interest in determining whether the Court is properly
fulfilling its duties when it approves an FLSA settlement agreement.
Boone, 79 F. Supp. 2d at 609; see also Bank of Am. Nat'l Trust & Sav.
Ass'n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 344 (3d Cir. 1986)
(recognizing that a "court's approval of a settlement or action on a
motion are matters which the public has a right to know about and
evaluate"); Stalnaker v. Novar Corp., 293 F. Supp. 2d 1260, 1263
(M.D. Ala. 2003) ("Absent some compelling reason, the sealing from
public scrutiny of FLSA agreements between employees and
employers would thwart the public's independent interest in assuring
that employees' wages are fair and thus do not endanger 'the national
health and well-being.'") (quoting Brooklyn Sav. Bank v. O'Neil, 324
U.S. 697, 706-07, 65 S. Ct. 895, 89 L. Ed. 1296 (1945)).

Baker v. Dolgencorp, Inc., 2011 U.S. Dist. LEXIS 5208 at *6-*7 (E.D. Va. 2011).
See also J oo v. Kitchen Table, Inc., 2011 U.S. Dist. LEXIS 12723 (S.D.N.Y. 2011) (in
denying a joint request to approve a settlement without prejudice, holding that an
FLSA settlement agreement cannot be sealed absent some showing that
overcomes the presumption of public access, and inviting the parties to negotiate a
settlement agreement that did not require sealing the agreement); McCaffrey v.
Mortgage Sources, Corp., 2010 U.S. Dist. LEXIS 109508 (D. Kan 2010) (denying
motion to file FLSA settlement under seal).

USDOL s Wage and Hour Division Announces a Proposed New Notice
Rule, Which Would Require Employers To Conduct a Written
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Classification Analysis for Each Exempt Employee, to Provide the
Analysis to the Employee, and to Retain a Copy on File So That it Can
Be Provided to the WHD in the Event of An Investigation:
The proposed Rule would further require the preparation and retention of the same
records for any individual the employer classifies as an independent contractor.
The Proposed Rule can be accessed here:
http://www.dol.gov/whd/regs/unifiedagenda/fall2010/1235-AA04.htm.

NLRB CASES

Complaint Regarding Dress Code Found to be Protected Activity by
NLRB:
In Wyndham Resort Development Corp., 356 N.L.R.B. No. 104 (2011), the Board
Found that an employee had engaged in protected, concerted activity, when he
questioned his supervisor in front of his coworkers, about a new dress code.
NLRB General Counsel Memorandum Addressing Back Pay Mitigation and
Calculation:
The NLRBs office of general counsel issued memoranda involving procedures for
calculating back pay that include daily compounded interest, search-for-work and
interim work-related expenses, and reimbursement for excess taxes owed.
See NLRB General Counsel Issues Memorandums Targeting Backpay Mitigation and
Calculation, Littler Labor Management Relations Group (Mar. 14, 2011),
http://www.laborrelationscounsel.com/unfair-labor-practices/nlrb-general-counsel-
issues-memorandums-targeting-backpay-mitigation-and-calculation/.
The NLRBs memorandum can be accessed here:
http://mynlrb.nlrb.gov/link/document.aspx/09031d458045d136.

NLRB Holds Employee s Secret Recording of a Meeting is Protected
Activity:
In Stephens Media, LLC d/b/a Hawaii Tribute-Herald, 356 N.L.R.B. No. 63, the
Board held that an employees recording of a meeting with management after
having first been disallowed bringing a coworker into a meeting as a witness,
was protected activity under the NLRA. The Board did not indicate whether its
analysis might change if such a case arose in a state that prohibited the secret
audio recording of private conversations without the consent of the parties.
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SOCIAL MEDIA

Employer May be Liable for Impersonating Employee on Facebook and
Twitter:
In Maremount v. Susan Friedman Design Group, Ltd., 2011 U.S. Dist. LEXIS
26441 ( N.D. Ill. Mar. 15, 2011) , an employer that allegedly posted to an
employees Facebook and Twitter accounts without her consent may be liable
for false association / false endorsement under the Lanham Act, 15 U.S.C.
1125( a) ( 1) ( A) , and the right to publicity under the Illinois right to publicity act.

CLASS AND COLLECTIVE ACTIONS

Challenges t o Class Cert ificat ion Based Upon St at ut e-of-Limit at ions
Issues:

The Third Circuit on September 22nd, issued yet another important class action
decisiona hundred-page opinion that is required reading for all involved in
class action litigation. In re: Community Bank of Northern Virginia and
Guarantee National Bank of Tallahassee Second Mortgage Loan Litigation, 622
F.3d 275 ( 3rd Cir. Sept. 22, 2010) , available here
( http://www.ca3.uscourts.gov/opinarch/083621p.pdf) .

J udge Ambro authored the opinion. This post only focuses on a portion of the
opinion that addresses the impact of statute-of-limitations issues on class
certification. As J udge Ambros opinion aptly captures the law of the Third
Circuit, I quote from his opinion extensively below:

Situations abound where statute-of-limitations issues overlap with certain of the
Rule 23 requirements. For example, defendants may contend that statute-of-
limitations defenses preclude a finding of typicality under Rule 23(a), either because
the named plaintiffs claims are untimely (and thus not typical of the class), see,
e.g., Franze v. Equitable Assurance, 296 F.3d 1250, 1254 (11th Cir. 2002), or
because the proposed class includes numerous class members with untimely claims
(rendering the named plaintiffs timely claims atypical), see, e.g., Doe v. Chao, 306
F.3d 170, 184 (4th Cir. 2002). Relatedly, defendants may oppose class
certification on the ground that class members with untimely claims must rely on
equitable tolling to save their claims, which presents an individual question of law
and fact that could predominate over common questions under Rule 23(b)(3), see,
e.g., In re Linerboard Antitrust Litig., 305 F.3d 145, 16062 (3d Cir. 2002), or
challenge the predominance requirement in light of the presence of idiosyncratic
statute-of-limitations issues among the laws of various states in a nationwide class
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action, see Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 29596 (1st
Cir. 2000).

Statute-of-limitations issues also touch the adequacy requirement. See, e.g.,
Goodman v. Lukens Steel Co., 777 F.2d 113, 124 (3d Cir. 1985) (named plaintiffs
were inadequate representatives in class action challenging discriminatory practices
in the initial assignment of newly hired employees, because [ a] ll of the named
plaintiffs . . . were originally hired outside the [ statute-of-] limitations period, and
therefore, none ha[ d] a viable complaint about discrimination in initial assignment).
Indeed, the merits of a statute-of-limitations defense to the named plaintiffs claims
may be relevant to evaluating their adequacy as class representatives in the same
way any type of defense may be relevant to that inquiry, i.e., named plaintiffs may
be inadequate representatives if their claims are extremely weak as compared to
the rest of the class. As J udge Posner explained,

if when class certification is sought it is already apparent . . . that the class
representatives claim is extremely weak, this is an independent reason to doubt
the adequacy of his representation. . . . One whose own claim is a loser from the
start knows that he has nothing to gain from the victory of the class, and so he has
little incentive to assist or cooperate in the litigation; the case is then a pure class
action lawyers suit.

Robinson v. Sheriff of Cook County, 167 F.3d 1155, 1157 (7th Cir. 1999) (internal
citations omitted). Thus, to the extent the claims of the named plaintiffsas
compared with the rest of the classare subject to fatal statute-of-limitations
defenses, that inquiry may be relevant to whether they can adequately represent
absent class members whose claims do not suffer from timeliness problems. Cf.
Beck v. Maximus, Inc., 457 F.3d 291, 297 (3d Cir. 2006) (the challenge presented
by a defense unique to a class representative is that the representatives interest
might not be aligned with those of the class, and the representative might devote
time and effort to the defense at the expense of issues that are common and
controlling for the class).

For more on this, click here for an article by Shannon P. Duffy for Law.com.

Class Act ions Subclassing and Bifurcat ion t o Remedy Predominance
Issues:

The Sixth Circuit in Randleman v. Fidelity Natl Title Ins. Co., 2011 U.S. App.
LEXIS 9915 ( 6th Cir. May 16, 2011) declined to rule on a split in the circuits as
to whether subclassing and bifurcation may be used to remedy predominance
issues in class litigation. The Second, Fourth, and Ninth Circuits allow such
practices so long as common issues predominate, see In re Nassau County Strip
Search Cases, 461 F.3d 219, 226 ( 2nd Cir. 2006) ; Gunnels v. Healthplan
Services, 348 F.3d at 417, 439 ( 4th Cir. 2003) ; Valentino v. Carter-Wallace,
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Inc., 97 F.3d 1227, 1234 ( 9th Cir. 1996) ; whereas the Fifth and the Eleventh
Circuits do not permit such practices, see Sacred Heart Health Systems, Inc. v.
Humana Military Healthcare Servs., Inc., 601 F.3d 1159, 1176 ( 11th Cir. 2010) ;
Castano v. American Tobacco Co., 84 F.3d 734, 745 & n.20 ( 5th Cir. 1996) .
See also Gunnels, 348 F.3d at 446-47 ( Neimeyer, J ., concurring in part and
dissenting in part) .

Combined Class and Collect ive Act ions:

In Ervin v. O.S. Restaurant Servs., Inc., 632 F.3d 971 ( 7th Cir. J an 18, 2011) ,
the district court granted conditional certification of plaintiffs FLSA claims, but
denied Rule 23 certification on supplemental state-law claims against the
defendant, finding that a FLSA collective action and state law class claims could
not be litigated together. The Court of Appeals, J udge Dianne Wood writing for
the panel, reversed, holding that there is no categorical rule against certifying a
Rule 23( b) ( 3) state-law class action in a proceeding that also included a FLSA
collective action, referring to such an action as combined actions.

Federal J udge Takes Race and Gender of Counsel Int o Account in
Deciding Whom t o Appoint as Class Counsel in Securit ies Class
Act ion Lit igat ion:

Federal District J udge Harold Baer of the Southern District of New York on
September 20, 2010, in In re: Gildan Activewear Inc. Securities Litigation, No.
08-civ-05048 ( S.D.N.Y. Sept. 20, 2010) , issued an order which reads, in part,
as follows:

WHEREAS this proposed class includes thousands of participants, both male
and female, arguably from diverse backgrounds, and it is therefore important to
all concerned that there is evidence of diversity, in terms of race and gender, in
the class counsel I appoint, see In re J .P. Morgan Chase Cash Balance Litigation,
242 F.R.D. 265, 277 ( S.D.N.Y. 2007) ; it is hereby
ORDERED that Co-Lead Counsel, Robbins Geller Rudman & Dowd LLP and
Labaton Sucharow LLP, shall make every effort to assign to this matter at least
one minority lawyer and one woman lawyer with requisite experience; and it is
further
. . . . . . . .
ORDERED that the parties shall appear for a preliminary approval hearing on
October 7, 2010, at 12:30 p.m., at which point Plaintiffs compliance with the
diversity requirement, as well as the other requirements listed here, will be
evaluated, and a date for the Settlement Fairness Hearing shall be set.
See also In re J .P. Morgan Chase Cash Balance Litigation, 242 F.R.D. 265, 277
( S.D.N.Y. 2007) ( The proposed class includes thousands of Plan participants,
both male and female, arguably from diverse racial and ethnic backgrounds.
Therefore, I believe it is important to all concerned that there is evidence of
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diversity, in terms of race and gender, of any class counsel I appoint. A review
of the firm biographies provides some information on this score. Here, it
appears that gender and racial diversity exists, to a limited extent, with respect
to the principal attorneys involved in the case. Co-lead counsel has met this
Court' s diversity requirement--i.e., that at least one minority lawyer and one
woman lawyer with requisite experience at the firm be assigned to this
matter.) .

Tip of the hat to Andrew Longstreth with Am Law Litigation Daily for bringing
this to our attention.
FOREIGN CORRUPT PRACTICES ACT

Foreign Corrupt Pract ices Act:

In United States v. Control Components, Inc., Case No. 8:09-cr-00077-J VS ( C.D.
Cal, May 9, 2011) , the court found that a jury, not a judge, should decide
whether someone is a foreign official under the Act.

In United States v. Lindsey Manufacturing Co., 2011 U.S. Dist. LEXIS 43895
( S.D. Cal. Apr. 20, 2011) ( a.k.a. United States v. Aguilar) , J udge Matz found
that officials of a Mexican state-owned utility were foreign officials under the
Act.
ATTORNEYS FEES

At t orneys Fees Award t o t he Defense Against EEOC:

In EEOC v. Tricore Reference Laboratories, Case No. 09-CV-956 ( D.N.M. Apr. 27,
2011) , District J udge J ohn Conway awarded attorneys fees to the employer,
which had prevailed on summary judgment. The court found that despite
black letter law, with which the EEOC is presumably intimately familiar, it
nevertheless pursued a failure to accommodate theory, even though its own
discovery responses to a request to admit facts had gutted its claim. See also
EEOC v. Peoplemark, Inc., 2011 U.S. Dist. LEXIS 38696 ( W.D. Mich. Mar. 31,
2011) .

At t orneys Fees Prevailing Part y:

In National Rifle Association of America, Inc. v. Chicago, 2011 U.S. App.
LEXIS 11055 ( 7th Cir. J une 2, 2011) , the Court reversed the District
Courts holding that the plaintiffs were not prevailing parties entitled to
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attorneys fees under 1988( b) because Chicago had repealed the
ordinance after the Supreme Courts decision in McDonald. In reversing,
the Circuit held: If a favorable decision of the Supreme Court does not
count as the necessary judicial impramatur on the plaintiffs position,
what would? The Court held that after the Supreme Courts McDonald
decision, the citys position was untenable and it had no choice but to
repeal the law and deliver a victory to plaintiffs without the need for a
formal injunction.

In Singer Mgt. Consultants, Inc. v. Milgram, 2011 U.S App LEXIS 12106
( 3rd Cir. J une 15, 2011) ( en banc) , a deeply divided Third Circuit held
that the plaintiff was not a prevailing party within the meaning of 42
U.S.C. 1988 where plaintiff obtained a TRO but later was denied a
preliminary injunction because of the defendants voluntary change of
position which mooted the case. The majority held that the plaintiff did
not receive a judgment on the merits, as required by Buckhannon, as
the TRO was not issued on the merits, and accordingly did not confer
eligibility for prevailing party status.
CHOICE OF LAW / FORUM

Choice of Forum Clauses in Employment and Set t lement Agreement s:

On October 18, 2010, J udge Deborah K. Chasanow issued an opinion on a
motion to remand to state court a civil action removed to the Federal District of
Maryland. Ruifrok v. White Glove Restaurant Servs., LLC, 2010 U.S. Dist. LEXIS
110369 ( D. Md. Oct. 18, 2010) , available here. The opinion, as well as an
earlier Ninth Circuit opinion to which it makes reference (Kamm v. Itex Corp.,
568 F.3d 752 ( 9th Cir. 2009) ) , underscore in drafting employment agreements
and severance / settlement agreements, that the language of the choice of
forum clause can be dispositive as to whether the controversy can be removed
to federal court or not. Additionally, Kamm teaches us that motions to remand
predicated on a choice of forum clause are not covered by the defect
exception in 28 U.S.C. 1447( d) , and thus the 30-day rule does not apply to
such motions to remand.

Drafting Forum Selection Clauses

In Ruifrok, the language of the forum selection clause read as follows:

This Agreement and the parties performance hereunder shall be governed by
and interpreted under the laws of the State of Maryland. Employee agrees to
submit to the jurisdiction of the courts of the State of Maryland, and that venue
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for any action arising out of this Agreement or the parties performance
hereunder, shall be in the Circuit Court for the County of Montgomery, Maryland.

In Ruifrok, the court was called upon to decide whether that language
necessitated a remand of the case to state court. J udge Chasanow looked at
cases containing forum selection clauses that applied to all claims arising from
or relating to the employment relationship and cases where courts had found
that a statutory wage claim was not a matter relating to the agreement and
therefore not encompassed by the forum selection clause. She contrasted
those cases with the matter before her, finding that the language in the instant
case applied not only to actions arising out of this agreement, but also to
those arising from the parties performance hereunder. She found that the
latter clause encompassed statutory wage claims under the FLSA and the
Maryland Wage Payment and Collection Law, as resolution of issues under those
statutes would require careful scrutiny of the employment agreement to
determine the nature and scope of the plaintiffs job duties, and the method by
which he was compensated. In short, she held that plaintiffs claims related to
defendants performance, or non-performance, under the agreement, and thus
were encompassed by the forum selection clause.

J udge Chasanow found that a forum selection clause constitutes a waiver of the
right of removal to federal court; that forum selection clauses are presumptively
enforceable; and that the clause at issue was mandatory, not permissive. Her
finding that the clause was mandatory was based upon the clauses use of the
phrase shall be rather than permissive language.

The opinion also discusses tort claims, finding that they could not be
adjudicated without analyzing whether the parties were in compliance with the
underlying agreement, and thus were governed by the forum selection clause.
J udge Chasanow also noted that the agreement had been drafted by
defendants, and thus she stated that they could have specifically reserved a
right to remove the action to federal court.

The opinion contains a brief discussion of the exceptions to the presumption of
enforceability of a forum selection clause, which are:

( 1) their formation was induced by fraud or overreaching; ( 2) the complaining
party " will for all practical purposes be deprived of his day in court" because of
the grave inconvenience or unfairness of the selected forum; ( 3) the
fundamental unfairness of the chosen law may deprive the plaintiff of a remedy;
or ( 4) their enforcement would contravene a strong public policy of the forum
state. Allen v. Lloyd' s of London, 94 F.3d 923, 928 ( citing Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585, 595 ( 1991) ; Bremen v. Zapata Off-Shore
Co., 407 U.S. 1, 12-13, 15, 18 ( 1972) ) .

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Defendants argued that enforcement of the clause would be unreasonable
because two individual defendants were not signatories to the employment
agreement. J udge Chasanow had no difficulty with this argument, finding that
removal is only permissible if all of the defendants consent to removal, and the
company had waived its right to removal by virtue of the forum selection
clause, and therefore could not consent to removal. Additionally, she pointed
out that it is well-established that non-signatories to an agreement are
nevertheless covered by choice of forum clauses so long as their alleged
conduct is closely related to the contract in question. The individuals were
being sued under the FLSA and Maryland Wage Payment and Collection Law as
employers within the meaning of those statutes, and therefore the claims
against them were closely related to the contract at issue.

So, in terms of takeaways, if anything, the opinion underscores the importance
of carefully drafting the forum selection clause either to prevent removal or
assure that the option is preserved.

Procedure

While the motion to remand in Ruifrok was filed within 30 days of removal,
J udge Chasanows citation of the Kamm case led me there, and it is worthwhile
to share with our readers the holding in Kamm, which is consistent with the
holdings of all other circuits that have addressed the issue. Some fairly arcane
history is a necessary predicate to understanding the issue.

Prior to 1996, the removal statute ( 28 U.S.C. 1447( c) ) provided: A motion to
remand on the basis of any defect in removal procedure must be made within
30 days after the filing of the notice of removal under 1446( a) . If at any
time before final judgment it appears the district court lacks subject matter
jurisdiction, the case can be remanded.

Prior to 1996, the courts had held that the 30 day requirement of 1447( c)
did not apply to motions to remand based on forum selection clauses.

In 1996, the statute was amended to delete the phrase any defect in removal
procedure and substitute simply any defect. The argument was then made
that the any defect language encompassed a motion to remand based on a
forum selection clause. Prior to Kamm, the Tenth, Seventh, First, and Eleventh
circuits had rejected that argument, finding that motions to remand based on a
forum selection clause are not governed by the 30 day rule. The Kamm court
agreed, finding that the any defect language had been substituted for the
prior language to cover motions to remand based on non-procedural statutory
requirements for removal such as the forum defendant rule ( dont let those
words confuse youthey have no relevance to a forum selection clause) . Thus,
the motion to remand based on a forum selection clause, like the motion that
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was successful in Ruifrok, need not necessarily be filed within 30 days, but
rather, must be filed within a reasonable timeframe. The Kamm court was
clearly uncomfortable with this result, stating, there are good policy reasons to
impose a statutory time limit on a motion to remand based on a forum selection
clause, whether that limit be thirty days or some other period. Having
expressed its displeasure, the Kamm court noted that that is a task for
Congress, and not the court, and thus it affirmed the district courts order
remanding that case to state court.

So, the takeaway from Kamm would seem to be that best practice, as was the
case in Ruifrok, is to file your motion to remand within 30 days even though not
required to do so, and in any event, to file within a reasonable time after notice
of removal.

Tip of the hat to Will Aitchison of the FLSA Blog.

Scope of Forum Select ion Clause:

In Simonoff v. Expedia, Inc., 2011 U.S. App. LEXIS 10374 ( 6th Cir. May 24,
2011) , the Court, in interpreting the scope of a forum selection clause, held
that the phraseology courts of a state limits jurisdiction to state courts;
whereas the phrase courts in a state permits jurisdiction in both state and
federal courts.
DISPARAGEMENT / DEFAMATION

Absolute vs. Qualified Immunity in U5 Defamation Cases:
The state courts continue to be deeply divided as to whether a qualified or an
absolute privilege applies to statements made by the employer on a Form U5.
New York and California have found such statements to be absolutely privileged;
whereas seven other states have found them to be qualifiedly privileged. See,
e.g., Rosenberg v. Metlife, Inc., Slip Op. 02627, 2007 WL 922920 at *7 ( NY
Mar. 29, 2007) ( absolute privilege under New York law) ; Fontani v. Wells Fargo
Investments, LLC, 28 Cal. Rptr. 3d 833 ( Cal. Ct. App. 2005) ( absolute privilege
under California law) ; Wietecha v. Ameritas Life Ins. Corp., No. CIV 05-0324-
PHX-SMM, 2006 WL 2772838, at *11 ( D. Ariz. Sept. 27, 2006) ( qualified
privilege under Arizona law) ; Dickinson v. Merrill Lynch, Pierce, Fenner & Smith
Inc., 431 F. Supp. 2d 247, 261-62 ( D. Conn. 2006) ( qualified privilege under
Connecticut law) ; Smith-J ohnson v. Thrivent Fin. For Lutherans, No.
803CV2551T30EAJ , 2005 WL 1705471, at *6 ( M.D. Fla. J uly 20, 2005)
( qualified privilege under Florida law) ; Dawson v. New York Life Ins. Co., 135
F.3d 1158, 1163-64 ( 7th Cir. 1998) ( qualified privilege under Illinois law) ;
Andrews v. Prudential Sec., Inc., 160 F.3d 304, 307 ( 6
th
Cir. 1998) ( qualified
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privilege under Michigan law) ; Prudential Sec. Inc. v. Dalton, 929 F. Supp. 1411,
1418 ( N.D. Okla. 1996) ( qualified privilege under Oklahoma law) ; Glennon v.
Dean Witter Reynolds, Inc., 83 F.3d 132, 137 ( 6
th
Cir. 1996) ( qualified privilege
under Tennessee law) ; In re Wakefield, 293 B.R. 372, 385-86 ( qualified privilege
under Texas law) .

Referring t o Former Boss as Slimebag Does Not Const it ut e
Disparagement , At Least in Ohio:

In Ohio Education Association v. Lopez, 2010 Ohio App. LEXIS 4272 ( Ohio Ct.
App. Oct. 19, 2010) , available here, the Court of Appeals of Ohio for the 10th
Appellate District held in a breach of contract case that the underlying contract,
a separation agreement, had not been violated even though it contained a non-
disparagement clause and even though the defendant, Lopez, referred to his
former boss as a slimebag. The court found that this was not a material
breach. Further, the court seemed to suggest that, because Lopezs
conversation ( actually a voicemail message) was directed to someone whom he
thought was a friend, this was apparently a no harm-no foul situation.
Looking at various dictionaries, a slimebag is defined as a scuzzbucket, a
scuzzbag, a disagreeable person, an unpleasant person; a creep, a sleazebag, a
crud, a degenerate, a deviant, a dirtbag, and a dirtball. While the level of civil
discourse has apparently degenerated so far in Ohio that such a reference is
treated as a slang expression [ that] is such a part of modern casual speech as
to be almost meaningless, one can only hope that this holding will be confined
to Ohio.

Oftentimes, we draft our non-disparagement clauses to read somewhat as
follows:
The Parties agree to make no disparaging, untrue, or misleading written or oral
statements about or relating to the other Party, their integrity, acumen, ethics,
inter-personal skills, job performance, business knowledge or business
practices.
One wonders if language like the foregoing had been utilized in the Lopez case
whether the court would have arrived at a different conclusion. Frankly, given
the rationales of the court, I am far from certain that the result would be
different. After all, the court found that there was a breach, but that the
breach was not material because it caused no damages. In addition, the court
found that Mr. Lopez had left the voicemail message with outside counsel for
the OEA, someone whom he stated he thought to be a friend. Now, I have
piqued your interest undoubtedly. Why would Mr. Lopez be calling a lawyer for
OEA. Put on your seatbelt folks the defendant who referred to his former
boss, the executive director of the OEA, as a sleazebag was none other than the
former general counsel of the OEA. So, in Ohio, lawyers can talk to lawyers
whom they think are their friends and refer their former bosses as slimebags
with impunity.
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Even though the court finds a breach, because it finds the breach is not
material, I guess that the breach could not be the predicate to rescind the
agreement and clawback the consideration/severance monies paid to the former
employee. I havent thought through completely how we might revise our non-
disparagement clauses, but it seems to me that one might consider language
that states, in essence, that a breach is a breach, or put more succinctly, one
need not establish damages or that the breach need not be material to obtain
relief, e.g., rescission and disgorgement of severance pay.

And, lets not forget: Whats sauce for the goose is sauce for the gander.
Here the former employee avoided a judgment against him, but this means that,
with the passage of time, eventually we will see Ohio cases ( at least from this
court) with the shoe on the other foot. I can envision the executive director
saying to people whom he thinks are his friends that he thought the general
counsel was a slimebag. While I have not researched it, Ill bet you that there
are significant number of lawyers out there who think that they are defamed
( not to mention disparaged) if they were referred to as a slimebag. And, given
the warm fuzzy feelings that juries have about lawyers, lots of luck in proving
that you were actually damaged by being called a slimebag.

Further, given that Ohio or at least this one Ohio appellate court has carved out
the I thought he was a friend exception, maybe ones non-disparagement
clause has to state that a disparagement stated to anyone, friend or otherwise,
constitutes an actionable breach.

Lets hope that this decision is not representative of some trend in how courts
will treat non-disparagement clauses. Otherwise, we might as well tell our
clients that we ought not waste our time and their money in negotiating such
clauses.

Tip of the hat to J on Hyman at Ohio Employers Law Blog for bringing this case
to my attention.

Virginia Supreme Court Reject s Damages for Breach of
Nondisparagement Agreement :
The Virginia Supreme Court recently reaffirmed the rule that a breach of
contract does not allow recovery of damages based on humiliation or injury to
feelings.

In Isle of Wight County v. Nogiec and Small v. Nogiec, 704 S.E.2d 83 ( Va.
2011) , the Court affirmed the trial court' s reversal of two plaintiff' s verdicts
based on statements made by a county official in violation of a
nondisparagement clause in the plaintiff' s severance agreement. As part of
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Alan Nogiec' s decision to retire early from his position as director of the Parks
and Recreation Department for the Isle of Wight County, he entered a severance
agreement with the County providing that the parties would " refrain from
making any disparaging comments or statements, whether written or oral,
about the other or any member of the County' s Board of Supervisors,
administrators, or employees." Id. at 84.

Two months later, Patrick Small, a witness before the Board, testified that the
previous Parks and Recreation director ( that is, Nogiec) had made significant
mistakes, and indeed, had taken action that " border[ ed] on negligence." Id. at
85. Nogiec brought suit against the County for breach of contract, and against
Small for defamation. After trial, the court entered verdicts for Nogiec against
both defendants.

The Virginia Supreme Court reversed the judgment against the County. The
evidence of harm resulting from the breach, which the Court described as
" embarrassment and humiliation," was not recoverable for a breach of
contract. Id. at 86. The Court based his holding on the rule that " tort damages
are not recoverable for breach of contract under the circumstances of this
case." Id. at 87. Evidence of pecuniary damages was necessary, and Nogiec did
not provide it. The Court also pointed out that if Nogiec were permitted to
prevail on both his breach of contract and defamation claims, he would have
been recovering twice based on the same evidence. Nogiec testified that he
" believed" that Small' s statements adversely affected his ability to find new
employment, but failed to present any evidence other than the fact that he was
not invited for job interviews for any of the positions for which he applied
during a two-month period following Small' s report to the Board.

The Court upheld, by contrast, the verdict against Small for defamation.
Though it acknowledged that Small' s testimony was entitled to a qualified
privilege for reporting his duties to the Board, the Court pointed out that the
circuit court had given the jury a proper instruction about malice ( the necessary
showing to overcome the privilege) .

In light of these holdings, lawyers drafting severance agreements should not
presume that a nondisparagement clause will provide their clients with complete
compensation for nonpecuniary damages. As long as the law refuses to grant
recovery of emotional distress or other tort-like damages, drafters must pay
close attention to which remedies the law will actually permit. Presumably, the
parties to a severance/settlement agreement can agree, by contract, that
emotional distress and humiliation, resulting from a breach of a
nondisparagement clause, is compensable. But, what employer would ever
agree to such a provision? One approach is to provide in the nondisparagement
clause that proof of a breach alone without necessarily proof of actual damage,
is compensable, and that the jury can determine the damages to be awarded.
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Or, one could provide that proof of a breach automatically results in an award of
a fixed amount of liquidated damages. Bottom line, the Virginia Supreme
Court' s decision underscores the need for counsel to carefully craft
nondisparagement clauses so that they have teeth and hopefully deter each
side from badmouthing the other. While the Nogiec case involves an employee
being disparaged, in my experience, oftentimes nondisparagement clauses are
of vital importance to management. I would be interested in the suggestions of
others on how to craft more meaningful nondisparagement clauses.
CONFIDENTIALITY

Agreement s To Maint ain Confident ial Informat ion:

In News America Marketing In-Store, LLC v. Emmel, 2011 U.S. App. LEXIS
11810 ( 11th Cir. J une 8, 2011) , the defendant former employee, Robert
Emmel, while still employed with the plaintiff former employer, News America,
felt that the News America was engaged in various unlawful activity. He
reported the alleged wrongdoing to U.S. Senator Sarbanes and to the SEC, and
sent both the senator and the SEC a number of News America company
documents to support his claims. Later, but before News America discovered
Emmels external disclosures of company documents, the relationship between
Emmel and News America soured, and News America terminated Emmel. Emmel
was offered a job with another employer, and needed a letter from News
America certifying that he was not bound under any non-compete agreement.
News America agreed to provide such a letter, but only in exchange for Emmel
signing a nondisclosure agreement ( NDA) , which provided that:

Emmel agrees that he will not disparage, denigrate or defame the
Company and/or related persons, or any of their respected business
products, practices, or services. Emmel further agrees that he will
maintain in complete confidence, and not discuss, share, reveal, disclose
or make available to any third party or entity any Confidential
Information of the Company.

Emmel signed the NDA on December 21, 2006, but only after he mailed a
number of additional News America company documents to a staffer for the
U.S. Senates Finance Committee on December 20, 2006 one day before he
signed the NDA. News America later learned of Emmels various disclosures of
company documents to outside parties and sued Emmel for breach of contract.

News America made two arguments ( 1) that certain documents in place when
Emmel was employed by News America created non-disclosure obligations
such as News Americas Standards of Business Conduct Policy; and ( 2) that
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Emmel breached the December 21, 2006 NDA by virtue of the mailing Emmel
sent out on December 20, 2006.
Both the District Court and the Eleventh Circuit rejected News Americas first
argument, and held that the employment documents in question did not impose
contractual nondisclosure obligations on Emmel.

But, the District Court agreed with News Americas second argument, granted
News America summary judgment on that aspect of News Americas contract
breach claim, and issued a permanent injunction barring Emmel from making any
further disclosures of News Americas confidential information. The court
reasoned that, while Emmel mailed out the documents in question the day
before he signed the NDA, it was undisputed that the recipient did not receive
the package until after Emmel had signed the NDA. The court found it
significant that Emmel didnt do anything to prevent the disclosure after he
had signed the NDA for example, he did not warn the recipient not to view the
documents. The court reasoned that Emmel thereby breached the NDA.

The Eleventh Circuit reversed, based on the verb tense which was used in the
NDA. That is, the NDA provided that Emmel will not disparage i.e., it was
written in the future tense, and therefore did not cover any of Emmels past
conduct which predated his signature of the NDA. The court reasoned that
nothing indicated that the parties intended the agreement to apply
retroactively, or to provide any assurances about past actions. The court
ultimately agreed with Emmels arguments that [ t] o capture his pre-contract
conduct the promises would have needed to be phrased in the present
perfect tense i.e., Emmel agrees he has not disparaged and that he has
maintained in complete confidence News Americas confidential information,
and that the District Courts ruling disregards the basic rule that a contract
operates only prospectively from execution absent language of retroactive
effect.

Needless to say, the decision vividly highlights the paramount importance of
careful drafting when it comes to writing contracts, employment agreements,
employment policies, settlement agreements, and other such documents.
DISCOVERY

Defense Discovery Subpoenas t o Plaint iffs Former and Current
Employers:

To the extent that defendants seek any and all . . . documents relating to
plaintiffs relationships with their former employers, courts have consistently
rejected such requests as overly broad on their face. See, e.g., Barrington v.
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Mortgage IT, Inc., 2007 U.S. Dist. LEXIS 90555 ( S.D. Fla. Dec. 10, 2007)
( rejecting subpoenas duces tecum which sought any and all documents, files
and records, reflecting or relating to the employment of the plaintiff as overly
broad on their face) ; Badr v. Liberty Mutual Group, Inc., 2007 U.S. Dist. LEXIS
73437 ( D. Conn. Sept. 28, 2007) ( holding that defendants subpoena of any
and all records relating to plaintiff was overbroad and limiting the subpoena to
documents relating to prior claims or complaints against plaintiffs coworkers) ;
Richards v. Convergys Corp., 2007 WL 474012 ( D. Utah Feb. 7, 2007)
( quashing overbroad subpoena duces tecum directed to plaintiffs former
employer that sought all documents in your possession or control regarding
the employment of the plaintiff) ; Richmond v. UPS Service Parts Logistics,
2002 U.S. Dist. LEXIS 7496, at *13 ( S.D. Ind. Apr. 5, 2002) ( holding that a
discovery request for the plaintiff' s entire personnel file was on its face
overbroad) ; Franzon v. Massena Mem. Hosp., 189 F.R.D. 220, 222 ( N.D.N.Y.
1999) ( finding that defendant' s discovery request for " any and all documents"
without limitations is overbroad) .

In addition to being facially overbroad, courts have found that such subpoenas
can have a chilling effect on a plaintiffs decision to assert his or her legal
rights. See Rivera v. NIBCO, Inc., 364 F.3d 1057, 1065-66 ( 9th Cir. 2003)
( recognizing that discovery that would cause a chilling effect on plaintiffs
seeking to enforce their employment rights is an unreasonable burden and
therefore affirmed the district courts protective order) ; EEOC v. Bice of
Chicago, 229 F.R.D. 581, 2005 U.S. Dist. LEXIS 15959 ( N.D. Ill. 2005) ( barring
discovery seeking immigration status of employment discrimination plaintiffs
because such discovery was oppressive, a substantial burden on the parties and
the public interest and would have a chilling effect on victims of employment
discrimination coming forward to assert claims) .
Moreover, when presented with such overly broad requests, courts have
consistently rejected the requests on the grounds that they could be obtained
through less obtrusive and intrusive means. See Graham v. Casey' s Gen. Stores,
Inc., 206 F.R.D. 251, 254 ( S.D. Ind. Mar. 18, 2002) ( granting motion to quash
subpoenas to present and former employers for plaintiffs medical records in a
discrimination case, since, while the plaintiffs medical history is important to
her disability discrimination claims, defendant could have obtained the records
from her medical providers and had no need to take the more intrusive step of
seeking this medical information from her employers) ; Conrod v. The Bank of
New York, 1998 U.S. Dist. LEXIS 11634 ( S.D. N.Y. J uly 30, 1998) ( holding that
documents the subject of a broad subpoena might have been obtained from
plaintiff via less intrusive means) ; see also Collins v. Midwest Medical Records
Assoc., Inc., 2008 U.S. Dist. LEXIS 18368, at 6 ( E.D. Wis. Feb. 7, 2008)
( granting plaintiffs motion for a protective order and quashing defendants
subpoena while noting [ i] f MMRA is unable to obtain the information it seeks
directly from Collins, MMRA is free to file a motion to compel.) .

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We previously posted on this issue here, but as it relates to the instant post, it
bears restating that courts have also held as a general rule that plaintiffs
prior job performance is irrelevant in employment cases. See Laffey v. J anssen,
2006 U.S. Dist. LEXIS 14833 ( M.D. Fla. 2005) ( excluding evidence of prior
performance for the same employer) . See also Neuren v. Adduci, Mastriani,
Meeks & Schill, 43 F.3d 1507, 1511 ( D.C. Cir. 1995) ( holding that because
plaintiffs difficulties with interpersonal relationships at her prior job was
irrelevant, the district court improperly admitted such evidence) ; Zenian v.
District of Columbia, 283 F. Supp. 2d 36 ( D.D.C. 2003) ( holding that evidence
of prior employment cannot be introduced in the attempt to prove that plaintiff
acted consistently with his prior conduct) ; Fyock v. American Public Gas Assn,
Civ. No. 2008 CA 006454 B ( D.C. Sup. Ct. Apr. 24, 2009) ( finding that
defendants proffered justification for the discovery of plaintiffs employment
recordsincluding that it is standard practice and that such discovery would
" shed light on Plaintiffs termination of previous employment and lead to
discovery of admissible evidence"failed to demonstrate how plaintiffs
employment records were relevant or discoverable) .

And courts have consistently prevented discovery of employees character. See
Neuren, 43 F.3d at 1511 ( holding that the district court improperly admitted
evidence of plaintiffs difficulties with interpersonal relationships at her prior
job) ; Zubulake v. UBS Warburg, LLC, 382 F. Supp. 2d 536 ( S.D.N.Y. 2005)
( holding that using plaintiffs prior job performance to show plaintiff was
insubordinate and uncooperative at the job he was terminated from was
inadmissible propensity evidence) ; Fyock, Civ. No. 2008 CA 006454, at p. 9-10
( As to Plaintiffs employment with [ his former employers] , this Court finds that
even if the Plaintiffs employment records did contain evidence suggesting that
Plaintiff had a problem with his emotional behavior during his employment with
[ his former employers] , such information is irrelevant to Plaintiffs claims of age
discrimination, breach of contract and promissory estoppel.) .
Namely, such evidence would not be admissible at trial as its only purpose would
be an attempt to prove that the employee acted consistently with his character
as evidenced by his prior employment. See Neuren, 43 F.3d at 1511 ( holding
that the district court improperly admitted evidence of plaintiffs difficulties
with interpersonal relationships at her prior job) ; Zenian, 283 F. Supp. 2d at 40
( D.D.C. 2003) ( If the District is offering the [ prior employment] evidence to
show that plaintiff has always been a bad employee, it is doing exactly what it
cannot do: introduce evidence of a persons character to prove that his
behavior on one or more occasions was consistent with that character.
Fed.R.Evid. 404( a) . That, of course, is exactly what a litigant cannot do.) .
Character evidence is also generally considered not to be an element of any
claim or defense in employment cases. See Zubulake, 382 F. Supp. 2d at 539
n.1 ( Plaintiffs character is not an essential element of any claim or defense in
an employment discrimination case. The prohibitions of Rule 404( b) therefore
apply.) . See also EEOC v. HBE Corp., 135 F.3d 543, 553 ( 8th Cir. 1998)
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( plaintiff' s character was not an essential element of his retaliatory discharge
claim) .

EEOC Subpoena:

In EEOC v. UPMC, 2011 U.S. Dist. LEXIS 55311 ( W.D. Pa. May 24, 2010) ,
District Court J udge Terrence F. McVerry held in a EEOC investigation of a ADA
charge where the charging party was a former employee of a nursing home
owned by the University of Pittsburg Medical Center, which employed 170
individuals, the EEOC sought production of information regarding every UPMC
employee, some 48,000 employees. The Court rejected EEOCs subpoena,
finding that it was an improper fishing expedition. The Court relied on the Third
Circuits holding in EEOC v. Kronos, Inc., 620 F.3d 287 ( 3rd Cir. 2010) , which
had held:

The EEOC is empowered to investigate charges of discrimination to determine
whether there is reasonable cause to believe that an employer has engaged in
an unlawful employment practice. See 42 U.S.C. 2000e-5( b) , 12117( a)
( expanding the EEOC' s power to investigate and address discrimination on the
basis of disability) . In connection with its investigation, the EEOC may issue
administrative subpoenas. See id. 2000e-9; 29 U.S.C. 161( 1) . However, the
EEOC' s statutory investigative authority is not plenary; the EEOC is entitled to
access only evidence " relevant to the charge under investigation." 42 U.S.C.
2000e-8( a) .
RICO

RICO Undocument ed Workers:

In Edwards v. The Prime, Inc., 602 F.3d 1276 ( 11th Cir. Apr. 9, 2010) , the
court found that the employees did not sufficiently allege RICO predicate acts
based upon violations of 8 U.S.C. 1324( a) ( 3) ( a) , which makes it a federal
crime for any person to knowingly hire for employment at least 10 individuals
with actual knowledge that the individuals are [ illegal] aliens during a twelve-
month period, or 1324( a) ( 1) ( A) ( v) , which makes it a crime for any person to
knowingly or recklessly conceal, harbor, or shield from detection, or attempt to
conceal, harbor, or shield from detection any alien who has come to, entered,
or remains in the United States illegally. On the other hand, the court found
that plaintiffs sufficiently alleged that defendants encouraged or induced illegal
aliens to reside in the United States, and concealed, harbored, or shielded aliens
from detection in violation of 1324( a) ( 1) ( A) ( iii) and ( iv) .
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PROCEDURE

Can an Employer in t he Employment Applicat ion Short en t he St at ut e
of Limit at ions for Ant i-Discriminat ion Claims?

The answer, rather uniformly, is affirmative. Recently, in Dunn v. Gordon Food
Services, Inc., 2011 U.S. Dist. LEXIS 13387 ( W.D. Ky. Feb. 10, 2011) , Chief
J udge Russell upheld the employer' s shortening of the statute of limitations
where the employment application with Ms. Dunn, on its last page, had eleven
clauses to which the applicant had to agree as a condition of being considered
for employment, and the fourth clause stated that the applicant agreed " that
any action or suit against [ the employer] arising out of any employment or
termination of employment, including but not limited to claims arising under the
State or Federal civil rights statutes, must be brought within one year of the
event giving rise to the claim or be forever barred." This clause went on to
state that the applicant " waive[ d] any statute of limitations to the contrary."
The Court, citing a plethora of authorities, both inside and outside the Sixth
Circuit upholding such provisions, sustained the defense motion for summary
judgment based on that clause. See also Ravenscraft v. BNP Media, Inc., No.
09-C-6617, 2010 U.S. Dist. LEXIS 37919, 2010 WL 1541455, at *1 ( N.D. Ill.
Apr. 15, 2010) ; PSC Info Group v. Lason, Inc., 681 F. Supp. 2d 577, 587 ( E.D.
Pa. 2010) ; Cole v. Federal Exp. Corp., No. CV-06-3485, 2008 U.S. Dist. LEXIS
71431, 2008 WL 4307090, at *9 ( E.D. Pa. Sept. 19, 2008) ; Vincent v.
Comerica Bank, No. H-05-2302, 2006 U.S. Dist. LEXIS 28613, 2006 WL
1295494, *5-6 ( S.D. Tex. May 10, 2006) ; Badgett v. Federal Express Corp.,
378 F. Supp. 2d 613 ( M.D.N.C. 2005) ; Fink v. Guardsmark, LLC, No. CV 03-
1480-BR, 2004 U.S. Dist. LEXIS 16970, 2004 WL 1857114, at *1 ( D. Or. Aug.
19, 2004) ; J ohnson v. DaimlerChrysler Corp., No. C.A. 02-69 GMS, 2003 WL
1089394, at *1 ( D. Del. Mar. 6, 2003) .

Pat t ern or Pract ice Suit s Time Limit at ions:

In EEOC v. Kaplan Higher Education Corp., 2011 U.S. Dist. LEXIS 50035 ( N.D.
Ohio May 10, 2011) , District J udge Patricia A. Gaughan held that the time
limitations of Section 706( e) of Title VII apply to pattern or practice suits under
Section 707. The Court rejected the reasoning of EEOC v. L.A. Weight Loss,
509 F. Supp. 2d 527 ( D. Md. 2007) and EEOC v. Sterling J ewlers, Inc., 2010
U.S. Dist. LEXIS 649 ( W.D.N.Y. J an. 6, 2010) .

Summary J udgment :

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In Pye v. Nu Aire, Inc., 2011 U.S. App. LEXIS 12226 ( 8th Cir. J une 17, 2011) , a
former employee appealed the district courts grant of summary judgment in
favor of the former employer on the employees claims of racial discrimination,
hostile work environment, and termination as a result of retaliation, in violation
of Title VII and Minnesota state law. The Eighth Circuit affirmed the summary
judgment ruling in connection with the hostile work environment claim because,
even accepting the former employees version of events, there was only a one-
time inappropriate racial comment made by a non-supervisor, and which was not
directed at the employee. Similarly, summary judgment was upheld as to the
former employees race discrimination claim, because the former employee
didnt show any circumstances that gave rise to a reasonable inference of racial
discrimination, whether in connection with the terms and conditions of his
employment, or in connection with the former employers decision to fire him.
However, the Eighth Circuit reversed the summary judgment decision in relation
to the retaliation claim, because the former employee did submit evidence
which suggested that his termination was a direct result of his complaint of
racial discrimination, and his suggestions of remedies, prompted by the
investigators questions. The Court held that it was for the jury to decide
whether the former employee was fired in retaliation for his engaging in
protected conduct, or whether he instead was terminated because the former
employer believed that he was engaging in extortion. The court noted that:

There is no discrimination case exception to the application of
summary judgment, which is a useful pretrial tool to determine
whether any case, including one alleging discrimination, merits a
trial. Torgerson v. City of Rochester, _ _ _ _ F.3d _ _ _ _ , 2011 U.S.
App. LEXIS 10938, 2011 WL 2135636, at *8 ( 8th Cir. J une 1,
2011) ( en banc) ( citations omitted) . Although employment
discrimination cases are often fact intensive and dependant on
nuance in the workplace, they are not immune from summary
judgment. Trierweiler v. Wells Fargo Bank, 639 F.3d 456, 2011
WL 1327991, at *3 ( 8th Cir. 2011) ( quoting Fercello, 612 F.3d at
1077) . If there is no dispute of material fact and reasonable
fact finders could not find in favor of the nonmoving party,
summary judgment is appropriate. Id. ( quoting another source) ;
see also Smith v. Fairview Ridges Hosp., 625 F.3d 1076, 1082 -83
( 8th Cir. 2010) ( [ N] o separate summary judgment standard exists
for discrimination or retaliation cases and . . . such cases are not
immune from summary judgment.)
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Whet her Oral Not ice of Right t o Sue by t he EEOC is Sufficient:

In DeTata v. Rollprint, 2011 U.S. App. LEXIS 583 ( 7th Cir. J an. 12, 2011) , the
Seventh Circuit, J udge Dianne Wood writing for the panel, held that a telephone
call between the EEOC and the charging party did not satisfy the notice-of-
right-to-sue requirement of 706( f) ( 1) of Title VII. The district court had
dismissed plaintiffs complaint because of plaintiffs telephone call with EEOC
more than 90 days before plaintiff sued, in which the EEOC advised plaintiff that
a right-to-sue had been sent to plaintiff, but had been returned to EEOC as
undeliverable. Another notice-to-sue was mailed to plaintiff and received by
plaintiff within the 90 day period preceding the filing of suit.

PLEADING

False Syllogism:

In Zucker v. Five Towns College, 2010 U.S. Dist. LEXIS 85441 ( E.D.N.Y. Aug. 18,
2010) , and in Ochei v. The Mary Manning Walsh Nursing Home Co., Inc., 2011
U.S. Dist. LEXIS 20542 ( S.D.N.Y. Mar. 1, 2011) , both courts issued favorable
decisions to the defendant employers on motions to dismiss. In Zucker, J udge
Seybert held that in order to survive a motion to dismiss, a plaintiff is required
to plead concrete facts demonstrating that the employment decision was
motivated by a discriminatory animus and further held that being replaced by
someone outside of plaintiffs protected class did not, standing alone, state a
claim:
[ I] f such barebones allegations sufficed to state a claim, then any
time an ADEA-covered employer terminated an employee over age
forty, the employer would be unable to replace that employee with
someone younger without exposing itself to potential liability for age
discrimination. And Defendants similarly argue, correctly noting that
every employee is a member of multiple protected classes. Thus,
unless a terminated employee is being replaced by a virtual clone,
his/her replacement will almost certainly be outside of one of the
Plaintiffs protected classes ( e.g., could be younger and/or a different
gender, race, religion, national origin) . The Court agrees with this
reasoning. And the Court has no desire to abrogate [ Federal Rule of
Civil Procedure] 8s gate-keeping function in employment
discrimination cases, enabling nearly every fired employee to subject
his employer to burdensome, expensive discovery.
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In Ochei, J udge McMahon rejected the false syllogism that a decision to
terminate someones employment necessarily flows from his/her protected
class. J udge McMahon held that the complaint must plead specific facts
demonstrating the causal connection between the adverse action and the
protected class:
Where there is no reason to suspect that an employers actions had
anything to do with membership in a protected class, other than
plaintiffs bald assertion that she was a member of such a class, and
the people who made decisions about her employment were not, no
claim is stated.
***
To protect employers from precisely this sort of untenable situation,
naked assertions by plaintiff that some protected demographic factor
motivated an employment decision, without a fact-specific allegation
of a causal link between defendants conduct and the plaintiffs
membership in a protected class, are simply too conclusory to
withstand a motion to dismiss.

Iqbal and Twombly Plausibilit y Pleading St andard Reject ed by St at e
Supreme Court :

The Washington State Supreme Court in an en banc unanimous opinion issued
on J une 24, 2010, in McCurry v. Chevy Chase, 2010 Wash. LEXIS 534 ( Wash.
J une 24, 2010) , refused to adopt the Supreme Courts plausibility pleading
standard set forth in its Bell Atlantic Corp. v. Twombly, 550 U.S. 544 ( 2007)
and Ashcroft v. Iqbal, _ _ U.S. _ _ , 129 S. Ct. 1937 ( 2009) decisions. In doing
so, it stated as follows:
The new Fed. R. Civ. P. 12( b) ( 6) standard [ under Twombly and Iqbal]
effectively reads plausible into the rule, as follows: failure to state a
[ plausible] claim upon which relief can be granted. This adds a determination
of the likelihood of success on the merits, so that a trial judge can dismiss a
claim, even where the law does provide a remedy for the conduct alleged by the
plaintiff, if that judge does not believe it is plausible the claim will ultimately
succeed.

The Supreme Court' s plausibility standard is predicated on policy determinations
specific to the federal courts. . . . Neither party has shown these policy
determinations hold sufficiently true in the Washington trial courts to warrant
such a drastic change in court procedure.
Nor has either party here addressed countervailing policy considerations. . . .

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Currently this court lacks the type of facts and figures ( specific to the
Washington trial courts) that were presented to, and persuaded, the United
States Supreme Court to alter its interpretation of Fed. R. Civ. P. 12( b) ( 6) . . . .

Even if such facts and figures had been presented, this court would be hesitant
to effectively rewrite [ Washington Civil Rule] 12( b) ( 6) based on policy
considerations. The appropriate forum for revising the Washington rules is the
rule-making process. This process permits policy considerations to be raised,
studied, and argued in the legal community and the community at large.
Thanks to the Constitutional Law Prof Blog for calling this interesting and
important decision to our attention.
EVIDENCE / PROOF

Evidence:

In Ahuluwalia v. Hamilton Crossing Animal Hosp., P.C., 2011 U.S. Dist. LEXIS
51480 ( S.D. Ind. May 13, 2011) , the Court evaluates the admissibility of prior
bad acts under a four part test. Specifically, the Court noted:

The Seventh Circuit evaluates the admissibility of prior bad acts under a four
part test. The evidence must be relevant to an issue other than the defendant' s
propensity to commit the crime charged, the other act must be similar enough
and close enough in time to be relevant, there must be sufficient evidence that
the defendant committed the similar act, and the probative value of the
evidence must not be substantially outweighed by the danger of unfair
prejudice. U.S. v. Hurn, 496 F.3d 784, 787 ( 7th Cir. 2007) ; see United States v.
Puckett, 405 F.3d 589, 596 ( 7th Cir. 2005) . [ *5] Further, under Fed.R.Evid.
404( b) other-acts evidence can be relevant to prove motive or intent in a
discrimination or retaliation case. Bledsoe v. Potter, 200 Fed. Appx. 604, 2006
WL 2883041, at *3 ( 7th Cir. 2006) ( unpublished opinion) .

Implicit Bias:

J erry Kang and Kristin Lane, Seeing Through Colorblindness: Implicit Bias
and the Law, 58 UCLA L. Rev. 465 ( 2010) .

Mark W. Bennett, Unraveling the Gordian Knot of Implicit Bias in J ury
Selection: The Problems of J udge-Dominated Voir Dire, the Failed Promise
of Batson, and Proposed Solutions, 4 Harv. L. & Poly Rev. 149 ( Winter,
2010) .

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Patrick S. Shin, Liability for Unconscious Discrimination? A Thought
Experiment in the Theory of Employment Discrimination Law, 62 Hastings
L.J . 67 ( Nov. 2010) .

Natalie Bucciarelli Pedersen, A Legal Framework for Uncovering Implicit
Bias, University of Cincinnati Law Review, Forthcoming, Drexel University
Earle Mack School of Law Research Paper No. 2010-A-16, available at
http://papers.ssrn.com/sol3/papers.cfm? abstract_ id=1701966 ( Posted
Nov. 3, 2010) .

Project Implicit, a study on implicit bias run by Harvard University, the
University of Virginia, and the University of Washington, accessible at
https://implicit.harvard.edu/implicit/ ( last accessed J une 21, 2011) .

Professor J erry Kang of the UCLA School of Law, on his research website,
has posted nearly 30 different papers that he has written over the past
20 years on implicit bias. They can be found at
http://jerrykang.net/Research/ ( last accessed J une 21, 2011) .
COMPUTER FRAUD AND ABUSE ACT

Comput er Fraud and Abuse Act :

In Lee v. PMSI, Inc., 2011 U.S. Dist. LEXIS 52828 ( M.D. Fla. May 6, 2011) , the
District Court held that a CFAA violation only occurs where a computer system
is damaged or one uses a computer to obtain restricted information. In Lee, the
employer argued that a former employee who had checked her Verizon personal
email account, her Facebook page, and news webpages on a work computer had
thereby violated the CFAA, relying on United States v. Rodriguez, 628 F.3d
1258 ( 11th Cir. 2010) , where the court found that the government employee
there had used the computer to obtain sensitive personal information. The
court in Lee found Rodriguez to be readily distinguishable.
USERRA

USERRA Host ile Work Environment:

In Carder v. Continental Airlines, 636 F.3d 172 ( 5th Cir. Mar. 22, 2011) , the
court held that the statutory language of USERRA did not cover claims for
harassment, noting differences between the language of USERRA prohibiting the
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denial of benefits and Title VIIs language which prohibits discrimination with
respect to conditions of employment. The court concluded that the USERRA
language would not permit a hostile work environment claim absent a denial of a
tangible benefit. The Court did note that two Circuits have recognized
constructive discharge claims under USERRA. See, e.g., Wallace v. City of San
Diego, 479 F.3d 616 ( 9th Cir. 2007) ; Knowles v. City Corp. Mortgage, Inc., 142
F.3d 1082 ( 8th Cir. 1998) . Thus, even after Carder, it would appear that a
constructive discharge claim might proceed under USERRA where an employee
could show that his working conditions became so intolerable that a reasonable
person would feel compelled to resign. Further, the court noted that the term
benefits of employment under USERRA is quite broad and a plaintiff might still
have a claim if they could demonstrate that they lost such benefits because of
their employers actions.
COMMUNICATIONS DECENCY ACT

Communicat ions Decency Act Blog Post:

In Mealer v. GMAC Mortgage, LLC , 2011 U.S. Dist. LEXIS 31776 ( D. Ariz. Mar.
25, 2011) , the Court held that an alleged defamatory statement made by a
General Motors engineer on GMs website was entitled to immunity under the
Communications Decency Act of 1996, finding that GMAC Mortgage qualified as
an interactive computer service. See also Kruska v.

Perverted J ustice Foundation Incorporated.Org, 2011 U.S. Dist. LEXIS 36832
( D. Ariz. Apr. 5, 2011) ( blog operator who allegedly viewed and approved a
defamatory comment was immune from liability under Section 230 of the
Communications Decency Act) .
PRIVACY ACT

Privacy Act:

The Sixth Circuit in Shearson v. Dept of Homeland Security, 638 F.3d 498 ( 6th
Cir. Apr. 21, 2011) held that an agency may exempt itself from the Privacy
Acts civil remedies provision ( 5 U.S.C. 552A( g) ) only when section 552A( j)
permits the information to be exempted. Accord Doe v. FBI, 936 F.2d 1346,
1352 ( D.C. Cir. 1991) ( holding that agency cannot escape liability for violating
non-exemptable Privacy Act obligations simply by exempting itself from the
Acts civil-remedy provisions; rather, an agency may exempt a system of
records from the civil-remedies provision only to the extent that the underlying
substantive duty is exemptable under 552a( j) ). The Fourth, Seventh, and
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Ninth Circuits, in contrast, permit a federal agency to exempt material from the
act if the records system was exempted by properly issued rules. Alexander v.
United States, 787 F.2d 1349, 1351-52 ( 9th Cir. 1986) ( concluding that
because the agency had promulgating rules exempting the record system at
issue from 552a( g) ( 1) , the plaintiff was barred from taking advantage of the
civil remedies provided by the Privacy Act) ; Kimberlin v. Dept. of J ustice, 788
F.2d 434, 436 n.2 ( 7th Cir. 1986) ( stating that although information system
can be exempted, the exemption did not apply because the agency had not
stated reasons for the exemption in its exempting rule) ; Ryan v. Dept. of
J ustice, 595 F.2d 954, 958 ( 4th Cir. 1979) ( recognizing that an agency may
exempt a system of records, but concluded that the agency had not properly
done so for the system of records at issue) .
IIED

Int ent ional Inflict ion of Emot ional Dist ress:

In Durham v. McDonalds Restaurants of Oklahoma, Inc., 2011 OK 45, 2011
Okla. LEXIS 47 ( Okla. May 24, 2011) , the Oklahoma Supreme Court held that an
IIED claim of a teenage restaurant employee who alleged that his supervisor
cursed at him while denying his request to take prescription anti-seizure
medication at work had a triable claim even though a federal court had
dismissed his ADA claim. The court found that the federal district courts
characterization of the managers behavior as not severe was dicta that did
not control whether the managers conduct was extreme and outrageous for
the purposes of the Oklahoma IIED claim.
LOSS OF CONSORTIUM

Tit le VII Loss of Consort ium Claim Reject ed:

In Barker v. Halliburton, 2011 U.S. App. LEXIS 12696 ( 5th Cir. J une 23, 2011) ,
the Fifth Circuit held that the Title VII plaintiff may not seek loss of consortium
damages, finding such damages to not be cognizable under the Act.
DUE PROCESS

Due Process One Biased Member of Seven Member Panel Deprives
Part y of Due Process, Even Though Panel s Decision Was Unanimous:

In Sullivan v. Elsmere, 2011 Del. LEXIS 307 ( Del. J une 17, 2011) , the Delaware
Supreme Court, in deciding an issue of first impression, held that when one
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member of a seven-member panel demonstrates a prima facie bias, and where
that panel acts without removing the biased member of the panel, a vote by the
panel can violate a partys due process rights even where the panels vote is
unanimous. For more on this decision, see:

Francis Pileggi, Supreme Court Decides Due Process is Violated by Biased
Member of Panel Despite Unanimous Vote, Delaware Corporate & Commercial
Litigation Blog ( J une 26, 2011) ,
http://delawarelitigation.com/2011/06/articles/delaware-supreme-court-
updates/supreme-court-decides-due-process-is-violated-by-biased-member-of-
panel-despite-unanimous-vote/.
ARBITRATION

Tent h Circuit follows Gardner-Denver, finding t hat 14 Penn Plaza
does not t rump t he plaint iff:

In Mathews v Denver Newspaper Agency LLP, 2011 U.S. App. LEXIS 11454
( 10th Cir. May 17, 2011) , a panel of the Tenth Circuit issued its revised opinion.
Its earlier opinion of March 16, 2011 is found at 2011 U.S. App. LEXIS 5142.
J udge Murphy, writing for the panel, concludes that plaintiff' s statutory
employment discrimination and retaliation claims may be litigated despite a prior
ruling by an arbiter on plaintiffs contractual claims which were coterminous with
his statutory claims.
The collective bargaining agreement provides as follows:
The Employer and the Union acknowledge continuation of their policies of no
discrimination against employees and applicants on the basis of age, sex, race,
religious beliefs, color, national origin or disability in accordance with and as
required by applicable state and federal laws.
Plaintiff was demoted and grieved the demotion. Apparently, the initial
grievance referenced state and federal discrimination and retaliation laws. That
initial grievance was amended to remove any reference to said statutes, and the
question of discrimination was stated, by agreement of the parties, to the
arbiter as follows: [ D] id GRIEVANTS demotion violate contractual provisions
prohibiting discrimination? The arbiter ruled against Mathews and, thereafter,
Mathews sued under Title VII among other statutes. The district court found
that the arbiters decision was preclusive, relying on the Supreme Courts
decision in 14 Penn Plaza LLC v. Pyette, 129 S. Ct. 1456 ( 2009) . The district
courts ruling can be found at 2009 U.S. Dist. LEXIS 37697 ( D. Colo. May 4,
2009) . The soTenth Circuit reversed, holding the fact that Mathews
contractual rights and statutory rights were coterminous is of no moment: As
the Supreme Court has recently reaffirmed, [ b] ecause the collective-bargaining
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agreement gave the arbitrator authority to resolve only questions of
contractual rights, his decision could not prevent the employee from brining
the Initial Title VII claim in federal court regardless of whether certain
contractual rights are similar to, or duplicative of, the substantive rights
secured by Title VII. Fourteen Penn Plaza, 129 S.Ct. at 1467 ( emphasis added)
( quoting Alexander v. Gardner-Denver Co., 415 U.S. 36 ( 1974) ) .
The Tenth Circuit panel went on to affirm summary judgment on plaintiffs
discriminatory demotion claim, finding that plaintiff was judicially estopped from
being able to establish his qualifications for the position in question. The court,
applying Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. ( 1999) , found that
plaintiffs unequivocal testimony in a SSA disability milieu that he was totally
disabled was a paradigmatic case for judicial estoppel. For a different take on
this issue, see Solomon v. Vilsack, 628 F.3d 555 ( D.C. Cir. 2010) .
In contrast, the court denied summary judgment on plaintiffs retaliatory
demotion claim, refusing to adopt the strong evidence standard articulated by
the Second Circuit in Collins v. N.Y. City Transit Authority, 305 F.3d 113, 119
( 2d Cir 2002) wherein that court held that for a plaintiff to survive a motion for
summary judgment following an adverse decision from an arbiter, the plaintiff
must present strong evidence that the decision was wrong as a matter of fact
- e.g. new evidence not before the tribunal or that the impartiality of the
proceeding was somehow compromised. Instead of adopting the Second
Circuits strong evidence standard, the Tenth Circuit rejected such a per se
standard for a case-by-case evaluation, including an evaluation of the degree
of procedural fairness in the arbitral forum, adequacy of the record with respect
to the issue of discrimination, and the special competence of particular
arbitrators. Barrentine v. Arkansas-Best Freight Sys, Inc., 450 U.S. 728, 743
n.22 ( 1981) ( quoting Gardner-Denver 450 U.S. at 60 n.21) .
The petition for rehearing filed by defendant Denver Newspaper Agency LLP
was directed at the ongoing debate regarding the elements of a prima facie
case of retaliation. The Tenth Circuit followed the three-part showing required
by Timmerman v. U.S. Bank, 483 F.3d 106, 1122-23 ( 10
th
Cir. 2007) which
requires a showing that ( 1) plaintiff engaged in protected activity; ( 2) plaintiff
suffered an adverse employment action;* ( 3) there is a causal connection
between the protected activity and the adverse action. The debate on rehearing
was whether in a retaliation case, the Tenth Circuit panel would reject
Timmerman and adopt a standard that some circuits have used which requires,
in addition to the three elements above, that plaintiffs demonstrate that they
are qualified for the position at issue, or, if already employed, [ had] met the
employers legitimate work expectations. Volosek v. Wis. Dept of Agric., Trade
& Consumer Prot., 344 F.3d 680, 692 ( 7
th
Cir. 2003) . See also contrasting
decisions on this question from the Fifth Circuit: Holtzclaw v. DSC Commcns
Corp., 255 F.3d 254, 259-60 ( 5
th
Cir. 2001) ( finding that qualification for the
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job is an element of a prima facie case of ADEA retaliation) ; EEOC v. Dunbar
Diagnostic Servs., Inc., 92 F. Appx 83, 84-85 ( 5
th
Cir. 2004) ( refusing to
require plaintiff to demonstrate qualification for the position as part of prima
facie case in a wrongful discharge case) , the appellees petitioned panel for
rehearing and appellants response to same contain citations to and discussion
of all of the many court decisions that have addressed this cutting edge debate.
J udge Murphy, who wrote for the panel, was joined by J udges McKay and
OBrien.
For more discussion on this topic, see Garlands Digest, Paul Mollicas Daily
Developments in EEO Law, Nelson Carys post at Vorys on Labor, and Richard
Renner at the Whistleblowers Protection Blog. For a discussion of the District
Courts ruling see the Workplace Prof Blog.

*While the court described Timmerman as requiring an adverse employment
action, undoubtedly the court merely used the incorrect phraseology, and
would require adherence to the Supreme Courts holding in Burlington Northern
& Santa Fe Ry. v. White, 548 U.S. 53 ( U.S. 2006) where the court requires in a
retaliation case, not an adverse action, but rather a materially adverse action.
In Shaw v. Tulsa Dynaspan Arrow Concrete, 2001 WL 263205 at *4 ( 10
th
Cir.
J an. 28, 2001) , the Tenth Circuit held that the prima facie case of retaliation
requires a showing that a reasonable employee would have found the challenged
action materially adverse, quoting Haynes v. Level 3 Communications, LLC, 456
F.3d 1215, 1228 ( 10
th
Cir. 2006) .

CRIMINAL BACKGROUND CHECKS

Criminal Background Checks:
According to the National Employment Law Project, roughly 65 million people
have an arrest or conviction that shows up in a routine criminal background
check, and a NELP report entitled 65 Million Need Not Apply: The Case for
Reforming Criminal Background Checks for Employment finds numerous
examples in which major employers preclude consideration of anyone with a
criminal record. The report is available here: http://www.nelp.org/page/-
/65_ Million_ Need_ Not_ Apply.pdf? nocdn=1.
EMPLOYEE SAFETY

Dist ract ed Driving: OSHA Expanding General Dut y Clause t o Include
Dist ract ed Driving:
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Assistant Secretary of Labor for OSHA, David Michaels, recently stated: When
OSHA receives a credible complaint that an employer requires texting while
driving or who organizes work so that texting [ while driving] is a practical
necessity, we will investigate and where necessary issue citations and penalties
to end this practice.

A Pew Research poll indicates that some 27% of all adults admit to texting while
driving.
Given the breadth of the comments made by the Assistant Secretary, those
employers whose employees travel extensively by automobile, should consider
the following:

Installation of hands-free devices in employees automobiles
Explicit written instructions not to text while driving
Explicit written directions to pull off the road if one needs to send a text
message
Include all such instructions in employee handbooks
Transmit such instructions to employees when they receive company-
issued cell phones
Discipline employees who violate the policy
Incorporate these instructions into training sessions

Tip of the hat to the New York Labor & Employment Law Report for bringing
this to our attention.
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July 28 - 30, 2011
Supplements to Cutting Edge Employment Law Issues
By
Washington, D.C.
2011 Robert B. Fitzpatrick, PLLC.
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DISCLAIMER OF ALL LIABILITY AND
RESPONSIBILITY

THE INFORMATION CONTAINED HEREIN IS BASED
UPON SOURCES BELIEVED TO BE ACCURATE AND
RELIABLE INCLUDING SECONDARY SOURCES.
DILIGENT EFFORT WAS MADE TO ENSURE THE
ACCURACY OF THESE MATERIALS, BUT THE
AUTHOR ASSUMES NO RESPONSIBILITY FOR ANY
READERS RELIANCE ON THEM AND ENCOURAGES
READERS TO VERIFY ALL ITEMS BY REVIEWING
PRIMARY SOURCES WHERE APPROPRIATE AND BY
USING TRADITIONAL LEGAL RESEARCH
TECHNIQUES TO ENSURE THAT THE INFORMATION
HAS NOT BEEN AFFECTED OR CHANGED BY

THIS PAPER IS PRESENTED AS AN INFORMATIONAL
SOURCE ONLY. IT IS INTENDED TO ASSIST
READERS AS A LEARNING AID; IT DOES NOT
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PROFESSIONAL ADVICE. IT IS NOT WRITTEN ( NOR
IS IT INTENDED TO BE USED) FOR PURPOSES OF
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OR RECOMMEND ANY TRANSACTION OR MATTER
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BETWEEN THE AUTHOR AND ANY READER. DUE
TO THE RAPIDLY CHANGING NATURE OF THE LAW,
INFORMATION CONTAINED IN THIS PAPER MAY
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BECOME OUTDATED. IN NO EVENT WILL THE
AUTHOR BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, OR OTHER DAMAGES RESULTING
FROM AND/OR RELATED TO THE USE OF THIS
MATERIAL.
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Table of Cont ent s

Sexual Harassment 1
FLSA Effect of Release of FCA Claims Against Employer
2
Disparagement 4
Evidence in Mot ions t o Dismiss 4
FLSA Offers of J udgment 4
FLSA Repeat ed Violat ions 5
Discriminat ion Alcoholic Employee 6
Discriminat ion 6
Recent EEOC Decisions 7
Second Circuit Applies Ricci 9
Pregnancy Discriminat ion Encompasses Fert ilit y Treat ment
10
EEOC subpoena upheld 11
Non-Compet e Clause in Lease Agreement Unenforceable
12
NLRB 13
Interest on NLRB Awards 13
False Claims Act 14
Statute of Limitations in 3730( h) Retaliation Actions 14
FERA Retroactivity 14
Collective Knowledge J ury Instruction 15
Causat ion 15
Application of Gross to Two Unlawful Reasons 15
Application of Gross to Federal Sector ADEA 16
Application of Gross to Title VII Mixed-Motive and Motivating Factor
Retaliation Claims 16
Rehabilitation Act: Causation Analysis After Gross: Request for
Current Medical Information 17
Evident iary and Wit ness-Relat ed Issues 17
Spoliation of Evidence 17
Statistical Evidence 18
After-Acquired Evidence Defense: 18
Expert Witness Fees 19
Class Act ions 19
Conversion of Company Propert y 20
Employee Removal of Documents from the Workplace 20
Background Checks 21
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Criminal Background Checks 21
Social Media Issues 24
Employer May be Liable for Impersonating Employee on Facebook
and Twitter 24
Training Programs 24
Failure to Follow Training Program is Not Breach of Contract 24
FRB Brokerage / Commission Payrolls 24
Accusing a Former Employee of St ealing Trade Secret s
May Const it ut e Unlawful Ret aliat ion 25

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Supplement s t o Cut t ing Edge Employment Law
Issues
Sexual Harassment

Hoyle v. Freightliner, LLC, 2011 U.S. App. LEXIS 6628 ( 4
th

Cir. April 1, 2011) . The Fourth Circuit vacated a grant of summary
judgment by the District Court, and engaged in an extended
analysis of sexual harassment, holding as follows:
o Because the workplace environment is one of the terms,
conditions, or privileges of employment, Title VII creates a cause
of action for employees forced to work in a hostile workplace.
( quoting Meritor Savs. Bank v. Vinson, 477 U.S. 57, 64-67, 106 S.
Ct. 2399, 91 L. Ed. 2d 49 ( 1986) ) .
o In order to make out a sexual harassment hostile work
environment claim, plaintiffs must show that the offending
conduct ( 1) was unwelcome, ( 2) was because of her sex, ( 3) was
sufficiently severe or pervasive to alter the conditions of her
employment and create an abusive working environment, and ( 4)
was imputable to her employer.
o Regarding the second prong of the sexual harassment hostile
work environment analysis, an employee is harassed because of his
or her sex if, but for the employees gender, he or she would not
have been the victim of discrimination. ( quoting Smith v. First
Union Nat' l Bank, 202 F.3d 234, 242 ( 4th Cir. 2000) ) .
o Regarding the third prong of the sexual harassment hostile
work environment analysis, the question of whether harassment is
sufficiently severe or pervasive is quintessentially a question of
fact. ( quoting Paroline v. Unisys Corp., 879 F.2d 100, 105 ( 4th
Cir. 1989) ) .
o [ I] n a case where an employee is sexually harassed by a
coworker, the employer may be liable in negligence if it knew or
should have known about the harassment and failed to take
effective action to stop it. Hoyle at *28 ( citing Burlington Indus.,
Inc. v. Ellerth, 524 U.S. 742, 759, 118 S. Ct. 2257, 141 L. Ed. 2d
633 ( 1998) ( noting that " [ n] egligence sets a minimum standard
for employer liability under Title VII" ) ) . Further, [ u] nder this
standard, an employer may be charged with constructive knowledge
of coworker harassment when it fails to provide reasonable
procedures for victims to register complaints In addition, the
distribution of an anti-harassment policy provides compelling proof
that the company exercised reasonable care in preventing and
correcting harassment. Hoyle at *28-29 ( citing Barrett v. Applied
Radiant Energy, 240 F.3d 262, 266 ( 4th Cir. 2001) ) .
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o To sustain her claim, a plaintiff must show by a
preponderance of the evidence that the policy was either adopted
or administered in bad faith or that it was otherwise defective or
dysfunctional.

Edwards v. Murphy-Brown, 2011 U.S. Dist. LEXIS 4088 ( E.D.
Va. J anuary 4, 2011) . In analyzing the first prong of the sexual
harassment hostile work environment analysis, the District Court
held that whether conduct is unwelcome must be determined from
the plaintiff' s subjective perspective. ( citing Harris v. Forklift Sys.,
Inc., 510 U.S. 17, 21-22 ( 1993) ( stating if the victim does not
subjectively perceive the environment to be abusive, the conduct
has not actually altered the conditions of the victim' s employment,
and there is no Title VII violation.) ) . The Court further held that
the final three elements are made up of objective components
based on a reasonable person standard. ( quoting Pueschel v.
Peters, 577 F.3d 558, 565 ( 4th Cir. 2009) ) .

Mosby-Grant v. City of Hagerstown, 630 F.3d 326 ( 4
th
Cir.
December 10, 2010) . In reversing a District Court grant of
summary judgment to the employer, the Fourth Circuit held that a
factual record that demonstrates that the workplace was
contaminated with explicit and derogatory references to women
provides an adequate basis for a plaintiff to show that the
harassment occurred because of her gender. ( quoting Smith v.
First Union Nat' l Bank, 202 F.3d 234, 242 ( 4th Cir. 2000) ) . In
reaching its conclusion, the Court considered whether the offensive
conduct was severe or pervasive enough that it unreasonably
interfered with the employee' s work performance.

EEOC v. Cromer Food Services, Inc., 2011 U.S. App. LEXIS
4279, *13 ( 4
th
Cir. March 3, 2011) . Regarding the fourth prong of
the sexual harassment hostile work environment analysis, the
Fourth Circuit held that the offending conduct is imputable to the
plaintiffs employer if the employer knew or should have known of
the harassment and failed to take appropriate actions to halt it.

False Claims Act Effect of Release of FCA Claims Against
Employer

U.S. ex rel. McLean v. County of Santa Clara, 2008 U.S. Dist.
LEXIS 41003 ( N.D. Cal. 2008) . In a qui tam action, the complaint
alleged that defendants invented fictional children for the purpose
of overbilling the State of California. In denying the defendants
motion to dismiss and motion for summary judgment, the District
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Court held that permitting a prefiling release when the government
has neither been informed of, nor consented to, the release would
undermine this incentive, and therefore, frustrate one of the central
objectives of the False Claims Act.

U.S. ex rel. Ritchie v. Lockheed Martin Corp, 558 F.3d 1161;
2009 U.S. App. LEXIS 5269 ( 10
th
Cir. 2009) . The relator former
employee brought a qui tam action against the defendant alleging
fraud in relation to defendants billing practices under federal
contracts. The District Court granted summary judgment based on
releases signed by the relator prior to filing suit. The Tenth Circuit
affirmed, defendant appealed a conviction in the District Court for
the Western District of Missouri of social security benefits fraud and
theft of government money. The Eighth Circuit affirmed, stating as
follows:
o When there is a release preceding the filing of the qui tam
action, as in this case, no action has been filed, so there is neither
an action to dismiss nor a judge to consent to the agreement. As a
consequence, the statute only governs the enforceability of
settlement agreements made after the filing of a qui tam claim.
o The goal of the FCA is to prevent and rectify fraud
perpetrated by government contractors Settlements of qui tam
claims directly implicate this federal interest in combating fraud.
When an individual prevails in a qui tam lawsuit, she is only entitled
to a percentage of the amount recovered on behalf of the
government. If the individual signs a general release in exchange for
money, however, she will probably keep the entire amount. The
contractor and the would-be relator might settle a qui tam case for
less than the amount recoverable on behalf of the government but
more than the prospective relator' s share of the recovery had a qui
tam action been filed. Thus, there is a federal interest in protecting
the federal government' s right to recover under the FCA. ( internal
citations omitted) .
o [ Here] , the interest in supplementing federal enforcement
does not outweigh the federal interests served by enforcement of
settlements following disclosure of fraud allegations to the
government, namely the interest in disclosure of fraud allegations
and the interest in encouraging settlement. The releases in this
case are therefore enforceable.

U.S. v. Purdue Pharma, L.P., 600 F.3d 319 ( 4
th
Cir. 2010) . A
plaintiff relator sued the defendant former employer under the FCA
alleging that the defendant fraudulently marketed a drug. The
District Court held that the relators pre-filing release did not bar
suit, but dismissed the suit for failure to plead with particularity.
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Both sides appealed. The Fourth Circuit held that the District Court
erred in not enforcing the release, stating that [ w] hen there is a
release preceding the filing of the qui tam action, as in this case, no
action has been filed, so there is neither an action to dismiss nor a
judge to consent to the agreement. As a consequence, the statute
only governs the enforceability of settlement agreements made
after the filing of a qui tam claim. ( quoting U.S. ex rel. Ritchie v.
Lockheed Martin Corp., 588 F.3d 1161, 1168 ( 10
th
Cir. 2009) ) .

Disparagement

Sohal v. Michigan State University Board of Trustees, 2011
Mich. App. LEXIS 915 ( Mich. Ct. App. May 17, 2011) . In a
separation agreement, the parties agreed not to knowingly
disparage each other. The plaintiff subsequently filed suit, alleging
that the defendant conveyed information to potential employees
that disparaged the plaintiff. The Court held that the term
disparage should be given its ordinary and plain meaning, which,
according to the American Heritage dictionary, is ( 1) To speak of
in a slighting or disrespectful way; belittle. ( 2) To reduce esteem or
rank, and according to Random House Webster' s College
Dictionary is 1. to speak of or treat slightingly. 2. to discredit;
lower the estimation of. Ultimately, the Court held that by the
plain meaning of disparage, the defendants did not knowingly
disparage the plaintiff in violation of the separation agreement.

J ason Shinn, Does Your Employment Separation Agreement
Mean What You Think It Means? Michigan Court Addresses Meaning
of Disparagement, Michigan Employment Law Advisor, J une 21,
2011, available at:
http://www.michiganemploymentlawadvisor.com/terminating-the-
employment-relationship/does-your-employment-separation-
agreement-mean-what-you-think-it-means-michigan-court-
addresses-mean/.

Evidence in Mot ions t o Dismiss

Hillbroom v. PricewaterhouseCoopers, LLP, No. 10-CV-92
( D.C. April 7, 2011) . The D.C. Court of Appeals reversed and
remanded the dismissal of a lawsuit for professional negligence. In a
footnote, the Court stated as follows:
o The exhibits that appellants attached to their opposition to
the motion to dismiss and the factual assertions in appellants
various briefs are not, of course, evidence, and we do not take
them as proven. But a plaintiff is free, in defending against a
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motion to dismiss, to allege without evidentiary support any facts
he pleases that are consistent with the complaint, in order to show
that there is a state of facts within the scope of the complaint that
if proved ( a matter for trial) would entitle him to judgment.
( quoting Early v. Bankers Life & Cas. Co., 959 F.2d 75, 79 ( 7
th
Cir.
1992) ) .

FLSA Offers of J udgment

Simmons v. United Mortgage Co., 634 F.3d 754; 2011 U.S.
App. LEXIS 1189 ( 4
th
Cir. J anuary 21, 2011) . Plaintiff employees
filed a class action suit against defendant employer for violations of
the FLSA and the North Carolina Wage and Hour Act. The District
Court dismissed all of the plaintiffs claims, and the plaintiffs
appealed. At trial, when nine new plaintiffs opted into the suit,
defense counsel sent a letter to plaintiffs counsel offering full
relief to each plaintiff, including attorneys fees and taxable costs,
and promising to compensate plaintiffs fully upon receipt of an
affidavit detailing dates that overtime was worked the total hours
worked, and back pay due. The offer required a confidentiality
agreement, and acceptance within 5 days. The plaintiffs did not
accept the offer, and the defendant moved to dismiss, arguing that
the defendants attempt to satisfy the plaintiffs claims rendered
the case moot. The District Court agreed and dismissed, but the
Fourth Circuit reversed because the defendants offer was not an
offer of judgment in accordance with FRCP 68. The Fourth Circuit
stated that the fact that the offer required a confidentiality
agreement and an affidavit indicated that additional negotiations
were likely, and the issue was not final. In addition, the defendants
offer required a response within 5 days, rather than the 10 days
required by Rule 68.

Scott McIntyre, Picking Off FLSA Plaintiffs, Employment Class
Action Blog, February 21, 2011, available at:
http://www.employmentclassactionreport.com/flsa/picking-off-
flsa-plaintiffs/.

FLSA Repeat ed Violat ions

Figueroa v. Dist. of Columbia Metro Police Dept., 633 F.3d
1129; 2011 U.S. App. LEXIS 3168 ( D.C. Cir. February 11, 2011) .
Plaintiff police officers sued the defendant police department for
violations of the FLSA, alleging the defendant failed to calculate
their overtime based on enhanced pay owed to detective sergeants
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under D.C. law. The District Court dismissed the claims because
they were barred by the statute of limitations, but the D.C. Circuit
reversed in part because a separate cause of action accrued every
payday that overtime was not paid or calculated properly, and
because the plaintiffs claims were based on repeated violations of
the FLSA, some of which fell within the limitations period and some
of which did not.

Repeated Violations of FLSA Overtime Provisions Occurred
Each Time Detective Sergeants Received Deficient Paychecks;
Claims Not Time-Barred, Wolters Kluwer, available at:
http://www.employmentlawdaily.com/index.php/news/repeated-
violations-of-flsa-overtime-provisions-occurred-each-time-detective-
sergeants-received-deficient-paychecks-claims-not-time-barred/.

Discriminat ion Alcoholic Employee

Ames v. Home Depot U.S.A, Inc., 629 F.3d 665; 2011 U.S.
App. LEXIS 250 ( 7
th
Cir. J anuary 6, 2011) . A plaintiff former
employee was terminated for coming to work under the influence of
alcohol. The plaintiff sued for violations of FMLA and ADA, and the
District Court granted summary judgment for the defendant
employer. The Seventh Circuit affirmed, holding that the plaintiffs
alcoholism did not constitute a serious health condition under the
FMLA because the plaintiff did not receive inpatient care or
continuing treatment by a healthcare provider, and because the
plaintiff only checked into a hospital long after violating the
defendant employers substance abuse policy. Regarding her ADA
claim, the Fourth Circuit found that the plaintiffs alcoholism did not
substantially limit any of the plaintiffs major life activities, and thus
the plaintiff was not disabled within the meaning of the act.

Pat Murphy, Alcoholic Employee Cant Sue For Discrimination,
Lawyers USA Online, J anuary 12, 2011, available with subscription
at: http://lawyersusaonline.com/blog/2011/01/12/alcoholic-
employee-cant-sue-for-discrimination/.

Discriminat ion

EEOC v. Con-Way Freight, Inc., 622 F.3d 933; 2010 U.S. App.
LEXIS 19638 ( 8
th
Cir. 2010) . The plaintiff EEOC brought suit
claiming that the defendant failed to hire intervenor applicant
because of her race in violation of Title VII. The District Court
granted summary judgment for the employer, and the plaintiff
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appealed. The Eighth Circuit affirmed because the plaintiff failed to
establish a causal link between the alleged discriminatory animus
and the decision not to hire the applicant. In addition, the
defendant employer had an unwritten, but well established policy of
not hiring any person with a theft related criminal conviction, and
the plaintiff had two such convictions. Thus the employee would
not have been hired because she was not qualified for the position,
and plaintiff could not establish a prima facie case of discrimination.

Frances Rogers, Failure to Hire was not Racially Discriminatory
Where Employer had Established Policy Against Applicants With
Theft Convictions, California Public Agency Labor & Employment
Blog, J anuary 11, 2011, available at:
http://www.calpublicagencylaboremploymentblog.com/discriminati
on/failure-to-hire-was-not-racially-discriminatory/.

Recent EEOC Decisions

EEOC o/b/o Serrano, et al v. Cintas Corp., 2010 U.S. Dist.
LEXIS 18130 ( E.D. Mich. Mar. 2, 2010) . In a gender discrimination
case, the EEOC refused to identify the women it represented,
claiming they should only be named later in the proceedings. The
District Court disagreed, holding that the defendant employer
reasonably seeks to focus its attention upon the specific women
on whose behalf the EEOC intends to seek damages. The
information is relevant to the issues in controversy and the EEOC
has no principled reason to withhold it." The Cintas court relied on
EEOC v. CRST Van Expedited, Inc., 257 F.R.D. 513 ( N.D. Iowa
2008) , in which the EEOC similarly attempted to conceal who it
sought to represent. This strategy resulted in the EEOC being
sanctioned $4.5 million.

EEOC v. Evans Fruit Co. Inc., No. 10-CV-3033-LRS ( E.D.
Wash. Oct. 5, 2010) . The EEOC alleged that the defendant
employer created a hostile work environment for the female
plaintiffs, and claimed that employees of the defendant were
intimidating witnesses, including following them from the facility,
tracking their movements, and photographing witness meetings.
The EEOC sought, and the District Court granted emergency
injunctive relief, because while an injunction is an " extraordinary
remedy," it was appropriate given the evidence that the
government' s investigation would be compromised if the alleged
intimidation continued. For more information, see:

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o Melissa Wagner, Evans Fruit Sued for Sexual Harassment,
KIMATV.com, J une 25, 2010, available at:
http://www.kimatv.com/news/97200464.html.

o Evans Fruit Company Sued by EEOC for Sexual Harassment,
eBoss Watch, October 5, 2010, available at:
http://blog.ebosswatch.com/2010/10/evans-fruit-company-sued-
by-eeoc-for-sexual-harassment/.

EEOC v. Bloomberg L.P., 2010 U.S. Dist. LEXIS 92511
( S.D.N.Y. Aug. 31, 2010) . The EEOC brought suit against the
defendant employer for discrimination on the basis of sex and
pregnancy, and retaliation. The District Court dismissed the
retaliation claim because the EEOC failed to attempt to conciliate
claims before filing suit. Such a sanction is not typical, but the
Court noted that the EEOC sought $41 million to settle the matter,
but failed to explain how it arrived at that number. The District
Court then refused to dismiss the class claims based on
Defendants " scope of the investigation" defense, which could
expand what an employer is expected to appreciate as a class case
even though the employer does not have specific information as to
the extent of the EEOC' s investigation. For more information, see:

o Michael P. Maslanka, The Importance of Conciliation, Work
Matters, J anuary 7, 2011, available at:
http://texaslawyer.typepad.com/work_ matters/2011/01/before-
the-eeoc-sues-an-employer-it-must-seek-to-resolve-what-it-sees-as-
the-employers-violation-of-the-law-through-the-stat.html.

o Chris DAgnelo, Southern District of New York Dismisses
EEOCs Title VII Retaliatio Claim as Sanction for Failure to
Conciliate, Labor & Employment N.Y., November 11, 2010, available
at:
http://nysbar.com/blogs/LENY/2010/11/southern_district_ of_ ne
w_ york.html.

EEOC v. Kronos, Inc., 620 F.3d 287 ( 3d Cir. 2010) . Plaintiff
employee was not selected for a position with defendant based on
a test created by defendant. The plaintiff then brought a disability
discrimination claim. The EEOC sought testing information from the
defendant through a third party subpoena in an effort to prove the
tests disparate impact on disabled applicants, and expanded its
investigation to include race discrimination, though the charge had
not alleged race discrimination. The Third Circuit found that the
EEOCs request for race data constituted an impermissible fishing
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expedition, and denied the request, but it did allow the subpoena
as to the disability claim. For more information, see:
o Mark Anderson, New Case Summaries: EEOC v. Kronos,
American Bar Association, September 15, 2010, available at:
http://www2.americanbar.org/SCFJ I/Lists/New% 20Case% 20Summ
aries/DispForm.aspx? ID=235.
o Michael Triplett, Third Circuit Allows EEOC to Compel Testing
Company to Turn Over Some Documents, BNA Lens on Labor Law,
September 9, 2010, available at:
http://blogs.bna.com/laborlaw/fulltext.aspx? id=4294969465&blog
id=4294969397.

EEOC v. Wal-Mart Stores, Inc., 2010 U.S. Dist. LEXIS 13192
( E.D. Ky. Feb. 16, 2010) . The EEOC brought suit against Wal-Mart,
claiming that Wal-Mart under-hired women. The EEOC relied on the
expert opinion of a sociologist to argue that the company was the
sort of environment where gender stereotyping could occur. The
District Court ultimately excluded the evidence, finding that the
sociologist could not clearly connect any stereotyping to Wal-Marts
failure to hire women.

Second Circuit Applies Ricci

In a hundred and twenty eight page opinion written by J udge
Calabresi with an eleven page concurrence by J udge Raggi, a panel
of the 2
nd
Circuit in United States v. Brennan, 2011 U.S. App. LEXIS
9455 ( 2d Cir. 2011) , applied Riccis strong basis in evidence
standard to a settlement agreement. The settlement agreement
reached between the New York City Board of Education and the
Department of J ustice included, in part, retroactive seniority to
minority and women employees to remedy alleged disparate impact
hiring practices. A group of incumbent employees losing seniority in
the settlement intervened against this provision of the settlement
alleging reverse discrimination. The issue before the Second Circuit
in this decision is the applicability of Ricci v. DeStefano, 129 S.Ct.
2658 ( 2009) to the district courts judgment that some parts of
the retroactive seniority violated Title VII and other parts did not.

The court held that Ricci does apply to the facts of this case. The
settlement agreement was individualized and, therefore, does not
qualify as an affirmative action plan. Instead, due to the
individualized determinations, it is a make-whole relief intended to
provide ex post benefits to specified individuals who have suffered
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discrimination. The 2nd Circuit remands the case back to the
district court to re-evaluate its decision in light of the strong basis
in evidence standard set forth in Ricci.

The court sets up a four criteria test for the district court that
J udge Raggi concurrence rejects as dicta. 1) The standard is
objective and focuses on the strength of evidence of liability, not
the employers fear of litigation. 2) The strength of evidence is
based on the time the employer took the race or gender biased
action. 3) Either an actual prima facie case or strong basis in
evidence for a prima facie case for disparate-impact liability is
required. 4) The employer must have a strong basis in evidence
that either the challenged employment procedures are not job-
related or there was a less discriminatory alternative procedure the
employer refused to adopt.

What does this mean for employers? It significantly reduces their
ability to take voluntary actions, including settlement agreements,
of individualized make-whole relief for alleged disparate-impact. No
longer can an employer settle a disparate-impact case on the fear
of litigation when the class claiming discrimination desires make-
whole relief. In order for this relief to be voluntarily taken by an
employer, the employer must be objectively convinced it currently
has disparate-impact liability. Practically, employers who are able to
settle will not be able to do so until late in the discovery phase due
to the strong basis in evidence required. Whenever the employer
can reasonably maintain that it does not have disparate-impact
liability it cannot offer make-whole relief in settlement and will be
forced to take the case to trial. This will make disparate-impact
cases more expensive for both sides and more risky for plaintiffs
when there is a low chance of settlement.

Pregnancy Discriminat ion Encompasses Fert ilit y Treatment

In Govori v. Goat Fifty, L.L.C., 2011 U.S. Dist. LEXIS 33708
( S.D.N.Y. Mar. 30, 2011) , J udge Denise Cote followed the 7
th

Circuits 2008 holding in Hall v. Nalco Co., 534 F.3d 644 ( 7
th
Cir.
2008) , holding that an employee terminated for taking time to
undergo in vitro fertilization is entitled to protection under the
pregnancy discrimination act as all individuals receiving such
treatment are women. In Govari, the plaintiff was terminated the
next day after she informed her supervisors and co-workers that
she began fertility treatments.

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The courts discussion begins with the Supreme Courts clarification
of the scope of the Pregnancy Discrimination Act ( PDA) in
International Union v. J ohnson Controls, Inc., 499 U.S. 187 ( 1991) .
In that case, the court held a battery manufacturers excluding
women from certain jobs involving lead exposure to protect their
unconceived children constituted sex discrimination. The court
found the decision was not a gender neutral protection of all
employees unconceived children but focused on women because of
childbearing capacity, not fertility.

The court then distinguishes its case from Saks v. Franklin Covey
Co., 316 F.3d 337 ( 2d Cir. 2003) . In Saks, the second circuit
upheld an employers denial of insurance for surgical impregnation
procedures. In that case, while the procedure can only be
performed on women, the need for the treatment can be traced
back equally to male and female infertility. Since the procedure
treats gender neutral infertility and infertility itself is not protected,
the insurance denial did not violate Title VII.

The court looks to the reasoning in the Seventh Circuit case Hall v.
Nalco Co., 534 F.3d 644 ( 7
th
Cir. 2008) to provide its argument.
While IVF can be used to treat both male and female infertility, only
women will undergo the procedure. The woman will always be the
one who has to take time off from work for IVF treatments, even
when it is the man who suffers from infertility. Firing an employee
for taking time off to undergo IVF treatments is based on the
gender-specific quality of childbearing capacity and falls under Title
VII. Thus, the court held that Govori had a cognizable claim for
sex-based discrimination under Title VII, as amended by the PDA.

Employers need to recognize the distinction courts are making
between infertility as a gender neutral medical condition and
fertility treatments specific to women in their childbearing capacity.
IVF and any other treatments that only women can undergo
because of their childbearing ability are protected under Title VII.
Employers must allow their female employees time off for these
treatments and cannot fire employees for likely pregnancies as a
result of such treatments.

For other blogs on this case see J on Hyman, In Vitro proving to be
fertile ground for sex discrimination claims, Ohio Employers Law
Blog ( May 2, 2011) ,
http://www.ohioemployerlawblog.com/2011/05/in-vitro-proving-
to-be-fertile-ground.html; and Michael Pospis, Female Server States
Claim For Pregnancy Discrimination, Bias Against In Vitro
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Fertilization, PospisLawBlog ( Apr. 12, 2011) .
http://pospislawblog.com/2011/04/12/female-server-states-
claim-for-pregnancy-discrimination-bias-against-in-vitro-fertilization.

EEOC subpoena upheld

In EEOC v. Konica Minolta Business Solutions USA, Inc., 2011 U.S.
App. LEXIS 8894 ( 7th Cir. Ill. Apr. 29, 2011) , the 7
th
Circuit J udge
Dianne Wood writing for the panel, upheld a broadly written EEOC
subpoena in an individual charge investigation. The case involves
Elliot Thompson, an African-American salesman, who filed an EEOC
complaint after being fired from his job at Konica. Thompson
worked at one of Konicas four Chicago area facilities. His complaint
alleged that he was subjected to different terms and conditions of
employment and fired shortly after complaining to human resources
about race discrimination.

In the course of its investigation, the EEOC believed it found a
discriminatory pattern in Konicas hiring practices. They learned
that there were only six blacks out of one hundred twenty
employees among the four facilities, and all six were located in one
facility and on one of two sales teams at that facility. In response
to this discovery, the EEOC issued a broad subpoena for all records
relating to the hiring of sales personnel at all four Chicago-area
facilities. Konica objected to the subpoenas arguing they were
unrelated to Thompsons charge.

The 7th Circuit disagreed. J udge Wood relies on EEOC v. Shell Oil
Co., 466 U.S. 54 ( 1984) to support the Commissions role granting
it a relevance standard broad enough to ensure its ability to
investigate charges of systemic discrimination not be impaired. Id
at 69. The EEOC is authorized to consider overall conditions in the
workplace to support the complaining employees allegations. As a
result, the EEOC has the authority to determine if others in the
same class suffered the same discrimination.

Thompson alleged both an individual instance and a pattern of race
discrimination. The EEOC is entitled to investigate employers to see
if there is a prohibited pattern of discrimination. The court held that
so long as the subpoena was tailored to the EEOCs realistic
expectation that the hiring materials would be beneficial to its
investigation of an alleged discriminatory pattern and particular
instance of discrimination, the EEOC has the authority. Refusing to
characterize the subpoena as a fishing expedition, the 7
th
Circuit
concluded that the EEOC properly limited its inquiry to the Chicago
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area facilities and sales personnel where it held a realistic
expectation rather than an idle hope to find relevant evidence of
discrimination.

Employers should be extra careful in their hiring practices. If the
EEOC believes it has found a pattern of discrimination on its own
investigation, it can and will issue a subpoena to fully investigate.
At least in the 7
th
Circuit, courts will give the EEOC leeway for broad
subpoenas, or as my friends at the Ohio Employers Law Blog think,
witch hunts [ link
http://www.ohioemployerlawblog.com/2011/05/eeoc-subpoenas-
or-witch-hunts.html] . The EEOC can issue subpoenas unrestricted
by the person who filed the initial complaint. All personnel files, not
just those of the employee who alleged discrimination, can be the
target of an EEOC subpoena. As Paul Mollica points out on his blog
[ link http://www.employmentlawblog.info/2011/05/eeoc-v-konica-
minolta-business-solutions-usa-inc-no-10-1239-7th-cir-apr-29-
2011.shtml] , steering members of a racial class to particular stores
or offices is unlawful and can get you a similarly broad subpoena.
Non-Compet e Clause in Lease Agreement Unenforceable

In Optical Partners, Inc. v. Dang, 2011 Ark. 156, 2011 Ark. LEXIS
142 ( Ark. 2011) , the Supreme Court of Arkansas held the non-
compete provision of a lease agreement to be unenforceable. Kevin
Dang, an optometrist who performs eye exams, writes prescriptions
for glasses and contacts, and treats eye diseases rented his space
from Optical Partners. Optical Partners manufactures and dispenses
eye glasses. Optical Partners found it good business to have an
optometrist inside its retail space so patients could utilize the
convenience of getting an exam, prescription, and new glasses all at
the same location. In an effort to preserve this extra business,
Optical Partners included a non-compete provision in the lease
agreement that Dang would not practice optometry for one year
after the end of the lease agreement within three miles of Optical
Partners.

The arrangement worked well for Optical Partners. Their neighboring
business was complimentary and drove increased business for
them. Then Kevin Dang moved his practice from the space he
leased from Optical Partners to a new location within three miles.
He provided verbal notice before leaving, and his sister replaced him
at Optical Partners. After moving offices, Dang gave written notice
of his termination of the lease agreement. Optical Partners
responded by filing suit against Kevin Dang including for injunctive
relief for violation of the non-compete.
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The court held that while Dang was in clear violation of the non-
compete, it was unenforceable. The only enforceable non-competes
arise out of either employment contracts or contracts for the
transfer of goodwill or other property. The court found no valid
interest protected by the non-compete. Further evidence of a lack
of legitimate business interest to protect is the fact that their
businesses were not in competition with each other. They were
complimentary, not competitive. Thus, the court concludes the
non-compete is unreasonable and unenforceable.

This case only applies to businesses operating in Arkansas. Non-
compete law will vary from state to state. If your state similarly
disfavors non-competes, be on alert. Your state may not uphold
non-competes outside employment contracts or a transfer of
goodwill or property. If you try adding a non-compete to a new
type of contract, your state courts may not enforce it and just say
nice try. [ link
http://www.tradesecretsnoncompetelaw.com/2011/05/articles/no
ncompete-agreements/supreme-court-of-arkansas-refuses-to-
enforce-noncompete-found-in-lease-agreement/]

NLRB:
NLRB
In Wyndham Resort Development Corp., 356 N.L.R.B. No. 104
(2011), the Board found that an employee had engaged in
protected, concerted activity, when he questioned his
supervisor in front of his coworkers, about a new dress code.
Interest on NLRB Awards
J effrey Hirsch, NLRB Requires Electronic Notification and Daily
Compound Interest, Workplace Prof Blog ( Oct. 25, 2010) ,
http://lawprofessors.typepad.com/laborprof_ blog/2010/10/
nlrb-requires-electronic-notification-and-daily-compound-
interest.html.
False Claims Act
Statute of Limitations in 3730(h) Retaliation Actions
Saunders v. District of Columbia, 711 F. Supp. 2d 42 (D.D.C.
May 13, 2010). The District Court, J udge Kollar-Kotelly, was
called upon to decide which D.C. statute of limitations governed
a retaliation claim under section 3730(h) of the False Claims
Act. In the wake of Graham County Soil & Water Conservation
District v. United States ex rel Wilson, 545 U.S. 409 (2005), the
District Court had to determine which D.C. statute of limitations
was most closely analogous to a FCA retaliation claim.
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Recognizing that this issue is one of first impression in the D.C.
Circuit, the court reviewed authorities from outside this
jurisdiction and then reviewed the various alternative statutes
that might apply. Plaintiff argued that the court should apply
the catchall three-year statute of limitations, whereas the
District argued that the D.C. Whistleblower Protection Act is the
most closely analogous state statute and the court should
accordingly apply its limitation period, which the District
asserted to be one year. The court noted that during the
pendency of the litigation, the D.C. Council had amended the
D.C. WPA to expand the statute of limitations to three years
with the amendment becoming effective on March 11, 2010. In
addition, the courts own research suggested a third possibility
the Districts statute of limitations period for claims of wrongful
discharge in violation of public policy, which appeared to be
three years. Finding that the parties briefing on this issue had
been inadequate, the court declined to make a ruling and
directed the parties to file supplemental briefs. On September
27, 2010, the District filed a motion to dismiss Plaintiffs claims
as time-barred. Plaintiff filed a memorandum in opposition on
October 12, 2010; and the District filed its reply on December
10, 2010. J udge Kollar-Kotelly has not ruled on this motion as
of April 5, 2011.
FERA Retroactivity
United States ex rel. Westrick v. Second Chance Body
Armor, Inc., 709 F. Supp. 2d 52 (D.D.C. May 4, 2010). In a False
Claims Act case, the District Court denied a motion to dismiss
by the defendants, including several companies and individuals.
Two companies filed a motion for reconsideration regarding a
FCA false statement claim, arguing that the Fraud Enforcement
and Recover Acts amendments to 31 U.S.C.S. 3729(a)(2) did
not apply retroactively. J udge Roberts disagreed, holding that
the FERAs amendments did not apply retroactively to the
claims at issue, and denied the motion.
United States ex rel. Kirk v. Schindler Elevator Corp.,
601 F.3d 94 ( 2nd Cir. Apr. 6, 2010) , cert. granted, 131 S.
Ct. 63 ( 2010) .
United States ex rel. Patton v. Shaw Servs., L.L.C., 2011
U.S. App. LEXIS 5415 (5th Cir. Mar. 17, 2011).
Collective Knowledge J ury Instruction
United States v. Sci. Applications Int'l Corp., 2010 U.S.
App. LEXIS 24808 (D.C. Cir. Dec. 3, 2010). A government
contractor appealed from a jury verdict in District Court finding
that the contractor violated the False Claims Act by seeking
payments from the United States when it knew it was violating
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conflict of interest provisions in its contract. J udge Tatel found
that the District Court erred in giving the jury an instruction
based on collective knowledge that was prejudicial and
erroneous because it could have misled the jury into believing
that the standard for knowledge under the FCA was different
for individuals and corporations.
Posting of Robert M. P. Hurwitz to Government Contracts
Blog,
http://www.governmentcontractslawblog.com/2011/01/article
s/false-claims/dc-circuit-rejects-collective-knowledge-but-
shines-spotlight-on-processes/ (J an. 18, 2011, 12:52 EST).
Causat ion
Application of Gross to Two Unlawful Reasons
Cross v. Clough, 2010 U.S. Dist. LEXIS 22415 (D.D.C. Mar. 11,
2010). A plaintiff prevailed against the Smithsonian Institution
before the Merit Systems Protection Board on his claim that he
was terminated for protected whistleblowing activities. The
plaintiff then sued the Secretary of the Smithsonian for
terminating his employment due to protected activity under
Title VII. The Smithsonian filed a motion for summary judgment,
arguing that mixed motive retaliation claims under Title VII are
barred after Gross v. FBL Financial Services, Inc., 129 S. Ct.
2343 (2009). J udge Collyer denied the motion, noting that this
was not a mixed motive case because the plaintiff claimed the
Smithsonian had two unlawful reasons for his termination, and
that each was separately actionable.
Application of Gross to Federal Sector ADEA
Ford v. Mabus, 2010 U.S. App. LEXIS 25254 (D.C. Cir. Dec. 10,
2010). In an Age Discrimination in Employment Act (ADEA)
action against a federal agency in which it was alleged that the
agency discriminated on the basis of age in violation of section
633(a) of the ADEA, the court, J udge Tatel, writing for a
unanimous panel, found that the language of section 633(a)
was substantially different than the language upon which the
Supreme Court had relied in Gross v. FBL Financial Services Inc.,
129 S. Ct. 2343 (2009), and that accordingly courts may
establish liability, although not necessarily entitlement to such
remedies as reinstatement, by a showing that consideration of
age was a factor in the challenged personnel action. Section
623 of ADEA prohibits personnel actions made because of a
persons age; whereas section 633(a) provides that all
personnel actions shall be free from any discrimination based
on age.
Application of Gross to Title VII Mixed-Motive and Motivating Factor
Retaliation Claims
2450
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Reserved
Hayes v. Sebelius, 2011 U.S. Dist. LEXIS 9839 (D.D.C. 2011) A
plaintiff employee sued the Department of Health and Human
Services for racial discrimination and retaliation under Title VII. In
considering mixed-motive and motivating factor claims in light
of Gross v. FBL Financial Services Inc., 129 S. Ct. 2343 (2009),
J udge Lamberth held as follows:
Title VII plaintiffs may not bring mixed-motives retaliation claims
under PriceWaterhouse.
Title VII plaintiffs may not bring motivating factor retaliation
claims under the 1991 revisions to Title VII.
Placing an employee on a Performance Improvement Plan could
dissuade a reasonable employee from pursuing a discrimination
claim, and thus may be an adverse action in a retaliation claim.
2011 U.S. Dist. LEXIS 9839 at 46 (citing Kelly v. Mills, 677 F.
Supp. 2d 206, 225 (D.D.C. 2010)).
Rehabilitation Act: Causation Analysis After Gross: Request for
Current Medical Information
Gard v. United States Dep't of Educ., 2010 U.S. Dist. LEXIS
123867 (D.D.C. Nov. 23, 2010). A pro se plaintiff sued the U.S.
Department of Energy for alleged retaliation under the
Rehabilitation Act after the plaintiffs underlying claim that he
was denied reasonable accommodation was dismissed. J udge
Collyer granted the Departments motion for summary
judgment, finding that the plaintiffs refusal to provide current
medical records was the reason the Department denied him a
reasonable accommodation. Following Gross v. FBL Financial
Services Inc., 129 S. Ct. 2343 (2009) the court held that a
plaintiff seeking vindication under the Rehabilitation Act must
prove that his disability was the sole or but-for reason for the
employer's actions or inactions, regardless of whether the
plaintiff advances a claim of discrimination based on disparate
treatment, mixed-motive, or retaliation. 2010 U.S. Dist. LEXIS
123867 at *15.

Evident iary and Wit ness-Relat ed Issues
Spoliation of Evidence

Talavera v. Shah, 2011 U.S. App. LEXIS 6299 ( D.C. Cir. Mar.
29, 2011) . In a case that turned, in part, on spoliation, a
plaintiff former employee of the United States Agency for
International Development appealed the District Courts grant
of summary judgment on her claims of gender discrimination
and retaliation under Title VII. J udge Rogers, writing for the
Court, affirmed the dismissal as to all counts except the
2451
18
Reserved
plaintiffs 2004 non-promotion gender discrimination claim,
and held as follows:

i. EEOC regulations required the selecting official to keep
his interview notes for one year. A reasonable jury could
conclude that the selecting officials intentional destruction
of his notes supports an inference that the notes would have
contained information favorable to the plaintiffs claim.
ii. Statements offered by the plaintiff were not stray
comments by an employer, but statements by the head of
the Office of Security relating specifically to alleged gender
bias on the part of a subordinate manager who was
responsible for making the challenged employment decision.
iii. A statement that men in the office had bonded
through military service was not a stray remark, and was
relevant to the plaintiffs gender discrimination claim.

Statistical Evidence

Randall v. Rolls-Royce Corp., 2010 U.S. Dist. LEXIS 23421 (S.D.
Ind. Mar. 12, 2011) (both parties expert statistical testimony
was admissible at class certification stage where purported
deficiencies in each sides analysis were questions of weight, not
of methodology; selection of too few variables to strengthen
the link between salary and gender was question of weight, as
was diluting the link with too many variables).
After-Acquired Evidence Defense:
Kapche v. Holder, 714 F. Supp. 2d 109 (D.D.C. May 29, 2010).
A jury awarded the plaintiff one hundred thousand dollars
($100,000.00) in compensatory damages on his claims of
discrimination and violation of the Rehabilitation Act. The
plaintiff then filed a motion for back pay and either instatement
or front pay. The defendant, the Federal Bureau of
Investigations, relied on after-acquired evidence in arguing that
the plaintiff should be entitled to no equitable relief because the
FBI revoked a conditional offer of employment upon a finding of
lack of candor by the plaintiff in the application process. J udge
Robertson agreed with the FBI, holding that it properly invoked
the after-acquired evidence defense.
Expert Witness Fees

Schmidt v. Solis, 2010 U.S. Dist. LEXIS 120986 ( D.D.C. Nov.
16, 2010) . When a discovery dispute erupted between the
parties, the plaintiff moved for an award of fees for expert
witness deposition preparation. J udge Facciola reversed a
2452
19
Reserved
position he articulated in U.S. ex rel. Fago v. M&T Mortg.
Corp., 238 F.R.D 3 ( D.D.C. 2006) , and held that reasonable
fees for the time spent by an expert preparing for a
deposition should always be paid by the party taking the
deposition.

Guantanamera Cigar Co. v. Corporacion Habanos, S.A., 2010
U.S. Dist. LEXIS 82543 ( D.D.C. Aug. 5, 2010) . J udge
Lamberth followed U.S. ex rel. Fago v. M&T Mortg. Corp., 238
F.R.D 3 ( D.D.C. 2006) , and held that preparation time for a
deposition was not included in the scope of Rule 26( b) ( 4) ( C) ,
and stated that fees for such time would be awarded on a
case-by-case basis.

Class Act ions
Alexandra D. Lahav, The Curse of Bigness and the Optimal Size of
Class Actions, 63 Vand. L. Rev. En Banc 117 ( 2010) ,
http://papers.ssrn.com/sol3/papers.cfm? abstract_ id=1701278.

Russell J ackson, Expert Testimony at the Class-Certification Stage,
The National Law J ournal ( J an. 24, 2011) ,
http://www.skadden.com/content/Publications/Publications2337_
0.pdf.

Richard A. Nagareda, Common Answers for Class Certification,
Vanderbilt Law Review En Banc, Forthcoming, Vanderbilt Public Law
Research Paper No. 10-33 ( 2010) ,

Gregory Mitchell, Good Causes and Bad Science, Vanderbilt Law
Review En Banc, Forthcoming, Vanderbilt Public Law and Legal
Theory Research Paper No. 2010-38 ( 2010) ,

Elizabeth Chamblee Burch, Introduction: Dukes v. Wal-Mart Stores,
Inc., 63 Vand. L. Rev. En Banc 91 ( 2010) ,

Conversion of Company Propert y
Employee Removal of Documents from the Workplace
The New J ersey Supreme Courts decision in Quinlan regarding
the removal by the employee of documents and/or ESI from the
workplace, and the use of same by employees counsel in
furtherance of employees case raises a host of ethical and
other issues.
2453
20
Reserved
Quinlan v. Curtiss-Wright Corp., 8 A.3d 209 ( N.J . 2010) . The
New J ersey Supreme Court reversed a lower court holding
and reinstated a jury verdict in favor of a plaintiff who was
fired after copying more than 1,800 confidential company
documents and sending them to her attorneys for use in her
pending discrimination lawsuit against the company. While
holding that the copying in these circumstances was not
protected activity under New J erseys Law Against
Discrimination ( LAD) , the court further held that Quinlans
attorneys subsequent use of one of the confidential
documents taken from the company ( specifically, the
performance appraisal of Quinlans boss) at a deposition in a
pending discrimination case was protected activity for which
the plaintiff could not be lawfully terminated. Having found
sufficient evidence that the employer had terminated Quinlan
as a result of her attorneys use of the performance appraisal
at the depositionas opposed to her initial copying of the
documentsthe court upheld the jurys verdict in favor of
the plaintiff. Further, the court upheld the award of punitive
damages, refusing to overturn the jurys findings of actual
participation by upper management or willful indifference to
the Quinlans termination, and egregious behavior.

For further discussion and analysis of Quinlan, see:

Retaliation Verdict Upheld Where Employee Was Fired
For Using Company Records to Prove Discrimination Claim,
Posting of David Conforto to Boston Employment Lawyer
Blog ( Mar. 1, 2011) , available at
http://www.bostonemploymentlawyerblog.com/2011/03/ret
aliation_ verdict_ upheld_ whe_ 1.html? utm_ source=feedburne
r&utm_ medium=feed&utm_ campaign=Feed% 3A+BostonEmpl
oymentLawyerBlogCom+% 28Boston+Employment+Lawyer+Bl
og% 29.
David W. Garland, Take 5: Views You Can Use, Epstein
Becker Green Client Newsletter ( Feb. 24, 2011) , available at
http://www.ebglaw.com/shownewsletter.aspx? Show=14040.
Harris N. Feldman & Timothy D. Sirhal, N.J . Supreme
Court Allows Employee to Copy Confidential Company
Documents in Support of Discrimination Lawsuits Against
Employers, Bloomberg Law Reports ( Feb. 17, 2011) , available
at http://www.schnader.com/files/Publication/7158f6de-
5c24-42e4-8662-
93f3d2320b21/Presentation/PublicationAttachment/489c0
2d9-fa2f-4b60-95f5-
2454
21
Reserved
9a9a34d45a7a/Bloomberg% 20Law% 20Report_ Feldman_ Sirh
al_ J anuary% 202011.pdf.
Employees Taking of Confidential Information Can Be a
Protected Activity Under the New J ersey Law Against
Discrimination, Posting of Michael N. Morea to Employment
Law Monitor ( Dec. 13, 2010) , available at
http://www.employmentlawmonitor.com/tags/quinlan-v-
curtiswright/.

Background Checks
Criminal Background Checks
According to the National Employment Law Project, roughly 65
million people have an arrest or conviction that shows up in a
routine criminal background check, and a NELP report entitled
65 Million Need Not Apply: The Case for Reforming Criminal
Background Checks for Employment finds numerous examples in
which major employers preclude consideration of anyone with a
criminal record. The report is available here:
http://www.nelp.org/page/-
/65_Million_Need_Not_Apply.pdf?nocdn=1.
Suzanne Lucas, Employment Background Checks: What Theyre
Really Looking For (J an. 5, 2011),
http://www.bnet.com/blog/evil-hr-lady/employment-
background-checks-what-they-8217re-really-looking-for/1479.
Ban the Box Laws
Several states, including Connecticut, Massachusetts, and New
Mexico, have passed laws prohibiting employers from asking
applicants about criminal history on a job application.
EmployeeScreenIQ, The Top Nine: EmployeeScreenIQs 2011
List of Background Screening Trends (Dec. 2010),
http://www.employeescreen.com/2011_EIQ_Trends.pdf.
Daniel Schwartz, [ Connecticut] General Assembly Overrules
Veto of Criminal Background Check Bill, Connecticut
Employment Law Blog (J une 22, 2010),
http://www.ctemploymentlawblog.com/2010/06/articles/legisl
ative-issues/general-assembly-overrules-veto-of-criminal-
background-check-bill/.

Credit History
Molly DiBianca, Is Creditworthiness a Protected Characteristic?
Yes, Says EEOC, The Delaware Employment Law Blog (Dec. 27,
2010),
http://www.delawareemploymentlawblog.com/2010/12/is_cre
ditworthiness_a_protecte.html.
2455
22
Reserved
Barry A. Hartstein, EEOC to Hold Meeting on the Use of Credit
History as Employment Screening Device, Washington DC
Employment Law Update (Oct. 13, 2010),
http://www.dcemploymentlawupdate.com/2010/10/articles/a
gency-happenings/eeoc-to-hold-meeting-on-the-use-of-credit-
history-as-employment-screening-device/.
Daniel Schwartz, EEOC Holds Public Hearing on Use of Credit
Reports for Hiring, Connecticut Employment Law Blog (Oct. 21,
2010),
http://www.ctemploymentlawblog.com/2010/10/articles/chro-
and-eeoc/eeoc-holds-public-hearing-on-use-of-credit-reports-
for-hiring/.
J on Hyman, EEOC holds public hearing on credit histories and
employee selection criteria, Ohio Employment Law Blog (Oct.
21, 2010),
http://www.ctemploymentlawblog.com/2010/10/articles/chro-
and-eeoc/eeoc-holds-public-hearing-on-use-of-credit-reports-
for-hiring/
Nick Fishman, EEOC Weighs Position on Credit Reports for
Employment Screening, IQ Blog (Oct. 19, 2010),
http://www.employeescreen.com/iqblog/eeoc-weighs-position-
on-credit-reports-for-employment-screening/.
Nick Fishman, Employment Credit Reports Have Value: I Hope
the EEOC Listened, IQBlog (Oct. 21, 2010),
http://www.employeescreen.com/iqblog/employment-credit-
reports-have-value-i-hope-the-eeoc-listened/.
Michael D. Haberman, Credit Checks: Yes or No?, HR
Observations (Oct. 21, 2010),
http://omegahrsolutions.com/2010/10/credit-checks-yes-or-
no.html.
Privacy and Data Protection Practice Group, Credit Check
Lawsuit Signals Potential New Wave of Class Actions, Workplace
Privacy Counsel (Dec. 9, 2010),
http://privacyblog.littler.com/2010/12/articles/background-
checks/credit-check-lawsuit-signals-potential-new-wave-of-
class-actions/.
Robin E. Weideman, Legislation Limiting Employer Use of Credit
Reports Pending in California, California Labor & Employment
Blog (J une 21, 2010),
http://www.callaborlaw.com/archives/new-laws-legislation-
legislation-limiting-employer-use-of-credit-reports-pending-in-
california.html.

