Testimony on Discriminatory Sales Lead System Stands

(See dauberttracker.com for a case documents and other details)

Motion Denied

In this case, the Plaintiff Eva A. Ramirez, a Hispanic, sued Defendant Olympic Health Management Systems, Inc. for employment discrimination.  The Defendant sells life insurance policies. While she was employed at the company, she alleges that the Defendant treated her differently than non-Hispanic employees.  She also alleged that after she complained of racist behavior at the company, she was constructively discharged.

One of the Plaintiff's claims was that because of her race she was never given sales leads in spite of being one of the top sales executives. The company had a policy that award sales leads to employees with the most sales.  She also contends that the company hurt her sales potential by only giving her Hispanic leads.

To help calculate the economic damages attributed to Plaintiff's alleged lost sales leads, Plaintiff retained Dr. Lori A. Geddes, Ph.D., an economist.   Dr. Geddes used a statistical techniques to determine the number of sales leads (which would turn into sales at some point) that Ms. rameriez should have recieved if the company was acting in a race neutral manner.  Dr. Geddes performed a sales-and-lead analysis after utilizing econometric statistical analysis to calculate total lost leads.  She applied correlation and standard regression analysis to demonstrate that the majority of Plaintiff's leads were from customers with Hispanic sounding surnames. 

The Defendants filed a Daubert motion to exclude the testimony of Dr. Geddes on the grounds that she was not qualified to serve as an expert, she did base her report upon any facts and neglected to use sound methodology. It was also alleged that her testimony would not assist the trier of fact and would prejudice the Defendant's case. The Court noted that Dr. Geddes was qualified to testify as an expert in this case and that her testimony was both reliable as well as relevant to the case. 

The motion to exclude was denied.

Complaint

Plaintiff's Response to Daubert

Court Order on Daubert

Case Details:

 Ramirez vs. Olympic Health Mgmt. Sys.

Washington, Eastern District

NO. CV-07-3044-EFS

EDWARD F. SHEA, United States District Judge.

Date of Decision: 4/17/2009

Valuing Employee Stock Options

Best book, so far written on the valuation of employee stock options. The text is dedicated to bridging the gap between the academic literature and the practical implemation issues that arise in ESO valuations. There is also demo software that can be used to value ESO.

Valuing Employee Stock Options, Johnathan Mun, Wiley Finance, 2004.

Relative v. Absolute Risk employment discrimination cases

bbThe recent foreclosures in the housing market provides a very interesting example of relative versus absolute risk. The AP recently reported that 'Foreclosure filings up 121 percent from last year'. Dig a little further and it is clear that the AP is discussing relative and not absolute risk.

The story goes on and says that this year 1 out of every 171 homes is being foreclosed. This foreclosure risk number equates to approximately 0.005 or 0.5% of homes. Last year approximately 1 in 342 homes were being foreclosed or about 0.0025 or 0.25%.

Relatively speaking there was a big spike but in absolute terms, not many homes were in foreclosure.


In employment cases where statistical analysis comes into play it is also important to keep it in mind the difference between relative and absolute risk.

For instance in a wrongful termination case where there are allegations that the defendant/employer discriminated against older workers, statistical experts will typical evaluate the chance probability that a given employer would have been terminated had the employer been using a age neutral employee selection process. If the chance probability is small then it is viewed as suggestive of a discriminatory selection process.

The chance probability in an employment case that is typically a relative risk.

In other words, the chance probability measures the likelihood that one group, i.e. older workers, would have been terminated versus the likelihood that another group of workers, i.e. younger workers, would have been terminated if all factors were equal.

Accordingly, just like the case of foreclosures above, the actual number of individuals 'at risk' of being selected at any given time may be quite small. For instance, the relative risk may say that the older workers are 75% less likely to be promoted as younger workers. However in practice this relative risk of promotion may translate into an actual (absolute) gap of only 1 or 2 persons (out of many hundreds) that arguably should have been promoted. In this type of situation, a claim of class wide discrimination against older workers would be a little dubiuos to say the least.

Drive-by Daubert Ruling

Judge throws out employment discrimination evidence on the way to a summary judgment for the plaintiffs...

In the last few years, the idea of stereo typing and racial profiling has really gained traction in employment discrimination cases. Prof. Bielby, a now well known sociologist from the University of Penn, has done a lot of research that suggest that race and gender stereotyping is unavoidable and happens all the time in the workplace.

In this case gender based employment discrimination case (CHADWICK v. WELLPOINT INC et al Federal Court-Maine), the plaintiffs alleged that the the employer had a policy of stereotyping female employees. In particular, the plaintiff was a mother of four who claims that she was discriminated against and should have received a job promotion that went to another employee.

