Wednesday, April 30, 2008

Statute prohibiting lawsuits against gun industry is constitutional

New York City sued gun manufacturers (and sellers) on the theory that the gun makers were selling guns that they knew would end up on the black market. The problem for New York City was the Congress passed a law in 2005 requiring the courts to dismiss lawsuits like this. That law contained an exception, however, allowing these cases to proceed if there was a separate basis in state or federal law to sue the gun manufacturers. The City argued that the New York State law against public nuisances allowed it to proceed with the case. No dice, says the Second Circuit.

The case is City of New York v. Beretta USA, Corp., decided on April 30. New York City's case against the gun industry was chugging along when Congress decided to nip these cases in the bud, enacting the Protection of Lawful Commerce in Arms Act. That law requires the courts to dismiss any

civil action or proceeding . . . brought by any person against a manufacturer or seller of a [firearm distributed in interstate or foreign commerce] . . . for damages, punitive damages, injunctive or declaratory relief, abatement, restitution, fines, or penalties, or other relief, resulting from the criminal or unlawful misuse of a [firearm distributed in interstate or foreign commerce] by the person or a third party.

For some reason, that law contains an exception which allows the lawsuits to proceed if the case is premised on the violation of state law. In this instance, New York City invoked the public nuisance law and also said the PLCAA law was unconstitutional. But, since Congress has authority to regulate the kind of interstate commerce alleged here (gun sales) and it also has authority to wipe out pending lawsuits by statute, the law is constitutional. The latter question concerned whether Congress dictated the outcome of pending cases (illegal) or simply changed the applicable law (legal). The Court of Appeals says the law simply changes the law, and for that reason the law does not violate the separation of powers by intruding on judicial authority.

The other question here is whether there is a separate basis in State law for the City to maintain this suit. The City relied on the state's criminal nuisance law.

A person is guilty of criminal nuisance in the second degree when:

1. By conduct either unlawful in itself or unreasonable under all the circumstances, he knowingly or recklessly creates or maintains a condition which endangers the safety or health of a considerable number of persons; or

2. He knowingly conducts or maintains any premises, place or resort where persons gather for purposes of engaging in unlawful conduct.

Whether the City may invoke the criminal nuisance law depends on whether that law is "applicable to the sale or marketing of [firearms].” If the nuisance law can be interpreted to cover this activity, then the City can maintain the suit under the 2005 law intended to protect the gun manufacturers. Since the nuisance law has never been interpreted to cover gun sales and it generally applies to everyone, not just gun manufacturers, the City has an uphill battle here. In its exhaustive statutory interpretation of the 2005 law, the Court of Appeals also finds that Congress intended that the loophole allowing predicate State or Federal law claims against the gun industry only allows these separate claims if the State or Federal law regulates the firearms industry. Since the New York nuisance law does not fit within this exception, the case is dismissed pursuant to an act of Congress.

For the lawyers out there who want the Second Circuit's precise holding, here it is:

In sum, we hold that the exception created by [PLCAA] (1) does not encompass New York Penal Law § 240.45; (2) does encompass statutes (a) that expressly regulate firearms, or (b) that courts have applied to the sale and marketing of firearms; and (3) does encompass statutes that do not expressly regulate firearms but that clearly can be said to implicate the purchase and sale of firearms.

Not every commute is work-related under the FLSA

Under the Fair Labor Standards Act, the employer has to pay you a fair day's pay for a fair day's work. The question in many of these cases is whether certain activities constitute "work" under the FLSA. That was the focus of a case decided by the Second Circuit this week.

The case is Singh v. City of New York, issued on April 29. The plaintiffs worked as fire alarm inspectors who were required by their employer to carry and keep safe necessary inspection documents during their commutes. For that reason, they wanted compensation for their commutes to and from work. The Second Circuit (Newman, Sotomayor and Wesley) said no.

As part of their job, the plaintiffs conducted field inspections of buildings in the city. As the Court of Appeals puts it: "On Friday mornings, inspectors normally report to [Fire Alarm Inspection Unit] headquarters to return completed inspection files for the past week and pick up new inspection files for the coming week. These files generally include documents describing the floor plans and fire alarm history of the buildings to be inspected; various inspection checklists, forms, and reports; and any correspondence between building owners and City agencies. Inspectors are responsible for keeping these documents safe from the time they pick them up on Friday morning until the time they return them on the following Friday. The plaintiffs estimate that the collective weight of these weekly assigned materials is between fifteen and twenty pounds."

