BP Employees Claim ERISA Violation Arising Out of Oil Spill, June 30, 2010
by Eric Paltell
Having practiced law for 23 years, I have seen a lot of creative lawyering in my time. However, a recent lawsuit filed by employees of British Petroleum ranks up there as one of the more outrageous examples of lawyers stretching legal theories to take advantage of an unpopular defendant.
The class action lawsuit, which was filed in federal court in Illinois, alleges that BP breached its fiduciary duties to its employees by allowing the stock fund to invest in BP stock, even though company management knew or should have known that the company's imprudent management practices exposed to risk of a catastrophic oil spill (Moule v. BP Corp. North America Inc., N.D. Ill., No. 1:10-cv-03990, lawsuit filed 6/28/10). To quote the lawsuit, as a consequence of BP's “inadequate safety measures in place for its oil and gas operations and the resulting devastating effect” it could have on the BP Stock Fund, the defendants knew or should have known that BP stock was an imprudent investment for the plan. The plaintiffs claim to have suffered hundreds of millions of dollars in principal losses as a result of the investment.
While the lawyers who prepared this complaint should be commended for creativity, I find it hard to believe that stock fund managers should - or could - be held liable for losses to investors arising out of an oil spill. Ironically, lawsuits like this will we serve to drive down the value of BP stock, further exacerbating plaintiffs allege losses. Well, as my father always told me, the lawyers make out just fine when catastrophe strikes!
Court Enforces Arbitration Clause in Employee Handbook, June 28, 2010
by Eric Paltell
Over the past decade, many employers have turned to mandatory arbitration agreements to reduce litigation costs arising out of employee claims. One such employer is the Cheesecake Factory resturant, which includes mandatory arbitration language in its employee handbook. On June 7, 2010, the United States District Court for the District of Maryland held that the language in the employee handbook was sufficient to require a Cheesecake Factory employee to arbitrate, rather than litigate, her sexual harassment claims against the company. Sedelnikova v. Cheesecake Factory Rest. Inc., D. Md. No 8:09-cv-02398 (June 7, 2010).
The case arose when an employee of a Cheesecake Factory restaurant in Montgomery County claimed that she experienced numerous instances of sexual harassment from 2003 to 2009. She filed a charge of discrimination with the Montgomery County Commission on Human Rights and then filed suit in Montgomery County Circuit Court. Cheesecake Factory removed the case to federal court, and sought to compel arbitration.
Cheesecake Factory relied upon arbitration language in its handbook to try to force the case into arbitration. The language at issue was contained in paragraph eight of a nine paragraph "Handbook Receipt and Confidentiality Agreement" included on pages 65 and 66 of the handbook. The arbitration language stated that employees agreed to participate in "impartial dispute resolution proceedings as a condition of and as consideration for the offer of employment" by Cheesecake Factory.
Although Judge Williams acknowledged that the arbitration agreement was "very general, and could be better differentiated from the other provisions surrounding it," he nevertheless found it to be enforceable. Judge Williams pointed out that it was one of only nine paragraphs in the handbook that were initialed by the employee, a fact he took to indicate that she read the paragraph and agreed to its terms.
While Cheesecake Factory was successful in enforcing this arbitration requirement, we do not recommend that employers emulate what was done in this case. When seeking to require employees to arbitrate claims, we advise that the arbitration agreement be clear, conspicuous, and separate and distinct from other policies, such as an employee handbook. Only in those circumstances can the employer confidently take the position that the employee knowingly and voluntarily agreed to waive their right to pursue claims in court
Handcuffed Prison Officials, June 24, 2010
Asset Protection & Security Services operated a prison in Buffalo, New York under contract. One of its assigned custody officers was videotaped having casual conversations with a prisoner for fifteen to twenty minutes after she was supposed to have locked the prisoner in a cell, and giving the prisoner squirts of hand sanitizer (contraband). When the government authority in charge of prisons learned of these events, Asset Protection was instructed that it no longer was permitted to employ that person as a security officer in the Buffalo prison. As a result, the employee was terminated.
At an arbitration hearing, the arbitrator observed that there was no express rule making hand sanitizer contraband, and that the absence of audio on the tape made it possible that there was a legitimate reason that the prisoner was not in lock down during the time required. The arbitrator concluded that the employer did not have just cause to terminate the grievant.