The plaintiffs engaged a qualified sociologist with a Ph.D. from Cornell, who had studied and wrote her dissertation on the topic of gender stereotyping. She testified that some of the statements that were made by management were consistent with gender stereotyping behavior within the work place.

The judge, in a drive-by Daubert, disregarded her testimony stating that it would not help the trier of fact in this situation. He goes on to say in the court's order:

The plaintiff would like to have her expert testify about the extent of
sex based stereotyping in the United States and its workplaces, the meaning of certain words (for example, that “Bless you” in the context in which Miller
said it shows sexual stereotyping; likewise for the other supervisor’s
comment about child discipline strategy), and that it is very unlikely that a
man would have been told that he had too much on his plate because of school
and children. For the reasons I describe below, I conclude that the expert’s
testimony would not be helpful to a fact finder on the issues that are relevant to this decision....

While the judge did not make any assessment her qualifications or the underlying methodology she used in the report, he says:

The proposed expert testimony about the prevalence of sex-based stereotypes
in America is no substitute for actual evidence (direct or circumstantial)
about these decision makers and their beliefs and behaviors. The expert,
whatever her professional credentials, is not competent to testify about what these supervisors meant, consciously or unconsciously, in using certain words.

well01.pdf
well02.pdf

Defending age discrimination suits just got tougher

In a 7-1 ruling, the Court said that when older workers are disproportionately affected by an employment decision, the employer bears the burden of explaining whether there was a reasonable explanation other than age for the company's action.


No. 06-1505
Title:
Clifford B. Meacham, et al., Petitioners
v.
Knolls Atomic Power Laboratory, aka KAPL, Inc., et al

Nuts and bolts of a wage and hour class settlement

Texas Lawyer Newspaper reports that the plaintiffs in a donning and doffing case (Vogt v. Texas Instruments Inc., No. 3:05-cv-02244 ) recovered $355,000 in allegedly unpaid overtime.

The newspaper's report is somewhat true....

According to the COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE filed with the court, the 71 plaintiffs actually recovered about $65,000, or about $650 each after taxes, in back wages.

The plaintiff's attorneys recovered $290,000 in attorney and court fees.


FYI, in the case the lead plaintiff Wilford Vogt claimed that Texas Instruments failed to pay him and other similarly situated employees overtime wages from November 2002 through 2005, alleging that they were not compensated for time spent changing in — and out of — protective gear. This practice allegedly took 32 to 42 minutes each shift and was necessary before entering — and after leaving — designated “clean” manufacturing rooms.

The plaintiffs said that they were only compensated for 11.5 hours of work on 12-hour shifts. Texas Instruments contended that it complies with the law, noting its generous pay policies, which reportedly exceed legal requirements.
TI.pdf

Low economic loss occupations

Plaintiffs who work in occupations with fast growth are more likely to obtain jobs after an employment termination. All else equal, economic damages will be lower in these occupations.

The Occupational Information Network (O*NET) identifies the occupations that are growing "much faster than average" across all industries and predicts which occupations will grow the most.

Customer Service Representatives (1,158,000)
Registered Nurses (1,001,000)
Personal and Home Care Aides (519,000)
Home Health Aides (454,000)
Computer Software Engineers, Applications (300,000)
Counter and Rental Clerks (291,000)
Computer Systems Analysts (280,000)
Management Analysts (264,000)
Medical Assistants (199,000)
Network Systems and Data Communications Analysts (193,000)
Amusement and Recreation Attendants (182,000)
Pharmacy Technicians (178,000)
Bill and Account Collectors (165,000)
Securities, Commodities, and Financial Services Sales Agents (161,000)
Network and Computer Systems Administrators (154,000)
Computer Software Engineers, Systems Software (150,000)
Dental Assistants (130,000)
Fitness Trainers and Aerobics Instructors (107,000)
Pharmacists (95,000)
Personal Financial Advisors (88,000)
Financial Analysts (87,000)
Paralegals and Legal Assistants (84,000)
Dental Hygienists (82,000)
Physical Therapists (68,000)
Mental Health and Substance Abuse Social Workers

Notes: The list below reflects the top 25 fastest-growing occupations followed by the projected need for each occupation during the years 2006-2016. Note, these are the occupations with the highest projected need among those growing much faster than average (not by sheer volume). So, for example, while there is a projected need for 802,000 Janitors and Cleaners during 2006-2016, this occupation is not projected to grow as quickly as the occupations on the list below. Nearly half (11) of the occupations in the list arre from the health care industry. In addition, five occupations each come from the financial services and information technology industries, while the hospitality and retail industries are each represented twice on the list. Two occupations on the list fell under more than one industry: Customer Service Representatives, which top the list, fall under both the financial services and retail industries. Counter and Retail Clerks (#6) are listed under both the hospitality and retail industries.

