Equality Bill - Published at last

The long awaited and eagerly anticipated Equality Bill has now been published in its first draft form and given its first reading. Needless to say it will subject to considerable debate through the various houses but a first draft however can be seen here.

The Bill itself proposes the following:-

• Allows positive discrimination during recruitment in favour of disadvantaged groups when faced with candidates who are otherwise equally qualified

• Reverses Malcolm v London Borough of Lewisham, and abolishes the list of areas in which a disability must impact (eg mobility, manual dexterity, memory or ability to learn, concentrate or understand etc.) I know this judgement caused unrest due to making it more difficult for claimants to succeed in claims of direct disability discrimination and as such this reversal is likely to slip through. Watch this space!

• Contains a clause allowing the Secretary of State to order employers with more than 250 employees to publish information about disparities in pay between male and female employees - although apparently the government has anounced that this power will not be exercised in the next four years. This will impact medium sized employers in terms of the administrative costs of maintaining such information.

• Outlaws any clauses in employment contracts which impose a secrecy obligation stopping employees discussing their pay packages. It has been a long held custom within certain organisations that pay not be discussed between staff members - whilst this will force employers to be more transparent, this could of course breed unrest and poor morale within businesses where there is disparity in pay but for lawful reasons such as skills, and performance.

• Introduces a new obligation for some public bodies to pay due regard to socio-economic disadvantage in making strategic decisions, and extends public sector duties to ensure equality to age discrimination

• Gives effect to recent European caselaw by outlawing discrimination by association.

These are all areas which will impact on the employers manage their staff and they should be prepared to take advice at every opportunity.

Court of Appeal: Release Bars Employee's Class Action

Watkins and Brown sued Wachovia Bank for mis-classification as exempt, as well as for individual wrongful termination and wage claims. There was a lot of litigation over arbitration, discovery and the like.

Brown ultimately settled her claims and signed a release, which covered all claims, including disputed claims for overtime. The trial court granted summary judgment against her, holding she no longer could participate in the class action. On the same day, the court denied the plaintiffs' motion for class certification of the wage claims.

Watkins settled her claims and signed a release as well. However, she purported to reserve the right to press any "class claims," and to receive an enhanced payment if the class claims were successful. She also reserved the right to appeal the denial of class certification.

On appeal, Brown argued that her release did not encompass claims for unpaid wages and that she was free to have signed the general release, but still maintain her wage claim. Relying on the recent decision in Chindarah v. Pick Up Stix, covered here, the court of appeal held that a release may properly include disputed claims for wages.

Then, the court turned to Watkins. The court held that Watkins could not preserve her right to appeal since she had signed a general release. Because parties cannot confer appellate jurisdiction and a court of appeal will not issue an opinion about a moot claim, the court dismissed the appeal. That left no appeal of the denial of class certification and, maybe, some annoyed absent class members?

The court of appeal was careful to distinguish what are called "pick off" cases. In those cases, the defendant pays a class representative all that s/he claims is due and then seeks dismissal of the action against that plaintiff. The plaintiff can stay in the case if s/he has an adequate economic interest in remaining in the case, such as the interest in attorneys' fees. But the court squarely held that a plaintiff accepting a voluntary settlement of all claims is not picked off and, therefore, not entitled to maintain a class action:

We believe that it is illogical to import the law governing "pick off" cases into the context of a voluntary settlement. Often, a plaintiff brings an action as a class action precisely because the attorney‟s fees involved in bringing the action individually would exceed the value of the any judgment the plaintiff could obtain individually. (Roper, supra, 445 U.S. at p. 338, fn. 9.) In such a situation, a "pick off" settlement, which gives the plaintiff only the relatively small amount sought as damages, may be inadequate to cover the substantial attorney‟s fees incurred in pursuing the litigation. Thus, the plaintiff who has been involuntarily picked off has not obtained satisfactory
relief, and is therefore permitted to continue pursuing the class litigation
until complete relief is received. This conclusion is supported by policy considerations which seek to prevent a defendant from avoiding class liability by picking off individual plaintiffs.

