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inside... Texas Non-Competes: What Is Reasonable? International Employment Law FLSA: An Overview of Hybrid Actions FLSA Arbitration Clauses: Class-Action Waivers Become Class-Notice Waivers Investigation Best Practices in the Wake of #MeToo
Volume 57 – Number 2
September/October 2019
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contents September/October 2019
Volume 57 Number 2
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FEATURES Non-Competes: 10 Texas What Is Reasonable? By Diana Gomez
Employment Law: 14 International A Still-Growing Concern for the Multi-National Employer By Dominic Hodson and John Tomaszewski
An Overview of 20 FLSA: Hybrid Actions
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By G. Mark Jodon and Kevin Little
Arbitration Clauses: 24 FLSA Class-Action Waivers Become Class-Notice Waivers
By Patrick Yarborough and Christy M. Ho
Best Practices 28 Investigation in the Wake of #MeToo By Molly Holub
Complex Web of Social 32 The Media and Employment Law
The Houston Lawyer
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By Sidd Rao
The Houston Lawyer (ISSN 0439-660X, U.S.P.S 008-175) is published bimonthly by The Houston Bar Association, 1111 Bagby Street, FLB 200, Houston, TX 77002. Periodical postage paid at Houston, Texas. Subscription rate: $12 for members. $25.00 non-members. POSTMASTER: Send address changes to: The Houston Lawyer, 1111 Bagby Street, FLB 200, Houston, TX 77002. Telephone: 713-759-1133. All editorial inquiries should be addressed to The Houston Lawyer at the above address. All advertising inquiries should be addressed to: Quantum/ SUR, 10306 Olympia Dr., Houston, TX 77042, 281-955-2449 ext 1, www.thehoustonlawyer.com, e-mail: leo@quantumsur.com. Views expressed in The Houston Lawyer are those of the authors and do not necessarily reflect the views of the editors or the Houston Bar Association. Publishing of an advertisement does not imply endorsement of any product or service offered. ŠThe Houston Bar Association/QuantumSUR, Inc., 2019. All rights reserved.
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contents September/October 2019
Volume 57 Number 2
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departments Message 6 President’s What Defines a Leader? By Benny Agosto, Jr.
the Editor 8 From The Impact of Employment Law By Taunya Painter
THE RECORD 36 OFF Patty Hair:
A True World Traveler By Carly Milner
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in professionalism 37 AMoProfile Aziz
Partner, Abraham, Watkins, Nichols, Sorrels, Agosto & Aziz SECTION Spotlight
38 The Labor and Employment Law Section: Bringing Both Sides of the Bar Together to Learn and Network By Sidd Rao
TRENDS 40 LEGAL Mandatory, Jurisdictional, or
Just Exhausting?: Fort Bend County v. Davis
Cover:
The HBA Ambassador program was created in 2013 to increase knowledge and understanding in the legal community about the benefits of HBA membership, enhance volunteerism and participation in the HBA, and promote opportunities for pro bono legal service in the community. Each two-year Ambassador Class comprises a diverse group of young attorneys who lead presentations to law firms, legal departments, HBA sections and committees, and other legal organizations. For more about HBA Ambassadors, visit www.hba.org/hba-ambassadors. First Row: Benny Agosto, Jr., HBA President; Ashley Edison Brown, Schlumberger; Pia Das,
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Spurlock & Associates, P.C.; Alicia Castro, Locke Lord LLP; Jacquelyn McAnelly, Cersonsky, Rosen & Garcia, P.C.; David Hsu, Givens & Johnston, PLLC. Second Row: Alex Kamel, Vinson & Elkins LLP; Jackie Coleman, Bracewell LLP; Fatima Hassan Ali, Jones Day; Neeharika Tumati, Harris County Attorney’s Office. Third Row: Ryan Cantu, Johnson DeLuca Kurisky & Gould, P.C.; Zeinab Kachmar Zahid, Matias J. Adrogue, PLLC; Susan Oehl, Jenkins & Kamin LLP; Mariame Aana, Attorney at Law; E. Derick Mendoza, Linebarger Goggan Blair & Sampson, LLP; David Miller, Amaro Law Firm; Quentin Smith, Vinson & Elkins LLP. Fourth Row: Agape Ogbonda, Spencer Ogden Inc.; Maine Goodfellow, Phillips 66 Company; Andrew Yeh, Norton Rose Fulbright US LLP; Chanler Langham, Susman Godfrey L.L.P. Photo by Carly Wood, Houston Bar Association.