How an economic expert deposition should go...

In this economic expert deposition, the defendants are deposing a very seasoned economist in an age discrimination case. Overall the economist, Dr. Ken McCoin does a superb job at the deposition. Dr. McCoin is candid and open in his responses. When there are obvious things in which the economist should 'give in' on he does...

Part 1 Part 2

The depo is a good read for attorneys looking for good questions on economic damages calculations involving back and front pay. There are also good discussions on interest rates and other assumptions used in front pay and back pay calculations.

Side note: The defense attorney and the economist have a past professional history; they have worked together. Makes the reading very interesting.

Employment practices are getting smaller

Looks like the employment practices in big firms are getting smaller....and going out on their own. This article, from the Austin Business Journal, discusses a recent move by the last portion of Vand E's employment section in Austin, Texas.
employmentchanges.pdf

Duty to find employment or comparable employment after employment termination?

What is the standard? Here are two attorneys with differing opinions:

Concerning a workers compensation claim:...In addition, you should start keeping a daily log, in a spiral bound notebook, of all the job searches you undercut after you have been fired. This is important because after you are fired, you have a duty to "mitigate" your damages. This means that you have a duty to go and look for other work. If you do not, you may be precluded from obtaining recovery of money damages for lost wages. This does not mean that you have to be successful, but you have to show that you have been diligent in seeking other employment.

In ADA case: Back Pay
This is the most common form of relief.
Includes the value of wages, salary, and fringe benefits the claimant would have received during the period of discrimination from the date of termination/failure to promote to the date of trial or settlement.
You have a duty to mitigate these damages by taking reasonable efforts to find comparable employment after you have been terminated.

Forced to exercise...

excercise stock options, that is. In short, are hypotheical losses from an early employee stock exercise an economic damage? There is at least one case, that says yes. Anyone know of any more cases?


See:

Stock Inflates Damage Award

The Tenth Circuit has affirmed a case where the measure of damages included the appreciation of stock, after the employee was forced to prematurely exercise stock options. Greene v. Safeway Stores, Inc. , Nos. 99-1215, 99-1228, 2000 WL 504738, at *1 (10th Cir. Apr 28, 2000).


At the time of Greene's termination, he had 250,000 fully vested Safeway stock options. The exercise price was $1 per share. Greene also had roughly 250,000 more options that had not yet vested. The subscription agreement required plaintiff to exercise his vested options within ninety-five days of his separation from Safeway. Had Greene not exercised the vested options within ninety-five days, they would have expired.

Greene exercised all of his vested opinions on December 21, 1993 and acquired Safeway stock with a market value in excess of $3,000,000. Greene's gain on the transaction was roughly $2,160,000. Greene immediately incurred a tax liability of roughly $850,000.
Greene testified at trial that, had he not been terminated, he would have refrained from exercising his stock options until the date he planned to retire. Greene also testified he sold all of the shares he acquired within a few months of exercising them because he needed to pay the Internal Revenue Service and because he was without income to cover his daily living expenses.

During the trial, Greene had an accountant testify that, had Greene exercised his vested options on January 31, 1996, instead of December 21, 1993, he would have reaped the benefit of increases in the market value price of Safeway stock for an incremental gain in excess of $3,000,000. The accountant also testified that, had Greene retired from Safeway in November 1995, as he had planned, options that had not yet vested at the time of Greene's termination would have vested and could have been exercised to purchase additional Safeway stock for a gain of more than $1,000,000.

The appellate court agreed that stock appreciation could be included in the damage award.

This decision demonstrates that substantially more than lost wages can easily be at risk should an employee wrongfully terminate an employee with options.

Backdoor to Duty to mitigate damages in employment termination case

In a whistleblower case over Pfizer Inc.’s alleged illegal marketing of human growth hormone Genotropin, a judge has denied Pfizer Inc.’s bid to force a former executive to turn over information as to whether he made adequate efforts to look for work after he was fired.

The defense argued that the plaintiff's sizable assets created a situation where the plaintiff did not have to work. Accordingly the defense argued that because of his assets, he had failed to mitigate his damages by finding employment. Pfizer's attorney wanted the court to order the plaintiff to turn over financial information.

