Mandatory arbitration clauses have become an accepted part of many contracts, when we buy cars, open bank accounts and when we apply for jobs. The mandatory arbitration clauses block employees and consumers from their day in court. But, those clauses are increasingly under attack, according to a recent story in the San Antonio Express News. Arbitration clauses are criticized by the #metoo movement because they are used to hide sexual harassment.

They were also used by Wells Fargo to shield complaints by customers when the bank abused customer data and opened bogus accounts. One state, California, passed a law preventing financial services companies from using arbitration clauses in cases of fraud.

Some companies are re-thinking the use of mandatory arbitration clauses altogether. Microsoft has dropped mandatory arbitration clauses in cases of sexual harassment. Some lawyers here in Texas are advising their corporate clients that mandatory arbitration clauses are not wise. One Dallas lawyer told about a client who lost an arbitration with a supplier. The company then had no avenue for appeal. The losing company was then hit with an arbitration bill of $200,000. Yes, in arbitration, the loser generally pays the expenses of the arbitration. AAA has rules for employment arbitrations in which the employee will not pay the expenses even if s/he loses. But, in most arbitrations, the loser pays the expenses of the arbitration. We tend to think of a lawsuit being free, more or less. The loser in a lawsuit will not be expected to pay the salary of the judge, the court reporter, the court clerk and the bailiff. The losing party will not have to pay for the use of the court room. But, in most arbitrations, someone has to pay those expenses.

One Houston lawyer who advises small automobile dealerships advises his clients to avoid arbitration clauses. He says in the judicial process, you know what to expect. With an arbitrator, you never know quite what to expect. See San Antonio Express News report.

 

The question arrises in many discrimination cases how far back can the plaintiff go in presenting relevant evidence? Title VII itself provides that a complainant must file his/her complaint within 300 days of the act of discrimination. Can the plaintiff present evidence of harassing conduct before that 300 days started? Yes, of course. The theory of “continuing violation” has been around a long time.In Heath v. Board of Supervisors for Southern University, 850 F.3d 731 (5th Cir. 2017), Prof. Heath was a professor at Southern University. In her lawsuit, she alleged a male supervisor had harassed her for ten years before she field her complaint. in her lawsuit, the district court refused to allow evidence of harassment older than 300 days.

The court noted that in cases alleging hostile work environment, a plaintiff can generally present evidence of harassment older than 300 days, so long as one act of harassment does fall within the 300 day window. But, the lower court refused to treat Prof. Heath’s situation as continuing. Prof. Heath left the school on a sabbatical. So, said the lower court, harassment prior to the sabbatical could not be included in her lawsuit.

In looking at continuing violation, the lower court applied a three part test: 1) whether the alleged acts involve the same type of discrimination, tending to connect them in a continuing violation; 2) whether the alleged acts are recurring or more in the nature of an isolated work assignment or incident; and 3) whether the act has the degree of permanence which should trigger an employee’s awareness of and duty to assert his or her rights. The district court focused on the third factor when it granted the defendant’s motion for summary judgment.

But, this test was used by Fifth Circuit decisions prior to the decision in National R.R. Corp. v. Morgan, 536 U.S. 101, 117, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002). Pre-Morgan caselaw noted that the third factor was the most important. The Morgan case make an important distinction. It distinguishes discrete acts of traditional discrimination from hostile work environment claims. The human dynamics of harassment by a co-worker are different from those of a supervisor. Claims based on traditional discrete acts of discrimination are not subject to the continuing violation theory. Claims based on hostile work environment are.

As the Heath court noted, a hostile work environment claim is one based on death by a thousand cuts, not by one discrete act. In a hostile work environment, no one act can be pointed to as the one “unlawful employment practice.”

