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NLRB General Counsel Issues Guidance on Employee Handbooks

On June 6, 2018, the National Labor Relations Board General Counsel issued a Memorandum to its field offices with guidance on how to interpret whether employers’ workplace rules violate workers’ labor rights. The Memorandum directs the application of the NLRB’s decision in The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017), where the Board reassessed its standard for when the mere maintenance of a work rule violates Section 8(a)(1) of the Act.  The Board established a new standard that focused on the balance between the rule’s negative impact on employees’ ability to exercise their Section 7 rights and the rule’s connection to employers’ right to maintain discipline and productivity in their workplace.  The Board in Boeing not only added a balancing test, but it also significantly altered its jurisprudence on the reasonable interpretation of handbook rules. The Memorandum contains general guidance for Regions regarding the placement of various types of rules into the three categories set out in Boeing, and regarding the Section 7 interests, business justifications, and other considerations that Regions should take into account in arguing to the Board that specific Category 2 rules are unlawful. Regions should now note that ambiguities in rules are no longer interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included. The link to the Memorandum can be found here.  

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Bruce Luchansky Jun 7 No Comments

Federal Court Rules that pregnancy – alone – is not a disability

A Federal Court has ruled that an employee cannot sue under federal law for discrimination based on her pregnancy, because pregnancy alone isn’t a “disability” under the law. In Arozarena v. Carpenter Co., 2018 BL 184934, E.D. Pa., No. 5:17-cv-05457, Plaintiff Gina Arozarena filed a Complaint against her former employer, Defendant Carpenter Co., alleging that it discriminated against her on the basis of her pregnancy and on the basis of her disability when it terminated her employment in June 2016. Carpenter Co. filed a partial Motion to Dismiss with respect to Arozarena’s disability discrimination claims, contending that Arozareba failed to allege that she was disabled. Background Arozarena alleged that in May 2015 she was hired by Carpenter Co. as a machine operator. In November 2015 she notified Carpenter Co. that she was pregnant, after which she became the target of disparaging behavior from her manager, Chris Huntsinger.  Subsequently, Arozarena began to have complications with her pregnancy and in the last two months of her pregnancy found herself having to see her doctor twice a week to be monitored. She explained this to Huntsinger and to Judy Barrett, Carpenter Co.’s human resources representative, and provided them with all of her doctor’s notes. On June 4, 2016, Carpenter Co. terminated her employment, stating that the termination was based on her excessive absences. Arozarena alleged that Carpenter Co.’s primary motivation for terminating her was that she was pregnant and that she missed work due to her pregnancy.  On the basis of these allegations, Arozarena asserted, that Carpenter Co. discriminated against her on the basis of her pregnancy, in violation of Title VII of the Civil Rights of 1964, as amended by the Pregnancy Discrimination Act, 42 U.S.C. §§ 2000e-2000e-17 . Under Count II of the Complaint, Arozarena asserted that Carpenter Co. discriminated against her on the basis of her disability, in violation of the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. §§ 12101-213.  In response to Arozarena’s Complaint, Carpenter Co. filed a Partial Motion to Dismiss with respect to Arozarena’s disability discrimination claims contending that Azorarena failed to allege that she was disabled. Analysis Carpenter Co. argued that Arozarena failed to allege that she was disabled, which is a necessary element of a disability discrimination claim. Carpenter Co. argued that it is well settled that pregnancy, in itself, is not a disability under the ADA. Further, with respect to Arozarena’s allegation that she had “complications with her pregnancy,” Carpenter Co. contended that was nothing more than a conclusory assertion that failed to specify what complications Arozarena allegedly experienced. Arozarena responded that courts have found that complications arising out of pregnancy can constitute a disability, and that whether such complications actually rise to the level of disability is a question of fact. Further, she contended that her allegation that she had to see her doctor twice a week as a result of her pregnancy-related complications sufficed to allege the existence of a disability.  The ADA defines “disability” as either (1) “a physical or mental impairment that substantially limits one or more major life activities of such individual;” (2) “a record of such an impairment;” or (3) “being regarded as having such an impairment.” 42 U.S.C. § 12102(1) . “Major life activities include, but are not limited to, caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.” 42 U.S.C. § 12102(2)(A) . The determination of whether an individual is substantially limited in a major life activity must be made ‘on a case-by-case basis.’”Matthews v. Pennsylvania Dep’t of Corr., 613 F. App’x 163 , 167 (3d Cir. 2015) (quoting Albertson’s Inc. v. Kirkingburg [*3] , 527 U.S. 555 , 566 , 119 S. Ct. 2162 , 144 L. Ed. 2d 518(1999)). “What matters is not the name or diagnosis of the impairment but ‘the effect of the impairment on the life of the individual.’” Id. As both parties acknowledged, pregnancy itself is not a disability, but a number of courts have found that pregnancy complications can constitute a disability. See Oliver v. Scranton Materials, Inc., No. 3:14-CV-00549, 2015 U.S. Dist. LEXIS 27121 , [2015 BL 59643], 2015 WL 1003981 , at *7 (M.D. Pa. Mar. 5, 2015) (collecting cases). But a plaintiff must do more than simply “recite, in talismanic fashion, that some “pregnancy complications” occurred in order to allege a disability. See id. Here, Arozarena alleged only that she began to have complications with her pregnancy and in the last two months of her pregnancy found herself having to see her doctor twice a week to be monitored.  As Carpenter Co. pointed out, Arozarena didnot specify what complications she experienced, nor did she indicate how those complications substantially limited one or more major life activities. Accordingly, Arozareana’s Complaint failed to allege sufficient facts to support her claim that she had a “disability” under the ADA. Accordingly, Carpenter Co.’s partial Motion to Dismiss was granted. But the dismissal was without prejudice.  The Court did not believe that allowing another amendment would be futile or inequitable, and Arozarena was granted leave to amend her Complaint to cure the deficiencies outlined.  