This is to be distinguished from the case of a voluntarily settling plaintiff. In such a case, the plaintiff has accepted an amount the plaintiff believes is sufficient to make the plaintiff whole. By voluntarily settling, the plaintiff has agreed to accept the offered sum in full satisfaction of the plaintiff‟s claim against the defendant. There are no public policy interests implicated by a settlement voluntarily accepted.

* * *

Applied to this case, it is apparent that Watkins‟s appeal must be dismissed. She has voluntarily released her wage claim against Wachovia in exchange for a $51,000 payment. While she attempted to reserve her right to pursue her "class claim," her "class claim" is simply a procedural device by which she pursued her substantive claim for overtime wages. Having settled her substantive claim, the class claim disappears, and her appeal of the denial of class certification must be dismissed. Watkins cannot salvage her right to appeal by asserting an economic interest in class certification in terms of a right to shift her attorney‟s fees to the class, if successful. If the class obtains a judgment or settlement, such recovery would belong to the class. Having voluntarily settled, she is, by her own choice, no longer a member of the class and cannot share in any such recovery.

The opinion is Watkins v. Wachovia Corporation and the opinion is here.

Alert the Media! Arbitration Agreement Enforced

As stated by the Court of Appeal,

The arbitration provision, contained in a separate paragraph initialed by Roman, provided, "I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by the company, that all disputes that cannot be resolved by informal internal resolution[1] which might arise out of my employment with the company, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules of the American Arbitration Association. This application contains the entire agreement between the parties with regard to dispute resolution, and there are no other agreements as to dispute resolution, either oral or written."

So, the first thing that jumps to mind is that a court would say it wasn't "mutual," in that it does not say that the Company will submit all disputes to arbitration. Forgive me my cynicism, but the courts seem to find any way possible to deny enforcement of these puppies.

Not this time. The court determined that there was no one-sidedness and that both parties would have to arbitrate all claims. The court had an interesting discussion of canons of construction of contracts contained in the Civil Code supporting enforceability.

The plaintiff also argued that the employer's propounding some paper discovery and even filing a motion to compel the plaintiff's deposition was a waiver. But no:

Although Roman incurred litigation expenses in serving and filing objections to
discovery requests and opposing the demurrer and motion to compel her deposition, those expenses are insufficient, by themselves, to support a finding of waiver: "[W]aiver does not occur by mere participation in litigation"‟ if there has been no judicial litigation of the merits of arbitrable issues" and no prejudice. (Saint Agnes, supra, 31 Cal.4th at p. 1203.) "Because merely participating in litigation, by itself, does not result in a waiver, courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses." (Ibid.; see also Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1197 [expense of responding to motions or other preliminary pleadings is not type of prejudice that bars later petition to compel arbitration].) The trial court did not err in impliedly rejecting Roman‟s waiver argument.

So, there you have it, an enforceable arbitration agreement. Take a picture. The case is Roman v. Superior Court (Flo-Kem), and the opinion is here.

Stanford GSB, Entry 20: 9 and 1/2 weeks, Google, CitiBank, Fannie Mae, Big Brother, and Keeping the Talent Happy

Only Ten Weeks Left. Wow. This year has moved quickly.

We just started (on April 1st) the Spring Quarter, the third of our three quarters in the Sloan program at the Stanford GSB. I guess that means only 9 and half weeks left.

It seems just yesterday we were sitting on the fourth floor of the GSB wondering how long it was going to take us to get used to being in school again, and how/when we might meet some of the MBA students.

And now, already there is talk of Graduation (ordering your caps and gowns, making sure you have enough units to graduate, and oh yeah, did you apply to graduate?).

Not only that but we’re already making preparations for the Orientation at the beginning of May for the next Sloan class – the Class of 2010.

