Articles Posted in Discrimination Claims – Race, Sex, Age and National Origin

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When determining punitive damages, courts generally rely on applicable statutes and recent court rulings to determine a limit to the punitive damages. However, in one recent discrimination and sexual harassment case, the court was left to consider, not only the absolute limit on the punitive damages, but also how large a ratio between nominal damages is allowed by the Constitution.

The case involves a female former employee of ASARCO, a copper mining facility. The employee, Angela Aguilar, alleged that she was subjected to sexual harassment in the workplace and that, when she complained, she was subjected to retaliation and constructive discharge. The harassment allegedly included a daily proposition by her male supervisor, who allegedly refused to help or train her when she refused his advances. Aguilar also alleges that this supervisor often stood so close to her that she feared for her safety. Aguilar alleges that she complained repeatedly of this treatment to the Human Resources department, but she was allegedly told that there was nothing that ASARCO could do and that she would just have to “handle it [herself]”. She eventually transferred to another work crew where she had to deal with harassment from another male coworker. This one allegedly told her “your ass is mine”, yelled at her, told her to “watch herself”, snapped his fingers at her, and threatened to fire her. Furthermore, Aguilar was the only female employee in a facility without any ladies’ restrooms. She used a portable facility which she alleged was covered in pornographic graffiti which was aimed at her. When she complained, the “porta-potty” was replaced, only to have the pornography repeated on the new facility.

The trail court found ASARCO guilty of discrimination and sexual harassment, but not retaliation or constructive discharge. The jury decided not to award Aguilar any compensatory damages, but it did award $1 in nominal damages and $868,750 in punitive damages. The judge reduced that award to $300,000, stating that, under the relevant statute, $300,000 was the maximum punitive damages that could be awarded for an employer of ASARCO’s size.

ASARCO appealed, arguing that the punitive award was still too large to be upheld under the Constitution, and the case moved to the Ninth Circuit Court of Appeals.

In ruling in this case, the appellate court first considered “the degree of reprehensibility of the defendant’s conduct”. To determine this, the Supreme Court has laid out ground rules for the lower courts to follow when ruling in cases of discrimination. These rules include considering whether “the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard for the safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.”

ASARCO argued that the lack of damages awarded by the lower court “indicates that [ASARCO’s] conduct caused no harm, much less any physical harm.” The court rejected that argument though, stating that ” ‘intentional discrimination’ is a ‘serious affront to personal liberty’ and should be considered high on the reprehensibility scale.”

The Court also determined that ASARCO’s conduct was indeed repeated and had demonstrated “indifference or reckless disregard for Aguilar’s health and safety.” The court further found that the company acted “with malice … [or] with reckless indifference to the federally protected rights of [Aguilar].” With this in mind the court decided that ASARCO’s actions justified substantial damages and a very large punitive award. The court further pointed out that, although the Supreme Court had noted that “courts must ensure that the measure of punishment is both reasonable and proportionate”, the Court had not provided a specific ratio which must be used. However, Court did state that a high ratio may be “justified when ‘a particularly egregious act has resulted in only a small amount of economic damages.’ ” The appellate court stated that it found ASARCO’s acts to be particularly egregious.”

The court therefore reviewed similar cases of discrimination across the country and found that the highest ratio in existence was 125,000 to 1. In keeping with this ruling by the Fifth Circuit Court of Appeals, the Ninth Circuit Court lowered the award for punitive damages from $300,000 to $125,000.

You can view the Court’s opinion here.

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When faced with a lawsuit, many companies choose to settle the case outside of court if at all possible. This is because lengthy legal battles have gotten increasingly expensive over the years. If the company does not at least attempt to settle the case outside of court, then it could potentially find itself having to pay hundreds of thousands of dollars in attorney’s fees for the plaintiff in addition to the plaintiff’s award for damages.

This happened in a recent court battle between UPS and a former employee. The plaintiff, Kim Muniz, worked as a UPS Division Manager until she was demoted two levels to Supervisor. She sued UPS for discrimination and violation of California’s Fair Employment and Housing Act. According to Muniz’s complaint, UPS allegedly demoted Muniz, denied her a stock bonus, and placed her on a performance plan as a result of her gender and her age. Muniz alleged that the discrimination was traceable in part to UPS’s negligence in hiring and training its employees.

