Posts tagged with "new haven"

ERISA Claim Challenges Vague Language of FINRA Arbitration Award in order to Include Back Pay as Benefits-Eligible Compensation

Ronald A. Roganti  v .Metropolitan Life Insurance Company, et el, 2012 WL 2324476 (S.D.N.Y.  June 18, 2012)

In a case before the Southern District of New York, Ronald Roganti (“Roganti”), a former employee of the Metropolitan Life Insurance Company (“MetLife”), asserted claims under the Sarbanes–Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), and the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132 (“ERISA”). Both claims challenge MetLife’s denial of Roganti’s request that a 2010 Financial Industry Regulatory Authority (“FINRA”) arbitration award be treated as benefits-eligible compensation.  MetLife moved to dismiss both claims on several grounds.  The court granted MetLife’s motion with respect to the SOX claim and denied the motion with respect to the ERISA claim.

Case Background

The underlying dispute in this case arose during Roganti’s employment with MetLife, which lasted from 1971 to 2005.  In 1999, Roganti began to voice concerns regarding allegedly-suspect business practices at MetLife and continued to do so until he terminated his employment in 2005.   Roganti claimed that throughout that time period, MetLife repeatedly disregarded his complaints and actively retaliated against him, including undermining his authority within the business subsets he oversaw and reducing his compensation with the specific purpose of reducing his pension benefits.

In July 2004, Roganti filed his initial Statement of Claim with the National Association of Securities Dealers (“NASD”) to arbitrate his disputes with MetLife.  FINRA, the successor to NASD, appointed a panel of three arbitrators to adjudicate four claims brought by Roganti: (1) the breach of contract claim, based on MetLife’s reduction of Roganti’s compensation; (2) violation of SOX retaliation provisions, based on MetLife’s retaliation against Roganti for reporting questionable business practices; (3) for the value of services rendered by Roganti; and (4) for violating ERISA, on the theory that, in reducing Roganti’s compensation, MetLife also sought to reduce his pension benefits.

In August 2010, the FINRA panel held that MetLife was liable to Roganti for $2,492,442.07 in “compensatory damages … above [MetLife’s] existing pension and benefit obligation to Claimant.” The arbitral award explain neither how the arbitrators arrived at this sum nor for what the award was intended to compensate Roganti. FINRA Docket Number 04-04876.

Benefits Claim

On March 24, 2011, Roganti filed a benefits claim with MetLife, in its capacity as the Plan Administrator, asking that the arbitral award be treated as compensation for income which MetLife had improperly denied him, and that the award be factored into the calculation of the benefits which he was entitled to under his pension plan with MetLife. MetLife denied the request for three reasons.

First, only income of current employees was benefits-eligible; therefore, since Roganti was not employed by MetLife when he received the award; therefore, it did not qualify as benefits-eligible compensation.  Second, FINRA broadly termed the award as “compensatory damages” rather than stating it was compensation for lost income.  Finally, the FINRA award did not indicate to which years of Roganti’s employment the award applied; therefore, even if the award represented unpaid income, it would be impossible for MetLife to determine concretely how the award should affect Roganti’s pension benefits. Roganti appealed this decision to MetLife, and MetLife again denied his claim.  Subsequently, Roganti filed SOX and ERISA claims in federal district court.

Because Roganti’s current SOX and ERISA claims are based on the 2011 denial of pension benefits, the court determined that these have not already been dispositioned by the 2010 FINRA arbitration.  Therefore, the court denied MetLife’s motions to dismiss both claims on grounds of res judicata and collateral estoppel.  However, because Roganti did not exhaust administrative remedies before filing his SOX claim in federal district court, the court determined that his SOX claim must be dismissed.

ERISA Claims

Roganti made two claims under ERISA, which creates a private right of action to enforce the provisions of a retirement benefits plan. 29 U.S.C. § 1132(a)(1)(B).  First, he alleged that the FINRA arbitral award compensated him for unpaid wages that resulted from MetLife’s retaliation against him.  Second, he argued that because the award constituted back pay, it must be taken into account in calculating his pension benefits.  The court determined that central to both claims is the issue of whether the FINRA arbitration award constitutes back pay to compensate Roganti for services rendered while he was a MetLife employee, which would properly be included in pension benefits calculations.