The Second Circuit reminds us that "the Supreme Court has generally described work as “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” So if the plaintiffs have to carry work-related materials to and from work rather than store it at headquarters, why shouldn't they get paid for the commutes? For most people, commutes involve reading the paper or listening to music, or both. For these guys, they are safekeeping records as required by their employer. They also testified that carrying these documents affects their commutes because this requirement sometimes causes them to miss the subway as it slows down their walk. Sometimes, they are forced to wait for the next subway train in order to make room for the briefcase holding these documents.

In ruling against the plaintiffs, the Court of Appeals says that "[t]he issue is whether the “time is spent predominantly for the employer’s benefit or for the employee’s [which] is a question dependent upon all the circumstances of the case.” In addition, the FLSA was amended to limit pay for certain commutes. "While employees need not be compensated 'for or on account of' commuting to and from work, they must be compensated for any work performed during a commute that is 'integral and indispensable' to a principal activity of their employment." The reason the plaintiffs don't get paid for carrying these documents, according to the Second Circuit, is that "the mere carrying of a briefcase without any other active employment-related responsibilities does not transform the plaintiffs’ entire commute into work." In other words, carrying the documents to and from work may be important, but it's not so important that the City has to pay them for the commutes. As for the additional commuting time required by this job requirement, it's too minimal to make a difference under the FLSA. In sum, the Court holds:

Carrying a briefcase during a commute presents only a minimal burden on the inspectors, permitting them freely to use their commuting time as they otherwise would have without the briefcase. Whether it be reading, listening to music, eating, running errands, or whatever else the plaintiffs choose to do, their use of the commuting time is materially unaltered. While the City certainly benefits from the plaintiffs’ carrying these materials, it cannot be said that the City is the predominant beneficiary of this time.

Friday, April 25, 2008

Class action against credit card companies gets the green light

A proposed class action against the credit card companies for allegedly conspiring with each other to limit the resolution of cardholder complaints was revived by the Second Circuit, which uses the opportunity to remind us about standing, a legal doctrine which can kill any good lawsuit.

The case is Ross v. Bank of America, decided on April 25. The plaintiffs claim that, in violation of the antitrust laws, the credit card companies illegally conspired with each other to force cardholders into accepting arbitration as the only dispute resolution method in the event a dispute arises regarding credit accounts. The arbitration clauses also prohibit class actions. Companies generally like arbitration clauses because arbitration is a less expensive means to resolve disputes than lawsuits. Plaintiffs and their lawyers generally think that arbitrations favor the defendant and pre-arbitration discovery, if any exists, is not as far-reaching as pre-trial discovery. The district court dismissed the Complaint for lack of standing because the plaintiffs were complaining about the arbitration clauses before any of them actually had disputes with the credit card companies. The Court of Appeals (Parker, Leval and Sotomayor) reversed.

The Second Circuit holds that the trial court misunderstood what the lawsuit was about. It's not that the plaintiffs are complaining about unfair arbitration clauses, but that the alleged conspiracy to set arbitration clauses throughout the industry deprived consumers of "any meaningful choice on a critical term and condition of their general purpose card accounts." In addition, "[t]he Complaint alleges that reduced choice and diminished quality in credit services result directly from the banks’ illegal collusion to constrict the options available to cardholders." Another injury is that the allegedly illegal arbitration agreements make the credit cards less valuable because "[a] card that limits the holder to arbitration is less valuable (all other factors being equal) than a card that offers the holder a choice between court action or arbitration. Even assuming that the cardholders might be able to void that limitation when an actual dispute arises by opposing the banks’ motion to compel arbitration via a claim of antitrust collusion, that possibility is more theoretical [in part, because] [t]he cost of litigating the antitrust issue when the particular dispute arises will almost certainly be disproportionate to the dispute."

The Court of Appeals finds that the injuries to the market created by the industry's alleged conspiracy to adopt arbitration clauses creates "injury in fact" among the plaintiffs sufficient to give them standing to sue the defendants. Without any such injury in fact, for example, when the plaintiffs allege a hypothetical or speculative injury, there is no standing.

Thursday, April 24, 2008

Informant can't sue the police for drug bust gone awry

The government does not generally have a duty to protect you from dangerous people or situations. This was the holding in the Supreme Court case, DeShaney v. Winnebago County Department of Social Services, 489 U.S. 189 (1989), a ruling that still triggers debate among scholars and critics. But DeShaney remains the law, and as the Second Circuit reminds us this week, it's difficult to win a lawsuit against the government even when law enforcement officers place you in harm's way.

The case is Matican v. City of New York, decided on April 23. After being busted for drugs, Matican agreed to help the police arrest a drug dealer. One of the officers told Matican, "Don't worry, Robert, we will look after you. We will protect you." With Matican's help, the police arrested the dealer in a sting operation, but when the dealer was released on bail, no one told Matican how violent and dangerous the dealer really was. Had Matican known this, he would have moved to California. Instead, the dealer tracked down Matican and slashed his face with a razor. Matican sued the police for failure to protect him.

