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Supreme Court Grants Cert in FLSA Rule 68/Mootness Matter


My colleague Mark Beutler wrote a detailed blog post in March about the employer's request that the Supreme Court review the Third Circuit's decision in Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. 2011).  In that decision, the Third Circuit Court of Appeals held that a defendant employer may not use the Rule 68 offer of judgment mechanism to “moot” a single-plaintiff FLSA case styled as a putative collective action, even when the plaintiff has yet to seek class certification. 

Yesterday, the Supreme Court decided to hear the case. Mark explained the issues at play here better than I can.  Whatever the result of this appeal, the Supreme Court’s decision will have great impact on those of us who litigate frequently in this area.  We will keep you posted as this develops.

 

 

 

 

 
 
 
 

EEOC Charges Reach All-Time High


The Miami office of the EEOC released its 2011 numbers last week.  It was a busy year for the agency.  Employees filed a record 5,263 charges of discrimination last year.  That number is up from 5,077 filed in 2010. 

The most popular chargers were charges of retaliation, and race or sex discrimination.  Age discrimination charges were also up.

These numbers should come as no real surprise - the nationwide numbers show similar trends.  Nationally, the EEOC took in more charges last year than ever before. 

The EEOC claims the increase in the number of charges is a result of "more people becoming aware of their rights".  I doubt that is entirely accurate.  It is more likely that the numbers are up because the economy continues to languish.  When employees lose their jobs in a bad economy, they will consider all options.  And, one option is to bring claims against their former employer.  As long as the economy continues to sputter along, I expect that the EEOC (and labor and employment attorneys) will continue to be busy.

 
 
 
 

Is a Mistaken Admission to a Conclusion of Law Binding on the Defendant?


Lawyers don’t like to admit mistakes. But, of course, even good lawyers make mistakes on occasion.  The key, I have found, is to acknowledge your mistake as soon as possible and attempt to correct it promptly.  (I suppose that’s good advice not just in litigation, but in life generally.)

 

A few years ago I made a mistake in filing my client’s answer to a complaint in an Americans with Disabilities Act case:  I admitted in the answer that the plaintiff had a disability.  Perhaps the mistake was understandable, as the plaintiff was born with only one hand, and the defendant had admitted in its response to plaintiff’s EEOC charge that she was disabled.  Still, the admission was a mistake, because when I took the plaintiff’s deposition, she insisted that she was not disabled and could do anything any two-handed person could do, except juggle.  Seriously, that was her testimony.  The plaintiff’s can-do attitude was admirable, but her testimony was inconsistent with her ADA complaint.  I immediately moved the amend the defendant’s answer to deny that she was disabled.  Plaintiff’s counsel opposed the motion. After briefing by the parties, the judge denied my motion on the grounds that the amendment would be futile.  The court reasoned that whether the plaintiff was disabled under the ADA was an issue of law for the court to decide; thus, the defendant’s admission of a legal conclusion could have no binding effect.  The court cited the Eleventh Circuit’s decision in Almand v. DeKalb County, Georgia, 103 F.3d 1510, 1514 (11th Cir. 1997), in which the court questioned “whether [defendant’s] admission has effect for conclusions of law that are set out in the complaint”.

 

(By the way, we ultimately prevailed in the case, because whether the plaintiff was disabled or not, the evidence showed that she had been fired for violating a company policy.)

 

I was reminded of my mistake this morning when I read of a lawyer’s similar mistake in a case under the Fair Labor Standards Act, Cortina v. F.A.D. Detective & Security Services, Inc., Case No. 11-20732-CIV-KING (S.D. Fla., December 1, 2011).  The defendants’ attorney admitted in the answer that defendants engaged in interstate commerce, which is a prerequisite for establishing that the business is covered by the FLSA.  (This is known as “enterprise coverage.”)  Subsequently, the defendants retained a different attorney. The second attorney filed a motion for summary judgment, arguing that the court lacked subject matter jurisdiction because there was no evidence that defendants had ever engaged in any interstate activities.  But the court rejected this argument on the grounds that defendant had admitted in their answer that they engaged in interstate commerce.  The court stated that while subject matter jurisdiction cannot be waived, defendants’ “assertion that they were not engaged in commerce raises a factual question.”