The Court’s Decision

Neither the brevity of the FINRA arbitration award nor Roganti’s statement of claims to FINRA provided the court with sufficient clarity to resolve the factual issue of exactly what the award represented. The court, therefore, construed the ambiguity in the award language in the light most favorable to Roganti.  The court concluded that he had met his burden and denied MetLife’s motion to dismiss the ERISA claim.

Because the three-month timeframe to seek clarification from a FINRA arbitration panel pursuant to 9 U.S.C. § 12 had elapsed, the court ordered the ERISA Plan Director to closely review the arbitral record, in the context of the evidence offered and arguments made by both sides at the arbitration, to determine whether or not the award represented back pay for Roganti.  The court found it unacceptable that the initial denials of benefits were based on the terse language of the arbitration award, rather than a more detailed analysis as to what the award amounts represented.


Should you have any questions relating to FINRA, employment, compensation or benefits 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.

Firing to Prevent Pension Vesting, Without More, Does Not Violate ADEA

In this economy, companies are terminating employees in an effort to increase share value or simply improve the bottom line.  Often it is the older, more senior, and more costly employees that are the first to go.  The question sometimes arises: “Can my employer fire me to prevent my pension from vesting (thereby saving itself money) without violating the Age Discrimination in Employment Act?”  The short and surprising answer is “yes,” assuming the absence of other critical allegations necessary to sustain an ADEA claim.

A Relevant Case

In a case out of the Second Circuit Court of Appeals, a Connecticut employee alleged in his Complaint only that “he was fired by defendants because he was nearing the age of retirement.”  The lower court dismissed this claim and the appellate court affirmed because this was the only fact alleged in the Complaint as evidence of age discrimination.  The United States Supreme Court has held that the firing of an employee to prevent his pension benefits from vesting does not, without more, violate the ADEA.

What essential allegations were missing?  In order to prevail, the plaintiff had to allege facts evincing that his employer was using pension status as a proxy for age, in order to discriminate on the basis of age.  How could he do that?  One way would be to plead and prove that his pension vested due to age and not years of service.  While age and years of service are empirically connected, the Supreme Court has said that they are “analytically distinct.”  What the Complaint lacked were additional allegations supporting a claim of age discrimination, for a successful ADEA plaintiff must prove that age actually motivated the employer’s decision.

The take-away from this case is that victims of age discrimination should consult with an experienced employment law litigator to ensure that an actionable claim is properly alleged in a Complaint.  In the case referred to above, it is impossible to say whether the plaintiff would have prevailed with a more artfully crafted Complaint.  What we do know is that his bare-bones Complaint was dismissed as insufficient without ever being heard on its merits.

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.

Did Basketball Powerhouse Force Coach to Resign Due to Her Disability?

Most people who have lived for some period of time here in Connecticut are amply familiar with the Lady Huskies and Lady Vols fierce decade-long rivalry. Before regular season matches were discontinued five years ago, these games were the highlight of the season. Thus, fans have come to form a love-hate relationship with Pat Summitt, Head Coach of the Lady Vols who has the most wins of any (both male and female) NCAA basketball coach.

It came as a shock to hear on April 18, 2012, after thirty-eight years of coaching, Summitt would be retiring from her post after being diagnosed with early-onset dementia-Alzheimer’s disease just before the start of the 2011-2012 season.[1] “I’ve loved being the head coach at Tennessee for 38 years, but I recognize that the time has come to move into the future and to step into a new role,” explained Summitt.[2]

As it turns out, the decision may not have been entirely that of Summitt.

In a recently released affidavit,[3] Summitt revealed that on March 14, 2012, she met with the University of Tennessee (UT) Athletics Director David Hart, who informed her that she would no longer be the coaching the Lady Vols. Summitt further explained:

This was very surprising to me and very hurtful as that was a decision I would have liked to have made on my own at the end of the season after consulting with my family, doctors, colleagues, and friends and not be told this by Mr. Hart. I felt this was wrong.[4]

UT spokeswoman Margie Nichols denied allegations that Summitt was forced out of her position. “It’s absolutely not true… It was Pat’s idea to become the head coach emeritus. I think she made that really clear at her press conference earlier this year.”[5] Regardless, this leaves many asking: was Summitt forced to resign because of her disability?