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Bruce Luchansky May 25 No Comments

Employee’s Facebook Post Does Not Qualify as Complaint Under the FLSA

In Trigueros v. New Orleans City, 2018 BL 183305, E.D. La., 17-10960, the Court ruled that the plaintiff employee may not move forward with her claim that she was fired in retaliation for commenting on her lack of overtime pay on Facebook, because comments to a general audience of friends and acquaintances do not qualify as complaints directed to an employer, and even if they were, her specific post mostly focused on a co-worker’s behavior and did not clearly make an assertion of her right to overtime wages. BACKGROUND From February 2015 to January 2017, Plaintiff Jennifer Trigueros was employed by Defendants New Orleans City (“City”) and Coroner Jeffrey Rouse (“Rouse”) as a death investigator. The position of death investigator was classified as exempt from overtime and Plaintiff was not paid overtime even though she was often required to work more than 40 hours per week. Plaintiff alleged that Defendants misclassified her job position and that she was entitled to overtime wages.  Plaintiff further alleged that she was terminated from her position because she complained about the lack of overtime wages on Facebook.  Plaintiff brought claims for overtime wages and damages due to retaliatory termination under the FLSA.   Defendant New Orleans City answered the complaint generally denying Plaintiff’s allegations.  City also asserted the following defenses: failure to state a claim, prescription, and failure to mitigate.  Defendants filed a 12(b)(6) motion on December 22, 2017.  The Court denied the motion and allowed Plaintiff to amend her complaint to add sufficient facts.  Plaintiff amended her complaint in April 2018. Defendants renewed their motion to dismiss.  MOTION TO DISMISS Defendant Rouse filed a motion to dismiss for failure to state a claim.  Defendant argued that Plaintiff has not alleged a protected activity under the FLSA, specifically, posting to Facebook is not a protected activity because it does not qualify as “filing a complaint” under the FLSA.  Defendant alleged that Plaintiff did not file a formal complaint with her employer and that her Facebook post does not qualify as an informal complaint. Defendant noted that Plaintiff’s Facebook post was not directed at her employer and did not allege any unlawful behavior. Additionally, Facebook is not a recognized forum for protected activity under the FLSA.  Therefore, Defendant argued, Plaintiff’s FLSA claims should be dismissed because she cannot sustain a claim for retaliation. Plaintiff responded that  her FLSA retaliation claim should not be dismissed because at the motion to dismiss stage the court must assume her allegations that she engaged in protected activity to be true.   LAW & ANALYSIS Under the FLSA, an employer may not discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee. 29 U.S.C. § 215 (a)(3) . To make a retaliation claim under the FLSA a plaintiff must show “(1) participation in protected activity under the FLSA; (2) an adverse employment action; and (3) a causal link between the activity and the adverse action.” Hagan v. Echostar Satellite, L.L.C., 529 F.3d 617 , 624 (5th Cir. 2008). “If [Plaintiff] cannot prove that he was engaged in protected activity under Section 215(a)(3) , then he cannot make out a viable [retaliation] claim under the FLSA.” Id . An informal, internal complaint may constitute filing a complaint and thus be a protected activity. Id. at 625-26 (listing examples where employees communicated an alleged violation of law to their employer). “[H]owever, not all ‘abstract grumblings’ or vague expressions of discontent are actionable as complaints.” Id. at 626 . “To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.” Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1 , 14 , 131 S. Ct. 1325 , 179 L. Ed. 2d 379 (2011). Here, Plaintiff’s Facebook post did not qualify as a protected activity under the FLSA. First, while Plaintiff’s post may be categorized as a complaint, it fails to meet the requirements here because it was not a complaint directed in any way at her employer. The post was to a personal social media page. While some of these pages, depending on privacy settings, may be viewed by the public, the general audience of a social media post is friends and acquaintances. Though an employee may be connected to coworkers and her employer on a social media site, the Court had not found an example of a social media post qualifying as a complaint to an employer or protected activity under the FLSA. Second, even if Plaintiff’s social media post was somehow a communication to her employer it is not “an assertion of rights . . . and a call for their protection.” The majority of Plaintiff’s complaint was focused on the unfair and/or inconsiderate behavior of a coworker. It is not until the very end of the post that Plaintiff mentions, as an aside, that she did not receive overtime pay. Nowhere in the post does Plaintiff claim she is legally entitled to overtime pay or even argue that she should be receiving overtime pay. Therefore, the content of this post was not sufficiently clear or detailed to qualify as a protected activity.

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Bruce Luchansky May 23 No Comments