The jury ruled in Muniz’s favor and awarded her $27,280 in damages for her lost earnings, past medical expenses, and past non-economic loss. Because UPS managed to defeat all but one of Muniz’s claims, the jury awarded her only about 36% of the damages she had originally sought.

Under California’s Fair Employment and Housing Act, Muniz, as the “prevailing party” was entitled to an award of “reasonable attorney’s fees”. The surprise to UPS came when Muniz sought $1.95 million in attorney’s fees. The fee request consisted of the number of hours spent multiplied by the hourly rates, which brought the total to $1.3 million. That number was then multiplied by a 1.5 enhancement, bringing the total to $1.95 million.
The district court reduced the award of attorney’s fees by 20% because Muniz’s attorneys could not prove that they actually spent as many hours on the case as they claim to have spent. Because Muniz’s attorneys were unsuccessful in attaining an award of damages for their client for her age discrimination and retaliation claims, the court deducted another 10% from the attorney’s fees, bringing the total award to just under $700,000.

UPS appealed the fee award, claiming that Muniz’s claims for attorney’s fees were highly inflated. The case went to the Ninth Circuit Court of Appeals, which upheld the lower court’s initial award of attorney’s fees at almost $700,000. Although the appellate court could have further reduced the award, it chose not to based on the fact that neither Muniz’s attorneys nor UPS could differentiate between the hours that had been spent on Muniz’s unsuccessful claims and the time spent on her successful claims. Instead, the court remanded the case back to the trial court to reconsider the award of attorney’s fees.

The court’s decision in this case is not the only one to make an award for attorney’s fees which is substantially larger than the award for damages. Because of decisions like this one, companies facing a lawsuit would be advised to settle a case rather than run up fees. Doing so can benefit both parties to the lawsuit and avoid a situation where the plaintiff later obtains an attorney fee award which greatly exceeds the damages award.

You can view the Appellate Court’s decision here.

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Many companies try to save money by classifying employees as exempt from overtime compensation, even if the employee does not qualify for that exemption under the federal Fair Labor Standards Act (FLSA). When determining qualifications for an employee to be considered exempt from overtime compensation, the FLSA took into consideration, not only the employee’s job title, but also the duties the employee performs. The FLSA does this to try to make sure that employers don’t get away with classifying employees as exempt from overtime to avoid paying overtime to those employees who fit the qualifications.

According to the FLSA, in order to be considered exempt from overtime, an employee must fulfill one of three positions: 1) administrative (she must provide administrative support directly to an executive); 2) executive (her main responsibilities must involve managing other employees who report directly to her): or 3) professional (her job requires a particular set of skills or training). Sometimes employers like to bend the rules a little on these qualifications. Managers, for example, are often put into the executive category, even if the majority of their duties are the same as those performed by hourly employees.

This was allegedly the case for employees of Taco Bell who had been labeled assistant general managers. Jacquelyn Ann Whittington filed a class action lawsuit against Taco Bell in 2010 on behalf of all other Taco Bell employees with the job title of assistant general manager. According to the lawsuit, Whittington had been working for Taco Bell since October 2008 and her duties, along with other assistant managers, allegedly involved the same responsibilities as lower-level employees. These duties included busing tables, cleaning, checking inventory, manning the cash registers, and cooking food.

The FLSA requires employers to keep accurate records, going back at least three years, of all of the time each employee spent working as well as their weekly earnings, shift assignment, and other relevant information. While Taco Bell did have these records, they allegedly did not include all shifts worked, nor did they accurately portray Whittington’s duties.

Taco Bell tried to force the case into arbitration twice before finally agreeing to settle the case. Many companies find arbitration to be advantageous because plaintiffs don’t have the benefit of class actions status in arbitration. Additionally, the arbitrating company is usually chosen and paid for by the company, which frequently results in a conflict of interest. Taco Bell’s most recent attempt at forcing the case to arbitration was denied by U.S. Magistrate Judge Kathleen M. Tafoya who said that Taco Bell had failed to provide sufficient evidence that Whittington had signed an arbitration agreement when she accepted her employment at Taco Bell.

Although Taco Bell continues to insist that all of their assistant managers are properly classified under the FLSA, they agreed to settle this lawsuit out of court for $2.5 million. This means that each of the hundreds of assistant general managers that opted into the class action lawsuit will receive about $5,000 on average. The amount that each individual receives will be determined by time sheets and records to determine how much Taco Bell owes them for unpaid overtime.

