We review hostile work environment claims as a whole

The Court of Appeals has reinstated a racial and gender discrimination lawsuit, finding that management's use of the N-word and other epithets supports his claim, and that the sexual harassment may have exacerbated the racial harassment. The Second Circuit, however, declines to find as a matter of law that the N-word by itself creates a hostile work environment.

The case is Daniel v. T&M Protection Resources, a summary order decided on April 25. Plaintiff handled the appeal pro se, but the EEOC submitted and amicus brief on his behalf. The EEOC wanted the Second Circuit (Pooler, Wesley and Carney) to find that this racial epithet is enough to prevail in a racial harassment case. The Circuit said in Rivera v. Rochester Genessee Reg'l Transp. Auth., 743 F.3d 11 (2d Cir. 2014), that "perhaps no single act can more quickly alter the conditions of employment and create an abusive working environment than the use of an unambiguously racial epithet of the slur 'nigger' by a supervisor in the presence of his subordinates." But that language was dicta, the Second Circuit says, and therefore not binding on any court. Still, "although we decline to confront the issue of  whether the one-time use of the slur 'nigger' by a supervisor to a subordinate can, by itself, support a claim for a hostile work environment, we conclude that the district court improperly relied on our precedents when it rejected this possibility as a matter of law." So what does this mean? Is the Court of Appeals suggesting the district court can find that the N-word is enough to make out a case? It looks that way.

The Second Circuit also says that, in making out his gender discrimination claim, plaintiff can cite evidence that his supervisor frequently called him a "homo" and told him to "Man up, be a man." This is harassment based on gender stereotypes. While the district court properly considered this evidence in evaluating plaintiff's claim, it improperly declined to consider whether facially-neutral conduct bolstered the harassment claim. "We have held that a plaintiff may rely upon facially neutral conduct to bolster a harassment claim when 'the same individual engaged in multiple acts of harassment, some overtly [based on a protected characteristic] and some not.'” Since plaintiff's supervisor treated him like garbage, that maltreat may be folded into the racial and sexual harassment case, and the jury may conclude that facially-neutral acts of harassment were in fact motivated by plaintiff's gender and race.

The district court also blew it in not evaluating plaintiff's harassment claims as a whole. In fact, plaintiff alleged about 20 acts of harassment during his 15-months of employment, including two severe incidents (the racial comment and the supervisor rubbing himself against plaintiff's buttocks). Viewed as a whole, all of this is enough to win the case. In and of itself, the Circuit says, it does not matter that plaintiff only missed one day of work because of the harassment. What is more, the Court of Appeals says, the evidence of racial, sexual and national origin harassment can be viewed in the aggregate in finding that, i.e., the racial harassment exacerbated the sexual harassment.

Outrageous vulgarities no basis to fire employee during union fight

The employees at a catering company in New York City were trying to organize a union. Management, of course, was against this. One employee insulted his supervisor on Facebook, using unprecedented vulgarities in also insulting his supervisor's mother. Management, of course, fired him. Is this a case? You're Goddamned right it's a case.

The case is NLRB v. Pier Sixty, LLC, decided on April 21. Two days before the workers voted to unionize, a supervisor by the name of McSweeney addressed them, exhibiting some degree of disrespect for the staff. Shortly thereafter, one employee, Perez, wrote this on Facebook: "Bob is such a NASTY MOTHER FUCKER don’t know how to talk to people!!!!!! Fuck his mother and his entire fucking family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!" Perez challenged his termination as retaliation for protected union activity. The NLRB agreed, and the Second Circuit (Cabranes, Chin and Kearse) affirms. So the employee does have a case.

Employers cannot fire people for engaging in union activity. "But even an employee engaged in ostensibly protected activity may act in such an abusive manner that he loses the protection of the NLRA." Is Perez's Facebook post sufficiently abusive to warrant his termination? The Court of Appeals says it is not, for the following reasons:

First, even though Perez’s message was dominated by vulgar attacks on McSweeney and his family, the “subject matter” of the message included workplace concerns—management’s allegedly disrespectful treatment of employees, and the upcoming union election. Pier Sixty had demonstrated its hostility toward employees’ union activities in the period immediately prior to the representation election and proximate to Perez’s post. Pier Sixty had threatened to rescind benefits and/or fire employees who voted for unionization. It also had enforced a “no talk” rule on groups of employees,
including Perez and Gonzalez, who were prevented by McSweeney from discussing the Union. Perez’s Facebook post explicitly protested mistreatment by management and exhorted employees to “Vote YES for the UNION.” Thus, the [NLRB] Board could reasonably determine that Perez’s outburst was not an idiosyncratic reaction to a manager’s request but part of a tense debate over managerial mistreatment in the period before the representation election.

I love this reasoning. It takes an outrageous set of facts and makes it legal. And this is from three judges before whom I have argued many times and I seriously doubt they use language like this even in private conversation.

