Senate Passes Ledbetter Fair Pay Act of 2009

Yesterday, by a vote of 61-39, the Senate passed the Ledbetter Fair Pay Act of 2009 in order to reverse the 2007 Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, which held that the statute of limitations under Title VII begins to run when a discriminatory pay decision is announced and/or implemented is not renewed with each subsequent paycheck. (The FLSA and companion Equal Pay Act already run with each illegal paycheck). The Act was already passed by the House of Representatives earlier in January and President Obama is expected to sign it. [Editor's Note: The White House blog confirms that he expects to sign the Senate version of the Ledbetter Act. http://www.whitehouse.gov/now-comes-lilly-ledbetter/]

The Ledbetter Act provides as follows:
• Nothing in the Act “is intended to change current law treatment of when pension distributions are considered paid.”
• An unlawful discriminatory compensation practice occurs under Title VII, the Americans With Disabilities Act (“ADA”), the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act (“ADEA”) “when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits or other compensation is paid, resulting in whole or in part from such a decision or other practice.
• In addition to relief provided by Title VII and 42 U.S.C. § 1981a [i.e., compensatory and punitive damages], an aggrieved person may obtain relief, including recovery of back pay for up to two years preceding the filing of the Charge of Discrimination when the unlawful employment practices that have occurred during the charge filing period are similar to or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.

Interestingly, the Act provides that it should take effect as if enacted on May 28, 2007 – the day before the Supreme Court’s 2007 Ledbetter decision -- and apply to all claims of discrimination in compensation under Title VII, the ADEA, the ADA and the Rehabilitation Act which are pending on or after that date. In that this provision would impose retroactive liability on defendants in lawsuits (which may no longer be pending) where the defendants were not otherwise liable under then-existing laws, there may be a constitutional challenge made to any retroactive application. In other words, Congress is attempting to substitute itself for the judicial branch and impose liability on Goodyear and other employers which the Supreme Court and other courts already dismissed more than 17 months ago.

Insomniacs may read the legislation in full at http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00014

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.

Sixth Circuit Provides Guidance for Imposing Attorney Fees on Unsuccessful Plaintiffs Who Bring or Pursue Frivolous Employment Claims.

Today, the Sixth Circuit affirmed in part and remanded in part a federal court sanction which imposed joint and several liability upon the plaintiffs’ attorney and eight unsuccessful plaintiffs who pursued discrimination and wrongful discharge claims against their former supervisors and managers at the Cuyahoga County Juvenile Court. Garner v. Cuyahoga County Juvenile Court, No. 07-3602. The Sixth Circuit agreed with the district court’s analysis of the merit of the plaintiffs’ claims and affirmed the award of $69,345 in Rule 54 costs, but remanded the $660,103 attorney fee award so that the district court could articulate how the fees should be re-allocated in consideration of (i) each plaintiff’s respective ability to pay; (ii) the admission of the plaintiffs’ attorney that she was primarily responsible for prosecution of the frivolous claims; (iii) the potential conflict of interest between the plaintiffs’ and their attorney on this issue; (iv) each plaintiff being responsible for their own claims and not for the prosecution or defense of other plaintiffs’ claims; and (v) the point in time when each plaintiffs’ claim became frivolous and should have been dropped. Most saliently, the Court found it inappropriate to impose joint and several liability for the fee sanction when there were factual differences in the claims and the plaintiffs’ attorney had admitted her primary responsibility for prosecuting the frivolous claims.

According to the Court’s opinion, the discrimination and wrongful discharge claims of fourteen plaintiffs had been consolidated into one lawsuit and all of them were dismissed on summary judgment in a 250-page opinion. Some of the claims were dismissed because the plaintiff failed to present evidence to substantiate each element of the prima facie case (i.e., the “no evidence plaintiffs”) and some were dismissed because the plaintiff could not show that the defendants’ non-discriminatory/retaliatory explanation was pretextual (i.e., the “insufficient evidence plaintiffs”). After the dismissal of the case, the defendants filed a bill of costs under Civil Rule 54 in the amount of $69,345 (for, among other things, deposition transcripts, witness fees, copies). The defendants then moved for reimbursement of their $664,885 in attorneys fees from the plaintiffs on the grounds that the claims were frivolous under 42 U.S.C. § 1988. Defendants also sought sanctions against the plaintiffs’ attorneys under “28 U.S.C. § 1927, [Civil Rule] 11 .. , Ohio Revised Code § 2323.51, and the court’s inherent authority.”