To the uninitiated, this case is an easy one. The police placed Matican in danger and did not warn him that the dealer was violent and might go after him. Matican would not have been injured had the police told him about the dealer's violent propensities. But the legal analysis is more complicated. In DeShaney, the Supreme Court ruled that "nothing in the language of the Due Process Clause itself requires the State to protect the life, liberty, and property of its citizens against invasion by private actors." There are two exceptions to this rule: (1) where the government has a "special relationship" with the victim or (2) the government "in some way assisted in creating or increasing the danger to the victim." However, even if the plaintiff satisfies one of these conditions, he can't win the case unless the government's failure to protect him was "shock[ing] to the contemporary conscience."

It's very difficult to win these cases under that standard. The Court of Appeals (Feinberg, Winter and Straub) notes that "this [conscience shocking] requirement screens out all but the most significant constitutional violations."As the courts have defined that phrase, Matican had no "special relationship" with the police as he was not in custody or forced into a situation against his will. On the other hand, the government did create and/or increase the danger to Matican because they conducted the sting in a manner that would allow the dealer to know that Matican was the informant.

That's not enough for Matican to win the case, though. Even though the government placed him in danger, it was not "conscience-shocking" as the courts have defined that phrase, because the police have discretion to plan the sting and they need leeway in determining its execution. That strategy may place Matican at great risk, but the police also have to worry about their own safety. If the police decide they need to use physical force against the dealer, that might place Matican in danger. But that force might be necessary to protect the police. That judgment call gives the police the benefit of the doubt, and the Court of Appeals expressly declines to tell the police how to carry out a sting like this. So, while the police may execute the sting in a manner that increases the danger to Matican, that is not "conscience-shocking."

Wednesday, April 23, 2008

Transfer denial may violate Title VII

Not every employment decision is worth suing over. In the employment discrimination context, courts determine whether the plaintiff suffered an "adverse employment action" for which she can receive compensation. Sometimes, this is an easy call: termination from employment or a demotion counts as an adverse employment action. Lateral transfers may or may not be adverse employment actions. Today the Second Circuit clarifies this issue where the plaintiff is denied a posted job opening to a desirable position.

The case is Beyer v. County of Nassau, decided on April 23. Beyer was a police detective working in the Serology Section, analyzing blood and other fluids from crime scenes. She applied for several available positions with her employer, the Nassau County Police Department, but those jobs went to men. In 2004, the Court of Appeals outlined the legal standard for a case like this: "A denial of a transfer may also constitute an adverse employment action, but we require a plaintiff to proffer objective indicia of material disadvantage; 'subjective, personal disappointment[]' is not enough." So, does Beyer have a case?

The Second Circuit (Calabresi, Walker and Raggi) says yes, reversing the district court's order dismissing the case. Here's the rule that the Court outlines today: "an employee has established the 'adverse employment action' necessary to make out a prima facie case when she has proffered evidence from which a reasonable trier of fact could conclude that the transfer sought and denied would have involved an objective and significant improvement in the terms, conditions, or privileges of her employment."

The Court says that a jury could find that Beyer's transfer denials significantly disadvantaged Beyer and that therefore she suffered an adverse employment action under Title VII: "We conclude that a reasonable jury could find that the [Latent Fingerprint Section] position Beyer sought was objectively and materially better than the position she occupied and that, accordingly, an adverse employment action had occurred." This is because Beyer's present position is a far less desirable place to work in light of the Department's having outsourced much of its work, the fact that her section was not modernizing its operations and credible rumors that her section was going to be closed out. The Court reasons:

These are all objective indications that, by the time Beyer applied to transfer to the LFS, the Serology Section had become a disadvantageous place in which to work. Other evidence, meanwhile, suggests that, for an officer pursuing a career in police forensics, being placed in the LFS was both highly desirable and objectively preferable to working in the Serology Section: (1) at least seventeen people applied for the November 2000 posting, and the supervisor of the unit viewed the jobs as a way of “tak[ing] care of the guys” who had done “the right thing”; (2) assignment
to the LFS entailed using up-to-date equipment and learning new skills; and (3) none of the Department’s latent fingerprint work was being outsourced.

The Court notes that while employers have leeway in how they manage their employees, employers cannot discriminate based on gender. As Judge Calabresi puts it: "Title VII gives employees the statutory right to compete on an equal basis without regard to gender for anything worth competing over."