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September/October 2019
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By Lloyd Van Oostenrijk
Raise a Glass to Beer-To-Go By Jennifer McCammon
ReviewS 42 Media From the Trenches III: Pretrial
Strategies for Success Reviewed by Trey Holm
The Chief: The Life and Turbulent Times of Chief Justice John Roberts
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president’s message By Benny Agosto, Jr. Abraham, Watkins, Nichols, Sorrels, Agosto & Aziz
What Defines a Leader?
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any books and articles have been written about leadership. We have studied leaders of the past and attempted to learn from their mistakes and their accomplishments, in order to make us better leaders and successful members of our
for women lawyers, young lawyers, and even for the seasoned lawyers. Please watch for those announcements and don’t forget to sign up to attend. I want to close with my attempt to answer the question posed above: What does it take to lead well? community. For many years I have tried to answer this question. I As I continue to work as president of the Houston Bar Ashave developed my answer with an acronym—PWCP. sociation, I strive to become the leader that P-Plan: You must plan to succeed. If one is the bar needs at this time. We are improvto become a leader, one must plan the steps I believe ing many aspects of what we do and how very carefully. Remember that as a leader the Houston we communicate with each other, from people will follow you, so be prepared to communications with the State Bar, to our lead. Bar Association ancillary organizations, to our partners and W-Work Hard: No one will ever complain funders that allow us to do the great work that you are working too hard. To become has a special the HBA does on a day-to-day basis. a true leader will take hard work. Howevopportunity to However, I am driven by the fact that we er, as you work hard, make sure nothing is must not rest on our laurels, but strive to left behind in your sometimes lonely road create leaders ever improve in the work that we do. As the as a leader. Always remember to take care 150th anniversary of the Houston Bar Asof your office life, family life, and personal to allow us sociation draws near, I am reminded of the life. to move early leaders of our organization and wonC-Commit: To become a successful leader, der what lessons we can learn from them. one must be committed. An uncommitted forward into leader will certainly fail, but a committed leader will find a way to meet and accomHow do we define leader? greater Is it the person in front, or the person servplish the goals they have set. heights. ing as the lead, one who takes charge of a P-Pray: With all the hustle and bustle of particular group? Leadership can be a title, everyday life, sometimes wellness gets put at a position, or it can be seen in one’s work and effort. the back of the line. As a leader, you must learn to make I believe the Houston Bar Association has a special optime to sit down and pray or meditate in the matters that portunity to create leaders to allow us to move forward into are greater than the work we are doing. I believe in the greater heights. This year, one of my pillars as president has power of prayer, so I close by reminding you to not only been building leaders. take care of your business life and family life, but also We are accomplishing this by revamping the HBA Amyour personal and spiritual life. In the end, your turn as a bassador program. The Ambassadors, a great example of the leader, and life in general, will be more enjoyable. success of our HBA young lawyers, are poised to present Strength of character and endurance are essential ingrefour distinct programs on leadership. These programs will dients to making great leaders. Most of us have more fortieducate, and hopefully motivate, young lawyers to excel in their profession, but also to challenge them to become leadtude than we realize. Bring it to the surface by writing down ers at their firms and in our community. your goals, facing your fears and obstacles, and setting forth Through our education department, we have planned to do things you have never done before. Become a leader, programs for leadership training at various CLE programs and lead well.
