Ohio Appeals Court Denies Unemployment Compensation To Supervisor Who Was Fired for Challenging His Managers About His Subordinates.

Last month, the Summit County Court of Appeals affirmed the denial of unemployment compensation to a manager who had been fired for insubordination in challenging his managers on behalf of his employees and for violating company policies and procedures. Curtis v. InfoCision Mgt Corp., 2008-Ohio-6434. Moreover, the employee had been ordered by the Unemployment Compensation Board of Review to repay $7,000 in unemployment compensation he had received before the employer’s appeal had been upheld.

As reported by the court, the fired manager had been taken through progressive discipline and was involved in three incidents of insubordination and/or policy violations before being fired. The first incident – on May 27, 2005 – took place after the supervisor’s manager questioned him about several of his employees leaving early for, and others returning late from, lunch. The supervisor “yelled across the room to [his manager] asking him what he was going to do about the employees returning late. In response to this, [the manager] asked [the supervisor] to step outside of the room and into the hallway where their conversation would not be overheard by other employees. [The supervisor] refused multiple requests to leave the room and speak with [the manager and] was issued a written warning for insubordination a few days later.

Later in October 2005, the supervisor sent an inappropriate email to another manager accusing him of lying and being unprofessional in the actions he took involving the termination of one of the supervisor’s most productive subordinates by a customer. The manager indicated that he only agreed to speak with the customer liason about the problem, but the supervisor insisted that he had promised to do more on behalf of the subordinate: "Let's be perfectly honest with each other. You DID indeed say last week that you were going to speak to [them] BOTH. I understand that we will just go on from here and [the employee] will be OK with that. But please do not lie straight to my face and tell me that you never said that you were going to talk to [them]. That is not professional or acceptable to me personally and/or morally."

Just a few days later, the supervisor then violated company policy by permitting his employees to call customers off a suspended call list because they otherwise had nothing to do. The supervisor was aware that the customer had suspended the particular program and had not yet been given a direction that the suspension had been lifted. He was then fired a few days later. The Court agreed with the UCBR that the supervisor had been fired with just cause and was not, therefore, eligible for unemployment compensation.

Insomniacs can read the decision in full at http://www.sconet.state.oh.us/rod/docs/pdf/9/2008/2008-ohio-6434.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Court Dismisses Physical Therapist's Public Policy and Whistleblower Claims Against Non-Profit Employer For Not Alleging Criminal Misconduct.

Late last month, the Montgomery County Court of Appeals affirmed the summary judgment entered for a non-profit employer of a physical therapist who had claimed that she had been wrongfully discharge in violation of public policy and Ohio’s Whistleblower statute. Duvall v. United Rehabilitation Servs. of Greater Dayton, 2008-Ohio-6231. The court held that the public policy claim failed because the Ohio statute which prohibited professional associations from interfering with the professional judgment of a physical therapist did not apply to non-profit employers. In addition, the court held that the whistleblower statute only applied to allegations of criminal conduct, which the plaintiff had not raised before being terminated.

According to the court’s opinion, the plaintiff provided hydrotherapy to patients in a heated swimming pool. Before being terminated, she had complained to her employer about the temperature of and amount of chlorine in the pool. She also complained “about the fact that URS required her to obtain a supervisor’s approval in order to suspend or discontinue hydrotherapy regimen for patients.” She ultimately was fired for placing “a patient with cerebral palsy in a supine position in the pool despite her knowledge that the patient was afraid of being placed in such a position” in violation of a “policy which prohibited staff from using “idiosyncratic aversives that are frightening to the consumer.’”

In her claim, the plaintiff alleged that the employer violated Ohio Revised Code § 1785.03, which provides in pertinent part that “[n]o professional association formed for the purpose of providing a combination of the professional services *** of *** physical therapists authorized under sections 4755.40 to 4755.56 of the Revised Code ***shall control the professional clinical judgment exercised within accepted and prevailing standards of practice of a licensed *** physical therapist *** rendering care, treatment, or professional advice to an individual patient.” As mentioned, the court rejected this claim because the non-profit employer was not subject to R.C. 1785.02 and no similar statute applied to non-profit organizations. Further, the court likewise rejected the plaintiff’s claim that the employer’s attempt to supervise her violated Ohio Administrative Code. §4755-27-02, which precluded licensed physical therapists from delegating their professional duties and responsibilities. Rather, the court noted that there is no statutory or administrative prohibition on all supervision of physical therapists.

Finally, the court followed prior interpretations of Ohio Revised Code § 4113.52, which prohibits an employer from taking disciplinary or retaliatory action against an employee for reporting criminal violations of certain laws. Because none of the complaints made by the plaintiff about the pool’s temperature or chlorine level involved criminal actions, none of those complaints were protected by the whistleblower statute.

Insomniacs may read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/2/2008/2008-ohio-6231.pdf.

