KEEPING UP WITH...

Retaliation: the New Standard for Adverse Employment Actions

By Erin O’Driscoll

In Burlington Northern, the Supreme Court recently resolved the split among Circuit Courts, deciding which standard defines acts that “discriminate against” a person under Title VII’s anti-retaliation provision. Burlington Northern & Santa Fe Railway Co. v. White, No. 05-259, 126 S.Ct. 2405 (June 22, 2006).
Affirming judgment in favor of Ms. White, the Court set out the following uniform standard for retaliation cases going forward: the act must be “materially adverse,” significant not trivial, and the act “well might have dissuaded a reasonable worker from making or supporting a charge of discrimination” from an objective standpoint. Further, “materially adverse action” is not confined to actions affecting the workplace, but can be something broader (explicitly adopting the Seventh and D.C. Circuits’ standard and rejecting the Fifth Circuit standard requiring an “ultimate employment action”).
Plaintiff White was the only woman in her department at Burlington Northern and she was reassigned to forklift operator. A few months later, White complained that her foreman sexually harassed her by repeatedly stating that women should not work there. After an investigation, her supervisor was suspended and directed to attend discrimination training.
Thereafter, she was reassigned to perform only standard track laborer duties (a dirtier more physically demanding job) after male employees expressed resentment toward White for having the coveted forklift position. White filed a complaint with the EEOC claiming her reassignment of duties was gender-based discrimination and retaliation for her earlier complaint about her supervisor.
Soon after, White was written up for insubordination after a disagreement at a worksite and suspended indefinitely without pay. She filed another EEOC charge alleging the suspension was retaliatory. Burlington Northern investigated the claim and determined that White was not insubordinate and reinstated her with full back pay after she was off work for 37 days.
White filed suit in Tennessee district court alleging two instances of retaliation: job reassignment and suspension without pay. The jury awarded White $43,500 in compensatory damages.
On appeal the company did not dispute that White was reassigned to a less desirable position. However, Burlington Northern challenged whether the “harm” White experienced was significant enough to be actionable. The company argued, the track laborer and forklift operator positions had the same job classification with the same pay and benefits, and she was reinstated with full back pay.
The high court rejected these arguments and held: the track laborer duties were more arduous and dirtier than the forklift position; and an indefinite suspension without pay (especially at Christmas time) could well deter a person from filing a discrimination complaint, regardless of later reinstatement with back pay.
How will our more conservative Fifth Circuit interpret this broader standard that is anything but a model of clarity? Negative performance evaluations, changes in work schedule, unwanted transfers, and refusals to train, now might be actionable depending on the specific circumstances of the case.

Erin O’Driscoll is an associate at Powers & Frost, L.L.P. in the Employment & Commercial Litigation section.

Arbitration: Notice and Enforcement

By Andrea M. Johnson and Shawn Golden

Employment arbitration remains alive and well in Texas – as long as sufficient notice and acceptance of arbitration are in the employers’ files. The key is proving that employees have some form of notice and have accepted their employer’s arbitration plan – even if only summarized on a signed acknowledgement page. The Supreme Court of Texas so concluded in In Re: Dallas Peterbilt, LTD., L.L.P., 2006 WL 1651694 (Tex. June16, 2006) (per curiam) Essentials of the agreement – the single-page acknowledgement and plaintiff’s continued employment thereafter – overcame any doubts and led the court to mandate arbitration.
Peterbilt came to the Supreme Court of Texas on mandamus, after the trial court and the court of appeals reached a different conclusion. Those courts questioned whether plaintiff actually received a copy of the arbitration plan. In its per curiam decision, however, the supreme court quickly dispatched those concerns, finding that an acknowledgement page along with plaintiff’s continued work were sufficient indices of acceptance and accord.
Plaintiff William Harris commenced his at-will employment with Peterbilt in December 1999, signing a rather bare-bones acknowledgment page that reflected his receipt of a summary of the arbitration plan, his agreement to the alluded-to policy, and his relinquishment of his right to litigate claims covered in the summary. Although the summary’s list of covered claims was broad – including tort, discrimination, harassment, wrongful termination, and statutory violations – that summary was not attached to the acknowledgement and its terms were not spelled out on the simple signature page. Harris then worked continuously at Peterbilt until March 2002, when the company ended his employment. Harris then filed his discrimination lawsuit (for retaliation, defamation, and other torts), seeking avoidance of arbitration (under the Federal Arbitration Act, 9 U.S.C. §§ 1-16) by arguing insufficient notice to him of the program specifics and the lack of his agreement to arbitrate. Plaintiff’s argument prevailed in the trial court and at intermediate appeal but failed in the supreme court: a valid arbitration agreement existed between Peterbilt and Harris, and his claims were within the scope of the agreement.
Evidence of an agreement was key. The supreme court looked at the totality of the communications, including the Harris signature to the clear and unequivocal acknowledgement page which referenced the arbitration program summary, along with his voluntary decision to keep working without protest.
Peterbilt proves the need for language in an acknowledgement that reflects the existence of an arbitration agreement, and suggests that employers are on solid arbitration grounds with a signature page that provides sufficient employee notice of the program, even if every program fact is not detailed on the page signed by the employee. Peterbilt also teaches that the Supreme Court of Texas continues to favor the arbitration process.

Andrea Johnson is a Powers & Frost partner and head of the Employment and Commercial Litigation Section.

Shawn Golden is a Powers & Frost senior associate, whose practice focuses on employment law.

