Posts tagged with "gender discrimination"

Proxy/Alter Ego Liability for Sexual Harassment

Leave a reply
Liability in Workplace Sexual Harassment

The United States Court of Appeals for the Second Circuit (that includes Connecticut and New York) addressed for the first time whether the so-called Faragher/Ellerth affirmative defense is available when an alleged sexual harassment attacker holds a sufficiently high position within an organization so as to be considered the organization’s proxy or alter ego.  The Second Circuit joined the other Circuits that have considered the issue in concluding that under those circumstances, the affirmative defense was unavailable to the employer.

By way of background, Faragher/Ellerth held that a company could escape vicarious liability for sexual harassment by taking certain steps directed toward reporting and eradicating sexual harassment in the workplace.  Left open was the issue of the employer’s direct liability where the actor was deemed to be the proxy/alter ego of the company.  Under that doctrine, an employer is liable in its own right for wrongful harassing conduct, as opposed to being vicariously liable for the actions of company agents.

A Company’s Proxy or Alter Ego

But who is the company’s proxy or alter ego?  Prior cases clearly place the company president and other sufficiently senior corporate officers within that category, and refer to “that class of an organization’s officials who may be treated as the organization’s proxy.”  Understandably, the courts do not want to draw a bright line around who may be considered an employer proxy, so that unusual cases can be determined on their peculiar facts without being constrained by particular titles.

All that is required is for the supervisor to occupy a sufficiently high position in the management hierarchy of the company for his actions to be imputed to the company.  When the official’s unlawful harassment is thus automatically charged to the employer, it cannot raise the Faragher/Ellerth affirmative defense, even if the harassment did not result in an adverse employment action.

The result is a settling of the law in the Connecticut federal court; the Faragher/Ellerth defense is unavailable when the alleged harasser is the employer’s proxy or alter ego.  Both employers and employees now know better where they stand.

–

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. Should you have any questions about Title VII and workplace discrimination or any other employment law matter, please do not hesitate to contact Attorney Joseph C. Maya, Esq. He may be reached at Maya Murphy, P.C., 266 Post Road East, Westport, Connecticut, by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.

Employer Not Liable for Doing “Stupid” or Even “Wicked” Things

Leave a reply
Case Background

Employment discrimination laws protect employees from discrimination.  They do not protect against “ordinary workplace experiences” that offend one’s sensibilities or result in hurt feelings.  A Connecticut woman found that out the hard way when a Court of Appeals affirmed the trial court’s grant of summary judgment against her.  There was no dispute as to any material fact and the employer was entitled to judgment as a matter of law.  Thus, there was no need for a trial on the merits.

The employee in question was fired from her “at will” position as Public Relations Coordinator for a large corporation because of her volatile workplace behavior spanning three years.  She claimed that she was fired because of her age, and that she had suffered intentional infliction of emotional distress as a result.

Establishing a “But For” Cause

Under the applicable law, the employee must first establish a prima facie case of discrimination.  If she does, the burden then shifts to the employer to articulate a legitimate, non-discriminatory reason for the adverse employment action.  Assuming such a reason, the employee may then prevail if she can show that the employer’s action was in fact the result of discrimination, i.e., that the stated reason is “pretextual.”

The employee must further prove that age was a “but for” cause for the challenged action and not merely a contributing or motivating factor.  In this case, the employee was unable to show that her age was the sole, i.e., “but for” cause of her termination.

Conclusions

In fairness to the employer, the employee’s insubordination was evident from the record.  On one occasion, the employee asked her manger if she had “stopped taking her medication.”  Nor did some favorable evaluations raise a genuine issue of material fact as to pretext.  The court concluded that isolated positive feedback was entirely consistent with the explanation for her termination: sporadic inappropriate behavior over the course of several years.  A reasonable jury would have no reason to doubt the employer’s explanation for the employee’s discharge.

