Monday, October 18, 2021

What happens when the case fails to settle?

What happens when settlement fails? A law professor/mediator has reviewed the numbers.

Vivian Berger has written in the past on the success rate for trials in the Southern and Eastern District of New York. This time around, she looks at the cases she has mediated over the last 35+ years.

Parties who file employment cases in the Southern and Northern Districts of New York are ordered to mediation. The courts do this because they know that early mediation can save everyone a lot of time and aggravation and, since most cases settle at some or another anyway, why not try to resolve the case early? 

Mediation is difficult for all parties. The plaintiff may enter the process in a state of anger over her unfair treatment. She may or may not listen to her lawyer's advice about the value of the case and whether to put the conflict behind her. The defendant is enraged that it's even being sued; no defendant will ever admit to breaking the law or discriminating against anyone, and the employer probably sees the entire exercise as extortion. The mediator, meanwhile, is handling the proceeding without charge (or for a small fee under the district court rules) and the process is tedious as he tries to bring all sides to a middle number. That can take hours and even multiple mediation sessions. Of course, when you're talking about money, emotions, and anger, it is hard to resolve the case. 

Yet, most cases wind up settling, if they are not dismissed on a motion for summary judgment. This is why we have so few civil trials. Berger's research shows that, of the 435 discrimination and wage & hour cases that she has mediated, most of them did settle at some point or another, if not with Berger than later on with assistance from the court or through the parties' attorneys working it out themselves. Berger was able to track 29 of the cases that were resolved on the merits. In 25 of those cases, it ended badly for the plaintiff, with 19 grants of summary judgment for the employer, two sui generis dismissals with prejudice, three defense verdicts following trial, and one defense victory following an EEOC hearing. The employee prevailed at trial four times, three times in federal court and once in arbitration.

Berger does not conclude that the best course for the plaintiff is to always settle at mediation, partly because he may get a better deal later on through independent settlement discussions. She also notes there are reasons a case does not settle, not only because the employer may not offer any money (or offers a nuisance amount) but because plaintiffs may "seek even an improbable victory in order to teach the employer a lesson and, it is hoped, prevent others from suffering discrimination in the future. Or they may wish to inflict pain on their adversary by forcing it to spend a lot of money in mounting a defense." When that happens, "if a claimant understands the risks she confronts and is conscious of the basis for her decision — rather than, say, so blinded by emotion that she is not really making a knowing choice among options — she is acting in her own interests, whether or not these appear rational in strictly economic terms." (Emphasis is Berger's).

Having said that, Berger concludes that "if, for whatever reason, she decides to prosecute her case till adjudication by a judge or a jury, she is extremely likely to lose." (Berger's emphasis). Here are the sobering numbers:

plaintiffs have a roughly 38.9% chance of surviving a summary judgment motion (at least, in our local federal courts) and a 30.0% chance of obtaining a favorable verdict at trial. In other words, the combined overall rate of success is a mere 11.7% (.389 times .330), even less than the 13.8% probability revealed in this account of my failed mediations. In addition, focusing just on summary judgment, the 65.5% rate of loss experienced by my claimants — which can be inversely expressed as a 34.5% survival rate — comes close to the 38.9% rate documented in my earlier study of the subject.

Citations to this research are found in the mediation article.  

Why do cases fail to settle? Berger suggests the following:

Although each matter presented its own peculiar dynamics, more often than not actions taken by the claimant’s side scotched resolution. When impasse occurred, it was frequently because either the employee started “too high” — at times, so much so that the employer declined to respond, thereby depriving the plaintiff of the chance to elicit a potentially acceptable offer — or, in the end, held out for “too much.” I use the quoted normative terms not just because 20-20 hindsight revealed that the game was not worth the candle, but also because my evaluation of the case at the time indicated that I believed the plaintiff was taking a very big gamble and making a mistake (at least, if she hoped to maximize her monetary gain).

Sometimes, the lawyer overvalued the case; often the client did, disregarding the mediator’s cautions and, I suspect, her attorney’s advice. Occasionally, both client and counsel had drunk the same Koolaid, or the latter may have feared losing the former’s confidence by pushing too hard. In no small number of instances, however, defendants created the barrier to settlement by taking a no-pay position or offering only nuisance value. While later events (often in the form of summary judgment) may have validated their view of the complaint’s absence of merit, usually any consideration of their prospective attorneys’ fees would have justified offering more.