I guess that’s the nature of a 1 year program, but it’s strange to be talking about next year’s class when we’re not done with this year’s class ☺

A lot has happened since my last blog entry. I’ll fill you in on whatever I can fit in: Read More

Eric Schmidt, Google, and the arrival of Big Brother

Before the end of the winter quarter, Eric Schmidt, the CEO of Google came and spoke at the GSB. Now, he’s already a guest lecturer for one class here, so it’s not that big of a deal, but it was one of the most highly attended talks I’ve seen since Steve Ballmer came to visit.

Bishop Auditorium, where the bigwhigs usually speak, was full and many of us had to go to an overflow classroom, which showed Eric talking on a big screen in the front of the room.

Now, generally speaking, I’ve been a fan of Google, and they’ve been the anti-establishment company for a long time now (Eric is also the only big company CEO who’s attended Burning Man, for example).

But I have to say, Eric’s talk creeped me out, and I wasn’t the only one.

He spoke about the future of Google, and how they can use the intelligence gained from what you’ve searched for to link to mobile devices and let you know when you’re passing a shop that has something in it you might have searched for.

Only with your permission, he slipped in, perhaps noticing that there might be some privacy issues being raised there.

Moreover, Google can monitor what search terms are coming from an entire community. So for example, if a community starts to have an above-average numbers of searches for “flu”, Google could take action, alerting the government that there might be an epidemic there.

Of course, he slipped in, very casually and almost as an after-thought, Google would only do these things with your permission.

A few of us in the overflow room started shifting in our seats. The big talking head at the front of the room was telling us that he knows what we’re thinking, what we’re buying, what our neighbors are thinking, and he has the ability and technology to alert the government to this.

Hmmm. I looked over at a classmate of mine, and his expression was as puzzled as mine. “Did he really just say what I thought he said?” Was this the twenty-first century equivalent of “I know what library books you’re checking out" ?

Now it’s funny, because when we think of “loving-to-hate” a nerdy looking, very wealthy white guy on a big screen in charge of a monopolistic technology company that may have grown too powerful, a different image usually comes to mind.

There’s a great TV mini-series, Pirates of Silicon Valley, from a few years ago, which tells the story of Microsoft and Apple (among others) in the early days of the PC revolution. At the end of the mini-series, Steve Jobs is speaking at MacWorld, and behind him, on the screen, in streaming video is Bill Gates head (oversized) smiling and looking down through his glasses at Steve. Microsoft has just rescued Apple from the clutches of bankruptcy, and Steve is grateful.

The last scene was meant to evoke the image of “Big Brother” from George Orwell’s 1984. It was also meant to evoke the image of Big Brother in the famous Apple commercial from 1984 (when IBM and Microsoft were Big Brother). Big Brother had arrived, and his name was Bill Gates, the mini-series seemed to be saying.

I couldn’t help but feeling, as I sat in that room at Stanford, watching an oversized talking head telling us he know what we’re thinking that maybe reports of Big Brother’s identification were greatly exaggerated.

In fighting the old Big Brother by supporting companies like Apple and Google in Silicon Valley, we (meaning myself and many other well-meaning consumers) may just have created an opportunity for the real Big Brother to arrive.

To quote another George Orwell novel, Animal Farm, about what happens when power shifts from one powerful group to the ones that overtook them: Four Legs Good, Two Legs Better.

Finals and End of Winter Quarter

Just after that interesting experience, we had our final exams and papers for the Winter Quarter. Our two Sloan core classes, Marketing and Accounting both had final exams, while two of my elective classes had final projects. One other elective class, finance, had a final exam as well.

As I sat there, getting ready for the our East Coast Study Trip (which happened during Spring Break), I was trying to get a handle on how to calculate net present values in two different countries using various exchange rates, interest rates, and discount rates. I think that was the moment I decided it’s probably better not to take a finance class in my last quarter at the GSB.

Grading at the GSB continues to mystify me. Classes that I thought I might not do well in, I did very well in. Classes that I thought I was doing really well in, I did only OK in.

