Employment Law U2

CHAPTER1

First the Forest, Then the Trees: An Overview of Employment and Labor Law

employment-at-will

both the employee and the employer are free to unilaterally terminate the relationship at any time and for any legally permissible reason, or for no reason at all

common law

judge-made law, as opposed to statutes and ordinances enacted by legislative bodies

Employment and labor are, arguably, as old as recorded history. In the New Testament’s parable of the laborers in the vineyard, we find those workers who began picking grapes at dawn complaining to the owner because those he hired at noon received the exact same wage as they got. “What business is it of yours, if I choose to be generous?” he inquires rhetorically.

The parable is a rare recorded case of employer largesse. More often workers’ complaints have involved too little pay, lack of benefits, unreasonably long hours, or unsafe workplace conditions. When such complaints have typically been addressed, it was by the workers themselves or the government.

For example, in the Middle Ages—when many Europeans believed the earth was flat— craftsmen formed guilds according to their respective trades. But by the 14th century, as one famous historian has explained, “Once united by a common craft, the guild masters, jour- neymen, and apprentices had spread apart into entrepreneurs and hired hands divided by class hatred. The guild was now a corporation in which the workers had no voice.”1 Dissatisfaction led to working-class revolts, which in turn resulted in brutal reprisals by the upper classes.2

The Black Death, a plague that first decimated Europe’s population in the mid-14th century, actually benefited those workers who survived. The labor shortage encouraged demands for higher wages and better conditions. Rulers’ responses were swift and severe. In 1339, Britain’s king issued a proclamation that required everyone to accept the same wages that they had received two years earlier. The new labor law also established stiff penalties for refusing to work, for leaving a job in search of higher pay, and for an offer of higher wages by an employer. Parliament reissued the proclamation as the Statute of Laborers in 1351, not only denouncing workers who had the temerity to demand higher wages, but especially decrying those who chose “rather to beg in idleness than to earn their bread in labor.”3

The Industrial Revolution in 19th-century England and America witnessed the rise of the employment-at-will doctrine in the common law. At-will employment—covered in depth in Chapter 2—meant, in theory, that either the employer or the worker could terminate their

relationship at any time for any reason. In reality, the employers had all the bargaining power; real negotiation of terms and conditions of employment was, for the most part, a myth.

To put the relationship more nearly into balance, workers banded together into labor unions. The reaction of the American judiciary, drawn almost exclusively from the upper, propertied class, was negative. Early court cases concluded that labor organizations were criminal conspiracies.4

Labor, however, persisted. The unions’ first breakthrough came in 1842, when the Supreme Judicial Court of Massachusetts held that unionized workers could be indicted only if either their means or their ends were illegal, and that the “tendency” of organized labor to diminish the employer’s gains and profits was not in itself a crime.5 Progress was slow but more or less steady thereafter, highlighted by such federal legislation as the Federal Employers Liability Act (1908) and the Railway Labor Act (1926), which allowed for alter- native methods of dispute resolution, first in the railroad, and later in the airline industry.

The New Deal and the Rise of the Modern American Union

Still, nearly a century would elapse before the Great Depression and the subsequent New Deal of President Franklin D. Roosevelt resulted in the enactment of the major federal employment and labor laws, which govern the fundamental features of the employment relationship and unionization to this very day. These statutes include:

• The Social Security Act (1935), which provides modest pensions to retired workers

• The National Labor Relations Act (1935) (NLRA), which sets the ground rules for the give and take between labor unions and corporate managers

• The Walsh-Healy Act (1936), the first of several statutes to set the terms and conditions of employment to be provided by government contractors

• The Merchant Marine (Jones) Act (1936), which provides remedies for injured sailors

• The Fair Labor Standards Act (1938), which sets minimum wages, mandates overtime pay, and regulates child labor

Before these statutes could revolutionize the American workplace, FDR’s New Deal had to survive constitutional challenge in the Supreme Court. In the early years of Roosevelt’s presidency (1933–1936) the justices repeatedly refused to enforce New Deal legislation, consistently declaring the new laws unconstitutional. Only after FDR threatened to “pack” the court with new appointments from the ranks of his New Deal Democrats did the high court reverse course and declare a piece of labor legislation to be constitutionally legitimate.

In West Coast Hotel Company v. Parrish,6 the challenged law was actually a state statute. Elsie Parrish, a chambermaid working at the Cascadian Hotel in Wenatchee, Washington (owned by the West Coast Hotel Company), sued her employer for the difference between what she was being paid and the $14.50 per 48-hour work week mandated by the state’s Industrial Welfare Committee and the Supervisor of Women in Industry, pursuant to a state law. The trial court held for the defendant. The Washington Supreme Court, taking the case on a direct appeal, reversed the trial court and found in favor of Mrs. Parrish. The hotel appealed to the U.S. Supreme Court. In a decision that clever pundits labeled “the switch in time that saved the nine” (because it forestalled the president’s court-packing plan), the justices asked, “What can be closer to the public interest than the health of women and their protection from unscrupulous and overreaching employers? And if the protection of women is a legitimate end of the exercise of state power, how can it be said that the require- ment of the payment of a minimum wage fairly fixed in order to meet the very necessities of existence is not an admissible means to that end?”

The Court majority answered those questions by stating that the legislature of the state was clearly entitled to consider the situation of women in employment, that they were in the class receiving the least pay, that their bargaining power was relatively weak, and that they were the ready victims of those who would take advantage of their necessitous circumstances. Furthermore, continued the Court, the legislature was entitled to adopt measures to reduce the evils of what was known as “the sweating system,” which referred to the exploiting of workers at wages so low as to be insufficient to meet the bare cost of living. Deferring to the judgment of the state lawmakers, the Court majority conceded that the legislature had the right to consider that its minimum wage requirements would be an important component of its policy of protecting these highly vulnerable workers. The opinion pointed to the prevalence of similar laws in a growing number of states as evidence of a broadening national consensus that (1) sweatshops were evil and (2) these kinds of laws significantly contributed to their eradication.

While this ruling was directly applicable only to state minimum wage laws—and arguably, only to such statutes as they applied to women—the broader impact was essen- tially to sweep away judicial opposition to the flood of legislation at both federal and state levels, which was overwhelmingly favorable to workers and their labor organizations. One result was a rush by workers to join labor unions, which organized with legal impunity. Corporations that resisted were charged with unfair labor practices under the NLRA— covered in depth in Part 3—and compelled by the National Labor Relations Board (NLRB) to recognize and bargain with organized labor.

1-2

Part 1 Common-Law Employment Issues

The Post-War Decline of Organized Labor

globalization

the integration of national economies into a worldwide economy, due to trade, investment, migration, and information technology

individual employee rights rights enjoyed by workers as individuals, as against collective rights secured by unionization; sources are statutes and court decisions

Several significant issues and trends combined to cause the gradual decline of organized labor in America from its peak in the 1950s, when one in three private-sector employees belonged to a union, to only about seven out of every 100 eligible private-sector workers being unionized in 2010.7

Several factors contributed to this precipitous decline. First, many policy makers, espe- cially in the conservative camp, became concerned about labor leaders’ abuse of power. One of the worst examples occurred when John L. Lewis, president of the United Mine Workers, violated a “gentlemen’s agreement” with the Roosevelt administration during World War II. Sullivan called a strike at the height of the war, making his miners look unpatriotic and selfish in the public eye. Critics, especially politicians aligned with “Big Business,” believed the combined American Federation of Labor/Congress of Industrial Organizations (AFL- CIO) had grown to be far too potent. The upshot in 1947 was the Taft-Hartley Act, a federal statute that enacted unfair labor practices for which unions might be punished, such as coercing workers to join against their will.

As the Cold War developed between the U.S. and the U.S.S.R., perceived communist influences in some large and powerful unions, notably the International Longshoremen’s Association, placed organized labor in the gun sights of such so-called Red Hunters as the infa- mous Senator Joseph McCarthy. Similarly, alleged organized-crime ties of other huge unions, especially Jimmy Hoffa’s Teamsters, attracted the attention of politicians, ranging from Senator Estes Kefauver in the 1950s to Attorney General Robert F. Kennedy in the early 1960s.

Most destructive of all to organized labor, however, has been globalization. American industry’s stranglehold on major manufacturing sectors, such as autos and steel, was successfully challenged immediately after World War II—first by a reconstructed Japan, then subsequently by many other Asian and European competitors. The manufacturing sector was the bedrock of unionism. When it declined, organized labor inevitably followed. As in the Middle Ages, the earth is once again flat.8

Meanwhile, among the many political and social trends of the 1960s was the rise of individual employee rights. Leading the way was the Civil Rights Act of 1964. Title VII9— covered in detail in Part 2—declared employment discrimination illegal if based on race, sex, religion, or any of several other “protected categories.” Other laws and court decisions followed in relatively quick succession, seemingly in inverse proportion to the steady decline of collec- tive bargaining under the auspices of organized labor. Other major examples of individual employee rights laws and legal concepts include the Age Discrimination in Employment Act (1967) and the generalized recognition of theories of wrongful discharge (see Chapter 2) and related employment-related torts (see Chapter 3) in American common law.

These new laws and common-law legal theories have often supplanted labor unions as the main source of legal protection for American workers. In fact, some- times they actually have conflicted with the legal remedies available to workers under

collective bargaining agreements. For example, under Title VII, an employee alleging illegal discrimination has the right to file a complaint with the Equal Employment Opportunity Commission (EEOC). If he or she is a union member, that same employee has not only a right but an obligation to pursue any such wrong as a grievance under the collective agreement with his or her employer, apparently as the exclusive remedy.

In Alexander v. Gardner-Denver Company, 415 U.S. 36 (1974), the Supreme Court was called upon to reconcile this clash between individual and collective worker rights within a decade of Title VII’s enactment. The employer wanted to limit the aggrieved employee’s remedy to the grievance/arbitration procedures in the collective bargaining agreement that Gardner-Denver had with Alexander’s union. More to the point, the company wanted to cut off Alexander’s access to Title VII. The Court refused to allow this to happen, holding that the doctrine of election of remedies was inapplicable in the present context, which involved statutory rights distinctly separate from the employees’ collective contractual rights, regardless of the fact that violation of both rights may have resulted from the same fact pattern. By merely resorting to the arbitration procedure, Alexander did not automati- cally waive his cause of action under Title VII; the rights conferred in fact could not be prospectively waived. Such an implied waiver formed no part of the collective bargaining process. The arbitrator’s authority was confined to resolution of questions of contractual rights, regardless of whether they resembled or even duplicated Title VII rights. It would take 35 years for the high court to reverse this rule in two stages.

In Alexander, the Supreme Court established a critical distinction between individual and collective employee rights. Perhaps it was not the Court’s intention, but the decision had the effect of further undermining the rapidly eroding influence of labor unions in the American workplace. If union members are able to effectively pursue their rights outside of the labor–management relationship, then why should they bother to pay dues to a labor organization?

election of remedies

the requirement to choose one out of two or more means afforded under the law for the redress of an injury to the exclusion of the other(s)

1-3 The Resurrection of the Arbitration Remedy

whistleblower

an employee who reports or attempts to report employer wrongdoing or actions threatening public health or safety to government authorities

The proliferation of individual employee rights soon swamped the state and federal courts. By the 1980s, for example, employment law cases dominated the federal District Court dockets across the country. In their heyday, labor unions diverted much of this court business into their grievance/arbitration processes. The decline of organized labor combined with the Supreme Court’s ruling that individual rights—at least those derived from antidiscrimina- tion, whistleblower, and other such statutes—could not be automatically ceded to the labor– management dispute-resolution process contributed significantly to the litigation tsunami.

In 1991, in Gilmer v. Interstate/Johnson Lane Corporation, the Supreme Court revis- ited the issue of whether an agreement to arbitrate employment disputes could ever trump an employee’s right to pursue his or her claims under a federal statute that enabled the aggrieved employee to file a complaint with an agency and/or in court. The case involved a standard employment contract that almost all employees in the financial-services industry are required to sign.

Gilmer’s impact upon the federal common law was profound. The U.S. trial and appel- late courts extended its reach to virtually all types of employment discrimination cases. Simultaneously, federal agencies also embraced alternative dispute resolution (ADR).

7 Jerry White, “US trade union membership at lowest level in more than a century,” World Socialist Web Site, February 3, 2010, available at http://www.wsws.org/en/articles/2010/02/unio-f03.html.

8 See Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Strauss and Giroux, 2005).

9 42 U.S.C. Sec. 2000e et s

discrimination with the Equal Employment Opportunity Commission (EEOC), the federal agency charged in a lawsuit filed yesterday.

According to the EEOC, Doherty requires each prospective employee to sign a mandatory arbitration agreement as a condition of employment. The agreement mandates that all employment- related claims—which would otherwise allow resort to the EEOC—shall be submitted to and deter- mined exclusively by binding arbitration. The agreement interferes with employees’ rights to file discrimination charges, the agency says.

Interfering with these employee rights violates Section 707 of Title VII of the Civil Rights Act of 1964, which prohibits employer conduct that constitutes a pattern or practice of resistance to the rights protected by Title VII. Section 707 permits the EEOC to seek immediate relief without the same presuit administrative process that is required under Section 706 of Title VII, and does not require that the agency’s suit arise from a discrimination charge.

The EEOC filed suit in the U.S. District Court for the Southern District of Florida (EEOC v. Doherty Enterprises, Inc., Civil Action No. 9:14-cv-81184-KAM). The suit has been assigned to U.S. District Judge Kenneth A. Marra.

“Employee communication with the EEOC is integral to the agency’s mission of eradicating employment discrimination,” explained EEOC Regional Attorney Robert E. Weisberg. “When an employer forces all complaints about employment discrimination into confidential arbitration, it shields itself from federal oversight of its employment practices. This practice violates the law, and the EEOC will take action to deter further use of these types of overly broad arbitration agreements.”

EEOC District Director Malcolm Medley added, “Preserving access to the legal system is one of the EEOC’s six strategic enforcement priorities adopted in its Strategic Enforcement Plan. When an employer seeks to deter people from exercising their federally protected Title VII rights, the EEOC is uniquely situated to seek an end to such unlawful practices, and to ensure the necessary safeguards are in place to allow employees to participate in the EEOC’s charge filing process.”10

Supreme Court Allows Arbitration Clause in Labor Contract to Trump

The EEOC’s 2014 policy pronouncement in Doherty Enterprises appears to pose a chal- lenge to the Supreme Court’s reconsideration of Alexander five years earlier. On April 1, 2009, by a vote of 5–4, the Court held that where a provision of a collective bargaining agreement clearly and unmistakably requires union members to arbitrate ADEA claims, the federal courts will enforce this provision. Writing in dissent, Justice Stevens com- plained, “Notwithstanding the absence of change in any relevant statutory provision, the Court has recently retreated from, and in some cases reversed, prior decisions based on its changed view of the merits of arbitration.... [T]he Court in Gardner-Denver held that a clause of a collective bargaining agreement (CBA) requiring arbitration of dis- crimination claims could not waive an employee’s right to a judicial forum for statutory claims.... Today the majority’s preference for arbitration again leads it to disregard our precedent.”11

However, in 2012, the NLRB, dominated by Obama appointees, signaled that they intended to interpret the 14 Penn Plaza holding very narrowly. Thus, at least so long as a

Democrat occupies the White House (which may be no more than another year and a half as this edition goes to press), the EEOC and NLRB appear to be of one mind where substi- tution of private ADR remedies for statutory rights and recourse to federal courts and agen- cies are concerned. This view is essentially opposed to that of the five conservative justices who made up the majority view in Pyett.

1-4

DecLine of Labor unions anD rise of inDiviDuaL rigHts

Employee Health, Safety, and Welfare

In the preceding section, we charted a sort of “bell curve” in the rise and fall of labor unions. American workers first banded together to increase their bargaining power and improve their working and living conditions. They then turned (or were driven) increasingly away from unions and toward a panoply of individual rights, ranging from statutory prohibitions of employment discrimination to common-law wrongful discharge decisions, all of which is discussed in detail in the chapters that follow.

Also covered thoroughly in their own sections of this text are the major aspects of employee health, safety, and welfare, as they are embodied in our federal and state laws. These include:

• The federal Occupational Safety and Health Act (OSHA) and its many state-law counterparts

• Workers’ compensation and unemployment insurance statutes, which are a part of vir- tually every state’s statutory safety net for injured and out-of-work workers

• The U.S. Social Security system, which includes both pensions and support payments for permanently disabled workers who are still too young to retire

The Employee Retirement Income Security Act (ERISA), which is intended to protect and preserve employee pensions

The Family and Medical Leave Act (FMLA) and its numerous state and local counter- parts, which increasingly require employers to grant leaves of absence (in some states, even paid leaves) for an ever-increasing range of personal issues

Worker Adjustment and Retraining Notification (WARN) acts, both federal and state, which are aimed at letting employees know when a plant closing or mass layoff is in the offing

The Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare after the president during whose first term it was enacted. This act dramatically revised the American health care system, notably by mandating that all Americans buy health insurance or pay a tax penalty.

• •

• •

As extensive as this web of federal, state, and local laws may seem to be, some notable gaps, which are very troubling to many people, remain in the American labor and employ- ment law system. No national statute requires private employers to provide their employees with either health insurance or a pension plan, for example (although Obamacare ensures that all Americans now have access to some form of health insurance).

The WORKING Law

From 2011 to 2015 Public-Employee Labor Unions, the Remaining Strongholds of Labor’s Power in the United States, Have Been Targeted by Conservative Governors, Legislators, and the U.S. Supreme Court

after the November 2010 mid-term elections, the switch from liberal Democrats to conservative Republicans in many governors’ mansions saw several states move toward ending collective bargaining by public employees. This initiative, most vis- ible and confrontational in Wisconsin and Ohio, led the American Federation of State, County and Municipal Employees (AFSCME) to issue the following comment: “The radical proposals by the governors in Wisconsin and Ohio would not just gut public services and jobs, they would take away the rights of workers to collectively bargain and the basic free- dom to join a union—effectively eliminating public employee unions. The goals of these efforts are simple: reduce the tax bills of the ultra-rich, privatize public services and deflect blame away from corporations for the reckless behavior that caused the economy to tank.”12

The Wisconsin Case

On March 11, 2011, Wisconsin’s governor Scott Walker signed the 2011 Wisconsin Act 10, a controversial bill that limits the collective bargaining power of the state’s public employees (except for firefighters, police, and State Patrol troopers) and requires state employees to pay more for their health care and pensions. The new law is labeled “An Act relating to: state finances, collective bargaining for public employees, compensation and fringe benefits of public employees, the state civil service system, the Medical Assistance program.”

Chapter 1

First the Forest, Then the Trees: An Overview of Employment and Labor Law 13

Simultaneously canceling 1,500 scheduled public employee layoffs, Governor Walker remarked, “While tough budget choices certainly still lie ahead, both state and local units of government will not have to do any mass layoffs or direct service reductions because of the reforms contained in the budget repair bill. The reforms contained in this legislation, which require modest health care and pension contributions from all public employees, will help put Wisconsin on a path to fiscal sustainability.”

On March 18, 2011, Dane County Circuit judge Maryann Sumi granted a restraining order, temporarily preventing the Wisconsin secretary of state from publishing the law, which remained the subject of bitter controversy and litigation as this edition went to press.

On June 14, 2011, the Supreme Court ordered the reinstatement of Governor Walker’s bill. The Court overruled the restraining order granted by Sumi, finding that the legislature did not violate the Wisconsin Constitution; the committee of lawmakers was not subject to the state’s open meetings law and therefore did not violate that law when it approved the governor’s bill and allowed the Senate to take it up. The Court ruled that Sumi’s ruling exceeded her jurisdiction and was void ab initio, or “invalid from the outset.”

While Republicans praised the Court’s decision, Democrats decried it for the Court’s finding that lawmakers do not have to follow the open meetings law, as the committee did not give the required 24-hour notice prior to the meeting, essentially saying that the legis- lature is above the law.

As a result of the new bill, the city projected savings of at least $25 million a year—and as much as $36 million in 2012—from health care benefit changes it didn’t have to nego- tiate with unions. Still, in March 2012 union supporters from around the world gathered in Wisconsin to rally for the governor’s recall, and a record number of educators retired after the bill was signed into law. The Wisconsin state pension fund received 18,780 retirement applications from state and local governments and school districts in 2011, representing a 79 percent increase from the average in each of the previous seven years.

Less than a year later, the governor was faced with an unprecedented recall election. On March 30, 2012, the state’s election commission ruled that the governor’s adversaries had met the requirements for the recall vote, which was scheduled for June 2012. Come June, the voters allowed the governor to remain in office.

Meanwhile, the legal challenge to the law continued. On April 25, 2013, a Wisconsin appellate court held the state in contempt of the trial court’s partial summary judgment in favor of the union and urged the state’s supreme court to review the case.13

Responding to the appellate court’s plea, the Wisconsin Supreme Court reviewed the case. In a November 2013 opinion, the high court held that the appellate court’s contempt order impermissibly interfered with the Supreme Court’s own jurisdiction. Opined the majority, “We are mindful of the pressures a circuit court can face from aggressive litiga- tion in high-profile cases. However, when the appeal of a circuit court’s prior decision is pending before this court, the circuit court must take care to avoid actions that may interfere with the pending appeal. Once an appeal had been perfected, the circuit court should not have taken any action that significantly altered its judgment. Accordingly, in order to assure the orderly administration of justice in the pending appeal, we elect to apply our superintending authority and vacate the circuit court’s contempt order.”

14

Part 1 Common-Law Employment Issues

Two dissenting justices retorted, “The order today essentially serves as a backdoor ruling on a substantive matter with no mention of the far-reaching effects of its order. The order creates a springboard for future uncertainty and litigation. Three glaring questions stand out: how will this affect (1) the unions that did not follow WERC’s rules, relying on the declaratory judgment, (2) the unions that did follow WERC’s rules, and (3) the contempt proceeding pending at the court of appeals?... The court’s order today fails to grapple with these unknown practical and legal implications. The per curiam reaches its result. Satisfied, the opinion foregoes any consideration of the collateral damage it has wrought.”14

In December 2013, under the requirements of the new law, some 400 school-district unions—mostly representing teachers, but also some custodial staff—sought recertification. About 80 of these locals failed to secure majorities and therefore were decertified.

The Ohio Case

On March 3, 2011, the Ohio legislature passed a massive revision of the state’s public sector collective bargaining act. The chief changes are described as follows:

1. S.B. 5 places significant restrictions on the subjects that can be brought to the bargain- ing table for public employees. Specifically, bargaining will not be permitted about health insurance benefits, employer assistance toward the employee share of pension contributions, privatization of public services, staffing levels, and certain other man- agement rights.

2. S.B. 5 prohibits strikes by all public employees. Previously, Ohio collective bargaining law prohibited strikes only by police officers, firefighters, and other specified employ- ees whose jobs have a direct impact on public safety. S.B. 5 makes it illegal for all public employees to strike and imposes extraordinary penalties if public employees do strike. Striking employees can be terminated and can be subjected to substantial finan- cial penalties.

3. S.B. 5 establishes a new procedure for dispute resolution in bargaining. Under existing law, if contract negotiations reach a stalemate, the parties typically first have a hear- ing before a neutral “fact-finder.” The fact-finder issues recommendations for resolving the dispute, but either the union or the employer can reject those recommendations. In the case of police, firefighters, and other specified safety employees who are pro- hibited from striking, the dispute then goes to a hearing before another neutral person whose decision is binding. The theory is that since those employees do not have the leverage of the threat of a strike, there has to be a neutral person to break the dead- lock in the bargaining. S.B. 5 eliminates the binding arbitration step and prohibits all employees from striking. In cases where bargaining reaches a stalemate, the fact- finding proceeding will be followed first. If either party rejects the fact-finder’s report, the employer’s last best offer and the union’s last best offer will be presented to the legislative body (i.e., City Council in the case of a municipality), which will conduct a public hearing and then vote to accept either the last best offer of the union or the last best offer of the employer.

On November 8, 2011, Ohioans voted to repeal the law, with 63 percent of voters against the bill, and a union-backed committee that formed to repeal the law raised approximately $30 million for the effort. This marked a major setback for Ohio governor John Kasich and those with similar initiatives.

However, not to be entirely dissuaded, in the wake of an NLRB regional director’s ruling in early April 2014 that Northwestern University’s Division I football players were employees eligible to organize and strike, the Ohio House of Representatives moved to enact legislation that would forestall any such organizing effort by student athletes at Ohio public universities, such as Ohio State.15

The Supreme Court Case

In June 2014, overruling a longstanding legal precedent, the U.S. Supreme Court held in yet another 5—4 split between conservative and liberal justices that public employees who do not choose to join the union that represents their bargaining unit need not necessarily pay their “fair share” contributions to that labor organization—even though they inevitably benefit from the favorable terms and conditions of employment won by the union. The decision16 is widely viewed as a major setback to public-employee unions in states where membership is a matter of choice, rather than a requirement, for employees in the units that such unions represent.

Ethical DILEMMA

Is president Obama’s “go it alone” strategy constitutional?

In 2010 the Republican Party won control of the House of Representatives in the mid- term national elections. In 2014, the GOP also (more narrowly) wrested control of the Senate from Democrats. These reversals of fortune presented President Obama with the prospect of being unable to win passage of any of his legislative agenda. Even achieving Senate consent for his presidential appointments became problematic. The president increasingly has sought to circumvent this congressional roadblock by “going it alone,” that is, using his ability to issue executive orders to outmaneuver his opponents. The following are examples, most notably in the employment law arena:

• An April 2014 executive order forbids government contractors to discipline employees who discuss their wages and benefits among themselves. An accompa- nying memorandum explains that the order is intended to assist female workers, especially women of color, to close the gender gap in employee compensation.