Social Media Issues
2456
23
Reserved
Employer May be Liable for Impersonating Employee on Facebook
and Twitter
In Maremount v. Susan Friedman Design Group, Ltd., 2011 U.S.
Dist. LEXIS 26441 (N.D. Ill. Mar. 15, 2011), an employer that
allegedly posted to an employees Facebook and Twitter
accounts without her consent may be liable for false association
/ false endorsement under the Lanham Act, 15 U.S.C.
1125(a)(1)(A), and the right to publicity under the Illinois right
to publicity act.
Training Programs
Failure to Follow Training Program is Not Breach of Contract
In Brule v. Nerac, 127 Conn. App. 315 (Conn. App. Ct. Mar. 15,
2011), former employees brought suit for breach of contract
and negligence against their former employer, who had
terminated them. The plaintiffs sought damages sustained after
the employer trained managers, including one of the plaintiffs, in
the proper procedures for terminating employees. The employer
did not follow those procedures when terminating the plaintiffs.
The Appellate Court rejected the contract claim because the
training program completely lacked any promissory language,
were only suggestive guidelines for managing employees, and
therefore could not have created a contract. For the same
reason, the court rejected the plaintiffs argument that the
employer had assumed a duty to carry out the disciplinary
methods outlined in the training.
FRB Brokerage / Commission Payrolls
Natl Assoc. of Mortgage Brokers v. Board of Governors of the Federal
Reserve System, 2011 U.S. Dist. LEXIS 33583 (D.D.C. Mar. 30, 2011).
The plaintiffs in this case requested a temporary restraining order and
injunction against enforcement of a new Federal Reserve Board rule
forbidding various types of compensation of mortgage brokers and
related parties. The court found that the plaintiffs had associational
standing through their members, but that they did not demonstrate a
likelihood of success on the merits. After holding that the Board was
acting within its authority under the APA, the court evaluated the
justification for the new regulation. The regulation, the court held, was
not arbitrary and capricious because the Board found that consumers
suffered a significant risk of economic injury based on the existing
system of compensation, the rules were designed to reasonably avoid
that injury, and that the record supported the Boards findings. The
rule also survived scrutiny under the Regulatory Flexibility Act and the
Small Business Regulatory Enforcement Fairness Act. Though the court
(having held that the plaintiffs did not demonstrate a likelihood of
success on the merits) did not need to address whether harm from
2457
24
Reserved
the Boards action would be irreparable, it did find that the claims of
irreparable harm were not supported by adequate evidence.
Accusing a Former Employee of St ealing Trade Secret s May
Const it ut e Unlawful Ret aliat ion
J udge Lewis T. Babcock of the Federal District Court for Colorado in
Hertz v. Luzanec America, Inc., 2010 U.S. Dist. LEXIS 125351 (D.
Colo. Nov. 29, 2010), ruled that the defendant companys email to
plaintiffs lawyer with a copy to plaintiffs new employer, alleging that
plaintiff was using stolen property (trade secrets), could be retaliatory.
2458
July 28 - 30, 2011
Trends in Employment Discrimination Law
By
Richard T. Seymour
Law OIIice oI Richard T. Seymour, P.L.L.C.
Washington, D.C.
Law OIIice oI Richard T. Seymour, P.L.L.C., 1150 Connecticut Avenue N.W., Suite
900, Washington, D.C. 20036-4129. Telephone: 202-862-4320. Cell: 202-549-1454.
Facsimile: 800-805-1065. E-mail: rickrickseymourlaw.net. Some oI the inIormation in this
paper is used with permission Irom a prior edition oI Richard T. Seymour and John F. Aslin,
Equal Employment Law Update (Bureau oI National AIIairs, Washington, D.C., 2007),
copyright American Bar Association, 2007. For copies, contact BNA at 1-800-960-1220;
attendees and members oI the Labor and Employment Law Section are entitled to a 25
discount as a beneIit oI Section membership. Mention priority code EQL in order to receive the
discount.
This paper is updated at various times each year, and updates can be downloaded Irom
www.rickseymourlaw.com. Many oI my other CLE papers are also downloadable Irom this site.
2459

ii
Table of Contents
I. The Statistics ....................................................................................................................... 1
II. EEOC Charge Statistics ...................................................................................................... 1
III. The Constitution and Statutes ......................................................................................... 2
A. The First Amendment ..................................................................................................... 2
B. Privacy: Employers Access to Employee Communications .......................................... 3
C. 42 U.S.C. 1983 ............................................................................................................. 4
1. Municipal Liability under Monell ............................................................................... 4
2. Supervisory Liability .................................................................................................. 4
D. Title VII of the Civil Rights Act of 1964 ........................................................................ 5
1. Mixed Bases of Discrimination .................................................................................. 5
2. Pregnancy Discrimination Prior to the PDA ............................................................... 6
3. Federal Employees Protected Against Retaliation ...................................................... 6
E. The Americans with Disabilities Act and Rehabilitation Act ......................................... 6
1. Ministerial Exception .................................................................................................. 6
2. Disability ..................................................................................................................... 7
3. Qualified Individuals ............................................................................................... 8
4. Reasonable Accommodation ...................................................................................... 9
F. Family and Medical Leave Act ....................................................................................... 9
1. Evidence Showing a Serious Health Condition .......................................................... 9
2. Rejecting a Fruit of the Poisonous Tree Argument ................................................. 9
G. Employment Status ....................................................................................................... 10
H. Whistleblower Protections ............................................................................................ 11
IV. Application of State Laws Against Discrimination ...................................................... 11
V. Theories and Proof ............................................................................................................ 11
A. The Inferential Model ................................................................................................... 11
1. Caution ...................................................................................................................... 11
2. Plaintiff Need Not Prove an Unlawful Motive Was the Sole Reason ...................... 12
3. Reverse Discrimination ............................................................................................. 13
4. Adverse Employment Actions .................................................................................. 13
5. Adequacy of Employers Nondiscriminatory Reason .............................................. 14
6. Pretext ....................................................................................................................... 14
a. Definitions............................................................................................................. 14
b. Shifting Explanations ............................................................................................ 15
c. Employers Good-Faith Error Does Not Constitute Pretext ................................. 15
d. Defendants Nonsensical Explanation Can Show Pretext .................................... 15
e. Business Judgment ................................................................................................ 16
7. Defndants Failure to Exercise Normal Business Judgment ..................................... 17
8. Timing ....................................................................................................................... 17
B. Mixed Motives .............................................................................................................. 18
1. The Decision in Gross .............................................................................................. 18
2. Gross Does Not Bar ADEA Pattern and Practice Claims ..................................... 19
3. Gross and the Same Decision Defense .................................................................. 20
4. 42 U.S.C. 1983 First Amendment Claims Cannot Involve Mixed Motives .......... 20
2460

iii
5. 42 U.S.C. 1981 Claims Can Involve Mixed Motives ............................................ 20
6. Pre-ADAAA ADA Claims Cannot Involve Mixed Motives .................................... 21
7. Post-ADAAA ADA Claims Still Open for Decision ................................................ 21
8. FMLA Retaliation Claims Can Involve Mixed Motives .......................................... 21
9. LMRDA Claims Cannot Involve Mixed Motives .................................................... 21
C. Constructive Discharge ................................................................................................. 21
1. Required Element: Intent to Force the Employee to Quit ......................................... 21
2. Employees Who Bolt Too Soon Have No Claim ..................................................... 22
3. If Most Employees Stay, the Claim Fails ................................................................. 23
D. Retaliation ..................................................................................................................... 23
1. Associational Discrimination .................................................................................... 23
2. Protected Conduct ..................................................................................................... 24
a. Power to Correct the Problem is Not a Factor ...................................................... 25
b. Official Job Duties, and Plaintiff Overstepping Perceived Bounds ...................... 25
3. Defendants Ignorance of Protected Conduct ........................................................... 26
4. How Specific Must Defendants Knowledge of Protected Conduct Be? ................. 26
5. Are Retaliatory Counterclaims Actionable? ............................................................. 27
a. Supreme Court Context ......................................................................................... 27
b. Courts of Appeals ................................................................................................. 29
6. What Other Conduct is Actionable? ......................................................................... 30
a. Request for Change in Office Space Not Actionable ........................................... 30
b. Two Days Loss of Pay Actionable ...................................................................... 30
c. Burlington Northern Standard Unavailable under USERRA ............................... 30
7. Causation................................................................................................................... 31
a. Following Standard Practices Precludes Causation .............................................. 31
b. Temporal Proximity .............................................................................................. 31
E. Circumstantial Evidence ............................................................................................... 31
F. Proving Truisms to be Inapplicable .............................................................................. 31
1. Same Decisionmakers Can Still Discriminate....................................................... 31
G. Discriminatory Statements ............................................................................................ 32
1. Biased Statements Do Not Have a Short Probative Shelf Life ................................. 32
2. The Inferences to be Drawn from a Biased Statement ............................................. 33
3. Speakers Who Were Not Formal Decisionmakers ................................................... 33
H. Simple Statistics Can Be Probative ............................................................................... 35
I. Harassment .................................................................................................................... 36
1. Hostile Housing Environment................................................................................... 36
2. The Prima Facie Case .............................................................................................. 36
3. Causation................................................................................................................... 37
4. Severe or Pervasive ................................................................................................... 39
5. Unwelcomeness ........................................................................................................ 41
6. Conditions of Employers Vicarious Liability .......................................................... 41
7. Employers Duty to Cure Any Harassment That Does Occur .................................. 41
8. Failure to Complain, and Adequacy of Complaints .................................................. 42
J. Taking Documents ........................................................................................................ 42
K. Privacy of E-Mails ........................................................................................................ 45
L. Independent Judgment .................................................................................................. 47
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iv
M. Independent Investigations ....................................................................................... 48
VI. Litigation ....................................................................................................................... 49
A. Exhaustion..................................................................................................................... 49
B. Timeliness ..................................................................................................................... 49
1. Promotional Rosters .................................................................................................. 49
2. Present Effects of Past Discrimination Under the Ledbetter Fair Pay Act ............... 50
3. EEOCs Oral Notice of Right to Sue Does Not Start Clock Running ...................... 51
4. Tolling Because of Mental Incapacity ...................................................................... 51
5. Hostile Environment ................................................................................................. 52
C. Bars to Suit .................................................................................................................... 53
1. Internal Exhaustion? ................................................................................................. 53
2. Immunity for Actions of Co-Workers? ..................................................................... 54
3. Claim Preclusion ....................................................................................................... 54
4. Preemption ................................................................................................................ 55
D. Pleading......................................................................................................................... 56
E. Summary Judgment ...................................................................................................... 58
F. Class Actions and Collective Actions ........................................................................... 59
F. Arbitration ..................................................................................................................... 62
G. Evidence ........................................................................................................................ 69
1. Authenticity............................................................................................................... 69
2. Other Instances of Discrimination ............................................................................ 69
H. Jury Trial ....................................................................................................................... 69
I. Jury Instructions ............................................................................................................ 70
J. The Jury Verdict ........................................................................................................... 71
K. Rate of Prejudgment Interest ........................................................................................ 71
L. Compensatory Damages ............................................................................................... 72
M. Punitive Damages ..................................................................................................... 73
1. Upholding Entitlement .............................................................................................. 73
2. Amounts .................................................................................................................... 73
3. Lower Court Chopped Too Much from the Award .................................................. 73
N. Attorneys Fees ............................................................................................................. 74
1. Enhancements ........................................................................................................... 74
2. Fee Recoveries .......................................................................................................... 77
O. Sanctions ....................................................................................................................... 77
VII. Federal-Sector Particularities ........................................................................................ 81
VIII. Appellate Tips for Effective Advocacy ........................................................................ 82
2462

1
I. The Statistics
Number of Employment
Twelve-Month Discrimination Cases
Period Filed in These 12 Months
1997 (12 mos. to 12/31/97) 24,174
1998 (12 mos. to 12/31/98) 23,299
1999 (12 mos. to 12/31/99) 22,412
2000 (12 mos. to 12/31/00) 21,111
2001 (12 mos. to 12/31/01) 21,062
2002 (12 mos. to 12/33/02) 20,972
2003 (12 mos. to 12/31/03) 20,040
2004 (12 mos. to 9/30/04) 19,746
2005 (12 mos. to 9/30/05) 16,930
2006 (12 mos. to 9/30/06) 14,353
2007 (12 mos. to 12/31/07) 13,107
2009 (12 mos. to 3/31/10) 13,523
2010 (12 mos. to 3/31/10) 14,334
There are no comparable figures available for filings in State courts.
The sharp decline since 1997 in the number of new fair-employment cases filed in
Federal district courts seems to have stopped, and the number of new filings is increasing again.
There is a 9% increase between 2007 and 2010.
II. EEOC Charge Statistics
The above information was downloaded on March 14, 2010, from the EEOC web site,
http://www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm:
Category FY 2007 FY 2009 FY 2010 % Change, FY 2007-
FY 2010
Total charges 82,792 93,277 99,922 20.7%
Race 30,510 33,579 35,890 17.6%
Retaliation 26,663 33,613 36,258 36.0%
Sex 24,826 28,372 29,029 16.9%
Age 19,103 22,778 23,264 21.8%
Disability 17,734 21,451 25,165 41.9%
2463

2
Category FY 2007 FY 2009 FY 2010 % Change, FY 2007-
FY 2010
National Origin 9,396 10,601 11,304 20.3%
Religion 2,880 3,386 3,790 31.6%
Equal Pay Act 818 942 1,044 27.6%
GINA N.A. N.A. 201

III. The Constitution and Statutes
A. The First Amendment
Christian Legal Society Chapter of the University of California, Hastings College of the
Law v. Martinez, __ U.S. __, 130 S.Ct. 2971 (2010), held that the First Amendment is not
violated by requiring that a student organization applying for official recognition, and thus for a
share of student activity fees, comply with the universitys nondiscrimination policy. Justice
Ginsburg, writing for the majority, described the issue:
In the view of petitioner Christian Legal Society (CLS), an accept-all-comers
policy impairs its First Amendment rights to free speech, expressive association, and free
exercise of religion by prompting it, on pain of relinquishing the advantages of
recognition, to accept members who do not share the organization's core beliefs about
religion and sexual orientation. From the perspective of respondent Hastings College of
the Law (Hastings or the Law School), CLS seeks special dispensation from an across-
the-board open-access requirement designed to further the reasonable educational
purposes underpinning the school's student-organization program.
In accord with the District Court and the Court of Appeals, we reject CLS's First
Amendment challenge. Compliance with Hastings' all-comers policy, we conclude, is a
reasonable, viewpoint-neutral condition on access to the student-organization forum. In
requiring CLS-in common with all other student organizations-to choose between
welcoming all students and forgoing the benefits of official recognition, we hold,
Hastings did not transgress constitutional limitations. CLS, it bears emphasis, seeks not
parity with other organizations, but a preferential exemption from Hastings' policy. The
First Amendment shields CLS against state prohibition of the organization's expressive
activity, however exclusionary that activity may be. But CLS enjoys no constitutional
right to state subvention of its selectivity.
Id. at 2978. The school offered CLS the alternative of not being officially recognized and
sharing in student activity fees, but of limiting its membership as it wanted and holding meetings
and activities in Hastings facilities and having access to campus bulletin boards and other means
of advertising its activities. Id. at 2981. The Court rejected CLSs argument challenging
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Hastings policy as written, i.e., that the written policys references to nondiscrimination
imposed burdens only on religious organizations with differing tenets, because the parties had
stipulated below that Hastings current policy was an all comers policy applicable to all
student organizations, such that the campus Democratic Club could not exclude Republicans.
The majority strongly emphasized the importance of stipulations:
Litigants, we have long recognized, [a]re entitled to have [their] case tried upon
the assumption that ... facts, stipulated into the record, were established. H. Hackfeld &
Co. v. United States, 197 U.S. 442, 447, 25 S.Ct. 456, 49 L.Ed. 826 (1905). This
entitlement is the bookend to a party's undertaking to be bound by the factual stipulations
it submits. See post, at 3005 (ALITO, J., dissenting) (agreeing that the parties must be
held to their Joint Stipulation). As a leading legal reference summarizes:

[Factual stipulations are] binding and conclusive ..., and the facts stated are not
subject to subsequent variation. So, the parties will not be permitted to deny the
truth of the facts stated, ... or to maintain a contention contrary to the agreed
statement, ... or to suggest, on appeal, that the facts were other than as stipulated
or that any material fact was omitted. The burden is on the party seeking to
recover to show his or her right from the facts actually stated. 83 C.J.S.,
Stipulations 93 (2000) (footnotes omitted).

This Court has accordingly refused to consider a party's argument that
contradicted a joint stipulation [entered] at the outset of th[e] litigation. Board of
Regents of Univ. of Wis. System v. Southworth, 529 U.S. 217, 226, 120 S.Ct. 1346, 146
L.Ed.2d 193 (2000). Time and again, the dissent races away from the facts to which CLS
stipulated. See, e.g., post, at 3001, 3002, 3003, 3005 - 3006, 3012 - 3013. But factual
stipulations are formal concessions ... that have the effect of withdrawing a fact from
issue and dispensing wholly with the need for proof of the fact. Thus, a judicial
admission ... is conclusive in the case. 2 K. Broun, McCormick on Evidence 254, p.
181 (6th ed.2006) (footnote omitted). See also, e.g., Oscanyan v. Arms Co., 103 U.S. 261,
263, 26 L.Ed. 539 (1881) (The power of the court to act in the disposition of a trial upon
facts conceded by counsel is as plain as its power to act upon the evidence produced.).

Id. at 2982 (footnotes omitted). The case involves a number of other fascinating issues, but the
other issues are less likely to be relevant to the litigation of employment law cases than the
above. Justice Ginsburgs majority opinion was joined by Justices Stevens, Kennedy, Breyer,
and Sotomayor. Justices Stevens and Kennedy filed concurring opinions. Justice Alito
dissented, joined by the Chief Justice and Justices Scalia and Thomas.
B. Privacy: Employers Access to Employee Communications
City of Ontario v. Quon, __ U.S. __, 130 S.Ct. 2619, 177 L.Ed.2d 216, 30 IER Cases
1345 (2010), held that the City did not violate the Fourth Amendment by examining employees
text messages sent over City pagers to see whether they were on City business or private, for
purposes of charging them for excessive private text messaging. The Court deliberately issued a
narrow opinion. It stated at 2630:
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A broad holding concerning employees' privacy expectations vis--vis employer-
provided technological equipment might have implications for future cases that cannot be
predicted. It is preferable to dispose of this case on narrower grounds. For present
purposes we assume several propositions arguendo: First, Quon had a reasonable
expectation of privacy in the text messages sent on the pager provided to him by the City;
second, petitioners' review of the transcript constituted a search within the meaning of the
Fourth Amendment; and third, the principles applicable to a government employer's
search of an employee's physical office apply with at least the same force when the
employer intrudes on the employee's privacy in the electronic sphere.
The Court held: The search was justified at its inception because there were reasonable
grounds for suspecting that the search [was] necessary for a noninvestigatory work-related
purpose. Id. at 2631. Justice Kennedy wrote for a nearly unanimous Court, with Justice Scalia
not joining in Part III-A and writing separately on that point. Justice Stevens joined the majority
opinion but also wrote a concurring opinion.
C. 42 U.S.C. 1983
1. Municipal Liability under Monell
Los Angeles County v. Humphries, __ U.S. __, 131 S.Ct. 447, 449, 178 L.Ed.2d 460
(2010) (Breyer, J.), held that the limits on municipal liability imposed by Monell v. New York
City Dept. of Social Servs., 436 U.S. 658 (1978), apply to suits for injunctive relief as well as
suits for monetary relief: The question presented is whether the policy or custom requirement
also applies when plaintiffs seek prospective relief, such as an injunction or a declaratory
judgment. We conclude that it does so apply.
2. Supervisory Liability
Starr v. Baca, 633 F.3d 1191, 78 Fed.R.Serv.3d 1060 (9th Cir. 2011), reversed the
district courts dismissal of the plaintiff inmates 1983 supervisory liability claim for deliberate
indifference to his health. By way of background, because there is no respondeat superior
liability under 1983, supervisory liability is the only means by which an official, such as a
supervisor or manager, can be held accountable for certain actions of the subordinates they
control. The court explained that where the applicable constitutional standard is deliberate
indifference, a plaintiff may state a claim for supervisory liability based upon the supervisor's
knowledge of and acquiescence in unconstitutional conduct by others. Id. at 1196. The court
stated further:
The requisite causal connection can be established ... by setting in motion a series of acts
by others, id. (alteration in original; internal quotation marks omitted), or by knowingly
refus[ing] to terminate a series of acts by others, which [the supervisor] knew or
reasonably should have known would cause others to inflict a constitutional injury,
Dubner v. City & Cnty. of San Francisco, 266 F.3d 959, 968 (9th Cir.2001). A
supervisor can be liable in his individual capacity for his own culpable action or inaction
in the training, supervision, or control of his subordinates; for his acquiescence in the
constitutional deprivation; or for conduct that showed a reckless or callous indifference to
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the rights of others. Watkins v. City of Oakland, 145 F.3d 1087, 1093 (9th Cir.1998)
(internal alteration and quotation marks omitted).
Id. at 1197. The court held that the Complaint met the requirements of Ashcroft v. Iqbal, __ U.S.
__, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), id. at 1197-1205, and that the standards for
supervisory liability had not been altered: We hold that the Supreme Court's decision in Iqbal
did not alter the substantive requirements for supervisory liability claims in an unconstitutional
conditions of confinement case under the Eighth and Fourteenth Amendments where deliberate
indifference is the applicable standard. Id. at 1205. Judge Trott dissented. Id. at 1205-10. See
also the discussion of this case under the Pleading topic below.
D. Title VII of the Civil Rights Act of 1964
1. Mixed Bases of Discrimination
Gorzynski v. Jetblue Airways Corp., 596 F.3d 93, 109-10, 108 Fair Empl.Prac.Cas.
(BNA) 769 (2d Cir. 2010), seemed to accept a combined age and sex discrimination claim, but
held it unnecessary to allege the combination explicitly where the plaintiff had shown both age
discrimination and sex discrimination, even if there were subsets of each group not suffering
from such discrimination.
Harris v. Maricopa County Superior Court, 631 F.3d 963, 111 Fair Empl.Prac.Cas.
(BNA) 503 (9th Cir. 2011), reversed the award of $125,000 in attorneys fees and expenses to
the prevailing defendant. In the course of examining plaintiffs Title VII race-and-sex hostile
environment claim, the court held that the lower court erred in considering a sexual hostile-
environment claim separately from a racial hostile-environment claim:
Although Harris made a single claim alleging that he had been subjected to a
hostile work environment on account of his race and gender together, the district court
treated this claim as two separate claims, one concerning race, one concerning gender. It
found that Harris's gender-based subclaim was frivolous because it was filed more than
300 days-the time limit imposed by Title VII-after the last act of discrimination alleged
by Harris that the district court categorized as gender-based. It did not determine that his
race-based subclaim was untimelyit apparently categorized acts within the 300 day
window as race basedbut that instead it was frivolous because he did not allege severe
and pervasive conduct based on his race, as would be required for relief under Title VII.
The district court erred in dividing the claim in two, and then treating half of it as
frivolous because of Title VII's statute of limitations and half as frivolous for a
substantive reason. Harris claimed that his work environment was hostile because of
discrimination against him as a black male, not that he was discriminated against as a
male and then suffered separate discrimination as a black person. It is perfectly plausible
that gender and race could together give rise to discrimination in the manner Harris
alleged: he claimed that false sexual harassment allegations were made against him and
that action was taken on these false charges because of the combination of his race and
gender. Prejudiced individuals have long promulgated a pernicious image of black men
as sexual predators; a view that they do not hold with respect to men of other racial
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backgrounds or with respect to black women. See, e.g., Powell v. State of Alabama, 287
U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 (1932). Courts, moreover, have properly shown
solicitude for claims based on the intersection of different categories of discrimination.
See Jefferies v. Harris Co. Community Action Assn, 615 F.2d 1025, 1032 (5th Cir.1980)
( discrimination against black fe-males[could] exist even in the absence of
discrimination against black men or white women).
Id. at 976-77.
2. Pregnancy Discrimination Prior to the PDA
AT & T Corp. v. Hulteen, __ U.S. __, 129 S.Ct. 1962, 173 L.Ed.2d 898 (2009), held that
AT&T did not have to give pension service credit to periods of time in which plaintiffs were not
working because of pregnancy discrimination occurring before the Pregnancy Discrimination
Act amendment to Title VII made such discrimination unlawful, because the denial of the service
credit was an aspect of a bona fide seniority system. The court held that the Lilly Ledbetter Fair
Pay Act did not alter this holding. For the reasons already discussed, AT & T's pre-PDA
decision not to award Hulteen service credit for pregnancy leave was not discriminatory, with the
consequence that Hulteen has not been affected by application of a discriminatory compensation
decision or other practice. 3(A), 123 Stat. 6. Id. at 1973.
3. Federal Employees Protected Against Retaliation
Bonds v. Leavitt, 629 F.3d 369, 384, 111 Fair Empl.Prac.Cas. (BNA) 171, 31 IER Cases
1078 (4th Cir. 2011), affirmed the dismissal of plaintiffs Title VII retaliation claim but held that
reading the statutory provisions together leaves us with little doubt that Congress incorporated
the protections against retaliation afforded to private employees by 2000e-3(a). See also the
discussion of this case in the section below on Retaliation, and the subsection on Protected
Conduct.
E. The Americans with Disabilities Act and Rehabilitation Act
1. Ministerial Exception
E.E.O.C. v. Hosanna-Tabor Evangelical Lutheran Church and School, 597 F.3d 769,
778-79, 22 A.D. Cases 1697 (6th Cir. 2010), reversed the grant of summary judgment to the
ADA defendant. The court held that the charging party was not a ministerial employee, and thus
that the defendant was not entitled to the ministerial exception. The court set forth the standards:
The question of whether a teacher at a sectarian school classifies as a ministerial
employee is one of first impression for this Court. However, the overwhelming majority
of courts that have considered the issue have held that parochial school teachers such as
Perich, who teach primarily secular subjects, do not classify as ministerial employees for
purposes of the exception. . . .

By contrast, when courts have found that teachers classify as ministerial
employees for purposes of the exception, those teachers have generally taught primarily
religious subjects or had a central role in the spiritual or pastoral mission of the church.
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. . .

(Citations omitted.) The court added: Perich spent approximately six hours and fifteen minutes
of her seven hour day teaching secular subjects, using secular textbooks, without incorporating
religion into the secular material. The court held that the fact that the charging party held the
title of commissioned minister was irrelevant, because her primary duties were secular.
Alcazar v. Corporation of the Catholic Archbishop of Seattle, 627 F.3d 1288, 110 Fair
Empl.Prac.Cas. (BNA) 1672, 17 Wage & Hour Cas.2d (BNA) 13 (9th Cir. 2010), held that the
plaintiff seminarian was precluded from recovery for unpaid overtime under the Washington
Minimum Wage Act because his religious duties made him subject to the ministerial exception to
the employment laws.
2. Disability
Side Effects of Medication: Sulima v. Tobyhanna Army Depot, 602 F.3d 177, 187, 23
AD Cases 27 (3d Cir. 2010), affirmed the grant of summary judgment to the ADA and
Rehabilitation Act defendants. Plaintiff took medications for obesity and sleep apnea. Thus, we
must consider whether the meaning of disability under the ADA can encompass an impairment
resulting solely from the side effects of medication, whether or not the underlying health
problems are disabling. The court held that such a claim can be viable, but was subject to
substantial limitations:
We agree with the Seventh Circuit that side effects from medical treatment may
themselves constitute an impairment under the ADA. However, as the Seventh Circuit
noted, this category of disability claims is subject to limitation. For a treatment's side
effects to constitute an impairment under the ADA, it is not enough to show just that the
potentially disabling medication or course of treatment was prescribed or recommended
by a licensed medical professional. Instead, following the Christian test, the medication
or course of treatment must be required in the prudent judgment of the medical
profession, and there must not be an available alternative that is equally efficacious that
lacks similarly disabling side effects. Christian, 117 F.3d at 1052. The concept of
disability connotes an involuntary condition, and if one can alter or remove the
impairment through an equally efficacious course of treatment, it should not be
considered disabling.
The court held that plaintiff did not meet these standards. His doctor stopped the mediations
because of their side effects, showing that the medications were not medically necessary, the
two-month period from the onset of side effects to the discontinuance of the medications was too
short to be disabling, and there was no showing of the unavailability of equally efficacious
courses of treatment without such side effects.
Lee v. City of Columbus, __ F.3d __, 24 A.D. Cases 257, 2011 WL 611904 (6th Cir. Feb.
23, 2011), reversed a Rehabilitation Act injunction against City policies requiring employees
returning from sick leave to provide a physicians note indicating the nature of the illness. The
court explained at pp. *7-*8 why it disagreed with the Second Circuits decision in Conroy v.
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New York State Dep't of Correctional Services, 333 F.3d 88 (2d Cir. 2003), that such inquiries
are impermissible because they may tend to reveal the existence of a disability:
The Conroy court's holding in this regard has yet to be followed by any of our
sister circuits, and we decline to apply it to the present circumstances. First, we do not
find the requirement that an employee provide a general diagnosis-or in this case, an even
less specific statement regarding the nature of an employee's illnessto be tantamount
to an inquiry as to whether such employee is an individual with a disability or as to the
nature or severity of the disability under 12112(d)(4)(A). By painting with such a
broad brush, and finding suspect any routine or general inquiry simply because it may
tend to reveal an employee's disability, the Conroy court has unnecessarily swept within
the statute's prohibition numerous legitimate and innocuous inquiries that are not aimed
at identifying a disability. Obviously, asking an employee whether he is taking
prescription drugs or medication . . . or questions seek[ing] information about illnesses,
mental conditions, or other impairments [an employee] has or had in the past[,] trigger
the ADA's (and hence the Rehabilitation Act's) protections. . . . Asking an employee
returning to work to describe the nature of his illness, however, is not necessarily a
question about whether the employee is disabled.
This is particularly problematic in the present context, which involves a claim
brought under the Rehabilitation Act, not the ADA. The mere fact that an employer,
pursuant to a sick leave policy, requests a general diagnosis that may tend to lead to
information about disabilities falls far short of the requisite proof that the employer is
discriminating solely on the basis of disability. . . .
(Emphases in original; citations omitted.)
3. Qualified Individuals
Kinneary v. City of New York, 601 F.3d 151, 22 AD Cases 1803 (2d Cir. 2010), reversed
the judgment for the ADA plaintiff because he was not qualified. Plaintiff was a sludge boat
captain who was subject to random drug testing. He had paruresis, or shy bladder syndrome,
and could not pass enough urine for the drug test within the three-hour time limit. He was given
an accommodation of having the unsuccessful drug test vacated if he provided within five days
an adequate note from his physician, meeting stated criteria, but the physicians note fell short of
the criteria.
Comment on Kinneary: Too many cases founder because busy physicians are
unaware of the need for a note meeting legal criteria foreign to them because the criteria are not
medical. Employees should not lose their jobs because their physicians dash off something that
is not adequate for the purpose. One remedy is to work with local medical societies to educate
physicians, but another is for employers to use a bit more common sense when dealing with this
common problem, and call the physicians to get the necessary information orally or to impress
upon the physician the need to address the stated criteria.
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4. Reasonable Accommodation
Reasonable Accommodation in Getting to Work: Colwell v. Rite Aid Corp., 602 F.3d
495, 22 AD Cases 1857 (3d Cir. 2010), affirmed in part and reversed in part the grant of
summary judgment to the ADA defendant. Plaintiff was blind in one eye, could not safely drive
to work at night, had no public-transportation option available to her, and requested an
accommodation of a transfer to the day shift. Defendant refused, saying it would not be fair to
other employees. The court held that defendant had a duty to accommodate plaintiffs difficulty
in getting to work.
Essential Function of Job: Gratzl v. Office of Chief Judges of 12th, 18th, 19th, and 22nd
Judicial Circuits, 601 F.3d 674, 22 AD Cases 1865 (7th Cir. 2010), affirmed the grant of
summary judgment to the ADA defendant. The plaintiff court reporter had been hired for the
specialist control room position, which she could perform, but the structure of the job was
changed to require all court reporters to rotate through the courtrooms. Because of her
incontinence problem, plaintiff could not work in courtrooms without frequent disruption of the
proceedings. The court stated at 680: Gratzl cannot prove that she is qualified for her current
job simply by citing evidence that she was qualified for a previous job, with different essential
functions, that has been eliminated. The court held: An employer need not create a new job or
strip a current job of its principal duties to accommodate a disabled employee. . . . Nor is there
any duty to reassign an employee to a permanent light duty position. Id. (citations omitted).
The court also held that her complaint should be dismissed because she rejected the defendants
offer of accommodation which the court held exceeded the requirements of the ADA.
F. Family and Medical Leave Act
1. Evidence Showing a Serious Health Condition
Schaar v. Lehigh Valley Health Services, Inc., 598 F.3d 156, 161, 15 Wage & Hour
Cas.2d (BNA) 1677 (3d Cir. 2010), vacated the grant of summary judgment to the FMLA
defendant. The court held:
Contrary to the Fifth and Ninth Circuits, however, we do not find lay testimony,
by itself, sufficient to create a genuine issue of material fact. Some medical evidence is
still necessary to show that the incapacitation was due to the serious health condition.
29 C.F.R. 825.114. This does not place an undue burden on employees because they
must present some medical evidence anyway to establish the inability to perform the
functions of the position. Id. 825.115. In contrast, allowing unsupported lay testimony
would place too heavy a burden on employers to inquire into an employee's eligibility for
FMLA leave based solely on the employee's self-diagnosed illness. For these reasons, we
hold that an employee may satisfy her burden of proving three days of incapacitation
through a combination of expert medical and lay testimony.
2. Rejecting a Fruit of the Poisonous Tree Argument
Schaaf v. Smithkline Beecham Corp., 602 F.3d 1236, 1241-42, 15 WH Cases 2d 1857
(11th Cir. 2010), affirmed the grant of summary judgment to the FMLA defendant. Plaintiff
was demoted while on maternity leave, as a result of an employer inquiry that only occurred
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because plaintiff was on maternity leave. The court held that the employer could rely on such
information:
Essentially, Schaaf's arguments rely on one basic premise: because GSK learned
of Schaaf's hostile temperament, ineffective management practices, and administrative
ineptitude while she was on leave, it follows that GSK would not have discovered these
derelictions had Schaaf not taken maternity leave. Thus, Schaaf concludes, her maternity
leave caused her demotion because, but for the leave, GSK would have had no reason to
demote her.

This argument, however, is legally incorrect and logically unsound. In an FMLA
interference case, courts examine not whether the FMLA leave was the but-for cause of
an employee's discharge or demotion, but rather whether it was the proximate cause.
(Emphasis in original; footnote omitted.)
G. Employment Status
Solis v. Laurelbrook Sanitarium and School, Inc., __ F.3d __, 2011 WL 1584356 (6th
Cir. April 28, 2011 (No. 09-6128), affirmed the lower courts rejection of the Secretary of
Labors claim that students were employees and the defendant engaged in impermissible use of
child labor. The court rejected the Wage & Hour Divisions six-part test of employment status in
training programs because, stating at p. *7:
We find the WHD's test to be a poor method for determining employee status in a
training or educational setting. For starters, it is overly rigid and inconsistent with a
totality-of-the-circumstances approach, where no one factor (or the absence of one factor)
controls. See Rutherford Food, 331 U.S. at 730 (We think, however, that the
determination of the relationship does not depend on such isolated factors but rather upon
the circumstances of the whole activity.). Moreover, at least one court has found the
test's all-or-nothing approach inconsistent with prior WHD interpretations and opinions
endorsing a flexible approach, thereby diminishing any persuasive force the test might be
entitled to under Skidmore. See Parker Fire, 992 F.2d at 1026. Furthermore, the test is
inconsistent with Portland Terminal itself, which, as outlined below, suggests that the
ultimate inquiry in a learning or training situation is whether the employee is the primary
beneficiary of the work performed. While the Secretary's six factors may be helpful in
guiding that inquiry, the Secretary's test on the whole is not.
The court added at p. *11:
To conclude, we hold that the proper approach for determining whether an
employment relationship exists in the context of a training or learning situation is to
ascertain which party de-rives the primary benefit from the relationship. Factors such as
whether the relationship displaces paid employees and whether there is educational value
derived from the relationship are relevant considerations that can guide the inquiry.
Additional factors that bear on the inquiry should also be considered insofar as they shed
light on which party primarily benefits from the relationship. The district court applied
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such a test. It did not err by doing so.
H. Whistleblower Protections
Graham County Soil and Water Conservation Dist. v. U.S. ex rel. Wilson, __ U.S. __, 130
S.Ct. 1396, 176 L.Ed.2d 225 (2010), held that the bar on filing qui tam actions under the False
Claims Act where the relators information has previously been publicly disclosed in
administrative proceedings applies to State and local, as well as Federal, administrative reports,
hearings, audits and investigations.
Bonds v. Leavitt, 629 F.3d 369, 381-82, 111 Fair Empl.Prac.Cas. (BNA) 171, 31 IER
Cases 1078 (4th Cir. 2011), reserved the question whether it would permit an official duties
exception to the protections of the WPA.
ACLU v. Holder, __ F.3d __, 2011 WL 1108252 (4th Cir. March 28, 2011) (No. 09-
2086) (4th Cir. 2011), held that the seal on a relators False Claims Act complaint, while the
government decided whether to go forward with the claim, does not violate the First
Amendment.
IV. Application of State Laws Against Discrimination
Schuler v. PricewaterhouseCoopers, LLP, 595 F.3d 370, 378, 108 Fair Empl.Prac.Cas.
(BNA) 795 (D.C. Cir. 2010), reversed the grant of summary judgment to defendant on plaintiffs
claims under the New York Human Rights Law. In a prior appeal, the D.C. Circuit had held
that, since defendant was headquartered in New York and the case involved promotions to
partner, the plaintiffs were entitled to the reasonable inference that the alleged policy of
promoting only younger persons to partner had been made in New York, and thus that the New
York Human Rights Law covered plaintiffs, although they were not residents of New York and
did not work in New York. On remand, the lower court dismissed the New York Human Rights
Law claim again. In this latest decision, the court stated: PwC says Schuler does not control
because it addressed only PwC's adoption and maintenance of a discriminatory policy, not the
discrete decision[ ] not to admit [Schuler] to partnership. To which we say: Pettifoggery and
piffle!

V. Theories and Proof
A. The Inferential Model
1. Caution
Caution to Be Sensible: Merritt v. Old Dominion Freight Line, Inc., 601 F.3d 289, 108
Fair Empl.Prac.Cas. (BNA) 1766, 93 E.P.D. 43,863 (4th Cir. 2010), reversed the grant of
summary judgment to the Title VII sex discrimination defendant. The court cautioned at 294-95:
Notwithstanding the intricacies of proof schemes, the core of every Title VII case remains the
same, necessitating resolution of the ultimate question of discrimination vel non. . . . As the
Supreme Court has explained, [t]he ultimate question in every employment discrimination case
involving a claim of disparate treatment is whether the plaintiff was the victim of intentional
discrimination. . . . Thus, [c]ourts must . . . resist the temptation to become so entwined in the
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intricacies of the [McDonnell Douglas] proof scheme that they forget that the scheme exists
solely to facilitate determination of the ultimate question of discrimination vel non. Id. at 295.
In holding that a jury could reasonably reject defendants explanation for firing plaintiff because
of a fully-healed ankle injury, the court stated:
Yet Old Dominion did not allow Merritt to return to work. It did not even leave
open the possibility that she could return to work at a later date, for example by providing
additional time for recovery or by waiting for Merritt's next doctor visit to resolve
ongoing concerns about the injury's effect on job performance. Instead, Old Dominion
deemed it necessary to order a full-blown fitness test to assess the effects of an injury that
was neither severe nor long-lasting and then used the results of that PAT to claim Merritt
was physically unable to perform the job she had been physically performing for months
prior to her minor injury. In doing so, Old Dominion terminated a good employee who,
pre-injury, performed her job ably and without complaint and who, post-injury, was both
willing and able to report to this same job for work. These facts, if believed, would allow
a trier of fact to think Old Dominion was simply looking for a reason to get rid of Merritt.
Id. at 296. The court also relied on the fact that the PAT was designed to test the entire body, not
just the injured ankle. The court also found reason to doubt that the asserted policy of requiring
a PAT even existed: First, the policy's existence is drawn into question by the conspicuous lack
of evidence in the record concerning it. As both parties agree, the policy has never been
memorialized in writing. And while an informal policy is no less a policy, it is curious that no
one at the company seemed to be familiar with even an informal policy. Of eight Old Dominion
employees asked about the matter, all eight denied ever having heard of the policy. Id. at 297-
98. At a later point in the decision, the court observed: It was only late in the game, on appeal
and perhaps not until oral argument before this court, that the policy really took shape. Id. at
298. The court observed: Evidence of a good employee record combines with evidence of an
impermissible company attitude to form a lethal concoction. Id. at 302.
2. Plaintiff Need Not Prove an Unlawful Motive Was the Sole Reason
Papelino v. Albany College of Pharmacy of Union University, 633 F.3d 81 (2d Cir.
2011), reversed in part and affirmed in part the grant of summary judgment against the Title IX
student plaintiffs. The court described the case succinctly at 84: In this case, plaintiff-appellant
Daniel Papelino alleges that he was sexually harassed by a professor when he was enrolled as a
student at the defendant-appellee Albany College of Pharmacy (the College). He complained
to the Associate Dean of Student Affairs. Shortly thereafter, the College accused Papelino and
his two roommates, plaintiff-appellant Michael Yu and plaintiff Carl Basile, of cheating on
exams. All three were disciplined, and Papelino and Basile were expelled. The court stated at
93: In any case, for Papelino to recover on his retaliation claim, he need only establish that
impermissible retaliation was one motive behind the initiation of the Honor Code charges against
himnot that it was the sole reason that any of the Panel members voted to find him guilty of
cheating. . . . From the evidence adduced, a reasonable jury surely could reach such a
conclusion.
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3. Reverse Discrimination
Stockwell v. City of Harvey, 597 F.3d 895, 901, 108 Fair Empl.Prac.Cas. (BNA) 1153
(7th Cir. 2010), affirmed the grant of summary judgment to the defendant. The court explained
its special articulation of the prima facie case when white plaintiffs are claiming discrimination:
The analysis of Title VII claims brought under McDonnell Douglas proceeds in
three stages. First, the plaintiff must establish a prima facie case. Ordinarily, the four
elements of the prima facie case in a failure-to-promote context are that the plaintiff (1)
was a member of a protected class; (2) that he was qualified for the position; (3) that he
was rejected for the position; and (4) that the position was given to a person outside the
protected class who was similarly or less qualified than he. . . . In a reverse discrimination
case such as this one, we have replaced the first element with a requirement that the
plaintiff show background circumstances suggesting that the employer discriminates
against the majority. . . .
(Citations omitted.)
4. Adverse Employment Actions
Pardo-Kronemann v. Donovan, 601 F.3d 599, 108 Fair Empl.Prac.Cas. (BNA) 1734
(D.C. Cir. 2010), reversed in part the grant of summary judgment against the Title VII
retaliation plaintiff. The court held that a lateral transfer with no loss of title, pay, status, or
benefits can be an adverse employment action where the duties are different and the duties of the
new position are less complex and challenging than those of the old position. Senior Judge
Williams dissented.
Maclin v. SBC Ameritech, 520 F.3d 781, 102 Fair Empl.Prac.Cas. (BNA) 1839, 20 AD
Cases 712 (7th Cir. 2008), affirmed the grant of summary judgment to defendant on plaintiffs
Title VII claims. The court held at 788 that denial of a discretionary bonus is not an adverse
employment action. The court also held that plaintiffs change in job title after her return from
leave was not an adverse employment action. The court stated at 789: An adverse employment
action must involve a material, substantive change in an employee's pay and responsibilities. . . .
An employee has not suffered an adverse employment action if her title changes but her position
remains the same in terms of responsibilities, salary, benefits and opportunities for promotion.
. . . Even a change in title that deprives an employee of prestige is insufficient if it lacks more
substantive effect. (Citations omitted.)
Comment of Richard Seymour on Maclin v. SBC Ameritech: The Seventh Circuit
standard would result in immunizing an employer that gave only discretionary bonuses, but had a
discount factor for race and sex under which the bonus as cut in half if it was to be awarded to a
woman, and cut by three-quarters if it was to be awarded to an African-American. While one
can understand the desire of the judiciary to resolve only issues they consider of importance, this
rule cannot be squared with the language of Title VII. There is no de minimis exception in the
statute.
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14
5. Adequacy of Employers Nondiscriminatory Reason
Schandelmeier-Bartels v. Chicago Park District, 634 F.3d 372, 111 Fair Empl.Prac.Cas.
(BNA) 739, 78 Fed.R.Serv.3d 1023 (7th Cir. 2011), reversed the district courts grant of
judgment as a matter of law, and reinstated the jury verdict on liability for the Caucasian Title
VII racial discrimination plaintiff. Defendant attempted to blame plaintiffs termination on the
admitted struggles she had had with some aspects of the job. However, the court held that the
jury could reasonably infer that the demonstration of racial bias by her African-American
supervisor expressed the true reason for her termination. The court stated at p. *2: At trial, the
Park District took pains to prove to the jury that Schandelmeier was far from a perfect employee.
She struggled with some of the administrative tasks required in her job, and Adams documented
those issues in several memos to Schandelmeier. Those memos and other examples of
Schandelmeier's administrative failings were presented to the jury. But Schandelmeier did not
claim to be a perfect employee, and perfection is not a requirement for protection under Title
VII.
6. Pretext
a. Definitions
Radentz v. Marion County, __ F.3d __, 2011 WL 1237931, 111 Fair Empl.Prac.Cas.
(BNA) 1676 (7th Cir. April 5, 2011) (No. 10-1523), reversed the grant of summary judgment to
the 1983 defendants. Plaintiffs were two white pathologists and their company, who had been
performing autopsies under contract to Marion County. They alleged that their contract was
terminated because defendants wished to replace them with African-Americans, not because of
the cost of the contract. The court stated:
In order to demonstrate that the reason for the termination was pretextual, the
plaintiffs must demonstrate that the nondiscriminatory reason was dishonest and that the
defendants' true reason was based on discriminatory intent. An employer's justification
may be considered pretextual where the plaintiff demonstrates that it had no basis in fact,
it did not actually motivate the decision to terminate employment, or it was insufficient to
motivate that decision. . . . The focus for the court is not whether the defendants' decision
was a wise one, but whether it was honestly believed. If a reasonable factfinder would
be compelled to believe [the defendants'] explanation, then the [defendants are] entitled
to summary judgment. . . .
Stockwell v. City of Harvey, 597 F.3d 895, 901-02, 108 Fair Empl.Prac.Cas. (BNA) 1153
(7th Cir. 2010), affirmed the grant of summary judgment to the defendant. The court explained
its articulation of the requirements of showing pretext:
In order to show pretext, a plaintiff must show that (1) the employer's non-
discriminatory reason was dishonest and (2) the employer's true reason was based on a
discriminatory intent. . . . If the plaintiff uses indirect evidence to meet his burden, he
must show that the employer's reason is not credible or factually baseless. . . . The
plaintiff also must provide evidence that supports the inference that the real reason was
discriminatory. . . . Although indirect proof of pretext is permissible, we must remember
2476

15
that, even if the business decision was unreasonable, pretext does not exist if the
decisionmaker honestly believed the nondiscriminatory reason. . . . This is because courts
are not superpersonnel department[s] charged with determining best business practices.
. . . Subjective evaluations of each candidate are entirely consistent with Title VII. . . .
b. Shifting Explanations
Pardo-Kronemann v. Donovan, 601 F.3d 599, 108 Fair Empl.Prac.Cas. (BNA) 1734
(D.C. Cir. 2010), reversed in part the grant of summary judgment against the Title VII
retaliation plaintiff. The decision-maker first admitted knowledge of plaintiffs prior EEO
complaints, and later denied knowledge of the complaints. He defended the transfer by saying
that plaintiff would be happier and more productive in the new office and that the office was so
important they needed A team people there, but also said that he would not have transferred
plaintiff if he had known about the EEO complaints because he would never send a problem
employee to another office. The court held that the combination of the decision-makers deceit
as to his knowledge and admission that prior EEO complaints would make a differences in his
decisions, permitted a jury to infer that the decision-maker was not trying to assemble an A
team in the new office, was not trying to make the plaintiff happier and more productive, and
was retaliating. The court also relied on the defendants failure to discuss the transfer with
plaintiff, the fact that there was no position description for the new position, and the fact that
plaintiffs new manager could not get an explanation for the transfer. Senior Judge Williams
dissented.
c. Employers Good-Faith Error Does Not Constitute Pretext
1078 (4th Cir. 2011), affirmed the dismissal of plaintiffs Title VII claim of discriminatory
termination. The court explained: Peterson articulated at length the reasons that he sustained
Moore's recommendation that Bonds be terminated. Bonds does not seriously argue that
Peterson did not believe his reasons warranted her termination. In fact, her only significant
argument regarding her unauthorized disclosure of agency information was that the disclosure
was uncovered only as the result of an improper investigation. . . . Neither of these points is of
any help to Bonds. Even if these investigations were improper or substandard, that does little to
help her establish that the reasons given for her termination were not the actual reasons, and it
certainly does not give rise to a reasonable inference that her race or gender was the real reason
for her termination.
d. Defendants Nonsensical Explanation Can Show Pretext
the cost of the contract. The contract allowed plaintiffs to perform autopsies for other counties at
the Marion County facilities, and obligated Marion County to provide supplies for all autopsies
conducted there. The court held that there was adequate evidence that defendants were
2477

16
legitimately concerned with the cost of those supplies, but that it was nonsensical to say that
this could have motivated defendants to exercise the contract clause allowing termination
without cause on six months notice, because the contract provision allowing out-of-county
autopsies also had a six-month trigger:
Those provisions indeed authorize the use of County facilities for out-of-county
autopsies. Provision K also, however, provides for the termination of that authority upon
six months' notice. Although the plaintiffs note in their opening brief that the defendants
had that ability to end the extra-county autopsies, the defendants do not explain why that
option was not exercised. At oral argument, counsel for the defendants asserted that they
did not exercise that option because they feared that if they were to do so, the plaintiffs
would find the contract too unprofitable and would exercise their option to terminate the
contract. Essentially, the defendants are asserting that they terminated the contract
because if they just modified it the plaintiffs might terminate it. That is nonsensical.
e. Business Judgment
the 1983 defendants. See the above description of this case. The court rejected defendants
argument that the court could not look closely at its proffered nondiscriminatory explanation
which the court termed nonsensical"because that would interfere with defendants business
judgment. It explained that its inquiry went not into whether defendants were making sound
decisions, but whether they were really motivated by the reason they gave:

In their briefs to this court, the defendants appear to believe that it is not our
province to inquire as to why they chose to terminate rather than modify the contract, and
that we cannot examine the wisdom of their business decisions. They further argue that
the plaintiffs brought a discrimination complaint based on the termination, not based on a
failure to renegotiate the contract. We do not examine the wisdom of business decisions,
but we do consider whether the asserted justification for the termination was honestly-
held. That determination is relevant to the claim of discriminatory termination. Here, the
defendants consistently have maintained that they were pleased with the quality of the
plaintiffs' services, and that they wished to retain the services of the plaintiffs, but that
they could not do so because the out-of-county autopsies rendered the contract too
expensive. They failed, however, to utilize the contract provision that would have
directly met both of those professed desiresit would have eliminated the extra expense
while retaining the services of the plaintiffs. Nor could the requirement of six months'
notice have been a factor in that choice, because in terminating the contract, the
defendants relied on the provision for terminating without cause, and gave the six
months' notice required by that provision. The failure to exercise the right under
provision K to eliminate the troublesome expenses, and to instead terminate the contract,
casts doubt on whether the expense was actually the reason for the termination.
2478

17
7. Defndants Failure to Exercise Normal Business Judgment
the cost of the contract. Defendants hired an African-American, Dr. Carter, to replace them.
The court held that the non-businesslike manner of her hiring helped to show retext:

Adding to the impact of that progression of events is the manner in which the
hiring decision was made. There is evidence indicating that no national search was
undertaken to fill the position and Ballew acknowledged that to her knowledge the
position was not even posted with the National Association of Medical Examiners.
Ballew indicated that Dr. Carter was the only individual interviewed in person for the
position of Chief Forensic Pathologist. Evidence further indicates that the Coroner's
Office did not receive letters of recommendation for Dr. Carter until after she was offered
the position. The sequence of events, and the manner in which it occurred, further
indicates that the decision to terminate the contract rather than exercise the provision K
rights was race-based.
* * *
Finally, the evidence indicated that the termination of the defendants' contract and
the hiring of Dr. Carter did not result in any financial benefit. Moreover, in response to
questioning at deposition, Ballew stated that she had conducted an analysis of forensic
pathology services prior to terminating the Forensic Pathology contract, and that the
analysis did not lead her to conclude that terminating Forensic Pathology's contract
would save the county money. The district court again dismissed the evidence of the lack
of financial savings based on the caution that we should not second-guess the defendants'
legitimate business decisions. That is an important proviso, but the financials are
nevertheless relevant to the question as to whether the cost of the contract was the true
reason for its termination. The lack of monetary savingsor even of an attempt to
achieve monetary savings with Dr. Carter's contractis relevant to the determination as
to whether the need for cost savings was the driving force in the decision to terminate the
contract.
8. Timing
VII racial discrimination plaintiff. Plaintiff observed what appeared to her to be an aunt striking
a small child with a belt, and made an official report of the incident. Her African-American
supervisor launched into a tirade about this being a standard type of discipline among African-
American families, and wrote a report emphasizing plaintiffs problems at work, accusing her of
making a baseless report, and omitting her own racial tirade. Plaintiff was subsequently fired.
2479

18
Defendant contended that one of the two possible decisionmakers could not have terminated
plaintiff because of the racist views of the biased supervisor, because she did not know of the
incident that gave rise to the expression of those views plaintiffs complaint until after the
decision to terminate plaintiff. The court rejected this argument, finding that the jury could infer
earlier knowledge from the reference to an earlier conversation in the last straw e-mail sent by
the biased supervisor to the possible decisionmaker. Id. at p. *7. The court similarly rejected
defendants argument that plaintiffs termination had been set in motion prior to the incident:
If McDonald really was the decisionmaker, and if her decision was already made
on July 24th, it would be more difficult to conclude that Adams's exhibition of racism on
July 31st tainted McDonald's already-made decision to fire Schandelmeier. The most
basic problem for the Park District is that the evidence does not point consistently in that
direction. McDonald herself described the decision as a joint one (and one in which
Adams certainly had input), but the supervisory group had not reached a joint
decision about Schandelmeier's employment as of July 24th. Both Williams and Adams
testified that they had no idea that Schandelmeier would be terminated until she was
actually terminated on August 1st. If McDonald had actually reached a decision before
thenespecially the joint decision she described in her testimonythe jury could
reasonably infer that she would have informed Schandelmeier's direct supervisors
Williams and Adams, who supposedly participated in the joint decisionof her
decision. Also, the language McDonald used in her CAM request e-mail is not absolute
and does not state that any decisionhers or anyone else'shad been made. The jury
could have reasonably read McDonald's message as only a request for information in case
a decision was made to terminate Schandelmeier. The jury had reasonable grounds for
discounting McDonald's testimony that her mind was made up on July 24th and that her
mind was the only one that counted.

Id.
B. Mixed Motives
1. The Decision in Gross
Gross v. FBL Financial Services, Inc., __ U.S. __, 129 S. Ct. 2343, 174 L. Ed. 2d 119,
106 Fair Empl.Prac.Cas. (BNA) 833 (2009), held that the Age Discrimination in Employment
Act does not allow mixed-motives analysis. In a 5-4 decision, the Court held that an ADEA
plaintiff must establish that age was the but for cause of the employment action at issue. The
Court explained at 2350-51:
Our inquiry therefore must focus on the text of the ADEA to decide whether it
authorizes a mixed-motives age discrimination claim. It does not. Statutory
construction must begin with the language employed by Congress and the assumption
that the ordinary meaning of that language accurately expresses the legislative purpose.
. . . . The ADEA provides, in relevant part, that [i]t shall be unlawful for an employer ...
to fail or refuse to hire or to discharge any individual or otherwise discriminate against
any individual with respect to his compensation, terms, conditions, or privileges of
employment, because of such individual's age. 29 U.S.C. 623(a)(1) (emphasis added).
2480

19
The words because of mean by reason of: on account of. 1 Webster's Third
New International Dictionary 194 (1966); see also 1 Oxford English Dictionary 746
(1933) (defining because of to mean By reason of, on account of (italics in
original)); The Random House Dictionary of the English Language 132 (1966) (defining
because to mean by reason; on account). Thus, the ordinary meaning of the ADEA's
requirement that an employer took adverse action because of age is that age was the
reason that the employer decided to act. See Hazen Paper Co. v. Biggins, 507 U.S.
604, 610, 113 S. Ct. 1701, 123 L. Ed. 2d 338 (1993) (explaining that the claim cannot
succeed unless the employee's protected trait actually played a role in [the employer's
decisionmaking] process and had a determinative influence on the outcome (emphasis
added)). To establish a disparate-treatment claim under the plain language of the ADEA,
therefore, a plaintiff must prove that age was the but-for cause of the employer's
adverse decision. See Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. ----, ----, 128
S.Ct. 2131, 2141-2142, 170 L.Ed.2d 1012 (2008) (recognizing that the phrase, by reason
of, requires at least a showing of but for causation (internal quotation marks omitted));
Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 63-64, and n. 14, 127 S.Ct. 2201, 167
L.Ed.2d 1045 (2007) (observing that [i]n common talk, the phrase based on indicates a
but-for causal relationship and thus a necessary logical condition and that the statutory
phrase, based on, has the same meaning as the phrase, because of (internal quotation
marks omitted)); cf. W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton
on Law of Torts 265 (5th ed. 1984) (An act or omission is not regarded as a cause of an
event if the particular event would have occurred without it).
It follows, then, that under 623(a)(1), the plaintiff retains the burden of
persuasion to establish that age was the but-for cause of the employer's adverse action.
Indeed, we have previously held that the burden is allocated in this manner in ADEA
cases. . . . And nothing in the statute's text indicates that Congress has carved out an
exception to that rule for a subset of ADEA cases. Where the statutory text is silent on
the allocation of the burden of persuasion, we begin with the ordinary default rule that
plaintiffs bear the risk of failing to prove their claims. . . . We have no warrant to depart
from the general rule in this setting.
(Footnote and citations omitted.)
2. Gross Does Not Bar ADEA Pattern and Practice Claims
Thompson v. Weyerhaeuser Co., 582 F.3d 1125, 1131 (10th Cir. 2009), rejected the
argument that Gross required the overruling of the Tenth Circuits pattern-and-practice ADEA
decision in Thiessen v. General Electric Capital Corp., 267 F.3d 1095 (10th Cir. 2001), cert.
denied, 536 U.S. 934 (2002). Thompson explained:
. . . Gross does not involve the pattern-or-practice procedure at issue here.
Moreover, the Court relied on the fact that Congress had amended Title VII to expressly
adopt a "motivating factor" standard for discrimination rather than a "but for" inquiry.
Here, Weyerhaeuser cannot point to an analogous difference in the language of Title VII
and the ADEA that establishes that the pattern-or-practice framework is proper under one
anti-discrimination statute but not the other.
2481

20
As we have noted, Title VII does contain a brief reference to pattern-or-practice
claims filed by the Attorney General, see 42 U.S.C. 2000e-6(a), while the ADEA
contains no similar provision. However, the pattern-or-practice burden shifting
framework at issue here is mentioned in neither statute. Instead, that framework has been
established by the courts. . . . Thus, in our view, the Supreme Court's decision in Gross
does not overrule circuit precedent that authorizes the application of the pattern-or-
practice framework in ADEA cases.
3. Gross and the Same Decision Defense
Mora v. Jackson Memorial Foundation, Inc., 597 F.3d 1201, 108 Fair Empl.Prac.Cas.
(BNA) 914 (11th Cir. 2010) (per curiam), grant of summary judgment to defendant in a mixed-
motives ADEA case because of the same decision defense, holding that Gross made both the
mixed-motives approach and the same-decision defense inapplicable, and holding that there was
enough circumstantial evidence of discrimination to preclude summary judgment.
4. 42 U.S.C. 1983 First Amendment Claims Cannot Involve Mixed
Motives
Fairley v. Andrews, 578 F.3d 518, 525-26, 29 IER Cases 1050 (7th Cir. 2009), petition
for certiorari filed, 78 USLW 3375 (U.S., Dec. 21, 2009) (No. 09-745), held that mixed motives
treatment is not available in 1983 cases based on the First Amendment, or in any other case
under Federal law where the statute does not specifically provide for mixed-motives treatment.
5. 42 U.S.C. 1981 Claims Can Involve Mixed Motives
Brown v. J. Kaz, Inc., 581 F.3d 175, 182, 107 Fair Empl.Prac.Cas. (BNA) 229 (3d Cir.
2009), strongly suggested in dictum that mixed-motives analysis should continue to be available
in 1981 cases:
In their written responses and at oral argument, the parties agreed that Gross, which
rejected the application of the Price Waterhouse framework to claims under the Age
Discrimination in Employment Act ("ADEA"), has no impact on this case. Accordingly,
we need not decide the impact, if any, of Gross on section 1981 here. We note only that
Gross focused on the statutory text of the ADEA and concluded that Congress' use of the
phrase "because of ... age" meant that "the plaintiff retains the burden of persuasion to
establish that age was the 'but-for' cause of the employer's adverse action." . . . Section
1981, however, does not include the "because of" language used in the ADEA. Instead,
section 1981 more broadly provides that "all persons ... shall have the same right ... to
make and enforce contracts ... as is enjoyed by white citizens." 42 U.S.C. 1981(a)
(emphasis added). Indeed, use of the Price Waterhouse framework makes sense in light
of section 1981's text. If race plays any role in a challenged decision by a defendant, the
plain terms of the statutory text suggest the plaintiff has made out a prima facie case that
section 1981 was violated because the plaintiff has not enjoyed "the same right" as other
similarly situated persons. However, if the defendant then proves that the same decision
2482

21
would have been made regardless of the plaintiff's race, then the plaintiff has, in effect,
enjoyed "the same right" as similarly situated persons.
6. Pre-ADAAA ADA Claims Cannot Involve Mixed Motives
Serwatka v. Rockwell Automation, Inc., 591 F.3d 957, 962, 22 A.D. Cases 1379 (7th Cir.
2010), held that under the pre-ADAAA version of the ADA, mixed-motives treatment is
unavailable because the liability clause of the ADA uses the same because of formulation as in
the ADEA, and there is no cross-reference in the body of the ADA itself to mixed-motives
treatment: Thus, in the absence of a cross-reference to Title VII's mixed-motive liability
language or comparable stand-alone language in the ADA itself, a plaintiff complaining of
discriminatory discharge under the ADA must show that his or her employer would not have
fired him but for his actual or perceived disability; proof of mixed motives will not suffice.
7. Post-ADAAA ADA Claims Still Open for Decision
Serwatka v. Rockwell Automation, Inc., 591 F.3d 957, 962 n.1, 22 A.D. Cases 1379 (7th
Cir. 2010), stated in dictum that it was not necessary to decide whether the on the basis of
liability language in the ADAAA will allow mixed-motives treatment in a case subject to the
ADAAA.
8. FMLA Retaliation Claims Can Involve Mixed Motives
Hunter v. Valley View Local Schools, 579 F.3d 688, 691-92, 15 Wage & Hour Cas.2d
(BNA) 321 (6th Cir. 2009), held that mixed-motives treatment remains available under the
FMLA for retaliation claims, because the regulations make clear that using FMLA leave as a
negative factor is enough for liability.
9. LMRDA Claims Cannot Involve Mixed Motives
Serafinn v. Local 722, 597 F.3d 908, 187 L.R.R.M. (BNA) 3594 (7th Cir. 2010), held
that mixed-motive claims cannot be brought under the Labor Management Reporting and
Disclosure Act.
C. Constructive Discharge
1. Required Element: Intent to Force the Employee to Quit
Trierweiler v. Wells Fargo Bank, __ F.3d __, 2011 WL 1327991 (8th Cir. April 8, 2011)
(No. 10-1343), affirmed the grant of summary judgment to the Title VII defendant. The court
stated: To prove a claim of constructive discharge under Title VII, Trierweiler must show that
a reasonable person would have found the conditions of employment intolerable and that [Wells
Fargo] either intended to force [her] to resign or could have reasonably foreseen that [she] would
do so as a result of its actions. Smith v. Fairview Ridges Hosp., 625 F.3d 1076, 1087 (8th Cir.
2010). Plaintiff had used most of her personal time off, and had been warned about missing
more work. She then went on maternity leave, and did not return. The court held that she failed
2483

22
to give the defendant a chance to work something out to accommodate her need to take time off
for maternity, and never contacted Human Resources.
Lisdahl v. Mayo Foundation, 633 F.3d 712, 190 L.R.R.M. (BNA) 2325 (8th Cir. 2011),
affirmed the grant of summary judgment to the USERRA defendant. The court held at p. *4 that
an employers intention to force the employee to quit is an element of a USERRA constructive-
discharge claim. A constructive discharge occurs when an employer deliberately renders an
employee's working conditions intolerable with the intent of forcing the employee to leave the
employment. . . . A plaintiff can satisfy the intent requirement by demonstrating that the
resignation was a reasonably foreseeable consequence of the employer's actions. Id. The
intolerability of the working conditions is judged by an objective standard; conditions are
considered intolerable if a reasonable employee would find them as such. Id. The court held
that there was no evidence of anti-military bias, let alone evidence of an intent to force plaintiff
to quit. The evidence showed at best a personality conflict between Johnson and Lisdahl.
However, as in Title VII, [p]etty slights and minor annoyances in the workplace, as well as
personality conflicts and snubs by co-workers, are not actionable. Id. at p. *5.
Comment of Richard Seymour on Requiring Proof of the Employers Intent to
Force the Employee to Quit: This standard has previously been adopted by some other
Circuits, such as the Sixth Circuit in Ford v. General Motors Corp., 305 F.3d 545, 554, 89 Fair
Empl.Prac.Cas. (BNA) 1721 (6th Cir. 2002). Plaintiffs lawyers should resist this pernicious
standard, because it has no logical relationship to the law. A simple hypothetical can make it
clear to the Court: An employer can intentionally harass an employee mercilessly because of
the employees gender, race, or religion, or intentionally tolerate such harassment by others,
because the employer finds it amusing or because it allows the employer to indulge in hostility
against a person with hated characteristics. The employer may not want the employee to leave,
because it wants to continue the harassment. Can any reasonable person doubt, however that
the harassment may reach a point at which any reasonable employee would be compelled to
leave?
2. Employees Who Bolt Too Soon Have No Claim
affirmed the grant of summary judgment to the USERRA defendant. The court held at p. *5:
Further, constructive discharge claims fail as a matter of law where the employee
has not given the employer a reasonable opportunity to correct the intolerable condition
before the employee quits. See Anda v. Wickes Furniture Co., 517 F.3d 526, 534 (8th
Cir.2008); Knowles, 142 F.3d at 1086 (noting that an employee's duty to act in a
reasonable manner includes an obligation not to assume the worst and jump to
conclusions); Tidwell v. Meyer's Bakeries, Inc., 93 F.3d 490, 494 (8th Cir.1996) (An
employee who quits without giving his employer a reasonable chance to work out a
problem has not been constructively discharged.). In this case, Lisdahl took medical
leave and never returned to Gold Cross. During his employment at Gold Cross after
returning from Iraq, he never filed any grievances or voiced any concerns to Gold Cross
about the alleged mistreatment by Johnson. Instead, Lisdahl simply resigned, offering a
reason in sworn statements that is inconsistent with the explanation he now submits. The
district court did not err in ruling that Lisdahl was not constructively discharged.
2484

23
3. If Most Employees Stay, the Claim Fails
Ahern v. Shinseki, 629 F.3d 49, 59, 110 Fair Empl.Prac.Cas. (BNA) 1785 (1st Cir. 2010),
affirmed the grant of summary judgment to the Title VII defendant on plaintiffs constructive-
discharge claims. The court held that there was no evidence that plaintiffs abrasive manager
was motivated by bias. Toiling under a boss who is tough, insensitive, unfair, or unreasonable
can be burdensome, but Title VII does not protect employees from the ordinary slings and
arrows that suffuse the workplace every day. . . . Nevertheless, generally disagreeable behavior
and discriminatory animus are two different things. (Citation omitted.) The court added that
the fact that most employees stayed working for the manager rather than leaving undermined
their claim: Indeed, the vast majority of the employees who worked under Khatib, male and
female, were subjected to the same treatment and chose to stay. This fact underscores the
absence of any foundation for a claim of constructive discharge. (Citation omitted.)
D. Retaliation
1. Associational Discrimination
Thompson v. North American Stainless, LP, __ U.S. __, 131 S.Ct. 863, 111 Fair
Empl.Prac.Cas. (BNA) 385 (2011) (Scalia, J.), reversed the Sixth Circuit, and held that Title VII
protects employees from being fired because their fiances or family members filed EEOC
charges under the statute. The Court stated: We think it obvious that a reasonable worker might
be dissuaded from engaging in protected activity if she knew that her fiance would be fired. Id.
at 868. The Court continued:
We must also decline to identify a fixed class of relationships for which third-
party reprisals are unlawful. We expect that firing a close family member will almost
always meet the Burlington standard, and inflicting a milder reprisal on a mere
acquaintance will almost never do so, but beyond that we are reluctant to generalize. As
we explained in Burlington, 548 U.S., at 69, 126 S.Ct. 2405, the significance of any
given act of retaliation will often depend upon the particular circumstances. Given the
broad statutory text and the variety of workplace contexts in which retaliation may occur,
Title VII's antiretaliation provision is simply not reducible to a comprehensive set of clear
rules. We emphasize, however, that the provision's standard for judging harm must be
objective, so as to avoi[d] the uncertainties and unfair discrepancies that can plague a
judicial effort to determine a plaintiff's unusual subjective feelings. Id., at 68-69, 126
S.Ct. 2405.
Id. at 868-69. The Court held that the question whether Thompson could sue under Title VII was
more difficult. Id. at 869. It held that the statutory phrase person aggrieved did not reach as
far as Article III, but that it included persons within the zone of interests protected by the statute.
Quoting the language of the Administrative Procedure Act, 5 U.S.C. 551 et seq. It continued:
The Administrative Procedure Act . . . authorizes suit to challenge a federal
agency by any person ... adversely affected or aggrieved ... within the meaning of a
relevant statute. . . . We have held that this language establishes a regime under which a
plaintiff may not sue unless he falls within the zone of interests' sought to be protected
2485

24
by the statutory provision whose violation forms the legal basis for his complaint. . . .
We have described the zone of interests test as denying a right of review if the
plaintiff's interests are so marginally related to or inconsistent with the purposes implicit
in the statute that it cannot reasonably be assumed that Congress intended to permit the
suit. . . . We hold that the term aggrieved in Title VII incorporates this test, enabling
suit by any plaintiff with an interest arguably [sought] to be protected by the statutes,
. . . while excluding plaintiffs who might technically be injured in an Article III sense but
whose interests are unrelated to the statutory prohibitions in Title VII.

Applying that test here, we conclude that Thompson falls within the zone of
interests protected by Title VII. Thompson was an employee of NAS, and the purpose of
Title VII is to protect employees from their employers' unlawful actions. Moreover,
accepting the facts as alleged, Thompson is not an accidental victim of the retaliation
collateral damage, so to speak, of the employer's unlawful act. To the contrary, injuring
him was the employer's intended means of harming Regalado. Hurting him was the
unlawful act by which the employer punished her. In those circumstances, we think
Thompson well within the zone of interests sought to be protected by Title VII. He is a
person aggrieved with standing to sue.
Id. at 870 (citations omitted). Justice Ginsberg, joined by Justice Breyer, concurred, relying on
the EEOC Compliance Manual. Id. at 870-71.
Comment by Richard Seymour on Thompson v. North American Stainless: The
Court seems to be looking for ways to integrate civil rights law with existing bodies of law having
nothing to do with civil rights. It would have been difficult to predict that the Court would draw its
standard from the Administrative Procedures Act, and it is unclear what difference that standard
is supposed to make. Will this zone of interests analysis now apply to all anti-retaliation
statutes? Implied prohibitions against retaliation? Whistleblower laws? Unfair labor practice
charges?
2. Protected Conduct
Kasten v. Saint-Gobain Performance Plastics, No. 09-834 (Supreme Court, argued
October 13, 2010). The case is on certiorari from the Eighth Circuit decision reported at 585
F.3d 310 (8th Cir. 2009). The question presented is:
Is an oral complaint of a violation of the Fair Labor Standards Act protected conduct
under the anti-retaliation provision, 29 U.S.C. 215(a)(3)?
Crawford v. Metropolitan Government of Nashville and Davidson County, __ U.S. __,
129 S. Ct. 846, 172 L. Ed. 2d 650, 105 Fair Empl.Prac.Cas. (BNA) 353 (2009), reversed the
decision of the Sixth Circuit and held that employees who give evidence of harassment in an
internal investigation in response to the employers questions, without having come forward on
their own and without any EEOC charge having been filed, are protected by the opposition
clause of 704(a) of Title VII. Plaintiff and two other women described harassment by
Employee Human Relations Director Hughes. No action was taken against Hughes, but all three
women were fired. Plaintiff was assertedly fired for embezzlement. The Court stated: There is,
then, no reason to doubt that a person can oppose by responding to someone else's question
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25
just as surely as by provoking the discussion, and nothing in the statute requires a freakish rule
protecting an employee who reports discrimination on her own initiative but not one who reports
the same discrimination in the same words when her boss asks a question. Justices Alito and
Thomas concurred in the judgment.
1078 (4th Cir. 2011), affirmed the dismissal of plaintiffs Title VII retaliation claim because the
conduct of which she complained did not involve an employment practice. Dr. Bonds had
complained of the unconsented retention of cell lines from blood samples taken for research on
sickle cell anemia. The court held that private employees would not be protected from such
retaliation: Title VII is not a general bad acts statute, however, and it does not prohibit private
employers from retaliating against an employee based on her opposition to discriminatory
practices that are outside the scope of Title VII. Id. The court stated it had little doubt that
Congress intended to prohibit retaliation against Federal employees despite the lack of a
reference to retaliation in 42 U.S.C. 2000e-16, but added: Nonetheless, we see no basis for
concluding that conduct of the type at issue herewhich would not be protected by 2000e-3(a)
if undertaken by a private employeeshould be protected by 2000e-16(a). Id.
Dawson v. Entek Intl, 630 F.3d 928, 936-37, 111 Fair Empl.Prac.Cas. (BNA) 306 (9th
Cir. 2011), reversed the grant of summary judgment to defendant, and held, inter alia, that a
complaint of discrimination based on sexual orientation is protected activity for purposes of Title
VIIs anti-retaliation provision. The court affirmed the grant of summary judgment on the
underlying Title VII sexual harassment claim because plaintiff contended that he did not have
effeminate characteristics, but reversed the grant of summary judgment on the underlying
Oregon sexual-orientation harassment claim. Id. at 937-38.
a. Power to Correct the Problem is Not a Factor
Cases 1078 (4th Cir. 2011), reversed the dismissal of plaintiffs claims under the Whistleblower
Protection Act, 5 U.S.C. 2302(b)(8). The district court had dismissed plaintiffs claim that her
she made a protected disclosure of wrongdoing to Dr. Elizabeth Nabel, who was the Director of
the NIHs National Heart, Lung, and Blood Institute, and her third-level supervisor, in part
because Dr. Nabel did not have authority to provide a remedy for the wrongdoing. The court
relied on the amendment to the WPA changing the coverage language from a disclosure to
any disclosure, and restrictively read Hooven-Lewis v. Caldera, 249 F.3d 259, 276 (4th Cir.
2001), as holding only that a disclosure to the wrongdoer is nor a disclosure to anyone.
b. Official Job Duties, and Plaintiff Overstepping Perceived
Bounds
1078 (4th Cir. 2011), reversed the dismissal of plaintiffs claims under the Whistleblower
Protection Act, 5 U.S.C. 2302(b)(8). The district court had dismissed plaintiffs claim that her
she made a protected disclosure of wrongdoing to Dr. Elizabeth Nabel, who was the Director of
the NIHs National Heart, Lung, and Blood Institute, and her third-level supervisor, in part
because the disclosure was part of her official job duties. Reversing, the court of appeals
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26
reserved the question whether it would permit such an exception to the protections of the WPA,
and held that in any event plaintiffs superiors view that she overstepped the bounds of her job,
or was unprofessional, in reporting wrongdoing to Dr. Nabel, were enough to defeat summary
judgment on the question whether the report was outside the duties of her job.
3. Defendants Ignorance of Protected Conduct
Rivera-Coln v. Mills, 635 F.3d 9, 111 Fair Empl.Prac.Cas. (BNA) 737 (1st Cir. 2011),
affirmed the grant of summary judgment to the Title VII retaliation defendant. Plaintiff made an
anonymous complaint, and was subsequently suspended for two days. The court affirmed the
lower courts determination that this could not have been retaliatory, because plaintiff did not
rebut defendants showing that she was suspended before the supervisors who imposed the
suspension learned she was the source of the anonymous complaint. Id. at p. *3.
student plaintiffs. The court described the case succinctly at p. *1: In this case, plaintiff-
appellant Daniel Papelino alleges that he was sexually harassed by a professor when he was
enrolled as a student at the defendant-appellee Albany College of Pharmacy (the College). He
complained to the Associate Dean of Student Affairs. Shortly thereafter, the College accused
Papelino and his two roommates, plaintiff-appellant Michael Yu and plaintiff Carl Basile, of
cheating on exams. All three were disciplined, and Papelino and Basile were expelled. The
court rejectedas irrelevantdefendants arguments that they did not know of plaintiffs
protected activity:
Even if the agents who carried out the adverse action did not know about the
plaintiff's protected activity, the knowledge requirement is met if the legal entity was
on notice. . . . Neither this nor any other circuit has ever held that, to satisfy the
knowledge requirement, anything more is necessary than general corporate knowledge
that the plaintiff has engaged in a protected activity.

While the individual agents' claims of unawareness of the protected activity are
relevant to the jury's determination of causality, a jury is entitled to disregard such claims
if they are unreliable. Further, while lack of knowledge on the part of particular agents
who carried out the adverse action is evidence of lack of causal connection, a plaintiff
may counter with evidence that the decision-maker was acting on orders or
encouragement of a superior who did have the requisite knowledge. . . . In a retaliation
case, a plaintiff is only required to prove that a retaliatory motive play[ed] a part in
adverse [ ] actions toward [him], whether or not it was the sole cause. . . .
Id. at 92.
4. How Specific Must Defendants Knowledge of Protected Conduct Be?
Cases 1078 (4th Cir. 2011), reversed the dismissal of plaintiffs claims under the Whistleblower
Protection Act, 5 U.S.C. 2302(b)(8). The court of appeals held that there was sufficient
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27
circumstantial evidence from which a jury could infer that the decisionmaker, Dr. Peterson, was
aware of plaintiffs protected disclosure to the Office of Special Counsel. The court held that a
combination of several factors was sufficient: (1) Dr. Petersons knowledge of the investigation
since he was one of the persons OSC interviewed; (2) Dr. Petersons knowledge that she was the
only person objecting to the retention of cell lines at issue, (3) another officials learning of her
involvement, (4) that officials reluctance to admit his knowledge of her involvement, (5) the
jurys ability to infer that that official had told Dr. Peterson, and (6) even without that persons
knowledge, plaintiffs poor relationship with Dr. Peterson, giving Dr. Peterson reason to believe
she would blow the whistle on his involvement. It stated: We agree with Bonds that she created
a genuine issue of material fact concerning whether Peterson knew at the time he terminated her
that she had blown the whistle to the OSC. Id. at 383.
5. Are Retaliatory Counterclaims Actionable?
a. Supreme Court Context
There has been a great deal of recent discussion on plaintiffs attorneys list-serves on
whether some or all counterclaims against the plaintiff by the defendant employer or its officials
is actionable retaliation, or can constitute a conspiracy to deprive the plaintiff of her or his civil
rights under 42 U.S.C. 1985(3). An analogous situation arose when defendants in cases based
on legislative rights counterclaimed that the plaintiff had lobbied for and obtained the legislation
in order to create barriers to competition, and that the lawsuit based on the resulting legislation
was unlawful as a breach of the antitrust laws. One major roadblock to such claims is the First
Amendment right of the employer and its officials to petition the government, including the
courts, for relief.
Eastern R. R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 138
(1961), rejected the effort of trucking companies to declare that the railroads successful
campaign to obtain legislation favoring railroads over truckers was a violation of the Sherman
Act. The Court held that such a construction of the Sherman Act would raise important
constitutional questions. The right of petition is one of the freedoms protected by the Bill of
Rights, and we cannot, of course, lightly impute to Congress an intent to invade these freedoms.
The Court held that a motive to obtain competitive advantage, and to place competitors at a
disadvantage, did not rob the effort of its protection under the First Amendment. Id. at 138-40.
The Court explained:
The right of the people to inform their representatives in government of their desires with
respect to the passage or enforcement of laws cannot properly be made to depend upon
their intent in doing so. It is neither unusual nor illegal for people to seek action on laws
in the hope that they may bring about an advantage to themselves and a disadvantage to
their competitors. This Court has expressly recognized this fact in its opinion in United
States v. Rock Royal Co-op., where it was said: If ulterior motives of corporate
aggrandizement stimulated their activities, their efforts were not thereby rendered
unlawful. If the Act and Order are otherwise valid, the fact that their effect would be to
give cooperatives a monopoly of the market would not violate the Sherman Act * * *.
Indeed, it is quite probably people with just such a hope of personal advantage who
provide much of the information upon which governments must act. A construction of the
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28
Sherman Act that would disqualify people from taking a public position on matters in
which they are financially interested would thus deprive the government of a valuable
source of information and, at the same time, deprive the people of their right to petition in
the very instances in which that right may be of the most importance to them. We reject
such a construction of the Act and hold that, at least insofar as the railroads' campaign
was directed toward obtaining governmental action, its legality was not at all affected by
any anticompetitive purpose it may have had.
Id. at 139-40. Simultaneously, the Court recognized an exception for sham activity:
There may be situations in which a publicity campaign, ostensibly directed toward
influencing governmental action, is a mere sham to cover what is actually nothing more
than an attempt to interfere directly with the business relationships of a competitor and
the application of the Sherman Act would be justified. But this certainly is not the case
here.
Id. at 143. The reason it was not the case was that it was the campaign really was intended to
influence governmental action, and was highly successful. Id.
The Supreme Court again addressed this question in Professional Real Estate Investors,
Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60-61 (1993). It stated:
We now outline a two-part definition of sham litigation. First, the lawsuit must
be objectively baseless in the sense that no reasonable litigant could realistically expect
success on the merits. If an objective litigant could conclude that the suit is reasonably
calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an
antitrust claim premised on the sham exception must fail.FN5/ Only if challenged
litigation is objectively meritless may a court examine the litigant's subjective motivation.
Under this second part of our definition of sham, the court should focus on whether the
baseless lawsuit conceals an attempt to interfere directly with the business relationships
of a competitor, Noerr, supra, 365 U.S., at 144 81 S.Ct., at 533 (emphasis added),
through the use [of] the governmental process-as opposed to the outcome of that
process-as an anticompetitive weapon, Omni, 499 U.S., at 380, 111 S.Ct., at 1354
(emphasis in original). This two-tiered process requires the plaintiff to disprove the
challenged lawsuit's legal viability before the court will entertain evidence of the suit's
economic viability. Of course, even a plaintiff who defeats the defendant's claim to
Noerr immunity by demonstrating both the objective and the subjective components of a
sham must still prove a substantive antitrust violation. Proof of a sham merely deprives
the defendant of immunity; it does not relieve the plaintiff of the obligation to establish
all other elements of his claim.
_______
FN5/ A winning lawsuit is by definition a reasonable effort at petitioning for
redress and therefore not a sham. On the other hand, when the antitrust defendant has
lost the underlying litigation, a court must resist the understandable temptation to
engage in post hoc reasoning by concluding that an ultimately unsuccessful action must
have been unreasonable or without foundation. Christiansburg Garment Co. v. EEOC,
434 U.S. 412, 421-422, 98 S.Ct. 694, 700, 54 L.Ed.2d 648 (1978). Accord, Hughes v.
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29
Rowe, 449 U.S. 5, 14-15, 101 S.Ct. 173, 178-179, 66 L.Ed.2d 163 (1980) (per curiam).
The court must remember that [e]ven when the law or the facts appear questionable or
unfavorable at the outset, a party may have an entirely reasonable ground for bringing
suit. Christiansburg, supra, 434 U.S., at 422, 98 S.Ct., at 701.
(Emphasis in original.)
The Court applied this principle to the National Labor Relations Act in Bill Johnson's
Restaurants, Inc. v. N.L.R.B., 461 U.S. 731, 743, 113 L.R.R.M. (BNA) 2647 (1983), holding that
retaliatory motive did not matter if the retaliatory claim or counterclaim was well-founded: The
filing and prosecution of a well-founded lawsuit may not be enjoined as an unfair labor practice,
even if it would not have been commenced but for the plaintiff's desire to retaliate against the
defendant for exercising rights protected by the Act. The Court continued:
Although it is not unlawful under the Act to prosecute a meritorious action, the
same is not true of suits based on insubstantial claimssuits that lack, to use the term
coined by the Board, a reasonable basis. Such suits are not within the scope of First
Amendment protection:
The first amendment interests involved in private litigationcompensation for
violated rights and interests, the psychological benefits of vindication, public
airing of disputed factsare not advanced when the litigation is based on
intentional falsehoods or on knowingly frivolous claims. Furthermore, since
sham litigation by definition does not involve a bona fide grievance, it does not
come within the first amendment right to petition.
Just as false statements are not immunized by the First Amendment right to freedom of
speech . . . baseless litigation is not immunized by the First Amendment right to petition.
(Citations and footnote omitted.) The Court held that the NLRB could not treat an ongoing
action as baseless and enjoin it if its merit turned on the credibility of witnesses, or presented a
genuine issue of material fact. Id. at 744-45. When the litigation was completed, however, a
different standard applies. If the employer wins on its claim, the claim cannot be considered
baseless. Id. at 747. If the employer loses or withdraws the claim, the Board would be
warranted in taking that fact into account in determining whether the suit had been filed in
retaliation for the exercise of the employees' 7 rights. If a violation is found, the Board may
order the employer to reimburse the employees whom he had wrongfully sued for their attorneys'
fees and other expenses. It may also order any other proper relief that would effectuate the
policies of the Act. Id. (citation and footnote omitted).
Finally, in BE & K Const. Co. v. N.L.R.B., 536 U.S. 516, 170 L.R.R.M. (BNA) 2225
(2002), the Court held that the NLRB could not declare unlawful any unsuccessful suit filed
because of a retaliatory motive, but only those that were objectively baseless.
b. Courts of Appeals
Bryant v. Military Department of Mississippi, 597 F.3d 678, 691-92, 30 IER Cases 654
(5th Cir. 2010), cert. denied, __ U.S. __, 131 S.Ct. 287, 178 L.Ed.2d 141 (2010), affirmed the
2491

30
dismissal of the plaintiff airmans whistleblower lawsuit against the Mississippi Air National
Guard and several of its officials. The court held that suits brought by individual defendants
against plaintiff were not objectively baseless, and thus could not be violations of 1985(3),
without having to consider the issue of retaliatory motive:
Accordingly, we find the narrow holding of BE & K inapposite to the issues
raised in this case. Rather, the standard to be applied to the allegedly retaliatory litigation
is the Professional Real Estate Investors test, requiring a finding that the petitioning
activity is objectively baseless, before subjective intent is considered. This test, rather
than Bill Johnson's, has been extended outside the area of antitrust to other contexts and
we find it appropriate here.
(Footnote omitted.) The court also held that the burden of showing objective baselessness was
on the plaintiff. Id. at 692.
6. What Other Conduct is Actionable?
a. Request for Change in Office Space Not Actionable
Lockridge v. The University of Maine System, 597 F.3d 464, 108 Fair Empl.Prac.Cas.
(BNA) 1160 (1st Cir. 2010), affirmed the grant of summary judgment to the Title VII sex
discrimination defendant. The court held that the denial of plaintiffs request for a change in
office space could not be actionable, where plaintiffs resulting office space was the same as for
many of her co-workers.
b. Two Days Loss of Pay Actionable
Young-Losee v. Graphic Packaging Intl, Inc., 631 F.3d 909, 111 Fair Empl.Prac.Cas.
(BNA) 488 (8th Cir. 2011), reversed the grant of summary judgment to the Title VII sexual
harassment and retaliation defendant. The court stated at p. *2:
Young-Losee presented direct evidence that she was terminated in retaliation for
filing a formal complaint of harassment. At the May 6 meeting, plant supervisor Shelley
wadded up her complaint, called it total bullshit, threw it in the garbage can, told her to
leave, and said he never wanted to see her again. These facts are direct evidence of a
causal link between the filing of the complaint and her firing.
The lower court held there was no materially adverse employment action because she was paid
through May 15, and an HR official who performed an investigation told her she had not been
fired, and that she could return to work. The court of appeals held: Being fired for making a
discrimination complainteven if rescinded after two daysmight well dissuade a reasonable
employee from making a complaint of harassment. Id. at p. *3.

c. Burlington Northern Standard Unavailable under USERRA
affirmed the grant of summary judgment to the USERRA defendant. The court held at p. *7 that
USERRA retaliation claims are limited to adverse employment actions, unlike Title VII
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31
retaliation claims: Unlike the situation in Burlington, no comparable textual distinction exists
between USERRA's anti-discrimination provision, 38 U.S.C. 4311(a), and the anti-retaliation
provision, 4311(b). USERRA's anti-retaliation provision expressly limits actionable harm to
adverse employment action, not the broader discrimination prohibited by Title VII's anti-
retaliation provision. The court held that the myriad of assertedly adverse employment actions
alleged by two plaintiffs amounted to no more than petty irritations and slights. Id. at pp. *8-*9.
7. Causation
a. Following Standard Practices Precludes Causation
Rivera-Coln v. Mills, 635 F.3d 9, 111 Fair Empl.Prac.Cas. (BNA) 737 (1st Cir. 2011),
affirmed the grant of summary judgment to the Title VII retaliation defendant. Plaintiff made an
anonymous complaint, was subsequently notified of an option to transfer to Philadelphia or to
take a severance package, failed to decide within the extended time period allowed by the
employer, and was terminated. The court held that plaintiff could not claim retaliation as a cause
of the transfer or termination, because the options and consequences had been negotiated with
the employee union, and had been applied to large numbers of people.
b. Temporal Proximity
Dawson v. Entek Intl, 630 F.3d 928, 936-37, 111 Fair Empl.Prac.Cas. (BNA) 306 (9th
Cir. 2011), reversed the grant of summary judgment to defendant on plaintiffs Title VII
retaliation claim, holding that evidence of temporal proximity was enough to show causation.
The court explained: Viewing the facts in the light most favorable to Dawson, the protected
activity occurred at most two days before the discharge and the treatment of Dawson was a topic
during both the protected activity and the discharge, as explained by the supervisor and human
resources person who fired him. The gravity of Dawson's complaints coupled with the time
frame are such that a reasonable trier of fact could find in favor of Dawson on his retaliation
claim. The district court erred in resolving this claim by summary judgment. Id. at 937
E. Circumstantial Evidence
Lockridge v. The University of Maine System, 597 F.3d 464, 108 Fair Empl.Prac.Cas.
(BNA) 1160 (1st Cir. 2010), affirmed the grant of summary judgment to the Title VII sex
discrimination defendant. Plaintiff was denied a pay increase because of a lack of scholarly
articles. The court rejected her proposed comparator because he was not on a scholarly track like
plaintiff, and thus was not expected to write as many scholarly articles as plaintiff.
F. Proving Truisms to be Inapplicable
1. Same Decisionmakers Can Still Discriminate
performing autopsies under a contract to Marion County. The contract was entered into by
defendant Ackles, who was under pressure to arrange quickly for the continuation of autopsies
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that Indiana University was no longer performing. Plaintiffs alleged that their contract was
terminated several months later because defendants wished to replace them with African-
Americans, not because of the stated reason, the cost of the contract. Throughout the opinion,
the court emphasized the need for a quick arrangement to keep autopsies continuing, and held
that this was not inconsistent with the same officials later terminating their contract so that he
could then bring more African-Americans on board. See the quoted part of the decision in the
discussion below on Biased Statements Do Not Have a Short Probative Shelf Life.
G. Discriminatory Statements
1. Biased Statements Do Not Have a Short Probative Shelf Life
the cost of the contract. The contract allowed plaintiffs to perform autopsies for other counties at
the Marion County facilities, and obligated Marion County to provide supplies for all autopsies
conducted there. The lower court held that racially biased statements by defendants to an official
named Linehan were stray and not probative because they were made before the County
entered into a five-year contract with plaintiffs. The court of appeals held that defendants were
under an immediate need to arrange for autopsies, to replace the services the University of
Indiana had been performing, and that the bias revealed by the bigoted statements did not expire
with the simple passage of time:
The district court was dismissive of the relevance of those statements, noting that
they occurred well before the Forensic Pathology contract was signed and characterizing
them as mere stray comments unrelated to the decision to terminate Forensic Pathology.
The timing of the comments is relevant, and the court properly noted that after indicating
the desire to hire an AfricanAmerican forensic pathologist in January 2005, Ackles
nevertheless entered into a contract with the plaintiffs who are white in September 2005.
That does not render the race-based statements stray comments, however, given the
urgency surrounding the initial contract with Forensic Pathology. . . . Because the
investigation and prosecution of crimes is dependent on autopsies and pathologist
testimony, Ackles was faced with the need to find a replacement quickly to ensure a
seamless transition. The hiring in September 2005 of the pathologists who had been
working for Indiana University must be viewed in that context. Moreover, Linehan was
the Chief Deputy Coroner at the time of the contract with Forensic Pathology. Ballew
took over his position in December 2005. Within just nine months after Forensic
Pathology began its five-year contract, and six months after Ballew became Chief Deputy
Coroner, the defendants issued a notice terminating that contract. They then replaced the
plaintiffs with an AfricanAmerican, Dr. Carter. Given that sequence of events, the
hiring of the white plaintiffs does not neutralize Ackles' earlier comments that he desired
to replace white employees with AfricanAmericans. See Marion County Coroner's
Office, 612 F.3d at 930 n. 6 (in discrimination case brought by Linehan, a white male,
court considered the defendant Ackles' stated preference for hiring AfricanAmericans
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33
even though Ackles initially hired Linehan and another white employee, where Linehan
was retained for the sake of continuity in the office and the white male who replaced him
took over on an interim basis for only a few weeks until Ballew, an AfricanAmerican,
was hired). The need for a quick transition and the short duration of the Forensic
Pathology contract allows for an inference that their hiring was merely as a placeholder
while the defendants pursued the goal of hiring AfricanAmericans. Therefore, the court
erred in dismissing outright any consideration of the clear statement by Ackles that he
wanted to replace white workers with AfricanAmericans, and that he wanted to hire an
AfricanAmerican pathologist. Those statements provide some support for the plaintiffs'
claim that their termination was race-based.
2. The Inferences to be Drawn from a Biased Statement
VII racial discrimination plaintiff. Plaintiff observed what appeared to her to be an aunt striking
a small child with a belt, and made an official report of the incident. Her African-American
supervisor launched into a tirade about this being a standard type of discipline among African-
American families, and wrote a report emphasizing plaintiffs problems at work, accusing her of
making a baseless report, and omitting her own racial tirade. Plaintiff was subsequently fired.
The court discussed at p. *8 the significance of the evidence that plaintiffs supervisor, Adams,
was racially biased at the moment of her racial tirade:
Regardless of whether McDonald or Rowland was the actual decisionmaker, the
parties' briefs have focused on pinpointing the details of who, what, and when about the
JJ. incident, as though all discriminatory bias in this case stems from that one event. The
jury, however, was not required to see it that way. The JJ. incident provided strong
evidence of Adams's racial bias, but the jury was not required to assume that Adams's
bias affected her only at that specific time with respect to that single incident. Nor was
the jury required to assume that the termination decision could have been tainted by
Adams's influencesingular or notonly if the decision could be connected to that one
incident. Under the cat's paw theory, the appropriate inquiry is whether the biased
Adams had influence over the decision to terminate Schandelmeier, and, if so, how much
influence she had, without limiting the inquiry to the single incident where that bias was
displayed so flagrantly.
Comment on Schandelmeier-Bartels v. Chicago Park District: The concept that a
biased statement reveals bias in the heart, that would ordinarily be expected both to precede
and to follow the point in time at which it is revealed, is critical.
3. Speakers Who Were Not Formal Decisionmakers
Staub v. Proctor Hospital, __ U.S. __, 131 S. Ct. 1186 (2011) (Scalia, J.), reversed the
Seventh Circuits decision reported at 560 F. 3d 647 (7th Cir. 2009). The case involved a
termination challenged under USERRA, where there was clear evidence of anti-military bias by
plaintiffs first- and second-level supervisors, Janice Mulally and Michael Korenchuk, and clear
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34
evidence that they wanted to get rid of him, and a clueless decisionmaker, Linda Buck, who was
the Vice-President of Human Resources. Ms. Buck relied on the representations of the
supervisors, a complaint about plaintiff from a co-worker, Angie Day, and a review of plaintiffs
personnel file. Ms. Buck did nothing to check the facts, even after plaintiff filed an internal
complaint that the reasons for his termination had been fabricated. The question presented was
the cats paw question: In what circumstances may an employer be held liable based on the
unlawful intent of officials who caused or influenced but did not make the ultimate employment
decision? The Court set out the Seventh Circuits rationale for overturning the jury verdict for
plaintiff:
The Seventh Circuit reversed, holding that Proctor was entitled to judgment as a
matter of law. . . . The court observed that Staub had brought a cat's paw case,
meaning that he sought to hold his employer liable for the animus of a supervisor who
was not charged with making the ultimate employment decision. . . . It explained that
under Seventh Circuit precedent, a cat's paw case could not succeed unless the
nondecisionmaker exercised such singular influence over the decisionmaker that the
decision to terminate was the product of blind reliance. . . . It then noted that Buck
looked beyond what Mulally and Korenchuk said, relying in part on her conversation
with Day and her review of Staub's personnel file. . . . The court admit[ted] that Buck's
investigation could have been more robust, since it failed to pursue Staub's theory that
Mulally fabricated the write-up. . . . But the court said that the singular influence
rule does not require the decisionmaker to be a paragon of independence: It is enough
that the decisionmaker is not wholly dependent on a single source of information and
conducts her own investigation into the facts relevant to the decision. . . . Because the
undisputed evidence established that Buck was not wholly dependent on the advice of
Korenchuk and Mulally, the court held that Proctor was entitled to judgment. . . .
Id. at p. *3 (citations omitted). The Court emphasized USERRAs similarity to Title VII, in
using a motivating factor basis of liability. The Court held that Congress created a federal
tort by enacting USERRA. Discussing the motivating factor test, the Court stated:
In approaching this question, we start from the premise that when Congress
creates a federal tort it adopts the background of general tort law. See Burlington N. &
S.F.R. Co. v. United States, 556 U.S. ----, ---- (2009) (slip op., at 13-14); Safeco Ins. Co.
of America v. Burr, 551 U.S. 47, 68-69, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007);
Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 764, 118 S.Ct. 2257, 141 L.Ed.2d
633 (1998). Intentional torts such as this, as distinguished from negligent or reckless
torts, ... generally require that the actor intend the consequences of an act,' not simply
the act itself. Kawaauhau v. Geiger, 523 U.S. 57, 61-62, 118 S.Ct. 974, 140 L.Ed.2d
90 (1998).
Id. at p. *4. The Court held that animus of nondecisionmakers cannot simply be assumed to be
causally related to the adverse action unless the nondecisionmakers intended the adverse action.
To do otherwise would be to conflate the two required elements of liability, animus and adverse
action. Id. at pp. *4-*5. In a paragraph certain to lead to a great deal of litigation, the Court
stated:
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35
Proctor, on the other hand, contends that the employer is not liable unless the de
facto decisionmaker (the technical decisionmaker or the agent for whom he is the cat's
paw) is motivated by discriminatory animus. This avoids the aggregation of animus and
adverse action, but it seems to us not the only application of general tort law that can do
so. Animus and responsibility for the adverse action can both be attributed to the earlier
agent (here, Staub's supervisors) if the adverse action is the intended consequence of that
agent's discriminatory conduct. So long as the agent intends, for discriminatory reasons,
that the adverse action occur, he has the scienter required to be liable under USERRA.
And it is axiomatic under tort law that the exercise of judgment by the decisionmaker
does not prevent the earlier agent's action (and hence the earlier agent's discriminatory
animus) from being the proximate cause of the harm. Proximate cause requires only
some direct relation between the injury asserted and the injurious conduct alleged, and
excludes only those link[s] that are too remote, purely contingent, or indirect. . . . FN2
We do not think that the ultimate decisionmaker's exercise of judgment automatically
renders the link to the supervisor's bias remote or purely contingent. The
decisionmaker's exercise of judgment is also a proximate cause of the employment
decision, but it is common for injuries to have multiple proximate causes. . . . Nor can the
ultimate decisionmaker's judgment be deemed a superseding cause of the harm. A cause
can be thought superseding only if it is a cause of independent origin that was not
foreseeable. . . .
_________
FN2. Under the traditional doctrine of proximate cause, a tortfeasor is sometimes,
but not always, liable when he intends to cause an adverse action and a different adverse
action results. See Restatement (Second) Torts 435, 435B and Comment a (1963 and
1964). That issue is not presented in this case since the record contains no evidence that
Mulally or Korenchuk intended any particular adverse action other than Staub's
termination.
Id. at p. *5.
VII racial discrimination plaintiff. Plaintiff relied on a cats paw theory under which the bias
of a non-decisionmaker influenced the decisionmaker to terminate plaintiff. The court held that
plaintiff had made an adequate showing because the evidence was that, whichever supervisor had
made the decision to terminate plaintiff, the supervisor relied almost entirely on the input of the
biased manager. Id. at p. *5.
H. Simple Statistics Can Be Probative
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36
the nondiscriminatory reason proffered. The court relied in part on simple statistical
comparisons and common-sense distinctions, without tests of statistical significance:
The sequence of events, and the manner in which it occurred, further indicates that
the decision to terminate the contract rather than exercise the provision K rights was
race-based.
Other evidence lends further support to that conclusion. The racial makeup of the
office changed significantly during Ackles' tenure. As a whole, the office went from
16.67% AfricanAmericans to 36%. That figure, however, includes the large number
of part-time employees, who according to plaintiffs work only sporadic hours and
receive no benefits. The racial change was even more dramatic when considering full-
time employees. From the time of Ackles' election to the end of 2007, the Coroner's
Office changed from 8 full-time white employees to 6, and the number of African
American employees transitioned from 2 full-time employees to 7, or 54% of the full-
time workforce. All three full-time supervisory positions were held by African
Americans. The plaintiffs produced evidence that the change was not inadvertent,
citing a statement made during the search for the replacement for the defendants. One
of the receptionists heard Ackles discussing how to replace the doctors, in which he
laughingly told Ballew I will put my people where they belong. That statement was
construed as again indicating a desire to place AfricanAmericans in the positions.
I. Harassment
1. Hostile Housing Environment
Quigley v. Winter, 598 F.3d 938 (8th Cir. 2010), affirmed the jury verdict under the Fair
Housing Act, and held that the plaintiff tenant had established sexual harassment by the landlord
and thus a hostile housing environment. The court held that there was sufficient evidence of
quid pro quo sexual harassment, in that the jury could reasonably infer that defendant would
only give her back her deposit if she exposed her body or granted sexual favors to the landlord.
2. The Prima Facie Case
1078 (4th Cir. 2011), affirmed the dismissal of plaintiffs Title VII hostile environment claim.
The court described the elements of a prima facie case:
To proceed on a Title VII hostile work environment claim, a plaintiff must show
that the offending conduct (1) was unwelcome, (2) was because of her sex [or race], (3)
was sufficiently severe or pervasive to alter the conditions of her employment and create
an abusive work environment, and (4) was imputable to her employer. . . . . Establishing
the third element requires that the plaintiff show that the work environment was not only
subjectively hostile, but also objectively so. . . . Such proof depends upon the totality of
the circumstances, including the frequency of the discriminatory conduct; its severity;
whether it is physically threatening or humiliating, or a mere offensive utterance; and
whether it unreasonably interferes with an employee's work performance. Id. (internal
quotation marks omitted).
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37
3. Causation
exams. All three were disciplined, and Papelino and Basile were expelled. The court stated at
90:
Finally, we also conclude that there is sufficient proof of the elements of a quid
pro quo claim to entitle Papelino to a jury trial. Papelino adduces evidence that: Nowak
made sexual advances toward him, he rejected them, and Nowak initiated Honor Code
proceedings against him soon thereafter, falsely accusing him of cheating. The close
temporal proximity between Papelino's final rejection of Nowak's advances and her
initiation of proceedings combined with the apparent speciousness of the proffered proof
of cheating constitute evidence of a causal connection, especially given Nowak's warning
that it would be a big mistake for Papelino to report her to White.
The court continued at 92-93:
Construing the evidence and drawing all reasonable inferences in favor of
plaintiffs, however, we conclude that triable issues of facts existed as to knowledge and
causation. First, there was evidence of knowledge-evidence that the College knew that
Papelino had engaged in protected activity. Papelino complained to White, and thus
White was aware that Papelino was engaging in protected activity. Yet, White did
nothing even after the cheating charges were lodged against Papelino. Moreover,
Papelino told Nowak that he was going to report her to White, and indeed he did so.
Although White testified that he never spoke to Nowak, the jury was not required to
credit this testimony. There is evidence that Nowak's behavior toward Papelino
changedshe became cold and hostile toward himaround this time, and Papelino
asserted that White reported that he had spoken to Nowak. The record also includes
evidence that members of the College faculty discussed Papelino's allegations of sexual
harassment during and after the Honor Code appeals process. A reasonable jury could
also conclude that even if the Panel members were themselves unaware that Papelino had
engaged in protected activity, they were acting on Nowak's explicit encouragement, or
that they acted without information that White should have imparted to them.

Second, the record contains substantial evidence of causation. A reasonable jury
could find that Nowak initiated the Honor Code proceedings for retaliatory reasons rather
than a good faith belief that Papelino had actually cheated. Nowak compiled and
presented the evidence to the Panel, serving as the hearing's primary witness. The
speciousness of the evidence presented to the Panel, as determined by the Third
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38
Department, is further evidence of a retaliatory motive and a causal connection. A
reasonable jury could also find that White should have followed up on Papelino's
complaint once the cheating charges were brought against him. In any case, for Papelino
to recover on his retaliation claim, he need only establish that impermissible retaliation
was one motive behind the initiation of the Honor Code charges against himnot that it
was the sole reason that any of the Panel members voted to find him guilty of cheating.
. . . From the evidence adduced, a reasonable jury surely could reach such a conclusion.

As for the College's refusal to provide an unqualified certification to the Florida
Pharmacy Board, we also find an issue of fact as to impermissible retaliatory motive.
Though the College claims that it refused to give an unqualified certification to the State
of Florida because it still harbored doubts about Papelino's academic integrity, the
validity of this explanation is undermined by the College's decision to provide an
unqualified certification to the State of New York two months prior. The only
circumstance that changed in the interim was plaintiffs' filing of this litigation. Further,
the College's letter to Papelino's counsel as much as admits that the pendency of this
lawsuit was the reason why the College was no longer willing to provide an unqualified
certification. At a minimum, there are issues of fact here.
Wilkie v. Department of Health and Human Services, __ F.3d __, 2011 WL 1563998 (8th
Cir. April 27, 2011 (No. 10-1916), affirmed the grant of summary judgment against the Title VII
sexual harassment plaintiff, rejecting her claim that the nonsexual, undermining conduct within
45 days of her informal complaint the was part of the same pattern as the sexualized conduct
outside the time period. The court then excluded the sexualized conduct ftom its consideration,
and held that plaintiff failed to prove that the later nonsexualized conduct occurred because of
her sex.
Comment on Wilkie v. Department of Health and Human Services: The court
clearygot it wrong, forgetting that evidence of motivation does not have to arise within the 45-
day period for contacting an EEO counselor, and that the earlier conduct can show sexual
causation regardless of itds being time-barred.
1078 (4th Cir. 2011), affirmed the dismissal of plaintiffs Title VII hostile environment claim.
The court held that the conduct in question related to plaintiffs job performance, and had not
been shown to be related to her race or gender.
Mosby-Grant v. City of Hagerstown, 630 F.3d 326, 334-35, 111 Fair Empl.Prac.Cas.
(BNA) 51 (4th Cir. 2010), reversed in part and affirmed in part the grant of summary judgment
to the Title VII hostile-environment defendant. Plaintiff was in the Western Maryland Police
Academy, and was in the process of applying for a position as a police officer with the
Hagerstown Police Department. The City of Hagerstown was deemed her employer. She did
not pass the Academy because she failed the firearms qualification test on the last day. The court
held that she had shown adequate evidence that the hostile environment was because of her sex:
Here, Mosby-Grant, the only female recruit, was consistently made to feel like an
outsider by her classmates and some instructors, with one instructor even referring to her
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39
as a bitch. Mosby-Grant felt ostracized in part because of her classmates' juvenile
behavior, including their constant use of sexist language and disparaging remarks about
women. In Mosby-Grant's presence, recruits would regularly sing sexually explicit lyrics,
and describe women as bitches, prostitutes, crazy, and dope fiends, and
denigrate the female victims of domestic violence. . . . Although the sexist language was
rarely directed at Mosby-Grant herself, her classmates explicitly told Mosby-Grant that
they felt she was asking for special treatment because [she is] a woman. The male
recruits also noticeably singled Mosby-Grant out for special scorn during trainings.
Given these facts, a reasonable jury could find that Mosby-Grant was targeted because of
her sex. . . .
Id. at 334 (citations omitted). The court also held that plaintiff had adequately shown that
hostility to her race was a cause of the hostile environment:
Mosby-Grant also suitably established that some of the unpleasant encounters
between her and the other recruits were the result of race-based enmity. To establish a
hostile environment claim, [the plaintiff] must show that but for his race ..., he would
not have been the victim of the alleged discrimination. . . . The references of recruits to
the historical lynching of African Americans, in particular, the brutal murder of James
Byrd, Jr.
FN3
, and their use of derogatory terms like fucking Mexicans, honky, and
ghetto demonstrate that there was a level of racial hostility at the Academy. These
comments are enough to suggest that the recruits' conduct was motivated by race.
__________
FN3. The recruit's comment about being dragged from the back of a truck was
an apparent reference to Byrd's racially motivated murder on June 7, 1998. Byrd's
murder was widely reported and became symbolic of the horrors of racism. 10 years
later, dragging death changes town, MSNBC.com (June 6, 2008),
http://www.msnbc.msn.com/id/25008925/38706994. Byrd, a 49-year-old African
American man, was beaten by three white men who then chained him by the ankles to the
bumper of a Ford pickup, and dragged him down the street. Id.
Id. at 334-35 (citation omitted). Judge Niemeyer dissented. Id. at 337.
4. Severe or Pervasive
Mosby-Grant v. City of Hagerstown, 630 F.3d 326, 111 Fair Empl.Prac.Cas. (BNA) 51
(4th Cir. 2010), reversed in part and affirmed in part the grant of summary judgment to the Title
VII hostile-environment defendant. Plaintiff was in the Western Maryland Police Academy, and
was in the process of applying for a position as a police officer with the Hagerstown Police
Department. The City of Hagerstown was deemed her employer. She did not pass the Academy
because she failed the firearms qualification test on the last day. The court held that she had
shown adequate evidence that the sexually hostile environment was severe or pervasive:
The work environment was severe or pervasive enough to sustain Mosby-Grant's
sex claim, but not her race claim. In measuring whether the offensive conduct is severe or
pervasive enough to warrant relief, we must look at the totality of the circumstances,
including: the frequency of the discriminatory conduct; its severity; whether it is
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40
physically threatening or humiliating, or a mere offensive utterance; and whether it
unreasonably interferes with an employee's work performance. . . . Nonetheless, Title
VII does not create a general civility code in the workplace; it only proscribes behavior
that is so objectively offensive as to alter the conditions' of the victim's employment.
. . .
Id. at 335. The court relied on the frequency of sexist and demeaning comments directed at other
women and at her personally, the fact that instructors participated in the remarks, and fellow
recruits frequent discussions of their sexual experiences with an underage girl. The court also
relied on the use of racially charged terms to find that the sexually hostile working environment
was severe and pervasive: When viewed cumulatively with the evidence of sex-based
harassment, the recruits' use of racially charged terms like honky, cracker, and fucking
Mexicans may also lead a jury to reasonably conclude that a discriminatory atmosphere was
pervasive at the Academy. Id. at 335-36 (citation omitted). Finally, the court relied on the
effect of this conduct on plaintiff:

The conduct was also severe and humiliating in as far as it caused Mosby-Grant
significant emotional distress with Mosby-Grant openly becoming emotional at work and
regularly leaving work in tears. The effect and source of the harassment were also noticeable
to Mosby-Grant's superiors, including Detective Yonkers and Lieutenant Kline, and other
recruits. . . . Dr. Tellefsen's expert diagnosis may also support a reasonable finding that the
Academy experience had an injurious effect on Mosby-Grant's mental health. . . .

Further, on at least one occasion, during the EVOC course, instructors had to
intervene to prevent the male recruits' behavior from having an adverse affect on Mosby-
Grant's work performance. It may also be reasonable for a jury to infer, based on the
testimony of Mosby-Grant, King and Wood, that the male recruits' snickering during
firearms testing was directed at Mosby-Grant and, but-for that harassment, she would have
succeeded on qualification day. . . .
Id. at 336. However, the court held that plaintiffs evidence of a racially hostile environment
was not enough to show that it was severe or pervasive:
Following the single incident wherein Mosby-Grant overheard racist comments, the
offending recruit immediately apologized, and explained that he and the biracial recruit
had been joking with one another. . . . Although another recruit did openly disparage
Mexicans, his repugnant remarks were made only two times in five months and, although
not dispositive, his remarks were also never directed at Mosby-Grant. . . .
Id. The court did not explain how this evidence of a racially hostile atmosphere could be used to
help plaintiff establish that the sexually hostile environment was severe and pervasive, but was
not enough to show that the racially hostile environment was severe or pervasive. The court did
state: We are keenly aware of the difficulties inherent in parsing out Title VII claims brought by
individuals, e.g., African American women, who fall under more than one protected class. We
also recognize that a hostile work environment claim can be bolstered by relying on evidence of
a workplace tainted by both sex and racial discrimination. Id. It also stated that, since plaintiff
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41
did not raise the issue of a hybrid race-and-sex hostile environment, it had no occasion to address
that issue. Id. at 337 n.4. Judge Niemeyer dissented. Id. at 337.
5. Unwelcomeness
Mosby-Grant v. City of Hagerstown, 630 F.3d 326, 334, 111 Fair Empl.Prac.Cas. (BNA)
51 (4th Cir. 2010), reversed in part and affirmed in part the grant of summary judgment to the
Title VII hostile-environment defendant. Plaintiff was in the Western Maryland Police
Hagerstown Police Department. The City of Hagerstown was deemed her employer. The court
held that plaintiffs repeated complaints about sexual and racial remarks showed that the conduct
was unwelcome. Judge Niemeyer dissented. Id. at 337.
6. Conditions of Employers Vicarious Liability
held that plaintiffs repeated complaints about sexual and racial remarks, as well as superior
officers own observations, showed that the defendant was well aware of the harassment, but
there was no evidence that they took any positive action. The initial sexual harassment training
was never supplemented, and the only active step taken by the Academy was to segregate the
plaintiff. The court held that the non-response raised a triable issue whether the City was entitled
to the affirmative defense. Judge Niemeyer dissented. Id. at 337.
Sutherland v. Wal-Mart Stores, Inc., 632 F.3d 990, 111 Fair Empl.Prac.Cas. (BNA) 495
(7th Cir. 2011), affirmed the grant of summary judgment to the Title VII sexual harassment
defendant because defendant began its investigation of plaintiffs complaint the same day she
complained. While the investigation confirmed several allegations of the complaint, it was
inconclusive of the most serious allegation: that the co-worker harasser had cupped plaintiffs
breast. Defendant decided not to fire the harasser, but gave him a Decision-Making Day, and
arranged his schedule and plaintiffs schedule so that they only overlapped for 90 minutes a
week, and worked 80 feet apart at that time. The court held that this was a sufficient response.
See the discussion of this case below.
7. Employers Duty to Cure Any Harassment That Does Occur
Sutherland v. Wal-Mart Stores, Inc., 632 F.3d 990, 111 Fair Empl.Prac.Cas. (BNA) 495
(7th Cir. 2011), affirmed the grant of summary judgment to the Title VII sexual harassment
defendant because defendant began its investigation of plaintiffs complaint the same day she
complained. The court rejected plaintiffs argument that defendant failed to take strong enough
corrective action on another womans earlier complaint of harassment, and thus failed to protect
plaintiff. The court relied on the fact that the earlier conduct was insufficient to constitute
harassment, that defendant had responded appropriately with two verbal warnings, and that the
conduct in question had stopped. As to the harassment of the plaintiff, the court rejected
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plaintiffs argument that defendant should have fired the harasser, or at least separated them by
more than eighty feet. It explained that the steps defendant took were successful, and stated:
But the steps Walmart failed to take are only relevant if the steps it actually took were not
reasonably likely to end the harassment. Id. at p. *4.
8. Failure to Complain, and Adequacy of Complaints
held that plaintiffs repeated complaints about sexual and racial remarks, as well as superior
officers own observations, showed that the defendant was well aware of the harassment, but
there was no evidence that they took any positive action. While plaintiff did not report all of the
conduct to which she had been subjected, she reported enough to support defendants liability.
Judge Niemeyer dissented. Id. at 337.
J. Taking Documents
Quinlan v. Curtiss-Wright Corp., 204 N.J. 239, 8 A.3d 209, 110 Fair Empl.Prac.Cas.
(BNA) 1688 (N.J. 2010), reinstated the jury verdict for plaintiff. The court outlined the issues
before it:
Plaintiff Joyce Quinlan, then the Executive Director of Human Resources for
defendant Curtiss-Wright Corporation, believed that the company had discriminated
against her when it promoted a man she thought was less qualified than she and made
him her supervisor. In an effort to prove that her suspicions were true and that defendant
was engaged in widespread sex discrimination, plaintiff gathered documents that were
available to her in the ordinary course of her employment and turned copies of them over
to an attorney. During discovery in her discrimination lawsuit, defendant learned that
plaintiff had taken, and was continuing to take, copies of hundreds of documents it
considered to be confidential. Following disclosure of one document that was particularly
helpful to plaintiff's claim that she had been discriminated against when she was not
selected for the promotion, defendant fired her. The letter terminating plaintiff from her
employment accused her of breach of company policies and theft. Believing that
defendant had fired her because of the prosecution of her discrimination claim, plaintiff
added a retaliation claim to her pending lawsuit.
After a lengthy and hard-fought trial, the jury agreed with plaintiff, awarding her
substantial compensatory and punitive damages. In the appeal that followed, the verdict
in her favor on the retaliation claim was reversed and remanded for a new trial and the
punitive award was vacated in its entirety. . . .
Plaintiff asks this Court to read the Law Against Discrimination (LAD), N.J.S.A.
10:5-1 to -42, broadly so that it provides complete protection for any employee who
copies and takes company documents for the purpose of helping in the prosecution of a
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43
discrimination claim. She argues that because she was motivated by the need to assist in
the prosecution of her lawsuit and because she disclosed the documents only to her
attorneys, permitting defendant to fire her for her conduct would be contrary to the strong
remedial purposes of the LAD.
Defendant insists that the employer's right to conduct its business and its right to
demand loyalty of its employees is paramount. It argues that if this Court adopts the
approach championed by plaintiff, the effect will be to insulate conduct that is a clear
ground for termination merely because an employee had the sense to limit the disclosure
of the company's confidential documents to a lawyer. Defendant cautions this Court not
to create circumstances in which employees will be encouraged to rummage through
employers' files hoping to find something to use as a shield against what would be an
otherwise permissible termination of their employment.
Id. at 244-45. The court surveyed decisions under the Federal antidiscrimination laws,
particularly those under the opposition clause in Title VII, and found that the Sixth Circuits
decision in Niswander v. Cincinnati Ins. Co., 529 F.3d 714, 103 Fair Empl.Prac.Cas. (BNA)
1257 (6th Cir. 2008), came closest to its analysis, but decided that it had to expand Niswander to
give effect to the strong remedial purposes of New Jerseys Law Against Discrimination. Its
resulting balancing test is as follows:
First, the court should evaluate how the employee came to have possession of, or
access to, the document. If the employee came upon it innocently, for example, in the
ordinary course of his or her duties for the employer, this factor will generally favor the
employee. In that evaluation, it will not be necessary that the employee came upon the
document either inadvertently or accidentally, but it will suffice if the employee came
into possession of the document in the ordinary course of his or her duties. If, however,
the discovery of the document was due to the employee's intentional acts outside of his or
her ordinary duties, the balance will tip in the other direction. Therefore, the employee
who finds a document by rummaging through files or by snooping around in offices of
supervisors or other employees will not be entitled to claim the benefit of this factor.
Second, the court should evaluate what the employee did with the document. If
the employee looked at it, copied it and shared it with an attorney for the purpose of
evaluating whether the employee had a viable cause of action or of assisting in the
prosecution of a claim, the factor will favor the employee. On the other hand, if the
employee copied the document and disseminated it to other employees not privileged to
see it in the ordinary course of their duties or to others outside of the company, this factor
will balance in the employer's favor.
Third, the court should evaluate the nature and content of the particular document
in order to weigh the strength of the employer's interest in keeping the document
confidential. If the document is protected by privilege, in whole or in part, if it reveals a
trade secret or similar proprietary business information, or if it includes personal or
confidential information such as Social Security numbers or medical information about
other people, whether employees or customers, the employer's interest will be strong.
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44
Fourth, the court should also consider whether there is a clearly identified
company policy on privacy or confidentiality that the employee's disclosure has violated.
The evaluation of this factor should take into account considerations about whether the
employer has routinely enforced that policy, and whether, in the absence of a clear
policy, the employee has acted in violation of a common law duty of loyalty to the
employer.
Fifth, the court should evaluate the circumstances relating to the disclosure of the
document to balance its relevance against considerations about whether its use or
disclosure was unduly disruptive to the employer's ordinary business. In evaluating
disruptiveness, the court may consider the manner or the timing of the disclosure or use
of the document. However, the focus must be on whether the use or disclosure of the
document unduly disrupted the employer's business, rather than on any effect it had on
individual company representatives. Thus, for example, if the document had marginal
relevance to the claim of discrimination, but was intended to be used merely to cast unfair
aspersions, to divert the attention of the jury, or to sensationalize the trial, this factor
would weigh in the balance against the employee. On the other hand, if the document was
central to the discrimination claim and merely troubling or upsetting to the employee to
whom it related, the factor will more likely weigh in favor of the employee.
Sixth, the court should evaluate the strength of the employee's expressed reason
for copying the document rather than, for example, simply describing it or identifying its
existence to counsel so that it might be requested in discovery. In this evaluation, the
court should consider whether there is evidence that demonstrates that, in the absence of
the employee's act of copying the document, there was a likelihood that the employer
would not maintain it, or would have discarded it in the ordinary course of business, that
it would have been destroyed, or that its authenticity would be called into doubt. As part
of this evaluation the court may also consider whether the document would be critical to
the case, like the true smoking gun, such that the employee's perceived need to preserve
it would be entitled to greater weight in light of the significance of the risk of its loss.
Last, but of the utmost importance, the court should evaluate how its decision in
the particular case bears upon two fundamental considerations that are often in conflict in
matters such as these. First, the court must be cognizant of the broad remedial purposes
the Legislature has advanced through our laws against discrimination, including the
LAD. Second, the court must consider the effect, if any, that either protecting the
document by precluding its use or permitting it to be used will have upon the balance of
legitimate rights of both employers and employees. Courts should apply the two parts of
this final factor with great care, utilizing them as a supplement rather than a substitute for
the multi-factor test we have created. Although in a close case, for example, the broad
remedial purposes of the LAD might tip the balance, courts should be vigilant lest they
err by overlooking the myriad considerations that make up the test we today announce.
In making these evaluations, the court must be mindful that both employers and
employees have legitimate rights. Employers have the right to operate their businesses
within the bounds of the law and legitimately expect that they will have the loyalty of
their employees as they do so. Employees have the right to be free of discrimination in
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their employment and the right to speak out when they are subjected to treatment that
they reasonably believe violates that right. Balancing all of those considerations is a
difficult and important task.
Id. at 269-71. The court stated that its decision would not open the floodgates to the wholesale
taking of documents. We, however, do not share the concern that employers will be powerless
to discipline employees who take documents when they are not privileged to do so. On the
contrary, employees may still be disciplined for that behavior and even under the best of
circumstances, run the significant risk that the conduct in which they engage will not be found by
a court to fall within the protection our test creates. The risk of self-help is high and the risk that
a jury will reject a plaintiff's argument that he or she was fired for using the document, rather
than for finding it and taking it in the first place, will serve as an important limitation upon any
realization of the fears that the employers have expressed to the Court. Id. at 272. Here,
plaintiff examined documents wholesale but only gave relevant documents to her attorneys. The
jury reasonably decided that she was fired for using documents, not for taking them.
Accordingly, the retaliation verdict was reinstated. Id. at 272-73. Judge Albin dissented. Id. at
277-83.
K. Privacy of E-Mails
Stengart v. Loving Care Agency, Inc., 201 N.J. 300, 307-08, 990 A.2d 650, 108 Fair
Empl.Prac.Cas. (BNA) 1558, 30 IER Cases 873 (N.J. 2010), succinctly stated its holding:
This case presents novel questions about the extent to which an employee can
expect privacy and confidentiality in personal e-mails with her attorney, which she
accessed on a computer belonging to her employer. Marina Stengart used her company-
issued laptop to exchange e-mails with her lawyer through her personal, password-
protected, web-based e-mail account. She later filed an employment discrimination
lawsuit against her employer, Loving Care Agency, Inc. (Loving Care), and others.
In anticipation of discovery, Loving Care hired a computer forensic expert to
recover all files stored on the laptop including the e-mails, which had been automatically
saved on the hard drive. Loving Care's attorneys reviewed the e-mails and used
information culled from them in the course of discovery. In response, Stengart's lawyer
demanded that communications between him and Stengart, which he considered
privileged, be identified and returned. Opposing counsel disclosed the documents but
maintained that the company had the right to review them. Stengart then sought relief in
court.
The trial court ruled that, in light of the company's written policy on electronic
communications, Stengart waived the attorney-client privilege by sending e-mails on a
company computer. The Appellate Division reversed and found that Loving Care's
counsel had violated RPC 4.4(b) by reading and using the privileged documents.
We hold that, under the circumstances, Stengart could reasonably expect that e-
mail communications with her lawyer through her personal account would remain
private, and that sending and receiving them via a company laptop did not eliminate the
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attorney-client privilege that protected them. By reading e-mails that were at least
arguably privileged and failing to notify Stengart promptly about them, Loving Care's
counsel breached RPC 4.4(b). We therefore modify and affirm the judgment of the
Appellate Division and remand to the trial court to determine what, if any, sanctions
should be imposed on counsel for Loving Care.
The court held that plaintiff had a reasonable subjective expectation of privacy despite the
companys policy, because she used her own web-based e-mail account, protected it with a
password, and did not store her password on her company-issued laptop. Id. at 322. Moreover,
the companys policy was silent on the key issues, making her expectation of privacy objectively
reasonable as well:
In light of the language of the Policy and the attorney-client nature of the
communications, her expectation of privacy was also objectively reasonable. As noted
earlier, the Policy does not address the use of personal, web-based e-mail accounts
accessed through company equipment. It does not address personal accounts at all. Nor
does it warn employees that the contents of e-mails sent via personal accounts can be
forensically retrieved and read by the company. Indeed, in acknowledging that
occasional personal use of e-mail is permitted, the Policy created doubt about whether
those e-mails are company or private property.
Id. The court added an important qualifier: Moreover, the e-mails are not illegal or
inappropriate material stored on Loving Care's equipment, which might harm the company in
some way. Id. (citations omitted). Finally, the e-mails themselves contained warnings: In
addition, the e-mails bear a standard hallmark of attorney-client messages. They warn the reader
directly that the e-mails are personal, confidential, and may be attorney-client communications.
While a pro forma warning at the end of an e-mail might not, on its own, protect a
communication . . . other facts present here raise additional privacy concerns. Id. The court
rejected defendants argument that she waived privilege by using its system: As to whether
Stengart knowingly disclosed the e-mails, she certified that she is unsophisticated in the use of
computers and did not know that Loving Care could read communications sent on her Yahoo
account. Use of a company laptop alone does not establish that knowledge. Nor does the Policy
fill in that gap. Under the circumstances, we do not find either a knowing or reckless waiver.
Id. at 324. The court held that even a better-written company policy would not change the
outcome:
Our conclusion that Stengart had an expectation of privacy in e-mails with her
lawyer does not mean that employers cannot monitor or regulate the use of workplace
computers. Companies can adopt lawful policies relating to computer use to protect the
assets, reputation, and productivity of a business and to ensure compliance with
legitimate corporate policies. And employers can enforce such policies. They may
discipline employees and, when appropriate, terminate them, for violating proper
workplace rules that are not inconsistent with a clear mandate of public policy. . . . For
example, an employee who spends long stretches of the workday getting personal,
confidential legal advice from a private lawyer may be disciplined for violating a policy
permitting only occasional personal use of the Internet. But employers have no need or
basis to read the specific contents of personal, privileged, attorney-client communications
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in order to enforce corporate policy. Because of the important public policy concerns
underlying the attorney-client privilege, even a more clearly written company manual-
that is, a policy that banned all personal computer use and provided unambiguous notice
that an employer could retrieve and read an employee's attorney-client communications,
if accessed on a personal, password-protected e-mail account using the company's
computer system-would not be enforceable.
Id. at 324-25 (citations omitted). Finally, the court rejected defendants argument that plaintiff
had left the e-mails behind on her laptop, because she did not know that the system saved e-mails
in temporary cache files, and the company had to hire a forensic expert to review them. The
court held that defense counsel had an obligation to stop reading the e-mails when they realized
that they involved privileged communications, and had an obligation to notify plaintiff and the
court to seek a ruling before proceeding. The court remanded the case to the trial court to
determine the significance of the e-mails and the appropriate sanction. Id. at 325-27.
Holmes v. Petrovich Development Co., 191 Cal.App.4th 1047, 1068-69, 119 Cal.Rptr.3d
878, 111 Fair Empl.Prac.Cas. (BNA) 424 (Cal.App. 3d Dist. 2011), distinguished Stengart and
held that plaintiff had no reasonable expectation of privacy in e-mails with her attorney under a
different set of facts: Holmes used her employer's company e-mail account after being warned
that it was to be used only for company business, that e-mails were not private, and that the
company would randomly and periodically monitor its technology resources to ensure
compliance with the policy.
Pure Power Boot Camp v. Warrior Fitness Boot Camp, 587 F.Supp.2d 548 (S.D.N.Y.
2008), surveyed cases and discussed employees reasonable expectations of privacy
notwithstanding employer policies stating that no e-mails sent over company equipment were
private and that the employer could read all of them. In the case at bar, plaintiffs accessed
defendants private e-mail accounts that were not stored on plaintiffs system, using usernames
and passwords that did appear in e-mails. The court held that this violated the Stored
Communications Act, 18 U.S.C. 2701. The court stated:
There is no sound basis to argue that Fell, by inadvertently leaving his Hotmail
password accessible, was thereby authorizing access to all of his Hotmail e-mails, no less
the e-mails in his two other accounts. If he had left a key to his house on the front desk at
PPBC, one could not reasonably argue that he was giving consent to whoever found the
key, to use it to enter his house and rummage through his belongings. And, to take the
analogy a step further, had the person rummaging through the belongings in Fell's house
found the key to Fell's country house, could that be taken as authorization to search his
country house. We think not. The Court rejects the notion that carelessness equals
consent.
Id. at 561.
L. Independent Judgment
Staub v. Proctor Hospital, __ U.S. __, 2011 WL 691244 (March 1, 2011) (Scalia, J.),
reversed the Seventh Circuits decision reported at 560 F. 3d 647 (7th Cir. 2009). The case
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involved a termination challenged under USERRA, where there was clear evidence of anti-
military bias by plaintiffs first- and second-level supervisors, Janice Mulally and Michael
Korenchuk, and clear evidence that they wanted to get rid of him, and a clueless decisionmaker,
Linda Buck, who was the Vice-President of Human Resources. Ms. Buck relied on the
representations of the supervisors, a complaint about plaintiff from a co-worker, Angie Day, and
a review of plaintiffs personnel file. Ms. Buck did nothing to check the facts, even after
plaintiff filed an internal complaint that the reasons for his termination had been fabricated. The
Court rejected the argument that defendant was immunized from liability because the
decisionmaker had exercised independent judgment:
Moreover, the approach urged upon us by Proctor gives an unlikely meaning to a
provision designed to prevent employer discrimination. An employer's authority to
reward, punish, or dismiss is often allocated among multiple agents. The one who makes
the ultimate decision does so on the basis of performance assessments by other
supervisors. Proctor's view would have the improbable consequence that if an employer
isolates a personnel official from an employee's supervisors, vests the decision to take
adverse employment actions in that official, and asks that official to review the
employee's personnel file before taking the adverse action, then the employer will be
effectively shielded from discriminatory acts and recommendations of supervisors that
were designed and intended to produce the adverse action. That seems to us an
implausible meaning of the text, and one that is not compelled by its words.
Id. at p. *5.