Moreover, the Court says, the Facebook post is not too offensive because the workplace was rife with this kind of foul language, for which employees are rarely written up. And no one ever gets fired for using this language. McSweeney also talks this way to his employees, calling them "motherfuckers" and "fucking stupid." While "one could draw a distinction between generalize scatology (or even cursing at someone) and, on the other hand, cursing someone's mother and family, ... one could reasonably decide, as the ALJ did in this case, that Perez's comments 'were not a slur against McSweeney's family but, rather, an epithet directed to McSweeney himself." Again, this is my kind of legal reasoning, which footnotes to scholarly works about how "different groups respond to the same words differently" and "among some groups, certain maternal insults could be perceived as 'fighting words.'" One book says that "all over the world groups of people have their ways to insult mothers or use mothers to insult others."

The final round of legal reasoning goes like this:

Third, the “location” of Perez’s comments was an online forum that is a key medium of communication among coworkers and a tool for organization in the modern era. While a Facebook post may be visible to the whole world, including actual and potential customers, as Pier Sixty argues, Perez’s outburst was not in the immediate presence of customers nor did it disrupt the catering event. Furthermore, Perez asserts that he mistakenly thought that his Facebook page was private and took the post down three days later, upon learning that it was publicly accessible.

SDNY issues TRO in FLSA case to prevent retaliation based on immigration status

A Southern District judge has issued a temporary restraining order that prohibits an employer in an FLSA case from "instructing all staff of All City Remodeling, Inc. to "provide an original social security card before collecting [their] weekly check." Plaintiff says this directive constitutes unlawful retaliation and that "this request for social security cards, made shortly after Plaintiffs raised concerns about other retaliatory conduct and shortly before the start of depositions, constitutes an implied threat or intimidation against Plaintiffs' exercise of their rights under the FLSA." Judge Torres grants the TRO,

The case is Alaguachi v. All City Remodeling, 15 Civ. 9688 (AT) (RLE). The TRO was issued on April 20. Judge Torres notes that "the reporting of an employee's immigration status -- as implicitly threatened by Defendants' conduct constitutes an adverse employment action." Also bear in mind that a plaintiff's immigration status is irrelevant in determining whether the plaintiff has a case under the Act. If you do the work, you get paid no matter what. The order is below.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------------
VICTOR P ALAGUACHI, DANIEL GALDAME,
and MARCO MOROCHO, on behalf ofthemselves
and other employees similarly situated,

Plaintiffs,

-against-

ALL CITY REMODELING, INC., T &G
CONTRACTING INC., GEORGE TSIMOYIANIS,
and JOHN DOES 1-100, the actual names ofsuch
individuals or entities being unknown,

Defendants.
-------------------------------------------------------------------
TEMPORARY RESTRAINING ORDER

ANALISA TORRES, District Judge:

On April 20, 2017, Plaintiffs filed an emergency motion seeking a temporary restraining order or preliminary injunction against allegedly retaliatory actions by Defendants in this wage and hour action. Letter Mot., ECF No. 128. In particular, Plaintiffs provided an April 18 memorandum sent by Defendant George Tsimoyianis instructing all staff of All City Remodeling, Inc. to "provide an original social security card before collecting [their] weekly check on Friday, April 21, 2017." Id Ex. A. Plaintiffs contend that Defendant's conduct constitutes retaliation in violation of the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 215(a)(3), as well as an unfair immigration-related employment practice in violation of 8 U.S.C. § 1324b(a)(6).

The standard for entry of a temporary restraining order ("TRO") "is the same as for a preliminary injunction." Andino v. Fischer, 555 F. Supp. 2d 418, 419 (S.D.N.Y. 2008). In particular, "a party must demonstrate '(1) irreparable harm in the absence of the injunction and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the  merits to make them a fair grounds for litigation and a balance of hardships tipping decidedly in the movant's favor."' Id (quoting MyWebGrocer, LLC v. Hometown Info, Inc., 375 F.3d 190, 192 (2d Cir. 2004)).

First, as to irreparable harm, ''[t]he Second Circuit has recognized that, depending on the facts and circumstances of a particular case, retaliation and the resulting weakened enforcement of federal law can itself be irreparable harm." Centeno-Bernuy v. Perry, 302 F. Supp. 2d 128, 135 (W.D.N.Y. 2003) (citing Holt v. Cont'! Grp., 708 F.2d 87, 91 (2d Cir. 1983)). Likewise, "[i]t is well established that the anti-retaliation provision of the FLSA is critical to the entire enforcement scheme of the federal wage and hour law." Id. (citing Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292 (1960)).

Plaintiffs have sufficiently demonstrated that this request for social security cards, made shortly after Plaintiffs raised concerns about other retaliatory conduct and shortly before the start of depositions, constitutes an implied threat or intimidation against Plaintiffs' exercise of their rights under the FLSA. Without a temporary restraining order, such conduct would cause Plaintiffs irreparable harm. See id.