Discrimination in the Workplace

Under Connecticut law, employees enjoy a very comprehensive statutory scheme (found here) prohibiting discriminatory practices in the workplace. Unless the employer and its agents (such as administration or management) have a “bona fide occupational qualification or need,” it is a violation of the General Statutes:

To refuse to hire or employ or to bar or to discharge from employment any individual or to discriminate against such individual in compensation or in terms, conditions or privileges of employment because of the individual’s race, color, religious creed, age, sex, marital status, national origin, ancestry, present or past history of mental disability, mental retardation, learning disability or physical disability, including, but not limited to, blindness.[6]

In addition, employees enjoy federal protection of their rights through such legislation as the Americans with Disabilities Act, the Rehabilitation Act, and the Family Medical Leave Act, to name just a few.

Discrimination on the basis of disability or another protected class is unfortunately a common occurrence in the workplace, but its prevalence in no way makes it lawful. If you are a teacher, coach, or any employee and you find yourself being the target of adverse employment action on any of the above bases, it is imperative that you consult an experienced and knowledgeable school or employment law practitioner.

Should you have any questions regarding employment discrimination or other education law or employment law matters, 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 (located in Fairfield County), by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.

 


[1] “Pat Summitt’s Early-Onset Dementia: Lady Vols Coach Resigns Less Than A Year After Diagnosis.” Published April 18, 2012. Accessed October 5, 2012: http://www.huffingtonpost.com/2012/04/18/pat-summitt-dementia-early-onset-alzheimers-memory_n_1435380.html

[2] Id.

[3] “Affidavit of Coach Pat Head Summitt.” Accessed October 5, 2012: http://www.documentcloud.org/documents/452632-pat-summitts-affidavit.html

[4] Id.

[5] “Pat Summitt Affidavit: Ex-Tennessee Coach Initially Felt Forced Out Of Job Over Early-Onset Dementia,” by Steve Megargee. Published October 3, 2012. Accessed October 5, 2012: http://www.huffingtonpost.com/2012/10/04/pat-summitt-affidavit-tennessee-coach-job_n_1937730.html

[6] Connecticut General Statutes § 46a-60(a). Accessed October 5, 2012: http://www.cga.ct.gov/current/pub/chap814c.htm#Sec46a-60.htm

Hurdles Employees Must Jump in Filing a Claim for Unlawful Discrimination

Here in Connecticut and across the nation, employees from all walks of life routinely face unlawful discriminatory practices and treatment in the workplace. Depending on the nature of the claim, he or she may file civil lawsuits under Title VII (which prohibits employment discrimination on the basis of race, color, religion, sex, and national origin) or the Connecticut Fair Employment Practices Act (CFEPA).

However, employees need to keep in mind that before they seek recourse with the courts, they must first exhaust all of their administrative remedies. “The exhaustion requirement exists to afford the administrative agency the opportunity to investigate, mediate, and take remedial action.”[1] Failure to do so will result in dismissal of the case (see, for example, this previously-discussed case).

CFEPA Title VII

Furthermore, employees must pay attention to statutory time restrictions for filing administrative charges under Title VII and CFEPA:

To sustain a claim for unlawful discrimination under Title VII in a deferral state such as Connecticut, a plaintiff must file administrative charges with the EEOC [Equal Employment Opportunities Commission] within 300 days of the alleged discriminatory acts.[2] … CFEPA requires that a complainant file the administrative charge with the CCHRO [Connecticut Commission on Human Rights and Opportunities] within 180 days of the alleged discriminatory act.[3]

Courts are particularly cognizant of these requirements and endorse “strict adherence… [as] the best guarantee of the evenhanded administration of the law.”[4] As a result, the time bar will begin running for each individual adverse employment action against the employee on the date it occurred. Failure to timely file a claim may prevent it from being reviewed by the EEOC or CCHRO.