• In July 2014, a second such order extended job-discrimination protection under federal government contracts to lesbian, gay, bisexual, and transgender (LGBT) employees.

Most controversial of all is the president’s late 2014 executive actions on immigra- tion, summarized by the U.S. Citizenship and Immigration Service as follows:

On November 20, 2014, the President announced a series of executive actions to crack down on illegal immigration at the border, prioritize deporting felons not families, and require certain undocumented immigrants to pass a criminal background check and pay taxes in order to temporarily stay in the U.S. without fear of deportation.

These initiatives include:

• Expanding the population eligible for the Deferred Action for Childhood Arrivals (DACA) program to people of any current age who entered the United States before the age of 16 and lived in the United States continuously since January 1, 2010, and extending the period of DACA and work authorization from two years to three years

• Allowing parents of U.S. citizens and lawful permanent residents to request deferred action and employment authorization for three years, in a new Deferred Action for Parents of Americans and Lawful Permanent Residents program, provided they have lived in the United States continuously since January 1, 2010, and pass required background checks

• Expanding the use of provisional waivers of unlawful presence to include the spouses and sons and daughters of lawful permanent residents and the sons and daughters of U.S. citizens

• Modernizing, improving and clarifying immigrant and nonimmigrant visa programs to grow our economy and create jobs

• Promoting citizenship education and public awareness for lawful permanent residents and providing an option for naturalization applicants to use credit cards to pay the application fee.17

Congressional opponents immediately saw this executive action as an attempt to cut them out of immigration-reform initiatives that all parties seem to agree are neces- sary. Many also saw it as a usurpation of congressional power. Most significantly, in December 2014 a 25-state coalition, led by Texas Attorney General (now governor) Greg Abbott, sued the president.

Attorney General Ken Paxton: President Obama’s Amnesty for Illegal Immigrants Tramples on U.S. Constitution

AUSTIN – Texas Attorney General Ken Paxton today issued the following statement after Texas led a 25-state coalition at a hearing in U.S. District Court in Brownsville on the states’ enforcement action against President Barack Obama’s unilateral execution action on immigration:

“No individual is above the law, not even the President of the United States. President Obama’s brazenly lawless action in November trampled on the U.S. Constitution. It is a clear violation of the Take Care Clause and federal statutory law. As the President himself had repeatedly admitted, he lacks the authority to impose this unilateral amnesty. The President’s action makes clear that he has decided that the rule of law no longer applies to his Administration. President Obama’s action violates the separation of powers and goes beyond prosecutorial discretion to the point of unilaterally creating and enforcing legislation—bypassing the people’s duly-elected representatives in Congress entirely.”

The multistate coalition led by Texas includes: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Michigan, Mississippi, Montana, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, West Virginia, and Wisconsin.18

Undeterred, as this edition went to press, President Obama promised that 2015 would be another “Year of Action.”

CHAPTER 2 Employment Contracts and

Wrongful Discharge

2-1

This chapter and the one that follows are a survey of several major areas of the law where the federal and state legislatures have not fully populated the field with statutes and, therefore, the courts are still, by and large, sovereign. This type of law is referred to as common law. These include employment-at-will and wrongful discharge, as well as express and implied employment contracts.

Employment-at-Will and Its Exceptions

employment-at-will

both the employee and the employer are free to unilaterally terminate the relationship at any time and for any legally permissible reason, or for no reason at all

To appreciate how far the courts have come, it is necessary to look back to where they were just decades ago. In the 19th century, virtually every state court subscribed to the doctrine of employment-at-will. In its raw form, employment-at-will holds that an employee who has not been hired for an express period of time (say a year) can be fired at any time for any reason—or for no reason at all.

State and federal laws have narrowed this sweeping doctrine in many ways. The National Labor Relations Act (NLRA) forbids firing employees for engaging in protected concerted activities. Title VII forbids discharge on the basis of race, color, gender, creed, or national origin. The Age Discrimination in Employment Act (ADEA) protects older workers from discriminatory discharge. The Occupational Safety and Health Act (OSHA) makes it illegal to fire an employee in retaliation for filing a safety complaint.

Although employers may complain that employment regulation is pervasive, these laws leave broad areas of discretion for private-sector employers to discharge at-will employees. Although federal government workers are protected from such discrimination, there is no federal law that specifically outlaws workplace discrimination on the basis of sexual orienta- tion in the private sector (i.e., the law allows an employer to discharge an employee if the company does not approve of an employee being homosexual or transgender). However, a growing number of states have enacted laws that prohibit sexual-orientation discriminat- tion in both public- and private-sector jobs. Furthermore, some cities and counties prohibit discrimination on the basis of sexual orientation on a local level. And in 2014, President Obama issued an executive order forbidding LGBT discrimination by federal government contractors and subcontractors

Whistleblowers—employees who bring intra-organizational wrongdoing to the atten- tion of the authorities—have often been fired. This has frequently occurred in spite of ostensible legal protection for whistleblowers. However, as we shall see later in this chapter, much tougher protections were put into place by the U.S. Congress in the wake of one of the financial-industry debacles of the 21st century. Sometimes an employee gets fired simply because the boss does not like him or her. In such situations, the employee is not covered by any of the federal and state labor laws previously discussed. Should the employee be protected? If so, how?

Advocates of the employment-at-will doctrine defend it by pointing out that

• the employee is likewise free to sever the working relationship at any time and

• in a free market, the worker with sufficient bargaining power can demand an employ- ment contract for a set period of time if so desired.

The trouble with the second point, in the view of most workers, is that as individ- uals they lack the bargaining power to command such a deal. This is one reason that in this age of globalization, labor unions continue to claim a role in securing workers’ rights and job security, despite a plethora of federal and state statutes. Unless and until a federal statute creates a “just cause” requirement (discussed later in the chapter) for all employment terminations—something that is not even on the national agenda—many workers’ best bet for job security is unionization. Indeed, making unionization easier is a priority item on the Obama administration’s legislative agenda.

The first of these arguments is not so easily dismissed. If the employee is free to quit at any time with or without notice, why should the employer be denied the same discretion in discharging employees? One answer to this troublesome question—an answer given by a majority of the state courts at this time—is, “The firing of an at-will employee is permitted, except if the discharge undermines an important public policy.”

Wrongful Discharge Based on Public Policy

public policy exception although the employee is employed at-will, termination is illegal if a clear and significant mandate of law (statutory or common) is damaged if the firing is permitted to stand unchallenged

The most commonly adopted exception to the pure employment-at-will rule (the employee can be fired at any time for any reason) is the public policy exception. If a statute creates a right or a duty for the employee, he or she may not be fired for exercising that legal right or fulfilling that legal duty. A widely adopted example is jury duty. The courts of most states agree that an employer cannot fire an employee who misses work to serve on a jury (provided, of course, that the employee gives the employer proper notice).

Many courts accepting this exception, however, have kept it narrow by holding that the right or duty must be clearly spelled out by statute. For instance, in the seminal case of Geary v. United States Steel Corporation,1 the Pennsylvania Supreme Court upheld the dismissal of a lawsuit brought by a salesman who was fired for refusing to sell what he insisted to manage- ment was an unsafe product. The court noted, “There is no suggestion that he possessed any expert qualifications or that his duties extended to making judgments in matters of product safety.” Most courts applying Geary have required the plaintiff-employee to point to some precise statutory right or duty before ruling the discharge wrongful.

Additionally, if the statute itself provides the employee with a cause of action, the courts are reluctant to recognize an alternative remedy in the form of a lawsuit for wrongful discharge. Thus, several Pennsylvania courts agree that an employee fired on the basis of gender or race discrimination in Pennsylvania has, as his or her exclusive state law remedy, the Pennsylvania Human Relations Act (PHRA), which requires that the employee initially seek redress with the commission created by that act. If the employee fails to file with the commission, thus losing the right of action under the PHRA, that person cannot come into court with the same grievance claiming wrongful discharge. Many other states’ courts have reached similar conclusions regarding their states’ antidiscrimination, workers’ compensa- tion, and work safety laws.

By contrast, California courts are willing to entertain a wrongful-discharge tort claim that is grounded in a plaintiff ’s allegation of sexual harassment. The question tackled in a 2014 Court of Appeals decision was whether the burden of proof placed on the plaintiff should parallel the standard set out in discrimination cases.

2-3 Express and Implied Contracts of Employment

express contract

a contract in which the terms are explicitly stated, usually in writing but perhaps only verbally, and often in great detail. In interpreting such a contract, the judge and/ or the jury is asked only to determine what the explicit terms are and to interpret them according to their plain meaning

implied contract

a contractual relationship, the terms and conditions of which must be inferred from the contracting parties’ behavior toward one another

Some employees have express contracts of employment, usually for a definite duration. Others fall within the coverage of a collective bargaining agreement negotiated for them by their union. Most workers, however, have no express agreement as to the term of their employment, and some were given an oral promise of a fixed term in a state in which the statute of frauds requires that contracts for performance extending for a year or more be written. Such employees have sometimes tried to convince the courts that they have been given implied promises that take them outside the ranks of their at-will coworkers. An express contract has terms spelled out by the parties, usually in writing. Implied contracts are contracts that the courts infer from company policies (such as those published in employee handbooks) and the behavior of the parties, or that are implied from the law.

If a company provides its employees with a personnel handbook, and that handbook says that employees will be fired only for certain enumerated infractions of work rules, or that the firm will follow certain procedures in disciplining them, a worker may later argue that the manual formed part of his or her employment contract with the firm. An increasing number of state and federal courts agree.

Many employers in turn have responded by adding clauses to their employee hand- books that reserve the firm’s right to make unilateral changes or to vary the application of particular policies to fit the unique circumstances of each new situation. The following cases involve determinations of if and when an employer can withdraw a unilaterally promulgated policy or employment agreement and replace it with another, thus unilaterally altering the employment relationship or deviate from a policy’s particular terms in a specific instance.

These three case decisions indicate that the employer retains considerable control over the terms of the employment relationship, but this control is not unlimited. While an employer, for example, may exercise discretion in its disciplinary procedures, this discre- tion is not unlimited. Furthermore, changes in such fundamental terms of employment as compensation, when contractually set, cannot be arbitrarily modified.

ThE WORKING LAW

Model Employment Termination Act

The National Conference of Commissioners on Uniform State Laws was organized in the 1890s as part of a movement in the American Bar Association for the reform and unification of American law. Currently, the conference’s list comprises 99 uniform acts and 24 model acts, which the states are encouraged to adopt. In 1987, the confer- ence established a drafting committee to create a Uniform Employment Termination Act to provide employees with statutory protection against wrongful discharge. By 1991, the conference had approved a “model” act. However, division among the commissioners has prevented the act from achieving the status of “uniform.” Consequently, states are encour- aged to modify the model to suit each jurisdiction’s particular social, economic, and legal needs. So far, only a handful of states have done so.

The heart and soul of the Model Employment Termination Act (META) in its present form is Section 3(a), which states “an employer may not terminate the employment of an employee without good cause.” “Good cause” is defined in one of two ways. The employ- ee’s own inadequate or improper conduct in the performance of the job is the first. The second involves the economic or institutional goals of the employer. If the employer’s goals require reorganization, discontinuing functions, and/or changing the size and character of its work force, employees discharged as a result are discharged with “good cause.”

Section 3(b) limits application of the good cause limitation on employment-at-will to workers who have been with the particular employer for at least one year. Section 4(c) adds another possible exception, stating that employer and employee may substitute a severance pay agreement for the good cause standard, and the good cause standard is inapplicable to situations where termination comes at the expiration of an express oral or written contract containing a fixed duration for the employment relationship.

If a qualified employee is terminated without good cause, META provides remedies. Remedies that may be sought under META include reinstatement, back pay, lost bene- fits, or, alternatively, a lump-sum severance payment. META excludes recovery for pain and suffering, emotional distress, defamation, fraud, punitive damages, compensa- tory damages, or any other monetary award. Attorney’s fees are recoverable, so that employees with modest incomes have an opportunity to obtain legal assistance in bringing legitimate claims.

Enforcement in META is conducted solely by arbitration. Judicial review of arbitration awards is permitted only for abuses of the discretion or office of the arbitrators.

Finally, META also provides protections to employees who participate in termina- tion proceedings. Employers are barred from retaliating against an employee who files a complaint, provides testimony, or otherwise lawfully participates in proceedings under META.

The META suggests that claims under it be subject to binding arbitration with arbitral awards being issued within 30 days of hearings. Section 10 forbids retaliation against employees who make claims or who testify under the procedural provisions of the META.2

Concept Summary 2.2

EmploymEnt contracts and EmployEE handbooks

• Common-law presumption of at-will employment can be overcome by an express contract or by implication, for instance, based on a policy in an employee handbook

• American courts remain reluctant to infer terms and conditions of employment when the employer has not expressly awarded the right to its employees or where the relevant employment documents, or even the reasonable passage of time, indicate the employer set limits on its obligations to the employee(s)

2-4

Protection for Corporate Whistleblowers

On July 30, 2002, Congress passed and the president signed the Sarbanes-Oxley Act (SOX). SOX amended the creaky Securities and Exchange Acts of 1933 and 1934, as well as the more recent-vintage Employee Retirement Income Security Act (ERISA), plus the Investment Advisers Act of 1940 and the U.S. Criminal Code. SOX includes two provi- sions, one criminal and the other civil, for the protection of employees who report improper conduct by corporate officials concerning securities fraud and corruption.

Dozens of federal laws, such as the Occupational Safety and Health Act (OSHA) and Title VII, protect employees who blow the whistle on illegal practices or who coop- erate in investigations and testify at hearings from employer retaliation, such as employ- ment termination. Dozens of states have jumped on the whistleblower bandwagon, adding a dizzying variety of whistleblower laws to the panoply of rules and regulations that human resource managers and employment lawyers must consider before initiating “industrial capital punishment” (i.e., firing a miscreant worker). In those increasingly rare jurisdictions or circumstances in which no federal or state antiretaliation rule is implicated, the courts often have shown themselves willing to carve out a public policy exception to employment-at-will, where the plaintiff provides proof that he or she was fired for reporting or restricting illegal supervisory activity. But the proliferation of such laws and court rulings has often fallen short of protecting whistleblowers, because of either poor enforcement procedures or ineffectual remedies. SOX is unique in making whistleblower retaliation a federal crime that can result in officer/director defendants actually going to prison.

Perhaps the scariest aspect of SOX’s criminal provision is that it can be used to punish retaliation against persons who provide information to law enforcement officials relating to the possible commission of any federal offense, not just securities fraud, albeit securities fraud was the catalyst for the legislation. The provision makes it a crime to “knowingly, with the intent to retaliate, take . . . any action harmful to any person, including interfer- ence with lawful employment or livelihood of any person, for providing a law enforce- ment officer any truthful information relating to the commission or possible commission of any Federal offense.” Individuals found guilty under this proviso may be fined up to a quarter-million dollars and imprisoned up to 10 years. Corporate defendants can face up to a half-million dollar fine if convicted.

2-4a Civil Liability Under SOX

A child of corporate greed and accounting scandals, SOX’s legislative history indicates that its whistleblower provisions are intended primarily to protect employees of publicly traded companies acting in the public interest to try to prevent officer/director wrongdoing and “to encourage and protect those who report fraudulent activity that can damage innocent investors in publicly traded companies.” The following case exemplifies the limits of this new federal whistleblower cause of action.

thE first amEndmEnt and unprotEctEd EmployEE spEEch

A director of a community youth program conducted an audit of the program’s expenses, and in doing so, discovered that a state legislator on the program’s pay- roll has not been reporting for work. Consequently, the director terminated the state lawmaker’s employment. Shortly after that, federal authorities indicted the state repre- sentative on charges of mail fraud and theft concerning a program receiving federal funds. The director testified, under subpoena, regarding the events that led to his terminating the state legislator. She in fact was convicted and sentenced to 30 months in prison.

Meanwhile, the youth program had experienced significant budget shortfalls. The president of the program’s sponsoring university terminated the director along with 28 other employees in a claimed effort to address the financial difficulties. A few days later, however, the president rescinded all but two of the 29 terminations—those of the director and one other employee. The director sued the president in his individual and official capacities, alleging that the president violated the First Amendment by fir- ing him in retaliation for testifying in court. The president made a motion for summary judgment, claiming that the director’s testimony was not entitled to First Amendment protection. He claimed the director spoke as an employee and not as a citizen be- cause he acted pursuant to his official duties when he investigated and terminated the state representative’s employment.

Consider: Should the First Amendment protect a public employee who provides truthful sworn testimony, compelled by subpoena, of an organization’s corruption? Or was the director’s testimony unprotected employee speech? What are some policy considerations pushing in each direction?

Concept Summary 2.3

• • •

•

Whistleblowers

A whistleblower is an employee who calls attention to the employer’s illegal or unethical activities Many federal and state statutes seek to protect whistleblowers by making retaliation an illegal act The most significant whistleblower-protection law of the 21st century is the federal Sarbanes-Oxley Act, which protects employees who blow the whistle on illegal financial transactions Whistleblowers’ rights may conflict with the privacy rights of others

» Summary • The employment-at-will doctrine became the norm in 19th-century American common law. The at-will doctrine holds that, unless the parties expressly agree on a specific duration, the employ- ment relationship may be severed by either the employee or the employer at any time and for any reason. • During the second half of the 20th century, American courts narrowed the at-will doctrine by carving out several common-law exceptions. The most common of these is the public policy excep- tion, which holds that an employer cannot fire an employee if that termination would undermine a clear mandate of public policy. For example, many states have punished employers for firing workers who were absent from work because they had been called to jury duty. • Another exception to the at-will rule is the legal doctrine of an implied contract. While the parties may not have agreed expressly to a duration of the employment relationship, an employee handbook or other employer policy may state that employees will not be fired except for good cause. Or such a company document may accord employees certain procedural rights, such as arbitration, before a job termination becomes final. • • • Under the doctrine of good faith and fair dealing, which only a minority of American courts have adopted as a limitation on at-will employment, a terminated worker may bring a wrongful discharge action whenever the employer has failed to deal in good faith. For instance, an employer who fires a salesperson simply to escape paying commissions might run afoul of this common-law rule. The Model Employment Termination Act seeks to make “good cause” the basis for all employ- ment terminations and to provide the parties with arbitration as their remedy when the propriety of a firing is in dispute. So far, only a handful of states have adopted all or some of the model act. Whistleblowers, who are ostensibly protected from retaliation under many federal and state laws, nevertheless have often been victimized by their employers, discovering too late that the laws on which they relied lacked the teeth to properly protect them. The federal Sarbanes-Oxley Act of 2002 makes such retaliation against those reporting a federal crime itself a crime that can result in the imprisonment of corporate officers.

Chapter3

Commonly Committed Workplace torts

tort

a private or civil wrong or injury, caused by one party to another, either intentionally or negligently

With increased frequency in the final decades of the 20th century, legal actions for wrongful termination were embellished by accompanying counts accusing employers of (and seeking additional damages for) defamation, invasion of privacy, infliction of emotional distress, and other forms of alleged improper conduct. Less frequently, employers and their defense counsels encountered such claims standing on their own. This trend did not diminish in the first decade and a half of this new century. In this chapter and the next (which focuses on employee privacy rights, a matter of special concern in our Internet age), we look at some of the major personal injury claims that plaintiff-employees pursue.

The word tort derives from the French influence upon the English language and the English common law. It means a civil wrong not based upon a preexisting contractual rela- tionship. By and large, tort law is the law of personal injury. Its application to employer– employee relationships is affected by workers’ compensation insurance (see Chapter 21), which immunizes the employer from some tort liabilities. The extent of this immunity varies widely from state to state. In an effort to circumvent such employer immunity and defeat that affirmative defense, plaintiffs sometimes contend that they were not employees at all but rather independent contractors not covered by state workers’ compensation statutes.

Additionally, where the work force is unionized (see Chapters 12–18) or where the employer is a public entity (see Chapter 19), the employee/plaintiff’s right to bring a common-law tort action against the employer may be subject to significant restrictions. These may include National Labor Relations Act preemption, a requirement to submit the claim to binding arbitration (even non-unionized companies may add arbitration clauses to their employment contracts to ward off these proliferating claims), and sovereign immunity, where public employers are targeted.

Furthermore, employers are turning the tables and using the tort of trade secret theft as a means of guarding their valuable intellectual property from misappropriation by disgrun- tled, departing employees

3-1 Defamation: Libel and Slander

defamation

an intentional, false, and harmful communication

libel

a written falsehood

slander

a spoken falsehood

strict liability

plaintiff prevails without proving negligence

One of the most commonly committed workplace torts is defamation. The tort of defama- tion has been defined as follows:

A communication is defamatory if it tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.1

Expanding on this bare-bones definition, it is said that language is defamatory:

... if it tends to expose another to hatred, shame, obloquy, contempt, ridicule, aversion, ostracism, degradation, or disgrace, or to induce an evil opinion of one in the minds of right-thinking persons and to deprive him of their confidence and friendly intercourse in society.2

Defamation is subdivided into the torts of libel and slander, the former being defa- mation by writing and the latter defamation through speech. These two torts may be further divided into the libel or slander that is per se and the libel or slander that is not per se. What makes this distinction critical in some cases is that libel or slander per se requires no showing of specific damages for the plaintiff to recover a judgment, whereas libel or slander that is not per se demands such a showing from the injured party. The term “per se” connotes that the third person to whom the defamation is communicated (and indeed the court) can recognize the damaging nature of the communication without being apprised of the contextual setting (innuendo) in which the communication was made. Professor Prosser, the greatest scholar of tort law, has identified the commonly recognized forms of per se defamation as:

... the imputation of crime, of a loathsome disease, and those affecting the plaintiff in his business, trade, profession, office or calling ...3

Business defamation thus may be defined as defamation per se having the following characteristics:

False spoken or written words that tend to prejudice another in his business, trade, or profession are actionable without proof of special damage if they affect him in a manner that may, as a necessary consequence, or do, as a natural consequence, prevent him from deriving therefrom that pecuniary reward which probably otherwise he might have obtained.4

This definition leaves the door to the courtroom wide open to the defamed employee, whose job is his or her “business, trade, or profession.” Indeed, since business defamation is a per se tort, it can amount to strict liability once the plaintiff has proved that the damaging statement was published. This use of the words strict liability is not to say that no defenses are available. On the contrary, it is possible to identify several. One can dispute the conten- tion that one published the statement or that it is defamatory. Or one can try to prove that the statement is true. Failing these, the defendant may be able to argue successfully that the statement was made from behind the shield of a privilege.

The law recognizes qualified privilege. When a person is protected by qualified privi- lege, the remarks made will be immune from a defamation suit if the person made them in good faith. If the remarks were made with malice, or in bad faith, they will not be privi- leged. The law generally recognizes a qualified privilege where one person communicates with another who has a legitimate need to know the information. For example, comments concerning an employee’s performance made to a supervisor, and communicated through the organizational structure, are privileged if made in good faith. In addition, assessments of an employee, communicated by a former employer to a prospective employer, made in good faith, are privileged. But comments or remarks, if not made in good faith and/or communi- cated to persons who have no legitimate need to know, are subject to a defamation action.