The employee also complained about the “tone” that was used with her and that she was “distraught” about negative comments she received.  This formed the basis for her claim of intentional infliction of emotional distress.  The court had no trouble dismissing this claim, as well.  “These ordinary workplace experiences clearly do not rise to the level of being ‘so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized society.’”

It was in this context that the court made the observation that employers are not liable for doing stupid or even wicked things in the absence of a sufficient connection between the employee’s age and termination of her employment.

–

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues. Please contact our Westport office at 203-221-3100.

Only Connecticut Employees Count Toward CFMLA Threshold

Leave a reply
What is the CFMLA?

The Connecticut Family and Medical Leave Act (CFMLA) requires employers who employ 75 or more employees to provide eligible employees with 16 weeks of leave during any 24-month period for a variety of reasons, most concerning a serious health condition of a family member.  The Connecticut Supreme Court has recently held that Connecticut employers are not subject to the CFMLA unless they employ at least 75 employees within the state.  In this day and age of “virtual workplaces,” the decision of the Court offers certainty to employers but may deprive employees working remotely of CFMLA coverage.

Valez v. Commissioner of Labor

In Valez v. Commissioner of Labor, Nos. SC 18683-84 (Sept. 25, 2012), the plaintiff worked as a full-time office manager at a Hartford apartment complex.  Her actual employer had over 1000 employees nationwide, but fewer than 75 within the State of Connecticut.  The plaintiff requested and received 12 weeks of leave under the federal Family and Medical Leave Act but when she was unable to return to her job due to medical restrictions, she was terminated.

A complaint to the Connecticut Department of Labor alleging violation of the CFMLA was unavailing as the hearing officer determined that the employer had fewer than 75 employees in Connecticut and was therefore exempt from the statute.  An appeal to the Superior Court was successful, as the Judge ruled that the CFMLA applied to employers that employ 75+ employees irrespective of their geographic location.

On appeal, the Connecticut Supreme Court reversed, holding that the CFMLA applies only to employers with 75+ employees physically within the State.  The Supreme Court felt that the lower court had failed to demonstrate appropriate deference to the Connecticut Labor Commissioner’s interpretation of the statutory term “employer” and his interpretation of who constitutes an “employee” for purposes of the CFMLA.

The Valez decision introduces a degree of certainty for employers with fewer than 75 employees in Connecticut.  Before, some national employers were following CFMLA even though they were exempt from the federal FMLA as a result of having fewer than 50 employees within a 75 mile radius.  Employees, too, can now be sure of their rights as it is settled that only employees within the state of Connecticut will count toward applicability of the CFMLA.

–

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues.  203-221-3100.

Bullying in the Workplace—the Next Litigation Frontier?

Leave a reply
Workplace Bullying

The Connecticut General Assembly enacted legislation to address student bullying in the school setting.  Now some states have turned their attention to bullying in the workplace.  The new statutes, if enacted, would create a new cause of action for employment discrimination—bullying.

Since 2003, 21 states have proposed legislation to rein in workplace bullying.  Many states have been working off of a model act (the Healthy Workplace Bill) authored by Suffolk University Law School professor David Yamada.  The bill defines workplace bullying as the “repeated, health-harming mistreatment of one or more persons (the targets) by one or more perpetrators that takes one or more of the following forms: verbal abuse; offensive conduct/behaviors (including nonverbal) which are threatening, humiliating, or intimidating; work interference—sabotage—which prevents work from getting done.”

Adopting Legislation 

According to a 2010 study, 35% of U.S. workers claim to have been bullied at work.  Absent a statutory cause of action, victims have claimed that employers have breached the terms of an employee handbook that requires employees to act professionally.  Such arguments are a stretch and a bullied employee would be much better served by a clearly stated statutory claim.

