Tuesday, July 25, 2017

2d Circuit upholds million dollar labor arbitration award

The Court of Appeals clarifies what it takes for an aggrieved party to challenge an labor arbitration award, ruling that the arbitration in this case was fair and the employee is entitled to keep his million dollar wrongful discharge award.

The case is Odeon Capital Group v. Ackerman, decided on July 21. Ackerman was a bond trader. When he was fired, Ackerman challenged his termination in arbitration, alleging breach of contract, disability discrimination and retaliation arising from an investigation into one of his bond trades. While it rejected the bulk of Ackerman's claims, an arbitration panel found in Ackerman's favor on the unpaid wages claim, awarding him $1.1 million.

The employer sought to vacate the arbitration in federal court. This is always an uphill battle. The purpose of arbitrations is the keep the case away from the courts. But there are exceptions: You can vacate the arbitration upon a finding of fraud. In this case, the employer said Ackerman perjured himself at the arbitration hearing in connection with one o' his bond trades. The Court of Appeals (Calabresi, Pooler and Wesley) says that fraud cannot predicate a federal challenge to an arbitration ruling unless the fraud was material to the arbitration award. The standard is that "the petitioner must demonstrate a nexus between the alleged fraud and the decision made by the arbitrators, although petitioner need not demonstrate that the arbitrators would have reached a different result."  The Court of Appeals cites cases from other circuits on this point, which means the Court is probably saying this for the first time in our circuit.

What does it all mean for Ackerman? He keeps the arbitration award. Even if he did perjure himself about a bond trade, the arbitrators granted him relief only on his unpaid wages/breach of contract claim, not the claim arising from the bond trade claim. Any possible fraud was immaterial to Ackerman's award.

Ackerman brings his own cross-appeal. The district court said he was not entitled to attorneys' fees expended in defending his successful arbitration award in federal court. The district court thought you only get fees in that circumstance if the party challenging the arbitration does so in bad faith. On that rationale, no fees for Ackerman, the district court said, because the employer's arbitration challenge was not a bad faith endeavor. But the Court of Appeals nixes that analysis, noting that New York Labor Law entitles you to attorneys' fees "in any action instituted in the courts upon a wage claim by an employee ... in which the employee prevails." That statute applies to "special proceedings" under the CPLR. Since applications to confirm, vacate or modify arbitration awards are special proceedings, Ackerman gets his attorneys' fees for the work his lawyer did in the district court, and presumably on appeal as well.

Monday, July 24, 2017

New trial in deadly excessive force case

This excessive force case tells us once again that the best way to appeal from an adverse jury verdict is to find a way to challenge the jury instructions. If something is wrong with the jury charge, then the trial may be fatally infected.

The case is Callahan v. County of Suffolk, decided on July 12, Callahan was shot during a confrontation with the police. What happened was the police were called to a single-family house; someone reported a situation involving a gun. Officer Wilson came upon a room with the door ajar. He saw that someone was inside the room. That person tried to shut the door. When the door partially shut, Wilson was holding his gun in his left hand. His hand holding the gun was on the other side of the door, inside the room. The officer was pinned on the door frame. The person inside the room made "some type of growl" that was "scary." Wilson thought he could be shot through the door or that the guy inside the room might take his gun. He saw a shadow coming around the door and "a hand thrusting toward him with an object." Wilson then fired his weapon, as he was unable to free himself. Those shots hit Callahan, who later died from the gunshot injuries. Callahan had no weapon.

Calllahan's family sued for wrongful death, but the jury found in favor of the police. This was a tough case for Callahan's estate. Callahan was unable to testify on his own behalf, and the officer was caught in a difficult position. It's easy to imagine a jury finding that the officer had no choice but to fire his gun in self-defense.

