No costs for losing plaintiff in funky search case

When you lose an appeal in federal court, you usually have to pay the winner's costs. These costs usually include the out-of-pocket expenses for bringing the appeal, including photocopying and other necessary expenditures. This may not sound like much, but it can total more than $1,000. What if the losing plaintiff doesn't have the money?

The case is Moore v. County of Delaware, decided on November 2. In July, the Court of Appeals rejected Moore's due process claim arising from a warrantless police search of his house when his lover called authorities after entering the house without his permission and panicked when an unidentified caller rang the telephone. The police showed up and discovered drugs in the house, and then the government seized Moore's property, allegedly without due process. The Second Circuit held that defendants had qualified immunity from suit because the legal violation was not clearly established.

Pouring salt into the wound, the government then sought costs from Moore in the amount of $2,572.18. Moore objected because he is "nearly destitute." Although an award of costs is the rule, not the exception, the Court needs a good reason to waive them. The Court of Appeals (Cabranes, Hall and Stein, D.J.) does not set forth a bright-line rule that says nearly destitute losing parties do not have to pay costs. Instead, the Court says "denial of costs may be appropriate where a losing party can demonstrate misconduct by a prevailing party, the public importance of the case, the difficulty of the issues presented, or its own limited financial resources."

These factors weigh in Moore's favor. The case did involve governmental misconduct even though the government ultimately prevailed, in that the evidence seized from Moore's property was suppressed by a state court. Moore brought this case in good faith and, of course, he cannot afford the costs. Under the circumstances, he's off the hook for the $2,572.18.

Post office retaliation case is reinstated for trial

In baseball, a tie goes to the runner. In litigation, close calls on the evidence go the jury. At least in employment discrimination cases.

The case is Faul v. Potter, decided by summary order on December 9. Roberta Faul worked for the Post Office. She filed a discrimination complaint with the Equal Employment Opportunity Commission in May 2002 and her position was eliminated in March 2004. Normally, if you want to prove a retaliation claim through circumstantial evidence, this nearly two-year gap between protected activity and termination is too long to connect the EEOC complaint with her termination. But, as the Court of Appeals (Raggi, Walker and Dearie [D.J.]), reminds us, causation is proven either "indirectly, by showing that the protected activity was followed closely by discriminatory treatment ... or directly, through evidence of retaliatory animus directed against the plaintiff by the defendant." Faul meets this de minimus burden through evidence that her superior, Sands, threatened her job in September 2002.

The harder issue is pretext, a necessary element to Faul's claim. Faul can prove that management's reason for the elimination of her position was pretextual. The Second Circuit goes out of its way to praise the district court for its careful review of the case. This seems to have been a close one. But the Court of Appeals here is taking seriously the principle that all ambiguities are interpreted in the plaintiff's favor on a summary judgment motion.

After Faul filed her EEOC charge, Sands requested an audit of his own office. This was an unusual maneuver, and it may establish that he was looking for a way to fire Faul. While the auditors recommended that Faul's position be eliminated, the record suggests that Sands had the final say on this decision. The Court concludes, "the record here permits the inference that it was Sands's retaliatory motives that occasioned not only their arrival, but also implementation of their recommendation" to eliminate Faul's position. The fact that Sands and Faul were not getting along in the 15 months between her EEOC complaint and the audit further helps Faul's position on appeal. It was apparently also unusual for an occupied position to be excessed. On this record, Faul gets her day in court.

JP Morgan underwriters are entitled to FLSA overtime pay

Not everyone is entitled to overtime. The Fair Labor Standards Act says that you get overtime pay if you work more than 40 hours per week unless, among other things, you work in a "bona fide executive administrative, or professional capacity." This provision brought a Mr. Michael J. Davis and his co-workers into Federal court against J.P Morgan Chase.

The case is Davis v. J.P. Morgan, decided on November 20. Davis and others were underwriters responsible for approving loans in accordance with guidelines provided by J.P. Morgan, which regarded these employees as exempt from the FSLA. This was a huge gamble. If J.P. Morgan called it wrong, it can owe a lot of people a lot of money. J.P. Morgan called it wrong, the Second Circuit (Lynch, Pooler and Livingston) rules in vacating summary judgment in favor of the employer.

Federal regulations say that someone works in a bona fide administrative capacity if she performs work "directly related to management policies or general business operations" and "customarily and regularly exercises discretion and independent judgment." This is in contrast to "'production' or, in a retail or service establishment, 'sales' work." Where do the plaintiffs in this case fall?

Underwriters at Chase were primarily responsible for selling loan products under management's guidelines. As the Second Circuit puts it, "Underwriters were given a loan application and followed procedures specified in the Credit Guide in order to produce a yes or no decision" from the customer. "Their work is not related either to setting 'management policies' nor to 'general business operations' such as human relations or advertising, but rather concerns the 'production' of loans -- the fundamental service provided by the bank." As far as the FLSA is concerned, these underwriters fall under the category of production rather than of administrative work.