M. Independent Investigations
reversed the Seventh Circuits decision reported at 560 F. 3d 647 (7th Cir. 2009). The case
involved a termination challenged under USERRA, where there was clear evidence of anti-
military bias by plaintiffs first- and second-level supervisors, Janice Mulally and Michael
Korenchuk, and clear evidence that they wanted to get rid of him, and a clueless decisionmaker,
Linda Buck, who was the Vice-President of Human Resources. Ms. Buck relied on the
representations of the supervisors, a complaint about plaintiff from a co-worker, Angie Day, and
a review of plaintiffs personnel file. Ms. Buck did nothing to check the facts, even after
plaintiff filed an internal complaint that the reasons for his termination had been fabricated. The
Court rejected the argument that defendant was immunized from liability because the
decisionmaker had conducted an independent investigation:
Proctor suggests that even if the decisionmaker's mere exercise of independent
judgment does not suffice to negate the effect of the prior discrimination, at least the
decisionmaker's independent investigation (and rejection) of the employee's allegations of
discriminatory animus ought to do so. We decline to adopt such a hard-and-fast rule. As
we have already acknowledged, the requirement that the biased supervisor's action be a
causal factor of the ultimate employment action incorporates the traditional tort-law
concept of proximate cause. . . . Thus, if the employer's investigation results in an adverse
action for reasons unrelated to the supervisor's original biased action (by the terms of
USERRA it is the employer's burden to establish that), then the employer will not be
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liable. But the supervisor's biased report may remain a causal factor if the independent
investigation takes it into account without determining that the adverse action was, apart
from the supervisor's recommendation, entirely justified. We are aware of no principle in
tort or agency law under which an employer's mere conduct of an independent
investigation has a claim-preclusive effect. Nor do we think the independent
investigation somehow relieves the employer of fault. The employer is at fault because
one of its agents committed an action based on discriminatory animus that was intended
to cause, and did in fact cause, an adverse employment decision.
Id. at p. *6 (citation omitted).
VI. Litigation
A. Exhaustion
Cases 1078 (4th Cir. 2011), reversed the dismissal of plaintiffs claims under the Civil Service
Reform Act of 1978, holding that plaintiff adequately raised her CSRA claims in her mixed-case
EEO complaint. The court stated that because administrative charges are not typically
completed by lawyers, they must be construed liberally. Id. at 379. The court held that
plaintiffs allegation that she had been accused of committing acts she did not commit, and that
her firing was overly harsh, adequately raised her CSRA claims. It stated: The claim, in other
words, is that, even aside from any improper motivations behind her firing, her firing was not
warranted. Id. at 380.
B. Timeliness
1. Promotional Rosters
Lewis v. City of Chicago, __ U.S. __, 130 S. Ct. 2191, 109 Fair Empl.Prac.Cas. (BNA)
449 (2010), involved the timeliness of a disparate-impact challenge to a hiring test. Twenty-six
thousand candidates took the July 1995 test. Based on scores, in January 1996 the City separated
the candidates into a well-qualified group, a qualified group, and an unqualified group.
The latter were sent immediate rejection letters. The qualified group were sent letters telling
them that the City planned to make hires from the well-qualified group until that group was
exhausted and that it was unlikely that they would be hired, but that they would be kept on the
eligibility list in case they could be reached. The City made ten batches of hires from this list
from 1996 through 2002. The plaintiffs filed their EEOC charges starting in March 1997, more
than 300 days after the City established the lists and sent the letters. The Seventh Circuit held
that the claims were untimely, because the Citys adoption of the lists was the relevant
employment practice. The Supreme Court reversed. Justice Scalia, writing for a unanimous
Court, quoted the language of 703(k)(1)(a)(i) of Title VII, 42 U.S.C. 2000e-2(k)(1)(a)(i),
stated at 2197-98:
Thus, a plaintiff establishes a prima facie disparate-impact claim by showing that the
employer uses a particular employment practice that causes a disparate impact on one
of the prohibited bases. Ibid. (emphasis added). See Ricci v. DeStefano, 557 U.S. ----,
----, 129 S.Ct. 2658, 2672-2673, 174 L.Ed.2d 490 (2009).
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Petitioners' claim satisfies that requirement. Title VII does not define
employment practice, but we think it clear that the term encompasses the conduct of
which petitioners complain: the exclusion of passing applicants who scored below 89
(until the supply of scores 89 or above was exhausted) when selecting those who would
advance. The City use[d] that practice in each round of selection. Although the City
had adopted the eligibility list (embodying the score cutoffs) earlier and announced its
intention to draw from that list, it made use of the practice of excluding those who scored
88 or below each time it filled a new class of firefighters. Petitioners alleged that this
exclusion caused a disparate impact. Whether they adequately proved that is not before
us. What matters is that their allegations, based on the City's actual implementation of its
policy, stated a cognizable claim.
(Emphasis in original.) The Court rejected the Citys argument that the only time to challenge
the test was at the outset:
The City's premise is sound, but its conclusion does not follow. It may be true that
the City's January 1996 decision to adopt the cutoff score (and to create a list of the
applicants above it) gave rise to a freestanding disparate-impact claim. Cf. Connecticut v.
Teal, 457 U.S. 440, 445-451, 102 S.Ct. 2525, 73 L.Ed.2d 130 (1982). If that is so, the
City is correct that since no timely charge was filed attacking it, the City is now entitled
to treat that past act as lawful. United Air Lines, Inc. v. Evans, 431 U.S. 553, 558, 97
S.Ct. 1885, 52 L.Ed.2d 571 (1977). But it does not follow that no new violation
occurredand no new claims could arisewhen the City implemented that decision
down the road. If petitioners could prove that the City use[d] the practice that
causes a disparate impact, they could prevail.
Id. at 2198-99. The Court distinguished cases involving discriminatory intent, and held that
implementation is a triggering act for a disparate-impact claim. The Court rejected the Seventh
Circuits reasoning that there were only superficial differences between a disparate-treatment
claim and a disparate-impact claim. If the effect of applying Title VII's text is that some claims
that would be doomed under one theory will survive under the other, that is the product of the
law Congress has written. It is not for us to rewrite the statute so that it covers only what we
think is necessary to achieve what we think Congress really intended. Id. at 2199-2200.
2. Present Effects of Past Discrimination Under the Ledbetter Fair Pay
Act
Schuler v. PricewaterhouseCoopers, LLP, 595 F.3d 370, 375, 108 Fair Empl.Prac.Cas.
(BNA) 795 (D.C. Cir. 2010), affirmed the grant of summary judgment to defendant on the
ADEA claim involving failure to promote to partner. The time to challenge the promotion
decision had expired, and the court held that the time was not revived by the phrase or other
practice in the Lilly Ledbetter Fair Pay Act despite its effect on compensation. The court held
that the phrase other practice was limited to the type of practice in the Ledbetter case itself,
where a discriminatory performance appraisal was responsible for the challenged compensation
decision. The court concluded: For these reasons, we conclude the decision whether to promote
an employee to a higher paying position is not a compensation decision or other practice within
the meaning of that phrase in the LLA and Schuler's failure-to-promote claim is not a claim of
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discrimination in compensation. The LLA therefore does not revive his claims under the
ADEA. (Footnote omitted.)
3. EEOCs Oral Notice of Right to Sue Does Not Start Clock Running
DeTata v. Rollprint Packaging Products Inc., 632 F.3d 962, 111 Fair Empl.Prac.Cas.
(BNA) 295 (7th Cir. 2011), vacated the dismissal of plaintiffs Complaint as untimely. The
court held that the EEOCs oral notice of issuance of a right-to-sue letter was insufficient to start
the 90-day period running. It summarized the case succinctly: The EEOC dismissed DeTata's
case, and it mailed a right-to-sue letter, but that letter never reached DeTata and was returned to
the agency as undeliverable. DeTata learned about the agency's action only when she telephoned
to check on her case. At that point, the EEOC re-sent the right-to-sue letter and a copy of her
file; she filed this suit within two months of receiving those materials. The district court,
however, using the date of DeTata's phone call as the beginning of the 90-day period in which
she had to file her suit, granted Rollprint's motion to dismiss on the ground that her suit was
untimely. We conclude that, under the facts of this case, the telephone call did not satisfy the
notice requirements of 42 U.S.C. 2000e-5(f)(1). We therefore vacate the district court's
judgment and remand the case for further proceedings. I.d at p. *1. The court also held that
receipt of the notice of right to sue by a third party who claimed to represent the plaintiff was not
enough to start the suit-filing period, where plaintiff contended that she was not represented by
the third party at the time the letter was mailed. The court held that a hearing was necessary in
order to resolve that contention.
4. Tolling Because of Mental Incapacity
sexual harassment plaintiff, rejecting her claim that mental incapacity tolled her time to contact
an EEO counselor. The court stated at pp. *5 to *6:
Here, to support her claim of mental incapacity, Dr. Wilkie relies on the testimony
of Dr. Kathleen HughesKuda, a psychiatrist who opined that Dr. Wilkie seemed pretty
stressed and depressed during the period of 2003 to 2005. Dr. HughesKuda also
testified that she personally witnessed Bercier's intrusions at Dr. Wilkie's home and saw
the stress and depression that the intrusions caused Dr. Wilkie. Dr. Wilkie also relies on
the testimony of John Wegerle, a friend, who testified that Dr. Wilkie was depressed and
stressed during this time period.
But, as in Jessie, neither Dr. HughesKuda's nor Wegerle's testimony satisfies the
high standard for tolling due to mental incapacity. Like in Jessie, the testimony
describing her dis-abilities mentions depression, but it gives no further information
that would shed light on whether the depression affected her ability to understand her
legal rights or act upon them. 516 F.3d at 715. And, Dr. Wilkie has filed no medical
records or opinions indicating that she was deprived of her reasoning faculties or was
incapable of understanding or managing her affairs. Id.
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5. Hostile Environment
exams. All three were disciplined, and Papelino and Basile were expelled. Most of these
events occurred outside the three-year period of limitations applicable to the Title IX claims.
However, the Honor Code hearing was held within the three years before suit was filed. The
court described the evidence of cheating as consisting primarily of statistical charts that Prof.
Nowak, the alleged harasser had prepared, and continued: During the hearing, Nowak leaned
over while showing a document to plaintiffs, whereby her shirt fell forward and plaintiffs were
exposed to her bare breasts. The Student Honor Code Committee found Papelino guilty of
cheating in three classes, Basile guilty of cheating in six classes, and Yu guilty of cheating in one
class. Id. at 87. Plaintiffs sued on May 8, 2001. The district court concluded that the only
harassing event alleged to have occurred within the three years prior to filing of suit was when
Nowak purportedly exposed her breasts to plaintiffs at the Honor Code hearing on May 20, 1998.
The district court held that this incident was not sufficiently severe to constitute actionable
sexual harassment. Id. at 90-91. The court held that this incident was part of the same pattern
of harassment, making the entire course of conduct timely challenged:
We reverse. First, the incident at the Honor Code hearing cannot be so easily
dismissed. Nowak's alleged exposure of her breasts at the hearing cannot be viewed in
isolation. In context, a jury could reasonably find that Nowak engaged in the conduct as
a final sexual taunting of Papelino and the others.
Id. at 91. The court continued, holding that the conduct of the Honor Code hearing was part of
the pattern of retaliation:
Second, the record contains evidence of other incidents of hostile conduct within
the three-year limitations period. For example, after plaintiffs were notified by email on
May 8, 1998 of the cheating charges, Nowak spearheaded the prosecution of the charges
by meeting with other professors and leading the presentation of the evidence. A
reasonable jury could find that Nowak engaged in this conduct because Papelino rejected
her sexual advances, and that these actions were part of a pattern of pervasive conduct
that was sufficiently hostile or abusive to alter the conditions of Papelino's educational
environment. While this adverse treatment was not overtly sexual in nature, in the
circumstances here, a reasonable jury could find that it was on account of sex. . . .
Moreover, under the continuing violation doctrine, a plaintiff may bring claims for
discriminatory acts that would have been barred by the statute of limitations as long as
an act contributing to that hostile environment [took] place within the statutory time
period. . . . A reasonable jury could find that the post-May 8, 1998 conduct was part of a
continuing course of conduct that began with Novak's earlier sexual advances.
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Id. (citations omitted).
sexual harassment plaintiff, rejecting her claim that the nonsexual, undermining conduct within
45 days of her informal complaint the was part of the same pattern as the sexualized conduct
outside the time period. The court explained at p. *7:
Here, Dr. Wilkie has failed to show how Bercier's alleged misconduct in 2004 is
so similar in nature, frequency, and severity to the misconduct occurring in July 2005
and thereafter. . . . As the district court noted, the harassing acts that occurred in 2004
were substantially different than those that occurred in 2005. The 2004 acts can be
characterized as sexual advances and include Bercier coming to Dr. Wilkie's home
while intoxicated, making comments regarding the two dating, playing footsie with Dr.
Wilkie, pointing a laser at her inappropriately, and entering Dr. Wilkie's home and
passing out naked in her bed.

By contrast, the 2005 acts did not involve personal, sexual advances made upon
Dr. Wilkie by Bercier or any other coworker. The alleged harassment was markedly
different, including (1) Bercier withholding information from her relating to one of her
subordinates, Dr. Plasse, taking pharmaceuticals from the emergency room; (2) Bercier
telling another subordinate, Dr. Earls, not to tell Dr. Wilkie about the pharmaceuticals
theft because Dr. Plasse and Dr. Wilkie were having an affair and Dr. Wilkie was under
psychiatric care; (3) Bercier attending a medical staff meeting and making comments that
Dr. Wilkie felt were confrontational to her and others; (4) Bercier questioning Dr. Wilkie
about comments that she had made to a coworker; (5) Bercier contacting Dr. Wilkie
about her inefficiencies monitoring physicians and the time it takes to transfer medical
charts; (6) Bercier referring patients with complaints regarding the pharmacy to Dr.
Wilkie; (7) Dr. Plasse and Dr. Lau calling a meeting of members of the medical staff to
address Dr. Wilkie's position as clinical director, resulting in a no confidence vote; (8)
several doctors verbally complaining to Parker about Dr. Wilkie, and Parker sending Dr.
Wilkie a letter regarding the complaints; (9) the interviewing of several staff members
regarding Dr. Wilkie's job performance; and (10) Parker denying Dr. Wilkie's leave to
attend a continuing medical education course in Las Vegas.
C. Bars to Suit
1. Internal Exhaustion?
reversed the Seventh Circuits decision reported at 560 F. 3d 647 (7th Cir. 2009). The Court
stated at p. *6, n.4: We also observe that Staub took advantage of Proctor's grievance process,
and we express no view as to whether Proctor would have an affirmative defense if he did not.
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2. Immunity for Actions of Co-Workers?
reversed the Seventh Circuits decision reported at 560 F. 3d 647 (7th Cir. 2009). The Court
stated at p. *6, n.4: Needless to say, the employer would be liable only when the supervisor acts
within the scope of his employment, or when the supervisor acts outside the scope of his
employment and liability would be imputed to the employer under traditional agency principles.
. . . We express no view as to whether the employer would be liable if a co-worker, rather than a
supervisor, committed a discriminatory act that influenced the ultimate employment decision.
3. Claim Preclusion
Czarniecki v. City of Chicago, 633 F.3d 545, 111 Fair Empl.Prac.Cas. (BNA) 490 (7th
Cir. 2011), affirmed the dismissal, as barred by res judicata, of plaintiffs Title VII national
origin discrimination suit against the City of Chicago for dismissing him from the Police
Academy because of his national origin. The court described plaintiffs allegations at p. *1:
In September 2007, Wojciech Czarniecki brought a lawsuit under 42 U.S.C.
1983 against the City of Chicago and Tobias. The complaint alleged that Tobias
terminated Czarnieckis employment based on national origin discrimination that violated
the equal protection clause of the Fourteenth Amendment. For purposes of this appeal,
we will treat Czarniecki's allegations as true. Tobias allegedly called Czarniecki into his
office to discuss Czarniecki's use of exam study guides, and then asked him a series of
questions about where he was born (Poland), where his parents were born (Poland), and
what language he spoke at home (Polish). Tobias then allegedly said to Czarniecki: We
don't need people like you. When Czarniecki asked Tobias what his Polish heritage had
to do with the exam study guides, Tobias told Czarniecki you have no rights and said
that he could fire Czarniecki for anything. Shortly thereafter, Czarniecki was
dismissed from the Police Academy.
The district court granted summary judgment in favor of the City, but denied qualified immunity
to Tobias in light of the alleged remarks. Plaintiff ultimately dismissed Tobias without
prejudice, after the district court ruled out relief that only the City could give, such as
reinstatement. Czarniecki filed his second federal action in May 2009, alleging that the City
intentionally discriminated against him in violation of Title VII of the Civil Rights Act of 1964,
42 U.S.C. 2000e et seq., based on his national origin. Under the district court's supplemental
jurisdiction, 28 U.S.C. 1367(a), Czarniecki also alleged state-law claims of intentional
infliction of emotional distress, negligent infliction of emotional distress, and negligent
supervision. Id. at p. *2. The court described the elements of claim preclusion, also known as
res judicata: Claim preclusion under federal law has three ingredients: a final decision in the
first suit; a dispute arising from the same transaction (identified by its operative facts'); and the
same litigants (directly or through privity of interest). Id. at p. *3. The court held that claim
preclusion can sometimes arise from even a dismissal without prejudice, where plaintiff
abandons the claim. It stated: As the appellees indicate, we have repeatedly found that even if a
court dismisses claims without prejudice, we assess finality by whether the district court has
finished with the case. . . . There is no question that the district court's grant of summary
judgment to the City has given rise to a final judgment in favor of the City. Id. The court
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continued with the second element: Second, the old and new cases involved the same parties. In
both the 1983 case and the Title VII case, Czarniecki sued the City of Chicago. The fact that
the second lawsuit does not include Tobias as a defendant does not affect the analysis. Id. at p.
*4. The court held that slight differences in the facts needed to prove liability, or differences in
legal theories, did not bar claim preclusion:
Third, the dispute at the core of the Title VII claim arises from the same
transaction or the same core of operative facts as the dispute at issue in the 1983
claim. Czarniecki's allegations in the Title VII lawsuit are essentially the same allegations
against the City of Chicago in his 1983 lawsuit: that the City of Chicago dismissed him
as a probationary police officer on the basis of national origin discrimination. Czarniecki
further alleges that the discrimination he experienced is part of a pattern of discrimination
and harassment at the Police Academy. As the district court concluded, the only
differences between the first lawsuit and the second lawsuit are the theories of liability
and the fact that the second complaint adds state-law claims for emotional distress.
We reject Czarniecki's argument that because the operative facts needed to prove
a Title VII claim and a 1983 claim are a little different, there is no claim preclusion.
That approach would thoroughly undermine claim preclusion and would allow endless
litigation as long as a lawyer could identify a slightly different cause of action with one
element different from those in the first, second, or third lawsuits between the same
parties arising from the same events. We have consistently explained: Two claims are
one for the purposes of res judicata if they are based on the same, or nearly the same,
factual allegations. . . . Title VII claims are not immune from res judicata, as the plaintiff
seems to suggest. . . . Because both of Czarniecki's federal claims and his new state-law
claims are based on the same set of factual allegations as his 1983 claim, res judicata
bars Czarniecki's Title VII claim and his state-law claims.
Id. at p. 4 (citations omitted). The court rejected plaintiffs argument that claim preclusion
should be barred because he was unable to obtain a Notice of Right to Sue from the EEOC
before the expiration of the two-year period of limitations for filing his 1983 claim: Plaintiffs
in the same situation as Czarnieckiseeking relief under 1983 and Title VII or other federal
employment discrimination statutes for the same adverse employment actionroutinely ask
district courts to stay the first lawsuit until they obtain a right-to-sue letter. Id. at p. *5. Finally,
the court held that plaintiffs State-law causes of action were also barred by claim preclusion
because they arose from the same set of operative facts.
4. Preemption
Lewis v. Whirlpool Corp., 630 F.3d 484, 189 L.R.R.M. (BNA) 3185 (6th Cir. 2011), said
it all in the first sentence: Plaintiff-appellant Timothy Lewis brought a wrongful-termination
claim against defendant-appellee Whirlpool Corporation alleging that he was terminated in
violation of Ohio public policy for his refusal to discharge employees for unionizing activities.
The court held that plaintiffs claim was preempted by the National labor Relations Act, and that
plaintiffs remedy was to file an unfair labor practice charge with the NLRB. The court held that
plaintiffs status as a supervisor did not block preemption under San Diego Building Trades
Council v. Garmon, 359 U.S. 236 (1959). It stated: Lewis asserts that his wrongful-termination
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claim is not arguably subject to the strictures of the NLRA because, as a former supervisor, he
is not an employee covered by the Act. The parties neither dispute that Lewis was a
supervisor, as the term is defined by the Act, nor that the NLRA does not generally protect
supervisors from unfair labor practices. However, a supervisor does have a viable claim under
the NLRA when terminated or otherwise disciplined for refusing to commit unfair labor
practices. Id. at 487-88 (footnotes and citations omitted).
D. Pleading
Skinner v. Switzer, __ U.S. __, 131 S.Ct. 1289, 1296 (2011), reversed the dismissal of a
prisoners Complaint that he had been denied access to potentially exculpatory DNA analysis.
Without even mentioning Iqbal and Twombly, the Court held that the Complaint met the
Swierkewicz standard:
Because this case was resolved on a motion to dismiss for failure to state a claim,
the question below was not whether [Skinner] will ultimately prevail on his procedural
due process claim, see Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d
90 (1974), but whether his complaint was sufficient to cross the federal court's threshold,
see Swierkiewicz v. Sorema N. A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1
(2002). Skinner's complaint is not a model of the careful drafter's art, but under the
Federal Rules of Civil Procedure, a complaint need not pin plaintiff's claim for relief to a
precise legal theory. Rule 8(a)(2) of the Federal Rules of Civil Procedure generally
requires only a plausible short and plain statement of the plaintiff's claim, not an
exposition of his legal argument. See 5 C. WRIGHT & A. MILLER, FEDERAL PRACTICE &
PROCEDURE 1219, pp. 277278 (3d ed. 2004 and Supp. 2010).
Matrixx Initiatives, Inc. v. Siracusano, __ U.S. __, 131 S.Ct. 1309, 1323 (2011), reversed
the dismissal of a securities fraud action. Writing for a unanimous Court, Justice Sotomayor
stated:
We believe that these allegations suffice to raise a reasonable expectation that
discovery will reveal evidence satisfying the materiality requirement, Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and to allo[w]
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged, Iqbal, 556 U.S., at , 129 S.Ct., at 1949. The information provided to
Matrixx by medical experts revealed a plausible causal relationship between Zicam Cold
Remedy and anosmia. Consumers likely would have viewed the risk associated with
Zicam (possible loss of smell) as substantially outweighing the benefit of using the
product (alleviating cold symptoms), particularly in light of the existence of many
alternative products on the market. Importantly, Zicam Cold Remedy allegedly
accounted for 70 percent of Matrixx's sales. Viewing the allegations of the complaint as
a whole, the complaint alleges facts suggesting a significant risk to the commercial
viability of Matrixx's leading product.
Cases 1078 (4th Cir. 2011), affirmed the lower courts dismissal of plaintiffs Title VII hostile-
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environment claim. The court held that plaintiffs allegations were insufficient to allege a hostile
working environment, or that any harassment plaintiff suffered was related to her gender.
Swanson v. Citibank, N.A., 614 F.3d 400 (7th Cir. 2010), reversed the dismissal of the
pro se plaintiffs claims under the Fair Housing Act, although the dismissal of other claims was
affirmed. Construing Iqbal and Twombly, the court placed substantial weight on Erickson v.
Pardus, 551 U.S. 89 (2007). The court suggested at 404 that not much had changed. Referring
to traditional standards, it stated:
Nothing in the recent trio of cases has undermined these broad principles. As
Erickson underscored, [s]pecific facts are not necessary. 551 U.S. at 93, 127 S.Ct.
2197. The Court was not engaged in a sub rosa campaign to reinstate the old fact-
pleading system called for by the Field Code or even more modern codes. We know that
because it said so in Erickson: the statement need only give the defendant fair notice of
what the ... claim is and the grounds upon which it rests. Id. Instead, the Court has
called for more careful attention to be given to several key questions: what, exactly, does
it take to give the opposing party fair notice; how much detail realistically can be
given, and should be given, about the nature and basis or grounds of the claim; and in
what way is the pleader expected to signal the type of litigation that is being put before
the court?
It continued: As we understand it, the Court is saying instead that the plaintiff must give enough
details about the subject-matter of the case to present a story that holds together. In other words,
the court will ask itself could these things have happened, not did they happen. Id. The court
concluded: Swanson's complaint identifies the type of discrimination that she thinks occurs
(racial), by whom (Citibank, through Skertich, the manager, and the outside appraisers it used),
and when (in connection with her effort in early 2009 to obtain a home-equity loan). This is all
that she needed to put in the complaint. Id. at 405. Judge Posner dissented in part. Id. at 407-
12.
Estate of Davis v. Wells Fargo Bank, 633 F.3d 529 (7th Cir. 2011), affirmed the
dismissal of plaintiffs claims under the Equal Credit Opportunity Act and stated at p. *2: To
withstand a Rule 12(b)(6) challenge after Iqbal and Twombly, the plaintiff must give enough
details about the subject-matter of the case to present a story that holds together, and the
question the court should ask is could these things have happened, not did they happen.
Starr v. Baca, 633 F.3d 1191, 2011 WL 477094, 78 Fed.R.Serv.3d 1060 (9th Cir. 2011),
reversed the district courts dismissal of the plaintiff inmates 1983 supervisory liability claim
for deliberate indifference to his health. The court discussed what it described as the
perplexing differences in pleading standards in five recent Supreme Court cases and suggested
a rule of decision:
The juxtaposition of Swierkiewicz and Erickson, on the one hand, and Dura,
Twombly, and Iqbal, on the other, is perplexing. Even though the Court stated in all five
cases that it was applying Rule 8(a), it is hard to avoid the conclusion that, in fact, the
Court applied a higher pleading standard in Dura, Twombly and Iqbal. The Court in
Dura and Twombly appeared concerned that in some complex commercial cases the usual
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lenient pleading standard under Rule 8(a) gave too much settlement leverage to plaintiffs.
That is, if a non-specific complaint was enough to survive a motion to dismiss, plaintiffs
would be able to extract undeservedly high settlements from deep-pocket companies. In
Iqbal, by contrast, the Court was concerned that the usual lenient standard under Rule
8(a) would provide too little protection for high-level executive branch officials who
allegedly engaged in misconduct in the aftermath of September 11, 2001. To the extent
that we perceive a difference in the application of Rule 8(a) in the two groups of cases, it
is difficult to know in cases that come before us whether we should apply the more
lenient or the more demanding standard.
But whatever the difference between these cases, we can at least state the
following two principles common to all of them. First, allegations in a complaint or
counterclaim must be sufficiently detailed to give fair notice to the opposing party of the
nature of the claim so that the party may effectively defend against it. Second, the
allegations must be sufficiently plausible that it is not unfair to require the opposing party
to be subjected to the expense of discovery.
Id. at 1204. Judge Trott dissented. Id. at 1205-10.
E. Summary Judgment
Hoyle v. Freightliner, LLC, __ F.3d __, 2011 WL 1206658, 111 Fair Empl.Prac.Cas.
the sexual harassment defendant, and affirmed the grant of summary judgment on other claims.
The court stated at p. *9:
On appeal, Freightliner pursues a similar approach and undertakes to defend the
district court's summary judgment on the issue of severity/pervasiveness by cataloging
some of the myriad cases that have come before this court and that involved behavior
considerably more offensive and opprobrious than that shown here. While this tack is
understandable, and assuming that other cases involve more heinous behavior in male
dominated workplaces than that shown here, we have never held that a weak case is
necessarily one that should be disposed of on summary judgment. The question at the
summary judgment stage is not whether a jury is sure to find a verdict for the plaintiff;
the question is whether a reasonable jury could rationally so find. . . . On this record, we
are satisfied that the answer to that query is yes and that it was error for the district
court to rule to the contrary as a matter of law. We have never held that a grant of
summary judgment in favor of a defendant is a legitimate substitute for a jury verdict in
favor of a defendant, and we decline to do so here.
(Emphases supplied.)
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F. Class Actions and Collective Actions
Wal-Mart Stores, Inc. v. Dukes, No. 10-277 (Supreme Court). The Ninth Circuits
decision was reported at 603 F.3d 571 (9th Cir. 2010). The Courts December 6, 2010 grant of
certiorari stated that the grant was:
LIMITED TO QUESTION I PRESENTED BY THE PETITION. IN ADDITION TO
QUESTION I, THE PARTIES ARE DIRECTED TO BRIEF AND ARGUE THE
FOLLOWING QUESTION: "WHETHER THE CLASS CERTIFICATION ORDERED
UNDER RULE 23(b)(2) WAS CONSISTENT WITH RULE 23(a)."
The petition for certiorari set forth the following two questions:
I. Whether claims for monetary relief can be certified under Federal Rule of Civil
Procedure 23(b)(2)which by its terms is limited to injunctive or corresponding
declaratory reliefand, if so, under what circumstances.
II. Whether the certification order conforms to the requirements of Title VII, the
Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule
of Civil Procedure 23.
The Court may have foreshadowed at least part of its decision in Dukes when it stated in AT&T
Mobility LLC v. Concepcion, __ U.S. __, __ S.Ct. __, 2011 WL 1561956 (U.S., April 27, 2011),
at p. *11: For a class-action money judgment to bind absentees in litigation, class
representatives must at all times adequately represent absent class members, and absent members
must be afforded notice, an opportunity to be heard, and a right to opt out of the class.
Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., __ U.S. __, 130 S. Ct. 1431
(2010), held that New Yorks statutory limit on class actionsthat they cannot be maintained for
suits seeking penalties or statutory minimum damagesis preempted in a diversity case in
Federal court. The decision means that the New York Labor Law provision allowing for 25%
liquidated damageswhich has not been enforced in most class actions in State or Federal court
for several decadescan now be enforced. The judicial line-up is extraordinary: SCALIA, J.,
announced the judgment of the Court and delivered the opinion of the Court with respect to Parts
I and II-A, in which ROBERTS, C.J., and STEVENS, THOMAS, and SOTO-MAYOR, JJ.,
joined, an opinion with respect to Parts II-B and II-D, in which ROBERTS, C.J., and THOMAS,
and SOTOMAYOR, JJ., joined, and an opinion with respect to Part II-C, in which ROBERTS,
C.J., and, THOMAS, J., joined. STEVENS, J., filed an opinion concurring in part and concurring
in the judgment. GINSBURG, J., filed a dissenting opinion, in which KENNEDY, BREYER,
and ALITO, JJ., joined.
Acevedo v. Allsup's Convenience Stores Inc., 600 F.3d 516, 15 WH Cases 2d 1801 (5th
Cir. 2010), held that the lower court did not abuse its discretion in denying mass joinder of the
former members of an FLSA collective action after the de-certification of the collective action.
The court held that circumstances differed at different stores, and that employees at any one store
could join together in the same action. However, about a thousand employees at three hundred
stores were too many to join.
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Ervin v. OS Restaurant Services, Inc., 632 F.3d 971, 973-74, 17 Wage & Hour Cas.2d
(BNA) 97 (7th Cir. 2011), reversed the denial of Rule 23 class certification for an Illinois-law
class where an FLSA collective action was also sought. The court stated at p. *1:
We conclude that there is no categorical rule against certifying a Rule 23(b)(3)
state-law class action in a proceeding that also includes a collective action brought under
the FLSA. (We refer to these as combined actions, rather than hybrid actions, to
avoid confusion with other uses of the term hybride.g., for cases certified under more
than one subsection of Rule 23(b).) In combined actions, the question whether a class
should be certified under Rule 23(b)(3) will turnas it always doeson the application
of the criteria set forth in the rule; there is no insurmountable tension between the FLSA
and Rule 23(b)(3). Nothing in the text of the FLSA or the procedures established by the
statute suggests either that the FLSA was intended generally to oust other ordinary
procedures used in federal court or that class actions in particular could not be combined
with an FLSA proceeding. We reverse the district court's class-certification
determination and remand for further consideration in accordance with this opinion.
The court held that there was no difference between cases filed originally in federal court and
those removed from State court. There is no reason for any such distinction, however. An
original filing and a proper removal are each appropriate ways to reach federal court. Once a suit
is removed from state court to federal court, it is governed by the federal court's procedures . . .
there is no exclusion for Rule 23 or for any other rule. If there is a problem with combined
actions, as the district court suggested, then the problem exists for all cases within the federal
court's jurisdiction. Id. at p. *4 (citation omitted). The court stated: There is ample evidence
that a combined action is consistent with the regime Congress has established in the FLSA. Id.
at p. *5. It rejected defendants objection that the notice would be confusing, and held that the
problem was not intractable:
It does not seem like too much to require potential participants to make two
binary choices: (1) decide whether to opt in and participate in the federal action; (2)
decide whether to opt out and not participate in the state-law claims. Other courts in this
circuit appear to have had little trouble working out an adequate notice in this type of
case. . . . When we asked at oral argument whether Outback's lawyers could provide any
concrete examples of confusion resulting from this type of notification, they were unable
to point to a single instance. Finally, if these actions were to proceed separatelythe
FLSA in federal court and the state-law class action in state courtan entirely different
and potentially worse problem of confusion would arise, with uncoordinated notices from
separate courts peppering the employees. As a general rule, it will usually be preferable
if the notice comes from a single court, in a unified proceeding, where the court and
lawyers alike are paying close attention to the overall message the participants will
receive.
Id., at p. *6 (citations omitted; emphasis in original). Turning to supplemental jurisdiction under
28 U.S.C. 1367(a), the court stated that it is important to emphasize that the FLSA is not a
statute that expressly provide[s] some limit to supplemental jurisdiction, as section 1367(a)
contemplates that some federal statutes might. . . . For the reasons we have already given, the
opt-in procedures in the FLSA do not operate to limitexpressly or impliedlya district court's
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supplemental jurisdiction to only those state-law claims that also involve opt-in procedures. Id.
at p. *7. The court held that there were no reasons to decline supplemental jurisdiction in this
case. Because the State-law claims closely tracked the Federal claims, there were no novel or
complex issues of Federal law. Id. at p. *8. The court continued:
That leaves subsection (c)(2), which permits a court to decline supplemental
jurisdiction if the state-law claims substantially predominate over the federal action.
The district court concluded that the difference in size between the larger state-law class
and the smaller FLSA collective action made a difference in the supplemental jurisdiction
analysis. If all it meant by this was that the need to include additional parties was
disfavored, then its decision was in conflict with the statute. Section 1367(a) expressly
states that [s]uch supplemental jurisdiction shall include claims that involve the joinder
or intervention of additional parties. 28 U.S.C. 1367(a). Inclusion of additional
litigants as unnamed members of a class is of no more jurisdictional significance than
joinder or intervention, and so we understand that final sentence as one that covers class
actions as well.
Id. The court distinguished De Asencio v. Tyson Foods, Inc., 342 F.3d 301 (3d Cir. 2003),
without addressing its core holding on predominance, by finding that it was fact-based:
It is true that the Third Circuit concluded in De Asencio that the number of state
law plaintiffs might-and did in the case before it-so far outnumber those engaged in the
FLSA collective action that the federal action [was] an appendage to the more
comprehensive state action. 342 F.3d at 312. That was part of the reason that it held that
supplemental jurisdiction should not have been exercised in that case. Without taking a
position on whether a state-law class might ever so dwarf a federal FLSA action that
supplemental jurisdiction becomes too thin a reed on which to ferry the state claims into
federal court, we can say conclusively that in the present case the disparity between the
number of FLSA plaintiffs and the number of state-law plaintiffs is not enough to affect the
supplemental jurisdiction analysis. In the majority of cases, it would undermine the
efficiency rationale of supplemental jurisdiction if two separate forums were required to
adjudicate precisely the same issues because there was a different number of plaintiffs
participating in each claim. . . . In this case, there are approximately 30 participants in the
FLSA collective action and potentially 180 to 250 people who might participate in any of the
three Rule 23 classes. Although that is a greater disparity than the D.C. Circuit considered in
Lindsay, where there were 228 people in the state-law class and 204 proceeding under the
FLSA, see 448 F.3d 425 n. 12, the overall numbers are still low. Our case is quite unlike De
Asencio, where the Third Circuit was confronted with an FLSA collective action involving
447 people and a 23(b)(3) class of 4,100 plaintiffs. See 342 F.3d at 305.
We agree with the D.C. Circuit in Lindsay and the Ninth Circuit in Wang that the
Third Circuit decision in De Asencio represents only a fact-specific application of well-
established rules, not a rigid rule about the use of supplemental jurisdiction in cases
combining an FLSA count with a state-law class action. In our case, the record reflects no
reason to doubt that it is sensible to litigate all theories in a single federal proceeding. The
identity of the issues, the convenience to both plaintiffs and defendants of not having to
litigate in multiple forums, and the economy of resolving all claims at once suggests that an
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exercise of supplemental jurisdiction will normally be appropriate. In all but the most
unusual cases, there will be little cause for concern about fairness or comity.
Id. at p. *9 (citation omitted).
F. Arbitration
AT&T Mobility LLC v. Concepcion, __ U.S. __, __ S.Ct. __, 2011 WL 1561956 (U.S.,
April 27, 2011), upheld a consumer arbitration agreement that included a ban on class
arbitrations. The Ninth Circuit, applying California law, had held the provision unconscionable.
The Supreme Court reversed in a 5-4 decision written by Justice Scalia. The details of the
question before the Court are important in determining its effect. The Court began by stating:
We consider whether the FAA prohibits States from conditioning the enforceability of certain
arbitration agreements on the availability of classwide arbitration procedures. It ended by
holding that the process of arbitration was unsuited for the resolution of class claims. The
arbitration agreement, as unilaterally revised by AT&T, required that claims be brought in the
parties' ndividual capacity, and not as a plaintiff or class member in any purported class or
representative proceeding. Id. at p. 3*. It also barred the arbitrator from consolidating more
than one persons claims, and barred the arbitrator from presiding over any form of a
representative or class proceeding. Id. at p. 3, n.2. The process of arbitration, and the rights
accorded to claimants against AT&T in arbitration, were unusual:
The revised agreement provides that customers may initiate dispute proceedings
by completing a one-page Notice of Dispute form available on AT & T's Web site. AT &
T may then offer to settle the claim; if it does not, or if the dispute is not resolved within
30 days, the customer may invoke arbitration by filing a separate Demand for Arbitration,
also available on AT & T's Web site. In the event the parties proceed to arbitration, the
agreement specifies that AT & T must pay all costs for nonfrivolous claims; that
arbitration must take place in the county in which the customer is billed; that, for claims
of $10,000 or less, the customer may choose whether the arbitration proceeds in person,
by telephone, or based only on submissions; that either party may bring a claim in small
claims court in lieu of arbitration; and that the arbitrator may award any form of
individual relief, including injunctions and presumably punitive damages. The
agreement, moreover, denies AT & T any ability to seek reimbursement of its attorney's
fees, and, in the event that a customer receives an arbitration award greater than AT & T's
last written settlement offer, requires AT & T to pay a $7,500 minimum recovery and
twice the amount of the claimant's attorney's fees.
FN3

FN3. The guaranteed minimum recovery was increased in 2009 to $10,000. . . .
The Courts description of the district courts approach at p. *3 is also important:
In March 2008, AT & T moved to compel arbitration under the terms of its
contract with the Concepcions. The Concepcions opposed the motion, contending that
the arbitration agreement was unconscionable and unlawfully exculpatory under
California law because it disallowed classwide procedures. The District Court denied AT
& T's motion. It described AT & T's arbitration agreement favorably, noting, for
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example, that the informal dispute-resolution process was quick, easy to use and likely
to promp[t] full or ... even excess payment to the customer without the need to arbitrate
or litigate; that the $7,500 premium functioned as a substantial inducement for the
consumer to pursue the claim in arbitration if a dispute was not resolved informally; and
that consumers who were members of a class would likely be worse off. . . .
Nevertheless, relying on the California Supreme Court's decision in Discover Bank v.
Superior Court, 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005), the court found
that the arbitration provision was unconscionable because AT & T had not shown that
bilateral arbitration adequately substituted for the deterrent effects of class actions. . . .
The Court rejected respondents argument that the California law barring exculpatory provisions
and holding class action waivers unconscionable applied to litigation as well as arbitration, and
could thus be reconciled with the FAA. It stated at pp. *6 and *7:
When state law prohibits outright the arbitration of a particular type of claim, the
analysis is straightforward: The conflicting rule is displaced by the FAA. Preston v.
Ferrer, 552 U.S. 346, 353, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008). But the inquiry
becomes more complex when a doctrine normally thought to be generally applicable,
such as duress or, as relevant here, unconscionability, is alleged to have been applied in a
fashion that disfavors arbitration. In Perry v. Thomas, 482 U.S. 483, 107 S.Ct. 2520, 96
L.Ed.2d 426 (1987), for example, we noted that the FAA's preemptive effect might
extend even to grounds traditionally thought to exist at law or in equity for the
revocation of any contract. Id., at 492, n. 9, 107 S.Ct. 2520 (emphasis deleted). We
said that a court may not rely on the uniqueness of an agreement to arbitrate as a basis
for a state-law holding that enforcement would be unconscionable, for this would enable
the court to effect what ... the state legislature cannot. Id., at 493, n. 9, 107 S.Ct. 2520.
An obvious illustration of this point would be a case finding unconscionable or
unenforceable as against public policy consumer arbitration agreements that fail to
provide for judicially monitored discovery. The rationalizations for such a holding are
neither difficult to imagine nor different in kind from those articulated in Discover Bank.
A court might reason that no consumer would knowingly waive his right to full
discovery, as this would enable companies to hide their wrongdoing. Or the court might
simply say that such agreements are exculpatoryrestricting discovery would be of
greater benefit to the company than the consumer, since the former is more likely to be
sued than to sue. See Discover Bank, supra, at 161, 30 Cal.Rptr.3d 76, 113 P.3d, at 1109
(arguing that class waivers are similarly one-sided). And, the reasoning would continue,
because such a rule applies the general principle of unconscionability or public-policy
disapproval of exculpatory agreements, it is applicable to any contract and thus
preserved by 2 of the FAA. In practice, of course, the rule would have a
disproportionate impact on arbitration agreements; but it would presumably apply to
contracts purporting to restrict discovery in litigation as well.
Other examples are easy to imagine. The same argument might apply to a rule
classifying as unconscionable arbitration agreements that fail to abide by the Federal
Rules of Evidence, or that disallow an ultimate disposition by a jury (perhaps termed a
panel of twelve lay arbitrators to help avoid preemption). Such examples are not
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fanciful, since the judicial hostility towards arbitration that prompted the FAA had
manifested itself in a great variety of devices and formulas declaring arbitration
against public policy. Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402,
406 (C.A.2 1959). And although these statistics are not definitive, it is worth noting that
California's courts have been more likely to hold contracts to arbitrate unconscionable
than other contracts. Broome, An Unconscionable Applicable of the Unconscionability
Doctrine: How the California Courts are Circumventing the Federal Arbitration Act, 3
Hastings Bus. L.J. 39, 54, 66 (2006); Randall, Judicial Attitudes Toward Arbitration and
the Resurgence of Unconscionability, 52 Buffalo L.Rev. 185, 186187 (2004).
The Court described at p. *7 a concession by respondents:

Rules aimed at destroying arbitration or demanding procedures incompatible with
arbitration, they concede, would be preempted by the FAA because they cannot
sensibly be reconciled with Section 2. Brief for Respondents 32. The grounds
available under 2's saving clause, they admit, should not be construed to include a
State's mere preference for procedures that are incompatible with arbitration and would
wholly eviscerate arbitration agreements. . . .

The majority stated:

We largely agree. Although 2's saving clause preserves generally applicable
contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as
an obstacle to the accomplishment of the FAA's objectives. . . . As we have said, a federal
statute's saving clause cannot in reason be construed as [allowing] a common law right,
the continued existence of which would be absolutely inconsistent with the provisions of
the act. In other words, the act cannot be held to destroy itself. . . .

Id. However, the Court held that the requirement of class proceedings was just such an element
incompatible with arbitration: The overarching purpose of the FAA, evident in the text of 2,
3, and 4, is to ensure the enforcement of arbitration agreements according to their terms so as to
facilitate streamlined proceedings. Requiring the availability of classwide arbitration interferes
with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.
Id. at p. 8. The Court made clear that classwide arbitration was available by consent, but that
requiring it under Discover Bank was incompatible with arbitration and the FAA.
Classwide arbitration includes absent parties, necessitating additional and different
procedures and involving higher stakes. Confidentiality becomes more difficult. And
while it is theoretically possible to select an arbitrator with some expertise relevant to the
class-certification question, arbitrators are not generally knowledgeable in the often-
dominant procedural aspects of certification, such as the protection of absent parties. The
conclusion follows that class arbitration, to the extent it is manufactured by Discover
Bank rather than consensual, is inconsistent with the FAA.
Id. at p. *9. The Court held that the a main advantage of arbitration is informality, and that class
arbitration requires formality. For a class-action money judgment to bind absentees in
litigation, class representatives must at all times adequately represent absent class members, and
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absent members must be afforded notice, an opportunity to be heard, and a right to opt out of the
class. Id. at p. *11. It then accepted the common argument of defendants that the stakes in
class litigation are so high that defendants are compelled to settle. The Court then turned a
logical cartwheel, turned its back on the use of arbitration to resolve large commercial disputes
and its past reliance on that practice to impose arbitration in the employment context, and stated
that class arbitration is unsuitable because arbitration is generally for small amounts:
Third, class arbitration greatly increases risks to defendants. Informal procedures
do of course have a cost: The absence of multilayered review makes it more likely that
errors will go uncorrected. Defendants are willing to accept the costs of these errors in
arbitration, since their impact is limited to the size of individual disputes, and presumably
outweighed by savings from avoiding the courts. But when damages allegedly owed to
tens of thousands of potential claimants are aggregated and decided at once, the risk of an
error will often become unacceptable. Faced with even a small chance of a devastating
loss, defendants will be pressured into settling questionable claims. Other courts have
noted the risk of in terrorem settlements that class actions entail . . . and class
arbitration would be no different.

Arbitration is poorly suited to the higher stakes of class litigation. In litigation, a
defendant may appeal a certification decision on an interlocutory basis and, if
unsuccessful, may appeal from a final judgment as well. Questions of law are reviewed
de novo and questions of fact for clear error. In contrast, 9 U.S.C. 10 allows a court to
vacate an arbitral award only where the award was procured by corruption, fraud, or
undue means; there was evident partiality or corruption in the arbitrators; the
arbitrators were guilty of misconduct in refusing to postpone the hearing ... or in refusing
to hear evidence pertinent and material to the controversy[,] or of any other misbehavior
by which the rights of any party have been prejudiced; or if the arbitrators exceeded
their powers, or so imperfectly executed them that a mutual, final, and definite award ...
was not made. The AAA rules do authorize judicial review of certification decisions, but
this review is unlikely to have much effect given these limitations; review under 10
focuses on misconduct rather than mistake. And parties may not contractually expand the
grounds or nature of judicial review . . . . We find it hard to believe that defendants would
bet the company with no effective means of review, and even harder to believe that
Congress would have intended to allow state courts to force such a decision.
FN8

FN8. The dissent cites three large arbitration awards (none of which stems from
classwide arbitration) as evidence that parties are willing to submit large claims before an
arbitrator. Post, at 78. Those examples might be in point if it could be established that
the size of the arbitral dispute was predictable when the arbitration agreement was
entered. Otherwise, all the cases prove is that arbitrators can give huge awardswhich
we have never doubted. The point is that in class-action arbitration huge awards (with
limited judicial review) will be entirely predictable, thus rendering arbitration
unattractive. It is not reasonably deniable that requiring consumer disputes to be
arbitrated on a classwide basis will have a substantial deterrent effect on incentives to
arbitrate.
Finally, the Court addressed the argument that only class treatment would result in relief to
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persons with small claims:
The dissent claims that class proceedings are necessary to prosecute small-dollar
claims that might otherwise slip through the legal system. See post, at 9. But States
cannot require a procedure that is inconsistent with the FAA, even if it is desirable for
unrelated reasons. Moreover, the claim here was most unlikely to go unresolved. As
noted earlier, the arbitration agreement provides that AT & T will pay claimants a
minimum of $7,500 and twice their attorney's fees if they obtain an arbitration award
greater than AT & T's last settlement offer. The District Court found this scheme
sufficient to provide incentive for the individual prosecution of meritorious claims that
are not immediately settled, and the Ninth Circuit admitted that aggrieved customers who
filed claims would be essentially guarantee[d] to be made whole, 584 F.3d, at 856, n. 9.
Indeed, the District Court concluded that the Concepcions were better off under their
arbitration agreement with AT & T than they would have been as participants in a class
action, which could take months, if not years, and which may merely yield an
opportunity to submit a claim for recovery of a small percentage of a few dollars. . . . .
Id. at p. *13 (emphasis in original). Justice Thomas joined the majority opinion and also wrote a
concurring opinion. Justice Breyer filed a dissenting opinion, joined by Justices Ginsberg,
Sotomayor, and Kagan.
Comment on AT&T Concepcion v. Mobility: This is not a workmanlike product. The
Courts reasoning ignores the history, purpose, and application of the Federal Arbitration Act,
and pulls out of thin airand contrary to realitythe proposition on which it actually decided the
case: that arbitration is only for small claims. However, it seems to me that the Courts
approach will turn out to be self-limiting.
I do not think that this result will affect EEO class litigation seeking systemic injunctive
relief where there are arbitration agreements with class action bans. The Court has permitted
arbitration agreements to be enforced only where they do not interfere with the substantive
rights of litigants, and one of the most important substantive rights in systemic EEO class
litigation is an injunctive decree changing the employers personnel practices for the future.
Such decrees can be obtained only in class actions, because individuals suing as individuals do
not have the standing necessary to obtain broad injunctive decrees that will not benefit them
personally. Thus, enforcement of a class action waiver would effectively immunize the
employer from one of the most important aspects of relief and repeal the injunctive provisions of
the EEO laws. Since this cannot be done, the arbitration agreement must either fall so that the
class claims can be heard in court, or the class claims must be heard in arbitration. There is no
room for AT&T Mobility in EEO class litigation seeking systemic injunctive relief.
Nor do I think that AT&T Mobility will have any effect in the normal consumer case.
AT&Ts plan made its customers individually better off in ADR and arbitration than they would
have been if they litigated the case in court and obtained all the relief allowable. That is
extraordinarily rare. The Court emphasized this better off feature both at the beginning and at
the end of its decision. In the 99.99% of all consumer cases where there are no such elements,
and where application of AT&T Mobility would in effect preclude the ability to obtain even
individual relief because the damages are small, the Fifth Amendment stands as a bar to class
action waivers. The Court had no occasion to consider the practical denial of due process, or
the status of AT&T as using state action under the FAA to deprive customers of property
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interests without due process of law, because such a question cannot arise where the
agreement leaves individuals with an incentive to proceed and a means of paying counsel. The
question does arise in the more typical consumer situation.
Rent-a-Center West v. Jackson, __ U.S. __, 130 S. Ct. 2772, 109 Fair Empl.Prac.Cas.
(BNA) 897 (2010), a 1981 case, involved an arbitration agreement that delegated to the
arbitrator any question of the validity of the arbitration agreement. The Court stated: The
Agreement provided for arbitration of all past, present or future disputes arising out of
Jackson's employment with Rent-A-Center, including claims for discrimination and claims for
violation of any federal ... law. . . . It also provided that [t]he Arbitrator, and not any federal,
state, or local court or agency, shall have exclusive authority to resolve any dispute relating to
the interpretation, applicability, enforceability or formation of this Agreement including, but not
limited to any claim that all or any part of this Agreement is void or voidable. Id. at 2775.
Plaintiff challenged the agreement as unconscionable under Nevada law because of the
requirement that he pay half the fees. The Court held that the agreement met the heightened
standard of clear and unmistakable evidence that the parties intended to delegate to the arbitrator
the issue of arbitrability, but that the heightened showing did not mean that the party seeking to
enforce arbitration had to show by clear and unmistakable evidence that the agreement was not
unconscionable. Id. at 2778 n.1. The Court held that the agreement to arbitrate is enforceable
under 2 of the FAA without regard to the enforceability of the underlying contract, and that a
court must therefore determine the enforceability of the agreement to arbitrate even if all other
questions under the agreement are to be resolved by the arbitrator. The Court held that it made
no difference that the agreement to arbitrate here involved the delegation provision as to
arbitrability, and that the remainder of the agreement was the broad arbitration agreement.
Accordingly, unless Jackson challenged the delegation provision specifically, we must treat it as
valid under 2, and must enforce it under 3 and 4, leaving any challenge to the validity of the
Agreement as a whole for the arbitrator. Id. at 2779. Justice Scalia wrote the opinion of the
Court, joined by the Chief Justice and Justices Kennedy, Thomas, and Alito. Justice Stevens
dissented, joined by Justices Ginsburg, Breyer, and Sotomayor.
Stolt-Nielsen S.A. v. AnimalFeeds International Corp., __ U.S. __, 130 S.Ct. 1758, 176
L.Ed.2d 605, (2010), held that an interim arbitration award ordering classwide arbitration must
be vacated under the F.A.A. where the arbitral panel exceeded its powers by failing to base its
decision on New York law or maritime law as to the proper construction of an arbitration
agreement that is silent as to class arbitration, and instead donning the mantle of a common-law
court in deciding what is the best public policy in such situations. The Court stated at 1768-69:
Rather than inquiring whether the FAA, maritime law, or New York law contains
a default rule under which an arbitration clause is construed as allowing class
arbitration in the absence of express consent, the panel proceeded as if it had the authority
of a common-law court to develop what it viewed as the best rule to be applied in such a
situation. Perceiving a post-Bazzle consensus among arbitrators that class arbitration is
beneficial in a wide variety of settings, the panel considered only whether there was
any good reason not to follow that consensus in this case. . . . The panel was not
persuaded by court cases denying consolidation of arbitrations,FN5 by undisputed
evidence that the Vegoilvoy charter party had never been the basis of a class action, or
by expert opinion that sophisticated, multinational commercial parties of the type that
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are sought to be included in the class would never intend that the arbitration clauses
would permit a class arbitration.FN6 . . . Accordingly, finding no convincing ground for
departing from the post-Bazzle arbitral consensus, the panel held that class arbitration
was permitted in this case. . . . The conclusion is inescapable that the panel simply
imposed its own conception of sound policy.FN7
(Footnotes omitted.) The Court held at 1775-76:
From these principles, it follows that a party may not be compelled under the
FAA to submit to class arbitration unless there is a contractual basis for concluding that
the party agreed to do so. In this case, however, the arbitration panel imposed class
arbitration even though the parties concurred that they had reached no agreement on
that issue . . .. The critical point, in the view of the arbitration panel, was that petitioners
did not establish that the parties to the charter agreements intended to preclude class
arbitration. . . . Even though the parties are sophisticated business entities, even though
there is no tradition of class arbitration under maritime law, and even though
AnimalFeeds does not dispute that it is customary for the shipper to choose the charter
party that is used for a particular shipment, the panel regarded the agreement's silence on
the question of class arbitration as dispositive. The panel's conclusion is fundamentally
at war with the foundational FAA principle that arbitration is a matter of consent.
In certain contexts, it is appropriate to presume that parties that enter into an
arbitration agreement implicitly authorize the arbitrator to adopt such procedures as are
necessary to give effect to the parties' agreement. Thus, we have said that procedural
questions which grow out of the dispute and bear on its final disposition are
presumptively not for the judge, but for an arbitrator, to decide. . . . This recognition is
grounded in the background principle that [w]hen the parties to a bargain sufficiently
defined to be a contract have not agreed with respect to a term which is essential to a
determination of their rights and duties, a term which is reasonable in the circumstances
is supplied by the court. Restatement (Second) of Contracts 204 (1979).
An implicit agreement to authorize class-action arbitration, however, is not a term
that the arbitrator may infer solely from the fact of the parties' agreement to arbitrate.
This is so because class-action arbitration changes the nature of arbitration to such a
degree that it cannot be presumed the parties consented to it by simply agreeing to submit
their disputes to an arbitrator. In bilateral arbitration, parties forgo the procedural rigor
and appellate review of the courts in order to realize the benefits of private dispute
resolution: lower costs, greater efficiency and speed, and the ability to choose expert
adjudicators to resolve specialized disputes. . . . But the relative benefits of class-action
arbitration are much less assured, giving reason to doubt the parties' mutual consent to
resolve disputes through class-wide arbitration. . . . Cf. First Options, supra, at 945
(noting that one can understand why courts might hesitate to interpret silence or
ambiguity on the who should decide arbitrability point as giving the arbitrators that
power, for doing so might too often force unwilling parties to arbitrate contrary to their
expectations).
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Justice Alito wrote the majority opinion, joined by the Chief Justice and Justices Scalia,
Kennedy, and Thomas. Justice Ginsburg dissented, joined by Stevens and Breyer. Justice
Sotomayor did not participate.
G. Evidence
1. Authenticity
VII racial discrimination plaintiff. The court held that plaintiffs counsel acted improperly
during closing argument by suggesting to the jury that an e-mail in a joint exhibit had been
fabricated by defendant. Plaintiff had made no challenge to its authenticity, and no testimony or
exhibit suggested it had been fabricated. The lower court erroneously overruled defendants
objection to the argument, but the court held that the error did not rise to the level requiring a
new trial. Id. at pp. *11-*12.
2. Other Instances of Discrimination
Sprint/United Management Co. v. Mendelsohn, 552 U.S. 379, 102 Fair Empl.Prac.Cas.
(BNA) 1057 (2008), reversed and remanded the decision of the Tenth Circuit, and held that the
lower court erred in concluding that a two-line minute entry of the district court meant that the
lower court had adopted a per se rule barring testimony of other instances of discrimination, and
in conducting its own balancing test as to such testimony instead of remanding the case to the
district court. The unanimous Court stated its views on the evidentiary issue succinctly:
The question whether evidence of discrimination by other supervisors is relevant
in an individual ADEA case is fact based and depends on many factors, including how
closely related the evidence is to the plaintiff's circumstances and theory of the case.
Applying Rule 403 to determine if evidence is prejudicial also requires a fact-intensive,
context-specific inquiry. Because Rules 401 and 403 do not make such evidence per se
admissible or per se inadmissible, and because the inquiry required by those Rules is
within the province of the District Court in the first instance, we vacate the judgment of
the Court of Appeals and remand the case with instructions to have the District Court
clarify the basis for its evidentiary ruling under the applicable Rules.
Id. at 388.
and thus a hostile housing environment. The court held that the lower court did not abuse its
discretion by admitting the evidence of three other female tenants. The trial court had excluded
the evidence of the fourth tenant as too remote, since the incident in question occurred in 1999.
H. Jury Trial
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Thomas v. iStar Financial, Inc., 629 F.3d 276, 281, 110 Fair Empl.Prac.Cas. (BNA) 1761
(2d Cir. 2010) (per curiam), was a case brought under Title VII and under the New York City
Human Rights Law. Plaintiff lost on his racial discrimination claim at trial, but prevailed on his
retaliation claim. The court rejected defendants argument that the lower court erred by
submitting the back pay claims to the jury:
Finally, while defendants are correct that lost wages under Title VII are equitable and,
therefore, need not be tried by a jury
FN4
. . ., economic damages under the statute may
nevertheless be tried by a jury if both sides consent. . . . Such consent may be express or
implied. . . . Because the defendants cannot point to anywhere in the record where they
objected to the district court submitting the issue of back-pay damages to the jury, they
have constructively consented to the jury trying that issue and have waived any challenge
to it.
________
FN4. Although we have never addressed the issue, defendants may be correct
that federal courts should also treat as equitable damages for violations of pendent state
law claims that are virtually identical to Title VII claims. . . . Because the defendants
consented to a jury trial on this aspect of damages, however, we need not resolve the
issue here.
I. Jury Instructions
VII racial discrimination plaintiff. Plaintiff relied on a cats paw theory under which the bias
of a non-decisionmaker influenced the decisionmaker to terminate plaintiff. The court held that
the standard pattern jury instructionwhether plaintiffs race made a difference to the
outcomewas sufficient, and that there was no need to discuss the intricacies of legal theories:
The statutory language of Title VII and the standard jury instructions in this
circuit weigh against too stringent a standard of proof for the cat's paw theory. Title VII
is written in terms of what the employer is prohibited from doing: it is unlawful for an
employer-(1) to fail or refuse to hire or to discharge any individual ... because of such
individual's race, color, religion, sex, or national origin. 42 U.S.C. 2000e-2(a). The
focus is on the employer entity as a whole, not on individual managers or supervisors,
who are not individually liable for an employer's violations of federal discrimination
statutes. . . . The statute is also written broadly in terms of cause: because of such
individual's race. This circuit's pattern jury instructions in employment discrimination
cases focus on causation. They leave plenty of room for counsel to argue a cat's paw
theory as a question of fact. The district judge gave the appropriate standard instruction
here: To determine that Ms. Schandelmeier-Bartels was terminated because of her race,
you must decide that the Park District would not have terminated Ms. Schandelmeier-
Bartels had she been non-Caucasian but everything else about Ms. Schandelmeier-Bartels
had been the same. See Seventh Circuit Pattern Civil Jury Instructions No. 3.01; . . . . It
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is not necessary to instruct the jury about the intricacies of various doctrines the courts
have developed for digesting summary judgment motions in employment discrimination
cases. The court may and should simply ask the jury the counter-factual question, and the
parties may argue whether, for example, the plaintiff's race made the critical difference,
regardless of which of the employer's agents made or influenced the decision, or exactly
how they did so.
Id. at p. *5. The court also held that defendants objection to the instructionswhich was made
during the middle of deliberations, after the jury had sent a note asking for clarificationwas
untimely.
J. The Jury Verdict
Ortiz v. Jordan, __ U.S. __, 131 S.Ct. 884, 79 USLW 4056 (2011) (Ginsberg, J.),
reversed the Sixth Circuits determination after a full trial that the prison officials who were civil
rights defendants were entitled to the grant of summary judgment on the basis of qualified
immunity. The Court held that no such review was possible after a full trial, and that the
question of qualified immunity had to be addressed in light of the trial record. Id. at 888-89, 891.
Defendants lost at trial, and substantial verdicts were entered against them, but they did not avail
themselves of the usual steps available to those who lose at trial:
The case proceeded to trial, and a jury returned a verdict of $350,000 in
compensatory and punitive damages against Jordan and $275,000 against Bright. Jordan
and Bright sought judgment as a matter of law, pursuant to Rule 50(a), both at the close
of Ortiz's evidence and at the close of their own presentation. But they did not contest the
jury's liability finding by renewing, under Rule 50(b), their request for judgment as a
matter of law. Nor did they request a new trial under Rule 59(a).
Id. at 890-91. The Court held that defendants waived their right to challenge the sufficiency of
the evidence because they did not renew their motion for judgment as a matter of law within 28
days after the entry of judgment. Id. at 892-94. The Court clarified the distinction between a
Rule 50 judgment as a matter of law and a Rule 59 grant of new trial:
A plea that a verdict is against the weight of the evidence, of course, is not equivalent
to a plea that the evidence submitted at trial was insufficient to warrant submission of the
case to the jury. 11 C. WRIGHT, A. MILLER, & E. COOPER, FEDERAL PRACTICE &
PROCEDURE 2806, pp. 65-67 (2d ed.1995 and Supp.2010). A determination that a
verdict is against the weight of the evidence may gain a new trial for the verdict loser, but
never a final judgment in that party's favor.
Id. at 892 n.6. Justice Thomas, joined by Justices Scalia and Kennedy, concurred. Id. at 894-95.
K. Rate of Prejudgment Interest
Thomas v. iStar Financial, Inc., 629 F.3d 276, 279-80, 110 Fair Empl.Prac.Cas. (BNA)
1761 (2d Cir. 2010) (per curiam), was a case brought under Title VII and under the New York
City Human Rights Law. The court rejected plaintiffs argument that prejudgment interest
should have been based on the New York rate of prejudgment interest, rather than on the Federal
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rate. As the district court stated, and we now hold, judgments that are based on both state and
federal law with respect to which no distinction is drawn shall have applicable interest calculated
at the federal interest rate. Id. at 280 (citations omitted). The court distinguished wage and
hour cases in which liquidated damages are awarded, because interest is not available on FLSA
claims where liquidated damages are awarded, but is available on New York labor Law claims
where liquidated damages are awarded. They stand for the proposition that where prejudgment
interest can only be awarded on the basis of what is solely a state claim, it is appropriate to use
the state interest rate. Id. at 280 n.2.
Comment on Thomas v. iStar Financial: New York has a 9% rate of prejudgment
interest. In light of Thomas, plaintiffs attorneys in New York should think about using a verdict
form in discrimination cases that distinguishes between awards under State law and awards
under Federal law.
L. Compensatory Damages
Human Rights Law. The court rejected plaintiffs argument that his compensatory damages
should have included damages for his inability to close on a house: Likewise, evidence that
Thomas had asked for an advance on his bonus some eight months before he was fired was an
insufficient basis for a reasonable jury to find that damages related to Thomas's inability to close
on a house were reasonably foreseeable to the defendants. See Hadley v. Baxendale, 9 Exch 341,
156 ER 145 (Eng.1854).
Comment on Thomas v. iStar Financial and Hadley v. Baxendale: Did we ever think
we would see that case cited as a rule of decision in an employment case? Keep those first-
year notebooks around!
VII racial discrimination plaintiff. The court held, however, that the jurys award of $200,000 in
compensatory damages was excessive and that no award above $30,000 would have been
reasonable. The court explained at p. *14:

We do consider Schandelmeier's testimony concerning the emotional impact of
the discriminatory acts that were directed at her, including Adams's racist tirade and her
termination. Although Adams's rants on July 31st and August 1st were understandably
offensive and disturbing to Schandelmeier, those incidents were also isolated. She was
not subjected to such incidents throughout her employment with the Park District, but
only twice, and she did not testify to any lasting physical or emotional effects resulting
from Adams's abuse. Regarding her termination, she testified that she was disturbed,
devastated and upset to be losing her job, but she also testified that she found a new
job just 10 days later. Schandelmeier did not testify to any lasting emotional or physical
ill-effects from losing her job with the Park District.
The court also surveyed other awards. Plaintiff did not rely on any expert.
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M. Punitive Damages
1. Upholding Entitlement
retaliation claim. The court held that the defendant company subjected itself to punitive-damage
liability by allowing an antagonist of plaintiffs to participate in the decision to terminate him:
Similarly, the record reveals sufficient evidence for a jury find that iStar was recklessand thus
susceptible to punitive damagesby allowing Baron to participate in the decision to terminate
Thomas when senior officials at the company knew the two men did not get along.
2. Amounts
retaliation claim. The jury awarded $1.6 million in punitive damages award on the retaliation
claim, and the trial court granted defendants Rule 59 motion for a new trial on punitive
damages, holding that $190,000 was the largest amount constitutionally permissible. Plaintiff
then joined with defendant in petitioning for a reduction of the punitive-damages award to
$190,000. The petition was granted, and plaintiff appealed. The court held: It is settled law
that a plaintiff in federal court, whether prosecuting a state or federal cause of action, may not
appeal from a remittitur order he has accepted. Id. (citations omitted). The court held that
plaintiff could not escape this rule by petitioning, or joining with defendant in petitioning, for a
reduction. Id.
3. Lower Court Chopped Too Much from the Award
and thus a hostile housing environment. The jury awarded $250,000 in punitive damages, and
the lower court reduced the award to $20,527.50. The court explained the lower courts
reduction: The district court noted the punitive damages award was more than eighteen times
the compensatory damages award ($13,685.00) and found the award was excessive and did not
comport with due process. The district court reduced the award to $20,527.50, which amounted
to one and a half times the compensatory damages award, for the simple reason that [Winter's]
conduct ... can be considered only as to what he said and did directly to [Quigley]. Id. at 953.
The Eighth Circuit held that the jury should be presumed to follow the instruction that its award
should be based only on defendants conduct towards Quigley, and held that the conduct was
reprehensible but a single-digit multiplier was appropriate. Relying on the penalty structure of
$55,000 for first-time violations in cases brought by the Attorney General, the court stated:
While we agree with the district court that the jury's punitive damage award was
excessive, we disagree with the district court's assessment that $20,527.50, which is one
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and a half times the compensatory award, sufficiently reflects the reprehensibility of
Winter's conduct. We conclude an appropriate punitive damages award in this case is
$54,750. This amount is four times greater than Quigley's compensatory damages
($13,685.00), which we find is an appropriate ratio under the circumstances of this case.
This amount comports with due process, while achieving the statutory and regulatory
goals of retribution and deterrence. See Campbell, 538 U.S. at 425.
Id. at 955-56.
N. Attorneys Fees
1. Enhancements
Perdue v. Kenny A. ex rel. Winn, __ U.S. __, 130 S.Ct. 1662, 176 L.Ed.2d 494, 109 Fair
Empl.Prac.Cas. (BNA) 1 (2010) (Alito, J.), reversed the enhancement of a fee award in a 1983
class action involving a challenge to foster child services in two Georgia counties, on behalf of
3,000 children. The five-Justice majority strongly endorsed the lodestar approach as providing a
more objective basis for awarding and reviewing fees than the old standard of Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir. 1974). The Court described the
virtues of the lodestar approach at 1672:
Although the lodestar method is not perfect, it has several important virtues.
First, in accordance with our understanding of the aim of fee-shifting statutes, the
lodestar looks to the prevailing market rates in the relevant community. . . . Developed
after the practice of hourly billing had become widespread . . . the lodestar method
produces an award that roughly approximates the fee that the prevailing attorney would
have received if he or she had been representing a paying client who was billed by the
hour in a comparable case. Second, the lodestar method is readily administrable . . . ; and
unlike the Johnson approach, the lodestar calculation is objective . . . and thus cabins
the discretion of trial judges, permits meaningful judicial review, and produces
reasonably predictable results.
(Emphasis in original.) The Court described, at 1672-73, six rules that it gleaned from prior
decisions:
Our prior decisions concerning the federal fee-shifting statutes have established
six important rules that lead to our decision in this case.
First, a reasonable fee is a fee that is sufficient to induce a capable attorney to
undertake the representation of a meritorious civil rights case. See Delaware Valley I,
478 U.S., at 565, 106 S.Ct. 3088 ([I]f plaintiffs ... find it possible to engage a lawyer
based on the statutory assurance that he will be paid a reasonable fee, the purpose
behind the fee-shifting statute has been satisfied); Blum, supra, at 897, 104 S.Ct. 1541
([A] reasonable attorney's fee is one that is adequate to attract competent counsel, but
that does not produce windfalls to attorneys (ellipsis, brackets, and internal quotation
marks omitted)). Section 1988's aim is to enforce the covered civil rights statutes, not to
provide a form of economic relief to improve the financial lot of attorneys. Delaware
Valley I, supra, at 565, 106 S.Ct. 3088.
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Second, the lodestar method yields a fee that is presumptively sufficient to
achieve this objective. See Dague, supra, at 562, 112 S.Ct. 2638; Delaware Valley I,
supra, at 565, 106 S.Ct. 3088; Blum, supra, at 897, 104 S.Ct. 1541; see also Gisbrecht,
supra, at 801-802, 122 S.Ct. 1817. Indeed, we have said that the presumption is a
strong one. Dague, supra, at 562, 112 S.Ct. 2638; Delaware Valley I, supra, at 565,
106 S.Ct. 3088.
Third, although we have never sustained an enhancement of a lodestar amount for
performance, see Brief for United States as Amicus Curiae 12, 17, we have repeatedly
said that enhancements may be awarded in rare and exceptional circumstances.
Delaware Valley I, supra, at 565, 106 S.Ct. 3088; Blum, supra, at 897, 104 S.Ct. 1541;
Hensley, 461 U.S., at 435, 103 S.Ct. 1933.
Fourth, we have noted that the lodestar figure includes most, if not all, of the
relevant factors constituting a reasonable attorney's fee, Delaware Valley I, supra, at
566, 106 S.Ct. 3088, and have held that an enhancement may not be awarded based on a
factor that is subsumed in the lodestar calculation, see Dague, supra, at 562-563, 112
S.Ct. 2638; Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S.
711, 726-727, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987) (Delaware Valley II) (plurality
opinion); Blum, 465 U.S., at 898, 104 S.Ct. 1541. We have thus held that the novelty and
complexity of a case generally may not be used as a ground for an enhancement because
these factors presumably [are] fully reflected in the number of billable hours recorded
by counsel. Ibid. We have also held that the quality of an attorney's performance
generally should not be used to adjust the lodestar [b]ecause considerations concerning
the quality of a prevailing party's counsel's representation normally are reflected in the
reasonable hourly rate. Delaware Valley I, supra, at 566, 106 S.Ct. 3088.
Fifth, the burden of proving that an enhancement is necessary must be borne by
the fee applicant. Dague, supra, at 561, 112 S.Ct. 2638; Blum, 465 U.S., at 901-902, 104
S.Ct. 1541.
Finally, a fee applicant seeking an enhancement must produce specific evidence
that supports the award. Id., at 899, 901, 104 S.Ct. 1541 (An enhancement must be based
on evidence that enhancement was necessary to provide fair and reasonable
compensation). This requirement is essential if the lodestar method is to realize one of
its chief virtues, i.e., providing a calculation that is objective and capable of being
reviewed on appeal.
The Court said at 1674 that enhancements are possible but rare: In light of what we have said in
prior cases, we reject any contention that a fee determined by the lodestar method may not be
enhanced in any situation. The lodestar method was never intended to be conclusive in all
circumstances. Instead, there is a strong presumption that the lodestar figure is reasonable, but
that presumption may be overcome in those rare circumstances in which the lodestar does not
adequately take into account a factor that may properly be considered in determining a
reasonable fee. The Court did not shut the door entirely on such a possibility, but was limiting:
We conclude that there are a few such circumstances but that these circumstances are indeed
rare and exceptional, and require specific evidence that the lodestar fee would not have been
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adequate to attract competent counsel, Blum, supra, at 897, 104 S.Ct. 1541 (internal quotation
marks omitted). Id. The Court described those circumstances:
First, an enhancement may be appropriate where the method used in determining
the hourly rate employed in the lodestar calculation does not adequately measure the
attorney's true market value, as demonstrated in part during the litigation.FN5 This may
occur if the hourly rate is determined by a formula that takes into account only a single
factor (such as years since admission to the bar) FN6 or perhaps only a few similar
factors. In such a case, an enhancement may be appropriate so that an attorney is
compensated at the rate that the attorney would receive in cases not governed by the
federal fee-shifting statutes. But in order to provide a calculation that is objective and
reviewable, the trial judge should adjust the attorney's hourly rate in accordance with
specific proof linking the attorney's ability to a prevailing market rate.
Respondents correctly note that an attorney's brilliant insights and critical
maneuvers sometimes matter far more than hours worked or years of experience. . . .
But as we said in Blum v. Stenson, 465 U.S. 886, 898, 104 S.Ct. 1541, 79 L.Ed.2d 891
(1984), [i]n those cases, the special skill and experience of counsel should be reflected
in the reasonableness of the hourly rates.
FN6. See, e.g., Salazar v. District of Columbia, 123 F.Supp.2d 8 (D.D.C.2000);
Laffey v. Northwest Airlines, Inc., 572 F.Supp. 354 (D.D.C.1983), aff'd in part, rev'd in
part, 746 F.2d 4 (C.A.D.C.1984).
Second, an enhancement may be appropriate if the attorney's performance
includes an extraordinary outlay of expenses and the litigation is exceptionally protracted.
As Judge Carnes noted below, when an attorney agrees to represent a civil rights plaintiff
who cannot afford to pay the attorney, the attorney presumably understands that no
reimbursement is likely to be received until the successful resolution of the case, 532
F.3d, at 1227, and therefore enhancements to compensate for delay in reimbursement for
expenses must be reserved for unusual cases. In such exceptional cases, however, an
enhancement may be allowed, but the amount of the enhancement must be calculated
using a method that is reasonable, objective, and capable of being reviewed on appeal,
such as by applying a standard rate of interest to the qualifying outlays of expenses.
Third, there may be extraordinary circumstances in which an attorney's
performance involves exceptional delay in the payment of fees. An attorney who expects
to be compensated under 1988 presumably understands that payment of fees will
generally not come until the end of the case, if at all. . . . Compensation for this delay is
generally made either by basing the award on current rates or by adjusting the fee based
on historical rates to reflect its present value. Missouri v. Jenkins, 491 U.S. 274, 282,
109 S.Ct. 2463, 105 L.Ed.2d 229 (1989) (internal quotation marks omitted). But we do
not rule out the possibility that an enhancement may be appropriate where an attorney
assumes these costs in the face of unanticipated delay, particularly where the delay is
unjustifiably caused by the defense. In such a case, however, the enhancement should be
calculated by applying a method similar to that described above in connection with
exceptional delay in obtaining reimbursement for expenses.
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The Court remanded the case for further proceedings. Justice Alito wrote the majority opinion,
joined by the Chief Justice and Justices Scalia, Kennedy, and Thomas. Justices Kennedy and
Thomas also wrote separate concurring opinions. Justice Breyer concurred in part and dissented
in part, joined by Justices Stevens, Ginsburg, and Sotomayor.
2. Fee Recoveries
Quigley v. Winter, 598 F.3d 938, 956-59 (8th Cir. 2010), affirmed the jury verdict under
the Fair Housing Act, and held that the plaintiff tenant had established sexual harassment by the
landlord and thus a hostile housing environment. The court held that the lower court erred in
failing to conduct a lodestar analysis and in limiting the fee award to $20,000 because of
concerns about defendants ability to pay. Rather than remand the case, it awarded $78,044.33
in fees itself. The court accepted counsels hourly rates but cut their hours by a third because the
case was too heavily lawyered and too many attorneys moved in and out of the case. Judge
Gruender dissented from the failure to remand the fee issue. Id. at 959-60.
O. Sanctions
Peterson v. Archstone Communities LLC, __ F.3d __, 2011 WL 1437501 (D.C. Cir.
April 15, 2011), reversed the dismissal of the pro se plaintiffs case, holding that the failure to
appear at a single motions hearing did not justify dismissal of the action. The court rejected
defendants argument that plaintiff had also filed baseless discovery motions, because
defendants opposition to plaintiffs motion for appointment of counsel had represented to the
court that plaintiff was doing a good job of representing herself: In a pleading opposing
Peterson's motion for appointment of counsel to represent her in the district court, Archstone
advised the court as follows: [C]ounsel for Archstone has observed that Ms. Peterson has, to
date, ably drafted and responded to motions, participated in discovery conferences, and
otherwise capably represented herself in this matter. . . . And the district court, in denying
Peterson's motion for appointment of counsel, found that her motions display not only a
workable familiarity with the Federal Rules of Civil Procedure and the local rules of this Court,
but also her ability to represent herself adequately. . . .
Lamboy-Ortiz v. Ortiz-Velez, 630 F.3d 228 (1st Cir. 2010), reversed the award of
$130,000 in defendants attorneys fees against the civil rights political-discrimination and due
process plaintiffs, affirmed the imposition of sanctions on plaintiffs counsel under 28 U.S.C.
1927, and reduced the amount of the sanctions from over $64,936 to $5,000. The court held
that the lower court improperly emphasized the failure of plaintiffs evidence at trial, and did not
adequately consider the information known to plaintiff at the time the Complaint was filed. Id at
237-38. Examining the record itself, the court noted that some of the evidence supporting
plaintiffs had been excluded at trial because of the failure to provide English translations, or
other problems that did not affect the reasonableness of reliance on the substance of the
evidence. The court concluded: Overall, it was reasonable for the plaintiffs to attribute a
political motive to the apparent campaign of harassment against them, given the undisputed
hostility between members of the NPP and PDP in Sabana Grande, the intimations of a
connection between the Mayor and Vargas-Santiago, and the apparent absence of any legitimate
explanation for the excessively punitive response from the police administration to Vargas-
Santiago's allegations against the plaintiffs. Id. at 239 (citation omitted).
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In sum, our review of the record finds the evidence available to plaintiffs at the
time of filing easily sufficient to support the reasonableness of their suit. We are left to
choose between one of two possible conclusions concerning the basis for the district
court's contrary assessment. First, the district court may have failed to give any
consideration to the evidence we have discussed above, relying solely upon the plaintiffs'
ultimate inability to support their case at trial as a proxy for the reasonableness of their
suit at the outset-in other words, a pure application of hindsight logic. Second, the court
may have duly considered all available evidence of reasonableness, but substantially
discounted it in light of the failure of proof at trial. The choice between the two makes
little difference. In either case, it is clear that the court gave significant weight to a factor
that should have received little or no consideration in its analysis . . . and we therefore
must conclude that the court abused its discretion.
Id. at 241 (citations omitted). In the next step of its analysis, the court cautioned that a finding
that an originally reasonable claim was prosecuted after it became untenable was particularly
prone to impermissible hindsight analysis. Thus, while a court need not find bad faith to justify
an award of fees for the continuation of a clearly untenable claim . . . it must at a minimum find
that, following the filing of the claim, circumstances changed to such an extent that a reasonable
person could not help but conclude that the claim was no longer viable. Such a change would
include, for example, the receipt of evidence in the course of discovery establishing a complete
defense, or a development in the controlling law that foreclosed the claim. Id. at 241-42
(citation omitted). The court held that plaintiffs survival of summary judgment may or may not
bear on the reasonableness of the claim, depending on the extent to which it was based on the
merits. Id. at 242. Ordinarily, however, one would not expect to see an untenable claim survive
a summary judgment on the merits, as occurred in the case at bar. Id. The court reversed the fee
award. Turning to the sanctions against plaintiffs counsel, the court first held that it had
jurisdiction to consider the appeal despite the failure to name plaintiffs counsel as an appellant
in the Notice of Appeal, since it was clear from the Notice that an appeal was sought from the
order awarding feeds against plaintiff and sanctioning plaintiffs counsel, and it was clear that an
appeal was sought as to the sanctions against counsel. Under the 1993 amendment to Rule 3,
F.R.A.P., this was sufficient. Id. at 243-44. The court held that Rule 11, Fed. R. Civ. Pro., was
not available as a basis for sanctions because defendants had not filed a 21-day safe harbor
motion, and the lower court had not on its own initiative issued an order to show cause why Rule
11 sanctions should not be imposed. Id. at 244-45. The court continued:
Even if these procedural safeguards had been satisfied, Rule 11 could not provide
a proper basis for the court's award of sanctions. The court's order detailed three separate
grounds for sanctions, but only the first of thesethe vexatious conduct of plaintiffs'
counselwas adequately supported. The court cited as additional or alternative grounds
(1) the filing of frivolous claims ... with no basis in fact and (2) the filing of frivolous
appeals. Our holding that the plaintiffs' suit had adequate foundation at the time of
filing forecloses the frivolous claims argument, and the court made no findings
sufficient to support its characterization of plaintiffs' prior appeals as frivolous.
Moreover, it is Federal Rule of Appellate Procedure 38, not Federal Rule of Civil
Procedure 11, that authorizes sanctions for the filing of frivolous appeals.
Id. at 245 (footnote omitted). The court held that Rule 11 could not reach the attorney
2540

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misconduct basis for sanctions, because the misconduct in question did not involve the filing of
papers, to which Rule 11 was restricted. Id. The court held, however, that 1927 was well-
suited to the types of vexatious conduct at issue:
The types of litigation conduct we have previously found vexatious and
unreasonablee.g., attempting to introduce evidence on irrelevant matters in the face of
numerous admonitions to desist, and engag[ing] in obfuscation of the issues,
hyperbolism and groundless presumptions, . . . pervade the record here. At trial,
attorney Gonzlez repeatedly ignored evidentiary rulings, pressing forward to ask
questions identical to those barred, often just moments prior, by the trial judge. On one
occasion, attorney Gonzlez refused to leave the sidebar when ordered to after an adverse
ruling, forcing the judge to remove the jury from the room and censure the attorney for
his obstinacy and manifest disrespect. Attorney Gonzlez further persisted, in
contravention of his obligations as an officer of the court, in making blatant
misrepresentations and referring to matters not established by evidence in the record.
This misconduct evoked a string of warnings from an admirably patient trial judge,
starting with an order near the outset of the case instructing plaintiffs' counsel to refrain
from making injurious remarks and avoid unnecessary rhetoric irrelevant to the issues
of the case, and proceeding to multiple, on-the-record admonishments and threats of
sanction during trial.
Id. at 246 (footnote omitted). The court held that, where the district court made no effort to
calculate the additional costs to defendants arising from the misconduct but simply took a third
of the total fee award, the sanctions award must be considered solely in relation to deterrence.
Id. at 247-48. The court stated that, while a lasting sting was appropriate for deterrence,
counsel could be deterred by something short of a financial disaster:
There can be no doubt of the need for a sanction that will signal to attorney
Gonzlez the seriousness of his misconduct and deter similar behavior in the future.
Nonetheless, we find $64,936 to exceed what is reasonably necessary for these purposes.
The sum lies far outside the mainstream in this circuit, where sanctions typically amount
to less than $10,000. Moreover, the sanction appears likely to impose an unjustifiable
hardship on attorney Gonzlez, who, according to counsel's representations to the court,
operates a small law office in partnership with his son, and for whom $64,936 would
likely threaten financial disaster. Accordingly, we modify the sanction to $5,000, a sum
we deem sufficient to deter similar conduct by attorney Gonzlez in the future and place
other potential offenders on notice of the consequences of such conduct.
Id. at 248-49 (footnotes omitted).
Harris v. Maricopa County Superior Court, 631 F.3d 963, 978, 111 Fair Empl.Prac.Cas.
the prevailing defendant. The court held that the lower court erred by dividing fees for general
work on the case equally across all causes of action, and held that some causes of action were
frivolous, some were not frivolous. The court held, for example, that plaintiffs hostile-
environment claim was sufficiently frivolous to justify a fee award against plaintiff because he
only alleged conduct sufficient to make out a disparate-treatment claim, and did not allege severe
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and pervasive conduct. The court also held that fees could only be awarded to defendants for
work done exclusively on the frivolous claims:
As we have already explained, in a civil rights action with multiple claims, only some of
which are groundless, a defendant is entitled only to those fees attributable exclusively to
defending against plaintiff's frivolous claims. If the work is performed in whole or in part
in connection with defending against any of plaintiff's claims for which fees may not be
awarded, such work may not be included in calculating a fee award. Accordingly, the
fees properly attributable to this claim, if any, would be quite minimal.
Norelus v. Denny's, Inc., 628 F.3d 1270, 111 Fair Empl.Prac.Cas. (BNA) 4 (11th Cir.
2010), affirmed the trial courts imposition of sanctions jointly and severally on plaintiff and on
plaintiffs counsel, in the amount of $387,738.45, for making 868 changes to plaintiffs
deposition testimony through a letter claiming errata, and for pursuing plaintiffs claim despite
knowledge of plaintiffs changing story and despite fact witnesses who testified that some of
plaintiffs contentions could not possibly be true because of the physical layout of the workplace.
For example, the court stated:
From the deposed witnesses' descriptions of the restaurants involved, it is
inconceivable that gross sexual harassment and misconduct could have occurred on a
near-daily basis for nearly a year, as Norelus claimed it did, without any witnesses having
seen or heard anything. According to Boleda, there is no way anything is going to
happen in that little tiny restaurant and [some employees are] not going to see what's
going on. Another waitress, Michele Stewart, explained that everything is open.
Employees are all over the restaurant. She agreed that [t]here's no way the conduct
Norelus alleged could have occurred without some employee seeing something. Line
cook Martin testified that it would be impossible for the conduct alleged to occur
without people knowing because the restaurant is too small.
Id. at 1275-76. Plaintiff admitted lying in her deposition and asked what was wrong with that,
and in her deposition denied allegations in her Complaint. The court stated that the witnesses on
whom plaintiff relied uniformly failed to corroborate her claims, described the evidence against
plaintiff as a mountain, and criticized plaintiffs counsel for continuing to believe their client
despite her shifting stories, the lack of corroborating evidence, and the strength of the evidence
against her claims. Plaintiffs counsel did arrange for a lie detector test to be administered to
plaintiff. The examiner found that plaintiff was lying about some matters, but not about her core
allegations. Id. at 1277. Plaintiffs counsel also arranged for plaintiff to be examined by a
clinical psychologist. They selected Dr. Astrid Schutt-Aine, a psychologist who spoke Haitian
French Creole, to perform the evaluation. She was of the opinion that Norelus' symptoms were
consistent with those exhibited by people suffering from Post-Traumatic Stress Disorder. The
record contains no evidence, however, that Dr. Schutt-Aine formed any opinion about the source
or nature of any trauma Norelus had suffered. Id. The errata sheet was compiled by using
plaintiffs brother as a translator, having an associate read the questions and the brother translate
the questions and plaintiffs answers. Id. The court continued:
The finished product errata sheet was actually sixty-three sheets that made 868 changes
to Norelus' deposition testimony. The reason given for more than 500 of the 868 changes
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to Norelus' deposition testimony was merely that Norelus [d]id not understand what was
being asked. The reasons given for most of the other changes in Norelus' testimony
were classified into three broad categories: poor translation by interpreter,
clarification of response, and refreshed recollection. At the end of the lengthy errata
sheet Norelus signed a sworn statement certifying that she had read the transcript of her
deposition and that it is a true and accurate recording of the proceedings had at the time
and place designated with the exceptions, if any, on the ERRATA sheet.
Id. at 1278. This was about four weeks before the start of trial. The court held that the
improper submission of the massive errata document rendered the eight days spent on Norelus'
deposition a waste of time and money to say nothing of the time the attorneys were forced to
spend on the issues created by the document itself, and that this violated 28 U.S.C. 1927. The
court identified the specific issue it was deciding:
The issue is not whether bringing the action in the first place was sanctionable. The issue
is not even whether continuing to pursue the case after all of Norelus' witnesses refused
to corroborate her claims was sanctionable. The issue is whether creating and submitting
the sixty-three page errata document and then continuing to press forward with Norelus'
claims, which had been left completely unsupported once the errata document rendered
her testimony useless, constituted conduct sanctionable under 1927.
Id. at 1291-92. The court stated that plaintiff and her counsel were not being sanctioned for the
lack of corroborating witnesses, although it would have been likely that there would have been
corroborating witnesses if plaintiffs testimony had been true:
. . . this is not a case where the claimed harassment occurred only when the victim and
abusers were behind closed doors or in a manner in which there likely would be no
corroboration. To the contrary, Norelus claimed not only that her managers sexually
harassed her virtually every day for eleven months, but also that they regularly raped her
and forced her to perform oral sex on a near-daily basis. She claimed most of the abuse
occurred in one of two relatively small restaurants where there were few, if any, places to
hide. If the alleged acts actually happened, they happened where many of them would
have been seen or heard by other employees. This is a case where the plaintiff claimed
that at least seven of her co-workers witnessed at least some of sexual abuse during the
eleven months it allegedly had occurred over and over again. This is not a case in which
it is unreasonable to expect corroborating evidence. It is a case in which, if the plaintiff's
story were true, it would be incredible not to have some corroborating evidence.
Id. at 1292. The court held that the fees and costs incurred by defendants were a proper part of
the sanctions award. Id. at 1297-1302. District Judge Bowen, sitting by designation, declined to
join Part III-C of the opinion. Id. at 1302. Judge Tjoflat dissented. Id. at 1302-12.
VII. Federal-Sector Particularities
Artis v. Bernanke, 630 F.3d 1031, 111 Fair Empl.Prac.Cas. (BNA) 300 (D.C. Cir. 2011),
reversed the dismissal of the class complaint of a group of secretaries presently or formerly
employed by the Federal Reserve Board. The court held that the class representatives had
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sufficiently cooperated with the counseling process by providing general allegations of the
classwide discrimination, coupled with recent examples of which they had personal knowledge.
It rejected the governments argument that the case should be dismissed because of bad faith in
the counseling process. The court stated at 1038-39 (citations omitted):
The Board cites several instances of obstruction of the counseling process by the
secretaries and their lawyer that it attributes to bad faith: Some if not all the secretaries
refused to discuss personal experiences of discrimination in group counseling sessions.
Some also refused to give specific examples of discrimination in their individual
counseling sessions, despite the Board's request for details. Finally, the secretaries
counsel refused to agree to an extension of the 30-day counseling period so the Board
could consider his request for statistical data and obtain the information if appropriate.
Assuming the Board accurately perceives a lack of good-faith cooperation in this
conduct, the secretaries nevertheless satisfied the administrative counseling requirement.
The counselees' alleged bad faith is relevant only to the extent it completely
frustrat[ed] the agencies' ability to investigate complaints. . . . As we have explained, the
Board was not so stymied. Despite their lawyer's counterproductive advice, the
secretaries managed to convey much more than bare notice of the basis of [their]
complaint. . . . Doubtless other class agents were not as forthcoming as Carter, Dorey,
Love-Blackwell, and Williams. But this is irrelevant to the administrative exhaustion
issue, since a single class agent may satisfy the counseling requirement as to the entire
class. . . .
Cases 1078 (4th Cir. 2011), reversed the dismissal of plaintiffs claims under the Civil Service
Reform Act of 1978, holding that when a Federal employee raises both discrimination claims
and CSRA claims in an administrative mixed-case complaint to an agency EEO office, and
where 120 days pass without an administrative decision, she may seek de novo determinations of
both her discrimination claims and her CSRA claims.
Carson v. U.S. Office of Special Counsel, __F.3d __, 2011 WL 650495 (6th Cir. Feb. 24,
2011), affirmed the denial of a petition for mandamus to require the OSC to investigate his
claims of prohibited personnel practices, but held that mandamus is available in limited
circumstances: Thus, we hold that a district court has subject matter jurisdiction to issue a writ
of mandamus only if it determines that the Office of Special Counsel has declined to investigate
a complaint at all; it has no subject matter jurisdiction to consider the Office of Special Counsel's
jurisdictional determinations or the merits of its investigations.
VIII. Appellate Tips for Effective Advocacy
The D.C. Circuit Plays Gotcha: Schuler v. PricewaterhouseCoopers, LLP, 595 F.3d
370, 375 n.*, 108 Fair Empl.Prac.Cas. (BNA) 795 (D.C. Cir. 2010), affirmed the grant of
summary judgment to defendant on the ADEA claim involving failure to promote to partner.
The court held that plaintiff-appellant did not preserve his challenge to the lower courts
rejection of his piggybacking argument as to the timeliness of his charge of discrimination:
In his opening brief, however, Schuler refers to piggybacking only in a footnote . . . in which he
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makes no affirmative argument that he should be allowed to piggyback, contending only the
reasons the district court gave for denying piggybacking were wrong. Because he first makes his
affirmative argument in his reply brief, we do not consider it.
Ahern v. Shinseki, 629 F.3d 49, 58-59, 110 Fair Empl.Prac.Cas. (BNA) 1785 (1st Cir.
2010), affirmed the grant of summary judgment to the Title VII defendant. The court held that
plaintiffs waived their constructive-discharge claims by presenting only terse support in the
district court, which led to a finding of waiver below, and on appeal ignoring the finding of
waiver and attempting to bolster these claims by a different merits-based theory. The court
stated: An appellant cannot change horses in mid-stream, arguing one theory below and a quite
different theory on appeal. . . . The plaintiffs have done violence to this principle and, therefore,
have waived (or, at least, forfeited) their constructive discharge claim. (Citations omitted.)
affirmed the grant of summary judgment to the USERRA defendant. The court disapproved of
plaintiffs approach, stating at p. *2: The district court made fact-findings about the Johnson-
Lisdahl relationship: We expressly find that the concentrated effort by Lisdahl, and his attorney,
to demonize Johnson was as fictionalized as it was scurrilous, and that there is absolutely no
credible basis to ascribe any legitimacy to that claimed fear.
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July 28 - 30, 2011
Constructive Discharge: Is Deliberateness/Intent an
Element Necessary to Establish a Constructive Discharge
By
Washington, D.C.
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RESPONSIBILITY


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MATERIAL.

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Copyright 2011, Robert B. Fitzpatrick, Robert B. Fitzpatrick, PLLC, Washington, D.C. All Rights
Reserved

Const ruct ive
Discharge:
Is Deliberat eness/Int ent an
Element Necessary t o Est ablish
a Const ruct ive Discharge?
by

Circuit Split

Federal Circuits are split on the issue of whether
deliberateness/intent is a necessary element to establish a claim of
constructive discharge. The Eighth and Fourth Circuits have
addressed the issue recently, and the Ninth Circuit gave a helpful
description of the state of the law across circuits in Poland v.
Chertoff, below.

In 2004, the U.S. Supreme Court decided Pennsylvonio Stote Police v.
SuJers, S42 0.S. 129, 124 S.Ct. 2S42, 1S9 L. Eu. 2u 2u4 (2uu4). In SuJers, the
Couit helu that employeis may be helu liable unuei Title vII foi constiuctive
uischaige, that constiuctive uischaige may be consiueieu a tangible
employment action, anu that the Fllertb,Foroqber affiimative uefense is
available to employeis in some constiuctive uischaige cases. The SuJers
Couit fuithei helu that an employee biinging a cause of action foi hostile
woik enviionment constiuctive uischaige must show ( 1) that there was a
hostile work environment and ( 2) that the working conditions were
so intolerable that a reasonable person would have felt compelled
to resign. The Court did not impose an intent requirement, leaving
open the question of whether intent is a necessary element in
constructive discharge cases generally. For further analysis of this
subject, see Crystal L. Norrick, Eliminating the Intent Requirement in
Constructive Discharge Cases: Pennsylvania State Police v. Suders,
47 Wm. And Mary L. Rev. 1813 ( 2006) .

PolonJ v. Cbertoff, 494 F.3d 1174; 2007 U.S. App. LEXIS 17247
( 9
th
Cir. 2007) , affirmed in part, reversed in part, and vacated in
part a decision by the District Court entering judgment in favor of a
former employee of the U.S. Customs Service. In dicta, the Court
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discussed the circuit split on the issue of intent in constructive
discharge claims, stating as follows:

"0nlike some of oui sistei ciicuits, we uo not iequiie that, in auuition to
pioving that woiking conuitions weie intoleiable, a plaintiff must establish
that his employei cieateu the intoleiable conuitions with the intent to cause
the employee to iesign. Compore |Wotson v. NotionwiJe lns. Co., 823 F.2d
360, 361; 1987 U.S. App. LEXIS 10011, 1-2 ( 9
th
Cir. 1987) ]
( holding that, to establish a claim of constructive discharge, the
plaintiff need not show that the employer subjectively intended to
force the employee to resign) , Ramos v. Davis & Geck, Inc., 167
F.3d 727, 732-33 ( 1
st
Cir. 1999) ( same) , Derr v. Gulf Oil Corp.,
796 F.2d 340, 343-44 ( 10
th
Cir. 1986) ( same) , Gross v. Exxon
Office Sys. Co., 747 F.2d 885, 888 ( 3
rd
Cir. 1984) ( same) , and
Bourque v. Powell Elec. Mfg. Co., 617 F.2d 61, 65 ( 5
th
Cir. 1980)
( same) , with Elnshar v. Speedway SuperAmerica, LLC, 484 F.3d
1046, 1058 ( 8
th
Cir. 2007) ( requiring plaintiff to prove employers
intent) , Goldmeier v. Allstate Ins. Co., 337 F.3d 629, 635 ( 6
th
Cir.
2003) ( same) , and J ohnson v. Shalala, 991 F.2d 126, 131 ( 4
th
Cir.
1993) ( [ T] he standard for constructive discharge requires a
plaintiff to show both intolerable working conditions and a
deliberate effort by the employer to force the employee to quit.) .

See also Small v. Feather River College, 2011 U.S. Dist. LEXIS
51579, No. 2:10-CV-3026-J AM-GGH ( E.D. Ca. May 3, 2011) ,
following Poland v. Chertoff in holding that the Ninth Circuit does
not require a plaintiff to establish that his employer created the
intolerable conditions with the intent to cause the employee to
resign.

Petrosino v. Bell Atl., 385 F.3d 210; 2004 U.S. App. LEXIS
20513 ( 2
nd
Cir. 2004) , reversed the grant of summary judgment on
appellants constructive discharge claim. The court stated:
Focusing first on the intent requirement, we recognize that in
some constructive discharge cases, plaintiffs have been able to
establish that employers acted with the specific intent to prompt
employees' resignations Certainly, where such evidence exists,
the mens rea requirement is easily established. Nevertheless, this
court has not expressly insisted on proof of specific intent.
Deferring decision on the issue in Whidbee v. Garzarelli Food
Specialties, Inc., [ 223 F.3d 62 ( 2
nd
Cir. 2000) ,] the court observed
that if a plaintiff suing for constructive discharge cannot show
specific intent, he or she must at least demonstrate that the
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employer' s actions were deliberate and not merely negligent or
ineffective. ( Internal citations omitted) .

See olso Rooney v. Brown 6roup Retoil, lnc., 2u11 0.S. Bist. LEXIS S4918, Case
No. u8-Cv-484-BRB-AKT (E.B.N.Y. Naich S1, 2u11), following Petrosino v.
Bell Atl. in holding that [ a] lthough the plaintiff is not burdened to
prove specific intent, she must at least show that the employers
actions were deliberate and not merely negligent or ineffective.
( quoting Petrosino v. Bell Atl. 385 F.3d at 230) .

Hiller v. Proxoir, lnc, 408 Fed. Appx. 408; 2010 U.S. App. LEXIS
24222 ( 2
nd
Cir. 2010) , cert. denied, No. 10-1299; 2011 U.S. LEXIS
4890 ( J une 27, 2011) , cert. denied, Docket No. 10-1299, 2010
U.S. LEXIS 4890 ( J une 27, 2011) , affirming summary judgment for
the employer on an employees claim that she was constructively
discharged in violation of Title VII. The Second Circuit held that to
establish a constructive discharge claim, a plaintiff must show that
the employer intentionally creates a work atmosphere that the
employee is forced to quit involuntarily. The employee filed a
petition for certiorari to the U.S. Supreme Court on November 24,
2010, presenting the question of whether a plaintiff seeking to
establish constructive discharge under Title VII must show that the
employer intended to cause the plaintiff to resign.
See olso TorJJ v. Brookboven Notl lob., No. u4-S262, 2uu7 0.S. Bist. LEXIS
S4S78, at *14 (E.B.N.Y. Nay 8, 2uu7), stating "|ijn light of |the employee'sj
own testimony that |his employeij was woiking to keep him as an employee
anu that he was tieateu well by his new supeivisoi, the Couit holus as a
mattei of law that no iational tiiei of fact coulu infei that the uefenuants
weie uelibeiately cieating an intoleiable woiking enviionment."

Goldmeier v. Allstate Ins. Co., 337 F.3d 629, 635 ( 6
th
Cir.
2003) , affirmed the District Courts grant of summary judgment to
the defendant employer, holding that to constitute a constructive
discharge, the employer must deliberately create intolerable
working conditions, as perceived by a responsible person, with the
intention of forcing the employee to quit and the employee must
actually quit. ( quoting Moore v. KUKA Welding Sys. & Robot Corp.,
171 F.3d 1073, 1080 ( 6
th
Cir. 1999) ) .

See olso Hitcbell v. 0niv. HeJ. Ctr., lnc., No. u7-414, 2u1u 0.S. Bist. LEXIS
8u194, at *21 n.9 (W.B. Ky. Aug. 9, 2u1u), noting that constiuctive uischaige
iequiies showing that employei intenueu to foice employee to quit, anu
iejecting plaintiff's claim because of eviuence that employei "wanteu hei to
stay."
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ForJ v. 6HC, SuS F.Su S4S; 2002 U.S. App. LEXIS 20501 ( 6
th
Cir.
2002) , affirmed in part and reversed in part the District Courts
grant of summary judgment to the employer, stated that in order
to prove constructive discharge, [ a] plaintiff must show that the
employer intended and could reasonably have foreseen the impact
of its conduct on the employee.

West v. Tyson FooJs, S74 Feu. App'x 624, 64u (6th Cii. 2u1u), holuing that
"To ueteimine if theie is a constiuctive uischaige, both the employei's intent
anu the employee's objective feelings must be examineu."

Norotzky v. Notrono Cnty. Hem. hosp. BJ. of Trs., 61u F.Su SS8, S6S (1uth
Cii. 2u1u), stating that the Tenth Ciicuit applies 'an objective test unuei
which neithei |the plaintiff'sj subjective views of the situation, noi |the
employei'sj subjective intent aie ielevant.'" (quoting Tron v. Trs. of Stote
Colls. in Colo., SSS F.Su 126S, 127u (1uth Cii. 2uu4) (alteiations ueleteu)).

For additional cases in which the plaintiff was not required to
show that the employer intended to force the employee to quit,
see the following:

Ramos v. Davis & Geck, 167 F.3d 727, 732 ( 1st Cir. 1999) ;
Goss v. Exxon Office Sys. Co., 747 F.2d 885 ( 3d Cir. 1984) ;
Bourque v. Powell Elec. Mfg. Co., 617 F.2d 61, 64 ( 5th Cir.
1980) ;
Lindale v. Tokheim Corp., 145 F.3d 953, 955 ( 7
th
Cir. 1998) ;
Nolan v. Cleland, 686 F.2d 806, 81314 ( 9th Cir. 1982) ;
0err v. 6ulf 0il Corp., 796 F.Su S4u (1uth Cii.1986);
Steele v. Offshore Shipbuilding Inc., 867 F.2d 1311, 1317
( 11th Cir. 1989) ;

For additional cases in which the plaintiff was required to show
that the employer intended to force the employee to quit, see:

Logan v. Dennys, 259 F.3d 558, 56869 ( 6th Cir. 2001)
( holding that constructive-discharge plaintiff must show that
employer had the intention of forcing the employee to quit) ;
Tatom v. Georgia-Pacific Corp., 228 F.3d 926, 932 ( 8th Cir.
2000) ( overturning jury verdict for constructive discharge because
the plaintiff presented no evidence that it was [ the employers]
intention to force his resignation) .
Victory v. Hewlett-Packard Co., 34 F. Supp. 809, 826
( E.D.N.Y. 1999) ( Not only is it necessary to show intolerable
2554
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working conditions, but the plaintiff must also allege facts sufficient
to prove that these conditions were intentionally created by the
employer for the purpose of inducing the employees resignation or
retirement.) .
EEOC v.Clay Printing Co., 955 F.2d 936, 944 ( 4th Cir. 1992)
( Deliberateness [ for constructive discharge] exists only if the
actions complained of were intended by the employer as an effort
to force the employee to quit. ( quoting Bristow, 770 F.2d at
1255) ) ;
Pena v. Brattleboro Retreat, 702 F.3d 322, 325 ( 2d Cir.
1983) ( A constructive discharge occurs when the employer,
rather than acting directly, deliberately makes an employees
working conditions so intolerable that the employee is forced into
an involuntary resignation.) ;
WbiJbee v. 6orzorelli FooJ Speciolties, lnc., 22S F.Su 62, 74 (2u Cii.
2uuu) (iejecting constiuctive-uischaige claims wheie the employei
"uemonstiateu an inteiest in ietaining the plaintiffs");
Skore v. FxtenJicore heoltb Serv., 4S1 F. Supp. 2u 969, 977 (B. Ninn.
2uu6) (iejecting constiuctive-uischaige claim because employei maue effoit
to convince plaintiff to stay at the company).

Recent Eight h Circuit Cases Requiring Int ent

Trierweiler v. Wells Fargo Bank, 639 F.3d 456; 2011 U.S. App.
LEXIS 7150; 2u11 WL 1S27991 (8th Cir. Apiil 8, 2u11) (No. 1u-1S4S),
affiimeu the giant of summaiy juugment to the Title vII uefenuant. The couit
stateu: "To piove a claim of constiuctive uischaige unuei Title vII,
Tiieiweilei must show that "a ieasonable peison woulu have founu the
conuitions of employment intoleiable anu that |Wells Faigoj eithei intenueu
to foice |heij to iesign oi coulu have ieasonably foieseen that |shej woulu uo
so as a iesult of its actions."

Lisdahl v. Mayo Foundation, 6SS F.Su 712, 19u L.R.R.N. (BNA) 2S2S
(8th Cir. 2u11), affiimeu the giant of summaiy juugment to the 0SERRA
uefenuant. The couit helu at p. *4 that an employei's intention to foice the
employee to quit is an element of a 0SERRA constiuctive uischaige claim. "A
constiuctive uischaige occuis when an employei uelibeiately ienueis an
employee's woiking conuitions intoleiable with the intent of foicing the
employee to leave the employment. . . . A plaintiff can satisfy the intent
iequiiement by uemonstiating that the iesignation was a ieasonably
foieseeable consequence of the employei's actions. Id. The intoleiability of
the woiking conuitions is juugeu by an objective stanuaiu; conuitions aie
consiueieu intoleiable "if a ieasonable employee woulu finu them as such."
Id. The couit helu that theie was no eviuence of anti-militaiy bias, let alone
2555
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eviuence of an intent to foice plaintiff to quit. "The eviuence showeu at best a
peisonality conflict between }ohnson anu Lisuahl. Bowevei, as in Title vII,
'|pjetty slights anu minoi annoyances in the woikplace, as well as
peisonality conflicts anu snubs by co-woikeis, aie not actionable.'" Id. at p.
*S. The couit also iejecteu the aigument that Pennsylvonio Stote Police v.
SuJers, S42 0.S. 129, 124 S.Ct. 2S42, 1S9 L. Eu. 2u 2u4 (2uu4) "limiteu any
Eighth Ciicuit cases iequiiing an intent-to-foiceout in oiuei to piove
constiuctive uischaige" unuei the 0nifoimeu Seivices Employment anu
Reemployment Act of 1994 anu concluuing that "an intent iequiiement is
implicit in the SuJers test."

Elnshar v. Speedway SuperAmerica, LLC, 484 F.3d 1046, 1058
( 8
th
Cir. 2007) , affirmed the District Courts grant of summary
judgment to the defendant employer, holding that [ c] onstructive
discharge occurs when an employer deliberately creates intolerable
working conditions with the intention of forcing the employee to
quit and the employee does quit. ( quoting Breeding v. Arthur J .
Gallagher & Co., 165 F.3d 1151, 1159 ( 8
th
Cir. 1999) ) .

Recent Fort h Circuit Cases Requiring Int ent But
Quest ioning t he Requirement

Whitten v. Freds, Inc., 601 F.3d 231; 2010 U.S. App. LEXIS
6740 ( 4
th
Cir. 2010) , reversed the grant of summary judgment on
appellants constructive discharge claim. The court stated: as to
the deliberateness requirement, we have never insisted on smoking
gun evidence of employer intent. Instead, an employer' s intent can
be proved by inference through evidence, for example, showing
that the employer failed to act in the face of known intolerable
conditions, or that the employee' s resignation was the reasonably
foreseeable consequence of the employer' s conduct." ( Internal
quotation marks and citations omitted) . Further, in dicta, the Court
noted the following:

"0ui iequiiement that the plaintiff piove the employei intenueu to foice the
plaintiff to quit is aiguably in some tension with the Supieme Couit's
uecision in Pennsylvonio Stote Police v. SuJers, S42 0.S. 129, 124 S.Ct. 2S42,
1S9 L. Eu. 2u 2u4 (2uu4). In SuJers, the Couit uesciibeu constiuctive
uischaige as "a 'woise case' haiassment scenaiio, haiassment iatcheteu up to
the bieaking point," iJ. at 147-48, anu helu that a constiuctive uischaige
plaintiff must piove that hei woiking conuitions weie "so intoleiable that a
ieasonable peison woulu have felt compelleu to iesign," iJ. at 147. Because
theie is no iequiiement that a plaintiff in a ioutine hostile-enviionment case
show that the employei intenueu to foice hei to quit, it coulu be that, unuei
SuJers, uelibeiateness on the pait of the employei woulu not be iequiieu to
2556
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show the "'woise case' haiassment scenaiio" that is constiuctive uischaige.
We have, howevei, continueu to apply the uelibeiateness iequiiement to
constiuctive uischaige claims since SuJers was ueciueu. We believe that
ciicuit pieceuent thus pievents us fiom consiueiing Whitten's asseition that
uelibeiateness is no longei an element of a constiuctive uischaige claim."

louture v. Soint Aqnes hospitol, No. 1u-11SS (4
th
Cii., Nay 18, 2u11), the
unpublisheu opinion wiitten by Associate }ustice (Retiieu) Sanuia Bay
0'Connoi, sitting by uesignation, anu }uuges King anu Bavis, affiimeu the
Bistiict Couit's giant of summaiy juugment. In uicta, the Couit biiefly
uiscusseu the uecision in Wbitten, stating "In uicta in Wbitten, we noteu that
this ciicuit's uelibeiateness iequiiement is 'aiguably in some tension with
the Supieme Couit's uecision in Pennsylvonio Stote Police v. SuJers, S42 0.S.
129, 124 (2uu4).' Lautuie aigues on that basis that we shoulu no longei
iequiie constiuctive uischaige plaintiffs in hostile woik enviionment
situations to piove that the employei intenueu to foice the employee to quit.
As we noteu in Wbitten, ciicuit pieceuent iequiies the employei intent
showing, anu one panel of the court cannot overrule a prior panel. We
therefore decline Lautures invitation to do away with the intent
requirement. ( Internal citations omitted) .