The problem was the jury charge. In 2013, the Second Circuit held in Rasamen v. Doe, 723 F.3d 333 (2d Cir. 2013), that the instruction in cases like this "must" convey "that the use of force highly likely to have deadly effects is unreasonable unless the officer had probable cause to believe that the suspect posed a significant threat of death or serious physical injury to the officer or to others." The charge in Callahan's case did use this language. But while Rasamen says the jury "must" be instructed that the use of deadly force is "unreasonable unless the officer had probable cause to believe that the suspect posed a significant threat of death or serious physical injury," in this case the charge said the officer "may use deadly force ... if" the officer has the requisite probable cause." The instructions were further tainted because they suggested the jury could find the officer's shooting "complied with constitutional standards for reasons other than the fact that Wilson had probable cause to believe that Callahan posed a significant threat of death or serious injury to Wilson or others." But Rasanen makes clear that deadly force is unreasonable unless the officer had probable cause to think the individual posed a significant threat of death or serious physical injury."

These errors may seem subtle, but the Second Circuit (Droney and Parker) thinks they warrant a new trial. Judge Raggi dissents, finding that that the jury charge complied with the directive in Rasamen as well as recent Supreme Court rulings that provide additional guidance on what it takes to win a deadly excessive force case.

Friday, July 21, 2017

When can the jury know the plaintiff invoked the Fifth Amendment at deposition?

The jury trial is the name of the game. If you lose, you are entitled to file a notice of appeal, but few appeals from adverse jury verdicts are successful. The jury is allowed to view the facts any way it wants (within reason), and the judge enjoys broad discretion in making evidentiary rulings at trial. In this case, however, the appeal was successful. The Court of Appeals provides some guidance on when you can impeach the plaintiff's credibility at trial.

The case is Woods v. START Treatment, decided on July 19. The plaintiff sued her former employer for FMLA retaliation. The jury found for the employer. Plaintiff wins the appeal for two reasons: first, the trial court improperly charged the jury, telling them the plaintiff had to prove "but for" causation instead of "motivating factor." As I write in this blog post, this case represents the first time the Court of Appeals holds that the motivating factor test governs FMLA retaliation cases.

The other holding in this case is that the trial court got it wrong in allowing the employer's attorney to exploit how the plaintiff in pre-trial deposition invoked the Fifth Amendment on unrelated issues that could have affected her credibility.While evidentiary rulings are difficult to challenge on appeal, in this case, the trial court crossed the line, and the Second Circuit (Kearse, Hall and Chin) says the plaintiff gets a new trial because the evidentiary error denied plaintiff a fair trial.

In deposition, defense counsel asked plaintiff if she had ever been investigated by the City of New York. She took the fifth. She also took the fifth when counsel asked if she was accused of "some kind of immoral conduct" and whether she was accused of lying or fabricating events or submitting false documentation. She further took the fifth when asked if she was accused of misrepresenting the facts to the government. The jury knew about all of this, and defendants used plaintiff's refusal to self-incriminate against her at trial, attacking her credibility.

This was unduly prejudicial to plaintiff, the Court of Appeals held, for a number of reasons. "Most of the questions in Woods’s deposition were merely whether Woods had been accused of something. Even assuming her answers would have been 'yes,' accusations have little, if any, probative value because the innocent and guilty alike can be accused of wrongdoing. Without more, accusations do not 'impeach the integrity or impair the credibility of a witness.'' Second, plaintiff "suffered even harsher prejudice from the admission of an adverse inference based on her invocation of the Fifth Amendment in response to being asked whether she was ever convicted of any immoral or unethical conduct. Federal Rule of Evidence 609(a)(2) permits the admission of a conviction only when the crime is a felony or the court 'can readily determine that establishing the elements of the crime' required proving a 'dishonest act or false statement.' The district court here failed to consider whether the requirements of Rule 609(a) were met." Third, the jury may have thought plaintiff had something to hide when she took the fifth. The Court of Appeals explains:

the danger of unfair prejudice is high when a jury is told that a witness declined to answer a question by invoking the Fifth Amendment; the implication is, at best, that the witness refused to answer because she had something to hide. We tolerate some danger of prejudice from such inferences in civil cases, unless it substantially outweighs the probative value of those inferences. Here, the way in which Woods’s Fifth Amendment invocation was raised and later argued at closing elevated the prejudice to an intolerable level. Woods’s Fifth Amendment invocation was repeatedly emphasized—defense counsel raised it during Woods’s cross examination, the district court instructed the jury on it, and defense counsel argued it during his summation. Although defense counsel attempted to moderate this line of argument, see J. App’x 632 (“I am not hanging my hat on [the] Fifth Amendment invocation.”), he did so only after forcefully highlighting the inferences that the jury was permitted to draw. In arguing that the entire case hinged on Woods’s credibility, defense counsel told the jury “you are permitted in this case to infer that Ms. Woods was the subject of a government grand jury investigation, was accused of fraud, lying, fabricating events, and misrepresenting facts to the government and was then convicted of a crime.” Id. Defense counsel’s statement was consistent with the district court’s instruction, but the inferences that the jury was permitted to draw did not necessarily mean anything with respect to Woods’s credibility or character
for truthfulness.

Thursday, July 20, 2017

2d Circuit rejects "but for"causation test for FMLA retaliation claims

The Court of Appeals holds for the first time that FMLA plaintiffs only have to show their family/medical leave was a motivating factor in their retaliatory dismissal. The Court rejects the more defendant-friendly "but for" causation test.

The case is Woods v. START Treatment, decided on July 19. (In addition to the causation standard, the Court also says plaintiff got an unfair trial because the jury knew she had taken the Fifth on certain deposition questions. I address that in a separate blog post). This case went to trial in the EDNY; the jury returned a verdict in favor of the employer. Plaintiff appealed, arguing that the trial was fatally tainted because the judge charged the jury under the "but for" test and not the "motivating factor" test. Finding that the jury was in fact wrongly charged and the bad charge could have made a difference at trial, the Court of Appeals (Hall, Kearse and Chin) remands the case for a new trial.

Woods worked for a drug rehabilitation facility. In summarizing the evidence at trial, the Second Circuit notes that management had repeatedly criticized plaintiff's job performance. However, plaintiff was fired shortly after taking FMLA leave. Disputes about what motivated plaintiff's termination entitled her to a jury trial.

The FMLA authorizes interference claims and retaliation claims. The interference claim arises when the employer prevents or impedes the employee's ability to exercise rights under FMLA. Retaliation claims "involve an employee actually exercising her rights or opposing perceived unlawful conduct under the FMLA and then being subjected to some adverse employment action." The Court of Appeals holds that retaliation claims fall under 29 U.S.C. § 2615(a)(1), which provides: "It shall be unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under this subchapter." (A related provision, § 2615(a)(2), provides: "It shall be unlawful for any employer to discharge or in any other manner discriminate against any individual for opposing any practice made unlawful by this subchapter").

Under Section 2615(a)(1), employers cannot fire staff in retaliation for taking FMLA leave. If the case goes to trial, the jury must be charged that plaintiff need only show that retaliatory intent was a motivating factor in the decision to terminate. That means there may be other factors that motivated the termination, as well, but so long as there was some retaliatory intent in the equation, the plaintiff wins. Under the more restrictive "but for" test, which applies to claims brought under the Age Discrimination in Employment Act and retaliation claims under Title VII, retaliatory intent must have been the determining factor, that is, that intent (as opposed to some other motivation) made the difference. The Second Circuit has held the "motivating factor"/"but for" distinction generally cannot be resolved on a summary judgment motion. But it can make a difference at trial. The Court sums it up like this:

We now hold that FMLA retaliation claims like Woods’s, i.e. terminations for exercising FMLA rights by, for example, taking legitimate FMLA leave, are actionable under § 2615(a)(1). The plain language of § 2615(a)(1) supports this conclusion. Firing an employee for having exercised her rights under the FMLA is certainly “interfere[nce]” with or “restrain[t]” of those rights. Indeed, FMLA rights have two parts—the right to take leave and the right to reinstatement, so terminating an employee who has taken leave is itself an outright denial of FMLA rights.
The Department of Labor's regulations support this analysis. The Second Circuit defers to the DOL's regulations under Chevron deference, owing to the DOL's expertise in the area. While the Second Circuit hinted in Millea v. Metro-North Railroad, 658 F.3d 154 (2d Cir. 2011), that "but for" causation governs FMLA retaliation claims, the Court of Appeals now says the reasoning in Millea did not squarely address the issue in Woods' case.