Anticipating adoption of the proposed legislation, many companies are incorporating anti-bullying training into in-house sexual harassment and anti-discrimination training.  There is a huge collateral benefit to ridding the workplace of bullies—they are extremely detrimental to employee morale and productivity.  As with other anti-discrimination statutes, an employer can avoid vicarious liability by instituting and enforcing a reasonable bullying prevention and protection policy.  In addition, a successful claimant must show demonstrable harm as a result of workplace bullying or an adverse employment action for reporting such activity.  Hurt feelings are not enough.

Reportedly, New York and Massachusetts are on the verge of passing anti-bullying statutes.  Connecticut has yet to weigh in on the issue.

–

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues.  Please contact our offices at 203-221-3100.

Employee Files Retaliatory Discrimination Suit Against Yale University

Leave a reply
Case Background

A Yale employee filed a retaliatory discrimination suit against Yale University, in which she alleged that after Yale hired her in 1999 as a “security education coordinator” to ensure the university’s compliance with Title IX, which is the federal law that prohibits sex discrimination in education, the university ignored her solutions, responded with indifference, and cut her pay.  Ultimately, Susan Burhans alleged that Yale University made it impossible to do her job, which was to “develop campus safety programs and strategies to ensure Yale’s compliance with Title IX and related laws,” according to the complaint.

Burhans stated that throughout the tenure of her employment, she brought to the attention of school administrators concerns about Yale’s “non-compliance with the Title IX and related laws.”  In April 2011, sixteen students filed a complaint alleging that the university had allowed a hostile sexual environment to persist on campus. According to Burhans’ complaint, “Yale responded to Ms. Burhans’ concerns with indifference, hostility and retaliation in many forms including job termination, initially in March 2010, despite ten years of service with excellent performance evaluations.”

Though Burhans was re-hired as a part-time, contract employee, the complaint alleges that she had no authority to oversee compliance with Title IX in this capacity, and was ultimately terminated, effective November 2012.  The action seeks at least $10 million in damages.

Retaliatory Discrimination Under Title IX

According to the United States Supreme Court, “retaliation against individuals because they complain of sex discrimination is ‘intentional conduct that violates the clear terms of [Title IX].’”[1] To properly allege a retaliatory discrimination case under Title IX, a plaintiff must demonstrate: (1) protected activity by the plaintiff; (2) knowledge by the defendant of the protected activity; (3) adverse school-related action; and (4) a causal connection between the protected activity and the adverse action.[2] Once a plaintiff has established those four elements, the burden shifts to the defendant “to articulate a legitimate, non-discriminatory reason for its actions.”[3]

In an unofficial response, a university spokesman stated in an email that the lawsuit is “baseless.”[4]

–

If you are faced with discrimination in the workplace, whether it be gender, sex, religious, or ethnicity based, you should consult with an employment attorney.  The attorneys at Maya Murphy, have represented employees in the Fairfield County region and are knowledgeable and experienced in the employment field.  Contact Joseph C. Maya, Esq., at 203-221-3100, or at JMaya@mayalaw.com.

The “Manifest Disregard of the Law” Standard for Judicial Review of a FINRA Arbitration Award Excludes Questions of Fact

Leave a reply
Patrick R. Murray v. Citigroup Global Markets, Inc., 2011 WL 5523680 (N.D. Ohio Nov. 14, 2011)
Case Background

In a case before the United States District Court for the Northern District of Ohio, Patrick R. Murray (“Murray”) filed motions to vacate, modify, or correct portions of a Financial Industry Regulatory (“FINRA”) arbitration award.  Citigroup Global Markets, Inc., (“CGMI”) filed a cross-motion to confirm the arbitration award and to award costs and fees incurred while seeking confirmation.   The court denied Murray’s motions to vacate, modify or correct the arbitration award and granted CGMI’s motion to confirm the arbitration award.  CGMI’s request for costs and fees was denied.