 

I find the court’s reasoning to be dubious.  All legal conclusions ultimately turn on the underlying facts.  The proper question, it seems to me, is whether the defendants admitted facts that compelled the legal conclusion that they engaged in interstate commerce, or, alternatively, whether defendant merely admitted the legal conclusion that they engaged in interstate commerce, notwithstanding any actual facts.  In my ADA case a few years ago, although defendant admitted that plaintiff was disabled, the court was open to the possibility that this legal conclusion might not be supported by the facts.  It seems to me that the judge in my case got it right, and the Cortina court got it wrong. 

But perhaps the real problem for defendants in the Cortina case was their unexplained delay of pointing out their mistake to the court.  In a footnote to its decision, the court noted that two months had elapsed between the time the second attorney had entered an appearance, and the date that defendants filed their motion for summary judgment.  Thus, the court noted, “Defense counsel had ample time to move to amend the Answer,” but failed to do so.

 

To answer the question posed by the title of this blog post –  is a mistaken admission to a conclusion of law binding on the defendant? – I think the answer is maybe.  Like so many other issues in the law, it depends on how the judge frames the issue.  What seems certain is that defense counsel should move to amend the answer as soon as possible after realizing their mistake, and not wait until filing a motion for summary judgment to spring their defense on opposing counsel and the court.

 
 
 
 

Eleventh Circuit Adopts Elastic Standard for COBRA Improper-Notice Claim Accrual


Courts often hold that parties are presumed to know the law.  And sometimes courts say otherwise. That's as much sense as I can make of the Eleventh Circuit's recent decision in Cummings v. Washington Mutual, Case No. 10-10706 (11th Cir, August 22, 2011). 

In Cummings, the court addressed the issue of when the plaintiff's improper-notice claim under COBRA accrued.  Under COBRA, an employer -- through its healthcare administrator -- must notify an employee of his right to continue his healthcare coverage after the termination of his employment. 29 U.S.C. §§ 1163(2), 1166. The employer must notify its healthcare administrator of the employee's termination within 30 days, § 1166(a)(2).  The administrator then must notify the employee of his continuation right within 14 days, §§ 1166(a)(4)(A), (c). Cummings was terminated from his bank job on March 19, 2007.  Thus, the employer had 44 days, i.e. until May 2, 2007, to notify Cummings of his continuation right: Cummings claimed that he never received a notification about his COBRA continuation right.

In Georgia, where Cummings was employed, a one-year limitations period applies to COBRA improper-notice claims.  The issue in Cummings was when that one-year period began running.  Cummings argued that his claim did not accrue until he learned from his lawyer on March 20, 2008 that his employer had failed to send him notification of his COBRA continuation right. The employer argued that the limitations period began to run on May 3, 2007, the day that the time for notifying Plaintiff expired. Cummings filed his lawsuit on July 24, 2008.

The Eleventh Circuit held that that a COBRA improper-notice claim accrues "when the plaintiff either knows or should know" that his former employer has failed to provide him with the required notice of his continuation right.  This holding is not surprising. As the opinion in Cummings notes, the Eleventh Circuit has applied the "knew or should have known" standard in other contexts. 

There was no allegation that Cummings actually knew on May 3, 2007 that his employer had failed to give him notice.  So the question was, should Cummings have known on May 3, 2007?

The Eleventh Circuit said no, stating that:

The COBRA notification requirement exists because employees are not expected to know instinctively of their right to continue their healthcare coverage. To begin the statute of limitations when the notification period expires, as Defendant urges, would create the possibility that the limitations period will run out before a plaintiff even knows he has been injured... [T]he mere expiration of the notification period on 3 May 2007, without more, was insufficient to give Plaintiff reason to know his notification right had been violated.