FMLA Claim Loses Due to Employer’s Handbook

A recent Federal Court case demonstrates the advantage an employer enjoys by including FMLA notice requirements in its employment handbook.   In Everson v. SCI Tennessee Funeral Services, LLC, 2018 WL 1899368, (M.D. Tenn. Apr. 20, 2018), Plaintiff Ommer Everson alleged unlawful employment practices against his former employer, Defendant SCI Tennessee Funeral Services, LLC. Plaintiff asserted claims under the Family and Medical Leave Act (“FMLA”) and the American with Disabilities Act (“ADA”). Specifically, Plaintiff alleged FMLA retaliation and interference, and ADA disability discrimination, retaliation, and failure to accommodate.   This article focuses on the FMLA interference claim.   FACTUAL BACKGROUND   Plaintiff was employed by Defendant as a funeral director and then a general manager from 1996 until January 11, 2015.  Plaintiff was diagnosed with Meniere’s Disease in 2000, but does not recall it affecting his work until 2010 when he had his first outpatient ear procedure.  Prior to his ear procedure in 2010, Plaintiff notified Jeffrey Duffer, Defendant’s Market Director and Plaintiff’s supervisor, of his ear condition and requested approximately one week to ten days off from work, which Duffer granted.  In October 2014, Plaintiff had a second ear procedure and requested an afternoon off from work for the procedure, which Duffer granted.    On January 9, 2015, Plaintiff informed Duffer that he was scheduled for a third ear procedure at the end of January and requested approximately one week off of work.  Duffer responded, “That’s fine. Whatever time you need.”  Plaintiff was terminated from his position two days later and claims that the reason given for termination was a pretext for discrimination.    In response, Defendant argued that Plaintiff was terminated for leaving an unembalmed body at one of the facilities without refrigeration in violation of Defendant’s policy.  Defendant denied discriminating or retaliating against Plaintiff under the ADA and FMLA, denied interfering with Plaintiff’s FMLA rights, and denied failing to accommodate Plaintiff’s disability. Defendant sought summary judgment on all of Plaintiff’s claims.   FMLA INTERFERENCE   To establish a prima facie case that Defendant interfered with Plaintiff’s FMLA rights, Plaintiff must show: (1) he was an eligible employee; (2) Defendant was an employer subject to the FMLA; (3) he was entitled to leave under the FMLA; (4) he gave Defendant notice of his intention to take FMLA leave; and (5) Defendant denied him FMLA benefits to which he was entitled. Romans v. Michigan Dept. of Human Services, 668 F.3d 826, 840 (6th Cir. 2012).   The fourth and fifth elements were disputed in this case. Defendant argued Plaintiff: (1) failed to provide notice of his need for FMLA leave; and (2) was never denied any benefits to which he was entitled.   To invoke FMLA protection, an employee must provide notice and a qualifying reason for requesting leave. Notice must take a certain form, namely, the employee must “comply with the employer’s usual and customary notice and procedural requirements…absent unusual circumstances.” 29 C.F.R. § 825.302(d); Cundiff v. Lenawee Stamping Corp., 597 Fed. Appx. 299, 300 (6th Cir. 2015). This regulation, which took effect January 16, 2009, “explicitly permits employers to condition FMLA-protected leave upon an employee’s compliance with the employer’s usual notice and procedural requirements, absent unusual circumstances.” Srouder v. Dana Light Mfg., LLC, 725 F.3d 608, 614 (6th Cir. 2015). “An employee also may be required by an employer’s policy to contact a specific individual.” Alexander v. Kellogg USA, Inc., 674 Fed. Appx. 496 (6th Cir. 2017) (quoting 29 C.F.R. § 825.302(d)).   Defendant contended that Plaintiff failed to give notice of his intent to take FMLA leave. Specifically, Defendant asserted that Plaintiff failed to follow Defendant’s notice requirements and contact the SCI Leave and Disability Center to request FMLA leave as outlined in the employee handbook.  In response, Plaintiff argued that the law does not require an employee to invoke the FMLA by name.  Plaintiff contended that providing notice to Duffer that he needed a week off in late January for a procedure related to his Meniere’s Disease was sufficient to put Defendant on notice that he was invoking FMLA protection.    Prior to 2009, Plaintiff’s arguments would have had merit. However, the 2009 amendment to 29 C.F.R. § 825.302(d) “explicitly permits employers to condition FMLA-protected leave upon an employee’s compliance with the employer’s usual notice and procedural requirements, absent unusual circumstances.” Srouder, 725 F.3d at 614.     Defendant’s employee handbook required employees to contact the SCI Leave and Disability Center to give notice of any FMLA leave.  Plaintiff received, read through, and signed Defendant’s employee handbook acknowledging his familiarity with it.  However, Plaintiff never requested FMLA leave or asked anybody at SCI for FMLA leave.  Plaintiff did not identify any unusual circumstances that would prevent him from complying with Defendant’s notice requirement for FMLA leave.   Therefore, the Court held that because Plaintiff failed to comply with Defendant’s notice requirement for requesting FMLA leave, he was unable to establish a prima facie case for interference. The Court granted Defendant’s motion for summary judgment on Plaintiff’s FMLA interference claim.            