The district court awarded costs to the Defendants and imposed joint and several liability against all of the plaintiffs. In granting the defendants’ fee motion for $660,103 in fees, the district court did not impose any fee sanctions upon the insufficient evidence plaintiffs or under Civil Rule 11, but held that the remaining claims were frivolous, should not have been pursued at all (and certainly not beyond the close of pre-trial discovery) and justified sanctions against eight of the plaintiffs and their attorney on a joint and several liability basis. The Sixth Circuit agreed with the district court’s analysis of the merits of the plaintiffs’ claims, affirmed the award of Rule 54 costs, and affirmed that the plaintiffs’ attorney could be liable for fees under § 1927, but remanded the attorney fee award so that the district court could reconsider and articulate how the fees should be re-allocated.

As an initial matter, the Sixth Circuit “conclude[d] that the district court erred in holding each employee jointly and severally liable with respect each other’s claims, as opposed to individually liable, for attorney fees under 42 U.S.C. § 1988. While “[t]he employees here all shared a disparate-impact claim involving common allegations about the CCJC’s employment practices, . . . this lone claim does not justify imposing the entire fee award jointly and severally among all of the employees in this case. Most of the individual employees’ claims are in fact unrelated. The disparate treatment claims, for example, do not share a common factual nexus. And the retaliation claims similarly involved different allegations unique to each employee. Indeed, the employees’ respective claims were sufficiently distinct that the district court decided to issue individual summary judgment orders against each one.”

The Court also remanded the sanction award so that the district court could better articulate how the fee sanction should be allocated in light of each plaintiff’s ability to pay. While the court agreed that each plaintiff bore the burden of proving an inability to pay their share of the sanction, “[w]e are nevertheless troubled by the district court’s failure to explain why the salary information provided to the court was insufficient to establish the employees’ inability to pay. In particular, the court itself recognized, in the portion of its order addressing costs, that the employees had “modest incomes” averaging about $35,000 per year. We are therefore puzzled as to why this information was not addressed in the portion of the court’s order discussing the calculation of attorney fees . . . The district court’s obligation to “explain its reasoning adequately” exists irrespective of which party bears the burden of persuasion to demonstrate an inability to pay.”

The Court also remanded so that the district court could explain when the sanctions began to accrue. “The parties disagreed during oral argument as to whether the attorney fees improperly included legal work done before the completion of discovery—i.e., the point in time at which the employees should have realized that their claims were frivolous and the lawsuit should have been voluntarily dismissed. Because the record is not clear on this issue, the district court should ensure on remand that the total attorney-fee award excludes fees incurred before the point in time when the individual employees should have known that their claims were frivolous. We presume that, for most of the employees, this point in time occurred at the close of discovery. But the district court should make a clear finding, for each of the individual employees, to determine whether this presumption is correct.”

Finally, the Court also remanded so that the district court could consider re-allocating a greater portion of the fee sanction against the plaintiffs’ attorney. “Our review of the record suggests that the fault for bringing the groundless claims in this case lies principally with Attorney Frost and not with her clients. Indeed, Frost graciously conceded during oral argument that, if there is anyone to blame for the litigation, she should be the one and not her clients. Frost’s concession tempts us to simply instruct the district court to reverse the imposition of any liability against her clients under § 1988.” However, because clients selected the attorney to be their agent, they remain responsible for the actions of their attorney. Moreover, the court did not want the Defendants to lose their ability to recoup their fees in the event that the attorney became insolvent.