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September/October 2019
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September/October 2019
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from the editor By Taunya Painter Painter Law Firm PLLC
Associate Editors
Anietie Akpan METRO
Anna M. Archer U.S. District Court
Kimberly Chojnacki Baker Donelson
The Houston Lawyer
Trey Holm Houston Volunteer Lawyers
Koby Wilbanks Murrah & Killough
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The Impact of Employment Law
he HBA survey of readers told us that you want more substantive articles. This issue delivers on a topic that affects us all: employment law. About 10 years ago, when I was Wal-Mart’s inhouse international counsel, I had the opportunity to do the legal work to set up and operate over 30 sourcing offices around the world. As I traveled, I got to see a wide variety of employment legal systems, but more intriguing to me was how people operated in practice, with vast differences in backgrounds but also fundamental similarities. India was one of my favorite places in which to work; I felt the common value of working hard while having fun. But recently, my husband and I got a new experience – traveling the country not from the perspective as employees but from the perspective as tourists. We vacationed in India with our four kids for over a week. My positive impression of the people hasn’t changed. There seems to be a pervasive joy in employment. One conversation last week struck me. We were spending the morning with a friend, and she was talking about her 30-year-old daughter, who has an excellent job in banking. But being a bit typical, the mom was stressed that her daughter worked 14-hour days and had no time to meet guys. We said, maybe she needs to take some evenings or weekends off. “Oh no, she will never do that!” I was a bit surprised by the response. Our friend explained there are thousands of people that are just dying to have her job. It hit me that having 1.4 billion people in a country would necessarily create this environment. But it also created in the mom such pride of her daughter’s ability to attain a competitive position, and in the daughter such appreciation and dedication. While I’m not advocating 14-hour work days, although I have certainly worked many myself, it is just interesting to see how times and circumstances in different countries change employment laws and practices. These changes are not necessarily things we can always predict, but they certainly do affect us all – as employers, as employees, or as attorneys advising clients that are one or the other.
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Anietie Akpan, in-house counsel at METRO, and Andrew Pearce, shareholder and litigation chair at BoyarMiller, served as guest issue editors for this issue that addresses some impactful changes to employment law here and abroad. Two articles in particular are good for us to read for our own law firms and for us to share with our clients. Molly Holub wrote an excellent piece about the #MeToo movement from a practical perspective: how employers should handle complaints, investigate, and implement best practices. Sidd Rao wrote a useful article about social media in the workplace. Of course, it covers the legal basis for policies about employee use of social media. But it also touches on something new to many of us: when employers should not look up a potential new hire’s social media accounts. Diana Gomez delivered a great article about the ever-popular topic in Texas, non-competes. She covers recent case law, focusing in particular on purchase agreements, employer/employee agreements, and broker-dealers, and on some new developments on fiduciary duty an employee owes an employer even absent a non-compete. We are excited to give the bar two articles on recent FLSA developments. G. Mark Jodon and Kevin Little give not only an overview of some of the challenges with federal and state hybrid FLSA class actions, but also potential ways to side-step them through arbitration agreements. Patrick Yarborough and Christy M. Ho give an overview of recent changes at the Supreme Court and Fifth Circuit levels made to enforcement of arbitration clauses in wage-and-hour litigation. Patrick and Christy were able to include reactions from Houston employment practitioners, from the employer and employee perspective, to the recent cases and their implications. Finally, in the vein of my thoughts on employment law, for those attorneys that have multinational or foreign based clients, Dominic Hodson and John Tomaszewski give us an overview of some of the topics particularly relevant to such clients today and outline some tips when handling employment law issues outside of the United States. A special thank you to Anietie and Andrew!
BOARD OF DIRECTORS President
Secretary
President-Elect
Treasurer
First Vice President
Past President
Benny Agosto, Jr.
Diana Gomez
Bill Kroger
Jennifer A. Hasley
Chris Popov
Warren W. Harris
Second Vice President
David Harrell
DIRECTORS (2018-2020)
Greg Moore Mitch Reid
Collin Cox Hon. Erin Lunceford
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N Texas
By Diana Gomez
Non-Competes: What Is Reasonable?
on-compete litigation typically involves a business trying to stop a former employee from vying for its business customers. Non-compete litigation also includes other restrictive covenants that arise in the workplace from purchase agreements and broker-dealer relationships. Although these restrictive agreements have similar requirements for injunctions, case law provides slight variations on what constitutes a reasonable limitation depending on the relationship of the individuals entering the non-compete agreements. This article will discuss the general requirements and recent case law addressing non-competes between an employer-employee, involving a purchase agreement, and concerning a broker-dealer agreement.