Second, Plaintiffs have demonstrated a likelihood of success on the merits. To state a prima facie claim for FLSA retaliation, "a plaintiff must show ' (1) participation in protected activity known to the defendant; (2) an employment action disadvantaging the plaintiff; and (3) a causal connection between the protected activity and the adverse employment action."' Id at 136 (quoting Lai v. Eastpoint Int 'l, Inc., No. 99 Civ. 2095, 2000 WL 1234595, at *3 (S.D.N.Y. Aug. 31, 2000)). The present litigation constitutes protected activity on the part of Plaintiffs, and the reporting of an employee's immigration status -- as implicitly threatened by Defendants' conduct constitutes an adverse employment action. See id.; EEOC v. Rest. Co., 490 F. Supp. 2d 1039, 1046, 1050-5 I (D. Minn. 2007); Contreras v. Corinthian Vigor Ins. Brokerage, 103 F. Supp. 2d 1180, 1185 (N.D. Cal. 2000). Finally, as discussed above, the timing of Defendants' conduct in relationship to other events in this litigation is sufficient to infer a causal connection. See Centeno-Beruny, 302 F. Supp. 2d at 136; EEOC, 490 F. Supp. 2d at 1050-51 ("One week after Torres complained to upper management about Centeno's behavior, she was terminated, or at least told that she could not return without proper documentation.").

Having met the standard for a temporary restraining order, Plaintiffs' motion is GRANTED to the extent that:

1. Defendants are prohibited from taking any adverse employment actions or retaliating in any way against Plaintiffs and putative class and collective action members on the basis of their participation in this litigation.

2. Defendants are temporarily restrained from soliciting from Plaintiffs and putative class and collective action members any information regarding immigration status, including requiring the presentation of social-security cards.

3. The parties shall confer at their earliest convenience and contact chambers at (212) 8050292
to schedule a prompt hearing on Plaintiffs' request for a preliminary injunction.

This Order is effective from April 20, 2017, at 7:00 p.m. through May 1, 2017, at 5:00 p.m.
or as further ordered by the Court.

SO ORDERED.

Dated: April 20, 2017
New York, New York

ANALISA TORRES
United States District Judge

Win some, lose some

This plaintiff has been in litigation against her employer for over a decade. That litigation will continue, thanks to the Court of Appeals, which finds her second lawsuit against the City of Syracuse states a plausible claim for discrimination.

The case is Dotson v. City of Syracuse, a summary order decided on April 24. Dotson is a Community Service Worker who originally sued her employer in 2004, alleging discrimination and retaliation. In 2011, a jury awarded her $225,000 in damages, finding that she suffered retaliation for complaining about pornography in the workplace.

The second lawsuit -- and the subject of this appeal -- was filed in connection with things that happened after the first lawsuit was filed. She claims her suspended in 2012 was discriminatory. The district court rejected that claim from the outset, but the Court of Appeals (Wesley, Kearse and Livingston) reinstates it. The Court of Appeals reminds us that "when evaluating pretext [under Title VII], a court must consider the plaintiff's evidence as a whole, including evidence evidence of discriminatory or disparaging language." The cases in support of these propositions are Walsh v. NYC Housing Authority,. 828 F.3d 70 (2d Cir. 2016), and Danzer v. Norden Systems, 151 F.3d 50 (2d Cir. 1998). Under this standard, plaintiff has a case. The two people who played a role in plaintiff's discipline in 2008 both made stupid comments that reflected hostility toward women. One said that "broads can't work together" because "they'll just be calling for back up all the time." The other said "he could not take hiring another woman" because "he was tired of dealing with their problems." Statements like this will give you a case, and the City of Syracuse now has to either get around these admissions or show that plaintiff can't win her case for other reasons.

But you can't win them all. Plaintiff also says she was suspended in 2012 for complaining about pornography in 2003. That's a nine-year gap. Courts will usually find a nine-month gap too long for retaliation cases. Plaintiff tries to get around this by arguing that the jury verdict in her first lawsuit happened in November 2011 and the discipline took place in February 2012. That certainly narrows the gap, but the Court of Appeals says the verdict is not "protected activity" under Title VII (although it probably threw the City into a rage and gave them an incentive to take it out against plaintiff). The Second Circuit says "the more relevant starting point is the time of the employee's protected activity -- here, the filing of the lawsuit, not its ultimate resolution." That eight-year gap will not cut it, so the retaliation claim is gone.

I can see a jury accepting the timeline proposed by plaintiff. The jury verdict is not protected activity, but it's a major event in the first lawsuit. It is probably enough to trigger a retaliatory impulse, since the City probably thinks it should won the case. But Title VII does not say verdicts constitute protected activity. A loophole that, I'm sure, the drafters of Title VII never thought about.

