Thaler Liebeler

How Well Do You Know Your Employees?

Fri, 17 Jul 2009 04:00:00 GMT

Recent revelations regarding a Washington, D.C. Metrobus driver’s criminal history are raising disturbing questions about employer’s obligations to investigate a potential employee’s criminal record, and exposure to liability if a third party is injured. A Metrobus driver, who was shot and killed by an off-duty police officer after the driver allegedly attempted to rob the officer at gunpoint, had a long and sordid criminal history. He had been hired by Metro soon after completing a ten-year prison sentence for robbing two men at gunpoint. Also in his criminal past – a voluntary manslaughter charge for fatally shooting a man during an argument; felony murder charges when an accomplice in an armed robbery shot a man to death; and drug and gun possession charges. No ordinary bus driver….

An employer is exposed to liability for the tort of negligent hiring where an employee willfully injures a third party on the job, and a reasonable background investigation would have revealed the employee’s dangerous propensity. The critical inquiry is often whether the employer knew, or should have known by conducting a reasonable investigation, that the employee was potentially dangerous. The parameters of a reasonable investigation are highly dependent on the facts and circumstances of the case, particularly the level of access or interaction between the employee and the public. Employers should also consider an employee’s access to vulnerable populations (including children, the elderly and disabled) and restricted areas (including homes or apartments) in considering the reasonableness of its investigations.

However, courts have been reluctant to mandate criminal background checks even where an employee will have regular access to the public. Rather, depending on the circumstances, the employer may rely on references, past employment history and employee representations where a sufficient basis for trustworthiness exists.

In order to sufficiently navigate the pitfalls of negligent hiring and background checks, employers should always require potential employees to fill out a job application including without limitation, employment history and references. Interviews are also a very important part of conducting a reasonable investigation as employers are afforded the opportunity to follow-up on inconsistencies, including gaps in employment. References and prior employers may also hold key information regarding an employee’s criminal or violent history. The most thorough criminal background checks should be performed on employees with significant exposure to the public, including vulnerable populations,[1] and access to people’s homes and apartments.

Employers have been found liable for negligent hiring where the employer lacked supporting documentation for claimed reasonable background investigations. In order to avoid such an outcome, employers should preserve supporting documentation, including notes from interviews and conversations with references and prior employers.

[1] Some states, including Maryland and Virginia, have statutorily mandated background checks for certain such employees, including public and/or private school employees and care workers.

Battle over Suit Salesman at Tysons Galleria

Thu, 16 Jul 2009 04:00:00 GMT

We have come to expect bidding wars over 20-game winners and clean up hitters in baseball, but the competition for high-level talent has extended into an unlikely field: suits. Yes, that suits as in men’s clothes. In a drama that sounds more like a made-for-tv reality show than a courtroom case, two high-end clothiers at Tyson’s Galleria Mall in McLean, Virginia engaged in a battle royal over a popular suit salesman who was generating nearly $1 million in annual revenue from suit sales.

A high-end, “made-to-measure” men’s clothing store at Tysons Galleria, James, Ltd., employed a popular suit salesman who earned nearly $1 million annually during the three years prior to his resignation. James offered competitive salary, commission and benefits not usually found in the retail clothing market in order to retain its proficient employees. Enter Saks Fifth Avenue, a large department store known for its high-end women’s clothing department. In order to increase profitability at its underperforming store at Tysons Galleria, Saks management decided to make a run at the men’s clothing market. Saks took aim directly at James’ most profitable suit salesman, determined to do “whatever it takes” to get the James employee. It succeeded, but James Ltd. would not go down without a fight.

James’ ammunition: the employee had agreed to a non-compete clause in his contract. According to the non-compete, the salesman could not become employed in the men’s clothing department of any store located within 1 mile of James for three years following his termination. Upon the salesman’s leaving James to work at a Saks in the same mall, James commenced litigation against both Saks and the employee. James prevailed on its claims against defendants for, in part, breaches of fiduciary duty and the non-compete. The court ordered the salesman to stop working for Saks. The court also entered judgment in the amount of $1,645,833.00 plus costs, attorney’s fees and expenses against Saks and the employee.