Go Figure. Oh well - I still stick firmly by the anonymous assertion (which I repeated in my last blog entry) that grades in the GSB are guaranteed to be accurate, but with a plus/minus margin of error of two letter grades.

East Coast Study Trip

After finals we had our “Spring Break”.

I put “Spring Break” in Quotes because it wasn’t really a break. We had our East Coast Study Trip to Washington, DC and New York City. Because the Sloan Program is a one-year program it feels like we have a lot of mandatory stuff crammed in.

Despite having to dress up in a suit and tie (every single day), and despite having to get up to board the bus by 7:15 am on most days, and despite being herded around like sheep from place to place, the trip was actually quite interesting.

I always get asked what we do on study trips. Well, other than get up early, dress in a suite and tie, and get herded around from building to building like a flock of sheep, we usually get a talk by a senior member of the company we’re visiting. In some cases, it’s the CEO of the company, which is very cool. They give us a little lecture, and then we are able to ask questions of them.

So here are some people and places we visited, and some random things I remember about the visits:

• Smithsonian. We had a talk by the head of the Smithsonian. I found this to be one of the more interesting talks, mainly because I didn’t know much about the Smithsonian (other than they run a great Air & Space Museum, which I visited). Turns out they run 19 museums and have collected something like over a 100 million scientific specimens over the years. There was a British guy in the 1800’s (Smithson) whose will said that if his only surviving heir (his nephew), didn’t have any heirs, then the money should be donated to the “United States of America” for the "Establishment for the increase & diffusion of Knowledge among men". That’s a pretty vague mission statement, and the government (under Andrew Jackson) they really didn’t know what to do with the money, until they established the Smithsonian as a scientific quasi-governmental organizations. Other things I didn’t know: that on the Board of Directors of the Smithsonian are both the Chief Justice of the Supreme Court and the Vice President. Memorable Quote: “When raising money for a non-profit, you still have to have a sales pitch”

• Senator Kent Conrad and the Capitol. We had a tour of the Capital Building visited the office of Senator Kent Conrad (D), of North Dakota, who was in the charge of the Senate budget committee. He only had a few minutes with us, because that week he was on TV a lot, and was overseeing the senate’s work with President Obama’s budget. Obama won’t get everything he wants in his budget, said the Senator to us, and then alter that night many of us saw his name being referenced again and again by the talking heads on TV. Little Known Fact About the US Capitol: there is a room called the crypt, which was meant for the Tomb of George Washington (he wasn’t buried there, he was buried at Mt. Vernon), and there is a compass on the floor of that circular room, which is the point from which all addresses in Washington DC get their name. Little Known Fact about me: I lived in North Dakota for a few very formative years, even started high school there – Mr. Conrad might have been my senator! Memorable quote: “I have to go meet with the Obama administration in 15 minutes. Now in the 14 minutes I have left… Now in the 13 minutes I have left, I’d like to talk about… Now, in the 12 minutes I have left, “

• Postmaster General of the United States. We met the postmaster general of the United States of America. He started off as mail clerk in Boston and is now in charge of one of the largest organizations in the US. He reminded me of the guy on Cheers (the mailman) a little bit. His biggest challenges: How to make the US Postal Service profitable when the volume of mail has been decreasing every year. They are required by law to have post offices in every single zip code, even if those zip codes have something like 100 households in them. Little Known Fact: the Postal Services biggest customer is its biggest vendor is its biggest competitor: Federal Express. Memorable Quote: “If there’s one thing that everyone has a strong opinion about – it’s the mail!”

• Chairman of the Federal Reserve. We were supposed to meet with Ben Bernanke (who used to be a professor of Economics at Stanford), but who had to go testify in front of Congress that day. Why? The AIG bonus scandal (more on this later). Instead we met with Kevin Walsh, who is the youngest of the 12 members of the Board of Governors of the Federal Reserve. Q: How did he get his job so young? A: He was a protégé of Bernanke so BB pulled him in on his coattails. He seemed like a pretty smart guy (also a Stanford alum). My question for him (hey here’s one thing I learned in my last finance class): With all the talk of the Fiscal bailout, there isn’t much talk about the monetary bailout underway –with the Fed buying up trillions of dollars in assets, and increasing the available money supply, aren’t they worried about devaluing the currency or inflation?”. His answer: “Under Chairman Bernanke, We’ve been aggressive about buying up assets; but that means we have to be equally aggressive about selling those assets when things stabilize.”