Yeah, it's legal

The police entered the apartment building with the owner's consent in order to keep the common areas free from drugs and crime. They found the defendant drinking alcohol on the third floor, so they decided to give him a summons for violating New York's open containers law, which prohibits alcoholic beverages in any "public place." The officer frisked defendant and found an illegal firearm. Should the courts suppress the firearm as the fruit of an unlawful search?

The case is United States v. Diaz, decided on April 18. There are two issues here: did the officer have probable cause to search Diaz? And was the warrantless search illegal if the officer did not intend to arrest defendant when he began the search? The Court of Appeals (Sack, Walker and Chim) upholds the search.

Issue number 1 asks if the officer had probable cause to arrest defendant for violating the open container law. This is tricky because the apartment building stairwell is arguably not a public place under the New York City penal code, which defines public place as "a place to which the public or a substantial group of persons has access, including, but not limited to, any highway, street, road, sidewalk, parking area, shopping area, place of amusement, playground, park or beach located within the city." Since the law says nothing about locked residential buildings or common areas, did the officer reasonably believe it was a public place under the law? The Court of Appeals says Yes. The Supreme Court said a few years ago (Heien v. North Carolina) that the police are able to arrest someone based on their reasonable misunderstanding of the law that authorized the arrest. Judge Sack says the City law is ambiguous and the courts have not yet clarified its scope. Some trial courts in New York have interpreted the City law to include apartment building lobbies. For these reasons, the officer acted reasonably under Supreme Court authority, even if the City law did not expressly authorize this search.

Issue number 2 asks whether the police can legally search someone if, at the time of the search, he did not intend to arrest the defendant, and makes the arrest after he finds something illegal, in this case, a gun. The Second Circuit took up this issue in 1977, ruling that a search was legal because the officer had probable cause to arrest the defendant for speeding, regardless of whether or nor the officer intended to arrest the defendant before finding drugs in the car. 1977 was a long time ago, but cases from 1977 can still be good law. While the defendant argues that the 1977 precedent has been repudiated by subsequent precedent, the Second Circuit is not buying it. This arrest was legal.  

Misplaced chair no basis for prisoners' rights suit

I sometimes wonder what federal judges think of the weaker cases that come before them. This is such a case. The plaintiff is an inmate who "alleged that the prison employee violated his Eighth
Amendment rights by failing to remove a chair from a baseball field. Cintron later ran into the
chair during a game and broke his arm." The Court of Appeals says plaintiff has no case.

The case is Cintron v. Doldo, a summary order decided on April 19. Inmates are allowed to file their own lawsuits. They do have constitutional rights, and without those protections, just imagine what the jails would look like. But if an inmate files too many frivolous suits, the courts can require him to seek pre-filing clearing before bringing another action. Even if the cases are quite weak, someone representing the government still has to do the work, and the courts have to review the matter, taking time away from other cases.

This plaintiff sues under the Eighth Amendment, which prohibits cruel and inhumane jail punishments. The courts have interpreted the Eighth Amendment to cover conditions of confinements inside the jail. Usually, these cases involve bad medical treatment or abusive prison guards. The legal standard is this: "a court should assess whether society considers the risk that the prisoner complains of to be so grave that it violates contemporary standards of decency to expose anyone unwillingly to such a risk.”

The Second Circuit (Katzmann, Jacobs and Leval) says there is no case here. "The placement of the chair on the baseball field did not constitute a 'deprivation . . . sufficiently serious that [Cintron] was denied the minimal civilized measure of life’s necessities,' nor did treatment by prison staff member Mattraw 'deprive [Cintron] of his basic human needs.'” Nor did plaintiff allege that prison staff acted with deliberate indifference.

2d Circuit declines to hold that Title VII prohbits sexual orientation discrimination

The Second Circuit has once again declined to rule that Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation, ruling that it cannot overrule a Second Circuit ruling from 2000 that said "sex discrimination" does not extend to gays and lesbians.

The case is Zarda v. Altitude Express, decided on April 18. I helped write the brief with lead counsel, Gregory Antollino, who argued the appeal. Zarda was a skydiver who was fired after a customer complained that he told her about his sexual orientation. A straight skydiver was not terminated after telling a customer about his own sexual orientation. The case went to trial in federal on a state-law discrimination claim after the district court ruled that plaintiff could not seek any relief under Title VII. The jury returned a defense verdict and plaintiff appealed the trial court's Title VII ruling, arguing that the EEOC's recent directive that Title VII prohibits sexual orientation discrimination renders the Second Circuit's decision in Simonton v. Runyon, 232 F.3d 33 (2d Cir. 2000), obsolete.

A few weeks ago, the Second Circuit took up this issue, holding in Christianson v. Omnicom that one Second Circuit panel cannot overrule the decision of a prior panel. Two judges in Christianson issued a concurrence stating the time may be right to bring the Court of Appeals into the modern age and recognize that sexual orientation is in fact sex discrimination. Citing Christianson, the Zarda Court says it cannot overturn Simonton. The Second Circuit is essentially inviting Zarda to seek en banc review on this issue. Astute Title VII aficionados know that the Seventh Circuit recently overruled a prior decision in ruling en banc that Title VII prohibits sexual orientation discrimination. Will the Second Circuit do the same?