Tuesday, April 22, 2008

9/11 health claim against Whitman fails

If the State government violates your constitutional rights, you can sue under 42 U.S.C. sec. 1983, which provides for damages against State defendants. The Federal counterpart to sec. 1983 is a Bivens action, named after a Supreme Court ruling from the early 1970's which authorizes remedies against Federal actors. The problem for plaintiffs is that Bivens is not co-extensive with sec. 1983 actions. In other words, Bivens provides for a remedy in limited cases. That's why the plaintiffs suing Christine Todd Whitman in connection with 9/11 health problems lost in the Court of Appeals.

The case is Benzman v. Whitman, decided on April 22. The potential class action plaintiffs argued that Whitman, former Environmental Protection Agency administrator in the Bush administration, misled 9/11 cleanup workers by telling them through press releases and public statements that the air quality was safe when it wasn't, causing the workers to suffer serious respiratory problems. They sued on the constitutional theory that Whitman's actions were sufficiently outrageous to justify a Bivens remedy. For you lawyers out there, the legal theory is "substantive due process." For everyone else, the theory is that the government's actions (or inactions) are so outrageous that the plaintiffs have a due process claim. As the Court of Appeals put it: "The core of the Plaintiffs’ substantive due process claim is that Whitman should be held personally liable for damages because she knew of the dangers posed by WTC dust and yet issued and approved a series of press releases that “falsely represented to the Plaintiffs and the putative Class that the air in and around Lower Manhattan was safe to breathe.”

Courts are reluctant to expand remedies under Bivens, especially when relief under other Federal statutes are available and/or when policy reasons militate against a damages award against the Federal government. This is because, according to the Second Circuit, "A Bivens action is a blunt and powerful instrument for correcting constitutional violations and not an 'automatic entitlement' associated with every governmental infraction."

The Court of Appeals agrees with the Federal government in this case that "no court has ever held a government official liable for denying substantive due process by issuing press releases or making public statements." But it gets worse for plaintiffs: another Federal law already protects them so there is no reason to expand Bivens to a case like this. The Court: "Not only is the Plaintiffs’ assertion of an implied cause of action unprecedented, it also encounters the substantial objection that Congress has already provided a statutory cause of action for claims 'arising out of' the airplane crashes that destroyed the WTC towers." That law is the Air Transportation Safety and System Stability Act.

Courts will also reject a Bivens claim when "special factors" justify dismissing the case. This is another loophole in the Bivens universe which does not apply in sec. 1983 claims against State defendants. Citing Supreme Court authority, the Second Circuit holds that special factors apply here because "the federal response to disasters, such as the events at issue here, involves 'policy questions in an area that [has] received careful attention from Congress.' Federal disaster response and clean-up efforts are an area in which 'Congress [has] developed considerable familiarity' and 'may inform itself through factfinding procedures such as hearings that are not available to the courts.'"

Thursday, April 17, 2008

Restaurants lose First Amendment challenge to calories regulation

New York City enacted a regulation requiring chain restaurants to conspicuously post the nutritional content of their food. The resturant industry challenged those rules in court, claiming among other things that they violate the First Amendment rights of resturants who do not want to government to coerce their speech. The restaurants lose the case.

The case is New York State Restaurant Association v. New York City Board of Health, 08 Civ. 1000 (RJH), decided on April 17, 2008. (No Lexis cite yet).

Generally, the government cannot coerce you to adopt speech with which you disagree. The classic cases in this respect were the Pledge of Allegience case of the early 1950's, when the Supreme Court ruled that the government cannot force children to salute the flag, and also the "Live Free or Die" case of the 1970's, when the Supreme Court held that the State of Vermont cannot force motorists to drive around with that slogan on their license plates. But this this case involves commercial speech, the government has greater leeway to regulate the corporate speech here.

The opening for the restaurants in this case is the legal principle that the government cannot force businesses to subsidize messages that they disagree with. The restaurants argued that the regulation forces them to promote the message that "patrons must consider the caloric content of food when ordering in a resturant, and that calories are the only nutritional criterion that patrons need to consider." The Court disagrees with this novel proposition because the regulation does not require the restaurants to take a position in any ongoing debate. It only requires the restaurants to post non-controversial information: the caloric content of their food.

Wednesday, April 16, 2008

A good look at damages for employment discrimination

Most the discussion about employment discrimination concerns liability: is the employer guilty of discrimination or not? We don't hear much about the nuts and bolts of an equally important topic: damages. The Northern District of New York this week gives us a good primer on front pay for lost wages and the mitigation of damages.