Remarkably, when the employer produced an email from the Buffalo prison authorities saying that the grievant no longer had a security clearance and could not work in the jail, the arbitrator rejected the e-mail as hearsay because "no one from [the prison authority] or the Company testified to identify it, authenticated it, or claim authorship of and be cross- examined on its contents. There was no other evidence submitted by the Company to corroborate the statement in the e-mail about Grievance's security clearance being revoked or when and how that occurred." The arbitrator said that he could not conclude that the security clearance had been revoked. The employee was entitled to full back pay and reinstatement, with back pay to be made for lost wages and benefits, and her record restored even if it turned out that she could not in fact return to work.
The Naked Truth, June 23, 2010
A utility worker who had an established pattern of absences and behavior problems "related to her mental health," arrived at work one day in West Palm Beach unprepared to begin her job. Instead, she removed "all of her clothing to the point that she was naked before redressing in her work clothes." Her employer, the transportation authority for West Palm Beach, called authorities who arrested the employee for her public stripping in the workplace.
Her employer terminated the stripper, following which her union dutifully claimed that she did not commit a violation of any stated work rule against stripping naked in the workplace. At an arbitration hearing, the union presented evidence that the employee was being treated for depression and psychosis, and had not taken her medicine on the day of the incident. Although the arbitrator found that the employee voluntarily abandoned her medicine, he concluded that her misbehavior was the result of psychosis and "not consciousness behavior or disregard of any work rules of the employer." The arbitrator further wrote that the psychosis- generated stripping was "not a true discipline problem."
The employee was reinstated with full seniority, subject to a "last chance agreement," under which if she strips naked again anytime during the next 30 months, her employment would be terminated.
U.S. Supreme Court Rules That City's Review Of Police Officer's Text Messages Was Reasonable, June 22, 2010
In this age of evolving workplace technology, the issue of employee privacy when using employer-provided equipment has arisen with increasing frequency in the courts. Private employers with policies that prohibit the use of computers or mobile devices for personal use and explicitly inform employees that their use may be monitored put employees on notice that they have no reasonable expectation of privacy when using that equipment. The question of whether the same standard applies to public employees, who enjoy Fourth Amendment protections from unreasonable search and seizure in their employment, was recently considered by the U.S. Supreme Court.
Should an employee expect that his personal text messages, typed during work hours on a pager provided by his employer, are subject to review by supervisors? In a recent opinion, the Supreme Court unanimously held that a SWAT team police officer for the City of Ontario, California, should have known that all of his work-related actions, including text messages on his official pager, were likely to be subject to his employer's scrutiny. Ontario v. Quon, No. 08-1332 (June 17, 2010). As part of his job, the City gave Sgt. Jeffrey Quon a pager. The City had a written policy providing that all employee email on work computers was subject to monitoring, and a superior officer told Quon that the City would treat text messages on City-issued pagers in the same way. Concerned about expenses from employees exceeding their allotted number of text messages, the City conducted an audit of employee pager use. This audit included a review of transcripts of Quon's text messages, many of which were personal.
Quon sued the City, claiming a violation of his Fourth Amendment rights under the Civil Rights Act of 1871, 42 U.S.C. §1983, and Arch Wireless Operating Company, the service provider for his pager, claiming violations of the Stored Communications Act.
Reversing the Ninth Circuit, the Supreme Court found no violation of Quon's Fourth Amendment rights, finding that even if Quon had a reasonable expectation of privacy in his personal texting on his City pager, the City's review of his messages was "reasonably related to the objectives of the search and not excessively intrusive." The Court noted that the City's policy regarding monitoring of email, as well as the supervisor's instruction that text messages were also subject to review, limited Quon's privacy expectations. As a law enforcement officer, Quon "would or should have known that his actions were likely to come under legal scrutiny and that this might entail an analysis of his on-the-job communications." The Court declined to extend its holding beyond the specific facts of Quon's case, noting that because of the "uncertainty regarding workplace rules relating to employee use of employer-provided technology," it was preferable to issue a narrow decision, rather than a broad ruling regarding Fourth Amendment rights.
Nepotism Policy Applies Only To Women? June 14, 2010
Black River Electric Cooperative had a nepotism rule prohibiting two employees of a stated "close relationship" from both working for the company. Though the policy had been in place since 1969, the company had never enforced it – until it fired a female office employee after she married the son (a non-employee) of another long-term male employee in May 2009. She filed a grievance soon thereafter.
At arbitration, the union pointed out that during the forty years the nepotism policy had been in place, to company's Board of Directors granted exemptions to six male employees who were closely related so that they could keep working. The company's excuse for applying the policy this time was based on the Board's announcement in November 2007 that it would no longer grant exemptions to the nepotism rule. Yet, strangely enough, in July 2009 – only two months after the Grievant's termination – the company let two male employees who were closely related to "grandfather in" under the policy.