The following case is a good example of a case of qualified privilege, and how it can affect a defamation claim

CASE 3.1 Toler v. Süd-Chemie, inC. --- S.W.3d ----, 2014 WL 7238202 (Ky. Supreme Ct. 2014) Facts: Süd–Chemie manufactured catalysts used in various chemical operations. Toler began working for the company in 1976 at its southern Louisville plant, one of two it operates in the area. After nearly 25 years of employment with the company, Toler was promoted to a supervisory role. By all accounts, Toler excelled at his role in management until the incidents that were the subject of this litigation. The company’s human resources director, Scott Hinrichs, received reports from some employees regarding Toler’s use of racist language in the workplace. Perhaps highlighting the obvious, Toler’s statements were rather offensive. And Hinrichs was duty-bound under company policy to inves- tigate any reports of racist language because the company had a zero-tolerance standard concerning the use of such language in the workplace. Accordingly, Hinrichs reviewed the written reports submitted by the employees and then sat down with each employee to discuss the allegations. During this investigation, the employees all acknowl- edged and affirmed the written statement submitted to Hinrichs. Going further, the employees were unequiv- ocal in confirming Toler had indeed uttered the offen- sive statements. Hinrichs, along with the company’s plant manager, then met with Toler to hear his side of the story. At the meeting, Toler was provided with the names of the employees as well as the nature of the accusations levied against him. By Toler’s account, he was not provided with the employees’ actual written statements until the pretrial discovery process. Toler denied making such statements in the workplace and, in an attempt to explain the employees’ motive, alleged he was the target of a “union gang-up” as a result of his disagreement with another employee named Allen Trice. The disagreement with Trice, an African American employee working under Toler, stemmed from an incident in which Trice allegedly failed to follow Toler’s instruction. As a result, Toler, acting within the company’s protocol, sent Trice home. In the end, the company terminated Trice’s employ- ment. A short time after Trice’s termination, Trice filed a racial-discrimination claim with the Equal Employment Opportunity Commission. As it happens, the company learned of Trice’s EEOC complaint the day after it received the employees’ written statements about Toler. Members of the local workers’ union, according to Toler, became upset with him over his handling of Trice. For each of the complaining employees, Toler provided an account of a disagreement that, in his view, essentially prompted a vendetta aimed at ousting him as a supervisor. The company terminated Toler’s employment the day after his meeting with Hinrichs and the company’s plant manager. Toler then filed the present case, arguing the employees had fabricated the allegations resulting in his termination, and, as a result, had defamed him. Analysis: The Court of Appeals relied heavily on a Kentucky Supreme Court precedent to reach the conclusion that, generally speaking, the determination of whether a defendant abused its qualified privilege is a question of fact properly reserved for the jury. It therefore reversed the trial judge’s grant of the company’s motion for a directed verdict. But, continued the Supreme Court, its prior decision in no way altered the proof required for a party opposing a directed verdict motion—Toler in this case—to be successful in that opposition. Not only was the analysis undertaken by the Court of Appeals incorrect, it seemed especially curious to the justices in light of a decision of that Court of Appeals in another case that it announced on the same day as its opinion in the Toler case. That other case, Harstad v. Whiteman, was applauded by the justices as a thorough, accurate review of Kentucky case law and the proper analytical approach to qualified-privilege defamation cases. The Court of Appeals in Harstad made a number of important observations regarding the burden of proof carried by the plaintiff in a defamation case involving the qualified privilege. In the words of the Harstad court: “It was Harstad’s burden to present some evidence that would incline a reasonable person to believe that Lowe’s perception was not simply the product of mistaken observation, but the result of malice, i.e., some evidence that Lowe knew she was lying or making wholly unfounded statements without regard to their truth or falsity.” In this case, Toler simply had not presented any evidence indicating the company’s malicious publication. To be sure, conceded the Justices, Toler wove a “dramatic narrative filled with collusion and rumor.” But simply alleging union retali- ation without any further proof could not support a jury verdict against the company, and, therefore, could not defeat its directed-verdict motion. The majority of Toler’s allega- tions revolved around the retaliatory motivations of the employees in publishing the statements to the company, rather than any maliciousness behind the company’s publi- cation during the meeting with Toler. The company, on the other hand, acted prudently within the scope of its qualified privilege by investigating the claims levied against Toler, meeting with Toler to discuss the claims, and simply enforcing a well-known, understood, and reasonable corporate policy of not permitting such offensive statements in the workplace. Toler presented no evidence that the company excessively published the material or otherwise abused its privilege. Instead, this case presents a “paradigmatic example of why the qualified privilege is recognized: society benefits when employers, or others who share common interests, are permitted to discuss matters freely, even if those discussions are found to be based on erroneous beliefs or misinformation.” Finally, concluded the high court, Toler’s argument failed because merely alleging falsity is not enough to defeat a directed-verdict motion based on the qualified privilege. As the Harstad court noted, “[e]ven were we to conclude that each of these inconsistencies was both material and indica- tive of a specific falsehood, we could not reasonably conclude from their falsity alone that they were malicious utterances as opposed to mistaken observations.” Added the justices, “We are in much the same position with Toler’s claims. And Toler ‘was required to do more than assert that these state- ments were false; people are sometimes wrong without even suspecting it.’ The qualified privilege, it should be remem- bered, requires evidence of malice in fact, i.e., actual malice, and ‘not every erroneous statement is expressed with malice.’” Further expounding on malice, they wrote that the abuse-of-privilege question typically is one for the jury, as are a great many determinations in tort law. But the submis- sion of the question to the jury is not automatic. A jury is entitled to draw all reasonable inferences from the evidence, but when insufficient evidence is presented to enable a jury to infer an issue “in accordance with reason or sound thinking and within the bounds of common sense without regard to extremes or excess” a reasonable inference cannot be drawn. In other words, providing evidence permitting a jury to perform mere guesswork—“making a judgment without adequate information, or to conjecture, or to specu- late”—does not defeat a directed-verdict motion. Decision: Simply put, held the high court, Toler failed to produce any evidence tending to show that the company acted toward him with malice. The trial court’s directed verdict was appropriate. Any finding of malice on the company’s part would have been nothing more than conjecture or speculation. Toler was required to put forth evidence sufficient to support a jury verdict founded on reason rather than emotion or prejudice. Accordingly, in light of the company’s qualified privilege, the Kentucky Supreme Court reversed the decision of the Court of Appeals and reinstated the trial court’s directed verdict in favor of the company.

Concept Summary 3.1 Defamation • Two types: + Libel: written lies + Slander: spoken lies • Defamation gives rise to damages if the lies harm, among other things, the plaintiff ’s career • Defenses include: + Truth + Privilege + Immunity • Privilege can be absolute or qualified + Public employers may enjoy an absolute privilege or sovereign immunity from suit + Private employers have a qualified privilege, meaning they are protected from suit if they speak without malice

3-2 Tortious Infliction of Emotional Distress Case Questions 1. Why did the plaintiff claim that the company abused its qualified privilege? Why did the Supreme Court disagree and reinstate the verdict in favor of the firm? How would you rule on the matter if you were one of the justices? 2. 3. What are the social and economic policies that under- lie the creation by the courts of a qualified privilege in the business environment? A plaintiff in a defamation action opposing a directed- verdict motion made by a defendant claiming a quali- fied privilege must produce some evidence of the defendant’s actual malice to survive a directed verdict. Where did this plaintiff fail in his argument? intentional infliction of emotional distress purposely outrageous conduct causing emotional harm negligent infliction of emotional distress carelessly outrageous conduct causing emotional harm The elements of a prima facie case of intentional infliction of emotional distress are: • extreme and outrageous conduct by the defendant; • the defendant’s intention of causing, or reckless disregard of the likelihood of causing, emotional distress; • the plaintiff ’s suffering of severe emotional distress; and • as a direct result of the defendant’s extreme and outrageous conduct. A minority of jurisdictions also recognize the tort of negligent infliction of emotional distress. In these states, a defendant may be liable in damages for unreasonable behavior

that results in severe emotional harm to the plaintiff, even though the defendant never meant to inflict any harm.

The following case involves a claim of intentional infliction of emotional distress.

CASE 3.2 nelSon v. TargeT CorporaTion 334 P.3d 1010 (Utah Ct. App. 2014) Nelson began working at a Target retail store in Orem, Utah, in January 1997. Nelson was fired on February 25, 2011, after Target security officers determined that she took a customer’s wallet. The customer had contacted Target’s security department on February 18 to report that her wallet was missing and that she may have left it at a checkout lane after paying for her groceries. Target’s secu- rity team reviewed the store’s video surveillance footage to determine what had happened. Video footage from a checkout location showed Nelson putting the customer’s wallet in her purse. In the video, Nelson, who was shop- ping after her shift ended that day, took her own wallet out of her purse to pay for groceries. Nelson noticed another wallet a previous customer apparently left at the checkout stand near the credit card reader, glanced at the cashier as the cashier turned away, picked up the customer’s wallet with her right hand while her own wallet was still in her left, and quickly placed it in her purse, which was in the shopping cart next to her. Nelson then finished paying for her groceries with her own wallet still in her hand, put her wallet back in her purse on top of the customer’s wallet, and left the store. A Target security officer called Nelson at home after reviewing the video. Nelson confirmed that she had the wallet, and the security officer asked her to return it. The officer stated in a deposition that Nelson seemed surprised by his question and returned the wallet within 10 minutes. Nelson claimed that she put the wallet in her purse because she mistook it for her own. Jason Turner, Target’s store security chief, investigated the wallet incident. He interviewed the security officer and viewed several store surveillance videos of the event. After reviewing “the video over and over and over again to elimi- nate any of the possibilities that it could have been an acci- dent,” Turner concluded that there was “no way” Nelson could have taken the wallet by mistake. Turner interviewed Nelson about the incident on February 25, 2011. As required by company policy, a human resources representative was also present at the interview. After some initial questioning, Turner left the room to allow Nelson time to complete a written statement explaining why she took the wallet. Nelson wrote that she took the wallet inadvertently and did not realize she had it until she got home. Turner returned, reviewed Nelson’s statement, listened to Nelson explain her version of the incident, and told Nelson he did not believe her. After Nelson refused to amend her written statement, Turner left the room and returned with a supervisor who informed Nelson that Target was dismissing her. In April 2011, Nelson sued Target for intentional infliction of emotional distress, among other claims. In the complaint, Nelson alleged that “she inadvertently picked up a wallet, resembling her own,” and “immediately returned” it when she realized her mistake. She further alleged that Turner “interrogated [her] at length and repeatedly accused [her] of being dishonest” even though he knew or should have known that Nelson was telling the truth. Nelson claimed that Turner’s questioning caused her “to suffer emotional distress,” along with other claims. Target moved for summary judgment on all of Nelson’s claims. Nelson opposed the motion, filed a discovery motion requesting leave to depose two additional witnesses, and moved to amend her complaint to add a claim for breach of the covenant of good faith and fair dealing. The court granted Target’s motion for summary judgment on each claim. With respect to the emotional distress claim, the court concluded that “the facts do not demonstrate any conduct by [Target], or [its] agent, Mr. Turner, so outrageous and intolerable that it would offend accepted standards of morality and decency.” The Court of Appeals found that the trial judge properly denied Nelson’s claim of intentional infliction of emotional distress. Nelson argued that because Turner, the store security chief, admitted that he “conducted the interrogation after he had determined that Nelson had intentionally taken the wallet and was to be terminated, ... the interview served no legitimate purpose other than to inflict emotional distress or to extract an admission from Nelson through intimidation in order to attempt to insulate Target from liability.” But, wrote the appellate judges, even if Turner intended to cause Nelson some distress, Nelson must still show that Turner’s conduct during the interview was “outrageous and intolerable in that [it] offend[s] against the generally accepted standards of decency and morality.” Conduct that is merely “unreasonable, unkind, or unfair” does not qualify. Rather, the plaintiff must identify behavior so extreme that it “evoke[s] outrage or revulsion.” Here, concluded the court, Turner told Nelson that he did not believe she had taken the wallet by mistake and gave her several opportunities to explain herself. The interview was private and, according to company policy, conducted in the presence of a human resources representative. There was no evidence that Turner was verbally abusive or unprofessional. To the extent Nelson alleged that Turner interviewed her so that Target could avoid liability for her termination, such a purpose was perfectly legitimate and did not support Nelson’s claim that Target deliberately caused her emotional distress. And the fact that Turner had already concluded that Nelson intentionally took the wallet and interviewed her for the sole purpose of persuading Nelson to admit it simply did not offend “generally accepted standards of decency and morality.” Consequently, the district court did not err when it determined that Turner’s conduct was not sufficiently outrageous for Nelson’s claim to withstand summary judgment. Case Questions 1. Explain why the court did not find that the defendant’s interview with the plaintiff constituted intentional infliction of emotional distress. 2. The case summary states that the plaintiff needed to show conduct that was “outrageous and intolerable in that [it] offend[s] against the generally accepted standards of decency and morality” in order to prove her claim of intentional infliction of emotional distress. Was there any evidence offered by the plaintiff that supported her contention? More specifically, should the security officer have been required to terminate the interrogation once the plaintiff provided her signed statement? 3. Why is this a contended case of intentional infliction of emotional distress, and not negligent infliction of emotional distress?

The WORKING LAW Infliction of Emotional Distress via Social Networking

Sites On April 19, 2006, Anna Draker, a vice-principal at Clark High School in Texas, was advised by a coworker that some students had created a website on MySpace.com. The website, which appeared to have been created by Draker, contained her name, photo, and place of employment, as well as explicit and graphic sexual references. It was subsequently discovered that Benjamin Schreiber and Ryan Todd, at the time both minors and students at Clark High School, were responsible for creating the website. Draker sued the students and their parents, alleging, among other things, intentional infliction of emotional distress. The Texas Court of Appeals said of her emotional distress claim, “The Internet capabilities of modern society present numerous opportunities for individuals to engage in extreme and outrageous conduct that can produce severe emotional distress.5 There appears to be little civil remedy for the injured targets of these Internet communications. Intentional infliction of emotional distress would seem to be one option. But as it has developed, the tort is nearly impossible to establish. The citizens of Texas would be better served by a fair and workable framework in which to present their claims, or by an honest statement that there is, in fact, no remedy for their damages.” See Draker v. Schreiber, 271 S.W.3d 318 (Tex. App. 2008). 5 See Layshockv Hermitage Sch. Dist., 496 F. Supp. 2d 587, 590-91(W.D. Pa. 2007) (discussing a student’s creation of a false MySpace profile of his high school principal); David L. Hudson, Jr., Taming the Gossipmongers, 94 A.B.A.J. 19 (2008) (reviewing the use of the 1996 Communications Decency Act to protect Web publishers, such as juicycampus.com, from liability for content created by third parties); John Seigenthaler, Op-Ed, “A False Wikipedia ‘Biography,’” USA Today, November 29, 2005, available at http://www.usatoday.com/ news/opinion/editorials/2005-11-29-wikipedia-edit_x.htm (detailing the “Internet character assassination” of a former government official with an Internet “biography” reference, indicating that the official was suspected of involvement in the assassinations of President John Kennedy and Attorney General Robert Kennedy); and Linda Deutsch, “Woman Pleads Not Guilty in Internet Suicide Case,” USA Today, June 16, 2008, available at http:// www.usatoday.com/news/nation/2008-06-16-327594069_x.htm (discussing a 13-year-old girl’s suicide after receiving more than a dozen cruel messages from a nonexistent teen boy via a false MySpace profile).

Concept Summary 3.2

Infliction of emotional Distress •

May be intentionally or negligently inflicted + Intentional infliction requires outrageous conduct by defendant with the intent and result of causing severe emotional distress to the plaintiff + Negligent infliction requires similarly extreme behavior by the defendant, who, though lacking a bad intent, carelessly causes severe emotional harm to the plaintiff • Many courts shy away from this tort, particularly the negligent variety, because of problems of proving the extent of the plaintiff ’s suffering, and/or the causal connection, particularly where the defendant never intended to cause the harm • Social networking sites, such as Facebook and Myspace, have vastly expanded the potential for causing harm, because the hapless target potentially may be exposed to the entire universe of cyberspace

3-3 Tortious Interference with Contract tortious interference with contract unprivileged intrusion into a contractual relationship Another tort worth noting, based upon its common occurrence in the context of employment law, is tortious interference with contract. It is a claim that is sometimes available to plaintiff- employees against third parties, who sometimes are named as additional defendants along with the plaintiff ’s employer in cases of alleged wrongful termination or breach of an employment contract. Following are some recent examples of how this tort plays out in real-world situations.

CASE 3.3

Bulwer v. mounT auBurn hoSp. 86 Mass. App. Ct. 316, 16 N.E.3d 1090 (2014) Facts: An employee, who was an experienced physician and a black man from Belize, brought his action against his hospital employer after he was terminated from the residency program, alleging discrimination and retaliation based on his race and national origin, breach of contract, defamation, and tortious interference with contractual relationship. He had joined the residency program under a one-year contract, with the possibility of advancement to a second year of residency upon successful completion of the first. Eight months into the program, he was told that the hospital would not extend a second-year contract to him because of concerns in the areas of patient care, interpersonal and communication skills, and practice-based learning (based on observation and interviews by hospital supervisors). However, he would be allowed to continue his residency through the end of his first year. One month later, however, he was terminated. He sued and, following discovery, the Superior Court granted summary judgment in favor of the employer. Bulwer appealed. Issue: Did the individually named defendants (the employee’s supervisors at the hospital) intentionally interfere with the employee’s contractual relationship with the hospital? Decision: To prove that the defendants intentionally interfered with his contractual relationship with the hospital, the plaintiff had to prove that they acted “malevolently, i.e., for a spiteful malignant purpose unrelated to the legitimate corporate interest.” Although the appellate court concluded that the record was sufficient to put the claim of discrimination to a jury, that record did not suffice to raise a genuine issue of fact regarding malevolence on the part of the three individual defendants.

CASE 3.4

duty v. Boys and girls Club of porter County --- N.E.3d ----, 2014 WL 7201770 (Ind. Ct. App. 2014) Facts: A former employee, Dawn Duty, brought action against her former employer, the Boys and Girls Club of Porter County (BGC), and a former coworker, Charles R. Leer, alleging wrongful discharge and tortious interference with a contractual relationship, claiming that the employer violated its policy to protect employees from retaliation under the employee handbook’s whistleblower policy and that the coworker persuaded the employer to terminate her employment. The superior court dismissed all the claims, and the employee appealed. Issue: Did the plaintiff prove a tortious interference claim against the defendants? Decision: The court’s reading of Duty’s allegations led to the conclusion that they were sufficiently specific regarding Leer’s alleged wrongful and unjustified conduct. First, Duty’s second amended complaint alleged that Leer “engaged in statements and conduct with [the] purpose and intent[ ] to persuade and induce [BGC] ... to terminate [Duty] as an employee of [BGC].” Under ‘notice pleading’, Duty did not have to describe those statements and conduct with more specificity than that. Moreover, Duty alleged that Leer’s statements and conduct were “in retaliation for [her] invocation of the Whistleblower policy of [BGC] with the intent[ ] to induce [BGC] to terminate its employment of [Duty]” and that Leer’s actions were “vindictive against [Duty] for what he thought were damaging [sic] to his reputation[.]” The court observed that vindictiveness is, by its very nature, malicious. Thus, Duty pled facts sufficient to show that the alleged breach was malicious and exclusively directed to the injury and damage of Duty. The judges held that Duty stated a claim upon which relief could be granted for tortious interference with a contractual relationship. They reinstated her case.

CASE 3.5 oliver v. orleanS pariSh SChool Bd. 133 So.3d 38 (La. App. 4 Cir. 2014) Facts: Employees of a parish school district, who were terminated by a reduction in force (RIF) after failing schools in the parish were transferred to the Recovery School District (RSD), filed a class action against the board and the Louisiana Department of Education (LDOE) for wrongful termination and also asserted a claim against LDOE for tortious interference with their employment contracts. Following a bench trial, the civil district court judge entered judgment for the employees, and the defendants sought appellate review. Issue: Do the plaintiffs have a tortious interference with contract claim against the defendant, because it terminated their employment? Decision: The trial court relied on a precedent called 9 to 5 Fashions v. Spurney, in determining that the state had intentionally and tortiously interfered with the appellees’ vested property rights in continued employment. However, the appellate court disagreed, finding that the appellees failed to establish the necessary elements to prove a claim of tortious interference. In 9 to 5, the Louisiana Supreme Court had set forth five elements that must be proven to succeed in a claim for tortious interference of contract: (1) the existence of a contract or a legally protected interest between the plaintiff and the corporation; (2) the corporate officer’s knowledge of the contract; (3) the officer’s intentional inducement or causation of the corporation to breach the contract or his intentional rendition of its performance impossible or more burdensome; (4) absence of justification on the part of the officer; and (5) causation of damages to the plaintiff by the breach of contract or difficulty of its performance brought about by the officer. In order to find that there was a tortious interfer- ence with contract, all five elements must be proven. In its discussion on the wrongful termination, the appellate panel acknowledged that the appellees had a vested prop- erty right in their employment. However, the judges also recognized that the right is not absolute. They found that ACT 35 (which allowed for the automatic transfer of a failing school to the RSD, if that school was in a district that was “academically in crisis”) together with the Board’s policy provided the authority to implement an RIF. In the same manner, they found that ACT 35 provided the state with the power and authority to transfer funding and facili- ties to the RSD. Therefore, the trial court’s determination that the defendant’s actions were unauthorized and unjusti- fied was “clearly wrong,” which defeats the tortious inter- ference with contract claim.

When an employee–lawyer sues his own law firm

In September 2010, a California attorney sued his own law firm, claiming that his pay had been docked because he refused to attend a weekend-long “New Warrior” personal-development seminar that allegedly would include the men disrobing and passing around a wooden phallus. According to the lawyer’s complaint, filed in the Orange County Superior Court, the event was hosted by the ManKind Project. The organization’s website6 states,

The ManKind Project flies in the face of rigid stereotypes about the “Sensitive New Age Man” AND the “Macho Man”. We ask men to go right up to the edge—and beyond it—in a culture that seems to be comfortable with mediocrity and passivity from men. We ask men to stop living a vicarious adventure through their TV’s and step into a real time adventure to win back their passion for life. We ask men to confront the real issues, to get 100% honest about who they are. Some men have a really hard time doing that. Many of us did too, but we took the risk anyway.

The website describes the “New Warrior Training Adventure” as “a modern male initiation and self-examination. We believe that this is crucial to the develop- ment of a healthy and mature male self, no matter how old a man is. It is the ‘hero’s journey’ of classical literature and myth that has nearly disappeared in modern culture. We ask men to stop living vicariously through movies, television, addictions and distractions and step up into their own adventure—in real time and surrounded by other men.”7

In a news story about the lawsuit, the executive director of the ManKind Project was cited as saying that nudity was optional, as was the exercise of which the plaintiff complained.8

The plaintiff-attorney claimed he was being paid $15,000 a month until he refused to attend the event. The defendant-firm countered that his six-month contract wasn’t renewed because his performance was sub-par. The attorney’s complaint pled every cause of action discussed in this chapter, and then some:

1.Sexual harassment

2. Retaliation

3.Failure to pay wages

4.Failure to provide itemized statements (of wages)

5Constructive termination

6.Intentional interference with economic advantage

7.Breach of written contra

8. Breach of oral contract

9 Intentional infliction of emotional distress9 Putting aside the potential merits of the case, is it ethically inappropriate for an attorney to sue his own law firm? Put another way, would it be more appropriate for the plaintiff to have brought ethics charges against the firm and its attorneys before the California bar association? What are the pros and cons of such a public policy, if it were adopted by the state’s supreme court and imposed by the court on the state’s legal profession? Putting aside the ethical issue for a moment, taking the facts as stated above, which—if any—of the plaintiff’s causes of action seem potentially meritorious to you?

CASE 3.6 TSg finiShing, llC v. Bollinger ---S.E.2d---, 2014 WL 7463824 (N.C. App. 2014), motion for temporary stay granted, ---S.E.2d---, 2015 WL 246016 (N.C. Supr. Ct. 2015) Facts: TSG Finishing is in the business of fabric finishing. It has three plants in Catawba County, North Carolina. Rather than manufacturing fabrics, TSG applies chemical coatings to achieve whichever result is desired by the customer, such as coloring, stiffening, deodorizing, and abrasion resistance. The defendant began working in the field of fabric finishing for Geltman Corporation after graduating from high school in 1982. He had no formal education beyond high school. TSG, the plaintiff ’s predecessor firm, acquired Geltman in 1992, and the defendant stayed on to work for TSG, Inc. By the late 1990s, he was promoted to quality control manager. Bollinger was responsible for assessing a customer’s finishing needs and developing a finishing protocol for that customer. He also helped in the creation of a “style data card” for each customer. The style data cards contained information on each step of the finishing process. TSG expended great effort to keep its customer and finishing information confidential. Specifically, according to the court, it used a code system in its communications with customers that allowed the customer to identify the type of finish it wanted, but did not reveal the chemicals or processes involved in creating that finish. TSG had confi- dentiality agreements in place with many of its customers. Third parties were required to sign confidentiality agree- ments and received a temporary identification badge when visiting TSG’s facilities. TSG’s computers were password protected, with additional passwords being required to access the company’s production information. In 2007, TSG, and the defendant entered into a nondisclosure and noncompete agreement. In exchange for an annual increase in compensation of $1,300.00 and a $3,500.00 signing bonus, the defendant agreed not to disclose TSG’s confidential and proprietary trade secrets and further assented to employment restrictions after his tenure at the company ended. TSG filed for bankruptcy in 2009. By a plan approved by the United States Bankruptcy Court on May 1, 2011, the company transferred its interests to the plaintiff, previously a wholly owned operating subsidy of TSG, which remained in operation. According to the defendant, every aspect of his day-to-day job remained the same after the bankruptcy reorganization. In July 2013, Bollinger and a direct competitor of TSG, American Custom Finishing, LLC (“ACF”), began negotiations regarding the defendant’s potential to leave TSG and work for ACF. According to TSG Finishing, the defendant resigned from his position on November 21, 2013 and announced that he was leaving to become plant manager for ACF at a plant five miles away from TSG Finishing. Bollinger claimed that he gave the plaintiff two weeks’ notice on November 21, 2013 but was terminated immediately and escorted off of the premises. He began working for ACF the following Monday. During his depo- sition, Bollinger testified that TSG Finishing and ACF shared certain customers, and that he was responsible for performing similar customer evaluations for ACF as he did at TSG. TSG Finishing filed suit against the defendant on January 16, 2014, alleging claims for breach of contract, misappropriation of trade secrets, and unfair and decep- tive practices. The plaintiff also moved for a preliminary injunction to prevent the defendant from breaching Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party c

his noncompete agreement and misappropriating TSG Finishing’s trade secrets. A confidential hearing was held on the plaintiff’s motion, and by order entered on February 20, 2014, the trial court denied the motion for a preliminary injunction. The plaintiff filed its timely notice of appeal.

Analysis: The plaintiff argued that the trial court erred by concluding that it had not demonstrated a likelihood of success on the merits of its claim for trade secret misappropriation. After careful review, the appellate court agreed.

The Trade Secrets Protection Act (“TSPA”) in North Carolina allows for a private cause of action where a plaintiff can prove the “acquisition, disclosure, or use of a trade secret of another without express or implied authority or consent, unless such trade secret was arrived at by independent devel- opment, reverse engineering, or was obtained from another person with a right to disclose the trade secret.” A trade secret under this statute

“a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and

b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

To determine what information should be treated as a trade secret for the purposes of protection under the TSPA, the Court should consider the following factors:

“(1) the extent to which the information is known outside the business;

(2) the extent to which it is known to employees and others involved in the business;

(3) the extent of measures taken to guard secrecy of the information;

(4) the value of the information to business and its competitors;

(5) the amount of effort or money expended in developing the information; and

(6) the ease or difficulty with which the information could properly be acquired or duplicated by others.”