The case is Picinich v. United Parcel Service, 2008 U.S. Dist. LEXIS 30200 (N.D.N.Y. April 11, 2008). Following a bench trial, Judge McCurn found that UPS fired plaintiff because of his disability. Finding that he did not mitigate his damages, the Judge limited plaintiff's future lost income (also known as "front pay") through February 2002, when he began working as an independent contractor for a realtor but quit after a few months because of the physical effort required. (Under employment discrimination law, the plaintiff has to make reasonable attempts to find other employment in order to recover full back and front pay). The Second Circuit reversed the mitigation finding and sent it back to Judge McCurn for reconsideration.

On remand, the Judge awards plaintiff more than $243,000 in back pay and more than $1.2 million in front pay, covering future lost income until plaintiff turns 65. Here's how the Judge did it:

1. The Judge admitted he was wrong in placing the burden on plaintiff to prove that he mitigated damages. Defendant was responsible for proving that suitable employment existed for plaintiff. So, although plaintiff testified that he worked temporarily as a realtor after UPS fired him, defendant did not ask him at trial when that position ended or what plaintiff did to find alternative employment. Defendant dropped the ball in this regard.

2. Plaintiff's failure to further his education after UPS fired him does not establish that he failed to minimize his damages. Says the Court, "While some courts have found that removing oneself from the job market in order to attend school constitutes a failure to mitigate such that one would not be eligible for back pay, and other courts have concluded that pursuit of education after a diligent search for employment does not constitute a failure to mitigate, no court has found that one must pursue an education in order to properly mitigate one's damages. Therefore, however ill-advised Picinich's decision to not enroll in college, it is not a proper consideration by this court in deciding whether Defendants have met their burden to show that Picinich failed to make reasonable efforts to mitigate his damages."

3. In the Court's discretion, plaintiff will receive front pay through the age of 65. Evidence at trial showed that plaintiff's ability to find employment outside UPS is severely limited because of his age, lack of education and physical limitations and that he could have worked for the company through the age of 65 had he not become disabled. (His disability got worse after UPS failed to accommodate it). As plaintiff will turn 65 in the year 2024, calculating his yearly salary, bonuses and other compensation and benefits, his front pay amounts to over $1.2 million.

Thursday, April 10, 2008

Circuit clarifies standards for attorneys' fees

In a series of decisions arising from the same case, the Court of Appeals has tried to clarify the standards governing the award of attorneys' fees to plaintiffs who win their civil rights cases. Generally, when the plaintiff prevails in these cases, her attorney can petition to court for reimbursement of all attorneys' fees. Today the Court of Appeals once again tries to make sense of the "fee-shifting" statutes, concluding that the traditional model -- multiplying the hours expended on the case times the attorney's hourly rate -- is not always appropriate.

The case is Arbor Hill Concerned Citizens Neighborhood Assn. v. County of Albany, decided on April 9.

Here's how attorneys' fees in civil rights litigation works. If the plaintiff wins, the trial court multiplies the reasonable hours expended by the reasonable attorney's hourly rate. The trial court can make adjustments to the fee award based on various factors, such as whether the case was particularly difficult to litigate and whether the attorney had to set aside other work to handle the case. These are some of the Johnson factors, named after an influentual Fifth Circuit case, Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974). But as the Second Circuit tells us in today's opinion, the attorneys' fee analysis has gotten too complicated over the years and the Supreme Court has not straightened it out.

So here's the best way to resolve this issue, according to the Circuit:

We think the better course –- and the one most consistent with attorney’s fees jurisprudence –- is for the district court, in exercising its considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney’s fees in setting a
reasonable hourly rate. The reasonable hourly rate is the rate a paying client would be willing to pay. In determining what rate a paying client would be willing to pay, the district court should consider, among others, the Johnson factors; it should also
bear in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively. The district court should also consider that such an individual might be able to negotiate with his or her attorneys, using their desire
to obtain the reputational benefits that might accrue from being associated with the case. The district court should then use that reasonable hourly rate to calculate what can properly be termed the “presumptively reasonable fee.

This means the Johnson test is back in the Second Circuit, insofar as the district courts have to consider these 12 factors, which are:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorney’s customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

When the Circuit first issued this decision in its earlier form last year (before revising it today), it came under criticism because it held that one of the many factors affecting the attorneys' fees is whether the hypothetical client may be presumed to pay a lower bill in light of the reputational advantages available to the lawyer in handling the case. The Circuit keeps that factor in the equation, no doubt over the objections of the plaintiffs' lawyers in this case who probably argued that defense lawyers in civil litigation don't charge lower rates in light of any comparable reputational advantages associated with handling the case. I don't know if the plaintiff's lawyers in this case also said this, but reputation alone will not put food on the table.