Columbus City Council Expands Classes From Discrimination to Include Gender Identity or Expression, Age, Disability, and Military and Familial Status

Last night, the Columbus City Council – with very little advance public notice – expanded the protection of the City laws against discrimination in employment, housing and public accommodations to include gender identity or expression (i.e., transgendered individuals), age (i.e., over the age of 40), disability (same definition as state and federal law), military status (i.e., activity military duty), sex (male and female, including pregnancy discrimination) and familial status (i.e., having children under the age of 18 or being about to have a child). The new ordinance will become effective immediately upon being signed by Mayor Coleman. Among other things, violations of the Ordinance constitute a first-degree misdemeanor. Before voting, the City Council agenda indicated only that the Council would vote on amending “various sections of Chapter 2331 of the Columbus City Codes, 1959 in order to include additional protected classes of individuals from discriminatory practices that are not currently covered.”

The Council also voted to clarify the meaning of sex discrimination to include “male or female The terms ‘because of sex’ and ‘on the basis of sex’ include pregnancy, any illness arising out of and occurring during the course of a pregnancy, childbirth, or related medical conditions.” Gender identity or expression is defined to include “having or being perceived as having gender-related identity, appearance, expression, or behavior, whether or not that identity, appearance, expression, or behavior is different from that traditionally associated with the person's actual or perceived sex.”

The City Ordinance covers employers with 4 or more employees and already prohibited discrimination on the basis of race, sexual orientation, color, religion, national origin, and ancestry. The Ordinance, which covers some characteristics not protected under either state or federal law, applies only within the City limits, although it has been cited as grounds for public policy claims.

I can email a copy of the Ordinance upon request.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

EEOC Announces $435K Settlement With Jewelry Store When HR Manager Ignored Sexual Harassment of Three Female Employees.

Last week the EEOC announced that “Fred Meyer Stores, Inc. . . . will pay $485,000 to three female victims of sexual harassment and retaliation to settle a lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC) [at] (EEOC, et. al. v. Fred Meyer Stores, Inc. No. CV08-0208 HA, United States District Court of Oregon) [based on], the company’s [alleged] practice of harassing female employees [in] 2004 through 2005 at the Fred Meyer Oregon City store. The EEOC says the sexually hostile work environment started . . . with illegal conduct by the store director and operations manager. The EEOC further asserted in the litigation that the store director and operations manager repeatedly subjected females to graphic sexual discussions, unwanted touching, and requests for sexual favors.”

In addition, the EEOC’s lawsuit alleged that the store “condoned and accepted this sexually harass­ing behavior, and the [EEOC] obtained testimony from the company’s human resources manager who witnessed the harassing conduct on several occasions and simply walked away. According to the EEOC, the same human resources manager failed to take appropriate action against the store director or operations manager. In addition, the EEOC charged that the company retaliated against the female employees when they complained about the sexual harassment.”

“Under a consent decree filed with the federal court, [the store] agreed to pay $485,000 to the three women who came forward during the EEOC’s lawsuit. The company also agreed to provide anti-discrimination training for the owner, managers, supervisors and employees; establish policies and procedures to address sexual harassment issues; provide information to the EEOC concerning any future discrimination complaints; and allow EEOC to monitor the work site for the next two years."

EEOC Regional Attorney William Tamayo explained, “The evidence in this litigation pointed to an alarming lack of recent workplace, anti-discrimination training for the high level managers involved in this case. It is unfortunate that a sophisticated employer like Fred Meyer Stores failed to recognize the importance of such training for its managers.”

Insomniacs can read the EEOC’s full press release at http://www.eeoc.gov/press/12-11-08a.html.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Cuyahoga Court of Appeals Limits Unfair Competition and Inevitable Disclosure Claims to Duration of Non-Competition Agreement.

In October, the Cuyahoga Court of Appeals ruled on a dispute between coffee barons which arose out of the division of a coffee business in a divorce (in which the wife’s attorney ended up with the business) after the husband began a new coffee venture (at the urgings of his disinherited children) following the expiration of his non-compete agreement. Berardi's Fresh Roast, Inc. v. PMD Enterprises, Inc., 2008-Ohio-5470 (8th Dist. 10/23/08). The courts agreed with the husband that his preparations to begin his new coffee business did not violate the non-competition agreement and he was entitled to engage in fair competition with his former business by promoting his “better” and “less expensive” coffee. The court also ruled that the inevitable disclosure doctrine did not justify relief for the plaintiff company because the confidentiality obligation did not survive the expiration of the non-compete.