In July 2000, Murray was hired as a financial advisor in a local Smith Barney office, which was later acquired by CGMI.  As required by FINRA rules, Murray executed a Uniform Application for Securities Industry Registration or Transfer (“Form U–4”).  He also executed a promissory note for a $1,508,401 forgivable loan, and an addendum to the promissory note that extended the length of the repayment period from seven years to nine years.

The instruments provided that the loan was to be repaid in nine equal annual installments commencing on the first anniversary date of its execution and that, if Murray terminated his employment prior to full repayment, the outstanding balance would be immediately payable with interest accruing from the date of termination.  In April 2009, Murray resigned after having made eight annual payments on the loan.

The Arbitration

In May 2009, Murray sued CGMI in state court alleging that CGMI fraudulently induced him to sign the addendum to the promissory note and illegally confiscated his assets related to a capital accumulation plan account.  CGMI removed the case to federal court, where it filed a motion to compel arbitration. The court found that the arbitration clauses in the Form U-4, the promissory note, the addendum to the promissory note and a separate signed acknowledgment of the CGMI employee handbook were valid and enforceable; therefore, it granted CGMI’s motion to compel arbitration.

FINRA appointed a panel of three neutral arbitrators to hear the matter.  In April 2011, the FINRA panel awarded CGMI compensatory damages of $40,153.00 representing the unpaid balance on the promissory note and awarded Murray compensatory damages of $25,705.95.

Murray filed the instant motion to vacate, modify or correct portions of the arbitration award in federal court and CGMI filed its response and cross-motion to confirm the arbitration award.  Murray challenged the arbitration award on the following grounds: (1) the award was irrational; (2) the award did not draw its essence from the contract between the parties; (3) the award violated public policy; and (4) the award manifestly disregarded the law.

Vacating an Arbitration Award

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, defines four limited statutory grounds on which a court may vacate an arbitration award, including instances of fraud or corruption, evident partiality, misbehavior or misconduct and acts exceeding the arbitration panel’s authority.  9 U.S.C. § 10(a).  The court found that none of Murray’s first three grounds for vacatur satisfied these statutory requirements.

Several federal circuits, including the Sixth Circuit, have held that an arbitration award can be vacated “if it displays ‘manifest disregard of the law.’ ” Jacada, Ltd. v. Int’l Mktg. Strategies, Inc., 401 F.3d 701, 712 (6th Cir. 2005), overruled on other grounds, (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Jaros, 70 F.3d 718, 421 (6th Cir. 1995)).

The Court’s Decision

However, the court found that Murray’s assertions of manifest disregard of the law were based on questions of fact rather than questions of law.  A federal court does not have the authority to re-litigate facts when reviewing an arbitration award to determine whether the arbitrators manifestly disregarded the law.   See Bd. Of County Commis of Lawrence County, Ohio v. L. Robert Kimball & Assocs., 860 F.2d 683, 688 (6th Cir.1988).  Therefore, the court denied Murray’s motion to vacate the arbitration award.

The court additionally determined that, although Murray was incorrect on the merits of his case, he did not engage in the degree of bad faith or vexatious behavior that would compel the court to award CGMI fees and costs for the instant litigation.  Therefore, the court confirmed the arbitration award in its entirety without awarding CGMI additional fees and costs.

–

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

Employer May Not Compel FINRA Arbitration of Gender Discrimination and Retaliation Claims

Leave a reply
Joni D. Ffrench, v.PricewaterhouseCoopers Corporate Finance, LLC, et al., 2012 WL 1900930 (S.D. Tex. May 24, 2012)
Case Background

In a case before the Southern District of Texas, PricewaterhouseCoopers Corporate Finance LLC (“PwCCF”) filed a motion to compel Joni Ffrench (“Ffrench”), a former employee, to arbitrate gender discrimination and retaliation claims pending before the federal court.  PwCCF also filed a motion to stay in federal court proceedings until arbitration by the Financial Industry Regulatory Authority (“FINRA”) was complete.  The court denied both motions.

