Articles by Our Attorneys

October 2022 brought some notable developments in the employment law world, including large discrimination / retaliation verdicts for employees nationally and in Pennsylvania, and a notable Appeals Court ruling that could have widespread impacts for remote workers.  Further details are below.

Fed-Ex hit with $366M Retaliation Verdict 

An African-American former salesperson for FedEx was awarded more than $366 million in damages after a Texas federal jury concluded that FedEx disciplined and eventually fired her for complaining that she was being discriminated against because of her race.  Notably, the jury awarded the worker $365 million in punitive damages in the face of (only) $120,000 for past pain and suffering and $1.04 million for future mental anguish.

FedEx defended it’s the case by asserting that the actions taken by the company were due to performance issues.  However, according to the complaint the worker was a rising star in the company who had received several awards and promotions because of her performance.  In March, 2019, she was allegedly asked to take a demotion by her manager, which the worker reported to human resources.  The worker alleged that the company failed to properly investigate her complaint, which led her receiving discipline and disrupting her commission structure.  The worker further alleged that she reported the manager again for discrimination and retaliation in August, 2019, however FedEx failed to perform a meaningful investigation, and the worker was eventually terminated in January, 2020 based on the track laid by the manager.

FedEx said in a statement that the company plans to appeal the verdict.  Regardless, the verdict serves as a reminder of the severe consequences that can arise out of equal opportunity complaints, and the need by employers to fully and effectively investigate them.

The case is Harris v. FedEx Corporation, case number 4:21-cv-01651, in the U.S. District Court for the Southern District of Texas.

Western Pennsylvania Jury Awards County Jail Guard $1.2M for Novel “Associational Discrimination” Claim

A former guard at the Allegheny County Jail was awarded $1.2 million dollars in damages in the U.S. District Court for the Western District of Pennsylvania after he claimed that he was wrongly fired for filing a workplace complaint about a supervisor who made offensive comments about his biracial niece.  Notably, the case had been previously dismissed at the trial level, before the Third Circuit Court of Appeals reversed and held for the first time that “associational discrimination,” or acting with prejudice toward someone because they associate with someone of a different race, could form the basis for a legal claim under Title VII of the Civil Rights Act.

The employee, who is white, alleged that a supervisor had called his biracial grandniece an offensive, racially charged name, and also had texted the employee pictures with racist depictions of African and Asian-American people captioned with the names of other jail employees. After the employee escalated his complaint, the supervisor was eventually placed on paid administrative leave during an investigation, and then retired.  The employee allegedly was then subjected to retaliation from other administrators and employees allied with supervisor, and he was terminated seven months after making his report. 

The case is Kengerski v. Allegheny County, case number 2:17-cv-01048.

Federal Appeals Court Rules that Time Spent by Employees Booting up Computers is Compensable under Federal Law

The Ninth Circuit Court of Appeals ruled this month that the time spent by a group of call center workers booting up their computers is intertwined with their work and therefore compensable under the Fair Labor Standards Act. “The employees’ duties cannot be performed without turning on and booting up their work computers, and having a functioning computer is necessary before employees can receive calls and schedule appointments,” a panel opinion stated.  The opinion reversed a lower court ruling granting summary judgment to the employer, which held that the tasks the workers completed before and after they logged out of the company’s timekeeping system weren’t compensable because they weren’t connected to their jobs. Though the lower court was reversed, the appeals court clarified in a footnote that its ruling focused on the pre-shift activities, stating that turning the computers off would not be an integral part of the workers’ jobs (and presumably not compensable).

The Ninth Circuit encompasses Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington State.  Nonetheless, the holding can serve as a reminder to employers nationwide to carefully consider whether they are properly paying their employees for “compensable” time, especially remote and other computer-based workers.

The case is Cariene Cadena et al. v. Customer Connexx LLC et al., case number 21-16522, in the U.S. Court of Appeals for the Ninth Circuit.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment.  Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.

Employment lawsuits have been as active as ever in September 2022.  Among them are interesting cases affecting a prominent ride-sharing company, the U.S. military, and the government agency in charge of investigating discrimination claims in the Commonwealth of Pennsylvania.  My analysis and insights are below.

Ride-hailing Giant Lyft Facing Flood of Lawsuits Over Sexual, Physical Assaults

Lyft Inc. was on the receiving end of 13 lawsuits filed in California state court this month alleging that the company’s systemic failure to conduct thorough background checks and screenings exposed both drivers and passengers to sexual and physical assaults.  The plaintiffs’ legal counsel have revealed that they also filed arbitration demands on behalf of other assault victims, and therefore the full number of claims against Lyft is unclear.