In affirming the frivolous nature of the no-evidence plaintiff’s claims as a sufficient basis for imposing sanctions, the Sixth Circuit rejected the plaintiff’s arguments that the CCJC had previously lost a discrimination claim and there was some evidence to support the claims of the insufficient evidence plaintiffs. The court rejected the plaintiffs’ arguments because the no-evidence plaintiffs failed to “establish[] a clear nexus between themselves” and the prima facie evidence of the insufficient evidence plaintiffs and ruling in their favor “would encourage frivolous “me-too” claimants to piggyback on the nonfrivolous claims of legitimate plaintiffs.” The court also refused to permanently bar every “employer who has lost a discrimination claim . . . from recovering attorney fees against subsequent frivolous claimants” because the plaintiffs failed to “present[] relevant evidence deriving from [the] prior successful jury verdict against the CCJC.”

Insomniacs can read the full court opinion at

DOL Posts New FMLA Forms on its Website.

The newly revised FMLA regulations became effective on Friday, January 16, 2009 and the Department of Labor has posted the new FMLA forms on its website at http://www.dol.gov/esa/whd/fmla/finalrule.htm. These new forms include:
• WH-380-E Certification of Health Care Provider for Employee’s Serious Health Condition (PDF)
• WH-380-F Certification of Health Care Provider for Family Member’s Serious Health Condition (PDF)
• WH-381 Notice of Eligibility and Rights & Responsibilities (PDF)
• WH-382 Designation Notice (PDF)
• WH-384 Certification of Qualifying Exigency For Military Family Leave (PDF)
• WH-385 Certification for Serious Injury or Illness of Covered Servicemember -- for Military Family Leave (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.

Franklin County Ohio Court of Appeals: Inevitable Disclosure Doctrine Is No Substitute for a Non-Compete Agreement.

Just before Christmas, the Franklin County Court of Appeals reversed a six-month injunction precluding an employee from working for the competitor of his former employer when he signed a confidentiality agreement, but was never requested and never signed a non-compete agreement. Hydrofarm, Inc. v. Ordendorff, 2008-Ohio-6819. The Court held that it was an abuse of the trial court’s discretion to enter the injunction because the employer failed to show by clear and convincing evidence that the employee’s working for a competitor – 18 months after he had left his prior job -- would necessarily or inevitably result in the disclosure of the trade secrets of his former employer. Accordingly, the Court held that this situation was distinguishable from other cases when an Ohio appellate court has precluded – in the absence of a non-compete agreement -- an employee from working for a competitor because it would inevitably result in the disclosure of trade secret information.

According to the Court’s opinion, the employee worked for the plaintiff employer for approximately 14 years in the area of sales. During his employment, the employee necessarily became aware of trade secrets, as well as confidential and proprietary information that belonged to the plaintiff employer. The parties executed a Separation Agreement on November 30, 2005 “which, among other things, prohibited [the employee] from disclosing confidential information, unless compelled by legal process, but did not require [the employee] to forego employment with any competitors . . . Approximately one and one-half years later, on May 14, 2007, [the employee] was hired by . . . a direct competitor of [the plaintiff employer], for a position that was substantially similar to his” last position with the plaintiff employer.

The plaintiff employer filed suit for compensatory damages and injunctive relief “[a]lleging, among other things, breach of contract; unfair competition; misappropriation of trade secrets, a violation of the Ohio Uniform Trade Secrets Act, R.C. 1333.61, et seq.; disclosure of confidential information without [the plaintiff employer’s] consent, a violation of R.C. 1333.81; breach of a confidential relationship; breach of fiduciary duty; and conversion.” The employee counterclaimed, “[a]lleging breach of contract; tortious interference with a business relationship; tortious interference with a contract; and malicious prosecution.” Over objections from both parties, the common pleas court accepted the magistrate’s recommendation that the employee be enjoined from working for any competitor for six months. Both parties appealed and the employer was initially required to post a $25,000 bond in the event that the employee prevailed on appeal. However, the trial court reconsidered, stayed in the injunction and required the employee to post a $10,000 bond in the event that the employer prevailed on appeal.

