Thomas Paschos and Assoc
June, 2007

EMPLOYMENT LAW ISSUES

Subsequent Non-Discriminatory Acts Do Not Carry Forward the Adverse Effects of Past Discriminatory Acts, And So Do Not Extend the Period for Filing an EEOC Charge Beyond the Time Allowed Following the Original Discriminatory Act.

In Ledbetter v. Goodyear Tire and Rubber co., Inc., --- S.Ct. ---, 2007 WL 1528298 (U.S., May 29, 2007), petitioner, Lilly Ledbetter filed an employment discrimination action against respondent, Goodyear, alleging violations of Title VII of the Civil Rights Act of 1964 and the Equal Pay Act of 1963, 29 U.S.C. §206(d). Ledbetter asserts that because she received poor evaluations in the past due solely to her sex, and as a result, her pay has not increased at the rate that it would have if she had been fairly evaluated, causing her to earn significantly less than similarly situated males. A jury trial resulted in an award to petitioner of back pay and damages. On appeal, the Eleventh Circuit reversed, finding that Title VII pay discrimination claims cannot be based upon alleged discriminatory events occurring outside of the EEOC charging. Petitioner appealed that decision. The Supreme Court affirmed the Eleventh Circuit, holding that “Because the later effects of past discrimination do not restart the clock for filing an EEOC charge, Ledbetter’s claim is untimely.”

Petitioner Ledbetter was employed by Goodyear from 1979 to 1998. During this period, salaried employees, including Ledbetter, were evaluated by supervisors, which evaluation then determined the amounts their raises, if any. In March 1998, Ledbetter submitted a questionnaire to the EEOC, alleging sexual discrimination. A formal charge was then filed in July 1998. After retiring in November 1998, Ledbetter brought suit against Goodyear. Goodyear was granted summary judgment as to the Equal Pay Act claim, while the Title VII claim proceeded to trial. At trial, Ledbetter alleged that throughout her employment, she was given poor evaluations because of her sex, resulting in a long-term affect on her pay throughout her employment. As a result, at the end of her career, she was receiving significantly less than similarly situated males, and less than she would have had she received fair evaluations.

On appeal, Goodyear asserted that Ledbetter’s claims were time barred as to all pay decisions made prior to September 26, 1997, based upon the 180 day filing deadline of the EEOC, and that no discrimination had occurred after that date. The Eleventh Circuit reversed. Ledbetter then sought review by the Supreme Court, on the issue of “whether and under what circumstances a plaintiff may bring an action under Title VII of the Civil Rights Act of 1964 alleging illegal pay discrimination when the disparate pay is received during the statutory limitations period, but is the result of intentionally discriminatory pay decisions that occurred outside the limitations period.”

A disparate treatment claim requires (1) an employment practice, and (2) discriminatory intent. In order to determine if the claim was filed within the EEOC charging period, the Supreme Court first examined what specific employment practice was at issue. Ledbetter asserted, alternately, that (1) each paycheck issued during the EEOC charging period was a separate act of discrimination, or (2) the denial of a raise in 1998 carried forward the intentionally discriminatory disparities from prior years. The Supreme Court rejected both arguments.

In a discriminatory intent matter such as this, the central element is the discriminatory intent itself. Ledbetter did not allege such discriminatory intent with the issuance of each individual paycheck, or with regard to the 1998 denial of her raise. Rather, Ledbetter suggested that the discriminatory acts occurred in the past evaluations, which resulted in a continuous affect during the charging period. In rejecting this argument, the Supreme Court noted that an “employment practice” generally refers to “a discrete act or single occurrence” which happens at a particular point in time. Thus, the Supreme Court found that there was no new violation based upon subsequent non-discriminatory acts carrying forward the adverse effect of past discrimination. To find otherwise would “impose liability in the absence of the required intent.”

Because the issuance of Ledbetter’s paychecks during the charging period were not done with discriminatory intent, they cannot represent an actual employment practice. Thus, the Supreme Court found that there were no discriminatory employment practices within the 180 day charging period.


Inquiries Concerning Retirement Made to Employee of Retirement Age, and Statements Made by a Co-Worker Without Decision-Making Authority Are Insufficient to Establish Age Discrimination

In Folcher v. Appalachian Insulation Supply, Inc., 2007 WL 1544693 (E.D. Pa. May 24, 2007), Plaintiff, Adrian Folcher filed an employment discrimination action against Appalachian Insulation, its president, William K. Brinser, and a former employee, Justin D’Amelio, alleging violations of the Federal Age Discrimination and Employment Act (ADEA), 29 U.S.C. § 61-34 (2007) and the NJ Law Against Discrimination (NJLAD), N.J.Rev. Stat. § 10:5-1 et. seq. (2007), based upon the Appalachian Insulation having fired Mr. Folcher from his position as an insulation salesman. Mr. Folcher alleges discrimination based upon age.

