Employment Law Memo 08/31/2018
First in Employment Law
*** Featured Cases ***
*** Capsules ***
Williams v. Wells Fargo Bank (8th Cir
Americans and Latinos sued Wells Fargo Bank claiming that the bank's
practices relating to employees' and applicants' prior criminal records
created a disparate impact on the basis of race in violation of Title VII
and the Iowa Civil Rights Act. The trial court granted summary judgment
for the bank; the 8th Circuit affirmed.
Federal law forbids
a bank from employing a person who has been convicted of certain crimes,
but waivers are available, and banks are allowed to "sponsor" waivers.
Over a period of 27 months the bank terminated 136 African Americans, 56
Latinos, and 28 white employees because of prior convictions – without
informing them of the availability of waivers and without offering to
The 8th Circuit
held that the bank's policy of summary exclusion was a business necessity,
especially in light of the possibility of daily fines of $1 million.
Plaintiffs claimed that the racial impact would be reduced if the bank
gave notice of the need for a waiver, granted leave to apply for a waiver,
and sponsored waivers. However, the court found that plaintiffs'
statistics failed to show that this would result in a reduced racial
EEOC v. BNSF Railway Co (9th Cir 08/29/2018)
EEOC sued claiming
that the employer violated the Americans with Disabilities Act (ADA) by
requiring an applicant, whom the employer regarded as impaired, to pay for
an MRI. The trial court held in favor of the EEOC and granted a nationwide
injunction. The 9th Circuit affirmed liability, but remanded on the issue
of whether the injunction should be nationwide.
The employer made a
job offer contingent upon a post-offer medical exam, which revealed a
prior back injury. Although the applicant's physician and the employer's
subcontractor's physician reported that the applicant was fit for the job,
the employer required the applicant to provide an MRI (costing more than
$2,500) at his expense. The applicant declined, and the employer treated
that as declining the conditional offer.
The 9th Circuit
found that the EEOC established that the employer perceived the applicant
as disabled, that he was qualified, and that conditioning the job offer on
the applicant procuring an MRI at his own expense was impermissible. It
would be OK to require all applicants to pay for an MRI, but it is not
permissible to request an MRI at the applicant's cost only from persons
with a perceived or actual impairment or disability.
On the question of
a nationwide injunction, the 9th Circuit vacated the injunction because
"the district court did not make factual findings or articulate its
reasoning, and so we cannot yet properly review the scope of the
injunction." The court remanded the case for further review and findings
to be made by the district court.
Cup v. Ampco Pittsburgh Corp (3rd Cir
The union and Cup,
retired union member, sued the employer and the plan for healthcare
benefits alleging, on behalf of Cup and other similarly-situated workers
who retired before March 1, 2015, in three courts: (I) a non-substantive
claim compelling arbitration under section 301 the Labor Management
Relations Act (LMRA), (II) a claim to enforce the collective bargaining
agreement (CBA) under section 301, and (III) in the alternative, a claim
under section 502(a) of ERISA. The trial court granted the union's motion
to compel arbitration as provided in the CBA. The 3rd Circuit reversed and
The court had to
determine if it had jurisdiction based on whether the trial court's order
compelling arbitration and administratively closing this case was final.
The court noted that the trial court also dismissed all of the other
claims without prejudice. For these reasons, the court held that the order
compelling arbitration was final for purposes of 28 USC Section 1291 and
the Federal Arbitration Act.
The employer argued
that this dispute was not subject to arbitration under Section 6 of the
CBA, because retiree health benefits were not covered by the CBA. The
court agreed. Former employees like Cup, who retired before the CBA went
into effect on March 1, 2015, were not "employees" under the CBA. The
union argued that section 19 of the CBA implicitly incorporated the
Memorandum of Understanding (MOU) which discussed retiree health benefits
and expressly includes "Medical Insurance" as an included "Other Plan."