The court denied the motion

See:

Excerpt From, Ex-Exec Can Shield Info In Pfizer Whistleblower Spat:

The plaintiff's economic expert has calculated the plaintiff's economic losses for the period after his termination at over $9 million. In an effort to determine whether Rost fulfilled his duty to mitigate his damages by making adequate efforts to look for work after he was fired, Pfizer had sought documents and deposition testimony that would reveal Rost's assets during the period after he left Pfizer.

The company said the existence of significant assets could explain Rost's "lackadaisical attitude toward finding meaningful employment.

Catching up after a job loss: The literature

What does the literature say about earnings losses after a job loss:

Generally, the evidence supports the conclusion that, on average, the earnings loss for an individual who losses a job will diminish slightly in time but the losses will last longer than 5 years.

(from listserv)

Most studies of displaced workers have found losses of roughly 5 to 25 percent (or, conversely, replacement rates of 75 to 95 percent).

At the lowend of the range of findings, David Shapiro and Steven Sandell ( The ReducedPay of Older Job Losers in The Problem Isn t Age: Workers and OlderAmericans, Praeger, 1983) found wage losses of about 4 percent.

At the high end of the range offindings, Louis Jacobsen, Robert LaLonde, and Daniel Sullivan ( EarningsLosses of Displaced Workers , AER, 1993) found earnings losses averaging about 25 percent.

Studies by Christopher Ruhm ( Are Workers Permanently Scarred by JobDisplacement? , AER, 1991) and Ann Huff Stevens ( Long Term Effects of JobDisplacement: Evidence from the Panel Study of Income Dynamics , NBERWorking Paper 5343, 1995) found earnings losses in the neighborhood of 15 percent.

Using PSID data, Stevens found that earnings lossesaveraged 6 to 12 percent seven plus years after displacement compared to about 15 percent one year after displacement.

****

Do Terminated Employees Catch Up? Evidence from the Displaced Workers Survey, David Macpherson and Michael Piette, Journal of Forensic Economics 16 (2), 2003, pp. 185-199. found that wage losses ranging from 10% to 40%.

- In addition, the authors found that more tenured persons and older persons tended to have larger wage losses

How far do economic damages go on in employment termination cases?

Economic damages in employment discrimination cases are different from damages in personal injury cases. In a nutshell, the economic damage calculation in employment termination cases needs to take into account that the terminated plaintiff may, and in all likelihood will, obtain alternative employment.

With re-employment income in mind, there are two components that are unique to employment termination cases. One component is the expected amount of time that the plaintiff would have been expected to work at the defendant had they not been wrongly terminated. The other component is the amount of time that it takes before the terminated individual is able to earn wages at their replacement employment that exceed the amount that they would have been expected to earn had they not been terminated.

These two factors generally determine how far economic damages will go into the future. Here are a couple of studies that have looked at these issues.

Duration of Employment, Robert Trout, http://nafe.net/JFE/j16_2_05.pdf and http://nafe.net/JFE/j08_2_06.pdf

Do Terminated Employees Catch Up? Evidence from the Displaced Workers Survey, David Macpherson and Michael Piette, Journal of Forensic Economics 16 (2), 2003, pp. 185-199.

Did you know?

In California, by law, a worker can not be prevented from discussing wages with co-workers?

Labor Code § 232 provides:
No employer may do any of the following:
(a) Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.
(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.
(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.

What do EEO-1 reports tell you about discrimination in a hiring case?

Probably not much.

EEO-1 reports from the EEOC provide a breakdown of how many people of different racial, gender, and age groupings are hired into different job positions within a company. The detailed reports, which most times the public will not have access to, provides a breakdown by employer. The more aggregated reports, which the public generally has access to, provides a breakdown at a higher level, such as at the zip code level or higher, by industry type. So ultimately the EEO-1 reports present the composition of the employer at a given point in time, usually a year.

In contrast, in a hiring case the plaintiffs are usually alleging that the defendant failed to hire
them because of their age, race, gender or other characteristics. In these types of cases, statistical analyses that compare the individual employer’s hiring numbers to EEO-1 data are common.

However, the EEO-1 report generally makes a poor comparison.

Instead of focusing only on the employer/defendant’s hiring decisions, a firm’s EEO-1 report reflects the composition of the workforce which is the result of hiring decisions over a much longer period than are issue in the typical hiring discrimination case. In short, the composition of an employer’s workforce is not necessarily representative of the composition of the hires in any given year, or the composition of the applicants available for hire for any given year.