This opinion was written by Judge Lynch, newly appointed to the Second Circuit. He was a district court judge when he heard the appeal and became a Circuit judge when he wrote the opinion. The opinion is well-structured. It starts by suggesting that Second Circuit authority points in this direction, and then it cites what the Court deems "persuasive decisions of our sister circuits" as well as district court rulings in the Second Circuit. Trial court decisions from around the country round out the discussion. Judge Lynch then distinguishes a few cases cited by J.P. Morgan from around the country. Legal scholarship that any Second Circuit junkie can appreciate.

Supervisor's "purposeful ignorance" of sexual harassment may violate Title VII

What is an employer's obligation to rid the workplace of sexual harassment? And when can we presume that management even knew about a hostile work environment? In a ruling handed down last week, the Second Circuit held that a manager should have known that a female subordinate was a sexual harassment victim and that the district court should not have granted summary judgment to the employer.

The case is Duch v. Jakubek, issued on December 4. This case actually raises several issues surrounding employer knowledge of a hostile work environment and its obligation to clean up the workplace. While two managers knew that Duch was being harassed, one of them was actually excused for not taking remedial action. As the Second Circuit does not issue many rulings on the employer's liability for co-worker harassment, this is an important case.

Duch worked for the Office of Court Administration. She was harassed by Kohn. When Duch was assigned to work with Kohn, she asked her supervisor, Jakubek to change her schedule. Kohn told Jakubek that he may have done "something or said something that I should not have." When Jakubek spoke about this with Duch, she said she did not want to talk about it. Jakubek was fine with this. He told Duch that "I don't want to know what happened."

Duch more explicitly told the EEO liaison, Christiano, about the harassment. But Duch did not speak to Christiano about this in her role as EEO liaison; she spoke to Christiano as a friend. Duch told Christiano not to report Kohn's harassment, and Christiano did not report it.

While Christiano actually knew about the harassment and Jakubek had reason to know about it, no one reported it, and Duch deteriorated mentally. If Title VII requires management to take prompt remedial action to investigate and remedy sexual harassment, is OCA liable for the inaction of Jakubek and Christiano? The answer is No and Yes.

First, some underbrush. Management did provide Duch a reasonable avenue to complain about the harassment. Christiano may not have been the best EEO officer in the world (she did not go to the sexual harassment training and inappropriately suggested that Duch "grab and hurt" the harasser. But OCA had other avenues for complaint besides the EEO office, including the Inspector General, other supervisors and a Work Life Program representative. If Duch is going to win the case, it will not stem from OCA's lack of reasonable avenues for complaint.

She also cannot win on the basis of Christiano's failure to report the harassment. According to Christiano's unrefuted testimony, Duch told Christiano not to report it. The Second Circuit dealt with a similar issue in Torres v. Pisano, 116 F.3d 625 (2d Cir. 1997), which presumes that the victim's instruction that a supervisor not take action on the harassment will absolve the company of any Title VII liability. Although Torres says that "there is certainly a point at which harassment becomes so severe that a reasonable employer simply cannot stand by, even if requested to do so by a terrified employee," as Christiano was not aware of the extent of Duch's emotional harm, she did not drop the ball in keeping Duch's confidence.

It is Jakubek's inaction which may violate Title VII, entitling Duch to a trial. Supervisors have a duty to take affirmative steps to stop the harassment. He knew that Duch did not want to work with Kohn and that Kohn had engaged in sex-related misconduct toward women in the past. He also told Kohn to "grow up" in hearing from Kohn himself that he may have done something wrong. Jakubek also told Duch that he did not want to hear about her problems with Kohn. The Second Circuit (Cabranes, Leval and Hall) concludes, "Based on this aggregation of facts, a jury could reasonably find that Jakubek strongly suspected that it was sexual harassment on Kohn's part that was responsible for Duch's emotional reaction, that Jakubek knew the issue was ongoing" and that Jakubek had a duty to inquire further rather than to discourage Duch from revealing the full extent of the harassment. In other words, a supervisor's "purposeful ignorance of the nature of the problem ... will not shield an employer from liability under Title VII."

Jakubek's inaction means that OCA could lose the case at trial. Jakubek had reason to know of the harassment October 2001, when he spoke with Duch about her problems with Kohn. Although management got around to investigating the harassment in January 2002 (when Duch told someone else about it), that was too long after Jakubek's constructive knowledge of the hostile work environment.

Defendant pays nominal damages and walks away from the case

There are ways for defendants in Section 1983 cases to make the lawsuit go away by simply consenting to judgment for the plaintiff. They can even do it without any concession of liability on their part. This is an obscure procedure, but it surfaced recently in a First Amendment case against the President of the College of Staten Island.