However, employees often endure discriminatory practices over a prolonged period of time, so even if alleged conduct falls outside of the charging period, it may be reviewable. An important exception to strict adherence is the continuing violation exception, which involves incidents occurring both within and outside the time bar. A continuing violation occurs “where there is proof of specific ongoing discriminatory policies or practices, or where specific and related instances of discrimination are permitted by the employer to continue unremedied for so long as to amount to a discriminatory policy or practice.”[5]

As an employee, it is imperative that you understand Connecticut’s statutory scheme surrounding hiring, evaluation, and termination processes, as well as the requirements for filing a lawsuit under State and federal anti-discrimination law. The attorneys at Maya Murphy, P.C., assist clients in Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, and Westport.

If you have any questions regarding any employment law matter, please do not hesitate to contact Attorney Joseph C. Maya. He may be reached at Maya Murphy, P.C., 266 Post Road East, Westport, Connecticut (located in Fairfield County), by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.

 


[1] Stewart v. United States Immigration and Naturalization Service, 762 F.2d 193, 198 (2d. Cir. 1985).

[2] Flaherty v. Metromail Corp., 235 F.3d 133, 136 n.1 (2d Cir. 2000).

[3] Connecticut General Statutes § 46a-82e.

[4] Mohasco Corp. v. Silver, 447 U.S. 807, 826 (1980).

[5] Cornwell v. Robinson, 23 F.3d 694, 704 (2d Cir. 1994).

Preemptive Effect of LMRA Extends to Suits Alleging Liability in Tort

Collective Bargaining Agreements (CBA)

Labor relations between an employer and a union are typically defined in a Collective Bargaining Agreement (“CBA”) between the two.  The CBA sets forth the parties’ respective rights and obligations with respect to such things as wages, hours, and other terms and conditions of employment.  The Labor Management Relations Act (“LMRA”) grants jurisdiction to the federal district courts for “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce.”

If resolution of a state law claim turns upon interpretation of the CBA, the claim is preempted and subject to dismissal by the federal court.  But “when the meaning of contract terms is not the subject of dispute, the bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished.”

A Relevant Case

A decision of the Second Circuit Court of Appeals pointed out the fuzzy line that can sometimes exist between a preempted claim and one that is not.  In Adonna v. Sargent Mfg. Co., 2012 U.S. App. LEXIS 10343 (2d Cir. May 23, 2012), a union employee brought claims against his employer for intentional and negligent infliction of emotional distress.  The employer conduct complained of included reassignment, suspension, reduction in pay, and demands not imposed on any other employee.

The Court of Appeals concluded that whether or to what extent this conduct was wrongful could be determined only by examining the CBA provisions relating to the employer’s right to manage, direct, and discipline the workforce, and set employee wages.  Because the employee’s claims were “inextricably intertwined” with the terms of the CBA they were preempted and properly dismissed by the trial court.

Employers and employees alike should be aware of the extensive preemptive effect of the LMRA.  It is the rare state-law tort claim that will not require not only the consultation, but also the interpretation of the relevant CBA, thereby resulting in preemption at the federal level.

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 office at 203-221-3100.

Employee Handbook Alert: Seemingly Neutral Work Rule May Violate NLRA

The National Labor Relations Act (“NLRA”) gives private-sector employees the unqualified right to engage in “protected concerted activity” which includes discussing among themselves such things as wages, hours and other terms and conditions of employment.  An employer cannot promulgate a work rule that tends reasonably to chill employees’ exercise of that statutory right.

Karl Knauz Motors, Inc. owned and operated a BMW dealership.  Its employee handbook contained the following (apparently common sense) rule:

(b) Courtesy: Courtesy is the responsibility of every employee.  Everyone is expected to be courteous, polite, and friendly to our customers, vendors and suppliers, as well as to their fellow employees.  No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The Board’s Decision

In a September 28, 2012 decision, the National Labor Relations Board for two reasons found the rule unlawful “because employees would reasonably construe its broad prohibition against ‘disrespectful’ conduct and ‘language which injures the image or the reputation of the Dealership’” as including employees’ protected statements objecting to and seeking improvement of terms and conditions of employment.

First, there was nothing in the rule that would reasonably suggest to employees that such protected communications were beyond the rule’s broad reach.  Second, an employee would reasonably assume that the employer would “regard statements of protest or criticism as ‘disrespectful’ or ‘injur[ious] [to] the image or reputation of the Dealership.’”