For example, consider a hiring case where there are allegations of age discrimination. In this example, the employer starts with a workforce of 200 employees that are under the age of 40. and zero that are 40 years of age or older. For this firm, it’s workforce composition is 0% 40 or over.

If during the following year the firm hires 20 employees and they all 40 years of age or over, the firm’s composition of older worker hires is 100%. However, the overall composition of the workforce is now just 9.09% that is 40 years of age or older. That is 20 workers who are over the age of 40 out of a total of 220 employees.

The workforce composition of 9.09% of older workers does not adequately represent that the firm’s composition of hires of 100% older workers in that year. Therefore, in this setting, the composition of the workforce is not an appropriate measure to analyze the hiring decisions in any given year.

New Wage and Hour litigation against Pilgrim's Pride

Michael Hassen, of Jeffer Mangels Butler & Marmaro LLP , a defense firm in California reports:

Arkansas court conditionally certifies, FLSA Class Action alleging failure to compensate workers for time spent donning, doffing and cleaning safety and sanitary gear ...

In re Pilgrim’s Pride Fair Labor Standards Act Litig., ___ F.Supp.2d ___ (W.D. Ark. March 13, 2008) [Slip Opn., at 1 and n.1]. The class action covered workers at 21 plants located in 10 states, and covered “tasks on the chicken processing line, such as slaughtering, cutting, deboning, cleaning, and packaging.”....

Best employment interrogatory questions

Economic damages in employment termination cases

Getting information on the jobs that the individual worked at and applied for after the defendant terminated them; helps the labor economist work up the damages and determine what types of jobs may have been available to the plaintiff. In addition, the information is used to assess the plaintiffs attempts to pursue available job opportunities i.e. mitigate their damages.

Here are some questions that are helpful in getting that information

INTERROGATORY NO.1

Identify each employer for whom you worked with since last employed by the defendant

INTERROGATORY NO.2

If you are no longer employer by an employer identified in response to interrogatory no.1, state when the employment ended and why

INTERROGATORY No.3

State the job duties, wages and responsibilities that you had at each employer identified in Interrogatory No.1

INTERROGATORY No. 4

Describe and state how much earned from any self-employment since leaving the defendant

INTERROGATORY No.5

Identify anyone with whom you have sought employment since you were last employed by the defendant

INTERROGATORY No.6

State whether you rejected or declined in accepting any offer of employment since last employed with the defendant.

Once the information is received, we should check (at deposition or by interview):

* If the list of jobs that the plaintiff provided includes all the jobs or is it just a representative job list? This is important because now the list can be used to determine how many jobs the person applied for and if the number of jobs searched for are consistent with the number of jobs a typical person will apply for when they are looking for a job)

* For any jobs that were turned down make sure that the plaintiff has listed that reason and the wage that would have been received by the person

* List and make sure that no other jobs have been received since the interrogatory answers

* Get the plaintiff to list out all programs, training, and capabilities that they possess. For example, if the plaintiff is a computer support person, get the full list of Microsoft certifications, list of software that the person can support (for example the windows products line), details on the networking capabilities they have (for example can they set networks up (if so, what type LINUX, Novell, etc.) or do they focus on making sure the computers talk to the network) also make sure that questions are ask to see what level or types of classes the person is currently pursuing.

Bayesian v. Frequenist analysis of employment discrimination

In the article 'Hierarchical Models for Employment Decisions', Joseph Kadane and George Woodworth (Journal of Business and Economic Statistics, April 2004, Vol 22. No.2) advocate the use of Bayesian analysis to assist the trier of facts in the determining if the employer had discriminated against the protected groups of workers.

Conceptually, the Bayesian statistical analysis approach turns the traditional approach to analyzing statistical evidence of discrimination upside down. The traditional approach, or what statisticians refer to as the frequentist approach, begins by assuming that no discrimination has occurred and the employment decisions were made in a age, race, or gender neutral manner. From that point, the data is used to determine the likelihood that a age, race, or gender neutral employment process would have generated the employment outcomes that are at issue in the lawsuit.

In short, the frequenist approach ask:

'Assuming that the defendant is utilizing a age, gender, or race neutral employment process, what is the probability that the unbiased employment process could have generated the observed employer's employment decisions?'


If there is a very small probability that a neutral employment process would have generated the outcome then it may be inferred that discrimination has occurred.

The Bayesian approach turns the approach around and upside down The Bayesian approach ask the question:

'Given that we observe the defendant's employment decision outcomes, what is the likelihood that the employment decision was age, race or gender neutral?'