Misappropriation of a trade secret is prima facie estab- lished by the introduction of substantial evidence that the person against whom relief is sought both:

“(1) Knows or should have known of the trade secret; and

(2)

Has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner.”

Here, the trial court determined that the plain- tiff failed to demonstrate a likelihood of success on the merits of its misappropriation of trade secrets claim for the following reasons: (1) the plaintiff asserted that its finishing process “as a whole” was the trade secret for which it sought protection, and under the holding of a 2002 North Carolina Supreme Court case, Analog Devices, Inc. v. Michalski, general processes were deemed to be too vague to receive TSPA protection; and (2) the defendant’s familiarity with customer preferences was “more akin to general knowledge and skill acquired on the job than any trade secret maintained by [p]laintiff.” For the following reasons, the appellate panel disagreed with the trial court’s conclusions.

First, contrary to the trial court’s assessment of the preliminary injunction hearing, the plaintiff did not “continually assert” that it was the “combination of [the] components,” or the “process as a whole,” for which it sought protection. Although TSG Finishing’s Chief Executive Officer Jack Rosenstein did say that the entire equation of processes was a trade secret in and of itself, he also testified that the particular steps in the process were also trade secrets. As an example, Rosenstein high- lighted the needle punch technique on a style data card that Bollinger had worked on during his time at TSG. The customer initially requested that the fabric be put through the needle punch machine one time at a specific setting. Through trial and error, the defendant discovered that the customer’s desired result could not be accomplished by running the needle punch machine one time at this setting, so he changed the process after experimenting with varying settings. Rosenstein testified the needle punch research for this client, as well as similar types of experimentation done to various processes throughout the finish equation, were trade secrets.

Therefore, held the appeals court, it was not just the process as a whole, but the specific knowledge defendant gained as to each discrete step in the process, that TSG Finishing sought to protect.

Based on the Analog Devices, Inc. decision, the trial court concluded that the plaintiff had failed to “put forward enough facts to support trade secret protection over the process as a whole or any particular component such that the [trial court] would be justified in granting the injunction sought.” However, the court in Analog

Chapter 3 Commonly Committed Workplace Torts 55 Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Devices, Inc. upheld the denial of a preliminary injunc- tion in part because the differences between the defen- dant’s former and new employers “render[ed] the alleged trade secrets largely non-transferable.” Furthermore, the court determined that the plaintiff did not carry its burden of producing evidence specifically identifying the trade secrets it sought to protect. The evidence before that court showed that some of the plaintiff’s production tech- niques were “easily and readily reverse engineered,” while others were “either generally known in the industry, are process dependent so as to preclude misappropriation, or are readily ascertainable by reverse engineering.” Finally, regarding the processes used by the plaintiff, the court found that there were substantial differences between the products of the two companies that would “require new experimentation and development of new ways to effec- tively identify efforts that will lead to successful develop- ment.” Thus, the court affirmed the trial court’s denial of the preliminary injunction. The court found the facts of this case readily distin- guishable from Analog Devices, Inc., holding that they demonstrated that TSG Finishing would likely prevail on the merits of its claim for misappropriation of trade secrets. TSG Finishing presented sufficient evidence on its specific trade secrets to warrant protection. First, Rosenstein testi- fied that the company spent $500,000.00 per year on research and development in order to create unique finishes and applications for its customers. Bollinger himself testified that the results of his experi- mentation at TSG Finishing regarding specific process refinements were not known outside the firm. Rosenstein also testified that the defendant’s work was not something that anyone else in the industry would know without years of trial and error by experienced technicians. Security measures were in place such that only top-level employees were familiar with the proprietary information defendant was in charge of developing. The trial court acknowledged in its order that the plaintiff “maintains signifi- cant security measures over its finishing process.” In fact, TSG made its employees, customers, and facility visitors sign confidentiality forms to protect this information. Additionally, Rosenstein testified that the defendant’s disclosure of the trade secrets would give ACF the opportunity to save “untold amounts of hours, days, weeks, and months to come up with these finishes and these applications.” Rosenstein testified that the defendant could help ACF achieve the customers’ desired results, which they sometimes shared with the company, without spending the money on research and development that TSG Finishing invested. The record reflected that Bollinger admitted as much in his deposition when he testified that he performed many of the same duties for ACF for some of the same customers that he formerly served at TSG Finishing. Therefore, unlike in Analog Devices, Inc., there was significant evidence showing that TSG Finishing’s trade secrets were transferrable to ACF. Over the past two decades, TSG had invested millions of dollars to develop and protect the information the defendant compiled through his years of employment. The director of operations at TSG Finishing testified in his deposition that the defendant would some- times work for more than a year on a process in order to achieve a desired result. There was no indication in the record that these processes were able to be “reverse engineered” like those in Analog Devices, Inc., and it was undis- puted that they were not generally known throughout the industry. In sum, each of the relevant factors weighed in the plaintiff ’s favor. The company specifically identified the production factors for which it claimed trade secret protection. Bollinger acknowledged during his deposition that he performed research and development for these factors during his time at TSG and TSG Finishing and was responsible for keeping customer- and fabric-specific proprietary information regarding these processes on the style data cards. Therefore, the appellate court concluded that the plaintiff carried its burden of presenting evidence sufficient to identify the specific trade secrets protected by the TSPA. Additionally, the judges held that the plaintiff presented prima facie evidence of misappropriation of its trade secrets. “Direct evidence ... is not necessary to establish a claim for misappropriation of trade secrets; rather, such a claim may be proven through circumstantial evidence.” Bollinger testified that he was being asked to perform similar duties for ACF as he did at TSG and TSG Finishing, including evaluating customer needs and organizing production processes. The defendant acknowledged that TSG Finishing and ACF shared customers and that he was currently working with multiple customers for ACF that he had served at TSG. Specifically, he admitted that he had done independent research and experimentation for TSG on the needle punch, finish, and heating processes for one specific customer that he now served at ACF, and that he talked about the various components of the TSG-style data cards with ACF management personnel. This, concluded the court, was precisely the type of threatened misappropriation, if not actual misappropriation, that the TSPA aims to prevent through issuance of a preliminary injunction. Based on the foregoing, the court concluded that the plaintiff demonstrated a likelihood of success on the merits of his claim for trade secret misappropriation. NOTE: As this edition was being prepared for press in 2015, the North Carolina Supreme Court had granted the defendant’s motion to stay the injunction while it considered hearing his appeal. Case Questions 1. Should a defendant such as Bollinger be prohibited from making use of the experience of a working lifetime in trying to better his career with another 2. 3. employer? Given that he voluntarily entered into non- compete and nondisclosure agreements, do you think he was paid enough in return to justify the restrictions placed on his future? Do you think the plaintiff presented prima facie evi- dence of misappropriation of its trade secrets under the North Carolina state statute? Or did it simply show that the defendant’s own hard work and ingenuity made him an experienced, and therefore very attractive, target for the plaintiff’s competitor? Can you conceive of a middle ground that could have set a better way to balance the parties’ conflicting inter- ests in lieu of years of costly litigation?

intrusion.”2 This expert suggests that the common ways in which employers (both public and private) intrude upon their employees’ privacy include surveillance and eavesdropping, monitoring and reviewing computer information and use, requests for information from third parties, requests for medical information, and conducting internal investigations.3

CHAPTER4 Employee Privacy Rights in

the 21st Century

Do we, as workers, have privacy rights in our places of employment? We often ask our students, most of whom hold part-time jobs, this question. Instinctively, they answer “yes,” but seem unsure about the accuracy of their answer or their support of it.

The idea of a legal right to privacy originated in America. Louis Brandeis (later a Supreme Court justice) and another young lawyer, Samuel D. Warren, published an article titled “The Right to Privacy” in the Harvard Law Review in 1890, in which they argued that the Constitution and the common law implied a general “right to privacy.” Their efforts were never entirely successful. It took the renowned tort scholar Dean Prosser to postulate some decades later that the “privacy” umbrella covered four separate torts, the only unifying element of which is “the right to be left alone.” These four elements of common-law privacy are:

• Appropriating the plaintiff ’s identity for the defendant’s benefit • Placing the plaintiff in a false light in the public eye • Publicly disclosing private facts about the plaintiff • Unreasonably intruding upon the seclusion or solitude of the plaintiff

In Griswold v. Connecticut,1 the Supreme Court for the first time expressly acknowledged a right of privacy implicit in the Constitution. Griswold was executive director of the Planned Parenthood League of Connecticut. Fellow-appellant Buxton was a licensed physician and a professor at the Yale Medical School and served as medical director for the League at its center in New Haven. The center operated from November 1 to November 10, 1961, when the two appellants were arrested. They gave information, instruction, and medical advice to married persons as to the means of preventing conception. They examined the woman and prescribed the best contraceptive device or material for her use. Fees were usually charged, although not always

The statute involved in the case provided:

Any person who uses any drug, medicinal article or instrument for the purpose of preventing conception shall be fined not less than fifty dollars or imprisoned not less than sixty days nor more than one year or be both fined and imprisoned.

Any person who assists, abets, counsels, causes, hires or commands another to commit any offense may be prosecuted and punished as if he were the principal offender.

The appellants were found guilty as accessories and fined $100 each. They appealed, contending that the accessory statute as so applied violated the Fourteenth Amendment. They argued that their services concerned a relationship (marriage) that lay within the zone of privacy created by several fundamental constitutional guarantees. In forbidding the use of contraceptives rather than merely regulating their manufacture or sale, they claimed that the law sought to achieve its goals by having a maximum destructive impact upon that rela- tionship. Such a law, they said, could not stand in light of the principle that a governmental purpose to control or prevent activities constitutionally subject to state regulation may not be achieved by means which sweep unnecessarily broadly and thereby invade the area of protected freedoms.

Justice William O. Douglas, writing for the majority of the Court, asked the rhetorical question, “Would we allow the police to search the sacred precincts of marital bedrooms for telltale signs of the use of contraceptives?” His answer: “The very idea is repulsive to the notions of privacy surrounding the marriage relationship.”

Declaring the law unconstitutional and reversing the convictions, he wrote, “We deal with a right of privacy older than the Bill of Rights—older than our political parties, older than our school system. Marriage is a coming together for better or for worse, hopefully enduring, and intimate to the degree of being sacred. It is an association that promotes a way of life, not causes; a harmony in living, not political faiths; a bilateral loyalty, not commercial or social projects. Yet it is an association for as noble a purpose as any involved in our prior decisions.”

While this decision had the marital bed as its focus, its impact has been far broader, as it has claimed to find a generalized right of privacy between the lines of the Bill of Rights.

Privacy Rights in the Employment Area

Clearly, public employees enjoy the protection accorded to all of us by the Fourth Amendment of the U.S. Constitution against unreasonable searches and seizures by govern- mental entities. This important constitutional right is extended to state and municipal employees by the Fourteenth Amendment’s “due process” clause. Public employers, unquestionably, are state actors for the purposes of the Fourth and Fourteenth Amendments’ restrictions.

What about employees working for private firms? Labor lawyers commonly counsel their clients that “the Bill of Rights stops at the factory door.” This is generally true. All the same, employees of private corporations do have significant common-law and statutory privacy protections. In the words of one widely read employment law expert, “The most common way employers invade their employees’ privacy is to intrude on their seclusion, solitude, or private affairs. There is a delicate balance between the employer’s legitimate need for the intrusion versus the employees’ legitimate expectations of privacy regarding the intrusion.”2 This expert suggests that the common ways in which employers (both public and private) intrude upon their employees’ privacy include surveillance and eavesdropping, monitoring and reviewing computer information and use, requests for information from third parties, requests for medical information, and conducting internal investigations.3

4-2 Surveillance and Eavesdropping

surveillance

monitoring of behavior

eavesdropping

surreptitiously listening to others’ conversations

The word surveillance is commonly used to describe “observation from a distance by means of electronic equipment or other technological means. However, surveillance also includes simple, relatively no- or low-technology methods such as direct observation, obser- vation with binoculars, postal interception, or similar methods.”4 Eavesdropping, on the other hand, is “the act of surreptitiously listening to a private conversation.”5 Both tech- niques are commonly associated with police, spies, and military intelligence. As such, they are the subjects of many laws and much controversy, especially in our post-9/11 world of international terrorism, the USA Patriot Act, and the Department of Homeland Security.

Employers often are tempted to observe and eavesdrop on employees to ensure quality of customer service, to prevent inventory and intellectual property thefts, and to discourage wasting time on Internet abuses—to name just a few motives. Not surprisingly, such activi- ties have generated much litigation, especially when the employer’s intrusion on employee privacy resulted in employee discipline. Following are several cases that exemplify the types of incidents that give rise to privacy-based lawsuits.

CASE 4.1 Koeppel v. SpeirS 808 N.W.2d 177 (Iowa 2011) Facts: An employee who discovered a hidden video camera in a workplace bathroom brought an invasion of privacy action against her employer, an insurance agent who secretly installed the camera. The district court entered summary judgment in the employer’s favor based upon evidence showing that the camera was inoperable at the time of its discovery due to a weak radio wave signal to the receiver in the employer’s office. The court of appeals reversed and the employer petitioned for review, which was granted. Issue: When are invasions of privacy intentional? Decision: The trial judge concluded that the district court erred in granting the employer’s motion for summary judgment. An electronic invasion occurs under the intrusion on solitude or seclusion component of the tort of invasion of privacy when the plaintiff establishes by a preponderance of evidence that the electronic device or equipment used by a defendant could have invaded privacy in some way.

CASE 4.2 liebeSKind v. rutgerS univerSity --- A.3d ---, 2015 WL 7662032 (N.J. Superior 2015) Facts: Suspecting that the plaintiff, a university employee, was spending a disproportionate amount of working time surfing on his office computer, his supervisor decided to investigate his Internet-browsing history. The supervisor used an application called “IEHistoryView” to extract browsing history based on data maintained by Internet Explorer. The investigation did not attempt to gather any information about the plaintiff ’s personal communications that might have been conducted on his work computer. Nor did the supervisor’s foray attempt to gather any of the plaintiff’s personal online accounts or websites. Nevertheless, the investigation yielded a report that reflected numerous visits to nonwork websites. Although the supervisor took no immediate disci- plinary action following this investigation, when termina- tion of the plaintiff was under consideration for a variety of performance issues, computer misuse issue was put into the mix. Ultimately, the plaintiff received a letter which read, “It is with sincere regret that I must inform you that your employment at Rutgers University as Unit Computing Specialist is being terminated due to the lack of skill set needed to perform the required duties. Over the past few weeks I have observed your work and find it to be inad- equate to effectively perform your duties. Your constant reliance for help to perform basic troubleshooting tasks and poor attitude does not meet our expectations and basic position requirements.” The plaintiff subsequently sued, challenging his termina- tion on a number of grounds, including invasion of privacy. With regard to this cause of action he claimed his firing offended New Jersey’s Wiretapping & Surveillance Control Act, N.J. Stat. Ann. 2A:156A-1, as well as the garden state’s Computer Related Offenses Act, NJ. Stat. Ann. 2A:38A-1. He also pointed to the Fourth and Fourteenth Amendments, because Rutgers University is a “state actor.” On the defendant’s summary judgment motion, the trial court dismissed this cause of action. Issue: Was the trial judge correct in dismissing the plaintiff ’s “invasion of privacy” cause of action? Decision: The Appellate Division of the New Jersey Superior Court held that, particularly in light of the university’s Acceptable Use Policy for Computing and Information Technology Resources, the plaintiff did not have the reasonable expectation of privacy with regard to his work computer that is required to trigger a violation of the “search and seizure” protections of the U.S. Constitution. Additionally, the court found that the two state stat- utes were inapplicable to his claim. The court suggested that the plaintiff may have had a stronger case if he had managed to prove certain allegations that were never factu- ally supported. “Plaintiff also alleges, based on the dates in one field of the browsing history report that Masforroll actually hacked into plaintiff’s personal email and other personal accounts and put over 1500 false entries into the report. Plaintiff declined to get an expert to prove this claim concerning the specifics of a computer software applica- tion. The trial judge appropriately dismissed this claim as an expert is required where, as here, the subject matter is so esoteric that jurors of common knowledge and experience cannot form a valid opinion without it.” was an officer in his police department, “maliciously, and/ or recklessly released information from the plaintiff’s personnel file to the press during an interview with reporters of the local newspaper.” The plaintiff alleged that the defendant “opened up plaintiff’s personnel file” and told reporters about a letter of reprimand the plaintiff received in 2007. The plaintiff also alleged that the letter should have been removed from the personnel file after two years but never was. The defendant also disclosed to the gathered reporters that the plaintiff was arrested in 2007, although the arrest was later dismissed. The plaintiff argued that the information revealed by the defendant was not subject to disclosure and was an invasion of personal privacy based upon intrusion into his right to seclusion. He also stated that as a result of these actions, he has suffered injury to his reputation, economic loss, and severe emotional distress. He asked for compensatory damages, punitive damages, and costs. Issue: Did the Chief intrude upon the plaintiff ’s right to seclusion, thus committing an invasion of privacy? Decision: In this case, the court explained that the crux of the tort of intrusion upon seclusion is the manner of the invasion, not the subsequent dissemination resulting from it. As the Restatement of Torts states, it is the intrusion itself, not the publication, which makes a party subject to liability for this tort. Here, the court found nothing in the pleadings argued that the method of obtaining the information was objectionable. In fact, there was nothing pleaded concerning the method of obtaining the information at all. At best, read in the light most favorable to the plaintiff, the manner of the intrusion was the opening of the file, and reading aloud of its contents. Thus, the plaintiff was not objecting to the manner in which the information was disseminated, but the fact that the information was disclosed to the press, thus publicizing the plaintiff’s personnel information and causing anxiety and distress. The court found that the conduct alleged, namely, the opening of the file and reading of its contents, did not rise to the level of invasion typically found in violations of this tort. [See Restatement of Torts, § 652B (invasion described as physical intrusion into a place in which the plaintiff has secluded himself, looking through windows with binoculars or tapping phones, opening private and personal mail or forging a court order in order to obtain private documents)], and therefore the count alleging intrusion upon seclusion was pleaded sufficiently and had to be stricken.

Liebeskind is a classic case of computer surveillance by the employer to ascertain if the employee, whose performance was under par, might be spending working time surfing the Internet. The lesson of the case is that an employer can shield itself against subsequent invasion of privacy actions by promulgating a policy that makes its surveil- lance rights crystal clear. As the case suggests, neither statutory nor constitutional rights are likely to avail the worker who has been placed on notice by an express written policy that she or he has no reasonable expectation of privacy where her or his desktop computer is concerned.

Koeppel and Huston are companion cases concerning intrusion into the plaintiffs’ right of seclusion. In the first case, the plaintiff prevailed. The employer had no right to intrude upon her bathroom breaks. In the latter, however, the Chief of Police had every right to open the plaintiff ’s personnel file. Thus, the nature of the intrusion, as well as where it occurs, will be determinative in these kinds of cases. Analogizing to Liebeskind, we also can characterize these outcomes in terms of the reasonable expectation of privacy that perme- ates so many of these cases. The plaintiff in Koeppel could reasonably expect her employer to keep its cameras out of the restrooms. Huston, however, could hardly expect the Chief to never open his personnel file.

4-3 Monitoring and Reviewing Computer Information and Use

Although private employers, and even public employers with an appropriate notice that trumps employees’ privacy expectations, are free to monitor and review employee use of employer-owned computers, some employers have voluntarily—or under pressure from a labor union—limited their own access to such devices and the information stored in them. The policy below, adopted by a northeastern university, where the faculty and clerical staff are both represented by labor unions, seeks a balance between protecting the integrity of the institution’s information technology and the employees’ (especially the tenured faculty’s) privacy interests.

The WORKING LAW

Rights and Responsibilities of Users of the

Rider University Computer Network.

This policy governs the use of computers and networks at Rider University. As a user of these resources, you are responsible for reading and understanding this document. This policy exists to protect the users of computing resources, computing hardware and networks, system administrators, other University employees and the University itself. The University re- serves the right to change this policy in accordance with applicable University procedures.... Rider University is committed to protecting the rights of students, faculty, and staff to freedom of expression and to free academic inquiry and experimentation. Concomitantly, users must respect the rights of other users, respect the integrity of the systems and related physical resources, and observe all relevant laws, regulations, and contractual obligations.... While users do not own their accounts on the University computer network, they are granted the exclusive use of those accounts. Users therefore are entitled to privacy regarding computer communication and stored data. Subject to the exceptions set out below, users have reason to expect the same level of privacy for their files on the University’s computer (i.e., files in a user’s home directory) as users have in any space under their personal control.

Private communications by computer (e-mail) will be treated to the same degree of privacy as any private communication. Users should note that by adopting this policy the University does not assume an affirmative responsibility of insuring the privacy or integrity of users e-mail....

System administrators or other University employees will access user files without permission of the user only when immediate action is necessary to protect the integrity of the computer network or when subject to a search by law enforcement agencies acting under the order of a court of appropriate jurisdiction. In the event of an order by a court, or a governmental agency with subpoena authority, the user of that file will be notified of that order prior to the University providing access to those files to the extent permitted by applicable law. Copies of all user files stored on the network may be routinely backed up for disaster recovery purposes. Such copying shall not be considered to be in violation of this policy as long as such operations are purely mechanical and do not involve the viewing of those files. However, ultimate responsibility for the back-up of files in personal accounts, local disks, and personal computers, lies with the account holder.

While Rider University is committed to intellectual and academic freedom and to the application of those freedoms to computer media and facilities, the University is also committed to protecting the privacy and integrity of computer data belonging to the University and to individual users....

This policy sets a balance that tips in favor—some would say heavily in favor—of the employee. As such, it reflects the power that the employee unions, especially the faculty union, wielded at the institution. Most organizations have not gone so far in according their employees such a broad expectation of privacy with regard to their workplace computers— and for good reason. Such a policy as this can make it difficult for an organization not only to investigate allegations of employee wrongdoing, but also even to defend itself under some circumstances, such as where the computer files of a hostile ex-employee are required and the disgruntled individual refuses to cooperate.

4-4 Requests for Information from Third Parties

Privacy concerns arise in the context of third-party information requests primarily at the hiring stage. Communications between former and prospective employers regarding an employee typically are protected by a qualified privilege, provided such communica- tions are conducted in the absence of malice. While malice in the generic sense usually implies animosity toward somebody, malice in the context of defamation6 and invasion of privacy means knowledge that your statement is false or a reckless disregard of its truth or falsity.

Some employers, often on the advice of legal counsel, have opted in recent years to limit responses to reference requests to confirming the dates of the former employee’s employment, his or her salary or wage rate, and job title. While this approach generally is the safest, it inhibits the free flow of information required for the hiring employer to make an informed and intelligent decision. And while this policy may protect the former employer from tort liability in most circumstances, where the former employee was fired for serious cause, withholding this knowledge from a potential new employer may actually open the former employer to more significant liability than if he or she had spoken up.

The following is an actual reference policy adopted by an organization in the health care industry. Try to articulate reasons why this organization chose to institute this policy:

When you terminate employment, you may use this hospital as a reference when seeking other employment. However, by law we can only give limited information from your file to your prospective employer unless you sign a release form. Letters of recommendation for terminating employees, therefore, cannot be given. We recommend that you retain your personal copies of your [evaluation forms] to share with prospective employers.

Faced with such restrictive reference policies, employers often take it upon themselves to learn as much as they can about prospective employees. Increases in incidents of work- place violence, and concomitant increases in negligent hiring lawsuits by customers and coworkers of violent employees, have added urgency to this effort. Applicants, therefore, are often asked to authorize extensive background investigations before they are offered employment. A typical authorization policy looks something like this:

Background Screening policy

ABC Company is committed to providing a safe and secure working environment for its employees, vendors, and customers. To this end, the company’s selection process includes background checks of all potential employees. ABC Company will follow all applicable state, federal, and local laws governing employment and background screening in all respects. The following procedures will be followed to ensure compli- ance with our background screening policy:

Applicants As part of the selection process, all applicants will be required to sign a release for the completion of a background check when being considered for potential employ- ment. The following information will be verified: • Social Security trace • Criminal search • Employment verification • Education verification • Motor vehicle report (if the position requires a valid driver’s license) Procedures 1. The Human Resources Department will initiate background checks at the time a CONTINGENT employment offer is made to an applicant. No offer of employ- ment is binding until completion of a background check and notification from HR to the hiring manager that a final offer can be made. 2. Human Resources will confirm to the hiring manager that the background screen is complete and that the applicant meets ABC Company’s criteria for employ- ment. In the event that adverse information is discovered, the offer will be retracted and the selection process and next steps will be determined on a case- by-case basis. 3. The external vendor will notify the applicant of any information that cannot be ver- ified through customary search methods to obtain another source of verification such as W2s, paycheck stubs, or diploma. Any material information that cannot be verified will result in a disposition of “not recommended.” 4. Any prospective employee who receives a “not recommended” result will receive communications consistent with Fair Credit Reporting Act (FCRA) requirements. Should you have any questions regarding this process, please feel free to contact your recruiting consultant. Background checks, especially of the criminal variety, are a sore point for many employees and labor unions. With regard to criminal background investigations, unions often observe that in the absence of a unified national clearinghouse, investigators are limited to checking the records of the states and counties where the applicant admits to having previously resided. This means that less than full disclosure by the applicant can result in a serious offense being entirely overlooked. Employees and labor organizations also object to the discretion that is often exercised by human resources professionals in determining whether a revealed offense will disqualify the applicant. That determination is necessarily a judgment call, taking into consideration the seriousness of the crime, the recency or remoteness of the conviction, and the direct or indirect relationship of the crime to the employer’s business.