More importantly, the decision in Morgan rejected the view of circuits like the Fifth Circuit that formerly held that “the plaintiff may not base a suit on individual acts that occurred outside the statute of limitations unless it would have been unreasonable to expect the plaintiff to sue before the statute ran on such conduct.” So, the Fifth Circuit recognized that the Fifth Circuit’s pre-Morgan test for the continuing violation doctrine was implicitly overruled to the extent prior cases held that the continuing violation doctrine does not apply when an employee was or should have been aware earlier of a duty to assert her rights. That the employee was on notice or not that an act of harassment gave rise to a valid claim is not relevant.

See the Fifth Circuit decision here.

Well, the San Antonio court of appeals recognized same sex harassment in Alamo Heights ISD v. Clark and now the Texas Supreme Court has overruled that decision. This has long been a difficult area of law for courts. In the federal court system, the Supreme Court reached a compromise of sorts. It recognized that harassment can be based on gender stereotypes, even if the harassers are not homosexual. See the decision in Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998). The Fourth Court of Appeals in Alamo Heights ISD v. Clark reached a similar result. The Fourth Court found there could be harassment under the state version of Title VII based on gender stereotypes that did not involve apparent homosexual conduct or desire.

I previously wrote about the Fourth Court’s decision here. As I noted then, the harassment by Coach Monterrubio included non-stop comments about Coach Clark’s buttocks and breasts. Coach Monterrubio discussed sexual intercourse frequently with Coach Clark and discussed her breasts almost daily. A second coach often joined in. The appeal concerns a plea to the jurisdiction. So, the issue is not whether Coach Clark can win her case, but whether she can simply advance a claim based on gender stereotyping. The Texas Supreme Court gets the last word and they say no, she cannot advance such a claim.

During the oral argument, Justice Guzman was troubled by the lack of obvious homosexual intent by Coach Monterrubio. Justice Guzman claims the jokes and bullying were not based on Coach Clark’s gender. The judge pointed out that Monterrubio’s remarks also suggested Coach Clark should be a stay-at-home mom where she could be “smug, wealthy and snotty.” But, it is disingenuous to argue that comments like these could not be linked to the plaintiff’s gender: “Wow, Coach, I think your boobs are going to pop out of your shirt!” Telling her that her thong underwear and the dimples on her buttocks were visible. And, upon receiving a candle from Coach Clark, Coach Monterrubio said she would make love next to her candle and think about Coach Clark. To claim these sorts of comments are not linked to her gender is a big stretch. This claim concerns a plea to the jurisdiction. The issue is not who wins at trial, but whether the plaintiff advance the claim.

The Texas Supreme Court rightly noted that courts which follow Oncale are divided regarding whether homosexual motive by the harasser is required. But, the Texas Supreme Court found it did not matter whether Coach Monterrubio was motivated by homosexual desire or not. The majority decision finds a paragraph in Oncale to provide two different methods of proof. Although, I read the same paragraph and do not see any sort of proscriptive injunction to lower courts. It is simply the Oncale court providing two possible examples of how a plaintiff could show same sex harassment under Title VII. They are examples, not rules.

The court is then troubled by the lack of any allegation on Coach Clark’s EEOC charge or in her lawsuit that Coach Monterrubio was motivated by homosexual desire. But, really, that was the point of Oncale, that a man could harass another man even though there was no homosexual desire on the part of either man. The Court claims that Oncale says a claim of homosexuality must be “credible.” But, the Oncale court was simply providing one example of how a person could allege same sex harassment and still be protected by Title VII. Indeed, in Oncale, there was no evidence or claim that the harassing men were homosexual. There was no evidence that the male victim was homosexual. Justice Guzman has found a requirement in Oncale that simply is not present.

Yet, there is ample evidence that the female harasser in Alamo Heights ISD v. Clark was focused on the victim’s gender, which is indeed a requirement of Oncale. Justice Guzman has completely mis-interpreted the decision on Oncale. The majority decision also fails to interpret the evidence in the light most favorable to the non-movant. It explicitly looks at the evidence in ways detrimental to her case. It looks for comments that do not suggest sexual motivation. In the end, this is yet another result-oriented decision from the Texas Supreme Court.

