Category: Uncategorized

THIRD CIRCUIT RULES AUTHORIZATION OF CLASS ARBITRATION SHOULD BE DECIDED BY COURTS

The Third Circuit ruled that courts, not arbitrators, should determine whether an arbitration agreement entered into by two parties allows for classwide arbitration.  The Third Circuit’s decision reversed the lower court’s ruling that the availability of class arbitration was a matter for the arbitrators to decide.

  In overturning the district court’s decision, the Third Circuit explained that “[b]ecause of the fundamental differences between classwide and individual arbitration, and the consequences of proceeding with one rather than the other…the availability of classwide arbitration is a ‘substantive question of arbitrability’ to be decided by a court[,]” unless the parties unmistakably provide otherwise.

This decision changes the field of class arbitration in the Third Circuit as now, the issue may be solely decided by the courts, except when the parties have clearly agreed that the issue is to be determined by the arbitrator.  The Third Circuit shares the same view as Sixth Circuit on this subject.

AMBIGUITY IN GOLDMAN SACHS’ BYLAWS CAUSES THIRD CIRCUIT TO VACATE RULING IN FAVOR OF EX-EMPLOYEE

Sergey Aleynikov, a former Vice President of Goldman Sachs, was convicted of trade secret theft in 2009 under federal law.  After serving one year in prison, his conviction was overturned.  Shortly thereafter, Aleynikov was again charged in New York State court under the same set of facts.  The state charges are still pending.  This case has generated legal costs in the amount of $2.5 million, and Aleynikov has sued Goldman for the payment of these legal bills on grounds that Goldman’s bylaws requires it to indemnify its officers for legal expenses.  The lower court held in favor of Aleynikov, and Goldman appealed to the Third Circuit.

Goldman argues that although Aleynikov was a vice president, he was not technically an officer necessitating the advancement of legal fees.  Goldman’s bylaws state that legal advancements will be paid to officers, but does not define the characteristics of that job title.  The Third Circuit’s analysis focused on whether Aleynikov was considered an “officer” as defined by the bylaws.  The Court ultimately held that that term “officer” was ambiguous and the case must go back to the lower court to determine the definition and rule whether Goldman should pay Aleynikov’s legal fees.

This decision serves as a reminder that ambiguous terms in bylaws can have a significant impact when a former employee seeks indemnification from the company after allegedly committing a wrongdoing.

TRANE U.S., INC. AGREED TO PAY $55,000 TO NEW JERSEY WOMAN TO SETTLE DISCRIMINATION CASE

Charnelle Gilliard of Ewing, New Jersey began working for Trane, a subsidiary of Ingersoll Rand, in July 2010 as an assembler.  In May 2012, upon the advice of her prenatal physician, Gilliard stopped working.  She was approved for temporary disability benefits due to her pregnancy, and was expected to return to work on July 24.   After the paperwork was submitted, a third-party benefits administrator contacted Gilliard’s prenatal physician seeking further information regarding Gilliard’s disability leave.  The physician told the administrator that although Gilliard’s pregnancy was normal, he advised her to stop working in May because of how far along she was in her pregnancy.  Trane refused to accept Gilliard’s request for medical leave during her final weeks of normal pregnancy and terminated her employment retroactive to her last day of work in May.

Last month, Acting Attorney General John J. Hoffman and the Division on Civil Rights announced that the company agreed to pay Gilliard $55,000 to resolve allegations that it discriminated against her by terminating her employment after she took doctor-prescribed medical leave to accommodate the final weeks of her pregnancy.  Trane also must pay $15,000 to the Division of Civil Rights.  As part of the settlement, Ingersoll Rand has also agreed to revise its anti-discrimination policy.

New Jersey is one of several states that are expanding the employment protections and enforcement of those laws concerning pregnant employees.

NINTH CIRCUIT RULES THAT UNITED BEHAVIORAL HEALTH IMPROPERLY DENIED BENEFITS TO WELLS FARGO EMPLOYEE

On January 25, 2015, a Wells Fargo employee was hospitalized at Pacific Shores Hospital for severe depression, anorexia and pneumonia and was described to be “skeletal in appearance.”  The patient had been eating 200 calories per day, inducing vomiting and abusing laxatives and was 88 pounds at the time of her hospital admission. 

United Behavioral Health relied on erroneous information regarding the patient and refused to authorize in-patient services beyond February 14, 2010.  On the patient’s last covered date, she weighed a mere 83 pounds.  The patient was released on February 25, 2010, and in August 2010, Pacific Shores Hospital sued United Behavioral Health for the11 days of treatment that United failed to pay.  The lower court judge ruled in favor of United, and the hospital appealed. 

The Ninth Circuit reversed and ruled that the lower court abused its discretion and held that United improperly denied benefits under ERISA.

This ruling is important because it shows that when a health insurer unreasonably denies a patient benefits, the patient may be able to force the company to make a reimbursement through the courts.

LEXISNEXIS SETTLES RETAIL THEFT DATABASE CLASS ACTION LAWSUIT FOR $2.38 MILLION

Lead plaintiffs, Keesha Goode and Victoria Goodman, brought a class action lawsuit against LexisNexis alleging that it had illegally distributed damaging information compiled in its Esteem database to current and prospective employers.

  According to the suit, Goode was denied employment at Family Dollar Stores, Inc. and Goodman was denied a promotion and later fired from Rite Aide based on information contained in the Esteem database.

  Plaintiffs alleged that the Esteem database wrongfully labels job seekers as criminals even if they have not been convicted of a crime.  Last week, a Pennsylvania federal judge gave preliminary approval to a $2.38 million settlement and LexisNexis suspended its Esteem database and agreed to implement stricter requirements to protect consumers if it resumes use of the database again.

