For some 10-15 years, employers have been trying to save some money by transforming traditional employees into independent contractors.  Different entities use different tests to determine whether an employee is truly an independent contractor. I previously wrote about the various tests here. One commonly used test is that employed by the Texas Workforce Commission. The TWC test looks at:

  • Who tells the employee how to do the job: a true independent contractor determines himself how he will accomplish a given task.
  • Training: who provides the training: a true independent contractor provides his own training.
  • Integration: the services of an independent contractor are easily separated from that of the larger employer.
  • Services rendered personally: a true independent contractor can assign the task to a subordinate and need not perform the service personally.
  • Hiring, supervising: an independent contractor can hire, select, pay the workers himself.
  • Continuing relationship. The work of an independent contractor is usually of a definite time period. It does not continue in perpetuity.
  • Set hours of work: an independent contractor sets his own hours.
  • Full time required: an independent contractor need not work for the employer exclusively.
  • Location of services: an independent contractor performs the work where he chooses.
  • Order of sequence. An independent contractor is concerned only with the final product. The sequence in which the work is performed do not concern him
  • Oral or written reports: an independent contractor is usually not required to submit regular reports or updates.
  • Payment by hour, week or month: an independent contractor is generally paid by the job, not by a set time period.
  • Payment of business & travel expense: an independent contractor is normally paid for his/her business and travel expenses.
  • Tools & equipment: an independent contractor provides his own tools.
  • Significant investment: an independent contractor has a significant investment in his business. An employee has little or no investment in the business for whom the work is performed.
  • Profit or loss: an independent contractor can realize a profit or loss from one job depending on the result.
  • Working for more than one firm at a time: an independent contractor often works for more than one business at a time.
  • Making service available to the public: an independent contractor generally makes his services available to the public at large. An independent contractor may hang a shingle or advertise his services.
  • Discharge without liability: if the work satisfies the contract terms, an independent contractor cannot be fired without incurring liability for breach of contract.
  • Right to quit without liability: an independent contractor is legally responsible for job completion. If he quits, he becomes liable for breach of contract.

These are 20 factors in the TWC test. The other tests also include many different factors. But, generally, the courts look to a few factors more than most: right to hire/fire; providing one’s own tools and equipment for the work; freedom to take on other work; how integral is the work to the business; and how the employee is paid are probably the most important factors.

If the work to be performed is so integral to what the business does, the courts are less likely to see the work as a true independent contractor. For example, if a bakery hires someone to bake a certain type of pastry, that worker is likely to be viewed an an employee. But, if the same Baker hires someone to install a new electrical lamp, that work will be seen as not integral to the sort of work normally performed by that bakery.

See the TWC website here for more information.

The Supreme Court decision in New York State Rifle & Pistol Association v. Bruen, 597 U.S. ___, 142 S.Ct. 2111, 213 L.Ed.2d 387 (2022),  is an odd decision. In that opinion Justice Thomas found that no law regarding possession of firearms could withstand judicial scrutiny unless it could be shown that the law fits with historical tradition. See that decision here. Historical custom or tradition has always been a factor, but more as an interpretive tool for ancient statutes and decisions. Justice Thomas’ decision has elevated historical research to a level on par with actual Second Amendment precedent. One judge in Southern Mississippi has tried to wrestle with that strange judicial standard and is annoyed. U.S. District Judge Carlton Reeves wrote a critical opinion about Bruen and expressed his frustration.

In a lawsuit that challenges the limits on felons to own firearms, Judge Reeves called on the parties to submit briefs regarding whether he should hire a historian to advise him on historical tradition in regard to felons owning forearms. He said he is not an expert in historical traditions and neither are the Supreme Court justices “in what white, wealthy and male property owners thought about firearms regulation in 1791.”

Judge Reeves noted historians are divided on whether the second Amendment pertains to individual right to bear arms or to a collective right. Yet, the Supreme Court is requiring him to play historian in the name of constitutional adjudication. See ABA Bar Journal report here.

The Bruen decision is truly odd in requiring judges to do exactly what Judges Reeves said, to “play historian.”