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Bruce Luchansky Apr 30 No Comments

Federal Court Allows Parties to Shorten Limitations Periods by Contract

In Bracey v. Lancaster Foods, LLC, No. RDB-17-1826, 2018 BL 112613 (D. Md. Mar. 30, 2018), the Maryland Federal Court reiterated the rule that statutory limitations periods may be shortened by agreement, so long as the limitations period is not unreasonably short. BACKGROUND Plaintiff Michael Bracey sued Defendant Lancaster Foods, LLC alleging violations of the Family and Medical Leave Act (“FMLA”), Americans with Disabilities Act (“ADA”), and Maryland Fair Employment Practices Act (“FEPA”). Plaintiff began working for Lancaster Foods, a wholly-owned subsidiary of Guest Services, Inc., as a Yard Jockey in 2008. Prior to being hired by Lancaster, he was required to enter into an arbitration agreement with Guest Services.  Specifically, the two-page Agreement states that “[i]n return for Guest Services considering my application for employment, and in consideration of my employment with Guest Services should Guest Services choose to employ me, I consent to arbitration of any Employment Related Claim . . ..”  The Agreement provides that in order to request arbitration, a party must submit a written Notice to Guest Services’ Director of Human Resources.  Further, any request must be submitted “within one year of the date that the act complained of occurred . . . regardless of any longer limitations period that may be provided by any federal, state or local statute.”  LITIGATION Defendant filed a Motion to Dismiss and Compel Arbitration on the ground that Plaintiff had signed the Arbitration Agreement.  Plaintiff did not contest that he signed the arbitration agreement or that his claims were subject to mandatory arbitration if the agreement was valid and enforceable.  Rather, he argued that the Court should not enforce the Agreement because the one year limitations period was unconscionable. The unconscionability doctrine has both a procedural and a substantive element. Both must be present in order for a court to refuse to enforce a contract provision. I. Procedural Unconscionability Under Maryland law, procedural unconscionability “‘deals with the process of making a contract’ and ‘looks much like fraud or duress.’” Freedman, 190 Md.App. at 208 , 988 A.2d 68 (quoting Walther v. Sovereign Bank, 386 Md. 412 , 430 , 872 A.2d 735 (Md. 2005)). “It includes concerns such as the use of ‘fine print and convoluted or unclear language,’ and ‘deficiencies in the contract formation process, such as deception or a refusal to bargain over contract terms’ and ‘one party’s lack of meaningful choice.’” Id. (quoting Walther, 386 Md. at 430 , 872 A.2d 735 )); see also Holloman v. Circuit City Stores, Inc., 391 Md. 580 , 602 ,894 A.2d 547 (Md. 2006) ( explaining that procedural unconscionability focuses on “oppression” or “surprise” due to unequal bargaining power). Plaintiff asserted that he was offered an employment contract on a take it or leave it basis with a promise to arbitrate all claims.  