4-5 Requests for Medical Information

The federal Health Insurance Portability and Accountability Act (HIPAA), enacted in 1998 and having taken full effect some five years later, mandates—among other things7— stringent policies and procedures aimed at preventing the unauthorized use or disclosure of health and medical information, commonly called protected health information (PHI) in the relevant regulations. In general, the privacy regulations promulgated pursuant to HIPAA apply to health care and health insurance providers. Covered entities include:

• Health care plans • Health care clearinghouses • Health care providers

The regulations are aimed at restricting access to health care information and tracking the use and disclosure of such information.

The Department of Health and Human Services’ Office of Civil Rights 2002 Guidelines pointed out that the regulations address disclosure of information by covered entities to a noncovered entities.8 As a matter of fact, one of the express purposes of HIPAA’s privacy provisions is to prevent employers from using PHI for personnel decisions. Furthermore, if an employer, as the sponsor of an employee health insurance plan, wants to receive PHI from covered health care providers in order to administer the plan, then the employer has to place itself under the HIPAA umbrella. Consequently, many thousands of private employers are subject to HIPAA and its implementing regulations. Employers subject to HIPAA must:

• Create a “firewall” between employees who administer health insurance plans and all other employees to prevent illegal dissemination of PHI

• Amend health insurance plan documents to describe how PHI will be handled and by whom • Certify in writing that they will comply with HIPAA’s regulations

• Designate a privacy official who will be specifically responsible for policing compliance • Notify plan participants of the company’s use and disclosure policies under HIPAA

Additionally, the Americans with Disabilities Act (ADA) also protects employees and applicants, who may suffer from physical and mental disabilities, from discriminatory use of their medical records to deny them employment and advancement. Jose Rosenberg, director of the Greensboro Office of the U.S. Equal Employment Opportunity Commission, drew a distinction between offering someone a job contingent on his or her passing a physical, which is legal, and asking for medical information in general, which is not.9

Ethical DILEMMA

use of genetic information

One of the most pressing ethical dilemmas facing employers today is if, and if so how, to use genetic information that is readily available. DNA testing can tell an employer and/or its health and life insurance carriers the likelihood that an employee or appli- cant will contract a wide range of serious medical conditions, which pose potentially catastrophic claims under the firm’s health and life insurance plans. However, genetic testing is undoubtedly among the most serious intrusions into an employee’s privacy that an employer might make. Below is a policy aimed at addressing this issue. Do you think it balances the two parties’ interests?

Policy Against Use of Genetic Information

[Company Name] does not collect, consider or make employment or benefit decisions based on genetic information.

[Company Name] does not use genetic information or genetic testing to identify individuals (applicants or employees) who are especially susceptible to general work- place risks, who may become unable to work, or who are likely to incur significant health care costs for either themselves or their dependents.

Accordingly, applicants for employment or employees of [Company Name] will not be required to undergo any genetic testing or reveal genetic information to [Company Name].

Limited Toxic Chemicals Exception

Testing prior to exposure. There is only one exception to our “no genetic information” policy. Employees may be asked to submit to genetic testing before working around certain toxic chemicals in the workplace. [Company Name] may require genetic testing to determine the individual’s susceptibility to or level of exposure of certain toxic chemi- cals that occur in the workplace. Work in a specified toxic area will not be permitted until testing demonstrates that the individual does not have sensitivity to the chemicals.

Informed, written consent required. Although genetic testing may be required, it will only be conducted after the individual’s informed, written consent has been

obtained. If testing consent is not obtained, the individual will not be permitted to work in the specified area.

No retaliation. No adverse reaction may be taken against an employee as a result of the genetic test; however, the genetic test may disqualify the individual from work in the toxic area.

There will be no retaliation against any applicant or employee who refuses to take a genetic test or refuses to reveal the results of a genetic test to [Company Name].

Confidentiality. Any genetic information obtained for this purpose will be stored in confidential files, not in the employee’s regular employment record. [Company Name] will not, except upon the individual’s informed, written consent, give the results to anyone else.

A number of state equal employment opportunity laws prohibit use of genetic testing and also “predisposing genetic characteristics” as a basis of employment decisions.10 Genetic testing raises the specter of eugenics, the now-discredited science that sought to control the direction of human evolution. In the infamous case of Buck v. Bell,11 no less a liberal jurist than Oliver Wendell Homes, declaring Virginia’s compulsory-sterilization law constitutional, infamously wrote, “Three genera- tions of imbeciles are enough.” Any tattered shred of credibility eugenics still had was destroyed by the revelations of ghastly medical experiments carried out by Nazi doctors in the Third Reich’s concentration camps. Novels like Aldous Huxley’s Brave New World, which postulated a future in which humans were designed and engineered in labs, also helped discredit eugenics.

On the other hand, as medical science learns more about our DNA, the possibility for the prevention or cure of many horrible diseases, including cancer, makes the science of genetics a valuable area of human knowledge. Therefore, genetic testing is an area of increased interest to many people. However, employers who seek to forestall costly medical claims by identifying genetically vulnerable applicants up front are unlikely to find much sympathy in American courtrooms.

4-6 Internal Investigations

Perhaps the aspect of internal investigation that has instigated the greatest amount of liti- gation is drug testing. The federal Drug-Free Workplace Act12 mandates drug testing for employers receiving federal funding. Yet, in all cases, drug testing raises significant privacy issues. One way to insulate an organization from liability is to promulgate a reasonable policy. Read the following example of a substance abuse policy, consider the reasoning behind its provisions, and evaluate its potential effectiveness in solving the problem(s) it is intended to address while avoiding employer liability.

active eMployee SuBStance aBuSe teSting policy

Employees may be required to submit to drug and/or alcohol testing at a laboratory chosen by the company if there is a cause for reasonable suspicion of substance abuse.

Whenever possible, the supervisor should have the employee observed by a second supervisor or manager before requiring testing. Employees who refuse substance testing under these circumstances will be terminated.

Circumstances that could be indicators of a substance abuse problem and consid- ered reasonable suspicion are:

1. Observed alcohol or drug abuse during work hours on company premises. 2. Apparent physical state of impairment. 3. Incoherent mental state. 4. Marked changes in personal behavior that are otherwise unexplainable. 5. Deteriorating work performance that is not attributable to other factors.

6. Accidents or other actions that provide reasonable cause to believe the employee may be under the influence.

If the test results are positive, the employee may be administratively referred to the Employee Assistance Program (EAP). If the employee refuses treatment, or does not comply with the treatment recommended by the EAP, termination will result.

If the tests are positive and if an employee is granted a leave of absence for substance abuse rehabilitation, he or she will be required to participate in all recom- mended after-care and work rehabilitation programs. Upon successful completion of all or part of these required programs, the employee may be released to resume work but must agree to random substance abuse testing and close performance monitoring to ensure that he or she remains drug free.

Likewise, many employers mandate a pre-employment drug test. Ultimate employ- ment is contingent upon passing of the test.

Pre-Employment Drug Testing Policy

All job applicants at this company will undergo screening for the presence of illegal drugs or alcohol as a condition for employment.

Applicants will be required to voluntarily submit to a urinalysis test at a labora- tory chosen by the company, and by signing a consent agreement, will release the company from liability.

Any applicant with positive test results will be denied employment at that time but may initiate another inquiry with the company after six months.

The company will not discriminate against applicants for employment because of past abuse of drugs or alcohol. It is the current abuse of drugs or alcohol that prevents employees from properly performing their jobs that the company will not tolerate.

False Light Invasion of Privacy

In a pair of related 2015 decisions, sister courts in the state of Michigan issued back-to- back January/February 2015 decisions in a high-profile case involving the attorney general’s office and the University of Michigan. In these cases, the central figure, a former assistant attorney general, turned up in the guise of a defendant being sued for “false light” inva- sion of privacy by a third party and of a plaintiff, suing his former employer for wrongful termination, which the attorney general based upon plaintiff’s alleged false light privacy invasion of the third party. Fresh as yesterday’s headlines, the twin decisions aptly illustrate the complexity of such cases in this age of social networking and “viral” Internet blogging.

CASE 4.4 ArmStrong v. SHirvell --- Fed. Appx. ---, 2015 WL 410545 (6th Cir., February 2, 2015) Andrew Shirvell, an alumnus of the University of Michigan and a former Assistant Attorney General for the State of Michigan, engaged in an online and in-person “campaign” against Christopher Armstrong, the former president of the University of Michigan’s student council. Shirvell appeals many aspects of the proceedings in the district court, which resulted in the jury finding him liable for defamation, false light invasion of privacy, intentional infliction of emotional distress, and stalking. Most of Shirvell’s objections lack merit, and we therefore affirm in part. The district court committed plain error, however, in its treatment of the compensatory damages for false light. We therefore reverse in part, vacate the judgment, and remand with instructions for the court to enter judgment in Armstrong’s favor for the reduced amount of $3.5 million. This represents the total sum that the jury awarded, less the damages for false light. I. In 2010, Christopher Armstrong was elected president of the student council at the University of Michigan in Ann Arbor. The student council does not make University policy, but it works with, reports to, and advises the University on a range of issues. Andrew Shirvell, a 2002 graduate of the University, worked as an Assistant Attorney General for the State of Michigan. In early 2010, Shirvell learned via an online newspaper report of Armstrong’s election and also learned that Armstrong was openly gay. Shirvell began posting on his Facebook page about Armstrong, whom he had never met. Among other comments, Shirvell called Armstrong “dangerous” and a “radical homosexual activist” and a “major- league fanatic who is obsessed with imposing the radical homosexual agenda on the student body.” Shirvell also set up a Facebook “fan page,” entitled “Michigan Alumni and Others Against Chris Armstrong’s Radical MSA Agenda,” which purported to “expos[e] the real Chris Armstrong.” He urged others, via Facebook and email, to join the “pro- family” group in order to “fight[ ] against Satan’s repre- sentative.” Shirvell took to his personal Facebook page to express outrage when Facebook deleted his “fan page” about Armstrong. He wrote: “I will not be SILENCED by the likes of Armstrong. You’re going down fruity-pebbles.” His self- proclaimed “outrage” continued from there: “I better not see Chris Armstrong at MY [church] parish in Charlotte—that’s all I got to say.” He claimed that Armstrong was scared of him and—in commenting on another story involving gay students—“remember[ed] the good old days when ‘guys’ like this would get their asses kicked at school.” Not content with Facebook posting, Shirvell then estab- lished a blog entitled “Chris Armstrong Watch,” which discussed Armstrong’s “character and his agenda and other items.” The blog purported to be a “watch site,” providing “testimony” and “an expose of the REAL Chris Armstrong.” The blog was accessible to the public from April 2010 until September 30, 2010, when Shirvell removed it from public view. The blog featured a picture of Armstrong’s face next to a swastika. It called Armstrong “a radical homosexual activist, racist, elitist, & liar.” It attributed to Armstrong a “Nazi-like hatred of the First Amendment,” explaining, “Much like Nazi Germany’s leaders, many of whom were also homo- sexuals, Armstrong believes that any and all opposition must be suppressed by whatever means necessary.” The blog further stated that Armstrong “mocks Christians,” and called Armstrong an “anti-Christian bigot[ ].” One entry claimed that Armstrong attended an event “whose intent was to encourage underage drinking,” and that Armstrong “spent most of this time [after the semester ended] engaging in underage binge- drinking.” The blog made repeated references to Armstrong’s participation in—and facilitation of—underage drinking. It alleged that Armstrong showed contempt toward law enforce- ment. Shirvell—re-posting online conversations between Armstrong and another student at the University—claimed that these conversations revealed Armstrong’s “tendency toward sexual promiscuity,” and thus labeled Armstrong “a perverted homosexual exhibitionist.” Shirvell interpreted another online conversation as demonstrating that Armstrong had previously hosted an “orgy” in his college dormitory, at which “homosexual shenanigans” were rampant. Days after this entry, Shirvell authored another blog post proclaiming: “Armstrong engages in sexual escapades at ‘churches & chil- dren’s playgrounds.’” He linked Armstrong to “possible involvement” in violent attacks against places of worship in the wake of California’s passage of Proposition 8. He alleged that Armstrong used his welcome to freshmen as “a thinly veiled attempt to cause sexually confused, and perhaps some impressionable, 17- and-18-year-olds to experiment sexually with members of their own gender.” Shirvell also reported on an alleged romantic relation- ship between Armstrong and another student. Shirvell claimed that the other student was “not out of the closet,” but that Armstrong “basically seduced” the student and quickly became obsessed with him. Explaining that the other student, “[t]hanks in large part to Armstrong’s influ- ence... has indeed morphed into a proponent of the radical homosexual agenda,” Shirvell called Armstrong “a very, very twisted sick individual who is manipulative and cunning in a most devilish way.” Shirvell also appeared on television to rant about Armstrong. In September 2010, in an interview on local station WXYZ, he said that Armstrong held the presiden- tial position in order “to promote special rights for homo- sexuals at the cost of... heterosexual students.” Shirvell later appeared in front of a national audience with CNN’s Anderson Cooper. Standing by his blog and Facebook posts, Shirvell told Cooper that he had “gotten stuff from third- party sources,” and argued that Armstrong was not giving interviews because “he can’t defend what’s on the blog.” When Cooper suggested that Shirvell was a bigot, Shirvell retorted, “The real bigot here is Chris Armstrong.” Two days later, back before a national audience on Comedy Central’s The Daily Show, Shirvell said that Chris was “acting like a gay Nazi,” and that this explained his decision to include a picture of Armstrong next to a swastika on the blog. Across these various forums, Shirvell attempted to justify his commentary by pointing to several purportedly legiti- mate concerns. Shirvell, a proud Roman Catholic, appar- ently feared that Armstrong would discriminate against Christian, pro-life, and pro-family people. In one post, Shirvell warned that these groups would be “violently persecuted.” Second, he claimed that “Armstrong’s radical agenda includes mandating ‘gender-neutral’ housing” at the University,” an initiative that Shirvell opposed. Third, he believed that Armstrong would use his platform as president to “promote the homosexual lifestyle.” Finally, Shirvell opposed Armstrong’s membership in a student group known as the Order of the Angell, an organization that—according to Shirvell—was known as “the University of Michigan’s version of the KKK,” and had “a well-documented history of racism and elitism.” Shirvell claimed that Armstrong lied before the election about his intentions to join the group. In addition to broadcasting his views, Shirvell tracked Armstrong down in Ann Arbor. At first, Shirvell posted flyers around campus and in students’ mailboxes. He soon discovered Armstrong’s off-campus residence and made an appearance at a party there. On several occasions, he marched up and down the street outside Armstrong’s house, protesting. Fearing for his safety and that of his roommates when they needed to leave their home, Armstrong called the campus Department of Public Safety and received an escort. Shirvell later followed Armstrong to two campus events in the space of a day, holding a sign that branded Armstrong a racist liar and advertised the Chris Armstrong Watch blog. On one occasion, Shirvell stood outside Armstrong’s resi- dence while Armstrong was hosting a party, called police to complain about the noise, then filmed the ensuing proceed- ings and posted about the party on his blog. On one occa- sion, while Armstrong was speaking at a rally, Shirvell heckled him and took pictures of him. After discovering online that Armstrong planned to attend a friend’s birthday party, Shirvell went, uninvited, to the party. Armstrong and his friends became concerned. Shirvell approached students outside of an Ann Arbor night club on one occasion while holding a sign saying “Chris Armstrong is a racist liar,” and quizzed them about their online conversations. Shirvell told one student that he planned to go to her house the following day because he had heard she was hosting a party. The friend, afraid that Shirvell might endanger her guests, decided to cancel the party. Another time, Shirvell learned that Armstrong’s friends were celebrating a birthday at a bar. He showed up at the bar, then followed the group to another bar around a mile away. When confronted, he lied about his identity, then asked for Armstrong. Shirvell believed Armstrong was supposed to be with the group, and produced a printed Facebook invitation to prove it. Shirvell continued to monitor Armstrong’s activities even while Armstrong was off campus. In the summer of 2010, Shirvell learned that Armstrong was working as an intern in Washington, D.C., in the office of then-Speaker Nancy Pelosi. In a blog post entitled “Pelosi’s Office Reconsiders Armstrong’s Internship; Currently Investigating His Ties to Racist Student Group,” Shirvell explained that he person- ally contacted a Pelosi aide, provided him with documents about Armstrong’s membership in the Order of the Angell, and was assured that the aide would investigate further. In several phone calls and messages to Pelosi’s office, Shirvell accused Armstrong of being a racist and of having lied to minority students’ faces. University authorities were concerned about Shirvell’s actions. Beginning in June 2010, University police reports detail Shirvell’s ongoing harassment of Armstrong. Ann Arbor police also became involved. In July 2010, police asked Shirvell to stop contacting Armstrong, but Shirvell continued, undeterred. In the fall of 2010, the University police issued Shirvell a trespass warning, banning Shirvell from the University campus. The warning was later modi- fied, allowing Shirvell onto campus, but still requiring him to avoid contact with Armstrong. The police were familiar with peaceful protests on campus but believed Shirvell’s conduct was different. The Deputy Chief of the University police testified that the warning was necessary because Shirvell was “obsessed with” Armstrong, and was perceived as a threat to him. Despite this, the prosecutor’s office declined to issue a criminal warrant against Shirvell. The Deputy Chief believed that Shirvell’s sole reason for focusing on Armstrong was “that he was against him being gay.” Even at the time of trial—after Armstrong had graduated and the trespass warning had expired—the Deputy Chief remained concerned about Armstrong’s safety. In April 2011, Armstrong sued Shirvell in Michigan state court for defamation, intentional infliction of emotional distress, abuse of process, false light, intrusion, and stalking. Shirvell removed the case to federal court. Armstrong later dismissed the abuse of process claim and the court granted summary judgment on the intrusion claim. The court denied Shirvell’s motion for summary judgment on the remaining claims. Armstrong requested that Shirvell retract certain statements, but Shirvell refused.... The jury awarded $750,000 in compensatory damages and $500,000 in exemplary damages for defamation, $1,000,000 in compensatory damages for casting Armstrong in a false light, $1,750,000 in compensatory damages for intentional infliction of emotional distress, and $100,000 in compensatory damages and $400,000 in exemplary damages for stalking. *** Armstrong argues that the jury separated the verdicts for defamation and false light and that there was no basis for assuming that double recovery resulted. But it is difficult to see how this verdict could represent anything other than double recovery. The jury was assessing the same harm caused by the same statements and awarded a lump-sum figure for both. There appears to be no plausible way in which the jury could have awarded damages for distinct harms. The court should consider the verdict form in combination with the jury instructions. Shirvell v. Department of attorney General --- N.W.2d ---, 2015 WL 114608 (Mich. App., January 8, 2015) In these consolidated appeals, in Docket Nos. 314223 and 314227, the Department of Attorney General (the Department), and the Department of Licensing and Regulatory Affairs/Unemployment Insurance Agency (UIA), respectively, appeal by leave granted a circuit court order reversing the Michigan Compensation Appellate Commission’s (MCAC’s) order affirming the UIA’s denial of claimant Andrew Shirvell’s claim for unemployment benefits. In Docket No. 316146, Shirvell appeals by leave granted a circuit court order affirming a Civil Service Commission (the Commission) order denying Shirvell’s grievance and holding that the Department had just-cause to terminate Shirvell’s employment under the Civil Service Rules (CSRs) for conduct unbecoming a state employee. For the reasons set forth in this opinion, in Docket Nos. 314223 and 314227, we reverse the circuit court’s order and remand for reinstatement of the MCAC’s order and in Docket No. 316146, we affirm the circuit court’s order. [NOTE: The facts presented in the court’s opinion are substantially the same as those in Armstrong v. Shirvell above.] Finally, on November 8, 2010, following a disciplinary hearing, the Department terminated Shirvell’s employ- ment for “conduct unbecoming a state employee.” The Department issued a termination letter to Shirvell that listed the reasons for the termination as follows: Engaging in inappropriate conduct by targeting individual members of the public both in person and through electronic media, which could reasonably be construed to be an invasion of privacy, slanderous, libelous, and tantamount to stalking behavior unbecoming an Assistant Attorney General.... IV. CONCLUSION To summarize, we conclude that Shirvell’s speech was not protected under the First Amendment for purposes of these proceedings. Although Shirvell may have spoken as a private citizen on a matter of public concern, the Department introduced evidence at both proceedings to show that its interests in the efficient provision of governmental services outweighed Shirvell’s speech interests. Accordingly, neither termination of Shirvell’s employment nor denial of unem- ployment benefits offended the constitution. Therefore, in Docket No. 316146 we affirm the circuit court’s order wherein the court properly held that there was competent, material, and substantial evidence on the whole record to support that there was just cause to terminate Shirvell and properly held that the termination was not arbitrary or capricious. However, in Docket Nos. 314223 and 314227, we reverse the circuit court order wherein the court erred in concluding that Shirvell did not engage in misconduct that disqualified him for unemployment benefits under the MESA. Shirvell’s speech was not protected and there was competent, material, and substantial evidence introduced at the unemployment compensation hearing to support the UIA’s determination that Shirvell engaged in miscon- duct such that he was disqualified for benefits under MCL 421.29(1)(b); therefore, remand for reinstatement of the MCAC’s order in that case is appropriate. Case Questions 1. As plaintiff Armstrong was “openly gay” according to the court in his case against Shirvell, how was Shirvell guilty of portraying the plaintiff “in a false light”? 2. If Shirvell in no way defamed Armstrong, could a jury still properly have found Shirvell liable to Armstrong for false light invasion of privacy? 3. In the second of these two cases, the Michigan state court affirmed Shirvell’s firing for—among other things—invading Armstrong’s privacy. As Armstrong obviously had his own remedy in court for this alleged privacy invasion, what business was it of the attorney general to get involved in this dispute? 4. If the jury in the first case and the attorney general in the second are both right that Shirvell portrayed Armstrong in a false light, what facts support their conclusion? And wasn’t the general public entitled to know the facts that Shirvell was revealing?

4-8

Personnel Files

Personnel files pose two major issues for employers regarding what should be placed and retained in the employee’s file and which employees should have access to personnel files. Typical items in a personnel file include applications, references and letters of recommendation, performance evaluations, disciplinary actions, and attendance records. (Health records usually are maintained in separate human resources files, as is appropriate under HIPAA and the ADA, as noted earlier.) Access to such files should be limited to human resources and legal department employees, direct supervisors, and senior management. “Need to know” is the operative principle here.

So, what about the employee’s access to his or her own personnel file? A typical company policy might look something like this:

Policy: employee access to their personnel files

Employee files are maintained by the Human Resources department and are considered confidential. Managers and supervisors other than Human Resources may only have access to personnel file information on a need-to-know basis. A manager or supervisor considering the hire of a former employee or transfer of a current employee may be granted access to the file.

[Company Name] shall provide access to personnel files by current or former employees in accordance with applicable laws.

Representatives of government or law enforcement agencies, in the course of their business, may be allowed access to file information. This decision will be made at the discretion of the Human Resources department in response to the request, a legal subpoena, or court order.

Many states have statutes dealing with access by current and former employees to their files. Pennsylvania’s law is a good example:

An employer shall, at reasonable times, upon request of an employee, permit that employee or an agent designated by the employee to inspect his or her own personnel files used to determine his

or her own qualifications for employment, promotion, additional compensation, termination or disciplinary action. The employer shall make these records available during the regular business hours of the office where these records are usually and ordinarily maintained, when sufficient time is available during the course of a regular business day, to inspect the personnel files in question. The employer may require the requesting employee or the agent designated by the employee to inspect such records on the free time of the employee or agent. At the employer’s discretion, the employee may be required to file a written form to request access to the personnel file or files or to indicate a designation of agency for the purpose of file access and inspection. This form is solely for the purpose of identifying the requesting individual or the designated agent of the requesting individual to avoid disclosure to ineligible individuals. To assist the employer in providing the correct records to meet the employee’s need, the employee shall indicate in his written request, either the purpose for which the inspection is requested, or the particular parts of his personnel record which he wishes to inspect or have inspected by the employee’s agent.13

Note, too, that the sample policy in the adjoining box allows access to “government or law enforcement agencies.” Who else should be entitled to access an employee’s personnel file and under what circumstances? Company human resources, legal, and management employees are often confronted with process servers delivering subpoenas related to every- thing from personal injury actions to child-support orders to criminal cases. How should employee privacy interests be balanced with the justice system’s interest in fair and expedi- tious processes? In the Commonwealth case that follows, a defendant on trial for murder attempted to obtain access to the personnel files of the arresting officers for purposes of cross-examination at trial.

