Subjective Redundancy Criterion

Is it appropriate for an employer in a redundancy situation to apply subjective reasoning in terms of redundancy selection?  Yes says the Employment Appeal Tribunal ("EAT").

The EAT has handed down its judgement in Mitchells of Lancaster (Brewers) Ltd v Tattersall. The EAT held at paragraph 21:

'...just because (subjective) criteria...' '...are matters of judgement, it does not mean that they cannot be assessed in a dispassionate or objective way...', 

 They further noted that:- 

'...the concept of a criterion only being valid if it can be "scored or assessed" causes us a little concern, as it could be invoked to limit selection procedures to box-ticking exercises...'.

What is important however is to ensure that the criterion isn't what the Tribunals would class as exceptionable and employers should still be prepared to be dispassionate and objective. That being said there is no reason why an employer cannot measure what the likely impact on the business is to be when dismissing one person above another and thus make a judgement call on that basis.

If you are planning or approaching a redundancy situation in Manchester or London and need to instruct expert Employment Lawyers then please feel free to call us on 07716 346 708.

 

U.S. Supreme Court on Federal Employees' Access to Court

WARNING - Most of you will not care about this. The Supreme Court held today that a federal government employee covered by the Civil Service Reform Act must bring employment claims before the Merit Systems Protection Board, rather than district court.

The MSPB is the exclusive forum, even if the employee is raising a constitutional law claim, and even if the employee is ineligible for federal employment. 

In this case, Elgin did not register for the draft and was fired because people who do not register are ineligible for federal employment.  He tried to bring a claim at the MSPB, but an ALJ held that MSPB had no jurisdiction over his claims. So, he sued in district court, which denied his claim on the merits.  He then appealed to the First Circuit Court of Appeals, which decided that both the district court and the First Circuit lacked jurisdiction.

The Supreme Court agreed, holding that the MSPB can decide constitutional law issues, and that MSPB rulings are subject to review by the Federal Circuit Court of Appeals and by the Supreme Court.

The case is Elgin v. Dept. of Treasury and the opinion is here. 

Employment Law Snapshots - Introduction

We at Employment Litigator Online wanted to provide employers and employees with a little snapshot of our knowledge in respect of Employment Law. We hope to kick off with the thorny issue of what is a 'Constructive Dismissal' and what is not.  As many of you know I work with Cheshire Law Associates LLP who are a full service firm of Solicitors based on Wirral. Our practice is spread nationally with work coming in from Manchester, London, and Edinburgh and we appear at the Employment Tribunals nationally for employers and employees.

We hope that you like our work and that it provides a suitable insight to our knowledge and depth of experience.

Court of Appeal: Concepcion Kills Gentry

It's hard to keep up with arbitration law in California.  Can you waive class actions? Must you attach the entire rule set to the arbitration agreement?  Must you serve a nutritious meal when you provide the arbitration agreement?  It never ends. 

The tension between California case law and case law interpreting the Federal Arbitration Act causes these problems. Last year the U.S. Supreme Court decided in ATT Mobility v. Concepcion that the Federal Arbitration Act allows parties to limit arbitration agreements to single-plaintiff claims.  The Court overruled the Califoria Supreme Court's decision in Discover Bank v. Superior Court.  We posted about that here.

Discover Bank was about a consumer class action for small dollars / cents per claim. In Gentry v. Superior Court (2007) 42 Cal.4th 443, the California Supreme Court extended Discover Bank  to wage-hour class actions. The Court held that a class waiver should not be enforced if "class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration."

The U.S. Supremes never mentioned Gentry. So what happened to it after Concepcion?

GENTRY

The Court of Appeal in Iskanian v. CLS Transportation- Los Angeles  (opinion here) decided that Gentry is no more. The real news here, though, is that this decision may dispose of - or severely restrict -- the entire body of anti-arbitration case law that has been developed over the past 10 years in California.  The language I've quoted below seems to sound the death knell to California courts' hostility to arbitration on "public policy" grounds (assuming this case remains on the books):

Now, we find that the Concepcion decision conclusively invalidates the Gentry test.  . . . Concepcion thoroughly rejected the concept that class arbitration procedures should be imposed on a party who never agreed to them. ... This unequivocal rejection of court-imposed class arbitration applies just as squarely to the Gentry test as it did to the Discover Bank rule. 

Second, Iskanian argues that the Gentry rule rested primarily on a public policy rationale, and not on Discover Bank‟s unconscionability rationale. While this point is basically correct, it does not mean that Gentry falls outside the reach of the Concepcion decision. ....

Third, the premise that Iskanian brought a class action to "vindicate statutory rights" is irrelevant in the wake of Concepcion. As the Concepcion court reiterated, "States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons." (131 S.Ct. at p. 1753.) ....