However, James’ victory was bittersweet. Although the order stopping the salesman from working at Saks survived, the Virginia Supreme Court reversed the damage award. The Virginia Supreme Court agreed with defendants’ argument that James had not established at trial any causal connection between its calculation of damages and defendants’ wrongful conduct. Rather, James’ calculation of damages was merely connected to the employee’s resignation, which, as an at-will employee, he was free to do at any time for any reason. As stated by the Supreme Court, “James’ [calculation of] damages were the same regardless of whether [the employee] left to work at the Saks store in the same shopping mall or simply retired.” Saks, 272 Va. at 312. Saks and the suit salesman prevailed in the end.

The takeaway from this case is that carefully and narrowly drafted non-compete agreements will be enforced in Virginia. But, litigants should pay special attention to any theory of damage recovery. Claims based on speculation will be stricken.

The case is Saks Fifth Avenue v. James, 272 Va. 177 (2006).

For more information, click on our non-competes section or contact Kelly Delaney.

Inadvertent Error No Excuse in Virginia

Wed, 15 Jul 2009 04:00:00 GMT

In a recent decision with significant ramifications for civil discovery in the state, the Supreme Court of Virginia articulated new standards governing waiver of privilege for inadvertently produced documents, and reemphasized the need for careful and thorough pre-production review of discovery materials. In Walton v. Mid-Atlantic Spine Specialists, P.C., 694 S.E.2d 545 (Va. 2010), plaintiff suffered a workplace injury and subsequently filed a medical malpractice action against her treating physician and his practice group. During discovery, a subpoena duces tecum was issued to the surgeon, who retained a third-party vendor to gather responsive documents. Among the documents ultimately produced was a letter from the treating surgeon to his attorney, in which he made several critical admissions which bolstered plaintiff’s case.

Defendant filed a motion for a protective order “against the use and/or distribution of [the] letter,” alleging that it is protected by the attorney-client privilege, and contained “retrospective critical analysis” of the case by defendant and his counsel. The lower court granted the protective order since disclosure of the privileged document was inadvertent.

However, the Supreme Court reversed and held the letter admissible. In so doing, the Court drew an important distinction between involuntary and inadvertent disclosure. Materials that are involuntarily produced – i.e., disclosure through criminal activity or bad faith, without the consent of the proponent of the privilege – remain privileged and therefore inadmissible. However, the Court held that waiver may occur where a privileged document is produced inadvertently if “the disclosing party failed to take reasonable measures to ensure and maintain the document’s confidentiality, or to take prompt and reasonable efforts to rectify the error.” Id. at 126. In making this determination, the Court applied a five-factor balancing analysis, in which the court considered (1) the reasonableness of the precautions to prevent inadvertent disclosures, (2) the time taken to rectify the error, (3) the scope of the discovery, (4) the extent of the disclosure, and (5) general considerations of fairness. Id. at 127 (adopting the test first enunciated in Lois Sportswear, 104 F.R.D. at 105).

Several factors were critical to the Court’s determination that the inadvertent production had resulted in waiver. The Court was particularly concerned by the haphazard manner in which litigation and non-litigation documents had been commingled, and noted that the letter had been marked neither confidential nor privileged. Second, the subpoena provided sufficient time for pre-production review of the produced documents; therefore, defense counsel should have been aware of the privileged document prior to production. Third, defense counsel did not act immediately upon realization that the privileged document had been produced, and instead waited more than a month to bring the issue to the Court’s attention. Finally, the Court found that the defendant had not undertaken sufficient efforts to supervise the third-party vendor in collecting responsive, non-privileged documents for production.

In light of this decision, it is more vital than ever that both parties to civil ligation vigilantly safeguard the various privileges preventing disclosure of potentially damaging documents. In order to avoid waiving important privileges, affirmative steps should be taken to carefully segregate privileged documents and to carefully review documents pre-production to ensure that privileged materials are not produced.

For more information, click on our Litigation section or contact Ryan Quinn.

Piercing Predicament: Accommodate or Terminate?

Mon, 13 Jul 2009 04:00:00 GMT

An interesting First Circuit Court of Appeals case recently addressed whether an employer must allow an employee to display her facial piercing at work based on her claim of religious protection. What religion, you ask? The Church of Body Modification, of course. That’s right, according to the employee, as a card-carrying member of the Church of Body Modification, she was required to display all of her piercings at all times, including her eyebrow piercing. As such, she claimed that she was not required to obey company dress code rules that expressly prohibit facial piercing. But, the First Circuit determined that the employer could not reasonably accommodate the plaintiff without suffering undue hardship and granted it summary judgment. The employee’s termination was upheld.