CASE 4.5 mArKen v. SAntA moniCA-mAlibu unified SCHool diSt. 202 Cal. App. 4th 1250, 136 Cal.Rptr.3d 395 (2012) A high school teacher, Marken, brought action against the school district for declaratory, injunctive, and writ relief challenging the district’s planned disclosure to a student’s parent of records concerning the district’s investigation and finding that the teacher violated the district’s sexual harass- ment policy. The Superior Court denied preliminary injunc- tion and denied the parent’s application to intervene. The teacher and the parent appealed. On December 14, 2010 Chwe, a professor of political science at UCLA and the father of two children who attend Santa Monica High School, made a CPRA request to the District, seeking “copies of all public records ... concerning the investigation of Santa Monica High School teacher Mr. Ari Marken and the resulting decision to place him on leave in December 2008 for sexually harassing a thirteen-year-old girl, in violation of SMMUSD policy 5145.7.” The request attached a copy of a letter dated December 4, 2008 from a District assistant superintendent to the mother of the student who had initiated the complaint against Marken, which stated, in part, “[T]he District hired an Independent Investigator to examine this complaint. The District found that Mr. Marken did violate Board Policy 5145.7 [on sexual harassment] and has taken appropriate action.” The request also sought other public records regarding any substantial complaints about Marken’s improper behavior toward students. On February 8, 2011 Marken filed a lawsuit against the District, captioned verified complaint for: temporary restraining order, preliminary and permanent injunction, declaratory relief; petition for writ of mandate. Marken alleged the District’s decision to disclose the November 25, 2008 investigation report and the November 26, 2008 letter of reprimand in response to Chwe’s request was not authorized under the CPRA because the sexual harassment complaint was neither substantial in nature nor well founded. Marken further alleged the District’s intended disclosure of his confidential personnel records, unless enjoined, would violate his rights of privacy protected by the California Constitution and the Education and Government Codes and cause him irreparable harm. Concurrently with the filing of his complaint/petition for writ of mandate, Marken filed an ex parte application for a temporary restraining order and an application for an order to show cause re preliminary injunc- tion, which were supported by a memorandum of points and authorities and related declarations. The Court of Appeal held that: the agency’s decision to release confidential documents under California Public Records Act (CPRA) is reviewable by petition for writ of mandate; the district’s planned disclosure did not violate the teacher’s right to privacy under state constitution; but the denial of the student’s parent’s ex parte application for leave to intervene was not appealable. Judgment affirmed, and appeal from order denying intervention dismissed. Case Questions 1. As a general proposition, which legal interest should outweigh the other in a case like this: the employee’s privacy interests or the interests of the minor involved in the investigation? 2. Does the fact that the employee, whose files were sought here, was a teacher change your answer to question 1? 3. Assuming the court was correct in denying the defen- dant’s request for access to the personnel files, what more, if anything, might the defendant have alleged that could have tipped the balance in his favor, per- suading the judge to grant access? 4. Does the fact that a minor was involved in the investi- gation and subsequent records in question sway your opinion on any of these questions?

CHAPTER 5

The Global Perspective: International Employment Law and American Immigration Policy

Before 1964, an American labor lawyer need only have known the National Labor Relations Act to practice competently. Beginning in that fateful year, nearly a half-century ago, federal and state statutory and common law greatly complicated the employment and labor law landscape. Still, a competent employment law lawyer’s expertise had no need to extend beyond U.S. borders. As businesses continue to evolve, emplolyemt lawyers and human resources executives must be versed in both international law and the employment laws and policies of the world’s major nations. Additionally, a working knowledge of U.S. immigration law is virtually a “must,” as new arrivals and employees of overseas subsidiaries increasingly figure into the work forces of American-based firms.

International Employment Law and Policy

International Labor Organization (ILO) a United Nations subsidiary agency dealing with international labor standards,workers’ rights, and global employment issues

The International Labor Organization (ILO) is the branch of the United Nations charged with developing and promulgating uniform labor and employment standards internationally, encouraging member nations to adopt those universal standards, and moni- toring compliance by those nations which have adopted them. The ILO, which is based in Geneva, has promulgated a vast scheme of labor and employment laws, regulations, and guidelines. These ILO “laws” cannot supersede an individual nation’s sovereignty unless that nation affirmatively adopts any such laws. The United States is not a signatory to many ILO enactments or pronouncements; however, U.S. labor and employment laws in many instances are equal or superior to the ILO scheme in according rights and remedies to workers within our borders (exceptions involve labor organization rights and employment security versus employment at will). However, Americans doing business globally must be mindful of ILO legal principles adopted by the nations in which they are operating and employing personnel. U.S. embassies and consulates should be consulted not only about the labor and employment laws of the host nation but also about any relevant ILO rules and regulations.

Conventions are “pacts or agreements between states or nations in the nature of a treaty.”1 In the context of international employment law, conventions are the uniform codes of procedure and standards of conduct that the ILO seeks to promulgate and enforce in order to establish international standards for the fair treatment of workers among all member nations of the United Nations. International conventions to which the United States is a signatory that should be noted when doing business abroad, and that can affect international labor relations and employment litigation, include:

• Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Facilitates and standardizes the service of legal processes, such as complaints, summons, and subpoenas, in pursuit of litigation, including labor and employment litigation.

• Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Ensures that signatory states will enforce arbitral awards, including labor and employment arbitra- tion awards, against parties found within their jurisdictions.

• Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. A judicial authority (e.g., a court) in one contracting state may request its counterpart in another contracting state to facilitate such discovery activities as the taking of depositions or sworn statements in support of litigation, including labor and employment litigation.

• Convention on the Civil Aspects of International Child Abduction. Aims to control and eliminate exploitation of child labor.

The major conventions on labor and employment, adopted under the auspices of the United Nations and the ILO, most of which have not been signed by the United States (primarily because they may conflict with existing U.S. labor and employment laws), involve the abolition of forced labor (signed by the U.S.), employment discrimination, and collective bargaining.

The fact that more and more business is being conducted across borders has led to a growing concern about how companies with differing policies should act. Global corporate responsibility signifies the notion, held by many advocates of workers’ rights and environ- mental issues, that multinational corporations have the ethical obligation to behave in fair and humane ways toward their workers and to pursue “green” policies and practices to protect the environments in which they operate.

Ethical DILEMMA

Should Multinational Corporations recognize their employees’ Same-Sex Marriages, regardless of Where the employees are located?

This set off a domino effect across the country, as one court after another declared states’ “Baby-DOMAs” equally unconstitutional. As of February 2015, same-sex marriage was legal in 30 states, plus the District of Columbia. The climactic event was the U.S. Su- preme Court’s June 26, 2015 decision [Obergefell v. Hodges, 135 S.Ct. 2584] that held (1) the right to marry is a fundamental 14th Amendment right of which same-sex couples may not be deprived by state laws, and (2) states must recognize same-sex mar- riages legally performed in sister states. These common-law developments have dramati- cally altered U.S. policy regarding same-sex marriages among immigrants. Less than two months after the Supreme Court’s 2013 decision was announced, U.S. Immigration and Customs Enforcement (ICE) issued the following notice to U.S. employers and universities:

The Department of State, Bureau of Consular Affairs has advised consulates that their officials may issue derivative visas based on same-sex marriage if the marriage is “recognized in the place of celebration.” That is, if the country where the couple married recognizes same-sex marriage as legal, then the U.S. government will recognize the union as legal for visa issuance, irrespective of where the couple plans to reside. The Department of State will be updating the reciprocity tables to 9 FAM 41.105 to identify what types of marriages are available to same-sex couples.

What should employers of H-1B nonimmigrant workers and other legal alien employees in the United States anticipate? According to immigration attorney Matthew I. Hirsch of Wayne, Pennsylvania, “In practical terms, the decision means that married same-sex couples will have the same rights as traditional married couples in such areas as income tax, estate tax, health privacy and other federally regulated areas—including immigration.” Confirming Hirsch’s prediction, on June 20, 2014, the U.S. Department of Labor, the Social Security Administration, and the Department of Veterans Affairs announced that benefits extended to heterosexual married couples will be extended to same-sex married couples.2

Within a month of the U.S. Supreme Court’s 2013 DOMA decision, Britain legalized same-sex marriage. Other nations fall along a broad spectrum in their treatment of discrim- ination against LGBT employees. For example, Canada is among the most advanced nations in the world for eradicating discrimination based on sexual orientation. Section 15(1) of the Canadian Constitution reads much like Title VII of the Civil Rights Act of 1964:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

As early as 1995, the Supreme Court of Canada held that the enumerated grounds for finding illegal discrimination were only examples and not limiting categories, and further that sexual orientation is implicitly included among the protected categories.3

In Britain, LGBT rights were spotty and varied across England, Scotland, Wales, and Northern Ireland. The Equality Act of 2010 uniformly extended protection against discrimination to eight specific categories of persons, including gender reassignment and sexual orientation.4

By 2015, the following nations recognized same-sex marriage:

Scotland (2014) Luxembourg (2014) Brazil (2013) England/Wales (2013) France (2013)

New Zealand (2013) Uruguay (2013) Denmark (2012) Argentina (2010) Iceland (2010) Portugal (2010) Norway (2009) Sweden (2009) South Africa (2006) Spain (2005) Canada (2005) Belgium (2003)

The Netherlands (2000)5 Of course, many more nations do not.

5-1a The Alien Tort Claims Act and International Workers’ Rights

The Alien Tort Claims Act6 was enacted in 1789 as part of the original Judiciary Act. In its original form, it simply said that “[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” For almost two centuries, the statute lay relatively dormant, supporting jurisdiction in only a handful of cases. In recent years, however, the statute has been rediscovered by attorneys seeking to vindicate the rights of foreign workers allegedly oppressed by U.S. multinational corporations. For example, two United States Courts of Appeals decisions were announced in December 2008, interpreting the Alien Tort Claims Act as it may or may not apply to labor-related claims. The two decisions offer mixed messages but, by and large, bode well for multinational corporate-defendants. One knowledgeable observer, viewing the two circuit court decisions with an eye fixed on the potential of the two federal statutes’ applicability in the global environmental arena, commented, “Like the earlier 9th Cir. case, this [11th Circuit] case demonstrates that the use of the Alien Tort Statute to establish jurisdiction and the use of the Torture Act will be difficult in the context of environmental and toxic tort matters occurring in third countries.”7 Given that each case enjoys a strong nexus to labor and employ- ment law, we must conclude that this commentator’s conclusion applies with equal force to foreign labor unions and labor leaders, as well as classes of workers, who had hopes of bringing tort claims into American federal courts against multinational corporations headquartered in the U.S. Like the ILO conventions, most of which the U.S. has declined to sign, and the idealistic concept of corporate responsibility, discussed earlier (see the Ethical Dilemma), the Alien Tort Statute is unlikely to have a high impact upon the way U.S. corporations deal with their overseas employees. For workers and reformers seeking to impact American multinationals, especially in nations that lack meaningful human rights and labor legislation, global labor organizations may present the highest prospect of success.

CASE 5.1 Sarei v. rio TinTo, PLC 2008 WL 5220286 (9th Cir. 2008) Facts: Bougainville is an island in the South Pacific located just off the main island of Papua New Guinea (PNG). Rich in natural resources, including copper and gold, the island was targeted as a prime mining site by defendants Rio Tinto, PLC, a British and Welsh corporation, and Rio Tinto Limited, an Australian corporation (collectively “Rio Tinto”). Rio Tinto was part of an international mining group that operated more than 60 mines and processing plants in 40 countries, including the United States. To operate a mine on Bougainville, Rio Tinto required and received the assistance of the PNG government. According to the plaintiffs’ complaint, beginning in the 1960s Rio Tinto displaced villages; razed massive tracts of rain forest; intensely polluted the land, rivers, and air (with extensive collateral consequences including fatal and chronic illness, death of wildlife and vegetation, and failure of farm land); and systematically discriminated against its Bougainvillian workers, who lived in slave-like conditions. In November 1988, some Bougainville residents revolted; they sabotaged the mine and forced its closure. After Rio Tinto demanded that the PNG government quash the uprising, the government complied and sent in troops. PNG forces used helicopters and vehicles supplied by Rio Tinto. On February 14, 1990, the country descended into a civil war after government troops slaugh- tered many Bougainvillians in what has come to be known as the St. Valentine’s Day Massacre. Unable to resume mining, Rio Tinto threatened to abandon its operations and halt all future investment in PNG unless the government took military action to secure the mine. In April 1990, the PNG government imposed a military blockade on the island that lasted almost a decade. The blockade prevented medicine, clothing, and other necessities from reaching the residents. Under further pres- sure from Rio Tinto, according to the complaint, the govern- ment engaged in aerial bombardment of civilian targets, wanton killing and acts of cruelty, village burning, rape, and pillage. As a result, an estimated 15,000 Bougainvillians, including many children, died. Of the survivors, tens of thousands are displaced and many suffer health problems. In March 2002, the PNG Parliament formalized a peace accord that ended the civil war. In November 2000, nearly a year and a half before the civil war formally ended, the plaintiffs filed their class action, raising numerous claims under the Alien Tort Statute, 28 U.S.C. Section 1350: • crimes against humanity resulting from the blockade; • war crimes for murder and torture; • violation of the rights to life, health, and security of the person resulting from the environmental damage; • racial discrimination in destroying villages and the environment, and in working conditions; • cruel, inhuman, and degrading treatment resulting from the blockade, environmental harm, and displacement; • violation of international environmental rights resulting from building and operating the mine; and • a consistent pattern of gross violations of human rights resulting from destruction of the environment, racial discrimination, and PNG military activities. The plaintiffs also raised various non–Alien Tort Statute claims ranging from negligence to public nuisance. A model of brevity, the Alien Tort Act says, simply, “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” In Sosa v. Alvarez-Machain,1 the high court held, “Though the Alien Tort Statute (ATS) . . . is a jurisdictional statute, which does not create a statutory cause of action for aliens, it was not intended to lie fallow until specific causes of action were authorized by further legislation, but was meant to have practical effect from the moment that it became law, by providing a basis for district courts to exer- cise jurisdiction over a modest number of causes of action recognized under the law of nations, such as for offenses against ambassadors, violations of safe conduct, and possibly for piracy.” The Court also indicated that plain- tiffs should first exhaust causes of action available to them under local law. Issue: Should the plaintiffs be required to exhaust their other available remedies before being permitted to sue in a U.S. court under the Alien Tort Statute?

Decision: In Sarei, the Ninth Circuit, sitting en banc, considered the significance of this exhaustion requirement. The plurality opinion noted that, “As the Supreme Court directed in Sosa, exhaustion of local remedies should ‘certainly’ be considered in the ‘appropriate case’ for claims brought under the ATS.2 This is an appropriate case for such consideration under both domestic prudential standards and core principles of international law.” Six judges then went on to hold, “As a preliminary matter, to ‘exhaust,’ it is not sufficient that a plaintiff merely initiate a suit, but rather, the plaintiff must obtain a final decision of the highest court in the hier- archy of courts in the legal system at issue, or a show that the state of the law or availability of remedies would make further appeal futile. . . . Another basic element is that the remedy must be available, effective, and not futile. To measure effectiveness, a court must look at the circumstances surrounding the access to a remedy and the ultimate utility of the remedy to the petitioner. In addition, ‘[w]hen a person has obtained favorable deci- sion in a domestic court, but that decision has not been complied with, no further remedies need be exhausted.’ A judgment that cannot be enforced is an incomplete, and thus ineffective, remedy. The adequacy determina- tion will also necessarily include an assessment of any delay in the delivery of a decision. We remand to the district court for the limited purpose to determine in the first instance whether to impose an exhaustion requirement on plaintiffs.” 1 124 S.Ct. 2739, 542 U.S. 692, 159 L.Ed.2d 718 (2004). This colorful case concerned a Mexican physician accused by U.S. authorities of participating in the torture and death of a U.S. Drug Enforcement Administration officer south of the border. The doctor was kidnapped by the famous bounty hunter Duane “Dog” Chapman—http://www.dogthebountyhunter.com—and brought back to Texas to stand trial. 2 542 U.S. at 733 n. 21. CASE 5.2 romero v. DrummonD ComPany, inC. 2008 WL 5274192 (11th Cir. 2008) A Colombian labor union sued executives of Drummond, Ltd., the Colombian subsidiary of an American coal mining company located principally in Alabama, which paid paramilitary operatives to torture and assassinate leaders of the union, SINTRAMIENERGETICA. In 2002 and 2003, the union and several of its leaders and relatives of deceased leaders sued Drummond and its parent company and executives under the Alien Tort Statute and the Torture Victim Protection Act of 1991. The Torture Act establishes a separate cause of action for victims of torture and extrajudicial killing. The district court consolidated the complaints and later granted partial summary judgment against them; one claim for relief—that Drummond aided and abetted the killings, which were war crimes— remained. At a trial of that claim, the jury returned a verdict for Drummond. The plaintiffs appealed the partial summary judgment and a series of discovery and evidentiary rulings made before and during the trial. Long after the discovery deadline had been extended and later expired, the plaintiffs moved for continuances and the admission of the testimonies of several new witnesses, and some of those requests were denied. Drummond challenged the subject- matter jurisdiction of the district court. In the underlying complaints in this case, the union, its leaders, and relatives of its leaders complained that Augusto Jimenez, the president of the mining operations of Drummond, Ltd., with the knowledge of company executives in the United States, hired paramilitaries affili- ated with the United Self-Defense Forces of Colombia to torture union leaders Juan Aquas Romero, Jimmy Rubio Suarez, and Francisco Ruiz Daza and to kill union leaders Valmore Locarno Rodriquez, Victor Hugo Orcasita Amaya, and Gustavo Soler Mora. The complaints included claims of torture, extrajudicial killing, and denials of the right to asso- ciate, lodged under the Alien Tort Statute; claims of torture and extrajudicial killing, grouped under the Torture Act; a claim of wrongful death under Colombian law; and claims for assault, intentional infliction of emotional distress, negli- gent infliction of emotional distress, negligent supervision, and false imprisonment under Alabama law. On these complex facts and complicated legal issues, the appellate court held:

(1) the Torture Victim Protection Act allows suits against corporate defendants; (2) the Alien Tort Statute contains no express exception for corporations, and the statute grants jurisdiction over complaints of torture against corporate defendants; (3) the plaintiffs failed to satisfy the “state action” requirement of the Torture Victim Protection Act; (4) the district court did not abuse its discretion in refusing to exercise supplemental jurisdiction over the plaintiffs’ wrongful death claim under Colombian law; (5) the district court did not abuse its discretion in denying plaintiffs’ motion for additional continuance when they were not able to complete the letter rogatory process to secure witness’s testimony for rescheduled trial date; (6) the district court did not abuse its discretion in excluding the testimony of late-disclosed witnesses; and (7) the district court did not abuse its discretion in refusing to allow the plaintiffs’ proffered experts to testify. In sum, the panel affirmed the district judge, essentially defeating the plaintiffs’ claims. Case Questions 1. Why didn’t the plaintiffs seek to secure justice in their own countries? 2. In Romero, the plaintiffs sought to have the U.S. federal judge take jurisdiction of their wrongful death claim, brought under Colombian law. Wouldn’t a Colombian court be better equipped to adjudicate this claim? Why did they prefer to bring it into an American courtroom? 3. If a multinational corporation strictly abides by the laws of each country in which it does business, affording its workers in each country whatever rights and benefits are required by local law, shouldn’t this be sufficient to insulate such company from legal liability? Don’t the shareholders of such a corporation have the right to expect management to take advantage of business-favor- able laws and policies to maximize the firm’s profits? 4. In these two cases, are the unions’ and workers’ griev- ances so closely connected to the fundamental labor- relations policies of the their respective countries that a U.S. court would be intruding upon foreign policy issues, which are the exclusive realm of the executive branch of our government, if it were to adjudicate these cases? 5. Why does the court in Sarei suggest that the plain- tiffs should first have to exhaust their local (i.e., home-country) remedies before coming into a U.S. courtroom?

In a 2012 decision, Mohamad v. Palestinian Authority,8 the issues were the same: do the human rights laws at issue apply to someone other than a natural person? In this case, the widow and sons of a U.S. citizen allegedly tortured and killed in Israel brought suit against three individuals, the Palestinian Authority, and the Palestine Liberation Organization for violations under the Torture Victim Protection Act and the Alien Tort Statute. The Supreme Court affirmed the decision of the lower court, finding that only a natural person is an “individual” who can be held liable.

Most recently, in 2014, the Supreme Court considered a case in which 22 resi- dents of Argentina filed suit in California Federal District Court, naming as a defendant DaimlerChrysler Aktiengesellschaft, a German public stock company that was the predecessor to Daimler AG, the defendant in this case. Their complaint alleged that Mercedes-Benz Argentina, an Argentinian subsidiary of Daimler, collaborated with state security forces during Argentina’s 1976–1983 “Dirty War” to kidnap, detain, torture, and kill certain Mercedes- Benz Argentinian workers, among them the plaintiffs or persons closely related to the plain- tiffs. Based on those allegations, the plaintiffs asserted claims under the Alien Tort Claims Act and the Torture Victim Protection Act of 1991, as well as under California and Argentina law. Personal jurisdiction over Daimler was predicated on the California contacts of Mercedes- Benz USA, LLC (MBUSA), another Daimler subsidiary, one incorporated in Delaware with its principal place of business in New Jersey. MBUSA distributed Daimler-manufactured vehi- cles to independent dealerships throughout the United States, including California. Daimler moved to dismiss the action for want of personal jurisdiction. Opposing that motion, the plaintiffs argued that jurisdiction over Daimler could be founded on the California contacts of MBUSA. The District Court granted Daimler’s motion to dismiss. Reversing the District Court’s judgment, the Ninth Circuit held that MBUSA, which it assumed to fall within the California courts’ all-purpose jurisdiction, was Daimler’s “agent” for jurisdictional purposes, so that Daimler, too, should generally be answerable to suit in that State.

In a unanimous opinion penned by liberal Justice Ginsburg, the high court held that Fifth Amendment due process rules prevented the federal courts in California from exer- cising jurisdiction over the defendant corporation on behalf of the Argentinian plaintiffs. Wrote Justice Ginsburg, “Here, neither Daimler nor MBUSA is incorporated in California, nor does either entity have its principal place of business there. If Daimler’s California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which MBUSA’s sales are sizable. Such exorbitant exercises of all-purpose jurisdiction would scarcely permit out-of-state defendants ‘to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.’ Burger King Corp., 471 U.S., at 472, 105 S.Ct. 2174 (internal quotation marks omitted).”

Justice Ginsburg added, “The Ninth Circuit, moreover, paid little heed to the risks to international comity its expansive view of general jurisdiction posed. Other nations do not share the uninhibited approach to personal jurisdiction advanced by the Court of Appeals in this case. In the European Union, for example, a corporation may generally be sued in the nation in which it is ‘domiciled,’ a term defined to refer only to the location of the corpo- ration’s ‘statutory seat,’ ‘central administration,’ or ‘principal place of business.’ European Parliament and Council Reg. 1215/2012, Arts. 4(1), and 63(1), 2012 O.J. (L. 351) 7, 18.”

5-2 Global Labor Unions

global unions

international labor organizations, which typically attempt to organize employees of globalized industries

Recently the international trade union movement has begun to use the term global unions as an umbrella designation. The components of global unions include the International Confederation of Free Trade Unions, which represents national trade union centers around the globe, and the Union Network International.

5-2a Union Network International (UNI)

Union Network International (UNI) is an organization aimed at meeting the globaliza- tion of corporations, trade, and manufacturing head on. Reasoning that the global labor market no longer recognizes or is confined within the borders of traditional nation-states, UNI seeks to organize workers on an international scale. The organization targets multina- tional corporations, seeking to apply global pressure in order to organize local and regional corporate facilities. “When companies are local, unions can be local; when companies are national, unions must be national; when companies are global, unions must be global. Our aim is to build more effective alliances in multinationals,” UNI explains.10

At its August 2005 Chicago convention, UNI announced that signing global agree- ments with targeted companies would be that organization’s focus going forward. In 2007, UNI expanded its attention to monitoring private equity funds. In a March 2007 press release, UNI stated:

In the furor that has enveloped private equity these past weeks, one of the criticisms of their way of doing business is the absence of any regard to corporate social responsibility (CSR). UNI Global Union has had a look at the websites of a range of the key private equity funds and has found precious few, if any, references to CSR, to the ILO core conventions, the UN Global Compact or the UN Principles for Responsible Investment (UNPRI). We are struck by the lack of any commitment to these global principles, which have been forged to improve the accountability and responsibility of the business community to all shareholders. . . . It is challenging to find even a minor reference to CSR matters among fund managers or those who spend time assessing trends in private equity funds. Issues of human rights, labor standards, environment and even corporate governance are seldom discussed as pros and cons of private equity. The fact that private equity funds closely guard their information represents a substantial impediment to actively analyzing the CSR performance of companies they hold. In the weeks to come, we will be keeping a close watch on whether there will be a shift towards more transparency, disclosure or any commitment to CSR principles.

UNI claims to hold the allegiance of approximately 15 million workers in 900 unions in 150 countries, representing employees in the following economic sectors:

• Commerce • Electricity • Finance • Gaming

• Graphical • Hair and beauty

IBITS (industry, business services, and information and computer technology) Media, entertainment, and the arts Postal Property services (cleaning and security)

Social insurance Telecom Tourism11

• • • • • • •

UNI has targeted a list of 100 multinational employers. As of early 2009, UNI had achieved labor contracts with the following targeted corporations:

• Carrefour (a Paris-based food retailer) • Hennes & Mauritz of Sweden (trading as H&M stores in the United States) • Falck (a Danish rescue, health care, and safety-training organization) • Internet Security Systems (based in Atlanta, Georgia) • Metro AG of Germany • OTE (Greek telecommunications company) • Telefónica (the Spanish telecom provider)12

In total, according to UNI’s general secretary Philip Jennings, the organization now boasts 50 signed collective agreements and another 50 in various stages of negotiation.