An interesting side note. The plaintiff in Zarda lost his sexual orientation claim at trial under state law. Defendant argued that Zarda cannot win his Title VII appeal because the jury has already said there was no discrimination. Zarda got around this by pointing out that the jury charge on the state law claim asked whether Zarda could prove "but for" causation. That is not the standard under Title VII, which asks whether the plaintiff's protected characteristic -- gender, race, etc. -- was a motivating factor in his termination. "Motivating factor" is a more plaintiff-friendly standard than "but-for" causation, so Zarda's Title VII challenge is not mooted by the adverse state-law verdict in federal court.

Supremes rule for plaintiff in Fourth Amendment seizure case

The plaintiff in this case was pulled over for a traffic stop when the police found a bottle in his car containing pills. The police claimed it was drugs, but tests proved otherwise. Still, plaintiff spent 48 days in pretrial detention. He sues for false arrest. The case was dismissed as untimely. It was also dismissed because the court said you can't challenge your pretrial detention under the Fourth Amendment . The Supreme Court finds otherwise and rules in his favor.

The case is Manuel v. City of Joliet, decided by the Supreme Court on March 21. This constitutional case actually looks at our nation's founding document in the most technical manner possible. We start with the Fourth Amendment's protection against "unreasonable seizures." Is that 48-day detention a seizure? If it is, then Manuel can sue.

Writing for the Court, Justice Kagan notes that the Supreme Court said four decades ago that a claim challenging pretrial detention falls within the scope of the Fourth Amendment. Subsequent Supreme Court cases say that pretrial detention can violate the Fourth Amendment not only when it precedes but when it follows the start of legal process in the criminal case. Manuel's criminal case had already started he spent all that time in the slammer. Here is where the technicality comes in. Manuel has a case under the Fourth Amendment and not -- as the Seventh Circuit held -- under the Due Process Clause. Here is the analysis:

Pretrial detention can violate the Fourth Amendment not only when it precedes, but also when it follows, the start of legal process in a criminal case. The Fourth Amendment prohibits government officials from detaining a person in the absence of probable cause. That can happen when the police hold someone without any reason before the formal onset of a criminal proceeding. But it also can occur when legal process itself goes wrong—when,for example, a judge’s probable-cause determination is predicated solely on a police officer’s false statements. Then, too, a person is confined without constitutionally adequate justification. Legal process has gone forward,but it has done nothing to satisfy the Fourth Amendment’s probable-cause requirement. And for that reason, it cannot extinguish the detainee’s Fourth Amendment claim—or somehow, as the Seventh Circuit has held, convert that claim into one founded on the Due Process Clause. If the complaint is that a form of legal process resulted in pretrial detention unsupported by probable cause, then the right allegedly infringed lies in the Fourth Amendment.

In other words, it was an unlawful seizure even after the criminal process began because there was no probable cause to detain Manuel. As Justice Kagan writes, "Legal process did not expunge Manuel’s Fourth Amendment claim because the process he received failed to establish what that Amendment makes essential for pretrial detention—probable cause to believe he committed a crime."

The remaining question involves the statute of limitations. The Supreme Court does not take up that issue, instead sending it back for the Seventh Circuit to worry about it. The Supreme Court does summarize the different points of view on this issue. If we treat Manuel's seizure like a malicious prosecution case, then his lawsuit is timely because the statute of limitations would begin on the day the charges were dismissed. But if we treat Manuel's case like a false arrest, then the statute of limitations began the day he was arrested, and this case is untimely.

Circuit finds black-car drivers are not employees under the FLSA

A huge number of "black-car drivers" bring this Fair Labor Standards Act case against corporate entities that either own a "base license" that allows them to operate a black-car dispatch base in New York City or provide administrative support for the operation of the franchisor's dispatch bases. In other words, the drivers -- who operate a type of for-hire vehicles that provide ground transportation for people -- sue the defendants for unpaid wages. The issue here: did the defendants employ the plaintiffs under the FLSA and state law? The Court of Appeals says the defendants are not employers.

The case is Saleem v. Corporate Transportation Group, decided on April 12. Only employers are liable under the FLSA. If the plaintiffs are independent contractors, they cannot sue for lost wages under the Act. The plaintiffs' black-car franchises are affiliated with defendants, some of whom provide administrative support for the operations. The plaintiffs mostly purchased their franchises from the franchisor defendants, and the franchise agreement has a non-compete clause that prevents them from driving CTG customers without processing payment through CTG. But these agreements do not prevent the drivers from transporting non-CTG customers. While the franchise agreements come with a rule book governing standards of conduct, plaintiffs still enjoyed considerable autonomy in their day-to-day affairs, such as deciding when and how often to drive, where they worked and to accept or decline jobs that were offered. The drivers could also work for other entities.