Thursday, October 14, 2021

NY Court of Appeals broadly interprets employment law protecting convicted job applicants

Did you know it is illegal in New York to decline to hire someone because of their criminal record? You can only slam the door if management shows an unhealthy connection between the crime and the job, i.e., a convicted embezzler cannot work as the comptroller. This case broadly interprets the statute.

The case is Sassi v. Mobile Life Services, issued by the New York Court of Appeals on October 12. Plaintiff worked for Mobile Life. After Sassi began working there, he was convicted for calling in a false emergency to 911. He was sentenced to 60 days' incarceration, which of course cost him his job. When Sassi was released from jail, he told Mobile Life that he wanted his job back. Human Resources told Sassi that the company had previously fired others who had been incarcerated and so, consistent with company policy, it could not bring him back, either. Sassi sues under the Correction Law article 23-A over this refusal to re-employ him.

The lower courts said Sassi has no case because he was convicted during his employment. The Court of Appeals unanimously reverses and finds that Sassi can return to work provided his crime does not create any kind of risk for Mobile Life, what we call the "direct relationship" test under the statute. Under the Correction Law, these protections apply to "any application by any person for a license or employment . . . who has previously been convicted of one or more offenses." 

Writing for the Court, Chief Judge DiFiore states that while the legislature may not have considered this precise scenario -- a request for re-employment with a pre-incarceration employer -- the statute protects Sassi in any event. The statutory language makes a difference here, stating that the law protects "any application by any person" for employment. "Any" means any. That would include re-employment to your old job that you lost upon the conviction. What also help Sassi is the statutory objective: allowing convicted persons a chance at re-entering society and making a living without having your criminal record follow you around for the rest of your life.

I would guess that Mobile Life will argue on remand that it cannot re-hire Sassi because there is a direct connection between Mobile Life's mission (it is an ambulance service) and Sassi's conviction (falsely reporting an emergency to 911). But that is for the lower courts to worry about. For now, the Court of Appeals offers what is perhaps the broadest interpretation of this statute in years

Wednesday, October 13, 2021

Federal judge strikes down NY vaccine mandate that excludes religious objection

A federal judge in Utica has ruled that the State Department of Health cannot impose a vaccine mandate on healthcare workers without allowing them to assert a religious objection.

The case is Dr. A v. Hochul (opinion embedded in article at this link), issued by Judge Hurd on October 12. On August 23, the DOH issued an order stating it would only recognize medical objections to the mandate. This mandate therefore revolved a religious objection that the DOH had authorized on August 18. Plaintiffs sued, arguing their religious objection draws from "the sincere religious belief that they cannot consent to be inoculated ... with vaccines that were tested, developed or produced with fetal cell lines derived from procured abortions."

The plaintiffs invoke Title VII of the Civil Rights Act of 1964, which prohibits religious discrimination in employment, in claiming the DOH mandate violates federal law. Employers must consider in good faith whether the employee is entitled to an accommodation for their religious practices. That  accommodation must be granted unless it would pose an undue hardship on the employer. For this reason, Judge Hurd finds, the mandate "stands as an obstacle to the accomplishment and execution" of Title VII of 1964.

Plaintiffs also raise a constitutional objection to the DOH under the free exercise clause, which protects religious freedom. Laws and regulations that burden religious practices are subjected to "strict scrutiny," which is a difficult hurdle for the government to overcome, as the laws must both promote a compelling governmental interest and be narrowly tailored to promote that interest. If the law is neutral and applies to everyone, then strict scrutiny does not apply and the law will be upheld if the government can articulate any "rational" basis for it, which means the justification will be upheld even if the justification is arguable. This regulation is subject to strict scrutiny because the it was amended on August 23 to remove the religious exception, "the kind of 'religious gerrymander' that triggers strict scrutiny," Judge Hurd says.

Having settled on the standard of review (strict scrutiny), the Court strikes down the regulation as it applies to religious objectors. Since the medical exception remains in the regulation, and the state therefore accepts a risk for these healthcare workers who can assert such an exception, the regulation is not narrowly-tailored to suppress and eliminate the virus. "There is no adequate explanation from defendants about why the 'reasonable accommodation' that must be extended to a medically exempt healthcare worker [under the regulation] could not be similarly extended to a healthcare worker with a sincere religious objection." Since the DOH regulation is not narrowly tailored, the Northern District of New York strikes it down.