If there is a small probability that the data is consistent with a neutral employment process, then it may be inferred that some type of discrimination has occurred.

What are the pros and cons of each approach? To be discussed....!

Wage and hour developments: 1 for the plaintiff - 1 for the defense

(As reported by Jackson Lewis employment section)

Treble Damages Now Mandated for Violation of Massachusetts Wage and Hour Laws
On April 14, 2008, the treble damages bill (Senate Bill 1059) became law. This new law makes awards of triple damages mandatory for prevailing plaintiffs in civil actions brought pursuant to the Massachusetts Wage and Hour laws. Full Story >

California Legislature Seeks to Ease Penalties for Meal and Rest Period Violations
In the year since the California Supreme Court decided Murphy v. Kenneth Cole Productions, employers have been hit with a surge of class actions for violations of California's meal and rest period laws. Full Story >

Discrimination damages vs.Retaliation damages

Is the defendant's economist failure to mitigate analysis under-estimating the plaintiff's losses in the employment termination case?

In employment termination cases one tactic of defense attorneys is to use labor economists and vocational experts to assess the plaintiffs ability to obtain replacement employment that pays as much or more than they recieved while employed with the defendant.

Typically, the analysis reveals that the damages for the indiviual plaintiff are cut off immediately or relatively soon after the date of trial. They will typically not go on until retirement.

In case where the plaintiff is claiming retaliation by the employer, the damage calculation by the defendant's economist may under estimate the damages. In these types of cases, the defendant's economist needs to examine not only the jobs that they can get but they also need to explore the jobs that the plaintiff may have been able to get had they not been retaliated against. In some instances, the allegations are that the defendant put the word out that the plaintiff is not a good worker and caused them to lose out on job opportunities.

As a consequence, one approriate measure of the damages may by the difference between the jobs that were foregone (as a result of the defendants actions) and current employment. These types of damages may be estimated to go further into the future.

Economic damages in wrongful termination cases

Damages in wrongful termination (WT) cases are different from those arising in personal injury and wrongful death cases. Generally, there a number of questions that arise in WT cases that are simply not present in PI and WD cases. In particular,

Has the plaintiff following the termination conducted an adequate job search for replacement employment?

- What did he/she do to search for a job?
- What does the average person do?
- Does it look like the plaintiff has stopped searching for replacement employment
- Becoming self employed may suggest that the plaintiff expects that self employment will be as lucrative as previous job position?

Are there openings in which he is qualified for?

What does labor market data such as BLS show? Monster?

What does the labor data shows about job openings in related occupational openings?

Are the claims for back pay and front pay supportable?

In terms of back pay or past damages, are there reliable estimates of loss? Are there tax returns? Does self employment picture suggest a higher income opportunities?

What does industry data say about unemployment time and economic damages?

Economist Daubert Watch: Sept. 24, 2007, Part I

Objection to defendant's statistical report is not enough to kick report and defeat summary judgement

(see dauberttracker.com for more details)

In Contreras vs. Chertoff, U.S. District Court, D.C., this class action discrimination case was before the district court on defendant's renewed motion for summary judgment. The plaintiffs sought to represent a class of current and former Customs Service agents alleging discrimination on the basis of national origin in violation of Title VII of the Civil Rights Act of 1964.

Defendant submitted an extensive expert analysis of the discipline files to address the question of whether or not Hispanic customs agents received harsher disciplinary treatment than similarly situated white customs agents. The defendant's concluded that because no disciplined Hispanic and white customs agents were similarly situated, a proper statistical comparison was impossible. Furthermore, even using alternative statistical analysis, there was no evidence indicating discrimination against Hispanic agents in the disciplinary context.

Plaintiffs apparently discovered nothing among these thousands of documents worth presenting to the court to substantiate their claims of discrimination. Instead, their opposition to the renewed motion for summary judgment only complained again that defendant's analysis was inadequate. The plaintiffs' challenged the reliability of the databases relied upon by defendant's expert and the expert's methodology in analyzing the data.

Plaintiffs did not present statistical evidence supporting their claims of discrimination. Instead, they offered studies of Customs employment practices, anecdotal evidence from the named plaintiffs, an expert disputing the defendant's analysis, and the testimony of an expert in management and equal opportunity practices.

Plaintiffs' responses to defendant's motions for summary judgment were insufficient to defeat defendant's renewed motion.

Court says 'short shift' bonus violates CA OT rules

Los Angeles Superior Court Judge William MacLaughlin has ruled that Huntington Memorial Hospital violated California Labor Code § 510 by paying its nurses and other employees a lower, hourly, rate-of-pay when they worked overtime shifts of 10 hours or more in a day

Court, like in many other cases, says that the overtimeshift bonus must be rolled into the regular rate in calculating OT losses.