ThE WORKING LAW Workers Uniting Claims to Represent Three Million

Members Worldwide, Uses the Social Net to Organize

Workers Uniting is a new international labor organization created through the combination of Unite, the largest union in the United Kingdom and Ireland, and the United Steelworkers, North America’s largest private sector union. The amalgamation claims the loyalty of some three million members. Its goal is to promote “global union activism,” including “[c]ommon political strategies to fight right-wing cuts in pensions and social services and attacks on workers’ fundamental right to organize and join unions, and to rebuild our economies through investment in manufacturing industry, infrastructure and green jobs ... [and] [j]oint collective bargaining efforts with common employers in our industries.”

This mega-union explains its raison d’etre with four key points: 1. The economy is globalizing. From Brussels to Beijing, decisions about our economy are

increasingly made far from home. A global union can provide us a voice in those decisions.

2. Politics is globalizing. Right-wing politicians are using the same vicious tactics to under- mine our livelihoods in the UK as they are in the U.S. and Canada. A global union can help us support progressive politics on both sides of the Atlantic.

3. Our employers are globalizing. A couple decades ago, only a few of our employers operated in more than one country. Now, nearly all of them do. A global union can help us stand up to our employers wherever they operate.

4. The movement is globalizing. Whether it’s standing up for fair trade or fighting back against bank bailouts, progressive groups are mobilizing and uniting everywhere. A global union can helps us join them in the fight for a better world.

Like nearly all organizations today, Workers Uniting has a social-network presence.14 Additionally, the union supports an online news service called “United Live.”15

Source: Workers Uniting, http://www.workersuniting.org.

5-3 Immigration Law and Policy

The fundamental U.S. immigration statute is the Immigration and Nationality Act (INA) of 1952. Prior to its passage, U.S. immigration was governed by a variety of federal statutes, which were not collected under a single title of the U.S. Code.

5-3a Immigration Reform and Control Act of 1986 The last major overhaul of the U.S. immigration statutory scheme, founded upon the 1952 law, occurred more nearly a quarter of a century ago. The purposes of the Immigration Reform and Control Act (IRCA) of 1986 were to: • • • Provide a solution for controlling illegal immigration to the United States; Make some changes in the U.S. system of legal immigration; and Provide a controlled legalization program for undocumented aliens who entered the United States before 1982. Primarily by the creation of civil and criminal penalties for employers who hire undocu- mented (illegal) aliens, IRCA intended to stem the flow of illegal immigrants. IRCA altered several immigration provisions of the INA of 1952. First, a new immigrant category for dependents of employees of international organizations was created. IRCA recognized the unique position of children and spouses of long-term international organization employees when those employees die, transfer, or retire. It is often difficult for children and spouses to become reoriented to their original society and culture. For all purposes, these individuals are “Americanized.” The special immigrant category recognizes their Americanization and allows the individuals to remain in this country if they meet certain residence requirements. Second, IRCA restricted the ability of many foreign students to adjust their status to that of lawful permanent resident aliens. This modification was aimed at reducing the number of foreign students who remain in the United States. IRCA also altered the alloca- tion of visas and created a visa waiver program. Finally, IRCA modified the former H-2 program for temporary workers by adding the H-2A program for temporary agricultural workers. It also established a mechanism by which “special agricultural workers” are admitted to perform field work in perishable crops. Under this mechanism, agricultural workers move freely between employers without penalty and are fully protected under all federal, state, and local labor laws. This mechanism creates a legal workforce without decreasing the number of workers available to harvest perishable crops. IRCA also provided a one-shot amnesty program under which illegal aliens who entered the United States before January 1, 1982, could become legalized. Applications for the amnesty program were accepted for an 18-month period that ended in April 1988. IRCA “grandfathered” workers hired prior to November 6, 1986; however, although the employers were not subject to sanctions, the grandfather provisions of IRCA did not make it lawful for an unauthorized alien to accept employment. Consequently, the alien was (and is) still subject to deportation for accepting employment. Today, experts estimate that more than 12 million illegal aliens are living in the U.S., and some pundits predict that the number is substantially higher.

5-3b Employer Compliance with IRCA Employers must verify the employment eligibility of any employee hired. The preemploy- ment question that must be asked is: Is the employee a U.S. citizen or lawfully authorized to work in the United States? To comply with verification requirements, an employer must show that it has examined documents that establish both:

• the employment authorization, and

• the identity of the employee.

A U.S. passport, certificate of U.S. citizenship, certificate of naturalization, or certain resident alien cards establish both. Employment authorization documents include a Social Security card or a birth certificate. Identity documents include a driver’s license, other state-issued card, or under certain circumstances, other documentation approved by the attorney general.

One of the proposals afloat in the Congress for immigrant verification and control is an electronic employment-verification system aimed at screening approximately 54 million new hires annually. The Government Accountability Office estimates that creation, dissem- ination, and operation of this proposed system could cost $11.7 billion. Employer cost per employee is expected to run somewhere between $10 and $50. One thing seems certain: the seldom-enforced requirement of the Immigration Reform and Control Act of 1986 (passed the last time the United States granted amnesty to its illegal aliens) that employers verify the legitimacy of their workers will no longer be winked at by the federal govern- ment, regardless of what other provisions a new immigration statute may contain.

Documents HR. offices May use to Verify new employees’ eligibility

For identity: • Driver’s license • Other state-issued I.D. card (e.g., a Pennsylvania Liquor Control Board I.D. card) For employment authorization: • Social Security card • Birth certificate For satisfaction of both categories: • • • • • • U.S. passport Certificate of U.S. citizenship Certificate of naturalization Certain resident-alien cards Unexpired foreign passport with attached visa authorizing U.S. employment Alien registration card with photo.

The employer is expected to examine the proffered documents. If they appear reason- ably on their face to be genuine and to relate to the person presenting them, they are to be accepted. To refuse to accept such documents, in fact, may be viewed by the INS as an unfair immigration-related employment practice. On the other hand, if the document does not appear reasonably on its face to be genuine or to relate to the person presenting it, the employer is expected to refuse to accept it. Instead, that employer should contact the local INS office closest to the employer’s facility and request assistance. Under these

circumstances, that employer will not be guilty of a verification violation and, all else being equal, should not be charged. If charged, the employer can raise the “good faith” defense, as the employer did not knowingly hire an illegal alien. Only original documents are accept- able. The one exception to this hard-and-fast rule is a certified copy of a birth certificate.

An employee who fails to provide required documentation within three business days of being hired may be terminated from employment. If the employee claims the docu- ments were lost or stolen, a receipt for a request for replacement documents will suffice for the time being. In that case, the employee has an additional 90 days in which to present those replacement documents to the employer, whose human resources department should make sure that there is a follow-up request should the employee fail to proffer the replace- ment documents within the time allotted by law. Remember, these policies must be applied uniformly to all employees in order to avoid a charge of immigrant-related discrimination.

5-3c Who Enforces U.S. Immigration Laws?

• U.S. Citizenship and Immigration Services: In the wake of the 9/11 terrorist attacks, in 2003, service and benefit functions of the U.S. Immigration and Naturalization Service (INS) transitioned into the Department of Homeland Security (DHS) as the U.S. Citizenship and Immigration Services (USCIS). The president nominated Eduardo Aguirre to lead the USCIS; he was confirmed by the Senate on June 19, 2003. The USCIS is responsible for the administration of immigration and naturaliza- tion adjudication functions and establishing immigration services policies and priori- ties. These functions include:

0 adjudication of immigrant visa petitions; 0 adjudication of naturalization petitions; 0 adjudication of asylum and refugee applications; 0 adjudications performed at the service centers; and 0 all other adjudications performed by the INS.16

• U.S. Immigration and Customs Enforcement: Also created in 2003 as a reaction to the INS’s failure to detect and deal with the 9/11 terrorists, Immigration and Customs Enforcement (ICE) remains in 2015 the largest investigative branch of the DHS. The agency was created after September 11, 2001, by combining the law enforcement arms of the former INS and the former U.S. Customs Service, to more effectively enforce U.S. immigration and customs laws so as to protect the United States against terrorist attacks. ICE does this by targeting illegal immigrants: the people, money, and materials that support terrorism and other criminal activities. ICE is a key component of the DHS layered defense approach to protecting the nation.17

• U.S. Department of Justice: The DOJ mission statement provides this list of responsibil- ities: “to enforce the law and defend the interests of the United States according to the law; to ensure public safety against threats foreign and domestic; to provide federal leadership in preventing and controlling crime; to seek just punishment for those guilty of unlawful behavior; and to ensure fair and impartial administration of justice for all Americans.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), in the Civil Rights Division, is responsible for enforcing the antidis- crimination provisions of the INA, 8 U.S.C. § 1324b, which protect U.S. citizens and legal immigrants from employment discrimination based upon citizenship or immi- gration status and national origin, from unfair documentary practices relating to the employment eligibility verification process, and from retaliation.18

• U.S. Social Security Administration: The Social Security Administration (SSA) is headquartered in Baltimore, Maryland, and has 10 regional offices and 1,300 local offices nationwide. The agency pays retirement, disability, and survivors benefits to workers and their families and administers the Supplemental Security Income program. It also issues Social Security numbers.19

• Federal Bureau of Investigation: Since the tragic events of September 11, 2001, one week into its new director’s term, the Bureau became responsible for spearheading what is perhaps the most extensive reorganization the FBI has experienced since its concep- tion. By May 2002, the director articulated 10 top FBI priorities:

0 protecting the United States from terrorist attacks, from foreign intelligence operations, and from cyber-based attacks and high-technology crimes;

0 combating public corruption at all levels; 0 protecting civil rights; 0 combating international and national organized crime, major white-collar crime,

and significant violent crime; 0 supporting our law enforcement and intelligence partners; and 0 upgrading FBI technology.

“While we remain committed to our other important national security and law enforcement responsibilities, the prevention of terrorism takes precedence in our thinking and planning; in our hiring and staffing; in our training and technologies; and, most importantly, in our investigations,” the director has said.20

• U.S. Department of Labor: The Department of Labor fosters and promotes the welfare of the job seekers, wage earners, and retirees of the United States by improving their working conditions, advancing their opportunities for profitable employment, protecting their retirement and health care benefits, helping employers find workers, strengthening free collective bargaining, and tracking changes in employment, prices, and other national economic measurements. In carrying out this mission, the depart- ment administers a variety of federal labor laws, including those that guarantee workers’ rights to safe and healthful working conditions, a minimum hourly wage and overtime pay, freedom from employment discrimination, unemployment insurance, and other income support.

The INA sets forth the conditions for the temporary and permanent employ- ment of aliens in the United States and includes provisions that address employment

eligibility and employment verification. These provisions apply to all employers. The DOL provides a wide variety of resources to aid employers with compliance.21

U.S. Department of State: The Department of State’s mission statement reads as fol- lows: “Create a more secure, democratic, and prosperous world for the benefit of the American people and the international community.”22 The Bureau of Consular Affairs within the State Department manages the visa process.23

•

5-3d Anatomy of an ICE Raid

During the first week of March 2007, ICE agents raided a leather factory in New Bedford, Massachusetts. Supported by local law enforcement, ICE arrested 361 workers. Most were female sewing-machine operators from Guatemala or El Salvador. The Michael Bianco plant employed a total of 500 workers, who made backpacks and vests for the U.S. military under an $83 million federal contract.

The detainees were taken to Fort Devens, a former army base near Ayer, Massachusetts. The following day, some 60 women, sole caretakers of their children, were released. The remaining workers were dispersed to detention centers and jails for processing of their cases.

Also arrested were factory owner Francesco Insolia and four plant managers. They were soon released on bail.

The arrests were hardly completed before the public relations war commenced. In a public statement, the U.S. attorney characterized the illegal immigrants as “exploited workers with low-paying jobs and horrible working conditions.” At a gathering in a local church, rela- tives of those arrested confirmed the U.S. attorney’s claims of exploitative conditions in the factory. One speaker was quoted in the media as saying, “They are only allowed two minutes to use the bathrooms and threatened with a fine of $20 if they return late to the job.”

Ultimately, the war of words made its way into a federal courthouse. By November 2007, the detainees’ main case had climbed all the way up into the lofty realm of the U.S. Court of Appeals for the Second Circuit, sitting in Boston.

CASE 5.3

aguiLar v. u.S. immigraTion anD CuSTomS enforCemenT 510 F.3d 1 (U.S. Ct. App. 1st Cir.) On March 6, 2007, federal officers conducted a raid as part of “Operation United Front.” The raid targeted Michael Bianco, Inc., a Department of Defense contractor suspected of employing large numbers of illegal aliens. Immigration and Customs Enforcement (ICE) agents, armed with search and arrest warrants, appeared unannounced at the factory, arrested five executives on immigration-related criminal charges, and took more than 300 rank-and-file employees into custody for civil immi- gration infractions. The ICE agents cast a wide net and paid little attention to the detainees’ individual or family circumstances. The government’s subsequent actions regarding the undocumented workers who were swept up in the net lie at the epicenter of this litigation. After releasing dozens of employees determined either to be minors or to be legally residing in the United States, ICE transported the remaining detainees to Fort Devens (a holding facility in Ayer, Massachusetts). Citing a shortage of available bed space in Massachusetts, ICE then began transferring substan- tial numbers of aliens to faraway detention and removal operations centers (DROs). For example, on March 7, 90 detainees were flown to a DRO in Harlingen, Texas, and the next day 116 more were flown to a DRO in El Paso, Texas. ICE attempted to coordinate its maneuvers with the Massachusetts Department of Social Services (DSS) to ensure the proper care of family members. It took steps to address concerns about child welfare and released several detainees for humanitarian reasons. Still, the petitioners allege (and, for present purposes, we accept) that ICE gave social welfare agencies insufficient notice of the raid, that caseworkers were denied access to detainees until after the first group had been transferred, and that various ICE actions temporarily thwarted any effective investigation into the detainees’ needs. As a result, a substantial number of the detainees’ minor children were left for varying periods of time without adult supervision. With respect to the detainees themselves, the petitioners averred that ICE inhibited their exercise of the right to counsel. According to the petitioners, a squad of volun- teer lawyers who had offered to provide the detainees with guidance was turned away from Fort Devens on March 7. The next day, the lawyers were allowed to meet with those detainees (some thirty in number) who had expressly requested legal advice. The petitioners allege that, notwith- standing this largesse, some detainees were denied access to counsel after they arrived in Texas. On the afternoon of March 8, the Guatemalan consul, acting as next friend of the detainees (many of whom were Guatemalan nationals), filed a petition for a writ of habeas corpus and a complaint for declaratory and injunctive relief in the United States District Court for the District of Massachusetts. The action sought the detainees’ imme- diate release or, in the alternative, a temporary restraining order halting further transfers. The district court enjoined ICE from moving any of the remaining detainees out of Massachusetts pending further order of the court. . . . The district court patiently sorted through them and, in a thoughtful rescript, eventually dismissed the action for want of subject matter jurisdiction. . . . We have scoured the case law for any authority suggesting that claims similar to those asserted here are actionable under the substantive component of the Due Process Clause, and we have found none. That chasm is important because, given the scarcity of ‘guideposts for responsible decision- making in this uncharted area,’ courts must be ‘reluctant to expand the concept of substantive due process.’24 This unfortunate case is a paradigmatic example of an instance in which the prudential principle announced by the Collins Court should be heeded. Accordingly, we dismiss the petitioners’ substantive due process claims for failure to satisfy the prerequisites of Federal Rule of Civil Procedure 12(b)(6). . . . We are sensitive to the concerns raised by the peti- tioners and are conscious that undocumented workers, like all persons who are on American soil, have certain inalien- able rights. But in the first instance, it is Congress—not the judiciary—that has the responsibility of prescribing a framework for the vindication of those rights. When Congress speaks clearly and formulates a regime that satis- fies constitutional imperatives, the courts must follow Congress’s lead. In that sense, it does not matter whether a court approves or disapproves of an agency’s modus operandi. We add only two comments. First, we applaud the able district judge for the skill and sensitivity with which he handled this highly charged case. Second, we express our hope that ICE, though it has prevailed, nonetheless will treat this chiaroscuro series of events as a learning experience in order to devise better, less ham-handed ways of carrying out its important responsibilities. Case Questions 1. The due process clauses of the Fifth and Fourteenth Amendments decree that “no person” may be deprived of life, liberty, or property without due process of law. If the detainees in this case, who clearly are persons, if not U.S. citizens, cannot secure their due process rights in a federal court, where do you think they will be secured? 2. Assuming that, following dismissal of their federal 4. court case, the detainees are afforded an opportunity to be heard in some other forum, such as in front of an immigration judge,25 do you think it would be more If the detainees ultimately are found to be illegal aliens, what penalty should be imposed upon them? What if some of them are found to be repeat offenders? What if they can prove they have children who were born in the United States? fair to place the burden of proving their right to stay in the U.S., or lack of such a right, upon the detainees or the ICE agency? 3. In what ways, if any, do you think that the ICE agency (in the words of the court) was “ham-handed”? 4. If the detainees ultimately are found to be illegal aliens, what penalty should be imposed upon them? What if some of them are found to be repeat offenders? What if they can prove they have children who were born in the United States?

5. Does this case suggest to you that the U.S. system for dealing with illegal-alien workers requires reforming? If so, what policy recommendations would you make to President Obama, if asked?

Aftermath

On November 4, 2007, the Boston Globe reported, “The New Bedford leather goods company that helped push deportation methods into the national spotlight when it was raided by federal immigration agents in March has been sold to a Missouri-based manufac- turer of military and law enforcement gear. Michael Bianco Inc., whose top officers were indicted in August for allegedly taking overt steps to shield illegal workers from authorities and help them stay in this country, was sold to Eagle Industries Inc., a longtime compet- itor, according to David Costello, the buyer’s Boston-based spokesman.” The Globe added, “Following the raid, the federal Occupational Safety and Health Administration fined Bianco $45,000 after identifying 15 violations, including chemical, mechanical, and elec- trical hazards.”26

The U.S. attorney’s press release, announcing the indictments of the managers, stated, “If convicted, INSOLIA, COSTA and MELO each face a maximum sentence of 10 years in prison, a $250,000 fine, a $100 special assessment, and at least two years of supervised release on the charge of conspiring to harbor illegal aliens; and 6 months in prison, a $100 special assessment, and $10,000 fine for each illegal alien hired by MBI on the conspiracy to hire illegal aliens charge.”

5-3e State and Local Involvement with Illegal Immigrants

As a general proposition, immigration law and policy are deemed to be the exclusive provinces of the federal government. State and local governments are usually deemed to be preempted from intruding into this area of the law. However, in recent years, many state and local governments have become frustrated with federal inaction or ineffec- tiveness in the face of rapidly rising numbers of illegal-immigrant workers, who make claims upon public services and, allegedly, increase crime rates in communities where they settle. Most of these state statutes and municipal ordinances have fallen to consti- tutional challenges.

5-3f The Legal Arizona Workers Act

One state statute, which stands out from the crowd by virtue of having so far survived all legal challenges, is the Legal Arizona Workers Act.27 In May of 2011, the Supreme Court of the United States made a decision upholding the law.

CASE 5.4

Chamber of CommerCe of u.S. v. WhiTing

131 S.Ct. 1968 (U.S. 2011)

Facts: The Chamber of Commerce and various business and civil rights organizations brought action challenging the validity of Arizona’s unauthorized alien employment law, which allowed the suspension and revocation of business licenses for employing unauthorized aliens and required every employer to verify the employment eligibility of hired employees through a specific Internet-based system. The United States District Court for the District of Arizona upheld the statute, and the plaintiffs appealed. The United States Court of Appeals for the Ninth Circuit affirmed the decision. Certiorari was granted.

Issue: Is the Legal Arizona Workers Act preempted by federal immigration law?

Decision: The Supreme Court affirmed the decision of the lower court and held that:

(1) the provision of Arizona law allowing suspension and revocation of business licenses fell within the Immigration Reform and Control Act’s (IRCA) savings clause;

(2) the provision of Arizona law allowing suspension and revocation of business licenses was not impliedly preempted for conflicting with federal law; and

(3) the Arizona law’s requirement that every employer verify the employment eligibility of hired employees through a specific Internet-based system did not conflict with federal law.

In the wake of the Ninth’s Circuit’s 2007 blessing on the act, the Arizona Attorney General moved forward with its implementation.28 According to the official legislative notice to employers, “A judicial determination of a violation of this new state law will subject the employer to probation, and may subject the employer to a suspension or revoca- tion of all licenses as defined in section 23–211, Arizona Revised Statutes, depending on the following conditions:

• For a first violation of an employer knowingly hiring an unauthorized alien, the court shall order mandatory three years’ probation and may suspend all licenses held by the employer for a maximum of 10 days. The employer must file a signed sworn affidavit with the county attorney within three business days, stating that the employer has fired all unauthorized aliens and that the employer will not intentionally or knowingly employ any unauthorized alien.

• For a first violation of an employer intentionally hiring an unauthorized alien, the court shall order a mandatory five years’ probation and order the appropriate licensing

agencies to suspend all licenses held by the employer for a minimum often days. The employer must file a signed sworn affidavit, stating that the employer has fired all unau- thorized aliens and that the employer will not intentionally or knowingly employ any unauthorized alien with the county attorney. A license that is suspended will remain suspended until the employer files a signed sworn affidavit.

For a second violation of this new state law committed during a period of probation, the court will order the appropriate licensing agencies to permanently revoke all licenses that are held by the employer.”29

Licenses that can be lost under the law include, “any agency permit, certificate, approval, registration, charter or similar form of authorization that is required by law and that is issued by any agency for the purposes of operating a business in this state.”30

• •

A year later, the Supreme Court was less kind to another Arizona statute, this one aimed at criminalizing the activities of illegal aliens in a variety of ways.

CASE 5.5

arizona v. uniTeD STaTeS 132 S.Ct. 2492 (U.S. 2012) Facts: An Arizona statute known as S.B. 1070 was enacted in 2010 to address pressing issues related to the large number of unlawful aliens in the State. The United States sought to enjoin the law as preempted. The District Court issued a preliminary injunction preventing four of its provisions from taking effect. Section 3 makes failure to comply with federal alien-registration requirements a state misdemeanor; § 5(C) makes it a misdemeanor for an unauthorized alien to seek or engage in work in the State; § 6 authorizes state and local officers to arrest without a warrant a person “the officer has probable cause to believe ... has committed any public offense that makes the person removable from the United States”; and § 2(B) requires officers conducting a stop, detention, or arrest to make efforts, in some circumstances, to verify the person’s immigration status with the Federal Government. The Ninth Circuit affirmed, agreeing that the United States had established a likelihood of success on its preemption claims. Decision: The Supreme Court held that (1) the provision making failure to comply with federal alien-registration requirements a state misdemeanor was preempted; (2) the provision making it a misdemeanor for unauthorized alien to seek or engage in work in Arizona was preempted; (3) the provision authorizing arrests for a removable offense was preempted; but (4) the preliminary injunction against the provision requiring officer conducting stop, detention, or arrest to verify person’s immigration status with the federal government if the officer had suspicion that the person was unlawfully in the United States was improper.