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We’ve all heard about the pay inequities between men and women. We’ve heard about women earning 25% less than men for the same work and we’ve heard of women who back down too easily when asking for a raise or promotion for themselves. Well, Francine Friedman Griesing is not one of them.

A former female shareholder in Greenberg Traurig’s Philadelphia office, Griesing has sued the firm for gender discrimination. Griesing worked at the firm from April 2007 through January 2010 and now has her own firm, Griesing Law.
While Griesing is currently the only member of the class, her suit alleges that the class could potentially include as many as 215 current and former female employees of GT. They are seeking $200 million in damages.

GT allegedly has three shareholder levels: the 300 level; the 500 level; and the 1,000 level. The 1,000 level is the most highly compensated and, allegedly, less than 10% of it is comprised of women. The 1,000 shareholders get exclusive access to the firm’s retreats, which allows them to network and refer business, according to Griesing. The 1,000 level shareholders allegedly earn $1 million per year more than other shareholders.

Most new shareholders are placed in the 300 level or 500 level and are required to remain in the 500 level for a certain period of time before becoming eligible for the 1,000 level. Griesing was hired at the 300 level where, allegedly, all but one of the female shareholders were placed. According to the complaint, men with similar or lesser qualifications were hired at the 500 level.

Griesing also alleges that the compensation system lacked sufficient standards, quality controls, implementation metrics, transparency, and oversight. In the complaint, she alleges that “By assigning women to lower levels and delaying their promotion, the firm denies its female shareholders compensation and opportunities to which they are otherwise entitled.”

Griesing does allege that the firm has one exception in its general practice of denying women advancement opportunities. She alleges that “GT prioritizes, pays, and promotes women who have intimate relationships with firm leaders or who acquiesce to socialized stereotypes.”

Griesing claims she brought in more than $4 million in timekeeper revenues and origination during her time at the firm. She was allegedly told that if she earned $600,000 in originations, she would receive a bonus of $108,000 and that the bonus would increase as the originations increased. Griesing alleges that she brought in double that in originations but that her bonus was only $115,000 in 2008.

When Griesing raised concerns about her pay, it was allegedly agreed that she was owed a bigger bonus, but that the firm had allegedly decided instead to make room for larger bonuses to male shareholders who had “families to support”. Then she was allegedly told that she was “lucky to have a job.”

Griesing went up the ranks in the firm until she finally reached the CEO, Richard Rosenbaum, who allegedly told her that he would not investigate her case unless she agreed to be “happy” at the firm. It was then that Griesing filed a complaint with the U.S. Equal Employment Opportunity Commission (EEOC).

At a subsequent meeting, Rosenbaum allegedly told Griesing that she needed to leave the firm if she was going to persist in questioning her compensation. The firm then allegedly stopped assigning Griesing work and urged her principal associate to work for another shareholder.

On July 28, after an investigation, the EEOC determined that Griesing had allegdly been paid $50,000 less than her nearest male counterpart; that women in the firm, on average, were allegedly compensated less than men; and that men were allegedly more likely to be hired above the 300 level. David Sanford, representing Griesing in this lawsuit, said it is extremely rare for the EEOC to find “reasonable cause” to pursue a case. Only 3.8% of single-plaintiff and class cases combined receive that distinction.

Hilarie Bass, GT’s executive committee member, has said in a statement that Griesing’s lawsuit gives a false impression of GT and its work environment. Bass insists that all of the attorneys at the firm are paid based on merit and that the lawsuit “is nothing more than a financially motivated publicity stunt without merit, backed by neither fact nor law.” She also claims that the lawsuit misrepresents the EEOC investigation, which she says included only a small number of women in one of the firm’s offices, and of which Griesing was the only one to complain. She goes on to say that the firm has every intention of fighting the lawsuit and fully expects to prevail.

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Everyone knows that, in order to avoid a sexual discrimination lawsuit from your employees, certain boundaries must be established and enforced to make sure everyone is comfortable. What might be somewhat less well-known is that you need to be very clear when you are firing someone – or when you’re not firing them (it’s not yet clear which one is the case here).

Ellen Pao, a junior investment partner for Kleiner Perkins Caufield & Byers, is currently suing them for sexual harassment and gender discrimination. Ms. Pao wrote on a question-and-answer web site, Quora, that she had been terminated from her job and senior management had told her to clean out her office, leave and never come back. Ms. Pao’s lawyer, Alan Exlrod, said that Ms. Pao “was cut off from access to company documents and told to transition off her corporate boards within 30 days”.