The parties have filed Cross Motions for Summary Judgment. The District Court has denied plaintiff’s Motion, and granted defendant’s Motion herein.

Plaintiff Folcher, currently in his 70’s, was hired by Mr. Brinser of Appalachian Insulation in 2002, at the age of 66. Plaintiff was hired to act as an insulation salesman with a territory in New Jersey, in the mid-Atlantic region. Following his hire, Mr. Folcher was responsible for $23.5 million worth of insulation sales, exceeding his goals regularly. During the course of his tenure, plaintiff was asked by Mr. Brinser on several occasions when he planned to retire, and was advised by Mr. Brinser to “look towards the future”. Also, during his tenure, Justin D’Amelio was hired as an insulation salesman. Plaintiff Folcher alleged that Mr. D’Amelio advised numerous customers that Mr. Folcher was planning to retire and that Mr. D’Amelio would be replacing him.

On Good Friday, April 14, 2006, plaintiff Folcher was fired by Mr.. Brinser after demanding that a truck be unloaded and re-loaded to change a customer’s order. On that same date, plaintiff Folcher had words with both Mr. Brinser and his wife. There was also evidence that plaintiff, Folcher was responsible for more than half of the company’s write-offs, and that he had previously been disrespectful to Mr. Brinser, his wife, and the office staff. In analyzing this matter for Summary Judgment, the Court noted that age discrimination claims under the ADEA and NJLAD are governed by the same standards and burdens.

The Court examined this matter using the McDonnell Douglas framework, and found that plaintiff could not meet the burden of proof because he could not show that he had been replaced by a younger worker. While he asserts that he was replaced by Mr. D’Amelio, age 33, his work was actually being performed by Mr. Brinser and his wife. Even if Plaintiff were able to meet the first test, and the burden were to shift to Appalachian, Appalachian would clearly be able to establish that it had legitimate reasons for terminating plaintiff, that being his high write-offs, and his mistreatment of the Brinsers and the office staff.

The Court also examined the matter using the standards set forth in Price Waterhouse, whereby plaintiff is required to present evidence that would prove his termination was based on illegitimate criterion, specifically, his age. Were plaintiff Folcher able to satisfy this test, then the burden would shift to Appalachian to show that the same decision would have been made had his age not been a consideration. In finding that plaintiff was not able to meet his burden under this test, the Court noted that isolated comments concerning age, “without an accompanying suggestion [that] plaintiff’s value to the company had diminished because of his age, are not discriminatory.” Thus, plaintiff’s assertion that Mr. Brinser had asked him on several occasions when he would retire was not sufficient to meet this test. Further, the plaintiff could not provide any evidence linking the comments concerning retirement to the events of April 14, 2006, or to the complaints concerning his job performance. Specifically, the Court noted “it is not unreasonable for an employer to ask an employee in his 70’s if he is planning to retire.”

With regard to the statements made by Mr. D’Amelio to customers, the Court found that such statements were not evidence of discriminatory animus on the part of the employer, because they were not made by a person involved in the decision-making process.

Therefore, based upon the above, the Court found in favor of defendants, Appalachian, Brinser and D’Amelio, and granted their Motion for Summary Judgment, while denying plaintiff’s motion.


PROFESSIONAL LIABILITY/INSURANCE COVERAGE ISSUES

In New Jersey, A Former Employee of the Insured May Be Entitled to Defense and Indemnity For Actions After the Termination of Employment When the Former Employee is Acting in a Professional Capacity on Behalf of the Insured .

In Jolley v. Marquess, 2007 WL 1518114 (N.J. Super. App. Div. May 25, 2007), an opinion approved for publication, third-party plaintiff, Joan Marquess, brought suit against Zurich Specialties London Ltd., the insurance provider for plaintiff’s former law firm. Third-party plaintiff sought coverage under that policy in the form of defense and indemnity for a malpractice claim brought by a client of his former firm, for whom he performed work after leaving, at the behest of the firm. Third-party defendant Zurich appealed from the granting of Summary Judgment in favor of third-party plaintiff. The Appellate Division affirmed, finding in favor of Marquess.

John Marquess was the former partner and former employee of the firm of Marquess, Morrison & Trimball (“the firm”). While Marquess was still a partner, the firm was retained by American Independent Insurance Company (AIIC) to defend AIIC’s insured, Barbara Gorna, with regard to an automobile negligence action. AIIC was a long-standing client of the firm, but considered by to be a client of Mr. Morrison specifically. Thus, Mr. Morrison was designated as trial counsel in the underlying matter, Jolley v. Gorna.