The majority decision is quite long, some 66 pages. Any decision that requires those many pages to make a point is stretching credulity. The majority decision devotes some 15 of those 66 pages to rebutting the dissent. See the majority decision here.

The minority decision makes a good point. If a male coach had said those same things to Coach Clark, there would be no doubt he was sexually harassing the young coach. But, because the harasser was female, the employer gets a pass. The dissent also noted that the majority decision fails to construe the facts in favor of the non-movant. It pointed to an incident in which Coach Monterrubio grabbed Clark’s buttocks during a photo shoot. That sort of incident does tend to show possible lesbian behavior. Yet, the majority decision dismissed it as “horseplay.” Justice Guzman drew conclusions when she should have simply allowed this created a factual issue. See the dissent here.

 

For decades, there has been such a thing as the attorney client privilege. In our system of justice, we depend on lawyers who represent clients zealously. To protect that representation, we have developed this attorney client privilege. Until Watergate, the privilege applied to every communication between a lawyer and his/her client. But, the Watergate conspiracy had many facets, one of which was some lawyers refusing to answer questions based on the attorney client privilege. Many of the Watergate actors were lawyers, so the privilege was invoked many times. So, among the many Watergate reforms, the American bar Association re-looked the attorney client privilege.

The ABA researchers modified the privilege. They recommended that it not apply to planned or future crimes. Yes, zealous representation is still critical to our judicial system. But, said, the ABA committee, zealous representation is not as important as preventing crime and harm to others.

So, when Pres. Trump says the attorney client privilege is dead, he is wrong. He exaggerates, of course, but even allowing for hyperbole, he is wrong. The attorney client privilege has not included crimes yet to be committed for several decades. We do not know yet what supported the search warrant for Michael Cohen. But, with all the multiple layers of review it received, it is very likely the U.S. Attorney for the Southern District of New York is looking at possible crimes, yet to be committed. See Politico news report.

And, by the way, it is not unheard of for law enforcement agencies to seize documents from successful criminal defense attorneys. It is rare to do so, but it happens. Some law enforcement agencies become convinced that some defense lawyer, especially after winning a few trials, are committing crimes him or herself. So, sure, they might investigate some criminal defense lawyers by conducting a raid at his/her office.

Pres. Trump says he has no no idea why a lawyer representing him paid $130,000 to Stormy Daniels. See CBS news report. He was asked if he knew about Michael Cohen’s payment of $130,000 to Stormy. The President answered, “no.” He added the reporter should ask his lawyer, Michael Cohen, about the payment. “Michael Cohen is my attorney,” the President added.

Those are extraordinary things to say. His lawyer, Michael Cohen, used the Trump campaign email address when he communicated with he Daniels attorney. In disclaiming any knowledge of the payment, Pres. Trump has suggested Michael Cohen took some action without his client’s consent. That exposes Mr. Cohen to ethical issues with the bar association. It also means Michael Cohen becomes a witness.

Mr. Cohen is now a witness who can be deposed about his discussions with then Candidate Trump and questioned about why he would make payments for the benefit of Trump without his consent. In fact, the President said to ask his lawyer about the payment. That makes Mr. Cohen a witness, not a lawyer any longer, in regard to that $130,000 payment. And, this answer makes Pres. Trump a key witness, as well. He will surely be deposed about what he knew or did not know about the payment to Stormy.

It was a difficult question for the President to answer. Answering yes would have caused him as many problems as no. The only safe answer would have  been to ignore the question. But, Pres. Trump cannot ignore questions. His instinct is to always push back in some way. This “push back,” however, will likely haunt him for weeks and months as Stormy’s lawsuit progresses.

Incredibly, it appears the settlements concerning Bill O’Reilly and his sexual harassment required his victims to lie about the evidence. According to a CNN report, a settlement agreement with Andrea Mackris, a former Fox News producer, required her to lie even under oath by referring to the allegations as “counterfeit” or as “forgeries.” According to this same CNN report, the lawyer who claimed to represent Ms. Mackris switched sides in the midst of the negotiations for the settlement agreement and then represented Bill O’Reilly.