Kleiner Perkins said that Ms. Pao’s comments were “misleading” and that she remained an employee. The firm said that Ms. Pao was never told to clean out her office, but that she was approached about a 6 to 12 month “transition” plan. This plan supposedly consists of keeping her on the payroll and helping her find a new job.

Pao alleges that she was sexually harassed at work and punished for complaining about said harassment. She was allegedly cut out of investment decisions and profits and had her career opportunities limited after she complained of the harassment. Pao also alleges that gender discrimination is rampant at the firm, including lower pay, restriction on what investments they could make, and fewer opportunities to move up in the company.

The firm insists there is no such discrimination, that almost 25% of their senior and junior partners are female (and impressive number for the industry) and that Pao was held back for poor performance rather than her gender. They also insist that she only recently made complaints about the work environment shortly before filing the lawsuit, and that she was not punished for those complaints.

Judge Kahn of the San Francisco Superior Court recently ruled against the firm’s appeal to move the lawsuit to arbitration. The firm claims that Pao signed arbitration agreements with Kleiner funds, although she admittedly did not have one with the firm itself. Kahn ruled that, because the lawsuit is against the firm, rather than against Kleiner, the arbitration agreements do not apply.

The firm has said that it will continue to appeal this decision. Arbitration would be favorable to the firm in that it would be privately held and would likely be far less costly. As it is, the judge’s ruling forces the company to suffer through either an embarrassing public trial or an expensive settlement.

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Everyone knows to make sure to avoid discrimination in the workplace. What some people may not know is that a company might be liable for discrimination even after the employee is no longer working. A class action of hundreds of Chrysler executives recently won a ruling to reinstate a lawsuit for age discrimination against Chrysler’s parent company, Daimler, AG.

More than 450 former executives of Chrysler allege that their retirement funds were not securitized, while the retirement funds of other current and former executives were securitized. The executives who received securitized retirement funds were allegedly younger than the retired executives whose retirement funds were not securitized (and were therefore lost in Chrysler’s government funded bankruptcy in 2009).

The lawsuit also alleges that Daimler and State Street hid the true state of Chrysler’s finances before selling the majority of the company in 2007.

In June of 2011, the case was dismissed entirely by a U.S. District judge in Detroit. A U.S. Appeals court in Cincinnati has revived the allegations of age discrimination, while agreeing with the lower court ruling to dismiss the allegations of breach of fiduciary duty.

A spokeswoman for Daimler has said they are pleased that the Appeals court decided to dismiss most of the allegations, and the Daimler will continue to fight the lawsuit.

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While it can be difficult to prove discrimination in the work place, if a plaintiff has enough evidence, they can make a compelling case. According to a lawsuit against Covelli Enterprises, an Ohio franchisee who runs several Panera stores in western Pennsylvania, as many as 300 current and former employees could be eligible for compensation.

According to the lawsuit, filed by Guy Vines, an African American former employee of Covelli Enterprises, Covelli allegedly restricted black employees to working in the back preparing food or washing dishes where they were out of view of customers and denied them promotions.

The lawsuit actually began, not with Vines, but with a separate lawsuit filed by a white former employee, Scott Donatelli, who was fired from his position as manager of Covelli’s store in the upscale Pittsburgh suburb of Mount Lebanon in September 2011. The company claimed in their court papers that Donatelli violated company policies regarding medical leave but Donatelli’s lawsuit alleged that he was fired for refusing to stop giving cash register duties to Vines.

Although Vines was not identified in Donatelli’s lawsuit, his name was revealed when he filed his own lawsuit and came forward as the employee mentioned in Donatelli’s lawsuit. Vines worked for the company beginning in November 2009 and quit in August 2011 over his alleged mistreatment.

The court has preliminarily approved a settlement in this case of more than $76,000. Guy Vines will receive $10,000 for being the lead plaintiff and Cordes, his legal representation, will receive $66,000 in legal fees. The rest has yet to be determined based on how many employees file claims. Each employee who worked for more than a year and applied for and was denied a promotion is eligible for 70 cents for each hour they worked after their first year. An employee who worked 40 hours per week for a year could be entitled to as much as $1,456 in compensation.

Covelli Enterprises continues to deny any wrongdoing and insists it is an equal opportunity employer. It is settling to avoid the costs of defending the lawsuit in court and has also pledged not to discriminate against employees in the future.

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