In other words, Plaintiff argued that the agreement is a “contract of adhesion,” or “one that is ‘drafted unilaterally by the dominant party and then presented on a take it or leave it basis to the weaker party who has no real opportunity to bargain about its terms.’” Caire v. Conifer Value Based Care, LLC,982 F.Supp.2d 582 , 595 (D. Md. 2013) (quoting Walther, 386 Md. at 430 , 872 A.2d 735 ). As the Court stated in Mould v. NJG Food Service Inc., 986 F.Supp.2d 674 , 678 (D. Md. 2013), “a finding that a contract is one of adhesion is sufficient to establish procedural unconscionability and continue the inquiry into substantive unconscionability.” Defendant did not dispute that had Plaintiff refused to sign the Agreement, he would not have been hired. Rather, Defendant asserted that Plaintiff could have easily chosen not to execute the document and to seek employment as a truck driver elsewhere. In addition, the Agreement itself stated that Guest Services would not even consider Bracey’s application unless he signed the Agreement.  Accordingly, the Court found that the Agreement was a contract of adhesion and procedurally unconscionable. As the Maryland Court of Appeals explained in Walther, however, “the fact that a contract is one of adhesion does not mean that either it or any of its terms are invalid or unenforceable.’” 386 Md. at 429 , 872 A.2d 735.  Rather, the analysis now turns to examine the substance of the particular provision at issue, the arbitration clause, to decide whether it is unconscionable. II. Substantive Unconscionability Bracey argued that the arbitration agreement was substantively unconscionable because it shortened the state and federal statute of limitations for his claims to one year. Specifically, he asserted that because he did not receive his Right to Sue Letter until February 5, 2017, almost two years after his “resignation,” he could not have vindicated his statutory claims in arbitration. However, a plaintiff’s failure to initiate arbitration within a reasonable and contractually agreed to limitations period does not render what was otherwise an adequate arbitral forum inadequate. As the United States Court of Appeals for the Fourth Circuit has explained, “as a general rule, statutory limitations periods may be shortened by agreement, so long as the limitations period is not unreasonably short.” In re Cotton Yarn Antitrust Litigation, 505 F.3d 274 , 287 (4th Cir. 2007). In Cotton Yarn, the court was tasked with determining whether an arbitration provision that shortened the four year federal limitations period for which to bring a claim under the Sherman Act, 15 U.S.C. § 1 , to one year rendered the arbitration agreement unenforceable. Section 15b of the Clayton Act , 15 U.S.C. §§ 1 et seq., establishes the four year limitations period. The court began by noting that nothing in the Clayton Act prevented the parties from contractually agreeing to a shortened limitations provision, and one year is a reasonable amount of time. Next, the court explained that § 15b , setting the four year limitations period, is procedural rather than substantive, and accordingly the one year limitations period was not inconsistent with any substantive rights. Finally, the court considered whether the one year period could prevent the plaintiffs from effectively vindicating their statutory rights. Subsequently, in Dieng v. College Park Hyundai, No. DKC-09-0068, 2009 WL 2096076 (July 9, 2009), the Court held that an arbitration agreement’s sixty or one-hundred eighty day limitations period was not substantively unconscionable. The plaintiffs argued that the limitation was unreasonably short because it was “a drastic reduction from the otherwise applicable two and three year statutory limitation periods” under the Fair Labor