The court found that section 19 of the CBA did not incorporate the MOA
because mere reference to another contract or document was not sufficient
to incorporate its terms into a contract; there must be an express intent
to incorporate, and there was no such expression here. The court further
observed that the CBA suggested an intent not to incorporate the MOA, as
language expressly incorporating other agreements could be found elsewhere
in the CBA with express incorporation language – the parties' knew how to
incorporate and did not do so with the MOA. Thus retiree medical benefits
was not arbitrable and the trial court erred when it granted the union's
motion to compel arbitration. The union may pursue its substantive claims
in Counts II and III on remand.
Robertson v. Allied Solutions (7th Cir
After the employer
revoked a job offer, job applicant Robertson, in a class action, sued the
employer for violation of the Fair Credit Reporting Act (FCRA) alleging a
notice claim, failure to furnish clear and conspicuous disclosure forms,
and an adverse-action claim, employer took action based on her background
check without first supplying a copy of the report or a written summary of
her FCRA rights. In the light of Spokeo, Inc. v. Robins, 136 SCt 1540
(2016) and Groshek v. Time Warner Cable, Inc., 865 F3d 884 (7th Cir 2017),
the trial court dismissed the entire case for lack of standing. The 7th
Circuit affirmed in part on the notice claim, and reversed in part on the
adverse-action claim and remanded. The only issue here as to standing was
whether Robertson suffered a concrete injury with respect to her
by withholding her background report the employer limited her ability to
review the basis of the adverse employment decision and impeded her
opportunity to respond. The court concluded that Robertson alleged enough
at this stage to demonstrate standing under Article III; her injury was
concrete and particular to her, and the remaining criteria for standing
(causation, redressability) were also present. The court held only that
Robertson had adequately alleged that what the employer divulged was
insufficient under the FCRA, and that she was entitled from an Article III
standpoint to press her adverse-action claim.
Vilcek v. Uber USA (8th Cir 08/30/2018)
brought a class action against Uber claiming tortious interference with a
valid business expectancy. The 8th Circuit affirmed the trail court's
dismissal for failure to state a claim. The drivers claimed that Uber used
drivers who did not comply with the St. Louis taxi commission's rules, and
that taxi drivers' revenues decreased by 30-40 percent. The 8th Circuit
did not decide whether the taxi drivers had a valid business expectancy,
because the drivers did not allege the absence of justification, which is
one of five elements of a claim for tortious interference with a business
expectancy. Uber has a legitimate economic interest, because Uber and the
taxi drivers are direct competitors. Therefore, the drivers must show that
Uber used improper means such as threats, violence, trespass, defamation,
misrepresentation of fact, restraint of trade, or any other wrongful act
recognized by statute or the common law. The alleged improper means was
disregarding the taxi commission's rules. However, that was not enough
because the legislature did not provide for a private cause of action to
enforce commission rules.
Melgar v. OK Foods (8th Cir 08/29/2018)
In federal trial
court, the individual plaintiffs alleged the employer failed to pay
certain wages in violation of Arkansas state law and the Fair Labor
Standards Act (FLSA). The trial court approved the settlement agreement as
to the amount awarded the plaintiffs, but the trial court, sua sponte,
reduced the attorney's fees, costs, and expenses from the agreed upon
$87,500.00 to $22,500.00. The 8th Circuit reversed in part and remanded
with instructions to award plaintiffs the agreed upon fees.
In light of the
settlement history, and the employer's lack of participation in this
appeal, the case presented two questions for the court's review: (1) did
the trial court have a duty or a right to review the settlement agreement,
and (2) if so, under what standard of review. Because neither party
discussed whether trial court approval was required, the court did not
address the first question. As to the second question, in light of the
need to focus on multiple factors and not just one, and in light of the
strong likelihood that the parties' agreement was reasonable, the court
found that any required review by the trial court was light and the award
in this case was not outside the range of what would be approved. The
court concluded the parties' agreed-upon attorneys' fees of $87,500.00 was
fair and reasonable.