In a very brief order, the Fifth Circuit ordered the release of Catherine Engelbrecht and Gregg Phillips, the two heads of True the Vote. Otherwise, the district court’s order remains in effect. Neither Ms. Englebrecht or Mr. Phillips have yet to disclose the name of the second analyst who supposedly showed them proof that Konnech had stored poll worker information on Chinese servers. See my prior post about this contempt finding here. Since their confinement, the two True the Vote leaders have turned their plight into a major cause and a nice fund-raiser, says Texas Tribune. See Texas Tribune report here. They have been selling merchandise emblazoned with “FREEOM!” including mouse pads, hoodies, hats and mugs. As I mentioned before, it is extremely rare to find a party litigant in contempt, much less send them to jail. I expect Judge Hoyt had good reason to do what he did.

See the Fifth Circuit order here.

A jury verdict for $366 million is very rare. It is especially rare for a single plaintiff case. It is even more rare in federal district court. Yet, that is exactly what happened in Harris v. Fedex, No. 21-CV-01651 (S.D. Tex.). Jennifer Harris sued Fedex for discrimination and for retaliation after she complained about discrimination. Harris, African-American, sued under Title VII of the Civil Rights Act and under 42 U.S.C. Sec. 1981. There is no cap under Sec. 1981.

Retaliation

Ms. Harris was a rising star for Fedex, with several company awards.  In 2019, her supervisor asked her to accept a demotion. Harris complained to Human Resources and said this was discriminatory. She was then disciplined three months later. She had no negative performance evaluations or written discipline prior to her first complaint of discrimination. Harris’ supervisor then started to sabotage Harris’ commission structure, even though her performance remained at a high level. Harris complained about discrimination again a few months later when her supervisor. Fedex conducted a meaningless investigation into her claims. The employer then fired Harris.

In October, 2022, Ms. Harris’ trial lasted seven days. The federal six-person jury deliberated for a day. It sent out a note saying it was deadlocked. The judge then urged them to continue. The jury then sent another note asking if they could assign some money to force the company to implement better systems to prevent discrimination. The judge replied, no. The jury ultimately awarded over $1 million in compensatory damages and $365 million in punitive damages. Fedex says it will appeal.

See Law360 article here. There are probably a few FedEx lawyers wishing they had settled this case.

Well, Catherine Engelbrect and Gregg Phillips appeared in Judge Hoyt’s court room on Oct. 31, and they did indeed refuse to provide the name of the second analyst. See my prior post on this wild hearing here. So, Judge Hoyt ordered they be confined in jail until they release the name. Engelbrecht and Phillips claim the second analyst is in danger from drug cartels.

New Lawyers

It turns out True the Vote replaced their earlier lawyer, Brock Akers, after he provided the name of the first analyst in court. Mr. Akers did not appear at the second October hearing. That does suggest True the Vote fired him and hired a new lawyer, Michael Wynne. At the Oct. 31 hearing, Mr. Wynne argued that the second analyst does not have the data, because it is too large. Judge Hoyt, unmoved, simply responded “I don’t know that and neither do you.” The judge appears to still question the credibility of Ms. Engelbrecht and Mr. Phillips. Certainly, the judge cannot credit anything anyone says, because Engelbrecht’s and Phillips’ testimony was too inconsistent. They contradicted their own testimony. Too, the two true the Vote leaders admitted they had no first-hand knowledge about the data. They only saw it displayed on a computer screen.

Mr. Wynne offered into evidence several text messages between Engelbrecht and what they claim are FBI agents. But, again, the judge was not interested. He expected them to reveal the name of the second analyst and nothing else. The lawyer for Konnech said three weeks ago, the FBI made it clear they had no interest in maintaining confidentiality with this matter.

Too, claiming someone is in danger from “drug cartels” is just over the top. Such a claim needs support. Where is an affidavit from the second analyst making the claim himself? The affidavit can be filed under seal. But, someone must first testify with first-hand information about these wild claims.

Call for Donations

Two hours after they entered a jail cell, Engelbrecht and Phillips issued a call for donations on Truth Social. They posted: “And ye shall know the truth, and the truth shall make you free. John 8:32,” the organization posted. “To join us in cause, please donate here.” See Texas Tribune report here for more information.

This is what happens when amateurs are sent to jail. If they were true reporters, they would have a boss and more independent legal advice. Someone would explain to the reporter that in court, you cannot claim “danger: – unless a credible person can testify with first-hand testimony about that alleged “danger.” Even if there was danger to someone, the name would still have to be provided. Persons cannot harm the reputation and business of someone else without providing evidence of their claims. In a democratic country, that is how the legal system works.