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Bruce Luchansky Apr 4 No Comments

Plaintiff Survives Motion for Summary Judgment in FLSA Executive Exemption Case

Under the FLSA, an employee is exempt from overtime compensation as an “executive” if: (1) he is compensated on a salary basis at a rate of not less than $455 per week; (2) his primary duty is “management of the enterprise in which the employee is employed”; (3) he “customarily and regularly directs the work of two or more other employees”; and (4) he has “the authority to hire or fire other employees” or his “suggestions and recommendations as to the hiring, firing, advancement, promotion” of other employees are “given particular weight.”  In Smith v. BLD Servs., LLC, No. 117-00167-JMC, 2018 BL 57886 (D. Md. Feb. 21, 2018), the Plaintiff claimed that his employer misclassified him as an “executive” employee exempt from overtime compensation and paid him on a salary basis in order to avoid paying him overtime compensation mandated by the FLSA and MWHL The Defendant filed a motion for summary judgment arguing that Plaintiff was exempt as an “executive” employee. In the Court’s analysis, it noted that Plaintiff admitted to elements 1 and 3 of the “executive” employee exemption. Plaintiff also conceded element 4, although he tried to argue that his suggestions were not given particular weight because his project manager, who outranked him in his superintendent position, ultimately made final hiring and firing decisions.  The Court noted, however, that the regulations specifically state that an employee’s suggestions and recommendations may still be given particular weight even if the employee does not make the ultimate decision. Finally, the Court analyzed the second element of the executive employee exemption requiring that management be the primary duty of the exempt employee. For management to be the employee’s “primary duty,” it must be the principal, main, major or most important duty that the employee performs.” 29 C.F.R. § 541.700(a). In analyzing what constitutes an employee’s primary duty, courts consider “the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee’s relative freedom from direct supervision; and the relationship between the employee’s salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.”  Jackson v. ReliaSource, Inc., Civ. No. WMN–16–358, 2017 WL 193294, at *4 (D. Md. Jan. 18, 2017).  The Defendant argued that Plaintiff acted in a managerial role because he was responsible for production, expense, and time reports, had the authority to discipline crew members, planned jobs based on a list of projects provided to him in order to maximize efficiency, scouted upcoming projects, maintained safety guidelines, and was given a company credit card to purchase necessary items for jobs.  Defendant further alleged that Plaintiff was the only person performing these managerial duties for his crew, and for that reason Plaintiff’s managerial duties were his most important duties.   However, Plaintiff testified that his primary duties were physically setting up and doing the manual work on the lateral production and that his supervisory duties were only a minor part of his day to day job, both in the amount of time he spent doing them and the importance of those activities to the crew’s function. Plaintiff also contended that he worked under the direct supervision of a project manager and without much autonomy, while Defendant argued that he operated his crew without direct supervision the vast majority of time. Neither Plaintiff nor Defendant provided a comparison of Plaintiff’s monetary compensation to that of his other crew members. The Court ruled that a genuine dispute of material fact existed as to whether management was Plaintiff’s primary duty in his position as superintendent for Defendant and therefore denied Defendants’ motion for summary judgment. 