Thursday, October 7, 2021

Fireman may bring First Amendment case over fire-origin cover-up

The Court of Appeals holds that a New York City firefighter states a claim for free speech retaliation against the fire department for refusing to alter a report about the origins of a fire that seriously damaged a building and led to the death of a firefighter. This is one of the rare cases where the plaintiff survives a motion to dismiss a free speech retaliation claim in the Second Circuit.

The case is Specht v. City of New York, issued on October 6. Pursuant to his duties as a fire investigator, plaintiff determined that the fire was caused by an outside film crew. Worried about offending the lucrative movie industry which often films throughout New York City, plaintiff's supervisors wanted plaintiff to find that a faulty boiler caused the fire. Plaintiff would not alter the report, and after he was removed from the investigation, his superiors issued a report that blamed the boiler. Plaintiff went on to tell the Department of Investigation and the fire marshals about this cover-up, and his notice of claim against the supervisors was covered in the Daily News.

Is there a speech retaliation claim? The Court of Appeals (Parker, Newman and Cabranes), says Yes. In 2010, the Second Circuit held in Weintraub v. Board of Education that a government employee does not engage in protected citizen speech when his speech is "part and parcel" of his job duties. That standard scaled back these claims, on authority of the Supreme Court's 2006 ruling in Garcetti v. Ceballos. Since many government employees who speak out about corruption learn about this misconduct through their job duties, the Weintraub/Garcetti language his killed off many speech retaliation claims. But not this one.

Plaintiff pleads a plausible claim because (1) government misconduct is almost always a matter of public concern and (2), on the Garcetti issue, while plaintiff learned about the cover-up through his usual job duties, "this case involves the refusal to file a false report, which is different than simply filing a report. We have been clear that a refusal to file a false report may receive First Amendment protection. In Jackler [v. Byrne], we concluded that the appellant’s refusals to obey demands to file false statements constituted speech activity that was significantly different from the mere filing of a report." Moreover, plaintiff's speech to outside government agencies also was not pursuant to his job duties because it was not his job to report misconduct in this manner; he was only responsible for preparing internal reports, not blowing the whistle outside the chain of command. The main event in this ruling is the Garcetti holding.

I argued Jackler in 2011. I did not think I would see another First Amendment case involving a governmental employee's refusal to falsify a report, which meant the complex holding in Jackler was unique on its facts, maybe the reason the Supreme Court did not grant the certiorari petition filed by the defendants in Jackler. That holding has now been applied in this case, confirming that the Court of Appeals will not tolerate governmental cover-ups like this, and that these facts will get around the broad Garcetti holding.

The Court further holds that plaintiff makes out a retaliation case because the adverse actions (being placed on modified duty, being forced to turn in his gun, badge and ID card), took place within five months after plaintiff spoke out. That brings this case within the legitimate time-frame for retaliation claims. I have seen recent district court cases that have tried to narrow the temporal proximity for retaliation cases, but this case deems the five-month analysis a noncontroversial time period.

Wednesday, October 6, 2021

A twist on qualified immunity

Lawyers who handle Section 1983 cases know qualified immunity, which eliminates liability against police officers and other public officials if the law at the time of the incident was not clearly established, that is, no Second Circuit case was directly on point. This case highlights a gloss on qualified immunity.

The case is Chase v. Town of Canton, a summary order issued on October 4. The idea behind qualified immunity is that if the law was not clearly-established, then the police or other public official was not on constructive notice that he was violating someone's constitutional rights. So the case is dismissed as early as possible since this immunity was intended to prevent public officials from being sued in the first place. This principle is so strong that if qualified immunity is denied on the summary judgment motion, the defendant seeking immunity can take an interlocutory appeal on that issue rather than wait for a final judgment, which is when most appeals can be taken.

The rule that the defendant may take an immediate appeal does not count, however, when the trial court in denying summary judgment says there are factual disputes that must be resolved before qualified immunity can be determined. That is what happened here. 