I. Legal and Factual Requirements for Injunction The enforceability of a covenant not to compete is a question of law.1 “The hallmark of enforcement is whether or not the covenant is reasonable.�2 To be considered reasonable and consequently enforceable, the agreement must be (1) ancillary to or part of an otherwise enforceable agreement at the time the agreement is made3 and (2) contain limitations as to time,4 geographical area5 (reasonable geographic scope is considered to be the territory in which the employee worked for the employer but a limitation to the clients the employee dealt with has also been found to be a reasonable alternative to a geographical limitation),6 and scope of activity that do not impose a greater restriction than necessary.7 Texas courts have further held that the agreements cannot prohibit an employee from servicing clients acquired after the employee left,8 and cannot prohibit an employee from servicing clients whom the employee had no contact with while associated with the former employer.9 Non-compete agreement cases require a fact-specific analysis, and court decisions depend heavily on the circumstance of each particular case.
an employer is generally considered to be II. Employer & Employee Agreement, the benchmark of a reasonable geographFomine v. Barrett 10 ic restriction.”12 Since the 500-mile radius Fomine is a typical non-compete lawsuit. included portions of five other states (and Alexei Fomine (Fomine) hired Rosa BarMexico), which was significantly broader rett (Barrett) to work at Fomine’s chithan the reach of Fomine’s business, the ropractic clinic, Eastex Medical Clinic court found this geographic restriction (Eastex). Barrett treated patients solely unreasonable. in Houston but also marketed to patients throughout Texas. Barrett signed sepaIII. Purchase Agreement, GTG rate agreements for confidentiality and Automation, Inc. v. Harris 13 non-compete, but both agreements were GTG Automation Inc. (GTG) contracted contained in a single document entitled to purchase Harris Plumbing Heating & “Confidentiality and Employee NonAir from Kenneth HarCompete Agreement.” ris (Harris). Harris also The agreement “limited Texas courts executed an employment [Barrett] from owning, have further agreement to work for managing, operating, GTG following the purconsulting, or being emheld that the chase. The purchase conployed in a business subagreements cannot tract included a covenant stantially similar to or not to compete, which competitive with Eastex prohibit an employee restricted Harris and his (i) for two years after any family from engaging in termination or expirafrom servicing any business that would tion of her employment clients acquired compete with GTG withand (ii) within a 500 mile in a 250-mile radius for 5 radius of the clinic’s locaafter the employee 11 years. Harris eventually tion.” left, and cannot resigned from GTG and Barrett’s employment a new plumbing was terminated and she prohibit an employee began business. GTG sued Haropened a clinic 22 miles ris seeking, among other from servicing from Fomine’s and anthings, to enforce the other clinic seven miles clients whom the non-compete agreement. from Fomine’s clinic. FoThe trial court reformed mine sued for breach of employee had no the non-compete agreethe non-compete agreecontact with while ment by reducing the ment. According to Fo250-mile radius to a 50mine, Barrett entered associated with the mile radius and awarded into the agreement in exformer employer. GTG $35,000 for Harris’s change for confidential breach of the non-cominformation, and Barrett pete. GTG appealed. obtained confidential and valuable inforIn analyzing the non-compete lanmation, e.g. patient files, referral sources, guage, the appellate court noted that covprocedures for reducing bills, and trainenants related to a sale of a business are ing in a specialized industry. afforded greater latitude than covenants In determining the reasonableness made as part of an employment contract.14 of the agreement, the court considered A reasonable area for an agreement in whether the 500-mile radius geographian employment contract is the territory cal limitation was necessary to protect worked by the employee, while a reasonFomine’s business interest. Before holdable area for an agreement in a purchase is ing the geographical limitation to be the area necessary to protect the goodwill unreasonable, the court noted “[t]he terpurchased by the buyer.15 The priority in ritory in which an employee worked for