There have been a lot of crazy lawsuits since 2020. One of those lawsuits concerns True the Vote. True the Vote is a conservative Texas non-profit that has been around for many years. They participated in the opposition to the recall of former Republican Gov. Scott Walker in Wisconsin. True the Vote was the primary source for the psuedo documentary, 2000 Mules. True the Vote is headed by Catherine Engelbrecht. Gregg Phillips sits on the board. Starting in 2021, True the Vote has been claiming that an election logistics company known as Konnech has stored the records of 1.8 million poll workers on servers based in China. Konnech denies these claims. Kenneth says it stores all its data on U.S. based servers. Konnech sued True the Vote for defamation.

True the Vote has claimed that it hacked its way into Konnech’s data files and looked at the records of 1.8 million poll workers. It has been saying that it hacked its way into the servers simply by guessing a simple password. True the Vote claims Konnech is owned by the Communist party of China. In reality, Konnech is owned by Eugene Yu, who lives in Michigan. True the Vote claims he is a Chinese “operative.”

Temporary Restraining Order

Konnech sought a temporary restraining order early in the suit. Judge Hoyt granted Konnech’s motion for a TRO at a September, 2022 hearing. The order prohibits True the Vote from accessing or attempting to access Konnech’s computers, or disclosing any contents of their computers. He also ordered the organization to provide more information about how they acquired their information. That the judge granted the request for a TRO is signficant. It means Judge Hoyt believes that Konnech’s case has some merit.

Early October Hearing

As with any lawsuit, Konnech has sought discovery of True the Vote’s basis for its claims. But, True the Vote resisted that discovery. Konnech then filed a motion to compel and sought sanctions from True the Vote for resisting those discovery requests. In a court hearing in early October, Judge Hoyt, grew visibly exasperated with the Defendants. In that hearing, the two lawyers for True the Vote resisted naming their source in court. For two hours in court, they argued that revealing the name of the person would expose him to danger.  Judge Hoyt, however, insisted they disclose the name. The two lawyers then wrote the name on a legal pad and showed it to the Konnech lawyers. The Konnech lawyers then insisted the True the Vote lawyers read the name out loud in open court. They wanted a record showing the name had been provided, perhaps to ensure the True the Vote lawyers were providing truthful information. The True the Vote lawyers then read the name out loud, so it would be part of the court’s record.

Judge Hoyt, a federal judge since the 1980’s, then warned the True the Vote lawyers. He said he did not trust the veracity of Englebrecht and Phillips, in part because they had not submitted written affidavits in support of their defenses. The Judge suggested the True the Vote lawyers may be “getting played” by their clients.

And, of course, about the time of the early October hearing,. Eugene Yu was arrested in Los Angeles, California. True the Vote denied any involvement in his arrest. And, he was indeed charged with storing information on Chinese servers, in violation of a contract with Los Angeles.

Second October Hearing

Then, at a second hearing in October, Engelbrecht and Phillips appeared in court. And, again, the Judge grew impatient with True the Vote and their lawuers. It sounds to me like the lawyers simply lodged too many unsupported objections. For example, as the Judge would ask follow-up questions of Ms. Englebrecht, the True the Vote lawyer would object that the Judge was mis-characterizing Ms. Engelbrecht’s testimony. This is a modestly BS objection. Any witness can or should be able to address a mis-leading question. More often, when a lawyer objects that the witness’ testimony is being mis-characterized, in reality the lawyer is trying to signal to his/her client to be careful with that question. Too, objecting to how the judge phrases a question is sure way to antagonize the judge.

No surprisingly, Judge Hoyt became very annoyed and told the lawyer to take his seat and to not get up again. This was a very critical area of questioning. The Judge was asking who, when and how the data was allegedly obtained. As Engelbrecht testified, there was probably a second analyst involved in the alleged hacking. Too, the hacking itself may have never occurred. Her testimony was not clear. In various interviews on public media Ms. Engelebrecht and Mr. Phillips have variously said there was hacking, that there was no hacking, that there was no password, and that the password was easy to guess.