No Legal Duty, Based on Lack of Government Standard:
Who Knew What, and When?

By Al Durrell

A recent asbestos case with likely repercussions holds that employers owe no duty to third-parties (family members) alleging asbestos exposure as a result of employees bringing home asbestos fibers on their work clothes – at least when exposure to the employee occurred before 1972. In Exxon Mobil Corp. v. Altimore, __ S.W.3d __, 2006 WL 2165725, the Fourteenth Court of Appeals declared that Exxon owed no duty largely because there was insufficient evidence about the dangers of “secondary” exposure before that time. During 1972, the government (OSHA) for the first time issued a standard requiring employers to have
employees remove work clothes exposed to asbestos fibers before leaving work, rather than take them home for cleaning.
Plaintiff Louise Altimore, the wife of a lifelong Exxon employee, was diagnosed with mesothelioma, a malignant form of lung cancer. Exxon’s expert testified that mesothelioma has only one proven cause – asbestos exposure. In her lawsuit against Exxon, Altimore claimed she contracted mesothelioma because she inhaled asbestos fibers when she laundered Mr. Altimore’s work clothes.
The Galveston jury agreed and awarded Altimore $992,901 in actual damages and $992,901 in exemplary damages. Due to settlement credits from other defendants, judgment was entered only on the amount of exemplary damages. Exxon appealed on eight different points, including a lack of a legal duty to plaintiff as a “second hand” or “household” exposure claimant.
The appellate court determined that Exxon owed no legal duty to Mrs. Altimore, reversing the trial court. Judgment was entered that Altimore take nothing against Exxon.
The Altimore court noted that whether there was a legal duty hinged on whether “foreseeability” existed. Exxon needed to be (a) knowledgeable enough about potential asbestos risks to family members like Altimore such that, (b) the knowledge created foreseeability that Altimore might be injured. If the duty existed, based on whether the danger was “foreseeable,” Exxon, arguably, should have taken steps to protect Altimore.
Following an in depth evaluation of the history and evidence related to asbestos and its known (and unknown) dangers before 1972, the appellate court found insufficient evidence of foreseeability before 1972. Altimore’s husband worked at Exxon from 1942 to 1977. However, after 1972, he worked in an air conditioned room where he was not exposed to asbestos. The timing of this change in work duties, combined with the timing of the 1972 OSHA regulation, was enough for the court to find that Exxon could not be liable to Altimore. Exxon owing Altimore no legal duty, Exxon was not negligent.

Al Durrell, an associate with Powers & Frost, L.L.P., is a 2000 graduate of South Texas College of Law.

Attorneys Cannot Serve as Advocates When They May be Witnesses on Behalf of Clients

By Sergio V. Leal

In Reliance Capital, Inc., v. G.R. Hmaidan, Inc., No. 14-05-00061-CV, 2006 WL 1389539 (Tex.App.—Houston [14th Dist.] May 18, 2006, no pet.), the Fourteenth Court of Appeals relied on Rule 3.08 of the Texas Disciplinary Rules of Professional Conduct to hold that attorneys cannot serve as advocates when they know or believe they may be called as witnesses to establish essential facts on behalf of their clients.
Reliance Capital, Inc. appealed a summary judgment in favor of G.R. Hmaidan, Inc. and Isam Hmaidan individually (collectively, “Hmaidan”), contending that the trial court erred in allowing the affidavit of Hmaidan’s attorney, Richard Kaplan, to serve as the sole basis for summary judgment.
The issue involved non-payment of three promissory notes currently owned by Reliance. Hmaidan entered an asset purchasing agreement with Bert Wheeler’s Liquor’s Inc. to buy several liquor stores, the notes being used to finance the purchase. G.R. Hmaidan, Inc., doing business as Copperfield Liquor, executed and delivered the first note (“Note A”) on June 6, 2000. Isam Hmaidan, individually, also executed and delivered a note (“Note B”) on June 6, 2000, and G.R. Hmaidan, Inc., doing business as Copperfield Liquor, executed and delivered the third note (“Note C”) on August 8, 2000. All three notes were payable to corporation La Villita del Norte. La Villita transferred the notes to Reliance in September 2000, and Hmaidan began making payments to Reliance. Hmaidan ultimately defaulted on the notes, however.
In the decisive point of error, Reliance argued that the trial court should not have granted summary judgment based solely on Kaplan’s affidavit. Reliance characterized Kaplan’s affidavit as a violation of Rule 3.08 of the Texas Disciplinary Rules of Professional Conduct, a rule that prohibits attorneys from serving as advocates when they know or believe that they may be witnesses necessary to establish an essential fact on behalf of their clients, unless: (1) the testimony relates to an uncontested issue; (2) the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; (3) the testimony relates to the nature and value of legal services rendered in the case; (4) the lawyer is a party to the action and is appearing pro se; or (5) the lawyer has promptly notified opposing counsel that the lawyer expects to testify in the matter and disqualification of the lawyer would work substantial hardship on the client.
The Fourteenth Court agreed with Reliance, concluding that Kaplan violated Rule 3.08 because his testimony was intended to establish privity between Reliance and La Villita, the ultimate issue concerning Note A. The court held that because Kaplan represented Hmaidan in the summary judgment proceeding, his testimony not falling within the exceptions to Rule 3.08, the trial court abused its discretion when it admitted the affidavit. The case was reversed and remanded.

Sergio V. Leal is a law student at Columbia Law School scheduled to graduate in May 2007.

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