As Ms. Mackris’ current lawyer mentions, if true, that is a profoundly unethical step for any lawyer in any state. There is no situation in which it would be proper for a lawyer to switch sides during a lawsuit or during a negotiation. The ethical rules emphasize the appearance of impropriety. Even if the lawyer, Benedict Morelli, could offer some explanation for switching sides, changing sides would simply look improper.

These are serious legal allegations, the kind any lawyer would lose his license for. I am sure all these legal problems helped persuade the judge to allow three of Mr. O”Reilly’s settlement agreements to become public. Mr. O’Reilly asked the judge to seal the settlement agreements. But, the federal judge denied his motion. See CNN news report.

Texas, like most states, adopted the worker’s compensation scheme decades ago. Worker’s compensation essentially provides coverage for workers for on-the-job injuries. In return for workers compensation, workers give up the right to sue for simple negligence. But, worker’s compensation does not apply to gross negligence if death results. Gross negligence is worse than simple negligence. Gross negligence involves an employer proceeding with a known risk. It requires the employer to have some knowledge and awareness of the dangerous condition. To show gross negligence, a plaintiff must prove by clear and convincing evidence that: (1) when viewed objectively from the defendant’s standpoint at the time of the event, the act or omission involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others, and (2) the defendant had actual, subjective awareness of the risk involved, but nevertheless proceeded with conscious indifference to the rights, safety, or welfare of others.

In Goodyear Tire & Rubber Co. v. Rogers, 2017 WL 3776837 (Tex.App. Dallas 8/31/2017), the court addressed the question whether the presence of asbestos was known to the employer. The jury found the asbestos was an extreme risk known to the employer. The jury fund the employer grossly negligent in exposing its workers to asbestos. Carl Rogers, who worked at the Goodyear plant from 1994 to 2004 contracted mesothelioma, from which he died in 2008 at the age of 60. Goodyear argued that the probability of developing mesothelioma under these circumstances was only 1 in 45,000. The employer agreed that that low probability was too remote to qualify as gross negligence. The court disagreed. The court found that statistical evidence of  serious injury is not necessary to show the objective element of gross negligence. In any event, added the court, there was some evidence that the probability was much higher.

Too, the jury need not consider only the probability. It can also consider the employer’s acts and omissions. In this case, there was evidence that the employer turned a “blind eye” to the risk of mesothelioma and the magnitude of  the risk was great because mesothelioma leads to certain death. See the decision here.

 

Hiring a lawyer poses perils for any client. Not only must the lawyer have sufficient expertise and competence, the client needs to get along with the lawyer. They are locked in a major endeavor that will last months, if not years. Yes, a lawyer can quit or be fired. The client can quit or be fired. But, termination is not simple. A lawyer cannot ethically leave a case too close to trial or to a major event in the lawsuit. In federal court, some judges will not let a lawyer quit.

So, once hired, lawyers do not often leave a case before it concludes. That helps explain why so many lawyers avoid what otherwise appears to be a prime client, Donald Trump. Most lawyers would jump at the chance to represent a President and the recognition it can bring. Like all types of business, lawyers rely on good reputations to attract new clients. A high profile lawsuit or criminal defense builds name recognition. Yet, many lawyers are avoiding the President’s case. As one Washington attorney, Mark Zaid explained, “I don’t have the time, energy or patience to babysit a client who ignores my expertise and opinions.” See The Hill report.

That is the problem. It does not build name recognition to accept a case and then the case goes south, badly. If a client consistently disregards my advice, absolutely, I would resign from that case. And, absolutely, if I knew ahead of time that a client frequently disregarded sound legal advice, I would never accept that client. No one needs headaches like that. Those are the sorts of clients who lead to bar grievances. Taking on a client like Donald Trump amounts to career suicide. No matter how competently a lawyer performs, the case is very likely to fail.