In the lawsuits, eleven passengers and two drivers, all female, from eleven states filed separate actions in San Francisco Superior Court asserting negligence, vicarious liability, misrepresentation and other claims against Lyft. The passengers claim that Lyft has been aware of a sexual predator crisis among its drivers for years but failed to take adequate measures to conduct background checks and monitor its drivers.  The claims by the drivers similarly allege failures on the part of Lyft to ensure the safety of drivers from predatory passengers.  The lawsuits describe disturbing acts of unwanted solicitations, groping and sexual assault.

Lyft released its first-ever Community Safety Report in October 2021, which stated that during the three-year period from 2017 to 2019, Lyft received reports of 4,158 sexual assaults, ranging from nonconsensual touching or kissing to rape.  Lyft nevertheless asserts that from 2017 to 2019, over 99% of trips occurred without any reported safety incident, with the safety incidents referenced in the report accounted for just 0.0002% of all trips.  The company also defended its driver screening procedures, saying it requires an initial and annual background checks, and continuous criminal and driving record monitoring, among other things. Lyft said it developed in-app safety features that allow riders and drivers to share their location with family and friends, connect directly with Lyft Support, and quickly and easily access emergency assistance from the Lyft app.  

​​​​​​​Sikhs Denied Bid To Start Marine Corps Training With Uncut Hair and Beards

A federal judge has refused to allow three Sikhs prospective recruits to start basic training with uncut hair and beards pending an appeal over related U.S. Marine Corps policy, saying doing so could negatively affect the Marines’ “national security mission.”

The three plaintiffs had filed suit in April, saying the Marine Corps had wrongly refused to accommodate their requests to keep their hair and beards, and carry other articles of faith. According to the complaint, maintaining uncut hair, including uncut facial hair, is an essential part of the Sikh religion.  During basic training, the Marine Corps requires recruits to comply with uniform grooming standards including shaved heads and beards, which it asserts is necessary to ensure that Marines are prepared to think as a team before thinking as individual and to serve in extreme environments.  The plaintiffs noted in their arguments for the injunction that the Marine Corps already allows certain recruits to maintain beards for medical reasons and female recruits not to shave their heads.

The court concluded that the public interest and balance of equities had weighed in favor of the Marine Corps at the preliminary stage of the case.  The plaintiffs subsequently said they would appeal the denial of their injunction.

Jury Clears Pa. Human Relations Commission In Staff Atty’s Retaliation Suit

The state agency charged with policing discrimination in the workplace, the Pennsylvania Human Relations Commission (“PHRC”), has been cleared of allegations of unlawful retaliation brought by African American former employee.  In a somewhat ironic series of events, the PHRC had entered into a settlement agreement in the employee’s earlier discrimination lawsuit in 2017 in which the PHRC was supposed to, among other things, create a diversity committee.  Following the settlement, the employee claimed that the agency was not following through its obligations.  In the same timeframe, the employee, a former staff attorney, was terminated from employment, and the employee brought a second lawsuit alleging unlawful retaliation for his complaints about the agency’s alleged failure to follow the settlement.  The agency defended by asserting that it let the employee go because he sent an email from his work account containing sexually suggestive material and forwarded confidential work documents to his personal email.

A jury in the Middle District of Pennsylvania found the PHRC’s arguments more persuasive and ruled in favor of the PHRC.  The case is Cooper v. Pennsylvania Human Relations Commission, case number 1:19-cv-02230, in the U.S. District Court for the Middle District of Pennsylvania.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment.  Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.

In the world of employment law, August 2022 brought a potentially landmark decision for transgender workers, increased tensions in the battle over unionizing Starbucks, and a significant potential class action lawsuit against American Express. Find out more below:

Fourth Circuit Rules that ADA covers Gender Dysphoria

A divided Fourth Circuit panel ruled that gender dysphoria can qualify as a disability under the Americans with Disabilities Act (“ADA”).  Although the ruling was a divided decision, this was the first federal appellate decision to extend the ADA to transgender people, and paves the way for transgender people to bring a lawsuit alleging they faced disability discrimination based upon their gender dysphoria.  The decision revived a transgender woman’s disability discrimination case over a Virginia detention center’s decision to place her in men’s housing.

The dissent pointed out that the majority’s opinion seemed to go against the intent of Congress, which expressly excluded “gender identity disorders” from falling within the ADA when the law was passed in 1990.  However, the majority supported its decision by distinguishing gender dysphoria: “nothing in the ADA, then or now, compels the conclusion that gender dysphoria constitutes a ‘gender identity disorder’ excluded from ADA protection.”  The Court also observed that the diagnosis of “gender identity disorder” was removed from the APA diagnostic manual nearly a decade ago.