Since the record contains evidence both that management took issue with plaintiff's job performance and that she was fired shortly after taking FMLA leave, the bad jury instruction could have made a difference at trial. 

Wednesday, July 19, 2017

Supreme Court strikes down same-sex Arkansas birth certificate rule

In its final days of the 2016-17 term, the Supreme Court issued a brief ruling that you may have overlooked. It holds that the Constitution prohibits the State of Arkansas from refusing to note that a newborn baby's parents are same-sex couples. This case is notable for Justice Gorsuch's dissenting opinion.

The case is Pavan v. Smith, decided on June 26. The female parents were married in Iowa and conceived children through an anonymous sperm donor. When the children were born, the state would only list the birth mother's name on the birth certificate. Yet, if heterosexual couples have children, both their names are on the birth certificate.

The Supreme Court holds that Arkansas's treatment of same-sex couples violates the Equal Protection Clause. Recall that a few years ago, the Court held in Obergefell v. Hodges that the Constitution makes it illegal for states to prohibit same-sex marriages. The Court now applies the reasoning in Obergefell to this case, reasoning that the state "denied married same-sex couples access to the 'constellation of benefits that the Stat[e] ha[s] linked to marriage.'" The Court adds, "As a result [of this unequal treatment], same-sex parents in Arkansas lack the same right as opposite-sex parents to be listed on a child’s birth certificate, a document often used for important transactions like making medical decisions for a child or enrolling a child in school. ... Obergefell proscribes such disparate treatment. As we explained there, a State may not 'exclude same-sex couples from civil marriage on the same terms and conditions as opposite-sex couples.' Indeed, in listing those terms and conditions—the 'rights, benefits, and responsibilities' to which same-sex couples, no less than opposite-sex couples, must have access—we expressly identified 'birth and death certificates.'”

While the Court decided this case in a per curium opinion, a brief unsigned ruling, three Justices dissent: Gorsuch, Thomas and Alito. Justice Gorsuch writes the dissent, making it clear that his appointment to the Court will continue the conservatism of his predecessor, Justice Scalia. He writes:

Before the state supreme court, the State argued that rational reasons exist for a biology based birth registration regime, reasons that in no way offend Obergefell—like ensuring government officials can identify public health trends and helping individuals determine their biological lineage, citizenship, or susceptibility to genetic disorders. In an opinion that did not in any way seek to defy but rather earnestly engage Obergefell, the state supreme court agreed. And it is very hard to see what is wrong with this conclusion for, just as the state court recognized, nothing in Obergefell indicates that a birth registration regime based on biology, one no doubt with many analogues across the country and throughout history, offends the Constitution.

Tuesday, July 18, 2017

Ministerial exception scuttles school principal's Title VII lawsuit

Not all employment discrimination can be challenged in court. If the plaintiff is a "minister" as defined by the Supreme Court, she cannot bring her lawsuit. The reason for this is a doctrine called the ministerial exception, endorsed by the Supreme Court in 2012. Last week, the Second Circuit applied that exception for the first time in holding that the principal of a private religious school cannot proceed with her gender discrimination lawsuit.

The case is Fratello v. Archdiocese, decided on July 14. I wrote an amicus brief in this case for the National Employment Lawyers Association. Fratello worked for St. Anthony's School in Nanuet, New York. After she was fired, plaintiff sued in the Southern District of New York, alleging gender discrimination. Citing the ministerial exception, the district court dismissed the case on summary judgment, and the Second Circuit (Sack, Lohier and Woods [D.J.]) affirms.

Judge Sack provides a comprehensive overview of the ministerial exception, drawing from Supreme Court and other authorities in noting that the values promoted by Title VII of the Civil Rights Act of 1964 (prohibiting gender and other forms of employment discrimination) clash with the Free Exercise and Establishment Clauses of the First Amendment, which protect the free exercise of religion and prohibit government regulation of religion. What it all means is that "ministers" as defined by the Supreme Court cannot bring these lawsuits because that would requires courts to tell religious institutions whom to employ as ministers. Some plaintiffs will end up on the losing end of these cases even if they are not formal "ministers." As the Supreme Court defined the term in Hosanna-Tabor v. EEOC, 565 U.S. 171 (2012), you can be a "minister" if the totality of the circumstances shows you took on certain religious duties such that a lawsuit would have the effect of telling religious institutions who can spread the gospel. This doctrine is therefore not limited to actual ministers.