This holding is surprising.  Employment laws are complex and often misunderstood, even by practicing lawyers (or at least those who do not specialize in employment law).  Knowledge of employment laws, or the violation of such laws, can rarely be said to be "instinctive."  Yet in construing statutes of limitation, courts usually indulge in the presumption that parties do know the law.  Otherwise, the "knew or should have known" standard becomes elastic to the point of absurdity:  Only when the employee gets around to consulting an employment law specialist "should" he know that his rights have been violated.  This principle seems to run contrary to the purpose of statutes of limitation: to bar stale claims and protect expectations of parties that have settled over time.  See Nat'l Parks & Conservation Ass'n v. TVA, 502 F.3d 1316, 1326 (11th Cir. 2007). Nevertheless, at least for COBRA improper-notice claims in the Eleventh Circuit, this elastic standard now determines when the statute of limitations begins running.

 

 
 
 
 

Florida’s Third DCA (Once Again) Narrowly Construes Protected Activity Under the FLSA


Defense lawyers should always remove Fair Labor Standards Act cases to federal court, right?

I thought so until last October, when Florida’s Third District Court of Appeals, relying on the U.S. Seventh Circuit Court of Appeals’ decision in Kasten v. Saint-Gobain Performance Plastics Corp., 570 F.3d 834, 838-40 (7th Cir. 2009), ruled that to “file” a complaint under the FLSA, the employee must complain in writing.  See Alvarado v. Bayshore Grove Mgmt., LLC, 2010 Fla. App. LEXIS 15020 (Fla. 3d DCA 2010).  This decision was at odds with precedent in the U.S. Court of Appeals for the Eleventh Circuit (which covers Florida, Georgia, and Alabama).  I wrote a blog post at the time recommending that defense attorneys reconsider their practice of removing FLSA retaliation cases to federal court.  If the employee did not make a written complaint, the employer was probably better off in state court, where the employer could argue that the employee did not engage in protected activity under the FLSA.  

In March of this year, the United States Supreme Court vacated the Seventh Circuit’s decision in Kasten, holding that oral complaints can suffice under the FLSA.  See Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325 (U.S. 2011).  I thought that it was back to business as usual, and that defense attorneys should resume their practice of removing FLSA retaliation cases to federal court. 

Now I’m re-thinking that strategy again.  Last week, the Third DCA issued a new decision in Alvarado that acknowledges the Supreme Court’s holding in Kasten, but once again seems to  construe the concept of protected activity under the FLSA more narrowly than Eleventh Circuit precedents.  See Alvarado v. Bayshore Grove Mgmt., LLC, 2011 Fla. App. LEXIS 12136 (Fla. 3d DCA. Aug. 3, 2011).

In Alvarado, the plaintiff described his complaint to his employer as follows:

Just before I was fired on July 11, 2007, I complained to Defendant's management that I was not receiving the correct amount of pay since my time records were altered and/or falsified so as to avoid having to pay me overtime.

The Third DCA held that “[i]t is obvious that this ‘complaint’ fell far short of the degree of specificity and reference to the statute required by the Supreme Court [in Kasten].”  In Kasten, the Supreme Court held that “[t]o fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.”

The Alvarado decision once again seems at odds with Eleventh Circuit precedents and other federal court decisions, under which employees can engage in protected activity by complaining about a practice that is regulated by the FLSA without mentioning the FLSA by name.  See, .e.g,  EEOC v. White & Son Enters., 881 F.2d 1006, 1011-12 (11th Cir. 1989) (finding that employees' informal complaints concerning unequal pay, which did not involve citation of the Equal Pay Act or the FLSA, constituted protected activity); Debrecht v. Osceola County, 243 F. Supp. 2d 1364, 1374 (M.D. Fla. 2003) (finding that employees' informal complaints to employer concerning unpaid overtime constituted protected activity under the FLSA). 

I do not believe the Supreme Court’s decision in Kasten changed this legal standard. But apparently, in the Third District Court of Appeals, an employee must do something more than complain about not receiving overtime pay.  That’s good news for employers, and suggests (once again) that employers may be better off defending FLSA retaliation claims in state court. 

