I.Happy Holidays.

II.Employment Litigation Issues.

Pennsylvania Court’s Ruling Leaves Faragher-Ellerth Sexual-Harassment Defense an Issue for Jury.

In Wells v. Happy Tymes Family Fun Center, Inc., WL 3111783 (E.D. Pa., November 21, 2005), the defense argued that this was a “classic case” in which the Faragher-Ellerth defense should bar the plaintiff’s claims. Under the Supreme Court decision in Faragher v. Boca Raton and Burlington Industries v. Ellerth, “an employer who receives notice of alleged harassment and sits idly by without investigating and/or taking prompt and effective remedial action, if appropriate, should be liable.” The defense argued that a defendant is entitled to summary judgment when the evidence shows that the employer had “no notice whatsoever of the occurrence of the alleged improper conduct, because plaintiff consistently failed to report such conduct throughout her employment.” Defense argued that in such a case, the defendant “cannot be held vicariously liable for the conduct of a low level manager.”

This case involved a 15-year old plaintiff who worked at the Happy Tymes Fun Center for six months. The plaintiff claimed that her assistant manager made inappropriate remarks and subjected her to inappropriate body contact at least once a week, totaling roughly 50 incidents. The plaintiff also admitted that she did not complain about the incidents to any manager at Happy Tymes until the day she quit, where she complained to a general manager.

U.S. District Judge, Michael M. Baylson, refused to dismiss the case on summary judgment, finding that there were factual disputes about several of the key elements in the defendant’s Faragher-Ellerth defense. Judge Baylson found that a jury must decide whether the defendant truly had in place an effective anti-harassment policy, and, if so, whether it made “reasonable efforts” to make plaintiff aware of it.

Judge Baylson stated that for the Faragher-Ellerth defense to succeed, the employer must show that it “exercised reasonable care to prevent and correct promptly any sexual harassment behavior”, and that plaintiff “unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” The plaintiff argued that Happy Tymes failed to prove its defense because it could not show that plaintiff was aware of its policy against sexual harassment.

At trial, Judge Baylson stated, the jury must decide whether plaintiff “was constructively discharged or left defendant’s employ for other reasons.” He also stated, the jury must decide whether Happy Tymes had an effective anti-harassment policy in place, and whether it made “reasonable efforts to make plaintiff aware of it by, for example, explaining the policy, providing plaintiff with an employee handbook, and/or otherwise notifying plaintiff.” Judge Baylson further stated, if the jury found that an effective policy was in place, it must also decide whether plaintiff was actually aware of such policy.”

Plaintiff’s Gallbladder Attacks Not a Recognized Handicap Under New Jersey’s LAD.

In the unpublished opinion of Boggs v. Phillip S. Van Embden, P.C., et al, (N.J. Super., October 31, 2005), the plaintiff appealed from a summary judgment dismissing her employment discrimination complaint alleging violation of the Family Leave Act (FLA), N.J.S.A. 34:11 B-1 to 16, and the Law Against Discrimination (LAD), N.J.S.A. 10:5-12 to -49. Plaintiff worked as a legal secretary for the defendant law firm from March 25, 1995 until her termination on November 2, 2000. Plaintiff worked at the law firm continuously with the exception of one day, when she quit to work for a local dentist, only to return to the law firm the very next day. On November 1, 2000, defendant Phillip S. Van Embden confronted plaintiff about her poor work performance and her attempt, while at work, to “fix” a co-worker’s traffic ticket with a friend who is a State Trooper. At a meeting in the firm’s conference room, defendant discussed with plaintiff the inappropriateness of engaging in excessive personal telephone calls, and the fact that her work was suffering as a result. Defendant also addressed the ethical impropriety of arranging to fix a speeding ticket while at work. Plaintiff denied any deficiency in her work performance; however, she admitted trying to fix a speeding ticket on company time. However, during the meeting, when confronted with the accusation, plaintiff was screaming and yelling. The following day, plaintiff was fired. When she arrived at work, defendant informed her that in light of what transpired the previous day, he did not feel comfortable having her in the office, and that her position was going to be eliminated immediately. According to defendant, plaintiff was terminated because of poor work performance and the attitude she exhibited when confronted with the issues of competence and ethics.

Plaintiff claimed her termination was for other reasons. Plaintiff suffered from occasional gallbladder attacks, for which her surgeon, on October 31, 2000, recommended surgery. Consequently, plaintiff scheduled her gallbladder surgery for the last week of December when the office would be closed for the holidays. According to plaintiff, immediately after her meeting with defendant on November 1, she informed him that she would be undergoing a gallbladder procedure during the week between Christmas and New Year’s. Because she was fired the very next day, plaintiff suspected she was discriminated against because of her medical condition, and further complained that defendant failed to reasonably accommodate this so called “handicap”. Plaintiff also claimed that she was exposed to a hostile work environment and harassment because she was the mother of a bi-racial child.

Plaintiff filed her complaint on October 15, 2002. On June 20, 2003, the motion judge granted defendant’s summary judgment dismissing the FLA claim, because the FLA does not apply to employers, like defendant, who employ less than 50 employees, and because the FLA does not protect employees, like plaintiff, taking leave for their own “serious health condition[s].” Thereafter, defendant filed a second motion for summary judgment, seeking to dismiss the remaining counts of plaintiff’s complaint. The judge granted this relief finding that there was no handicap discrimination because, whether or not plaintiff either had a handicap recognized under the LAD, or was perceived to have a handicap, she never sought an accommodation for her condition, and her condition did not require any accommodation by the employer. The court also held that plaintiff failed to establish a prima facie race harassment case. The Appeals Court affirmed the summary judgment, dismissing both plaintiff’s handicap discrimination claim and the other claim alleging hostile work environment and racial harassment.

III.Insurance Coverage Issues.

Plaintiff Whose Long Term Disability Payments Were Improperly Terminated Does Not Have Standing to Assert a Civil RICO Claim.

In the case of Weiss v. First Unum Life Insurance Co., Et al., (U.S. Dist. N.J., November 22, 2005), plaintiff’s suit arose from defendant’s termination of plaintiff’s long-term disability benefits. After plaintiff sued, defendant reinstated his benefits retroactively and plaintiff amended his complaint to include claims under the federal Racketeer Influence and Corrupt Organizations (RICO) Act and the RICO statute. The court granted defendant’s motion to dismiss plaintiff’s state law causes of action, as preempted by the Employee Retirement Income Security Act (ERISA), and also dismiss the RICO claims, finding that plaintiff did not have standing to assert a civil RICO claim for failure to allege a compensable loss to his business or property, and that he failed to plead fraud with the requisite particularity.