5-3g President Obama’s Executive Order In 2014, immigrant-advocacy groups clamored for reform at the national level, while

Congress dithered. Hispanics in particular called upon President Barack Obama to institute

reform measures. He, too, hesitated, as the November national elections loomed and many Democratic senators and representatives up for reelection feared a backlash by their non- Hispanic constituencies. Despite the president’s restraint, his party lost the mid-term elec- tions and control of the Senate. Finally, with both houses of Congress in Republican hands, a frustrated President Obama acted unilaterally, issuing an executive order on November 20, 2014. His order mandated a number of initiatives by the federal bureaucracy, the major ones being:

• Expanding the population eligible for the Deferred Action for Childhood Arrivals (DACA) program to people of any current age who entered the United States before the age of 16 and lived in the United States continuously since January 1, 2010, and extending the period of DACA and work authorization from two years to three years;

• Allowing parents of U.S. citizens and lawful permanent residents to request deferred action and employment authorization for three years, in a new Deferred Action for Parents of Americans and Lawful Permanent Residents program, provided they have lived in the United States continuously since January 1, 2010, and pass required back- ground checks;

• Expanding the use of provisional waivers of unlawful presence to include the spouses and sons and daughters of lawful permanent residents and the sons and daughters of U.S. citizens;

• Modernizing, improving, and clarifying immigrant and nonimmigrant visa programs to grow the economy and create jobs; and

• Promoting citizenship education and public awareness for lawful permanent residents and providing an option for naturalization applicants to use credit cards to pay the application fee.31

On December 3, 2014, 17 states joined together in a suit aimed at blocking the presi- dent’s executive order.3

Summary

The principle source of international labor and employment law is the International Labor Organization (ILO), which develops conventions covering significant topics in labor and employ- ment law and policy. Sovereign nations are free to adopt or decline to adopt these conventions. The United States has adopted some, but far from all, the ILO’s conventions. In some areas, the U.S. decision not to sign onto particular conventions is grounded in the belief that U.S. labor law and policy are superior to the international options. • • Corporate social responsibility is more of an aspira- tion or ideal than it is an actual example of inter- national employment law. However, some nations have incorporated notions of corporate social responsibility into their laws. The Alien Tort Claims Act is one of the oldest U.S. statutes on the books and for many years was little used. However, in the 21st century workers and labor unions in foreign countries have rediscovered the statute and are attempting to use it—with mixed results—against U.S.-based multinational companies. International labor unions are attempting to orga- nize the employees of multinational corporations on a global scale. • U.S. immigration law’s most recent major overhaul took place in 1986. A major goal of Congress at that time was to staunch the flow of illegal immi- grants into the country. However, limited resources and lack of will resulted in only limited, spotty enforcement of the new statutory scheme. The result has been an enormous influx of illegal aliens into the U.S. during the past two decades. • After September 11, 2001, the Department of Homeland Security was created and the Immigration and Naturalization Service (INS) was split into an enforcement branch, Immigration » Problems » Questions 1. Can an argument be made that even underpaid and exploited workers in so-called sweatshops in under- developed nations are better off than if no such sweatshops existed? 2. If your answer to question 1 is “yes,” does this justify the exploitation of these workers? 3. If a foreign nation chooses not to enact or enforce humane wage and hour, health and safety, and other human resources laws for the benefit of its citizens, why should an American company, doing business in that nation, be expected to do any better? 4. If menial and dirty jobs which American citizens have no interest in performing are filled primarily by illegal aliens, isn’t the best policy for all concerned to ignore the presence of these workers in the U.S.? 5. Granting that it is probably unrealistic to round up and deport the estimated 12 million illegal immi- grants in the U.S., what social services should these illegal residents in the U.S. be permitted to have: Welfare and/or unemployment compensation when they are out of work? Emergency room services? and Customs Enforcement (ICE), and a services- oriented branch, the U.S. Citizenship and Immigration Service (USCIS). ICE has been more active than the predecessor INS in enforcing the laws, including increased raids of workplaces known to employ numerous undocumented immigrants. • Nevertheless, many states and municipalities, frus- trated by the failure of the federal government to staunch the flow and employment of illegal immi- grants, have enacted their own statutes and ordinances to deal with the problem on the local level. These laws have been subjected to court challenges. Recently some of them have survived these challenges and remain in effect. Public school for their children? The right to join a labor union? The right to file a health and safety complaint with an appropriate federal or state agency? The right to sue for unpaid wages or job- related injury? »

Case Problems 6. The plaintiff, a private citizen, sought to obtain for Native Americans “just compensation for the minerals mined in the Black Hills of South Dakota.” He averred that the Black Hills belonged to Native Americans and were taken from them in violation of the Fifth Amendment of the U.S. Constitution. He also asserted in one of several consolidated complaints that American companies that operate sweatshops “should not be allowed to enter into international trade with the United States,” and asked that the court enjoin such trade. Additionally, he contended that the “globalization of the auto industry violate[s] the Sherman Anti- Trust Act.” In yet another complaint, he contended that the U.S. Food and Drug Administration is “in violation of the Treaty of Unification of Pharmacopeial Formulas for Patent Drugs.” Finally, he pled that the “U.S.A.,” presumably the federal government, is “trading in fur seals in violation of [a] treaty.”

How should the federal district judge assigned to these consolidated cases resolve them? Why? [See Demos v. U.S., 2007 WL1492413 (CIT), 29 ITRD 1926 (U.S. Court of International Trade 2007).]

7. The plaintiffs, current and former residents of the Republic of the Sudan, filed a class action suit against Talisman Energy, Inc. and Sudan, alleging violations of international law stemming from oil exploration activities conducted in that country. Specifically, the plaintiffs alleged that the defen- dants collaborated to commit gross human rights violations, including extrajudicial killing, forc- ible displacement, war crimes, confiscation and destruction of property, kidnapping, rape, and enslavement for forced labor. Collectively, the plaintiffs claimed that these activities amounted to genocide. Talisman moved to dismiss this action on the basis of lack of subject matter jurisdic- tion, lack of personal jurisdiction, lack of plain- tiffs’ standing, forum non conveniens, international comity, act of state doctrine, political question doctrine, failure to join necessary and indispens- able parties, and because equity does not require a useless act.

Based upon what you have read in this chap- ter, is there a basis in U.S. law for the plaintiffs to proceed with their case? [See Presbyterian Church of Sudan v. Talisman Energy, Inc., 244 F. Supp. 2d 289 (S.D.N.Y. 2003).]

8. The plaintiffs were seven Guatemalan citizens currently residing in the United States. Del Monte is a Delaware company; its principal place of busi- ness is in Coral Gables, Florida. In Guatemala, the plaintiffs were officers in SITRABI, a national trade union of plantation workers. At the time in question, they represented workers on a Bandegua banana plantation that was a wholly owned subsid- iary of Del Monte. SITRABI and Bandegua were negotiating a new collective bargaining agreement for workers at the plantation. While those nego- tiations were ongoing, Bandegua terminated 918 workers. SITRABI responded by filing a complaint in the Labor Court of Guatemala. The plaintiffs allege that on October 13, 1999, Bandegua hired a private, armed security force. (Private security forces are permitted and regulated in Guatemala.) According to the plaintiffs, Del Monte agents met with the security force “to plan violent action against the Plaintiffs and other SITRABI leaders.” According to the plaintiffs, at 5:45 p.m., the secu- rity force, which is described as “a gang of over 200 heavily armed men,” arrived at SITRABI’s head- quarters. There, the security force held two plain- tiffs hostage, threatened to kill them, and shoved them with guns. Throughout the evening, other SITRABI leaders were lured, abducted, or otherwise forced to the headquarters and similarly detained. The plaintiffs, at gunpoint, announced the labor dispute was over and that they were resigning.

Do the plaintiffs have a cause of action against Del Monte in federal court? [See Aldana v. Del Monte Fresh Produce, NA, Inc., 416 F.3d 1242 11th Cir. 2005).]

9. San Juan Pueblo is a federally recognized Indian tribe, which is to say an independent Indian nation, located in New Mexico. Most of its 5,200 members live on tribal lands that are held in trust by the United States for the Pueblo. The Pueblo is governed by a tribal council, which is vested with legislative authority over tribal lands. Through federally approved leases, the Pueblo leases portions of its tribal land to nontribal businesses as a source of generating tribal income and as a means of employment for tribal members. On November 6, 1996, the San Juan Pueblo Tribal Council enacted Tribal Ordinance No. 96-63. The ordinance in substance is a so-called “right-to-work” measure (see Chapter 14). The Pueblo asserts that the ordinance is a valid exercise of its inherent sovereign authority. As amended, the ordinance prohibits the making of agreements containing union-security clauses covering any employees, whether tribal members or not. Section 6(a) of the ordinance reads: membership in, voluntary affiliation with, or voluntary financial support of a labor organization; (ii) become or remain a member of a labor organization; (iii) pay dues, fees, assessments or other charges of any kind or amount to a labor organization; (iv) pay to any charity or other third party, in lieu of such payments any amount equivalent to or a pro-rata portion of dues, fees, assessments or other charges regularly required of members of a labor organization; or (v) be recommended, approved, referred or cleared through a labor organization. as structural and pipe welders during the period when the DOL was supposed to be reevaluating the matter after receipt of the relevant union’s letter, opposing the company’s application; however, none was offered employment by Cianbro. Meanwhile the federal and state agencies proposed to issue more than 50 H-2B visas. On March 21, 2003 the relevant unions filed an application for a temporary restraining order. Should the court grant this TRO, blocking the issuance of the H-2B visas, pending resolution of the unions’ objections? What policy considerations should the judge take into account on both sides of the controversy when making this decision? [See Maine State Building and Construction Council v. Chao, 265 F. Supp.2d 105 (D. Maine 2003).] 11. JAL was a Japanese commercial air carrier based in Tokyo. HACS, a Hawaii corporation with its principal place of business in Honolulu, provided contract flight crews to JAL. Plaintiffs Ventress and Crawford were employed by HACS to perform services for JAL flights. The plaintiffs’ employment agreements with HACS contained mandatory arbi- tration provisions. In December 2002, Ventress and Crawford jointly filed a complaint against JAL and HACS in the U.S. District Court for the Central District of California, alleging that JAL required a seriously ill pilot to fly in June 2001, in violation of American and Japanese aviation laws as well as JAL’s own operations manual. Crawford expressed his concern to a JAL official in Honolulu in July 2001. Afterward, he experienced harassment from his superiors, including repeated performance checks, questions, and homework assignments. In December 2001, HACS informed Crawford that his assignment to JAL was canceled because of unsatisfactory performance. That same month, Ventress submitted reports on the June incidents to JAL, HACS, and aviation regulators. Ventress claimed repeated harassment from JAL there- after, including demands to undergo psychiatric evaluations. Ventress was not allowed to fly after September 2001. The complaint sought recovery for violation of California’s whistleblower statute, wrongful termi- nation in violation of the public policy protecting Should the tribal law be considered preempted by the National Labor Relations Act, or should the tribal council be recognized as a sovereign govern- ment body outside the reach of the NLRA? What policy reasons can you think of that favor one or the other of these outcomes? [See NLRB v. Pueblo of San Juan, 276 F.3d 1186 (10th Cir. 2002).]

10. During August to October 2002, Cianbro Corporation applied to the United States Department of Labor and the Maine Department of Labor for H-2B temporary labor certifications for as many as 120 foreign workers to be employed as structural and pipe welders on two giant oil rigs known as the Amethyst 4 and 5 that were under construction in the harbor of Portland, Maine. To make their determinations, the DOL and the Maine DOL were required to calculate prevailing wages and working conditions for the jobs for which Cianbro sought temporary labor certifica- tions pursuant to a DOL regulation, 20 C.F.R. § 656.40. Federal regulations (8 C.F.R. § 214.2(h)(6) (iii)(A)) provided that before filing a petition with the INS (now USCIS) director in whose jurisdiction a petitioning employer intends to employ an H-2B nonagricultural temporary worker, the employer must apply for a temporary labor certification with the Secretary of Labor. The Secretary of Labor’s temporary labor certification provided advice to the INS director on “whether or not United States workers capable of performing the temporary services or labor are available and whether the alien’s employment will adversely affect the wages and working conditions of similarly employed United States workers.” Many qualified and available U.S. workers applied for positions with Cianbro as structural and pipe welders during the period when the DOL was supposed to be reevaluating the matter after receipt of the relevant union’s letter, opposing the company’s application; however, none was offered employment by Cianbro. Meanwhile the federal and state agencies proposed to issue more than 50 H-2B visas. On March 21, 2003 the relevant unions filed an application for a temporary restraining order.

Should the court grant this TRO, blocking the issuance of the H-2B visas, pending resolution of the unions’ objections? What policy considerations should the judge take into account on both sides of the controversy when making this decision? [See Maine State Building and Construction Council v. Chao, 265 F. Supp.2d 105 (D. Maine 2003).]

11. JAL was a Japanese commercial air carrier based in Tokyo. HACS, a Hawaii corporation with its principal place of business in Honolulu, provided contract flight crews to JAL. Plaintiffs Ventress and Crawford were employed by HACS to perform services for JAL flights. The plaintiffs’ employment agreements with HACS contained mandatory arbi- tration provisions. In December 2002, Ventress and Crawford jointly filed a complaint against JAL and HACS in the U.S. District Court for the Central District of California, alleging that JAL required a seriously ill pilot to fly in June 2001, in violation of American and Japanese aviation laws as well as JAL’s own operations manual. Crawford expressed his concern to a JAL official in Honolulu in July 2001. Afterward, he experienced harassment from his superiors, including repeated performance checks, questions, and homework assignments. In December 2001, HACS informed Crawford that his assignment to JAL was canceled because of unsatisfactory performance. That same month, Ventress submitted reports on the June incidents to JAL, HACS, and aviation regulators. Ventress claimed repeated harassment from JAL there- after, including demands to undergo psychiatric evaluations. Ventress was not allowed to fly after September 2001.

The complaint sought recovery for violation of California’s whistleblower statute, wrongful termi- nation in violation of the public policy protecting

whistleblowers, and emotional distress. The Califor- nia whistleblower law states in pertinent part, “An employer may not retaliate against an employee for disclosing information to a government or law en- forcement agency, where the employee has reason- able cause to believe that the information discloses a violation of state or federal statute, or a violation or noncompliance with a state or federal regula- tion.” Cal. Labor Code § 1102.5(b). The defendant claimed that the plaintiffs’ claims were preempted by the Friendship, Commerce, and Navigation Treaty (U.S.–Japan, April 2, 1953). The treaty was primarily designed to protect the right of employers on both sides of the Pacific to “utilize the services of their own nationals in managerial, technical, and confidential capacities to be critical.” The court here was faced with three choices:

(1) dismiss the case as preempted by the treaty;

(2) stay the proceedings and require the plaintiffs to pursue arbitration under the express terms of their employment contracts; or

(3) permit the action to proceed under the California Whistleblower Law.

What policy considerations can you come up with in favor of or against each of these options? [See Ventress v. Japan Airlines, 486 F.3d 1111 (9th Cir. 2007).]

12. The governor of Missouri issued a press release, which included the following announcements:

KINGSTON—Gov. Matt Blunt today highlighted his tough new directives in the fight against illegal immigration in Missouri in a visit to the Caldwell County Sheriff’s Office, where on an average day the facility holds approximately 55 immigration detainees. “With Washington failing to enact policies to enforce our federal immigration laws it is necessary for our state to take action,” Gov. Blunt said. “We support and welcome lawful immigrants into Missouri but will also continue to take a tough stand against illegal immigration in our state.”

Governor Blunt has offered his support to local prosecutors in their efforts in the fight against illegal immigration and reminds prosecutors that state law makes the receipt of tax credits by employers of il-legal aliens who are ineligible for state tax credits, tax abatements, or loans a class A misdemeanor, punish- able by up to a year in prison. In a letter to pros- ecutors, the governor notes that since the attorney general has yet to bring a case to enforce this law, it is left to them to enforce the law in their counties.

Governor Blunt also called on his administration to work with ICE for authority under Section 287g of the Immigration and Nationality Act that would deputize state law enforcement officers to enforce fed- eral laws and protect Missourians against illegal im- migration. The agreement will allow select troopers, capitol police, and water patrol officers to help enforce immigration laws. The governor has directed his staff to examine the costs associated with the 287g designa- tion and plans to seek funding in next year’s budget to help state and local law enforcement agencies pursue the cooperative agreement and help enhance public safety.

The governor also directed state law enforce- ment agencies to verify the immigration status of every criminal presented for incarceration.

In addition, he took significant steps to shield taxpayers’ money from supporting building projects that employ illegal workers including:

• Conducting random on-site inspections of all projects accompanied by the tax credit recipient to monitor and retrieve documentation regarding the legal status of all workers on the job. The inspec- tions will include direct employees of the tax credit recipient, contracted or subcontracted agents, and both general contractors and their subcontractors.

• Performing a Compliance by Written Demand action for all tax credit recipients that requires all workers’ proof of legal status, including contractors and subcontractors, to be submitted within 30 days of the date of the receipt of the written request.

Based upon what you have learned in this chap- ter, evaluate the legality of the governor’s various proposals in light of (1) federal preemption and (2) due process of law considerations.

13. David Rodriguez, a citizen of Mexico, entered the United States without inspection at El Paso, Texas,

on or about July 22, 1996. During his time in the United States, he lived in Minnesota and fraudulently obtained a Texas birth certificate, a Minnesota driver’s license and a social security card in the name of Oscar Martinez, and a social security card and legal resi- dent card in the name of David Rodriguez Silva. He sought to obtain employment with a private employer by checking a box on a Form I-9 indicating that he was a “citizen or national of the United States” and by submitting the fraudulent Martinez driver’s license and social security card as support for his claim. On April 19, 2001, Rodriguez married Veronica Vazquez, a U.S. citizen. On April 24, 2001, he submitted an immediate relative immigrant visa petition, which the Immigration and Naturalization Service (now the USCIS) approved. The INS informed Rodriguez that he would be considered for lawful permanent resi- dence status subject to his application for adjustment of status. On February 26, 2002, Rodriguez and his wife appeared for an interview with a district adju- dications officer as part of the process to adjust his status. Rodriguez brought the fraudulent documents. After the interview, the adjudications officer prepared a sworn statement that included the questions and answers from the interview. Rodriguez reviewed and signed the statement. In the interview and in his resulting sworn statement, Rodriguez admitted that he knew that with the use of the fraudulent docu- ments he had made a claim to a government agency that he was a citizen of the United States. The INS denied Rodriguez’s application for adjustment of status because he had made a false claim that he was a U.S. citizen. On appeal of the agency’s decision, the court can either affirm the decision—in which case Rodriguez will be deported back to Mexico—or overlook his earlier employment history and order his change of status based upon his marriage to an American citizen.

What are the ethical considerations favoring each of these outcomes? What would you do, if you were the judge and had discretion to rule either way? [See Rodriguez v. Mukasey, 519 F.3d 773 (8th Cir. 2008).]

14. Petitioner Agri Processor Co. was a wholesaler of kosher meat products based in Brooklyn, New York. In September 2005, the company’s employees voted to join the United Food and Commercial Workers union. When the company refused to bargain, the union filed an unfair labor practice charge with the National Labor Relations Board. The company defended its refusal, arguing that most of those who voted were undocumented aliens. The company argues that undocumented aliens are prohibited from unionizing because they do not qualify as “employees” protected by the National Labor Relations Act. The NLRA states, “The term ‘employee’ shall include any employee . . ., but shall not include any individual employed as an agri- cultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having the status of an independent contractor, or any individual employed as a supervisor, or any individual employed by an employer subject to the Railway Labor Act . . ., or by any other person who is not an employer as herein defined.”

How should the court rule in this case? Does the statutory definition compel an outcome, or is there sufficient ambiguity for the court to go either way? If so, what are the public policy considerations that the court ought to weigh in reaching a determi- nation of the case? [See Agri Processor, Inc. v. NLRB, 514 F.3d 1 (D.C. Cir. 2008).]

15. Yu owned and operated the Great Texas Employment Agency along with his girlfriend, Ya Cao. Great Texas was in the business of supplying Chinese restaurants in several states with immi- grant workers. Yu advertised Great Texas to Chinese restaurant owners through direct mailings and in the Midwest edition of a Chinese periodical, agreeing to supply “Hispanic and Middle Southern American workers” for “odd jobs” or positions such as “dishwashers” or “busboys.” Upon receiving an order from a restaurant owner, Great Texas would recruit immigrant workers from Texas and arrange for their transportation to the restaurants.

Authorities began investigating Yu after a border patrol agent encountered two men riding bicycles on Interstate 29 in North Dakota in June 2004. The two men admitted that they were Mexican citizens who were in the country illegally and who had been working at a Chinese restaurant in Grand Forks, North Dakota. One of the men had an employment

contract, written in both Chinese and Spanish, which provided that the employee would receive a salary of $1,000 per month. The contract also listed a 312 area code telephone number for an employ- ment agency. Agents asked to interview Yu, and he consented. After receiving his Miranda warnings, Yu explained that he lived at the residence with Ya Cao (whom he referred to as Lily) and that Ya Cao and a Spanish-speaking recruiter would go to street corners to find workers to fill requests. He said that he paid $20 for each worker recruited. Yu admitted that some of the workers were illegal but said that he assumed most were legal and that the restaurants would check on the workers’ immigration status. After he was indicted, he contested the charges and sought to have his statement excluded on the ground that he spoke poor English and did not understand what rights he was giving up.

If you were the trial judge, how would you rule on Yu’s motion to suppress the confession? [See U.S. v. Shan Wei Yu, 484 F.3d 979 (8th Cir. 2007).]

(1) (2) (3)

an individual investor, a university endowment fund, or an employee pension fund?

» Hypothetical Scenarios

16. One well-known approach to corporate respon- sibility is the so-called “triple bottom line.” Traditionally, a corporation’s bottom line referred to the company’s net profits. “In practical terms, triple-bottom-line accounting means expanding this traditional reporting framework to take into account ecological and social performance in addition to financial performance. The phrase was coined by John Elkington in 1994. It was later expanded and articulated in his 1998 book Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Sustainability, itself, was first defined by the Brundtland Commission of the United Nations in 1987. The concept of TBL demands that a company’s responsibility be to stake- holders rather than shareholders. In this case, “stake- holders” refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. According to the stakeholder theory, the business entity should be used as a vehicle for coordinating stakeholder interests instead of maximizing share- holder (owner) profit” (http://en.wikipedia .org/wiki/Triple_bottom_line). Assume that an American corporation decides to adopt the triple- bottom-line approach with regard to its environ- mental and labor relations policies worldwide. What are the pros and cons of this decision for the firm’s traditional bottom line? What response should shareholders make to this decision? Does your answer to the second question depend upon whether the particular shareholder happens to be

contract, written in both Chinese and Spanish, which provided that the employee would receive a salary of $1,000 per month. The contract also listed a 312 area code telephone number for an employ- ment agency. Agents asked to interview Yu, and he consented. After receiving his Miranda warnings, Yu explained that he lived at the residence with Ya Cao (whom he referred to as Lily) and that Ya Cao and a Spanish-speaking recruiter would go to street corners to find workers to fill requests. He said that he paid $20 for each worker recruited. Yu admitted that some of the workers were illegal but said that he assumed most were legal and that the restaurants would check on the workers’ immigration status. After he was indicted, he contested the charges and sought to have his statement excluded on the ground that he spoke poor English and did not understand what rights he was giving up.

If you were the trial judge, how would you rule on Yu’s motion to suppress the confession? [See U.S. v. Shan Wei Yu, 484 F.3d 979 (8th Cir. 2007).]

(1) (2) (3)

an individual investor, a university endowment fund, or an employee pension fund?

» Hypothetical Scenarios

16. One well-known approach to corporate respon- sibility is the so-called “triple bottom line.” Traditionally, a corporation’s bottom line referred to the company’s net profits. “In practical terms, triple-bottom-line accounting means expanding this traditional reporting framework to take into account ecological and social performance in addition to financial performance. The phrase was coined by John Elkington in 1994. It was later expanded and articulated in his 1998 book Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Sustainability, itself, was first defined by the Brundtland Commission of the United Nations in 1987. The concept of TBL demands that a company’s responsibility be to stake- holders rather than shareholders. In this case, “stake- holders” refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. According to the stakeholder theory, the business entity should be used as a vehicle for coordinating

17. Villagers from Myanmar’s Tenasserim region, the rural area through which an American oil company built a new pipeline, alleged that the Myanmar mili- tary forced them, under threat of violence, to work on and serve as porters for the project. For instance, John Doe IX testified that he was forced to build a helipad near the pipeline site in 1994 that was then used by company officials who visited the pipe- line during its planning stages. John Doe VII and John Roe X described that the helipads constructed at Eindayaza and Po Pah Pta, both of which were near the pipeline site, were used to ferry executives and materials to the construction site, and were constructed using the forced labor of local villagers, including Plaintiffs John Roes VIII and IX, as well as John Does I, VIII, and IX, who testified that they were forced to work on building roads leading to the pipeline construction area. Finally, John Does V and IX testified that they were required to serve as “pipe- line porters”—workers who performed menial tasks such as such as hauling materials and cleaning the army camps for the soldiers guarding the pipeline construction. Plaintiffs also alleged, in furtherance of the forced labor program just described, that the Myanmar military subjected them to acts of murder, rape, and torture. For instance, Jane Doe I testi- fied that after her husband, John Doe I, attempted to escape the forced labor program, he was shot at by soldiers, and, in retaliation for his attempted escape, that she and her baby were thrown into

a fire, resulting in injuries to her and the death of the child. Other witnesses described the summary execution of villagers who refused to participate in the forced labor program or who grew too weak to work effectively. Several plaintiffs testified that rapes occurred as part of the forced labor program. For instance, both Jane Does II and III testified that while conscripted to work on pipeline-related construction projects, they were raped at knife- point by Myanmar soldiers who were members of a battalion that was supervising the work. Plaintiffs finally allege that the American firm’s conduct gives rise to liability for these abuses. What must these plaintiffs prove in order to pursue an Alien Tort Claims Act case against the U.S. oil company? What must the U.S. try to show in order to successfully defend itself? Should the law impose an obligation on the oil company to “police” how the host coun- try’s military fulfills a national agreement to assist the oil company in building the pipeline?

18. A European labor union succeeded in organizing the workers at a facility in Germany that was owned and operated by a U.S.-headquartered and incorporated multinational corporation. After successfully nego- tiating a first contract for the German workers, the union presented the corporation’s board of directors with a demand that they recognize the union as the collective bargaining representative for all workers holding similar rank-and-file jobs worldwide. Without trying to deal with the National Labor Relations Act, which you’ll learn about further on in this book, what are the equitable considerations that, let’s say, a world court should consider in

deciding whether or not the multinational corpo- ration ought to be required to recognize the union globally? Are there any possible advantages to the corporation in voluntarily agreeing to do so?

19. In a U.S. ICE raid on a Midwestern meat packing plant, federal agents round up dozens of illegal aliens employed at the plant. Assuming that an immigration judge has the authority to do, how much weight should he or she give to the following factors in deciding whether to repatriate these illegal workers to their countries of origin:

(1) length of time in the U.S.; (2) children born in the U.S.; (3) clean criminal and credit records; (4) skill level and value to the employer; and (5) membership in a U.S, labor union?

20. In assessing penalties against the employer in ques- tion 19 above, and again assuming that the court has broad discretion whether to impose severe or mild penalties, what weight should a judge give each of the following factors in determining punishment:

(1) availability or lack of American workers to fill the jobs held by the alien workers;

(2) level of compensation and benefits provided to the illegal workers;

(3) the health and safety conditions to which the illegal workers were subjected; and

(4) the handling of payroll deductions or lack of such payroll “formalities”?