Second Analyst

But, as the five hour hearing came to a close, Ms. Engelbrecht’s testimony still was not clear. There might have been a second analyst involved in whatever hacking or breach occurred. At the end of the hearing, with no fanfare, Judge Hoyt simply said he found Englebrecht and Phillips in contempt. That is also unusual. It is rare for a federal judge to rule from the bench at the close of a hearing. The Judge said he expected True the Vote to return to the courtroom by 9:00 am. Monday, and reveal the name of the second analyst. If the witnesses, Engelbrecht and Phillips did not appear, they would be arrested. It is also quite rare for a judge to warn Defendants they could be arrested for failure to appear. Clearly, he believed they might otherwise consider not appearing.

During their testimony, both Mr. Phillips and Ms. Engelbrecht had resisted providing the name of the second analyst, or even admitting there was a second analyst involved in some vague breach of Konnech’s computers. The two witnesses claimed such persons would be “doxed” and then be exposed to danger. Phillips claimed the second analyst was an informant to the FBI. The Judge expressed disbelief at the need for this sort of discretion, but still, they would not reveal the name of the second analyst.

And, yes, it turned out that Eugene Yu’s arrest was indeed based on a tip from True the Vote. As the judge’s decision registered in the court room, the 12 member True the Vote contingent stared at the judge unbelieving at first, and then rose from their table. See Texas Tribune report here.

When an appellate decision starts with a quote from the Federalist papers about despotism, you know this decision presents a bumpy ride. In Community Financial Services Assoc. of Ame. v. Consumer Financial Protection Bureau, No. 21-50826 (5th Cir. 10/19/2022), the Fifth Circuit quotes from the Federalist papers six different times. The Federalist papers have their place in jurisprudence, but they are not precedent. It is the rare appellate opinion that quotes from the Federalist papers even once.

The Fifth Circuit oversees appeals for Louisiana, Mississippi and Texas. This is the court of appeals for federal district court in those three states. The Fifth Circuit has generally been pretty conservative for a few decades. But, with half a dozen Trump appointees, it seems to have entered a whole other level of conservative. In one recent decision, Community Financial Services, the court addresses the 2017 Payday lending rule. That rule prevents lenders from debiting a person’s account more than twice if the funds are not available. Prior to establishment of the rule, lenders – usually payday lenders – would debit the account multiple times, so as to rack up more fees.

The Community Financial Services Assoc. is the organization that represents those payday lenders. The CFSA sued attacking the rule. On appeal, the Fifth Circuit panel, comprised of three Trump appointees, found the appeal “missed the mark,” except for the attack on the constitutionality of the CFPB itself. In an odd decision, the court found the funding mechanism was unconstitutional. The CFPB is funded by funds which pass through the Federal Reserve. The Fifth Circuit panel was concerned that the funding was not the result of annual appropriations by Congress. It pointed to a normally mundane and non-controversial provision in the Constitution that says no money shall be drawn from the Treasury except by appropriation by Congress. The provision does not require an annual, weekly or hourly appropriation. It simply says Congress must appropriate any money which it spends. That language imposes no time requirement.

Second Agency Funding

The panel found that funding which passes through another agency to render the CFPB unconstitutional. Yet, numerous agencies are funded in ways not involving an annual appropriation: the Federal Reserve itself, the Federal Deposit Insurance Corporation, and others. The court in Community Financial does acknowledge that other courts that have addressed the issue have found the CFPB to be constitutional. As the panel noted, the constitutionality of the CFPB has been “heavily” litigated. This is the first decision to find the agency’s funding mechanism to be unconstitutional.

The court’s reasoning disregards the decision in Cincinnati Soap Co. v. U.S., 301 U.S. 308 (1937). That decision held that the appropriations clause simply requires that Congress pass a law allowing expenditures. As the Cincinnati Soap court said, “that Congress has wide discretion in the matter of prescribing details of expenditures for which it appropriates must, of course, be plain.” Cincinnati Soap, 301 U.S. at 322. There is no requirement in the Constitution or in caselaw that Congress pass an annual appropriation for a particular agency. The court’s opinion even acknowledges that Congress has sole power over spending. So, if Congress – with exclusive power to appropriate monies as it sees fit – passes a law allowing funding through a second agency, how is that not constitutional? The court does not address that question. See the decision here.

And, now we know that funding through a second agency represents despotism. … Who knew?

PACER – Public Access to Court Electronic Records – has existed for some 20 years. Prior to PACER, lawyers and parties received court orders via regular old snail mail. But, with PACER, we would receive those orders via fax and then via email. PACER seemed like a good price, because it did not send a bill if the PACER charges were below $15. But, it turns out the provider of those records over-charged its users. According to a class action lawsuit, PACER which charged up to $3 per document at 10 cents per page was too much. Even though the charges were maxed out at $3 per document, no matter how long the document, the charges were much higher than the actual cost pf providing those copies.