But see J ohnson v. Shalala, 991 F.2d 126 ( 4
th
Cir. 1993) , reversing
a ruling from the District of Maryland finding that a federal
employer had not reasonably accommodated an employees
handicap under the Rehabilitation Act, and thus has constructively
discharged her. The J ohnson court stated that [ T] he standard for
constructive discharge requires a plaintiff to show both intolerable
working conditions and a deliberate effort by the employer to force
the employee to quit.

Gordon v. Armorgroup, N.A., 2010 U.S. Dist. LEXIS 89035
( E.D.Va. Aug. 27, 2010) , holding that [ t] o establish a constructive
discharge, the plaintiff must show that his employer deliberately
made [ the] working conditions intolerable in an effort to induce
[ the plaintiff] to quit. Matvia v. Bald Head Island Mgmt., Inc., 259
F.3d 261, 272 ( 4th Cir. 2001) ( citation omitted) . Deliberateness
exists only if the actions complained of were intended by the
employer as an effort to force the plaintiff to quit. Taylor v. Va.
Union Univ., 193 F.3d 219, 237 ( 4th Cir. 1999) .

Second Circuit Cases Post -Suders

Nugent v. St. Lukes-Roosevelt Hosp. Ctr., 303 F. Appx 943,
945 ( 2d Cir. 2008) , stating that [ E] ven if [ the plaintiff] is correct
2557
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that the Supreme Court has removed the intent element of the
constructive discharge standard, [ she] introduced insufficient
evidence to survive summary judgment.

Theilig v. United Tech Corp., No. 10-1417, 2011 U.S. App. LEXIS
6074, at *6 ( 2d Cir. Mar. 24, 2011) , stating that constructive
discharge occurs when an employer intentionally creates an
intolerable work atmosphere that forces an employee to quit
involuntarily ( quoting Chertkova v. Conn. Gen. Life Ins. Co., 92
F.3d 81, 89 ( 2d Cir. 1996) ) .

Morris v. Schroder Capital Mgmt. Intl, 481 F.3d 86, 88 ( 2d Cir.
2007) , relying on the Second Circuits decision in Pena v.
Brattleboro Retreat, 702 F.3d 322, 325 ( 2d Cir. 1983) to define
constructive discharge and making no reference to Suders.

Cecil v. United States Postal Serv., No. 03-8404, 2004 U.S. Dist.
LEXIS, at *4 ( S.D.N.Y. Aug. 24, 2004) , citing Suders and Second
Circuit decisions for the proposition that a plaintiff claiming
constructive discharge must establish that the employer
deliberately imposed intolerable working conditions in order to force
the employee to retire.

Const ruct ive Discharge Generally

At least forty two state high courts have addressed
constructive discharge, and each recognized constructive discharge
as a viable doctrine. See the following cases:

Baker v. Tremco, Inc., 917 N.E.2d 650, 656 ( Ind. 2009) ;
Wallingsford v. City of Maplewood, 287 S.W.3d 682, 686 ( Mo. 2009) ;
Anderson v. First Century Fed. Credit Union, 738 N.W.2d 40, 47 ( S.D.
2007) ;
Baylor Univ. v. Coley, 221 S.W.3d 599, 605 ( Tex. 2007) ;
Morris v. Schroder Capital Mgmt., Intl, 859 N.E.2d 503, 507 ( N.Y. 2006) ;
Touchard v. La-Z-Boy, Inc., 148 P.3d 945, 954 ( Utah 2006) ;
Rizzitiello v. McDonald' s Corp., 868 A.2d 825, 831 ( Del. 2005) ;
Gormley v. Coca-Cola Enter., 109 P.3d 280, 283 ( N.M. 2005) ;
Wellborn v. Spurwink/Rhode Island, 873 A.2d 884, 891 ( R.I. 2005) ;
Whye v. City Council for City of Topeka, 102 P.3d 384, 386 ( Kan. 2004) ;
Brooks v. Lexington-Fayette Urban County Hous. Auth., 132 S.W.3d 790,
807-08 ( Ky. 2004) ;
Porter v. City of Manchester, 849 A.2d 103, 117 ( N.H. 2004) ;
Boulton v. CLD Consulting Engrs, Inc., 834 A.2d 37, 42 ( Vt. 2003) ;
Navarre v. South Washington County Sch., 652 N.W.2d 9, 32 ( Minn.
2002) ;
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Shepherd v. Hunterdon Dev. Ctr., 803 A.2d 611, 627 ( N.J . 2002) ;
Cothern v. Vickers, Inc., 759 So.2d 1241, 1246 ( Miss. 2000) ;
Balmer v. Hawkeye Steel, 604 N.W.2d 639, 642 ( Iowa 2000) ;
Strozinsky v. School Dist. of Brown Deer, 614 N.W.2d 443, 461 ( Wis.
2000) ;
Collier v. Insignia Fin. Group, 981 P.2d 321, 324 ( Okla. 1999) ;
Martini v. Boeing Co., 971 P.2d 45, 50 ( Wash. 1999) ;
Brittell v. Department of Correction, 247 Conn. 148, 178 ( Conn. 1998) ;
J ewell v. North Big Horn Hosp. Dist., 953 P.2d 135, 140 ( Wyo. 1998) ;
Furukawa v. Honolulu Zoological Soc., 936 P.2d 643, 645 ( Haw. 1997) ;
Champion v. Nationwide Sec., Inc., 450 Mich. 702, 710 ( Mich. 1996) ;
Raintree Health Care Ctr. V. Illinois Human Rts. Commn, 173 Ill.2d 469,
483 ( Ill. 1993) ;
Mauzy v. Kelly Servs., Inc., 664 N.E.2d 1272, 1280-81 ( Ohio 1996) ;
Campbell v. Florida Steel Corp., 919 S.W.2d 26, 34-35 ( Tenn. 1996) ;
GTE Products Corp. v. Stewart, 421 Mass. 22, 34 ( Mass. 1995) ;
J arvenpaa v. Glacier Electric Coop., Inc., 898 P.2d 690, 692 ( Mont.
1995) ;
Martin v. Sears, Roebuck & Co., 899 P.2d 551, 553 ( Nev. 1995) ;
McGanty v. Staudenraus, 901 P.2d 841, 854 ( Or. 1995) ;
Turner v. Anheuser-Busch, Inc., 876 P.2d 1022, 1030 ( Cal. 1994) ;
Cameron v. Beard, 864 P.2d 538, 547 ( Alaska 1993) ;
Arthur Young & Co. v. Sutherland, 631 A.2d 354, 362 ( D.C. 1993) ;
Irons v. Service Merchan. Co., Inc., 611 So.2d 294, 295 ( Ala. 1992) ;
King v. Bangor Fed. Credit Union, 611 A.2d 80, 81-82 ( Me. 1992) ;
Slack v. Kanawha County Hous. & Redevelopment Auth., 423 S.E.2d. 547,
556 ( W. Va. 1992) ;
O' Dell v. Basabe, 119 Idaho 796, 817 ( Idaho 1991) ;
Soentgen v. Quain & Ramstad Clinic, P.C., 467 N.W.2d 73, 81 ( N.D.
1991) ;
Sterling Drug, Inc. v. Oxford, 294 Ark. 239, 250 ( Ark. 1988) ;
Wilson v. Board of County Com' rs of Adams County, 703 P.2d 1257,
1259-60 ( Colo. 1985) ;
Sanders v. May Broad. Co., 336 N.W.2d 92, 95 ( Neb. 1983) .

Relat ed Lit erat ure

J ohn A. Berandbaum, Reconstructing Construcive Discharge in
Second Circuit, N.Y.L.J . ( J une 6, 2008) .
Demi Sophocleous, Sexual Harassment Test: Still Murky Despite
Suders, N.Y.L.J . ( Sept. 19, 2007) .
Crystal L. Norrick, Eliminating the Intent Requirement in
Constructive Discharge Cases: Pennsylvania State Police v. Suders,
47 Wm. & Mary L. Rev. 1813 ( 2006) , available at
http://scholarship.law.wm.edu/cgi/viewcontent.cgi? article=1243&c
ontext=wmlr&sei-
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redir=1#search=% 22constructive+discharge+intent+requirement%
22.
Stephen F. Befort and Sarah J . Gorajski, When Quitting is Fitting:
The Need for a Reformulated Sexual Harassment/Constructive
Discharge Standard in the Wake of Pennsylvania State Police v.
Suders, 67 Ohio St. L.J . 593, 601 ( 2005) , available at
http://moritzlaw.osu.edu/lawjournal/issues/volume67/number3/be
fort.pdf.
Marcha Chamallas, Title VIIs Midlife Crisis: The Case of
Constructive Discharge, 77 S. Cal. L. Rev. 307, 316 ( 2004) ,
available at http://www-bcf.usc.edu/~usclrev/pdf/077202.pdf, P.
316.
Cathy Shuck, Thats it, I Quit: Returning to First Principles in
Constructive Discharge Doctrine, 23 Berkeley J . Emp. & Lab. L. 401
( 2002) .

2560
July 28 - 30, 2011
6RFLDO)UDPHZRUN([SHUWV
By
Maureen McLoughlin
Davis & Gilbert LLP
New York, New York
2011 Davis & Gilbert LLP.
2561
2
2562
1
Social Framework Experts 0
Presentation to the American Law Institute -
American Bar Association
SOCIAL FRAMEWORK EXPERTS
July 30, 2011
Maureen McLoughlin
212.468.4910
[email protected]
2011 Davis & Gilbert LLP
Uses social science research to provide
context within which to evaluate evidence
about a particular workplace
Usually psychologists, sociologists or
organizational occupational behavioralists
WHAT IS A SOCIAL
FRAMEWORK EXPERT?
2563
2
There is a large body of social science work
relating to factors in the workplace that support
or discourage use of stereotypes and biases in
workplace decisions
Social framework expert testimony may show
operation of stereotypes i.e., that certain
behaviors by supervisors consistent with
discrimination, or certain policies/procedures that
allow/foster discrimination
USE IN EMPLOYMENT
DISCRIMINATION LITIGATION
USES OF SOCIAL
FRAMEWORK EXPERTS
Individual actions and class actions
Almost always used by plaintiff
Mostly used in sex discrimination cases
In class actions, often used at class certification
stage to show commonality of issues, i.e., that
workplace policies are linked to likelihood of
bias and stereotyping
In individual cases, expert relied upon to
identify policies that allow excessive
subjectivity which permits decisions based on
stereotypes
2564
3
STARTED WITH PRICE
WATERHOUSE v. HOPKINS, 490
U.S. 228, 109 S.CT. 1775 (1989)
Supreme Court first considers expert
psychological testimony on stereotyping in
a gender discrimination case
Expert testified about gender stereotyping in
accounting firms partner selection process
and settings in which discrimination typically
occurs
Here - plaintiff was only female in pool of
partner candidates
RECENT EXAMPLE
Dukes v. Wal-Mart Stores, Inc.
Social framework expert identifies certain
workplace policies that lead to discrimination --
Excessive subjectivity in promotion and pay
decisions
Failure to posting opportunities
Failure to review promotion and pay patterns
2565
4
Scope of testimony
- Conclusion that discrimination did in fact occur
vs. conclusion that policies/procedures could
have fostered discrimination
Methodology
- Did expert thoroughly review the record
Prejudice
- Will testimony confuse the jury on issue of
whether discrimination occurred in a particular
case
FACTORS AFFECTING ADMISSIBILITY
COURTS RECURRING CONCERNS
Wary of experts opining on whether discrimination
did in fact occur
More likely to admit if expert opines only as to
whether allegedly discriminatory behavior was
consistent with patterns of discrimination
Less likely to admit if expert seeks to opine on
whether certain statements/behavior were
motivated by discriminatory intent
2566
5
Was first and only board-certified female
neurosurgeon at BWH victim of gender
discrimination?
Plaintiff sought to admit testimony of social
framework expert who would opine about BWH
being a workplace in which discrimination typically
occurred which was consistent with observed
patterns of discrimination
Ruling: Admissible expert would not testify about
final decision (whether discrimination had
occurred)
TULI v. BRIGHAM & WOMENS
HOSPITAL, 592 F. SUPP.2D 208
(D. MASS. 2009)
Was failure to promote female employee
motivated by gender discrimination?
Plaintiff alleged that she was not promoted
because women who are mothers of young
children are perceived to neglect job duties in
favor of childcare responsibilities
CHADWICK v. WELLPOINT, INC.,
561 F.3D 38 (1ST CIR. 2009)
2567
6
CHADWICK v. WELLPOINT, INC.,
561 F.3D 38 (1ST CIR. 2009) (continued)
Trial court: Not admissible expert not competent
to testify about what these supervisors meant by
using certain words (supervisor noted that plaintiff
with kids and school had a lot of her plate)
First Circuit: Affirmed trial court did not repudiate
all sociological expert testimony, but noted that
expert was not sufficiently familiar with facts of
case, no abuse of discretion
Teacher filed action against charter school
alleging that her termination was motivated by
gender discrimination
Social framework expert would opine that gender
stereotyping may have been a factor in
termination decision
Ruling: Admissible Employers arguments as to
reliability go to weight of testimony and could be
scrutinized on cross-examination
MERRILL v. M.I.T.C.H. CHARTER
SCH. TIGARD, CIV. 10-219-HA, 2011
WL 1457461 (D. OR. APR. 4, 2011)
2568
7
EEOC sought to introduce testimony of social
psychologist who used social framework analysis
to conclude that gender stereotyping was
prevalent at Bloomberg
Specifically, expert concluded that stereotypes
about female employees who are pregnant or
mothers influenced employment decisions at
Bloomberg
Ruling: Not admissible Expert only reviewed
material selected by the EEOC and merely dog-
eared passages from depositions that supported
his conclusions
EEOC v. BLOOMBERG L.P., 07 CIV.
8383 LAP, 2010 WL 3466370
(S.D.N.Y. AUG. 31, 2010)
EEOC v. WAL-MART STORES, INC.,
CIVA 6:01-CV-339-KKC, 2010 WL
583681 (E.D. KY. FEB. 16, 2010)
EEOC offered social framework expert to establish
that gender stereotyping was a plausible
explanation for hiring patterns in entry-level
positions
Ruling: Inadmissible irrelevant and unnecessary
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8
EEOC v. WAL-MART STORES, INC., CIVA
6:01-CV-339-KKC, 2010 WL 583681 (E.D.
KY. FEB. 16, 2010) (continued)
Reasoning
- Court was critical that expert did not go far
enough by merely acknowledging gender
stereo-types that may occur subconsciously
If expert testimony was admitted, the burden
would have improperly shifted to Wal-Mart to
establish that gender discrimination did not occur
CLASS ACTIONS
Used to show commonality
Expert typically does not reach conclusions
on specific employment decisions
Expert offers his or her knowledge of social
science research to identify common policies that
foster discrimination in the workplace
2570
9
Largest class action discrimination case in
U.S. history
Plaintiffs asserted both disparate impact and
disparate treatment claims, alleging that Wal-
Marts policies and practices allowed stereotyping
and bias to infect decisionmaking processes that
affected women throughout the company
District Court certified class of 1.5 million women
who had been or were employed by Wal-Mart,
Ninth Circuit affirmed, Supreme Court reversed on
June 20, 2011
DUKES v. WAL-MART STORES, INC.,
DUKES v. WAL-MART STORES,
INC., No. 10-277, slip op. (U.S. 2011)
5-4 decision by Justice Scalia with Roberts,
Kennedy, Thomas, Alito in majority, and Ginsberg,
Breyer, Sotomayor and Kagan concurring in part
and dissenting in part
Majority -- class did not meet commonality
requirements because plaintiffs failed to show that
Wal-Mart used a universal evaluation procedure or
operated under a general policy of discrimination
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10
SOCIAL FRAMEWORK EXPERT
TESTIMONY IN DUKES
Plaintiffs had offered expert Dr. Bielby, a
sociologist, to explain facts suggesting that Wal-
Mart has and promotes a corporate culture that
make pay and promotion decisions vulnerable to
gender bias
Ninth Circuit ruled that Dr. Bielbys opinions, for
which Wal-Mart did not challenge the methodology,
raised a question of corporate uniformity and
gender stereotyping that is common to all class
members.
TESTIMONY IN DUKES (continued)
Supreme Court disagreed. It found that Dr.
Bielbys opinion failed to show a general policy of
discrimination because he could not calculate
whether 0.5 or 95 percent of the employment
decisions at Wal-Mart might be determined by
stereotyped thinking. If Dr. Bielby has no answer
to that question, we can safely disregard what he
has to say.
Minority concurring and dissenting opinion did not
address use of social framework expert testimony
2572
11
TESTIMONY IN DUKES (continued)
Supreme Courts skepticism of social framework
expert testimony in Dukes casts doubt on future
use of such experts in class actions
Court did not rule on whether Daubert standard
should be applied at class certification stage, but
noted that it doubt[ed] District Courts conclusion
that Daubert did not apply at class certification
stage
SERRANO v. CINTAS CORP., CIV.
04-40132, 2009 WL 910702 (E.D. MICH.
MAR. 31, 2009)
Plaintiffs sought to certify class of female and
African-American and Hispanic job applicants
alleging class-wide sex and race discrimination
Trial court skeptical of the scientific reliability of
expert report
Experts observations that people tend to have
personal biases is entirely insufficient to support
the claim that, in this particular case, Cintas
managers acted on their biases and discriminated
against women and racial minorities.
2573
12
PUFFER v. ALLSTATE INS. CO.,
255 F.R.D. 450 (N.D. ILL. 2009)
Female employee brought putative class action
alleging that Allstate had nationwide pattern or
practice of sex discrimination
Plaintiffs expert opined that Allstate's policies
allowed bias in performance appraisals because
senior managers have great discretion
in employee assignments and judging
performance
PUFFER v. ALLSTATE INS. CO.,
255 F.R.D. 450 (N.D. ILL. 2009) (continued)
Plaintiffs expert conceded that evaluations are not
applied consistently between regions or between
supervisors, and that their assessments of
employees are not comparable
Ruling: No commonality -- [E]ven if one
supervisor used Allstate's subjective employment
practices as a mask for discrimination, that does
not inexorably lead to the conclusion that any
other supervisors did so.
2574
13
QUESTIONS?
Maureen McLoughlin
Partner
212.468.4910
[email protected]
2575
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2576
July 28 - 30, 2011
Maximizing and Minimizing Damages Claims
By
Maureen McLoughlin
Davis & Gilbert LLP
New York, New York
2011 Davis & Gilbert LLP.
2577
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Maximizing and Minimizing Damages Claims Pre-Trial and at Trial 0
Presentation to the American Law Institute -
MAXIMIZING AND MINIMIZING
DAMAGES CLAIMS
July 29, 2011
Maureen McLoughlin
212.468.4970
[email protected]
2011 Davis & Gilbert LLP
NEGOTIATIONS - MINIMIZING DAMAGES
Strong Documents that address
- Bonus
- Notice/Severance
- Non-Compete
- Venue/Applicable Law/Arbitration
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(continued)
Discuss Specifics
- Dont Stop at In-House Counsel
- Anticipate Arguments and Test Witnesses
- Early Email Searching Often Yields Admissions
(continued)
Provide Draft Agreement
- Avoids needless delay
- Pre-empts discussions that could otherwise re-
open negotiations on settlement amount, e.g.,
taxes
- Dont stand on ceremony
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NEGOTIATIONS - MAXIMIZING DAMAGES
Emphasize Subjective Factors
- Length of service
- Circumstances of termination
- Culture
- Comparitors
NEGOTIATIONS - MAXIMIZING DAMAGES
(continued)
Dont Oversell Your Case
- Risk of inciting decision-makers and peers
- Lose credibility
- It doesnt work
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AT TRIAL
Mitigation
- Employers Burden
- What is reasonable?
- Scrutinize online job search techniques
Anticipate arguments regarding how recession
contributed to an extended period of
unemployment in support of front pay
Be aware of Company-issued statements after a
RIF
RECENT CASES DAMAGES ISSUES
Online Job Search
- Plaintiff failed to mitigate where testimony that she
searched for work online was not supported by evidence
from job search website
Smith v. JP Morgan Chase, No. 09-0168, 2011 WL
841439 (W.D. La. Mar. 8, 2011
- Mitigation considered in light of plaintiffs specific
characteristics and the job market. Plaintiffs failure to
use internet and failure to post resume was not
unreasonable given her limited computer skills
Cassella v. Mineral Park, Inc., No. 08-01196, 2010 WL
454992 (D. Ariz. Feb. 9, 2010)
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(continued)
Back Pay and Front Pay
- Plaintiffs efforts to mitigate were reasonable,
despite long period of unemployment, given
local economy and job market. However,
plaintiff was not entitled to front pay given the
high turnover rate in her field and the fact that
her line of work was predicted to grow in the
future
Garner v. Grenadier Lounge, No. 06-13318,
2008 WL 2761158 (E.D. Mich. July 15, 2008)
(continued)
Emotional Distress
- Award of $300,000 -- not excessive -- in light of plaintiffs
long employment and her difficult personal
circumstances
McInerney v. United Air Lines, Inc., Nos. 09-1423, 09-
1425, 2011 WL 1350453 (10th Cir. Apr. 11, 2011)
- Award reduced from $200,000 to $30,000 -- no lasting
physical and emotional effects
Schandelmeier-Bartels v. Chicago Park Dist., 634
F.3d 372 (7th Cir. 2011)
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QUESTIONS?
Maureen McLoughlin
Partner
212.468.4910
[email protected]
2584

Maureen McLoughlin
Partner, Labor & Employment
212.468.4910
[email protected]
RECENT DECISIONS ON DAMAGES IN EMPLOYMENT CASES

Mitigation of Damages

Plaintiff did not exercise reasonable diligence to obtain new employment where her
testimony that she searched for employment online was not supported by evidence from
job search website.

Smith v. JP Morgan Chase, No. 09-0168, 2011 WL 841439 (W.D. La. Mar. 8, 2011)
In suit alleging disability discrimination, the defendant moved for summary
judgment on the issue of the plaintiffs entitlement to back pay and front pay after a
certain time period. Finding no genuine issue of fact that the plaintiff failed to satisfy her
duty to mitigate damages, the district court granted the defendants motion. The court
noted that while the plaintiff testified that she was signed up for Career Builders, an
online job search site, she failed to demonstrate that she applied to any jobs on the site.
The court also noted an e-mail that was sent to the plaintiff from Career Builders
indicating that she had not logged into the website for a substantial period of time.

Mitigation efforts had to be considered in light of plaintiffs specific characteristics and
the job market; plaintiffs failure to search the internet for jobs or post resume online was
not unreasonable given her limited computer skills.

Cassella v. Mineral Park, Inc., No. 08-01196, 2010 WL 454992 (D. Ariz. Feb. 9, 2010)
In race and gender discrimination suit, the defendant moved for partial summary
judgment on the issue of whether the plaintiff fulfilled her duty to mitigate damages. The
plaintiff, who was employed at a mine in a position involving the operation of heavy
machinery, searched for employment for six months following her termination. She
subsequently entered a different line of work. In considering the defendants argument
that the plaintiff failed to consider hundreds of job opportunities, the district court held
that the defendant did not meet its burden on this issue because it failed to demonstrate
which of the job opportunities were substantially equivalent to plaintiffs job.
The defendant also argued that the plaintiff failed to use reasonable diligence in
her job search because she did not search classified ads or jobs on the internet and did
not post her resume online. In rejecting this argument, the district court noted that while
using the internet and newspaper may have helped the plaintiffs search, the standard is
reasonable, not maximum, diligence. The court observed that the plaintiff may not have
possessed the skills necessary to utilize the internet in her job search.

Subpoenas seeking information concerning plaintiffs efforts to mitigate damages,
including subpoenas directed to local library, plaintiffs current employer, and job search
websites, were overbroad.

Hunsaker v. Proctor & Gamble Mfg. Co., 09-2666, 2010 WL 5463244 (D. Kan. Dec. 29,
2010)
Defendant in age and disability discrimination suit moved for leave to serve
subpoenas on local library where the plaintiff used computers to search for jobs online,
website providers through which the plaintiff sought employment, and his current
employer. The subpoena directed to the library sought information concerning all
websites that the plaintiff visited on the librarys computers. In denying defendants
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2
motion concerning the library subpoena, the district court reasoned that, even if the
subpoena was more limited in scope, the information sought by the defendant in order to
refute plaintiffs efforts to mitigate damages was outweighed by the burden and expense
of responding to the subpoena. The court noted that the plaintiff had already provided
documents and testimony concerning his job search and that the information sought by
the subpoena could encroach upon private communications.
The court also denied defendants motion with respect to the subpoena directed
to plaintiffs employer, which sought, among other information, performance evaluations,
attendance records, documents concerning discrimination complaints and available
positions. The court reasoned that the only relevant matter sought by the subpoena
was payroll and benefits information, which the plaintiff agreed to provide. In addition,
the court observed that the risk of the subpoena being used as a tool to harass Plaintiff
in his current job, along with the risk of harming his relationship with his employer
outweighs any need for Defendant to obtain further confirmation of the payroll and
benefits information.
As for the subpoenas directed to job search sites such as Career Builder and
Monster, the court held that the defendant could serve them on the condition that it
remove the subpoenas broad definition of the word document or record.

Plaintiff was not entitled to front pay given her failure to proffer evidence necessary to
calculate it and limited efforts to find employment.

McInerney v. United Air Lines, Inc., Nos. 09-1423, 09-1425, 2011 WL 1350453 (10th Cir.
Apr. 11, 2011)
Former ramp supervisor for United Airlines filed suit against the airline, alleging
that United discriminated and retaliated against her by denying her an unpaid leave of
absence and terminating her employment. Following a jury verdict in the plaintiffs favor,
the district court awarded back pay but denied front pay. The Tenth Circuit affirmed the
district courts denial of a front pay award, holding that the plaintiff did not adequately
calculate front pay. The Court observed that the plaintiff failed to include evidence in the
record addressing her life expectancy, continued employment term with United, and a
viable discount rate to support a calculable front pay amount. In addition, the Tenth
Circuit noted that the plaintiff did not adequately attempt to find comparable employment
because she documented only two attempts to find jobs with other airlines and accepted
a position at a lower pay than her position with the defendant.

Plaintiffs efforts to mitigate her back pay damages were reasonable despite long period
of unemployment given poor state of local economy and job market, but plaintiff was not
entitled to front pay.

Garner v. Grenadier Lounge, No. 06-13318, 2008 WL 2761158 (E.D. Mich. July 15,
2008)
Following evidentiary hearing on damages in pregnancy discrimination case
brought by plaintiff who was employed as a waitress and bartender, the district court
found that the defendants did not meet their burden of showing that the plaintiff failed to
mitigate her damages. The court noted the plaintiffs testimony that she tried to find
work through job fairs, internet postings and walking, driving and looking for work. The
court also observed that it was not surprising that the plaintiff was unable to find a job
given that the local economy had gotten progressively more dismal in the years
following her termination, and issued a back pay award representing 42 months from her
termination to the date of judgment.
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The court declined to award front pay, however, noting that while the plaintiff met
her duty to mitigate with regard to back pay, there came a point where regardless of the
state of the economy and job market, the plaintiff could reasonably expect to find
employment given the high turnover rate in her field and the fact that her line of work
was predicted to grow in the future.

Emotional Distress Damages

Emotional distress damages award of $300,000 was not excessive in light of plaintiffs
long employment and her difficult personal circumstances.

McInerney v. United Air Lines, Inc., Nos. 09-1423, 09-1425, 2011 WL 1350453 (10th Cir.
Apr. 11, 2011)
Former ramp supervisor for United Airlines filed suit against the airline, alleging
that United discriminated and retaliated against her by denying her an unpaid leave of
absence and terminating her employment. The jury awarded the plaintiff $3,000,000 in
emotional distress damages, which the district court reduced to the statutory maximum
under Title VII of $300,000.
On appeal, United argued that it was entitled to a new trial on damages because
the jurys emotional distress award was excessive in light of other comparable jury
verdicts. In affirming the district courts denial of Uniteds motion, the Tenth Circuit held
that the emotional distress award was appropriate given the plaintiffs eleven-year career
at United, the stressful impact of the termination on her personal life, and the context of
Uniteds retaliatory behavior.

Emotional distress damages award of $100,000 was reasonable given plaintiffs
testimony about the emotional and physical effects of her termination

Mercado-Berrios v. Cancel-Alegria, 611 F.3d 18 (1st Cir. 2010)
Government employee brought a suit against a supervisory employee of public
corporation in Puerto Rico, alleging that the defendant failed to appoint her to a
permanent position in retaliation for her protected speech under the First Amendment.
The jury awarded plaintiff $100,000 for pain and suffering. Finding the $100,000 award
supported by the evidence, the First Circuit noted that that the plaintiff testified that she
suffered from so much stress that she was unable to sleep, that her relationships with
friends and extended family suffered, and that she eventually had to seek the help of a
psychologist.

Emotional distress damages award reduced from $200,000 to $30,000 based on
absence of lasting physical and emotional effects resulting from violations

Schandelmeier-Bartels v. Chicago Park Dist., 634 F.3d 372 (7th Cir. 2011)
Former employee of Chicago Park District filed race discrimination claim arising
from termination and verbal tirades that her supervisor directed against her. The jury
awarded the plaintiff $200,000 in compensatory damages, and the defendant moved for
a new trial on the ground that the jury award was excessive. In remanding the case to
the district court with instruction to enter a reduced judgment of $30,000, the Seventh
Circuit observed that the verbal abuse directed at the plaintiff, while offensive and
disturbing to her, was isolated. The Court noted that the plaintiff did not testify to any
lasting physical or emotional effects resulting from the incidents or the termination and
that she found another job ten days later. In addition, the Court noted that in other cases
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4
where large compensatory damages awards were upheld on appeal, the awards were
supported with first- and third-person testimony regarding ongoing emotional and
physical effects of the discrimination suffered by the plaintiffs.

Punitive Damages

Plaintiff could not appeal reduced punitive damages award after consenting to reduction
without the option for a new trial.

Thomas v. iStar Financial, Inc., 629 F.3d 276 (2d Cir. 2010)
Former employee brought suit against financial services company and
supervisor, alleging that he was subjected to race discrimination and retaliated against
for complaints he made about supervisor. The jury awarded $1.6 million in punitive
damages against the corporate defendant. Finding the punitive damages award to be
unconstitutional, the district court conditionally granted the defendants motion for a new
trial unless the plaintiff would agree to remit his award to $190,000. After agreeing by
requesting that the district court issue an order reducing the award without option for a
new trial, the plaintiff appealed the district courts decision. On appeal, the Second
Circuit held that the plaintiffs petition to the district court to order a reduction in damages
without the possibility of a new trial was identical to the acceptance of a remittitur and
was not appealable.
The plaintiff also argued that the district court should have calculated
prejudgment interest on his compensatory damages based on the higher New York state
interest rate rather than the lower federal interest rate. The Second Circuit held that in
cases where judgments are based on both state and federal law, where no distinction is
drawn among claims, the applicable interest rate is the federal rate.

Punitive damages award of $1,000,000 against individual defendant was excessive
where retaliation was related to isolated incident.

Mercado-Berrios v. Cancel-Alegria, 611 F.3d 18 (1st Cir. 2010)
Government employee brought a suit against a supervisory employee of public
corporation in Puerto Rico, alleging that the defendant failed to appoint her to permanent
position in retaliation for her protected speech under the First Amendment. The jury
awarded plaintiff $1,000,000 in punitive damages. In reducing the award to $500,000,
the First Circuit held that a $1,000,000 award against an individual defendant based on
retaliation arising from an isolated incident was excessive. The Court also noted that the
original award was likely based on two claims, one of which was unsupported by the
evidence.

2588
July 28 - 30, 2011
EEOC Awards of Emotional Distress Damages Exceeding $100,000.00
By
Joshua F. Bowers
Joshua F. Bowers, P.C.
Silver Spring, Maryland
Submitted by
Washington, D.C.
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2590

RESPONSIBILITY


2591
MATERIAL.
2592

The Federal Empl oyee
Advocate
( Updat ed April 4, 2011)
EEOC Awards of Emot ional
Dist ress Damages Exceeding
$100, 000. 00
By J osh Bowers
1

This is the first of two articles discussing awards of over $100,000
for emotional distress injuries suffered because of wrongful
discrimination. Todays article will discuss emotional distress
awards by the Equal Employment Opportunity Commission in cases
filed by employees of the Federal government. The second article
will discuss court decisions awarding more than $100,000.

In 1991, the Civil Rights Act was amended to provide victims of
discrimination with compensation for emotional distress. Since that
time, Federal employees and Federal Agencies have struggled in
settlement negotiations to determine what is reasonable
compensation for emotional distress. When the parties can not
agree, either an Administrative J udge of the EEOC or a jury will
solve the dispute with an award for emotional distress
compensation. We now have a body of EEOC and court decisions
awarding emotional distress compensation that allows us to better
predict the emotional distress award if a case is not settled and
goes to trial.

The EEOC instructs that there is no precise formula for
determining the amount of damages for non-pecuniary losses,
except that the award should reflect the nature and severity of the
harm and the duration or expected duration of the harm.
Chast ain v. U. S. Depart ment of t he Navy, EEOC Appeal No.
0120102409 ( November 17, 2010) request for reconsideration
denied, EEOC Request No. 0520110240 ( March 31, 2011) . The
more inherently degrading of humiliating the agencys action is, the
more reasonable it is to infer that a person would suffer humiliation
or distress from that action. Lopez-Rosende v. U. S. Post al
Service, EEOC Appeal No. 0120102789 ( November 30, 2010) .
The Commission instructs that not all harms are amenable to a
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2
precise quantification, the burden of limiting the remedy, however,
rests with the employer. Id. citing Chow v. Depart ment of t he
Army, EEOC Appeal No. 01982308 ( Feb. 12, 2001) . The
Commissions approach to determining emotional distress
compensation is understood by carefully reading the many EEOC
decisions applying this formula to the facts of individual cases.

Munno v. Depart ment of Agricult ure, EEOC Appeal No.
01A01734 ( February 8, 2001) ( $250, 000 for emotional distress
damages) . The Commission increased an award of $150,000 in
emotional distress damages to $250,000 based on the
Complainants serious psychological and emotional injuries that
required treatment for an indefinite period. The Complainant was a
manager whose ongoing emotional injury was extreme, but who was
capable of performing her duties and qualified for promotion to a
senior management position.

Linehan v. Marion Count y Coroner' s Office, EEOC Appeal No.
1120080001 ( August 24, 2009) ( $200, 000 for emotional
distress damages) Award based on the emotional distress
Complainant suffered from being demoted and fired, and from
having his name besmirched in the press, all of which resulted in
months of treatment and counseling. Complainant did not submit
medical records in support of the emotional distress claim.

Fonda-Wall v. Depart ment of J ust ice, EEOC Appeal No.
0720060035 ( J uly 29, 2009) ( The Commission modified an
Administrative J udges award of non-pecuniary compensatory
damages from $150,000 to $200, 000) . Complainant was in
constant fear of the supervisors retaliatory acts. The rumors about
her mental health were detrimental to her reputation. The
Agencys actions caused her to be transferred and suffer in her
family and financial life. Complainants emotional harm manifested
itself into physical harm over a period of 8 years. In addition to the
$200, 000 emotional distress award, Commission awarded
pecuniary damages for wear and tear on Complainant' s vehicle in
the amount of $ 8,859.16; trailer rental and storage costs in the
amount of $ 3,484.19; moving expenses in the amount of $
1,136.00; lodging costs in the amount of $ 244.08; lost profit on
the sale of Complainant' s home in the amount of $65,600.00;
tutoring costs for Complainant' s children due to readjustment after
being involuntarily moved twice in the amount of $ 32,000.00;
attorney' s fees incurred for child custody issues arising from
Complainant taking children out of state in the amount of $
3,000.00; cell phone costs in the amount of $ 4,628.59; fees paid
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to a special advocate for Complainant' s children in the amount of $
5,000.00; plane fare for children to visit their father in her former
work location in the amount of $1,289.00; office supply costs in
connection with this complaint in the amount of $3,000.00; and
past and future psychological care for Complainant' s children' s
separation anxiety from their father and stepfather in the amount
of $12,996.60.

Blount v. Depart ment of Homeland Securit y, EEOC Appeal
No. 0720070010 ( October 21, 2009) , request for reconsideration
denied EEOC Request No. 0520100148 ( April 16,
2010) ( $200, 000 for emotional distress damages) Complainant
testified that due to the loss of his job, his ex-wife sued for
custody of his children, and he was unable to satisfy his child and
spousal support obligations. Complainant stated that the agencys
actions brought him to the brink of financial ruin.

Glockner v. Depart ment of Vet eran s Affairs, EEOC Appeal
No. 07A30105 ( Sept. 23, 2004) ( $200, 000 for emotional
distress damages.) The Complainant was harassed at work for
nearly five years and diagnosed as suffering depression, anxiety,
exhaustion, migraine headaches, irritable bowel syndrome and other
gastrointestinal disorder. Complainant did not take medication for
depression, but demonstrated depression through testimony.

Sebek v. At t orney General, EEOC Appeal No. 07A00005 ( March
8, 2001) ( $200, 000 emotional distress damages) The
Administrative J udges award of $200, 000 was upheld by the
Commission because the agency failed to provide the Commission
the evidentiary record that was before the EEOC Administrative
J udge.

St iehl v. Post mast er General. , EEOC Case No. 150-2004-
00433X ( Administrative J udge Decision, Miami District Office, Sept.
12, 2008) ( $200, 000 for emotional distress damages)
Complainant suffered PTSD, major depression, anxiety, inability to
work, anger, hypertension, nightmares, sexual dysfunction, changed
his relationships with his family and suffered loss of self worth.
Complainant was unable to function in the same manner as he could
before the harassment and despite medication and counseling, he
had not been cured or significantly improved.

Looney v. Depart ment of Homeland Securit y, EEOC Appeal
No. 07A40124, 01A53252 ( May 19, 2005) , ( $195, 000 for
emotional distress damages.) Length of hostile work environment
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not stated in EEOC decision, but appears to have been less than
two years. Administrative J udge concluded Complainant suffered
permanent emotional injury based only on Complainant and her
husbands testimony. Complainant suffered bouts of crying;
humiliation; depression; destruction of her spirit and confidence;
feelings as if she had no purpose in life; fluctuating weight
problems; rashes; anxiety; nightmares relating to her supervisor;
difficulty coping with life; being tense and unable to sleep when she
lays next to her husband in bed; and was disinterested in sexual
intercourse. As a result of medication taken for the emotional
distress, complainant felt clumsy, shaky, considered herself to be
unsafe operating a motor vehicle, and a nervous wreck.
Complainant' s husband testified that complainant was extremely
stressed, experienced mood swings, became sick more often,
kicked the bed while sleeping, and was exhausted to the point were
she remained in bed for twenty hours during the day. He testified
that complainant is unable to deal with any negativity and is
extremely self conscious about her communication skills, interaction
with others, and loss of professional reputation and standing in the
community. Complainant' s friends testified to complainant' s
change in appearance, including significant aging in short amount of
time, facial appearance being swollen and sunken, and complainant
becoming withdrawn. Complainant' s psychologist testified that
complainant suffered from a significant amount of depression.

Mack v. Depart ment of Vet erans Affairs EEOC Appeal No.
01983217 ( J une 23, 2000) request for reconsideration denied,
EEOC Request No. 05A01058 ( October 26, 2000) ( $185, 000 for
emotional distress damages) . Complainant unable to work for
years to come. Complainant left homeless after being fired based
on his development of AIDS. The emotional distress evidence in the
Commissions decision is not especially severe, but the
consequences of being left homeless were quite severe. [ note: The
Commissions decision may indicate the employee failed to submit
significant evidence of emotional distress at the hearing.
Otherwise, it is difficult to understand why being left homeless with
a terminal illness did not result in an emotional distress award at
the statutory ceiling of $300,000.]

Cahn v. Unit ed St at es Post al Services, EEOC Appeal No.
0720060029 ( September 5, 2008) ( $175, 000 for emotional
distress damages) . The Agencys discrimination exacerbated the
Complainants PTSD and he suffered significant emotional distress
over a three year period. Complainant had insomnia, migraines,
decrease in his ability to concentrate, think, focus or recall
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information, extreme stress and inability to complete projects or
organize. He became secluded due to heightened anxiety and was
separated from his wife. The damages were supported by the
Complainants testimony, written documentation from his wife, co-
workers testimony and medical documentation.

Lopez-Rosende v. U. S. Post al Service, EEOC Appeal No.
0120102789 ( November 30, 2010) ( EEOC increased an
Administrative J udges award of $35,000 for emotional distress to
$150, 000) . Complainant suffered seven years of sexual
harassment and did not submit medical evidence in support of her
emotional distress claim. Testimony demonstrated the harassment
made it difficult for complainant to sleep, made her depressed,
resulted in nightmares, and caused her to scream and yell at her
children. Complainant experienced chest pains, sought counseling
with an Agency psychologist, went to a physician who prescribed
medication for anxiety. Complainant was constantly worried the
sexual harasser would come to her work area.

Solomon v. Depart ment of t he Navy, EEOC Appeal No.
0720070071 ( March 3, 2008) ( $150, 000 for emotional distress
damages) . The Complainants disposition changed, she lost her
self-confidence, withdrew from friends and felt her reputation had
been soiled. She returned from work crying, upset and appearing
depressed. She had migraines and sleeplessness. Complainants
Psychiatrist testified that she had depression and anxiety. The
discriminatory harassment occurred over approximately one year.

Tyner v. Dept. of Veterans Af f airs, EEOC A ppeal No. 0720060032
(October 23, 2007)($150,000 for emotional distress damages). Sexual
harassment over seven months with crude sexual language by a co-worker
and supervisor. Complainant suffered difficulty sleeping, nightmares and
panic attacks; aggravation of pre-existing psychological injury due to
observing sexual abuse of a sibling by a family member; diagnosis of a
major depressive disorder, post-traumatic stress disorder and agoraphobia
(fear of leaving home), panic attacks, problems with her appetite, feeling
sad and tearful, problems with memory comprehension and thinking clearly,
and problems with self-esteem and self-confidence. Complainant became
withdrawn and was spending most of the day in bed during her visits to her
parent's home. Complainant awarded restoration of 273 hours of sick
leave, 31.75 hours of annual leave and three hours of compensatory time.

Furch v. Depart ment of Agricult ure, EEOC Appeal No.
07A40094 ( 2005) ( $150, 000 for emotional distress) . The
employee saw a psychologist for 6-8 months, and continued to see
a Licensed Social Worker through the agency' s Employee
Assistance Program. At the hearing, the employee testified she
suffered from weekly crying spells, saw no relief in sight and was
2597
6
withdrawn socially from friends and family. The employees
daughter and co-workers corroborated complainant' s testimony and
reported complainant suffered from stomach problems, anxiety,
and is no longer the outgoing person she once was. The employee
submitted medical records from her physician, psychologist, and
psychiatrist, stating a diagnosis of Generalized Anxiety Disorder.

Kloock v. Post mast er General, 01A31159 ( 2004) ( $150, 000
for emotional distress damages) . An agency' s discriminatory
removal of complainant resulted in him having to withdraw support
of his son' s ambitions to become a professional hockey player and
the complainant ultimately told his son to leave home. Complainant
submitted evidence of nonpecuniary damages through his
affidavit, as well as affidavits from a friend and his son.
Complainant provided several psychological reports. Prior to May
1994, complainant was a stable, welladjusted and relatively happy
individual. Complainant described his relationship with his son
before May 1994 as exceptional and had good friendships and a
rewarding life. J ust prior to May 1994, complainant was in the
process of buying a new home and had been preapproved for a
mortgage. Prior to May 1994, complainant had been very active
with his union and the local youth hockey community.)

Est at e of Nason v. Post mast er General, EEOC Appeal No.
01A01563 ( 2001) ( $150, 000 for emotional distress damages) .
Complainant, after two suicide attempts, successfully committed
suicide and left behind a note that blamed the Post Office for " all
the stress that they have caused me leading to this action. The
Commission explained its decision in Estate of Nason, stating: " a
tortfeasor takes its victims as it finds them." Citing Wallis v. United
States Postal Service, EEOC Appeal No. 01950510 ( November 13,
1995) ( quoting Williamson v. Handy Button Machine Co., 817 F.2d
1290, 1295 ( 7th Cir. 1987) .

Franklin v. Unit ed St at es Post al Service, EEOC Appeal No.
07A00025; 01A03882 ( J anuary 19, 2001) ( $150, 000 for
emotional distress damages) . Complainants whole world had been
built around this job. Once complainant forced into disability
retirement, he became withdrawn, gloomy, purposeless and
depressed. He was unable to find comparable work and became
estranged from his wife and children and moved into a different
part of the house.

Booker v. Depart ment of Defense, EEOC Appeal No.
07A00023 ( August 10, 2000) ( $150, 000 for emotional distress
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7
damages) Complainant suffered severe depression, the duration of
emotional distress was not put into evidence so the Administrate
J udges award of $195,000 was reduced to $150,000 based on
the complainants three suicide attempts and voluntary
hospitalization.

Fellows-Gilder v. Depart ment of Homeland Securit y, EEOC
Appeal No. 0720070046 ( J anuary 31, 2008) . ($130, 000 for
emotional distress damages) . Complainant suffered from a pre-
existing condition, of anxiety and depression was significantly
exacerbated by the discrimination. Complainant began to cut
herself, which she had not done before, and was admitted to a
psychiatric hospital under a suicide watch. After the discrimination,
complainant sought public assistance for the first time in her life,
and lost her health insurance, which had been her link to a support
network that provided her with funding for prescription medication
and therapy.

Terban v. Depart ment of Energy, EEOC Appeal No.
0720040117 ( April 3, 2008) . ( $130, 000 for emotional distress
damages) . Complainant endured two years of harassment which
resulted in complainants hospitalization, his becoming suicidal, and
his receiving electro-shock treatment. As a result of the
harassment, complainant became depressed and withdrawn and his
relations with his children became severely strained.

Burt on v. Depart ment of Int erior, EEOC Appeal No.
0720050066 ( March 6, 2007) ( $130, 000 for emotional distress
damages) . Complainant was out of work for three years.
Complainant suffered from depression, loss of enjoyment of life,
interference with family relationships, permanent diminishment in
quality of life, and physical symptoms. She suffered anxiety,
depression, humiliation, sleep deprivation and began a medication
regimen, which included Prozac and Paxil. Complainant saw no
relief in sight, thought about suicide, and had withdrawn socially
from friends and family. Complainant' s husband testified the
complainant suffered from anxiety, depression, and was no longer
the outgoing person she had been. Complainant submitted medical
records from her physicians, and noted that she had been
diagnosed with post traumatic stress disorder, major depression
disorder, non-epileptic seizures, panic attacks and memory loss.
Complainant suffered migraines, stomach problems, nervousness,
trembling, emotional issues and contemplated suicide.

Cook v. Post mast er General, EEOC Appeal No. 01950027
2599
8
( 1998) ( $130, 000 awarded for emotional distress damages)
Complainant disabled from future employment. The Commission
awarded $80,000 in damages for daily harassment that lasted
about 14 months and sporadic incidents of harassment that
occurred over the next 14 months. The Commission also awarded
$50,000 in emotional distress damages caused by the
complainant' s future inability to work. The Commission considered
that the complainant prolonged her recovery by failing to take
prescribed medication. The award was tempered by the fact that
more than half of the total period of harassment33 months
occurred before the effective date of the 1991 Civil Rights Act.

Champion v. Unit ed St at es Post al Service, EEOC Appeal No.
0720090037 ( March 10, 2010) . ( $125, 000 awarded for
emotional distress) Complainant was subjected to harassment for
over two years. Complainant needed medication to sleep, had
nightmares, was uninterested in things she used to do, and
experienced severe stress. Complainant was prescribed several
medications, was under the care of a psychiatrist and a
psychologist, and was placed off work. She was diagnosed with
major depressive disorder, anxiety disorder, and panic disorder.

Davis v. Depart ment of Homeland Securit y, EEOC Appeal No.
0720060003 ( J une 18, 2007) , request for reconsideration denied,
EEOC Request No. 0520070778 ( September 25,
2007) ( $125, 000 for emotional distress damages) . Complainant
was subjected to sexual harassment by her supervisors attempt to
solicit sexual favors in exchange for employment advancement and
his inappropriate comments. Complainant suffered severe
emotional harm, stress, fear, depression and loss of self-esteem, as
well as physical harm in the form of insomnia, headaches, weight
fluctuations, and a stress-induced jaw disorder.

Cleland v. Depart ment of Vet eran Affairs, EEOC Appeal No.
01970546 ( August 9, 2000) ( $125, 000 for emotional distress
damages) . Complainant suffered physical and emotional harm for 5
years and expected continuation into the indefinite future.

Hendley v. At t orney General, EEOC Appeal No. 01A20977
( 2003) ( $125, 000 for emotional distress damages) Complainants
psychological harm was severe and psychological treatment
required for at least two years. The Commission noted:

. . . Complainant in her affidavit statements credibly recounted that
she had an initial severe reaction to the agency' s decision to
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9
discipline her for the incidents of sexual harassment that she
reported to the agency in October 1994. Prior to that time she
had been seeing a psychiatrist for the emotional harm from the
sexual assault just months before, but was improving and was
ready to return to work. She stated she shook with anger and pain
became extremely distraught and filled with anxiety. Complainant
stated she cried uncontrollably for long periods of time and she was
filled with despair and depression. This continued for the next six
years. Complainant stated that she became fearful and paranoid
that prison officials would come to her house and attack her, she
became antisocial, developed an eating disorder, experienced
sleeplessness and nightmares. Her professional life suffered
because she stated she was unable to return to work in her chosen
field of law enforcement. She felt " deeply humiliated and
embarrassed" because the agency concluded that she was
responsible for the behavior about which she complained.
Complainant also described deterioration in family relationships
which her husband corroborated in his affidavit.

VanDesande v. Post mast er General, EEOC Appeal No.
07A40037 ( 2004) ( EEOC Awarded $65,979.00 f or negative tax
consequences.)( Complainant harassed and terminated. The Commission
reduced an administrative judges award of $200,000 for emotional
distress damages to $150, 000 because the judge had not
accounted for the fact that despite his mental condition, the
complainant was able to train successfully as a firefighter/EMS and
complete his probationary period. The complainant presented
evidence that he would continue to need psychiatric treatment and
medication for depression, anxiety disorder and Post Traumatic
Stress Disorder for at least five years after the close of the hearing.
However, the Commission reduced the award because there was no
evidence the psychological conditions interfered with his training or
subsequent job performance.)

George v. Dep t of Healt h & Human Serv. , EEOC Appeal No.
07A30079 ( J uly 21, 2004) ( $125, 000 for emotional distress
damages) Complainants rheumatologist testified that as a result of
the agencys discriminatory conduct complainants rheumatoid
arthritis and lupus worsened substantially, which also resulted in
depression and anxiety, and the need for aggressive treatment ( i.e.,
chemotherapy) to address these concerns. Complainant would not be
able to have children with her husband; there was a marked differed
in complainants life; complainant became emotionally destroyed;
she did not want to go anywhere; her self-confidence was
undermined; and her relationship with her stepson was affected.
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The duration of the harassment appears to have lasted approximately
one year.

Sant iago v. Depart ment of t he Army, EEOC Appeal No.
01955684 ( October 14, 1998) ( $125, 000 for emotional distress
damages) . Complainant harassed and then terminated. Complainant
suffered depression and other emotional and mental disorders, and
severe chest and stomach pains, digestive problems and incidents
of shortness of breath for approximately 1 years due to three
years of verbal abuse by her supervisor.

Apont e v. Depart ment of Homeland Securit y, EEOC Appeal
No. 0120063532 ( J une 11, 2008) , request for reconsideration
denied, EEOC Request No. 0520080673 ( September 10, 2008) .
( $120, 000 for emotional distress damages). Complainant years
of depression, anxiety, anger, shame, humiliation, marital strain,
spiritual turmoil, sleep disturbances, and headaches. The
Commission considered complainants failure to respond to the
agencys requests for medical documentation to support his claim
in making the award, noting that complainant provided no evidence
to support his claim of a possible breach of confidentiality if he did
so. The Commission indicated that complainants failure to provide
supporting documentation weakened the credibility of a
psychologists diagnosis of Post Traumatic Stress and Adjustment
Disorder. Nevertheless, testimony of complainant, his wife and co-
workers showed that he experienced substantial emotional distress
as a result of the discrimination.

Moore v. U. S. Post al Service, EEOC Appeal No. 0720050084
( March 6, 2007) ( $120, 000 for emotional distress damages) .
Complainant was unemployed for over four years and suffered
ongoing significant physical pain, loss of health, emotional pain,
mental anguish, loss of career opportunities, and loss of enjoyment
of life as a result of retaliatory and discriminatory conduct by the
agency. His pain was chronic, and he was not been helped by
multiple surgeries or steroid injections. He became so depressed
and nervous that he sought treatment by a psychiatrist.
Complainants orthopedist testified the complainant' s shoulder
injury did not improve despite surgery and injections of steroids
and painkillers designed to reduce inflammation and stiffness. The
complainants shoulder injury resulted in significant burning pain and
discomfort as well as tightness. The physical pain interrupted his
sleep. He essentially could not use the arm for anything, but very
small activities. Complainant' s psychiatrist testified the complainant
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is in a vicious cycle of anxiety and depression caused by his ongoing
orthopedic pain.

Durinzi v. U. S. Post al Service, EEOC Appeal No. 01A41946
( J uly 28, 2005) reconsideration denied 05A51158 ( October 10,
2005) ( $120, 000 for emotional distress damages). The
complainant and family members submitted affidavits:
Since August 1997, for over six years, as a result of the U.S. Postal
Service denying me reasonable accommodations and no job, to say
that my life has been turned upside down would be a gross
understatement. The anxiety and pain that I have experienced as a
result of the agency' s actions has had a severe negative impact on
my physical, emotional, mental, spiritual, and financial well-being. I
have gone from being a person who was secure, organized, well
adjusted, focused, happy with a bright future to a person who is
irritable, agitated, worried, tired, anxiety-ridden, unable to stay
focused, difficulty concentrating, angry, distressed and depressed
feeling a sense of dread about life in general. The person that I once
was is gone...The discriminatory action of the agency against me
have caused me to even challenge my faith and religion, which has
become a great source of pain, sorrow, and guilt for me. My faith
has always carried me through life up until this time. However, the
duration of time that this has gone on - six years - has caused me
to become too overburdened and too overwhelmed for too long a
period of time. . .I used to be a highly motivated individual. I now
feel motionless most of the time. . . I have also experienced
significant amount of weight loss. . . Six years ago, when the
agency denied me reasonable accommodation and denied me work
because of my disabilities, they threatened everything that meant
anything to me ( my health, my marriage, my livelihood, my dignity,
my intelligence, my faith, my very being!!!) Not only to me
personally, but it took a significant toll and put a tremendous
amount of strain on my relationship with my husband and on our
marriage. Our intimate marital relations, as a result, have become
virtually non-existent.

Chast ain v. Depart ment of t he Navy, EEOC Appeal No.
0120102409 ( November, 17, 2010) request for reconsideration
denied, EEOC Request No. 0520110240 ( March 31, 2011) ( EEOC
increased an Administrative J udges award of $15,0000 to
$115, 000 for emotional distress) . Complainant forced to resign
in lieu of termination. Complainant suffered significant weight gain,
an inability to sleep; nightmare; aggravation of physical injuries;
stomach distress; change in personality; loss of enjoyment in life;
withdrawal from family and friends; increased use of alcohol; lack of
2603
12
socialize; isolation; bouts of anger. Complainant saw a therapist
twice a week until he could no longer afford the treatments. A
clinical psychologist diagnosed Complainant as suffering from Major
Depression as a result of the Agencys actions and testified
Complainants prognosis for recovery was only fair.
Complainants marriage deteriorated leading to divorce, and
Complainant was only permitted to see his youngest daughter
every other weekend and holiday. The Agencys discriminatory act
occurred in March 2008 and Complainants emotional injury was
continuing at the time of the EEOCs decision on November 17,
2010.

Sanford v. Post mast er General, EEOC Appeal No. 01A31818
( 2004) ( $115, 000 for emotional distress compensation)
Complainant had no t ime lost from work. Complainant was
stalked and sexually harassed by a co-worker for several years, and
the Agency failed to protect the Complainant. The Complainant
was not absent from work as a result of the discriminatory actions,
but reported nausea, a lump in the throat, sweating not brought on
by heat, itching all over her body, intensifying of her asthma,
clammy hands, dizziness, tingling in fingers and toes, difficulty
catching her breath, diarrhea, pain in the stomach, a pit in the
stomach, jelly legs, hot and cold flashes, crying, disturbances in
sleeping, nightmares/daydreams, shivers, and intrusive thoughts
and images related to the violence she experienced. The
Complainants psychiatrist reported the complainant suffered from
post-traumatic stress and would need 10 years of treatment to
recover from the effects of the harassment.

Rivers v. Secret ary of Treasury, EEOC Appeal No. 01992843
( 2002) ( $115, 000 for emotional distress damages) . Complainant
had a preexisting condition, but the harm extended over a
significant period of time. Complainants disability not
accommodated, substantial time off work, employee granted
disability retirement by OPM.

Winkler v. Dep t of Agricult ure, EEOC Appeal No. 01975336
( J une 7, 2000) , the Commission awarded $110, 000 after
complainant described experiencing feelings of fright, shock,
humiliation, embarrassment, loss of enjoyment of life, grief, anxiety,
loss of self-esteem, isolation, loss of marital harmony, and
depression as a result of the agency' s discrimination. A
psychiatrist concluded Complainants condition will continue for at
least two years.

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Brinkley v. U. S. Post al Service, EEOC Appeal No. 01953977
( 1998) ( $110, 000 for emotional distress damages) Complainant
hospitalized and suffered feelings of hopelessness, loss of energy,
agoraphobia, loss of interest in living, depressed mood, impaired
memory and concentration, insomnia, agitation, and loss of interest
in routine activities and personal self care.

St . Louis v. Depart ment of Agricult ure, EEOC Appeal No.
01985846 ( 2000) ( $105, 000 for emotional distress damages) .
Complainants psychiatrists report stated recovery may take years
for a partial recovery. Complainant unable to work and granted
worker compensation benefits by the U.S. Department of Labor.

Maeso v. Depart ment of Homeland, EEOC Appeal No.
0720080003 ( February 26, 2009) ( $100,000 emotional distress) .
Complainant submitted statements from friends and family
members discussing her depression, exhaustion, sleeplessness, lack
of self-esteem, stomach ailments, nervousness, and tearfulness
because of the harassment. Her physician reported she suffered
from tension headaches, situational depression/anxiety, and mild
panic attacks because of the hostile work environment.

Gray v. Depart ment of Int erior, EEOC Appeal No. 0120072136
( J uly 24, 2009) . ( EEOC increased an FAD award of $10, 000 for
emotional distress to $100, 000 and added a $6, 100 t ax
enhancement on back pay) . Complainant had a massive weight
gain to make herself less attractive to the sexual harasser.
Complaint suffered hypertension, headaches, sleep disorder,
depression, anxiety, nightmares, low self-esteem, increased alcohol
usages and withdrew from relationships with her daughter,
grandchildren and friends.

Sainz v. Depart ment of t he Treasury, EEOC Appeal No.
0720030103 ( September 19, 2008) ( $100, 000 for emotional
distress damages) . For at least three years, Complainants suffered
ongoing depression, low self-esteem, reduction in his quality of life;
financial difficulties, feelings of rejection, humiliation and isolation,
and weight gain. Complainant was forced to sell a life-time
collection of rare coins and currency that complainant considered
irreplaceable.

Sorg v. Depart ment of Commerce, EEOC Appeal No.
0720060065 ( J uly 23, 2008) , request for reconsideration denied,
EEOC Request No. 0520080765 ( December 17, 2008) ($100, 000
for emotional distress damages). Complainant suffered both severe
2605
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emotional and physical distress over a period of five years, and was
diagnosed with irritable bowel syndrome, chronic depression, and
anxiety. Complainant was to be treated for these conditions
indefinitely.

Kahn v. Depart ment of t he Int erior, EEOC App. No.
07A50039 ( September 28, 2005) , the Commission awarded
$100, 000 in emotional distress damages despite the lack of
medical testimony, where the complainant described harm
involving: avoidance of people, crowds, and intense distrust of
White males; social isolation and withdrawal, including loss of
friends and colleagues; joylessness and loss of sense of humor;
distraction and withdrawal from family; relationship with husband
severely strained; high levels of stress and anxiety; exacerbation of
previously existing migraine, bronchitis, and asthma conditions;
menstrual irregularities; gastro-intestinal disorders; cracking of the
teeth due to excessive clenching and grinding; heart palpitations;
30 to 40 pound weight gain; foot problems; heartburn; difficulty
sleeping; diagnosed with moderately severe depression and
generalized anxiety; loss of appetite; diminished energy; and loss of
self-esteem and self-respect.

Mika v. Depart ment of t he Air Force, EEOC Appeal No.
07A40113 ( 2005) ( $100, 000 for emotional distress damages)
Complainant was wrongfully terminated from employment and
started drinking so he could stay drunk and sleep through it, [ so
he would not] have to worry about [ being terminated] , and
psychotherapy after termination.)

Green v. Pot t er, Post mast er General USPS, EEOC Appeal No.
01A44490 ( J uly 19, 2005) ( $100, 000 for emotional distress
damages) Complainant diagnosed with Post Traumatic Stress
Syndrome, his social and occupational functioning had been
significantly impaired, and his prognosis was poor. A clinical
psychologist' s stated complainant continued to display the
symptom configurations associated with PTSD and major
depression at severe levels. Complainant' s prognosis was poor and
that a global functionality assessment indicated a functionality of
50, which indicated serious impairment in social and vocational
functioning. He had been on various psychotropic medications to
control his symptoms, including, but not limited to Gabapentin,
Citalopram Hydro bromide, Clonzpen, Quetiapine Fumarate,
Trazodone, Nortriptyline, and Klonopin.

2606
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Despite extensive psychiatric treatment and evaluation, he
continued to exhibit these symptoms between March 1996 and
May 2004, and beyond. He reported that panic reactions would be
triggered by such activities as attending church services where
people would be behind him, and watching the rain. A doctor' s
note dated December 4, 2001, indicated that he had also been
diagnosed with peripheral neuropathy, a degenerative nerve
condition, which caused him to have to walk with a cane. The
doctor stated that, although complainant was first diagnosed with
peripheral neuropathy in 1985, the condition had been made worse
by having been coupled with his PTSD. The doctor characterized
his neuropathy as, more of a disability. The various statements
from treating psychiatrists and psychologists indicate that
complainant' s condition is permanent. Complainant was
convert ed from full-t ime t o part-t ime posit ion but t he
amount of lost t ime due t o discriminat ion is not st at ed in
t he EEOC decision.

Ellis-Balone v. Depart ment of Energy, EEOC Appeal No.
07A30125 ( 2004) ( $100, 000 in emotional distress) . For nine
months, complainant suffered physical pain and depression, felt
physically and emotionally drained.

Holland v. SSA, Appeal No. 01A01372 ( October 2,
2003) ( $100, 000 for emotional distress damages) Complainant
and psychiatrist showed that he experienced a severe emotional
injury when he continued to experience feelings of worthlessness
and low self-esteem for a period of five years, after he was denied a
reasonable accommodation and constructively discharge.
Complainant constructively discharged.

Yasko V. Depart ment of Army, EEOC Appeal No. 01A32340
( April 21, 2004) ( $100, 000 for emotional distress damages) .
Complainant started feeling depressed and anxious and was still in
emotional distress when her psychologist wrote his statement four
years later. It was expected the distress would last at least another
four to eight months. Complainant feared for her life, and
continued to do so at least until she stopped working. At times she
was too anxious to go to work, and upon returning from work would
frequently cry and vomit. The harassment broke the complainant' s
spirit, and she changed from a lively affectionate person to a
depressed and angry person. For months she was so depressed she
had trouble getting out of bed, and when she was awake, was
barely capable of conversation. She suffered from debilitating
anxiety attacks for years, and was so jumpy she no longer drove.
2607
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The anxiety attacks isolated the complainant, at first preventing
much social contact, but later usually preventing extended social
contact. She had ongoing problems with suicidal ideation,
nightmares about the harassment, and insomnia. As a result of the
harassment, she is distracted, and has trouble focusing and
accomplishing tasks. As a result of the emotional injuries caused by
the harassment, she has been incapable of working for a period of
time.

Complainant' s weight gain and hypertension were aggravated by
the effects of the harassment, but not completely caused by it.
Prior to the harassment, the complainant had weight problems and
hypertension, and had been treated for high blood pressure. These
are ongoing conditions. While the complainant had prior situational
and reactive depression, statements by the complainant' s husband
and daughter demonstrate that this had resolved prior to the
harassment at issue.

Hendley v. Depart ment of J ust ice, EEOC Appeal No.
01A20977 ( May 15, 2003) request for reconsideration dismissed,
EEOC Request No. 05A30962 ( J anuary 14, 2004) ($100, 000
awarded for emotional distress) .Complainant suspended from
October 4, 1994 through November 25, 1994.

J anda V. Pot t er, Post mast er General, U. S. P. S. EEOC Appeal
No. 07A10018 ( March 4, 2002) ( $100, 000 emotional distress
award upheld by Commission in default case against the Agency,
but there is no description of the emotional harm suffered by
Complainant.

Pat el v. Depart ment of t he Army, EEOC Appeal No. 01980279
( Sept. 26, 2001) ( $100, 000 awarded for emotional distress) (The
EEOC denied Complainant s claim of 882 hours of annual
and sick leave. ) .

Leat herman v. Depart ment of t he Navy, EEOC Appeal No.
01A1222 ( 2001) ( $100, 000 for emotional distress damages) .
Complainant expressed suicidal ideations and was twice hospitalized
once for psychiatric treatment and once to treat physical aliments
related to her emotional distress. Complainants depression
became so severe she stopped bathing, combing her hair or
otherwise caring for herself and remained in bed.

In the first Chow decision, Chow v. Depart ment of t he Army,
EEOC Appeal No. 01981308 ( August 5, 1999)( $100, 000 for
emotional distress damages) . Complainant suffered from abdominal
2608
17
and chest pains, headaches, and hair loss, had difficulty sleeping
and stopped socializing with friends. Complainant had two years of
psychotherapy and was projected to complete psychotherapy with
a total of 42 months in therapy. (The complainant made no
claim for t ime off work.) Subsequently, in a second Chow
decision, in Chow v. Depart ment of t he Army Request No.
05991106 ( February 13, 2001) , the Commission granted
reconsideration and modified the award based on an agreement by
the parties placing a ceiling of $93,031.01 on the amount of the
compensatory damages. In modifying the award, the Commission
did not otherwise change the finding that based on the injuries
demonstrated that an award of $100,000 in emotional distress
compensation was appropriate.

Kelly v. Depart ment of Vet erans Affairs, EEOC Appeal No.
01951729 ( J uly 29, 1998) ( $100, 000 awarded where subjection
of aggrieved individual to hostile work environment caused her to
develop severe psychological injury, from which she was still
suffering at the hearing) ; (Complainant off work 17 mont hs.)

Finlay v. U. S. Post al Service, EEOC Appeal No. 01942985
( April 20, 1997) ( $100, 000 awarded for severe psychological
injury over four years with harm expected to continue for an
indeterminate period of time. Post-traumatic stress disorder.
Complainants symptoms included ongoing depression, frequent
crying, concern for physical safety, loss of charm, lethargy, social
withdrawal, recurring nightmares and memories of harassment, a
damaged marriage, stomach distress and headache.)( Complainant
off work for t hree years) .

The author of this article will welcome your comments or questions.
Please contact Attorney J osh Bowers at J [email protected] or visit
www.J oshBowersLaw.com.

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2610
July 28 - 30, 2011
Court Awards of Emotional Distress Damages Exceeding $100,000.00
By
Joshua F. Bowers
Joshua F. Bowers, P.C.
Silver Spring, Maryland
Submitted by
Washington, D.C.
2611
2
2612

RESPONSIBILITY


2613
MATERIAL.
2614
2

The Federal Empl oyee
Advocate
Vol. 1, No. 15
( Updat ed December 7, 2010)
Court Awards of Emotional Distress
Damages Exceeding $100,000.00
By J osh Bowers
1

This is a second of two articles discussing awards of over
$100,000 for emotional distress injuries suffered because of
wrongful discrimination. The first article discussed awards of
emotional distress in Federal employee cases by the U.S. Equal
Employment Opportunity Commission. This article will discuss
emotional distress awards by Federal and State Courts.

In 1991, the Civil Rights Act was amended to provide victims of
discrimination compensation for emotional distress. Since that
time, Federal employees and Federal Agencies have struggled in
settlement negotiations to determine what is reasonable
compensation for the emotional distress. Negotiations have been
difficult because unlike all other litigation, virtually all settlements in
discrimination cases are confidential. The confidential settlements
have made it difficult for anyone to know what is the standard
settlement practice when settling emotional distress claims. When
parties to litigation are unable to reach a settlement agreement,
either an Administrative J udge of the EEOC or a jury will solve the
dispute with an award for emotional distress compensation.
Fortunately, we now have a growing body of EEOC and court
decisions awarding emotional distress compensation that allows us
to predict better the emotional distress award if a case goes to
trial. With the knowledge of the potential outcome in court, it is
becoming easier for parties to reach an agreement on a reasonable
settlement amount for emotional distress.

The cases below are provided to assist you evaluate the possible
verdict range based on the facts in your case:

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3

Paul, et . al. v. Asbury Aut omot ive Group, LLC d/b/a
Thomason Auto Group, D. Or. 06-1603-KI -- fall 2008 - race
discrimination/retaliation ( African-Americans) -- After deliberating
for about a day after six-day trial, the jury issued a verdict in favor
of all four plaintiffs, awarding each between $2. 2 and $1. 9
million in emotional distress damages, and punitive damages in the
amount of $2.75 million each. ( Case summary by Attorney
Marianne Dugan)

Griffin v. Cit y of Opa-Locka, 261 F.3d 1295( 11
th
Cir.
2001) ( $2 million award to a woman who was sexually harassed
during a four-month period and was raped by her manager.)

Wat son v. Depart ment of Rehabilit at ion, ( 1989) 212
Cal.App.3d 1271 ( $1. 6 million award for race and age
discrimination not excessive.)

Hubis v. Burns Pont iac GMC, No. 98-CV-1360, 2001 WL
34031303 ( D.N.J . March 12, 2001) ( J ury awarded plaintiff $1. 5
million for hostile work environment sexual harassment and gender
discrimination based, in part, on her supervisor exposing himself to
her twice and demoting her, motion for new trial or, in the
alternative, remittitur pending.)

Passant ino v. J ohnson & J ohnson Consumer Prods. , Inc.,
212 F.3d 493 ( 9
th
Cir. 2000) ( Affirming $1 million emotional
distress award for sexual harassment where plaintiff worried, cried,
and felt trapped and upset, spent less time with her family,
suffered stomach problems, rashes and headaches, and sought
counseling with her pastor.)

Lockley v. St at e of N. J . , L-031965-94 ( N.J . Law Div., Mercer
County, J an. 1997) ( J ury awarded male prison guard $750, 000 in
compensatory damages and $3 million in punitive damages for
reverse sexual harassment by female supervisor.)

Baker v. J ohn Morrell & Co., 266 F.Supp.2d 909 ( N.D.Iowa,
2003) Award of $735, 000. 00 in past and future emotional
distress damages to female employee, who was subject to sexual
harassment, retaliation, and constructively discharged in violation
of Title VII and the Iowa Civil Rights Act ( ICRA) , was not excessive,
given the years of unremedied harassment to which employee was
subjected, employee' s long-time relationship with employer, the
severity of harassment, employer' s disregard for her rights, and the
2616
4
toll that unlawful conduct took on employee' s emotional and
physical health. Award of $250,000.00 for past emotional distress
and $50,000.00 for future emotional distress; on her retaliation
claim, $75,000.00 for past emotional distress and $10,000.00 for
future emotional distress. The jury also awarded $150,000.00 for
past emotional distress and $200,000.00 for future emotional
distress for Plaintiffs constructive discharge. The jury awarded
$14,470.24 for Plaintiffs past medical expenses and $90,000.00
for future medical expenses on her sexual harassment claim. The
jury found that Plaintiff was entitled to a $33,314.73 award for
backpay. Finally, the jury assessed a sizable punitive damages
award of $600,000.00 for sexual harassment and $50,000.00 for
retaliation. The Clerk of Court entered judgment in the amount of
$1,522,784.97 on October 2, 2002.

Bihun v. AT & T Informat ion Syst ems, Inc. ( 1993) 13
Cal.App.4th 976 ( $662, 000 award for emotional distress for
sexual harassment not excessive, disapproved on other grounds by
Lakin v. Wat kins Associat ed Indust ries 6 Cal. 4th 644, 664
( 1993) )

St anisz v. Federal Exp. Corp. 2003 WL 21660885, Mich.App.,
2003., J uly 15, 2003
( In a sexual harassment case, the Appeals court upheld an
noneconomic damage award of $600, 000.)

Layt on v. New J ersey Turnpike Aut h., N.J .L.J . ( J une 12,
2000) ( J ury awarded toll collector $590, 000 for the emotional
distress she suffered from her supervisor' s unwanted physical
advances.)

Set t legoode v. Port land Public Schools, D. Or. 00-00313-ST -
Retaliation for enforcing special education laws - trial in 2002 --
$402,000 in economic damages for lost earnings; $500, 000 in
nonecononomic damages; $50,000 punitives against each of two
administrators. ( Case summary by Attorney Marianne Dugan)

Caridi v. Port Aut h. of N. Y. & N. J . , W-019262-89, 1992 WL
1474162 ( N.J . Law Div., Hudson County, Oct 1992) ( J ury awarded
police officer $500, 000 for emotional distress resulting from
sexual harassment in form of inappropriate work assignments,
unfounded departmental charges and inadequate supervision by her
supervisors of sexual harassment by co-workers.)

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J enkins v. American Red Cross, 141 Mich.App. 785, 798-99,
369 N.W.2d 223, 230 ( 1985) ( Upholding $500, 000 emotional
distress award) .

Wilmingt on v. J . I. Case Co. , 793 F.2d 909 ( 8th Cir. 1986)
( Affirming $400, 000. 00 jury award for emotional distress where
[ the plaintiff' s] testimony as well as that of other witnesses
tended to show a deterioration in his health, mental anxiety,
humiliation, and emotional distress resulting from the conditions
under which he worked and from the discharge.)

Wilson v. General Mot ors Corp. , 183 Mich.App. 21, 454
N.W.2d 405 ( 1990) ( Plaintiff presented no expert testimony
regarding her mental distress but only testimony as to her own
subjective feelings, the appellate court allowed the $375, 000. 00
award-remitted by the trial court from $750,000.00-of non-
economic damages to stand) .

Lilley v. BTM Corp., 958 F.2d 746 ( 6th Cir. 1992) ( Upholding a
verdict of $350, 000. 00 for emotional distress damages flowing
from the employer-defendant' s violation of the Elliott-Larsen Civil
Rights Act) ;

Love v. Shelby Count y Sheriff' s Dept., 2006 WL 1049336,
W.D.Tenn., April 20, 2006. ( Emotional Distress jury verdict of
$331,455.00, reduced by Court to $300, 000 due to statutory
ceiling, was not excessive award of emotional distress damages.
Plaintiff testified at length about the emotional and physical effects
he experienced. For example, Plaintiff testified that Nichols'
conduct made him feel upset and disappointed and shocked as
well as embarrassed, disgusted appalled. After Nichols' conduct
ceased, Plaintiff suffered from repeated migraine headaches;
experienced grief, frustration, and disgust; and had problems
focusing and relating to his family. Plaintiff further testified that he
feels as though he is in suspended animation and stuck in [ his]
tracks still dealing with something that happened to me almost
three years ago. Plaintiff' s wife testified that Plaintiff suffered from
migraines, depression, and other emotional problems starting in
J une 2001, all of which affected Plaintiff' s marital relationship as
well as his interaction with his children.)
EEOC v. Harbert Yeargin, 266 F.3d 498
( 6th Cir. 2002) : Award of $300,001 was
reduced by $1 to $300, 000 to conform to
the statutory cap on damages.
2618
6
Cadena v. The Paceset t er
Corporat ion: 224 F.3d 1203 ( 10th Cir.
2000) : The court affirmed an award of
$300,000 in compensatory and punitive
damages, $131,368.30 in attorneys fees,
and $6,735.70 in related expenses

Velez v. Roche, 335 F.Supp.2d 1022
( N.D.Cal. 2004) ( Hostile work environment
resulted in social withdrawal, loss of sleep
award $300, 000 in compensatory
damages.)

Ramseur v. Barret o, 213 F.R.D. 79
( D.D.C. 2003) ( Federal employee awarded
$300, 000 despite governments
argument that the medical evidence was
insufficient. Involves retaliation in
performance evaluations and
reassignments.)

Peyt on v. DiMario, 287 F.3d 1121 ( D.C.
Cir. 2002) ( Affirming $300, 000 award
based on anger, fear and loss of self-
esteem.)

Channon v. Unit ed Parcel Service,
Inc. , 629 N.W.2d 835, 851 ( Iowa, 2001)
( Plaintiff, subjected to unwelcome
touching, sexual comments, and assault,
was awarded a verdict including
approximately $530, 000 in
compensatory damages and $80,220,000
in punitive damages, the latter of which
was reduced to $300, 000 under title
VII.)

Det ers v. Equifax, 981 F.Supp. 1381
( D.Kan., 1997) ( Plaintiff, whose coworkers
rubbed and kissed her against her will,
received $5,000 in compensatory
damages and $1 million from the jury,
reduced to $300, 000 cap under 42
U.S.C. 1891a [ b] ) , aff' d 202 F.3d 1262
( Cir. 10, 2000) .
2619
7

Said v. Nort heast Securit y, 18 MDLR
255 ( 1996) ( $300, 000 award,
Complainants prayer rug was used to
clean; Complainant cried at hearing and
endured listening to manufactured
explanation of employers actions at
hearing.)

McDonough v. Cit y of Quincy, 452
F.3d 8 ( 1
st
Cir. 2006) ( Emotional distress
award of $300, 000 to a supervisor who
assisted employee with a sexual
harassment claim. Reprisal resulted in
humiliation, adverse impact on relationship
with wife and grandchildren, inability to
control anger.)

Gagliardo v. Connaught Laborat ories,
Inc. 311 F.3d 565 ( 3
rd
Cir.
2002) ( Emotional distress verdict of $1. 5
million reduced to Title VII damages cap
of $300, 000. ( Chest pains, elevated
blood pressure, moody-grouch, adverse
impact on relationship with children, self-
doubt, inability to control anger.)

Brady v. Gebbie, 859 F.2d 1543, 1558
( 9
th
Cir. 1988) ( Upholding an award of
$300, 000 for emotional distress;
Plaintiff suffered severe and malignant
insomnia, anxiety, suicidal fantasies, quiet
and severe depression and anxiety;
permanent psychological damage and
would require treatment for several years.
Numerous professionals in the legal,
academic, and medical field testified that
Plaintiffs reputation was tarnished and his
usefulness as an expert in his field
diminished due to his discharge.)

O' Rourke v. Cit y of Providence, 235
F.3d 713 ( 1st Cir. 2001) ( Emotional
distress award of $275, 000. 00 was not
excessive where plaintiff suffered from
2620
8
severe post-traumatic stress disorder
resulting from harassment.)

Tost i v. Ayik, 400 Mass. 224 ( 1987)
( $275, 000 in defamation claim;
discharge caused plaintiff to sell two
homes, uproot his family, sell furniture, and
borrow from relatives.)

Madison v. IBP. Inc. 330 F.3d 1051 ( 8
th

Cir. 2003) ( Affirming $266, 750. 00 jury
award for emotional distress and holding
award was not excessive in light of the
voluminous evidence the plaintiff
suffered emotional distress damages.)

Pavon v. Swift Transport at ion, 192
F.3d 902 ( 9th Cir. 1999) , Upholding a
Portland, Oregon, federal jury verdict for
racial employment discrimination with a
large amount of punitives and
noneconomics despite very minimal
economic damages - $1,218 in economic
damages; $250, 000 in noneconomic
damages; and $300,000 in punitives.
( Case summary by Attorney Marianne
Dugan)

Blakey v. Cont inent al Airlines, Inc.,
1997 WL 1524797 ( D.N.J . Sept. 1997)
( J ury awarded airline pilot $375,000 for
economic loss and $500,000 for pain and
suffering, which was remitted by the court
to $250, 000, for hostile work
environment sexual harassment.)

Samuelson v. Sungard Financial
Syst ems, Inc., 20 MDLR 197 ( 1998)
( $250, 000) ( Trouble concentrating,
crying, loss of enjoyment of life,
sleeplessness.)

Chanson v. West inghouse Corp., 17
MDLR 1293 ( 1995) ( $250, 000)
2621
9
( Exacerbation of Crohns disease, diarrhea
and stomach pains.)

Moorer v. Bapt ist Memorial Healt h
Care Syst em, 398 F.3d 469 ( 6
th
Cir.
2005) ( $250, 000 emotional distress
award to plaintiff devastated and
depressed by termination, isolated himself
from his family, suffered insomnia and
feelings of betrayal, anger, loss of self-
esteem, increased anxiety and adverse
impact on marriage.)

Webb v. Hyman, 861 F.Supp. 1094
( D.D.C. 1994) ( Sex discrimination and
retaliation resulted in post-traumatic
stress disorder award $225, 000 in total
damages.)

Simpson v. Burrows, D. Or. 97-6310-HU
-- February 2000 -- J udge Hubel issued
Findings of Fact and Conclusions of Law in
a tort case where plaintiff alleged that
defendants had drafted and circulated
letters hostile to her because of her sexual
orientation. He awarded plaintiff
$200, 000 in non-economic damages,
$52,500 in economic damages, and
$5,000 in punitive damages. ( Case
summary by Attorney Marianne Dugan)

Fox v. General Mot ors Corp., 247 F.3d
169, 180 ( 4
th
Cir. 2001) ( Affirming
$200, 000 emotional distress damages
award for plaintiff who suffered anxiety,
severe depression, and a worsening of an
already-fragile physical condition as a
result of constant harassment and
humiliation.)

Hogan v. Bangor & Aroost ook R. R.
Co. , 61 F.3d 1034 ( 1st Cir. 1995)
( Upholding $200, 000 compensatory
damages award to ADA plaintiff who
became depressed, withdrawn, and gave
2622
10
up his usual activities" due to employer' s
refusal to allow him to return to work after
work-related injury.)

Eich v. Board of Regent s for Cent .
Missouri St at e Universit y, 350 F.3d
752, ( 8
th
Cir. 2003) ( $200, 000 for non-
economic damages award was not
excessive.)

Grow v. W. A. Thomas Co. , 236
Mich. App. 696, 601 N.W.2d 426 ( 1997)
( $192, 684, Plaintiff subjected to
sexually explicit comments and unwanted
kissing and groping over several years.)

Hurley v. At lant ic Cit y Police Dep t,
933 F. Supp. 396 ( D.N.J .
2006) ( $175, 000 in emotional distress
damages, reduced on post trial motion
from $575,000.)

Deloughery v. Cit y of Chicago, 422
F.3d 611 ( 7
th
compensatory award of $175, 000
emotional distress based solely on
testimony plaintiff suffered and would
continue to suffer significant emotional
distress for denial of promotion.)

Mat hieu v. Gopher News Co., 273 F.3d
769 ( 8th Cir. 2001) ( $165, 000
emotional distress award not excessive
where plaintiff in ADA claim was only
witness to testify about emotional
distress.)

Arnold v. Cit y of Seminole, 614
F.Supp. 853 ( N.D.Okla. 1985) ( Female
police officer awarded $150, 000 for
severe emotional distress as evidence by
post-traumatic stress syndrome and her
inability to work arising from harassment
that included vulgar comments, sexually
2623
11
graphic graffiti, and disparaging comments
about women police officers.)

Hurley v. At lant ic Cit y Police Dept.,
933 F.Supp. 396 ( D.N.J . 1996) ( Remitting
award from $500,000 to $175, 000 in
sexual harassment case where plaintiff
demonstrated serious harm which
resulted in plaintiff leaving work on stress
leave for a year.)

Moody v. Pepsi-Cola Met ro. Bot t ling
Co., 915 F.2d 201, 210-11 ( 6
th
Cir.
1990) ( Upholding a $150, 000 award of
emotional distress; Plaintiff was shocked
and humiliated; unable to secure
employment after the termination; moved
away from his family in order to maintain
employment; Plaintiff testified the move
had an adverse effect on his marriage; wife
testified that Plaintiff was upset to the
point of crying and that he never really
overcame the shock and humiliation of the
termination.)

Dodoo v. Seagat e Tech. , Inc. 235 F.3d
522, 532 ( 10
th
$125, 000 damages award; Plaintiff has
trouble sleeping and wakes up with his
heart pounding, not knowing where he is.)

Kient zy v. McDonnell Douglas Corp.,
990 F.2d 1051 ( 8th Cir. 1993) ( Upheld
award of $125, 000 for mental anguish
and suffering and held that the district
court did not abuse its discretion in failing
to remit the award.)

Muldrew v. Anheuser-Busch, Inc., 728
F.2d 989 ( 8th Cir.1984) ( Finding
$125, 000 award for mental anguish in
1981 case to be reasonable) .

Durant e v. East ern Propert ies, Inc.,
18 MDLR 1 ( 1996) ( $125, 000; Plaintiff
2624
12
felt dirty and degraded, like a piece of
property, after being forced to have sex to
keep job.)

Moreno v. Consolidat ed Rail Corp.,
909 F.Supp. 480 ( E.D.Mich. 1994) , aff' d,
99 F.3d 782 ( 6th Cir. 1996) ( In a case
brought pursuant to the Rehabilitation Act,
the court upheld a jury award of
$125, 000. Plaintiff worked for the
defendant for over 30 years and was
terminated as a result of his disability.)

Rowlet t v. Anheuser-Busch, Inc., 832
F.2d 194 ( 1st Cir. 1987) ( Award of
$123, 000 in racial discrimination case
was not grossly excessive, where plaintiff
was subjected to several years of
discrimination and a significant period of
unemployment.)

Camacho v. Count ry Squire Diner, L-
599-96 ( N.J .Law.Div., Atl. County, Oct.
1998) ( J ury awarded waitress $103, 900
in compensatory damages, $50,000 in
punitive damages against diner and
$15,000 against owner for sexual
harassment in form of repeated foul and
suggestive language, obscene gestures
and her termination for complaining about
same.)

Ross v. Douglas Count y, Nebraska,
234 F.3d 391( 8th Cir. 2000) ( $100, 000
for emotional distress in a race
discrimination case was not excessive
where the plaintiff suffered emotional and
physical injuries and was forced to take a
lower paying job without health benefits.)

Kim v. Nash Finch Co., 123 F.3d 1046,
1065 ( 8
th
Cir. 1997) ( Affirming $100, 000
emotional distress award based on anxiety,
sleeplessness, stress, depression, high
2625
13
blood pressure, headaches, and
humiliation.)

Rush v. Scot t Specialt y Gases, Inc.,
930 F.Supp. 194 ( E.D.Pa. 1996) ( J ury
awarded plaintiff $1,000,000 in
compensatory damages after plaintiff had
proven that she had sustained substantial
emotion distress for over four years, and
the district court ordered a remittitur to
$100, 000.)

In St allwort h v. Shuler, 777 F.2d 1431
( 11th Cir. 1985) ( Affirming of $100, 000
for loss of sleep, marital strain and
humiliation over several years; plaintiff did
not seek professional counseling, did not
miss work and continued to adequately
perform work.)

In Lowery v. WMC-TV, 658 F.Supp.
1240 ( W.D.Tenn.1987) , vacated by
settlement, 661 F.Supp. 65
( W.D.Tenn.1987) , after a bench trial, the
court awarded plaintiff, a black television
news anchor who was denied promotion
and otherwise discriminated against,
$100, 000 in compensatory damages for
embarrassment, humiliation and mental
anguish. Plaintiff had been demoted ( not
fired) from his position. The award was
based on evidence including [ t] he
ultimate in humiliation when [ plaintiff]
was forced from his on-air responsibilities
in the wake of his filing of his Tit le VII
lawsuit. Such action shamed [ plaintiff]
before his coworkers and the community
and had an obvious devastating effect
upon him. Prior to this, [ plaintiff] was
continually humiliated and embarrassed by
being passed over for promotion, being
denied an employment contract, and being
paid less than similarly situated white
employees.

2626
14
In Dickerson v. HBO & Co. , et .
al.,1995 WL 767193 ( D.D.C.) , a Title VII
retaliation case, the court upheld a
$100, 000 jury award, although it fell in
the upper range of reasonableness. The
court based its conclusion on the fact that
plaintiff testified as to the humiliation and
emotional distress he felt because of his
demotion and transfer to the midnight
shift; he also explained how working the
midnight shift severely impacted the time
he spent with his children, and that
his entire employment situation adversely
affected his marital relationship.

Binder v. Long Island Light ing Co. ,
847 F.Supp. 1007 ( E.D.N.Y.1994)
( $100, 000 damage award for pain and
suffering where the plaintiff was so
distressed by his wrongful termination that
he attempted suicide.)

Gut h v. Fradellos, 18 MDLR 229 ( 1996)
( $100, 000) ( Insomnia; nightmares,
feeling of dread about going to work.)

Love v. Bost on Housing Aut horit y, 18
MDLR 249 ( 1996) ( $100, 000) ( Feeling
unsafe in own home.)

Nikolsky v. Summit Services Group,
Inc., 20 MDLR 126 ( 1998) ( $100, 000)
( depression)