During the course of litigation in the underlying matter, counsel for Jolley sent numerous letters to the firm, seeking to resolve the matter within the policy limits. After several months with no response, counsel for Jolley withdrew the offer. Thereafter, Mr. Marquess responded to the offer, advising that he had authority to settle within policy limits. Counsel for Jolley refused the offer.

In the interim, disputes arose between Mr. Marquess and the other partners, which resulted in an agreement that the other partners would acquire Mr. Marquess’ interest in the firm, effective April 30, 2000. The firm would then be dissolved. During the period from November 3, 1999, until April 30, 2000, Mr. Marquess acted as a senior trial attorney with the firm, but was no longer a partner. He continued to perform work on behalf of Ms. Gorna in the underlying matter. In February 2000, the firm received notice that the underlying matter was scheduled for trial May 15, 2000.

On April 30, 2000, Mr. Marquess terminated his employment with the Firm, and on May 1, 2000, opened his own office. When he left the firm, Mr. Marquess took with him approximately 75 to 100 former clients, which did not include either AIIC or Ms. Gorna.

In early May, 2000, Mr. Morrison contacted Mr. Marquess, requesting that he try the underlying matter, Mr. Marquess agreed, on the condition that he be permitted to bill AIIC directly, because the firm already owed him substantial amounts of money.

The May 15, 2000, trial date was adjourned until August 2000. Jury selection finally began on August 8, 2000, and testimony concluded on August 9, 2000. Thereafter, a jury verdict was rendered finding Ms. Gorna responsible for the accident in the underlying matter. On that date, Mr. Marquess entered into an agreement with counsel for Jolley, stipulating damages in the amount of $750,000, with prejudgment interest to be added. At the time this agreement was entered into, Ms. Gorna was not present, and was not asked to consent to the stipulation of damages. Thereafter, on September 5, 2000, judgment was entered in favor of Jolley and against Gorna in the amount of $750,000 plus interest.

Upon learning of the Entry of Judgment and the Stipulation, Ms. Gorna and the Jolleys, as her subrogees, brought a legal malpractice suit against Mr. Marquess and the firm. The allegations of the Complaint include a failure to adhere to reasonable standards of a qualified and competent attorney, breach of expressing implied covenants, and false, deceptive and fraudulent misrepresentation.

Mr. Marquess then brought the Third-Party Complaint against Zurich, the malpractice carrier for the Firm. Under the policy of insurance, issued to the firm on June 1, 2000, and in effect at the time of the trial in the underlying matter, an insured includes “any person who is not defined as Named Insured, but was, is now, or hereinafter becomes an employed lawyer or another employee of the firm or predecessor firms named in the Declarations solely while acting in a professional capacity on behalf of such firm or firms; ” and also “any form of partner, ... of the firm or predecessor firms named in the Declarations Page “while acting solely in a professional capacity on behalf of such firms.” The Court noted that no reported decisions could be found interpreting such policy language.

Zurich argued that the language concerning former partners was meant to address the acts of former partners while they were still employed by the firm. However, the Court noted that with regard to retired partners, the language specifically stated that coverage was simply for while those partners were still employed by the firm. Accordingly, the language concerning former non-retired partners, could not be similarly interpreted, and covered work after those former partners left the firm, so long as they were acting solely in a professional capacity on behalf of the Firm.

The Court then set out to determine if Mr. Marquess was acting in a professional capacity on behalf of the Firm. In finding that he was, the Court noted Mr. Morrison was not prepared to try the matter; Mr. Morrison forwarded the file to Mr. Marquess, and requested that he handle the trial; neither AIIC nor Gorna were listed in the stock purchase and employment agreement as clients which Marquess could take at the time he left the firm; Gorna did not consent to a change in designation of counsel; no substitution of counsel was filed with the Court; Morrison continued to assist in the matter, in regard to the evaluation of Jolley’s expert report; and Mr. Marquess kept Mr. Morrison advised of the status of the matter through to the time of trial. The fact that Mr. Marquess billed, and was paid directly by, AIIC was of no consequence.

Once it was determined that Mr. Marquess fell under the policy, the Court next compared the policy with the allegations of the Complaint to determine if the risk itself was covered. The Court found that the Complaint was worded in such a way as to cover potential malpractice claims against Mr. Marquess even prior to his having left the firm. Further, the Court stated that Zurich’s acknowledgement that coverage was available under the policy to Morrison and Trimble “compels the conclusion that Marquess would likewise be entitled to a defense and possible indemnification . . . as long as a fair reading of the malpractice complaint triggers coverage.”

Accordingly, the Court affirmed the lower Court decision, finding that Mr. Marquess was entitled to coverage under the policy regarding his malpractice both while he was with the firm, and after his departure while acting in a professional capacity on behalf of the firm in handling the underlying matter.



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