PAGA
 This Court then decided that Concepcion applies to PAGA claims too. The Court disagreed with
Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489. "Brown held that the Concepcion holding does not apply to representative actions under the PAGA, and therefore a waiver of PAGA representative actions is unenforceable under California law."
This Court disagreed and held that Concepcion would not allow courts to invalidate arbitration agreements merely because they preclude PAGA claims:

Respectfully, we disagree with the majority‟s holding in Brown. We recognize that the PAGA serves to benefit the public and that private attorney general laws may be severely undercut by application of the FAA. But we believe that United States Supreme Court has spoken on the issue, and we are required to follow its binding authority.

HORTON

The Court then went for the Tri-Fecta and disagreed with the National Labor Relations Board's decision in DR Horton, too. D. R. Horton  (2012) 357 NLRB No. 184

In D.R. Horton, the NLRB held that a mandatory, employer-imposed agreement requiring all employment-related disputes to be resolved through individual arbitration (and disallowing class or collective claims) violated the National Labor Relations Act (NLRA) because it prohibited the exercise of substantive rights protected by section 7 of the NLRA.

 The Court decided that it was not bound to follow DR Horton:

We decline to follow D.R. Horton. In reiterating the general rule that arbitration agreements must be enforced according to their terms, Concepcion (which is binding authority) made no exception for employment-related disputes. Furthermore, the NLRB‟s attempt to read into the NLRA a prohibition of class waivers is contrary to another recent United States Supreme Court decision. In CompuCredit Corp. v. Greenwood (2012) __ U.S. __, __ [132 S.Ct. 665, 668] (CompuCredit), plaintiff consumers filed suit against a credit corporation and a bank, contending that they had violated the Credit Repair Organizations Act (CROA) (15 U.S.C. § 1679 et seq.).5 The plaintiffs brought the matter as a class action, despite having previously agreed to resolve all disputes by binding arbitration. The Supreme Court rejected their efforts to avoid arbitration, finding that unless the FAA‟s mandate has been "„overridden by a contrary congressional command,‟" agreements to arbitrate must be enforced according to their terms, even when federal statutory claims are at issue. (CompuCredit, at p. 669, citing (1987) 482 U.S. 220, 226.) The Supreme Court held: "Because the CROA is silent on whether claims under the Act can proceed in an arbitrable forum, the FAA requires the arbitration agreement to be enforced according to its terms." (CompuCredit, at p. 673.)

The D.R. Horton decision identified no "congressional command" in the NLRA prohibiting enforcement of an arbitration agreement pursuant to its terms. D.R. Horton’s holding—that employment-related class claims are "concerted activities for the purpose of collective bargaining or other mutual aid or protection" protected by section 7 of the NLRA, so that the FAA does not apply—elevates the NLRB‟s interpretation of the NLRA over section 2 of the FAA. This holding does not withstand scrutiny in light of Concepcion and CompuCredit.

ARMENDARIZ?

Well, all that is left is Armendariz.  This Court did not touch it expressly. So, stay tuned.... The California Supreme Court is considering related issues. My bet is that the Court will take this case up as well if the parties seek review.

DGV

PILON and Discovery of Pre Termination Gross Misconduct

If an employer dismisses a member of staff with payment in lieu of notice ("PILON") but then later learns that prior to termination of employment they had committed an act of Gross Misconduct, can they withold that PILON payment?

No, says the Court of Appeal. They have recently handed down their judgement in Cavenagh v William Evans Limited.

This concerned a Managing Director who had been made redundant and was due to be paid a payment in lieu of 6 months notice.  Prior to making the payment the company discovered that the MD had committed an act of gross misconduct and witheld the payment of notice on the basis that had he still been in employment and discovered the gross misconduct they would have been entitled to dismiss him summarily without notice.

The Court of Appeal held that the MD had acquired an accrued right to the PILON payment as his contract had been terminated lawfully under relevant provisions of his contract of employment (or service agreement) - They further held that there was no general principle in contract law barring him from exercising his right to recover the payment as a debt owed to him.  The principle that a claim for wrongful dismissal could be defeated by relying on evidence of misconduct after dismissal did not provide the company with a defence to the MD's claims to a money claim.

One observation from this is that, had the company dismissed him unlawfully they would have had a defence to his claims (Boston Deep Sea Fishing v Ansell (1888)) but because they did not wrongfully dismiss him, they are considerably worse off.

To prevent similar situations employers should consider updating their contract of employment to include a clause that enables them to withhold notice pay should the employer discover prior acts of gross misconduct.

Employer SLAPPed for Suing Ex-Employee

Robert Rogers is a former officer of Summit Bank, a local, Oakland bank.  When Summit learned there were a number of anonymous, negative posts about it on Craigslist, it decided to sue Rogers for defamation. Here are some of his posts, according to the court:

The June 7, 2009 post: ―Being a stockholder of this screwed up Bank, this year there was no dividend paid. The bitch CEO that runs this Bank thinks that the Bank is her personel [sic] Bank to do with it as she pleases. Time to replace her and her worthless son.