Ffrench was employed by PwCCF from 1999 until her termination in 2009.  She alleged that she was terminated in retaliation for complaints about the substantial compensation disparities between her and her male counterparts.  In accordance with FINRA rules, PwCCF filed a Uniform Termination Notice for Securities Industry Registration (“Form U-5”) stating the basis for her termination.

Ffrench alleged that the U-5 filed by PwCCF in October 2009 contained improper disparaging remarks and filed a claim with FINRA for “Libel and Slander on Form U-5.” The parties agreed to hold the FINRA arbitration in late October 2011; however, Ffrench later moved for a continuance of the arbitration hearing, which was granted.

Motion to Compel Arbitration

In addition to the FINRA arbitration hearing, Ffrench filed a charge of gender discrimination and retaliation against PwCC with the Equal Employment Opportunity Commission and the Texas Workforce Commission Civil Rights Division.  After receiving her “right to sue” letter, Ffrench filed a lawsuit against PwCCF and its parent company in state court, which PwCCF removed to federal district court.  PwCCF moved to compel arbitration and stay federal court proceedings, asserting that the same claims are at issue in both the FINRA arbitration case and the federal court case.

Courts follow a two-step inquiry to determine whether parties should be compelled to arbitrate.  First, the court must determine whether the parties agreed to arbitrate the dispute.  The party seeking to compel arbitration must establish by a preponderance of the evidence that such an agreement exists.  Once the court has determined that such agreement exists, the burden shifts to the party opposing arbitration to show either that the agreement is not enforceable or that the subject dispute does not come within the scope of the agreement.

The Court’s Decision

The Federal Arbitration Act (“FAA”) provides a mandatory stay of proceedings in federal district courts when the issue can be referred to arbitration.  9 U.S.C. § 3.  However, pursuant to FINRA Rule 13201, claims alleging employment discrimination in violation of a statute are not required to be arbitrated, and may be arbitrated only if the parties have agreed.

The court found Ffrench’s signature on her Uniform Application for Securities Industry Registration or Transfer (“U-4 Form”) to be insufficient to constitute such an agreement because this agreement only encompassed “any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of [FINRA].”

The court also found Ffrench’s initiation of FINRA proceedings to be insufficient to constitute an agreement to submit her gender discrimination and retaliation claims to arbitration.  Based on Ffrench’s Statement of Claim and the composition of the arbitration panel, the court determined that she only agreed to submit her defamation claim regarding Form U-5 to FINRA arbitration.

Because the court determined that the parties did not agree to arbitrate Ffrench’s gender discrimination and retaliation claims, the PwCCF motion to compel arbitration and stay proceedings in federal court was denied.

–

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

California Court Does Not Compel FINRA Arbitration of Statutory Discrimination Claims

Leave a reply
John Simmons v. Morgan Stanley Smith Barney, LLC, et al, 2012 WL 1900110 (S.D. Cal. May 24, 2012)
Case Background

In January 2008, John Simmons (“Simmons”) was offered employment by Morgan Stanley Smith Barney, LLC (“Morgan Stanley”) as the Executive Director and District Manager in the Global Wealth Management Department.  The offer letter stated that Simmons would be entitled to a $1 million forgivable loan, relocation benefits and a stock award.  Simmons accepted the employment offer by signing the Morgan Stanley offer letter. In February 2008, Simmons and Morgan Stanley entered into a bonus agreement and a promissory note that each contained a clause agreeing to arbitrate disputes related to these instruments in accordance with the Financial Industry Regulatory Authority (“FINRA”) rules.

During March in 2008, Simmons signed a Uniform Application for Securities Industry Registration or Transfer (“Form U-4”) which also contained an arbitration clause citing FINRA rules.  In May 2009, Simmons and Morgan Stanley entered into a second bonus agreement and a second promissory note, each of which contained the same arbitration clauses as the previous instruments.  During March in 2011, Simmons’s employment with Morgan Stanley was terminated. In September 2011, Morgan Stanley initiated a Statement of Claim with FINRA seeking to arbitrate its claim against Simmons for violation of the bonus agreements and promissory notes.