Like most businesses, the Company started in happier days when the Executive and his wife began with a small retail store in Cleveland and the Executive’s talent with coffee blends grew the business to a nationwide scope. Fourteen years later, the Executive sold his share in the Company to his wife in a divorce, agreed to a three-year non-competition agreement (containing a perpetual confidentiality clause) and accepted a deferred compensation arrangement. However, after the wife sold the business to her attorney (thus disinheriting their children), the Executive’s sons asked him to re-enter the coffee business, which the Executive agreed to do following the expiration of his non-compete agreement. In the meantime, he lined up the financing and suppliers for his new business, investigated prices and blends, purchased the necessary equipment and signed an office lease. The day after the non-compete agreement expired, the Executive opened his new coffee business and he hired three former employees (who then worked for the Company). One of the Company’s major grocer clients then began buying its coffee from the Executive based on his reputation, his lower price and the taste of his coffee. The Company then filed suit against the Executive, his new company and its former employees.

“In its complaint, [the Company] alleged tortious interference with business, breach of the noncompetition agreement, theft of trade secrets, deceptive trade practices, civil conspiracy, and destruction or conversion of [the Company’s] personal property. The Executive counterclaimed for failure to pay the remainder of his deferred compensation. The trial court granted summary judgment to the Executive on all claims and the Court of Appeals affirmed that judgment, except that it reversed summary judgment on the conspiracy and on one of the trade secret claims.

Trade Secrets Claim. The Company’s trade secrets consisted of the coffee blend formulas the Executive developed when he owned the Company. “The formulas consist of both the origin of the beans (i.e. Africa, Columbia, Brazil) and percentage used of each type of bean.” Although the Executive’s new company created a sales cheat sheet to indicate which of its blends most closely approximated the Company’s coffee blends, a comparison of the formulas showed that the Executive’s coffee blends used different beans and percentages than the Company’s blends – with one exception. In that case, the Executive admitted that the formulas were identical, although he used a different roasting method which changed the taste. In addition, the Executive claimed that the formula for that blend actually belonged – in whole or in part – to the client who helped develop the blend and was its exclusive buyer. The client supported this contention. However, because the Company pointed out that the client was not even aware of the blend’s formula and had asked for a copy of the formula only a few months before the Executive opened his new coffee business, there was a disputed issue of material fact as to whether the Executive misappropriated this particular trade secret formula.

The courts rejected the remaining trade secret claims involving the confidential client list because the Executive showed that he created his new client list (of names and telephone numbers) from researching the yellow pages, the internet and client referrals and making cold calls, etc. There was no evidence that the Executive’s new client list overlapped identically with the Company’s client list or contained other information unique to the Company’s clients (such as buying habits, prices, etc.).

Conspiracy. Because the court of appeals resurrected this trade secret claim, it felt compelled to resurrect the civil conspiracy claim based on the alleged misappropriation of trade secret. “The elements of civil conspiracy are: (1) a malicious combination of two or more persons, (2) resulting in injury to person or property, and (3) existence of an unlawful act independent of the conspiracy.” In that the Executive is alleged to have conspired with his new employees to misappropriate the single coffee blend, that claim would be sent to a jury to decide its merits.

Inevitable Disclosure. The Company argued that the doctrine of inevitable disclosure should bar the Executive from hiring its former employees since those employees possessed trade secret information and could use it to compete against the Company. The courts indicated that this doctrine is limited to when “a threat of harm warranting injunctive relief exists when an employee with specialized knowledge commences employment with a competitor.” Because those employees were apparently not subject to a non-compete agreement and the Executive’s non-compete agreement had expired, the courts held that the doctrine was inapplicable to this situation.

Unfair Competition. The court rejected the Company’s arguments that the Executive’s preparations in forming his new business constituted a violation of the non-compete and unfair competition because there was no evidence that he was competing, was soliciting customers, was hiring or recruiting employees or advertising before the expiration of the non-compete agreement. The fact that the Executive’s son mentioned his father’s future venture to a Company employee a few months before the business opened was irrelevant.

Similarly, the court rejected the Company’s arguments that the Executive and its former employees tortiously interfered with its contracts with its customers by persuading them to switch suppliers (i.e., to buy from the Executive instead of the Company). Under Ohio law, competitors are permitted to engage in fair competition without actual malice. There was no evidence that any of the customers breached any contracts with the Company when they switched coffee suppliers. Rather, their contracts were terminable at will. Moreover, “informing potential clients that its coffee tastes better and was less expensive, does not constitute ‘actual malice.’"

The courts also rejected for lack of evidence claims that the Executive was providing customers with “cheat sheets” indicating that his coffee was the same as the Company’s or was placing his coffee in grocery bins identified for the Company’s coffee.

Deferred Compensation. The Company argued that it was not required to make the remaining payments of deferred compensation to the Executive because he allegedly breached the non-compete agreement. However, as discussed above, the court rejected all arguments that he breached the non-compete agreement. In any event, the courts found this to be irrelevant because, pursuant to the contractual terms, the deferred compensation obligation was independent of the non-compete obligation. The compensation was due because of past services rendered, not because of the non-compete provision.

Insomniacs may read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/8/2008/2008-ohio-5470.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.