2627
2
2628
July 28 - 30, 2011
Damages in Employment Cases
By
Richard T. Seymour
Law OIIice oI Richard T. Seymour, PLLC
Washington, District oI Columbia
Some oI the inIormation in this paper is used with permission Irom various
editions oI Richard T. Seymour and Barbara Berish Brown or John F. Aslin, Equal
Employment Law Update (Bureau oI National AIIairs, Washington, D.C.,
1996-2007), copyright American Bar Association, 1996-2007.
2629
2
2630
Table of Contents
A. Releases....................................................................................................................................... 3
B. Announced Settlements .............................................................................................................. 5
C. Settlement Authority ................................................................................................................... 6
D. Damages for Breach of Settlement ............................................................................................. 6
E. Verdicts and Verdict Forms ........................................................................................................ 6
F. After-Aquired Evidence .............................................................................................................. 8
1. Background ............................................................................................................................. 8
2. Misconduct During the Hiring Process ................................................................................. 10
3. Misconduct After Termination ............................................................................................. 10
4. General Application .............................................................................................................. 11
5. Inapplicability of McKennon to Predictions of Future Wrongdoing .................................... 13
6. Waiver of the Defense .......................................................................................................... 13
7. Establishing That the Wrongdoing Would, if Known, Have Led to Discharge or
Other Adverse Consequences ........................................................................................................... 14
a. Defendant Has the Burden of Persuasion ......................................................................... 14
b. Severity of the Alleged Misconduct ................................................................................. 15
c. Possible vs. Certain Consequences ................................................................................... 17
d. Other Elements of the Defendants Showing .................................................................... 17
8. Contentions of Excessive Employer Inquiries ...................................................................... 19
9. Effect of the Rule on Liquidated Damages ........................................................................... 20
10. Effect of the Rule on Compensatory and Punitive Damages ............................................ 21
11. Plaintiffs Efforts to Use the Doctrine to Bar Evidence ................................................... 22
G. Back Pay ................................................................................................................................... 22
1. Entitlement ............................................................................................................................ 22
a. Defendants Lowering of Pay Scale in the Job at Issue .................................................... 22
b. Undocumented Aliens ....................................................................................................... 23
c. Pattern and Practice Finding Creates Presumption ........................................................... 23
d. Eleventh Amendment ........................................................................................................ 24
e. Entitlement When Plaintiff Too Sick to Work ................................................................. 24
2. Causation............................................................................................................................... 24
3. Unconditional Offers of Reinstatement ................................................................................ 25
4. Mitigation .............................................................................................................................. 26
5. Laches ................................................................................................................................... 28
6. Elements of Back Pay ........................................................................................................... 29
7. Length of Back Pay Period ................................................................................................... 31
8. Calculation ............................................................................................................................ 31
a. Lost Chance Method ..................................................................................................... 31
b. Make-Whole Relief When There are More Complainants than Vacancies .................. 32
c. Ending Date ...................................................................................................................... 33
d. Offsetting Economic Value ............................................................................................... 34
e. Ranges of Pay Rates.......................................................................................................... 34
f. Components ...................................................................................................................... 34
9. Jury Determinations .............................................................................................................. 34
H. Front Pay ................................................................................................................................... 35
2631
2
1. Entitlement ............................................................................................................................ 35
2. Alternative of Reinstatement ................................................................................................ 35
3. Awards of Front Pay Where Liquidated Damages Are Awarded ......................................... 39
4. Unclean Hands Defense .................................................................................................... 39
5. Length of Front Pay Award .................................................................................................. 39
6. Ability to Work as Condition of Front-Pay Entitlement ....................................................... 41
7. Necessity of Hearing ............................................................................................................. 41
8. Mitigation .............................................................................................................................. 41
9. Deduction for Sick Leave or Collateral Benefits .................................................................. 43
10. Ending Date ...................................................................................................................... 43
11. Calculation ........................................................................................................................ 44
a. Reduction of Front Pay Award to Present Value .............................................................. 44
b. Proof by Plaintiffs Own Testimony ................................................................................. 44
c. Front Pay and the Caps on Damages under the 1991 Civil Rights Act ............................ 45
I. Prejudgment Interest ................................................................................................................. 45
1. Entitlement ............................................................................................................................ 45
2. Rate of Interest ...................................................................................................................... 45
J. Compensatory Damages ........................................................................................................... 47
1. Entitlement ............................................................................................................................ 47
2. Waiver of Appeal as to Amount ........................................................................................... 48
3. Amount, in the Absence of Expert Testmony ....................................................................... 49
4. Mitigation .............................................................................................................................. 51
5. Allowing Post-Verdict Amendment to Complaint to Justify Award of Compensatory
Damages ................................................................................................................................ 51
6. Foreseeability ........................................................................................................................ 52
7. Irrelevance of Defendants Ability to Pay ............................................................................ 53
8. Other Decisions as to Amount .............................................................................................. 53
K. Liquidated Damages ................................................................................................................. 55
L. Punitive Damages ..................................................................................................................... 57
1. State Farm v. Campbell......................................................................................................... 57
2. Punitive-Damage Amounts After State Farm: Civil Rights Cases ....................................... 60
3. Punitive-Damage Amounts After State Farm: Other Cases ................................................. 68
4. Entitlement Where No Compensatory or Nominal Damages Are Awarded ........................ 70
5. Entitlement Where Defendant Has Tried to Cover Up Its Acts ............................................ 74
6. Entitlement Where Accommodation Was the Issue ............................................................. 77
7. Other Questions of Entitlement ............................................................................................ 78
8. Action Taken Pursuant to Legal Advice ............................................................................... 86
9. Vicarious Liability ................................................................................................................ 86
10. Good-Faith Defense .......................................................................................................... 88
11. Effect of Post-Event Remediation .................................................................................... 93
12. Instructions ........................................................................................................................ 94
13. Amount ............................................................................................................................. 95
14. Waiver of Challenge to Amount ....................................................................................... 98
M. The Damages Caps in the 1991 Act ...................................................................................... 98
N. Re-Allocation of Jury Awards to Maximize Damages ............................................................. 99
O. Fees and Expenses .................................................................................................................. 101
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3
1. Bars to Entitlement ............................................................................................................. 101
2. FLSA Plaintiff Denied Fees for Lack of Collegiality ......................................................... 102
3. Grounds for Entitlement ......................................................................................................... 103
4. Enhancements to Lodestar .................................................................................................. 103
5. Procedure for Resolving Fees in Common-Fund Class Actions ........................................ 106
6. Reasonable Time ................................................................................................................. 109
7. Problems with Recordkeeping ............................................................................................ 109
8. The Relevant Community for Hourly Rates ....................................................................... 110
9. Need to Exercise Billing Judgment ..................................................................................... 110
10. Discounts for Partial Success, and Need to Avoid Double Discounts ............................ 111
11. Refusal to Discount for Partial Success .......................................................................... 111
12. Costs and Expenses ......................................................................................................... 113
P. Sanctions ................................................................................................................................. 113
Q. Taxes ....................................................................................................................................... 122
1. Attorneys Fees ................................................................................................................... 122
2. The Civil Rights Tax Fairness Act Glitch........................................................................... 123
3. Emotional-Distress Damages .............................................................................................. 123
4. Grossing Up Awards to Compensate for the Additional Taxes ...................................... 124
5. Tax Disputes Do Not Affect Finality of Settlement ........................................................... 124
A. Releases
Syverson v. International Business Machines Corp., 461 F.3d 1147, 98 FEP Cases 1345
(9th Cir. 2006), reversed the grant of summary judgment to the ADEA collective action
defendant and held that IBMs release and covenant not to sue did not meet the requirement of
the OWBPA. The flaw in question was that IBMs severance package required that employees
sign a document containing a release of all claims, including ADEA claims, and also containing
a covenant not to sue that expressly excluded claims under the ADEA. Judge Berzon
summarized the panel ruling at 1149:
Under the Older Workers Benefit Protection Act (OWBPA), employees may
not waive rights or claims arising under the Age Discrimination in Employment Act
(ADEA) unless the waiver is knowing and voluntary. 29 U.S.C. 626(f)(1) (2000).
To qualify as knowing and voluntary, a waiver included in an agreement between an
employer and its employees must, among other things, be written in a manner calculated
to be understood by the average employee eligible to participate in the agreement. Id.
626(f)(1)(A). This appeal presents the question whether a waiver form used by
International Business Machines Corp. (IBM) in connection with a severance benefit
package meets that standard. We hold that it does not and was therefore not knowing
and voluntary. Id. 626(f)(1).
The court further elaborated on the OWBPA requirements in referring with approval to the U.S.
Department of Labors explication:
2633
4
To satisfy the manner calculated requirement, [w]aiver agreements must be
drafted in plain language geared to the level of understanding of the individual party to
the agreement or individuals eligible to participate in a group termination plan. 29
C.F.R. 1625.22(b)(3) (2005). Employers are thus instructed to take into account such
factors as the level of comprehension and education of typical participants. Id. These
considerations usually will require the limitation or elimination of technical jargon and
of long, complex sentences. Id.
Id. at 1152 (footnote omitted.) Because the court held that the basic requirements of the statute
were not met, it saw no reason to decide whether to adopt the totality of the circumstances
approach for deciding matters as to which the basic requirements are met. Id. at 1152 n.7. The
court held that the apparent conflict between the release and the covenant not to sue would be
confusing to the ordinary reader, and that IBMs business purpose in adding the covenant not to
sueto ensure its ability to collect damages if a signing employee sued on a waived claimdid
not save the provision:
Given this substantive overlap between releases and covenants not to sue, that fact
that the MERA Agreements covenant not to sue contains an exception for ADEA claims
necessarily creates potential confusion, as it appears to lift any barrier from proceeding to
court with an ADEA claim. The confusion ensues, in part, from including in a single
document two concepts that, technically speaking, cannot coexist. Under the classic
definitions contained in Blacks Law Dictionary and in the case law quoted above, a
covenant not to sue is pertinent only if the underlying right is not extinguished, while a
release extinguishes any underlying right. Where both nonetheless appear in the same
document, the covenant not to sue largely swallows the releaseand the negation of the
covenant not to sue can therefore be read as negating the release as well.
IBM stresses that without the covenant not to sue it would have been deprived of
the full benefit of its bargain with those employees who signed on to the MERA
Agreement, because without the covenant, although IBM could raise the Release as an
affirmative defense and obtain a dismissal of the suit, it still would be out its costs and
attorneys fees. IBM also maintains that the covenant not to sue was drafted to comply
with the EEOC regulation that provides: [n]o ADEA waiver agreement, covenant not to
sue, or other equivalent arrangement may impose any . . . penalty, or any other limitation
adversely affecting any individuals right to challenge the agreement . . . . [including]
provisions allowing employers to recover attorneys fees and/or damages because of the
filing of an ADEA suit. 29 C.F.R. 1625.23(b).
It very well may have been IBMs intention to draft an agreement that would
preserve the right of an employee to challenge without penalty his waiver of ADEA
claims as not knowing or voluntary. See Thomforde II, 406 F.3d at 504 (observing that
[t]he intended effect of the Agreement was to release the employees substantive claims
under the ADEA, while preserving the employees right to challenge the validity of the
release through a lawsuit, as provided by the regulations (citing 29 C.F.R.
1625.23(b))). If that was IBMs intention, it would have been quite easy to have
accomplished this purpose directly. The MERA Agreement, by contrast, uses a term
unfamiliar to lay people,covenant not to sue, and does not explain how the release and
2634
5
the covenant not to sue dovetail, either in general or as they relate to the ADEA claims.
See id. (noting that the Agreement does not explain how the provisions relate to each
other or the limited nature of the exception to the covenant not to sue in light of the
release of claims); see also 29 C.F.R. 1625.22(b)(3) (Consideration [of the need to
draft waiver agreements in plain language] . . . usually will require the limitation or
elimination of technical jargon and of long, complex sentences.).
Indeed, far from explaining the intended, independent functions of the release and
of the covenant not to sue, the MERA Agreement muddles the matter by referring to both
provisions with the same shorthand nameReleaseindicating interchangeability, not
distinction. See Thomforde II, 406 F.3d at 504 (noting same). Adding to the confusion,
the paragraph containing the covenant not to sue in fact refers to the covenant and the
broader Release as if the terms were completely interchangeable. See id. (noting
same).
Id. at 116061.
Thomforde v. International Business Machines Corp., 406 F.3d 500, 95 FEP Cases 1145
(8th Cir. 2005), also held that these aspects of IBMs release and covenant not to sue were too
confusing to meet the OWBPA requirements.
Myricks v. Federal Reserve Bank of Atlanta, 480 F.3d 1036, 1041, 100 FEP Cases 1
(11th Cir. 2007), affirmed the grant of summary judgment to the Title VII defendant, holding
that the cause of action was barred by plaintiffs execution of a general release as part of his
severance agreement. The court explained the standards in considering the knowing and
voluntary character of a release:
The error of Myrickss argument is that the Bank explained in clear terms that the
severance agreement required the execution of a general release, and Myricks had an
opportunity to consult his attorney about those terms. A genuine issue of fact may exist
when an employee has not been given enough time to review the agreement after being
terminated . . . is not educated enough to understand the waiver . . . or is misled to believe
that the release was necessary to prevent the employer from taking an unlawful action . . .
but an educated employee with ample time to consider an agreement cannot profess
ignorance about its clear terms after consulting an attorney . . . . Myricks had enough time
to consider the clear terms of the release, was educated, was not threatened with any
unlawful action, and consulted an attorney.
The court affirmed the award of costs against plaintiff, because the defendant prevailed on an
affirmative defense.
B. Announced Settlements
Practice Tip: Do Not Agree to a Settlement and Then Assert that New Desired
Terms are Material: Dillard v. Starcon International, Inc., 483 F.3d 502, 100 Fair
Empl.Prac.Cas. (BNA) 824 (7th Cir. 2007), enforced an oral settlement agreement, holding that
enforceability was governed by State law, and that plaintiffs disputes about additional written
terms he wanted to see in the agreement were immaterial. One of the disputes concerned
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plaintiffs effort to change his at-will employment status. The court approved the Magistrate
Judges finding this was immaterial because plaintiff had always been an at-will employee, and
this question had not even been mentioned in the negotiations leading to the oral agreement
although more mundane matters had been addressed. The court rejected plaintiffs argument
that terms discussing the consequences of certain possible events were material, stating: Terms
addressing purely contingent matters are not necessarily material.
C. Settlement Authority
Makins v. District of Columbia, 389 F.3d 1303 (D.C. Cir. 2004) (per curiam), after an
answer to a question certified to the D.C. Court of Appeals, that attorneys do not have any
presumed authority to settle cases and that in the absence of actual authority defendants cannot
rely on any statements by plaintiffs counsel but must have direct confirmation from the plaintiff
of authority to settle. The D.C. Court of Appeals citation answering the certified question is
Makins v. District of Columbia, 861 A.2d 590 (2004). The court stated at 59495:
As pointed out, in the District of Columbia the decision to settle belongs to the
client, see D.C. Rule of Prof. Conduct 1.2(a) (2004), a fact confirmed by our decisions.
In Bronson, supra note 3, 404 A.2d at 960, for example, an attorney brought a declaratory
judgment action to enforce a purported settlement agreement against the client. This
court refused to bind the client to the agreement, because the decision to accept the
agreement was the client's and not the attorney's. "[R]egardless of the good faith of the
attorney," we stated, "absent specific authority, an attorney cannot accept a settlement
offer on behalf of a client." Id. at 963.
D. Damages for Breach of Settlement
Frahm v. United States, 492 F.3d 258, 100 Fair Empl.Prac.Cas. (BNA) 1631 (4th Cir.
2007), involved a settlement agreement of a Title VII claim. The IRS conceded that it had
breached the agreement. The agreement provided: If a breach of this provision or any other
provision occurs, Frahm will be permitted to reassert any and all claims covered by this
Agreement. IRS acknowledges and waives any applicable time restraints and/or statutes of
limitation generally applicable to such claims, expressly permitting such claims to be reopened
and asserted. The court held that there was no right to monetary damages for the breach, where
the settlement agreement did not provide such a remedy.
E. Verdicts and Verdict Forms
Medina v. District of Columbia, __ F.3d __, 2011 WL 2609840 (D.C. Cir. July 1, 2011)
(No. 10-7094), reversed the judgment of $180,000 in compensatory damages to plaintiff on his
racial discrimination claim against the D.C. Police Department as an impermissible double
recovery, where the verdict form showed $90,000 on a Federal claim and $90,000 on a D.C.
claim. The court had to jump through analytic hoops to determine that the Federal claim on
which damages were awarded was 1983 and not Title VII based on the instructions. Id, at p.
at p. *3. The court held, based on the Complaint, that plaintiff had pleaded only one injury,
emotional distress caused by retaliation. It then concluded that the jurys award was a duplicate
recovery for one injury, at pp. *4-*5:
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The only question remaining is whether Medina recovered twice for the same injury. We
conclude he did. The magistrate judge held as a matter of law Medina could recover under
both D.C. law and federal law theories. Id. at 96, reprinted at J.A. 369 (I have concluded
as a matter of law that [Medina] may [succeed under both the D.C. law and federal law
theories] and you [the jury] are not to concern yourself with that question at all or worry
about double recovery.). It seems the magistrate judge believed the double recovery
inquiry turned not on the injuries Medina suffered but on the source of law giving rise to
the cause of action. See Medina, 718 F.Supp.2d at 58 (Thus, contrary to defendant's claim
that plaintiff recovered twice upon the same theory of retaliation, plaintiff actually
recovered once under a federal statute and once under a District of Columbia statute.). But
this is incorrect. As we explained earlier, [i]f a federal claim and a state claim arise from
the same operative facts, and seek identical relief, an award of damages under both theories
will constitute double recovery. Mason, 115 F.3d at 1459 (quoting U.S. Indus. ., 854 F.2d
at 1259). Medina's D.C. law and federal law theories of retaliation arose from the same
facts (MPD's failure to transfer him to Internal Affairs) and sought identical relief
(compensation for emotional distress and humiliation). That Medina presented both D.C.
law and federal law theories to prove his case does not alter this conclusion.
Medina can prevail under these facts only if the jury intended to award him $180,000
for a single injury and allocated that amount between Medina's two theories of liability.
Although Medina failed to make this argument, even if he had, it would be unsuccessful.
The magistrate judge explicitly instructed the jury not to concern itself with double
recovery because he had concluded as a matter of law that Medina could recover under
both his federal law and D.C. law theories. Trial Tr. at 96 (July 24, 2008), reprinted at J.A.
369. In light of this statement, we cannot presume the jury intended to compensate Medina
$180,000 for a single injury without regard to the multiplicity of theories pled.
The court held that the problem of a double recovery does not arise for punitive damage awards:
Punitive damages, unlike compensatory damages, are not aimed at making a plaintiff whole;
thus the rule against double recovery is inapplicable when the damages awarded are punitive.
Id. at p. *5.
Comment on Medina v. District of Columbia: Attorneys on both sides need to pay
more attention to the verdict form, to avoid the difficulties the court encountered. The practical
difficulty is that if a verdict form has one damages entry for multiple theories, a reversal on any
one will require a re-trial. Perhaps the safest form would be one that had a blank for the total
award, and a question whether the same award would have been made under either statute by
itself. If the answer is no, the jury will need to be asked for separate awards.
Bains LLC v. Arco Products Co., 405 F.3d 76 (9th Cir. 2005), affirmed the judgment of
liability and the award of compensatory damages, but held that the award of $5 million in
punitive damages to the Sikh-owned plaintiff was excessive and that the most that could be
allowed was between $300,000 and $450,000. The court rejected defendants challenge to the
verdict form as inconsistent, holding that the $1 awarded in nominal damages did not necessarily
mean that there was no harm, but that the extent of the harm had not been proven. The court was
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required to adopt the latter interpretation because it made sense out of the verdict, considering
the evidence.
Goldsmith v. Bagby Elevator Co., Inc., 513 F.3d 1261, 1287, 102 FEP Cases 716 (11th
Cir. 2008), affirmed the judgment on a jury verdict for the Title VII and 1981 retaliation
plaintiff. In connection with the courts holding on the permissibility of admitting evidence of
other instances of discrimination, the court stated: The jury reached a split verdict that
discharged Bagby Elevator from liability for Goldsmith's claim of a hostile work environment
and his claim about a failure to promote. A split verdict suggests that the jury reached a
reasoned conclusion free of undue influence. (Citation omitted.)
Wilbur v. Correctional Services Corp., 393 F.3d 1192, 1200 n.4 (11th Cir. 2004),
affirmed the grant of judgment as a matter of law to the Title VII sexual harassment defendant
because the jurys answers to the special interrogatories removed any basis for the award of
damages. The court held that defendant did not waive its Rule 49(b) challenge to the
inconsistency of the verdict despite its failure to raise the issue before the jury was discharged.
The court held it would have been futile, because plaintiffs counsel had raised the issue of
inconsistency prior to discharge of the jury, and the trial court had refused to resubmit the
question. To find otherwise means that CSC was required, solely for the sake of formality, to
challenge the same matter that the district court had expressly ruled on an instant before.
F. After-Aquired Evidence
1. Background
McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 66 FEP Cases 1192
(1995), held that evidence of employee wrongdoing or problems acquired after the challenged
employment decision was taken, or occurring after that decision was taken, can never bar a
finding of liability but can be taken into account in determining the remedy. The Sixth Circuit
rule rejected by the Court had barred all types of employment discrimination suitseven racial
and sexual harassment cases, e.g., Vandeventer v. Wabash National Corp., 867 F. Supp. 790, 67
FEP Cases 619 (N.D. Ind. 1994) (racial harassment; alternative holding), superseded, 887 F.
Supp. 1178, 68 FEP Cases 56 (N.D. Ind. 1995); Conaway v. Auto Zone, Inc., 866 F. Supp. 351,
66 FEP Cases 265 (N.D. Ohio 1994) (sexual harassment)if the employer could prove that it
would not have hired the employee if it had known of the concealed problem.
The Court held that such evidence can be relevant to the relief to be accorded a victim of
discrimination, but is never relevant to liability. Nor may such evidence operate in all cases to
foreclose all relief. Discussing the importance of the ADEA and the effect of individual suits in
vindicating public policy, the Court stated:
It would not accord with this scheme if after-acquired evidence of wrongdoing that would have
resulted in termination operates, in every instance, to bar all relief for an earlier violation of the
Act.
513 U.S. 352, 358. Mixed-motive cases are inapposite, because the task here is not disentangling
the employers motives at the time of the action. Here, the employer did not know of the
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legitimate reason for termination at the time of the decision. Id. at 35960. Further, the clean
hands doctrine does not apply where a private suit serves important public purposes. Id. at 360.
The effect of such evidence on relief is to be determined on a case-by-case basis, bearing in mind
both the importance of the statutory goals and the importance of legitimate employer
prerogatives. The Court stated:
The proper boundaries of remedial relief in the general class of cases where, after
termination, it is discovered that the employee has engaged in wrongdoing must be
addressed by the judicial system in the ordinary course of further decisions, for the
factual permutations and the equitable considerations they raise will vary from case to
case. We do conclude that here, and as a general rule in cases of this type, neither
reinstatement nor front pay is an appropriate remedy. It would be both inequitable and
pointless to order the reinstatement of someone the employer would have terminated, and
will terminate, in any event and upon lawful grounds.
Id. at 36162. The Court stated that the back pay questions were more difficult, requiring a
balancing test between the need to compensate victims and deter violations on the one hand, and
to give effect to employers lawful rights on the other:
Resolution of this question must give proper recognition to the fact that an ADEA
violation has occurred which must be deterred and compensated without undue
infringement upon the employers rights and prerogatives. . . . Once an employer learns
about employee wrongdoing that would lead to a legitimate discharge, we cannot require
the employer to ignore the information, even if it is acquired in the course of discovery in
a suit against the employer and even if the information might have gone undiscovered
absent the suit. The beginning point in the trial courts formulation of a remedy should be
calculation of backpay from the date of the unlawful discharge to the date the new
information was discovered. In determining the appropriate order for relief, the court can
consider taking into further account extraordinary equitable circumstances that affect the
legitimate interests of either party. An absolute rule barring any recovery of backpay,
however, would undermine the ADEAs objective of forcing employers to consider and
examine their motivations, and of penalizing them for employment decisions that spring
from age discrimination.
Where an employer seeks to rely upon after-acquired evidence of wrongdoing, it
must first establish that the wrongdoing was of such severity that the employee in fact
would have been terminated on those grounds alone if the employer had known of it at
the time of the discharge. The concern that employers might as a routine matter undertake
extensive discovery into an employees background or performance on the job to resist
claims under the Act is not an insubstantial one, but we think the authority of the courts
to award attorneys fees, mandated under the statute, 29 U.S.C. 216(b), 626(b), and in
appropriate cases to invoke the provisions of Rule 11 of the Federal Rules of Civil
Procedure will deter most abuses.
Id. at 36263 (citation omitted).
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2. Misconduct During the Hiring Process
Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 111415, 83 FEP Cases 556 (D.C. Cir.
2000), reversed the dismissal, for failure to state a claim, of the pro se Title VII and 1981
Complaint. The lower court had dismissed the Complaint for failure to plead facts sufficient to
establish a prima facie claim and to establish pretext. The D.C. Circuit rejected that reasoning.
The court stated that a plaintiff can plead too much: that is, to plead himself out of court by
alleging facts that render success on the merits impossible. Id. at 1116 (citation omitted). It
observed that the plaintiff came close to the line here by alleging his conviction of multiple
felonies in 1982, his falsification of his employment application, and Uniteds informing him
that it was firing him because of his dishonesty in failing to reveal the convictions. But that is
not the end of the matter. First, this nondiscriminatory reason would apply at most to Sparrows
termination claim; the complaint does not suggest that United knew of Sparrows false statement
at the time his requests for promotion were rejected. Id. at 111617 (citation omitted).
In general, the appellate courts are treating McKennon as applicable when the after-
acquired evidence concerns a lie or misstatement in the hiring process, as well as an employees
wrongful conduct during employment.
3. Misconduct After Termination
Sellers v. Mineta, 358 F.3d 1058, 106365, 93 FEP Cases 417 (8th Cir. 2004), affirmed
the lower courts denial of reinstatement and front pay to the Title VII plaintiff because of her
post-termination serious misconduct that led to her discharge from a subsequent employer. The
court stated that we cannot establish a bright-line rule and foreclose the possibility that a Title
VII plaintiffs post-termination conduct may, under certain circumstances, limit the remedial
relief available to the plaintiff. Id. at 1063. The court explained:: The availability of front pay
as a remedy thus presupposes that reinstatement is impractical or impossible due to
circumstances not attributable to the plaintiff. It would be inequitable for a plaintiff to avail
herself of the disfavored and exceptional remedy of front pay where her own misconduct
precludes her from availing herself of the favored and more traditional remedy of reinstatement.
As such, we hold that a plaintiffs post-termination conduct is relevant in determining whether a
front pay award is available, and if so, in determining the extent of the award. Id. at 1064. The
court held that defendant had to establish its actual practices, and could not simply rely on the
representation that it would never employ a person fired or forced to resign. The court stated:
On remand, in order to establish that Sellers front pay remedy should be limited by her post-
termination conduct, the defendant must convince the court by a preponderance of the evidence
that Sellers post-termination conduct renders her ineligible for reinstatement under the FAAs
employment regulations, policies, and actual employment practices. Id. at 1065 (footnote
omitted).
Medlock v. Ortho Biotech, Inc., 164 F.3d 545, 55455, 78 FEP Cases 1592 (10th Cir.),
cert. denied, 528 U.S. 813 (1999), affirmed the judgment on a jury verdict for the Title VII
retaliation plaintiff, but stated: Defendant is correct that it may rely on information obtained
during the discovery process in making employment decisions so long as it does not do so as a
pretext for discrimination or retaliation. Id. at 554. The court stated that information on pre-
termination misconduct that was learned by the defendant after plaintiffs discharge may bar
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reinstatement, front pay, and possibly back pay. Post-termination misconduct is in a different
category, however. The court explained:
Defendant argues that it would have terminated plaintiff on the basis of his post-
termination conduct at his unemployment compensation benefits hearing, during which
he touched and cursed at Defendants counsel. . . . Although we do not foreclose the
possibility that in appropriate circumstances the logic of McKennon may permit certain
limitations on relief based on post-termination conduct . . . we cannot conclude that the
district court abused its discretion in refusing to adopt defendants proffered instruction.
The alleged misconduct to which defendant points occurred at a hearing occasioned by
plaintiffs termination. In this case, as in most cases in which the alleged misconduct
arises as a direct result of retaliatory termination, the necessary balancing of the equities
hardly mandates a McKennon-type instruction on after-occurring evidence.
7
________________
7
It is not difficult to envision a defendant goading a former employee into losing
her temper, only to claim later that certain forms of relief should be unavailable because
it would have discharged the plaintiff based on her inability to control her temper.
Id. at 555 & n.7.
4. General Application
Miller v. AT&T Corp., 250 F.3d 820, 83738, 6 WH Cases 2d 1754 (4th Cir. 2001),
affirmed the judgment on stipulated facts for the FMLA plaintiff. The court affirmed the lower
courts holding that defendant did not make out its case for limiting plaintiffs back pay award in
McKennon, but disagreed with its reasoning. The court explained:
The district court concluded that the after-acquired evidence doctrine did not
apply to the January absences because AT&T was aware of Millers additional absences
at the time of her termination and therefore had the ability to evaluate that conduct as
part of an overall decision to terminate her employment. . . . This reasoning overlooks
the fact that, while AT&T was aware that the additional absences had occurred when it
terminated Miller, the Health Affairs Office had not yet determined whether those
absences were covered by the FMLA. AT&T policy therefore prohibited it from
considering those absences in deciding whether to terminate Miller. Cf. 29 C.F.R.
825.307(a)(2) (2000) (providing that an employee is provisionally entitled to
protection under the FMLA while the employer seeks a second opinion).
Perhaps recognizing this flaw in its logic, the district court noted that AT&T
should have resolved the ongoing investigation into the additional absences before
deciding to terminate Miller. . . . Such a requirement is not realistic. Indeed, in the case of
a chronically absent employee, it is entirely possible that evaluating all outstanding
requests for FMLA leave before making a decision would effectively preclude any action
by the employer.
Id. at 837. The court rejected defendants reliance on a stipulation that it would have fired the
plaintiff for absences in January and that it did not believe plaintiff was entitled to FMLA leave
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for those absences, because the stipulation did not meet the second prong of defendants burden:
to show that plaintiff was in fact not entitled to FLMA leave for those absences. The court stated:
AT&T reads too much into this stipulation. Id. at 838.
Smith v. The Berry Co., 165 F.3d 390, 395, 79 FEP Cases 52 (5th Cir.), modified in other
respects, 198 F.3d 150 (5th Cir. 1999), upheld the jury finding of liability for age discrimination
and rejected the defendants argument that after-acquired evidence that the plaintiff had tried to
tape an office meeting in violation of company policy, and by going on unapproved travel
during her medical leave. In denying Berrys post-trial motion for judgment as a matter of law,
the district court stated that the jury could have reasonably found that Berry failed to satisfy its
burden of proving that Smith would have been fired for her violations of company policy alone.
In light of the factual disputes over travel and the fact that the antirecording policy focused on
phone calls with clients, we agree with the district courts conclusion.
Dvorak v. Mostardi Platt Associates, Inc., 289 F.3d 479, 48587, 13 AD Cases 1 (7th
Cir. 2002), affirmed the grant of summary judgment to the ADA defendant. Defendant
explained plaintiffs firing by referring to plaintiffs poor performance, including his written
tirade against the company, and the discovery that he had apparently misused his company
laptop to save a confidential customer database and to send a competitor disparaging information
about defendant. Plaintiff contended that the laptop- related information was after-acquired
evidence, and could not be considered in connection with his termination, because he was fired
on April 3, 1997, when he was told to clean out his desk and take FMLA leave. Defendant
contended plaintiff was fired on May 28, 1997, after discovery of the laptop- related problems,
when it sent him an official letter of termination. Id. at 48283. The court held that the correct
date was May 28 because neither plaintiff nor defendant had treated plaintiff as fired on April 3.
The application for FMLA leave would have been fraudulent if plaintiff were no longer an
employee, and on April 28 plaintiff had written to the HR Director asking for clarification of
whether he had been fired or remained an employee. The court held that the May 28 date was
the most unequivocal notice of termination. With no competent evidence to support a
termination date earlier than May 28, the laptop misuse is not information that the employer
learned after the termination; it may thus be considered as one of Mostardi-Platts
nondiscriminatory reasons for terminating Dvorak. Id. at 487.
Rivera v. Nibco, Inc., 364 F.3d 1057, 107475, 93 FEP Cases 929 (9th Cir. 2004),
affirmed the protective order entered by the district court, barring defendant from using the
discovery process to find out the immigration status of the plaintiffs. See the discussion of this
case in Chapter 44 (Back Pay), in the section on Entitlement to Back Pay.
Crapp v. City of Miami Beach, 242 F.3d 1017, 85 FEP Cases 353 (11th Cir. 2001),
affirmed the lower courts amendment of the judgment and denial of defendants Rule 60(b)
motion. Defendant fired plaintiff for asserted misconduct. After the entry of judgment, the
Criminal Justice Standards and Training Commission of the Florida Department of Law
Enforcement suspended for two years plaintiffs certification as a law enforcement officer,
retroactive to the date of his discharge. The lower court treated the suspension as after-acquired
evidence, and vacated the back pay award and order of reinstatement, but left the compensatory-
damages award in place and held that the decertification would not affect plaintiffs
establishment of a prima facie case or the determination of liability. Id. at 1019. The court held
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that the decertification could not be considered a legitimate nondiscriminatory reason for
plaintiffs termination because it was unknown at the time. Id. at 102021. The court held that
the lower courts vacation of the back pay award and order of reinstatement, while leaving in
place the award of compensatory damages, appropriately recognized that the City could have
fired Crapp for a lawful reasonlack of certificationon the same day that it fired him for a
discriminatory reason. Id. at 1021. The court rejected defendants contention that this result was
inconsistent: The district court vacated its award of backpay and reinstatement because the
FDLEs decision precluded the City from retaining Crapp as a police officer. The FDLEs
decision does not, however, change the fact that the jury concluded that the Citys decision to
fire Crapp was a racially motivated adverse employment action for which Crapp should be
compensated. Id.
5. Inapplicability of McKennon to Predictions of Future Wrongdoing
Teahan v. Metro-North Commuter Railroad Co., 80 F.3d 50, 55, 5 AD Cases 603 (2d
Cir. 1996), held that the defendant=s use of psychiatric testimony on the likelihood of a
recurrence of plaintiff=s substance abuse went to the issue whether plaintiff was Aotherwise
qualified@ under the Rehabilitation Act and did not trigger McKennon=s limitations on the use of
after-acquired evidence.
6. Waiver of the Defense
Russell v. Microdyne Corp., 65 F.3d 1229, 1240, 68 FEP Cases 1602 (4th Cir. 1995),
held that an employer may waive the Aafter-acquired@ defense as to remedies by failing to
terminate the plaintiff immediately upon learning of the alleged misstatement or misconduct:
In this case, Russell did not suffer any immediate negative employment decision
after Microdyne=s alleged discovery of her supposed falsehoods. Absent such a
negative employment decision premised upon evidence of wrongdoing, the
defense cannot apply and the remedies available are not curtailed in any way.
Under these rather unusual circumstances, however, we do not think this is fatal
to Microdyne=s use of the defense, for the company faced a difficult situation in
which the availability of this defense was not established, and it acted in an under-
standably conservative manner, in fear of the additional liability for discrimina-
tory retaliation that might attach to its conduct. Thus, we believe that the
after-acquired evidence doctrine, as limited by the McKennon Court, might be
available in this case. We note, though, that in post-McKennon cases, an
employer's decision not to terminate a Title VII plaintiff would be dispositive on
this issue. Cf. Shattuck v. Kinetic Concepts, Inc., 49 F.3d 1106, 1108 (5th Cir.
1995) (AWe are persuaded that the pertinent inquiry, except in refusal-to-hire
cases, is whether the employee would have been fired upon discovery of the
wrongdoing . . . .@).
Hyatt v. Northrop Corp., 80 F.3d 1425, 11 IER Cases 1020 (9th Cir. 1996), applied
McKennon to a California claim of wrongful discharge in violation of public policy, based on
plaintiff=s having filed a False Claims act qui tam action. The court held that California law
would not use the after-acquired evidence doctrine to bar all recovery for a wrongful discharge,
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where the plaintiff worked for the defendant for almost five years, and had a satisfactory work
performance notwithstanding his false representations on his application. The court affirmed the
district court=s denial of the defendant=s post-trial motion to limit plaintiff=s back-pay remedy to
the time period from the date of his discharge until the date plaintiff=s misrepresentations were
discovered. The court held that the defendant waited too long to raise the defense, having failed
to assert it in a motion for summary judgment and failing to request a jury instruction. Id. at
1433 n.3.
7. Establishing That the Wrongdoing Would, if Known, Have Led to
Discharge or Other Adverse Consequences
a. Defendant Has the Burden of Persuasion
Thurman v. Yellow Freight Systems, Inc., 90 F.3d 1160, 1168, 72 FEP Cases 657 (6th
Cir.), modified on rehearing in other respects, 97 F.3d 833, 73 FEP Cases 1359 (6th Cir. 1996),
stated that the defendant had Afailed to prove@ that it would have refused to hire the plaintiff if it
had known of the omissions and misstatements on his application form, suggesting that the
defendant had the burden of persuasion on this issue. This case is discussed below in greater
detail.
Welch v. Liberty Machine Works, 23 F.3d 1403, 1404, 3 AD Cases 385 (8th Cir. 1994), a
pre-McKennon case. involved an employee discharged a week after he informed the defendant
that he had developed a fistula requiring surgery. He sued for wrongful discharge under ERISA
and for handicap discrimination under Missouri law. In discovery, the defendant learned that
plaintiff had intentionally omitted from his application form the fact that he had worked for
another company for a month and been discharged for poor performance. The defendant=s
application form states that Aany misstatement or omission of fact on this application shall be
considered cause for dismissal.@ The defendant obtained summary judgment based on an
undisputed affidavit from the company president stating that the company would not have hired
the plaintiff if it had known of his prior employment and his discharge for poor performance, and
that the company would have terminated the plaintiff for omitting this information on his
application. The court of appeals reversed, stating that the affidavit was inadequate because the
defendant did not have the misconduct in mind at the time the challenged decision was made.
Therefore, we believe that the employer bears a substantial burden of establishing
that the policy pre-dated the hiring and firing of the employee in question and that
the policy constitutes more than mere contract or employment application
boilerplate. Liberty presented no other evidence of its policies. By itself, Maier=s
affidavit is a self-serving document and does not establish the material fact that
Liberty would not have hired Welch but for the misrepresentation. As the movant
for summary judgment, Liberty bore the significant burden of establishing that it
had a settled policy of never hiring individuals similarly situated to Welch.
Id. at 1405B06. The court stated that it was not deciding whether some undisputed employer
affidavits Acould, in some circumstances, establish the requisite material fact of a particular
employer=s policy.@ Id. at 1406.
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O=Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 759, 70 FEP Cases 615 (9th
Cir. 1996), held by a divided panel that the employer asserting an Aafter-acquired evidence@
defense has the burden of persuasion not just that it could have fired the employee for the
misconduct alone if it had known of the misconduct, but that it would have fired the employee
for this reason alone. The court rejected plaintiff=s argument that the employer=s burden should
be of Aclear and convincing@ proof, and held that the proper standard is proof by a preponderance
of the evidence. Id. at 760B61. Judge Fletcher dissented, arguing that the proof question here is
fundamentally different from that in mixed-motive cases and that the employer should be
required to prove by clear and convincing evidence that it would have fired the plaintiff for the
misconduct alone. Id. at 764B68.
Turnes v. AmSouth Bank, N.A., 36 F.3d 1057, 66 FEP Cases 340 (11th Cir. 1994),
involved a prospective employer that ran a credit check on the rejected applicant plaintiff after he
had filed an EEOC charge. The defendant argued that it had a Aclean credit@ policy, that it would
have discovered the credit problems in due course if it had proceeded with the application, and
that the plaintiff therefore could not have been injured by the discrimination. The district court
agreed and granted summary judgment. Reversing, the court of appeals pointed out that the
plaintiff had produced evidence from which a reasonable factfinder could conclude that the
company had no such policy, that the company was inconsistent in its treatment of credit
problems, and that his credit may not have been so bad as to be rejected under the employer=s
normal practices.
b. Severity of the Alleged Misconduct
Patterson v. P.H.P. Healthcare Corp., 90 F.3d 927, 934B35, 72 FEP Cases 613 (5th Cir.
1996), cert. denied, 519 U.S. 1091 (1997), held that the district court did not commit clear error
in finding that an employee filled out his application form truthfully, denying that he had ever
pleaded guilty to, or been convicted of, any criminal offense excluding minor traffic violations,
because of his testimony that his parole officer had told him that his conviction would be
expunged once he completed the probation and paid restitution, and that it was not necessary for
him to notify employers of an expunged conviction. Moreover, plaintiff contended that the
Project Manager already knew of the conviction. The defendant asserted that the prior
conviction would not necessarily bar plaintiff from working for the defendant, but that
Aapplication fraud would result in that employee=s immediate dismissal.@ 90 F.3d 927, 934. The
court stated:
Even if PHP Healthcare did not have imputed knowledge of Brown=s prior
conviction, we are not convinced that Brown=s failure to include his 10 year-old
conviction on his employment application was so severe that PHP Healthcare
would have terminated him based on this after-acquired knowledge. The district
court's decision to award back pay and reinstatement does not leave us with a firm
and definite conviction that a mistake has been made and, as such, we find no
clear error.
Id. at 935.
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Thurman v. Yellow Freight Systems, Inc., 90 F.3d 1160, 1168, 72 FEP Cases 657 (6th
Cir.), modified on rehearing in other respects, 97 F.3d 833 (6th Cir. 1996), held that the trial
court did not err in finding that plaintiff=s failure to list on his application form that a $27 utility
account had been placed for collection, his misstatement of his dates of employment with a prior
employer, and his leaving blank the reason why he had left that prior job, were Anot material.@
Plaintiff explained that he did not receive the utility bill because he had moved, and that he later
paid the bill. The court held that the district court did not commit clear error in finding that the
reason plaintiff left his job with the former employer was not because of poor performance or
because of another negative factor, because the employer had later recommended him for another
job. The plaintiff met the defendant=s requirement of two years of driving experience even
though he overstated his period of employment with the former employer. ABecause Yellow
Freight failed to prove it could have and would have refused to hire Thurman, the after-acquired
evidence defense did not apply.@ Id.
Sheehan v. Donlen Corp., 173 F.3d 1039, 1047, 79 FEP Cases 540 (7th Cir. 1999),
affirmed the judgment on a jury verdict for the Title VII pregnancy discrimination plaintiff. The
court affirmed the lower courts rejection of the defendants after-acquired evidence defense.
Donlen argued that Sheehan had falsified her job application by leaving several jobs off her
rsum and not explaining that she had been fired from one of them. The court affirmed the
lower courts finding that there had been no falsification. It found that the application and the
rsum were separate documents and the omissions were made only on the rsum, no job
history at all being provided on the application; and, moreover, that there was no evidence
Sheehan had been fired from those jobs. Id. The court affirmed the finding that there was no
evidence of causation, because no one in the history of the company had ever been fired for such
falsifying a rsum. The court stated that employers often say they will discharge employees for
particular employees, but often do not do so. that the same decision would have been justified
. . . is not the same as proving that the same decision would have been made. Id. at 1048
(citation omitted).
Kempcke v. Monsanto Co., 132 F.3d 442, 445B46, 75 FEP Cases 1403 (8th Cir. 1998),
reversed the grant of summary judgment to the defendant on plaintiff=s retaliation claim, holding
that a reasonable jury could find that the plaintiff was lawfully opposing age discrimination by
refusing to return all copies of two documents he had innocently acquired, where the documents
had caused him to be concerned over age discrimination against him and to make an enquiry of
his supervisor, and where he turned the documents over to his attorney when the supervisor gave
him a noncommittal response and told his supervisor that the company should contact his
attorney for return of the missing documents. The documents were on the hard drive of a
computer the plaintiff had been assigned to use, but which had previously been used by a high-
ranking Human Resources officer. The court distinguished this situation from that of an
employee who steals documents potentially evidencing discrimination, stating:
But when documents have been innocently acquired, and not subsequently
misused, there has not been the kind of employee misconduct that would justify
withdrawing otherwise appropriate ' 623(d) protection. Of course, employee
insubordination is ordinarily a legitimate non-discriminatory reason for adverse
action . . . and insubordination can include refusing to return confidential
employer documents. But when the insubordination consists of refusing to cease
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what a jury could find to be reasonable ADEA-protected activity, such as
retaining a document that may evidence on-going discrimination, summary
judgment dismissing a retaliation claim is not appropriate.
Id. at 446 (citation omitted). Judge Fagg dissented. Id. at 447.
Odima v. Westin Tucson Hotel, 53 F.3d 1484, 1497-98, 67 FEP Cases 1222 (9th Cir.
1995), held that equitable remedies are not barred when some of the language on an employee=s
resume may be misleading to the casual reader but did not seem seriously intended to deceive.
In this case, the plaintiff=s resume stated that he had a degree when he had satisfied all require-
ments for the degree but had not registered to receive the diploma because of cost concerns.
Ricky v. Mapco, Inc., 50 F.3d 874, 876, 68 FEP Cases 1745 (10th Cir. 1995), held that
one of the elements the defendant must prove to take advantage of the defense is that the
misconduct alleged Awas serious enough to justify discharge.@
c. Possible vs. Certain Consequences
Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 40, 66 FEP Cases 1133 (2d Cir.
1994), involved a plaintiff who had continued to hold a second job without company approval.
The company relied on its employee handbook as establishing a prohibition against holding a
second job. The district court granted summary judgment to the defendant on other issues, and
the court of appeals reversed. The court stated that it was Ahardly clear@ that defendant would be
able to prove that its policy was as strict as it maintained. The employee handbook actually
stated that the company preferred that full-time employees not engage in such employment, and
should obtain permission from a supervisor before accepting such employment. Only
employment with a competitor of the defendant was flatly ruled out.
Kristufek v. Hussman Foodservice Co., 985 F.2d 364, 369, 61 FEP Cases 72 (7th Cir.
1993), rejected the employer=s contentions that it would have fired the plaintiff if it had known of
his misrepresentations on his resume, because the principal evidence was a statement on the
application form stating that misstatements and omissions of material facts Amay be cause for
immediate dismissal.@ The court stated: A>May be= is not >will be= and is not enough to avoid the
proven charge of a retaliatory firing.@ The plaintiff=s misrepresentations as to his education also
did not involve a Acritical@ factor. 985 F.2d at 370.
d. Other Elements of the Defendants Showing
Castle v. Rubin, 78 F.3d 654, 657, 72 FEP Cases 1701 (D.C. Cir. 1996), involved a
plaintiff who prepared training manuals for the Office of the Comptroller of the Currency.
During discovery, the defendant learned that in writing her training manuals she had plagiarized
the works of other authors in violation of Federal copyright laws. The court rejected plaintiff=s
contention that termination is an excessive penalty for plagiarism, because she merely pointed to
one decision of the Merit Systems Protection Board involving the authority to reconsider the
mitigation of an employee=s removal for plagiarism to a demotion. The decision does not
explain the nature or circumstances of the plagiarism, and does not hold that termination is, as a
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18
matter of law, an excessive penalty for plagiarism. Id. at 659. Plaintiff was denied reinstatement
and her jury verdict for back pay was limited to a period of less than nine months.
Perkins v. Brigham & Women=s Hospital, 78 F.3d 747, 751, 70 FEP Cases 568 (1st Cir.
1996), held that the plaintiff could not use McKennon to attack the district court=s reliance on
three coworker affidavits in considering the defendants= motion for summary judgment, on the
ground that the affidavits did not exist at the time he was terminated. The court rejected this
Aanfractuous reasoning.@ It held that the information contained in the affidavits, which Acontain
lurid firsthand accounts of his unsavory conduct,@ was known to the defendants and fully
absorbed by them at the time they fired plaintiff.
Padilla v. Metro-North Commuter R.R., 92 F.3d 117, 124B25, 72 FEP Cases 1448 (2d
Cir. 1996), cert. denied, 520 U.S. 1274 (1997), involved the demotion of plaintiff from his
position as Superintendent of Train Operations in charge of the Operations Control Center
(AOCC@) for asserted mismanagement. For the reasons discussed in Chapter 14 (The McDonnell
Douglas / Burdine / Hicks Model), the court held that a reasonable jury could find that the
defendant=s asserted reasons for the demotion were a pretext for retaliation against the plaintiff
for having provided testimony to the EEOC that in its details supported another employee=s age
discrimination claim, and in retaliation for the plaintiff=s having filed his own EEOC charge
alleging retaliation. Plaintiff admittedly lied at the end of his affidavit to the EEOC, when he
said that he did not know his supervisor=s reason for disqualifying the other employee but he did
not think it was because of the employee=s age. The defendant asserted that plaintiff=s admitted
perjury should disqualify him from an award of front pay because if he were reinstated to his
former position its officials would never know whether he was lying to them. The court did not
comment on the obvious problems with this assertion, but instead rested on two narrower
grounds. First, neither of the defendant=s affiants Astated that, if Padilla had remained as
superintendent, his making of a false statement to the EEOC would have led to his demotion for
that reason alone.@ Id. at 124. Second, there was no evidence Athat Metro-North had a policy in
which it demoted managers for making such false statements, or that a manager had ever been
demoted for this reason in the past.@ Id. at 124B25. The court affirmed plaintiff=s entitlement to
front pay.
ODay v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 759, 70 FEP Cases 615 (9th
Cir. 1996), stated: AThe inquiry focuses on the employer=s actual employment practices, not just
the standards established in its employee manuals, and reflects a recognition that employers often
say they will discharge employees for certain misconduct while in practice they do not.@ The
court observed that it was doubtful that employers would be able Ato come forward with proof
that they discharged other employees for the precise misconduct at issue.@ Id. at 762. Often, the
only proof available will be evidence of a company policy Aand the testimony of a company
official that the misconduct would have resulted in immediate discharge.@ Id. The court
cautioned that employers cannot simply rely on Abald assertions,@ id., but the testimony here is
buttressed by both a plausible reading of the company policy and common sense. Id. The
plaintiff did not contest either the misconduct he was charged with committing or the contention
that he would have been fired for engaging in such misconduct if the defendant had known of it.
The court affirmed the grant of summary judgment to the defendant on the after-acquired
evidence defense, reversed the grant of summary judgment on the entire case, and remanded the
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19
case for a determination of plaintiff=s ADEA claim and for the award of the limited remedies still
available.
On December 14, 1995, the EEOC issued an ENFORCEMENT GUIDANCE ON AFTER-
ACQUIRED EVIDENCE in light of McKennon. EMPLOYMENT DISCRIMINATION REPORT (BNA), vol.
5, No. 23 at 686 (Dec. 20, 1995). Enforcement Guidances are prepared by the EEOCs Office of
Legal Counsel, are voted on by the Commission, and are placed in the agencys Compliance
Manual for the guidance of EEOC employees, including investigators and conciliators. One
provision in the GUIDANCE has attracted criticism by some plaintiffs attorneys:
If no comparable past incidents are discovered, other criteria may be used in
ascertaining whether the misconduct would have prompted the employer to take the
adverse action. Such inquiries may include whether: 1) the misconduct is criminal in
nature, (e.g., embezzlement, fraud, assault or theft); 2) the employees behavior
compromised the integrity of the employers business (divulgence of trade secrets,
security, or confidential information); or 3) the nature of the employees misconduct was
such that the adverse action appears reasonable and justifiable.
Id. at 687.
ODay v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 764 (9th Cir.), held that the
district court properly granted summary judgment to the defendant on the after-acquired
evidence defense, but erred in holding that this was a complete bar to plaintiff=s ADEA claim.
8. Contentions of Excessive Employer Inquiries
There are no reported appellate decisions, within the period covered by this volume, on
this subject. We will monitor this area of the law for developments.
The EEOCs ENFORCEMENT GUIDANCE states that any purposeful attempt by a
respondent (R) to obtain derogatory information about a charging party (CP) is retaliatory,
and is one example of an extraordinary equitable circumstance that may warrant additional
relief. EMPLOYMENT DISCRIMINATION REPORT (BNA), vol. 5, No. 23 at 688. Its example
suggests that retaliatory motive can be presumed from the respondents conducting an extensive
background investigation of the charging party:
ExampleCP files a charge alleging that he was discriminatorily denied a
promotion. R launches an extensive background investigation of CP and learns that he
falsified his application. Accordingly, R fires CP. The Commission investigation reveals
that R does terminate employees who have falsified their applications. It also shows that
the failure to promote was not discriminatory. R contends that CP suffered no loss until
the termination, that the termination was for legitimate reasons and that R is not,
therefore, liable to CP. However, the Commission finds that R did not simply discover
the information in the course of investigating the charge, but purposefully sought
derogatory information about CP in retaliation for his challenging the failure to promote.
As in McKennon, reinstatement would be inappropriate because the employer
2649
20
does terminate those known to have engaged in similar misconduct. However, because
the evidence of wrongdoing was not simply unearthed during an investigation of CPs
complaint, but was deliberately sought to retaliate against CP and to discourage similar
charges, the Courts starting point for backpay cannot be the ending point. Instead this
is the kind of extraordinary equitable circumstance that warrants extending backpay to
the date the complaint is resolved. An employer who chooses to wage a retaliatory
investigation must lose the advantage of equities that would, absent the retaliation, favor
that employer, especially since retaliation is an independent violation of the federal
employment discrimination laws.
Id. The Commissions rationale for extending back pay to the date of resolution of the charge
seems to be limited to the administrative investigation, because footnote 5 states that
McKennons reliance on Rule 11 and awards of attorneys fees to protect against defendants
overzealousness are inapplicable to charge- processing and other constraints are needed. The
Commissions own rationale would not support applying its retaliation rule once the case comes
to court.
Comment by Richard Seymour on the EEOCs Enforcement Guidance: It is not
clear that this rule will have much practical effect. The key here is the EEOCs limitation of this
rule to the administrative process, which I think will severely limit its effect. Where the limitation
on relief makes a substantial difference, I expect that many respondents will simply refuse to
conciliate and will wait for the case to be filed in court and for the limitation on relief then to
become applicable. With such a limitation, the Commissions policy will primarily affect
respondents who are anxious to resolve the charge in conciliation. In the meantime,
respondents who would rather wait to be sued will still have a strong incentive to discover any
misconduct as soon as possible because the date of discovery will eventually insulate them
from the further accumulation of back pay.
Going beyond the Commissions rationale, it seems reasonable that some types of
background investigation could be so intense as to trigger the equitable considerations that
McKennon said could justify a change in the presumptive limitations on relief. For example, the
employers tapping the complainants telephone, opening and reading her mail, or having a
zealous private investigator interview her neighbors, would appear so extreme to a court or jury
that it could be easy for them to draw a reasonable inference of retaliation. Using an imprudent
private investigator, invading the plaintiffs privacy, bringing the plaintiff into disrepute among
friends or acquaintances, and similarly extreme steps, could be used in litigation to support a
claim of retaliation and may lead to the employers forfeiture of its protection.\
9. Effect of the Rule on Liquidated Damages
Wallace v. Dunn Construction Co., 62 F.3d 374, 380B81, 68 FEP Cases 990 (11th Cir.
1995) (en banc), held that after-acquired evidence does not bar a claim for liquidated damages
under the Equal Pay Act for the retaliation claim. AThe after-acquired evidence is irrelevant to
Dunn's mental state and thus does not bar these liquidated damages under the Equal Pay Act.@
Id. at 380. However, such damages are tied to back pay, and Aafter-acquired@ evidence Amay . . .
mandate an early end to the period of liquidated damages.@ Id. at 381.
2650
21
The EEOCs ENFORCEMENT GUIDANCE states that after-acquired evidence should not bar
the award of liquidated damages under the Equal Pay Act or in ADEA cases. EMPLOYMENT
DISCRIMINATION REPORT (BNA), vol. 5, No. 23 at 687 n.4, 689.
10. Effect of the Rule on Compensatory and Punitive Damages
Castle v. Rubin, 78 F.3d 654, 656, 72 FEP Cases 1701 (D.C. Cir. 1996),
affirmedCwithout discussion of this issueCa judgment for plaintiff for $75,000 in damages for
an unlawful termination, in addition to a back pay award substantially reduced because of the
defendant=s discovery that plaintiff had plagiarized the works of other authors in preparing
official training manuals for the Office of the Comptroller of the Currency. The court also
denied front pay and reinstatement to the plaintiff.
Mardell v. Harleysville Life Ins. Co., 31 F.3d 1221, 1231B33, 65 FEP Cases 734 (3d Cir.
1994), vacated and remanded for reconsideration in light of McKennon, 514 U.S. 1034 (1995),
reaffirmed in relevant part, 65 F.3d 1072, 68 FEP Cases 481 (3d Cir. 1995), discussed the need
to provide a remedy for discriminatory injury to dignity and self-esteem even where the victim
has lied on his or her resume as a reason why the after-acquired evidence defense should not bar
a finding of liability.
Russell v. Microdyne Corp., 65 F.3d 1229, 1241, 68 FEP Cases 1602 (4th Cir. 1995),
squarely addressed this issue:
Thus, because Russell=s complaint contains examples of unlawful activity in
1992, she would be eligible for damages, both compensatory and punitive,
resulting from actions occurring between November 21, 1991, and May 25, 1993,
regardless of whether the doctrine of after-acquired evidence applies.
The court also referred to the doctrine as dealing with an Aafter-acquired motive.@ Id. at 1237.
EEOC v. Farmer Bros. Co., 31 F.3d 891, 901, 65 FEP Cases 857 (9th Cir. 1994),
approved in dictum the decision in Massey v. Trump=s Castle Hotel and Casino, 828 F. Supp.
314, 63 FEP Cases 21 (D.N.J. 1993), holding that it would be inequitable to deny other forms of
damages to a plaintiff already penalized by denial of reinstatement and front pay.
The EEOCS ENFORCEMENT GUIDANCE states that economic damages should, like back
pay, continue only to the date of discovery. The example involves out-of-pocket costs associated
with job loss. However, the GUIDANCE states that a charging party should be able to obtain
compensatory damages for emotional harm caused by discrimination, where the resulting
emotional harm continued after a legitimate reason for the adverse action is discovered. The
GUIDANCE states that punitive damages should not be barred or limited by after-acquired
evidence and that proof of retaliation virtually always warrants punitive damages.
EMPLOYMENT DISCRIMINATION REPORT (BNA), vol. 5, No. 23 at 68889.
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11. Plaintiffs Efforts to Use the Doctrine to Bar Evidence
Teahan v. Metro-North Commuter R.R. Co., 80 F.3d 50, 5 AD Cases 603 (2d Cir. 1996),
is a Rehabilitation Act case involving an employee who was discharged for excessive
absenteeism. The defendant=s notice of intent to discharge was mailed to him on the same day he
entered an inpatient rehabilitation program for alcohol and drug abuse. The court conducted a
hearing to determine whether plaintiff was an Aotherwise qualified individual,@ and heard
testimony from two psychiatric experts that Athere was a significant potential, indeed a
likelihood, of relapse.@ Id. at 53. The plaintiff had relapsed after going through an earlier
rehabilitation program. Id. at 52. Plaintiff contended that McKennon barred the district court
from considering, on a question relating to liability, evidence not available to the employer at the
time of its decision to fire him. The court held:
In this case, Metro-North did not offer its psychiatric testimony to present
an alternative, Alegitimate@ motive for dismissing Teahan. It offered this evidence
to prove that its decision to dismiss Teahan had a reasonable basis under all the
facts as they existed at the time of the dismissal. As we stated in Teahan I, the
issue Awhether the employee is >otherwise qualified= as of the date of termination
is forward-looking and enables the employer to consider how the employee will
perform as compared to nonhandicapped individuals.@ . . . Thus, the expert
testimony at trial was necessarily predictive. Accordingly, the rule announced in
McKennon has no application here.
Id. at 55 (internal citations omitted).
G. Back Pay
1. Entitlement
a. Defendants Lowering of Pay Scale in the Job at Issue
Dodoo v. Seagate Technology, Inc., 235 F.3d 522, 531, 84 FEP Cases 933 (10th Cir.
2000), affirmed the judgment on a jury verdict for the ADEA and Title VII plaintiff as to a
promotion to Product Line Manager and Program Line Manager positions. The court rejected
defendants argument that plaintiff suffered no actual loss justifying the $15,000 back pay award
for the Program Line Manager position in light of the fact that defendant had reduced the pay
grade for the job to a figure $15,000 lower than plaintiffs then-current salary. The court
explained:
As for the remaining backpay award (for Seagates failure to promote Dodoo to
the Program Manager position), the evidence sufficed for a jury finding that but for
Seagates unlawful discrimination the position would not have been downgraded to grade
30 (it will be recalled that downgrading took place in the context of awarding the position
to newcomer Koelsch, for whom grade 30 was a step up from grade 28). It was surely
reasonable for the jury to infer that if Dodoo had gotten the spot instead, that job would
have remained at grade 32 (as originally posted), with Dodoo receiving the corresponding
increase in salary.
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23
Id. (emphasis in original).
b. Undocumented Aliens
Hoffman Plastics Compounds, Inc. v. N.L.R.B., 535 U.S. 137, 169 L.R.R.M. (BNA) 2769
(2002), reversed the Boards grant of back pay to Jose Castro, an undocumented alien who had
never been authorized to work in the United States. Castro testified that he had used a friends
birth certificate fraudulently to obtain a Social Security card, and a California drivers license,
and he had used these to obtain employment. There was no evidence that he had applied or
intended to apply for legal authorization to work in the United States. The Court held that the
legal landscape of prior decisions was altered by enactment of the Immigration Reform and
Control Act of 1986. Speaking of the fact that it is impossible for an undocumented alien to
obtain employment in the United States without some party directly contravening explicit
congressional policies, id. at 148, such as by the employees tender of fraudulent documentation
or the employers knowing hiring of an undocumented alien, the Court stated:
The Board asks that we overlook this fact and allow it to award backpay to an illegal
alien years of work not performed, for wages that could not lawfully have been earned,
and for a job obtained in the first instance by a criminal fraud. We find, however, that
awarding backpay to illegal aliens runs counter to policies underlying IRCA, policies the
Board has no authority to enforce or administer.
Id. at 14849. The Court pointed out that Castro could not satisfy his duty to mitigate his
earnings loss without committing further violations of IRCA. Justice Breyer, joined by Justices
Stevens, Souter, and Ginsburg, dissented.
The logic of this decision would seem to apply to back pay awards under all of the
antidiscrimination statutes, but not necessarily to awards of compensatory and punitive damages.
It is not clear that this decision would bar minimum-wage and overtime awards under the FLSA
for work already performed.
The Courts caveatthat there was no evidence that Castro had applied or intended to
apply for legal authorization to work in the United Statesraises the question whether Castro
could have rehabilitated himself for purposes of a back pay award by applying for such
authorization.
Some courts have held that Hoffman Plastics does not affect a plaintiffs right under
FLSA or State wage and hour law to obtain back pay or overtime compensation for work
actually performed, and/or have for this reason barred discovery into the plaintiffs immigration
status. Flores v. Amigon, 233 F. Supp. 2d 462, 46365 (E.D. N.Y. 2002); Zeng Liu v. Donna
Karan Intl, Inc., 207 F.Supp.2d 191, 19293 (S.D. N.Y. 2002); Singh v. Jutla & C.D. & Rs Oil,
Inc., 214 F. Supp. 2d 1056, 8 WH Cases 2d 165 (N.D. Calif. 2002).
c. Pattern and Practice Finding Creates Presumption
In re Employment Discrimination Litigation Against State of Alabama, 198 F.3d 1305,
131516, 81 FEP Cases 950 (11th Cir. 1999), stated in dicta that, when the plaintiff shows that
2653
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an employment practice has disparate impact against a protected group and the defendant fails to
demonstrate that it is lawful, the principal relief should be an injunction. It stated that
determinations must then be made as to individual equitable remedies: As for individual relief,
if an individual plaintiff has shown that he or she was within the class of persons negatively
impacted by the unlawful employment practice, then the employer must be given an opportunity
to demonstrate a legitimate nondiscriminatory reason why, absent the offending practice, the
individual plaintiff would not have been awarded the job or job benefit at issue anyway. . . . If
the employer cannot so demonstrate, then individual relief may be merited.
d. Eleventh Amendment
In re Employment Discrimination Litigation Against State of Alabama, 198 F.3d 1305,
131516, 81 FEP Cases 950 (11th Cir. 1999), held that Congress validly abrogated the States
Eleventh Amendment immunity to Title VII suits for disparate-impact discrimination.
e. Entitlement When Plaintiff Too Sick to Work
Lathem v. Department of Children and Youth Services, 172 F.3d 786, 79394, 79 FEP
Cases 1267 (11th Cir. 1999), affirmed the grant of back pay to the Title VII plaintiff
notwithstanding the defendants argument that she was not eligible for an award because she was
disabled and not available for work during the back pay period. The district court, after
reviewing all the evidence, specifically found that DCYSs conduct caused Lathems disability
and that this disability precluded her from obtaining other employment. Accordingly, we hold
that a Title VII claimant is entitled to an award of back pay where the defendants discriminatory
conduct caused the disability. Id. at 794.
2. Causation
Fogg v. Gonzales, 492 F.3d 447, 100 Fair Empl.Prac.Cas. (BNA) 1601 (D.C. Cir. 2007),
affirmed the award of backpay, holding that the defendant could not switch positions after trial
and post-trial motions, arguing a same decision defense as a defense to back pay when it had
litigated the case until then as a single-motive case. The court rejected the governments
argument that the 1991 Civil Rights Act had abolished single-motive liability. Judge Henderson
concurred.
Alexander v. City of Milwaukee, 474 F.3d 437, 451, 99 FEP Cases 961 (7th Cir. 2007),
affirmed the judgment holding the City liable, and the then Police Chief and each of the
members of the Board of Police and Fire Commissioners personally liable, under Title VII and
42 U.S.C. 1981 and 1983 for racial and sexual discrimination against 17 white male plaintiffs
in making promotions to the rank of Captain. The court held that the lower court erred in
instructing the jury that, under the lost-chance method, plaintiffs were to be evaluated only
against other plaintiffs with respect to each of the promotional opportunities in question:
The plaintiffs bear the burden of establishing their losses, and, in the case of
promotional opportunities, it is the plaintiffs burden to establish the probability that they
would be promoted over all other potential candidates. Only in the face of evidence that
they would have been promoted over any other non-plaintiff candidates absent
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discrimination would the district court have been justified in instructing the jury to limit
its consideration of the plaintiffs lost chances to the consideration only of other
plaintiffs. Although the evidence in the record strongly supports the conclusion that the
lieutenant-plaintiffs were qualifiedindeed, that is uncontestedit necessarily does not
follow from our case law that the plaintiffs were entitled to an instruction that treated
them as though they were the only qualified individuals.
(Footnote omitted; emphases in original.) The court held that the same analysis had to be
applied to the damages for emotional distress.
Voeltz v. Arctic Cat, Inc., 406 F.3d 1047, 16 AD Cases 1208 (8th Cir. 2005), vacated the
back pay award on plaintiffs ADA failure-to-accommodate claim, because there was no
evidence that plaintiff lost his job as a result of defendants failure to engage further in the
interactive process, and the jury had rejected his disparate-treatment claim by finding that
defendant would have made the same decision regardless of plaintiffs multiple sclerosis.
3. Unconditional Offers of Reinstatement
Ford Motor Co. v. E. E. O. C., 458 U.S. 219, 29 Fair Empl.Prac.Cas. (BNA) 121 (1982),
held that an employees rejection of an unconditional offer of reinstatement, even without
constructive seniority, stops the accumulation of back pay. The Court held that this both serves
the goal of facilitating the employers coming into compliance with the fair employment laws,
while satisfying the employees duty of mitigation. The employee may accept without being
required to surrender any of the claims for relief in the lawsuit, and may not reject the offer on
the ground that the offer is not accompanied by the other relief sought in the lawsuit.
Comment on the Ford Motor Rule: The Ford Motor rule does seem to me to apply
equally to employers offers of hiring or promotion; instatement should operate the same as
reinstatement. The rule does not require an employee to submit to unlawful working conditions,
such as requiring a former employee to come back to work and submit to sexual or other
harassment, or require a disabled employee needing a reasonable accommodation to work
without an accommodation.
Halle Enterprises v. NLRB, 247 F.3d 268 (D.C. Cir. 2001), denied the employers
petition for review and granted the Boards cross-application for enforcement of the Boards
order requiring reinstatement and make-whole relief. The court rejected the employers argument
that its offer of reinstatement to four senior employees had been unconditional and barred the
accrual of back pay. When the four senior employees tried to return to work pursuant to an
unconditional offer, the employers Property Manager told them they could not return unless
they signed a waiver agreeing not to participate in legal action against the company. Id. at
270. The employer agreed that that made the offer conditional, and argued that this preceded the
unconditional offer made by the President of the employer. The court held that substantial
evidence supported the Boards determination that Elliss offer was the last offer.
Lightfoot v. Union Carbide Corp., 110 F.3d 898, 908B09 (2d Cir. 1997), held that the
plaintiff=s entitlement to back pay was terminated when he rejected the defendants= unconditional
offer of reinstatement into the job from which he had been terminated. The court rejected
plaintiff=s argument that he should have been able to disregard the offer because the pay rate of
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his old job was affected by discrimination and he was not offered a higher salary. The court
stated that substantial equivalence to the position at issue was all that was required. AIn short, an
employer is not required to >insure the claimant against the risk that the employer might win at
trial.=@ Id. at 908. The court rejected plaintiff=s unsupported argument that the offer was made in
bad faith to allow the defendant to continue to harass the plaintiff while figuring out a more
effective way to rid itself of the plaintiff. Id. The court also rejected plaintiff=s contention that
his rejection was reasonable because he had already agreed to accept a position with a different
company. AIt is a matter of law that a commitment to a new employer does not preserve the
employee=s right to recover back pay for discriminatory termination from a previous employer.@
Id. at 909. The court rejected as unsupported plaintiff=s contention his rejection of the offer
should be excused because returning to the defendant Awould have imperiled his health and well-
being.@ Id. at 908. Plaintiff had a physician=s supporting affidavit at the time he raised his point
in opposition to the defendants= motion for partial summary judgment, but did not attempt to
introduce it until he moved to vacate and amend the order granting partial summary judgment.
Id. at 909. Finally, the court held that an unconditional offer of reinstatement is not a settlement
document and is therefore not barred from evidence by Rule 408, FED. R. EVID. Id. The court
affirmed the grant of partial summary judgment to the defendants.
Canny v. Dr. Pepper/Seven-Up Bottling Group, Inc., 439 F.3d 894, 905, 17 AD Cases
1153 (8th Cir. 2006), affirmed the judgment on a jury verdict to the ADA plaintiff on all issues
other than punitive damages. The court rejected defendants argument that plaintiffs back pay
should have ended because of its reinstatement letter, citing the district courts actions with
approval: The district court also remarked Dr Peppers July 30 offer was not an unconditional
offer of reinstatement, because the offer was conditioned on Canny arranging his own
transportation, making wage concessions, and relocating. The district court further reasoned Dr
Pepper failed to engage in discussion with Canny regarding the accommodations of that
position.
4. Mitigation
Fogg v. Gonzales, 492 F.3d 447, 455, 100 Fair Empl.Prac.Cas. (BNA) 1601 (D.C. Cir.
2007), affirmed the lower courts rejection of defendants argument that plaintiff failed to
mitigate his damages. The court stated at *6:
We approach this issue cognizant of the Supreme Court's teaching that the
unemployed or underemployed [Title VII] claimant need not go into another line of work,
[or] accept a demotion. . . . As for opportunities in Fogg's line of work, the district court
accepted Fogg's self-evidently plausible assertion that because his employment record
showed the USMS had dismissed him for insubordination, any efforts to find a
comparable law enforcement position would have been futile. . . . The Government,
notwithstanding that it bears the burden of proving failure to mitigate, simply ignores this
point. Lacking any evidence to the contrary, therefore, the district court fairly inferred
Foggs failure to mitigate his damages by finding other police work was attributable to
the Marshals Service's having terminated him purportedly for cause, and hence did not
abuse its discretion in preventing the Government from profiting from its own wrongful
conduct.
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(Citations omitted.) Judge Henderson concurred.
Borges Colon v. Roman-Abreu, 438 F.3d 1 (1st Cir. 2006), affirmed the judgment for the
First Amendment political-affiliation plaintiffs, holding that there was sufficient evidence that
defendants privatization of the municipal sanitation department was motivated by
discrimination. The court rejected defendants argument that plaintiffs failed to mitigate by
failing to apply for jobs in two municipal departments: When there was evidence the Mayor
instructed ARB and municipal officials not to hire the laid-off employees in San Lorenzo, he is
ill-situated to argue that the employees should have, despite the demonstrated futility of
requesting jobs, made the requests anyway. Id. at 21.
Conetta v. National Hair Care Centers, Inc., 236 F.3d 67, 77, 85 FEP Cases 578 (1st Cir.
2001), affirmed the lower courts refusal to set aside the entry of default on plaintiffs retaliatory
discharge claim, holding that defendant failed to show good cause. The lower court found that
plaintiffs attempts to mitigate were inadequate, and reduced her back pay claim by 25%. Both
sides appealed. The court held that defendant showed that some comparable jobs were available,
but plaintiff showed that she pursued at least one application and reviewed newspaper
advertisements every day. The court stated: No one knows exactly what would have happened
if Conetta had been more vigorous in her efforts, and the district courts use of a partial discount
was a sensible way of resolving the problem. (Citation omitted.)
Deffenbaugh-Williams v. Wal-Mart Stores, Inc., 156 F.3d 581, 591, 77 FEP Cases 1699
(5th Cir. 1998), vacated on grant of rehg en banc, 169 F.3d 215, 79 FEP Cases 1770 (5th Cir.),
reinstated in relevant part, 182 F.3d 333, 80 FEP Cases 704 (5th Cir. 1999), affirmed the back
pay judgment based on the jury verdict. The court rejected the argument of the Title VII and
1981 defendant that the plaintiffs back pay period should have ended when she quit her
subsequent employment. She testified that when she obtained the new job, she moved to her in-
laws residence in a lower-income area because of her reduced earnings. When she was sexually
assaulted at her new residence, she resigned. She sought $34,000 in lost earnings, and the jury
awarded $19,000. The defendant argued that her lost earnings should be no more than $10,000,
reflecting its contended end of the back pay period caused by the plaintiffs asserted failure to
mitigate her losses. The plaintiff testified as to her efforts to obtain a job after her resignation
from the interim employer. The court held that mitigation is a question of fact turning on
reasonableness, similarity, and diligence, and that a reasonable jury could have found that the
plaintiff had satisfied her duty of mitigation. Id.
Chalfant v. Titan Distribution, Inc., 475 F.3d 982, 99293, 18 AD Cases 1601 (8th Cir.
2007), affirmed the judgment on a jury verdict for the ADA plaintiff, holding that plaintiff was
entitled to the $60,000 awarded in back pay, and rejecting defendants argument that plaintiff
failed to mitigate his damages. The court relied on the fact that plaintiff found other
employment, at half his former pay, within two months, and continued looking for better jobs in
the newspaper classified advertisements. Titan relies on testimony from Chalfants and Titans
vocational experts that Chalfant would have been able to find a better paying job. There was also
testimony from Chalfants vocational expert, though, that at Chalfants age it would be difficult
to find a similar paying job. With this evidence, we cannot say the district court clearly abused
its discretion in concluding that the jury could reasonably find that Chalfant mitigated his
damages. Id. at 992 (citation omitted).
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Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1253, 16 AD Cases 1197 (10th Cir. 2005),
affirmed the judgment on a jury verdict for the ADA plaintiff. The court rejected defendants
attack on the award based on an asserted failure to mitigate: The evidence of Ms. Praseuths
efforts by way of mitigation of damages (evidence that she applied for several jobs, searched
classified job advertisements, and made monthly visits to the Kansas Job Services Offices) was
sufficient to preclude interference with the jurys determination, with the aid of the trial courts
instruction on mitigation, of the amount of her compensatory damages. Id. at 1253.
McClure v. Independent School District No. 16, 228 F.3d 1205, 1214 (10th Cir. 2000),
reversed the limitation of plaintiffs back pay to the 199697 school year. The lower court found
that plaintiff had failed to mitigate her damages. After her discharge, plaintiff applied for
employment in public school systems within an eighty mile radius of Salina, sending out fifty to
seventy resumes. These applications were all unsuccessful, and plaintiff took early retirement.
Id. at 1210. The court of appeals held that the duty to mitigate is not the same as a duty to
succeed in mitigation, and that only an honest good faith effort is required. Id. at 1214
(citation omitted). It held that plaintiff had made an adequate effort.
5. Laches
Pruitt v. City of Chicago, 472 F.3d 925, 99 FEP Cases 737 (7th Cir. 2006), affirmed the
grant of summary judgment to the Title VII and 1981 racial harassment defendant, because of
laches. The ten plaintiffs alleged that for twenty years a certain Foreman had harassed them for
being black or Hispanic, and as part of the harassment had disciplined them and denied them
promotions because of their race. The court held: That discrete acts may have been mixed with
a hostile environment does not extend the time; Morgan, which involved just such a mixture,
shows as much. Id. at 927 (citation omitted). The court observed that plaintiffs knew enough to
bring suit by 1981, and held that plaintiffs had delayed unreasonably and that defendant had been
prejudiced. It held that Morgan allowed the application of laches to hostile environment claims
even though they were within the period of limitations. It continued:
There remains the final question posed by Morgan: what consequences follow if
laches is established? . . . The district court assumed that the upshot of laches must be
outright dismissal. Yet thats not the only possible consequence. A less severe
consequence would be to carve off the aspects of the plaintiffs claim that are no longer
subject to meaningful adversarial testing. It might well be sensible to allow litigation
about events back to 1999 (four years before the 1981 suit began) while foreclosing
litigation about older events. That would respect the fact that prejudice is not an all-or-
none affairevidence about what happened three or four years ago is more accessible,
and memories of that time more reliable, than evidence about the events 10 or 20 years
earlier.
The court observed that plaintiffs had not urged such an approach, but had litigated the twenty-
year period as an all-or-nothing affair. It continued at 930:
Although using laches to carve years out of a claim thus may be a sensible way to
answer the question reserved in Morgan, it is not the relief that plaintiffs sought in the
district court. They did not try to identify the scope of the prejudice caused by delay and
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specify a temporal bound that would leave the opposing sides with roughly equal access
to evidence. Their appellate brief hints at such a possibility but does not undertake any of
the work necessary to determine how far back the claim could reach without undue
prejudice to the employer. In the district court plaintiffs argument was limited to the
proposition (one inconsistent with Morgan) that the claim must stretch at least four years
back because laches never may be used to abbreviate the time allowed by a statute of
limitations. The City argued that plaintiffs have forfeited the benefit of any other
approach. Plaintiffs then filed a reply brief that ignored the Citys argument that
forfeiture has occurred. Such a head-in-the-sand position is unavailing. We hold the
parties to the positions they preserved in the district court, which means that we need not
attempt to draw a line between recent events (unaffected by laches) and older ones where
the employers ability to defend has been undermined.
This also means that we need not discuss Chicagos fallback argument that
Morgans one-employment-practice holding is limited to Title VII (which has a short
period of limitations) and does not apply under 1981. If the City is right, then an
employee never may complain about episodes of hostile environment that occurred more
than four years before the suit began. Whether that is so is a question for another day.
6. Elements of Back Pay
Acevedo-Garcia v. Monroig, 351 F.3d 547, 571 (1st Cir. 2003), rejected defendants
argument that the jurys awards for back pay were excessive because they exceeded the amounts
of lost earnings that had been proven. The court explained:
As a threshold matter, the magnitude of the claimed discrepancy is sufficiently small
(ranging from $2,607.94 to $10,900.00) to preclude a finding that the verdict was
grossly excessive, inordinate, shocking to the conscience of the court, or so high that it
would be a denial of justice to permit it to stand. . . . Furthermore, the jury was entitled
to consider any secondary economic injuries flowing from the plaintiffs loss of earnings
and employment benefits. . . . For example, nearly every claimant testified that they
relied entirely on their monthly earnings to cover the expenses of running their
household, meet their mortgage obligations, pay their childrens tuition, etc. As a
consequence of losing their jobs, plaintiffs were forced to seek additional bank loans, dip
into their savings, and make other costly financial adjustments to cover these expenses.
Sharkey v. Lasmo (AUL Ltd.), 214 F.3d 371, 37475, 84 FEP Cases 967 (2d Cir. 2000),
reversed the denial of the successful ADEA plaintiffs lost pension benefits, holding that relief
without such benefits did not make him whole. Such benefits are compensation for past
economic loss, not prospective relief. The court held that there are two ways to provide the
plaintiff with the appropriate relief. In addition to restoring his lost service and salary credits to
his pension plan, it is also possible to award money damages to compensate the plaintiff for the
value of the pension benefits that were lost. This form of legal relief is proper for a jury to
award. Id. at 375 (citation omitted). The court held that the record was unclear as to whether
the jurys award of $1,427,200 in damages included the lost pension benefits, and remanded the
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issue so that the lower court could address it and either award the relief or withhold it so as to
avoid duplicative relief. While the plaintiff did not attempt to quantify his lost benefits to the
jury, the evidence presented to the jury contained references to pension provisions, and
plaintiffs closing argument referred to pension benefits. The lower court had instructed the jury
that the plaintiffs economic loss should be the measure of damages, and had referred four
times in its instructions to the plaintiffs right to recover salary and benefits, or pension benefits,
or financial losses. Id. Judge Hall concurred in part and dissented in part. Id. at 37677.
City of New York v. Local 28, Sheet Metal Workers International Association, 170 F.3d
279, 285 (2d Cir.), affirmed the lower courts order that the fee for reinstatement to active status
with the union be waived for nonwhite journeypersons who are entitled to back pay for having
been harmed by a practice found to have been in contempt of an earlier order, but modified the
order as to the payment of back dues:
Had there been no discrimination, and had these members never been terminated for
inability to pay dues due to lack of work, they would never have been forced to pay the
reinstatement fee. However, returning the members to their ex ante position does not
require a waiver of all back dues. If the nonwhite journeypersons had been working
steadily from 1984 to 1991, they would have paid dues in the normal course. As a
compensatory contempt remedy, the back pay award should not place the journeypersons
in a better financial position than they would have been in if the Union had not
discriminated against them. Accordingly, we reverse the order of the district court
waiving the payment of back dues from back pay awards, with one caveat. Due to the
Unions financial condition, journeypersons discriminated against by the Union are likely
to receive only a portion of their lost back pay. . . . Back dues should therefore not be
deducted from a back pay award for a given year except to the extent that the actual
award for that year exceeds an amount equal to the full back pay for that year minus back
dues for the year.
(Citation omitted.)
Skalka v. Fernald Environmental Restoration Management Corp., 178 F.3d 414, 425 (6th
Cir. 1999), cert. denied sub nom. Conover v. Fernald Environmental Restoration Management
Corp., 530 U.S. 1242 (2000), reversed the judgment for ADEA plaintiff Skalka and remanded it
for a remittitur or new trial on damages. The court held that future pension payments cannot be
included in back pay and subjected to doubling as liquidated damages, but must be treated as
front pay. The court held that the defendant had not waived the issue by failing to object to the
jury instruction defining back pay as including pension benefits which a plaintiff would have
received but for the discrimination, because it was possible to construe the language as
referring only to 401(k) payments that the plaintiff would have received before the trial.
Greene v. Safeway Stores, Inc., 210 F.3d 1237, 124344, 82 FEP Cases 1306, 24 EB
Cases 1417 (10th Cir. 2000), affirmed the judgment on a jury verdict for the ADEA plaintiff,
who had been fired at the age of 53, about two years before the plaintiffs interest in the
defendants Supplemental Executive Pension Plan and new stock options vested. The judgment
included $4.4 million for unrealized stock option appreciation, including both the options that
had not yet vested and the difference in the value of the already-vested options at the time of
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plaintiffs termination, when he exercised them and sold the stock to pay his IRS bills, and their
value if he had been able to execute his plan of retiring at 55, exercising them, and selling the
stock. The court discussed the importance of stock options in executive compensation, id. at
1243, and held that stock option appreciation is compensable under the ADEA, but that it was
not subject to liquidated damages. Moreover, the court upheld the inclusion in the judgment of
the $3 million difference between the value of the options in 1993, when the plaintiff was forced
to exercise them, and the value the options would have had if he had been able to exercise them
two years later, as he had planned. The court rejected the defendants argument that this
difference was compensatory damages not allowable under the ADEA:
Safeway argues that the unrealized stock option appreciation constituted consequential
damages because Safeway had no control over the market price of its stock and Greene
opted to sell his stock a short time after exercising his options. Safeways argument is
unpersuasive because Safeway conferred on Greene the right to buy shares of its stock at
a set price. The value of that right to buy stock at a prefixed price went up and down
with the market price of the stock. In forcing Greene to exercise the options earlier than
he otherwise would have, Safeway curtailed Greenes right to choose the date on which
he would exercise his right to buy stock in order to maximize his profit on the sale of the
shares acquired.
Id. at 1244. See the discussion below as to mitigation.
Munoz v. Oceanside Resorts, Inc., 223 F.3d 1340, 1348, 88 FEP Cases 628 (11th Cir.
2000), affirmed the judgment on a jury verdict for the discharged ADEA plaintiff. The court
rejected the defendants argument that the award included fringe benefits such as the reduced
cost of meals, health insurance coverage, and vacation pay. This circuit repeatedly has held that
such benefits should be recouped in a back pay award. (Citation omitted.)
7. Length of Back Pay Period
2007), held at p. *5 that the lower court did not abuse its discretion in awarding back pay from
the date of plaintiffs termination in 1995 to the date of judgment in 2005. The court also held
that the back pay period did not stop in 1999, when plaintiff stated he was unable to go back to
work, because plaintiff did not represent that he was disabled. Id. at *6. Judge Henderson
concurred.
8. Calculation
a. Lost Chance Method
in making promotions to the rank of Captain. The lower court used the lost-chance method of
awarding back pay, and the court held that the plaintiffs had to be compared to all other eligible
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candidates, not just to other plaintiffs. Although the evidence in the record strongly supports
the conclusion that the lieutenant-plaintiffs were qualifiedindeed, that is uncontestedit
necessarily does not follow from our case law that the plaintiffs were entitled to an instruction
that treated them as though they were the only qualified individuals. (Footnote omitted;
emphases in original.) The court held that the same analysis had to be applied to the damages for
emotional distress.
Bishop v. Gainer, 272 F.3d 1009, 101617, 87 FEP Cases 920 (7th Cir. 2001), affirmed
the calculation of back pay based on the lost chance method described hypothetically in Doll v.
Brown, 75 F.3d 1200, 5 AD Cases 369 (7th Cir. 1996):
Here, Hanford and Robert were competing against each other--as well as the
person who actually was promoted. The judge turned to our decision in Doll and took us
up on our invitation to apportion damages under a lost-chance theory, borrowed from tort
law, which we said recognizes the inescapably probabilistic character of many injuries.
We analogized by saying that if a patient was entitled to 25 percent of his full damages
because he had only a 25 percent chance of survival, he should be entitled to 75 percent
of his damages if he had a 75 percent chance of survival--not 100 percent of his damages
on the theory that by establishing a 75 percent chance he proved injury by a
preponderance of the evidence.
At 1206. Using the tort approach, the judge proceeded to calculate the plaintiffs
damages by assessing what the chances were that each would have received the
promotion he sought. For this promotion, Hanford placed third and Robert fourth on the
promotion list. The person who was first received a different promotion and the person
who placed second had been out of the particular district for several years, and for that
reason the judge reasoned that his chances of getting the promotion would be reduced to
25 percent. Then the judge assessed that Hanford had a 45 percent chance and Robert had
a 30 percent chance to receive the promotion. The other appellant, Volle, was competing
for a promotion with two other white males who placed higher than he did on the list, so
his chances were assessed at 15 percent.
The approach obviously involves more art than science. But as we said in Doll,
that is true in all comparative negligence calculations as well. It strikes us that in this
particular situation, it was the likeliest way to arrive at a just result. We think the judge
(Judge Harry Leinenweber here) did a wonderful job of cutting this Gordian knot. We
have examined the evidence and find no reason to disturb the thoughtful calculations he
has made and the result they have produced.
b. Make-Whole Relief When There are More Complainants
than Vacancies
United States v. City of Miami, 195 F.3d 1292, 130002, 81 FEP Cases 397 (11th Cir.
1999), cert. denied sub nom. Fraternal Order of Police v. United States, 531 U.S. 815 (2000),
vacated and remanded the remedy the lower court had ordered after a finding that the City was in
contempt of the Consent Decree by issuing unwarranted Special Certifications that allowed it
to promote one additional black candidate to the rank of Sergeant, and one to the rank of
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Lieutenant. The court held that the lower court impermissibly ordered make-whole relief for all
of the 35 bypassed officers on the promotional certificates. It held that make-whole relief
should instead be limited to one promotion for each rank, from among the pools on the regular
Certificates. Id. at 1299. The court approved the lower courts decision to use a classwide
approach, because the promotional process was highly subjective and there was no means to
determine which of the 23 bypassed candidates for Sergeant, and which of the 12 bypassed
candidates for Lieutenant, would have been promoted in the absence of the Special
Certifications. We have explained in the context of remedial backpay relief that a classwide
remedy is appropriate when fashioning an individualized remedy would create a quagmire of
hypothetical judgment[s] as to which individuals, out of a large class, should receive remedial
relief. . . . In endorsing this approach, we have recognized that the only other relief alternatives
would be unpalatable: either (1) randomly selecting several individuals from a large class for
full make-whole relief, or (2) awarding no relief at all because specific individuals deserving of
a make-whole remedy could not be identified from a victim class. Id. (citations omitted; some
internal quotation marks omitted). The court stressed that equity for both sides is important. Id.
at 12991300. The court held that the district courts error was in treating each bypassed
candidate as if he had been deprived of a 100% chance of promotion, whereas each lieutenant
candidate stood only a one in twenty-three (or four percent) chance of promotion, and each
sergeant candidate stood only a one in twelve (or eight percent) chance of promotion. Id. at
1300. The court held that a pro rata approach should be used, with the value of the promotion
for each rank divided among the eligible pool for that rank. Id. at 130001. It stated that the
district courts approach was punitive in nature because of its excessiveness. Id. at 130102.
Moreover, the sheer number of promotions could radically restructure the Citys police force by
creating many more lieutenants and sergeants than the City sought fit to create under its own
promotion policies. The very magnitude of this remedy risks reshaping the Police Department in
a variety of ways unforseen and unintended by the district court. Id. at 1302. The court vacated
the remedy and remanded the case for the entry of pro rata relief. Id.
c. Ending Date
EEOC v. E.I. Du Pont de Nemours & Co., 480 F.3d 724, 731, 18 AD Cases 1793 (5th
Cir. 2007), affirmed the award of $91,000 in back pay to the ADA charging party, holding that
the record allowed the jury to disregard the charging partys physicians certification that he was
unable to work and determine that he would have worked longer in the absence of
discrimination:
Although Dr. Montegut, Barrioss physician, testified that Barrios was medically unable
to work after June 2001, the jury could have relied upon testimony that Barrios had a
high pain threshold and could have worked after that date. The jury was in a better
position than this court to weigh the evidence concerning the proper date to cut off
backpay. . . . Further, assessing the backpay at the modest amount of approximately
$20,000 per year over a five-year period was not improper.
(Footnote and citation omitted.) Note 4 stated: The backpay award was adjusted for the amount
of disability compensation Barrios received from DuPont during this period.
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d. Offsetting Economic Value
in making promotions to the rank of Captain. The court held that the lower court erred in
ignoring the economic value of the overtime the plaintiffs did earn as Lieutenants but could not
have earned as Captains, and in ignoring the economic value of the flextime Captains earned.
e. Ranges of Pay Rates
Allen v. Tobacco Superstore, Inc., 475 F.3d 931, 94142, 99 FEP Cases 1127 (8th Cir.
2007), affirmed the judgment for the Title VII racial-discrimination and retaliation plaintiff,
holding that the lower court did not err in finding that plaintiff would likely have received the top
range of managerial pay rather than the bottom range, because plaintiff was still receiving
Assistant Manager pay after her demotion to the job of Cashier. Judge Smith concurred in part
and dissented in part. Id. at 94546.
f. Components
Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1250 n.1, 16 AD Cases 1197 (10th Cir.
2005), affirmed the judgment on a jury verdict for the ADA plaintiff. The court held that there
was sufficient evidence of back pay and front pay to support the jury award of compensatory
damages, once the value of fringe benefitsan additional 40% of paywas taken into account.
Id. at 1252.
9. Jury Determinations
Arrieta-Colon v. Wal-Mart Puerto Rico, Inc., 434 F.3d 75, 91, 17 AD Cases 769 (1st Cir.
2006), affirmed the judgment for the ADA harassment plaintiff on a jury verdict for $76,000 in
compensatory damages and $160,000 in punitive damages. The court rejected plaintiffs
argument that the lower court erred in denying his post-verdict motion for back pay and front pay
in addition to the compensatory-damage award:
As the district court correctly noted, in this circuit when the jury is asked, as here, to
resolve issues of liability and compensatory damages, the issue of back pay is normally
decided by the jury as well. . . . Here, Arrieta did not advise the court before the jury was
instructed that he wished to reserve the issue of back pay from the compensatory
damages calculation by the jury, nor did he object to the instructions on compensatory
damages. So the district court was not put on notice that Arrieta wished to have the issue
of back pay decided by the court. We are not inclined to hold the plaintiff harmless from
the foreseeable consequences of his actions.
(Citations omitted.) The court did not mention the provisions of the Civil Rights Act of 1991
that effectively reserve back pay for the court and allow jury trials only of common-law damage
claims. 42 U.S.C. 1981a(b)(2) and (c). It did, however, state that plaintiff failed to present
evidence of his efforts to mitigate his back pay by seeking other employment, but did not explain
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why it placed the burden of showing mitigation on plaintiff, instead of placing the burden on
defendant of showing failure to mitigate.
H. Front Pay
1. Entitlement
Wilson v. Phoenix Specialty Mfg. Co., Inc., 513 F.3d 378, 388, 20 AD Cases 193 (4th
Cir. 2008), affirmed the judgment for the ADA plaintiff on his claim that defendant
discriminated against him because it regarded him as disabled. The court affirmed the denial of
front pay because plaintiffs neurologist testified that Wilson was competitively unemployable
by the end of 2005, which was six months before the entry of judgment. Judge Niemeyer
dissented. Id. at 38895.
entitled to the $18,750 awarded as front pay, representing one years difference in earnings and
benefits, because plaintiff continued looking for better jobs in the newspaper classified
advertisements. Plaintiff had sought six years of front pay.
Voeltz v. Arctic Cat, Inc., 406 F.3d 1047, 16 AD Cases 1208 (8th Cir. 2005), vacated the
front pay award on plaintiffs ADA failure-to-accommodate claim, because there was no
evidence that plaintiff lost his job as a result of defendants failure to engage further in the
interactive process, and the jury had rejected his disparate-treatment claim by finding that
defendant would have made the same decision regardless of plaintiffs multiple sclerosis.
Salitros v. Chrysler Corp., 306 F.3d 562, 570, 13 AD Cases 1057 (8th Cir. 2002),
affirmed the judgment for the ADA retaliation plaintiff for $445,516 in front pay, representing
seven years worth of wages and benefits, up to September 8, 2007, Salitross anticipated
retirement date. The court held that the award was not an abuse of discretion notwithstanding
the jurys determination that plaintiff was not entitled to back pay through the date of the verdict.
The court rejected defendants argument that the front pay award conflicted with the jury verdict
that there had been no discrimination. The district courts finding of animosity between the
parties was not based on disability discrimination on Chryslers part, but on retaliation.
Therefore, the district courts reasoning did not conflict with the verdict for Chrysler on
Salitross discrimination claim. Id. at 573.
2. Alternative of Reinstatement
Borges Colon v. Roman-Abreu, 438 F.3d 1, 20 (1st Cir. 2006), affirmed the judgment for
the First Amendment political-affiliation plaintiffs, holding that there was sufficient evidence
that defendants privatization of the municipal sanitation department was motivated by
discrimination. The court affirmed the reinstatement order:
Plaintiffs presented strong evidence of a First Amendment violation, and many of
the career plaintiffs have not found work in the aftermath. The possibility of workplace
antagonism, and the upheaval that will be caused by finding jobs for the fired workers,
are the foreseeable sequelae of defendant[s] wrongdoing, Rosario-Torres, 889 F.2d at
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322. Nor do the damage awards obviate the need for reinstatement. See Hiraldo-Cancel,
925 F.2d at 13 (noting that often, [w]hen a person loses his job, it is at best disingenuous
to say that money damages can suffice to make that person whole, because [t]he
psychological benefits of work ... are real and cannot be ignored) (first alteration in
original) (internal quotation marks omitted) (quoting Allen v. Autauga County Bd. of
Educ., 685 F.2d 1302, 1306 (11th Cir. 1982)). Defendants last argument, that the career
plaintiffs do not have clean hands, is without merit. On the evidence at trial, those
plaintiffs who did not apply for jobs had good reason for their decisions both as to ARB,
where working conditions were poor, and as to the Municipality, where they had every
reason to believe they were unwelcome.
Abuan v. Level 3 Communications, Inc., 353 F.3d 1158, 1178, 93 FEP Cases 94 (10th
Cir. 2003), affirmed the two-year front-pay award for the ADEA and Title VII plaintiff, relying
in part on the tone of the parties court filings as showing too great a level of animosity for
reinstatement to be feasible. The facts surrounding Level 3s treatment of Mr. Abuan, together
with its litigation strategy, are persuasive examples of animosity on Level 3s part resulting from
Mr. Abuans prosecution of this litigation. The court added: Even an unconditional and
comparable job offer does not prevent the award of front pay in lieu of reinstatement when
hostility renders reinstatement inappropriate. The court held that the lower court abused its
discretion in basing plaintiffs rate of pay for front-pay purposes on his salary at time of layoff,
and that the jurys back pay award showed that that salary was depressed because of defendants
discriminatory demotions of plaintiff. The court explained, id. at 1179:
We believe the court abused its discretion in failing to adjust Mr. Abuans front
pay to reflect the effects of Level 3s illegal conduct on his failure to receive promotions.
The jurys award of back pay clearly reveals its finding that Mr. Abuan had suffered a
loss in salary as a result of Level 3s retaliation. The fact that his salary at the time of
trial was above that of others in positions comparable to the job he held then is irrelevant
if the evidence indicates he would have been in a higher position absent Level 3s
retaliation.
Banks v. Travelers Companies, 180 F.3d 358, 36465, 80 FEP Cases 30 (2d Cir. 1999),
reversed the trial courts denial of both reinstatement and front pay, for the reasons discussed
below. The court stated that, while animosity between the employer and employee may bar
reinstatement, it is not a ground on which to deny front pay. Id. at 365 n.5.
Rutherford v. Harris County, 197 F.3d 173, 18889, 81 FEP Cases 1775 (5th Cir. 1999),
vacated and remanded the Title VII front pay award because the lower court did not adequately
articulate its findings on why instatement to the promotional position at issue was inappropriate
and front pay should be awarded. The court distinguished between the reinstatement of
discharged employees, which was not involved in this case, and the instatement of the plaintiff
into a promotional position discriminatorily denied her. It stated that the considerations may
differ for these two types of actions.
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retirement date. The court rejected defendants argument that the award of front pay was an
abuse of discretion because defendant had offered to reinstate plaintiff: In this case, the district
court found that the reinstatement Chrysler offered Salitros was illusory, because Salitros was
never able to work after he was reinstated, and his inability to work resulted from Chryslers ill-
treatment: He remained on medical leave because of physically and psychologically damaging
harassment experienced at the worksite. Id. at 572.
Caudle v. Bristow Optical Co., Inc., 224 F.3d 1014, 1021 (9th Cir. 2000), affirmed the
lower courts decision ending the pregnancy discrimination plaintiffs front pay period in
September 1995, because the plaintiff voluntarily withdrew from the workforce then to care for
her young child, and this decision was unaffected by the defendants discrimination. The court
held that she suffered no subsequent injury after her return to the workforce in 1997. The
defendant had offered her reinstatement, in a different job and under a different supervisor, with
only incidental contact with the former supervisor who had discriminated against her. The
plaintiff rejected the offer because she felt she would feel awkward there. The court held that
this was not sufficient for a finding of excessive hostility between the parties.
Passantino v. Johnson & Johnson Consumer Products, Inc., 212 F.3d 493, 51213 (9th
Cir. 2000), affirmed under Washington law the jurys award of $2,000,000 in front pay to the
still-employed plaintiff, relying in part on Federal law, as the courts of Washington do. The
court explained that the defendants failure to seek a jury instruction on the subject had waived
its argument that the plaintiff was barred as a matter of law from receiving front pay because she
had not quit and thus had not been constructively discharged. Indeed, the defendant had
presented its own jury instruction on front pay. At trial, it objected to the plaintiffs testimony of
future losses only on foundation/opinion grounds, and did not object after a foundation was laid.
Its closing argument mentioned front pay. Id. at 512. The court held in the alternative that there
was ample basis on which to support the jurys award even if the objection were considered.
The court held that there was evidence of hostility substantial enough to warrant a front pay
award. Id. at 51213. It explained that the plaintiff felt constrained to stay in her job because
she was the primary breadwinner for her family, and continued: Nonetheless, she made it clear
that she could not remain in her job much longer. Thus, the evidence also permitted the jury to
find that, as a result of the hostile atmosphere, Passantino would be forced to actually terminate
her employment. Accordingly, the jury could properly award front pay on the ground that
Passantino was entitled to compensation for the difference between what she would have earned
had she been promoted (in the absence of retaliation) and what she is able to earn at a new job.
Gotthardt v. National Railroad Passenger Corp., 191 F.3d 1148, 115556, 80 FEP Cases
1528 (9th Cir. 1999), affirmed the award of front pay to the plaintiff. The court held that the
plaintiff had shown sufficient evidence of a causal connection between the sexually hostile
working environment to which the plaintiff was subject and her post-traumatic stress disorder
(PTSD) rendering her unable to work. The court recognized that the plaintiff had been treated
for PTSD prior to the harassment, after a train on which she had been working as fireman hit and
killed four young people. Although the train crew was not at fault, the plaintiff received
treatment for PTSD for eleven months. Id. at 1156 n.8. The court stated that the district courts
finding of causation is plausible in light of the extensive testimony of Dr. Jeanne Rivoire,
Gotthardts treating psychologist and psychological expert, that the hostile environment at
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Amtrak caused Gotthardts disability. Id. at 1156. Because the plaintiffs expert was qualified
as an expert and there was no evidence showing that she was less credible than the defendants
expert, the court rejected the defendants argument that the district court should have credited the
defendants expert instead of the plaintiffs expert. Id. at 1156 n.9. The court approved the trial
courts finding, based on Dr. Rivoires testimony, that the plaintiffs PTSD made her unable to
perform any job. It held that the lower court did not abuse its discretion in awarding front pay in
lieu of reinstatement. Id. at 1156.
Munoz v. Oceanside Resorts, Inc., 223 F.3d 1340, 134951, 88 FEP Cases 628 (11th Cir.
2000), affirmed the judgment on a jury verdict for the discharged ADEA plaintiff. The court
rejected the defendants argument that the award of front pay in lieu of reinstatement was
improper. It stated that the district court enjoyed wide discretion in selecting which remedy to
impose. Id. at 1349. Moreover, when age discrimination plaintiffs are near the age of
retirement, this court has signaled its comfort with awarding front pay. Id. Here, the plaintiff
had worked for the defendant for 27 years, and was one year away from retirement as of the
close of trial. Awarding a year of front pay was not an abuse of discretion. Id..
EEOC v. W&O, Inc., 213 F.3d 600, 619, 83 FEP Cases 117 (11th Cir. 2000), vacated the
award of front pay to one of the formerly pregnant women on whose behalf the EEOC had
brought suit, because the defendant had stated its willingness to re-employ the woman in
question and the district court had not provided any explanation for awarding front pay rather
than reinstatement.
Farley v. Nationwide Mutual Insurance Co., 197 F.3d 1322, 133840, 10 AD Cases 87
(11th Cir. 1999), affirmed the trial courts decision to award the ADA and ADEA plaintiff a
years front pay in lieu of reinstatement. The court recognized the presumption in favor of
reinstatement, but stated:
Farley suffers from several stress-induced long-term disabilities including post-traumatic
stress disorder, alcoholism, and depression. Both Farley and his psychologist testified
that his symptoms were heavily influenced by his workplace environment. Farley also
testified about the debilitating effects on his physical and mental condition that resulted
from the pervasive verbal abuse he endured from his former supervisors. According to
Farley, colleagues and supervisors would call him one of the crazies and demean his
mental condition and job performance. In a particularly egregious incident, one of his
supervisors posted a cartoon labeling Farley as Just Plain Nuts on the company bulletin
board for all Nationwide employees to see. On this record, we find that Farleys hostile
work environment, coupled with his stress-induced disabilities, created sufficient special
circumstances to support the trial courts award of front pay in lieu of reinstatement.
Id. at 1339. The court stated that the presence of some hostility attendant to many lawsuits
should not normally preclude a plaintiff from receiving reinstatement, and added: Defendants
found liable of intentional discrimination may not profit from their conduct by preventing former
employees unlawfully terminated from returning to work on the grounds that there is hostility
between the parties. . . . To deny reinstatement on these grounds is to assist a defendant in
obtaining his discriminatory goals. Id. at 133940 (citations omitted). The court stated that the
facts here were unusual. Id. at 1340.
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3. Awards of Front Pay Where Liquidated Damages Are Awarded
Munoz v. Oceanside Resorts, Inc., 223 F.3d 1340, 134951 , 88 FEP Cases 628 (11th
Cir. 2000), affirmed the judgment on a jury verdict for the discharged ADEA plaintiff. The
court held that an award of liquidated damages does not influence whether or not front pay is
also awarded, contrasting the positions of the Seventh and Eleventh Circuits. Id. at 1349 n.13.
Farley v. Nationwide Mutual Insurance Co., 197 F.3d 1322, 1340 (11th Cir.), affirmed
the award of front pay in lieu of reinstatement and did not disturb the award of liquidated
damages on the plaintiffs ADEA claim. The court held that the amount of the front pay award
should not be doubled in liquidated damages.
4. Unclean Hands Defense
2007), affirmed the denial of front pay based on plaintiffs unclean hands, because, in
testimony before the Congressional Black Caucus and on his website, he had misrepresented
himself as a deputy U.S. Marshal after he had been discharged. Id. at p. *7 (citation omitted).
Judge Henderson concurred.
5. Length of Front Pay Award
retirement date.
Belk v. City of Eldon, 228 F.3d 872, 883 (8th Cir. 2000), cert. denied, 532 U.S. 1008
(2001), affirmed the judgment on a jury verdict for the First Amendment retaliation plaintiff,
including $119,000 for ten years of front pay, a reduction from the jury verdict of $310,000. The
plaintiff had been the City Clerk and Assistant to the City Administrator. The court explained
the lower courts calculation: The court calculated the difference between Belks current salary
and her salary during her employment with the city of Eldon, multiplied that difference by ten
years, and discounted that amount to a present value of $119,000. Nothing in the record suggests
that ten years is an unreasonable length of time in this case. In fact, the district court particularly
noted that Belks limited education and Eldons rural location would make it difficult for Belk to
find a job that would compensate her as well as her employment with the city.
Gotthardt v. National Railroad Passenger Corp., 191 F.3d 1148, 115556 , 80 FEP
Cases 1528 (9th Cir. 1999), affirmed the district courts calculation of the $603,928.37 front pay
award (the present value) awarded to the Title VII sexual harassment plaintiff. The district court
had found that the plaintiff, a train engineer, would have qualified for the Capitol Run if it had
not been for the sexual harassment she suffered to the point of being diagnosed with Post-
Traumatic Stress Disorder and leaving her job just before her check ride on the Capitol Run, that
she would have continued to work for eleven years until she reached the mandatory retirement
age of 70 on September 15, 2008, and that she had no duty to mitigate her damages. Id. at 1155.
The court began its discussion of the calculation of front pay by rejecting the defendants
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argument that its financial losses might lead to a shutdown of the Capitol Run prior to September
15, 2008, because the defendant had introduced no evidence of its financial prospects. Id. at
1155 n.10. The court affirmed the district courts finding that the plaintiff was an experienced
engineer who had the necessary skills and abilities to work the Capitol Run. For example,
senior Amtrak engineers who had trained or evaluated Gotthardt testified that she was a highly
capable engineer, and there was evidence that the Capitol Run was less challenging than other
Amtrak routes. Id. at 1156. Although the plaintiff had missed several months of work because
of a severely cut finger and because of disciplinary suspensions that were unrelated to the
harassment, and although the district court did not take this explicitly into account in making its
front pay award, the court held that there was no error in finding that the plaintiff would have
worked steadily until the mandatory retirement age because there was no evidence that
Gotthardt was particularly likely to suffer similar injuries or become subject to similar
disciplinary suspensions. Id. The court also held that the plaintiff had no duty to find other
employment because it was unlikely that she would succeed. Although an eleven-year front
pay award seems generous, the district court explicitly found that Gotthardt would be unable to
work in the future, taking into account her age (59), her educational and vocational background,
and, especially, her health. Dr. Rivoires testimony supported the courts finding that
Gotthardts medical condition would render her unable to return to work. Id.
Davoll v. Webb, 194 F.3d 1116, 114345, 9 AD Cases 1533, 24 EB Cases 1088 (10th
Cir. 1999), affirmed in part, and reversed in part, the judgment on a jury verdict for the ADA
plaintiffs. The court reversed the limitation on all plaintiffs front-pay awards to two years, and
remanded the case with instructions that the district court articulate the specific bases for the
end date for each plaintiff, taking into consideration the factors we have outlined above. Id. at
1145. The court stated generally:
Numerous factors are relevant in assessing front pay including work life
expectancy, salary and benefits at the time of termination, any potential increase in salary
through regular promotions and cost of living adjustment, the reasonable availability of
other work opportunities, the period within which a plaintiff may become re-employed
with reasonable efforts, and methods to discount any award to net present value. . . . A
court may also consider a plaintiffs future in the position from which he was
terminated. . . . A front pay award should reflect the individualized circumstances of the
plaintiff and the employer.
Id. at 1144 (citations omitted). The trial court accepted the testimony of plaintiffs vocational
expert as to the plaintiffs work life expectancies and earnings capacity based on their
educational levels, disabilities, ages, and genders. He then looked at how much each plaintiff
would have earned had he or she been reassigned to a city government position for which he or
she was qualified, since those positions pay considerably more than non-city jobs. He took the
difference between the annual city salaries and the annual projected future earnings for each
plaintiff, accounting for cost of living and merit increases, to determine the amount of front pay
each plaintiff deserved per year. Id. The court stated that this method accounts for ones duty
to mitigate damages because a plaintiff will receive only the difference between the city salary
and his or her earning capacity, not what he or she actually earns. The differences were
substantial, and were supported by the trial record. For example, at the time of trial in late
1996, after a lengthy and extensive job hunt Mr. Davoll had a job that paid $24,000 a year, and
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41
Mr. Escobedo earned $8.50 per hour. Had Mr. Davoll been reassigned to a city position for
which he was qualified, his salary and benefits for 1997 would have been worth over $56,000;
Mr. Escobedos salary and benefits would have been worth over $51,000. Denver presented no
evidence to counter Dr. Vogenthalers assessment. Id. The trial court then imposed a two-year
ceiling on front pay, however, without citing any information in the record to support the
limitation and citing instead to two district court decisions in other cases. Reversing, the court of
appeals stated: Because the purpose of front pay is to make each plaintiff whole, the district
court must look at the individualized circumstances of each plaintiff. A flat rule awarding front
pay for a specific period, no matter how long or short, would defeat the purpose of the award.
Id. at 1145. While two years might be appropriate here, the lower court was obligated to show
that its decision was based on more than mere guesswork. Id. (citation omitted).
6. Ability to Work as Condition of Front-Pay Entitlement
Cir. 2007), reversed the award of $200,000 in front pay to the ADA charging party, where his
physical condition had deteriorated so sharply in the years since his termination that at the time
of judgment he was no longer able to work.
retirement date. The court rejected defendants argument that the award of front pay was an
abuse of discretion as to periods in which plaintiff is unable to work, because Chryslers
argument depends on its assertion that it did nothing to cause Salitros to go on medical leave.
Id.
7. Necessity of Hearing
retirement date. The court held that the defendant was not prejudiced by the absence of a
hearing on front pay, or by the lower courts reliance on charts that were not received in
evidence. It stated that the award of front pay was a matter for the court. It added: Salitross
expert testified at trial about his sources and the methodology he used in preparing back pay
exhibits. Chrysler had the opportunity to cross examine Salitross expert about the information
and assumptions on which the back pay exhibits were based. The front pay exhibits were
obviously prepared using the same methodology, simply extended for future years. After
Salitros filed the affidavit with the exhibits attached, Chrysler did not move to strike the exhibits
or ask the court for an evidentiary hearing, but waited to object until the district court had already
ruled on the front pay motion. Id. at 571.
8. Mitigation
Tobin v. Liberty Mutual Insurance Co., 553 F.3d 121, 137, 21 AD Cases 769 (1st Cir.
2009), affirmed the judgment on a jury verdict for the ADA and Massachusetts-law plaintiff.
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The court of appeals upheld the jurys award of $440,000 in back pay and in front pay running to
the date of plaintiffs planned retirement at age 62, a year and a half after the verdict. The court
held that a plaintiffs duty to mitigate was not absolute:
A victim of employment discrimination ordinarily has the duty to mitigate
damages by seeking alternative employment. . . . However, the employer may be held
responsible for the entire amount of lost salary notwithstanding the employee's failure to
obtain another job [i]f the employer's unlawful conduct caused the employee's inability
to mitigate damages. . . . In other words, if an employee is unable to work because of a
disability caused by the employer, the employee may obtain compensation for the
resulting lost pay.
Id. at 141 (citations and footnote omitted). The court held that plaintiff made a sufficient
showing for a rational jury to accept, particularly because of the devastating psychological
consequences of being placed on probationary status each time plaintiff returned from disability
leave:
This evidence allowed the jury to find that the lack of support reflected in the
company's final denial of accommodations further exacerbated Tobin's stress and
precipitated his total inability to function in the workplace. Although the company points
to other stressors in Tobin's life that could have contributed to his disability-including
family conflicts and additional medical issues-the jury was free to credit the evidence
showing a link between Tobin's status at work and his mental condition. Based on that
evidence, the jury could have concluded that Liberty Mutual's refusal to accommodate
Tobin's disability in early 2001 denied him a last chance to avoid the termination with
which he had been threatened, increasing the stress that, in turn, exacerbated his
functional difficulties. Losing the job predictably resulted in more anguish, and the jury
could have found that it caused further deterioration of his functional abilities.
Id. at 143.
EEOC v. Bd. of Regents of University of Wisconsin System, 288 F.3d 296, 304, 88 FEP
Cases 1133 (7th Cir. 2002), affirmed the judgment for the EEOC. The court rejected
defendants argument that it was entitled to a new trial on mitigation, because the charging
parties failed to apply for employment with the defendant. The court stated: But they had
explanations for their failure to apply to the very organization which just terminated them. For
one thing, after just being terminated for alleged deficiencies in their performance and skills,
they had no reason to believe they would be hired if they did apply. Finally, the court noted
that two charging parties had re-applied with the defendant, and had not been hired.
Belk v. City of Eldon, 228 F.3d 872, 883 (8th Cir. 2000), cert. denied, 532 U.S. 1008
(2001), affirmed the judgment on a jury verdict for the First Amendment retaliation plaintiff,
including $119,000 for ten years of front pay, reduced from the jury verdict of $310,000. The
court rejected defendants argument that the front pay should have been mitigated by plaintiffs
farming income, because Belk had begun making her agricultural investments while still
employed by the City, and farming income was supplemental to her salary. Because the
purpose of awarding front pay is to compensate the plaintiff for what she would have had but for
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her wrongful termination, the district court was correct in not penalizing Belk for farming
income that she would have had in any case.
Henderson v. Simmons Foods, Inc., 217 F.3d 612, 61718, 83 FEP Cases 279 (8th Cir.
2000), affirmed the judgment on a jury verdict for the Title VII sexual harassment and
constructive-discharge plaintiff. The plaintiff left her job at a chicken processing plant because
the defendant did not take adequate corrective action despite her repeated complaints of hostile-
environment harassment. She applied for employment with more than thirty non-poultry
employers, although she had no training or experience outside the poultry industry. The court
rejected the defendants argument that her $15,000 back pay award was improper because her
failure to apply for poultry-related jobs meant that she had failed to mitigate her damages. It
held that she had tried to obtain numerous positions commensurate with her education and skill
levels. Simmons has proffered no evidence that Henderson refused a position that was
substantially similar to her previous employment or that she failed to use reasonable care in
obtaining a suitable position. Id. at 618.
Greene v. Safeway Stores, Inc., 210 F.3d 1237, 124445, 82 FEP Cases 1306, 24 EB
Cases 1417 (10th Cir. 2000), rejected the defendants argument that the lower court erred in
failing to instruct the jury on mitigation, and that mitigation required the plaintiff to hold onto his
stock and hope that the market value would not decrease. The court observed that the defendant
had consented to a proximate cause instruction in lieu of a mitigation instruction, so that the
plain error rule applied. The court held that the lower courts instruction on proximate cause
sufficed under the plain error rule.
9. Deduction for Sick Leave or Collateral Benefits
retirement date. The court denied any reduction for the value of plaintiffs sick leave or
collateral benefits, because the defendants actions had made plaintiff sick. Id. at 57374.
Gotthardt v. National Railroad Passenger Corp., 191 F.3d 1148, 115657 , 80 FEP
Cases 1528 (9th Cir. 1999), affirmed the district courts refusal to reduce the Title VII sexual
harassment plaintiffs $603,928.37 front pay award (the present value) by the present value of
disability benefits for which she might become eligible in the future. Recognizing the conflict
among the Circuits, the court held that it was unnecessary to decide the legal question because
the defendant had offered only speculation as to whether the plaintiff might receive such benefits
in the future.
10. Ending Date
Alexander v. City of Milwaukee, 474 F.3d 437, 45253, 99 FEP Cases 961 (7th Cir.
2007), affirmed the judgment holding the City liable, and the then Police Chief and each of the
in making promotions to the rank of Captain. The court held that the lower court erred in ending
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front pay at retirement or after two years service as Captain, because the proper stopping point
under the lost-chance method is when a plaintiff obtains the right to compete on an equal footing,
regardless of selection. The court stated: We note that, because the City promotes officers to
captains only when a vacancy in the rank of captain arises, the frequency of this availability
should be among the relevant considerations in determining when each of the seventeen
plaintiffs, and in particular, those who have not yet been promoted or have not yet retired, would
have an unimpeded promotional opportunity.
Fine v. Ryan International Airlines, 305 F.3d 746, 756, 89 FEP Cases 1543 (7th Cir.
2002), affirmed the judgment on a jury verdict for the Title VII retaliation plaintiff, and denied
plaintiffs cross-appeal from the denial of reinstatement. The court held that plaintiffs
stipulation that all damages ceased as of a certain post-employment date waived any claim for
reinstatement. Plaintiff had entered into the stipulation in order to avoid discovery into the
circumstances of her resignation from a subsequent employer. The court explained:
Fine argues that her stipulation was intended to apply only to money damages, not to
equitable remedies such as reinstatement. That is not, however, what the stipulation says.
It refers to any damages without drawing a distinction between legal and equitable
relief. Even more importantly, Fine herself created the endpoint for Ryans responsibility
when she took the new job. It makes no sense to make Ryan her employer of last resort
for life, if it bears no responsibility for the actions of later employers. Both because of
the stipulation and for the latter reason, we agree with the district courts decision to deny
reinstatement.
11. Calculation
a. Reduction of Front Pay Award to Present Value
Skalka v. Fernald Environmental Restoration Management Corp., 178 F.3d 414, 426 (6th
Cir.), reversed the judgment for ADEA plaintiff Skalka and remanded it for a remittitur or new
trial on damages. The court held that the award of Skalkas pension benefits must be reduced to
present value.
Gotthardt v. National R.R. Passenger Corp., 191 F.3d 1148, 115253 (9th Cir.),
affirmed the district courts award of $603,928.37 in front pay (the present value) to the Title VII
sexual harassment plaintiff.
b. Proof by Plaintiffs Own Testimony
Passantino v. Johnson & Johnson Consumer Products, Inc., 212 F.3d 493, 51011 (9th
Cir. 2000), affirmed under Washington law the jurys award of $100,000 in back pay, because
the plaintiff testified that she would have received between $130,000 and $200,000 more in
salary if she had been promoted to one of the positions denied to her, and the jury could
reasonably have determined that she was denied promotions in retaliation for her complaints.
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c. Front Pay and the Caps on Damages under the 1991 Civil
Rights Act
Pollard v. E.I. du Pont De Nemours & Company, 532 U.S. 843, 85 FEP Cases 1217
(2001), held that front pay is not an element of compensatory damages under the 1991 Act, and
is not subject to the damages caps.
I. Prejudgment Interest
1. Entitlement
ORourke v. City of Providence, 235 F.3d 713, 737, 85 FEP Cases 1135 (1st Cir. 2001),
reversed the lower courts grant of judgment as a matter of law to defendant after the first trial,
directed reinstatement of the first jurys verdict for the Title VII sex discrimination and sexual
harassment plaintiff, and affirmed the award of prejudgment interest because it was within the
district courts discretion to order make-whole relief. (Citation omitted.)
2002), affirmed the judgment on a jury verdict for the Title VII retaliation plaintiff, but held that
the lower court erred in calculating prejudgment interest on plaintiffs back pay award only until
June 30, 2000, although final judgment was not entered until November 22, 2000. It is the
latter date which is relevant for the calculation. (Citation omitted.) It concluded: The
judgment of the district court is MODIFIED to reflect a prejudgment interest rate of 8.47% on
the judgment of backpay, running through the date of judgment, November 22, 2000. Id.
Frazier v. Iowa Beef Processors, Inc., 200 F.3d 1190, 1194, 5 WH Cases 2d 1445 (8th
Cir. 2000), relied on Federal law to uphold the award of prejudgment interest on an Iowa-law
retaliatory discharge claim. The court stated the general rule under Circuit precedent: [a]s a
general rule, prejudgment interest is to be awarded when the amount of the underlying liability is
reasonably capable of ascertainment and the relief granted would otherwise fall short of making
the claimant whole because he or she has been denied the use of money which was legally due.
(Citation omitted.) The court added: Generally, prejudgment interest should be awarded
unless exceptional or unusual circumstances exist making the award of interest inequitable. Id.
(citation omitted).
2. Rate of Interest
Berger v. Iron Workers Reinforced Rodmen, Local 201, 170 F.3d 1111, 1139 (D.C. Cir.)
(per curiam), affirmed the use of a 6% annual rate of prejudgment interest, compounded
annually since October 21, 1972, on back pay to a class of African-American rodmen
discriminatorily denied membership in the union. The court rejected plaintiffs argument that
they should have had the benefit of a variable or larger rate, because they had earlier conceded
that such a rate would make them whole.
Conetta v. National Hair Care Centers, Inc., 236 F.3d 67, 7778, 85 FEP Cases 578 (1st
Cir. 2001), affirmed the lower courts refusal to set aside the entry of default on plaintiffs
retaliatory discharge claim, holding that defendant failed to show good cause, and affirmed the
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award of prejudgment interest. Plaintiff had sued under Title VII and Rhode Island law, and the
default judgment was undifferentiated. On reconsideration, the lower court used the statutory
Rhode Island 12% rate of prejudgment interest. The court stated that defendant did not dispute
that the statutory state rate is by virtue of Rhode Island law mandatory on state-law claims, and
continued: Here, however, the applicable federal and state claims appear to be wholly
symmetrical so far as Diane Conettas claims are concerned (at least National does not suggest
otherwise). Thus, it is fair to treat the judgment as affording her an option to have it rest on
federal or state law, whichever affords her the better interest rate. Id. at 78 (emphasis in
original; citation omitted). The court distinguished a case in which Massachusetts law gave the
judge discretion as to whether to award prejudgment interest. Id.
Thomas v. iStar Financial, Inc., 629 F.3d 276, 279-80, 110 Fair Empl.Prac.Cas. (BNA)
1761 (2d Cir. 2010) (per curiam), was a case brought under Title VII and under the New York
City Human Rights Law. The court rejected plaintiffs argument that prejudgment interest
should have been based on the New York rate of prejudgment interest, rather than on the Federal
rate. As the district court stated, and we now hold, judgments that are based on both state and
federal law with respect to which no distinction is drawn shall have applicable interest calculated
at the federal interest rate. Id. at 280 (citations omitted). The court distinguished wage and
hour cases in which liquidated damages are awarded, because interest is not available on FLSA
claims where liquidated damages are awarded, but is available on New York labor Law claims
where liquidated damages are awarded. They stand for the proposition that where prejudgment
interest can only be awarded on the basis of what is solely a state claim, it is appropriate to use
the state interest rate. Id. at 280 n.2.
Comment on Thomas v. iStar Financial: New York has a 9% rate of prejudgment
interest. In light of Thomas, plaintiffs attorneys in New York should think about using a verdict
form in discrimination cases that distinguishes between awards under State law and awards
under Federal law.
Williams v. Trader Publishing Co., 218 F.3d 481, 488, 83 FEP Cases 668 (5th Cir.
2000), affirmed the judgment on liability for the Title VII gender discrimination plaintiff, and
upheld the awards of prejudgment and postjudgment interest. The lower court awarded
prejudgment interest at the rate of 10%, and postjudgment interest at the rate of 5.407%. Id. at
484. Because the defendant did not challenge the rate of interest below, the court reviewed the
award for plain error. The court stated that it had previously approved the Federal rate of interest
as making the plaintiff whole, but that this was not the exclusive rate that can be used for this
purpose. Considering the total circumstances of this case, we conclude that the district courts
imposition of a somewhat higher rate of interest (apparently based on the state interest rate), even
if error, was not plain error affecting the fairness, integrity, or public reputation of judicial
proceedings. Id. at 488.
Caffey v. Unum Life Ins. Co., 302 F.3d 576, 589-90, 29 Employee Benefits Cas. 1971
(6th Cir. 2002), affirmed the lower courts award of postjudgment interest on the award of
prejudgment interest, and held that postjudgment interest starts to run on the portion of an initial
award that is not later changed, without regard to whether the initial award is appealable.
Blankenship v. Liberty Life Assur. Co. of Boston, 486 F.3d 620, 627-28, 40 Employee
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Benefits Cas. 2239 (9th Cir. 2007), an ERISA case involving wrongful denial of disability
benefits, affirmed the lower courts award of prejudgment interest at the 10.01% rate paid in the
personal account from which plaintiff had had to withdraw personal funds because of the
defendants failure to pay benefits, and ordered that the interest be compounded monthly.
E.E.O.C. v. Joe's Stone Crabs, Inc., 296 F.3d 1265, 1276, 89 Fair Empl.Prac.Cas. (BNA)
522 (11th Cir. 2002), cert. denied, 539 U.S. 941 (2003), affirmed the lower courts award of
prejudgment interest and order that the interest be compounded. The court stated: Additionally,
Joe's maintains that the district court erred both in crediting the back pay calculation of the
EEOC's expert economist and in compounding interest. These arguments are meritless and do
not warrant further discussion. The district court did not abuse its discretion for any of the
reasons advanced by Joe's.
J. Compensatory Damages
1. Entitlement
Gagliardo v. Connaught Laboratories, Inc., 311 F.3d 565, 57071, 13 AD Cases 1345
(3rd Cir. 2002), affirmed the judgment on a jury verdict for the ADA and Pennsylvania-law
plaintiff in the amount of $450,000 in economic damages, and $1.55 million in compensatory
damages for emotional distress. See the discussion of this case below. The court affirmed the
denial of remittitur:
To recover emotional damages a plaintiff must show a reasonable probability
rather than a mere possibility that damages due to emotional distress were in fact incurred
[as a result of an unlawful act]. . . . . The district court found this standard to be met
because Gagliardo produced evidence from her co-workers and family demonstrating the
effects her problems with CLI had on her life. This testimony tied Gagliardos pain and
suffering to her early employment problems after she was diagnosed with MS and
detailed their subsequent worsening effect on her life. The testimony demonstrated the
effects of the mental trauma, transforming Gagliardo from a happy and confident person
to one who was withdrawn and indecisive. Because this evidence establishes a
reasonable probability that Gagliardo incurred the emotional damages, we hold that the
trial court did not abuse its discretion by allowing the jurys verdict to stand. . . .
Therefore, we affirm the district courts denial of CLIs motion for a new trial. In
addition, in light of this evidence we also hold the trial court did not abuse its discretion
in finding the jurys verdict is not so excessive as to be unsupportable or offend the
conscience of the court, and therefore denying remittitur.
Bryant v. Aiken Regional Medical Centers Inc., 333 F.3d 536, 54647, 92 FEP Cases 233
(4th Cir. 2003), cert. denied, 540 U.S. 1106 (2004), affirmed the Title VII and 1981 award of
$50,000 in compensatory damages for emotional distress. The court held that plaintiffs own
testimony provided an adequate basis for the award: We have held that a plaintiffs testimony,
standing alone, can support an award of compensatory damages for emotional distress. . . . Such
testimony must establish that the plaintiff suffered demonstrable emotional distress, which must
be sufficiently articulated. . . . The testimony cannot rely on conclusory statements that the
plaintiff suffered emotional distress or the mere fact that the plaintiff was wronged. . . . Rather,
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it must indicate with specificity how [the plaintiffs] alleged distress manifested itself. . . . The
plaintiff must also show a causal connection between the violation and her emotional distress.
(Citations omitted.) The court held that plaintiffs testimony was adequate, and that it was not
undermined by her decision to rely on faith and prayer instead of seeking professional therapy:
Bryant was sufficiently specific about the emotional trauma she suffered as a
result of ARMCs actions. She explained that she was embarrassed, frustrated, and
angry, very disgusted, and that she didnt feel very good about coming to work.
She also testified that this distress inflicted a series of specific physical ailments on her:
frequent headaches, insomnia, irregular menstrual cycles, nausea, [and] vomiting.
ARMC argues that we should discount her testimony because she did not seek medical
attention for the physical symptoms she was suffering. But Bryant testified that she had
always been taught to believe that anything can be handled through prayer and faith
and to rely on [her family] for strength. She therefore chose to address the signs and
symptoms of what stress could do to a person through prayer and faith and through
talking with [her] family. That was an understandable way for Bryant to respond to the
situation in which she found herself. It is also worth noting, as the district court observed,
that Bryant was herself a medical professional whose opinion as to her own condition
the jury was entitled to consider.
We further reject ARMCs suggestion that the degree of Bryants distress was
unreasonable. She was working multiple jobs and trying to better herself by pursuing
further education in her field. As ARMCs former director of surgical services testified,
Bryant was known even outside ARMC as a capable employee. But in applying for jobs
that she qualified for, she was stonewalled for almost one year. Her emotional distress
was a reasonable reaction to this mystifying frustration of her professional career.
Id. at 547.
2. Waiver of Appeal as to Amount
Rodriguez-Marin v. Rivera-Gonzalez, 438 F.3d 72 (1st Cir. 2006), affirmed the damages
awarded by the jury: The jury awarded Rodrguez back pay of $3,500 per month, $180,000 in
compensatory damages, and $120,000 in punitive damages against Dvila. The jury awarded
Escobar back pay of $3,306 per month, $105,000 in compensatory damages, and $195,000 in
punitive damages against Dvila. Id. at 79. The court rejected defendants argument that the
compensatory damages were excessive. The court stated that defendants were obliged to
present the facts in the light most favorable to the verdict but failed to do so, and failed to cite
the appropriate law. Id. at 84. The court held: Given the defendants failure to specify the
applicable law and their failure to present the facts in the light most favorable to the verdict, this
argument is not sufficiently developed and thus waived. Id. The court then added that the
verdict was supported by the record, and stated at 84 n.6: Rodrguez testified that as a result of
her demotion and transfer to a dangerous, high-security prison, she sought emotional therapy
through state insurance. Defendants stated that Rodrguez voluntarily decided to seek state
benefits and was not compelled to do so. Escobar testified that as a result of her demotion she
was forced to seek psychological help, she needed medication to sleep well, and her credit was
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harmed. Defendants argue, without any evidentiary support, that Escobars emotional condition
was not the result defendants actions but caused by her poor credit history and divorce.
3. Amount, in the Absence of Expert Testmony
Tobin v. Liberty Mutual Insurance Co., 553 F.3d 121, 144-45, 21 AD Cases 769 (1st Cir.
2009), affirmed the judgment on a jury verdict for the ADA and Massachusetts-law plaintiff.
The court of appeals upheld the jurys award of $500,000 in emotional-distress damages:
The district court did not abuse its discretion in allowing the jury's verdict to
stand. Although Liberty Mutual argues that Tobin failed to present any evidence even
hinting that his psychological condition was worsened by Liberty Mutual's failure to
accommodate his disability, other than his own, self-serving testimony, we already
have explained why the jury permissibly could conclude that the company's denial of
accommodations caused his total disability. As recounted above, both Tobin and Kantar
testified that at the time of trialfive years after he left the companyTobin continued
to suffer severe emotional distress from Liberty Mutual's failure to provide reasonable
accommodations that the jury found would have enabled him to successfully perform his
job. Moreover, Tobin had spent thirty-seven years at the company-his entire working
life. Kantar observed that his identity has been connected with Liberty Mutual and that
being a sales rep for Liberty Mutual [is] ... part of who he is. Kantar reported that
Tobin was devastated by the way the termination occurred, perceiving it as a betrayal.
Tobin also was told incorrectly on the day of his termination that he and his family no
longer had health insurance coverage, information that was particularly alarming in light
of his wife's ongoing treatment for breast cancer.FN33
__________
FN33. Tobin was told two days later that his coverage would, in fact, continue.
He described the intervening period as two days of turmoil.
VII racial discrimination plaintiff. The court held, however, that the jurys award of $200,000 in
compensatory damages was excessive and that no award above $30,000 would have been
reasonable. The court explained at p. 389:
We do consider Schandelmeier's testimony concerning the emotional impact of
the discriminatory acts that were directed at her, including Adams's racist tirade and her
termination. Although Adams's rants on July 31st and August 1st were understandably
offensive and disturbing to Schandelmeier, those incidents were also isolated. She was
not subjected to such incidents throughout her employment with the Park District, but
only twice, and she did not testify to any lasting physical or emotional effects resulting
from Adams's abuse. Regarding her termination, she testified that she was disturbed,
devastated and upset to be losing her job, but she also testified that she found a new
job just 10 days later. Schandelmeier did not testify to any lasting emotional or physical
ill-effects from losing her job with the Park District.
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The court also surveyed other awards. Plaintiff did not rely on any expert.
Farfaras v. Citizens Bank and Trust of Chicago, 433 F.3d 558, 565, 97 FEP Cases 391
(7th Cir. 2006), affirmed the judgment on a jury verdict for the Title VII and State-law sex
discrimination and sexual harassment plaintiff for $200,000 in compensatory damages and
$100,000 in punitive damages against the individual State-law defendants, $50,000 against the
corporate Title VII defendant, $9,314.48 in lost wages, and $436,766.75 in attorneys fees and
costs. The compensatory damages included $100,000 for pain and suffering and $100,000 for
the loss of dignity. The court held that the award was not excessive despite the lack of expert
testimony, because there was adequate evidence of the effect of defendants harassment on
plaintiff. The court described the evidence: Farfaras and other witnesses testified that as a result
of the defendants actions, Farfaras lost self-esteem, gained weight, had problems sleeping,
changed demeanor, and became nervous. Although Farfaras never consulted a medical
professional about her unhappiness, Farfarass friend Yonia Yonan testified that Farfaras had
been very depressed beginning early in the year 2000. Id. at 563. The court held that the
award was roughly comparable to awards in similar cases, and explained:
Although we cannot completely analogize the damage award in this case to an
identical case with either a similar or dissimilar verdict, such an exact analogy is not
necessary. Awards in other cases provide a reference point that assists the court in
assessing reasonableness; they do not establish a range beyond which awards are
necessarily excessive. Due to the highly fact-specific nature of Title VII cases, such
comparisons are rarely dispositive. . . . Some of the cases presented by the defendants
appear more egregious with lower damages, while some of the cases presented by
Farfaras appear less egregious with higher damages. Our responsibility, however, is not
to fit this case into a perfect continuum of past harms and past awards. Rather, our role in
reviewing awards for abuse of discretion is to determine if the award in this case was
roughly comparable to similar cases, such that the instant award was not so beyond the
pale as to constitute an abuse of discretion.
Id. at 56567.
Webner v. Titan Distribution, Inc., 267 F.3d 828, 836, 12 AD Cases 513 (8th Cir. 2001),
affirmed the award of $12,500 in emotional-distress damages on the plaintiffs ADA claim and
the award of an equal amount on his State-law claim. The court stated that medical or other
expert evidence is not necessary to support an ADA emotional-distress award. The plaintiff can
rely on his or her own testimony, but must introduce specific facts supporting the claim of
emotional distress. The court stated:
Webner testified that he was emotionally devastated by losing his joba
termination Titan told him explicitly was because of his disability. He testified that
immediately after he was terminated he felt empty, like he lost his best friend and that
there was a hole in his chest. . . . He also testified that he was scared that he would be
unable to pay his bills and was frustrated with his inability to find other regular work for
six months. Titan contends that Webners self- serving testimony about his reaction after
he was terminated is insufficient to sustain the jurys award of emotional distress
damages. We disagree. As previously stated a plaintiffs own testimony may provide
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ample evidence when heard in combination with the circumstances surrounding the
plaintiffs termination. Furthermore, [a]wards for pain and suffering are highly
subjective and the assessment of damages is within the sound discretion of the jury,
especially when the jury must determine how to compensate an individual for an injury
not easily calculable in economic terms. . . . We will not disturb the jurys award of
emotional distress damages to Webner on his disability claim.
Id. at 83637.
Madison v. IBP, Inc., 257 F.3d 780, 80203, 86 FEP Cases 77, 80 E.P.D. 40,628 (8th
Cir. 2001), vacated and remanded for reconsideration in light of National R.R. Passenger Corp.
v. Morgan, 536 U.S. 919 (2002), affirmed the award of $266,750 for emotional distress damages,
because the evidence supporting the award was much better developed than in cases in which the
courts have ordered remittiturs. The court described the evidence:
Madison presented voluminous evidence that she suffered severe emotional
distress as a result of the harassment and discrimination she endured after January 13,
1993. She was subjected to egregious and humiliating conduct which wreaked havoc on
her emotional health and caused her great anguish which manifested itself physically.
The taunting and harassment made her feel humiliated, hurt, and degraded. The
undisputed evidence indicated that Madison was made so distraught by the behavior of
fellow employees and managers that she often left her work station in tears. Her family
life was affected by what went on in the plant. Her working conditions strained her
relationship with her husband and nearly caused the breakup of their marriage. The
couple separated several times during the course of her employment at IBP. Madison also
testified that as a result of her stressful work environment, she lost weight, had trouble
sleeping and frequent headaches, and broke out in hives. The evidence about the physical
and emotional effects on Madison was corroborated by her family and several coworkers.
Keith Ratliffe, a minister who counseled Madison on at least four occasions during these
events, described her as depressed and emotionally drained because of her experiences at
IBP.
Id. at 802.
4. Mitigation
compensatory damages and $160,000 in punitive damages. The court relied on plaintiffs
repeated internal complaints in rejecting defendants argument that plaintiff failed to mitigate his
damages.
5. Allowing Post-Verdict Amendment to Complaint to Justify Award of
Compensatory Damages
Baker v. John Morrell & Co., 382 F.3d 816, 83032 (8th Cir. 2004), affirmed the
judgment on a jury verdict for the Title VII and Iowa Human Rights Act sexual harassment and
2681
52
retaliation plaintiff, including the awards of $839,470 in compensatory damages, $33,314 in back
pay, $38,921 in front pay, $650,000 in punitive damages (remitted to $300,000), and $174,927 in
attorneys fees and costs, a total of $1,386,632. Plaintiff filed suit only under Title VII, and after
the verdict moved to amend her complaint to add a claim under the Iowa Civil Rights Act, which
provides for uncapped compensatory damages but no punitive damages. That would allow her to
keep all of her compensatory-damage award, and $300,000 of her punitive-damage award.
District Judge Mark Bennett ultimately granted the motion under Rules 15(b) and 54(c), FED. R.
CIV. PRO., and the court of appeals affirmed. The court noted the agreement of the parties that
the proof and legal standards under Title VII and the ICRA were identical, stated that the
amendment was not inconsistent with defendants position through the litigation, held that an
issue can be tried by consent even if the evidence is also relevant to an issue withinb the
pleadings, and held that Judge Bennett did not abuse his discretion in holding that the
amendment reflected the issues tried by consent, i.e., without objection,. Id. at 831. The court
held in the alternative that the amendment was also permitted under Rule 54(c), as relief to
which the plaintiff was entitled even if she did not demand it in her pleadings. It stated that there
are limits on such a use of Rule 54(c), and that the rule cannot be applied so as to prejudice the
other side. For example, if the pleading failure denies the opposing party the opportunity to
make a realistic appraisal of the case, so that [their] settlement and litigation strategy [could be]
based on knowledge and not speculation, the amendment may properly be denied. Id. at 831
32 (citations and some internal quotation marks omitted). The court rejected Morrells claim that
it would have settled the case if it had known of its larger exposure:
Morrell contends it was prejudiced by Bakers failure to plead an ICRA claim
because had it known damages would not be capped under Title VII it may have settled
the claim instead of risking a verdict in excess of the cap. Morrell, however, has failed to
present any evidence to show its settlement strategy was affected by the Title VII cap.
Indeed, aside from Morrells bare assertion, we have no reason to believe it would have
been any more inclined to settle this claim irrespective of whether an ICRA claim was
pleaded. Furthermore, Morrell was well aware throughout the course of the litigation
Baker was demanding an amount to settle the claim well in excess of the Title VII caps.
Surely, this fact alone put Morrell on notice Baker was seeking a verdict in excess of
$300,000. In light of the liberal policy in favor of Rule 54(c) amendments, and because it
is undisputed Baker proved an ICRA claim, we will not permit Morrells bare assertion
of prejudice to thwart the amendment.
Id. at 832. The obduracy of defendants litigation positiondenying a hostile environment even
after years of degrading comments, actions, and physical assaults drove plaintiff to a suicide
attempt and mental hospitalizationmay have contributed to this holding.
6. Foreseeability
Human Rights Law. The court rejected plaintiffs argument that his compensatory damages
should have included damages for his inability to close on a house: Likewise, evidence that
Thomas had asked for an advance on his bonus some eight months before he was fired was an
insufficient basis for a reasonable jury to find that damages related to Thomas's inability to close
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on a house were reasonably foreseeable to the defendants. See Hadley v. Baxendale, 9 Exch 341,
156 ER 145 (Eng.1854).
Comment on Thomas v. iStar Financial and Hadley v. Baxendale: Did we ever think
we would see that case cited as a rule of decision in an employment case? Keep those first-
year notebooks around!
7. Irrelevance of Defendants Ability to Pay
Acevedo-Garcia v. Monroig, 351 F.3d 547, 57072 (1st Cir. 2003), involved claims of
political discrimination and deprivation of due process brought by 82 former municipal
employees. The lower court severed the plaintiffs into four groups, and tried the first 20
plaintiffs, and entered judgment on an award of $6,356,400 in compensatory damages against a
municipality whose entire annual budget in 1996-97 was only $4,529,327, with the claims of 62
plaintiffs left to be tried. Id. at 570. The court upheld the award as not excessive. Id. at 57172.
8. Other Decisions as to Amount
Morgan v. New York Life Insurance Co., 559 F.3d 425, 440-41, 105 FEP Cases 1217 (6th
Cir. 2009), affirmed the judgment of age discrimination liability and the $ 6 million
compensatory-damages award under the Ohio Civil Rights Act.
McCombs v. Meijer, Inc., 395 F.3d 346, 95 FEP Cases 1 (6th Cir. 2005), affirmed the
judgment on a jury verdict for the Title VII sexual harassment plaintiff. Plaintiff recovered
$25,000 in compensatory damages and spent $9,482.00 in expert witness fees, of which she
recovered $4,532.50. She thus received $2.64 in damages for every dollar she spent in expert
witness fees.
Moore v. Freeman, 355 F.3d 558, 564, 9 WH Cases 2d 321 (6th Cir. 2004), an FLSA
retaliation case, affirmed an award of $40,000 in emotional-distress damages, stating: Though
the award could be reasonably described as fulsome, we cannot say that it is clearly excessive.
The plaintiff in this case submitted evidence that the stress of losing his job demoralized him,
strained his relationships with his wife and children, and negatively affected his sleeping habits
and appetite.
Worth v. Tyer, 276 F.3d 249, 26869, 87 FEP Cases 994 (7th Cir. 2001), affirmed the
Title VII sexual harassment verdict for the plaintiff. The court held that the plaintiffs evidence
of emotional distresslack of sleep, humiliation, distress, lost wages, etc.were significant
enough to support the jurys award of compensatory damages in the amounts of $20,000 for
retaliatory discharge, $2,500 for sexual harassment, and $50,000 for battery.
Rowe v. Hussmann Corp., 381 F.3d 775, 94 FEP Cases 520 (8th Cir. 2004), affirmed the
jury verdict for the Title VII and Missouri Human Rights Act sexual harassment plaintiff in the
amounts of $ 500,000 in compensatory damages and $ 1 million in punitive damages. The court
relied on the fact that the harassment had continued over a period of four years, with no more
than a seven-month gap. The harasser had repeatedly touched plaintiffs breasts and buttocks,
and defendant did nothing for a long period of time although plaintiff complained two or three
times a month. The harasser threatened to rape and kill her. Defendant told plaintiff she should
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be more understanding of the harasser since he only had an eighth-grade education, never fired
the harasser, and ultimately transferred plaintiff to a position where the harasser occasionally
came into her vicinity.
Sellers v. Mineta, 350 F.3d 706, 71214, 92 FEP Cases 1665 (8th Cir. 2003), upheld the
award of $15,000 in compensatory damages from defendant co-worker John Joseph to plaintiff
for an incident in which he had pinched her buttocks, and upheld the award of $50,000 in
compensatory damages and $50,000 in punitive damages for plaintiffs assault and battery tort
claims for his alleged attempt to rape her.
Eich v. Board of Regents for Central Missouri State University, 350 F.3d 752, 76264, 92
FEP Cases 1812 (8th Cir. 2003), held that the award of $200,000 in non-economic damages was
proper, and reversed the lower courts order that plaintiff accept a remittitur to $10,000 or that
there be a retrial. The court set forth plaintiffs testimony, and held that the $200,000 award did
not shock the conscience, at 76364:
Its very frustrating to know that that behavior I was subjected to would be allowed to
happen for so long, so many times and nothing be done to correct it. They didnt care
anything about what I contributed to the university. They put in my job performance or
my job performance reviews I am a valuable employee of the university but when I
turned to them for help it was like I was nothing. There is just no way to really describe
everything that I have been through, the volume, the intense situations, the rejection of
my requests for help. There is just, there is really no words to describe how completely
and totally devastating everything that has happened to me has been. Its completely
destroyed everything.
Judge Smith concurred in part and dissented in part. Id. at 76467.
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020, 1040, 92 FEP Cases 641 (9th
Cir. 2003), cert. denied, 541 U.S. 902 (2004), affirmed the 1981 jury verdict for $360,000 in
compensatory damages and $2,600,000 in punitive damages, $86,000 in lost wages on the on the
breach of contract claim, and a remitted $86,000 in double damages for willful withholding of
wages and benefits under Washington law. The verdict form for compensatory damages did not
distinguish between economic and non-economic damages, and defendant challenged the award
for emotional distress. The court rejected defendants contention that the jury could not award
damages for a discretionary annual $25,000 bonus:
We hold that the jury reasonably could have awarded bonuses for these years; the
evidence in the record demonstrates that in 1998, the year before he was terminated,
Zhang exceeded his performance goal and had the highest sales of any American Gem
employee. The jury reasonably could have concluded that Zhang would have continued
his outstanding work performance, entitling him to bonuses in each of the following four
years and an additional $100,000 in economic damages. Thus the jury could have
awarded up to $236,845 in economic damages, leaving only $123,155 in compensation
for emotional distress.
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In any event, the court held, the damages for emotional distress would be proper regardless of
whether they amounted to $223,155 or $123,155. The court rejected defendants argument that
emotional distress must be supported by objective evidence and held that a plaintiffs
unsupported testimony alone can be sufficient. In the case at bar, plaintiffs testimony was
enough to support substantial damages:
Zhangs testimony alone is enough to substantiate the jurys award of emotional
distress damages. Zhang testified that the job at American Gem was my dream, working
in this country, and that when he was terminated, he was troubled, and couldnt
believe it. He testified that when American Gem sent letters to his suppliers stating that
he had been terminated, the Chinese version of the letters made it seem like I was either
criminal or something very bad. He stated that the termination very, very hurt my
dignity and reputation, because the letters went to suppliers in Dalian, China, his
hometown, and people think there must be something wrong, because Wei is doing
something wrong in the States. He testified that people from China called him,
concerned about the letters, and that American Gem ruined my future business....
Because doing business in China, your reputation and your credibility is the key.
Despite the fact that his testimony was hampered by language and translation problems,
the jury obviously could have gleaned that he was greatly hurt and humiliated by his
termination and the manner in which it was carried out. Under Passantino, this testimony
is more than sufficient to support a substantial compensatory damage award for
emotional distress. The award of compensatory damages was not grossly excessive or
monstrous. . . . The district court committed no error, let alone a clear abuse of
discretion, in denying the motion for a new trial on this basis.
Hardeman v. City of Albuquerque, 377 F.3d 1106, 21 IER Cases 1096 (10th Cir. 2004),
affirmed the judgment for $ 3.6 million in favor of the racial discrimination and First
Amendment retaliation plaintiff.
K. Liquidated Damages
Liquidated damages under the FLSA are compensatory, not punitive. Brooklyn Sav.
Bank v. O'Neil, 324 U.S. 697, 70708 (1945), stated:
We have previously held that the liquidated damage provision is not penal in its
nature but constitutes compensation for the retention of a workman's pay which might
result in damages too obscure and difficult of proof for estimate other than by liquidated
damages. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 62 S. Ct. 1216, 86 L. Ed.
1682. It constitutes a Congressional recognition that failure to pay the statutory
minimum on time may be so detrimental to maintenance of the minimum standard of
living necessary for health, efficiency, and general well-being of workers'FN19 and to
the free flow of commerce, that double payment must be made in the event of delay in
order to insure restoration of the worker to that minimum standard of well-being.
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Liquidated damages under the ADEA are punitive, not compensatory. Trans World
Airlines, Inc., v. Thurston, 469 U.S. 111, 125, 36 FEP Cases 977 (1985), stated: The legislative
history of the ADEA indicates that Congress intended for liquidated damages to be punitive in
nature.
Cross v. New York City Transit Authority, 417 F.3d 241, 25257, 96 FEP Cases 239 (2d
Cir. 2005), held that defendants status as a public agency did not exempt it from an award of
liquidated damages. Id. at 25657. The court rejected defendants argument that liquidated
damages are unavailable unless plaintiffs show that a decisionmaker had actual knowledge of the
ADEA, holding that reckless disregard is an alternative basis for finding liability. The court
stated:
In this case, the evidence was sufficient to support a jury finding that the
defendants recklessly disregarded federal law prohibiting age discrimination. Viewed in
the light most favorable to the plaintiffs, the evidence shows that Transit Authority
supervisors who made age-hostile remarks to and about Cross and Francis deliberately
afforded these men less training than younger provisional Maintainers in order to have an
excuse to demote them. The creation of a calculated subterfuge to support an adverse
employment action supports an inference that the employer knew or recklessly ignored
the fact that their real reason for demoting the plaintiffsagewas unlawful.
Id. at 253 (citations omitted). The court also relied on the fact that the union had complained of
racial discrimination against these older African-American employees:
Further supporting this inference is evidence that the union specifically
complained to defendants that their treatment of Cross and Francis was impermissibly
discriminatory. Although these complaints apparently focused on plaintiffs race rather
than age, the fact that defendants ignored the warning and proceeded to demote plaintiffs,
to replace them with younger Helpers, and to place these younger hires in a structured
training program strengthens the inference that the defendants were indifferent to
whether federal law proscribed age discrimination; their calculated purpose was to
develop a corps of young Maintainers.
Id. (citation omitted).
Hildebrandt v. Illinois Department of Natural Resources, 347 F.3d 1014, 1031, 92 FEP
Cases 1441 (7th Cir. 2003), affirmed in part and reversed in part the grant of summary judgment
to the Title VII and 1983 gender discrimination defendants. The court held that liquidated
damages under the Equal Pay Act are compensatory in nature, to compensate for the hard-to-
calculate losses of not having received the proper pay in time.
Mathis v. Phillips Chevrolet, Inc., 269 F.3d 771, 77778, 87 FEP Cases 219, 81 E.P.D.
40,807 (7th Cir. 2001), affirmed the jurys award of liquidated damages to the ADEA plaintiff.
The court rejected the defendants argument that liquidated damages were improper because the
hiring manager was ignorant of the ADEA. Phillipss general manager did testify that he was
not aware that it was illegal to discriminate on the basis of age, but as this circuit has held,
leaving managers with hiring authority in ignorance of the basic features of the discrimination
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laws is an extraordinary mistake for a company to make, and a jury can find that such an
extraordinary mistake amounts to reckless indifference. Id. at 778. The court rejected the
defendants argument that the printed message on its application forms, acknowledging that the
ADEA prohibits discriminating against applicants over the age of 40, demonstrates a good-faith
effort to comply and bars the imposition of liquidated damages. However, this evidence
appears more harmful to Phillips than helpful, because the jury could easily have concluded that
printing this statement on the application but then making no effort to train hiring managers
about the ADEA shows that Phillips knew what the law required but was indifferent to whether
its managers followed that law. Id.
Tuttle v. Metropolitan Government of Nashville, 474 F.3d 307, 322, 99 FEP Cases 974
(6th Cir. 2007), reversed the grant of judgment as a matter of law to the ADEA retaliation
defendant but upheld the lower courts denial of a requested instruction on liquidated damages,
because there was no evidence of a knowing violation of law.
L. Punitive Damages
1. State Farm v. Campbell
State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed.
2d 585 (2003), reversed in a 6-3 decision the award of $145 million in punitive damages for bad-
faith failure to defend an accident claim, where plaintiffs post-remittitur award for
compensatory was only $1 million. The Court held that the award was excessive and violated
the Due Process Clause. Discussing its concerns with punitive damage awards, the Court stated:
Our concerns are heightened when the decisionmaker is presented . . . with evidence that
has little bearing as to the amount of punitive damages that should be awarded. Vague
instructions, or those that merely inform the jury to avoid passion or prejudice . . . do
little to aid the decisionmaker in its task of assigning appropriate weight to evidence that
is relevant and evidence that is tangential or only inflammatory.
Id. at 1520. The Court elaborated on the three standards it had set forth in BMW v. Gore, 517
U.S. 559 (1996).
The first factor is the degree of reprehensibility of the defendants conduct. The Court
found that defendants alteration of records to make its insureds appear less culpable, and its
false pretrial assurances to its insureds that their assets would be safe if the case went to trial
(contrasting with its post-trial statement that they should put their house up for sale), and the
evidence of a pattern of such conduct, justified an award of punitive damages even after taking
into account the amount of the compensatory damages. Id. at 1521. However, this is only
economic harm. The Court took sharp exception to plaintiffs reliance on evidence that this
conduct was part of a nationwide pattern, and that this case was an occasion to punish State Farm
for the nationwide pattern, particularly in light of the fact that much of the out-of-state conduct
was lawful where it occurred. Id. at 1522. There was no specific instruction that the evidence
could be considered only for background purposes:
Lawful out-of-state conduct may be probative when it demonstrates the deliberateness
and culpability of the defendants action in the State where it is tortious, but that conduct
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must have a nexus to the specific harm suffered by the plaintiff. A jury must be
instructed, furthermore, that it may not use evidence of out-of-state conduct to punish a
defendant for action that was lawful in the jurisdiction where it occurred.
Id. at 152223 (citation omitted). The Court held that there was no link between the award and
the injury for which the award was made, and that the absence of such a link created the risk that
multiple awards of punitive damages might be made for the same conduct:
For a more fundamental reason, however, the Utah courts erred in relying upon
this and other evidence: The courts awarded punitive damages to punish and deter
conduct that bore no relation to the Campbells harm. A defendants dissimilar acts,
independent from the acts upon which liability was premised, may not serve as the basis
for punitive damages. A defendant should be punished for the conduct that harmed the
plaintiff, not for being an unsavory individual or business. Due process does not permit
courts, in the calculation of punitive damages, to adjudicate the merits of other parties
hypothetical claims against a defendant under the guise of the reprehensibility analysis,
but we have no doubt the Utah Supreme Court did that here. 65 P.3d at 1149 (Even if
the harm to the Campbells can be appropriately characterized as minimal, the trial courts
assessment of the situation is on target: The harm is minor to the individual but massive
in the aggregate ). Punishment on these bases creates the possibility of multiple
punitive damages awards for the same conduct; for in the usual case nonparties are not
bound by the judgment some other plaintiff obtains. Gore, supra, at 593, 116 S.Ct. 1589
(BREYER, J., concurring) (Larger damages might also double count by including in
the punitive damages award some of the compensatory, or punitive, damages that
subsequent plaintiffs would also recover).
Id. at 1523. The Court held that, for the same reasons, the award could not be justified on the
ground that the defendant was a recidivist. While recidivism justifies a higher award, and while
recidivism need not be shown by identical situations, the Utah court erred here because
evidence pertaining to claims that had nothing to do with a third-party lawsuit was introduced at
length. The Court said that these problems were exacerbated by the introduction of even more
tangential evidence on the personal life of an employee and on the corruption of employees by
the practices challenged. Id. In this case, because the Campbells have shown no conduct by
State Farm similar to that which harmed them, the conduct that harmed them is the only conduct
relevant to the reprehensibility analysis. Id. at 1524.
The second Gore factor is the ratio between harm or potential harm to the plaintiff and
the punitive damages award. The Court refused to apply a bright-line rule, but stated:
Our jurisprudence and the principles it has now established demonstrate, however, that,
in practice, few awards exceeding a single-digit ratio between punitive and compensatory
damages, to a significant degree, will satisfy due process. . . . The Court further
referenced a long legislative history, dating back over 700 years and going forward to
today, providing for sanctions of double, treble, or quadruple damages to deter and
punish. . . . While these ratios are not binding, they are instructive. They demonstrate
what should be obvious: Single-digit multipliers are more likely to comport with due
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process, while still achieving the States goals of deterrence and retribution, than awards
with ratios in range of 500 to 1 . . . or, in this case, of 145 to 1.
Id. at 1524 (citations omitted). The Court stated that there may be exceptions justifying higher
awards:
Nonetheless, because there are no rigid benchmarks that a punitive damages
award may not surpass, ratios greater than those we have previously upheld may comport
with due process where a particularly egregious act has resulted in only a small amount
of economic damages. Ibid.; see also ibid. (positing that a higher ratio might be
necessary where the injury is hard to detect or the monetary value of noneconomic harm
might have been difficult to determine). The converse is also true, however. When
compensatory damages are substantial, then a lesser ratio, perhaps only equal to
compensatory damages, can reach the outermost limit of the due process guarantee. The
precise award in any case, of course, must be based upon the facts and circumstances of
the defendants conduct and the harm to the plaintiff.
In sum, courts must ensure that the measure of punishment is both reasonable and
proportionate to the amount of harm to the plaintiff and to the general damages
recovered. In the context of this case, we have no doubt that there is a presumption
against an award that has a 145-to-1 ratio. The compensatory award in this case was
substantial; the Campbells were awarded $1 million for a year and a half of emotional
distress. This was complete compensation. The harm arose from a transaction in the
economic realm, not from some physical assault or trauma; there were no physical
injuries; and State Farm paid the excess verdict before the complaint was filed, so the
Campbells suffered only minor economic injuries for the 18-month period in which State
Farm refused to resolve the claim against them. The compensatory damages for the injury
suffered her, moreover, likely were based on a component which was duplicated in the
punitive award. Much of the distress was caused by the outrage and humiliation the
Campbells suffered at the actions of their insurer; and it is a major role of punitive
damages to condemn such conduct. Compensatory damages, however, already contain
this punitive element. See RESTATEMENT (SECOND) OF TORTS 908, Comment c, p. 466
(1977) (In many cases in which compensatory damages include an amount for emotional
distress, such as humiliation or indignation aroused by the defendants act, there is no
clear line of demarcation between punishment and compensation and a verdict for a
specified amount frequently includes elements of both).
Id. at 152425. The Court held that the defendants wealth does not justify deviation from these
standards.
The third Gore standard is the relationship between the punitive damages award and civil
penalties authorized or imposed in comparable cases. The Court stated that a criminal penalty
shows that the state regards the conduct as serious, but that it has less utility than other factors in
determining the amount of the award. Id. at 1526.
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2. Punitive-Damage Amounts After State Farm: Civil Rights Cases
Rodriguez-Marin v. Rivera-Gonzalez, 438 F.3d 72, 84 (1st Cir. 2006), affirmed the
punitive damages awarded by the jury: The jury awarded Rodrguez back pay of $3,500 per
month, $180,000 in compensatory damages, and $120,000 in punitive damages against Dvila.
The jury awarded Escobar back pay of $3,306 per month, $105,000 in compensatory damages,
and $195,000 in punitive damages against Dvila. Id. at 79. The court held that the award was
reasonable:
The jury found that Dvila intentionally demoted plaintiffs because of their political
affiliation. Dvilas act also jeopardized plaintiffs livelihood. As a result of their
demotions, Rodrguezs salary was reduced by 60 percent and Escobars salary was
reduced by 43 percent. Both plaintiffs suffered harms to their professional careers, were
unable to meet their financial obligations because of their reduced salaries, and suffered
emotional distress for which they sought medical attention.
Id. at 85. In addition, the multiple of compensatory damages, and their magnitude, was
favorable.
Rivera-Torres v. Ortiz Velez, 341 F.3d 86, 10203 (1st Cir. 2003), cert. denied, 541 U.S.
972 (2004), a 1983 case challenging adverse employment actions motivated by political
discrimination, the court relied on Campbell to uphold the jurys award of $250,000 in punitive
damages given the reprehensibility of defendants conduct and the resultant injuries inflicted on
Rivera and his family, although the employee plaintiff received only $26,400 in economic
damages and $125,000 in compensatory damages.
EEOC v. Federal Express Corp., 513 F.3d 360, 376, 20 AD Cases 204 (4th Cir. 2008),
affirmed the award of $8,000 in compensatory damages and $100,000 in punitive damages for a
failure to accommodate the charging partys profound deafness by providing a certified ASL
translator for meetings and important documents. The court rejected defendants challenge to the
reprehensibility factor:
Although Lockhart suffered no physical harm from the actions complained of, his
supervisors at FedEx were plainly indifferent to the fact that their failure to accommodate
his disability could jeopardize his safety, and potentially implicate the safety of others.
Because Lockhart was denied the ADA accommodations necessary for him to understand
and participate in employee meetings and training sessions, he consistently missed
updates about important subjects such as workplace safety, handling dangerous goods,
interpreting hazardous labels, and potential anthrax exposure. Finally, Lockhart's
supervisors were familiar with the mandate of the ADA and perceived the risk that their
conduct was unlawful. Under the evidence, the jury was thus entitled to find that FedEx
higher management officials, including Cofield and Hanratty, had acted reprehensibly
with respect to Lockhart's need for ADA accommodations.
Id. at 377. The court also rejected defendants argument that the 12.5 ratio of punitive to
compensatory damages was unconstitutionally excessive, holding that such ratios are merely
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instructive and do not establish bright lines. Id. at 37778. Moreover, the court held that the fact
the total award was well below the $300,000 statutory cap showed it was reasonable.
Abner v. Kansas City Southern R. Co., 513 F.3d 154, 165, 102 FEP Cases 616 (5th Cir.
2008), affirmed the award of $125,000 in punitive damages to the Title VII and 1981 racial
harassment plaintiffs, although the jury did not award compensatory damages and no back pay
was involved. The court reviewed recent decisions, and stated: We similarly refuse to strike
down the jury award here, as it fell well below the cap, and there is no indication that it resulted
from jury bias or insufficient evidence of malice.
Williams v. Kaufman County, 352 F.3d 994, 1016 (5th Cir. 2003), a case involving
illegal strip searches of individuals without individualized probable cause, affirmed an award of
$100 in nominal damages and $15,000 in punitive damages for each plaintiff. The court stated
that the ratio between compensatory and punitive damages is less important in 1983 civil rights
cases than in other cases, and stated that ratios between punitive and compensatory damages do
not apply to cases in which nominal damages are awarded.
Lincoln v. Case, 340 F.3d 283, 293 (5th Cir. 2003), a Fair Housing act case, affirmed the
reduction of a punitive-damage award of $100,000 to $55,000 (the amount of the maximum civil
penalty for first-time findings of violations) where the award of compensatory damages was only
$500. The court rejected the argument that the $500 award was for nominal damages, and held
that it was make-whole relief. The courts discussion of reprehensibility emphasized that greater
punitive damages are appropriate where there is a pattern of wrongdoing, or where the defendant
falsely stated the apartment was unavailable, or where the defendant has taken advantage of
someone who is relatively unsophisticated or financially vulnerable. (Citation omitted.) False
statements to employees are very common, but under Weaver may constitute the trickery or
deceit that will justify a higher award of punitive damages. As to the ratio, the court squarely
rejected the argument that that 10 to 1 is the highest permissible ratio.
Case argues that any ratio of compensatory damages to punitive damages greater than
10:1 requires remittitur. We disagree. In Watson, this Court stated that [t]here is no
particular disparity between punitive and actual damages that will automatically result in
our declaring a punitive damages award unconstitutional. . . . Although the Supreme
Court recently reminded lower courts of appeal that in practice, few awards exceeding a
single-digit ratio between punitive and compensatory damages, to a significant degree,
will satisfy due process, it once again declined to impose a bright- line ratio which a
punitive damages award cannot exceed. Campbell, 123 S. Ct. at 1524. As we explained
in Watson, the ratio merely gives the Court an idea whether the size of the award is
suspect.
(Citations omitted.) The court thought that higher ratios may be more common in housing than
in employment cases, because the actual injuries can be low in a housing case.
compensatory-damages award under the Ohio Civil Rights Act, and held that plaintiff had shown
entitlement to punitive damages under Ohio law. The court remanded the award of $10 million
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in punitive damages and held that the lower court should not award more in punitive damages
than the $6 million awarded in compensatory damages.
costs. The court rejected defendants attack on the punitive-damage award. The defendants
openly boasted of their substantial wealth and indicated their belief that this wealth allowed them
to flout the law and harass a young woman. One purpose of punitive damages is to dissuade
defendants who are unaffected by compensatory damages from the misapprehension that they are
beyond the reach of civil penalties. The court also relied on the fact that the punitive-damages
award was only half of the compensatory-damages award.
Lust v. Sealy, Inc., 383 F.3d 580, 590, 94 FEP Cases 645 (7th Cir. 2004), affirmed the
judgment on a jury verdict for the Title VII sex discrimination plaintiff, but held that the award
of $273,000 in punitive damages was excessive in light of defendants remedial efforts, and that
$150,000 is the most that could be sustained. The court affirmed the award of $27,000 in
compensatory damages, and held that the caps made it unnecessary to address the ratio between
the punitive and compensatory damage awards. When Congress sets a limit, and a low one, on
the total amount of damages that may be awarded, the ratio of punitive to compensatory damages
in a particular award ceases to be an issue of constitutional dignity . . . . (Citations omitted.)
The court also stated:
As we emphasized in Mathias, moreover, capping the ratio of compensatory and
punitive damages makes sense only when the compensatory damages are large, which the
statutory cap on total damages in employment discrimination cases precludes. Suppose
Lust had been emotionally sturdier and incurred only $10 in emotional injury from the
delay in her promotion to Key Account Manager. Would Sealy argue that in that case the
maximum award of punitive damages would be $100? So meager an award would
accomplish none of the purposes, discussed in Mathias, for which punitive damages are
validly awarded.
Id. at 591. The case cited is Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 67578
(7th Cir.2003). The court went on to state that imposing the maximum penalty in a case
involving slight, because quickly rectified, discrimination would impair marginal deterrence.
Id. Its argument is that employers in such a situation would have no incentive to avoid further
discrimination Its as if the punishment for robbery were death; then a robber would be more
inclined to kill his victim in order to eliminate a witness and thus reduce the probability of being
caught and punished, because if the murdering robber were caught he wouldnt be punished any
more severely than if he had spared his victim. Id.
Williams v. ConAgra Poultry Co., 378 F.3d 790, 79697, 94 FEP Cases 266 (8th Cir.
2004), affirmed the judgment on a jury verdict for the Title VII, 1981, and Arkansas Civil
Rights Act racial harassment and termination plaintiff, including the remitted awards of
$173,156 in compensatory damages and $500,000 in punitive damages on the termination claim
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and compensatory damages of $600,000 on the harassment claim, but ordered that the punitive-
damage award on the harassment claim be remitted to $600,000 from the jurys verdict of
$6,063,750. The court rejected defendants argument that it should not be liable for punitive
damages, relying on incidents affecting the plaintiff, incidents affecting others of which the
plaintiff was not aware, and relying on the egregiousness of the harassment. The court held that
a reasonable jury could find malice from these facts and from the fact that ConAgra managers
were inconsistent in their reasons for firing plaintiff:
As we noted above, there was substantial evidence of egregious racial harassment
at the El Dorado plant, and although Mr. Williams did not testify to being aware of this
activity, it could be probative of the state of mind of ConAgras managers in firing him.
Furthermore, at trial there were contradictions in the testimony of ConAgra managers
with respect to the basis for Mr. Williamss firing. Thus, in this case the same evidence
that the jury used to support its finding of racial motivation in Mr. Williamss discharge
also supports an inference of intentional and malicious conduct by ConAgra.
Id. at 796. The court also held that there was sufficient evidence to support a jury determination
of reckless indifference on plaintiffs harassment claim, because plaintiff made many complaints
to upper management about his supervisors harassment, over several years, and no meaningful
action was taken. The court held that the $6,063,750 punitive-damage award on the harassment
claim was unconstitutionally excessive for three interrelated reasons. First, in upholding the
award the district court improperly relied on evidence of misconduct by ConAgra unrelated to
Mr. Williamss claim. Second, the punitive damages award is far in excess of what analogous
statutes would allow. Finally, the ratio of punitive damages to compensatory damages far
exceeds the levels that the Supreme Court has suggested are consistent with due process. Id. at
796. As to the first, the court stated:
Tying punitive damages to the harm actually suffered by the plaintiff prevents punishing
defendants repeatedly for the same conduct: If a jury fails to confine its deliberations
with respect to punitive damages to the specific harm suffered by the plaintiff and instead
focuses on the conduct of the defendant in general, it may award exemplary damages for
conduct that could be the subject of an independent lawsuit, resulting in a duplicative
punitive damages award. Where there has been a pattern of illegal conduct resulting in
harm to a large group of people, our system has mechanisms such as class action suits for
punishing defendants. Punishing systematic abuses by a punitive damages award in a
case brought by an individual plaintiff, however, deprives the defendant of the safeguards
against duplicative punishment that inhere in the class action procedure.
That does not mean that conduct in other cases is always irrelevant when
assessing the defendants reprehensibility. An incident that is recidivistic can be
punished more harshly than an isolated incident. . . . In determining what constitutes a
previous example of the same conduct, however, we must be careful not to let the
exception swallow the rule. By defining his or her harm at a sufficiently high level of
abstraction, a plaintiff can make virtually any prior bad acts of the defendant into
evidence of recidivism. . . .
The Supreme Court has therefore emphasized that the relevant behavior must be
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defined at a low level of generality. [E]vidence of other acts need not be identical to
have relevance in the calculation of punitive damages, id., but the conduct must be
closely related.
Id. at 797 (emphasis in original). The question whether particular incidents are sufficiently
factually and legally similar is not always simply, as the courts application of the standard
shows:
In upholding the punitive damages award on the harassment claim, we find that
the district court improperly relied on evidence of harassment not suffered by Mr.
Williams that was insufficiently similar to his experiences to be evidence of recidivism
under the narrow exception set forth in State Farm. In particular, the district court relied
extensively on the testimony of Mr. Johnican who stated that he saw black dolls hung
from nooses around the plant. He also reported invitations to KKK barbecues and seeing
a long racist joke about keeping black individuals out of heaven posted in the factory.
Another black employee, James Atkins, testified that he was invited on KKK hunting
trips, where he was to serve as the hunted. He also testified to seeing nooses left about
the factory. Tasha Moore testified that female black employees who responded favorably
to sexually suggestive banter were extended the privileges of white employees, while
black women who did not respond favorably were, along with other black employees,
given less favorable treatment. Mr. Williams never testified to being aware of these
events, let alone being the target of similar behavior. We hold that this misconduct is
insufficiently similar to that of which Mr. Williams was the object to count as evidence of
its recidivist character.
The district court did, however, identify evidence that would fall within the State
Farm recidivism exception. Mr. Atkins testified that white managers were extended
privileges, like travel at company expense, unavailable to black employees. Ms. Moore
testified that black employees were given shorter breaks than white employees. These
instances are factually similar to the disparate work assignments that Mr. Williams
testified about. Mr. Johnican testified to the widespread use of racist language of the
kind that Mr. Williams complained of. Once the evidence has been subject to the
winnowing required by State Farm, ConAgras conduct in Mr. Williamss case remains
reprehensible, but it is less appalling than the general picture of ConAgras misconduct
that the district court drew.
Id. at 79798. The court stated that it would be inappropriate for the courts simply to extend the
Title VII limitations to 1981 cases under the guise of interpreting the Constitution, and
continued: In this case, the award of punitive damages alone on the harassment claim was
$6,063,750, more than twenty times the Title VII limit. We do not hold that there is any
constitutionally required ratio between 1981 damages awards and the Title VII cap, but so huge
a discrepancy when coupled with the other infirmities that we discern in this award is telling and
hard to ignore. Id. at 798. The court then addressed the ratio between compensatory and
punitive damages, and held that there was no simple test. Rather, the mathematics alerts the
courts to the need for special justification. In the absence of extremely reprehensible conduct
against the plaintiff or some special circumstance such as an extraordinarily small compensatory
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award, awards in excess of ten-to-one cannot stand. Id. It held that this case did not present
such an extreme, and continued:
Mr. Williamss large compensatory award also militates against departing from the
heartland of permissible exemplary damages. The Supreme Court has stated that [w]hen
compensatory damages are substantial, then a lesser ratio, perhaps only equal to
compensatory damages, can reach the outermost limit of the due process guarantee.
State Farm, 538 U.S. at 425, 123 S. Ct. 1513. Mr. Williams received $600,000 to
compensate him for his harassment. Six hundred thousand dollars is a lot of money.
Accordingly, we find that due process requires that the punitive damages award on Mr.
Williamss harassment claim be remitted to $600,000.
Id. at 799.
Bains LLC v. Arco Products Co., 405 F.3d 764, 77071 (9th Cir. 2005), affirmed the
judgment of liability and the award of $50,000 in compensatory damages for losses caused by
breach of contract and $1 in nominal damages for racial discrimination pursuant to the rule that a
corporation cannot claim emotional distress damages, but held that the award of $5 million in
punitive damages to the Sikh-owned plaintiff was excessive and that the most that could be
allowed was between $300,000 and $450,000. The court limited its prior holdings:
Flying B argues that we should sustain the $5 million amount under Swinton,
because there we upheld a $1 million punitive damages for racial harassment where the
compensatory damages award was $35,600. That argument is not persuasive for several
reasons. First, Swinton involves a much lower award, $1 million instead of $5 million,
and less than one-third the ratiopunitive damages that were only 28, not 100, times the
compensatory damages. Second, we decided Swinton before the Supreme Court decided
State Farm, which limits Swinton. State Farm emphasizes and supplements the BMW
limitation by holding that [w]hen compensatory damages are substantial, then a lesser
ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the
due process guarantee. In Zhang v. American Gem Seafoods, Inc., a post-State Farm
1981 race discrimination case, we took note that few awards exceeding a single digit
ratio will satisfy due process, although this is not a brightline rule, and upheld the
award because it was only seven times the amount of compensatory damages.
We need not rely solely on the ratio, because the third BMW guidepostwhich
looks to the difference between the amount of punitive damages awarded and the civil
penalties authorized or imposed in comparable casesprovides us with another measure
that restrains the permissible amount. Both pre-State Farm in Swinton, and post-State
Farm in Zhang, we noted that the $300,000 statutory limitation on punitive damages in
Title VII cases was an appropriate benchmark for reviewing 1981 damage awards, even
though the statute did not apply to 1981 cases.
Flying B argues that the huge corporate assets of ARCO justify a higher award
than might be justified for a defendant less able to pay it. A punitive damages award is
supposed to sting so as to deter a defendants reprehensible conduct, and juries have
traditionally been permitted to consider a defendants assets in determining an award that
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will carry the right degree of sting. But there are limits. The wealth of a defendant
cannot justify an otherwise unconstitutional punitive damages award, and cannot make
up for the failure of other factors, such as reprehensibility, to constrain significantly an
award that purports to punish a defendants conduct.
Thus what we are left with is a case of highly reprehensible conduct, though not
threatening to life or limb, that caused economic harm to a corporation. The jury found
$50,000 of actual harm, and, as this is not the rare case for which State Farm leaves
room, the ratio approach suggests that punitive damages could not, consistent with due
process, exceed $450,000. Comparing the award to the civil penalty authorized in Title
VII for comparable harm suggests that Congress regards $300,000 as the highest
appropriate amount in somewhat comparable cases. The conclusion we reach is that the
district court must, to comply with State Farm (which came down after the district court
had ruled) and BMW, reduce the amount of punitive damages to a figure somewhere
between $300,000 and $450,000.
Id. at 77677 (footnotes omitted).
Comment: State Farm refused to establish the bright line the panel in this case
sees, and the panel overlooked important qualifications in State Farm precluding
the panels insistence on a ratio of less than ten. The panel also ignored the
Congressional purpose in enacting a damages cap exclusively for Title VII and
some ADA and Rehabilitation Act cases, while failing to do so for 1981, a
statute amended by the Civil Rights Act of 1991 but left without a damages cap.
Plaintiffs attorneys should seek en banc review of any decision following the
reasoning above, and should in the meantime be careful to preserve their
arguments for larger damages in the event that this aspect of Flying B is
overruled.
Bell v. Clackamas County, 341 F.3d 858, 86768, 92 FEP Cases 879 (9th Cir. 2003),
reversed the trial courts reduction of 42 U.S.C. 1981 and 1983 punitive-damage awards
against defendant deputies who were fellow employees of the plaintiff, and who had retaliated
against him for his complaints of racial discrimination. The court remanded the punitive
damages with instructions that the trial court evaluate the individual reprehensibility of each
individual defendants conduct, and that it consider evidence of each defendants financial net
worth to the extent that the deputy would not be reimbursed by the County for the punitive
damage award against him.
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020, 104344, 92 FEP Cases 641 (9th
Cir. 2003), cert. denied, 541 U.S. 902 (2004), an individual Title VII and 1981 case involving
anti-Asian discrimination, affirmed the award of $2.6 million in punitive damages, $360,000 in
compensatory damages for emotional distress, and $193,000 in lost wages and wages unlawfully
withheld. The court observed that intentional racial discrimination was far more reprehensible
than the mere economic harm involved in BMW v. Gore and Campbell. It added: Racial
discrimination often results in large punitive damage awards. Id. at 1043 (citations omitted).
The court found that the seven-to-one ratio was permissible. Id. at 1044. The court refused to
consider the $300,000 punitive-damages cap in the Civil Rights Act of 1991 as a civil penalty
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limiting the permissible size of the punitive-damages award under 1981 because Congress had
refused to cap such damages under 1981. It held that the ratio between the $2.6 million
punitive-damages award and the $300,000 cap was reasonable. Id. at 104445.
Goldsmith v. Bagby Elevator Co., Inc., 513 F.3d 1261, 128285, 102 FEP Cases 716
(11th Cir. 2008), affirmed the lower courts refusal to order a remittitur on the jury award of
$500,000 in punitive damages, on top of the award of $27,160.59 in back pay and $27,160.59 in
damages for mental anguish for the Title VII and 1981 retaliation plaintiff.
One factor that suggests that the misconduct of Bagby Elevator was reprehensible
is that Goldsmith suffered both economic harm and emotional and psychological harm.
Goldsmith's relationships with his family suffered, he attended counseling after his
termination, and his termination made him feel hurt and upset. . . . The record also
establishes that Goldsmith was financially vulnerable and had to borrow money after he
was terminated.
Another factor that suggests that the misconduct of Bagby Elevator was
reprehensible is that Bagby Elevator engaged in a pattern of retaliatory and
discriminatory misconduct. Three other employees who had filed EEOC charges or
complained about racial slurs were terminated before Goldsmith. There also was
substantial evidence, as discussed above, that Bagby Elevator engaged in a pattern of
reckless indifference to its employees federal rights.
Id. at 1283. The court also rejected defendants argument that the 9.2-to-1 ratio of punitive to
compensatory damages (including back pay) was excessive. The court stated that a higher ratio
could also have been upheld. It noted that Bagby had 150 employees, and a Title VII damages
cap of $100,000. It held that an award of five times that amount is not excessive. Id. at 1284.
Bogle v. McClure, 332 F.3d 1347, 92 FEP Cases 16 (11th Cir. 2003), cert. dismissed,
124 S. Ct. 1168 (2004), affirmed an award of $500,000 in compensatory damages and $ 2
million in punitive damages to each plaintiff Caucasian librarian harmed by racial discrimination
in violation of 1983. As to reprehensibility, the court stated:
Appellants wrongdoing was more than mere accident. There was evidence that,
in the face of repeated warnings, Appellants intentionally discriminated against the
Librarians on the basis of race and used trickery and deceit to cover it up under the guise
of a reorganization. Furthermore, Appellants intentionally discriminated against the
Librarians with full knowledge of recent cases of employment discrimination brought by
Caucasian employees against other Fulton County officials which resulted in jury
verdicts for the plaintiffs or settlements. A reasonable jury could have concluded from
the evidence that Appellants knew that transferring the Librarians on the basis of race
was illegal, were warned not to make the transfers, and knew that other Fulton County
officials had been caught and punished for making employment decisions on the basis of
race; yet Appellants intentionally discriminated against the Librarians and concocted the
reorganization plan to hide their discriminatory motives. Repeatedly, courts have
found intentional discrimination to be reprehensible conduct under Gore s first
guidepost.
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Id. at 1361 (citation omitted). The court found the 4:1 ratio to be permissible notwithstanding
the large compensatory-damage awards, in light of the reprehensibility of the conduct. It
rejected the argument that the $300,000 damages cap for Title VII claims should limit the
damages awarded under 1983. The court emphasized that Congress had refused to apply the
same caps to 1983 claims despite the opportunity to do so. Furthermore, although the
punitive damages awarded here are more than the damages available under Title VII for
analogous conduct, the difference is not enough, by itself, to suggest that the punitive damages
award violates due process. Id. at 1362.
3. Punitive-Damage Amounts After State Farm: Other Cases
Exxon Shipping Co. v. Baker, 554 U.S. 471, 515 (2008), a Federal maritime law case,
held that in light of the substantial compensatory damages awarded, a 1:1 punitive damages ratio
was appropriate:
Applying this standard to the present case, we take for granted the District Court's
calculation of the total relevant compensatory damages at $507.5 million. . . . A punitive-
to-compensatory ratio of 1:1 thus yields maximum punitive damages in that amount.
Justice Scalia, joined by Justice Thomas, concurred. Id. at 515. Justice Stevens concurred in
part and dissented in part. Id. at 516-23. Justice Ginsburg concurred in part and dissented in
part. Id. at 523-25. Justice Breyer concurred in part and dissented in part. Id. at 525-26.
DiSorbo v. Hoy, 343 F.3d 172 (2d Cir. 2003), reversed a $400,000 compensatory-
damage award to the female plaintiff for her serious injuries, holding that $250,000 would be
adequate, and reversed the $1.275 million punitive-damages award and held that a reasonable
amount would be $75,000 based on other awards, because only one police officer beat the
plaintiff woman, and he stopped beating and choking her when she was about to lose her vision.
Romanski v. Detroit Entertainment, L.L.C., 428 F.3d 629 (6th Cir. 2005), was a 1983
unlawful arrest case. Plaintiff was visiting the Motor City Casino, found a nickel in slot machine
tray, and tried to use it to play on another machine. She was arrested. The jury awarded $279.05
in compensatory damages, and $875,000 in punitive damages against the casino. The court
required a remittitur to $600,000 or a new trial, saying that $600,000 was enough to deter similar
conduct and was in line with similar awards.
Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 678 (7th Cir. 2003) (Posner, J.),
upheld an award of $186,000 apiece, and $5,000 in compensatory damages apiece, to two
plaintiffs bitten by bedbugs. The court held that one of the factors supporting the award was the
zealous nature of the defense. It explained:
And still today one function of punitive-damages awards is to relieve the pressures on an
overloaded system of criminal justice by providing a civil alternative to criminal
prosecution of minor crimes. An example is deliberately spitting in a persons face, a
criminal assault but because minor readily deterrable by the levying of what amounts to a
civil fine through a suit for damages for the tort of battery. Compensatory damages would
not do the trick in such a case, and this for three reasons: because they are difficult to
determine in the case of acts that inflict largely dignitary harms; because in the spitting
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case they would be too slight to give the victim an incentive to sue, and he might decide
instead to respond with violenceand an age-old purpose of the law of torts is to provide
a substitute for violent retaliation against wrongful injuryand because to limit the
plaintiff to compensatory damages would enable the defendant to commit the offensive
act with impunity provided that he was willing to pay, and again there would be a danger
that his act would incite a breach of the peace by his victim.
When punitive damages are sought for billion-dollar oil spills and other huge
economic injuries, the considerations that we have just canvassed fade. As the Court
emphasized in Campbell, the fact that the plaintiffs in that case had been awarded very
substantial compensatory damages$1 million for a dispute over insurance coverage
greatly reduced the need for giving them a huge award of punitive damages ($145
million) as well in order to provide an effective remedy. Our case is closer to the spitting
case. The defendants behavior was outrageous but the compensable harm done was
slight and at the same time difficult to quantify because a large element of it was
emotional. And the defendant may well have profited from its misconduct because by
concealing the infestation it was able to keep renting rooms. Refunds were frequent but
may have cost less than the cost of closing the hotel for a thorough fumigation. The
hotels attempt to pass off the bedbugs as ticks, which some guests might ignorantly have
thought less unhealthful, may have postponed the instituting of litigation to rectify the
hotels misconduct. The award of punitive damages in this case thus serves the additional
purpose of limiting the defendants ability to profit from its fraud by escaping detection
and (private) prosecution. If a tortfeasor is caught only half the time he commits torts,
then when he is caught he should be punished twice as heavily in order to make up for the
times he gets away.
Finally, if the total stakes in the case were capped at $50,000 (2 x [$5,000 +
$20,000]), the plaintiffs might well have had difficulty financing this lawsuit. It is here
that the defendants aggregate net worth of $1.6 billion becomes relevant. A defendants
wealth is not a sufficient basis for awarding punitive damages. . . . That would be
discriminatory and would violate the rule of law, as we explained earlier, by making
punishment depend on status rather than conduct. Where wealth in the sense of resources
enters is in enabling the defendant to mount an extremely aggressive defense against suits
such as this and by doing so to make litigating against it very costly, which in turn may
make it difficult for the plaintiffs to find a lawyer willing to handle their case, involving
as it does only modest stakes, for the usual 3340 percent contingent fee.
In other words, the defendant is investing in developing a reputation intended to
deter plaintiffs. It is difficult otherwise to explain the great stubbornness with which it
has defended this case, making a host of frivolous evidentiary arguments despite the very
modest stakes even when the punitive damages awarded by the jury are included.
As a detail (the parties having made nothing of the point), we note that net
worth is not the correct measure of a corporations resources. It is an accounting artifact
that reflects the allocation of ownership between equity and debt claimants. A firm
financed largely by equity investors has a large net worth (= the value of the equity
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claims), while the identical firm financed largely by debt may have only a small net
worth because accountants treat debt as a liability.
Id. at 67678 (citations omitted).
and thus a hostile housing environment. The jury awarded $250,000 in punitive damages, and
the lower court reduced the award to $20,527.50. The court explained the lower courts
reduction: The district court noted the punitive damages award was more than eighteen times
the compensatory damages award ($13,685.00) and found the award was excessive and did not
comport with due process. The district court reduced the award to $20,527.50, which amounted
to one and a half times the compensatory damages award, for the simple reason that [Winter's]
conduct ... can be considered only as to what he said and did directly to [Quigley]. Id. at 953.
The Eighth Circuit held that the jury should be presumed to follow the instruction that its award
should be based only on defendants conduct towards Quigley, and held that the conduct was
reprehensible but a single-digit multiplier was appropriate. Relying on the penalty structure of
$55,000 for first-time violations in cases brought by the Attorney General, the court stated:
While we agree with the district court that the jury's punitive damage award was
excessive, we disagree with the district court's assessment that $20,527.50, which is one
and a half times the compensatory award, sufficiently reflects the reprehensibility of
Winter's conduct. We conclude an appropriate punitive damages award in this case is
$54,750. This amount is four times greater than Quigley's compensatory damages
($13,685.00), which we find is an appropriate ratio under the circumstances of this case.
This amount comports with due process, while achieving the statutory and regulatory
goals of retribution and deterrence. See Campbell, 538 U.S. at 425.
Id. at 955-56.
4. Entitlement Where No Compensatory or Nominal Damages Are
Awarded
Cush-Crawford v. Adchem Corp., 271 F.3d 352, 87 FEP Cases 456, 81 E.P.D. 40,800
(2nd Cir. 2001), affirmed the judgment on a jury verdict for the Title VII hostile-environment
plaintiff. The jury did not award any compensatory or nominal damages, but did award the
statutory maximum of $100,000 in punitive damages. The court summarized the law of the
Circuits:
The plain language of the statute does not expressly state whether punitive
damages are available absent an award of actual damages, and the Courts of Appeals that
have considered the question have reached different results. The Seventh Circuit holds
that punitive damages may be awarded in a Title VII case absent an award of actual or
compensatory damages. See Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008,
1010-11 (7th Cir. 1998) (Easterbrook, J.) (affirming jury award of punitive damages
without actual damages and apparently without nominal damages). And, under an
analogous provision of the Fair Housing Act, the Third Circuit has held that punitive
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damages are available absent awards of actual or nominal damages. See Alexander v.
Riga, 208 F.3d 419, 430-34 (3d Cir. 2000), cert. denied, 531 U.S. 1069, 121 S. Ct. 757,
148 L. Ed. 2d 660 (2001). By contrast, under the First Circuits rule, punitive damages
award must be vacated absent either a compensatory damages award, or a timely request
for nominal damages. Kerr-Selgas v. Am. Airlines, Inc., 69 F.3d 1205, 1215 (1st Cir.
1995). Similarly, on the question of punitive damages under the Fair Housing Act, the
Fourth and Fifth Circuits have held that punitive damages are not available absent a
compensatory damages award. See Louisiana ACORN Fair Hous. v. LeBlanc, 211 F.3d
298, 303 (5th Cir. 2000) (recognizing that punitive damages are not available in absence
of actual damages unless there has been a constitutional violation), cert. denied, [532
U.S. 904] __ U.S. __ (2001); People Helpers Found., Inc. v. City of Richmond, 12 F.3d
1321, 1327 (4th Cir. 1993).
Id. at 357. Further surveying the law, the court found that there was no consensus on the
common-law rule. The requirement of actual damages has been described by commentators as
the majority rule, see PROSSER &KEETON ON THE LAW OF TORTS 2, at 14 (5th ed. 1984), but it
has also been sharply criticized, see id; see also RESTATEMENT (SECOND) OF TORTS 908 cmt.
(c) (1979) ( [I]t is not essential to the recovery of punitive damages that the plaintiff should have
suffered any harm, either pecuniary or physical.). Id. at 358. The court distinguished the
general concerns about allowing awards of punitive damages without proof of actual harm: In
Title VII cases, however, the statutory maxima capping punitive damage awards strongly
undermine the concerns that underlie the reluctance to award punitive damages without proof of
actual harm. Id. at 359. The court continued:
Furthermore, the objectives of punitive damages by definition differ from the
objectives of compensatory damages. There is some unseemliness for a defendant who
engages in malicious or reckless violations of legal duty to escape either the punitive or
deterrent goal of punitive damages merely because either good fortune or a plaintiffs
unusual strength or resilience protected the plaintiff from suffering harm. It is often
precisely [in the cases where no actual harm is shown] that the policy of providing an
incentive for plaintiffs to bring petty outrages into court comes into play. PROSSER &
KEETON ON TORTS 2, at 14; see also RESTATEMENT (SECOND) OF TORTS 908 cmt.
(c).
As for nominal damages, they are generally no more than symbolic. The need for
such a symbol of opprobrium in the absence of compensatory damages disappears where
the factfinder has signified its opprobrium by making an express award of punitive
damages. And to make enforcement of the jurys award of punitive damages turn on
whether the jury also awarded purely symbolic nominal damages carries a likelihood of
defeating the jurys intention as the result of confusion.
In conclusion, in Title VII cases, we see no reason to make award of actual or
nominal damages a prerequisite to the award of punitive damages. We hold that in Title
VII cases, where the factfinder has found in a plaintiffs favor that the defendant engaged
in the prohibited discrimination, punitive damages may be awarded within the limits of
the statutory caps if the defendant has been shown to have acted with a state of mind that
makes punitive damages appropriate, regardless whether the plaintiff also receives an
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award of compensatory or nominal damages.
Corti v. Storage Technology Corp., 304 F.3d 336, 34143, 89 FEP Cases 1477 (4th Cir.
2002), affirmed the judgment on a Title VII RIF jury verdict for $100,000 in punitive damages,
back pay, and prejudgment interest. The court held that punitive damages may be awarded for a
Title VII violation even without an award of compensatory damages, where actual harm is
shown by the award of back pay. The court explained:
Unlike compensatory damages at common law, compensatory damages under
1981a are defined to omit back pay, which is the most obvious economic damage in a
wrongful discharge case. . . . The omission occurs under the 1991 Act to prevent double
recovery. . . . For this reason, the court instructed the jury that [i]n calculating damages,
you may not consider any wages or benefits that Ms. Corti may have lost. The award of
lost pay or benefits should you find StorageTek liable, will be determined by the Court. .
. . We believe that the award of back pay clearly establishes that Corti suffered injury.
[FN12] Because back pay awards serve a similar purpose as compensatory damage
awards, the familiar tort mantra that punitive damages may not be assessed in the
absence of compensatory damages will not aid StorageTek in this case. . . . [FN13]. In
Title VII cases, a jurys punitive damage award will stand even in the absence of
compensatory damages if back pay has been awarded.
FN12. StorageTek has not offered, nor can we find, any reason to disallow
punitive damages merely because the court, not the jury, is responsible for awarding back
pay under the statutory scheme.
FN13. After Hennessy, the Seventh Circuit went further, holding that a punitive
damage award survives even without an award of back pay. See Timm v. Progressive
Steel Treating, Inc., 137 F.3d 1008, 1010 (7th Cir. 1998); see also Cush-Crawford v.
Adchem Corp., 271 F.3d 352, 357 (2d Cir. 2001). Because back pay was awarded in the
case at hand, we need not reach this question today.
Id. at 34243. Judge Niemayer concurred. Id. at 34345.
Abner v. Kansas City Southern R. Co., 513 F.3d 154, 102 FEP Cases 616 (5th Cir. 2008),
affirmed the award of $125,000 in punitive damages to the Title VII and 1981 racial
harassment plaintiffs, although the jury did not award compensatory damages and no back pay
was involved. The court stated at 160: We agree with the conclusion of several of our sister
circuits that a punitive damages award under Title VII and 1981 need not be accompanied by
compensatory damages. We base our holding on the language of the statute, its provision of a
cap, and the purpose of punitive damages under Title VII. The court relied in part on the
provisions of the Civil Rights Act of 1991 treating compensatory and punitive damages as
independent. It continued:
The grounding of punitive damages between the high threshold of culpability for
an award and a cap of the amount in any event upholds Congress's purpose in enacting
the 1991 amendments to Title VIIto provide additional remedies, in the form of
damages, to prevent discrimination in the workplace while mitigating the risk of
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disproportionate awards. Injury that results from discrimination under Title VII is often
difficult to quantify in physical terms; preventing juries from awarding punitive damages
when an employer engaged in reprehensible discrimination without inflicting easily
quantifiable physical and monetary harm would quell the deterrence that Congress
intended in the most egregious discrimination cases under Title VII. Indeed, there is some
unseemliness for a defendant who engages in malicious or reckless violations of legal
duty to escape either the punitive or deterrent goal of punitive damages merely because
either good fortune or a plaintiff's unusual strength or resilience protected the plaintiff
from suffering harm.
Id. at 16364 (footnotes omitted). The court rejected defendants argument that the result
violated BMW v. Gore and was unconstitutional:
As we see it, the combination of the statutory cap and high threshold of
culpability for any award confines the amount of the award to a level tolerated by due
process. Given that Congress has effectively set the tolerable proportion, the three-factor
Gore analysis is relevant only if the statutory cap itself offends due process. It does not
and, as we have found in punitive damages cases with accompanying nominal damages, a
ratio-based inquiry becomes irrelevant. Accepting this analysis makes the sufficiency of
evidence to support the statutory threshold a determinant of constitutional validity.
Id. at 164 (footnote omitted). The court then described the racial harassment that had occurred
over the ten-year period from 1995 to 2005, and held that it was enough to support punitive
damages:
Here, Plaintiffs, supervisors, and other witnesses testified to incidents of racially
discriminatory behavior that occurred within the ten-year time frame of evidence
permitted by the court. Elgie Abner testified about picking up a toolbox on which
someone had written, You lazy ni_ _ _ _s and that, when he presented the box to a
supervisor, the supervisor laughed. He also testified that a cement pillar in the workshop
contained a large marking of KKK for a number of years, as did the fuel tanks and
roofs of many locomotives in the shop, and that in May of 2005, Abner is a lazy racist
was written on the walls in the bathroom of the workshop. Ni_ _ _r go home and Lazy
ni_ _ _ _s were also written on the walls. Harry Brooks testified that foreman Gary
Moore would, on the night shift, wait until a large thunderstorm came and then, laughing,
send the workers out in the storm. He also testified that an electrical wire in the form of a
noose was hanging outside of the workshop, that there was graffiti in the workshop
bathrooms that said, Ni_ _ _ _s stink and Ni_ _ _ _s go home, and that supervisors
knew of the graffiti and the noose. Napoleon Player testified that a supervisor called
him boy in 1995 and that Gary Moore referred to him as a rice-eating Ethiopian and
said that he was going to run two black a_ _ es off. In 1995, Moore also allegedly
referred to Napoleon Player's shift as the c_ _n shift. Napoleon Player also testified that
he did not recall receiving any racial harassment training prior to retiring in June of 2003.
Mr. Odom similarly testified that the first [racial harassment policy] I got was ... if I'm
not mistaken, August 2003. Donald Harville testified that a company surgeon told him,
when he arrived late for work in November of 2001, That's it for you and your ni_ _ _ _
buddies. This and other evidence supports the jury's conclusion that KCSR supervisors
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caused and/or failed to properly respond to numerous instances of racially derogatory
behavior in the workplace.
Id. at 16465 (footnotes omitted). The court then held that no award of nominal damages was
required in order to support the award of punitive damages:
With respect to the district courts award of nominal damages of $1 to each
Plaintiff, we find such formalities to be unnecessary. We have required a district court to
grant a plaintiff $1 in nominal damages when her constitutional rights were violated.
Other circuits, however, have found that a jury verdict of liability under Title VII did not
require a court to award a nominal damages award in the absence of a request that the
jury determine nominal damages or a request for additur by the judge. Because the award
of actual or punitive damages is capped under Title VII, we do not require a ceremonial
anchor of nominal damages to tie to a punitive damages award.
Id. at 165 (footnotes omitted).
Hertzberg v. SRAM Corp., 261 F.3d 651, 656 n.3 (7th Cir. 2001), cert. denied, 2002 WL
232975, 70 USLW 3395, 70 USLW 3514 (U.S., Feb. 19, 2002) (No. 01829), affirmed the
award of $20,000 in punitive damages to the Title VII sexual harassment plaintiff in a case in
which no compensatory damages were awarded, and in which the awards of back pay and front
pay were reversed.
affirmed the judgment for $100,000 in punitive damages for the ADA retaliation plaintiff where
no back pay or compensatory damages were awarded. The court held that the award of front pay
served the same function as an award of compensatory damages, in terms of demonstrating
injury, and was sufficient to support the punitive-damage award.
Juarez v. ACS Government Solutions Group, Inc., 314 F.3d 1243, 90 FEP Cases 1104
(10th Cir. 2003), affirmed the judgment for the plaintiff in the amounts of $22,500 in back pay
and $250,000 in punitive damages for racial and national origin discrimination in a RIF.
5. Entitlement Where Defendant Has Tried to Cover Up Its Acts
United States v. Space Hunters, Inc., 429 F.3d 416, 42728 (2d Cir. 2005), reversed the
denial of punitive damages under the Fair Housing Act, holding that there was ample evidence of
malice or reckless indifference in defendants recidivism, erasing tape recordings of calls, use of
vulgarity to drive away disabled applicants, and likelihood of future violations. The court
explained:
First, there can be no dispute that McDermott was generallyindeed acutely
aware of the FHA. A consent judgment had been previously entered against him in which
he was personally enjoined from violating the FHA, expressly including discriminating
in housing on the basis of a disability. And the State of New York revoked his real estate
license in 1997, in part because of FHA violations. Moreover, McDermotts letters to
HUD during the course of its investigation into Totos complaint demonstrate a vast, if
skewed, awareness of the FHA. Thus, McDermott cannot argue that he did not know
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about the FHA. . . .
Second, the Government presented evidence that defendants discriminate[d] in
the face of a perceived risk that [their] actions ... violate[d] the FHA. . . . For example,
the jury could have inferred that McDermott knew he was acting improperly based on the
fact that he erased his recordings of the telephone conversations at issue in this case
recordings that he purportedly made to protect himself from allegations of misconduct.
Cf. EEOC v. Wal-Mart Stores, Inc., 156 F.3d 989, 993 (9th Cir. 1998) (stating that
evidence of a defendants actions to cover up discriminatory conduct can support an
inference that the defendant acted with reckless indifference to a federally protected
right).
Third, the record is awash with evidence of egregious and outrageous acts by
defendants that could support an inference of the requisite evil motive. . . .
McDermott did not simply hang up on relay calls. He used profanity to chase them
away from continuing to call back. . . . He told Toto to eat shit, assholenot the most
judicious of remarksand that Space Hunters does not do business with disabled people.
. . . McDermott also threatened Toto with harassment charges if he called Space Hunters
again. And McDermott told the HUD investigator that if a disabled person, a hearing
impaired person would come to [his] office . . . they would not gain entry into the
building.
Finally, given McDermotts history, this case is particularly appropriate for
consideration of punitive damages. [T]he purpose of punitive damage awards is to
punish the defendant and to deter him and others from similar conduct in the future. . . .
McDermott is an FHA recidivist.
2002), affirmed the judgment on a jury verdict for the Title VII retaliation plaintiff. The court
held that plaintiff was entitled to the reduced $300,000 judgment for compensatory and punitive
damages, reduced from the jury award of $6,000 in compensatory damages and $3.5 million in
punitive damages. The court explained plaintiffs entitlement:
There is more than sufficient evidence here to sustain the adjusted award of
punitive damages. Ryan had an antidiscrimination policy of which all its managers were
aware. That policy required employees to refer complaints of discrimination by
supervisors to McGoldrick for investigation. McGoldrick, however, did not play her
assigned role. Instead of investigating Fines accusations, she immediately turned Fines
letter over to Looney. In addition, McGoldricks letter to Fine openly indicated that she
was terminated for writing the October 2 letter, but Looney recorded in her personnel file
that she was terminated for poor attendance and interpersonal skills. The jury obviously
found the latter explanation to be pretextual, which permitted it to infer that Looney was
aware that terminating Fine for her report of sex discrimination violated federal law. And
there is no argument here that Looney was acting contrary to company policy or outside
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the bounds of his authority, as President Ron Ryan himself concurred with Looneys
decision to fire Fine.
Worth v. Tyer, 276 F.3d 249, 269, 87 FEP Cases 994 (7th Cir. 2001), affirmed the Title
VII sexual harassment verdict for the plaintiff. The court affirmed the punitive-damages awards
of $5,000 for Title VII sexual harassment, $25,000 for retaliatory discharge, and $50,000 for
battery in a case involving improper touching for two days, including touching the plaintiffs
breast near the nipple and maintaining the contact for several seconds, lying to police
investigators about the incident, and lying in court papers about the incident for three years and
not amending the papers until 13 days before the trial.
Beard v. Flying J, Inc., 266 F.3d 792, 799, 87 FEP Cases 1836 (8th Cir. 2001), affirmed
the award of $12,500 in punitive damages for sexual harassment because Flying J did nothing to
discipline Mr. Krout despite the fact that Mr. Snider testified that he believed the allegations of
harassment made against Mr. Krout. Flying Js management, furthermore, stated that Mr. Krout
did nothing wrong, and even accused the women of conspiring to remove Mr. Krout, again
despite the fact that the manager responsible for investigating the allegations thought that they
were credible.
and $250,000 in punitive damages for racial and national origin discrimination in a RIF. The
court relied heavily on comparative evidence and evidence of bias against Mexicans by Mr.
Nesmith. The court stated:
Applying these standards, we hold that Appellee presented sufficient evidence that ACS
terminated Appellee despite a recognized risk of violating Title VII. Appellee presented
evidence that Mr. Nesmith and other supervisory employees had received some EEO
training and that Mr. Nesmith was the Equal Employment Opportunity Officer at the Fort
Sill site. In conjunction, Appellee presented evidence that could lead the jury to conclude
that Mr. Nesmith was involved in the RIF decision.
Id. at 1246. The court continued:
In addition, Appellee presented evidence of cover-up after the discriminatory action.
Appellee introduced evidence that the Human Resources Department actively
participated with management-level employees to cover up the discriminatory discharge
of Appellee by giving a false reason for his discharge. Even though cover-up after the
fact does not necessarily import previous evil intent, in the instant case, the jury could
infer that the cover- up was planned prior to the discriminatory discharge.
Based on the evidence presented, the jury could determine that the merit
spreadsheet was used merely in an attempt to justify the termination of certain
individuals. Even though eight categories were supplied by Human Resources, ACS
chose to use only six of those categories in rating employees. . . . The two categories
supposedly not used in the RIF decision were tenure and past performance evaluation
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score. The jury could infer that these categories were intentionally excluded in an
attempt to justify terminating Appellee.
Appellee also presented proof that ACSs Human Resources Department failed to
provide more detailed instructions and guidelines in the RIF or to review and monitor the
RIF selection process. The totality of the evidence allowed the jury to determine that the
defendant acted with malicious, willful or gross disregard of a plaintiffs rights over and
above intentional discrimination.
Id. at 1247.
6. Entitlement Where Accommodation Was the Issue
(3rd Cir. 2002), affirmed the judgment on a jury verdict for the ADA plaintiff in the amount of
$300,000 in punitive damages, holding that the defendants failure to provide a reasonable
accommodation for the plaintiff justified the award. The court stated:
As the trial court concluded, Gagliardo produced sufficient evidence of CLIs
reckless indifference toward her statutory disability rights. Gagliardo presented evidence
that CLIthrough its employeeswas aware she had MS. For example, Gagliardo
produced evidence that her last supervisor, Judith Stout, and CLIs human resources
representative, Christine Kirby, discussed Gagliardos MS prior to Gagliardos dismissal.
Gagliardo also produced evidence that Stout requested information concerning MS. She
also offered evidence that she advised CLI of the limitations her condition imposed on
her ability to perform her job and that a high level CLI employeeherself an MS
sufferercounseled Gagliardo regarding the impact of the disease. In addition,
Gagliardo produced evidence that she had requested accommodation on multiple
occasions and that CLI refused to act on any of those requests. Finally, Gagliardo
demonstrated that CLI was aware of her federal disability rights, as Christine Kirby
testified she was familiar with the ADA and responsible for ensuring CLI followed the
ADA. In sum, there was sufficient evidence to support the jurys award of punitive
damages.
Id. at 573.
Canny v. Dr. Pepper/Seven-Up Bottling Group, Inc., 439 F.3d 894, 90304, 17 AD Cases
1153 (8th Cir. 2006), reversed the punitive damages award on a jury verdict to the ADA
plaintiff. The court stated that Federal law imposes a formidable burden on plaintiffs seeking
punitive damages, and continued:
Although we concluded sufficient evidence supports the jury's finding Dr Pepper
intentionally and unlawfully discriminated against Canny by failing to accommodate him,
Dr Pepper's conduct did not, as a matter of law, rise to the level of malice or reckless
indifference.
Dr Pepper did not offer Canny reassignment to an available position in the
warehouse because Dr Pepper believed Canny's poor vision created a safety risk to Canny
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and to others. Dixson based that safety concern on a serious arm injury sustained by
another employee in the warehouse just six months earlier. Dixson also testified she had
very, very serious concerns about [Canny's] safety if he was operating . . . a forklift.
Dixson said she logically equated Canny's inability to operate a motor vehicle, with an
inability to operate motorized equipment in the plant. Dixson testified, I believe that the
basis of our decision to disallow [Canny] to drive a forklift would be substantiated by an
OSHA investigator or by [a] medical professional as putting [Canny] and the other
employees at undue risk. Dr Pepper reasonably perceived itself caught between federal
regulations under the Occupational Safety and Health Administration and federal law
under the ADA, and made a culpable, but not malicious or reckless, decision based upon
safety concerns.
Although these reasons are not enough to escape liability under the ADA, they do
not constitute the type of malicious intent or reckless indifference required to support an
award of punitive damages.
7. Other Questions of Entitlement
compensatory damages and $160,000 in punitive damages. The court rejected defendants
argument that there was no evidence supporting vicarious liability, where plaintiff had repeatedly
complained to store-level officials: Wal-Mart argues that any conscious wrongdoing by
supervisors could not be imputed to Wal-Mart because there was a lack of evidence that the
managers who taunted Arrieta and ignored his complaints were acting within the scope of their
employment. We reject this argument; we agree with the district court that, on these facts, a
reasonable jury could have found that the supervisors were acting in the scope of their
employment.
retaliation claim. The court held that the defendant company subjected itself to punitive-damage
liability by allowing an antagonist of plaintiffs to participate in the decision to terminate him:
Similarly, the record reveals sufficient evidence for a jury find that iStar was recklessand thus
susceptible to punitive damagesby allowing Baron to participate in the decision to terminate
Thomas when senior officials at the company knew the two men did not get along.
Cush-Crawford v. Adchem Corp., 271 F.3d 352, 359, 87 FEP Cases 456, 81 E.P.D.
40,800 (2d Cir. 2001), affirmed the judgment on a jury verdict for $100,000 in punitive
damages for the Title VII hostile-environment plaintiff. The court stated:
Plaintiff testified not just that she was the victim of persistent egregious sexual
harassment by a supervisor, but also that she notified company officials about the
harassment as early as September 1993just two months into her employment and over
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one year before Adchem took any remedial action. Adchems theory of the case, to be
sure, was that plaintiff did not effectively notify company officials of the sexual
harassment until November 1994, and that the earlier complaints had really only been
complaints about other problems that were only tangentially related to plaintiffs
relationship with Collin Mars. Nonetheless, the jury could rationally have credited
plaintiffs version that, in spite of her complaints to company officials, the company did
nothing to protect her from the abuse for many months.
Springer v. Henry, 435 F.3d 268, 281, 23 IER Cases 1658 (3d Cir. 2006), affirmed the
judgment on a jury verdict for the First Amendment retaliation plaintiff. Defendant appealed the
award of punitive damages. The court held that the requirements for punitive damages are
disjunctive, and that plaintiffs evidence of Henrys displays of emotion adequately showed that
her conduct was callous or malicious:
The jury finding of callous or malicious behavior also is supported by Henrys
attitude toward Dr. Springer and the medical staff in general. Dr. Sylvester testified that
Henry viewed her interactions with the medical staff, including Dr. Springer, as
adversarial. . . . Three witnessesHenry, Dr. Sylvester, and Dr. Springertestified
that Henry was upset and unhappy with Dr. Springer. Dr. Springer testified that during
meetings of the DPC Governing Body Henry was angry and spoke [to him] with a lot of
emotion, . . . Based on its observations at trial, the jury could have concluded that Henry
acted vindictively.
Le v. University of Pennsylvania, 321 F.3d 403, 40709, 91 FEP Cases 310 (3d Cir.
2003), affirmed the judgment for plaintiff, and held that punitive damages were appropriately
awarded where plaintiff claimed that his supervisor was racially biased and the decisionmaker
reassigned the same supervisor to plaintiff after satisfying himself the supervisor was not racist
by watching his interactions on the basketball court with a racially diverse team. The court
stated: The decisionmaking process used by Dr. Palladino could easily have been viewed by the
jury as demonstrating reckless indifference towards Les federally protected rights. Also, there
was additional evidence that Le presented a lengthy rebuttal in response to a bad performance
review, which was then cursorily handled by the Universitys administration. Further, the
District Court noted that upon receiving Les complaint, and before concluding its investigation,
the administration failed to counsel and advise Les supervisors and colleagues about the evils of
discrimination. In all, sufficient evidence exists to support the jurys verdict.
EEOC v. Federal Express Corp., 513 F.3d 360, 20 AD Cases 204 (4th Cir. 2008),
affirmed the award of $100,000 in punitive damages for a failure to accommodate the charging
partys profound deafness by providing a certified ASL translator for meetings and important
documents. The court described the four Lowery factors relevant to entitlement to punitive
damages:
(1) That the employer's decision maker discriminated in the face of a perceived
risk that the decision would violate federal law;
(2) That the decision maker was a principal or served the employer in a
managerial capacity;
(3) That the decision maker acted within the scope of his employment in making
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the challenged decision; and
(4) That the employer failed to engage in good-faith efforts to comply with the
law.
Id. at 372. The court noted that defendant admitted the second and third factors were met, and
challenged only the first and fourth factors. The court continued:
Here, the instructions (to which FedEx did not object) did not specify whofor example,
Hanratty, Cofield, Thompson, or someone elsecould be considered as a relevant FedEx
managerial official. Therefore, if the jury could have found that any one of them
perceived the risk that their failure to accommodate Lockhart would violate the ADA, we
are not entitled to vacate the punitive damages award for lack of sufficient evidence to
support the first Lowery finding.
Id. at 373. The court held that Hanratty was aware of defendants ADA compliance policy, and
that Cofield had contacted other FedEx supervisors seeking clarification on ADA reasonable
accommodations. Id. at 37374. The court held that the jury could find that the first factor was
met. The court also rejected defendants argument that the mere existence of its ADA policy
required a finding that it engaged in good-faith compliance efforts. Unfortunately for FedEx,
the mere existence of an ADA compliance policy will not alone insulate an employer from
punitive damages liability. Rather, in order to avoid liability for the discriminatory acts of one of
its management officials, an employer maintaining such a compliance policy must also take
affirmative steps to ensure its implementation. Id. at 374. The court held that higher-level
officials were aware of the problem:
On the evidence, the jury was entitled to find that FedEx failed to sufficiently take
affirmative steps to ensure the implementation of its ADA compliance policy with respect
to Lockhart. In this case, FedEx managerial officials shared responsibility for the failed
implementation of the policy with the company's managerial agents at the FedEx-BWI
Ramp. For example, through Cofield, at least three higher FedEx officials received
notice that a deaf package handler had requested or was in need of ADA accommodations
at the FedEx-BWI Ramp. As noted, Cofield initiated contact in 2001 with an official in
FedEx's legal department to clarify FedEx's ADA obligations with respect to Lockhart. In
2002, he contacted Connors at corporate headquarters twice, and he contacted
Arrington, the Senior Personnel Representative for the FedEx-BWI Ramp, at least once,
concerning the need to provide ADA accommodations for Lockhart. Furthermore,
Connorsas well as Hanrattywas placed on notice of ADA compliance problems at
the FedEx-BWI Ramp when Lockhart filed his charge of discrimination with the EEOC
in October 2001.
Id. at 375. The court noted that defendant did not even provide the charging party with a copy of
its ADA reasonable-accommodation request form until three years after he started work, the
same month he was fired.
Cir. 2007), affirmed the award of $300,000 on a jury verdict for the ADA charging party,
holding that punitive damages were permissible where back pay has been awarded, even if no
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other legal compensatory damages are awarded. It held that awards of back pay and front pay
serve a compensatory function. The court also gave short shrift to defendants argument that the
EEOC had failed to show malice or reckless disregard of the law:
There was sufficient, albeit disputed, evidence to support the jury finding that
DuPont intentionally discriminated against Barrios with malice or with reckless disregard
for her rights. DuPont was aware of its responsibilities under the ADA. Yet, viewed in
the light most favorable to the verdict, DuPont made Barrioss job more difficult. The
company placed Barrioss printer over one hundred feet from her desk in spite of her
walking difficulties, whereas other lab clerks printers were adjacent to their desks.
DuPont refused to allow Barrios to demonstrate her ability to evacuate before she was
terminatedfor inability to evacuate. The company spent years trying to convince
Barrios to retire on disability. But the crowning evidentiary blow against DuPont is that
after Barrios attempted to get her job back, a DuPont supervisor stated that he no longer
wanted to see her crippled crooked self, going down the hall hugging the walls. The
supervisors denial of this remark under oath, like DuPonts rejoinder to other negative
evidence, was subject to the jurys credibility assessment. The jury likewise could have
rejected DuPonts good-faith defense based on the conclusory assertions by two DuPont
employees that they comply with the law. . . .
(Citation omitted.)
compensatory-damages award under the Ohio Civil Rights Act, and held that plaintiff had shown
entitlement to punitive damages under Ohio law. Its description appears quite similar to Federal
law. The court relied on comparators to show entitlement to punitive damages:
The record includes evidence that New York Life consciously disregarded Morgan's right
to be free from age discrimination. While New York Life correctly argues that courts
should not second guess a company's business decisions, the record establishes quite
clearly that the company found extenuating circumstances in certain instances when a
younger managing partner had performance issues. This was not the case with Morgan
(or other older managing partners).
Parker v. General Extrusions, Inc., 491 F.3d 596, 603-04, 100 Fair Empl.Prac.Cas.
(BNA) 1489 (6th Cir. 2007), reversed the lower courts grant of judgment as a matter of law to
the Title VII sexual harassment defendant. The court held that the evidence as to the actions of
the Human Relations Manager in hushing things up allowed the jury to award punitive damages
against defendant:
It is unnecessary to take issue with the district court's conclusion that Maloney
bore no malice toward Parker, because a review of the record indicates quite clearly that
Maloney was, at the very least, recklessly indifferent to her plight. Significantly, after
Maloney received the first complaint from the plaintiff regarding the metal throwing
incident with Rendes, Maloney immediately took Rendes's side without any
investigation. When he finally did investigate, he simply spoke to Rendes and, based on
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Rendes's denial of any wrongdoing, took no disciplinary action whatever.
After Parker complained to Maloney again, this time about the intercom incident,
Rendes was initially told that he had been accused of sexual harassment. However,
Rendes was not ultimately punished for sexual harassment, but instead was written up for
the relatively minor offense of horseplay. Rendes testified that at the meeting about this
incident, Maloney chuckled when Rendes made a sexually offensive comment about
Parker in Maloney's presence. Importantly, Rendes testified that after this meeting he got
the impression that management was looking for a reason to get [Parker] out because
she complained. When asked to clarify whether he specifically meant her complaints
about sexual harassment, Rendes said that it related to Parker trying to get me on sexual
harassment. Parker testified that Maloney told her about the result of the meeting in a
public place, in front of other employees, in an effort to embarrass her.
In response to Kopkash's e-mail to Maloney regarding the fan incident with Eli
Rodriguez, Maloney looked into the circumstances but did nothing to stop the foreman
from punishing Parker for absenteeism. Informed about the letter from Parker's counsel,
Maloney did undertake investigation, but neither he nor higher-up management assigned
the investigation to someone else, despite the fact that Maloney himself was named as
part of the basis for the complaint.
Without question, oversights such as these, whether intentional or merely reckless
in the extreme, could lead a jury to infer that the investigation was not taken seriously.
Finally, although Parker's departure from the company hindered Maloney's investigation
into the final incident with Malwori, Maloney admitted that he had told the foreman to
tell Parker that he would investigate the next day, but then did not come in the next day
and, moreover, lied about his reason for doing so. Additionally, Harvey Toy testified that
in his role as Parker's advocate, he questioned Maloney about Parker's complaints, and
Maloney replied, This is a mill-type environment. If she doesn't like it here, she can go
get a job somewhere else. The overt callousness of this response could only have
convinced the jury that Maloney did not take Parker's complaints seriously.
in making promotions to the rank of Captain. The court held that plaintiffs were entitled to
punitive damages:
As the plaintiffs correctly note, there is some evidence in the record that the
defendants at times failed to require the Chief to comply with their policies mandating
that he submit various paper records to the Board along with a candidate for promotion.
. . . During the liability phase, the jury found the personal participation of the
Commissioners in discrimination, and this finding would suggest that the jury concluded
that the Commissioners had done more than simply evaluate single candidates that had
come before them, as the statute requires. The plaintiffs also produced evidence of the
apparent racial animus of Chief Jones of which the Commissioners were aware, and
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introduced the 2001 Dimow report. This evidence could be interpreted as having put the
Commissioners on notice that the promotional policies in effect in the Police Department,
over which they had authority, were resulting in a quickly changing racial make-up
exhibiting an under-representation of white males on the command staff. Taking that
evidence in the light most favorable to the plaintiffs and in light of the jurys verdict, the
Commissioners knew about a problem, failed to act to control it, as the responsibility of
their office required them to do, and knowingly participated in its continuance. This
evidence permitted a jury to find reckless or callous indifference to the federally
protected rights of the plaintiffs, and we must therefore conclude that the district court
did not abuse its discretion in submitting the issue of punitive damages to the jury.
EEOC v. Indiana Bell Telephone Co., 256 F.3d 516, 52628, 86 FEP Cases 1, 80 E.P.D.
40,590 (7th Cir. 2001) (en banc), affirmed the judgment of liability for sexual harassment,
holding that the employers asserted reason for not taking effective action against the alleged
harasserthat he would file a grievance under the collective bargaining agreement and be
reinstatedwas irrelevant on liability but was relevant to the issue of the employers state of
mind with respect to a punitive damages award. The court held that its exclusion was prejudicial
error, and remanded the case for a new trial on punitive damages.
entitled to the $100,000 awarded for punitive damages. The court noted that defendants
President testified that he and corporate counsel were aware of the law on disability
discrimination. The court continued: Titan also had knowledge of the federal disability
discrimination laws because it had been a defendant in two federal disability discrimination cases
that were ultimately appealed to our circuit. Id. at 991 (citations omitted). The court continued:
Along with this strong evidence of Titans familiarity with disability
discrimination laws at the time it made the decision, Titans inconsistent behavior at the
time of the decision and its inability to explain its behavior could lead a reasonable jury
to infer that Titan knew it might be acting in violation of federal law. In short order,
Titan accepted that Chalfant passed his physical, notified him that he would be hired,
changed the results of his physical to failed and notified him that he would not be
hired. Until Luthins sudden memory improvement at trial, no one at Titan could say who
made the decision to alter the outcome of the physical examination from pass to fail,
and no one from Titan ever explained the impetus for that change. Instead, each person
simply denied that he or she had any involvement at all in the decision not to hire
Chalfant. A reasonable jury could infer that this unusual decision-making process
occurred because Titan was aware at the time it decided not to hire Chalfant that it may
[have been] acting in violation of federal law.
Allen v. Tobacco Superstore, Inc., 475 F.3d 931, 94243, 99 FEP Cases 1127 (8th Cir.
2007), affirmed the judgment for the Title VII racial-discrimination and retaliation plaintiff, but
held that plaintiff was not entitled to punitive damages because plaintiffs insubordination was
not enough to justify defendants failure to promote her, but was enough to disprove malice. The
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court relied on the fact that other employees were fired for insubordination, but TSI gave some
deference to Allen and transferred her, rather than terminating her as TSI terminated Lovell. Id.
at 943. The court also relied on an I was overwhelmed defense, stating:
In addition, the record depicts TSI as a rapidly growing company with inadequate,
rather than malicious, personnel procedures. Cobb testified when he started with TSI in
1993, TSI had only one store, and by 2003, TSI had eighty-two stores. Cobb further
testified TSI opened eleven stores during the eight-week period beginning December 15,
2001, which suggests most of TSIs growth occurred after 2002. Cobb explained the
focus of the business was on profits rather than on the make-up of store personnel. Cobb
also explained in 2001 and 2002, to advance at TSI, an employee would ask to be
considered for a management position. Although TSIs rapid growth and promotion
practices fail to justify the racial disparity within TSIs management personnel, those
practices demonstrate justifiable business reasons or ineptness and not racial malice or
reckless indifference directed toward Allen. Neither Allen nor the record before us
demonstrates TSI acted with the requisite state of mind to support an award of punitive
damages.
Id. Judge Smith dissented in part as to this holding. Id. at 94546.
affirmed the judgment for the ADA retaliation plaintiff and found that plaintiff had shown an
adequate basis for the award of $100,000 in punitive damages:
Chryslers manager Richard Haynes was quoted as saying he was going to teach Salitros
a lesson, in circumstances that support the inference that the lesson to be learned was
either not to file EEOC charges or not to protest work assignments that he thought
exceeded his medical restrictions. Haynes testified that he had received training on the
Americans With Disabilities Act. A jury could conclude that Haynes acted in reckless
indifference to whether he was violating Salitross federally protected rights. Hayness
malice may be imputed to Chrysler because he was serving in a managerial capacity and
acting in the scope of his employment.
Webner v. Titan Distribution, Inc., 267 F.3d 828, 83738, 12 AD Cases 513 (8th Cir.
2001), reversed the award of $100,000 in punitive damages on the plaintiffs ADA claim and the
award of an equal amount on his State-law claim. The plaintiff had twice injured his back on the
job, and been off for long periods. At the time of his termination, he was working in a different
job with an accommodation that eased the strain on his back, and was meeting his production
target. When his attorney filed a proceeding to require the company to allow videotaping of his
work station for purposes of a workers compensation claim, the defendant fired the plaintiff and
stated it was because of his disability. The court held that there was insufficient evidence of
malice or reckless disregard:
Titans stated reasons for terminating Webnerthat his back injury precluded him from
performing all but light duty tasks, Titan was fearful that Webner would reinjure his
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back, and Titan did not have a job suited to his disabilitywhile culpable, do not rise to
the level of maliciousness required to sustain the jurys award of punitive damages.
Instead, Titans actions are consistent with an employer acting to protect itself against the
possible sporadic absence of an employee.
Id. at 837.
Bains LLC v. Arco Products Co., 405 F.3d 764, 774 (9th Cir. 2005), affirmed the
judgment of liability and the award of compensatory damages, but held that the award of $5
million in punitive damages to the Sikh-owned plaintiff was excessive and that the most that
could be allowed was between $300,000 and $450,000. The court rejected defendants argument
that it could not be held liable for punitive damages because only a low-level attendant had
engaged in discrimination:
The district court reviewed the evidence with care, and concluded, correctly, that
the jury could find that Davis was not a mere gas station attendant, but a supervisor.
While ARCO claims that Davis had no managerial responsibilities, the evidence
demonstrated that Davis had direct control over the daily fuel hauling operation and fuel
carriers. Moreover, immediately after the termination of the contract, Davis himself took
credit for getting Flying B terminated, bragging to non-Flying B drivers about his part in
kick[ing] those ragheads out of the facility.
Even were Davis not a supervisor, there can be no question under the evidence
that Lawrence was. Lawrence was ARCOs official in charge of the Seattle terminal and,
as Tim Reichert testified, Lawrence had full authority over safety issues at the terminal,
including the power to lock Flying B out of the facility. The jury could conclude that
when Flying B first complained to Lawrence about Daviss racial harassment, Lawrence
simply made excuses for Daviss behavior and did nothing about it. And when Flying B
repeated its complaints several times, Lawrence did nothing to restrain Davis, but instead
terminated Flying B without even the thirty-days notice required by the contract.
Davis testified that Lawrence was present on occasions when he called the Flying
B drivers ragheads. The jury did not have to conclude, as ARCO urges, that Lawrence
locked out Flying B only for safety violations. The jury could conclude, to the contrary,
that Lawrence perceived a conflict between Flying B and Davisover Daviss
harassment and intentional delays of those he called ragheadsand that Lawrence
chose to back up Davis. That suffices for corporate liability. If a company official with
sufficient authority to subject the company to vicarious liability backs-up a racist
employee's racially-motivated conduct instead of protecting the victim from the
employee, then the company is liable, even if the supervisors motivation is non-racial,
such as loyalty to his subordinate or a desire to avoid conflict within the company. A
written antidiscrimination policy does not insulate a company from liability if it does not
enforce the antidiscrimination policy and, by its actions, supports discrimination.
(Footnote omitted).
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8. Action Taken Pursuant to Legal Advice
Farias v. Instructional Systems, Inc., 259 F.3d 91, 102 (2nd Cir. 2001), affirmed the
judgment of liability on a jury verdict for Title VII retaliation plaintiff Robinson, and affirmed
the denial of punitive damages. Defense counsel had advised the defendant not to offer a
severance payment because the plaintiff had filed an EEOC charge. The court held that whether
or not the advice was appropriate, action taken pursuant to advice that the action is consistent
with the law is insufficient to support an award of punitive damages under the standard
articulated in Kolstad.
9. Vicarious Liability
Hertzberg v. SRAM Corp., 261 F.3d 651, 66162 (7th Cir. 2001), cert. denied, 2002 WL
232975, 70 USLW 3395, 70 USLW 3514 (U.S., Feb. 19, 2002) (No. 01829), affirmed the
award of $20,000 in punitive damages to the Title VII sexual harassment plaintiff, rejecting the
defendants argument that it could not be held liable for punitive damages because the plaintiff
had complained unsuccessfully to her supervisor and to the plant manager, but had not
complained to the company President, the last step in the companys internal complaint
procedure. The court first described Circuit precedent applying Kolstad on the question of
vicarious liability. In pertinent part, including its footnote 9, it stated:
This court applied the Kolstad standard in Bruso v. United Airlines, Inc., 239
F.3d 848 (7th Cir. 2001). In Bruso, we discussed Kolstads three-part framework for
determining whether an award of punitive damages is proper under the statutory
standard. 239 F.3d at 857. The first step requires the plaintiff to demonstrate that the
employer acted with the requisite mental state. Id. However, we continued,
[t]he employer need not be aware that it is engaging in discrimination. Instead, it
need only act in the face of a perceived risk that its actions will violate federal
law. A plaintiff may satisfy this element by demonstrating that the relevant
individuals knew of or were familiar with the antidiscrimination laws and the
employers policies for implementing those laws.
Id. at 857-58 (internal quotation marks and citations omitted).
9
Once the plaintiff has met
this burden, the plaintiff must demonstrate that the employees who discriminated against
him are managerial agents acting within the scope of their employment. Id. However,
even if the plaintiff meets these burdens, the employer may avoid liability for punitive
damages if it can show that it engaged in good faith efforts to implement an
antidiscrimination policy. Id.
_________
9
Another way a plaintiff may meet this burden is by showing that the
defendants employees lied, either to the plaintiff or to the jury, in order to cover up their
discriminatory actions. Bruso v. United Airlines, Inc., 239 F.3d 848, 858 (7th Cir.
2001).
The court held that there was evidence that the plaintiffs supervisor and plant manager knew
about the antidiscrimination laws. Id. at 66263. It held that Lester was not a managerial agent
for purposes of punitive damages liability, because he had little discretion in hiring, disciplining
or terminating employees that reported to him. Id. at 663. It held that the jury could reasonably
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find that Plant Manager Margelos was a managerial agent because he hired the staff for the Elk
Grove Village plant, he took care of personnel issues and he had the authority to discipline and
terminate the employment of those who worked for him, directly or indirectly. Id. Finally, the
court held that a reasonable jury could reject the defendants good faith defense because the
plaintiffs co-worker made over a hundred demeaning comments about women in four months,
the plaintiffs supervisor told her she was being too emotional and put his hand on her knee, and
the Plant Manager failed to follow the companys policy by failing to put the complaint in
writing, and never did take meaningful action. Id. at 655, 66364.
Bains LLC v. Arco Products Co., Bains LLC v. Arco Products Co., 405 F.3d 76 (9th Cir.
2005), affirmed the judgment of liability and the award of compensatory damages, but held that
the award of $5 million in punitive damages to the Sikh-owned plaintiff was excessive and that
the most that could be allowed was between $300,000 and $450,000. The court rejected
defendants argument that it could not be held liable for punitive damages because only a low-
level attendant had engaged in discrimination:
The district court reviewed the evidence with care, and concluded, correctly, that
the jury could find that Davis was not a mere gas station attendant, but a supervisor.
While ARCO claims that Davis had no managerial responsibilities, the evidence
demonstrated that Davis had direct control over the daily fuel hauling operation and fuel
carriers. Moreover, immediately after the termination of the contract, Davis himself took
credit for getting Flying B terminated, bragging to non-Flying B drivers about his part in
kick[ing] those ragheads out of the facility.
Even were Davis not a supervisor, there can be no question under the evidence
that Lawrence was. Lawrence was ARCOs official in charge of the Seattle terminal and,
as Tim Reichert testified, Lawrence had full authority over safety issues at the terminal,
including the power to lock Flying B out of the facility. The jury could conclude that
when Flying B first complained to Lawrence about Daviss racial harassment, Lawrence
simply made excuses for Daviss behavior and did nothing about it. And when Flying B
repeated its complaints several times, Lawrence did nothing to restrain Davis, but instead
terminated Flying B without even the thirty-days notice required by the contract.
Davis testified that Lawrence was present on occasions when he called the Flying
B drivers ragheads. The jury did not have to conclude, as ARCO urges, that Lawrence
locked out Flying B only for safety violations. The jury could conclude, to the contrary,
that Lawrence perceived a conflict between Flying B and Davisover Daviss
harassment and intentional delays of those he called ragheadsand that Lawrence
chose to back up Davis. That suffices for corporate liability. If a company official with
sufficient authority to subject the company to vicarious liability backs-up a racist
employee's racially-motivated conduct instead of protecting the victim from the
employee, then the company is liable, even if the supervisors motivation is non-racial,
such as loyalty to his subordinate or a desire to avoid conflict within the company. A
written antidiscrimination policy does not insulate a company from liability if it does not
enforce the antidiscrimination policy and, by its actions, supports discrimination.
Id. at 774 (footnote omitted).
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Swinton v. Potomac Corp., 270 F.3d 794, 810, 87 FEP Cases 65 (9th Cir. 2001),
affirmed the judgment on a jury verdict for the 1981 and Washington State-law racial
harassment plaintiff. The plaintiff was subjected to a frequent barrage of racist slurs and jokes,
some of them in the presence of a member of management. The court agreed with other Circuits
that the inaction of even relatively low-level supervisors may be imputed to the employer if the
supervisors are made responsible, pursuant to company policy, for receiving and acting on
complaints of harassment. Here, such an official not only listened to the racist slurs but laughed
at the jokes and told some himself.
Wilbur v. Correctional Services Corp., 393 F.3d 1192, 1205 (11th Cir. 2004), affirmed
the grant of judgment as a matter of law to the Title VII sexual harassment defendant because the
jurys answers to the special interrogatories removed any basis for the award of damages. The
court held that, even assuming the claim for punitive damages was not moot, the lower court did
not err in dismissing it. It reasoned that, although plaintiffs supervisors may have acted with
malice or reckless indifference towards her, she failed to establish a sufficient basis for
imputing their conduct to CSC. (Citation omitted.) The court added:
And, in this Circuit, punitive damages will ordinarily not be assessed against employers
with only constructive knowledge of harassment. . . . In order to ground liability in an
employer, the plaintiff must establish that the discriminating employee was high[] up the
corporate hierarchy or that higher management countenanced or approved his
behavior. . . . Even if, as Wilbur asserts, CSCs corporate office had notice of the alleged
sex discrimination as of February 2002, when she complained to CSCs human resources
department, Wilbur has offered nothing to establish that CSCs higher management
countenanced or approved the offending behavior of Wilburs supervisors. Moreover,
to hold otherwise seems irreconcilable with the jurys finding that CSC had exercised
reasonable care to prevent and correct promptly any sexually harassing behavior in the
work place. . . . Therefore, even if the issue is not moot, we conclude that the district
court did not err in dismissing Wilburs punitive damages claim.
(Citation omitted.)
Miller v. Kenworth of Dothan, Inc., 277 F.3d 1269, 1280, 87 FEP Cases 1209 (11th Cir.
2002), reversed the award of $50,000 in punitive damages against the Title VII and 1981 racial
and ethnic harassment defendant because the plaintiff had not complained and the defendants
constructive knowledge of the harassment, while sufficient for liability, was not sufficient for
punitive damages.
10. Good-Faith Defense
Monteagudo v. Asociacion de Empleados del Estado Libre Asociado de Puerto Rico, 554
F.3d 164, 175-76, 105 FEP Cases 494 (1st Cir. 2009), affirmed the judgment on a jury verdict
for the Title VII and Puerto Rican law sexual harassment plaintiff. The court held that defendant
did not preserve its argument that plaintiff had failed to show entitlement to the $300,000 in
punitive damages awarded under Title VII, because its Rule 59 motion and its motion for
judgment as a matter of law did not present any developed argument on this point. In its new
trial and remittitur motion, AEELA did not provide any developed argumentation as to why
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Monteagudo should not be entitled to punitive damages. Further, AEELA did not cite any cases
for its proposition that punitive damages are unwarranted. [T]heories not raised squarely in the
district court cannot be surfaced for the first time on appeal. Id. at 176 (citations omitted). The
court held that the lower court did not commit plain error in failing to grant remittitur:
From our review of the record, AEELA has not provided sufficient proof that it
had in place an active mechanism for renewing employees' awareness of the policies
through either specific education programs or periodic re-dissemination or revision of
their written materials; FN13 testimony by appellants' witnesses that indicated that
supervisors were trained to prevent discrimination from occurring; or examples in
which their anti-discrimination policies were successfully followed. FN14 Id. (providing
a non-exhaustive list of ways an employer could demonstrate good faith compliance).
While having all of these factors is not necessary to qualify for the defense, see id.,
AEELA has not provided sufficient evidence that it fulfilled any of these factors. Thus,
the district court did not commit plain error in upholding the punitive damages award and
denying a new trial on damages.
FN13. Notably, Monteagudo testified that she had never been offered a seminar
on sexual harassment and that she was unaware if any sexual harassment seminars had
been given to her supervisors.
FN14. We acknowledge that AEELA was rebuffed by the district court in its
attempt to show how its policy was successfully implemented in 2005. However, as we
noted in assessing AEELA's evidentiary claim above, this evidence was not proffered to
show that AEELA should not have been liable for punitive damages. Rather, AEELA
attempted to introduce Medina's testimony in order to bolster its Faragher-Ellerth
defense. This was evidence which the district court was within its discretion to exclude.
Even if the district court had considered the 2005 corrective measure AEELA had
employed pursuant to its policy, the district court still did not commit plain error in
upholding the punitive damages award. This is because AEELA failed to provide
sufficient evidence of other indicators of good faith compliance and because the 2005
corrective measure occurred three years after the sexual harassment in this case. See id.
Id. at 176.
compensatory damages and $160,000 in punitive damages. The court rejected defendants
argument that any evidence of good faith bars punitive damages: Wal-Marts position is wrong
and would allow companies to pay lip service to the law while blatantly violating it. The court
added: On these facts, a jury could easily conclude that the open door policy was a sham
designed to give the appearance, but not the reality, of an effort to comply with the law, and that
Wal-Mart acted with reckless disregard of Arrietas rights.
Bryant v. Aiken Regional Medical Centers Inc., 333 F.3d 536, 54849, 92 FEP Cases 233
(4th Cir. 2003), cert. denied, 540 U.S. 1106 (2004), reversed the Title VII and 1981 award of
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$210,000 in punitive damages. The court held that defendant had made a good-faith attempt to
comply with the law:
. . . ARMC had an extensively implemented organization-wide Equal Employment
Opportunity Policy. That policy, a version of which was included in the employee
handbook, stated that all persons are entitled to equal employment opportunity
regardless of race and that it is and shall continue to be our policy to provide promotion
and advancement opportunities in a nondiscriminatory fashion. ARMC also created a
grievance policy encouraging employees to bring forward claims of harassment,
discrimination, or general dissatisfaction, and employees were explicitly informed that
they would not be retaliated against for making a complaint. There was also a carefully
developed diversity training program that included formal training classes and group
exercises for hospital employees. And ARMC voluntarily monitored departmental
demographics as part of an ongoing effort to keep the employee base reflective of the
pool of potential employees in the area. These widespread anti-discrimination efforts, the
existence of which appellee does not dispute, preclude the award of punitive damages in
this case.
Hatley v. Hilton Hotels Corp., 308 F.3d 473, 477, 89 FEP Cases 1861 (5th Cir. 2002),
reversed the grant of judgment as a matter of law on plaintiffs Title VII sexual harassment
claims but affirmed the denial of punitive damages. The court held that, notwithstanding the
inadequacy of the defendants handling of plaintiffs internal harassment complaints and earlier
complaints filed by others, the defendant made out its affirmative defense:
Davidson was arguably an agent in a managerial capacity, and she may have acted with
malice or reckless indifference to the rights of the plaintiffs within the scope of her
employment. However, these actions were contrary to Ballys good faith effort to
prevent sexual harassment in the workplace, as is evidenced by the fact that Ballys had a
well-publicized policy forbidding sexual harassment, gave training on sexual harassment
to new employees, established a grievance procedure for sexual harassment complaints,
and initiated an investigation of the plaintiffs complaints. These actions evidence a good
faith effort on the part of Ballys to prevent and punish sexual harassment.
Parker v. General Extrusions, Inc., 491 F.3d 596, 605, 100 Fair Empl.Prac.Cas. (BNA)
1489 (6th Cir. 2007), reversed the lower courts grant of judgment as a matter of law to the Title
VII sexual harassment defendant. The court held that the good-faith defense was not simply
established by the mere existence of a written policy, and was for the jury. It stated: Here, the
plaintiff put on evidence disputing the extent of any sexual harassment training, as well as proof
calling into question not only the credibility but the very sincerity of enforcement efforts on the
defendant's part.
Madison v. IBP, Inc., 257 F.3d 780, 795, 86 FEP Cases 77, 80 E.P.D. 40,628 (8th Cir.
2001), petition for cert. filed, 70 USLW 3445 (U.S., Dec. 19, 2001) (No. 01985), held that the
plaintiff had shown enough evidence to support an award of punitive damages by showing
egregious harassment, repeated complaints, and repeated failures to act on the complaints. The
court rejected the companys argument that it was entitled to the defense for good-faith efforts to
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comply, inasmuch as it had adopted a policy and engaged in regular training of its managers.
The court stated:
Madison presented a great deal of evidence from which the jury could find that
IBP employees in a managerial capacity acted with malice or reckless disregard to her
civil rights in failing to protect her from illegal conduct or to promote her. The evidence
indicated that supervisors and managers were among those who harassed and abused her.
High level employees such as Personnel Director Alberto Olguin and Plant Manager
Larry Moser, both of whom had authority to terminate employees, ignored her complaints
about illegal harassment and discrimination, failed to investigate whether her civil rights
were being violated, and did not document illegal behavior or discipline perpetrators.
The companys EEO Coordinator, Bernielle Ott, was present at a mediation session at
which Madison told Ott and other IBP representatives that she was being physically and
verbally harassed almost daily and that she had been repeatedly denied promotions
because of her sex. Neither Ott nor any other company representative took action to
investigate these allegations or to ensure that Madisons civil rights were not being
violated.
IBP contends that it should escape liability for punitive damages because it made
good faith efforts to comply with federal employment laws. The company presented
evidence at trial that it had a corporate policy prohibiting racial and sexual discrimination
and harassment, that it maintained an affirmative action plan, and that it put on an annual
two hour training session for plant managers on the Legal Aspects of Supervision.
There was also evidence, however, that the written corporate policies were not carried out
at the Perry plant and that the company did not make good faith efforts to comply with
federal civil rights laws.
Employers have an affirmative obligation to prevent civil rights violations in
the workplace. . . . There was evidence that IBP did not have effective procedures in
place to encourage employees to come forward with employment complaints or to protect
them from retaliation. Madison and other employees complained to management on
many occasions that their civil rights were being violated, but management did not take
reasonable care to investigate or stop such behavior. There was evidence that Personnel
Director Olguin, the manager charged with addressing employee grievances, conflicts,
and disciplinary matters, did not investigate many complaints of harassment and
discrimination. On at least fourteen occasions, an employee was counseled for engaging
in harassing conduct, but nothing was recorded in his personnel file. Training
Coordinator Mike Miller ignored Madisons reports that male line workers were grabbing
and fondling her, did nothing to discipline her harassers, and relied on an unsubstantiated
report from one line worker that Madison had willingly engaged in horseplay on the line.
When Madison informed Assistant Personnel Director Sue Menhusen that she was being
harassed, Menhusens response was that many of the Hispanic males working at the plant
havent been in the country for very long and dont take direction very well from
females. There was also evidence that IBP maintained policies which actually served to
punish victims and discourage them from reporting illegal behavior, such as telling an
alleged harasser the identity of a complainant and putting counseling for sexual
harassment notations in the personnel files of any complaining employee.
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harassment plaintiff. The plaintiff prevailed on a negligence theory of liability, rather than
vicarious liability, because his chief harasser, while a supervisor, was not in the chain of
command over the plaintiff. As described above, the affirmative defense was not available to the
defendant. The court rejected the defendants argument that punitive damages were
inappropriate because of its written materials forbidding harassment and putting in place anti-
harassment procedures. Id. at 810. The court seemed to treat the unavailability of the
affirmative defense to liability in a harassment case as tantamount to the unavailability of a
good-faith defense to punitive damages, but any such suggestion would be dictum because it also
relied on the ineffectiveness of the policy:
Surely, U.S. Mat cannot claim to have implemented its anti-harassment policy in good
faith (even if it were conceived in good faith) when the very employee (Stewart) charged
with carrying it out vis-a-vis Swinton laughed along with the nigger jokes, did nothing
to stop them, and never reported the repeated incidents to higher management. U.S. Mat
made a considered judgment to place responsibility for reporting on an employees direct
supervisor. It could well have required some other supervisor or manager further up the
chain to be the point of contact. And it could have impressed upon its supervisors, like
Stewart, whom it tasked with accepting complaints of harassment, the (we would hope)
obvious point that repeatedly subjecting a black employee to nigger jokes is wholly
unacceptable, and at odds with basic anti-discrimination principles. But it chose not to,
and U.S. Mat cannot now be heard to protest that Stewarts position was too low-level
to warrant imputation of his actions or inaction to the company.
Id. at 811.
Harsco Corp. v. Renner, 475 F.3d 1179, 118990, 99 FEP Cases 1145 (10th Cir. 2007),
affirmed the judgment of liability on a jury verdict for the Title VII sexual harassment plaintiff,
but reversed the award of punitive damages where defendant had adequate policies and plaintiff
failed to link local managers inactions to defendant. Harsco Corporation submitted substantial
evidence showing that the company established comprehensive polices and training procedures
in an effort to comply with Title VII. In response, Ms. Renner alleges that her supervisors were
not properly trained, but the only evidence she provides of that faulty training is the fact that her
supervisors did not comply with the companys policies and procedures in various respects. If
failure of supervisors to comply with company policy were sufficient evidence to prove the lack
of a good-faith effort to train, the Kolstad defense would be effectively eliminated. Id. at 1189.
The court rejected plaintiffs argument that defendants HR manager was aware of the
harassment, because it was based on one remark at trial, and more than a scintilla of evidence
was needed. Id. at 118990. The court rejected plaintiffs argument that Kolstad did not apply
on the ground that this was assertedly a direct-liability case rather than a vicarious-liability case,
finding that she waived the theory by failure to mention it before her reply brief on appeal, and
failing to object to a Kolstad instruction at trial. Id. at 1190.
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(11th Cir. 2008), affirmed the judgment on a jury verdict for the Title VII and 1981 retaliation
plaintiff. Plaintiff was fired immediately after he refused to sign an agreement to arbitrate his
pending charge. Because he was willing to arbitrate future claims, the dispute was only about
arbitration of his pending employment discrimination claim. The court held that there was
sufficient evidence that Bagby was recklessly indifferent to plaintiffs Federally guaranteed
rights in requiring him to sign the arbitration agreement and refusing to allow a modification that
would have excluded his pending claim. The court held that the evidence on plaintiffs
underlying racial harassment case also showed recklessness. Id. at 128081. The court rejected
defendants argument that its policy on harassment barred the imposition of punitive damages,
because the policy existed in name only:
Bagby Elevator contends that it attempted in good faith to comply with the civil
rights laws because it adhered to an antidiscrimination policy, but the record supports the
finding of the jury that the antidiscrimination policy of Bagby Elevator was totally
ineffective. Goldsmith introduced evidence that managers at Bagby Elevator, namely,
Steber and Bowden, had actual notice that white employees had uttered racial slurs in the
workplace but did not discipline those employees. Goldsmith offered proof that other
employees who had filed EEOC charges and complained of racial slurs were soon
afterward terminated. Goldsmith testified that the policy was ineffective and that it did
not stop Farley from making racial comments because supervisors did not follow the
policy. Arthur Bagby, president and owner of Bagby Elevator, testified that he was not
that good on the [antidiscrimination] policy, and he admitted that he did not know how
he would discipline a supervisor for using racial slurs or failing to discipline an employee
for using racial slurs. Both Bowden and Steber acknowledged that the policy did not
prevent Farley from making a racial slur, and Steber testified that Farley could have been,
but was not, terminated for making one racial slur. Goldsmith testified that Bagby
Elevator did not provide training regarding discrimination in the workplace.
Id. at 128182.
11. Effect of Post-Event Remediation
Lust v. Sealey, Inc., 383 F.3d 580, 585, 94 FEP Cases 645 (7th Cir. 2004), affirmed the
judgment for the Title VII promotional discrimination plaintiff except for punitive damages. The
court stated in dictum that the general tort rule barring evidence of curative actions as showing
the steps that could have been taken earlier to avoid injury, is not limited to tort cases and could
reasonably be applied in employment discrimination cases as well. It reduced the award of
punitive damages from the statutory cap to $150,000, stating:
We are concerned that to uphold the award of the maximum damages allowed by
the statute in a case of relatively slight, because quickly rectified, discrimination would
impair marginal deterrence. If Sealy must pay the maximum damages for a relatively
minor discriminatory act, it has no monetary disincentive (setting aside liability for back
pay) to escalate minor into major discrimination. Its as if the punishment for robbery
were death; then a robber would be more inclined to kill his victim in order to eliminate a
witness and thus reduce the probability of being caught and punished, because if the
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murdering robber were caught he wouldnt be punished any more severely than if he had
spared his victim. . . . In light of this consideration and this courts treatment of punitive-
damages awards in similar cases, we believe that the maximum such award that would be
reasonable in this case would be $150,000.
(Citation omitted.)
some of them in the presence of a member of management. The defendant argued that it was
entitled to a new trial because the lower court had excluded evidence of one of the post-suit steps
it had taken to remedy discrimination. The court stated that evidence of post-charge remediation
would not automatically bar the imposition of punitive damages, that the trial judge acts as a
gatekeeper as to the relevance of the evidence, and that the jury can decide that the evidence is
either window-dressing designed to avoid an award of punitive damages, or bona fide evidence
of repentance lessening the need for additional deterrence in the form of punitive damages. Id.
at 815 (footnote omitted). In the case at bar, the trial judge allowed evidence of the post-charge
investigation conducted by the company, and only barred evidence that the defendant put all of
its supervisors and managers through anti-harassment training two months after the plaintiff filed
suit. The court held that the trial court did not abuse its discretion in excluding this evidence and
explained: Such evidence, if introduced, would have done little, if anything, to undermine the
uncontroverted evidence that, even after everyone in management became fully cognizant of
Swintons allegations, no onenot Pat Stewart, none of those at U.S. Mat who had witnessed
the harassment and had done nothing about it, and none of the workers who had actually hurled
the epithet nigger at Swintonwas ever fired, demoted, or in any way disciplined. Id. at 816
(footnote omitted). Nor was the court persuaded that the exclusion of the evidence was
prejudicial in light of the jury argument of plaintiffs counsel, because the company did nothing
in response to the harassment, because the defendant made no contemporaneous objection and
the plain error standard was not satisfied, because the company did introduce evidence of its
investigation, and because the argument actually referred to the companys failure to take action
prior to the harassment of the plaintiff. Id. at 81617.
12. Instructions
Arrieta-Colon v. Wal-Mart Puerto Rico, Inc., 434 F.3d 75, 8990, 17 AD Cases 769 (1st
Cir. 2006), affirmed the judgment for the ADA harassment plaintiff on a jury verdict for $76,000
in compensatory damages and $160,000 in punitive damages. The court held that the following
instruction was close enough to Kolstad to be permissible:
In order to find punitive damages, you must find that the acts of the Defendant
which proximately caused actual damages to the Plaintiff were maliciously or wantonly
done. If you so find, you may add to the award of actual damages such amount as you
shall agree to be proper as punitive damages.
An act or failure to act is maliciously done if prompted or accompanied by ill-
will, spite or grudge, either toward the injured person individually or towards all persons
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in one or more groups or categories of which the injured person is a member. An act or
failure to act is wantonly done if done in reckless or callous disregard of, or indifference
to the rights of one or more persons, including the injured person.
punitive damages, but that the jury should have been instructed to award punitive damages in
accordance with each defendants actual fault:
We note that the punitive damages award was equal with respect to each
Commissioner and with respect to Chief Jones, apparently irrespective of the fact that
some Commissioners sat on the Board over a significantly smaller number of promotions
than others and the concededly discriminatory acts of Chief Jones. [P]unitive damages
should be proportional to the wrongfulness of each defendants actions. . . . Although
the jury was instructed to consider the reprehensibility of the Defendants conduct and
the likelihood that a defendant would repeat the conduct absent an award of punitive
damages . . . it should have been more clearly instructed that each individual defendants
actions and fault must serve as the basis for fashioning an appropriate punitive damages
award.
13. Amount
McCombs v. Meijer, Inc., 395 F.3d 346, 359, 95 FEP Cases 1 (6th Cir. 2005), affirmed
the judgment on a jury verdict for the Title VII sexual harassment plaintiff. Plaintiff recovered
$100,000 in punitive damages. The court rejected defendants argument that the lower court
erroneously admitted evidence of its gross annual sales, because high volume does not mean
high profit. The court held that defendant had not shown it was prejudiced, or that it was unable
to pay the award. Judge Gilman dissented.
punitive damages, and that State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S.
408 (2003), did not require any reduction in the punitive damages because the compensatory
damages were relatively low, and the State Farm ratios do not apply in such instances.
See the discussion of Lust v. Sealey, Inc., 383 F.3d 580, 590-91, 94 FEP Cases 645 (7th
Cir. 2004), in the section below on The Damages Caps in the 1991 Act.
2002), affirmed the judgment on a jury verdict for the Title VII retaliation plaintiff. The court
held that plaintiff was entitled to the reduced $300,000 judgment for compensatory and punitive
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damages, reduced from the jury award of $6,000 in compensatory damages and $3.5 million in
punitive damages. The court explained its approval of the amount:
Ryans protestations notwithstanding, there was more than enough evidence for
the jury to find its conduct sufficiently egregious to justify the maximum legally possible
punitive damages award. Indeed, that is what the jurys very high monetary assessment
signaled. (It is therefore not necessary for us to consider whether punitive damages
awards that must be adjusted because of the statutory cap should simply be lopped off at
the maximum, or if they should be reduced to a number less than or equal to the statutory
cap based on a proportional assessment of culpability.) This was not a case where there
was a smidgin of retaliation, such as a temporary suspension or minor loss of pay.
Instead, Ryan, having recently informed its female pilots to put complaints of sexual
harassment and discrimination in writing, terminated Fine within 24 hours of its receipt
of her complaint on these subjects precisely because she had written the letter. Nor can
Ryan credibly argue that its actions were the result of a rogue supervisor, since its general
counsel and the president of the company both concurred in the decision. To accept
Ryans position here we would essentially have to hold that the statutory maximum for
punitive damages could never be awarded in a Title VII complaint where the plaintiff
prevailed only on her retaliation claim. We see no evidence that Congress sought to
enact such a rule, and we decline to endorse it. The damages award is affirmed.
Rowe v. Hussmann Corp., 381 F.3d 775, 94 FEP Cases 520 (8th Cir. 2004), affirmed the
jury verdict for the Title VII and Missouri Human Rights Act sexual harassment plaintiff in the
amounts of $ 500,000 in compensatory damages and $ 1 million in punitive damages. The court
relied on the fact that the harassment had continued over a period of four years, with no more
than a seven-month gap. The harasser had repeatedly touched plaintiffs breasts and buttocks,
and defendant did nothing for a long period of time although plaintiff complained two or three
times a month. The harasser threatened to rape and kill her. Defendant told plaintiff she should
be more understanding of the harasser since he only had an eighth-grade education, never fired
the harasser, and ultimately transferred plaintiff to a position where the harasser occasionally
came into her vicinity.
some of them in the presence of a member of management. The verdict affirmed by the court
was for $5,612 in back pay, $30,000 in emotional-distress damages, and $1,000,000 in punitive
damages. Id. at 801. The court rejected the defendants argument that its failure to stop the
racial slurs and jokes was not reprehensible because it was, at the end of the day, nothing more
than joking. It stated that the plaintiff made clear on the witness stand that he did not consider
the language a joke. The only African-American employee of about 140 at the U.S. Mat plant,
he was subject to daily abuse featuring the word nigger, perhaps the most offensive and
inflammatory racial slur in English, . . . a word expressive of racial hatred and bigotry.
MERRIAM-WEBSTERS COLLEGIATE DICTIONARY 784 (10th ed.1993). Id. at 817. The court
observed that the jurys verdict did not consider it a laughing matter and we do not hesitate
before agreeing. Id. The court also rejected the defendants argument that the plaintiff had not
complained, because the plant official who was the companys proxy for receiving complaints
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observed the harassment and did nothing to stop it. Id. at 81718. The court recognized that
verbal slurs and jokes are not as serious as actual violence or the threat of violence, but held that
the highly offensive language directed at Swinton, coupled by the abject failure of Potomac to
combat the harassment, constitutes highly reprehensible conduct justifying a significant punitive
damages award. Id. at 818. The court combined the back pay and compensatory damages
awards to obtain a total compensatory damages package of $35,600, and calculated the ratio of
punitive to compensatory damages as 28 to 1. The court stated: This is precisely the type of
case posited by the Court in BMWthe low award of compensatory damages supports a higher
ratio of punitive damages because of particularly egregious acts and noneconomic harm that
might have been difficult to determine. Id. The court emphasized that plaintiffs counsel
warned the jury not to go hog wild, had stated that an award of ten million dollars would be
wrong, and that they should be more moderate. In light of these admonitions, the court took the
verdict of one million dollars as a verdict calculated to punish unlawful conduct and deter its
repetition. Id. at 819. The court next turned to the magnitude of the harm, and stated:
But for Swintons decision that he couldnt take it any longer and thus had to quit,
nothing in the record suggests that U.S. Mat would have done anything to address a
workplace replete with racial and ethnic slurs, not only about blacks, but also directed at
other minorities and ethnic groups. The fact that the harm from unchecked racial
harassment occurring day after day cannot be calculated with any precision does not
deflate its magnitude.
Id. The court surveyed the decisions of other Circuits and held that, in light of the low
compensatory award, the ratio of 28 to 1 was constitutionally permissible. Id. at 81920.
Finally, the court refused to reduce the award in light of the analogous cap on damages for Title
VII violations. While the Title VII cap weighs in favor of a reduction, we also hasten to add
that Congress has not seen fit to impose any recovery caps in cases under 1981 (or 1983),
although it has had ample opportunity to do so since the 1991 amendments to Title VII. Id. at
820.
and $250,000 in punitive damages for racial and national origin discrimination in a RIF.
Hatley v. Hilton Hotels Corp., 308 F.3d 473, 477, 89 FEP Cases 1861 (5th Cir. 2002),
reversed the grant of judgment as a matter of law on plaintiffs Title VII sexual harassment
claims but affirmed the denial of punitive damages. The court held that, notwithstanding the
inadequacy of the defendants handling of plaintiffs internal harassment complaints and earlier
complaints filed by others, the defendant made out its affirmative defense:
Davidson was arguably an agent in a managerial capacity, and she may have acted with
malice or reckless indifference to the rights of the plaintiffs within the scope of her
employment. However, these actions were contrary to Ballys good faith effort to
prevent sexual harassment in the workplace, as is evidenced by the fact that Ballys had a
well-publicized policy forbidding sexual harassment, gave training on sexual harassmet
to new employees, established a grievance procedure for sexual harassment complaints,
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and initiated an investigation of the plaintiffs complaints. These actions evidence a good
faith effort on the part of Ballys to prevent and punish sexual harassment.
14. Waiver of Challenge to Amount
retaliation claim. The jury awarded $1.6 million in punitive damages award on the retaliation
claim, and the trial court granted defendants Rule 59 motion for a new trial on punitive
damages, holding that $190,000 was the largest amount constitutionally permissible. Plaintiff
then joined with defendant in petitioning for a reduction of the punitive-damages award to
$190,000. The petition was granted, and plaintiff appealed. The court held: It is settled law
that a plaintiff in federal court, whether prosecuting a state or federal cause of action, may not
appeal from a remittitur order he has accepted. Id. (citations omitted). The court held that
plaintiff could not escape this rule by petitioning, or joining with defendant in petitioning, for a
reduction. Id.
Local Union No. 38, Sheet Metal Workers Intern. Assn, AFL-CIO v. Pelella, 350 F.3d
73, 8990, 173 LRRM 2673, 173 LRRM 2843 (2d Cir. 2003), held that the LMRDA defendant
waived its right to challenge an award of $25,000 in punitive damages, where only $1 was
awarded in nominal damages, because the union had not raised the issue in the lower court. The
court held that it made no difference that State Farm was not decided until the appeal, because
State Farm discussed precedents predating the judgment as well as later precedents.
Hardeman v. City of Albuquerque, 377 F.3d 1106, 1122, 21 IER Cases 1096 (10th Cir.
2004), affirmed the judgment for $ 3.6 million in favor of the racial discrimination and First
Amendment retaliation plaintiff. The court held that defendants waived their right to challenge
the constitutionality of the amount of the award of punitive damages by raising it in only a
perfunctory fashion below. The court rejected defendants argument that they preserved the
constitutional argument by citing BMW v. Gore in a footnote, while disclaiming anything other
than discretionary review of the amount of the award.
M. The Damages Caps in the 1991 Act
Lust v. Sealey, Inc., 383 F.3d 580, 590-91, 94 FEP Cases 645 (7th Cir. 2004), affirmed
the judgment for the Title VII promotional discrimination plaintiff except for punitive damages.
The court rejected defendants argument that the award of punitive damages was
unconstitutionally excessive, although it did reduce the amount, holding that the cap on damages
eliminates any question of unconstitutional excess. It stated:
The purpose of placing a constitutional ceiling on punitive damages is to protect
defendants against outlandish awards, awards that are not only irrational in themselves
because out of whack with any plausible conception of the social function of punitive
damages but potentially catastrophic for the defendants subjected to them and, in
prospect, a means of coercing settlement. That purpose falls out of the picture when the
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legislature has placed a tight cap on total, including punitive, damages and the courts
honor the cap.
Abuan v. Level 3 Communications, Inc., 353 F.3d 1158, 1170, 93 FEP Cases 94 (10th
Cir. 2003), affirmed the judgment for the ADEA and Title VII plaintiff. The court rejected
defendants argument that allowing liquidated damages under the ADEA, on top of a full
$300,000 recovery for compensatory damages under Title VII, violated the 1991 Acts caps on
damages.
N. Re-Allocation of Jury Awards to Maximize Damages
Monteagudo v. Asociacion de Empleados del Estado Libre Asociado de Puerto Rico, 554
F.3d 164, 174-75, 105 FEP Cases 494 (1st Cir. 2009), affirmed the judgment on a jury verdict
for the Title VII and Puerto Rican law sexual harassment plaintiff, and held that the lower court
did not abuse its discretion in denying remittitur of the compensatory damages. Here, the jury
awarded Monteagudo $333,000 in compensatory damages without apportioning the award
between the Puerto Rico and the Title VII claims. The jury also awarded Monteagudo $300,000
in punitive damages under Title VII. Upon Monteagudo's motion, the district court issued an
order allocating $1 of the compensatory damages award to the Title VII claims and the
remaining $332,999 to the claims under Puerto Rico laws 17, 69, and 100. The district court
then doubled the amount awarded pursuant to the Puerto Rico claims as required by Puerto Rico
law, resulting in a total award amount of $965,999. Id. at 174 (footnote omitted). The court
upheld the compensatory damages at 174-75:
With respect to compensatory damages, we hold that the jury's award here of
$333,000 was neither grossly excessive to shock the conscience of this court, nor
was it exaggeratedly high. Admittedly the jury was generous in awarding this amount;
however, the district court did not abuse its discretion in deciding that the award was
proportionate to harm suffered by Monteagudo. As we expressed above, as a result of the
sexual harassment she endured for several months, Monteagudo felt like a piece of
meat and wept every evening. After her constructive discharge, she testified that she
suffered from depression and an inability to sleep.
(Footnote omitted.)
(3rd Cir. 2002), affirmed the judgment on a jury verdict for the ADA plaintiff in the amount of
$2.3 million in compensatory and punitive damages, unapportioned as between the State and
Federal claims. Plaintiff had a virtually identical claim under Pennsylvania law, which allows
uncapped compensatory damages but not punitive damages. The court affirmed the allocation of
the punitive damages to the ADA claim, its reduction to $300,000, and the allocation of all
$450,000 in economic damages, and all $1.55 million in compensatory damages for emotional
distress to the State-law claim. The court explained:
Importantly, the ADA also contains such a prohibition: Nothing in this chapter shall be
construed to invalidate or limit the remedies, rights, and procedures of any Federal law or
law of any State . . . that provides greater or equal protection for the rights of individuals
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with disabilities than are afforded by this chapter. 42 U.S.C. 12201(b) (2000). Here,
the PHRA, with its similar language and applicability, clearly provides a cause of action
nearly identical to that of the ADA. The fact that the PHRA does not contain a damages
cap further indicates that it was intended to provide a remedy beyond its federal
counterpart, the ADA. As the courts in Passantino and Martini recognized, subjecting
such state law claims to the federal cap would effectively limit a states ability to provide
for greater recovery than allowed under the corresponding federal law. Passantino, 212
F.3d at 510; Martini, 178 F.3d at 134950. Imposing such a limitation would violate the
federal laws prohibition on limiting state remedies. Id.
The court further upheld the apportionment of damages between the Federal and State claims:
In this case, given the similarity of the claims and the jurys unapportioned award of
damages, it is reasonable to infer that the jury intended to award its entire verdict to
Gagliardo. Because there is no cap under the PHRA, it was entirely reasonable for the
trial court to apportion the damages so as to allow Gagliardo to recover the entire jury
award, as reduced by the district court.
Id. at 571. The court distinguished situations in which a plaintiff sues for the same conduct
under multiple Federal statutes. Id.
Baker v. John Morrell & Co., 382 F.3d 816, 832 n.4 (8th Cir. 2004), affirmed the
judgment on a jury verdict for the Title VII and Iowa Human Rights Act sexual harassment and
retaliation plaintiff, including the awards of $839,470 in compensatory damages, $33,314 in back
pay, $38,921 in front pay, $650,000 in punitive damages (remitted to $300,000), and $174,927 in
attorneys fees and costs, a total of $1,386,632. Plaintiff filed suit only under Title VII, and after
the verdict moved to amend her complaint to add a claim under the Iowa Civil Rights Act, which
provides for uncapped compensatory damages but no punitive damages. That would allow her to
keep all of her compensatory-damage award, and $300,000 of her punitive-damage award.
District Judge Mark Bennett ultimately granted the motion under Rules 15(b) and 54(c), FED. R.
CIV. PRO., and the court of appeals affirmed. The court held that it would not consider the
permissibility of allocating all $300,000 in Title VII damages to punitive damages, without a
compensatory award under Title VII, because defendant did not raise the issue.
Madison v. IBP, Inc., 257 F.3d 780, 80405, 86 FEP Cases 77, 80 E.P.D. 40,628 (8th
Cir. 2001), petition for cert. filed, 70 USLW 3445 (U.S., Dec. 19, 2001) (No. 01985), held that
the caps on damages in the Civil Rights Act of 1991 are constitutional. However, the court
refused to apply the caps to plaintiffs 1981 and State-law claims. Id. at 80304. The court
affirmed the lower courts decision to allocate all of the plaintiffs compensatory damages to her
State-law claim so that they would not count under the caps. It explained:
In granting Madisons motion for reallocation of her sex based damages, the
district court observed that the verdict had not tied the question of damages to a particular
statute, that the standard of liability under all three statutes was the same, and that
allocation would permit Madison to recover more of the damages awarded by the jury.
Appellate courts have approved the allocation of damages between state and federal
claims in cases such as this where the standards of liability are the same and the jury has
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not been asked to distinguish between statutes in assessing damages. The D.C. Circuit
concluded in a similar situation that there was no reason why the plaintiff could not
recover her judgment under the local Human Rights Act, since the local law contains the
same standards of liability as Title VII but imposes no cap on damages. Martini v.
Federal National Mortgage Assn, 178 F.3d 1336, 1349 (D.C. Cir. 1999) The Martini
court noted that the standards of liability for the plaintiffs local and federal claims were
the same, and it reasoned that if courts were not permitted to treat damages under federal
and local law as fungible where the standards of liability are the same, [it] would
effectively limit the local jurisdictions prerogative to provide greater remedies for
employment discrimination than those Congress has afforded under Title VII. Id. at
134950.
The Ninth Circuit has also approved allocation of compensatory damages to a
plaintiffs state law claims where the verdict form permitted the jury to award damages
on state and federal civil rights claims without specifically distinguishing them. See
Passantino v. Johnson & Johnson Consumer Products, Inc., 212 F.3d 493 (9th Cir.
2000). Since the jury had awarded damages without differentiating between the claims,
the awards were effectively fungible, and the district courts action was entirely within its
discretion and consistent with the jurys verdict. Id. at 509.
We find the reasoning in Martini and Passantino persuasive and consistent with
federal policy. Title VII states that nothing in its provisions shall be deemed to exempt
or relieve any person from any liability, duty, penalty, or punishment provided by any
present or future law of any State ... 42 U.S.C. 2000e7. To prohibit courts from
allocating damages after a jury verdict finding liability under both federal and state law
would conflict with the statutory framework of Title VII and the congressional policy to
deter discrimination and harassment. See Kimzey, 107 F.3d at 576 (no language in Title
VII indicat[es] that its upper limit is to be placed on awards under state anti-
discrimination statutes). The jury in this case found for Madison on both her state and
federal sexual harassment and discrimination claims, and no persuasive reason has been
shown why she should be prevented from receiving her award for compensatory damages
under ICRA instead of under the federal statutes. The trial court did not err in its
allocation of Madisons compensatory damages for sex based violations to her state law
claims.
Id. at 80102.
O. Fees and Expenses
1. Bars to Entitlement
Buckhannon Board and Care Home, Inc., v. West Virginia Department of Health and
Human Resources, 530 U.S. 1304, 121 S. Ct. 1835, 11 AD Cases 1300 (2001), rejected the
catalyst theory as a basis for entitlement to a fee award under 42 U.S.C. 1988. The court
held that obtaining relief pursuant to a court order or approval of a settlement that changes the
legal relationship of the parties is essential requirement for prevailing party status and thus for
entitlement to fees under the wording of this statute, which parallels the wording of many fee-
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award provisions. The court rejected as far-fetched petitioners argument that defendants would
avoid their fee obligations by voluntarily tendering full relief, and thus mooting the action before
judgment. And petitioners fear of mischievous defendants only materializes in claims for
equitable relief, for so long as the plaintiff has a cause of action for damages, a defendants
change in conduct will not moot the case. Even then, it is not clear how often courts will find a
case mooted: It is well settled that a defendants voluntary cessation of a challenged practice
does not deprive a federal court of its power to determine the legality of the practice unless it is
absolutely clear that the allegedly wrongful behavior could not reasonably be expected to
recur. Id. at 184243.
Sole v. Wyner, 551 U.S. 74 (2007), a 1983 case involving nudist performance art,
unanimously held that plaintiffs who prevail in obtaining a preliminary injunction but lose on the
merits are not entitled to attorneys fees under 42 U.S.C. 1988. The Court held: A plaintiff
who achieves a transient victory at the threshold of an action can gain no award under that fee-
shifting provision if, at the end of the litigation, her initial success is undone and she leaves the
courthouse emptyhanded. Id. at 78. The Court expressed no view as to cases in which the grant
of a preliminary injunction is not followed by a loss on the merits. The Court stated in note 3
that the opinion was consistent with the views of both the majority and the dissenters in
Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources,
532 U. S. 598, 600 (2001).
2. FLSA Plaintiff Denied Fees for Lack of Collegiality
Sahyers v. Prugh, Holliday & Karatinos, P.L., 560 F.3d 1241, 14 WH Cases 2d 1000
(11th Cir. 2009), affirmed the complete denial of attorneys fees in an FLSA case that settled
when plaintiff accepted an offer of judgment for $3,500 plus fees and expenses. Plaintiffs
demand in settlement discussions had been in the $25,000 to $35,000 range, and she had refused
to provide discovery to set forth the amount of time on which she claimed unpaid overtime was
due. The court stated at 1245-46:
The district court's inherent powers support its decision here. Defendants are
lawyers and their law firm. And the lawyer for Plaintiff made absolutely no effortno
phone call; no email; no letterto inform them of Plaintiff's impending claim much less
to resolve this dispute before filing suit. Plaintiff's lawyer slavishly followed his client's
instructions andwithout a word to Defendants in advancejust sued his fellow
lawyers. As the district court saw it, this conscious disregard for lawyer-to-lawyer
collegiality and civility caused (among other things) the judiciary to waste significant
time and resources on unnecessary litigation and stood in stark contrast to the behavior
expected of an officer of the court. The district court refused to rewardand thereby to
encourageuncivil conduct by awarding Plaintiff attorney's fees or costs. Given the
district court's power of oversight for the bar, we cannot say that this decision was
outside of the bounds of the district court's discretion.
(Footnotes omitted.)
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3. Grounds for Entitlement
Harsco Corp. v. Renner, 475 F.3d 1179, 1191, 99 FEP Cases 1145 (10th Cir. 2007),
affirmed the judgment of liability on a jury verdict for the Title VII sexual harassment plaintiff,
and affirmed the vacation of the award of punitive damages where defendant had adequate
policies and plaintiff failed to link local managers inactions to defendant. Plaintiff had
requested appellate attorneys fees in her opening brief. The court stated: We have discretion to
award attorney fees when we deem it appropriate, but a prevailing party is not automatically
entitled to an award of attorney fees. The court granted the fees because plaintiff had
successfully defended her verdict.
4. Enhancements to Lodestar
Perdue v. Kenny A. ex rel. Winn, __ U.S. __, 130 S.Ct. 1662, 176 L.Ed.2d 494, 109 Fair
Empl.Prac.Cas. (BNA) 1, 93 Empl. Prac. Dec. 43,877 (2010) (Alito, J.), reversed the
enhancement of a fee award in a 1983 class action involving a challenge to foster child services
in two Georgia counties, on behalf of 3,000 children. The relief obtained was equitable, not
monetary. Plaintiffs counsel petitioned for a doubling of their lodestar to reflect the high quality
of their work. The district court made cuts to the lodestar, resulting in a lodestar of $ 6 million,
and then granted a 75% enhancement. The Supreme Court described the district courts
reasoning at 1670:
The court then enhanced this award by 75%, concluding that the lodestar
calculation did not take into account (1) the fact that class counsel were required to
advance case expenses of $1.7 million over a three-year period with no ongoing
reimbursement, (2) the fact that class counsel were not paid on an on-going basis as the
work was being performed, and (3) the fact that class counsel's ability to recover a fee
and expense reimbursement were completely contingent on the outcome of the case. . . .
The court stated that respondents' attorneys had exhibited a higher degree of skill,
commitment, dedication, and professionalism ... than the Court has seen displayed by the
attorneys in any other case during its 27 years on the bench. . . . The court also
commented that the results obtained were extraordinary and added that [a]fter 58
years as a practicing attorney and federal judge, the Court is unaware of any other case in
which a plaintiff class has achieved such a favorable result on such a comprehensive
scale. . . . The enhancement resulted in an additional $4.5 million fee award.
The Eleventh Circuit affirmed. The 5-Justice majority strongly endorsed the lodestar approach
as providing a more objective basis for awarding and reviewing fees than the old standard of
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir. 1974). The
Supreme Court described the virtues of the lodestar approach at 1672:
Although the lodestar method is not perfect, it has several important virtues.
First, in accordance with our understanding of the aim of fee-shifting statutes, the
lodestar looks to the prevailing market rates in the relevant community. . . . Developed
after the practice of hourly billing had become widespread . . . the lodestar method
produces an award that roughly approximates the fee that the prevailing attorney would
have received if he or she had been representing a paying client who was billed by the
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hour in a comparable case. Second, the lodestar method is readily administrable . . . ; and
unlike the Johnson approach, the lodestar calculation is objective . . . and thus cabins
the discretion of trial judges, permits meaningful judicial review, and produces
reasonably predictable results.
(Emphasis in original.) The Court described, at 1672-73, six rules that it gleaned from prior
decisions, which in its view supported the presumptive use of the lodestar approach as sufficient
to attract capable attorneys and reflecting both the complexity and difficulty of the case and the
qualities of counsel. The Court said at 1674 that enhancements are possible but rare: In light of
what we have said in prior cases, we reject any contention that a fee determined by the lodestar
method may not be enhanced in any situation. The lodestar method was never intended to be
conclusive in all circumstances. Instead, there is a strong presumption that the lodestar figure
is reasonable, but that presumption may be overcome in those rare circumstances in which the
lodestar does not adequately take into account a factor that may properly be considered in
determining a reasonable fee. The Court held that the first inquiry is whether the superior
results are attributable to the attorneys superior performance and commitment of resources,
which alone might justify an enhancement, or to factors that cannot justify an enhancement, such
as inferior performance by defense counsel, unanticipated defense concessions, unexpectedly
favorable rulings by the court, an unexpectedly sympathetic jury, or simple luck. Id. The Court
held that the next inquiry is whether there are circumstances in which superior attorney
performance is not adequately taken into account in the lodestar calculation. It did not shut the
door entirely on such a possibility, but was limiting: We conclude that there are a few such
circumstances but that these circumstances are indeed rare and exceptional, and require
specific evidence that the lodestar fee would not have been adequate to attract competent
counsel, Blum, supra, at 897, 104 S.Ct. 1541 (internal quotation marks omitted). Id. The
Court described those circumstances:
First, an enhancement may be appropriate where the method used in determining
the hourly rate employed in the lodestar calculation does not adequately measure the
attorney's true market value, as demonstrated in part during the litigation.FN5 This may
occur if the hourly rate is determined by a formula that takes into account only a single
factor (such as years since admission to the bar) FN6 or perhaps only a few similar
factors. In such a case, an enhancement may be appropriate so that an attorney is
compensated at the rate that the attorney would receive in cases not governed by the
federal fee-shifting statutes. But in order to provide a calculation that is objective and
reviewable, the trial judge should adjust the attorney's hourly rate in accordance with
specific proof linking the attorney's ability to a prevailing market rate.
Respondents correctly note that an attorney's brilliant insights and critical
maneuvers sometimes matter far more than hours worked or years of experience. . . .
But as we said in Blum v. Stenson, 465 U.S. 886, 898, 104 S.Ct. 1541, 79 L.Ed.2d 891
(1984), [i]n those cases, the special skill and experience of counsel should be reflected
in the reasonableness of the hourly rates.
FN6. See, e.g., Salazar v. District of Columbia, 123 F.Supp.2d 8 (D.D.C.2000);
Laffey v. Northwest Airlines, Inc., 572 F.Supp. 354 (D.D.C.1983), aff'd in part, rev'd in
part, 746 F.2d 4 (C.A.D.C.1984).
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Second, an enhancement may be appropriate if the attorney's performance
includes an extraordinary outlay of expenses and the litigation is exceptionally protracted.
As Judge Carnes noted below, when an attorney agrees to represent a civil rights plaintiff
who cannot afford to pay the attorney, the attorney presumably understands that no
reimbursement is likely to be received until the successful resolution of the case, 532
F.3d, at 1227, and therefore enhancements to compensate for delay in reimbursement for
expenses must be reserved for unusual cases. In such exceptional cases, however, an
enhancement may be allowed, but the amount of the enhancement must be calculated
using a method that is reasonable, objective, and capable of being reviewed on appeal,
such as by applying a standard rate of interest to the qualifying outlays of expenses.
Third, there may be extraordinary circumstances in which an attorney's
performance involves exceptional delay in the payment of fees. An attorney who expects
to be compensated under 1988 presumably understands that payment of fees will
generally not come until the end of the case, if at all. . . . Compensation for this delay is
generally made either by basing the award on current rates or by adjusting the fee based
on historical rates to reflect its present value. Missouri v. Jenkins, 491 U.S. 274, 282,
109 S.Ct. 2463, 105 L.Ed.2d 229 (1989) (internal quotation marks omitted). But we do
not rule out the possibility that an enhancement may be appropriate where an attorney
assumes these costs in the face of unanticipated delay, particularly where the delay is
unjustifiably caused by the defense. In such a case, however, the enhancement should be
calculated by applying a method similar to that described above in connection with
exceptional delay in obtaining reimbursement for expenses.
Id. at 1674-75. True to past form, the Court ignored utterly the difference between being paid,
win or lose, and being paid only in the event one prevails. The Court rejected the 75%
enhancement as essentially arbitrary. It noted that the enhancement would bring the top hourly
rate to $866 an hour and there was no evidence that this was an appropriate rate in the relevant
legal market. It rejected Justice Breyers suggestion that the average rate of all counsel was
below the market average hourly rate, since this merely reflected that a disproportionate share of
the work was done by counsel at a lower hourly rate. The Court held that the enhancement could
not be based on the extraordinary outlays of counsel, since there was no calculation of the
amount of the enhancement attributable to this factor. The Courts war with economic reality is
shown in the following paragraph at 1676:
The District Court pointed to the fact that respondents' counsel had to make
extraordinary outlays for expenses and had to wait for reimbursement . . . but the court
did not calculate the amount of the enhancement that is attributable to this factor.
Similarly, the District Court noted that respondents' counsel did not receive fees on an
ongoing basis while the case was pending, but the court did not sufficiently link this
factor to proof in the record that the delay here was outside the normal range expected by
attorneys who rely on 1988 for the payment of their fees or quantify the disparity. Nor
did the court provide a calculation of the cost to counsel of any extraordinary and
unwarranted delay. And the court's reliance on the contingency of the outcome
contravenes our holding in Dague. . . .
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The Court rejected the trial courts comparison of the performance of counsel to that of counsel
in other, unnamed cases, since such an impressionistic basis undermined objectivity and the
ability of an appellate court to review the award. Id. at 1676. In addition, in future cases,
defendants contemplating the possibility of settlement will have no way to estimate the
likelihood of having to pay a potentially huge enhancement. Id. The Court then again
expressed its rejection of economic reality, at 1676-77:
Section 1988 serves an important public purpose by making it possible for
persons without means to bring suit to vindicate their rights. But unjustified
enhancements that serve only to enrich attorneys are not consistent with the statute's
aim.FN8 In many cases, attorney's fees awarded under 1988 are not paid by the
individuals responsible for the constitutional or statutory violations on which the
judgment is based. Instead, the fees are paid in effect by state and local taxpayers, and
because state and local governments have limited budgets, money that is used to pay
attorney's fees is money that cannot be used for programs that provide vital public
services. Cf. Horne v. Flores, 557 U.S. ----, ----, 129 S.Ct. 2579, 2593-2594, 174
L.Ed.2d 406 (2009) (payment of money pursuant to a federal-court order diverts funds
from other state or local programs).
FN8 Justice BREYER's opinion dramatically illustrates the danger of allowing a
trial judge to award a huge enhancement not supported by any discernible methodology.
That approach would retain the $4.5 million enhancement here so that respondents'
attorneys would earn as much as the attorneys at some of the richest law firms in the
country. Post, at ---- - ----. These fees would be paid by the taxpayers of Georgia, where
the annual per capita income is less than $34,000, see Dept. of Commerce, Bureau of
Census, Statistical Abstract of the United States: 2010, p. 437 (2009) (Table 665) (figures
for 2008), and the annual salaries of attorneys employed by the State range from $48,000
for entry-level lawyers to $118,000 for the highest paid division chief, see Brief for State
of Alabama et al. as Amici Curiae, 10, and n. 3 (citing National Association of Attorneys
General, Statistics on the Office of the Attorney General, Fiscal Year 2006, pp. 37-39).
Section 1988 was enacted to ensure that civil rights plaintiffs are adequately represented,
not to provide such a windfall.
The Court remanded the case for further proceedings. Justice Alito wrote the majority opinion,
joined by the Chief Justice and Justices Scalia, Kennedy, and Thomas. Justices Kennedy and
Thomas also wrote separate concurring opinions. Justice Breyer concurred in part and dissented
in part, joined by Justices Stevens, Ginsburg, and Sotomayor.
Seethe discussion of Quigley v. Winter, 598 F.3d 938, 956-59 (8th Cir. 2010), in the
section below on Reasonable Time.
5. Procedure for Resolving Fees in Common-Fund Class Actions
Staton v. Boeing Co., 313 F.3d 447, 45445, 90 FEP Cases 641 (9th Cir. 2002), reversed
the grant of final approval to a settlement for several reasons. One reason was the courts
concern about the settlements provisions on attorneys fees:
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The parties negotiated the amount of attorneys fees as part of the settlement
between the class and the Company. They included as a term of the proposed decree the
amount of attorneys fees that class counsel would receive. The action falls under the
terms of two fee-shifting statutes. By negotiating fees as an integral part of the settlement
rather than applying to the district court to award fees from the fund created, Boeing and
class counsel employed a procedure permissible if fees can be justified as statutory fees
payable by the defendant.
Boeing and class counsel did not, however, seek to justify the attorneys fees on
this basis but instead made a hybrid argument: They maintained that the award is an
appropriate percentage of a putative common fund created by the decree even though
common funds, as opposed to statutory fee-shifting agreements, usually do not isolate
attorneys fees from the class award before an application is made to the court. The
district court approved the fee on that common fund basis.
The incorporation of an amount of fees calculated as if there were a common fund
as an integral part of the settlement agreement allows too much leeway for lawyers
representing a class to spurn a fair, adequate and reasonable settlement for their clients in
favor of inflated attorneys fees. We hold, therefore, that the parties to a class action may
not include in a settlement agreement an amount of attorneys fees measured as a
percentage of an actual or putative common fund created for the benefit of the class.
Instead, in order to obtain fees justified on a common fund basis, the classs lawyers must
ordinarily petition the court for an award of fees, separate from and subsequent to
settlement.
In order to assess the reasonableness of the attorneys fees awarded by the decree,
the district court compared the amount of the fees to the amount of the putative common
fund and determined what percentage of this fund the fee amount constituted. This
comparison is a permissible procedure when a court is determining the reasonableness of
fees taken from a genuine common fund. In conducting the comparison, however, the
district court included in the value of the putative common fund the inexact and easily
manipulable value of injunctive relief. Such relief should generally be excluded from the
value of a common fund when calculating the appropriate attorneys fee award, although
the fact that counsel obtained injunctive relief in addition to monetary relief for their
clients is a relevant circumstance to consider in determining what percentage of the fund
is reasonable as fees. We hold further, therefore, that parties may not include an
estimated value of injunctive relief in the amount of an actual or putative common fund
for purposes of determining an award of attorneys fees.
The court held that there is no preclusion on recovery of common fund fees where a fee-shifting
statute applies. Id. at 476. It cited the following authority:
See Brytus v. Spang & Co., 203 F.3d 238, 246-247 (3d Cir. 2000) (holding that
common fund funds can be appropriate in both settled and litigated cases where statutory
fees are available); Cook v. Niedert, 142 F.3d 1004 (7th Cir. 1998) (approving fees
measured by common fund rather than statutory principles where statutory fees were
available); Florin v. Nationsbank, 34 F.3d 560, 564 (7th Cir. 1994) (common fund
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principles properly control a case which is initiated under a statute with a fee shifting
provision, but is settled with the creation of a common fund.); Skelton v. General
Motors Corp., 860 F.2d 250, 256 (7th Cir. 1988) ([W]hen a settlement fund is created in
exchange for release of the defendants liability both for damages and for statutory
attorneys fees, equitable fund principles must govern the courts award of the attorneys
fees.); 1 Mary Francis Derfner and Arthur D. Wolf, Court Awarded Attorney Fees,
2.05[7] at 2-81 (2001) ( [T]he mere fact that a fee-shifting statute is implicated in the
action does not ensure that fees will be awarded under that statute.... [F]ees may be taxed
against the [settlement] fund under the common fund doctrine. (citing Skelton and
Florin)).
Id. at 476 n.18. The court explained the nature of such a recovery: In contrast to fee-shifting
statutes, which enable a prevailing party to recover attorneys fees from the vanquished party, the
common fund doctrine permits the court to award attorneys fees from monetary payments that
the prevailing party recovered in the lawsuit. Put another way, in common fund cases, a variant
of the usual rule applies and the winning party pays his or her own attorneys fees; in fee-
shifting cases, the usual rule is rejected and the losing party covers the bill. Id. at 47677. The
court noted that a risk multiplier is allowed in common-fund fee awards, and stated that the
Ninth Circuit has generally determined that a reasonable fee would constitute 25% of a common
fund. Id. at 477. It explained the operation of a common-fund recovery in a fee-shifting case:
Application of the common fund doctrine to class action settlements does not
compromise the purposes underlying fee-shifting statutes. In settlement negotiations, the
defendants determination of the amount it will pay into a common fund will necessarily
be informed by the magnitude of its potential liability for fees under the fee-shifting
statute, as those fees will have to be paid after successful litigation and could be treated at
that point as part of a common fund against which the attorneys fees are measured.
Conversely, the prevailing party will expect that part of any aggregate fund will go
toward attorneys fees and so can insist as a condition of settlement that the defendants
contribute a higher amount to the settlement than if the defendants were to pay the fees
separately under a fee-shifting statute.
Id. at 478 (footnote omitted). However, if the parties invoke common fund principles, they
must follow common fund procedures and standards, designed to protect class members when
common fund fees are awarded. Id. The court elaborated, id. at 481:
We hold, therefore, that in a class action involving both a statutory fee-shifting
provision and an actual or putative common fund, the parties may negotiate and settle the
amount of statutory fees along with the merits of the case, as permitted by Evans. In the
course of judicial review, the amount of such attorneys fees can be approved if they meet
the reasonableness standard when measured against statutory fee principles.
Alternatively, the parties may negotiate and agree to the value of a common fund (which
will ordinarily include an amount representing an estimated hypothetical award of
statutory fees) and provide that, subsequently, class counsel will apply to the court for an
award from the fund, using common fund fee principles. In those circumstances, the
agreement as a whole does not stand or fall on the amount of fees. Instead, after the court
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determines the reasonable amount of attorneys fees, all the remaining value of the fund
belongs to the class rather than reverting to the defendant.
Id. at 481. Judge Trott dissented. Id. at 487.
6. Reasonable Time
costs. The court rejected defendants objections to plaintiffs counsels time records:
We begin our analysis of the defendants claim for a reduction by noting that the
parties did not comply with Local Rule 54.3 of the Northern District of Illinois.
Defendants counsel claimed before the district court that its billing records were
irrelevant. This position is inconsistent with the letter and spirit of Local Rule 54.3. The
rules purpose is to avoid exactly the type of hypocritical objections presented by the
defendants. Although the defendants object to the use of block billing and vague
descriptions by Farfarass counsel, the defendants counsel used similarly vague
descriptions and block billing. Although block billing does not provide the best
possible description of attorneys fees, it is not a prohibited practice.
Quigley v. Winter, 598 F.3d 938, 956-59 (8th Cir. 2010), affirmed the jury verdict under
the Fair Housing Act, and held that the plaintiff tenant had established sexual harassment by the
landlord and thus a hostile housing environment. The court held that the lower court erred in
failing to conduct a lodestar analysis and in limiting the fee award to $20,000 because of
concerns about defendants ability to pay. Rather than remand the case, it awarded $78,044.33
in fees itself. The court accepted counsels hourly rates but cut their hours by a third because the
case was too heavily lawyered and too many attorneys moved in and out of the case. Judge
Gruender dissented from the failure to remand the fee issue. Id. at 959-60.
See the discussion of Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 125760, 16 AD
Cases 1197 (10th Cir. 2005), in the section below on Need to Exercise Billing Judgment.
7. Problems with Recordkeeping
Bishop v. Gainer, 272 F.3d 1009, 1020, 87 FEP Cases 920 (7th Cir. 2001), affirmed the
denial of part of the attorneys fees sought by plaintiffs: The district court awarded plaintiffs
over $238,000 in attorneys fees and costs. He denied a request for additional fees arising out of
hundreds of hours of long-distance telephone calls. He said he could not assess the
reasonableness of the request because counsel refused to describe in general terms the substance
of the calls. We fail to see an abuse of discretion in this decision.
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8. The Relevant Community for Hourly Rates
Mathur v. Board of Trustees of Southern Illinois University, 317 F.3d 738, 90 FEP Cases
1537 (7th Cir. 2003), reversed the fee award for two of plaintiffs attorneys because the lower
court erred in using Southern Illinois local rates for their time instead of the Chicago rates they
customarily charged. The court held that the out-of-town attorneys rate is presumptively the
rate that should be used, unless there is evidence that local attorneys were able to perform as well
as visiting counsel and there was no reason why local counsel should not have been engaged.
9. Need to Exercise Billing Judgment
Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 125760, 16 AD Cases 1197 (10th Cir.
2005), affirmed the fee award to the ADA plaintiff notwithstanding the 35 points of error raised
by one side or the other. Ms. Praseuth filed a motion seeking attorneys fees in the amount of
$1,011,280.00 plus expenses in the amount of $132,639.00. The district court reduced the
amounts requested by approximately two-thirds, awarding Ms. Praseuth attorneys fees of
$336,025.50 and expenses of $97,581.11. Id. at 1249. The court stated: The fee applicant
should exercise billing judgment with respect to the number of hours worked and billed. . . .
Billing judgment consists of winnowing hours actually expended down to hours reasonably
expended. Id. at 1257. The court objected to the huge chunks of time charged by plaintiffs
counsel for extremely basic research:
Ms. Praseuths attorneys requested fees for over 200 hours spent during the six
months prior to the commencement of this litigation doing background research and
educating themselves generally about the ADA. These hours included time for work
described as follows: Skimmed and reviewed first six chapters of Cal Practice Guide,
Federal Civil Procedure Before Trial, to refresh on federal rules and law, and Reviewed
Chapters 7 through 10 and Chapter 11 in the Rutter Group Treatise Federal Civil
Procedure in Before Trial ... preparation for litigation. Ms. Praseuths attorneys devoted
50 hours to drafting the EEOC charge. They spent 160 hours drafting the complaint.
They then filed a motion to amend the complaint, expending over 42 hours on the
amendment.
Id. at 125758. The court held that time spent reading background material designed to
familiarize an attorney with an area of law is presumptively unreasonable. . . . When counsel is
inexperienced, a losing party should not be obligated to pay for that counsels legal education.
Id. at 1258 (citations omitted). The court held that local rates in Wichita, Kansas, were properly
applied to counsel from California: While a party is free to select counsel from any locality,
absent a clear showing that the matter could not reasonably have been handled by counsel from
the locality, rates above the prevailing local hourly rates should not be applied. Id. at 1259
(citations omitted). The court then addressed the question of competing excesses:
As already noted, Ms. Praseuths attorneys sought compensation for enormous
amounts of time, including a truly remarkable number of hours spent on relatively
straightforward tasks. Rubbermaids attorneys, on the other hand, defended this action
very aggressively on every conceivable front. After protracted proceedings memorialized
by 531 docket entries in the district court record, the district judge found that both the
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plaintiff and the defendants have engaged in an extreme and unnecessary amount of
briefing in this case. Our own, first-hand knowledge of the parties approach to this
appeal amply supports the correctness of that finding.
Given the excesses on both sides of this case, the district court was called upon to
avoid penalizing Rubbermaid by awarding fees for the huge amounts of time devoted to
the matter by Ms. Praseuths counsel; at the same time, the district court was called upon
to avoid penalizing Ms. Praseuth by denying compensation for legal services necessitated
by Rubbermaids noticeably aggressive defense. We conclude that the district courts fee
award appropriately balanced these competing considerations. An aggressive litigation
strategy carries with it certain risks, one of which is that a party pursuing an aggressive
strategy may, if it loses, find itself required to bear a portion of the attorneys fees
incurred by the other party in responding to that aggressiveness.
Id. at 1260. Finally, the court held that the trial court did not abuse its discretion in denying
prejudgment interest on the fees. Id.
10. Discounts for Partial Success, and Need to Avoid Double Discounts
Farias v. Instructional Systems, Inc., 259 F.3d 91, 10203 (2nd Cir. 2001), affirmed the
judgment of liability on a jury verdict for Title VII retaliation plaintiff Robinson, affirmed the
denial of punitive damages, and vacated and remanded the fee award. The lower court had
awarded $37,194.97 in attorneys fees and costs instead of the $132,193.75 in attorneys and
paralegal fees $3,406.59 in costs that had been sought. To arrive at that amount, the court (i)
cited several grounds for reducing the number of hours reasonably expended in the litigation for
purposes of calculating the lodestar, and (ii) adjusted the lodestar further downward to reflect
Robinsons limited success. Id. at 103. The court of appeals held that the lower courts opinion
did not make clear whether it had doubly discounted plaintiffs fees for limited success, and
remanded the award for clarification, with leave to revisit the entire award, and directed that any
new appeal be resolved by the same panel.
2002), affirmed the judgment on a jury verdict for the Title VII retaliation plaintiff, and denied
plaintiffs cross-appeal from a 10% reduction in the lodestar for failure to prevail on the
discrimination claim. The court observed that the plaintiff was fully successful, in that because
of the cap on damages she received as much relief as she would have been able to receive if she
had prevailed on the discrimination claim. The court held that the reduction might have been
based on the lower courts view that plaintiffs counsel wasted some time pursuing less
promising theories of recovery, and that such a view would not be an abuse of discretion.
11. Refusal to Discount for Partial Success
retirement date. The court affirmed the fee award, holding that plaintiff was entitled to fees
because she recovered on her retaliation claim, even if she lost her discrimination claim, and
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rejecting the defendants contention that the award should be cut because of issues on which
plaintiff did not prevail. The magistrate judge considered this argument and concluded that the
claims shared a common core of facts and therefore the fees should not be reduced for failure to
prevail on every theory. Accepting this recommendation was not an abuse of the district courts
discretion. Id. at 577 (citation omitted).
Webner v. Titan Distribution, Inc., 267 F.3d 828, 838, 12 AD Cases 513 (8th Cir. 2001),
affirmed the award of attorneys fees. The court rejected the defendants argument that it was
unreasonable to require it to pay for two attorneys at depositions, because the workers
compensation and ADA issues were intertwined, and it was reasonable to have attorneys
specializing in workers compensation and fair-employment litigation each present at the
depositions. Titan further contends that the district court should have reduced the attorneys
fees by 50% because Iowa law does not provide for an award of attorneys fees in a wrongful
termination case. The district court agreed in part and reduced the amount of fees Webner
sought but by only 10%. The court concluded that the evidence Webner submitted was
interrelated and overlapped between the two claims, therefore further reduction was not
appropriate. The court of appeals agreed, stating that the most important factor is that the
plaintiff won.
El-Hakem v. BJY Inc., 415 F.3d 1068, 1076, 96 FEP Cases 84, 10 WH Cases 2d 1313
(9th Cir. 2005), cert. denied, 547 U.S. 1004 (2006), affirmed the judgment for the 1981 and
Title VII plaintiff for $15,000 in compensatory damages and $15,000 in punitive damages
because of a hostile working environment based on race and national origin. The court affirmed
the lower courts decision not to apportion attorneys fees. It explained: There was no gross
disproportion in the time expended by El-Hakems counsel as between BJY and Young because
the claims against the two defendants were virtually interchangeable. Neither was there a need
to apportion the fee award as to the respective claims, because only a small percentage of the
total hours expended was attributable to the state law wage claim, a portion of which was
successful. (Citation and footnote omitted.)
(11th Cir. 2008), affirmed the lower courts award of approximately $160,000 in fees to the
successful Title VII and 1981 retaliation plaintiff, who recovered $500,000 in punitive
damages, $27,160.59 in back pay, and $27,160.59 in damages for mental anguish. The court
held that the lower court did not abuse its discretion in declining to reduce the award because
plaintiff had lost approximately half the issues. The court stated at 1292:
The district court did not abuse its discretion. A review of the record establishes
that evidence supporting Goldsmith's successful claim of retaliation was inextricably
intertwined with evidence supporting his unsuccessful claims, and the punitive damages
award was supported by evidence underlying the unsuccessful claims. The me too
evidence was admissible both as evidence of the intent of Bagby Elevator to retaliate
against Goldsmith and as evidence of Goldsmith's hostile work environment claim. The
evidence regarding Goldsmith's failure to promote claim provided the basis for
Goldsmith's first EEOC charge, which was in turn necessary for Goldsmith to prove his
claim of retaliation. The evidence regarding the EEOC investigation and cause
determination supported all of Goldsmith's claims. Because Goldsmith's successful claim
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of retaliation was related to his unsuccessful claims and he won substantial relief, we
conclude that the refusal of the district court to reduce the amount of attorney's fees and
costs was not an abuse of discretion.
12. Costs and Expenses
Mota v. University of Texas Houston Health Science Center, 261 F.3d 512, 530, 86 FEP
Cases 1140, 81 E.P.D. 40,728 (5th Cir. 2001), held that investigation fees were recoverable
under Title VII, that the costs of videotaped depositions were not recoverable, and that mediation
fees were not recoverable.
Little v. Mitsubishi Motors North America, Inc., 514 F.3d 699, 102 FEP Cases 977 (7th
Cir. 2008) (per curiam), affirmed the lower courts award under 28 U.S.C. 1920 of the costs of
both video-taping and stenographically transcribing depositions. The court also held that the
costs of computerized research were recoverable under 1920.
EEOC v. Bd. of Regents of University of Wisconsin System, 288 F.3d 296, 302, 88 FEP
Cases 1133 (7th Cir. 2002), affirmed the judgment for the EEOC. The court affirmed the award
of witness fees for the charging parties, holding that the EEOC was the only party filing the suit
and the charging parties were merely nonparty witnesses for whom the EEOC was seeking relief.
P. Sanctions
Peterson v. Archstone Communities LLC, 637 F.3d 416, 111 Fair Empl.Prac.Cas. (BNA)
1772 (D.C. Cir. 2011), reversed the dismissal of the pro se plaintiffs case, holding that the
failure to appear at a single motions hearing did not justify dismissal of the action. The court
rejected defendants argument that plaintiff had also filed baseless discovery motions, because
defendants opposition to plaintiffs motion for appointment of counsel had represented to the
court that plaintiff was doing a good job of representing herself: In a pleading opposing
Peterson's motion for appointment of counsel to represent her in the district court, Archstone
advised the court as follows: [C]ounsel for Archstone has observed that Ms. Peterson has, to
date, ably drafted and responded to motions, participated in discovery conferences, and
otherwise capably represented herself in this matter. . . . And the district court, in denying
Peterson's motion for appointment of counsel, found that her motions display not only a
workable familiarity with the Federal Rules of Civil Procedure and the local rules of this Court,
but also her ability to represent herself adequately. . . . Id. at 419.
Lamboy-Ortiz v. Ortiz-Velez, 630 F.3d 228 (1st Cir. 2010), reversed the award of
$130,000 in defendants attorneys fees against the civil rights political-discrimination and due
process plaintiffs, affirmed the imposition of sanctions on plaintiffs counsel under 28 U.S.C.
1927, and reduced the amount of the sanctions from over $64,936 to $5,000. The court held
that the lower court improperly emphasized the failure of plaintiffs evidence at trial, and did not
adequately consider the information known to plaintiff at the time the Complaint was filed. Id at
237-38. Examining the record itself, the court noted that some of the evidence supporting
plaintiffs had been excluded at trial because of the failure to provide English translations, or
other problems that did not affect the reasonableness of reliance on the substance of the
evidence. The court concluded: Overall, it was reasonable for the plaintiffs to attribute a
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political motive to the apparent campaign of harassment against them, given the undisputed
hostility between members of the NPP and PDP in Sabana Grande, the intimations of a
connection between the Mayor and Vargas-Santiago, and the apparent absence of any legitimate
explanation for the excessively punitive response from the police administration to Vargas-
Santiago's allegations against the plaintiffs. Id. at 239 (citation omitted).
In sum, our review of the record finds the evidence available to plaintiffs at the
time of filing easily sufficient to support the reasonableness of their suit. We are left to
choose between one of two possible conclusions concerning the basis for the district
court's contrary assessment. First, the district court may have failed to give any
consideration to the evidence we have discussed above, relying solely upon the plaintiffs'
ultimate inability to support their case at trial as a proxy for the reasonableness of their
suit at the outset-in other words, a pure application of hindsight logic. Second, the court
may have duly considered all available evidence of reasonableness, but substantially
discounted it in light of the failure of proof at trial. The choice between the two makes
little difference. In either case, it is clear that the court gave significant weight to a factor
that should have received little or no consideration in its analysis . . . and we therefore
must conclude that the court abused its discretion.
Id. at 241 (citations omitted). In the next step of its analysis, the court cautioned that a finding
that an originally reasonable claim was prosecuted after it became untenable was particularly
prone to impermissible hindsight analysis. Thus, while a court need not find bad faith to justify
an award of fees for the continuation of a clearly untenable claim . . . it must at a minimum find
that, following the filing of the claim, circumstances changed to such an extent that a reasonable
person could not help but conclude that the claim was no longer viable. Such a change would
include, for example, the receipt of evidence in the course of discovery establishing a complete
defense, or a development in the controlling law that foreclosed the claim. Id. at 241-42
(citation omitted). The court held that plaintiffs survival of summary judgment may or may not
bear on the reasonableness of the claim, depending on the extent to which it was based on the
merits. Id. at 242. Ordinarily, however, one would not expect to see an untenable claim survive
a summary judgment on the merits, as occurred in the case at bar. Id. The court reversed the fee
award. Turning to the sanctions against plaintiffs counsel, the court first held that it had
jurisdiction to consider the appeal despite the failure to name plaintiffs counsel as an appellant
in the Notice of Appeal, since it was clear from the Notice that an appeal was sought from the
order awarding feeds against plaintiff and sanctioning plaintiffs counsel, and it was clear that an
appeal was sought as to the sanctions against counsel. Under the 1993 amendment to Rule 3,
F.R.A.P., this was sufficient. Id. at 243-44. The court held that Rule 11, Fed. R. Civ. Pro., was
not available as a basis for sanctions because defendants had not filed a 21-day safe harbor
motion, and the lower court had not on its own initiative issued an order to show cause why Rule
11 sanctions should not be imposed. Id. at 244-45. The court continued:
Even if these procedural safeguards had been satisfied, Rule 11 could not provide
a proper basis for the court's award of sanctions. The court's order detailed three separate
grounds for sanctions, but only the first of thesethe vexatious conduct of plaintiffs'
counselwas adequately supported. The court cited as additional or alternative grounds
(1) the filing of frivolous claims ... with no basis in fact and (2) the filing of frivolous
appeals. Our holding that the plaintiffs' suit had adequate foundation at the time of
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filing forecloses the frivolous claims argument, and the court made no findings
sufficient to support its characterization of plaintiffs' prior appeals as frivolous.
Moreover, it is Federal Rule of Appellate Procedure 38, not Federal Rule of Civil
Procedure 11, that authorizes sanctions for the filing of frivolous appeals.
Id. at 245 (footnote omitted). The court held that Rule 11 could not reach the attorney
misconduct basis for sanctions, because the misconduct in question did not involve the filing of
papers, to which Rule 11 was restricted. Id. The court held, however, that 1927 was well-
suited to the types of vexatious conduct at issue:
The types of litigation conduct we have previously found vexatious and
unreasonablee.g., attempting to introduce evidence on irrelevant matters in the face of
numerous admonitions to desist, and engag[ing] in obfuscation of the issues,
hyperbolism and groundless presumptions, . . . pervade the record here. At trial,
attorney Gonzlez repeatedly ignored evidentiary rulings, pressing forward to ask
questions identical to those barred, often just moments prior, by the trial judge. On one
occasion, attorney Gonzlez refused to leave the sidebar when ordered to after an adverse
ruling, forcing the judge to remove the jury from the room and censure the attorney for
his obstinacy and manifest disrespect. Attorney Gonzlez further persisted, in
contravention of his obligations as an officer of the court, in making blatant
misrepresentations and referring to matters not established by evidence in the record.
This misconduct evoked a string of warnings from an admirably patient trial judge,
starting with an order near the outset of the case instructing plaintiffs' counsel to refrain
from making injurious remarks and avoid unnecessary rhetoric irrelevant to the issues
of the case, and proceeding to multiple, on-the-record admonishments and threats of
sanction during trial.
Id. at 246 (footnote omitted). The court held that, where the district court made no effort to
calculate the additional costs to defendants arising from the misconduct but simply took a third
of the total fee award, the sanctions award must be considered solely in relation to deterrence.
Id. at 247-48. The court stated that, while a lasting sting was appropriate for deterrence,
counsel could be deterred by something short of a financial disaster:
There can be no doubt of the need for a sanction that will signal to attorney
Gonzlez the seriousness of his misconduct and deter similar behavior in the future.
Nonetheless, we find $64,936 to exceed what is reasonably necessary for these purposes.
The sum lies far outside the mainstream in this circuit, where sanctions typically amount
to less than $10,000. Moreover, the sanction appears likely to impose an unjustifiable
hardship on attorney Gonzlez, who, according to counsel's representations to the court,
operates a small law office in partnership with his son, and for whom $64,936 would
likely threaten financial disaster. Accordingly, we modify the sanction to $5,000, a sum
we deem sufficient to deter similar conduct by attorney Gonzlez in the future and place
other potential offenders on notice of the consequences of such conduct.
Id. at 248-49 (footnotes omitted).
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Agiwal v. Mid Island Mortgage Corp., 555 F.3d 298, 105 FEP Cases 873 (2d Cir. 2009),
affirmed the dismissal with prejudice of the pro se plaintiffs Complaint as a sanction for willful
and repeated failures to comply with discovery requests despite numerous warnings from the
court.
Parker v. Sony Pictures Entertainment, Inc., 260 F.3d 100, 11114, 12 AD Cases 1 (2d
Cir. 2001), affirmed the grant of judgment as a matter of law to the ADA defendant but reversed
the award of attorneys fees to the defendant. The court held that the sanction of a fee award to
the defendant was improper where the plaintiff proceeded in good faith to trial, based on the
same evidence that had held the court on an earlier appeal to reverse the grant of summary
judgment to the defendant. There were no intervening factors that would have deprived of its
good-faith character a decision to proceed to good faith on a claim previously adjudged
trialworthy. The court rejected the lower courts distinction between summary judgment and
trial, to the effect that on summary judgment a defendant is required to prove a negative and at
trial the plaintiff is required to prove a positive. The court cited Reeves and held that the
standards for summary judgment and judgment as a matter of law were the same.
EEOC v. Agro Distribution, LLC, 555 F.3d 462, 468, 21 AD Cases 788 (5th Cir. 2009),
affirmed the award of $225,000 in attorneys fees against the EEOC in favor of the ADA
defendant. The court held that the EEOC had not engaged in reasonable efforts to conciliate the
case. It stated: By repeatedly failing to communicate with Agro, the EEOC failed to respond in
a reasonable and flexible manner to the reasonable attitudes of the employer. The EEOC
abandoned its role as a neutral investigator and compounded its arbitrary assessment that Agro
violated the ADA with an insupportable demand for compensatory damages as a weapon to force
settlement. The district court awarded fees for the period of time after the charging partys
deposition revealed that he was not significantly limited in any major life activity.
Garner v. Cuyahoga County Juvenile Court, 554 F.3d 624, 646-47, 105 FEP Cases 507
(6th Cir. 2009), said it all in its Conclusion:
For all of the reasons set forth above, we AFFIRM the portion of the district
court's judgment (1) finding that the employees' claims were frivolous under 42 U.S.C.
1988, and (2) finding that Attorney Frost engaged in conduct sanctionable under 28
U.S.C. 1927. On the other hand, we REVERSE the portion of the district court's
judgment (1) holding the employees jointly and severally liable for $660,103.49 in
attorney fees awarded under 42 U.S.C. 1988, and (2) holding Attorney Frost jointly and
severally liable for the same fees as a sanction under 28 U.S.C. 1927.
With respect to the attorney fees to be imposed on the employees under 42 U.S.C.
1988, we REMAND with instructions to (1) determine the point in time when each
employee's claim clearly became frivolous (which might simply be at the close of
discovery), (2) calculate, on an individual basis, the attorney fees owed by each employee
after that point in time, and (3) consider any new information proffered by the employees
regarding their inability to pay, as well as relevant evidence on this issue that already
exists in the record.
With respect to the attorney fees to be imposed on Attorney Frost under 28 U.S.C.
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1927, we REMAND with instructions to (1) determine the point in time when the
pursuit of each of her clients' claims became unreasonable and vexatious, (2) calculate the
attorney fees owed by her after that point in time, (3) decide whether that liability should
be joint and several with each of her clients, and (4) consider any proof that she may wish
to present regarding her inability to pay.
In summary, we AFFIRM in part and REVERSE in part the judgment of the
district court, and REMAND the case for further proceedings consistent with this
opinion.
Sanctions for Improper Deposition Conduct: Redwood v. Dobson, 476 F.3d 462, 467
70 (7th Cir. 2007), censured three attorneys, and admonished one attorney, for improper
deposition conduct. Defense counsel asked thoroughly improper questions, and were sanctioned.
Plaintiffs counsel should have stopped the deposition and sought relief from the court, but
instead repeatedly directed the witness not to answer even though the question did not call for
privileged information. The Federal claims in the case were frivolous, but their merit is
immaterial. What is material is that, as the Seventh Circuit observed in beginning its opinion,
This case is a grudge match. Charles Danner and Jude Redwood represented plaintiffs Jude
and Erik Redwood. Defendant Harvey Welch was former counsel for Erik Redwood in a
criminal matter ending in Redwoods conviction. Erik Redwood is white, Welch is African-
American, and the two scuffled after Erik Redwood was convicted and called his criminal
counsel a shoe-shine boy. Redwood filed a State-court battery claim against Welch, who was
represented by Marvin Gerstein. That case settled. With an unsuccessful hate-crime prosecution
and Redwoods demand that Welch admit ineffective assistance of counsel so that Redwood
could get his conviction overturned, things went rapidly downhill. The Redwoods brought
1983 and 1985 claims against Welch and Gerstein. The Redwoods also sued Elizabeth
Dobson, an Assistant States Attorney, and Officer Troy Phillips of the Urbana Police
Department. Roger Webber represented Gerstein. Just to make things clear, Jude Redwood is
Eriks wife, and is both a plaintiffclaiming loss of consortiumand counsel for Erik. And
making things even more clear, they are jointly suing Erik Redwoods former counsel in the
criminal matter (Welch), and counsels counsel in the State-court battery case (Gerstein). To
aficionados of crazy cases, it doesnt get much better than this. The courts opinion is well
worth setting out:
A profusion of motions and cross-motions for sanctionsand the conduct
underlying some of these motionsdemonstrates the extent to which counsel have
allowed personal distaste to displace dispassionate legal analysis. Most depositions are
taken without judicial supervision. Witnesses often want to avoid giving answers, and
questioning may probe sensitive or emotionally fraught subjects, so unless counsel
maintain professional detachment decorum can break down. That happened here; the
results were ugly.
Gersteins deposition was taken by Charles L. Danner on behalf of both
Redwoods, though Jude Redwood attended and sometimes acted as counsel in addition to
her role as a plaintiff. Gersteins counsel was Roger Webber, though Gerstein himself
peppered the transcript with legal arguments. The deposition began badly when Danner
spent the first 30 pages or so of the transcript exploring Gersteins criminal record
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mostly vehicular violations. Danner made no effort to explain how these questions could
lead to admissible evidence, and they got under Gersteins skin. After Gerstein
spontaneously refused to answer some of the questions (remarking Thats none of your
business), Webber began instructing Gerstein not to answer.
Webber gave no reason beyond his declaration that the questions were designed to
harass rather than obtain informationwhich may well have been their point, but
Fed.R.Civ.P. 30(d) specifies how harassment is to be handled. Counsel for the witness
may halt the deposition and apply for a protective order, see Rule 30(d)(4), but must not
instruct the witness to remain silent. Any objection during a deposition must be stated
concisely and in a non-argumentative and non-suggestive manner. A person may instruct
a deponent not to answer only when necessary to preserve a privilege, to enforce a
limitation directed by the court, or to present a motion under Rule 30(d)(4).
Fed.R.Civ.P. 30(d)(1). Webber violated this rule repeatedly by telling Gerstein not to
answer yet never presenting a motion for a protective order. The provocation was clear,
but so was Webbers violation.
* * *
Danners conduct of this deposition was shamefulnot as bad as the insult-
riddled performance by Joe Jamail that incensed the Supreme Court of Delaware, see
Paramount Communications Inc. v. QVC Network Inc., 637 A.2d 34, 5257 (Del. 1994),
but far below the standards to which lawyers must adhere. Gerstein, Webber, and Klaus
were goaded, but their responsesfeigned inability to remember, purported ignorance of
ordinary words (the consult episode was not the only one), and instructions not to
respond that neither shielded a privilege nor supplied time to apply for a protective
orderwere unprofessional and violated the Federal Rules of Civil Procedure as well as
the ethical rules that govern legal practice.
* * *
Mutual enmity does not excuse the breakdown of decorum that occurred at
Gersteins deposition. Instead of declaring a pox on both houses, the district court should
have used its authority to maintain standards of civility and professionalism. It is
precisely when animosity runs high that playing by the rules is vital. Rules of legal
procedure are designed to defuse, or at least channel into set forms, the heated feelings
that accompany much litigation. Because depositions take place in law offices rather than
courtrooms, adherence to professional standards is vital, for the judge has no direct
means of control.
Sanctions are in order, but they need not be monetary. See Fed.R.Civ.P. 30(d)(3),
37(a)(4), (b)(2). Because the arguments pro and con have been fully ventilated in this
court, and none of the attorneys has asked for a hearing under Fed. R.App. P. 46(c), we
see no need to drag out this controversy with a remand. Attorneys Danner, Gerstein, and
Webber are censured for conduct unbecoming a member of the bar; attorney Klaus is
admonished. (We differentiate in this way because a censure is the more opprobrious
label, see In re Charge of Judicial Misconduct, 404 F.3d 688, 695-96 (2d Cir.2005), and
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Klauss misconduct is substantially less serious than that of the other lawyers.) Any
repetition of this performance, in any court within this circuit, will lead to sterner
sanctions, including suspension or disbarment.
Id. at
Vacation of Default Sanction Affirmed: Sun v. Board of Trustees of University of
Illinois, 473 F.3d 799, 81112, 99 FEP Cases 897 (7th Cir. 2007), affirmed the lower courts
vacation of its own entry of default judgment as a sanction for defense counsels discovery
violations, because the penalty was unduly harsh. The court explained:
While defendants attorneys were by no means paragons of responsible lawyering, their
involvement in the discovery process was consistent and ongoing. Although counsel
should have promptly complied with the courts orders to answer outstanding
interrogatories, their delay was not so extreme as to warrant an entry of default. Likewise,
although the district court tried to use less drastic sanctions by twice imposing monetary
penalties, it brought out the heavy artillery too soon. Instead of entering a default,
punishing the defendants and giving the plaintiff a windfall, the district court should have
imposed increased monetary sanctions against the attorneys who had caused the
discovery delays.
Allen v. Chicago Transit Authority, 317 F.3d 696, 702, 90 FEP Cases 1229 (7th Cir.
2003), rejected the defendants argument that plaintiff Leonards appeal should be dismissed
without consideration of the merits because Leonard had not finished paying his $4,000 sanction
for having perjured himself in the case. The court held that this was inappropriate because there
has been no determination that Leonards continuing failure to pay is willful, which it is not if he
simply does not have any money. The court also rejected defendants arguments that the appeal
should be dismissed, or none of Leonards testimony should be believed, because of the perjury.
It undermines the witnesss testimony; but obviously there are cases, perhaps the majority, in
which a witnesss testimony is a compound of truth and falsity. Perjury is a circumstance to be
weighed by the jury in determining a witnesss credibility rather than a ground for removing the
issue of credibility from the jury by treating the witnesss entire testimony as unworthy of
belief. Id. at 703.
EEOC v. Liberal R-II School District, 314 F.3d 920, 90 FEP Cases 1032 (8th Cir. 2002),
reversed the grant of summary judgment to the defendant, holding that there was direct evidence
of discrimination. See the discussion of this case above. The court also reversed the district
courts award of $47,333 in fees and expenses to the defendant under the Equal Access to Justice
Act, because the defendant has not yet prevailed and because the EEOCs position was, in any
event, substantially justified. It did not reach the question whether the EAJA is available to
employers who prevail in ADEA cases against the EEOC.
Denial of Sanction Affirmed: Allen v. Tobacco Superstore, Inc., 475 F.3d 931, 936, 99
FEP Cases 1127 (8th Cir. 2007), affirmed the trial courts refusal to grant judgment for the
losing Title VII defendant as a sanction for plaintiffs testimony about two incidents where her
testimony was successfully impeached by surveillance videotapes. Defendant won as to those
two incidents, but lost as to others. The court explained: Although impeachment may be clear
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and beneficial, the degree of benefit is properly for the trier of fact. Furthermore, like the district
court, we do not find the discrepancies between Allens testimony and the events as depicted on
the surveillance videotapes to be so egregious as justify dismissing Allens claims. The court
also held that any claim of falsified application was not material because defendant did not rely
on applications. Judge Smith concurred in part and dissented in part. Id. at 94546.
Harris v. Maricopa County Superior Court, 631 F.3d 963, 978, 111 Fair Empl.Prac.Cas.
the prevailing defendant. The court held that the lower court erred by dividing fees for general
work on the case equally across all causes of action, and held that some causes of action were
frivolous, some were not frivolous. The court held, for example, that plaintiffs hostile-
environment claim was sufficiently frivolous to justify a fee award against plaintiff because he
only alleged conduct sufficient to make out a disparate-treatment claim, and did not allege severe
and pervasive conduct. The court also held that fees could only be awarded to defendants for
work done exclusively on the frivolous claims:
As we have already explained, in a civil rights action with multiple claims, only some of
which are groundless, a defendant is entitled only to those fees attributable exclusively to
defending against plaintiff's frivolous claims. If the work is performed in whole or in part
in connection with defending against any of plaintiff's claims for which fees may not be
awarded, such work may not be included in calculating a fee award. Accordingly, the
fees properly attributable to this claim, if any, would be quite minimal.
B.K.B. v. Maui Police Department, 276 F.3d 1091, 110609, 87 FEP Cases 1306 (9th
Cir. 2002), affirmed the award of $5,000 in attorneys fee sanctions against both the defendant
and its counsel under 28 U.S.C. 1927 and the courts inherent power for knowing and reckless
violation of Rule 412 and having misled the court about the testimony after plaintiffs counsel
had made an anticipatory objection. The court also affirmed the sanction of $5,000 in emotional-
distress damages for the plaintiff because of the emotional stress caused by the humiliation of
hearing this evidence come in. The nature of the violation is discussed above in the section on
Rule 412. The court held that the lower court clearly erred in stopping short of explicitly
finding that the defendants lawyers acted in bad faith, and that the violation was knowing and
intentional. Id. at 110607. The court held that 1927 was satisfied because the defense
counsels misconduct caused a mistrial and a sanctions proceeding, and thus multiplied
proceedings, and because the lower courts finding of recklessness was sufficient to support
sanctions under the statute. Id. at 1107. The court stated that 1927 sanctions could also be
based on the frivolous nature of the defendants Rule 412 argument. Id. at 1107 n.8. Turning to
the second award, the court stated: Here, regardless of whether defense counsels behavior
constituted bad faith per se, we readily find that counsels reckless and knowing conduct in this
case was tantamount to bad faith and therefore sanctionable under the courts inherent power.
Id. at 1108. The court held that the fees and emotional-distress damages assessed by the lower
court were proper sanctions. Id. at 110809.
Norelus v. Denny's, Inc., 628 F.3d 1270, 111 Fair Empl.Prac.Cas. (BNA) 4 (11th Cir.
2010), affirmed the trial courts imposition of sanctions jointly and severally on plaintiff and on
plaintiffs counsel, in the amount of $387,738.45, for making 868 changes to plaintiffs
deposition testimony through a letter claiming errata, and for pursuing plaintiffs claim despite
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knowledge of plaintiffs changing story and despite fact witnesses who testified that some of
plaintiffs contentions could not possibly be true because of the physical layout of the workplace.
For example, the court stated:
From the deposed witnesses' descriptions of the restaurants involved, it is
inconceivable that gross sexual harassment and misconduct could have occurred on a
near-daily basis for nearly a year, as Norelus claimed it did, without any witnesses having
seen or heard anything. According to Boleda, there is no way anything is going to
happen in that little tiny restaurant and [some employees are] not going to see what's
going on. Another waitress, Michele Stewart, explained that everything is open.
Employees are all over the restaurant. She agreed that [t]here's no way the conduct
Norelus alleged could have occurred without some employee seeing something. Line
cook Martin testified that it would be impossible for the conduct alleged to occur
without people knowing because the restaurant is too small.
Id. at 1275-76. Plaintiff admitted lying in her deposition and asked what was wrong with that,
and in her deposition denied allegations in her Complaint. The court stated that the witnesses on
whom plaintiff relied uniformly failed to corroborate her claims, described the evidence against
plaintiff as a mountain, and criticized plaintiffs counsel for continuing to believe their client
despite her shifting stories, the lack of corroborating evidence, and the strength of the evidence
against her claims. Plaintiffs counsel did arrange for a lie detector test to be administered to
plaintiff. The examiner found that plaintiff was lying about some matters, but not about her core
allegations. Id. at 1277. Plaintiffs counsel also arranged for plaintiff to be examined by a
clinical psychologist. They selected Dr. Astrid Schutt-Aine, a psychologist who spoke Haitian
French Creole, to perform the evaluation. She was of the opinion that Norelus' symptoms were
consistent with those exhibited by people suffering from Post-Traumatic Stress Disorder. The
record contains no evidence, however, that Dr. Schutt-Aine formed any opinion about the source
or nature of any trauma Norelus had suffered. Id. The errata sheet was compiled by using
plaintiffs brother as a translator, having an associate read the questions and the brother translate
the questions and plaintiffs answers. Id. The court continued:
The finished product errata sheet was actually sixty-three sheets that made 868 changes
to Norelus' deposition testimony. The reason given for more than 500 of the 868 changes
to Norelus' deposition testimony was merely that Norelus [d]id not understand what was
being asked. The reasons given for most of the other changes in Norelus' testimony
were classified into three broad categories: poor translation by interpreter,
clarification of response, and refreshed recollection. At the end of the lengthy errata
sheet Norelus signed a sworn statement certifying that she had read the transcript of her
deposition and that it is a true and accurate recording of the proceedings had at the time
and place designated with the exceptions, if any, on the ERRATA sheet.
Id. at 1278. This was about four weeks before the start of trial. The court held that the
improper submission of the massive errata document rendered the eight days spent on Norelus'
deposition a waste of time and money to say nothing of the time the attorneys were forced to
spend on the issues created by the document itself, and that this violated 28 U.S.C. 1927. The
court identified the specific issue it was deciding:
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The issue is not whether bringing the action in the first place was sanctionable. The issue
is not even whether continuing to pursue the case after all of Norelus' witnesses refused
to corroborate her claims was sanctionable. The issue is whether creating and submitting
the sixty-three page errata document and then continuing to press forward with Norelus'
claims, which had been left completely unsupported once the errata document rendered
her testimony useless, constituted conduct sanctionable under 1927.
Id. at 1291-92. The court stated that plaintiff and her counsel were not being sanctioned for the
lack of corroborating witnesses, although it would have been likely that there would have been
corroborating witnesses if plaintiffs testimony had been true:
. . . this is not a case where the claimed harassment occurred only when the victim and
abusers were behind closed doors or in a manner in which there likely would be no
corroboration. To the contrary, Norelus claimed not only that her managers sexually
harassed her virtually every day for eleven months, but also that they regularly raped her
and forced her to perform oral sex on a near-daily basis. She claimed most of the abuse
occurred in one of two relatively small restaurants where there were few, if any, places to
hide. If the alleged acts actually happened, they happened where many of them would
have been seen or heard by other employees. This is a case where the plaintiff claimed
that at least seven of her co-workers witnessed at least some of sexual abuse during the
eleven months it allegedly had occurred over and over again. This is not a case in which
it is unreasonable to expect corroborating evidence. It is a case in which, if the plaintiff's
story were true, it would be incredible not to have some corroborating evidence.
Id. at 1292. The court held that the fees and costs incurred by defendants were a proper part of
the sanctions award. Id. at 1297-1302. District Judge Bowen, sitting by designation, declined to
join Part III-C of the opinion. Id. at 1302. Judge Tjoflat dissented. Id. at 1302-12.
Sanction Reversed for Procedural Error: Amlong & Amlong, P.A. v. Dennys, Inc.,
457 F.3d 1180, 98 FEP Cases 1617 (11th Cir. 2006), reversed $400,000 in sanctions against
counsel for plaintiff in an unsuccessful sexual harassment lawsuit, because the lower court
engaged in plenary review of findings of fact made by a magistrate judge who had conducted an
evidentiary hearing, and did not conduct an evidentiary hearing of her own. The court stated at
1184: After thorough review, we conclude that the district court committed reversible error
when, after referring the issue of sanctions to a magistrate judge for an evidentiary hearing and
Report and Recommendation, the district court discarded numerous findings of fact and
credibility determinations made by the magistrate judge and substituted its own findings of fact
on bad faith, without conducting any evidentiary hearing. The district court also abused its
discretion in ordering the Amlongs to pay 10 percent back interest on a portion of the sanctions,
and we, therefore, reverse that portion of the sanctions award too.
Q. Taxes
1. Attorneys Fees
Commissioner v. Banks, 543 U.S. 426, 94 FEP Cases 1793 (2005), held that, when a
clients recovery constitutes gross income, the client must pay income tax on the part of the
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recovery paid directly to the attorney as a contingent fee for services performed in obtaining the
taxable income, under a contingent fee arrangement. The Court left some issues open, such as
the tax effect of a court-awarded fee. It is important to keep in mind that this rule does not apply
to the fees that generated nontaxable income or other nontaxable relief, such as an injunction.
Congress has passed, and the President has signed, the provision of the Civil Rights Tax
Relief Act barring the double taxation of attorneys fees and costs. Sec. 703 of the American
Jobs Creation Act of 2004, creates an above-the-line deduction for attorneys fees and costs. It is
not subject to the Alternative Minimum Tax or the 2%-of-adjusted-gross-income exclusion.
The bill applies to a wide variety of civil rights and employment statutes, including Title
VII, the ADA, the ADEA, the NLRA, the FLSA, the Rehab Act, 510 of ERISA, Title IX, the
Employee Polygraph Protection Act, WARN, the FMLA, USERRA, 1981, 1983, and 1985,
the Fair Housing Act of 1968, Federal whistleblower claims, and a beautiful catch-all: Any
provision of Federal, State, or local law, or common law claims permitted under Federal, state, or
local law(i) providing for the enforcement of civil rights, or (ii) regulating any aspect of the
employment relationship . . . .
It is doubly prospective: The amendments made by this section shall apply to fees and
costs paid after the date of enactment of this Act with respect to any judgment or settlement
occurring after such date.
2. The Civil Rights Tax Fairness Act Glitch
The Civil Rights Tax Fairness Act has a technical glitch in its wording. It defines
adjusted gross income as not including Any deduction allowable under this chapter for attorney
fees and court costs paid by, or on behalf of, the taxpayer in connection with any action
involving a claim of unlawful discrimination . . . . The preceding sentence shall not apply to any
deduction in excess of the amount includible in the taxpayers gross income for the taxable year
on account of a judgment or settlement (whether by suit or agreement and whether as lump sum
or periodic payments) resulting from such claim.
The first sentence seems to require an action, but the second sentence also refers to
suits and agreements.
The question is whether the CRTRA protects attorneys fees paid in connection with a
settlement or arbitration or mediation or even an EEOC conciliation before a lawsuit is filed.
The IRS has not yet come up with any regulations.
Plaintiffs attorneys should urge clients with pre-suit settlements about this
question, give them information in writing, and urge them to consult a tax adviser.
3. Emotional-Distress Damages
Murphy v. Internal Revenue Service, 493 F.3d 170 (D.C. Cir. 2007), overturned its own
earlier decision and held that the Constitution allows imposition of the income tax on emotional-
distress damages unrelated to earnings.
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4. Grossing Up Awards to Compensate for the Additional Taxes
Eshelman v. Agere Systems, Inc., 554 F.3d 426, 441-42, 21 AD Cases 865 (3d Cir.
2009), affirmed the award of an additional amount to compensate the ADA plaintiff for the
additional taxes due on her lump-sum recovery, stating:
We hold that a district court may, pursuant to its broad equitable powers granted
by the ADA, award a prevailing employee an additional sum of money to compensate for
the increased tax burden a back pay award may create. Our conclusion is driven by the
make whole remedial purpose of the antidiscrimination statutes. Without this type of
equitable relief in appropriate cases, it would not be possible to restore the employee to
the economic status quo that would exist but for the employer's conduct.
(Citation omitted.) The court accepted the uncontradicted evidence of plaintiffs economics
expert and upheld the $6,893.00 award to compensate her for the negative tax consequences of
receiving a lump sum back pay award. Id. at 442-43.
2007), reversed the lower courts order grossing up the monetary award by 14% to compensate
for the higher rate of taxes when several years of back pay are received in a single year. Quoting
a 1994 case, the court stated: Absent an arrangement by voluntary settlement of the parties, the
general rule that victims of discrimination should be made whole does not support gross-ups' of
backpay to cover tax liability. We know of no authority for such relief. Judge Henderson
concurred.
5. Tax Disputes Do Not Affect Finality of Settlement
Rivera v. Baker West, Inc., 430 F.3d 1253, 97 FEP Cases 4 (9th Cir. 2005), affirmed the
dismissal of the Title VII plaintiffs claims pursuant to a settlement agreement, rejecting
plaintiffs argument that defendant had not complied with the settlement agreement because it
withheld taxes despite his being a former employee, holding that the recovery should be
construed as a back-pay recovery, and rejecting his argument that his back pay recovery was a
tort recovery in a personal-injury case.
2754
July 28 - 30, 2011
Multijurisdictional Ethics and Practice Issues and GATS
By
Richard T. Seymour
Law OIIice oI Richard T. Seymour, P.L.L.C.
Washington, D.C.
2755
Section of Labor and Employment Law
International Labor and Employment Law Committee
Midwinter Meeting, Berlin, Germany, May 11, 2011
Multijurisdictional Ethics and
Practice Issues, and GATS
by
Richard T. Seymour
A. Problems of Out-of-State In-House Labor and Employment Law Counsel ....................... 2