The case is Husain v. Springer, 2009 WL 3422927, decided by the Eastern District of New York on October 26. If you're a First Amendment junkie, Husain is a hell of a case. It started in 1997 when the college president nullified the student elections because the college newspaper had allegedly broken the rules in endorsing student candidates. In 2007, the Court of Appeals held that the newspaper editors had a case under the First Amendment because the college's act of nullifying the student elections had a chilling effect on the newspaper's First Amendment activity. That decision is reported at 494 F.3d 108 (2d Cir. 1997). The Second Circuit ruling was notable not only for its innovative First Amendment reasoning but because Chief Judge Jacobs dissented despite admitting that he did not want to waste his time by reading the majority opinion.

Interesting case, but the newspaper editors are only entitled to nominal damages. These damages are separate from pain and suffering and punitive damages. Nominal damages are available when the defendant has broken the law but no other damages are available. The case can proceed on a nominal damages theory, and in constitutional cases it may be the only way that courts can decide important precedents where the plaintiffs have not suffered tangible damages.

What happened here is that after the Court of Appeals reinstated the case, the defendant college president decided to end the case by paying out the damages to which plaintiffs are entitled: one dollar for each of the eight plaintiffs. Despite paying out the damages, the defendant does not have to concede liability. Is this legal? Yes, says the court. Defendants can consent to judgment and pay any appropriate damages without conceding liability. As the Court of Appeals has held, "There is no justification for taking the time of the court and the defendant in the pursuit of minuscule individual claims which defendant has more than satisfied." Abrams v. Interco Inc., 719 F.2d 23, 32 (2d Cir. 1983). Judge Gershon applies that logic in this case, and the case is over after 12 years of litigation.

Plaintiffs vigorously objected to this tactic, but Judge Gershon cites from a Fifth Circuit case holding that "A winning party cannot appeal merely because the court that gave him his victory did not say things that he would have liked to hear, such as that his opponent is a lawbreaker." Judge Gershon also emphasizes that the Second Circuit's ruling in this case is still good law and a viable precedent. So, the decision in this case ends with language you don't normally see in civil rights cases: "Defendant's motion for entry of judgment against herself is granted."

It's not defamatory to accuse inmate of cooperating with authorities

How would you like it if someone accused you of cooperating with the police? What if you were in jail and other inmates frowned upon that allegation? Is it defamation? The Second Circuit says it is not.

The case is Michtavi v. New York Daily News, decided on November 25. Michtavi is in jail, convicted on a narcotics offense. After the Daily News wrote that he planned to cooperate with police and testify against an organized crime figure with whom he was associated, he sued for defamation.

Courts ask what a "right-thinking person" would think of the allegation in determining whether the plaintiff is entitled to protect his reputation in a defamation suit. The Court of Appeals (Jacobs, Kearse and Gardephe, D.J.) notes that the Restatement on Torts says that a statement is not defamatory if the relevant audience carries "standards [that] are so anti-social that it is not proper for the courts to recognize them."

Well, you know where this is going. The relevant audience here is the inmate population which doesn't like cooperating witnesses. This is not enough for plaintiff. In the context of a defamation case, no one really cares what inmates think. Citing cases which include a State Supreme Court decision from 1941 and a Southern District case written by Judge Mukasey (who later became Bush 43's Attorney General), the Second Circuit notes that "The population of right-thinking persons unambiguously excludes 'those who would think ill of one who legitimately cooperates with law enforcement.'"

Court of Appeals affirms overtime ruling for non-exempt worker under FLSA

The Second Circuit has ruled in favor of a worker who was denied overtime pay, ruling that the Fair Labor Standards Act does not exempt workers whose job skills are not customarily the product of advanced educational training.

The case is Young v. Cooper Cameron Corp., decided on November 12. Young was a highly-skilled Product Design Specialist II with 20 years of engineering-type experience but no college degree. He worked with hydraulic power units which contain fluid under pressure for use in connection with oil drilling rigs. After Young was let go in a reduction-in-force, he sued for all the the overtime which defendant had denied him.

The legal standard governing whether a worker is exempt from overtime pay is whether he is employed in a professional capacity. Regulations define "professional" as employees whose work requires "knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study." We presume that if the job requires an academic degree, the job is exempt from FSLA. (This means that lawyers who did not go to law school are still exempt).

As the Court of Appeals (Jacobs, Pooler and Parker) frames it, "the issue is whether a position can be exempt notwithstanding the lack of an educational requirement, if the duties actually performed require knowledge of an advanced type in a field of science or learning." The judgment in Young's favor is affirmed. Chief Judge Jacobs writes, "an employee is not an exempt professional unless his work requires knowledge that is customarily acquired after a prolonged course of specialized, intellectual instruction and study.." Although Young had specialized knowledge, he was entitled to overtime under FSLA because his job did not customarily require an advanced degree. In fact, none of the employees in his title had more than a high school education.

The Court of Appeals handled this issue on a clean slate in this Circuit, but it does note that other federal circuit courts have ruled the same way. The Court of Appeals does reject as non-persuasive some contrary district court rulings and an unpublished Eleventh Circuit case. Although this is an issue of first impression in the Second Circuit, the Court of Appeals also sustains the district court's finding that Cooper Cameron's erroneous classification of Young as exempt was willful, which entitles Young to additional damages.