Simmons’ Allegations

In December 2011, Simmons initiated an action in California state court asserting statutory claims for discrimination pursuant to Cal. Govt.Code section 12940(a) and for violation of 42 U.S.C. § 2000e (“Title VII”).  Simmons claimed that Morgan Stanley employees made disparaging remarks to him regarding his religious beliefs because he was a member of the Church of Jesus Christ of Latter Day Saints.

Simmons also alleged that, despite his high level of performance, he was not paid in accordance with the terms of his employment agreement.  Finally, the complaint also alleged that, in February 2011, shortly before his termination, Simmons informed his supervisor that he was aware of the fact that he was paid less than other co-workers who performed similar duties but who did not share his religious beliefs.

Simmons’s complaint stated that these discrimination claims were “inextricably related” to Morgan Stanley’s allegations that he violated the two promissory notes because he was “illegally terminated before he was able to fully perform his obligations thereunder.” In addition to the two statutory discrimination claims, Simmons’s complaint also asserted non-statutory claims of wrongful termination in violation of public policy, fraud, and breach of contract.

Enforcing an Arbitration Agreement

Morgan Stanley removed the matter to the United States District Court for the Southern District of California and filed motions to compel arbitration and stay litigation.  Simmons filed a motion for a preliminary injunction asserting that he should not be compelled to arbitrate the claims that Morgan Stanley filed with FINRA in September 2011. Simmons presented five distinct legal arguments for why he should not be compelled to arbitrate with Morgan Stanley.  The federal court dedicated the most discussion to Simmons’s argument that the arbitration agreements which he allegedly entered into did not encompass his statutory discrimination claims.

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, embodies both a fundamental principle that arbitration is based in contract and a federal policy favoring arbitration.  A written arbitration agreement “shall be valid, irrevocable and enforceable,” unless the arbitration agreement can be invalidated by a generally applicable contract defense, such as fraud, duress and unconscionability.  9 U.S.C. §2.

Therefore, federal courts deciding motions to compel or stay arbitration examine (1) whether a valid arbitration agreement exists; and (2) whether the agreement encompasses the dispute at issue.  Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008).  Courts apply state contract law to determine whether an arbitration agreement exists and whether such agreement is enforceable.  Only if both findings are affirmative can a federal court enforce an arbitration agreement in accordance with its terms.

Statutory Remedies

Causes of action premised on statutory rights are just as subject to contractual arbitration agreements as non-statutory common law claims.  However, Congress may pass federal legislation that removes certain claims from the purview of the FAA.  Precedent within the Ninth Circuit is that “a Title VII plaintiff may only be forced to forego her statutory remedies and arbitrate her claims if she has knowingly agreed to submit such disputes to arbitration.” Renteria v. Prudential Ins. Co. of Am., 113 F.3d 1104, 1105-06 (9th Cir. 1997)(citing Prudential Ins. Co. of America v. Lai, 42 F.3d 1299, 1305 (9th Cir.1994)).

Both the public policy of protecting victims of sexual discrimination and the Congressional intent motivating Title VII legislation required that there be a knowing waiver of statutory remedies for civil rights violations, including employment discrimination based on gender.  Id. at 1108.  An earlier case within the Ninth Circuit held that parallel state anti-discrimination laws were made part of the Title VII enforcement scheme.  Lai, 42 F.3d at 1301 n.1.  Because the agreements to arbitrate in the February 2008 and May 2009 promissory notes and bonus agreements did not explicitly state that Simmons waived his right to a jury trial on claims of statutory employment discrimination, the court  refused to find that Simmons knowingly waived his statutory remedies on these claims.