As noted by the Court, different courts have evaluated the inevitable disclosure doctrine differently. “The rule against inevitable disclosure "holds that a threat of harm warranting injunctive relief exists when an employee with specialized knowledge commences employment with a competitor." Berardi's Fresh Roast, Inc. v. PMD Ent., Inc., Cuyahoga App. No. 90822, 2008-Ohio-5470, at ¶27. ‘[T]his doctrine is applied when a former employer seeks `injunctive' relief when a former employee begins work with a competitor while the noncompetition clause has not expired.’ Id. (Emphasis added.) Cf. Dexxon Digital Storage, Inc. v. Haenszel, 161 Ohio App.3d 747, 2005-Ohio-3187, discretionary appeal and cross-appeal not allowed, 107 Ohio St.3d 1682, 2005-Ohio-6480 (applying the "inevitable disclosure" doctrine to enjoin a former employee in the absence of a noncompetition agreement).”

The Court found that the inevitable disclosure doctrine may rarely substitute for a non-compete agreement to preclude an employee from working for a competitor only in different circumstances. “Although in Dexxon, the Fifth District Court of Appeals applied the "inevitable disclosure" doctrine to enjoin a former employee in the absence of a noncompetition agreement, Dexxon is factually distinguishable because in Dexxon both entities were engaged in the highly technical business of large-scale electronic data storage. Moreover, Dexxon does not reveal what sort of trade secrets the former employee possessed, or how these former employees afforded the rival entity an irreparable competitive advantage over the plaintiff.”

“In cases in which courts have enforced the "inevitable disclosure" doctrine in absence of a noncompetition agreement, the former employee possessed timely, sensitive strategic and/or technical, or both, information that, if it was proved, posed a serious threat to his former employer's business, or a specific segment thereof. See PepsiCo, Inc. v. Redmond (C.A.7, 1995), 54 F.3d 1262; Barilla Am., Inc. v. Wright (S.D.Iowa, 2002), No. 4-02-CV-90267; Proctor & Gamble Co. v. Stoneham (2000), 140 Ohio App.3d 260. On the record before us, the present case is distinguishable from those cases.”

Ultimately, the Court held that the employer failed to support its burden of proving entitlement to injunctive relief under its legal theory about the inevitable disclosure doctrine. “When resolving a matter involving trade secrets, "[a] court must balance `* * * the conflicting rights of an employer to enjoy the use of secret processes and devices which were developed through his own initiative and investment and the right of employees to earn a livelihood by utilizing their personal skill, knowledge and experience.' . . . Neither this court nor the Supreme Court of Ohio has applied the "inevitable disclosure" doctrine in a case that did not involve an enforceable noncompetition agreement. An employee possessed of his former employer's trade secrets ‘[has] the right to take employment in a competitive business, and to use his knowledge (other than trade secrets) and experience, for the benefit of the new employer[.]’ . . . . Although Ohio passed its version of the Uniform Trade Secrets Act after B.F. Goodrich, see, generally, R.C. 1333.61 et seq., the Act did not so much alter the common law as codify it. Consistent with common law, Ohio's version of the Uniform Trade Secrets Act provides that threatened misappropriation of trade secrets may be enjoined. See R.C. 1333.62. If the General Assembly had intended to permit injunction of competition or employment under the Act, it easily could have so specified. Instead, it left the law substantially intact; that is, employers or employees are free to, and frequently do, enter into noncompetition agreements, while the state has an interest in promoting morality in business affairs and innovation.”

In this case, the Court found that the fact that the employee both possessed knowledge of trade secret and confidential information and held substantially similar jobs with the plaintiff employer and, 18 months later, its competitor was insufficient to justify precluding the employee from working for the competitor in the absence of a non-compete agreement. Rather, the plaintiff employer would be required “to demonstrate by clear and convincing evidence not only that [the employee] possesses [plaintiff employer’s] trade secrets, but, also, that [the employee] will inevitably disclose them to [the direct competitor], or will utilize those trade secrets in his competitive work on behalf of [the direct competitor], and that those trade secrets will enable [the competitor] to achieve a substantial competitive advantage over [the plaintiff employer]. In other words, [the plaintiff employer] must demonstrate that the danger of misappropriation in this case threatens irreparable harm. ‘Actual irreparable harm is usually not presumed, but instead must be proved.’ Levine, supra, paragraph four of the syllabus.”