 

 
 
 
 

Big Enough to Drive a Truck Through? Considering Florida’s “Ulterior Purpose” Exception to the Third Party Requirement of a Tortious Interference Claim


There is no basis for holding an individual liable under Title VII, the Florida Civil Rights Act, or the Florida private sector Whistleblower’s Act.  So, managers and co-workers need not fear being sued for discrimination or retaliation.  Only the employer can be held liable, right?  

Not exactly.  Supervisor and co-workers can be sued under one or more tort theories for conduct that violates one of these laws.  For example, a plaintiff who sues her employer alleging that her supervisor sexually harassed her by groping or fondling her in violation of Title VII can also sue the supervisor for battery.

But what about garden variety discrimination or retaliation claims?  Can the facts that support such a claim also support a claim against the plaintiff’s supervisor or co-worker for tortious interference with a business relationship?  According to a recent decision by Florida’s Third District Court of Appeals, Alexis v. Ventura, Case No. 3D10-2879 (Fla. 3d DCA, June 29, 2011), the answer is yes. 

Ketlyn Alexis was terminated from her job with Arbor E&T, LLC. She filed suit under the Florida Civil Rights Act, claiming that her supervisor, Lilliam Ventura, and others subjected her to a hostile work environment based on her race (black) and national origin (Haitian.). 

Alexis later amended her complaint to add Ventura as a defendant, alleging that Ventura tortiously interfered with an advantageous business relationship that Alexis had with Arbor E&T. In particular, Alexis alleged that Ventura made a number of hostile statements and engaged in a number of hostile acts against Alexis.  For example, Alexis alleged in her complaint that Ventura told other employees: “I am the boss and I am in charge and I’m going to make that Haitian Bitch know it.” Alexis alleged that these statements and acts were motivated by a discriminatory intent to undermine Alexis’ job performance in the eyes of Arbor E&T, and that these statements and acts by Ventura ultimately led to Alexis’ termination by Arbor E&T.

Ventura filed a motion to dismiss this count and to dismiss Ventura as a defendant to the action. Ventura argued that, as a matter of law, Alexis could not state a claim against Ventura for tortious interference with a business relationship because Ventura and Alexis were co-workers. The trial court granted the motion, dismissed the claim, and dismissed Ventura as a party defendant.

On appeal, the Third DCA reversed the trial court’s order.  The court noted that to state a claim for unlawful interference with an advantageous business relationship, Alexis must have alleged the following elements: 1. The existence of a relationship between Alexis and her employer, under which Alexis has legal rights; 2. Ventura’s knowledge of the relationship; 3. An intentional and unjustified interference with that relationship; 4. By a third party; 5. Resulting in damages to Alexis caused by the interference.

The court’s decision turned on the fourth element: whether Ventura could be characterized as a “third party” where she and Alexis were co-employees of Arbor E&T. Generally, the court noted, “in the context of a managerial or supervisory employee terminating a plaintiff’s employment, an action will usually not lie against the terminating employee because he/she is considered a party to the employment relationship.”

But, the court wrote, “[t]here is a recognized exception to this general rule, as explained in O.E. Smith’s Sons, Inc., v. George, 545 So. 2d 298 (Fla. 1st DCA 1989): 

For the interference to be unjustified, the defendant must be a third party, external to the business relationship. However, the privileged interference enjoyed by a party that is integral to the business relationship is not absolute.  The privilege is divested when the defendant “acts solely with ulterior purposes and the advice is not in the principal’s best interest.”  Id. at 299 (quoting Sloan v. Sax, 505 So. 2d 526, 528 (Fla. 3d DCA 1987)) (emphasis supplied).

The court noted further that, “[a]lthough ‘an allegation that [defendant] was maliciously motivated does not by itself mean that [defendant] acted outside the scope of his employment,’ Sloan, 505 So. 2d at 528, an allegation that the defendant was not acting on the employer’s behalf or was acting to its detriment satisfies the “third party” requirement.” 