Tarantola v. Henghold (Florida Ct App
appealed from the trial court's order denying her motion to terminate a
temporary injunction. In her third appeal regarding the non-compete
agreement she entered into as part of her employment with the medical
practice, the Florida Court of Appeal agreed the trial court abused its
discretion and reversed.
The issue was
whether or not the website Dr. Tarantola established and used in May of
2015 constituted advertising or marketing activity. If it did, then the
temporary injunction should not be terminated. If it did not, the
temporary injunction should be terminated either February 10, 2018 or
thirty days after that date. The trial court determined the website did
constitute "advertising or market activity" prohibited by the non-compete
agreement and extended the injunction at least an additional 134 days from
the date of the order denying Dr. Tarantola's motion.
The court found
that the trial court abused its discretion in considering and relying upon
the screenshots of the website as proof the website was in existences in
May 15, 2015. The court concluded the record was void of any evidence
establishing the website's existence in May 2015, and any such finding was
based on mere speculation. The court also agreed with Dr. Tarantola that
the website did not constitute improper advertising or marketing in
violation of the non-compete agreement. The court found the two-year
non-compete period expired thirty days after February 10, 2018.
Cormier v. City of Lafayette (Louisiana Ct App
police officer, appealed the judgment of the trial court upholding the
Civil Service Board decision to discharge him. The Louisiana Court of
Appeal affirmed. Cormier was discharged for removal, whiting out certain
information, and dissemination of a confidential police document, which
eventually was attached to an appellate brief of another discharged police
officer. The court found no error in the Board's decision to uphold
Cormier's discharge; found that the Internal Affairs Investigation was
conducted in a timely manner; and found that the Lafayette Municipal Fire
and Police Civil Service Board acted in good faith and statutory cause in
finding that there was sufficient evidence to discharge Cormier's
employment with the Lafayette Police Department.
Heffington v. Moser (Maryland Ct App
presented a question of first impression in Maryland: whether, and under
what circumstances, a plaintiff in a civil case who was also the defendant
in a related criminal prosecution was entitled to a stay of the civil case
so as not to penalize her for invoking her Fifth Amendment privilege
against self-incrimination. Employee sued the employer in a tort action
for defamation based on false statements to the police, the employer's
insurer, and others that the employee had stolen money from the employer
and engaged in identity fraud. Subsequently the employee was indicted by a
grand jury for one count of theft and four counts of identity fraud. The
employee filed a motion to stay the civil action for purposes of the Fifth
Amendment which the trial court denied. At the civil trial, the employee
moved for a mistrial, which was denied, and rested without putting on
evidence. The trial court granted judgment in favor of the employer. The
Maryland Special Appeals Court vacated the judgment of the trial court.
contended the trial court abused its discretion by denying the motion to
stay because it did not properly weigh the employee's constitutional
privilege against self-incrimination against the employer's interest in an
expeditious trial of the claims against it. The employer responded: first,
the issue was not preserved because the employee acquiesced in the trial
court's granting the motion for judgment against her; second, it lacked
merit because the employee waived her Fifth Amendment privilege by not
actually taking the stand and invoking it at trial and by not invoking it
at her deposition; and, third, the trial court did not abuse its
discretion by denying the motion to stay given that it was filed on the
eve of the trial and the criminal case could last for years.
First, the court
found that the employer acquiesced in the process the employee's lawyer
Second, For the
same reason, at no time did the employer object to the employee's invoking
the Fifth Amendment issue without taking the stand or assert, as they do
now, that the employee had to invoke the privilege on the stand and allow
the jurors to draw a negative inference from that. Regarding the
employee's deposition testimony without claiming the Fifth Amendment
privilege, in light of the uncertainty regarding potential criminal
charges at the time of the employee's deposition and the change in
circumstances brought about by her indictment, the court held that the
employee did not waive her Fifth Amendment privilege, for purposes of
trial, by testifying before trial at her pre-indictment deposition.