The case is Cloutier v. Costco Wholesale Corp., 390 F.3d 126 (1st Cir. 2004). Costco terminated Ms. Cloutier, a cashier, after she refused to comply with its dress code prohibiting facial piercings. The employee, a member of the Church of Body of Modification with an eyebrow piercing, commenced litigation against Costco on the basis of religious discrimination in violation of federal and state law. In pertinent part, Title VII of the Civil Rights Act of 1964 and applicable state law prohibit discrimination on the basis of religion, and require an employer to provide a “reasonable accommodation” where a conflict exists between a sincere religious belief and a condition of employment unless such accommodation would constitute an undue hardship.

The First Circuit avoided the admittedly “thorny” (no pun intended, Church of Body Modification) issue of determining whether the employee’s piercing constituted a “sincere” religious belief. The Court assumed without deciding for purposes of its discussion that the employee could establish a bona fide religious practice.

Instead, the Court focused on whether the employer could provide a reasonable accommodation without undue hardship. The Court found that Costco could not provide any reasonable accommodation acceptable to plaintiff without undue hardship because the employee would only accept an accommodation that would allow her to display her piercing. Employers have a legitimate interest in presenting a reasonably professional appearing workforce to its customers. It is within Costco’s discretion to make a determination that facial piercings detract from its professional image.

The First Circuit found that Costco would suffer undue hardship in its loss of control over its public image if required to permit plaintiff to display her facial piercing. Because the only acceptable accommodation to plaintiff was to be permitted to display her facial piercing, the Court determined that Costco could not reasonably accommodate plaintiff without suffering undue hardship. As such, the Court granted Costco’s motion for summary judgment and dismissed plaintiff’s claims.

For more information, contact Kelly Delaney.

The Supreme Court Speaks: Age Discrimination Claims Go to Arbitration

Sun, 12 Jul 2009 04:00:00 GMT

Supreme Court Decision:
14 Penn Plaza LLC V. Pyett and Mandatory Arbitration

The Supreme Court of the United States, in 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456 (2009), recently held that a provision in a collective bargaining agreement that clearly requires employees to submit their Age Discrimination in Employment Act of 1967 (“ADEA”) claims to arbitration is enforceable.

In the closely divided 5-4 decision, the Supreme Court found that, pursuant to the National Labor Relations Act (“NLRA”), unions act as exclusive bargaining representatives with broad authority to negotiate conditions of employment, and freedom of contract, a fundamental policy of the NLRA. Accordingly, it must uphold the union’s negotiated bargain to submit ADEA claims to arbitration in exchange for employer concessions, unless the ADEA precludes arbitration of such claims. Because the text and legislative history of the ADEA do not indicate Congressional intent to exclude such claims from arbitration, a union negotiated agreement to arbitrate is enforceable.

The decision extends the Supreme Court’s determination in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) that individuals may explicitly waive their right to a judicial remedy pursuant to the ADEA to such waivers negotiated by unions. The only requirement in both cases is that the agreement to arbitrate statutory antidiscrimination claims must be clearly stated in the agreement.

The Supreme Court also resolved the apparent conflict between Gilmer and its decision in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). A broad reading of Gardner-Denver (and the one advocated by the dissent in 14 Penn Plaza) is that there is a broad prohibition against union waiver of an employee’s right to a judicial forum for statutory claims.

However, the Supreme Court narrowly read Gardner-Denver to hold merely that a union’s waiver of statutory anti-discrimination claims must be explicit. In contrast to 14 Penn Plaza, the agreement at issue in Gardner-Denver also provided for contractual guarantees against antidiscrimination in the collective bargaining agreement. The Supreme Court in Gardner-Denver found that the union could not waive the employee’s right to a judicial remedy for a claim pursuant to Title VII of the Civil Rights Acts of 1964 because such waiver was not explicitly stated. Rather, the arbitration provision at issue applied only to the contractual claims. The majority also found that certain of the Supreme Court’s statements in Gardner-Denver, which appear to support the dissent’s broader interpretation of the decision, were merely dicta that reflected a negative view of arbitration that has since been abandoned.

Accordingly, a provision in a collective bargaining agreement that clearly requires employees to submit their ADEA claims to arbitration is enforceable. It also appears that the Supreme Court would enforce a provision in a collective bargaining agreement that clearly requires employees to submit other statutory antidiscrimination claims to arbitration unless the statute at issue precludes such an agreement.

For more information, click on the legal topic:arbitration & mediation.