Because Alexis had made the requisite allegations, the Third DCA ruled that Alexis had stated a claim against Ventura for tortious interference with an advantageous business relationship.

It is, of course, a relatively easy matter for a plaintiff to allege that her supervisor, in discriminating against or retaliating against her in violation of the law, was acting solely with ulterior purposes, and not in the best interests of the employer.  Indeed, while an employer accused of discrimination or retaliation will typically deny such allegations, it will also likely take the position that if its supervisor discriminated against or retaliated against the plaintiff, the supervisor was acting with ulterior purposes and not in the employer’s best interest.  After all, an employer is not going to admit that it encourages or condones unlawful discrimination or retaliation. 

So, it would seem that the “ulterior purpose” exception to the third party requirement of a tortious interference claim is “big enough to drive a truck through,” at least in cases of discrimination or retaliation.

The inclusion of a supervisor as a co-defendant complicates an employer’s case.  Depending on the facts, the supervisor may have to retain separate counsel because of a potential conflict of interest.  And the employer may choose, or be obligated, to pay for the supervisor’s defense, which increases the overall cost of the defense.  If the employer agrees to indemnify the supervisor in the event of an adverse judgment, the employer must realize that there are no automatic caps on damages in a tort claim, unlike claims under Title VII or the Florida Civil Rights Act. 

Plaintiff-side lawyers realize that the addition of a supervisor-defendant typically drives up the settlement value of the case, and may even make a plaintiff’s verdict more likely at trial.  Thus, in the wake of the Alexis case, it seems likely that Florida employers will see an increase in tortious interference claims against their supervisors.  

 
 
 
 

Mulling the Meaning of an Employee’s “Termination”


Florida’s Third District Court of Appeal, construing a non-compete provision in an employment agreement, ruled this week that the phrase “employee’s termination of employment with the company” “unambiguously refers to the employee’s own termination of his or her employment.” Avisena v. Santalo, Case No. 3D10-178 (Fla. 3d DCA, May 4, 2011) (emphasis supplied). 

The effect of the court’s ruling was that the employee, who had been terminated by the company, was not bound by the longer non-compete restriction that would have applied if he had left on his own accord.  The court, therefore, affirmed the trial court’s denial of the company’s motion for a temporary injunction.

Ironically, I  have heard employees’ attorneys argue that the words "employee's termination” mean precisely the opposite of the Third DCA’s interpretation.  These attorneys say that when an employee’s personnel file reflects an employee’s “termination,” that suggests the company terminated the employee.  According to these plaintiffs’ lawyers, if the employee actually resigned, documenting a “termination” in a personnel file, or in a response to a request for employment verification, could constitute defamation; or, in the case of an employee who had engaged in protected activity before she resigned, retaliation.

I always considered such arguments to be dubious, and still do.  But I also think the Third DCA got it wrong in Avisena.  As Judge Schwartz noted in his dissenting opinion, the word “termination” “simply means the end of given period of time or relationship, regardless of how it occurs.”  The word “termination” and the phrase “employee’s termination” do not unambiguously describe who initiated the termination.  If your employment contracts are premised on the assumption that the word “termination” carries an unambiguous meaning, you may want to revisit those contracts.  Avisena’s attorneys are probably doing that right now.

 
 
 
 

Third DCA Erases $2.6 Million Racial Discrimination and Retaliation Verdict


Florida’s Third District Court of Appeals has reversed the jury verdict and judgment of a Miami-Dade Circuit Court in favor of the plaintiff for nearly $2.6 million.  Ruling that the plaintiff failed to meet the legal requirements for establishing racial discrimination or retaliation under the Florida Civil Rights Act, the appellate court ruled that the trial judge should have directed a verdict in favor of the employer. The case is Sean St. Louis v. Florida International University, Case No. 3D08-2316 (Fla. 3d DCA, March 30, 2011).