'Grossing up' the plaintiffs damages in employment cases, is it right?

From a legal standpoint maybe not, to some economists the answer is yes.

For some economists, whether or not a state allows consideration of income tax adjustments to arrive at earnings losses, the gross-up for excess taxes in employment lawsuits is a separate and necesary calculation. Recent IRS and court rulings cause a prevailing plaintiff not to be made whole if they win.

That is because the lump-sum award will be taxed at a relatively higher rate than would have been paid on the earnings year-by-year. Think: Of winning the taxes on winning the lottery

Several articles address the issue and present a simple (and mathematically correct) procedure & formula for calculing the gross-up.

Tyler J. Bowles, and W. Cris Lewis, “Taxation of Damage Awards: Current Law and Implications,” Litigation Economic Digest, Fall 1996, Volume 2, Number 1, pp. 73-77

Ben-Zion, Barry, "Neutralizing the Adverse Tax Consequences of a Lump-Sum Award in Employment Cases," Journal of Forensic Economics 13(3), 2000, pp. 233-244;

When attorneys become expert witnesses

Attorneys in the Wal-Mart break-time class action appeared in a Philadelphia Common Pleas courtroom Tuesday to debate the plaintiffs' request for counsel fees totaling more than $46 million. Among the fees-related expert witnesses called to the stand by the retail giant during the hearing was Ralph Wellington, chairman of Schnader Harrison Segal & Lewis. Wellington who oversees his firm's billing structure, was Wal-Mart's expert on the reasonableness of class counsel's rates.

Read the entire article here: http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1172656993341

What would Daubert say about those damages? 2.20.2007

From a popular listserv:

In the calculation of lost fringe benefits in a wrongful termination case I included the cost of medical insurance that the employer had been providing to the employee. The company’s medical plan covered the spouse of the employee so the cost of the benefit was significant. The attorney taking my deposition asked that if the plaintiff was able to secure medical benefits in a new job should those be taken into consideration as an offset to the loss of medical benefits at his prior place of employment and I said that yes I would have to take that into consideration but that to my knowledge he was not covered or was not eligible for coverage in any of the jobs he has had since his termination.

The plaintiff’s wife is self employed and on their income tax returns there is a Schedule C which shows her earnings. The income tax return also shows that she paid $6,000 in self employed health insurance. The attorneys question was that:

if the wife was paying for heath insurance and if the husband (plaintiff) was covered under that insurance shouldn’t that be treated as deduction against the loss of medical benefits from his prior employer (defendant)?

Also if the plaintiff was eligible for health insurance at another employer but did not elect to be covered because he could not afford the employee part of the cost should the defendant be given a credit for the medical insurance that was available but not elected by the plaintiff?

Thoughts?

Non-compete agreements do not hold water...

at least in CA.

Calif. Court Finds Employees Can't Be Forced to Sign Noncompetition Agreements
from The Associated Press 9-01-2006

Companies operating in California cannot make employees sign contracts promising not to work for a competitor, a state appellate court ruled.

Wednesday's decision in Raymond Edwards II v. Arthur Andersen LLP, No. B178246, rejects 20 years of federal case law that had held the non-competition agreements were legal....

Read more: http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1157030381442

Blow to wage and hour cases?

As reported on Wisconsin Personal Injury Lawyer
.Wisconsin Personal Injury Lawyer blog:


Wisconsin's Court of Appeals recently dealt a blow to class actions in a decision involving Wal-Mart and its alleged failure to pay employees appropriately. The appeals court ruled that a class action, in part because of the plaintiffs plan to use statistical and survey evidence, made the class unmanageable.

In re Wal-Mart Employee
Litigation:

Kathleen Hermanson, Ardyce
Weichbrod and George Otradovec,

Plaintiffs-Appellants,

v.

Wal-Mart Stores, Inc., a
Delaware corporation,

Defendant-Respondent.

click here to read the opinion

New EEO-1 forms may affect wrongful termination damage calculations

EEOC Overhauls EEO-1 Report

The U.S. Equal Employment Opportunity Commission (EEOC) has implemented the first major changes to the the EEO-1 Report in four decades.

The EEO-1 Report provides the federal government with workforce profiles by ethnicity, race, and gender, divided into job categories. The new format will be required for the first time for the 2007 survey, which is due by September 30, 2007. The agency expects employers to use the current format for their 2006 EEO-1 submissions.