The Board took particular offense to the second section of the rule as specifically proscribing certain types of conduct and statements.  The Board construed these as workplace “lines” that a Karl Knauz Motors’ employee may not safely cross.  In the Board’s estimation, the second section of the rule prohibits not merely a manner of speaking, but rather the actual content of employee speech—content that would damage the employer’s reputation.

Consequently, a reasonable employee would conclude that protected communications about the employer’s allegedly unlawful terms and conditions of employment would expose the employee to employer sanctions for violation of its handbook rule.  Stated differently, the Board felt that compliance with the first section of the rule offered no assurance against sanctions under the second section of the rule.

Final Takeaway

Historically, NLRB decisions have ebbed and flowed depending upon the current occupant of the White House, who appoints the Board’s members.  Lately, the pendulum has continued to swing in the direction of further limiting employer rights to regulate threatening or offensive employee speech, leading one commentator to question whether at-will employment will be relegated to an historical artifact.

The takeaway from the Board’s decision vector is for employers to examine employee handbooks to compare and contrast their language with that found by the NLRB to be unlawful.  The cost of an amendment pales in comparison with the cost of an NLRB investigation and proceeding.  Remember that the NLRA protects  all private sector employees, irrespective of whether or not they belong to a union.

The employment and labor law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the counseling, negotiation and litigation of all sorts of employment-related issues and assist employers from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in ensuring compliance with the applicable law. 203-221-3100.

To Be Qualified for a Position, an Employee Must Also Be Eligible

Most employees are familiar with the proposition that for them to prevail in a discrimination case they must prove several things, including that they were “qualified” for the position sought (and denied).  Most people equate being “qualified” with “possessing the qualifications to perform the job” and this is correct.  But there is more.  In addition to being technically competent, the employee must also be eligible to apply for the position.

Case Background

In a decision, a Physician’s Assistant (“PA”) voluntarily chose to transfer from a hospital’s Department of Surgery to its Department of Medicine in order to avoid impending “on-call” obligations.  When a Lead PA position was posted in the Department of Surgery it was hospital policy to offer it first to PA’s within the Department (of which there was one) and absent interest, to open the position to other Departments.  When the Lead PA position was offered to and accepted by the lone PA in the Department of Surgery the former Department PA sued on a variety of grounds, including race and gender discrimination.

The Court’s Decision

After a jury initially found for the disappointed PA, a reviewing court found that the jury’s determination that he was qualified for the position found no support in the record.  The court framed the relevant inquiry as “whether he would have been eligible to apply as a non-departmental candidate when there was an internal candidate willing to take the . . . position.”  The court answered this question in the negative and judgment was entered in favor of the defendant hospital.

Parenthetically, the court also found that the plaintiff PA did not suffer any adverse employment action and that the circumstances of the case did not give rise to an inference of gender discrimination.  Noteworthy, too, was the court’s observation that “unfairness is not the equivalent of gender discrimination.”  The court’s sole concern is “whether unlawful discriminatory animus motivates a challenged employment decision.”  Thus, a successful plaintiff must produce evidence from which such motivation can reasonably be inferred.

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.

Investigatory Meeting Even With Possible Consequences Not an Adverse Employment Action

Employees sometimes find themselves summoned to an internal investigation and informed that they could be terminated depending upon the results of the investigation.  As long as the employer is merely (and reasonably) enforcing its preexisting disciplinary policies, such circumstances (however unsettling) do not support even a prima facie case of employment discrimination.

In order to establish a prima facie case and put an employer to its proof that there was a legitimate, non-discriminatory reason for its challenged action, an employee must demonstrate that he suffered an “adverse employment action.”  This means “a materially significant disadvantage with respect to the terms of [a plaintiff’s] employment.”  While each situation must be assessed under the totality of the particular circumstances, there must be “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”

Merely being called into an investigatory meeting and informed of its potential consequences does not constitute an adverse employment action, particularly where no discipline or other negative consequence follows.  In the absence of an adverse employment action, an employee’s case will likely be dismissed via summary judgment without the need for a trial on the merits.

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.