Three non-profits brought the class action: Alliance for Justice, National Veterans Legal Services Program and the National Consumer Law Center. In a 2018 ruling, a federal district court said fees from PACER public records should not have been used for expenses related to anything other than online filing and downloading copies. In 2020, the Federal Circuit affirmed that ruling.

The court has already lowered the PACER fee to $30, meaning a user who incurs less than $30 in a billing quarter will not incur a charge.

Under the terms of the class action, all persons who have used PACER from 2010 to 2018 will receive a refund of at least $350. The user does not need to register his/her claim to receive that refund. See ABA Bar Journal report here.

What sort of person seeks to profit from the murder of dozens of children? Twenty of the victims were between 6 and 7 years old. Yet, for years, Alex Jones sought to profit from the deaths of children killed at Sandy Hook Elementary. In so doing, he inflicted emotional torment on their families. For this, a jury in a Connecticut district court has awarded $965 million in compensatory damages to 15 different plaintiffs, all family members of Sandy Hook victims and one FBI agent. The jury will next decide on punitive damages. The jury verdict applies to both Alex Jones and his company, Free Speech Systems LLC. Free Speech Systems has already filed for bankruptcy. It is very likely Mr. Jones will also file for bankruptcy protection. See Reuter news report here.

The jury awarded $120 million to Robbie Parker, father to the murdered Emilie Parker. For years, Mr. Jones excoriated Mr. Parker as an actor. Jones said Parker’s tribute to his daughter the day after the shooting was “disgusting.”

I previously wrote about this second trial here. This is surely the largest defamation verdict ever. Defamation cases are notoriously difficult to win.

Jones will surely appeal. But, even a major reduction in the total will still result in a large verdict. And, we still have not seen a decision on punitive damages. A similar reduction will likely occur in bankruptcy court. The bankruptcy court cannot pay the entire amount, but the Jones estate will amount to millions of dollars. One estimate is that he has some $130-$200 million in assets.

But, the larger question remains, Why? Why would someone embark on such a mean-spirited, brutal crusade? The answer to that question may not emerge for years.

In Wilhite v. HE Butt Co., 812 S.W.2d 1 (Tex.App. Corpus Christi 1991), the employee was accused of sexual harassment. His employment was terminated after many years at HEB. Mr. Wilhite sued for defamation and invasion or privacy. The district court granted summary judgment regarding the invasion of privacy.

On appeal, the Corpus Christi Court of Appeals found that summary judgment to be error, sort of. Texas, said the court, recognizes a tort known as intrusion upon a person’s seclusion or solitude, or into his private affairs. Physical acts such as eavesdropping on a conversation or physical invasion of a person’s property are associated with this sort of invasion of privacy. The court found that the plaintiff did not allege this sort of privacy invasion. Instead, Mr. Wilhite described his employer not allowing him to confront his accusers and by invading his private life by trying to control what he could do or not do. There was no physical invasion of the plaintiff’s privacy by his employer.

The Court noted that the plaintiff’s description sounded more like the torts of 1) disclosure of embarrassing facts or 2) publicity which places the person in a false light. But, said the court, the HEB officials did not make public any private acts or accusations. So, summary judgment was appropriate. So, the court of appeals affirmed the summary judgment. See the Wilhite decision here.

The decision then recognizes that invasion of privacy at work can occur if the employer eavesdrop on conversations or invades an employee’s seclusion or solitude. The question then becomes at work, what are those areas of seclusion?

One case that answers the question is K-Mart Corp. Store No. 7441 v. Trotti, 677 S.W.2d 632 (Tex.App. Hou. 1984). That decision found that a worker did have an expectation of privacy in his locker, which the employer provided. The locker was used to store personal effects. The lockers were sometimes locked, sometimes not. In this instance, the employee did lock her locker, with her purse inside. Later, she found the locker open and her purse had been ransacked. The manager had opened all the lockers, because he believed some unknown employee had stolen a watch.

This invasion of privacy amounted to an intrusion of the plaintiff’s seclusion, said the court. In providing her own lock with the employer’s consent, the employee showed a legitimate expectation of privacy to the locker and the contents of the locker. See the decision in the Trotti case here.