Therefore, the court concluded that these arbitration provisions did not encompass Simmons’s first claim for violation of Cal. Govt. Code section 12940(a) and his second claim for Title VII violation.  However, the court determined that Simmons’s remaining non-statutory claims were encompassed by the existing arbitration agreements.

Arbitration Provisions

An arbitration provision may be challenged “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.   Under California law, a contract clause is unenforceable only if it is both procedurally and substantively unconscionable. Davis v. O’Melveny & Myers, 485 F.3d 1066, 1072 (9th Cir.2007)   Procedural unconscionability analysis focuses on the oppression or surprise of a contract clause.  The court found that the arbitration provisions at issue contain a minimal element of procedural unconscionability because they were standard FINRA agreements and clearly visible.  Substantive unconscionability considers the effect of the contract clause, specifically whether the clause is so one-sided as to shock the conscience.  Id. at 1075.

The court found that the arbitration provisions were substantively unconscionable because the rules of FINRA may require Simmons to pay hearing session fees in excess of what he would pay in court.  However, the single substantively unconscionable provision can be severed from the arbitration agreements; therefore, the court held that the arbitration agreements in the February 2008 and May 2009 promissory note and bonus agreements were enforceable once the unconscionable provision was severed.

The Court’s Decision

The court granted Morgan Stanley’s motion to compel arbitration on Simmons’s non-statutory claims pursuant to the arbitration provisions set out in the February 2008 and May 2009 promissory note and bonus agreements.  Likewise, pursuant to 9 U.S.C. § 3, the court granted Morgan Stanley’s motion to stay litigation on these claims pending arbitration.  Because the court found that valid arbitration provisions exist, it denied Simmons’s motion for a preliminary injunction.

With respect to Simmons’s first two claims of employment discrimination under California and federal statutes, the court denied Morgan Stanley’s motions to compel arbitration and stay litigation.  Simmons was permitted to litigate these claims in federal district court.

–

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

Year End Employment Contract Bonus Payments in Connecticut: Enforceable Promises?

Leave a reply
Employment Contracts in Connecticut: When is a promise to pay a year-end bonus enforceable against an employer?

Given the downturn in the economy, millions of employees lost their jobs at the end of 2012. Many of those jobs were based upon a compensation structure including a base salary and a bonus to be paid at the end of the year, or early this year, as in now. If you are one of those individuals who lost your job, you are probably wondering whether you are entitled to the bonus you thought you were promised. The Connecticut Appellate Court answered this question in favor of employees.

Case Background

Here are the facts of the case. An employee worked for a small Connecticut employer for several years. At the outset of the employment relationship, the employee agreed to accept a lower salary in consideration for the employer’s promise to pay a year-end bonus. This arrangement continued for several years. Eventually, the employee left the firm and the employer decided to pay only his base salary, but no year-end bonus. The employee sued.

In the lawsuit, the employee alleged breach of contract and wrongful withholding of wages. After trial the court entered judgment for the employee on the breach of contract count awarding damages.  In reviewing the case, the Connecticut Appellate Court found that the trial court properly looked at the employment contract, and parole evidence – circumstances outside of the employment contract – to determine the appropriate compensation, including a bonus payment, for the employee during the last year of his employment. The Connecticut Appellate Court determined the parties entered into a written employment contract setting forth the criteria upon which annual compensation would be based and therefore, the employee had a viable claim to a bonus payment.

The Court’s Decision

The Court found the written employment contract only set forth the timing and basis for calculating the amount of annual compensation. The written employment contract did not set forth the expression of the parties intent as to the timing, form and amount of payment, which are essential terms to an employment contract.

The trial court concluded that the employer had agreed by either words or deeds pursuant to the compensation clause in the contract to pay a bonus to the employee for that portion of the year the plaintiff was employed with the employer. The Appellate Court further found that even though the employer and the employee were indefinite as to the amount of the bonus, this did not render the bonus promise unenforceable. The employer’s promise of a yearly bonus was supported by the consideration of the employee accepting a lower salary throughout the year.