• CEO of the NY Stock Exchange. We met with the CEO of the NYSE in New York. What struck me most about this meeting was just how “calm” this guy was in the middle of one of the biggest financial crises in the past 50 years. In fact, he was a little too calm. The NYSE has been around a long time, he seemed to be saying with his demeanor, and has weathered other storms and it’ll weather this one too. But then we learned the real reason for his equanimity: “When stocks go up, I don’t necessarily have a good day. When stocks go down, I don’t necessarily have a bad day.” The unspoken message: He makes money either way, as long as there is a lot of share volume. Wow- nice business model, dude! Other memorable quote, when the first two questions asked were from our two Russian classmates, “Are there any questions from students who aren’t from Russia today?”

• Fannie Mae and Citibank. I put these last two together, because as those of you following the financial markets will know, both of these institutions had to be bailed out using billions of dollars of US Government money (i.e. our money, the taxpayers). At Fannie Mae, we met with two people: the CEO (relatively new) and the Chief Economist. At Citibank, we met with Vikram Pandit the CEO of Citibank. These meetings were very surreal – it felt like these guys were living inside bubbles (called their companies in particular, and the financial services sector in general) that were pretty disconnected from the rest of the world.

The other thing that these two organizations had in common? They were both upset about the AIG bonus scandal. Now, let’s get this right, they weren’t upset that AIG, which took billions of dollars in aid from the Federal Government was paying multi-million dollar bonuses to its management team members. They were upset that th taxpayers and the government would have the audacity to ask for it back!

They were of the opinion that the bonuses being paid by institutions like themselves were necessary for “retaining the talent” and that the Government has no business meddling in the internal affairs of these companies.

All I have to say is that both were pretty out of touch with how the US Public was feeling that week, when this was the biggest story in the news and individual taxpayers were upset about the million dollar bonuses.

One more thing that both CEO’s said, almost verbatim: “The People that were part of the problem are gone; the people that we have left here are part of the solution, not part of the problem”. It was so verbatim that I wonder if there was a “federal bailout CEO phrasebook” that they shared.

This of course begs the question, where did those people, who were part of the problem, go?

Moreover, the CEO of Fannie Mae said that he’d agreed to pay bonuses last year to his senior people, including some 7 figure bonuses. Let me repeat that, 7 figure bonuses were paid by Fannie Mae after being bailed out by the Federal Government. If they didn’t pay these 7 figure bonuses, he said, the “talent” would leave and go elsewhere.

Which brings up my next question: “What bank or insurance company has a mortgage business that has so much money that they are willing to lure away Fannie Mae executives by paying them 7 figure bonuses?”

I can only think of one: AIG.

Court of Appeal: No Privacy on Myspace

Myspace, Facebook, Linkedin, etc. are fertile sources of information about employees and job applicants. The phenomenon of otherwise private individuals airing out their grievances, sharing personal information, etc. continues unabated. The phenomenon of the same individuals' shock and surprise that people actually read their stuff and hold it against them continues as well.

In a non-employment matter, the Court of Appeal addressed whether an essay on myspace was private such that republishing it in a newspaper without the author's permission constituted an invasion of privacy. Umm no.

Moreno was from the small town of Coalinga. After she left town, she wrote an essay about her disdain for her hometown. She neglected to consider that folks who remained in Coalinga might get offended. Her principal forwarded the posting to the local newspaper, which published it as a Letter to the Editor. And of course, although Moreno's last name is not on her myspace page, the principal helpfully supplied it.