In any event, today's multi-part standard in assessing the reasonable attorneys' fee for the plaintiff and her attorney certainly makes things equally complicated. Many judges still calculate the correct attorneys' fee by multiplying the reasonable hours by the reasonable hourly rate. A good deal of attorneys' fee litigation centers on the lawyers' hourly rate and whether he spent too much time on the case. Now that the Johnson factors are part of the analysis, much time and effort will be expended in dealing with them on the attorneys' fee application. That only raises the prevailing attorney's hourly rate, as the time spent in litigating the reasonable attorneys' fee is also recoverable under the attorneys' fees statute.

This amended opinion does not make clear exactly how it differs from the prior opinions. figures it out for us, noting that a footnote in a prior version of the opinion read, "Our decision today in no way suggests that attorneys from nonprofit organizations or attorneys with private law firms engaged in pro bono are excluded from the usual approach to determining attorneys fees." According to, "Apparently, however, the footnote was not enough, and on Thursday, the circuit issued its second amended opinion, this time with a lengthy footnote that built on the above quote and explicitly affirmed past case law on the issue. In last week's amended ruling, [Circuit Judge John M.] Walker cited the U.S. Supreme Court in Blum v. Stenson, 465 U.S. 886 (1984), for the proposition that, 'The reasonableness of a fee award does not depend on whether the attorney works at a private law firm or a public interest organization.' Walker then added some of the circuit's own case law, '[N]or is the award necessarily limited because the attorney has agreed to undertake the case for a reduced fee compared to the customary market rate, see Reiter v. MTA N.Y. City Transit Auth., 457 F.3d 224 (2d Cir. 2006).'" adds:

In its footnote last week, Walker, citing Blum, said, "Nevertheless, the nature of the representation and type of work involved in a case are critical ingredients in determining the 'reasonable hourly rate.'"

And Walker cited other cases emphasizing that fees charged for similar work by attorneys of like skill in the area are the "starting point" for fixing a reasonable fee award.

"These factors may justify compensating an attorney at a rate lower than his or her customary rate for a different type of practice, regardless of whether the attorney has agreed to take the case on a pro bono or reduced-fee basis," Walker said. "All we are holding is that in calculating the reasonable hourly rate for particular legal services, a district court should consider all relevant circumstances in concluding what a reasonable client would expect to pay."

He continued, "Thus, attorneys -- regardless of whether they are pursuing litigation on behalf of a paying client or a non-paying client -- should receive out-of-district fees only if a reasonable, paying client would have retained out-of-district counsel."

Finally, the Court of Appeals clarified the standards for when the plaintiff hires an attorney from outside the jurisdiction. The hourly rates in the Southern District of New York are much higher than those in the Northern District of New York. What happens when an NDNY plaintiff hires an SDNY lawyer? Do the SDNY rates apply? Or should the district court lower the SDNY lawyer's rates to confirm to the NDNY? The Court of Appeals wants the SDNY lawyer to receive the lower NDNY rates in most cases unless "the party wishing the district court to use a higher rate demonstrates that his or her retention of an out-of-district attorney was reasonable under the circumstances as they would be reckoned by a client paying the attorney’s bill."

Tuesday, April 8, 2008

Privacy lawsuit against Borat fails

New York makes it illegal to use someone's name or likeness for commercial purposes. This right is protected under the "invasion of privacy" statute, Civil Rights Law section 50. As New York is still the home of big media, the courts are continuously interpreted this law in every convievable context. And, as New York is home to big media, the exceptions to this law are large enough to drive a truck through, as I learned a few years ago in getting one of these cases dismissed against a client. But as outlined in a recent court decision involving the Borat movie, these cases are not always easy to win.

The case is Lemerond v. Twentieth Century Fox Film Corp., 2008 U.S. Dist. LEXIS 26947 (S.D.N.Y. March 31, 2008). (Courtesy of the Appellate Law and Practice Blog, fans of this litigation should click here for all case-related documents). If you haven't seen the movie, Borat is a pseudo-documentary about an obnoxious foreigner who films his travels in the United States. The movie is a satirical look at modern American life, as the star, Borat, films real people and events. In order to make the movie interesting, Borat basically makes an ass of himself in public. That means that unwitting people on the street are part of the movie. One of those guys sued 20th Century Fox over this.

As Judge Preska puts it:

One such clip, at issue in this litigation, shows Borat, with a heavily accented voice, greeting Plaintiff on the corner of 5th Avenue and 57th Street in Manhattan. Approaching Plaintiff, Borat extends his hand and says: "Hello, nice to meet you. I'm new in town. My name a Borat." Before Borat can finish his greeting, however, and without further provocation, Plaintiff begins to run away in apparent terror, screaming "Get away!" and "What are you doing?" The 13-second clip concludes as Borat responds, "What is the problem?" Defendants never obtained consent to use Plaintiff's image, which appears twice in the movie and once in its trailer advertisement. In the trailer, Plaintiff's face is scrambled, rendering his likeness "blurry" and indiscernable; his face is not scrambled in the film itself.