This problem in finding a lawyer compounds itself as time goes on. Much has happened in Pres. Trump’s criminal case. Even if a new law firm was hired today, it would require weeks for the lawyers to catch up on where John Dowd was before he left. Those are weeks in which the Muller investigation will proceed without any real opposition from the President. Tweets do not count as legal opposition.

The best advice I can give to folks looking at hiring a lawyer, is to interview 2 or 3 lawyers. Once you pick one, follow his or her advice. You can and should disagree from time to time. But, if you consistently disagree regarding major strategic issues, then it is time to part ways. And, never, ever undermine your own lawyer publicly.

I wrote about this McDonald’s lawsuit a couple of years ago. See my prior post here. The lawsuit represented a new approach to franchisees. For years, even decades, persons suing franchisees could not also sue the parent company. A person could sue the local McDonald’s, but not the parent company. The theory was that the parent corporation sells work systems, but does not otherwise exert control over the franchisee. That theory started to change in 2015 when the National Labor Relations Board found that a company that hired a management company could indeed be liable in those rare situations when the first company retained some minimal management control. The first company and the new company would be a joint employers, said the NLRB.

In 2016, some McDonald’s workers walked off the job to call for higher wages. They suffered retaliation and then filed complaints with the NLRB. As I mentioned in my 2016 post, a simple franchisee agreement does not normally provide enough indicia of control to justify a joint employer relationship. McDonald’s settled the investigation with the NLRB. See Reuter’s report here. McDonald’s agreed to pay $3.75 million to settle the back wage claims. See Fortune report. According to the Fortune report, a judge ruled in 2017 that McDonald’s could not be liable as a joint employer, but said the company could be found liable if the employees believed the parent company was their employer.

Jon Hyman, an employer side blogger, seems to believe the matter settled in terms favorable to the McDonald’s parent company. See his post here. Regardless, it is likely that the joint employer theory has legs and will not go away soon.

 

Stormy Daniels signed a Non-Disclosure Agreement with Michael Cohen. There is a place on the agreement for the signature of “David Dennison,” who is probably Donald Trump. Mr. Dennison/Trump never signed the agreement. The NDA includes a liquidated damages provision. “Liquidated” damages simply means damages would be hard to determine, so the parties agree in the NDA itself what the damages should be. As Harry Litman explains, this liquidated damages provision represents an effort at pre-determining the amount of damages if Stormy violates the NDA. See CNN news report. The agreement provides that if she breaches the agreement, she would be liable for $1 million per violation. So, Michael Cohn has sued her for $20 million claiming she violated the agreement 20 times.

Yea, yea, whatever. Selecting such  high amount shows bad faith on the part of Michael Cohen and Donald Trump. In any court in the country, anyone suing for $1 million or more better have a very good explanation for that figure. That high an amount suggests it was pulled out of the air. In every discrimination case that settles, the parties sign a settlement agreement. The settlement agreement often contains a non-disclosure provision, just like the one Stormy signed. Sometimes, but not often, the parties agree to a liquidated damages amount. The amount, at least in my experience, is never over $10,000. It just looks silly and amateurish to have an amount in six figures, much less seven figures.

The liquidated damages amount is intended as a guess-estimate regarding how much the damages would be. Otherwise, it would be exceedingly difficult to put a number to how a party has been harmed because the other party blabbed about the settlement. There may be no dollar value. So, generally, I personally oppose including a dollar value. For most of us who lack any notoriety, there is no monetary value to the harm caused.

No, as Harry Litman explains, this use of a million dollars is more “Bronx bluster” than actual legal argument. In 99.9 % of the court rooms in the country, the Trump/Cohen legal team would show themselves to be bullies or amateurs with that sort of a dollar amount. Mr. Litman tells her in his piece on CNN not to worry about the liquidated damages. I would tell her the liquidated damages provision helps her much more than it helps Mr. Cohen/Dennison/Trump. And, that does not even get into the issue regarding whether the agreement is binding. It may not be binding. Mr. Cohen can sign as a lawyer, but he cannot sign as a party. Only Dennison/Trump can do that.