Federal Court Confirms FINRA Arbitration Award that Refuses to Classify a Forgivable Loan as Employee Compensation Subject to the Wage Act

Pauline Sheedy v. Lehman Brothers Holdings, Inc., 2011 WL 5519909 (D. Mass. Nov. 14, 2011)

In a recent Massachusetts case, Pauline Sheedy (“Sheedy”), a former managing director at Lehman Brothers, Inc., filed an action in state court seeking to vacate a Financial Industry Regulatory Authority (“FINRA”) arbitration award entered in favor of Lehman Brothers Holdings, Inc. (“LBHI”).  LBHI removed the case from state to federal court, and filed a motion to dismiss Sheedy’s complaint, confirm the FINRA arbitration award, and award “collection expenses.”  The United States District Court for the District of Massachusetts allowed LBHI’s motion.

Case Background

The underlying dispute in this case involves LBHI’s efforts to collect the unpaid principal balance, plus interest and fees, for a forgivable loan that was extended to Sheedy when she began her employment with Lehman Brothers, Inc. Sheedy alleged that her compensation package included a “one-time incentive signing bonus” of $1 million; however, Lehman’s offer letter characterized the $1 million payment a loan to be forgiven in five equal installments of $200,000 on the first through fifth anniversary of her employment start date.

The offer letter further stated that if Sheedy separated from Lehman Brothers, Inc. for “any reason” prior to full forgiveness of the loan, she would be required to repay the remaining principal balance, plus interest accrued through her separation date.  In 2008, Lehman Brothers, Inc. was forced to file for bankruptcy protection and ceased doing business in Massachusetts.

As a result, Sheedy was separated from Lehman Brothers, Inc. in September 2008, approximately two months prior to the second anniversary of her employment start date. During the marshaling of assets for the bankruptcy estate, Lehman Brothers, Inc. assigned Sheedy’s promissory note for the loan to LBHI.

The Arbitration Award

LBHI initiated FINRA arbitration proceedings against Sheedy, claiming the principal balance due of $800,000, plus interest and fees.  A single FINRA arbitrator was appointed to hear the case.  In June 2011, the arbitrator entered an award ordering Sheedy to repay LBHI the outstanding balance of $800,000, plus interest and attorneys’ fees.

After the arbitration award, Sheedy filed an action in Massachusetts state court to vacate the FINRA arbitration award pursuant to the state Uniform Arbitration Act for Commercial Disputes. Mass. Gen. Laws ch. 251, §§ 1-19.   LBHI timely removed the case from state to federal court.

Sheedy sought vacatur on two grounds: (1) that the arbitrator exceeded her authority because the award requires her to “forfeit earned compensation” in violation of the Massachusetts Weekly Wage Act (“Wage Act”), Mass. Gen. Laws ch. 149, § 148; and (2) that the award violated the Massachusetts public policy prohibiting the unlawful restraint of trade and competition.

Sheedy’s Arguments

Both the Massachusetts Uniform Arbitration Act for Commercial Disputes and the Federal Arbitration Act (“FAA”) provide statutory grounds for vacating an arbitration award where an arbitrator exceeds his authority.  Compare Mass. Gen. Laws ch. 251, §§ 12(a)(3) with 9 U.S.C. § 10(a)(3).   Sheedy argued that the FINRA arbitrator exceeded her authority by issuing an award that required Sheedy to forfeit earned compensation in violation of the Wage Act.

The Wage Act defines the requirements for payment of employee wages and commissions, and prohibits the use of “special contract…or other means” to create exemptions from these requirements.  Citing Massachusetts case law, Sheedy argued that the provisions of the Wage Act cover any payment that an employer is obligated to pay an employee; therefore, once she signed Lehman’s offer letter and Lehman was bound to make the $1 million payment to her, that payment became a non-discretionary deed subject to the Wage Act.

The court disagreed with this characterization of the payment.  The court determined that the accepted offer clearly made forgiveness of the full amount of the loan contingent upon completing five years of employment at Lehman Brothers, Inc.; therefore, the portion of the payment which remained outstanding at the time of Sheedy’s termination was never “earned” within the meaning of the Wage Act.  The court denied vacatur on the grounds that the arbitrator exceeded her authority because the award was not in violation of the Wage Act.