Is the use of Lemerond's face a violation of the New York invasion of privacy law? After all, the movie used his likeness without his consent. The movie arguably used his likeness for advertising and "for the purposes of trade."

Lemerond loses the case. An exception to the invasion of privacy law is that the defendant can use your name and likeness if its reflects "newsworthy events or matters of public interest." Judge Preska finds that this case falls within that exception:

It is beyond doubt that Borat fits squarely within the newsworthiness exception to [New York Civil Rights Law § 51]. Of course, the movie employs as its chief medium a brand of humor that appeals to the most childish and vulgar in its viewers. At its core, however, Borat attempts an ironic commentary of "modern" American culture, contrasting the backwardness of its protagonist with the social ills afflict supposedly sophisticated society. The movie challenges its viewers to confront, not only the bizarre and offensive Borat character himself, but the equally bizarre and offensive reactions he elicits from "average" Americans. Indeed, its message lies in that juxtaposition and the implicit accusation that "the time will come when it will disgust you to look in a mirror." Such clearly falls within the wide scope of what New York
courts have held to be a matter of public interest.

Friday, April 4, 2008

Pretext-only is enough for trial in age discrimination case

The shorthand analysis for determining whether an employment discrimination plaintiff can survive a motion for summary judgment is that he must first prove a prima facie case of discrimination and that the employer's articulated reason for his termination (or demotion) is a pretext for discrimination. Sounds simple, but it isn't. In 2000, the Supreme Court ruled that "proof that the defendant's explanation is unworthy of credence is simply one form of circumstantial evidence that is probative of intentional discrimination, and it may be quite persuasive." Reeves v. Sanderson Plumbing, 520 U.S. 133, 147 (2000). But in its first case interpreting Reeves, the Second Circuit ruled that "the Supreme Court's decision in Reeves clearly mandates a case-by-case approach, with a court examining the entire record to determine whether the plaintiff could satisfy his 'ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff.'" That case was Schnabel v. Abramson, 232 F.3d 83, 90 (2d Cir. 2000).

The Schnabel case has haunted plaintiffs' attorneys ever since as courts in this Circuit have dismissed cases even where the plaintiff proves that the employer's reason is pretext. The Second Circuit still applies its en banc ruling in Fisher v. Vassar College, 114 F.3d 1332 (2d Cir. 1997) for the proposition that pretext, by itself, is not always enough for trial. There has to be enough evidence to show that the adverse employment decision was motivated by discrimination. Over the years, the Circuit has dismissed cases despite a showing of pretext, as in Schnabel, leaving litigants to wonder exactly what evidence is needed to bring about a trial. The general view has been that pretext plus some affirmative evidence of discrimination (like stereotyping, statistical evidence, racist comments) can repel summary judgment.

In a decision handed down on April 4, the Second Circuit (Pooler, McLaughlin and Straub) finds that evidence of pretext was enough for a case alleging age discrimination, but the Court does not explain the discrepancy between this case and other cases where pretext was not enough for trial. The fact that this case is an unpublished summary order makes it all the more confusing.

The case is Medeiros v. Pratt & Whitney Power Systems. The plaintiff was fired after receiving a negative performance review. He claimed age discrimination. The decision does not highlight any ageist animus on the part of plaintiff's employer, but the Court instead notes that he received a subjective performance evaluation by a supervisor who was not sufficiently familiar with the employees he evaluated, in violation of company guidelines. Also, there was evidence that this supervisor lied in stating that he consulted with another supervisor in drafting the negative evaluation. Cryptically and without explanation, the Second Circuit notes that the district court referred to "aggregate evidence of pretext."

The district court granted summary judgment, ruling that the it was "possible" but not "obvious" that the jury could find that the employer gave a pretextual, or false, reason for the bad performance review. The district court further held that the plaintiff's evidence of pretext was "fairly weak." The Second Circuit admonishes the district court for substituting its own judgment as to the persuasive nature of the pretext evidence, and remands the case for a jury trial on this issue. The Court of Appeals also deemed it relevant that someone else who had previously supervised plaintiff would have more favorably rated his performance.