Tensions rise between Starbucks and the NLRB in Ongoing Unionizing Fight

In the ongoing saga over unionizing Starbucks, Starbucks issued a letter earlier this month to the National Labor Relations Board (“NLRB”) asserting that multiple regional offices of the NLRB “secretly colluded” with the Workers United union to unfairly sway mail-in ballot union elections.  The alleged conduct includes giving the union duplicate ballots, mishandling ballots, allowing certain workers to vote outside of normal agency procedures, and providing the union with confidential, real-time information about votes to enable the union to target individuals who had not yet voted.  The letter asked the NLRB Inspector General to investigate the matter, and urged the agency to suspend all mail-ballot votes nationwide.

Not to be outdone, roughly a week after the Starbucks letter the NLRB’s Seattle office filed a complaint accusing Starbucks Interim CEO Howard Schultz of making unlawful comments that promised increased benefits for nonunion stores and threatened workers who had voted to unionize.  Among other relief, the complaint seeks to require Schultz to read a notice on video to Starbucks’ workforce about their unionizing rights under the NLRB, and to require Starbucks to send apology letters.

Thus far, unionization efforts at Starbucks locations across the country have been largely successful.  Out of 344 reported cases of unionizing efforts, the union has prevailed in 218 of them.

Proposed Class Action lawsuit by White Manager alleges American Express favors African-American Workers

A white former Manager at American Express filed suit this month alleging that American Express implemented a system that favored African-American workers and forced out white workers.  According to the Complaint, the plaintiff claims that the company implemented illegal racial quotas and a policy in which executives were given financial incentives that enhanced their bonuses if the executives reduced the percentage of white employees in their departments.  Moreover, that during recent layoffs, white employees were disproportionately let go, while other white workers were allegedly either forced out or suffered mental stress because of the “racially repressive environment”.  This allegedly included “constant” racial training on topics like “microaggressions” and “unconscious bias”.  The action seeks to certify a class of white American Express employees who held certain managerial positions and who have allegedly been discriminated against.  The case is Netzel v. American Express Co. et al., case number 2:22-cv-01423, in the U.S. District Court for the District of Arizona.

This case comes on the heals of a federal lawsuit in North Carolina against Novant Health in which a white male executive was awarded a multi-million dollar verdict after a jury found that he was improperly fired as a consequence of the company’s efforts to diversify its workforce.  Notably, this August the court in that matter reduced the damages awarded to the plaintiff from $10 million to $3.7 million to bring the award in line with Title VII’s damages cap, however the court denied the employer’s request to eliminate the punitive damages award altogether.  That case is Duvall v. Novant Health Inc., case number 3:19-cv-00624, in the U.S. District Court for the Western District of North Carolina.

Time will tell if these cases are harbingers of future claims asserted on behalf of white workers in response to the growing push for diversity and inclusion programs across the United States.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment.  Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.

Phil Mickelson, Bryson DeChambeau and nine of their fellow golfers filed a lawsuit against the PGA Tour. The 101 page Complaint alleges, among other things, that the PGA Tour violated the Antitrust Laws of the United States by acting as a monopoly to crush competition. The competition that the PGA Tour is allegedly attempting to crush is, of course, the upstart Saudi Arabia-backed LIV golf tour. The lawsuit is pending in Federal Court in the Northern District of California.  

Unless some settlement is reached (which seems highly unlikely), this lawsuit promises to be both entertaining and precedent setting for possible future lawsuits against professional sports leagues. Given the behemoth law firms that will be involved on both sides, it is also likely that this case could impact antitrust law in other industries for years to come.  

The antitrust laws in this country are found in the Sherman Act (15 U.S.C. § 1, et seq.). These laws provide, among other things, that it is illegal to acquire or maintain a monopoly through anticompetitive conduct. In order to establish a violation of Section 2 of the Sherman Act, Phil Mickelson and his fellow golfers will have to show (1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power. Stated in layman’s terms, Phil’s attorneys are arguing that the PGA Tour is, essentially, the only game in town and that the PGA Tour is using its power to quash competition (namely the LIV tour). This is a highly complex area of the law.

One of the benefits of an antitrust lawsuit is that the statute permits the prevailing plaintiff to receive trebled damages. This means that any award the plaintiff is able to obtain for violation of antitrust laws entitles the plaintiff to three times what is awarded. The prevailing plaintiff also receives attorney’s fees and costs.  