The court’s opinion is straightforward and sensible.  The plaintiff could not establish his discrimination claim, the court ruled, because he could not show that similarly situated employees outside his protected class were treated more favorably.  As for the plaintiff’s retaliation claim, the plaintiff produced no evidence that the decision makers knew of his allegations of discrimination, so they could not have retaliated against him.

The Third DCA’s opinion reads like a federal district court’s order granting summary judgment to the employer.  The difference, of course, is that this case went to trial at great expense to the employer.  That’s not surprising, because state court trial judges, unlike their federal counterparts, are generally reluctant to grant motions for summary judgment before trial, or motions for directed verdict at trial.  That’s why defense counsel remove employment cases to federal court, if possible. Here, that wasn’t possible because there were no federal claims, and there was no diversity of citizenship between the parties.  The saving grace for the employer was that cases under the Florida Civil Rights Act are supposed to be analyzed under the same rigorous standards as federal Title VII claims.  And under those standards, the Third DCA ruled that the employer was entitled to a defense verdict, the jury’s feelings to the contrary notwithstanding.

 

 

 
 
 
 

Filing Complaint with DOL Doesn't Preclude FMLA Lawsuit, Says Eleventh Circuit


The Family and Medical Leave Act authorizes employees to file a complaint against their employer with the Department of Labor, which can then file an enforcement action.  The FMLA also permits employees to file suit directly against their employer in court. But what happens if an employee does both?  That was the question posed in a recent decision by the Eleventh Circuit Court of Appeals, Spakes v. Broward County Sheriff's Office (11th Cir. January 31, 2011).

The employer argued that the FMLA's implementing regulations require an employee to choose either a DOL complaint or a private lawsuit, and that an earlier-filed complaint with the DOL bars a subsequent private lawsuit.  Specifically, the employer relied on 29 CFR 825.400(a), which provides:

(a) The employee has the choice of: (1) Filing, or having another person file on his or her behalf, a complaint with the Secretary of Labor, or (2) Filing a private lawsuit pursuant to section 107 of FMLA.

This language seems pretty clear: the phrase "the employee has the choice of..." seems to require, well, that the employee choose one or the other. On its face, then, the employer's argument seems to have merit.

The problem with the employer's argument, according to the court, was that the regulations are inconsistent with the statute. The FMLA itself provides that an employee's right to bring an action is terminated only upon the filing of a complaint by DOL. That did not happen here, so the court held that the employee had the right to bring a private lawsuit.  "[W]here the statute provides a right to a cause of action and lists the limitations, regulations cannot contravene the statute by terminating the right where the statute did not so authorize," wrote the court.  In other words, as any first year law student can tell you, the statute trumps the regulations. And in this case, that means the employer loses.  

 
 
 
 
 

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Michael W. Casey III, Kevin E. Vance, Mark J. Beutler, and Teresa M. Maestrelli practice labor and employment law, with a particular focus on labor and employment litigation, including Title VII, ADEA, ADA, Florida Civil Rights Act, and whistleblower claims, as well as non-compete litigation, in state and federal trial and appellate courts in Florida and throughout the United States. They also represent employers before the National Labor Relations Board (NLRB), the National Mediation Board (NMB), the U.S. Department of Labor, including the Wage and Hour Division and the Occupational Safety and Health Administration (OSHA), the Equal Employment Opportunity Commission (EEOC), and various state and local agencies, as well as in arbitrations, collective-bargaining negotiations and union representation elections. Hector A. Chichoni practices in the area of US and global immigration law. He chairs Duane Morris's Florida Immigration Practice. The editors of Chambers USA 2010 also selected Mr. Chichoni as a "Leader in the Immigration Field." He has represented a vast number of corporate and individual clients throughout his career ranging from premier US health care organizations, Fortune 100 and Fortune 500 companies, multinational corporations and universities to doctors, professors, researchers and students. His international experience includes handling matters relating to export controls and global corporate compliance and business transactions. He has represented clients in a wide variety of cases before the US Immigration Court.
© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.
The opinions expressed on this blog are those of the author and are not to be construed as legal advice.