Although the Supreme Court's ruling in Reeves arguably compels a trial in most discrimination cases if the plaintiff can show that the employer's reasons for the adverse employment action are pretextual, any plaintiffs' lawyer will tell you that the Second Circuit has narrowly applied that analysis ever since. Today's case, and another case cited in today's opinion, D'Cunha v. Genovest/Eckerd Corp., 479 F.3d 193 (2d Cir. 2007), moves away from that restrictive interpretation of Reeves. We don't know what evidence, if any, directly ties the employer's false reasons to age discrimination. Did a manager make an ageist statement or fire other older workers? The decision does not tell us. My sense is that if this evidence existed, the Court of Appeals would have told us about it. Since today's case is an unpublished summary order that generally cannot be cited as precedent in other cases, its broad interpretation of Reeves may simply be an aberration.

Tuesday, April 1, 2008

Title VII prohibits termination because of inter-racial marriage

The Second Circuit has held for the first time that the employment discrimination laws are violated when a white employee is fired for being married to a black woman. The case is Holcomb v. Iona College, decided on April 1.

Holcomb was a basketball coach at Iona College in New York. He claims that an Iona official, Brennan, was trying to prevent his black wife from attending public functions attended by Iona College alumni, and that Brennan had made racially derogatory comments about some of the black players. Another college official, Petriccone, also made offensive racial comments about black players in the basketball program, allegedly referring to them as "niggers." As the Second Circuit put it, "Colleagues at Iona testified to Petriccione’s record of what might, charitably, be called racial insensitivity. Egregiously in this respect, Petriccione is said to have referred to a Nigerian employee at the Alumni Giving Office as a 'jungle bunny' and an 'African princess.' When that member of staff applied to his office for the position of Assistant Director of Annual Giving, he remarked: '[W]hat does she think she is coming from a hut in Africa and thinking she could apply for this job?'” In addition, when Petriccione found out that Holcomb was marrying an African-American woman, he allegedly made one of the most offensive comments I've ever seen in a Second Circuit decision.

Iona College eventually fired Holcomb, explaining that his termination had to do with his poor job performance. After the district court granted summary judgment in this wrongful termination case, the case went to the Court of Appeals, which remands this case for trial. The crux of the decision is as follows:

1. Holcomb belongs to a "protected class" under Title VII even though he is not black; since his wife is black and there is evidence that his inter-racial marriage motivated his termination, he may proceed under the employment discrimination laws. Some courts (in the deep south) have disagreed with this analysis, but the Court of Appeals won't have it: "The reason is simple: where an employee is subjected to adverse action because an employer disapproves of interracial association, the employee suffers discrimination because of the employee’s own race. All the district judges in this circuit to consider the question, including the district court in this case, have reached that conclusion." Other Circuits have also adopted this view.

2. Holcomb has also produced evidence that he was fired because he was married to a black woman. Here's the reasoning:

The college decided to fire Holcomb, a white man married to a black woman, and Chiles, a black man, while retaining O’Driscoll, a white man who was not in an interracial relationship. Moreover, it is plain that Brennan and Petriccione both knew that Holcomb was married to a black woman, and the record suggests that both Brennan and Petriccione played a role in the termination decision. For each of these men, finally, Holcomb has adduced evidence of racially improper motives. As further detailed below, the record permits an inference that Brennan sought to reduce African-American presence at basketball program events for the sake of alumni relations and fundraising. From this perspective, it would make sense for Brennan to want to keep O’Driscoll, as the only white member of the staff without a black girlfriend or spouse, rather than Holcomb. And in the case of Petriccione, there is clearly evidence in the record indicating his disapproval of Holcomb’s marriage to a black woman, and, indeed, of Petriccione’s willingness to act on his disapproval by insulting Holcomb in public.

3. Since the Court of Appeals reverses the grant of summary judgment in this Title VII case, it reminds us that circumstantial evidence is enough to win these cases and that plaintiffs are not required to produce "smoking gun" evidence of racially discriminatory intent. The Court also notes that the discriminatory intent of one decisionmaker up the chain is enough to create liability under Title VII on the theory that the bad link in that chain has infected the process because of race. The Court cites Bickerstaff v. Vassar College, 196 F.3d 435 (2d Cir. 1999) for this proposition. And, since this is a "mixed motives" case, the plaintiff does not have to show that racial discrimination was the only reason for his termination, only that it played a role in the decision. Citing Fields v. N. Y. State Office of Mental Retardation & Developmental Disabilities, 115 F.3d 116, 120 (2d Cir. 1997), the Court of Appeals notes that "A plaintiff alleging that an employment decision was motivated both by legitimate and illegitimate reasons may establish that the 'impermissible factor was a motivating factor, without proving that the employer’s proffered explanation was not some part of the employer’s motivation.'”

Of course, as the Second Circuit states, the jury could render a verdict for the College and reject Holcomb's case, especially since the decisionmakers deny making any racial comments. But there is too much evidence of racial discrimination here for the district court to grant summary judgment. Only a jury can resolve these disputed issues of fact and motive.