BOEING ALLEGED TO HAVE IMPLEMENTED AGE BIAS SCHEME

The Society of Professional Engineering Employees in Aerospace, the union which represents engineers and technical workers at Boeing, alleges that Boeing implemented a scheme to engage in age discrimination on a “breathtaking scale.”

  Last month, the union filed a complaint with the U.S. Equal Employment Opportunity Commission and the Washington state anti-bias agency claiming that the company manipulated retention ranking factors used to select employees for layoffs, which made older employees more vulnerable to layoffs. 

The union alleged that “this illegal manipulation doubled, tripled and quadrupled layoff vulnerability for older employees compared to previous years.”  The union also claims that the company is moving jobs from one state to another and filling them with younger workers.

Companies will sometimes attempt to mask their intentions to get rid of older employees by including them in a layoff or restructuring in hopes to skirt federal and state age discrimination laws.  Therefore, older workers should scrutinize their selection and consult an attorney to help determine if they have been unlawfully chosen for a layoff.

This firm will continue to monitor the developments in this case.

MORGAN STANLEY TO PAY $4.2 MILLION IN OVERTIME CLASS ACTION LAW SUIT

In June 2011, three client service associates in the wealth management division of Morgan Stanley filed a class action lawsuit in New York federal court on behalf of current and former client service associates.  Plaintiffs claimed that Morgan Stanley, one of the world’s largest brokerage firms, violated the federal Fair Labor Standards Act and New York state labor law by failing to pay overtime.

  Last week, Morgan Stanley agreed to settle the case for $4.2 million.  The three lead plaintiffs agreed to settlements of $10,000 each in addition to their individual settlement amounts and the other plaintiffs who joined shortly thereafter will receive $7,500.

Client service associates are often compensated by both the brokerage firm and the individual broker for whom they work.  They are usually classified as non-exempt employees, which entitles them to overtime pay if they work more than 40 hours per week pursuant to both federal and state law, but as here, such employees are often not paid overtime pay.

NLRB RULES THAT EMPLOYEES HAVE RIGHT TO SEEK ASSISTANCE FROM CO-WORKERS IN HARASSMENT CLAIMS UNDER THE NLRA

On Monday, the NLRB ruled that an employee of Fresh & Easy Neighborhood Market had the right to solicit assistance under the National Labor Relations Act from co-workers in support of her sexual harassment claim.  The employee in this case was trying to find support for her individual sexual harassment claim by asking co-workers to provide evidence on her behalf.

  The employer was conducting it’s own investigation and asked the employee to stop collecting statements from co-workers.

In order for conduct to be protected under the NLRA, an employee must show that he or she was engaging in “concerted” (group) activity for the “mutual aid and protection” of others, rather than just to benefit his or her self.  In this case, the National Labor Relations Board found that this employee’s conduct was protected and held that an employee’s subjective intent is irrelevant in determining whether the conduct is concerted or for mutual aid or protection. 

Rather, the NLRB focused on whether there was a “link between the activity and matters concerning the workplace or employees’ interests as employees.”  As such, because the employee here attempted to get others to help her in her complaint against the company and attempted to stop sexual harassment at the company, the NLRB held that there was, in fact, group action for the mutual aid and protection of others.

This ruling reinforces the important point that the National Labor Relations Act protects not only union activity but also attempts by any employee to obtain the assistance of another employee regarding their employment conditions in the workplace.

EX-INTERNS SUE GIORGIO ARMANI FOR WAGES

Ex-interns who worked at Giorgio Armani filed a class-action lawsuit in New York last week against their former employer.  The suit alleges that over 100 interns were misclassified as unpaid interns when they should have been paid minimum wage.  Lead plaintiff, Stephanie Figuccio, claims to have worked 16 to 20 hours per week ironing and folding clothing, setting up the floor and arranging lighting at Armani’s corporate headquarters in New York City, but was not paid at all.

Similarly, last year, Valentino Smith, an intern who worked at Donna Karan, sued the company on behalf of at least 100 other interns who claimed that they should have been paid minimum wage.  That case is still pending.

Companies in the fashion, entertainment and publishing industries are known for offering unpaid internships to college students and college graduates on the premise that the internship program will provide a valuable educational experience for students.  In some situations, however, the work experience of unpaid interns does not include vocational or academic training as promised, and instead, companies take advantage of the situation by illegally using internships as a guise for free labor like at Giorgio Armani.

  As this Firm previously posted, according to the Fair Labor Standards Act, an internship must meet certain criteria to be unpaid.  For example, the internship must be for the benefit of the intern and be similar to the training given in an educational environment and the intern cannot be hired to do the work of a regular employee.  For more information about these factors, click here.

CAPITAL ONE AGREES TO SETTLE MANAGERS’ OVERTIME CASE FOR $3 MILLION

Last Friday, a New York federal judge gave preliminary approval to a $3 million settlement of a lawsuit commenced by assistant branch managers against Capital One NA for unpaid overtime.   Assistant branch managers sued the bank in March 2014 alleging that the bank violated the Fair Labor Standards Act and wage and hour laws in New York, New Jersey and Maryland by classifying them as exempt employees under state and federal law.  A hearing has been set for November 14, 2014 to make a final determination, determine the amount of attorneys’ fees and hear any objections.

It is common for companies to falsely classify managers and assistant managers as “exempt” employees under the executive exemption under both state and federal law in order to escape paying overtime.  However, a close review of the actual job duties often show, as in this case, that the “managers” are just regular workers who are entitled to overtime pay.   Employers frequently give employee fancy job titles and pay them on a salary basis to make employees mistakenly believe they are not entitled to over time pay.