This back-and forth with respect to driver autonomy and defendant control over them lies at the heart of this case. An employer under state and federal law is able to control the plaintiff. Without sufficient control over the plaintiff, the defendant is not an employer and the plaintiff is merely an independent contractor who cannot invoke the FLSA and state law wage protections. This is a totality of the circumstances test, and the facts are typically quite involved, so much that these decisions can be lengthy and complicated, as reflected in the 14 month time period the Court of Appeals (Livingston, Leval and Carney) took to issue this decision. The Court finds that plaintiffs were independent contractors.

Despite the broad sweep of the FLSA’s definition of “employee,” the record here does not permit the conclusion that Plaintiffs were employees, but instead establishes that they were in business for themselves. As discussed below, Plaintiffs independently determined (1) the manner and extent of their affiliation with CTG; (2) whether to work exclusively for CTG accounts or provide rides for CTG’s rivals’ clients and/or develop business of their own; (3) the degree to which they would invest in their driving businesses; and (4) when, where, and how regularly to provide rides for CTG clients. While none of these facts is determinative on its own, considered as a whole with the goal of discerning the underlying economic reality of the relationship here, the district court correctly determined that Plaintiffs are, as a matter of law, “properly classified as independent contractors rather than employees for purposes of the FLSA.” 

Are Rule 68 offers covered by Cheeks v. Pancake House?

Normally, parties settle lawsuits in private and tell the judge the case is over. The judge then "so orders" a stipulation of discontinuance, someone writes a check and we all move on with our lives. That does not apply to cases brought under the Fair Labor Standards Act. In 2015, the Second Circuit held that courts must approve FLSA settlements "to avoid the “potential for abuse,” including “highly restrictive confidentiality provisions in strong tension with the remedial purposes of the FLSA,” “overbroad release[s],” excessive attorney’s fee awards, and inadequate awards. Does this apply to settlements reached under Rule 68?

The case is Yu v. Hasaki Rest., Inc., No. 16-CV-6094 (JMF), 2017 U.S. Dist. LEXIS 54597 (S.D.N.Y. Apr. 10, 2017), a SDNY case decided on April 10. Under Rule 68, the defendant serves an Offer of Judgment on the plaintiff. That offer would pay the plaintiff a sum of money. The plaintiff has a limited time to accept that offer. If the plaintiff rejects the offer and wins less money at trial, then plaintiff has to pay the defendant's post-offer costs. Plaintiff also forfeits attorneys' fees incurred after the offer was sent. In return, the plaintiff gets money and a judgment against defendant.

In this case, Judge Furman holds that Rule 68 settlements are subject to the requirements set forth by the Second Circuit in Cheeks v. Freeport Pancake House, 796 F.3d 199, 200 (2d Cir. 2015), which says the courts must approve FLSA settlements. The judge writes:

In the wake of Cheeks, litigants have increasingly tried to evade the requirement for judicial or DOL approval by entering into settlements pursuant to Rule 68. These litigants have argued — as the parties do in this case — that approval is not required for such settlements because Rule 68 provides that “[t]he clerk must . . . enter judgment” of an accepted offer of judgment and lacks any language comparable to Rule 41’s “applicable federal statute” exception that figured prominently in Cheeks. Fed. R. Civ. P. 68.

Some courts in the Second Circuit say that Rule 68 settlements are not covered by Cheeks. Judge Furman sees it differently. While the judge notes that the clerk "must" enter judgment for the plaintiff upon accepting a Rule 68 offer, allowing parties to avoid Cheeks oversight makes no sense. He writes:

But that foundation — namely, that Rule 68 is, by its terms, mandatory and leaves no room for judicial scrutiny of an accepted offer — crumbles under closer scrutiny. That is, although it is sometimes said that a court “has no choice about entering” a Rule 68 judgment, “this general statement is too broad to encompass all instances in which Rule 68 offers are made.” 12 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 3005 (2d ed. 1996)). Indeed, as one judge on the Eleventh Circuit observed, “[t]here are myriad settings in which a court has an independent duty . . . to review the terms of a settlement offer; Rule 68’s operation does not relieve the court of that duty.” Util. Automation 2000, Inc. v. Choctawhatchee Elec. Co-op., Inc., 298 F.3d 1238, 1250-51 (11th Cir. 2002) (Marcus, C.J., specially concurring). “[I]n the context of class actions,” for example, “Rule 68 offers of judgment are routinely employed despite the fact that all agreements must subsequently be approved by the court after a fairness hearing.” Gordon v. Gouline, 81 F.3d 235, 239 (D.C. Cir. 1996) (citing cases). And as the D.C. Circuit has held, in bankruptcy cases, Rule 68 does not override the requirement that compromises or settlements must be approved by the court. See id. at 239-40. In fact, there are a host of situations in which parties may not, without approval of either or both a government agency and a court, enter into a settlement.