1. The Practical Situation.................................................................................................. 2
2. The Resolution .............................................................................................................. 2
3. The Current Text of Model Rule 5.5 ............................................................................ 3
4. Actions by State Bars ................................................................................................... 4
B. GATS .................................................................................................................................. 4
1. What It Is ...................................................................................................................... 4
2. The Application of GATS to Legal Services ................................................................ 6
3. Information from the American Bar Association ......................................................... 6
C. Foreign Legal Consultants .................................................................................................. 6
D. State Bar Rules on Temporary Practice by Foreign Lawyers ............................................. 7
E. ABA Ethics 20/20 Commission .......................................................................................... 7
1. Multijurisdictional Practice .......................................................................................... 7
2. Alternative Business Structures .................................................................................... 8
F. The Akzo Nobel Decision ................................................................................................... 9
1. U.S. Background as to In-House Counsel and Privilege .............................................. 9
2. The European Court of Justice Decision .................................................................... 11
3. Effect of the Decision on U.S. Courts ........................................................................ 16
G. Issues at the Edge of U.S. Ethics Developments .............................................................. 16
1. Employee Theft of Employers Documents ............................................................... 16
2. Invading the Privacy of Others E-Mails .................................................................... 19
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A. Problems of Out-of-State In-House Labor and Employment Law Counsel
1. The Practical Situation
Both corporate and union in-house counsel routinely travel on behalf of their employers
to States in which they are not admitted, to participate in collective bargaining, help handle
significant grievances, participate in arbitrations under a collective bargaining agreement,
investigate internal complaints, help initiate or respond to unfair labor practice charges, respond
to EEOC complaints, train their respective officials, render legal advice, and direct or assist
outside counsel.
Similarly, in-house counsel for a variety of tax-exempt associations with local chapters
often need to travel to local chapters in various States to perform some of the same types of
functions as in-house corporate or union counsel. These can include civil rights organizations,
trade associations, organizations of employers, and the like.
The activities of in-house counsel are not the types of activities that have traditionally
caused the problems that have led to charges of the unauthorized practice of law (UPL), and
there are no clients potentially misled about the qualifications of the counsel seeking to be
retained. Nevertheless, the traditional wording of ULP provisions in many States could reach
such activities.
2. The Resolution
The ABA Commission on Multijurisdictional Practice developed revisions to Model Rule
of Professional Conduct 5.5, to provide a safe harbor for in-house counsel while recognizing the
interest of State Bars in regulating the practice of law within their own borders.
In 2007 and 2008, the ABA was considering a revision under which in-house counsel
would have a safe harbor if they registered with the State Bars of every State in which they were
not admitted but engaged in professional activity. A fee would have been charged for the
proposal.
There were objections. The Council of the Section of Labor and Employment Law
established a task force to address the problems, and ultimately urged significant changes in the
proposal. Among other problems, we pointed out the multitude of States in which our in-house
members had to carry out their professional responsibilities, and that the expense of paying that
many registration fees per attorney would in some instances cost more than the salaries of the
attorneys. The result would be either a significant deterioration of the ability of the corporation,
union, or organization to continue performing essential legal services, with layoffs of attorneys
likely, or cause a significant distortion in allocation of the limited resources of the corporation,
union, or organization.
Law Office of Richard T. Seymour, P.L.L.C., 1150 Connecticut Avenue N.W., Suite 900, Washington,
D.C. 20036-4129. Telephone: 202-862-4320. Cell: 202-549-1454. Facsimile: 800-805-1065. E-mail:
[email protected]. Copies of a number of my CLE papers are on my web site, www.rickseymourlaw.com.
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A copy of the Sections August 8, 2008 Statement to the House of Delegates is attached.
1
It was widely circulated. The sponsors of the measure met with our Sections delegates to the
House, and we jointly worked out wording that resolved our problems. The Section then co-
sponsored the measure, and it passed.
3. The Current Text of Model Rule 5.5
Rule 5.5 Unauthorized Practice Of Law; Multijurisdictional Practice Of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the
legal profession in that jurisdiction, or assist another in doing so.
(b) A lawyer who is not admitted to practice in this jurisdiction shall not:
(1) except as authorized by these Rules or other law, establish an office or other
systematic and continuous presence in this jurisdiction for the practice of law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to
practice law in this jurisdiction.
(c) A lawyer admitted in another United States jurisdiction, and not disbarred or
suspended from practice in any jurisdiction, may provide legal services on a temporary
basis in this jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in this
jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a
tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is
assisting, is authorized by law or order to appear in such proceeding or reasonably
expects to be so authorized;
(3) are in or reasonably related to a pending or potential arbitration, mediation, or
other alternative dispute resolution proceeding in this or another jurisdiction, if
the services arise out of or are reasonably related to the lawyers practice in a
jurisdiction in which the lawyer is admitted to practice and are not services for
which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably
related to the lawyers practice in a jurisdiction in which the lawyer is admitted to
practice.
(d) A lawyer admitted in another United States jurisdiction, and not disbarred or
suspended from practice in any jurisdiction, may provide legal services in this
jurisdiction that:
1
We were not alone in seeing these problems. A copy of the October 10, 2007 statement of the
Association of Corporate Counsel on the then version of proposed changes to Model Rule 5.5 is also attached.
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(1) are provided to the lawyers employer or its organizational affiliates and are
not services for which the forum requires pro hac vice admission; or
(2) are services that the lawyer is authorized to provide by federal law or other
law of this jurisdiction.
4. Actions by State Bars
State Bars across the country are considering the changes, and many have amended their
rules in conformance with the revised ABA Model Rule 5.5.
The ABAs June 23, 2010 paper, State Implementation of ABA MJP Policies, has a State-
by-State listing of those States that have adopted rules that are identical or similar to ABA Model
Rule 5.5. Some, like Arizona and Connecticut, have additional requirements to be met. Some,
like California and Colorado, have their own provisions that differ from those in the ABAs
Model Rule.
x Practice Pointer: Before going to a State to engage in any professional activity on behalf
of a client where there is no pro hac vice admission or pending litigationthe situation in
which these problems most often arisecheck that States rules.
B. GATS
1. What It Is
The General Agreement on Trade in Services, or GATS, is an international treaty to
which the United States is a signatory. The following description is from a June 29, 2010 paper,
EMILY C. BARBOUR, LEGISLATIVE ATTORNEY, CONGRESSIONAL RESEARCH SERVICE, TRADE
LAW: AN INTRODUCTION TO SELECTED INTERNATIONAL AGREEMENTS AND U.S. LAWS, at 25-27,
but with the paragraph indentations required by proper usage:
General Agreement on Trade in Services
The General Agreement on Trade in Services (GATS) is designed to liberalize
trade in services. Unlike international trade in goods, which is largely governed by
measures imposed at countries borders, trade in services tends to be governed mostly by
internal regulations. Internal regulations might, for example, restrict the number of
drugstores allowed within a geographical area, define technical safety requirements for
airline companies, or prohibit banks from selling certain financial products. As this list
suggests, the GATS disciplines a wide range of domestic measures, but some of its
provisions, including those on market access and national treatment, are limited by the
scope of each countrys commitments, which are defined in the national schedules and
subject to progressive reduction .
If the specific service sector being regulated by a Members measure is not
exempted or excluded from the relevant provisions of the GATS, the GATS disciplines a
broad swath of domestic measures affecting trade in that service sector. The GATS does
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not define service, however, and, instead, regulates the supply of a service in four
modes: (1) from a service supplier in one Member to a consumer in another Member
without travel (e.g., an architecture firm mails blueprints to a consumer overseas), (2) in
the territory of one Member to a consumer of any other Member (e.g., in the U.S. to a
foreign tourist), (3) by a service supplier of one Member with a commercial presence in
the territory of any other member (e.g., by a commercial bank with branches in a foreign
country), and (4) by a service supplier of one Member travelling temporarily to provide
services in another Member (e.g., by a consultant on an overseas business trip).
Among the measures that affect trade in services and are subject to the GATS are
laws, regulations, procedures, and administration actions that concern the purchase,
payment, or use of a service and are issued by a central, regional, or local government.
Only measures affecting the supply of services in the exercise of governmental authority
are excluded from GATS obligations. By broadly defining service and supply of
service, the GATS disciplines not merely measures affecting the supply of the actual
service (e.g., a measure regulating the supply of accounting services to an overseas firm)
but also measures affecting the production, distribution, marketing, sale, and delivery of
that service.
Because the GATS permits Members to specify how they will reduce market
access barriers to trade in services, whether a particular measure is GATS-inconsistent
generally hinges on the scope of the national schedules of commitments of the Member
imposing the measure. Unlike the GATT, under which the nondiscrimination provisions
apply to goods from all Members, the GATS permits Members to schedule (1)
exemptions from the Most Favored Nation (MFN) treatment obligation, and (2) specific
service sector commitments to the national treatment obligation. As a result, each
Member limits the scope of its obligations not to discriminate between services provided
by firms from different Members and between services provided by foreign, rather than
domestic, firms. In addition to its basic obligations and Members national schedules of
commitments, the GATS also contains a number of annexes addressing the special
situations of individual services sectors.
The GATS does not compel a government to privatize services industries or
outlaw government or private monopolies. However, the GATS is concerned with
increasing transparency.
Consequently, similar to the Agreements on Technical Barriers to Trade and
Sanitary and Phytosanitary Measures, Article III of the GATS requires governments to
publish all relevant laws and regulations and to set enquiry points that can provide
foreign companies and governments with information about entering and competing in a
service sector. This is particularly important because the services sectors may be
regulated by multiple government entities at both the national and local levels.
Consequently, service providers seeking to do business internationally may be stymied by
a lack of transparency in how a country licenses its service providers or regulates service
delivery. U.S. service providers continue to cite the lack of transparency in the
development and implementation of foreign countries regulations as a primary obstacle
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to increasing foreign trade in services. If the policy goals behind the GATS are achieved,
Members will presumably have an improved understanding of all other Members
services regulations.
This paper can be downloaded from http://fpc.state.gov/documents/organization/145587.pdf.
2. The Application of GATS to Legal Services
The May 2002 International Bar Association Handbook on GATS states at p. 6:
Were All Countries Pleased that Legal Services Were Covered by the GATS?
Legal services were included within the coverage of the GATS despite the
objections of some countries. France, for example, did not want legal services to be
covered by the GATS. Although the United States initially sought inclusion of legal
services in the GATS and preferred a special annex addressing legal services, the annex
approach was rejected and, by the conclusion of the GATS negotiations, many U.S.
lawyers were unhappy that legal services had been included. Regardless of objections,
however, legal services are now part of the GATS.
The Handbook can be downloaded from
http://www.personal.psu.edu/faculty/l/s/lst3/IBA%20GATS%20Handbook%20final.pdf.
3. Information from the American Bar Association
The ABA has established a web site for members to keep abreast of these developments,
http://www.abanet.org/cpr/gats/home.html. It explains:
Negotiations for the U.S. are coordinated by the Office of the U.S. Trade
Representative. USTR representatives have indicated that they do not intend to displace
state regulation of lawyers and have made efforts to consult with U.S. lawyers concerning
these events. To date, however, the USTR has heard from relatively few U.S. lawyers
concerning these important issues. This website has been established in order to increase
awareness about the GATS and the implications it has for the delivery of legal services.
Comments on the website and additional submissions are welcome.
C. Foreign Legal Consultants
The ABA has a Model Rule for the Licensing and Practice of Foreign Legal Consultants,
which is attached.
According to the ABAs June 23, 2010 paper, State Implementation of ABA MJP
Policies, several States have adopted rules on the activities of non-U.S. legal consultants. These
rules generally apply only to in-house counsel.
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These include Alaska, Arizona, California, Connecticut, Delaware, the District of
Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan,
Minnesota, Missouri, New Jersey, New Mexico, New York, North Carolina, North Dakota,
Ohio, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia, and Washington.
A detailed analysis comparing the State rules with the ABA Model Rule, as of May 2006,
is provided in CAROLE SILVER AND NICOLE DEBRUIN, COMPARATIVE ANALYSIS OF UNITED
STATES RULES LICENSING LEGAL CONSULTANTS. It can be downloaded from
http://www.abanet.org/cpr/mjp/silver_flc_chart.pdf.
D. State Bar Rules on Temporary Practice by Foreign Lawyers
The American Bar Associations House of Delegates adopted in 2002 a resolution on
temporary practice within the United States by foreign lawyers. The report can be downloaded
from http://www.abanet.org/cpr/mjp/201j.pdf.
According to the ABAs June 23, 2010 paper, State Implementation of ABA MJP
Policies, several States have adopted rules on temporary practice of law by foreign attorneys.
These include Delaware, the District of Columbia (incidental legal practice only),
Florida, Georgia, Illinois (in-house counsel only), New Hampshire, New Mexico, Pennsylvania,
and Virginia.
E. ABA Ethics 20/20 Commission
1. Multijurisdictional Practice
The Ethics 20/20 Commission is looking at potential revisions of the ethics rules,
including multijurisdictional practice, a term that includes multinational practice.
The speakers and their papers at the 20/20 Ethics Commissions August 6, 2010 hearing
can be downloaded from http://www.abanet.org/ethics2020/speakers.pdf.
On March 29, 2011, the Ethics 20/20 Commission released an issue paper and requested
comments by June 1, 2011 on specific questions on opening up domestic cross-border practice
(i.e., a lawyer admitted in one State and practicing in another, and on broadening the rules
multijurisdictional rules under which non-U.S. attorneys may practice in the U.S. A copy of its
paper and invitation for comments are included in the materials. The march 29 paper repprted
the following:
7/ Forty-four United States jurisdictions now have some form of Model Rule 5.5. See
http://www.americanbar.org/content/dam/aba/migrated/cpr/mjp/quick_guide_5_5.authch
eckdam.pdf. Fourteen jurisdictions have adopted a rule identical to the ABA Model
Rule, and thirty jurisdictions have adopted a rule similar to ABA Model Rule 5.5. Of the
thirty jurisdictions that have adopted a rule similar to ABA Model Rule 5.5, some of the
differences between what has been adopted and the ABA Model Rule are as follows:
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x Eight jurisdictions (CT, ID, KY, ME, NJ, NC, SC, and TN) require that the
temporary legal services provided in the host jurisdiction be reasonably related to
the representation of an existing client in the jurisdiction where the lawyer is
licensed. The Model Rule provides that the services need only be reasonably
related to the lawyers practice in the jurisdiction where the lawyer is licensed.
x Six jurisdictions (DE, DC, FL, GA, PA, and VA) expressly allow temporary
practice by foreign (non-U.S.) lawyers. In addition, North Carolinas rule appears
to permit such temporary practice by omitting reference to the words U.S.
jurisdiction.
x Four jurisdictions (CT, NV, NJ, and SC) require out-of state lawyers to register in
the host jurisdiction and pay a fee.
x Two jurisdictions (NM and ND) require the out-of-state lawyer to associate with
an in-state lawyer in transactions involving issues specific to the host
jurisdictions law.
x Two jurisdictions (MN and WI) provide that the lawyer would not be disciplined
in the state in which the lawyer is licensed for engaging in conduct in the host
jurisdiction that is permitted in the home jurisdiction.
x One jurisdiction (SD) requires the out-of-state lawyer to obtain a sales tax license
and to pay applicable taxes.
Part III of the Ethics 20/20 paper raises larger questions:
III. Alternative Approaches to Multjurisdictional Practice
Rather than relying on a professional conduct rule to regulate multijurisdictional practice,
several alternatives exist. For example, one United States jurisdiction Colorado
regulates multijurisdictional practice within its rules governing admission to the bar
(rather than in its rules of professional conduct) and provides for more permissive
multijurisdictional practice than Model Rule 5.5. Moreover, some countries have adopted
interstate compacts and forms of mutual recognition that permit lawyers to move between
jurisdictions with greater ease than is typically found within the United States. These
approaches are described below.
The paper then describes the practices of Colorado, Canadas Interprovincial Compact
Model (Temporary Mobility, Permanent Mobility, and Quebec Mobility), The European
Unions System of Mutual Recognition, and the Australian Model.
2. Alternative Business Structures
On April 5, 2011, the ABA Ethics 20/20 Commission issued a discussion draft on
Alternative Business Structures (ABS), i.e., structures in which nonlawyers may have part of
the ownership. The only U.S. jurisdiction allowing such a structure is the District of Columbia,
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and any such structure can operate only within the District of Columbia. Comments are due by
June 1, 2011. A copy of the paper is in the materials.
Part III of the issues paper deals with alternative business structures abroad. It begins
with the following overview:
III. ABS Abroad
As noted in the Introduction, since July 2000, few jurisdictions within the United States
have examined the issue of multidisciplinary practices or any other form of ABS. Other
countries, however, have moved forward in this area, adopting a wide range of
approaches. The competitive environment in which U.S. firms of all sizes now operate
has changed, and at least one New York-based litigation firm with fewer than 40 lawyers
converted its office in London, England to operate as a Legal Disciplinary Partnership
(LDP), a form of ABS discussed below that permits up to 25% of a law firms
partnership to be formed by nonlawyers. Accordingly, while the regulatory environment
elsewhere may not directly map the regulatory structures in place in the United States,
U.S. firms and lawyers are already participating in ABS abroad. The discussion is no
longer simply theoretical.
Further, the impact of the economic challenges of the intervening period also invites
reconsideration of whether ABS might serve to enhance access to legal services for those
otherwise unable to afford them, and to provide new and varied opportunities for lawyers
and firms domestically to better serve the public. Though many of the issues and
concerns present in the period leading up to the July 2000 resolution remain at the core of
the assessment of ABS, the domestic and global context within which they are to be
considered has changed.
The paper then discusses such structures in Australia, Canada, England and Wales, Scotland,
Germany, the Netherlands, and New Zealand.
F. The Akzo Nobel Decision
1. U.S. Background as to In-House Counsel and Privilege
At least in the United States, in-house counsel play a dual role, sometimes acting as
attorneys and sometimes acting as business managers, and sometimes acting as both.
It is black-letter law in the United States that corporations are protected by the attorney-
client privilege as to communications with and for in-house counsel to the same extent as they
enjoy the protection for outside counsel, to the extent that in-house counsel acted as attorneys
rather than business managers, and have no attorney-client privilege with respect to
communications with and for in-house counsel to the extent that the in-house counsel acted as
business managers. The same is true for attorney work-product privilege.
See generally Quantum Systems Integrators, Inc. v. Sprint Nextel Corp., 338 Fed.Appx.
329, (4th Cir. 2009) (recognizing attorney-client privilege applied to in-house counsel and
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holding that the privilege was not waived by narrow testimony compelled by the court); Gagnon
v. Sprint Corp., 284 F.3d 839, 855-56 (8th Cir. 2002), cert. denied, 537 U.S. 1001, 1014 (2002)
(applying attorney-client and work-product privilege to internal investigation by in-house
counsel); American Natl Bank and Trust Co. of Chicago v. Equitable Life Assur. Soc. of U.S.,
406 F.3d 867, 870 (7th Cir. 2005) (distinguishing between privileged legal activities and non-
privileged business activities of in-house counsel).
ABA Formal Ethics Opinion 99-415 on Representation Adverse to Organization by
Former In-House Lawyer (September 8, 1999), held that in-house counsel transferring to a law
firm is under the same type of restraints as to his or her former work for the corporation as
outside counsel would have been. The ABAs summary of its decision is:
When an in-house lawyer moves to a law firm or another legal department, both
he and his new law firm have ethical obligations that limit their ability to handle matters
adverse to his former employer. If the former in-house lawyer personally represented his
employer in a matter, neither he nor his new firm may undertake a representation adverse
to his former employer in the same or a substantially related matter absent the former
employer's consent. Even if the former in-house lawyer did not personally represent his
former employer in a matter, but obtained protected information concerning that matter
while it was being handled by others in his legal department, he will be disqualified and
his disqualification will be imputed to his new firm.
Having borne supervisory responsibility for a matter without some personal
involvement does not necessarily mean that the former in-house lawyer personally
represented his former employer with respect to that matter. Similarly, the fact that he
was responsible for matters of a particular type will not by itself preclude him from
representing a client in a similar matter in which the former employer is an adverse party.
(Italics omitted.)
There are other limits in the United States on privilege as to in-house counsel. For
example, the Fourth Circuit has held that in-house counsel for a corporation represents the
corporation, does not necessarily have a personal attorney-client relationship with its sole
shareholder, the existence of such a relationship requires a subjective personal belief by the
individual claiming protection that was reasonable under the circumstances. In the absence of
such a relationship, in-house counsel can be subpoenaed as to conversations with the sole
shareholder. In re Grand Jury Subpoena: Under Seal, 415 F.3d 333, 339 (4th Cir. 2005), cert.
denied, 546 U.S. 1131 (2006), stated:
The person seeking to invoke the attorney-client privilege must prove that he is a
client or that he affirmatively sought to become a client. The professional relationship ...
hinges upon the client's belief that he is consulting a lawyer in that capacity and his
manifested intention to seek professional legal advice. United States v. Evans, 113 F.3d
1457, 1465 (7th Cir.1997). An individual's subjective belief that he is represented is not
alone sufficient to create an attorney-client relationship. See United States v. Keplinger,
776 F.2d 678, 701 (7th Cir.1985) (We think no individual attorney-client relationship
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can be inferred without some finding that the potential client's subjective belief is
minimally reasonable); see also, In re. Grand Jury Subpoena Duces Tecum, 112 F.3d
910, 923 (8th Cir.1997) ( [W]e know of no authority ... holding that a client's beliefs,
subjective or objective, about the law of privilege can transform an otherwise
unprivileged conversation into a privileged one.). Rather, the putative client must show
that his subjective belief that an attorney-client relationship existed was reasonable under
the circumstances.FN4
FN4. This court addressed the question of whether a corporate employee could
personally assert the attorney-client privilege for communications with corporate counsel
conducting an internal investigation in United States v. Aramony, 88 F.3d 1369 (4th
Cir.1996). In Aramony, this court affirmed the finding of the district court that Aramony
was not the client of internal investigation counsel. The court noted that Aramony did
not seek legal advice; Aramony could not have reasonably believed that the information
he disclosed would be kept confidential; and internal investigation counsel told Aramony
that they were retained to represent the company. Id. at 1390-92.
See also United States v. Okun, 281 Fed.Appx. 228 (4th Cir. 2008) (sole shareholder of company
employing in-house counsel did not have an objectively reasonable belief that in-house counsel
represented him).
A company that relies on the advice of counsel defense in patent infringement litigation
waives attorney-client and work-product privilege on the subject whether the counsel were in-
house or outside. E.g., In re Seagate Technology, LLC, 497 F.3d 1360, 1370 (Fed. Cir. 2007),
cert. denied, 552 U.S. 1230 (2008).
2. The European Court of Justice Decision
On September 14, 2010, the European Court of Justice held in Akzo Nobel Chemicals
Limited and Akcros Chemicals Limited v Commission of the European Communities that in-
house counsel are by definition not sufficiently independent of their employers to constitute the
types of attorneys with whom communications are subject to legal professional privilege.
The key parts of the decision are as follows:
1. The first ground of appeal
30 Akzo and Akcros base the first ground of appeal on two arguments. They submit,
first of all, that the General Court incorrectly interpreted the second condition for legal
professional privilege, which concerns the professional status of the lawyer with whom
communications are exchanged, as laid down in the AM & SEurope v Commission
judgment, and, second, that by that interpretation the General Court breached the
principle of equality.
31 The Commission submits that that ground of appeal is unfounded.
(a) The first argument
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(i) Arguments of the parties
32 Akzo and Akcros submit that the General Court, in paragraphs 166 and 167 of the
judgment under appeal, gave a literal and partial interpretation in AM & SEurope v
Commission of the second condition of legal professional privilege relating to the
lawyers status. The General Court should have chosen a teleological interpretation of
that condition and should have held that the exchanges at issue were protected by that
principle.
33 Akzo and Akcros submit that paragraph 21, read in conjunction with paragraph 24,
of AM & S Europe v Commission, reveals that the Court of Justice does not equate the
existence of an employment relationship with a lack of independence on the part of the
lawyer.
34 Akzo and Akcros, and a number of the interveners, submit that the criterion that the
lawyer must be independent cannot be interpreted so as to exclude in-house lawyers. An
in-house lawyer enrolled at a Bar or Law Society is, simply on account of his obligations
of professional conduct and discipline, just as independent as an external lawyer.
Furthermore, the guarantees of independence enjoyed by an advocaat in
dienstbetrekking, that is an enrolled lawyer in an employment relationship under Dutch
law, are particularly significant.
35 Akzo and Akcros observe that the rules of professional ethics and discipline
applicable in the present case make the employment relationship fully compatible with
the concept of an independent lawyer. They argue that the contract between Mr S. and the
company which employed him provided that the company was to respect the lawyers
freedom to perform his functions independently and to refrain from any act which might
affect that task. The contract also authorised Mr S. to comply with all the professional
obligations imposed by the Netherlands Bar.
36 Akzo and Akcros add that the employed lawyer concerned in this case is subject to
a code of conduct and to the supervision of the Netherlands Bar. Furthermore, regulations
lay down a certain number of additional guarantees aiming to resolve in an impartial
manner any differences of opinion between the undertaking and its in-house lawyer.
37 The Commission states that the application, by the General Court, of legal
professional privilege was correct. It is clear from paragraphs 24 to 26 of the judgment in
AM & S Europe v Commission that the fundamental quality required of a lawyer so that
communications with him are privileged is that he is not an employee of his client.
38 Accordingly, in the Commissions view, if the Court had wanted legal professional
privilege to apply also to communications exchanged with lawyers who are employed by
the person who asks their advice, it would not have limited the scope of the second
condition, as set out in paragraph 21 of AM & S Europe v Commission.
39 The Commission submits that in AM & S Europe v Commission the Court placed
lawyers in one of the following two categories: (i) employed salaried lawyers and (ii)
lawyers who are not bound by a contract of employment. Only documents drafted by
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lawyers in the second category were regarded as being covered by legal professional
privilege.
(ii) Findings of the Court
40 It must be recalled that, in AM & S Europe v Commission, the Court, taking
account of the common criteria and similar circumstances existing at the time in the
national laws of the Member States, held, in paragraph 21 of that judgment, that the
confidentiality of written communications between lawyers and clients should be
protected at Community level. However, the Court stated that that protection was subject
to two cumulative conditions.
41 In that connection, the Court stated, first, that the exchange with the lawyer must
be connected to the clients rights of defence and, second, that the exchange must
emanate from independent lawyers, that is to say lawyers who are not bound to the
client by a relationship of employment.
42 As to the second condition, the Court observed, in paragraph 24 of the judgment in
AM & S Europe v Commission, that the requirement as to the position and status as an
independent lawyer, which must be fulfilled by the legal adviser from whom the written
communications which may be protected emanate, is based on a conception of the
lawyers role as collaborating in the administration of justice and as being required to
provide, in full independence and in the overriding interests of that cause, such legal
assistance as the client needs. The counterpart to that protection lies in the rules of
professional ethics and discipline which are laid down and enforced in the general
interest. The Court also held, in paragraph 24, that such a conception reflects the legal
traditions common to the Member States and is also to be found in the legal order of the
European Union, as is demonstrated by the provisions of Article 19 of the Statute of the
Court of Justice.
43 The Court repeated those findings in paragraph 27 of that judgment, according to
which written communications which may be protected by legal professional privilege
must be exchanged with an independent lawyer, that is to say one who is not bound to
his client by a relationship of employment.
44 It follows that the requirement of independence means the absence of any
employment relationship between the lawyer and his client, so that legal professional
privilege does not cover exchanges within a company or group with in-house lawyers.
45 As the Advocate General observed in points 60 and 61 of her Opinion, the concept
of the independence of lawyers is determined not only positively, that is by reference to
professional ethical obligations, but also negatively, by the absence of an employment
relationship. An in-house lawyer, despite his enrolment with a Bar or Law Society and
the professional ethical obligations to which he is, as a result, subject, does not enjoy the
same degree of independence from his employer as a lawyer working in an external law
firm does in relation to his client. Consequently, an in-house lawyer is less able to deal
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effectively with any conflicts between his professional obligations and the aims of his
client.
46 As regards the professional ethical obligations relied on by the appellants in order
to demonstrate Mr S.s independence, it must be observed that, while the rules of
professional organisation in Dutch law mentioned by Akzo and Akcros may strengthen
the position of an in-house lawyer within the company, the fact remains that they are not
able to ensure a degree of independence comparable to that of an external lawyer.
47 Notwithstanding the professional regime applicable in the present case in
accordance with the specific provisions of Dutch law, an in-house lawyer cannot,
whatever guarantees he has in the exercise of his profession, be treated in the same way
as an external lawyer, because he occupies the position of an employee which, by its very
nature, does not allow him to ignore the commercial strategies pursued by his employer,
and thereby affects his ability to exercise professional independence.
48 It must be added that, under the terms of his contract of employment, an in-house
lawyer may be required to carry out other tasks, namely, as in the present case, the task of
competition law coordinator, which may have an effect on the commercial policy of the
undertaking. Such functions cannot but reinforce the close ties between the lawyer and
his employer.
49 It follows, both from the in-house lawyers economic dependence and the close ties
with his employer, that he does not enjoy a level of professional independence
comparable to that of an external lawyer.
50 Therefore, the General Court correctly applied the second condition for legal
professional privilege laid down in the judgment in AM & S Europe v Commission.
51 Accordingly, the first argument put forward by Akzo and Ackros under the first
ground of appeal cannot be accepted.
(b) The second argument
(i) Arguments of the parties
52 Akzo and Akcros submit that, in paragraph 174 of the judgment under appeal, the
General Court wrongly rejected the claim that refusing to apply legal professional
privilege to correspondence exchanged with an in-house lawyer violates the principle of
equal treatment. The independence guaranteed by the rules of professional ethics and
discipline applicable in the present case should be the benchmark for determining the
scope of that principle. According to that criterion, the position of in-house lawyers
enrolled with a Bar or Law Society is no different from that of external lawyers.
53 The Commission takes the view that the General Court, in paragraph 174 of the
judgment under appeal, rightly held that in-house lawyers and external lawyers are
clearly in very different situations, owing, in particular, to the personal, functional,
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structural and hierarchical integration of in-house lawyers within the companies that
employ them.
(iii) Findings of the Court
54 It must be recalled that the principle of equal treatment is a general principle of
European Union law, enshrined in Articles 20 and 21 of the Charter of Fundamental
Rights of the European Union.
55 According to settled case-law, that principle requires that comparable situations
must not be treated differently and that different situations must not be treated in the
same way unless such treatment is objectively justified (see Case C-344/04 IATA and
ELFAA [2006] ECR I-403, paragraph 95; Case C-303/05 Advocaten voor de Wereld
[2007] ECR I-3633, paragraph 56; and Case C-127/07 Arcelor Atlantique et Lorraine and
Others [2008] ECR I-9895, paragraph 23).
56 As to the essential characteristics of those two categories of lawyer, namely their
respective professional status, it is clear from paragraphs 45 to 49 of this judgment that,
despite the fact that he may be enrolled with a Bar or Law Society and that he is subject
to a certain number of professional ethical obligations, an in-house lawyer does not enjoy
a level of professional independence equal to that of external lawyers.
57 As the Advocate General stated, in point 83 of her Opinion, that difference in terms
of independence is still significant, even though the national legislature, the Netherlands
legislature in this case, seeks to treat in-house lawyers in the same way as external
lawyers. After all, such equal treatment relates only to the formal act of admitting an in-
house lawyer to a Bar or Law Society and the professional ethical obligations incumbent
on him as a result of such admission. On the other hand, that legislative framework does
not alter the economic dependence and personal identification of a lawyer in an
employment relationship with his undertaking.
58 It follows from those considerations that in-house lawyers are in a fundamentally
different position from external lawyers, so that their respective circumstances are not
comparable for the purposes of the case-law set out in paragraph 55 of this judgment.
59 Therefore, the General Court rightly held that there was no breach of the principle
of equal treatment.
60 Consequently, the second argument put forward as part of the first ground of
appeal must also be rejected.
61 Therefore, that ground of appeal must be rejected in its entirety.
The decision applies to European Union antitrust matters and presumably other matters,
but some advocates maintain that it will not apply to national investigations in some E.U.
countries, where national legislation makes in-house counsel independent. See, for example,
Karen Birchs excellent article on the Allen & Ovary web site discussing the case,
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http://www.allenovery.com/AOWEB/Knowledge/Editorial.aspx?contentTypeID=1&contentSub
TypeID=7944&itemID=57879&prefLangID=410 , and the following comment there:
Kees Schillemans, Anti-Trust Partner in Amsterdam, who advised the Netherlands
Bar in their intervention in this case, and Marieke van Hooijdonk, Litigation
Partner in Amsterdam, comment: The ECJ's judgment does not affect the scope of
legal privilege in national Dutch competition, civil or criminal law cases. In the context
of investigations by the Dutch competition authority, the Dutch Competition Act grants
legal privilege to all lawyers admitted to the Dutch Bar, irrespective of whether they are
in-house or external counsel. One of the most remarkable points in the judgment is that
the Court took the view that in-house lawyers can by definition not be truly independent,
while under Dutch law, in-house lawyers admitted to the Bar ("Cohen-advocaten") are to
be considered independent, provided that certain requirements to safeguard their
independence are met. As a result of the ECJ's judgment, such Cohen-advocaten can
invoke legal privilege in case of an investigation carried out on the basis of the Dutch
Competition Act, but not when the investigation is carried out on the basis of EU
competition law.
3. Effect of the Decision on U.S. Courts
A WestLaw search in the ALLCASES file did not reveal a single Federal court or State
appellate court that has referred to the Akzo Nobel decision since it came down. State trial court
decisions are frequently not covered by WestLaw, so one cannot be certain that there has not
been any decision in this area.
G. Issues at the Edge of U.S. Ethics Developments
This section is intended to give non-U.S. lawyers some things to think about in terms of
emerging U.S. developments in some States, so that they too can look with amazement and
fascination as they contemplate how such a matter would be resolved under their national law or
European Union law.
1. Employee Theft of Employers Documents
Quinlan v. Curtiss-Wright Corp., 204 N.J. 239, 8 A.3d 209, 110 Fair Empl.Prac.Cas.
(BNA) 1688 (N.J. 2010), reinstated the jury verdict for plaintiff. The court outlined the issues
before it:
Plaintiff Joyce Quinlan, then the Executive Director of Human Resources for
defendant Curtiss-Wright Corporation, believed that the company had discriminated
against her when it promoted a man she thought was less qualified than she and made
him her supervisor. In an effort to prove that her suspicions were true and that defendant
was engaged in widespread sex discrimination, plaintiff gathered documents that were
available to her in the ordinary course of her employment and turned copies of them over
to an attorney. During discovery in her discrimination lawsuit, defendant learned that
plaintiff had taken, and was continuing to take, copies of hundreds of documents it
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considered to be confidential. Following disclosure of one document that was particularly
helpful to plaintiff's claim that she had been discriminated against when she was not
selected for the promotion, defendant fired her. The letter terminating plaintiff from her
employment accused her of breach of company policies and theft. Believing that
defendant had fired her because of the prosecution of her discrimination claim, plaintiff
added a retaliation claim to her pending lawsuit.
After a lengthy and hard-fought trial, the jury agreed with plaintiff, awarding her
substantial compensatory and punitive damages. In the appeal that followed, the verdict
in her favor on the retaliation claim was reversed and remanded for a new trial and the
punitive award was vacated in its entirety. . . .
Plaintiff asks this Court to read the Law Against Discrimination (LAD), N.J.S.A.
10:5-1 to -42, broadly so that it provides complete protection for any employee who
copies and takes company documents for the purpose of helping in the prosecution of a
discrimination claim. She argues that because she was motivated by the need to assist in
the prosecution of her lawsuit and because she disclosed the documents only to her
attorneys, permitting defendant to fire her for her conduct would be contrary to the strong
remedial purposes of the LAD.
Defendant insists that the employer's right to conduct its business and its right to
demand loyalty of its employees is paramount. It argues that if this Court adopts the
approach championed by plaintiff, the effect will be to insulate conduct that is a clear
ground for termination merely because an employee had the sense to limit the disclosure
of the company's confidential documents to a lawyer. Defendant cautions this Court not
to create circumstances in which employees will be encouraged to rummage through
employers' files hoping to find something to use as a shield against what would be an
otherwise permissible termination of their employment.
Id. at 244-45. The court surveyed decisions under the Federal antidiscrimination laws,
particularly those under the opposition clause in Title VII, and found that the Sixth Circuits
decision in Niswander v. Cincinnati Ins. Co., 529 F.3d 714, 103 Fair Empl.Prac.Cas. (BNA)
1257 (6th Cir. 2008), came closest to its analysis, but decided that it had to expand Niswander to
give effect to the strong remedial purposes of New Jerseys Law Against Discrimination. Its
resulting balancing test is as follows:
First, the court should evaluate how the employee came to have possession of, or
access to, the document. If the employee came upon it innocently, for example, in the
ordinary course of his or her duties for the employer, this factor will generally favor the
employee. In that evaluation, it will not be necessary that the employee came upon the
document either inadvertently or accidentally, but it will suffice if the employee came
into possession of the document in the ordinary course of his or her duties. If, however,
the discovery of the document was due to the employee's intentional acts outside of his or
her ordinary duties, the balance will tip in the other direction. Therefore, the employee
who finds a document by rummaging through files or by snooping around in offices of
supervisors or other employees will not be entitled to claim the benefit of this factor.
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Second, the court should evaluate what the employee did with the document. If
the employee looked at it, copied it and shared it with an attorney for the purpose of
evaluating whether the employee had a viable cause of action or of assisting in the
prosecution of a claim, the factor will favor the employee. On the other hand, if the
employee copied the document and disseminated it to other employees not privileged to
see it in the ordinary course of their duties or to others outside of the company, this factor
will balance in the employer's favor.
Third, the court should evaluate the nature and content of the particular document
in order to weigh the strength of the employer's interest in keeping the document
confidential. If the document is protected by privilege, in whole or in part, if it reveals a
trade secret or similar proprietary business information, or if it includes personal or
confidential information such as Social Security numbers or medical information about
other people, whether employees or customers, the employer's interest will be strong.
Fourth, the court should also consider whether there is a clearly identified
company policy on privacy or confidentiality that the employee's disclosure has violated.
The evaluation of this factor should take into account considerations about whether the
employer has routinely enforced that policy, and whether, in the absence of a clear
policy, the employee has acted in violation of a common law duty of loyalty to the
employer.
Fifth, the court should evaluate the circumstances relating to the disclosure of the
document to balance its relevance against considerations about whether its use or
disclosure was unduly disruptive to the employer's ordinary business. In evaluating
disruptiveness, the court may consider the manner or the timing of the disclosure or use
of the document. However, the focus must be on whether the use or disclosure of the
document unduly disrupted the employer's business, rather than on any effect it had on
individual company representatives. Thus, for example, if the document had marginal
relevance to the claim of discrimination, but was intended to be used merely to cast unfair
aspersions, to divert the attention of the jury, or to sensationalize the trial, this factor
would weigh in the balance against the employee. On the other hand, if the document was
central to the discrimination claim and merely troubling or upsetting to the employee to
whom it related, the factor will more likely weigh in favor of the employee.
Sixth, the court should evaluate the strength of the employee's expressed reason
for copying the document rather than, for example, simply describing it or identifying its
existence to counsel so that it might be requested in discovery. In this evaluation, the
court should consider whether there is evidence that demonstrates that, in the absence of
the employee's act of copying the document, there was a likelihood that the employer
would not maintain it, or would have discarded it in the ordinary course of business, that
it would have been destroyed, or that its authenticity would be called into doubt. As part
of this evaluation the court may also consider whether the document would be critical to
the case, like the true smoking gun, such that the employee's perceived need to preserve
it would be entitled to greater weight in light of the significance of the risk of its loss.
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Last, but of the utmost importance, the court should evaluate how its decision in
the particular case bears upon two fundamental considerations that are often in conflict in
matters such as these. First, the court must be cognizant of the broad remedial purposes
the Legislature has advanced through our laws against discrimination, including the
LAD. Second, the court must consider the effect, if any, that either protecting the
document by precluding its use or permitting it to be used will have upon the balance of
legitimate rights of both employers and employees. Courts should apply the two parts of
this final factor with great care, utilizing them as a supplement rather than a substitute for
the multi-factor test we have created. Although in a close case, for example, the broad
remedial purposes of the LAD might tip the balance, courts should be vigilant lest they
err by overlooking the myriad considerations that make up the test we today announce.
In making these evaluations, the court must be mindful that both employers and
employees have legitimate rights. Employers have the right to operate their businesses
within the bounds of the law and legitimately expect that they will have the loyalty of
their employees as they do so. Employees have the right to be free of discrimination in
their employment and the right to speak out when they are subjected to treatment that
they reasonably believe violates that right. Balancing all of those considerations is a
difficult and important task.
Id. at 269-71. The court stated that its decision would not open the floodgates to the wholesale
taking of documents. We, however, do not share the concern that employers will be powerless
to discipline employees who take documents when they are not privileged to do so. On the
contrary, employees may still be disciplined for that behavior and even under the best of
circumstances, run the significant risk that the conduct in which they engage will not be found by
a court to fall within the protection our test creates. The risk of self-help is high and the risk that
a jury will reject a plaintiff's argument that he or she was fired for using the document, rather
than for finding it and taking it in the first place, will serve as an important limitation upon any
realization of the fears that the employers have expressed to the Court. Id. at 272. Here,
plaintiff examined documents wholesale but only gave relevant documents to her attorneys. The
jury reasonably decided that she was fired for using documents, not for taking them.
Accordingly, the retaliation verdict was reinstated. Id. at 272-73. Judge Albin dissented. Id. at
277-83.
2. Invading the Privacy of Others E-Mails
Stengart v. Loving Care Agency, Inc., 201 N.J. 300, 307-08, 990 A.2d 650, 108 Fair
Empl.Prac.Cas. (BNA) 1558, 30 IER Cases 873 (N.J. 2010), succinctly stated its holding:
This case presents novel questions about the extent to which an employee can
expect privacy and confidentiality in personal e-mails with her attorney, which she
accessed on a computer belonging to her employer. Marina Stengart used her company-
issued laptop to exchange e-mails with her lawyer through her personal, password-
protected, web-based e-mail account. She later filed an employment discrimination
lawsuit against her employer, Loving Care Agency, Inc. (Loving Care), and others.
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In anticipation of discovery, Loving Care hired a computer forensic expert to
recover all files stored on the laptop including the e-mails, which had been automatically
saved on the hard drive. Loving Care's attorneys reviewed the e-mails and used
information culled from them in the course of discovery. In response, Stengart's lawyer
demanded that communications between him and Stengart, which he considered
privileged, be identified and returned. Opposing counsel disclosed the documents but
maintained that the company had the right to review them. Stengart then sought relief in
court.
The trial court ruled that, in light of the company's written policy on electronic
communications, Stengart waived the attorney-client privilege by sending e-mails on a
company computer. The Appellate Division reversed and found that Loving Care's
counsel had violated RPC 4.4(b) by reading and using the privileged documents.
We hold that, under the circumstances, Stengart could reasonably expect that e-
mail communications with her lawyer through her personal account would remain
private, and that sending and receiving them via a company laptop did not eliminate the
attorney-client privilege that protected them. By reading e-mails that were at least
arguably privileged and failing to notify Stengart promptly about them, Loving Care's
counsel breached RPC 4.4(b). We therefore modify and affirm the judgment of the
Appellate Division and remand to the trial court to determine what, if any, sanctions
should be imposed on counsel for Loving Care.
The court held that plaintiff had a reasonable subjective expectation of privacy despite the
companys policy, because she used her own web-based e-mail account, protected it with a
password, and did not store her password on her company-issued laptop. Id. at 322. Moreover,
the companys policy was silent on the key issues, making her expectation of privacy objectively
reasonable as well:
In light of the language of the Policy and the attorney-client nature of the
communications, her expectation of privacy was also objectively reasonable. As noted
earlier, the Policy does not address the use of personal, web-based e-mail accounts
accessed through company equipment. It does not address personal accounts at all. Nor
does it warn employees that the contents of e-mails sent via personal accounts can be
forensically retrieved and read by the company. Indeed, in acknowledging that
occasional personal use of e-mail is permitted, the Policy created doubt about whether
those e-mails are company or private property.
Id. The court added an important qualifier: Moreover, the e-mails are not illegal or
inappropriate material stored on Loving Care's equipment, which might harm the company in
some way. Id. (citations omitted). Finally, the e-mails themselves contained warnings: In
addition, the e-mails bear a standard hallmark of attorney-client messages. They warn the reader
directly that the e-mails are personal, confidential, and may be attorney-client communications.
While a pro forma warning at the end of an e-mail might not, on its own, protect a
communication . . . other facts present here raise additional privacy concerns. Id. The court
rejected defendants argument that she waived privilege by using its system: As to whether
2775
21
Stengart knowingly disclosed the e-mails, she certified that she is unsophisticated in the use of
computers and did not know that Loving Care could read communications sent on her Yahoo
account. Use of a company laptop alone does not establish that knowledge. Nor does the Policy
fill in that gap. Under the circumstances, we do not find either a knowing or reckless waiver.
Id. at 324. The court held that even a better-written company policy would not change the
outcome:
Our conclusion that Stengart had an expectation of privacy in e-mails with her
lawyer does not mean that employers cannot monitor or regulate the use of workplace
computers. Companies can adopt lawful policies relating to computer use to protect the
assets, reputation, and productivity of a business and to ensure compliance with
legitimate corporate policies. And employers can enforce such policies. They may
discipline employees and, when appropriate, terminate them, for violating proper
workplace rules that are not inconsistent with a clear mandate of public policy. . . . For
example, an employee who spends long stretches of the workday getting personal,
confidential legal advice from a private lawyer may be disciplined for violating a policy
permitting only occasional personal use of the Internet. But employers have no need or
basis to read the specific contents of personal, privileged, attorney-client communications
in order to enforce corporate policy. Because of the important public policy concerns
underlying the attorney-client privilege, even a more clearly written company manual-
that is, a policy that banned all personal computer use and provided unambiguous notice
that an employer could retrieve and read an employee's attorney-client communications,
if accessed on a personal, password-protected e-mail account using the company's
computer system-would not be enforceable.
Id. at 324-25 (citations omitted). Finally, the court rejected defendants argument that plaintiff
had left the e-mails behind on her laptop, because she did not know that the system saved e-mails
in temporary cache files, and the company had to hire a forensic expert to review them. The
court held that defense counsel had an obligation to stop reading the e-mails when they realized
that they involved privileged communications, and had an obligation to notify plaintiff and the
court to seek a ruling before proceeding. The court remanded the case to the trial court to
determine the significance of the e-mails and the appropriate sanction. Id. at 325-27.
Holmes v. Petrovich Development Co., 191 Cal.App.4th 1047, 1068-69, 119 Cal.Rptr.3d
878, 111 Fair Empl.Prac.Cas. (BNA) 424 (Cal.App. 3d Dist. 2011), distinguished Stengart and
held that plaintiff had no reasonable expectation of privacy in e-mails with her attorney under a
different set of facts: Holmes used her employer's company e-mail account after being warned
that it was to be used only for company business, that e-mails were not private, and that the
company would randomly and periodically monitor its technology resources to ensure
compliance with the policy.
Pure Power Boot Camp v. Warrior Fitness Boot Camp, 587 F.Supp.2d 548 (S.D.N.Y.
2008), surveyed cases and discussed employees reasonable expectations of privacy
notwithstanding employer policies stating that no e-mails sent over company equipment were
private and that the employer could read all of them. In the case at bar, plaintiffs accessed
defendants private e-mail accounts that were not stored on plaintiffs system, using usernames
2776
22
and passwords that did appear in e-mails. The court held that this violated the Stored
Communications Act, 18 U.S.C. 2701. The court stated:
There is no sound basis to argue that Fell, by inadvertently leaving his Hotmail
password accessible, was thereby authorizing access to all of his Hotmail e-mails, no less
the e-mails in his two other accounts. If he had left a key to his house on the front desk at
PPBC, one could not reasonably argue that he was giving consent to whoever found the
key, to use it to enter his house and rummage through his belongings. And, to take the
analogy a step further, had the person rummaging through the belongings in Fell's house
found the key to Fell's country house, could that be taken as authorization to search his
country house. We think not. The Court rejects the notion that carelessness equals
consent.
Id. at 561.
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Page 1 of 3
AMERICAN BAR ASSOCIATION
SECTION OF LABOR AND EMPLOYMENT LAW
August 8, 2008
STATEMENT ON PROPOSED MODEL RULE FOR REGISTRATION OF IN-
HOUSE COUNSEL, TO BE SUBMITTED TO ABA HOUSE OF DELEGATES
FOR ACTION IN AUGUST 2008
At its Spring Council meeting on June 1, 2008, the Council of the Labor and
Employment Law Section voted unanimously to:
1. Seek to table the proposal for a year while problems are worked out;
2. Oppose the proposal unless the problems below are worked out;
3. Work on the following serious problems presented by the Model Rule in its
current form:
(a) The language of Part A, automatically subjects a wide range of
attorneys to the reach of Part H with its bar on all admissions pro hac vice and its
potential for multiple disciplinary actions which would presently apply not only to
in-house counsel representing a corporation, but also to in-house attorneys
employed by labor unions, civil rights organizations, and other public-interest
organizations whose responsibilities include acting on behalf of members in
meetings, arbitrations, filings with State and/or Federal government agencies, and
other non-litigation matters. Corporate in-house counsel face the same types of
problems, having to interact with Federal, State and local agencies at a wide range
of locations where their companies have facilities, helping with negotiations with
unions and other groups, monitoring the performance of retained outside counsel,
providing legal assistance to local managers or even local in-house counsel, local
outside counsel, and the like;
(b) The language of Part B authorizes only legal services provided to the
employer or its affiliates, and does not authorize legal services provided to the
members of the organization. This is a critical problem for labor unions, in
particular, because labor union lawyers frequently provide assistance and
guidance (often working with union officials) to members involved in serious
workplace disputes, arbitration proceedings, NLRB proceedings and in other
venues where the labor union is obligated to represent workers and advocate for
improvements or changes in their terms and conditions of employment. In the
case of many international labor unions, these union-represented workers may be
located at various employment sites in every state as well as other jurisdictions
such as Puerto Rico, the Virgin Islands or others. Similarly, members of
organizations such as the NAACP look to the NAACP to represent their interests
in serious civil rights matters, and members of other public-interest organizations
such as environmental organizations, disability-rights, organizations representing
2778
Page 2 of 3
the interests of people with specific medical conditions or other unique
constituencies and other similar advocacy organizations look to their
organizations lawyers to advise them on their rights, and those lawyers must
often travel out of their home jurisdictions in order to meet with members or
members of affiliated organizations. The onerous conditions imposed by the
proposed Rule could well have a chilling effect on the ability of unions, civil
rights and other advocacy organizations to provide the level and quality of
assistance necessary to effectively protect the interests of their members;
(c) Contrary to the more limited description in the Report, the language of
the Model Rule can easily be read to require registration in all jurisdictions in
which the organization or employer may need to use its in-house counsel,
anticipating possible involvement because of the number and widespread location
of members or facilities. In the case of a national union, organization, multi-state
corporation or other entity, this would require registration in all 50 States, the
District of Columbia, Puerto Rico, and other possessions. The costs involved in
such multiple state registrations may present hardships, particularly for
organizations that have limited funding and budgets, as noted below;
(d) In Part D, the cost of such multiple registration obligations could easily
be onerous. Just limiting the calculation to 50 States, and using an average $250
registration fee amount would result in a charge to the organization of $17,500 per
attorney, per year, with another such fee each time that individual changes
employment. Such fees would be a major percentage of annual pay, and some
corporations, and many unions and other organizations could be forced to cut
their legal staff in order to pay the fees, resulting in a diminished ability to
perform their responsibilities to their members;
(e) Part D requires every in-house attorney to meet the CLE requirements
in every State in which registered. Given the frequency of changes in such
requirements, as well as the differences in lengths of credit hours, and the
differences in reciprocity, this will be an onerous requirement over a large number
of jurisdictions, with the resulting chilling effect on the provision of services
noted above;
(f) Part E vests jurisdiction in every States ethics bodies over every
alleged act or omission in every other jurisdiction. There could potentially be 50+
ethics bodies looking into the same alleged act or omission. Given the often
significant differences in State ethics rules and interpretations, the proposed rule
would subject in-house counsel to irreconcilable standards imposed by
jurisdictions with absolutely no connection whatsoever to the alleged act,
omission, or injury.
(g) There is no benefit to the in-house lawyer provided by the proposed
Model Rule. Not only do all of the varying pro hac vice requirements have to be
met, but the rule could also be read as attempting to interfere with the present
2779
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ability of attorneys to appear before Federal agencies, even those with their own
admission requirements.
2780