The Court’s Decision

An arbitration award may also be challenged by reference to a “well-defined and dominant” public policy. United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 28, 43 (1987).   Arbitrators may not award relief that offends public policy or requires a result contrary to statutory provisions.  Plymouth–Carver Reg’l Sch. Dist. v. J. Farmer & Co., 553 N.E.2d 1284 (1985).   Sheedy argued that the FINRA arbitration award should be vacated because forfeiture of the payment is an unlawful penalty to punish her if she chose to leave Lehman and freely compete in the market place.

The court determined that the structure of the forgivable loan in the offer letter was not equivalent to a non-compete agreement that restricted an employee’s ability to work in the same field within a given geographic area.  Therefore, the arbitration award did not violate the state public policy against unlawful restraint of trade and competition and the court denied vacatur on these grounds.

The court allowed LBHI’s motion to dismiss Sheedy’s complaint, confirm the arbitration decision and award collection expenses.  The court gave LBHI fourteen days from the date of its order to submit a request for attorneys’ fees and a proposed form of judgment.

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.

Teacher Placed on DCF’s Child Abuse and Neglect Registry

Case Background

Twelve-year-old Kyle G., while attending MicroSociety Magnet School in New Haven, Connecticut, was subjected to repeated harassment and bullying, amounting to child abuse and neglect.  However, Kyle’s bully was not another student, but rather his teacher Nicholas Frank.  The witnesses, Kyle’s classmates.

Mr. Frank subjected Kyle to constant ridicule in front of Kyle’s classmates, calling Kyle “cheeks,” “birthing mother,” and “fish out of water.” Mr. Frank even resorted to physical harassment, by pinching Kyle’s cheeks.  Mr. Frank limited Kyle to asking only ten (10) questions a day, and if Kyle went over, Kyle could choose his punishment: have his cheeks pinched or lunch detention.  As a result, Kyle became terrified in class, as he was afraid of how Mr. Frank was going to make fun of him next. Kyle’s grades started slipping from A’s to C’s. He had trouble sleeping and started wetting his bed.

Kyle’s mother became alarmed and reported her concerns to the school administrators. Upon learning of Mr. Frank’s actions, the school advised him to stop calling Kyle names, stop pinching his cheeks, and to minimize contact with Kyle.  When questioned, other students confirmed Kyle’s story. Students reported that Mr. Frank called Kyle “pregnant” due to his weight.  As a result of the investigation, Mr. Frank was suspended for eight days without pay.

The Charges

Connecticut Department of Children and Families (“DCF”) learned of the incident and charged Mr. Frank with emotional neglect. A hearing officer substantiated the finding, holding that Mr. Frank “subjected Kyle to ‘acts, statements, or threats’ that would have an adverse impact on Kyle, including referring to his facial appearance and his weight. After substantiating the findings, DCF had a separate hearing as to whether Mr. Frank should be placed on DCF’s central registry of child abuse and neglect.

In deciding to place Mr. Frank on the central registry, the hearing officer determinate that Mr. Frank “in light of the attention given to anti-bullying in the school context, should have been aware of the implications of his statements. Kyle suffered an adverse emotional impact from the plaintiff’s [Mr. Frank’s] behavior as his grades dropped and his fear of school increased.” The hearing officer found that Mr. Frank had a pattern of abuse.

On Mr. Frank’s appeal of the DCF’s findings, the Superior Court rejected Mr. Frank’s arguments that the decision was not based on substantial evidence. The Court stated, “the court defers to the conclusion of the hearing officer who noted that teachers through the schools districts are on notice that poking fun at students is inappropriate behavior.”

By: Leigh H. Ryan, Esq.

If you or someone you know has been a victim of bullying or harassment, please contact a knowledgeable attorney.  At Maya Murphy, P.C., we have decades of experience dealing with Education Law, harassment or bullying, Special Education Law, and discrimination– often in situations where they run concurrently.  We handle all types of issues, in a broad geographic area, which includes Westport, Fairfield, Greenwich, New Canaan, and the entire Fairfield County area.

If you have any questions regarding bullying, or any education law matter, contact Joseph Maya at 203-221-3100 or by email at JMaya@MayaLaw.com.