For now, there is a split in the Second Circuit on this issue. The Court of Appeals will no doubt straighten this out some day. Until that happens, each Rule 68 settlement under the FLSA will be handled differently from judge to judge.

New York's credit card surcharge law implicates First Amendment

This is not the most exciting First Amendment case I've ever seen, but a First Amendment case it is. The Supreme Court says that

The case is Expressions Hair Design v. Schneiderman, decided on March 29. We examine credit card pricing in this case. New York makes it illegal for merchants to charge more money if customers want to use a credit card. The credit card companies charge a fee for the use of the cards, so merchants want to encourage customers to use cash. The plaintiffs are merchants who want to impose credit card surcharges. They also want to tell customers that it's not the merchant's fault that they have to raise prices to cover these surcharges. Hence, this First Amendment case.

The Second Circuit ruled against the plaintiffs, finding that this law does not restrict speech and that it instead merely regulates conduct in the form of price controls. The Supreme Court disagrees. The law regulates First Amendment speech because it tells merchants how they can communicate their prices. Chief Justice Roberts writes:

The law tells merchants nothing about the amount they are allowed to collect from a cash or credit card payer. Sellers are free to charge $10 for cash and $9.70, $10, $10.30, or any other amount for credit. What the law does regulate is how sellers may communicate their prices. A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases. He is not free to say “$10,with a 3% credit card surcharge” or “$10, plus $0.30 for credit” because both of those displays identify a single sticker price—$10—that is less than the amount credit card users will be charged. Instead, if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price. Accordingly, while we agree with the Court of Appeals that §518 regulates a relationship between a sticker price and the price charged to credit card users, we cannot accept its conclusion that §518 is nothing more than a mine-run price regulation. In regulating the communication of prices rather than prices themselves, §518 regulates speech.

The Court does not decide whether this law is constitutional. Now that the Court has found that the law regulates speech, the case is sent back to the Second Circuit to decide if the law is a valid speech regulation or whether it can be upheld as a valid disclosure requirement. The only direction for the Second Circuit is to treat this law as a speech regulation and decide whether it violates the First Amendment.

Sexual harassment victim is awarded $25,000 in damages

Employment discrimination cases are not always resolved in federal court. Some plaintiffs file complaints in the State Division of Human Rights and/or the Equal Employment Opportunity Commission, which can investigate and settle the complaints. The SDHR can hold an evidentiary hearing to get to the bottom of things. After someone wins or loses, the case then proceeds to state court.

The case is In the Matter of AMG Managing Partners v. New York State Division of Human Rights, an Appellate Division case issued on March 31. This case went to an SDHR hearing. The SDHR found in favor of the complainant, who alleged she was sexually harassed in violation of the state human rights law. The SDHR awarded her $65,000 in damages for pain and suffering, It also fined the individual defendants $15,000 and ordered him to attend an unlawful discrimination training seminar. The plaintiff also won $5,720 in lost wages arising from her forced resignation, what lawyers call "constructive discharge."

The Fourth Department upholds the finding that the complainant was sexually harassed. Unfortunately, the decision tells us nothing about what actually happened in the workplace, which is one reason why we have few state court decisions that fully outline what harassment is actionable under state law. But we do know that the SDHR awarded the victim $65,000 for pain and suffering. The Fourth Department thinks that amount is too high, and it reduces the award to $25,000. From my experience, the reduced amount is more in line with SDHR practices. The agency does not award the high damages that you'll see in federal court with a jury.

The appellate court notes that plaintiff was not required to corroborate her pain and suffering claims. "In challenging the award for mental anguish and humiliation, petitioners rely heavily on the fact that complainant failed to submit documentary evidence to corroborate her testimony that she sought counseling 33 times in the four months following her constructive discharge. Contrary to petitioners’ contention, such testimony does not require corroboration inasmuch as proof of mental anguish 'may be established through the testimony of the complainant alone.' This is a common defense argument, that the pain and suffering is subjective and cannot be objectively measured. But this case reminds us that plaintiff's testimony on this issue is enough.

What makes this case interesting is that the employer challenged the sexual harassment findings by arguing that the plaintiff was not really harassed because she "may have used sexually inappropriate language or engaged in sexually inappropriate conduct with a longtime person friend who worked in the same office." In other words, the plaintiff was not subjectively offended by the harassment. This defense is not going to cut it these days. People are allowed to have a private life. The Fourth Department cites a Fourth Circuit case from 1987, Swentek v. USAir, Inc., 830 F.2d 552 (4th Cir. 1987), for the proposition that a plaintiff's "use of foul language or sexual innuendo in a consensual setting does not waive her legal protections against unwelcome harassment." There must be few cases on this issue in our jurisdiction, though the Fourth Department also cites a case from the Southern District of New York, Danna v. NY Telephone Co., 752 F. Supp. 594 (SDNY 1991), for this proposition.