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Bruce Luchansky Feb 22 No Comments

Maryland Federal Court Asserts Jurisdiction Over Purported State Court Contract Claim

In Allied Fire Prot., Inc. v. Thai, No. PWG-17-551, 2017 WL 4354802, at *1 (D. Md. Oct. 2, 2017), the plaintiff employer filed suit against its former employee in the Circuit Court for Prince George’s County, alleging four causes of action: (I) breach of contract (specifically, the Non-Compete/Non-Disclosure Agreement); (II) breach of the non-compete and non-solicitation provisions of the Agreement; (III) tortious interference with contractual relations and prospective advantage; and (IV) intentional misrepresentation.   Defendant Thai removed the case to the Federal District Court in Maryland under diversity jurisdiction and filed a motion to dismiss. Allied Fire filed an untimely opposition thirty-three days later, and Thai filed a timely reply.   In its Opposition, Allied Fire challenged the Federal Court’s jurisdiction to resolve its claims because to do so would violate Article I, § 10, Clause 1 of the United States Constitution, the so-called “Contracts Clause.” Specifically, Allied Fire asserted that the purported Agreement included a “choice of law section” that stated: Any disputes arising from or related to the subject matter of this agreement shall be heard in an appropriate court of PG County, Maryland and the parties hereby consent to the personal jurisdiction and venue of these courts. After ruling that Allied Fire was untimely in challenging personal jurisdiction, the court noted that the purported forum selection clause, stating that disputes “shall be heard in an appropriate court of PG County, Maryland,” does not vest exclusive jurisdiction in the state courts. The court first noted that the “Contracts Clause” applies only to the states, not to the federal government. The court then addressed the “choice of law section,” citing Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 374, 380 (2012), a Supreme Court case construing a statutory provision that “a person or entity may, if otherwise permitted by the laws or rules of court of a State, bring a private action in an appropriate court of that State” concluded that “nothing in that permissive language makes state-court jurisdiction exclusive.”  Id. Next the court looked to IntraComm, Inc. v. Bajaj, 492 F.3d 285, 290 (4th Cir. 2007), stating that under federal law, “a general maxim in interpreting forum-selection clauses is that ‘an agreement conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere unless it contains specific language of exclusion.’” Therefore, the court held that it had jurisdiction to hear the case since the court was located in Prince George’s County. Takeaway: If you want to limit the court venue options in your contracts, you must input specific language of exclusion. Here, the contract language limiting the venue to “an appropriate court of Prince George’s County” was construed to include the Federal Court in Prince George’s County and was not limited to state courts in the County.

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Bruce Luchansky Feb 9 No Comments

Senate Finance Committee Unanimously Votes to Postpone the Maryland Healthy Working Families Act

Today, the Senate Finance Committee voted unanimously to delay the enforcement of the Maryland Healthy Working Families Act (“HWFA”). The HWFA was supposed to to go into effect on February 11, 2018, however, the Senate Finance Committee voted to postpone the law until July 1, 2018, based on a bill introduced by the chair of the Committee, Senator Thomas “Mac” Middleton.  The bill’s primary purpose was to provide more time for businesses to prepare to comply with the new law. The full Senate could take a vote on the bill as early as Monday evening.  