The Appellate Court also reversed the trial court and found that the claim for wrongful withholding of wages should not have been dismissed. The Court determined that under the employment agreement the bonus could have been classified as wages under Connecticut Labor Law.

–

If you have any questions regarding this article, or would like to discuss an employment contract, severance package, non-competition agreement, non-solicit agreement, or any other issue related to your employment, please contact Joseph C. Maya, Esq. at JMaya@Mayalaw.com or (203) 221-3100.

Circuit Court Vacates Decision Holding Insurance Company Must Indemnify Employer Liable in Sexual Harassment Claim

Leave a reply

The First Circuit of the U.S. Court of Appeals vacated a decision by the District Court granting summary judgment for an insured employer, requiring its insurance company to defend and indemnify it against sexual harassment claims.[1] The First Circuit held that there was a factual dispute as to whether the underlying sexual harassment charges began before the insured employer’s insurance policy took effect.

Case Background

Beginning in 1997 to 2006, Mrs. Burgess was a human resource manager at Jasmine, a clothing retailer of whom Manganella was the president and sole shareholder.  In 1998 another former employee filed claims against Jasmine based on Manganella’s offensive conduct. In response, Jasmine purchased from the insurance company, Evanston, an employment liability insurance policy.   The Policy covered damages, including monetary settlements, “which [Jasmine] shall become legally obligated to pay as a result of [timely made claims], by reason of any Wrongful Employment Practice.[2]”

The Policy stated that Wrongful Employment Practice includes, “conduct of an Insured with respect to … [an] employee that allegedly culminated in … violation of any state, federal or local civil rights or anti-discrimination law and/or fair employment practices law.[3]”  According to the contract, for a claim to be covered, a Wrongful Employment Practice must have happened in its entirety during the policy period or after the retroactive date, which was April 28, 1999.

Burgess’s Accusation

On March 19, 2007, Burgess filed a charge of discrimination against Manganella and Jasmine with the Massachusetts Commission Against Discrimination. Burgess’s MCAD charge alleged that, “throughout her employment with Jasmine, Manganella subjected Ms. Burgess to nearly constant physical and verbal sexual harassment,” including “inappropriate comments about Ms. Burgess’ body, inappropriate touching,” and, eventually, coerced sexual activity on five separate occasions.[4]

Ten days after Burgess filed her charges Manganella notified Evanston of her claims and requested coverage. Less than two weeks later, Evanston sent a letter to Jasmine, denying coverage for Burgess’s claims on the ground that the harassment alleged by Burgess in “did not happen in its entirety subsequent to the retroactive date,” as required for coverage.[5]

The Court’s Decision

While the District Court granted the employer’s action for declaratory judgment that the insurance company had a duty under the insurance policy to defend and indemnify it against charges of sexual harassment, the Court of Appeals found that statements made by the former employee could support the inference that the harassing conduct giving rise to her claim did include inappropriate comments before the Policy’s April 1999 retroactive date.

After analyzing the insurance policy and the statements made by Manganella’s, the Court held that a reasonable factfinder could conclude that Manganella’s offensive sexual comments, while perhaps “not … serious enough for complaint” when made, were ultimately part of the broader pattern of harassing, unlawful conduct that gave rise to Burgess’s claims.[6]  The Court thus vacated and remanded the case to determine if any of Manganella’s harassing conduct toward Burgess predated the insurance policy.

–

Employers and businesses need Employment Liability Insurance to insulate them from the inherent risks and unpredictable events that arise from owning and running a business, but coverage requirements and policy details are often complex.  The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.

Should you have any questions about Employment Liability Insurance, coverage and policy requirements, workplace sexual harassment or any other employment law matter, please do not hesitate to contact Attorney Joseph C. Maya, Esq. He may be reached at Maya Murphy, P.C., 266 Post Road East, Westport, Connecticut, by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.