The company explained that the two male employees were linemen, whose skills were valuable and hard to replace. The terminated female employee, however, was just an office worker who presumably could be replaced more easily. Not surprisingly, the arbitrator disagreed, finding that the Board's application of the nepotism policy was discriminatory, perhaps not intentionally so, but discriminatory all the same. He ordered the grievant to be reinstated. Black River Electric Cooperative, 127 LA 878 (BNA) (Cohen, 3/25/10).
No Unemployment For Hotheaded Gas Station Attendant, June 14, 2010
Todd Goble worked for twenty years at gas and convenience stores owned by Speedway SuperAmerica in Minnesota. Goble liked to use the store outdoor intercom to pester customers who annoyed him. In 2006, Goble received a disciplinary warning after he yelled through the intercom at a customer "Why don't you clean your whole car with our squeegee?" In January 2009, Goble got into an altercation with an African-American customer who called Goble and his coworker names and said "good thing Obama was elected." In response, Goble yelled "Obama sucks" over the intercom. Speedway fired him.
Goble applied for unemployment insurance benefits, but was denied. Goble tried to excuse his behavior because he was "just hotheaded" with the customer. The court disagreed, finding that the company's loss of trust in Goble as a result of his customer harassment was enough to disqualify him from benefits. Goble v. Speedway SuperAmerica LLC, No. A09-024 (Minn. Ct. App. May 11, 2010).
Breast Feeding Rules in Maryland, June 8, 2010
This story brings back memories of 1960's sit-ins, sort of. I heard this on N.P.R. while driving around the D.C. Beltway today. It seems that Ann-Marie Luciano, an associate on maternity leave from a big D.C. law firm, had completed her exercise class at a Frederick, Maryland mall when her three month old son decided it was time to eat. So, Ms. Luciano sat down on a bench in the mall and started breast-feeding. She was more than just miffed when she was asked three times (by mall security and by mall patrons) to please either move to the mall’s specially provided nursing room or to “cover up” while she breast fed. She refused.
Instead, Ms. Luciano organized a protest to convey her disappointment about the treatment. This past Saturday, she organized a feed-in at the mall. About 150 people showed up; apparently not all of them were there to breast-feed but there to support public breast-feeding.
On the radio show, Ms. Luciano said that Maryland law lets her breast-feed anywhere she wants. Indeed, that is pretty close to correct (the suggestion that breast-feeding women may want to be discrete, or at least sympathetic to those around them who are uncomfortable about breast-feeding in public, on the other hand, appeared to be totally lost on Ms. Luciano).
Maryland law provides:
(a) In general.- A mother may breast-feed her child in any public or private location in which the mother and child are authorized to be.
(b) Restriction of right prohibited.- A person may not restrict or limit the right of a mother to breast-feed her child.
MD Health-Gen. Code Ann. § 20-801. Employers, particularly those with customers in their workplace, are well advised to take note of this law. Those who ignore it may risk their own “feed-in.”
“Not Gay Enough” , June 7, 2010
This is not employment law related, but it still is worth a quick clip. Reported in the San Francisco Chronicle a month or so ago: It was the Gay Softball World Series in Seattle, and the competition was fierce. The trouble started when the Atlanta Mudcats complained following their semi-final loss to team D2 from San Francisco. According to the paper, a handful of players from a D2 were then marched one by one into a conference room and, in front of about 25 people, asked about their “private sexual attractions and desires.” After the inquisition the team was stripped of its second place finish because the men were determined to be “non-gay.” You see, the North-American Gay Amateur Athletic Alliance has a “only two heterosexuals per team” rule. The D2 team members have sued in Washington federal court, alleging a violation of the state’s public accommodation law. Apilado, et al. v. North American Gay Amateur Athletic Alliance, No. 2:2010cv00682 (W.D. Wash. April 20, 2010).
EEOC’s Plate is Full-Up, June 7, 2010
The EEOC is back to full strength for the first time in almost two years. And there’s a lot to do. First, there’s a proposed rule to revise existing regulations to implement the ADA Amendments Act. Then, there’s consideration the first regulations under the Genetic Information Nondiscrimination Act, a proposed rule regarding employer defenses under the Age Discrimination in Employment Act, and proposed revisions to the process for handling federal employees' discrimination complaints. (Meanwhile, over at the Department of Labor, rumor has it that there may be revisions to FMLA regulations before the end of the year).
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