Now Moreno also forgot that her family still lived in Coalinga, and operated a small business there. The fans of Coalinga were miffed by Moreno's letter, and drove the family out of business and out of town. She chose to sue the newspaper and principal rather than herself. No word whether her family sued her.

The Court of Appeal, upholding the trial court, held that when you post on myspace, it's not "private." As such there is no invasion of "privacy" when you use the posted information or disclose it to others. Without a private fact, there is no tort of invasion of privacy.

Interestingly, the Court of Appeal also held, albeit in an unpublished portion of the decision, that Ms. Moreno could proceed against the defendants for intentional infliction of emotional distress, possibly because of the fact that the principal intentionally supplied the posting to the newspaper out of spite? No clue. Simply reading the information and relying on it on the job may or may not supply the requisite "outrageous conduct" required for IIED. My bet is" not."

So, at least based on this case, if you put your private information out on the INtRaw3Bs, your employer is not invading your privacy by reading it. The case is Moreno v. Hanford Sentinel and the opinion is here.

DGV

Another I-9 Reminder

All of you well-educated, information-saturated folks know the new I-9 Form is effective 4/3, right? OK, then.

This one has the 6/30/09 expiration date, just like the old one. But it also has the critical 2/2/09 revision date (visible in the lower right-hand corner of the form.) Looks like you'll have to replace these new forms, too. (The expiration date is near! Alert the media!) So, you can look forward to still more newsletters and blogs nagging you about this critical issue facing employers. If you need one of these new forms, find it here.

U.S. Supreme Court: Union May Agree to Arbitration of Age Discrimination Claims

In New York City, there is a multi-employer association of building management that negotiates with a large union over building workers' wages, hours and other terms of employment. The union contract provided for arbitration of discrimination claims as follows:

NO DISCRIMINATION. There shall be no discrimination against any present or
future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to,claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, . . . or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations.Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

So, this is a clear agreement to arbitrate. But can a union agree with an employer that individuals' claims must be arbitrated, even though the individuals have not personally agreed to do so?

Yep. The Court decided, 5-4, that the arbitration clause was fully enforceable. To get there, the majority decided two issues. First, the Court noted that unions and employers have broad discretion to agree on terms to be included in collective bargaining agreements. Unions are the employees' designated bargaining representatives and may bargain away rights (such as to sue in lieu of arbitration) in exchange for other concessions by management.

As a result, the only way the above contractual provision could be invalid was if the ADEA prohibited mandatory arbitration of discrimination claims. But the Court already had decided that the ADEA contains nothing precluding mandatory arbitration. Hence, the Court upheld the language in the CBA:

Examination of the two federal statutes at issue in this case, therefore, yields a straightforward answer to the question presented: The NLRA provided the Union and the RAB with statutory authority to collectively bargain for arbitration of workplace discrimination claims, and Congress did not terminate that authority with respect to federal age-discrimination claims in the ADEA. Accordingly, there is no legal basis for the Court to strike down the arbitration clause in this CBA, which was freely negotiated by the Union and the RAB, and which clearly and unmistakably requires respondents to arbitrate the age discrimination claims at issue in this appeal.

The Court also refused to rule that mandatory arbitration was a waiver of substantive rights without the employees' consent. The Court made clear it does not consider arbitration in lieu of court to be a substantive change, but rather merely a change of forum.

Four justices dissented in two opinions, arguing that prior precedent precluded the majority's result. Justice Souter admitted the majority's conclusion "at least could be considered" if it weren't for precedent that, in the dissent's view, should control the question.

Anyway, this is all very interesting to students of stare decisis and Supreme Court watchers. But for you, gentle reader, all that matters is that Union contracts can require mandatory arbitration of discrimination claims, if the clause in the contract is "clear and unmistakable."

What also matters is that Congress is moving to ban arbitration of employment discrimination lawsuits, this time with a clear Democratic majority and a Democratic president. So, the odds of this case surviving Congressional action are much lower than they were a few years ago.

The opinion is 14 PENN PLAZA LLC v. PYETT and the opinion is here.