"The new EEO-1 Report recognizes the shifting demographics of today's workplace," says EEOC Chair Cari M. Dominguez.. "The revised report will also better enable the commission to accurately monitor the advancement of women and people of color into the upper ranks of management."

The new EEO-1 Report's race and ethnic categories include:
Adding a new category titled "Two or more races, not Hispanic or Latino";
Deleting the "Asian and Pacific Islanders" category;
Adding a new category titled "Asians, not Hispanic or Latino";
Adding a new category titled "Native Hawaiian or Other Pacific Islander, not Hispanic or Latino";
Extending the EEO-1 data collection by race and ethnicity to the State of Hawaii ; and

Strongly endorsing employee self-identification of race and ethnicity, as opposed to visual identification by employers.

The new EEO-1 Report's job categories include:
Dividing "Officials and Managers" into two levels based on responsibility and influence within the organization: "Executive/Senior Level Officials and Managers" and "First/Mid-Level Official and Managers"; and
Moving non-managerial business and financial occupations from the "Officials and Managers" category to the "Professionals" category.

EEO-1 Reports must be filed annually by employers with 100 or more employees, or employers with federal government contracts of $50,000 or more and 50 or more employees.
The new report format, instructions, and explanation can be found on the EEOC's website at www.eeoc.gov/eeo1/index.html .

The importance of economic damage experts in employment cases

In far too many cases, defense attorneys underestimate the importance of economic damage experts in employment discrimination cases. Here is an example posted on Ross' Employment Law Blog, where the defense's failure to show that there was comparable work available for the plaintiff cost them a cool $1 million.

Background:

Bruce Hope, a gay man, won a jury verdict for $914,104 in economic damages plus $1,000,000 in non-economic damages. On November 30 the California Court of Appeal affirmed. Hope v. California Youth Authority (California Ct App 11/30/2005).

Hope worked as a cook in one of California's youth correctional facilities. He claimed that he was harassed - because he was gay - over a period of about five years. The jury agreed. The employer appealed, arguing that the verdict was not supported by the evidence.

The economic damage award:

Economic damages - $914,104.

The jury implicitly found that Hope would have worked for the state until retirement age but for the harassment.

Although Hope was HIV positive, he had no obligation to prove that he had a normal life expectancy. He didn't have AIDS, and was responding well to medication.

Although the employer argued that Hope did not prove he could never work again, it was the employer's burden to prove what he would have earned.

The court's opinion:

At trial, there were “dueling” experts testifying about whether Hope could work
again. Hope himself made clear that he wanted to go back to work. But CYA offered no evidence as to the amount that Hope might have earned through reasonable effort.

Nor did CYA make any showing about the availability of comparable or substantially similar
employment. For these reasons, CYA’s mitigation argument fails.

Are damages in employment discrimination cases going to get more complicated?

Supreme Court gets 42 USC 1981 case


Interesting case suggests that damages in employment cases may get more complicated. If the Supreme Court upholds the 9th Circuit's decision there may be an increase in the number of cases involving businesses; esp. closely held businesses that are owned and operated by minorities. Economic damages in these types of cases would basically involve a valuation of a business or loss profits which all else equal tends to be more involved than lost wage calculations.

Read More....(see below)

Supreme Court gets 42 USC 1981 case By Ross Runkel on Discrimination - Race Section 1981 prohibits race discrimination in the formation, termination, and performance of contracts.
Can a person who is not a contracting party recover under 1981?

That's what the US Supreme Court will decide in Domino's Pizza v. McDonald, Docket No. 04-593, certiorari granted April 25, 2005. The allegations were: McDonald, an African American, was the president and main shareholder of JWM, a corporation. JWM entered into contracts with Domino's. Domino's made it difficult or impossible for JWM to perform, propelling JWM into bankruptcy. JWM and Domino's settled. McDonald sued Domino's under Section 1981 claiming financial and emotional loss. He claimed that the downfall of JWM was caused by racial discrimination on the part of Domino's. The allegation have not been proved. The trial court granted summary judgment for the Domino's.

The 9th Circuit reversed, saying that McDonald, even though he personally had no contractual relationship with Domino's, had standing to sue Domino's for alleged injuries that he personally suffered. The 9th Circuit's decision (07/18/2004) was not reported. See 2004 WL 1380296. The 9th Circuit relied on its earlier case Gomez v. Alexian Bros. Hosp., 698 F.2d 1019 (9th Cir 1983). The Circuits are split on this theory. See Guides Ltd v. Yarmouth Group, 295 F.3d 1065 (10th Cir 2002).