SOX Squelches Arbitration of Entangled Claim 2014-11-26T13:28:45-06:00

Posted on November 26, 2014

By Lori Phillips

In Laubenstein v. Conair Corp., No. 5:14-cv-05227 (W.D. Ark. Nov. 19, 2014), Plaintiff claimed retaliation under the Sarbanes-Oxley Act (“SOX”) and a state-law claim for wrongful termination. A recent amendment to SOX preempts the Federal Arbitration Act as to arbitration of SOX claims. (The statute states “No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.”) But the employer moved to compel arbitration on the state law claim. Did Congress intended to bar arbitration of a claim that is “entangled with the SOX dispute and that arises from the same nucleus of operative facts?” The court concluded that it did, otherwise whistleblowers with entangled claims would be forced to choose between duplicative and costly litigation in multiple forums or abandoning their claims. Not all district courts will agree with this court’s conclusion, but remember that SOX whistleblowers get special protection from compelled arbitration, and this protection might extend to related claims.

That Shouldn’t Be My Job 2014-11-21T16:00:51-06:00

Posted on November 21, 2014

By Bill Wright

The plaintiff argued he was fired over a host of production issues, but none were his fault. Every single issue was someone else’s fault. So, he argued, he must have been fired because of his age. The employer said it fired him because he wouldn’t take responsibility (collectively with the rest of the management team) for the production operations. The Plaintiff responded: I shouldn’t be held responsible for what other people do. That goes a little further than usual. Plaintiffs often claim certain duties are not in their job description, but what can you do when the employee admits he has a duty, but claims he shouldn’t have it? I’d say you let the employee go. The court also didn’t buy the plaintiff’s argument; it dismissed his claim. Widmar v. Sun Chemical Corp., No. 13-2313 (7th Cir. Nov. 19, 2014).

Arizona Trade Secrets Grow New Teeth 2014-11-19T10:51:51-06:00

Posted on November 19, 2014

By John Doran

Over the last 18 months, the courts had diluted Arizona trade secret protections, notwithstanding the recent criminalization of trade secret theft by the AZ legislature. Today, however, the Arizona Supreme Court breathed new life into trade secret protection in Orca Communications Unlimited v. Noder, No. CV-13-0351 (Ariz. November 19, 2014). Orca Communications sued its former President, Noder, for unfair competition because Noder, while still employed by Orca, informed Orca customers that she was starting a competing business and urged them to do business with her instead of Orca. The trial court dismissed the lawsuit on the premise that Arizona’s Uniform Trade Secrets Act (“AUTSA”) preempts common law claims such as Orca’s unfair competition claim. The Arizona Supreme Court reversed that decision, in part, finding that the AUTSA only preempts common law claims involving trade secrets as defined by the AUTSA, and not claims based on misuse of confidential information that does not constitute a trade secret.

In a peculiar win/lose for employers covetous of their confidential and proprietary information, the Court added two additional points. First, the Court noted that the unfair competition tort might not even be actionable in Arizona. It would have helped if the Court had recognized that somewhat catch-all tort, but that will have to wait for another day. Second, the Court ordered that only that section of the Court of Appeals decision addressing unfair competition claims be depublished. This is extremely significant because the Court of Appeals opinion contained wide-ranging and, frankly, terrifying language with respect to non-competition, non-solicitation, and confidentiality covenants. Thus, while the Supreme Court giveth, it managed to taketh away. The Court would have done all employers a favor had it revisited the Court of Appeals’ opinion specifically with respect to restrictive covenants.

Which Petard? 2014-11-18T14:22:25-06:00

Posted on November 18, 2014

By Bill Wright

Title VII says a union may not refuse to refer a person for work on discriminatory grounds. In a recent case, the plaintiff alleged that, because of her sex, her union never referred her to a job driving for movie production companies. The trial court dismissed the case, noting the plaintiff was “hoist by her own petard” by alleging she knew of the discriminatory conduct more than 300 days before filing. The 7th Circuit rejected the trial court’s reasoning—the plaintiff had alleged failure to refer her to available jobs within 300 days. On appeal, the union also argued that it never made a referral; the employers simply chose drivers from available resumes. But, according to the plaintiff, the union representative told her he did refer drivers for jobs when there were openings. The union might be the one hoist by an admission. The parties will have to ask questions and have depositions before the courts can tell whether the union violated the law. It just goes to show that, the right allegation will cause protracted litigation even without proof. Stuart v. Local 727, IBT, No. 14-1710 (7th Cir. Nov. 14, 2014).

Court Sinks EEOC’s Broad Subpoena 2014-11-12T09:24:45-06:00

Posted on November 12, 2014

By Bryan Stillwagon

Although the EEOC frequently attempts to expand its investigation of a charge far beyond a single complainant, some courts allow employers to defend against the agency’s broad subpoenas if the subpoenas are irrelevant to the individual charge under investigation. In EEOC v. Royal Caribbean Cruises, No. 13-13519 (11th Cir. Nov. 6, 2014), the Eleventh Circuit rejected the EEOC’s attempt to investigate all foreign nationals terminated by Royal Caribbean because of medical issues. Plaintiff, who had been diagnosed with HIV and Kaposi’s sarcoma, filed a charge of discrimination after the Company declined to renew his employment contract. The Company admitted it acted because of plaintiff’s medical condition, which made him unfit for his seafarer duties under Bahamian law.

The Court of Appeals held that the Company’s admission made the issue of other employees irrelevant. The information sought by the EEOC’s subpoena must be relevant to the matter of the individual complainant, not relevant “to issues that may be contested when and if future charges are brought by others.”

The Customer Is Sometimes Right 2014-11-11T17:28:45-06:00

Posted on November 11, 2014

By Elizabeth Chilcoat

You’re a subcontractor with employees at your customer’s worksite. The customer orders you to remove an employee from the project. In fact, the customer emails you that the employee’s repeated safety complaints are killing them and they want him gone immediately. In the inevitable whistleblower suit, can you be liable if your contract gives the customer the right to have you remove workers?

In a recent case, a plaintiff alleged the Department of Energy and a general contractor had asked his employer (a subcontractor) to remove him from a nuclear remediation project, because he challenged their plans to address nuclear safety issues. Discovery produced an email with the request and the reason in writing. The supervisor sued under the whistleblower protections in the Energy Reorganization Act and, in due course, removed the action to federal court. The Ninth Circuit Court addressed the case only on a motion for summary judgment, but ruled there had to be a trial: the broad contract language giving the customer the right to ask for employees to be reassigned might be contrary to public policy. Tamosaitis v. URS Inc., No. 12-35924 (9th Cir. Nov. 7, 2013). But, what kind of trial? The Court also held that plaintiffs have a constitutional right to a jury trial on ERA whistleblower claims.

Bottom line? A customer’s request can set you up for a lawsuit (with a jury). You need robust customer-management skills.

Are You On OSHA’s New List? 2014-11-06T13:29:16-06:00

Posted on November 6, 2014

By Pat Miller

Recently, OSHA announced a revision to its recordkeeping requirements. The revision updates the list of industries required to keep injury and illness records. The new requirements go into effect on January 1, 2015. Some industries that were previously required to maintain injury and illness records will not be required to do so as of next year. However, many previously exempt industries are now required to keep such records. To review the list of newly-covered industries, as well as the complete list of industries that are exempt from recordkeeping requirements, go to https://www.osha.gov/recordkeeping2014/records.html.