“Although the Ohio Trade Secrets Act permits injunction of threatened misappropriation of trade secrets, the usual elements for an injunction must be proved by clear and convincing evidence, even where the plaintiff seeks to invoke the "inevitable disclosure" doctrine to enjoin a former employee's employment with a competitor.” In this case, the plaintiff employer’s “executive vice president, testified that the information involved includes [the plaintiff employer’s] price lists and sales goals, but these are created annually, and it is unclear how 2-year-old price lists and sales goal information would produce a competitive advantage for [the competitor]. [He] testified that defendant [employee] possesses production information related to [plaintiff employer’s] "private label" sales, but because defendant [employee] was a salesman and not involved in the actual production of such products, it appears that his knowledge was limited to pricing and marketing efforts. Such information is hardly static. “

The executive “also testified that [the employee] possessed consumer research analysis; that is, the results of customer polling conducted in advance of each trade show, which was used to determine the product selection and display for each particular show. According to [the executive], there are numerous trade shows in North America every year. Thus, it is difficult to imagine, and [the executive] did not explain, how two-year-old customer polling results for shows that have already occurred poses the threat of an unfair competitive advantage. [The executive] also testified that [the employee] possessed information about new product concepts. However, he also testified that it was [the employee] who would suggest new products based on his conversations at trade shows and with customers. This information seems more the product of [the employee’s] own 14 years of sales and marketing experience than technical information posing a threat of misappropriation.”

The executive “further testified that [the employee] possessed information about [the plaintiff employer’s] marketing and advertising strategies. More specifically, this meant sales leads, pricing information, decisions as to which trade shows to attend, and information about the way in which [the plaintiff employer’s] products would be displayed and marketed at each trade show. Again, the pricing, sales leads and trade show selection information is out-of-date, and product displays would have been visible to anyone attending the same trade shows attended by [the plaintiff employer]. Finally, the record contains no evidence that the employee has misappropriated or disclosed any of [the plaintiff employer’s] trade secrets or other confidential business information, or that he engaged in any nefarious activities or attempts to circumvent any of the parties' agreements. In fact, [the executive] testified that he has no reason to believe that [the employee] has shared any confidential information with [the competitor].

Insomniacs may read the full opinion at http://www.sconet.state.oh.us/rod/docs/pdf/10/2008/2008-ohio-6819.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.

Chicago Dentist to Pay $462,500 in Consent Decree to Settle EEOC Harassment and Retaliation Lawsuit

Yesterday, the EEOC announced that a “Chicago dental practice will pay $462,500 to settle a class sexual and religious harassment and retaliation lawsuit” it filed in September 2007 in federal court which alleged that “James L. Orrington, D.M.D., Ltd. discriminated against 18 employees by subjecting them to sexual harassment, including sexual propositions, comments and touching; forcing them to engage in Scientology religious practices and learn about Scientology as conditions of their employment; and/or retaliating against employees who complained about the sexual or religious harassment.” EEOC et al. v. James L. Orrington D.M.D., Ltd., No. 07 C 5317. “The consent decree resolving the case was entered by the court [yesterday] morning.”

The EEOC also announced that “[i]n addition to requiring that Orrington pay monetary relief, the three-year consent decree resolving the case enjoins Orrington from engaging in sexual or religious discrimination and prohibits the firm from conditioning any terms or conditions of employment on complying with the religious teachings or practices of Scientology or attending seminars regarding Scientology. The consent decree also requires that Orrington contract with an outside representative to receive and investigate complaints of sexual discrimination and religious discrimination; adopt and distribute a policy against sexual harassment, religious discrimination and harassment, and retaliation; provide training to employees; submit periodic reports to the EEOC about any complaints of sexual harassment, religious discrimination or harassment, or retaliation; and post a notice at its facility regarding the outcome of this lawsuit.

Insomniacs can read the full press release at