 The June 21, 2009 post: ―Whats [sic] up at this problem Bank. The CEO provides a [sic] executive position to her worthless, lazy fat ass son Steve Nelson. [¶] This should not be allowed. Move your account now.

 The July 14, 2009 post: ―The FDIC and the California Department of Financial Institutions are looking at Summit Bank. This is the third time in less than one year. This is not a good thing, move your accounts ASAP.‖

The July 25, 2009 post: ―I had banked at Summit Banks [sic] Hayward Office. Service was poor and Summit Bank closed this office. Whats [sic] up with that. [¶] All the customer [sic] were left high and dry. This is a piss poor Bank. I would suggest that anyone that banks at Summit Bank leave before they close. 

The second July 25, 2009 post: ―Move your accounts now before its [sic] too late.

The Bank learned that Rogers was the author of the anonymous posts and named him in the lawsuit as the defendant.

Rogers then brought an "anti-SLAPP" motion, used to strike lawsuits that arise from protected speech.  The Bank argued that Rogers' speech was not protected, because making false allegations about a bank's financial condition is criminal conduct under California law.  (When the conduct upon which a lawsuit is based is criminal, a SLAPP motion is barred.)

The trial court denied Rogers' motion because the trial court believed that Rogers' conduct was actionable as defamation and that the Bank was likely to win.  Rogers appealed.

The Court of Appeal, though, decided that the trial court should have granted Rogers' Motion to Strike.  First, the Court of Appeal held that Financial Code Section 1327 (which criminalizes false statements about a bank's financial condition) is an unconstitutional violation of freedom of speech.

The Court then decided that Rogers' posting on an internet bulletin board was speech in furtherance of the public interest in stable, financially sound banking, entitling him to the protection of the anti-SLAPP statute.   Rogers therefore satisfied step one of the two-step analysis applicable to anti-SLAPP motions.

Step 2 involves an analysis regarding whether the plaintiff (Bank) is likely to succeed on its defamation claim against Rogers' posts.  The Court of Appeal decided that the Bank could not win on its defamation suit because Rogers' posts were expressions of (1) true facts - such as financial difficulties the bank had experienced or (2) "opinion" rather than fact. The Court took into consideration that the posts were on the "Rants and Raves" part of Craigslist, that bulletin boards are known for hyperbole and strong opinions, and that in context, even the arguably factual statements were more likely to be understood as opinion.

This case proves it can be hard to sue disgruntled ex-employees for defamation based on anonymous web postings.  The CEO, called a "bitch," and basically accused of stealing money, has no remedy against Rogers.  The Bank, accused of stiffing customers of a closed branch (untrue allegedly), also has no remedy. And because Rogers won his anti-SLAPP motion, he gets his attorney's fees. What a country!

The case is Summit Bank v. Rogers and the opinion is here.

Employee Discipline and Baby P

Can an employee be disciplined for the same offence twice? Yes in extreme circumstances says the Employment Appeal Tribunal ("EAT"). The Appeal Tribunal has recently handed down its decision in Christou & Ward v London Borough of Haringey

Ms Ward was the social worker responsible for Baby P. Ms Christou was her supervisor, whom Sharon Shoesmith promised would not lose her job over the death of Baby P. Both employees were subject to  Haringey Councils 'Simplified Disciplinary Procedure'. The maximum penalty under the Simplified Disciplinary Procedure was a written warning, which they both received.

After the media coverage alongside the OFSTED inspection and the subsequent dismissal of Sharon Shoesmith, the Council revisited the disciplinary allegations and decided to dismiss Ms Ward and Ms Christou.

Both Claimants issued proceedings in the Employment Tribunal ("ET") submitting that to discipline them twice for the same allegation and already having been subject to a sanction was legally impermissible and unfair. The Employment Tribunal disagreed and held that they had been fairly dismissed.

They appealed to the EAT and they upheld the original judgement of the ET. 

Slade J (presiding) upheld the majority decision of the employment tribunal that the dismissals were not unfair. It held there was no concept of 'double jeopardy' or 'res-judicata' in internal disciplinary proceedings. It further held that whilst it would be highly unusual for a second set of disciplinary proceedings to follow a first arising out of the same facts, this was an extremely 'rare' case and the tribunal was entitled to hold that the employer's actions were fair in the light of the media spotlight and the new management regime which took a different view of the seriousness of the employees' conduct (see para 112).

Employers should not take this case as being authority for the proposition that an employer can revisit previous disciplinary proceedings and choose to dismiss when a sanction has already been decided and acted upon. The key phrases in this case are 'rare case' and 'highly unusual'. What does remain is the employers duty to always act within a range of reasonable responses.

If you need assistance with disciplinary issues our Free Employment Law Helpline is available to you on 07716 346 708. Failing that you can email us on gda@cheshirelawassociates.com