1025 Connecticut Avenue, NW, Suite 200
Washington, DC 20036-5425

Tel 202.293.4103
Fax 202.293.4701

www.acc.com

The in-house bar association.
sm

October 10, 2007

VIA ELECTRONIC SUBMISSION & HAND DELIVERY

Section of Legal Education and Admission to the Bar
Attn: Bucky Askew
321 N. Clark St. 21st floor

Chicago, IL 60610

Re: ABA Model Rule for Registration of In-House Counsel

Dear Members of the Committee:

The Association of Corporate Counsel (ACC),
1
appreciates this opportunity to comment on the proposed Model
Rule for Registration of In-House Counsel. As you are aware, ACC is a long-time advocate for multijurisdictional
practice (MJP) reform and has been involved in promoting MJP reforms since the Associations inception in 1982.
ACC supports the ABAs efforts in connection with MJP reforms generally, and participated in the ABA
Multijurisdictional Practice Task Force that drafted ABA Model Rule 5.5, which was created to recognize the
realities of modern legal practice and client needs, as well as encourage greater uniformity in setting standards
regulating lawyers working in cross-border practices.

ACC believes ABA Model Rule 5.5without a separate administrative registration process-- offers the most
concise method of authorizing the multijurisdictional practice of in-house lawyers. As such, ACC encourages the
ABA to include, within the final rule or its commentary, language that reinforces our belief that ABA Model rule
5.5(d)(1) was crafted to meet the needs of jurisdictions that seek to authorize the practices of in-house lawyers and
additional registration rules are generally unnecessary.
2
However, we understand that the commentary supporting

1
ACC is the in-house bar association, with more than 21,000 members employed by more than 9000 corporations and other private sector
organizations in the United States and 64 other countries. ACC members advise corporate clients on virtually every conceivable matter of
law, compliance, and legal policy.
2
A prime example of the registration system gone haywire is New Jersey, which had a full authorization (by opinion of court) for in-house
counsel licensed and in good standing from another state who were working in New Jersey for decades before the adoption of the states
new MJP reforms under Model Rule 5.5s roll-out. While we laud the state for adopting the tenets of the larger rule, when they adopted
5.5(d), we thought that they were simply codifying the practice of the state that had worked without fault for many years. But instead,
local bar officials took the opportunity of 5.5s adoption to install a new registration system which has become the bane of the in-house bar
in the state, requiring drivers license checks, lengthy and expensive application processes, testing for lawyers whove been in practice for
many years without any blemish on their record or suggestion they may not be competent or ethical, fingerprinting, application and
renewal fees unconnected to any benefits associated with being members of the local bar, limitations on the ability of counsel to engage in
such vital services as pro bono work, and a regular spate of bar regulatory opinions issuing that seem focused on increasing the bars
ability to regulate in-house lawyers who work in other jurisdictions outside of New Jersey, and who New Jersey now claims should
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5.5 includes language that suggests that registration systems are options that many jurisdictions should consider in
implementing the rule. So, while we find registration systems in general to be an unnecessary and onerous practice
(for both the in-house lawyers required to comply with them, as well as the bars which must administer them), we
also understand that some jurisdictions simply wont adopt an in-house counsel authorization under 5.5(d)(1)
without a registration system in place. While this is a shame, for those jurisdictions who insist that a large and
formal registration process is necessary, we appreciate the ABAs work to provide a model registration rule
offering clarity and consistency, as well as best practices that will lead to the adoption of the most reasonable
standards.

Through this letter, ACC hopes to offer some suggestions and clarifications that we believe would improve the
proposal and eliminate unnecessary complications. Our comments are intended to be helpful, not critical, and we
hope the Committee may find these comments persuasive. We look forward to working with the Committee
towards adoption of the final model registration rule.

1. General Provisions- Clarifications for Relocations (Section A): We suggest inserting language to clarify
that lawyers who are employed by an entity but move to a new state will be authorized under the registration rule (if
it is in force in the new state as well) provided that they register within [xx] days of relocating to the new state.
Possible language to offer this option might be to amend the introductory paragraph in Section A as follows:

,shall register as in-house counsel within [xx] days of the commencement of employment as a lawyer or
moving to a new state in which the lawyer is not admitted but is similarly qualified under a local registration rule
in the new state or within [xx] days of the effective date of this rule

2. General Provisions- Clarification to Authorize Foreign Counsel (Section A): We suggest enhancing the
scope of the rule to include lawyers who are licensed and in good standing in the jurisdiction in which they hold a
plenary license (not from another US jurisdiction only). In-house counsel working within corporate offices in other
countries may regularly be posted to the United States for any period. If these lawyers are also practicing

register under their system if they engage in the provision of legal services in New Jersey on anything more than the most irregular basis.
ACC members working in New Jersey (and surrounding states) under the registration system are far worse off than they were prior to New
Jerseys reforms, not because of passage of 5.5, but because the state used the opportunity to institute a registration system in an
unreasonable and unjustified fashion. While we cant verify this without the bars cooperation, we are reasonably sure that states such as
New Jersey spend far more adopting and administering a registration than they earn in fees they collect because of it, suggesting that this is
not such a clever way to regulate folks whove never presented any kind of empirically quantified threat to public safety or the
professionalism of lawyers in the state. States also use registration systems to suggest that in-house counsel working under them are
authorized, but not quite as competent or trustworthy as their peers who are locally admitted. Registration infers a mini-lawyer status
that is not justified by the facts, by experience, or by any identifiable threat posed by these lawyers to the bar or the public. Consider by
contrast the experience of states such as Georgia, which adopted 5.5(d)(1) and no registration system. The sky has not fallen, and indeed,
theres been absolutely no impact on professionalism at the in-house bar or the states ability to feel that it regulates the practice of law in
the state with the protection of the public and the profession in mind. If all that states want is to know whos on the rolls of 5.5(d)(1) status
and to have the ability to communicate with them and integrate them into the fabric of the bar, it would be possible to accomplish this
without a full regsitration system in place.
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exclusively for the designated entity (as clarified in our comment in paragraph 4 below), then it should be
permissible for these duly licensed foreign lawyers in good standing to also practice within the scope of the
registration rule. More specifically, we suggest revising the first sentence of Section A to read as follows:

A lawyer not admitted to the practice of law in this jurisdiction but admitted in any other jurisdiction
(within or outside of the United States) who is employed as a lawyer in the jurisdiction on a continuing basis

3. General Provisions-Suggestion to Delete A(5): We suggest that subsection A(5) in the current draft of the
model rule (e.g., the general statement regarding other information or documentation) be deleted as unnecessary. A
general catch-all provision that could lead to additional information and document requirements doesnt seem
necessary and indeed, seems to invite administrivia that the model Rule should be designed to discourage.

4. Scope of Authority of Registered Lawyer- Clarifications on designated entity (Section B(1)): We suggest
inserting language to clarify that authorization to practice would extend to work performed by the registered lawyer
for the entitys parents, subsidiaries, employer sponsored entities and affiliates. Addition of this language would
help clarify that work performed within the corporate family and for employer-sponsored benefit plans and the
plans fiduciaries (for example) would be authorized. More specifically, we suggest inserting the following
parenthetical at the end of the proposed language in B(1):
shall practice exclusively for the designated entity (defined to include its respective parents, subsidiaries,
affiliates and employer- sponsored entities and their fiduciaries).

5. Addition of Amnesty Provision: We suggest including an amnesty provision that we believe is an important
and often overlooked aspect of any proposed registration rule.

States looking to adopt registration rules are already aware of the issues that traditional state-based license
restrictions create for in-house lawyers who work for clients with multijurisdictional needs. A rule created to
address the registration of in-house lawyers who will move to the state in the future, should first address the issues
of in-house counsel already in the state and representing their employer-clients without a local license.

Without an amnesty provision, the model Rule misses the point: it will exclude and disqualify a large portion of
those lawyers (and their local clients) to whom the rule is addressed. While the rule as currently drafted provides
defined time frames for lawyers taking a new in-house job, we suggest also including a provision that allows a
lawyer who has been operating as in-house counsel in the state, and who wishes to be registered, to apply for
registration within some period of time (we suggest 6 months from the effective date of the rule)-- without concern
of disciplinary report to their bar or denial of their application.

More specifically, we suggest including a Section that would read:

Registration of In-House Counsel Previously Working in the State Before Passage of this Rule:

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This Rule generally applies to in-house counsel who meet the requirements of this Rule, including those
in-house counsel who are in good standing in the jurisdiction(s) of their admission, and who have been
working for a corporate client in the state without a local license prior to the passage of this Rule. This
Rule offers a six-month amnesty period from the date of implementation of the registration system
afforded by this Rule, whereby an in-house counsel who is engaged in practice in the state at the time of
the passage of this Rule, but who has not yet registered, may apply for registration without fear of
disciplinary action or rejection of their registration application based on an argument of past
unauthorized practice in the state. Future applicants will likewise not be penalized for similar violations
of unauthorized practice rules if such a practice took place prior to the passage of this Rule. Nothing in
this provision shall prevent the state from pursuing an action against a counsel who falls under the
authority of this provision but has engaged in some other form of inappropriate behavior for which the
state prescribes a disciplinary sanction.

6. Pro Bono Practice (Section C): We strongly support including a provision that recognizes authorization for
pro bono practice. However, we suggest revising the draft model rule language to clarify that such services may be
provided to those who meet the definition of clients qualified for pro bono representation by recognized legal
services organizations (rather than limiting to only those legal services programs that are authorized by a
registration authority). This offered revision clarifies that pro bono services for national projects would be included
within the pro bono authorization, and continues to assure that participation in such programs occurs with adequate
oversight. More specifically, we suggest revising the language as follows:

Notwithstanding the provisions of paragraph B above, a lawyer registered under this section is authorized
to provide pro bono legal services to those who meet the definition of clients qualified for pro bono representation
by recognized legal services organizations.

7. Alternatives to Full Registration Rules: We suggest the framework provide less onerous options for bars that
only wish to implement a roster for lawyers working in the state under ABA Model rule 5.5(d)(1). Full registration
rules can be unnecessary and expensive for the state bar and the registrant. The bar is better off spending its
resources on those individuals who actually and empirically pose a threat to the public and the profession. These
folks dont, so why establish a system that presumes they need regulation that is totally inconsistent with what we
know is the case-- that in-house counsel are the least likely lawyers working in the state to experience any kind of
bar discipline or be the targets of public or other lawyer complaints.