As principal, Fratello's formal title was not religious in nature. But that is not enough for her to get around the ministerial exception. Other factors help the defendants. The school's principal must be a practicing Catholic, committed to the teachings of the Church, and she must, among other things, exercise leadership to ensure a thriving Catholic school community. The Circuit court also says plaintiff understood that she would be perceived as a religious leader, and she performed important religious functions in that role. The Court says:

We think the record establishes beyond doubt that, as principal, Fratello “convey[ed]” the School's Roman Catholic “message and carr[ied] out its mission,” id., insofar as she: (1) consistently managed, evaluated, and worked closely with teachers to execute the School's religious education mission; (2) led daily prayers for students over the loudspeaker, and other prayers at various ceremonies for faculty and students; (3) supervised and approved the selection of hymns, decorations, and lay persons chosen to recite prayer at annual special Masses; (4) encouraged and supervised teachers' integration of Catholic saints and religious values in their lessons and classrooms; (5) kept families connected to their students' religious and spiritual development through the newsletter; and (6) delivered commencement speeches and yearbook messages that were religious in nature.Not only did Fratello perform all these functions, she was also evaluated on the quality of that performance.
In the end, no lawsuit for plaintiff. As the Second Circuit sees it, her job duties were too religious in nature to get around the ministerial exception. Although plaintiff was not a formal minister but instead a school principal, under Supreme Court authority, she was a "minister" under Hosanna-Tabor.

Monday, July 17, 2017

For appellate junkies only

I know there are appellate junkies out there. Some of you may even practice in the Court of Appeals. If you do, this case answers a question that few of us had even asked before.

The case is Hines v. City of Albany, decided on July 6. In this Section 1983 case, the plaintiff claimed the City had illegally seized and retained his SUV. The district court granted summary judgment for the plaintiff on the seizure claim. This is unusual. Normally, the defendants win summary judgment, not the plaintiff. So the City appealed from that ruling, and the Second Circuit affirmed. This all happened in 2011-2013. After plaintiff won the appeal, his attorneys moved for attorneys' fees arising from the appeal. These fees are recoverable. Defending a plaintiff's judgment in a Section 1983 case takes time and effort, and the fee-shifting statute governing these cases applies beyond the district court.

Here's the problem. After upholding summary judgment in favor of the plaintiff, the Court of Appeals said that each party would bear its own costs respect to the appeal. What does this mean? Plaintiff said that it only means that defendant was not obligated to pay the out-of-pocket costs associated with prosecuting the appeal, i.e., the cost of printing up the briefs and appendix, which can be sizable. Defendant said this means that it does not have to pay the attorneys' fees, which can be exponentially higher than the out-of-pocket costs. In this case, the appellate fees amounted to over $13,000.  The district court on remand denied plaintiff's application for those fees, concluding that the Court of Appeals wanted that result in stating that each side would bear its own costs on appeal.

The Court of Appeals (Lohier, Livingston and Rakoff [D.J.]) sides with plaintiff on this, and his lawyers get their attorneys' fees from that appeal, and presumably this appeal as well. Other Circuits have already reached this conclusion.

The Second Circuit runs through what it means to pay costs and how costs fall into a different category as attorneys' fees. But apart from the dry analysis drawing from Federal Rules, the Second Circuit also considers policy reasons, noting that the fee-shifting law allows civil rights plaintiffs to bring their cases even if they have no money, as their lawyers will have an economic incentive to pursue these claims in the knowledge that if they win, the defendant pays their fees. Without that incentive, few people would actually bring their civil rights claims to court. "Prevailing parties under Section 1988 [the fee-shifting] law are therefore entitled to recover a reasonable fee for preparing a defending a fee application. That includes attorneys' fees incurred as a result of appeals related to the defense of a fee award." While the Circuit notes that fees litigation should not turn into a second major litigation, it concludes that "plaintiffs were entitled to attorneys' fees on appeal under Section 1988 even though it was their third fee application."