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Bruce Luchansky Feb 2 No Comments

Fourth Circuit Court of Appeals Affirms District Court’s Denial to Enforce Arbitration Agreements

The Federal Arbitration Act (FAA) adopted a liberal federal policy favoring arbitration agreements.  The FAA recognizes that arbitration is an expeditious way to resolve disputes and conserve judicial resources.  It accordingly requires that courts stay any suit or proceeding pending arbitration of any issue referable to arbitration under an agreement in writing for such arbitration.  Pursuant to this directive, courts generally respect contractual agreements to settle disputes via arbitration.   However, the policy undergirding the FAA is not without limits.  A litigant may waive its right to invoke the FAA by so substantially utilizing the litigation machinery that to subsequently permit arbitration would prejudice the party opposing the stay.  This is because arbitration laws are passed to expedite and facilitate the settlement of disputes and avoid the delay caused by litigation, not to provide a means of furthering and extending delays.  Two factors specifically inform a court’s inquiry into actual prejudice: (1) the amount of the delay; and (2) the extent of the moving party’s trial-oriented activity. In Degidio v. Crazy Horse Saloon & Rest., Inc., No. 17-1145, 2018 BL 16442 (4th Cir. Jan. 18, 2018), Plaintiff Degidio filed a class and collective action alleging that Crazy Horse misclassified her and other putative class members as independent contractors and that it further violated the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). Degidio also claimed that Crazy Horse violated the South Carolina Payment of Wages Act (SCPWA), by failing to pay the appropriate minimum wages, improperly denying overtime wages, and inappropriately withholding tips. Over the course of litigation, Crazy Horse adopted three distinct strategies to defeat Degidio’s claim. First, Crazy Horse attempted to win the judicial action on the merits by filing multiple motions for summary judgment. Second, it repeatedly asked the district court to certify questions of state law to the South Carolina Supreme Court. And third, it sought to compel arbitration on agreements executed after the commencement of this suit. Only after the district court had resolved on the merits a number of legal issues did Crazy Horse ask the court to enforce the arbitration agreements. In pursuing this merits-based strategy for three years, Crazy Horse actively sought to obtain a favorable legal judgment. In doing so, it forced plaintiffs and the district court to spend unnecessary time and resources on issues that might have had to be reargued before an arbitrator. The Fourth Circuit Court of Appeals held that this conduct could not be more at odds with the FAA’s goal of facilitating the expeditious settlement of disputes. If the district court had granted any of Crazy Horse’s motions for summary judgment, then arbitration would have been unnecessary: the district court would already have resolved the dispute and arbitration would serve no purpose. The only possible purpose of the arbitration agreements, then, was to give Crazy Horse an option to revisit the case in the event that the district court issued an unfavorable opinion. In other words, Crazy Horse did not seek to use arbitration as an efficient alternative to litigation; it instead used arbitration as an insurance policy in an attempt to give itself a second opportunity to evade liability. Generally, arbitration agreements are signed before the commencement of any litigation. When such agreements are executed during the pendency of litigation, there is an increased risk that arbitration will operate not to expedite the resolution of disputes, but to prolong the entire process and to give defendants a second opportunity to contest unfavorable judgments. The agreements in this case were all obtained after potential plaintiffs met with Crazy Horse’s CFO or counsel. The setting here was ripe for duress: Not only were arbitration agreements executed without knowledge of the court and in the context of an employment relationship in which the employer alone could profess the requisite legal expertise, they falsely suggested that participation in the lawsuit would deprive potential plaintiffs of important professional rights. The combination of these circumstances rendered defendant’s conduct indefensible from the get-go. The Fourth Circuit Court of Appeals held that the district court was right to describe the circumstances here as distinct and disturbing, and was correct in denying enforcement of these sham agreements.  

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Bruce Luchansky Jan 19 No Comments

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