Interestingly, the Sherman Antitrust Act is not necessarily designed to just protect the plaintiff golfers here.  The golfers will need to focus their arguments on establishing that the PGA Tour’s alleged anti-competitive behavior somehow harms consumers (the public that views these golf tournaments). The argument will have to be that the PGA’s actions restrict competition to such an extent that the quality of the product is diminished for the viewing public.  This will undoubtedly be a focus of the PGA’s defense. The PGA will also likely assert that there is no monopoly as the plaintiff golfers are permitted to play in other tours.

The allegations in the Complaint go beyond the alleged violations of the Antitrust Act. The Complaint also charges the PGA with unlawful restraint of trade and breach of contract. The contract in question is the agreement that all players enter into when they agree to be members of the PGA.

While the lawsuit could potentially go on for years, we could have an early indication of the Court’s thinking on plaintiffs’ case as three of the golfers are seeking an immediate injunction. These three golfers want an early ruling so that they may be permitted to take part in the very lucrative FedEx Cup playoffs, set to begin shortly after the filing of the Complaint.

This is by no means the first antitrust action brought with regards to professional sports.  In 1986, the upstart USFL filed an antitrust lawsuit against the NFL.  The USFL alleged (similar to the golfer plaintiffs here) that the NFL engaged in anticompetitive behavior to crush the upstart league. After an extended Court battle, the USFL actually won a jury verdict against the NFL. The NFL was found to have violated the antitrust laws.  But this result shouldn’t give Phil and his friends comfort.  Unfortunately for the USFL, the jury famously (or infamously) awarded only $1.00 in damages.  But with the treble damages provision of the Sherman Act, the award was increased to $3.00.  After years of litigation and millions spent in legal fees, the final award (with interest) was a whopping $3.76.

We will follow the Mickelson v. PGA case closely.  Stay tuned …!

*Robert A., Burke is a trial attorney and a Partner in MacElree Harvey’s Commercial Litigation Department

Recently, the Supreme Court of New Jersey issued a decision clarifying whether and how third party beneficiaries with default judgments against insured entities may recover on those judgments against insurers.  The decision reinforced New Jersey’s strong policy favoring arbitration.

In Crystal Point Condo. Ass’n, Inc. v. Kinsale Ins. Co., No. 085606, 2022 WL 2793326 (N.J. July 18, 2022), a condominium association (“Association”) obtained default judgments and writs of execution against a structural engineering firm and a construction inspection company for professional negligence involving construction defects in the Association’s managed properties.  A single insurer (“Insurer”) covered both entities for such claims through a policy which contained an arbitration clause to resolve coverage disputes.

The Association sought to recover on the default judgments and brought a declaratory judgment and breach of contract action against the Insurer pursuant to New Jersey’s Direct Action Statute, N.J.S.A. 17:28-2 (“Statute”).  The Statute authorizes an injured victim with an unsatisfied judgment against an insolvent or bankrupt policyholder to file a direct legal action against the policyholder’s insurer under certain circumstances.  Those circumstances including proceeding under the terms of the policy.  The Court noted that the purpose of the Statute was for a third-party judgment creditor to directly pursue an insurer without the need for the insured party’s cooperation.

The Court determined that the Associations’ claims could be directly asserted against the Insurer pursuant to the Statute.  First, the Court clarified that the text of the Statute was broadly applicable to such claims and did not limit the Statute to motor vehicle or animal-related property damage claims. Second, the Court noted that the Association had sufficiently demonstrated that the two entities were insolvent or bankrupt.  Specifically, the Court held that proof of the writs of execution on the judgment being returned unsatisfied constituted prima facie evidence that the two insured entities were insolvent (the sheriff found that the two companies did not exist at their respective addresses).

Importantly, the Court also provided a partial win for insurers within New Jersey.  Specifically, the Court stated that the Association’s direct action under the Statute was subject to arbitration pursuant to the terms of the insurance policy issued to the insolvent, insured entities.  The Statute requires that a third party’s claim be brought under the terms of the policy.  While the Association did not sign off on the policy and its arbitration provision, it was nevertheless claiming rights that were purely derivative of the rights the insured could claim against the Insurer.  Consequently, permitting the Association to avoid arbitration would grant it greater rights than what the insured could have asserted under the policy and would contravene the Statute’s terms.

This decision reinforced New Jersey’s strong public policy favoring arbitration and made clear that an injured plaintiff’s rights under the Statute were purely derivative of the insured’s policy rights.  Therefore, to recover under an insured’s policy, the third-party beneficiary has to take the proverbial “good” with the “bad” under a policy, including subjecting itself to an express arbitration provision.

*The author was involved in the representation of the insurance entity at one point during the course of the appellate process.