Third, the majority
of jurisdictions have adopted a test which balances the competing rights
of a plaintiff to exercise his privilege against self-incrimination and of
a defendant to adequately defend the claim brought against him. The court
adopted the modern trend and hold that in ruling the employee's motion to
stay, which, more specifically, was a request to stay the trial of the
case where discovery was completed, it was incumbent upon the trial court
to balance the employee's Fifth Amendment right against self-incrimination
and her Article 19 right to access to the courts against the employer's
right to a timely resolution of the claims against it without harm to its
defense. The court concluded the trial court did not balance the parties'
competing interests, and by not applying the proper legal standard in
ruling on the motion to stay, the court abused its discretion.
Wayne County v. AFSCME Local 3317 (Michigan Ct
The County, in the
midst of a financial emergency, entered into a consent agreement with the
State Treasurer under the Local Financial Stability & Choice Act (Act 436)
where the County was temporarily given a reprieve from being subject to
mandatory collective bargaining under the Public Employment Relations Act
(PERA) for a period of approximately three years. The union filed various
unfair labor practice (ULP) charges with Michigan Employment Relations
Commission (MERC) against the County, all of which, while filed at
different times and pertaining to different conduct occurring before and
during the three-year period, were pending after the County's obligation
to engage in collective bargaining ceased. MERC concluded that the ULP
charges were properly before the administrative law judge (ALJ) for
determination whether the charges stated a claim upon which relief could
be granted and, if so, to decide whether the union established the charges
at an evidentiary hearing. The Michigan Court of Appeals affirmed. The
issue was whether MERC had subject matter jurisdiction to adjudicate ULP
charges during the collective-bargaining suspension three-year period.
The court explained
that the Legislature conferred on MERC the power and authority to
adjudicate ULP charges, MCL 423.216, and it did not withdraw that power in
Act 436 within the setting of financial emergencies. Under the plain and
unambiguous language of Act 436, mirrored in the consent agreement, the
County was not subject to the requirement or mandate to engage and
participate in collective bargaining during the collective-bargaining
suspension period. The court specifically noted the Legislature did not
express in Act 436 that local governments were not to be subjected to ULP
charges during a collective-bargaining suspension period or that MERC
could not exercise its subject-matter jurisdiction over ULP charges during
that timeframe. In sum, the court held that nothing in the language of Act
436, let alone clear and unambiguous language, revealed a legislative
intent to divest MERC of its subject-matter jurisdiction to adjudicate UPL
charges during a collective-bargaining suspension period.
Modumetal v. XtaIic Corp (Washington Ct App
08/22/2018] John Hunter Martin left Modumetal Inc. to work for Xtalic
Corp. Xtalic subsequently filed two patent applications describing
processes in an area that both companies had been researching. Modumetal
brought claims for trade secret misappropriation, breach of
confidentiality obligations, and breach of contract against Martin and
Xtalic. The trial court granted Xtalic's motion for summary judgment; the
Washington Court of Appeals reversed.
After Martin went
to work for Xtalic, Xtalic filed patent applications which Modumetal
claimed contained confidential information and trade secrets. Xtalic
pushed back with several arguments: that Modumetal failed to specify its
trade secrets with particularity; lack of evidence of misappropriation;
the information was in the public domain; Martin worked on fundamentally
different metals, chemistry, and processes at Xtalic than he did at
Modumetal; Martin had nothing to share because his Modumetal research was
unsuccessful; the mere fact that patent claims cover processes attempted
by a member of a research team at a prior employer, does not allow an
inference of misappropriation; Xtalic independently developed the
processes it sought to patent. However, as to each of these arguments, the
court found that there was sufficient evidence – especially testimony from
Modumetal's expert witness – to overcome summary judgment.
Editor: Ross Runkel,
Ross@LawMemo.com. Copyright 2018 by
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