8. General Comments for Consideration in the Commentary/Report Language: For the commentary report, we
encourage including language suggesting types of provisions that state bars adopting registrations should avoid,
and list some thoughts below:

Avoid provisions that require applicants to replicate the kind of application forms and background checks
they have already satisfied in becoming full-fledged members of the jurisdiction(s)which currently license
them. These character and fitness requirements are unnecessary and repetitious work for lawyers who
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have otherwise sterling credentials, long and respected experience at the bar, and a history of exemplary
practice. If necessary, these requirements can be mandated for individuals who are in bad standing and
require further examination and those who are first-time lawyers (and for whom the bar has no other test to
gauge their competence).

Avoid provisions that require counsel to note their registration status on business cards, communications,
letterhead, etc. These types of provisions are not necessary and unduly burdensome, as well as confusing
to clients and others. What is conveyed to a client or other person who reads that the companys counsel
with whom theyre working is a registered in-house lawyer? Might it suggest that the lawyer is less or
more qualified or authorized to practice? The statement carries with it no independent meaning
ascertainable by the recipient. It also does not serve any purpose to warn a recipient of this disclosure
statement of the registered lawyers status as registered counsel: he or she is no less or more qualified for
using it, and it should not be seen as a replacement of the title that the lawyer carries on the authorization
of his or her client (but could have that affect if required).

Avoid registration systems that include additional testing requirements as a condition of registration
authorization. As set forth in the draft model rule, documents demonstrating admission to practice law and
current good standing and an affidavit attesting to the lawyers employment should be sufficient.
Evidence of admission to practice and good standing in another jurisdiction is more valuable to help show
competence than a test.

Discourage fees that are inconsistent with fees required of plenary licensed lawyers in the state.
Registration systems are not supposed to be money makers for the bar they are supposed to be for the
protection of the public and to help facilitate the bars disciplinary reach.

Conclusion
ACC stands ready to assist the Committee in any way it can in connection with these efforts and appreciates the
opportunity to provide input. Please feel free to contact me (202.293.4103, ext. 318; email: [email protected]) if
we can clarify any of our comments further, or be of assistance to you in the process. Thank you again for the
opportunity to submit these comments.

Sincerely,

Susan Hackett
Senior Vice President and General Counsel
2785

ABA Commission on Ethics 20/20
321 N. Clark Street
Chicago, IL 60654-7598
Phone: (312) 988-5311
Fax: (312) 988-5280
Website: www.abanet.org/ethics2020

Memorandum
To: ABA Entities, Courts, Bar Associations (state, local, specialty, and international),
Law Schools, Disciplinary Agencies, Individuals, and Entities
From: ABA Commission on Ethics 20/20 Working Group on Uniformity, Choice of Law,
and Conflicts of Interest
1
Re: For Comment: Issues Paper Concerning Multijurisdictional Practice
Date: March 29, 2011
I. Introduction
The American Bar Association Commission on Ethics 20/20 is examining the impact of
globalization and technology on the legal profession. It is clear that these developments are
driving continued growth of cross-border legal practice both within the United States and
between the United States and other nations. One of the Commissions objectives is to examine
existing rules and laws governing cross-border practice and determine whether to propose
amendments to existing ABA policies in this area or to develop alternative approaches.

The Commission already has released documents that identify two possible options.
First, the Commission released an issues paper concerning the ABA Model Rule on Admission
by Motion.
2
That issues paper asks whether the Model Rule, which sets out a process by which
a lawyer licensed in one U.S. state or jurisdiction can gain admission to practice law in another
state or jurisdiction, should be liberalized. Second, the Commission released a memorandum
concerning the rules that govern foreign lawyers who seek to practice in the United States on a
limited or temporary basis.
3

The Commission now seeks feedback on two additional options that are not mutually
exclusive. In seeking comments on these two additional options, the Commission is not
suggesting that it has reached any conclusions about these issues. Rather, the Commission
expects to use any comments that it receives to supplement the research that the Commission
has completed and to facilitate the development of various reports and proposals that the
Commission might draft.
_______________________
1
Members of the Working Group are: Stephen Gillers (Chair and Commission Member), Hon. Elizabeth B.
Lacy (Commission Member), Theodore Schneyer (Commission Member), Doug Ende (National Organization
of Bar Counsel), Donald B. Hilliker (ABA Center for Professional Responsibility), Janet Green Marbley (ABA
Standing Committee on Client Protection), James McCauley (ABA Standing Committee on Ethics and
Professional Responsibility), and John P. Sahl (ABA Standing Committee on Professional Discipline). Andrew
M. Perlman serves as Chief Reporter, and Dennis A. Rendleman and John A. Holtaway provide counsel.
2
http://www.americanbar.org/content/dam/aba/migrated/2011_build/ethics_2020/admission_motion.authcheckd
am.pdf
3
http://www.americanbar.org/content/dam/aba/migrated/ethics2020/pdfs/discussion_draft.authcheckdam.pdf

2010-2011
CO-CHAIR
Jamie S. Gorelick
WilmerHale
1875 Pennsylvania Ave., N.W.
Washington, DC 20006
CO-CHAIR
Michael Traynor
3131 Eton Ave.
Berkeley, CA 94705
MEMBERS
Professor Stephen Gillers
New York, NY
Jeffrey B. Golden
London, United Kingdom
George W. Jones, Jr.
Washington, DC
Hon. Elizabeth B. Lacy
Richmond, VA
Judith A. Miller
Washington, DC
Hon. Kathryn A. Oberly
Washington, DC
Roberta Cooper Ramo
Albuquerque, NM
Herman Joseph Russomanno
Miami, FL
Professor Theodore Schneyer
Tucson, AZ
Professor Carole Silver
Bloomington, IN
Kenneth W. Starr
Waco, TX
Frederic S. Ury
Fairfield, CT
Hon. Gerald W. VandeWalle
Bismarck, ND
LIAISONS
ABA Board of Governors
Carolyn B. Lamm
Washington, DC
Kenneth G. Standard
New York, NY
ABA Center for Professional
Responsibility
Donald B. Hilliker
Chicago, IL
ABA Task Force on International Trade
in Legal Services
Professor Robert E. Lutz, II
Los Angeles, CA
ABA Standing Committee on Ethics and
Professional Responsibility
Philip H. Schaeffer
New York, NY
ABA Young Lawyers Division
Youshea A. Berry
COMMISSION REPORTERS
Andrew M. Perlman, Chief Reporter
Boston, MA
Paul D. Paton
Sacramento, CA
Anthony Sebok
New York, NY
W. Bradley Wendel
Ithaca, NY
CENTER FOR PROFESSIONAL
RESPONSIBILITY
Jeanne P. Gray, Director
Ellyn S. Rosen, Commission Counsel
(312) 988-5311
Marcia Kladder, Policy & Program Director
(312) 988-5326
Natalia Vera, Senior Paralegal
(312) 988-5328
Kimley Grant, Regulation Paralegal
(312) 988-5319
2786
First, the Commission could propose amendments to Model Rule 5.5(c)-(d)
(multijurisdictional practice) that would authorize more domestic cross-border legal practice than
the Model Rule currently allows for U.S.-licensed lawyers. Second, the Commission could
consider other mechanisms that might be employed within our current regulatory structure and
that might better facilitate ethical domestic and international cross-border practice. For example,
the Commission could examine whether procedures similar to those used in other parts of the
world might be worth adapting for the United States, such as interstate compacts and mutual
recognition of licenses.

II. ABA Model Rule 5.5 (Unauthorized Practice of Law; Multijurisdictional Practice)
On August 12, 2002, the American Bar Association House of Delegates adopted Rule 5.5
of the Model Rules of Professional Conduct in the form proposed by the ABA Commission on
Multijurisdictional Practice (MJP Commission). The MJP Commissions proposal was the
product of a thorough examination of a wide range of issues relating to domestic and international
cross-border legal practice.
4
The black letter provisions of Model Rule 5.5 have remained
unchanged since that time
5
and currently provide as follows:

Rule 5.5 Unauthorized Practice Of Law; Multijurisdictional Practice Of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal
profession in that jurisdiction, or assist another in doing so.
(b) A lawyer who is not admitted to practice in this jurisdiction shall not:
(1) except as authorized by these Rules or other law, establish an office or other
systematic and continuous presence in this jurisdiction for the practice of law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to
practice law in this jurisdiction.
(c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended
from practice in any jurisdiction, may provide legal services on a temporary basis in this
jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in this
jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a
tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is
assisting, is authorized by law or order to appear in such proceeding or reasonably
expects to be so authorized;

4
Report 201B, American Bar Association, Commission on Multijurisdictional Practice, Report to the House
of Delegates, http://www.americanbar.org/content/dam/aba/migrated/cpr/mjp/201b.authcheckdam.pdf.
5
In 2007, a sentence to Comment [14] was added to reflect the existence of the Model Court Rule on
Provision of Legal Services Following Determination of Major Disaster.
2
2787
(3) are in or reasonably related to a pending or potential arbitration, mediation, or
other alternative dispute resolution proceeding in this or another jurisdiction, if the
services arise out of or are reasonably related to the lawyers practice in a
jurisdiction in which the lawyer is admitted to practice and are not services for
which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably
related to the lawyers practice in a jurisdiction in which the lawyer is admitted to
practice.
suspended from practice in any jurisdiction, may provide legal services in this jurisdiction
that:
(1) are provided to the lawyers employer or its organizational affiliates and are not
services for which the forum requires pro hac vice admission; or
(2) are services that the lawyer is authorized to provide by federal law or other law
of this jurisdiction.
The 2002 amendments to the Model Rule have facilitated cross-border legal practice
throughout the United States. Lawyers, however, have an even greater need to engage in
domestic cross-border practice now than when the House of Delegates adopted the MJP
Commissions proposal nearly ten years ago. This development suggests that the Commission
should review the current Model Rule to determine if it has accomplished its intended goals and
decide whether any new efforts in this area might be advisable.
6
To that end, the Commission
seeks information regarding the following questions:

In states that have adopted Model Rule 5.5, have any problems emerged?
7
For
example, are out-of-state lawyers who practice on a temporary basis more likely to be the subject

6
In its final report, the MJP Commission concluded that precisely such work would have to be undertaken.
It advised that the ABA would have to evaluate the implementation and impact of its policies relating to
multijurisdictional practice, coordinate the continued study of multijurisdictional practice and monitor
developments in the United States and in international practice, and make such additional recommendations
as appropriate to govern the multijurisdictional practice of law that serve the public interest. Introduction
and Overview, American Bar Association, Commission on Multijurisdictional Practice, Report to the
House of Delegates, at 15.
7
Forty-four United States jurisdictions now have some form of Model Rule 5.5. See
http://www.americanbar.org/content/dam/aba/migrated/cpr/mjp/quick_guide_5_5.authcheckdam.pdf.
Fourteen jurisdictions have adopted a rule identical to the ABA Model Rule, and thirty jurisdictions have
adopted a rule similar to ABA Model Rule 5.5. Of the thirty jurisdictions that have adopted a rule similar
to ABA Model Rule 5.5, some of the differences between what has been adopted and the ABA Model Rule
are as follows:
x Eight jurisdictions (CT, ID, KY, ME, NJ, NC, SC, and TN) require that the temporary legal
services provided in the host jurisdiction be reasonably related to the representation of an existing
client in the jurisdiction where the lawyer is licensed. The Model Rule provides that the services
need only be reasonably related to the lawyers practice in the jurisdiction where the lawyer is
licensed.
3
2788
of disciplinary complaints, disciplinary sanctions, or legal malpractice actions than home
jurisdiction lawyers? If the answer is yes, what type of conduct has led to discipline or
malpractice claims?

In states that have not adopted Model Rule 5.5 or have adopted a more restrictive
version of the Model Rule, what concerns have motivated this more restrictive approach to cross-
border legal practice? Is there any evidence that these concerns exist in states that have adopted
Model Rule 5.5?

Should the Commission consider recommending further liberalization of Model Rule
5.5 to make domestic cross-border practice easier? If so, what specific amendments are worth
considering? (Suggestions for particular language changes are especially welcome.) For
example, should a lawyer be permitted to practice in a jurisdiction under Rule 5.5(d) while the
lawyer pursues admission through one of the procedures that the jurisdiction authorizes, such as
admission by motion, in-house counsel registration, or passage of that jurisdictions bar
examination? The following underlined language is one possible approach (bracketed portions
would vary depending on a jurisdictions preferences for time limits and its available admission
options):
suspended from practice in any jurisdiction, may provide legal services in this jurisdiction
that:
(1) are provided to the lawyers employer or its organizational affiliates and are not
services for which the forum requires pro hac vice admission; or
(2) are services that the lawyer is authorized to provide by federal law or other law
of this jurisdiction.

(3) are provided for no more than [365] days, but only if the lawyer submits an
application for admission by motion, by examination, or as in-house counsel within [90]

x Six jurisdictions (DE, DC, FL, GA, PA, and VA) expressly allow temporary practice by foreign
(non-U.S.) lawyers. In addition, North Carolinas rule appears to permit such temporary practice
by omitting reference to the words U.S. jurisdiction.
x Four jurisdictions (CT, NV, NJ, and SC) require out-of state lawyers to register in the host
jurisdiction and pay a fee.
x Two jurisdictions (NM and ND) require the out-of-state lawyer to associate with an in-state lawyer
in transactions involving issues specific to the host jurisdictions law.
x Two jurisdictions (MN and WI) provide that the lawyer would not be disciplined in the state in
which the lawyer is licensed for engaging in conduct in the host jurisdiction that is permitted in the
home jurisdiction.
x One jurisdiction (SD) requires the out-of-state lawyer to obtain a sales tax license and to pay
applicable taxes.
Of the remaining jurisdictions, two states have declined to adopt Model Rule 5.5; one state has a
recommendation pending to adopt a version of Rule 5.5 that does not authorize multijurisdictional practice;
and four states are still studying whether to adopt a version of Rule 5.5 that authorizes multijurisdictional
practice.

4
2789
days of first providing legal services in this jurisdiction, fulfills all of this jurisdiction's
requirements for that form of admission, and has not previously been denied admission to
practice in this jurisdiction pursuant to this jurisdictions character and fitness
requirements. If the lawyer seeks admission as in-house counsel, the lawyers services must
be limited to those that may be provided by in-house counsel in this jurisdiction. Prior to
admission by motion or examination, the lawyer may not appear before a tribunal in this
jurisdiction that requires pro hac vice admission unless the lawyer is granted such
admission. The authority in this paragraph shall terminate immediately if the lawyers
application for admission is denied prior to 365 days.

The Commission seeks feedback on this possible approach, including whether any
additional requirements should be added. For example, the Rule could also require the lawyer to
notify the jurisdictions disciplinary authority of the lawyers intent to practice under this
provision as soon as the lawyer begins practicing in the jurisdiction (i.e., before the end of the 90
day window specified for the submission of an application for admission.) The out-of-state
lawyer could also be required to affiliate with, or be supervised by, a lawyer licensed in the
jurisdiction while the out-of-state lawyer awaits an admission decision. Moreover, the limitation
on past denials of admission could be broadened to include any type of denial, including a past
failure to pass the jurisdictions bar examination. Finally, to avoid misleading potential clients
regarding the lawyers admission status, clarifying language could be added to Comment [20],
which already advises out-of-state lawyers that they may have an obligation to disclose their
admission status in certain situations.

Notably, the District of Columbia has adopted a provision that is similar to the Rule
5.5(d)(3) approach described above. It permits a lawyer licensed in another jurisdiction to
practice within the District of Columbia for up to 360 days as long as the lawyer submits an
application for admission to the Bar of the District of Columbia within 90 days of establishing a
practice in the District of Columbia and the lawyer is supervised by a D.C.-licensed lawyer. See
D.C. App. R. 49(c)(8). The District of Columbia has not reported any problems arising out of
the existence of this Rule.

III. Alternative Approaches to Multjurisdictional Practice
Rather than relying on a professional conduct rule to regulate multijurisdictional practice,
several alternatives exist. For example, one United States jurisdiction Colorado regulates
multijurisdictional practice within its rules governing admission to the bar (rather than in its rules
of professional conduct) and provides for more permissive multijurisdictional practice than
Model Rule 5.5. Moreover, some countries have adopted interstate compacts and forms of
mutual recognition that permit lawyers to move between jurisdictions with greater ease than is
typically found within the United States. These approaches are described below.

A. The Colorado Approach

Colorado has adopted a rule governing admissions to the bar (Rule 220) that permits a
lawyer who is licensed in another U.S. jurisdiction to practice freely in Colorado on a temporary
basis (subject only to pro hac vice requirements) as long as the lawyer does not take up residence
in Colorado or establish an office there.
8
Rule 220 provides as follows:

8
http://www.coloradosupremecourt.com/pdfs/Registration/Rule%20220.%20Out-of-State%20Attorney%20--
%20Conditions%20of%20Practice.pdf
5
2790

Colorado Rule 220: Out-of-State Attorney Conditions of Practice
(1) An attorney who meets the following conditions is an out-of-state attorney for the
purpose of this rule:
(a) The attorney is licensed to practice law and is on active status in another jurisdiction
in the United States;
(b) The attorney is a member in good standing of the bar of all courts and jurisdictions in
which he or she is admitted to practice;
(c) The attorney has not established domicile in Colorado; and
(d) The attorney has not established a place for the regular practice of law in Colorado
from which such attorney holds himself or herself out to the public as practicing Colorado law or
solicits or accepts Colorado clients.
(2) An out-of-state attorney may practice law in the state of Colorado except that an out-
of-state attorney who wishes to appear in any state court of record must comply with C.R.C.P.
221 concerning pro hac vice admission and an out-of-state attorney who wishes to appear before
any administrative tribunal must comply with C.R.C.P. 221.1 concerning pro hac vice admission
before state agencies.
(3) An out-of-state attorney practicing law under this rule is subject to the Colorado
Rules of Professional Conduct and rules of procedure regarding attorney discipline and disability
proceedings and those remedies set forth in C.R.C.P. 234(a).
(4) An out-of-state attorney who engages in the practice of law in Colorado pursuant to
Rule 220 shall be deemed, for the purposes of Colorado Revised Statutes, Title 12, Article 5,
Sections 101, 112, and 115, to have obtained a license for the limited scope of practice specified
in this rule.
B. Canadas Interprovincial Compact Model

Lawyers licensed in one Canadian province or territory who want to practice in another
province or territory in Canada can now generally do so with ease as a result of three agreements
adopted by the provincial law societies. The agreements create avenues for lawyers to work
permanently in all provinces and territories without the need for further bar examination, and
temporarily in all provinces. Lawyers may also be licensed in multiple jurisdictions.

1. Temporary Mobility
The 2002 National Mobility Agreement
9
(NMA) permits lawyers in common law
provinces to provide legal services in or with respect to the law of another signatory province for
up to 100 days in a calendar year without a permit. Such lawyers must be entitled to practice in
their home province; have liability insurance and defalcation coverage; have no outstanding
criminal or disciplinary proceedings; and have no restrictions or limitations on their right to
practice. Lawyers exercising temporary mobility do not have to advise the host jurisdiction that
they are providing legal services on a temporary basis.

Lawyers who are not eligible for mobility without a permit under these conditions may
apply for a permit from the host provincial law society. A lawyer becomes ineligible for

9
http://www.flsc.ca/en/pdf/mobility_agreement_aug02.pdf
6
2791
temporary mobility if he or she establishes an economic nexus with a jurisdiction. In that
case, he or she may apply to transfer to the jurisdiction under the permanent mobility provisions
of the NMA (discussed in the next section). An economic nexus is established when a lawyer
does anything inconsistent with temporary mobility, including:

x Providing legal services for more than 100 days
x Opening an office from which the lawyer serves the public
x Opening and operating a trust account in the jurisdiction
x Becoming a resident of the jurisdiction
2. Permanent Mobility (Transfer)
Under the NMA, lawyers who are entitled to practice in a signatory common law
province and who are of good character may transfer permanently to another common law
province without having to take transfer examinations or any other examination. They still must
meet any qualifications that ordinarily apply for lawyers to be entitled to practice law in the
jurisdiction in question.
10
They also must certify that they have reviewed and understood certain
materials required by the jurisdiction.
11

3. Quebec Mobility
Because the province of Quebec is a civil law, French-language jurisdiction, a further and
separate protocol is required. In 2008, the governing body for lawyers in Quebec introduced a
new membership category to permit lawyers from other Canadian jurisdictions to work in
Quebec. In particular, Canadian Legal Advisors are lawyers licensed in Canadian common law
jurisdictions who may become members of the Barreau du Quebec with the right to practice
federal law, the law of their home jurisdiction, and public international law. A March 2010
agreement recognized this new category and created a path for implementation of a form of
reciprocal mobility for Quebec members of the Barreau in all other provinces and territories.
12

C. The European Unions System of Mutual Recognition

In 1998, the European Parliament and the Council of the European Union adopted the
Lawyers Establishment Directive.
13
The Directive is based on the Treaty that established the

10
See, for example, the process for lawyers from other Canadian provinces wishing to transfer into Ontario
at http://rc.lsuc.on.ca/jsp/membershipServices/transfersNationalMobility.jsp
11
Under an agreement signed in 2006, Canadas three northern territories Yukon Territory, Northwest
Territories and Nunavut accepted the permanent (transfer) mobility provisions of the National Mobility
Agreement, but they have not accepted the NMAs temporary mobility provisions.
http://www.flsc.ca/en/pdf/mobility_agreement_nov06.pdf
12
http://www.flsc.ca/en/pdf/mobility_agreement_jul10.pdf
13
See Directive 98/5/EC of the European Parliament and of the Council of 16 February 1998, http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31998L0005:EN:HTML .
7
2792
European Union (E.U. Treaty).
14
The Directive applies to E.U. countries whose admission
requirements range from very stringent to lenient, and it applies to both civil law and common
law jurisdictions.

The Directive allows European lawyers from one E.U. country (home jurisdiction) to
establish themselves permanently in another E.U. country (host jurisdiction) and practice law
there.
15
The lawyer must register with the appropriate host jurisdiction authority so that the host
authority can ensure that the lawyer abides by the host jurisdictions rules of professional
conduct. The Directive permits the lawyer to practice home jurisdiction law, E.U. law,
international law, and even the law of the host jurisdiction. Although the lawyer is subject to
some practice limitations with respect to certain kinds of court and uniquely local work, the
lawyer is otherwise permitted to practice law in the host jurisdiction under his or her home title.
Use of the host jurisdictions professional titles is forbidden until the lawyer fulfills the
requirements for doing so. The requirement that the lawyer use the home title is to ensure
transparency to consumers and to avoid any possible confusion about a lawyers licensing status.

To gain the ability to use the host jurisdictions professional titles, the Directive requires
the lawyer to practice the host jurisdictions law effectively and regularly for three years. After
that time, the lawyer is presumed to have obtained the necessary skills to become fully
integrated into the host countrys legal profession. The lawyer must then provide the
appropriate host jurisdiction authority with proof of compliance with the three year practice
requirement. At that point, the lawyer is officially licensed in the host jurisdiction.

Many lawyer regulatory authorities within the E.U. originally opposed this system. The
E.U. Treaty (and interpretations of it by the European Court of Justice), as well as pressure from
the European Commission, resulted in its creation. Opposition, however, has largely dissolved,
and there have been very few disciplinary complaints or problems associated with the new
system.

D. The Australian Model

Australia, which has a state/territory-based licensing scheme that is analogous to the
system in the United States, has adopted laws that allow a lawyer licensed in one Australian state
or territory to practice in other states and territories.
16
In terms of enforcement, the Australian
system differs from that in the United States. Specifically, there is co-regulatory authority
between the Offices of the Legal Services Commissioner and the bar (the law councils or law
society).
17

In 1992, the Commonwealth passed a Mutual Recognition Act that enabled a lawyer

14
Notably, the E.U. Treaty applies only to E.U. citizens. Thus, a U.S. citizen who has qualified as a lawyer
in one E.U. country may not use this directive to practice in another E.U. country.
15
An E.U lawyer who wants to stay in the home jurisdiction while qualifying as a lawyer in another E.U.
country can use the Recognition of Professional Qualifications Directive 2005 to do so. See http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:255:0022:01:EN:HTML.
16
See e.g., http://www.lawlink.nsw.gov.au/lawlink/olsc/ll_olsc.nsf/pages/lra_mobility .
17
See, e.g., Legal Professions Act 2004, http://www.austlii.edu.au/au/legis/nsw/consol_act/lpa2004179/.
8
2793
registered in one jurisdiction to practice in another. The Act required the lawyer to register in the
host state or territory and obtain a local practicing certificate. The 1992 Act was adopted by all
Australian States and Territories.

In 1998, an Interstate Practice Certificate system was created to enable a lawyer from one
Australian state/territory to practice in another without having to be admitted in the second
state/territory. The Australian Capital Territory, Northern Territory, New South Wales,
Queensland, Victoria, South Australia, Tasmania, and Western Australia have adopted this
system.

In 2004, the National Legal Profession Model Bill was published. The Model Bill
provided the states and territories with a template to draft legislation that would permit seamless
practice by a lawyer from one jurisdiction to another. Lawyers only need a practice certificate
from one jurisdiction. If they establish an office in another jurisdiction, they must simply notify
the other jurisdiction that they are doing so. The legislatures of the Australian Capital Territory,
New South Wales, Victoria, Queensland and the Northern Territory have adopted Legal
Professions Acts based upon the Model Bill. In 2008, Western Australia passed legislation
following the Model Bill, but substantive provisions have not yet been implemented. The same is
true of Tasmania, which adopted legislation in 2007. In South Australia legislation has been
drafted but has not yet been enacted.

E. Questions Concerning Alternative Approaches

The approaches described above suggest that there are plausible alternatives or
supplements to the existing regulatory structures for cross-border practice within the United
States. As part of its examination of these approaches, the Commission seeks input regarding the
following questions:

What advantages or disadvantages would such approaches have relative to the current
regulation of cross-border practice in Model Rule 5.5 and admission by motion procedures? For
example, would new difficulties or challenges arise for disciplinary authorities with regard to
continuing legal education requirements or trust account rules if any of the above alternatives
were adopted?

Should the Commission consider proposing a system similar to Colorados?

Should the Commission develop a white paper that explores in detail whether the
development of interstate compacts similar to those in Canada or forms of mutual recognition as
in Europe and Australia would be feasible alternatives or supplements to Model Rule 5.5?
IV. Conclusion
The practice of law has become increasingly national and transnational in the years since
the American Bar Association adopted Model Rule 5.5. In light of these trends, the Commission
seeks input into whether amendments to the Model Rule or other action, such as a white paper
that examines interstate compacts and forms of mutual recognition, would be advisable. Any
responses to the questions posed in this paper, as well as any comments on related issues, should
be directed by June 1, 2011, to:

9
2794
10
Natalia Vera
Senior Research Paralegal, Commission on Ethics 20/20
ABA Center for Professional Responsibility
321 North Clark Street
15th Floor
Phone: 312/988-5328
Fax: 312/988-5280
[email protected]

Comments received may be posted to the Commissions website.

2795
ABA Commission on Ethics 20/20
321 N. Clark Street
Phone: (312) 988-5311
Fax: (312) 988-5280
Website: www.abanet.org/ethics2020
To: ABA Entities, Courts, Bar Associations (state, local, specialty and
international), Law Schools, and Individuals
From: ABA Commission on Ethics 20/20 Working Group on Alternative
Business Structures
1

Re: For Comment: Issues Paper Concerning Alternative Business Structures
Date: April 5, 2011
I. Introduction and Questions Concerning Alternative Business Structures
The American Bar Association Commission on Ethics 20/20 is examining the impact
of globalization and technology on the legal profession. The principles guiding the
Commissions work are protection of the public; preservation of core professional values; and
maintenance of a strong, independent and self-regulated profession.
The Commissions November 2009 Preliminary Issues Outline invited consideration
of how core principles of client and public protection [can] be satisfied while simultaneously
permitting U.S. lawyers and law firms to participate on a level playing field in a global legal
services marketplace that includes the increased use of one or more forms of alternative
business structures.
2
To address these challenges, the Commission formed a Working Group
that has been studying the impact of domestic and international developments in this regard
and is considering whether lawyers and law firms, in order to better serve their clients, should
be able to structure themselves differently than is currently permitted under the Model Rules
of Professional Conduct.
__________________________
1
The members of the Working Group are George W. Jones (Co-Chair and Commissioner), Professor
Theodore J. Schneyer (Co-Chair and Commissioner), Jeffrey B. Golden (Commissioner), Roberta
Cooper Ramo (Commissioner), Professor Carole Silver (Commissioner), Chief Justice Gerald W.
VandeWalle (Commissioner), Donald B. Hilliker (ABA Center for Professional Responsibility,
Kathleen J. Hopkins (ABA General Practice, Solo and Small Firm Division), George Ripplinger (ABA
Standing Committee on Ethics and Professional Responsibility), and Gene Shipp (National
Organization of Bar Counsel), and Robert D. Welden (ABA Standing Committee on Professional
Discipline). Paul D. Paton serves as Reporter. Ellyn S. Rosen, Commission Counsel, and Arthur
Garwin, Deputy Director of the ABA Center for Professional Responsibility provided counsel to the
Working Group.
2
See ABA Commission on Ethics 20/20, Preliminary Issues Outline at 6, available at
http://www.americanbar.org/content/dam/aba/migrated/2011_build/ethics_2020/preliminary_issues_out
line.authcheckdam.pdf.
2010-2011
CO-CHAIR
Jamie S. Gorelick
WilmerHale
1875 Pennsylvania Ave., N.W.
Washington, DC 20006
CO-CHAIR
Michael Traynor
3131 Eton Ave.
Berkeley, CA 94705
MEMBERS
Professor Stephen Gillers
New York, NY
Jeffrey B. Golden
London, United Kingdom
George W. Jones, Jr.
Washington, DC
Hon. Elizabeth B. Lacy
Richmond, VA
Judith A. Miller
Washington, DC
Hon. Kathryn A. Oberly
Washington, DC
Roberta Cooper Ramo
Albuquerque, NM
Herman Joseph Russomanno
Miami, FL
Professor Theodore Schneyer
Tucson, AZ
Professor Carole Silver
Bloomington, IN
Kenneth W. Starr
Waco, TX
Frederic S. Ury
Fairfield, CT
Hon. Gerald W. VandeWalle
Bismarck, ND
LIAISONS
ABA Board of Governors
Carolyn B. Lamm
Washington, DC
Kenneth G. Standard
New York, NY
ABA Center for Professional
Responsibility
Donald B. Hilliker
Chicago, IL
ABA Task Force on International Trade
in Legal Services
Professor Robert E. Lutz, II
Los Angeles, CA
ABA Standing Committee on Ethics and
Professional Responsibility
Philip H. Schaeffer
New York, NY
ABA Young Lawyers Division
Youshea A. Berry
COMMISSION REPORTERS
Andrew M. Perlman, Chief Reporter
Boston, MA
Paul D. Paton
Sacramento, CA
Anthony Sebok
New York, NY
W. Bradley Wendel
Ithaca, NY
CENTER FOR PROFESSIONAL
RESPONSIBILITY
Jeanne P. Gray, Director
Ellyn S. Rosen, Commission Counsel
(312) 988-5311
Marcia Kladder, Policy & Program Director
(312) 988-5326
Natalia Vera, Senior Paralegal
(312) 988-5328
Kimley Grant, Regulation Paralegal
(312) 988-5319
2796
At present, only the District of Columbia permits nonlawyer ownership or management
of law firms.
3
Except in very limited circumstances, there is a similar restriction on fee-sharing
with nonlawyers. In March 2011, legislation to permit nonlawyer equity owners of incorporated
law firms was introduced in North Carolina.
4
The ABA has undertaken several previous efforts to examine alternative business
structures (ABS), and the Working Groups efforts are necessarily informed by them. Since the
House of Delegates last considered recommendations on multidisciplinary practice in July 2000,
few jurisdictions within the United States have examined the issue of MDP or any other form of
ABS. In the intervening period, however, other countries have implemented a wide range of
approaches. Understanding how those models might be adapted or implemented domestically, as
well as the challenges these approaches pose in the global legal services marketplace, is important
given this Commissions charge. The economic challenges of the intervening period also invite
otherwise unable to afford them, and to provide new and varied opportunities for lawyers and
firms domestically to better serve clients.
At its February 2011 meeting in Atlanta, the Commission decided that two options for
alternative business structures -- passive equity investment in law firms and the public trading of
shares in law firms -- would not be appropriate to recommend for implementation in the United
States at this time, though both have been adopted elsewhere since July 2000. However, the
Commission has invited the Working Group to continue analyzing previously unavailable data
and information to determine whether and to what extent other structural reforms may now be
desirable in the U.S. and, if so, how they might be implemented in our regulatory scheme in a
manner consonant with the principles guiding the Commissions work.
This paper describes several issues and approaches that the Working Group has identified
and is evaluating. The Working Group appreciates that, in many respects, the description of the
current ABS landscape described below is very detailed. However, the Working Group believes
that this level of detail will facilitate informed discussion and comments about these issues.
Apart from the February 2011 decisions about passive equity investment and the public
trading of shares in law firms noted above, the Commission has taken no positions about the
matters addressed in this paper. To assist the Commission in determining what, if any, other
3
District of Columbia Rule of Professional Conduct 5.4 provides in relevant part that: (a) A lawyer or law
firm shall not share legal fees with a nonlawyer, except that: . . . . (4) Sharing of fees is permitted in a
partnership or other form of organization which meets the requirements of paragraph (b) . . . (b) A lawyer
may practice law in a partnership or other form of organization in which a financial interest is held or
managerial authority is exercised by an individual nonlawyer who performs professional services which
assist the organization in providing legal services to clients, but only if: (1) The partnership or organization
has as its sole purpose providing legal services to clients; (2) All persons having such managerial authority
or holding a financial interest undertake to abide by these Rules of Professional Conduct; (3) The lawyers
who have a financial interest or managerial authority in the partnership or organization undertake to be
responsible for the nonlawyer participants to the same extent as if nonlawyer participants were lawyers
under Rule 5.1; (4) The foregoing conditions are set forth in writing. (c) A lawyer shall not permit a
person who recommends, employs, or pays the lawyer to render legal services for another to direct or
regulate the lawyers professional judgment in rendering such legal services.
4
See An Act to Allow Nonattorney Ownership of Professional Corporation Law Firms, Subject to Certain
Requirements, available at http://www.ncleg.net/Sessions/2011/Bills/Senate/HTML/S254v0.html.
2
2797
recommendations should be made regarding whether to permit U.S. law firms to structure
themselves in a manner not currently permitted under the Model Rules of Professional Conduct,
the Commission seeks input regarding the following questions by June 1, 2011:
1. Are there client services that U.S. lawyers and law firms should be permitted to offer, but
that they currently are not permitted to offer due to restrictions set forth in Rule of
Professional Conduct 5.4, including the prohibitions on sharing fees with nonlawyers?
2. Would maintaining the present restrictions contained in the Rules of Professional Conduct
impede U.S. lawyers and law firms from participating on a level playing field in a global
legal services marketplace that includes the increased use of one or more forms of alternative
business structures (e.g., including but not limited, to the cost of services or the ability to
recruit lawyers and nonalwyers)? If so, in what ways?
a. What guidance is required for U.S. lawyers and law firms practicing in countries
that currently permit forms of ABS?
3. What types of nonlawyer service providers (other than administrative assistants, paralegals,
receptionists and other support staff) currently assist you in serving your clients?
a. Are they employees of the firm, independent contractors, or do they have some
other status?
b. If you employ these nonlawyers directly, why do you choose to do so rather than
through a separately organized business structure, such as a law-related business as
defined under Rule 5.7 of the ABA Model Rules of Professional Conduct?
c. If you were permitted to have nonlawyer partners in your firm would you do so?
4. The District of Columbias version of Model Rule of Professional Conduct 5.4 permits
(with certain restrictions set forth in footnote 3) a lawyer to practice law in a partnership or
other form of organization in which nonlawyers hold a financial interest or have managerial
authority.
a. Do you believe that the District of Columbia Rule provides adequate protections
to clients?
b. If not, do you believe that District of Columbia Rule 5.4, along with limitations on
the percentage of nonlawyer participation, would adequately protect clients?
3
2798
II. A Brief History of the ABAs Consideration of ABS
As noted above, the ABA has previously studied ABS. In doing so, it has recognized that
there is a relationship between those efforts, advances in technology, and increases in the
globalization of legal practice. In 1999, a background paper made the following observation:
The delivery of legal services in the United States faces unprecedented challenges.
Revolutionary advances in technology and information sharing, the globalization of the
capital and financial services markets, and more expansive government regulation of
commercial and private activities have reshaped client demands for legal advice and
advocacy.
5
These same challenges are equally apparent today and are arguably even greater. As this
Commissions Preliminary Issues Outline noted, already the profession is encountering the
competitive and ethical implications of U.S. lawyers and law firms seeking to represent American
and foreign clients abroad and foreign lawyers seeking access to the U.S. legal market.
6
A. Pre-Model Rules Treatment of ABS
Prior to 1969, Canon 33 of the ABA Canons of Professional Ethics provided that
[p]artnerships between lawyers and members of other professions or nonprofessional persons
should not be formed or permitted where any part of the partnerships employment consists of the
practice of law.
In 1969, this prohibition was carried forward in the ABA Model Code of Professional
Responsibility. DR 3-103(A) prohibited a lawyer from forming a partnership with a non-lawyer
if any of the activities of the partnership consist of the practice of law. Moreover, under DR 3-
102(A), lawyers could not share legal fees with a non-lawyer except under narrow
circumstances.
B. The Kutak Commission Model Rule 5.4
Between 1977 and 1983, the Commission on Evaluation of Professional Standards
(Kutak Commission) developed the Model Rules of Professional Conduct. The Kutak
Commission carefully considered the issue of lawyers partnering with nonlawyers and initially
proposed that such partnerships should be permitted as long as certain safeguards were employed.
The 1982 draft of Model Rule 5.4 provided as follows:
Professional Independence of a Firm
A lawyer may be employed by an organization in which a financial interest is held
or managerial authority is exercised by a nonlawyer, or by a lawyer acting in a capacity
other than that of representing clients, such as a business corporation, insurance company,
legal services organization or government agency, but only if the terms of the relationship
provide in writing that:
5
Commission on Multidisciplinary Practice, Background Paper on Multidisciplinary Practice: Issues and
Development, at 1 (January 1999), available at
http://www.americanbar.org/groups/professional_responsibility/commission_multidisciplinary_practice/mu
lticomreport0199.html.
6
Preliminary Issues Outline, supra note 2, at 1.
4
2799
(a) there is no interference with the lawyers independence of professional
judgment or with the client-lawyer relationship;
(b) information relating to representation of a client is protected as required by
Rule 1.6;
(c) the arrangement does not involve advertising or personal contract with
prospective clients prohibited by Rules 7.2 and 7.3; and
(d) the arrangement does not result in charging a fee that violates Rule 1.5.
The House of Delegates rejected this proposed version of Model Rule 5.4. A revised version of
Model Rule 5.4 was subsequently adopted in 1983 and has remained largely intact, except for
relatively minor subsequent amendments that have not affected the basic prohibition on
lawyer/nonlawyer partnerships and sharing of fees.
C. The Commission on Multidisciplinary Practice
In the late 1990s, the legal profession took note of the extent to which consulting firms
had become associated with the then-Big-5 accounting firms. In particular, these consulting
firms had begun to engage in work that was similar to the work being performed by law firms.
7
In August 1998, then-ABA President Philip S. Anderson appointed the Commission on
Multidisciplinary Practice (MDP Commission) to study and report on the extent to which and
the manner in which professional service firms operated by accountants and others who are not
lawyers are seeking to provide legal services to the public.
8
The Commission was asked to
analyze:
The experience of clients, foreign and domestic, who had received legal services
from professional service firms, and report on international trade developments
relevant to the issue;
Existing state and federal legislative frameworks within which professional
service firms were providing legal services, and recommend any modifications or
additions to that framework that would be in the public interest;
The impact of receiving legal services from professional service firms on a
clients ability to protect privileged communications and to have the benefit of
advice free from conflicts of interest; and
The application of current ethical rules and principles to the provision of legal
services by professional service firms, and to recommend any modifications or
additions that would serve the public interest.
9
Though large accounting firms were the impetus for the MDP Commissions work, it
heard testimony and received written comments that suggested that the Model Rules should be
revised to permit multidisciplinary practices and that such changes would benefit both lawyers
7
Supra note 5, at 2.
8
See The Commission on Multidisciplinary Practice, About The Commission, at
http://www.americanbar.org/groups/professional_responsibility/commission_multidisciplinary_practice.ht
ml.
9
Id.
5
2800
and the public.
10
Accordingly, the MDP Commissions August 1999 Report to the House of
Delegates contained a Recommendation that the Model Rules of Professional Conduct be
amended to permit multidisciplinary practices, but with certain safeguards in place to ensure that
the core values of the legal profession were maintained.
11
The recommendation was
accompanied by illustrations of possible amendments to the Model Rules of Professional Conduct
that would have been considered at a later time if the underlying recommendation were
adopted
o the MDP Commissions recommendation, the House adopted the
llowing resolution:
wyer independence and the legal profession's tradition of
loyalty to clients.
13
mendation, and this time adopted a recommendation that included the
following language:
aw by nonlawyers are inconsistent with the core values of the legal
profession.
nlawyers ownership
or control over entities practicing law, should not be revised.
* * * *
services should own or control the practice of law by a lawyer or law firm or
.
12
In response t
fo
That the American Bar Association make no change, addition or amendment to
the Model Rules of Professional Conduct which permits a lawyer to offer legal
services through a multidisciplinary practice unless and until additional study
demonstrates that such changes will further the public interest without sacrificing
or compromising la
The MDP Commission proceeded to take more testimony and receive additional
comments. It returned to the House of Delegates with a new Report in July 2000, which once
again recommended changes to the Model Rules of Professional Conduct, but with less detail
than in 1999 and in a manner that imposed more restrictions on proposed multidisciplinary
practices.
14
The key change from the prior recommendation was that only lawyer-controlled
MDPs would be permitted under the new recommendation. The House again rejected the
Commissions recom
The sharing of legal fees with nonlawyers and the ownership and control of the
practice of l
The law governing lawyers, that prohibits lawyers from sharing legal fees with
nonlawyers and from directly or indirectly transferring to no
FURTHER RESOLVED that the American Bar Association recommends that in
jurisdictions that permit lawyers and law firms to own and operate nonlegal
businesses, no nonlawyer or nonlegal entity involved in the provision of such
10
See Report to the House of Delegates 109 (August 1999) at C9-10, available at
http://www.americanbar.org/groups/professional_responsibility/commission_multidisciplinary_practice/md
pfinalreport.html.
11
Id.
12
Id.
13
Report to the House of Delegates 10B (as revised) (August 1999).
14
Report to the House of Delegates 117 (July 2000), available at
pfinalrep2000.html.
6
2801
otherwise be permitted to direct or regulate the professional judgment of the
lawyer or law firm in rendering legal services to any person.
15
During the time that the MDP Commission was in existence, forty-four states and the District of
Columbia formed committees to study the multidisciplinary practice issue.
16
A variety of
recommendations followed.
17
When the Commissions work ended in July 2000, however, state
initiatives in this area lost their impetus.
III. ABS Abroad
As noted in the Introduction, since July 2000, few jurisdictions within the United States
have examined the issue of multidisciplinary practices or any other form of ABS. Other countries,
however, have moved forward in this area, adopting a wide range of approaches. The competitive
environment in which U.S. firms of all sizes now operate has changed, and at least one New
York-based litigation firm with fewer than 40 lawyers converted its office in London, England to
operate as a Legal Disciplinary Partnership (LDP), a form of ABS discussed below that permits
up to 25% of a law firms partnership to be formed by nonlawyers. Accordingly, while the
regulatory environment elsewhere may not directly map the regulatory structures in place in the
United States, U.S. firms and lawyers are already participating in ABS abroad. The discussion is
no longer simply theoretical.
Further, the impact of the economic challenges of the intervening period also invites
otherwise unable to afford them, and to provide new and varied opportunities for lawyers and
firms domestically to better serve the public. Though many of the issues and concerns present in
the period leading up to the July 2000 resolution remain at the core of the assessment of ABS, the
domestic and global context within which they are to be considered has changed.
A. Regulatory Reform in Australia
Australia has adopted an expansive approach to ABS. Australia is a Federation of six
States, each with a plenary constitutional power to regulate the legal profession and the provision
of legal services. Two self-governing Territories have primary regulatory power over the legal
profession. In most jurisdictions it is a bifurcated profession (barristers and solicitors), with
approximately 56,000 solicitors and 5,200 barristers as of December 2010. The profession is
made up overwhelmingly of sole practitioners and small law firms, constituting approximately 80
percent of the total.
18
15
See Revised Recommendation 10F, available at
precom10f.html.
16
See charts at
pstats.html and
p_state_summ.html.
17
Id.
18
Murray Hawkins, Director, National Legal Profession Project, Australian Models of Regulating the
Legal Profession, Presentation to the Federation of Law Societies of Canada Semi-Annual Conference,
17-19 March 2011.
7
2802
Australias reforms began in 1994, when New South Wales became the first Australian
jurisdiction (and the first of any common law jurisdiction) to permit multidisciplinary practices.
19
In that year, legislation authorized multidisciplinary partnerships, but required legal practitioners
to retain at least 51% of the net partnership income in order to ensure that these firms retained the
ethical practices of a law firm.
20
At that time, lawyers and firms did not express much interest in
adopting these alternative business structures, in part because of prevailing attitudes that law
should remain a profession and not be treated as a business.
21
Subsequently, pressure from national competition authorities to reform regulatory
structures to create greater accountability and enhance consumer interest and protection, and
increased interest in innovation led to proposals to eliminate the 51% rule and to permit
Incorporated Legal Practices [described below], including multidisciplinary practices and
publicly traded law firms. These proposals raised concerns within the profession about
conflicting duties and increased risks of unethical behavior. Regulators and the organized bar
were able to overcome these reservations and to adopt these forms of alternative business
structures.
As of December 2010, there were approximately 2,000 Incorporated Legal Practices in
Australia, and this number is growing rapidly.
22
Most Incorporated Legal Practices are smaller
firms, but mid-sized and large national firms also have incorporated. There are around 70 known
multidisciplinary partnerships.
23
In New South Wales, the State with the largest number of firms
and practitioners, as of August 2010, more than 20% of the legal profession was employed within
non-traditional business structures (more than 1,000 of them operating as Incorporated Legal
Practices).
24
Approximately 30 New South Wales firms operate as multidisciplinary practices. A
primary reason for Australian lawyers taking advantage of these structures is the growing reality
and perception that the traditional structure of law firms no longer meets the needs of many
practitioners and clients.
25
A drive to promote competitiveness and participation in international
markets for goods and services, the need to enhance consumer interests and protection, and the
need for the national legal services market to complement and facilitate national competition have
been consistent themes animating regulatory reform.
26
1. Incorporated Legal Practices
Each Australian state or territorys Legal Profession Act sets forth the primary rules
applicable to Incorporated Legal Practices (ILP).
27
Australian legal practitioners with valid
19
Steve Mark, Tahlia Gordon, Marlene Le Brun, and Gary Tamsitt, Preserving the Ethics and Integrity of
the Legal Profession in an Evolving Market: A Comparative Regulatory Response, (2010) (hereafter
Mark & Gordon).
20
Id.
21
Id.
22
Hawkins, supra note 18.
23
Id.
24
Steve Mark, Regulating for Professionalism, the New South Wales Approach, August 5, 2010. This
paper was presented as part of the Ethics 20/20 Commissions Showcase CLE Presentation at the 2010
Annual Meeting in San Francisco and is attached. (hereinafter Mark)
25
Mark & Gordon, supra note 19.
26
Hawkins, supra note 18.
27
For purposes of illustration, reference is made in this part to the legislation and regulations for New
South Wales.
8
2803
practice certificates can provide legal services either alone or alongside other service providers
who may, or may not, be lawyers.
28
An ILP may provide legal and any other lawful service,
except it may not operate a managed investment scheme or provide other services prohibited by
applicable regulations.
29
The ILP itself is not required to have an Australian legal practice
certificate.
30
The law relating to attorney-client privilege or applicable legal professional privileges
continues to apply to legal practitioners who are officers or employees of ILPs.
31
The ILP and
each lawyer who is a legal practitioner director, employee or officer must have professional
liability insurance and comply with all other rules and regulations governing the profession.
32
ILPs may have external investors and be listed on the Australian Stock Exchange. They
also must operate in compliance with the Australian Federal Corporations Act, including
registration with the Australian Securities & Investment Commission. In Australia, a lawyers
professional duty is owed first to the court and then to the client, whereas a corporations primary
duty is to its shareholders. As a result, the New South Wales Legal Services Commissioner
worked closely with Slater & Gordon, the worlds first publicly listed law firm, to ensure that its
prospectus, constituent documents and shareholder agreements provided that its duty to the court
remained primary, that duties to its clients followed, and that the firms obligations to
shareholders were last.
Upon incorporation an ILP must appoint at least one Legal Practitioner Director
responsible for the management of the legal services provided by the entity. If the ILP operates
in more than one jurisdiction, it is not required to have a Legal Practitioner Director in each
jurisdiction in which it operates. The Legal Practitioner Director must implement and maintain
appropriate management systems that allow the entity to provide legal services in accordance
with the professional obligations of legal practitioners. A failure to do so may constitute
misconduct.
33

In addition to self-assessment and audit requirements, Legal Practitioner Directors must
report to the regulator the conduct of any director of their ILP (whether or not the Legal
Practitioner Director) that has resulted in, or is likely to result in a violation of that persons
professional obligations or other obligations imposed by or under the Act.
34
The Legal
Practitioner Director also must report to the appropriate regulator any professional misconduct of
a solicitor employed by the practice and take all reasonable action to address any professional
misconduct or unsatisfactory professional conduct by a solicitor employed by the ILP. Finally, a
Legal Practitioner Director has an obligation to disclose to clients the services to be provided by
28
Legal Profession Act 2004, http://www.austlii.edu.au/au/legis/nsw/consol_act/lpa2004179/; (hereinafter
LPA 2004) Legal Profession Regulation 2005,
http://www.austlii.edu.au/au/legis/nsw/consol_reg/lpr2005270/.
29
Id. at Section 112.
30
Id. at Section 136.
31
Id. at Section 112.
32
Id. at Section 144.
33
The New South Wales Office of the Legal Services Commissioner, the Law Society of New South
Wales, the College of Law, and LawCover (the primary professional liability insurer in New South Wales)
have developed key criteria designed to help the Legal Practitioner Director and ILPs demonstrate that they
have developed and implemented these management systems. See Mark & Gordon supra note 19; Mark,
supra note 24.
34
See Mark & Gordon supra note 19; Mark, supra note 24; LPA 2004 supra note 29.
9
2804
the ILP, and whether or not the legal services to be provided will be provided by a legal
practitioner.
35

Sanctions for violations of the regulations governing ILPs can be taken against the entity
as well as against the Legal Practitioner Director or other licensed legal practitioners for
professional misconduct they commit.
36
Discipline can include canceling the practice certificate
of the Legal Practitioner Director. Nonlawyers also may be prohibited from serving as officers or
from acting as a manager of an ILP.
37
Upon application to the Supreme Court by the bar
association or the Legal Services Commissioner, the Court can enter an order disqualifying the
ILP from providing legal services; this means it must cease to be an ILP.
38
Australia does not have a prerequisite fit to own test for nonlawyer managers/owners of
alternative business structures like that described below for England, Wales, and Scotland. Also,
the United Kingdoms fit to own test applies to all business structures permitted, not just
incorporated practices.
2. Multidisciplinary Partnerships
Lawyers in Australia also may form multidisciplinary partnerships.
39
A multidisciplinary
partnership is defined as a partnership between one or more Australian legal practitioners and
one or more other persons who are not Australian legal practitioners, where the business of the
partnership includes the provision of legal services in this jurisdiction as well as other services.
40
Partnerships between Australian lawyers and Australian-registered foreign lawyers do not count
as multidisciplinary partnerships.
41
Each lawyer partner is responsible for the management of the
legal services provided by the partnership and must ensure that appropriate management systems
are implemented and maintained as required by the rules and regulations governing the
professional obligations of Australian legal practitioners.
42
Requirements for professional
liability insurance apply and the Australian legal practitioner partners retain the attorney-client
and other applicable legal professional privileges.
The legal practitioner partners of multidisciplinary partnerships may be found to have
committed misconduct if any of the other legal practitioner partners commit professional
misconduct, if the conduct of any nonlawyer partner adversely affects the provision of legal
services by the partnership or if a nonlawyer partner is found to be unsuitable to serve in that
capacity.
43
On application by the bar association or the Regulator, the Supreme Court can
prohibit an Australian legal practitioner from being a partner with a nonlawyer in a firm that
provides legal and other services if the Court finds that the nonlawyer is not a fit and proper
person to be a partner or has committed conduct that, if committed by an Australian legal
practitioner, would violate applicable professional conduct rules.
44
35
See Mark & Gordon, supra note 19.
36
See LPA 2004 supra note 29 at Section 153.
37
Id. at Section 154.
38
Without Prejudice supra.
39
See LPA 2004, supra note 29 at Section 165.
40
Id.
41
Id.
42
Id. at Section 168
43
Id. at Section 169.
44
Id. at Section 179.
10
2805
B. Multidisciplinary Practices in Canada
Multidisciplinary practices are permitted in two Canadian common-law provinces,
Ontario and British Columbia, and in Quebec, which is a civil law jurisdiction. MDPs have been
permitted in Ontario since 1999 and in British Columbia since 2010. The Ontario and British
Columbia MDP regime is permissive but with significant restrictions: the lawyers involved in the
partnership must have effective control over the legal services the partnership provides, and
nonlawyer partners are not permitted to provide services to the public unless they support or
supplement the practice of law by the MDP.
45
For example, By-Law 7 of the Law Society of
Upper Canada, which regulates lawyers in the Province of Ontario, permits a lawyer (licensee)
to form a partnership or other association (but not a corporation) with a nonlawyer professional
for the purpose of permitting the licensee to provide to clients the services of the professional if
application is made and a series of conditions are satisfied.
46
The conditions include a good
character requirement for the nonlawyer professional, that the nonlawyer professional is
qualified to practise a profession, trade or occupation that supports or supplements the practice
of law or provision of legal services, and that the lawyer shall have effective control over the
nonlawyers professional practice of his or her profession.
47
In addition, the Law Society of Upper Canada has had rules in place since 2001 to
regulate affiliated law firms. The Law Societys Multi-Disciplinary Practice Task Force had
been tasked in 1998 and 1999 with examining a captive law firm model, the provision of legal
services to the public through law practices affiliated with professional-service or accounting
firms.
48
As a result of the Task Forces deliberations, there are now provisions that impose a
notification requirement on a lawyer member or firm that affiliates with an affiliated entity as
well as various restrictions on such arrangements. For purposes of the By-Law, a lawyer
affiliates with an affiliated entity when the [lawyer] on a regular basis joins with the affiliated
entity in the delivery or promotion and delivery of the services of the licensee and the services of
the affiliated entity.
49
The Task Force acknowledged at the time that the definition of affiliation
captures more than law firms and non-law firms who by design operate under comprehensive
arrangements for the joint delivery of legal and non-legal services.
50
The section further requires that the lawyer member or firm in such an arrangement shall:
(a) own the professional business through which the [lawyer] practises law
or provides legal services []
(b) maintain control over the professional business through which the
[lawyer] practises law or provides legal services; and
45
Law Society of British Columbia, Law Society Rules, Multi-Disciplinary practice, Section 2-
23.3(2)(a)(i), available at http://www.lawsociety.bc.ca/publications_forms/rules/rules_part02.html#2-23-3.
46
Law Society of Upper Canada, By-Law 7, PART III, MULTI-DISCIPLINE PRACTICES (hereinafter
By-Law 7), Section 18, available at http://www.lsuc.on.ca/media/bylaw7.pdf.
47
Id.
48
THE LAWSOCY OF UPPER CAN., MULTI-DISCIPLINARY PRACTICE TASK FORCE, IMPLEMENTATION
PHASE: REPORT TO CONVOCATION 1 n.1 (Apr. 26, 2001) [hereinafter IMPLEMENTATION REPORT] (quoting
The Law Society of Upper Canada Transcript of Convocation 218 (Sept. 25, 1998)), available at
http://www.lsuc.on.ca/media/mdptaskforcereport.pdf.
49
Law Society of Upper Canada, By-Law 7, PART IV, AFFILIATIONS, Section 31(2), available at
http://www.lsuc.on.ca/media/bylaw7.pdf.
50
IMPLEMENTATION REPORT, supra note 48 at 14.
11
2806
(c) carry on the professional business through which the [lawyer] practises
law or provides legal services, other than the practice of law or the
provision of legal services that involves the delivery of the services of
the [lawyer] jointly with the services of the affiliated entity, from
premises that are not used by the affiliated entity for the delivery of its
services, other than those that are delivered by the affiliated entity jointly
with the delivery of the services of the [lawyer].
51
The notification requirements include the following information:
1. The financial arrangements that exist between the [lawyer] and the affiliated
entity.
2. The arrangements that exist between the [lawyer] and the affiliated entity with
respect to
i. the ownership, control and management of the professional business
through which the licensee practises law or provides legal services,
ii. the [lawyers] compliance with the Societys rules, policies and
guidelines on conflicts of interest in relation to clients of the licensee
who are also clients of the affiliated entity, and
iii. the [lawyers] compliance with the Societys rules, policies and
guidelines on confidentiality of information in relation to
information provided to the [lawyer] by clients who are also clients
of the affiliated entity.
52
No fee-splitting or profit-sharing is permitted between the law firm and the affiliated entity, and
the conflicts clearance requirements in essence treat the law firm and the affiliated entity
economically as if they were one firm.
53
In contrast to the restrictive approach adopted in Ontario and British Columbia,
amendments to regulations under the Code des professions (Professional Code) of Quebec in
2010 provide for a far more liberal multidisciplinary practice regime, requiring simple majority
ownership by members of the Barreau du Quebec of the firm through which the professional
services are provided.
54
Nonlawyer membership is restricted to those members of various other
recognized professional bodies (including actuaries, patent agents, and members of the Chambre
de lassurance de dommages)
55
[damage insurance adjusters and brokers] or the Chambre de la
securite financiere
56
[financial planners and insurance agents], but the regulation does not require
that their activities support or supplement the practice of law in the manner of the Ontario and
British Columbia MDP rules.
51
By-Law 7, Part IV, at Section 32.
52
Id., at Section 33(2).
53
IMPLEMENTATION REPORT, supra note 48 at 3.
54
Quebec, Reglement sur lexercice de la profession davocat en societe et en multidisciplinarite, Loi sur le
Barreau (L.R.Q., c. B-1, a.4), Code des professions (L.R.Q., c C-26, a. 93 et 94), [hereafter Quebec
Regulation] Sections 1 and 5, available at
http://www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/telecharge.php?type=2&file=%2F%2FC_26
%2FC26R19_1_2.htm.
55
See http://www.chad.ca/en/index.html.
56
See http://www.chambresf.com/en/chamber/.
12
2807
The firm is required to provide an undertaking to the Barreau du Quebec that in essence
ensures that all members of the partnership comply with rules of law so as to permit the lawyer
members to carry on their professional activities, particularly as regards the following:
a) professional secrecy, the confidentiality of information contained in
client files and the preservation thereof;
b) professional independence;
c) the prevention of situations of conflict of interests;
d) activities reserved for advocates;
e) liability insurance;
f) professional inspections;
g) advertising;
h) billing and trust accounts; and
i) access by the syndic of the Barreau to this undertaking and, if
applicable, to every contract or agreement regarding a [member of the
Barreau]
57
C. England and Wales: The Legal Services Act 2007
The approach in England and Wales is the result of passage of the Legal Services Act of
2007 (LSA). The LSA sets forth the following regulatory objectives:
(a) protecting and promoting the public interest;
(b) supporting the constitutional principle of the rule of law;
(c) improving access to justice;
(d) protecting and promoting the interests of consumers;
(e) promoting competition in the provision of services within subsection (2);
(f) encouraging an independent, strong, diverse and effective legal profession;
(g) increasing public understanding of the citizens legal rights and duties;
(h) promoting and maintaining adherence to the professional principles.
58
Under the LSA, alternative business structures are defined as entities that have lawyer
and nonlawyer management and/or ownership and that provide only legal services or legal
services in combination with non-legal services.
59
The Legal Services Board (the overarching
regulator) has designated the Solicitors Regulation Authority (SRA) as an approved regulator for
these entities. There also may be other approved regulators. All entities with a nonlawyer
manager and/or owner must be licensed, and all individual participants also must be authorized.
As noted above, unlike the current Australian regulatory regime, the LSA takes a front-end
approach by requiring nonlawyer owners and managers to pass a fit to own test.
60
Disciplinary
57
Quebec Regulation, at Schedule B (s.3) [in translation, French version official].
58
See Legal Services Act 2007, Part I, The Regulatory Objectives, available at http://www.sra.org.uk/lsa.
59
See http://www.sra.org.uk/sra/legal-services-act/faqs/ABS-faqs.page; and
http://www.sra.org.uk/sra/legal-services-act/lsa-glossary.page.
60
See, e.g., Solicitors Regulation Authority Recognized Bodies Regulations, Regulation 3, at
http://www.sra.org.uk/solicitors/change-tracker/code-of-conduct/recognised-bodies-regulations.page#r3.
13
2808
sanctions can be imposed against the entity as well as lawyer and nonlawyer managers and
employees.
1. Legal Disciplinary Practices
Since March 31, 2009, firms have been able to become licensed as a Legal Disciplinary
Practice (LDP). An LDP can engage only in the provision of legal services, but may have
managers who are different types of lawyers (barristers and solicitors) and up to 25% nonlawyer
managers.
61
External owners are not permitted.
62
As noted above, nonlawyer managers are
subject to a fitness review and approval by the SRA.
63
The SRA imposes an approval fee of
250 plus the cost of the criminal background check for nonlawyer managers.
64
The SRA can
withdraw approval of a nonlawyer manager. The SRA may direct an LDP to appoint a person
analogous to a Head of Legal Practice under Part 5 of the LSA to ensure compliance with the
LDPs obligations and duties under the LSA, the Solicitors Code or Conduct, and other applicable
rules and regulations, including the disciplinary rules and procedures. LDPs are required to
maintain professional liability insurance.
65
At the ABA Commission on Ethics 20/20s August 2010 meeting, the Chief Executive of
the Law Society of England and Wales reported that, as of June 2010, there existed 254 LDPs;
184 of them were firms of 10 members or fewer. Types of nonlawyer partners include
accountants, financial planners, barristers, and teachers. To date, no disciplinary problems with
LDPs have been reported.
2. Full Alternative Business Structures
The SRA has reported that implementation of the full range of alternative business
structures (ABS) permitted under the LSA will occur in October 2011.
66
At that time, existing
LDPs will be able to passport into other permitted forms of ABS. The regulations under which
the SRA will oversee full ABS are still under development. The SRA is developing a Handbook
that will set forth the regulatory framework for solicitors and ABS that includes a new form of
outcome-focused or risk-based regulation as opposed to primarily rule-based regulation. The
Handbook is the subject of numerous consultations within the U.K. legal profession.
67
As noted above, an ABS can have external investment by nonlawyers and may be a
multidisciplinary practice. Potential external investors who will own a 10% or greater interest in
an ABS must also pass the fit to own test. The SRA does not plan to prohibit any particular
model under which an approved and licensed entity can operate. Rather, it would require an ABS
61
See Legal Services Act: Legal disciplinary practices practical issues at http://www.sra.org.uk/sra/legal-
services-act/faqs/abs-faqs.page and Solicitors Code of Conduct 2007, the Management and control
requirement, para. 10-21, available at http://www.sra.org.uk/solicitors/code-of-conduct/rule14.page.
62
Id.
63
See SRA Recognised Bodies Regulations 2009 at 3.3, available at
http://www.sra.org.uk/solicitors/change-tracker/code-of-conduct/recognised-bodies-regulations.page#r3.
64
http://www.sra.org.uk/sra/legal-services-act/faqs/abs-faqs.page
65
See Legal Services Act 2007, supra note 58.
66
See Solicitors Regulation Authority Guidance, Preparing for Alternative Business Structures, November
2010, http://www.sra.org.uk/solicitors/code-of-conduct/guidance/abs/preparing-for-alternative-business-
structures-info.page.
67
See http://www.sra.org.uk/solicitors/freedom-in-practice/new-handbook/new-handbook-overview.page.
14
2809
to meet minimum requirements such as having at least one active nonlawyer and lawyer
owner/manager, and using a suitable regulatory model to ensure necessary client protection.
68
Full ABSs will be accountable to the SRA through a nominated Head of Legal Practice
and Head of Finance and Administration. These individuals must ensure the maintenance of
appropriate ethical and financial accounting standards. Nonlawyer owners are obligated not to
cause a lawyer to breach his or her professional duties. The SRA will have the power to ban a
nonlawyer owner from future involvement in an ABS, to revoke the ABSs license or to fine the
firm.
On the issue of confidentiality, an MDP ABS will be subject to the same requirements as
other firms under the Solicitors Code of Conduct and other applicable rules and regulations. It
will not be able to disclose confidential client information to, for example, other companies
within the same group.
69
The SRA also considers it inappropriate for any firm to exploit
sensitive client information for marketing purposes. With regard to protecting client funds when
an entity operates as an MDP ABS, the SRA has amended the trust accounting rules to ensure that
monies coming from legal activities of the firm are segregated from other forms of client fun
70
ds.
The Law Society of England and Wales has urged the SRA to ensure that access to
justice not receive short shrift as the implementation of ABSs moves forward. The Law Society
has acknowledged that these new entities could improve access to justice by reducing costs and
providing more services. However, it warns that regulators should take care to ensure that ABSs
do not simply lead to expansion in the most profitable areas of practice while unacceptably
reducing access in other areas like family or immigration law. To address these concerns, the
SRA has engaged in an Equality Impact Assessment and ongoing consultation.
D. Scotland: Alternative Business Structures
On October 6, 2010, the Scottish Parliament approved the Legal Services (Scotland) Act,
which permits ABS. The Act received Royal assent on November 9, 2010. Like the LSA in
England and Wales, Part 1 of the Act sets forth regulatory objectives.
71
A recent consultation
paper states that the primary aim of the Act is to remove the current restrictions in the Solicitors
(Scotland) Act 1980 on how solicitors can organize their businesses. It will allow solicitors to
form partnerships with non-solicitors, and to seek investment from outside the profession.
However, the Act is enabling rather than prescriptive, so solicitor firms that do not want to
operate under the new business arrangements will be under no obligation to do so.
72
Scottish
solicitors will be able to provide legal services in partnership with nonlawyers, as MDPs, and
with external ownership. Solicitors can remain in traditionally structured practices. Unlike ABS
68
See FAQs: Legal Services Act and ABSs, http://www.sra.org.uk/sra/legal-services-act/faqs/abs-faqs.page
In a 2010 teleconference arranged by the State Bar of Georgia, the nonlawyer head of the SRA indicated
that entities seeking to become a licensed ABS would likely be required to submit to the SRA for review
and approval their business plans.
69
Solicitors Regulation Authority, Consultations, The Architecture of Change Part 2 the new SRA
Handbook, para. 29, available at http://www.sra.org.uk/sra/consultations/OFR-handbook-October.page.
70
Id. at para. 105.
71
Legal Services (Scotland) Act (2010) at Part I, available at
http://www.legislation.gov.uk/asp/2010/16/pdfs/asp 20100016 en.pdf [hereafter Legal Services (Scotland)
Act 2010].
72
The Scottish Government, Ownership and control of firms providing legal services under the Legal
Services (Scotland) Act 2010 A consultation paper (2011), available at
http://www.scotland.gov.uk/Publications/2011/02/09105855/0.
15
2810
in England and Wales, Scottish ABSs must have majority ownership by solicitors; nonlawyer
external investors can only own up to a 49% percent stake in the entity.
73
As in England and
Wales, nonlawyer investors must pass a fitness for involvement test.
74
The Scottish legislation
does not create a Legal Services Board to oversee regulation like the LSA did in England and
Wales. The Law Society of Scotland will retain its regulatory authority over solicitors and the
Scottish Ministers in Parliament may approve other regulators.
A Scottish ABS must have a Head of Legal Services and also either a Head of Practice or
a Practice Committee. The same licensed solicitor may serve as Head of Legal Services and Head
of Practice. The Head of Legal Practice is required to see that licensed professionals in the entity
adhere to their professional obligations.
75
The legal professional privilege applies to
communications made to or by licensed providers in the course of providing legal services for
any of their clients, as well as to or by others employed by the licensed entity who are acting in
connection with the provision of legal services or who are working at the direction or under the
supervision of a solicitor.
76
E. Other Countries with ABS
MDPs also are permitted in Germany, the Netherlands (but not with accountants), and in
Brussels (only with accountants but there must be separate billing). New Zealand permits
incorporated law practices, but nonlawyers may only own non-voting shares. The definition of
nonlawyer is restricted to relatives (spouse, civil union partner, de facto partner, parent,
grandparent, child, brother or sister) of the actively involved lawyer. Only lawyers actively
involved in providing the incorporated firms regulated services can be directors.
F. Summary Rationale for Regulatory Reform Abroad
Regulatory reforms in Australia and the U.K. were driven in large part by competition
authorities and extreme consumer dissatisfaction with the lawyer disciplinary regime. In
Australia, the 1998 Report by the New South Wales Attorney Generals Department, entitled
National Competition Policy Review, concluded that the partnership model for structuring and
operating law firms was anticompetitive.
77
As noted above, this resulted in New South Wales
passing legislation to permit Incorporated Legal Practices (ILP), including multidisciplinary
practices.
78
Legislators believed these reforms would benefit consumers by enhancing
competition and efficiency and lowering costs. Others believed that the changes would help
Australia become a hub for the provision of legal services in the Asia-Pacific region.
79
In the United Kingdom, the 2001 Report of the Office of Fair Trading, entitled
Competition in Professions, concluded that certain rules governing the legal profession were
unduly restrictive. In England and Wales, organized consumer groups voiced concerns that the
73
Legal Services (Scotland) Act 2010. at Chapter 2, para. 49.
74
Id., at sections 62-67.
75
Id. at Chapter 2, para. 52.
76
Id. at Chapter 3, para. 75.
77
National Competition Policy Review, available at http://www.lawlink.nsw.gov.au/.
78
All Australian states and territories permit incorporation of law firms.
79
See, e.g., Legal Profession Amendment (Incorporated Legal Practices) Bill Second Reading New South
Wales Legislative Council, Hansard, October 12, 2000.
16
2811
discipline system operated by the Law Society was confusing, inconsistent, protective of lawyers,
and unresponsive. The government solicited a study by Sir David Clementi to address these
issues. The Legal Services Act 2007 incorporated many of Clementis recommendations from his
2004 Report entitled Report of the Review of the Regulatory Framework for Legal Services in
England and Wales,
80
including alternative business structures.
The Council of the Law Society of Scotland determined that further discussion about
alternative business structures was necessary because of the cross-border impact of the Legal
Services Act 2007 and changes to the legal services market driven by technology and
globalization.
81
The Office of Fair Trading also supported consumer claims that the restrictive
nature of the legal services market in Scotland harmed consumer interests.
82
On April 4, 2008,
the Council adopted a policy paper, entitled The Public Interest: Delivering Scottish Legal
Services, Policy Paper on Alternative Business Structures.
83
The report, which endorsed
alternative business structures, stated: The business structures in which solicitors practice now
reflect society, the profession and market conditions of the mid-twentieth century. They are not
the conditions pertaining in Scotland now, much less in the decades to come.
84
IV. Possible Approaches for Consideration
As the above discussion makes clear, alternative business structures can take many
different forms. While there are various approaches possible, the Working Group is seeking
feedback only with respect to the first three options enumerated below.
A. Limited Lawyer/Nonlawyer Partnerships with a Cap on Nonlawyer Ownership
Consistent with the Kutak Commission proposal, lawyers could be permitted to become
partners with (and share fees with) nonlawyers, such as economists, social workers, architects,
consultants, and financial advisors, under narrowly defined circumstances. The most modest
such approach would require that: (1) the firm engage only in the practice of law, (2) the
nonlawyers own no more than a certain percentage (e.g., 25%) of the firm,
85
and (3) the
nonlawyers pass a fit to own test (such as the test that exists in the United Kingdom for all
ABS, including LDPs).
B. Lawyer/Nonlawyer Partnerships with No Cap on Nonlawyers Ownership (The D.C.
Approach)
The District of Columbia currently permits lawyers to engage in partnerships of the sort
described in Option A, but without a cap on the nonlawyer ownership percentage. It also does not
require nonlawyers to pass a fit to own test.
80
Report of the Review of the Regulatory Framework for Legal Services in England and Wales, available
at http://www.legal-services-review.org.uk/content/report/index.htm.
81
See http://www.lawscot.org.uk/members/legal-reform-and-policy/law-reform/alternative-business-
structures.
82
Id.
83
The Public Interest: Delivering Scottish Legal Services, Policy Paper on Alternative Business Structures,
available at http://www.lawscot.org.uk/members/legal-reform-and-policy/law-reform/alternative-business-
structures/abs-news-archive.
84
Id.at p.6.
85
For example, LDPs in the United Kingdom have capped at 25% the ownership interest that nonlawyers
can have in a law practice.
17
2812
As noted above, Rule 5.4 of the District of Columbia Rules of Professional Conduct
provides in relevant part that:
Rule 5.4Professional Independence of a Lawyer
(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that: . . . .
(4) Sharing of fees is permitted in a partnership or other form of organization which meets the
requirements of paragraph (b) . . .
(b) A lawyer may practice law in a partnership or other form of organization in which a
financial interest is held or managerial authority is exercised by an individual nonlawyer who
performs professional services which assist the organization in providing legal services to clients,
but only if:
(1) The partnership or organization has as its sole purpose providing legal services to clients;
(2) All persons having such managerial authority or holding a financial interest undertake to
abide by these Rules of Professional Conduct;
(3) The lawyers who have a financial interest or managerial authority in the partnership or
organization undertake to be responsible for the nonlawyer participants to the same extent as if
nonlawyer participants were lawyers under Rule 5.1;
(4) The foregoing conditions are set forth in writing.
(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render
legal services for another to direct or regulate the lawyers professional judgment in rendering
such legal services.
The Comment to this Rule elaborates as follows:
[4] This rule rejects an absolute prohibition against lawyers and nonlawyers joining together to
provide collaborative services, but continues to impose traditional ethical requirements with
respect to the organization thus created. Thus, a lawyer may practice law in an organization
where nonlawyers hold a financial interest or exercise managerial authority, but only if the
conditions set forth in subparagraphs (b)(1), (b)(2), and (b)(3) are satisfied, and pursuant to
subparagraph (b)(4), satisfaction of these conditions is set forth in a written instrument. The
requirement of a writing helps ensure that these important conditions are not overlooked in
establishing the organizational structure of entities in which nonlawyers enjoy an ownership or
managerial role equivalent to that of a partner in a traditional law firm.
[5] Nonlawyer participants under Rule 5.4 ought not be confused with nonlawyer assistants
under Rule 5.3. Nonlawyer participants are persons having managerial authority or financial
interests in organizations that provide legal services. Within such organizations, lawyers with
financial interests or managerial authority are held responsible for ethical misconduct by
nonlawyer participants about which the lawyers know or reasonably should know. This is the
same standard of liability contemplated by Rule 5.1, regarding the responsibilities of lawyers with
direct supervisory authority over other lawyers.
[6] Nonlawyer assistants under Rule 5.3 do not have managerial authority or financial interests
in the organization. Lawyers having direct supervisory authority over nonlawyer assistants are
held responsible only for ethical misconduct by assistants about which the lawyers actually know.
[7] As the introductory portion of paragraph (b) makes clear, the purpose of liberalizing the
Rules regarding the possession of a financial interest or the exercise of management authority by
18
2813
a nonlawyer is to permit nonlawyer professionals to work with lawyers in the delivery of legal
services without being relegated to the role of an employee. For example, the rule permits
economists to work in a firm with antitrust or public utility practitioners, psychologists or
psychiatric social workers to work with family law practitioners to assist in counseling clients,
nonlawyer lobbyists to work with lawyers who perform legislative services, certified public
accountants to work in conjunction with tax lawyers or others who use accountants services in
performing legal services, and professional managers to serve as office managers, executive
directors, or in similar positions. In all of these situations, the professionals may be given
financial interests or managerial responsibility, so long as all of the requirements of paragraph (c)
are met.
The Comment also makes clear that the Rule does not permit an individual or entity to
acquire all or any part of the ownership of a law partnership or other form of law practice
organization for investment or other purposes.
C. MDPs that Offer Non-Legal Services
A third option would be to permit firms of the sort described in option B and to allow
those firms to offer both legal and non-legal services. In other words, this option would
essentially be the D.C. Rule, but without the restriction contained in D.C. Rule 5.4(b)(1).
As noted above, the Commission has determined that the following two options are not
appropriate to be recommended for the United States at this time. Both are in place in the global
services marketplace in which U.S. lawyers and firms engage, however, so they may warrant
additional monitoring and study.
D. Endorsing Outside Investment
The three options above assume that the nonlawyer is partnered with and is an active
member of the firm. An alternative would be to permit nonlawyer passive investment in such
entities, but to place caps on nonlawyer ownership in the context of passive investment.
E. The Australia Model
This approach would not only permit external passive investment and ownership in law
firms, but also place no limits on the percentage of ownership that nonlawyers have in the entity.
19
2814
20
V. Conclusion
In light of these issues and concerns, the Commission seeks input into whether amendments to the
Model Rules of Professional Conduct or other action would be advisable. Any responses to the
questions posed in this paper, as well as any comments on related issues, should be directed by
June 1, 2011 to:
Natalia Vera
Senior Research Paralegal, Commission on Ethics 20/20
ABA Center for Professional Responsibility
321 North Clark Street
15th Floor
Phone: 312/988-5328
Fax: 312/988-5280
[email protected]
Comments received may be posted to the Commissions website.
2815
2
2816
July 28 - 30, 2011
Company-Issued Laptops/Cell Phones and Waivers of the
Attorney-Client Privilege
By
Washington, D.C.
2817
Reserved



2818
2
Reserved
Company-Issued Lapt ops/Cell Phones
and
Waivers of t he At t orney-Client
Privilege

Hypot het ical:

Your firm has a new client who is employed at the C-level by a company
that will be your adversary in negotiating your clients compensation package
and executive employment agreement. Your C-level client communicates in
great detail to your firm his negotiating position and fall-back positions for the
upcoming negotiations. In communicating with you, your client emails to you,
using the company-issued laptop. The company has a written policy that
provided, in part, that employees should have no reasonable expectation of
privacy in any emails that they transmit, using the companys equipment.
Indeed, company employees are advised not to use company-issued equipment
for their personal use. What could you and your client have done in the
representation agreement to minimize the now very real possibility that this
communication was made in a fishbowl, i.e., that the attorney-client privilege is
waived? Even if you had instructed your client in advance not to send such
communications using company-owned email systems, computers, or other
devices, what can or should you do if the client fails to comply with your
instructions in this regard?

Suggested Sample Language in the Representation Agreement:

While e-mail provides a fast and efficient medium for communication,
there exists some case law which suggests that e-mail communications
between attorney and client may not be confident ial and may be
discoverable by an adverse party.

In addition, most employers consider company-owned computers and
other electronic devices, as well as all information contained in them, to
be company property. Accordingly, there is generally no right to privacy
of any e-mail sent or received at your place of employment or using any
company-owned computer or other electronic device. Your employer has
complete access to, and is capable of, retrieving any e-mail message sent
2819
3
Reserved
or received by you at your company-owned computer or business e-mail
address, even after you have deleted the message.

Therefore, you should NEVER communicate by e-mail with your attorney
using a company-owned computer or other company-owned electronic
device or using your business e-mail address. Additionally, you should
exercise discretion in e-mailing the Firm from your home or non-business
e-mail address. Client should provide Firm with an email address, other
than employers, for communication between the Firm and Client.

Emerging Issue: Photocopiers Storing Confidential Information

Photocopiers, particularly new models, may be storing confidential
records on internal hard drives that users generally cannot access, but
the drives could be removed and copied. Because copiers are storing
data, it is critical that copiers be disposed of properly at the end of their
life cycle, and that confidential data is protected or destroyed. For more
information, see the following:
Armen Keteyian, Digital Photocopiers Loaded With Secrets, CBS
News ( Apr. 15, 2010) ,
http://www.cbsnews.com/stories/2010/04/19/eveningnews/m
ain6412439.shtml.
Steve Bruce, Copy Machine May Be Storing Your Confidential
Records, HR Daily Advisor ( Dec. 6, 2010) ,
http://hrdailyadvisor.blr.com/archive/2010/12/06/HR_ Policies
_ Procedures_ Records_ Recordkeeping_ DOL_ IRS_ Crackdown.aspx
.
Educate Your Client:

Overview:

Convertino v. Dept of J ustice, 674 F. Supp. 2d 97; 2009 U.S. Dist. LEXIS
115050 ( D.D.C. Dec. 10, 2009) ( Lamberth, J .)

The question of privilege comes down to whether the intent to
communicate in confidence was objectively reasonable. In order for
documents sent through e-mail to be protected by the attorney-
client privilege there must be a subjective expectation of
confidentiality that is found to be objectively reasonable. There are
four factors to determine reasonableness: ( 1) does the corporation
2820
4
Reserved
maintain a policy banning personal or other objectionable use; ( 2)
does the company monitor the use of the employees computer or
e-mail; ( 3) do third parties have a right of access to the computer
or e-mails; and ( 4) did the corporation notify the employee, or was
the employee aware, of the use and monitoring policies? Each case
should be given an individualized look to see if the party requesting
the protection of the privilege was reasonable in its actions. Id. at
*33.

Case Authority Arguing Both For and Against Waiver of Privilege in
this Context:

For examples of cases which have held that the employee
has no reasonable expectation of privacy when sending
such emails via company-owned computers or devices,
see, e.g., United States v. Simons, 206 F.3d 392, 398 ( 4
th

Cir. 2000) ( in light of an employer policy which placed
employees on notice that they could not reasonably
expect their internet activity at work would be private,
[ employee] lacked a legitimate expectation of privacy in
the files downloaded from the Internet [ while at work] ) ;
Muick v. Glenayre Elecs., 280 F.3d 741, 743 ( 7
th
Cir.
2002) ( finding that there was no reasonable expectation
of privacy where the employer had announced that it
could inspect computer files) ; Thygeson v. U.S. Bancorp,
CV-03-467-ST, 2004 U.S. Dist. LEXIS 18863; 34
Employee Benefits Cas. ( BNA) 2097, at **68-69 ( D. Or.
Sept. 15, 2004) holding that there was no reasonable
expectation of privacy in computer files and email where
the employers employee handbook stated that the
employer had the right to monitor these communications) ;
Kelleher v. City of Reading, Civ. A. No. 01-3386, 2002
U.S. Dist. LEXIS 9408, at **24-25 ( E.D. Pa. May 29, 2002)
( finding that there was no reasonable expectation of
privacy in emails where the employer had stated to
employees that no such expectation exists) ; Garrity v.
J ohn Hancock Mut. Life Ins. Co., Civ. A. No. 00-12143-
RWZ, 2002 U.S. Dist. LEXIS 8343; 146 Lab. Cas. ( CCH)
P59,541, at **4-6 ( D. Mass. May 7, 2002) ( holding that
there was no reasonable expectation of privacy despite
employees use of a personal password to limit access,
where the employer periodically reminded employees of its
email policy that the employer had the right to inspect
email usage.

2821
5
Reserved
For examples of cases which have held that the employee
and/or lawyer has waived attorney-client privilege by
sending such emails via or to company-owned computers
or devices, see, e.g., Long v. Marubeni America Corp., 05
Civ. 639 ( GEL) ( KNF) , 2006 U.S. Dist. LEXIS 76594, at *8
( S.D.N.Y. Oct. 19, 2006) ( holding that two employees
email exchanges with their attorneys on the employer
provided email system were not protected by the
attorney-client privilege where the employer had a policy
that prohibited personal use of the computers and
systems and provided for the employers right to monitor
communications on its systems, and the employer had
notified employees that they had no right of privacy in
their communications using the employers systems) ;
Alamar Ranch LLC v. County of Boise, Case No. CV-09-
004-S-BLW, 2009 U.S. Dist. LEXIS 101866 ( D. Idaho Nov.
2, 2009) ( finding that a lawyers emails sent to the
employee / clients work were unprotected by privilege) ;
Kaufman v. SunGard Inv. Sys., Civ. A. No. 05-CV-1236
( J LL) , 2006 U.S. Dist. LEXIS 28149, at **11-12 ( D.N.J .
May 9, 2006) ( finding that an employees emails to her
attorney were not protected by the attorney client
privilege where the employers policy expressly provided
that all communications on its systems were subject to
monitoring) ; Scott v. Beth Israel Med. Ctr., Inc., 847
N.Y.S.2d 436, 438-39 ( 2007) ( finding that an employees
communications with his attorney on the employers
systems were not protected by the attorney-client
privilege where the employer had notified its employees
that the employees had no right of privacy in
communications using the employers systems and that
the employer reserved its right to access such
communications) ; Bonds v. Leavitt, 647 F. Supp. 2d 541
( D. Md. 2009) ( Titus, J .) ( holding that where an employee
has been notified that there is no reasonable expectation
of privacy in that employees use of the employers
communication systems, any privilege with respect to
communications sent by that employee of those systems
is waived) ; Banks v. Mario Indus. Of Va., Inc., 650 S.E. 2d
687 ( Va. 2007) ( preparing an otherwise privileged
communication on a company computer waived the
employees privilege) ; Smyth v. Pillsbury Co., 914 F. Supp.
97, 100-01 ( E.D.Pa.1996) ( finding no reasonable
expectation of privacy in unprofessional e-mails sent to
supervisor through internal corporate e-mail system) .
2822
6
Reserved
However, for examples of cases which have instead held
that such communications retain their reasonable
expectation of privacy and/or privilege, notwithstanding
the fact that the data was stored or sent via an
employers computer, see, e.g., Leventhal v. Knapek, 266
F.3d 74 ( 2d Cir. 2001) ( holding that an employee had a
reasonable expectation of privacy in the contents of his
work computer where the employee occupied a private
office with a door, had exclusive use of the computer in
his office, and did not share use of his computer with
other employees or the public, notwithstanding an
employer policy which prohibited using the computer for
personal business) ; Sims v. Lakeside Sch., 2007 U.S. Dist.
LEXIS 69568 ( W.D. Wash. 2007) ( holding that public
policy demanded that an employees privileged
communications be protected) ; Curto v. Med. World
Commcns, Inc., 2006 U.S. Dist. LEXIS 29387 ( E.D.N.Y.
2006) ( concluding that an employee had not waived
privilege by leaving traces of privileged e-mails on a
company computer, despite a company policy which
stated that all e-mails viewed on company computers
were subject to monitoring) ; Natl Econ. Research Assocs.
V. Evans, 21 Mass. L. Rep. 337; 2006 Mass. Super. LEXIS
371 ( Mass. Super. Ct. 2006) ( checking email on company
computer did not waive employee privilege) ; Convertino v.
Dept of J ustice, 2009 U.S. Dist. LEXIS 115050 ( D.D.C.
Dec. 10, 2009) ( Lamberth, J .) .

As reflected in many of the cases above, the attorney
should be careful to notify his or her clients not only to
avoid sending privileged, confidential, or otherwise
personal emails using the companys email system, but to
avoid sending such emails using company computers or
devices altogether. Even where the employee sends such
communications using personal, password-protected email
accounts, the mere fact that company computers,
servers, and/or other devices were used to send the
messages may threaten the employees reasonable
expectation of privacy in such communications, and
therefore jeopardize any privilege or confidentiality which
might have otherwise attached to such emails. This is
particularly true where, as in the hypo above, the
company has an explicit policy that it reserves the right to
monitor all employee communications made on or sent
from company computers or devices.
2823
7
Reserved

For More Related Cases, See the Following:
City of Ontario v. Quon, 130 S. Ct. 2619; 177 L. Ed. 2d 216;
2010 U.S. LEXIS 4972 ( J une 17, 2010) . The Supreme Court
reversed a Ninth Circuit decision that a police officer had a
reasonable expectation of privacy in text messages sent to his
wife using a city-owned pager, holding as follows:
1. The Court assumed without deciding that there was a Fourth
Amendment expectation of privacy in the employees text
messages, but found that the employers search of the text
messages was reasonable under the Fourth Amendment
because it was work-related.
2. The Court distinguished the facts of Quon from those of
Stengart v. Loving Care Agency, Inc., 208 N.J . Super. 53;
504 A.2d 1207; 1986 N.J . Super. LEXIS 1163 ( N.J . Super.
Ct. App. Div. 2009) , finding that the citys audit of the
employer-provided pager was not nearly as intrusive as a
search of his personal e-mail account or pager, or a wiretap
on his home phone line, would have been.
3. The Court further limited its holding, stating as follows: The
Court must proceed with care when considering the whole
concept of privacy expectations in communications made on
electronic equipment owned by a government employer. The
judiciary risks error by elaborating too fully on the Fourth
Amendment implications of emerging technology before its
role in society has become clear Prudence counsels caution
before the facts in the instant case are used to establish far-
reaching premises that define the existence, and extent, of
privacy expectations enjoyed by employees when using
employer-provided communication devices A broad holding
concerning employees privacy expectations vis--vis
employer-provided technological equipment might have
implications for future cases that cannot be predicted. It is
preferable to dispose of this case on narrower grounds.
For additional materials related to this case, see the following:
For briefs, analysis, and the case below, see:
http://www.scotusblog.com/case-files/cases/city-of-ontario-
v-quon/.
Ariel Cudkowizc, Kent Sinclair and Erik Weibust, Technology
and Privacy in the Workplace: Monitoring Employee
2824
8
Reserved
Communications After the Supreme Courts Quon Decision,
54 B.B.J . 29 ( 2010) .
Carolyn Coda, The Battle Between Privacy and Policy in Quon
v. City of Ontario: Employee Privacy Rights and the
Operational Realities of the Workplace on Display t the
Supreme Court, 19 CommLaw Conspectus 211, 2010.
Michael Hrdlicka, The-Times-They-Are-A-Changin or
Technology Issue Avoidance City of Ontario, Cal v. Quon, 130
S. Ct. 2619 ( 2010) , 15 J . Tech. L. & Poly 275, December,
2010.
Adam Santucci, Supreme Court Issues Highly Anticipated City
of Ontario v. Quon Decision, Pennsylvania Labor &
Employment Blog, J une 22, 2010, available at:
http://www.palaborandemploymentblog.com/2010/06/articl
es/public-employers-1/supreme-court-issues-highly-
anticipated-city-of-ontario-v-quon-
decision/? utm_ source=feedburner&utm_ medium=feed&utm_
campaign=Feed% 3A+PennsylvaniaLaborAndEmploymentBlog+
% 28Pennsylvania+Labor+and+Employment+Blog% 29.
Roy Ginsburg, City of Ontario v. Quon, The Supreme Court
Weighs In On Employee Privacy Expectations, Quirky
Questions? , J une 22, 2010, available at:
http://quirkyemploymentquestions.com/privacy-rights/city-
of-ontario-v-quon-the-supreme-court-weighs-in-on-employee-
privacy-expectations/.
Ethan Ackerman, No Warth in this Quon Ontario v. Quon,
Technology & Marketing Law Blog, J une 20, 2010, available
at:
http://blog.ericgoldman.org/archives/2010/06/no_ wrath_ in
_ thi.htm.

Stengart v. Loving Care Agency, Inc., 201 N.J . 300; 990 A.2d
650; 2010 N.J . LEXIS 241 ( N.J . 2010) . A plaintiff employee
sued the defendant for discrimination. The trial level court held
that emails between the employee and her attorney on an
employee-owned computer were not privileged, and denied the
employees request to disqualify the employers counsel. On
Appeal to the New J ersey Superior Court, the ruling was
reversed, and counsel was found to have violated N.J . R. Prof.
Conduct 4.4( b) . On an appeal to the New J ersey Supreme
Court, brought by the employer, the Court affirmed the ruling of
the New J ersey Superior Court, and held that the policies behind
attorney-client privilege substantially outweighed the employers
interest in enforcement of its unilaterally imposed workplace
2825
9
Reserved
regulation, authorizing it to rummage through and retain an
employees emails to her attorney on an employer-provided
computer.
This case has been cited by the following related cases, articles
and briefs:

In re Royce Homes, LP, 2011 Bankr. LEXIS 909 ( Bankr.
S.D. Tex. Mar. 11, 2011) .
Holmes v. Petrovich Development Co., LLC, 191 Cal. App.
4th 1047, 119 Cal. Rptr. 3d 878, 2011 Cal. App. LEXIS
33, 111 Fair Empl. Prac. Cas. ( BNA) 424 ( Cal. App. 3d
Dist. 2011) .
Parnes v. Parnes, 80 A.D.3d 948, 915 N.Y.S.2d 345,
2011 N.Y. App. Div. LEXIS 156, 2011 NY Slip Op 136
( N.Y. App. Div. 3d Dep' t 2011) .
Forward v. Foschi, 27 Misc. 3d 1224A, 911 N.Y.S.2d 392,
2010 N.Y. Misc. LEXIS 1066, 2010 NY Slip Op 50876U
( 2010) .
Corey Ciocchetti, The Eavesdropping Employer: A Twenty-
First Century Framework for Employee Monitoring, 48 Am.
Bus. L.J . 285 ( 2011) .
Constance E. Bagley, Law as a Source of Strategic
Advantage: What' s Law Got to Do With It? : Integrating
Law and Strategy, 47 Am. Bus. L.J . 587 ( 2010) .
Ariel Cudkowizc, Kent Sinclair and Erik Weibust,
Technology and Privacy in the Workplace: Monitoring
Employee Communications After the Supreme Courts
Quon Decision, 54 B.B.J . 29 ( 2010) .
Carolyn Elefant, The Power of Social Media: Legal Issues
& Best Practices for Utilities Engaging in Social Media, 32
Energy L. J . 1 ( 2011) .
Bennett Borden, Monica McCarroll, Brian Vick and Lauren
Wheeling, Four Years Later: How the 2006 Amendments
to the Federal Rules Have Reshaped the E-Discovery
Landscape and are Revitalizing the Civil J ustice System,
17 Rich. J . L. & Tech. 10 ( 2011) .
Cicero H. Brabham, J r., Curiouser and Curiouser: Are
Employers the Modern Day Alice in Wonderland? Closing
the Ambiguity in Federal Privacy Law as Employers Cyber-
Snoop Beyond the Workplace, 62 Rutgers L. Rev. 993
( 2010) .
Gregory C. Sisk and Nicholas Halbur, A Ticking Time Bomb?
University Data Privacy Policies and Attorney-Client
2826
10
Reserved
Confidentiality in Law School Settings, 2010 Utah L. Rev.
1277 ( 2010) .
For more information on this case, see:
William Morriss, Personal Email on Company Computers,
Ephemerallaw, April 14, 2010, available at:
http://ephemerallaw.blogspot.com/2010/04/personal-
emails-on-company-computers.html.
Michael Rinne, Marina Stengart v. Loving Care Agency, Inc.,
Sacramento Bankruptcy Lawyer Blog, May 6, 2010,
available at:
http://www.sacramentobankruptcylawyerblog.com/2010/
05/marina-stengart-v-loving-care.html.
Philip K. Miles, III, Employee Email Privacy: Stengarts
Chicken and Egg, Lawffice Space, April 29, 2010, available
at: http://www.lawfficespace.com/2010/04/employee-
email-privacy-
stengarts.html? utm_ source=feedburner&utm_ medium=fe
ed&utm_ campaign=Feed% 3A+LawfficeSpace+% 28Lawffic
e+Space% 29.
Fernanco Pinguelo, New J ersey and Stengart: Perfect
Together? , E-Lessons Learned, February 15, 2010,
available at : http://ellblog.com/? p=1925#more-1925.
Court Rules Communications With Attorney Using Work
Computer Are Protected as Privileged, Electronic
Discovery Law, April 2, 2010, available at:
http://www.ediscoverylaw.com/2010/04/articles/case-
summaries/court-rules-communications-with-attorney-
using-work-computer-are-protected-as-
privileged/? utm_ source=feedburner&utm_ medium=feed&
utm_ campaign=Feed% 3A+ediscoverylaw% 2Fklgates+% 28
Electronic+Discovery+Law% 29.
J ack Pringle, NJ Supreme Court Opinion Addresses
Corpoarte Electronic Communications Policies, Ellis
Lawhorne, April 14, 2010, available at:
http://www.scbusinesslawblog.com/2010/04/companies-
should-electronic.html.
Holmes v. Petrovich Development Co., 191 Cal. App. 4
th
1047;
2011 Cal. App. LEXIS 33 ( Cal. Ct. App. J anuary 13, 2011) . A
plaintiff employee brought suit for hostile work environment
sexual harassment, breach of the right to privacy, intentional
infliction of emotional distress, retaliation, and constructive
discharge. The Superior Court of Sacrament County granted the
2827
11
Reserved
employers motion for summary judgment on the hostile work
environment sexual harassment, retaliation, and constructive
discharge claims, and a jury returned a verdict for the employer
on the remaining claims. The employee appealed. In an opinion
by J udge Chang, the Court found as follows:
1. Emails from the plaintiff to her attorney were not protected
by the attorney-client privilege because they were sent from
the employers computer using her employers company email
account after the employee was expressly advised that such
emails were not private, and were accessible by the
employer. Because the plaintiffs privacy and intentional
infliction of emotional distress claims were based on the
employers alleged violation of the attorney-client privilege,
they could not stand.
2. The hostile work environment claim was appropriate for
dismissal because the plaintiff failed to show that the
environment was objectively offensive.
3. The plaintiffs retaliation claim could not stand because the
plaintiff failed to demonstrate that she suffered an adverse
employment action. The plaintiffs salary, benefits and work
hours were not reduced, and she was not terminated.
4. Finally, there was no evidence from which a reasonable trier
of fact could conclude that the defendant intentionally
created or knowingly permitted working conditions that were
so intolerable or aggravated at the time of [ plaintiffs]
resignation that a reasonable employer would realize that a
reasonable person in [ her] position would be compelled to
resign. Thus the constructive discharge claim was properly
dismissed.
This case has been cited by the following related cases, articles
and briefs:
Taylor v. Waddell & Reed, Inc., 2011 U.S. Dist. LEXIS
54109 ( S.D. Cal. May 20, 2011) .
A Ticking Time Bomb? University Data Privacy Policies and
Attorney-Client Confidentiality in Law School Settings,
2010 Utah L. Rev. 1277 ( 2010) .
J ulie Gilman Veronese v. LucasFilm, 2011 CA App. Ct.
Briefs 29535, 2011 CA App. Ct. Briefs LEXIS 2619 ( Cal.
App. 1st Dist. May 3, 2011) .
Ramaiya v. Pac. Coast Care Ctr., 2010 CA App. Ct. Briefs
35769, 2011 CA App. Ct. Briefs LEXIS 907 ( Cal. App. 6th
Dist. Feb. 16, 2011) .
2828
12
Reserved
For more information on this case, see:
Shappard Mullin, Belongs to the Company Means Exactly
That, Labor & Employment Law Blog, J anuary 18, 2011,
available at:
http://www.laboremploymentlawblog.com/computer-and-
internet-use-belongs-to-the-company-means-exactly-
that.html.
Ashwin Trehan, Employees Private Email Accounts Not
Necessarily Off-Limits to Employers, Natl Developments in
Labor & Employment Law Blog, J anuary 27, 2011,
available at:
http://www.gtleblog.com/2011/01/articles/privacy/empl
oyees-private-email-accounts-not-necessarily-offlimits-to-
employers/? utm_ source=feedburner&utm_ medium=feed&
utm_ campaign=Feed% 3A+GtLeBlog+% 28GT+LE+Blog% 29
.
Dana Schultz, Handbook Defeats Employee Claim of
Attorney-Client Privilege, The High-Touch Legal Services
Blog, J anuary 26, 2011, available at:
http://danashultz.com/blog/2011/01/26/handbook-
defeats-employee-claim-of-attorney-client-confidentiality/.
Ashley Kasarjian, The Spotlinght on Employee Privacy,
Employment and the Law, J anuary 24, 2011, available at:
http://employmentandthelaw.com/2011/01/24/the-
spotlight-on-employee-privacy/.
Lauren Moak, Work Email and the Attorney-Client Privilege
Do Not Mix, The Delaware Employment Law Blog, J anuary
23, 2011, available at:
http://www.delawareemploymentlawblog.com/2011/01/
work_ email_ and_ the_ attorneycli.html? utm_ source=feedb
urner&utm_ medium=feed&utm_ campaign=Feed% 3A+dela
wareemploymentlawblog% 2FUagR+% 28Delaware+Employ
ment+Law+Blog% 29.
Donna Bader, Another Important Appellate Decision
Regarding the Privacy of Emails, An Appeal to Reason,
J anuary 28, 2011, available at:
http://donnabader.com/? p=556.

In re Asia Global Crossing, Ltd., 322 B.R. 247; 2005 Bankr. LEXIS
415 ( Bankr. S.D.N.Y. 2005) ( the Bankruptcy Court for the
Southern District of New York considered whether a bankruptcy
trustee could force the production of e-mails sent by company
employees to their personal attorneys on the company' s e-mail
2829
13
Reserved
system. The court developed a four-part test to " measure the
employee' s expectation of privacy in his computer files and e-
mail" : ( 1) does the corporation maintain a policy banning
personal or other objectionable use, ( 2) does the company
monitor the use of the employee' s computer or e-mail, ( 3) do
third parties have a right of access to the computer or e-mails,
and ( 4) did the corporation notify the employee, or was the
employee aware, of the use and monitoring policies? Because
the evidence was " equivocal" about the existence of a corporate
policy banning personal use of e-mail and allowing monitoring,
the court could not conclude that the employees' use of the
company e-mail system eliminated any applicable attorney-client
privilege.)
TransOcean Capital, Inc. v. Fortin, 21 Mass. L. Rep. 597; 2006
Mass. Super. LEXIS 504; 2006 WL 3246401 ( Mass. Super. Oct.
20, 2006) ( Where the evidence was clear that an employer did
not notify employees of a policy prohibiting personal email use,
the Massachusetts Superior Court concluded that an employees
emails sent from the office computer to his lawyer remained
privileged) .
Kaufmann v. SunGard Inv. Sys., 2006 WL 1307882, 2006 U.S.
Dist. LEXIS 28149 ( D.N.J . May 10, 2006) . The court affirmed a
magistrate judges order granting the defendants motion
seeking to discover email communications between one plaintiff
and counsel, most of which had been copied and/or deleted
from a company laptop. The plaintiff had not segregated her
communications with counsel on the laptop before she sold the
company ( which owned the laptop) to the defendants. As such,
the court affirmed the magistrates decision that she had failed
to take reasonable measures to withhold the emails from the
defendant or ensure their confidentiality, and that disclosure of
the pre-closing email communications constituted a deliberate
waiver of the privilege. Moreover, the acquisition agreement
indicated that email communications should have been
transferred with other information. In addition, the plaintiff had
used SunGards network knowing that SunGards company policy
declared company property all information and email on its
computer systems. According to company policy, all emails were
subject to monitoring, and SunGard reserved the right to
monitor emails. Consequently, the plaintiff had no reasonable
expectation of privacy in the emails.
2830
14
Reserved
People v. J iang, 131 Cal. App. 4th 1027; 2005 Cal. App. LEXIS
1281 ( Cal. App. 4th Dist. 2005) . The trial court found that
password-protected documents placed on the defendants
employer-owned laptop and segregated into a folder named
Attorney were not protected by the attorney-client privilege
because the defendant had no reasonable expectation of privacy
in documents on an employer-issued laptop. The prosecutor
printed the contents of a CD produced by the defendants
employer in response to a subpoena, and represented to the
court and opposing counsel that the printed contents contained
everything on the CD. A couple months later, however, the
prosecutor discovered the password-protected files and
obtained the password from the defendants employer. The
defendant, it turned out, had been communicating with counsel
through his wife and other family members using his work
laptop. On appeal, the court decided that because the
defendants work agreement with his employer did not preclude
personal use of the computer or make any reference to copying
or disclosure by the employer, and because the defendant had
made substantial efforts to prevent others from viewing the
documents, the defendants expectation of privacy in those
documents was reasonable.
Haynes v. Office of Atty. Gen. Phill Kline, 298 F.Supp.2d
1154 ( D. Kan. 2003) ( former assistant attorney general
was entitled to preliminary injunctive enjoining a state
Attorney General' s Office from accessing personal files
and e-mail communications stored on his work computer
following his termination; plaintiff had a subjective
expectation of privacy in the personal files stored on his
work computer, and this expectation was objectively
reasonable under the Fourth Amendment; although a
computer use policy was displayed daily on his computer
stating that there was no expectation of privacy in the
computer system, he was told he could put personal
information in a private file so no one could access it) .

Articles and Other Sources:

Frank Steinberg, Using Your Employers E-mail: Theres
Legal, and Then Theres Smart, New J ersey Employment
Law Blog ( J an 18, 2011) ;
http://employment.lawfirmnewjersey.com/finding-hiring-
an-employment-lawyer/using-your-employers-e-mail-
theres-legal-and-then-theres-smart/.
2831
15
Reserved
Anthony E. Davis, More Privilege Issues with Employee E-
Mail, Law Technology News, J anuary 5, 2010,
http://www.law.com/jsp/lawtechnologynews/PubArticleFri
endlyLTN.jsp? id=1202437380338.
Robert Ottinger, Employees Have a Right to Privacy in E-
Mail Sent from Work, New York Employment Lawyer Blog,
December 15, 2009,
http://www.newyorkemploymentlawyerblog.com/2009/1
2/employees_ have_ a_ right_ to_ priv.html.
Tresa Baldas, District Court Finds Personal E-Mail from
Work Still Privileged, The Blog of Legal Times, December
11, 2009,
http://legaltimes.typepad.com/blt/2009/12/district-
court-finds-personal-email-from-work-still-privileged.html.
Adam C. Losey, Dunwoody Distinguished Lecture in Law:
Note: Clicking Away Confidentiality: Workplace Waiver of
Attorney-Client Privilege, 60 Fla. L. Rev. 1179, December,
2008.
Ruth E. Piller, Employees Cannot Expect Privacy in E-Mail
Using Employers Computers, American Bar Association
Litigation News Online, May 2008,
http://www.abanet.org/litigation/litigationnews/2008/jun
e/0608_ article_ email.html.
Debra Cassens Weiss, Email to Lawyer Not Privileged
Because of Employer Policy, ABA J ournal, October 30,
2007,
http://www.abajournal.com/news/article/e_ mail_ to_ lawy
er_ not_ privileged_ because_ of_ employer_ policy/.
2832
July 28 - 30, 2011
Anticipating Counterclaims in Representation Agreements
By
Washington, D.C.
2833
Reserved



2834
2
Reserved

Ant icipat ing Count erclaims in
Represent at ion Agreement s

Hypot het ical:

Your representation agreement with your client provides that your firm
will be paid on a contingency fee basis for services to be rendered in a suit to
be filed against another entity. After suit is filed, the defendant files a multi-
count counterclaim against your client. The representation agreement is
completely silent on the question of whether your firm is obliged to represent
the plaintiff in defending against the counterclaims and, if so, how you are to be
paid. How could the representation agreement have been drafted to address
this circumstance? In the absence of language in the representation agreement,
how should this situation be resolved? Is a reverse contingency fee one way
to approach this situation?

Suggested Sample Language in the Representation Agreement:

Option A:

The services to be provided by Attorney under this
agreement are for the filing and prosecution of Clients action
only, and in the event of a counterclaim, Attorney and Client
will discuss a separate agreement in the event any such
counterclaim is filed. *

* The obvious risk that the attorney takes by selecting
Option A is the chance that the attorney and client will be
unable to agree to the terms of such a separate agreement
to govern litigation of the counterclaim. The attorney may
consider adding a provision providing that, in the event of
such a failure to agree, the attorney and client agree to
submit the matter to arbitration, and that the arbitrator will
be given the power to determine the value of the plaintiffs
potential exposure perhaps in the form of a so-called
baseball arbitration, where both parties submit their
proposed number to the arbitrator, leaving it to the arbitrator
to come up with a number somewhere between the two
proposals. On the other hand, certain ethics opinions would
appear to frown on this practice. See, e.g., D.C. Bar Legal
Ethics Comm., Op. 347, n.4 ( Mar. 2009) ,
2835
3
Reserved
http://www.dcbar.org/for_ lawyers/ethics/legal_ ethics/opini
ons/opinion347.cfm.

Thus, in order to avoid such an unnecessary headache, it may
behoove the attorney to instead lay out in advance the
clients payment terms for the litigation of a counterclaim,
should one arise. While other variations are clearly possible,
options B and C below are two such possibilities.

Option B:

only, and in the event of a counterclaim, work performed on
the counterclaim will be billed by the Attorney on an hourly
basis as set forth below.

Option C:

only, and in the event of a counterclaim, work performed on
the counterclaim will be subject to the terms of the reverse
contingency agreement set forth below. **

** See link to sample agreement, below on p. 8.

Where the Existing Representation Agreement is Silent as to Counterclaims:

When the existing representation agreement is silent as to counterclaims,
the attorney may nevertheless be required to litigate the counterclaim
under the terms of that agreement. See, e.g.:

o Kriegsman v. Kriegsman, 375 A.2d 1253, 1255 ( N.J . 1977) :

When a firm accepts a retainer to conduct a legal proceeding,
it impliedly agrees to prosecute the matter to a conclusion.
The firm is not at liberty to abandon the case without
justifiable or reasonable cause, or the consent of its client. 7
Am. J ur. 2d, Attorneys at Law, 143 at 134 ( 1963) ; 7
C.J .S., Attorney and Client, 110 at 943-45 ( 1937) .

o Woodbury v. Andrew J ergens Co., 61 F.2d 736, 739-40 ( 2d Cir.
1932) :

2836
4
Reserved
[ A] fter the commencement of the suit, a counterclaim was
interposed. The defendant in that action moved to take
testimony by depositions in August and September, 1927, in
numerous places outside of the state of New York.
Appellants [ appellees attorneys in the above referenced
action] first claimed that their retainer did not require them
to render such services, but it is clear that the retainer
contemplated full prosecution of the suit. It was reasonable
to expect that a counterclaim might be interposed.
Appellants demanded additional compensation for taking
these depositions, and it was demanded just a few days prior
to the date set for so doing. The appellants refused to
attend the taking of the depositions unless they were paid
this additional compensation. It is said that it was, at that
time, too late to obtain new counsel, and under this pressure
an agreement to pay additional compensation was made.

The counterclaim filed with the answer was known to the
appellants for some time prior to the taking of these
depositions. When they accepted the retainer, if they were
not then aware of the possibility of counterclaims being
interposed, they surely had knowledge thereof after they
were interposed and the clients had a right to expect that, in
the absence of protest which was not made until a few days
before the taking of testimony, the attorneys regarded it as
part of their duty to proceed under the original retainer. It is
no answer for the appellants to say that they required
additional compensation because they were confronted with
more work than they had contemplated. The position they
have assumed is that contract or no contract it was
equitable that ( they) ought to be paid for work to be done on
an assault of this magnitude. This did not excuse the
performance of their contract obligation. 3 Williston on
Contracts, 1963.

Furthermore, even assuming that the jurisdiction in question would allow for
a retainer agreement to be modified to account for the litigation of a
counterclaim, the attorney would be wise to take a number of precautions
in making such a modification. See, e.g.:

o David D. Dodge, Take Care When Changing Fee Agreements,
Arizona Attorney, September 2005,
http://www.myazbar.org/AZAttorney/PDF_ Articles/0905Ethics.pd
f.

2837
5
Reserved
o D.C. Bar Legal Ethics Comm., Op. 29, Change in Contingent Fee
Arrangement in Course of Representation ( 1977) ( online citation
not available) .

Reverse Contingency Fee Arrangements:

Overview:

o The firm is compensated based upon a percentage of the money
saved by the client as a result of the firms work. Reverse
contingency fees are computed by comparing the clients potential
exposure with the final results. The client pays the firm a
predetermined percentage of that difference.

Sample Reverse Contingency Fee Agreement:

o For an example of such an agreement, see, e.g.,
http://www.tlotf.com/reverse.htm ( prepared by the Law Offices of
Tom Fulkerson, P.L.L.C of Houston, TX) .

Potential Ethical Issues:

o A number of opinions have been written about the potential ethical
issues inherent in entering into reverse contingency agreements
particularly about the potential for attorneys to abuse such
arrangements. As such, attorneys should tread carefully when
drafting the language of such an agreement. See, e.g.:

Brown & Strum v. Frederick Road L.P., 768 A.2d 62 ( Md. Ct.
Spec. App. 2001) :

The case . . . illustrates the potential for abuse in
reverse contingent fee cases. In that case, the
underlying representation concerned the value of a
family farm. The clients requested an hourly fee
arrangement but the lawyers insisted on a reverse
contingency fee. The IRS assessed the property at
$60 million. While negotiating the fee agreement with
their clients ( the individuals who had inherited the
farm) , the lawyers knew that the IRS assessment was
inflated, more than double any other contemporaneous
appraisal of the property. Id. at 76. The attorneys
concealed from their clients appraisals that depicted a
more realistic worst-case market value and entered
into a reverse contingent fee contract with their clients
2838
6
Reserved
based upon the inflated $60 million appraisal. The
underlying litigation with the IRS was settled prior to
trial, based on a $20 million valuation. Under the fee
agreement, the attorneys claimed a $40 million
savings and charged the clients $4.8 million in fees.
The Court of Special Appeals upheld findings that the
attorneys failure to disclose to their clients what they
knew about the propertys net worth made their fee
agreement unenforceable. The Court also upheld a
finding that the fee was unreasonable because it bore
little relation to time, labor, novelty and risk of the
legal problem. Id. at 81.

D.C. Bar Legal Ethics Comm., Op. 347, Reverse Contingency
Fees ( Mar. 2009) ,
http://www.dcbar.org/for_ lawyers/ethics/legal_ ethics/opini
ons/opinion347.cfm:
[ W] e conclude that reverse contingency fee agreements are
not unethical. Indeed, in the appropriate instance, such
arrangements may be in the best interests of the clients.
ABA Formal Opinion 93-373 ( 1993) . Unlike a typical fixed fee
or hourly arrangement, under a reverse contingency
arrangement, the lawyer could receive no fee if not
successful in saving the client money. Id. Like any other fee,
a reverse contingent fee must be reasonable, as judged both
at the outset and the conclusion of the representation. A
reverse contingent arrangement must also be reflected in a
written fee agreement under Rule 1.5( c) and such fee
agreement must state the method by which the fee is to be
determined.
The key components of a reverse contingency fee
arrangement are ( a) the selection of the sum or amount from
which a clients savings are computed and ( b) the percentage
to be applied to such savings to produce the lawyers fee.
The selection of the former should be the product of full
disclosure by the lawyer and informed consent from the
client. The lawyer may not suggest a number based upon an
assessment of the matter or experience in the particular type
of dispute that is not disclosed to the client. A lawyer whose
experience and knowledge provide insight into the range of
results that are typically achieved in a particular type of
matter must share such insight with the client. The amount
demanded by an adversary may not be taken alone as the
2839
7
Reserved
basis for a reverse contingent fee. Following such a course
would be highly problematic. Instead, to the extent a demand
is used by an attorney as the basis for a contingent fee, the
lawyer should perform his or her own independent analysis
and thoroughly discuss the matter with the client.
The percentage to be applied to the savings obtained by the
lawyer must similarly be the product of full disclosure by the
lawyer and informed consent by the client. Unlike the typical
contingent fee arrangements, there are no established norms
concerning the appropriate percentages for a lawyer to use.
It is beyond the expertise of this Committee to opine about
the percentages or range of percentages that might be
appropriate. To support the reasonableness of a particular
percentage, the lawyer should consider discussing with the
client the likely range of fees under hourly or fixed fee
arrangements as compared to the range of fees that might
result from a reverse contingent fee arrangement.
The lawyer should summarize for the client, preferably in
writing, the analysis underlying the sum or amount from
which a clients savings are computed and the percentage to
be applied to produce the lawyers fee. Particularly when it is
the lawyer and not the client who suggests the reverse
contingent fee, a prudent lawyer will recognize that a writing
will facilitate review of the reasonableness of the fee and of
the clients informed consent to the fee arrangement. A
lawyer may also find it advisable to document any offer to
accept a fixed or hourly fee arrangement as an alternative to
a reverse contingency fee arrangement.
ABA Comm. on Ethics and Profl Responsibility, Formal Op.
93-373 ( 1993) ( copy of opinion available online only when
purchased) ( discussing the use of contingent fees in civil
cases based on the amount of money saved for the client) .

Iowa Supreme Court Board of Professional Ethics and
Conduct, Op. 98-03 ( 1998) ,
http://www.iowabar.org/ethics.nsf/e61beed77a215f668625
6497004ce492/af37d75128b2d84586256681004e1e92!O
penDocument, ( approving reverse contingency fee
arrangement in cases where damages sought against lawyers
client were liquidated and ascertainable) .

2840
8
Reserved
Kentucky Bar Assn Ethics Op. E-359 ( 1993) ,
http://www.kybar.org/documents/ethics_ opinions/kba_ e-
359.pdf, ( placing the burden upon the lawyer to prove[ ]
that the method of computing the charge, and the amount of
the fee, are reasonable and rational under the
circumstances) .

Pennsylvania Bar Assn Comm. on Legal Ethics and Profl
Responsibility, Informal Op. 92-76 ( 1992) ( copy of opinion
available online only for PBA members) ( approving use of
reverse contingent fee in tax appeal case) .

Articles and Other Sources:

o Barry Barnett, Delaware Okays Reverse Contingency Fee,
Blawgletter, September 21, 2010,
http://blawgletter.typepad.com/bbarnett/2010/09/delaware-
court-okays-reverse-contingent-
fee.html? utm_ source=feedburner&utm_ medium=feed&utm_ campai
gn=Feed% 3A+Blawgletter+% 28Blawgletter% C2% AE% 29.

o William R. Towns, U.S. Contingency Fees: A Level Playing Field?,
World Intellectual Property Organization Magazine, February 2010,
http://www.wipo.int/wipo_ magazine/en/2010/01/article_ 0002.ht
ml.

o Eric Cooperstein, Using Reverse Contingent Fees for Clients Caught
in the Mortgage Mess, Lawyerist.com, October 14, 2008,
http://lawyerist.com/using-reverse-contingent-fees-for-clients-
caught-in-the-mortgage-mess/.

o Rich Stim, Is it Anything Like a Reverse Pac-Man? , What Price
J ustice Blog, J anuary 16, 2008,
http://www.whatpricejusticeblog.com/contingency-
fees/2008/01/.

o Barry Barnett, How to Negotiate a Reverse Contingent Fee,
Blawgletter, J anuary 5, 2008,
http://blawgletter.typepad.com/bbarnett/2008/01/how-to-
negotiat.html? utm_ source=feedburner&utm_ medium=feed&utm_ c
ampaign=Feed% 3A+Blawgletter+( Blawgletter% C2% AE) .

o J im O. Stuckey, II, Reverse Contingency Fees: A Potentially
Profitable and Professional Solution to the Billable Hour Trap, 16
ABA Prof. Law. 25 ( 2005) .
2841
9
Reserved

o David Watson, C.A. Rejects Claim Agreement Provided for Reverse
Contingency Fee, Metropolitan News-Enterprise, J uly 24, 2003,
http://www.metnews.com/articles/bear072403.htm.

o Donald C. Massey and Christopher A. DAmour, The Ethical
Considerations of Alternative Fee Billing, 28 S.U. L. Rev. 111
( Spring, 2001) .

2842
July 28 - 30, 2011
Employment Law Papers on my Firm`s Website
By
Washington, D.C.
2843
2
2844
Reserved
RESPONSIBILITY


2845
MATERIAL.
2846
Reserved
1
The following papers, authored by Robert B.
Fitzpatrick, are available at
http://www.robertbfitzpatrick.com/publishedarticl
es.html.

Recent Developments in D.C. Labor and Employment Law
Alleged Employee Misconduct
Bullying in the Workplace
Computer Fraud and Abuses Act Current Developments
Discrimination and Harassment in the Workplace
E-Discovery Opinions and Articles by Magistrate J udge Grimm
Faithless Servant Doctrine
Federal Legislation Developments
FLSA Developments
Recent Developments in the Treatment of Tips Under the
FLSA
Retaliation Developments
Social Media Employer and Employee Concerns
State Law Developments
Supreme Court Update 2009-2010
The Fluctuating Workweek Method of Calculating Overtime
The Subtext of Iqbal and How Bench and Bar Ought to
Respond
Which State Law Applies State Employment Law Statutes
Recent Developments Under the 2008 Amendment to Rule
502 of the Federal Rules of Evidence.
The Paycheck Fairness Act
J ury Instructions: J uror Use of Social Media
Employee Misconduct: Employer Claims and Counterclaims
Electronic Discovery: Zubulake Revisited
U.S. Supreme Court Highlights: Ricci Developments
Rule 35 Mental Exams
Gross v. FBL Financial Services, Inc.: The Courts Begin to
Apply the Decision
2009-2010 Legislative Update
Some Recent Retaliation Developments
Misclassification of Employees as Independent Contractors
McCaskill Amendment New Whistleblower Protections for
Government Contractors and Employees of State and Local
Governments.
2009 Employment Law Issues
Review of the Supreme Courts Employment Cases ( 2001-
2006)
State Employment Law Developments
2847
Reserved
2
2008 Emerging Employment Law Issues
Annual Employment Law Update 2006
Working with Mental Health Experts on Workplace Claims:
Some Practical Advice
European Unions Age Directive: Implementation in United
Kingdom
2005 Term)
Stories of a J udge: Remembering Robert Merhige J r.
2004 Term)
State Employment Law Developments
Vox Populi: The Public Policy Tort in the Workplace
State Employment Law Development ( October 2004)
2004 Term) and a Preview of This Term ( 2004-2005)
State Employment Law Development ( J uly 2004)
Employment Law Update ( J anuary 2004)
How Lawyers Can Promote Responsible Use of Medical
Experts in Americans With Disabilities Act Litigation
Settlement of Employment Issues: A Checklist
State Employment Law Development
2003 Term) and a Preview of This Term ( 2003-2004)

2848

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DEFINITION OF EMPLOYEE UNDER ANTI-DISCRIMINATION LAWS ...........................4

A. Problems of Out-of-State In-House Labor and Employment Law Counsel ....................... 2

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