This case alleges that plaintiff was falsely arrested and denied equal protection arising from her alleged false statement to the police about a sexual assault against her. The trial court denied summary judgment on the qualified immunity issue because a jury must first determine if she intentionally made a false written statement about the incident, among other things. That is enough for the Court of Appeals (Chin, Nardini and Livingston) to find there is no appellate jurisdiction over the appeal. The Court states:

We likewise conclude that factual disputes preclude our consideration of the officers’ assertion of qualified immunity. The parties disagree on several facts material to the existence of probable cause, including whether Chase made her initial written statement under oath; whether Chase  omitted  the  full extent of the sexual contact  in  her  initial  statements  with  the  intent  to mislead authorities; whether Chase characterized the sexual contact as  consensual; the circumstances of her supplemental filing and its potential impact on a magistrate; and the contents and  weight  accorded to various  details  in  a  hypothetical corrected affidavit. Defendants-Appellants have not shown that they would be entitled to qualified immunity as a matter of law under Chase’s version of the facts, and thus we cannot consider their claim.

Tuesday, October 5, 2021

For labor-law fanatics only

This is a particularly complex labor law case involving the National Labor Relations Board and an electric company from upstate New York. The Court of Appeals rules against the company's efforts to avoid an agreement with a labor union, and the termination of an employee who is now entitled to damages.

The case is NLRB v. Newark Electric Corp., issued in September 17, more than a year following oral argument. Newark Electric was an electrical contractor owned by Richard Colacino, who turned the business over to his son, James, who formed a new corporation, Colacino Industries. James eventually formed a third company, Newark Electric 2.0. The union and James then entered into two Letters of Agreement, which would bring the companies into a multi-employer collective bargaining agreement. The first LOA involved the union and Newark Electric. The second involved Colacino Industries and the union. Later on, pursuant to the terms of the LOA, James cancelled the LOA with Newark Electric 2.0. A few days later, James told the union that this cancellation also applied to the LOA with Colacino Industries. 

The Court of Appeals hold that the first cancellation does not mean the second LOA is also cancelled. While the companies are single-employers and one is an alter-ego of the other (as they have common ownership, etc., the LOA did not supersede or merge with the first LOA. (Under normally circumstances a first contract merges with the second contract between the parties). The employer's legal arguments on this point have a superficial appeal to them, the Court of Appeals says, since the entities are a single employer/alter ego. But adopting that argument is a bad idea. The Court reasons:

it would be misguided to apply the merger doctrine to two contracts signed by facially distinct parties, relieving one of its voluntarily undertaken obligations, premised on an administrative agency’s post hoc application of a doctrine intended to further Congressionally endorsed aims to the contrary.


Monday, October 4, 2021

For federal practitioners only

The Federal Rules of Civil Procedure, and other procedural statutes in the United States Code, are a carefully-crafted set of rules that do not lend themselves to creative judicial interpretations. Unlike other statutes that contain vague or brief language, the Rules seem to anticipate any problem that may arise in civil litigation. Creativity in getting around the rules will usually fail. Like in this case.

The case is Taylor v. Medtronic, issued on September 30. Plaintiff sued this company over a defective mesh implant used during hernia surgery. He brought the case in Supreme Court, County of Broome, suing multiple defendants. For whatever reason, the defendants wanted to remove the case to federal court, which they can do if the parties are from different states and the case is valued over $75,000. If those removal factors are met, then removal to federal court is easy. 

It was not easy in this case, though. Under the removal statute, all defendants must agree to remove the case to federal court. Without unanimity, the plaintiff is left to litigate case against different defendants in state and federal court. Also, without unanimity, one defendant does not get to choose the forum for all other defendants. Who wants that? No one.  

In order to effectuate removal, all defendants must file a notice of removal within 30 days. Most defendants in this case did so, but not all. One defendant was untimely in filing its notice of removal. It failed to timely remove because it had mistakenly believed it was not properly served with the lawsuit. While the district court excused the late filing and allowed the case to be removed to state court, the Court of Appeals (Pooler, Park and Sullivan) reverses, and the case returns to Broome County. The Second Circuit reasons, "A properly served defendant cannot cure a failure to timely consent to removal by opposing a motion for remand when the opposition is filed after the thirty-day statutory period for removal lapsed."