Seventh Circuit rules that sexual orientation discrimination violates Title VII

A federal appeals court in Chicago has ruled that Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation. The Seventh Circuit is the first Circuit court to rule this way, reasoning that Title VII's prohibition against sex discrimination also protects gays and lesbians from hostile employment decisions based on their sexual orientation.

The case is Hively v. Ivy Tech Community College, decided on April 4. Hively is a lesbian who worked for the College. After the College declined to renew Hively's employment, she sued under Title VII. The Seventh Circuit originally ruled against her, but the en banc court overturns Circuit precedent in ruling for Hively, adopting the EEOC's view that sexual orientation discrimination violates Title VII.

The Seventh Circuit opens its analysis by noting it has authority to take up this question. "The question before us is not whether this court can, or should, 'amend' Title VII to add a new protected category to the familiar list of 'race, color, religion, sex, or national origin.' 42 U.S.C. § 2000e-2(a). Obviously that lies beyond our power. We must decide instead what it means to discriminate on the basis of sex, and in particular, whether actions taken on the basis of sexual orientation are a subset of actions taken on the basis of sex. This is a pure question of statutory interpretation and thus well within the judiciary’s competence."

This language about the Court's capacity to take up this issue may not seem a remarkable proposition, but there was a time when courts had outright rejected the position that Title VII prohibits sexual orientation discrimination. But the world has changed, and the landscape governing the rights of gays and lesbians -- including the Supreme Court's ruling on same-sex marriage and intimate sexual endeavors -- makes this analysis of Title VII a logical next step. This dovetails with the Seventh Circuit's tutorial on statutory interpretation, noting that Title VII prohibits today what no one had anticipated in 1964, including sexual harassment, same-sex workplace harassment, as well as discrimination based on sexual stereotypes.

The Court summarizes Hively's position: "Hively offers two approaches in support of her contention that “sex discrimination” includes discrimination on the basis of sexual orientation. The first relies on the tried-and-true comparative method in which we attempt to isolate the significance of the plaintiff’s sex to the employer’s decision: has she described a situation in which, holding all other things constant and changing only her sex, she would have been treated the same way? The second relies on the Loving v. Virginia, 388 U.S. 1 (1967), line of cases, which she argues protect her right to associate intimately with a person of the same sex. Although the analysis differs somewhat, both avenues end up in the same place: sex discrimination."

On the pure discrimination angle, the Seventh Circuit reasons it this way:

Hively alleges that if she had been a man married to a woman (or living with a woman, or dating a woman) and everything else had stayed the same, Ivy Tech would not have refused to promote her and would not have fired her. (We take the facts in the light most favorable to her, because we are here on a Rule 12(b)(6) dismissal; naturally nothing we say will prevent Ivy Tech from contesting these points in later proceedings.) This describes paradigmatic sex discrimination.

The Circuit adds:

Viewed through the lens of the gender non-conformity line of cases, Hively represents the ultimate case of failure to conform to the female stereotype (at least as understood in a place such as modern America, which views heterosexuality as the norm and other forms of sexuality as exceptional): she is not heterosexual. Our panel described the line between a gender nonconformity claim and one based on sexual orientation as gossamer-thin; we conclude that it does not exist at all. Hively’s claim is no different from the claims brought by women who were rejected for jobs in traditionally male workplaces, such as fire departments, construction, and policing. The employers in those cases were policing the boundaries of what jobs or behaviors they found acceptable for a woman (or in some cases, for a man).

 The Seventh Circuit further holds that sexual orientation discrimination punishes people based on whom they associate with. In 1967, the Supreme Court made it illegal to prevent interracial marriages. Both parties to an interracial marriage suffered discrimination because of their race, the Circuit notes. That case was Loving v. Virginia. The Seventh also notes that the Second Circuit held in 2008 that it was unlawful for an employer to backstab an employee based on the race of his fiance. That's the Holcomb decision. The Seventh Circuit has utilized similar reasoning in the past. It finds now that the associational discrimination theory makes sense. "If we were to change the sex of one partner in a lesbian relationship, the outcome would be different. This reveals that the discrimination rests on distinctions drawn according to sex."

Judge Posner writes an interesting concurrence, taking a potshot at the recent sexual harassment scandal at Fox News. Three judges dissent.

As Second Circuit watchers know, the NY-based Circuit court recently decided against adopting the EEOC's position on sexual orientation discrimination and stood firm on a 1990 Second Circuit precedent that said discrimination against gays and lesbians does not violate Title VII. Two judges on that panel suggested the Court might someday consider adopting the EEOC's position. The plaintiff in that case won the appeal in any event because he did not conform to gender stereotypes, still the traditional way to win a Title VII case. Several cases are now pending in the Second Circuit that raise this issue, including the Zarda case, argued on January 5, 2017.