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analyzing a non-compete in a purchase agreement is “the nature and extent of the previously owned business.”16 In addition to plumbing services, GTG also performed electrical and automation services for companies in a 250-mile radius. GTG argued unsuccessfully that it had goals of expanding its plumbing services out to the 250-mile radius. In reaching its decision to uphold the trial court’s reformation of the non-compete to a 50-mile radius, the appellate court observed that GTG’s electrical and automation services encompassed a 250-mile radius, but its plumbing services only encompassed a 50-mile radius. Furthermore, Harris only performed plumbing service for GTG within a 50-mile radius, and his company only serviced a 50-mile radius. Therefore, the 50-mile area was a reasonable area since it was the area of the previously owned business. Unclear from this decision is whether the geographical limitation would have been expanded to the 250-mile radius if GTG had performed plumbing services in a 250-mile radius. Further, the appellate court held that since the non-compete was reformed, GTG was not entitled to the $35,000 in damages as a result of Harris’s breach of the non-compete.17 Pursuant to Section 15.51(c) of the Texas Business and Commerce Code, a court may not award “damages for a breach of the covenant before its reformation.” Because of the trial court’s reformation of the non-compete, GTG “was not entitled to the award of $35,000 for Harris’s breach of the covenant prior to its reformation.”18 IV. Broker-Carrier Agreement, Central States Logistics, Inc. v. BOC Trucking, LLC Central States Logistics, Inc. d/b/a Diligent Delivery Systems (Diligent) is a broker arranging freight transport. BOC Trucking, LLC (BOC) is a company that transports freight. Diligent and BOC entered into a broker-dealer agreement with the following language, For a period of twenty four (24) months following the Carrier’s last contact with
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any client or client[s] of Broker the Carrier agrees it shall not either directly or indirectly influence or attempt to influence customers or clients of Broker (or any of its present or future subsidiaries or affiliates) for whom the Carrier has rendered services pursuant to this Agreement to divert their business to the Carrier or any individual, partnership, firm, corporation or other entity then in competition or planning to be in competition in the future with the business of Broker or any subsidiary or affiliate of Broker.19
compete agreements may still have fiduciary duties to their employers which prohibits how they may form a competing business. Total Air Services, LLC (Total Air) sued its former employee, Heriberto Salas (Salas), after learning that Salas operated a competing business while still employed with Total Air. Salas did not sign a noncompete agreement but the court found that Salas owed his employer “at least some measure of a fiduciary duty.”22 Since Salas had authority to pull city permits, obtain final city inspection, assist in presentIn analyzing the ing quotes, and troubleBOC began transportnon-compete lanshoot problems, he “was ing freight for a company, in a position to compete Ameriforge, arranged by guage, the appellate against Total Air on the Diligent. Ten months later court noted that two to very jobs that [Total Air] BOC formed a separate company and befive year time periods was bidding on.”23 In gan transporting freight reaching its conclusion, have been upheld for Ameriforge. Diligent the court focused on the sued BOC for breaching fiduciary duty between as reasonable. the non-compete agreean agent (employee) and ment, among other things. A jury found a principle (employer) stating, “[a]n agent BOC liable for breach of contract and BOC generally has a fiduciary duty to act for the appealed. benefit of his principal in all matters conIn analyzing the non-compete language, nected with the agency... [A]n agent who the appellate court noted that two to five uses his position to gain a business opporyear time periods have been upheld as tunity belonging to the principal commits reasonable. However, the language at issue an actionable wrong.”24 While an at-will was for two years after BOC’s last contact employee may plan to go into competiwith any client of Diligent. This language tion with his employer and take steps in “create[d] the potential for a covenant that direction while employed, there are not to compete that does not end,” since limitations. The court determined that an it remains in effect regardless of whether employee has a duty to act for the benefit BOC had any previous interaction with of the employer in employment matters Diligent’s clients and regardless of whethand may not steal trade secrets, solicit the er the interaction was during or after the employer’s customers or employees while agreement. The appellate court held that still working for the employer, or take the a non-compete agreement extending for employer’s confidential information.25 an “indeterminable amount of time” is simply not reasonable and therefore not VI. Anti-SLAPP No Longer Applies to 20 enforceable. Because BOC could not deNon-Compete Actions On September 1, 2019, the new amendtermine when the non-compete agreement ments to Texas’ anti-SLAPP (strategic ended, the agreement was not enforceable lawsuits against public participation) as written. statute, known as the Citizens Participation Act, took effect.26 These new, nonV. Fiduciary Duty, Salas v. Total Air Services, LLC 21 retroactive27 amendments now exclude At-will employees who do not sign nonnon-compete matters between an em-
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ployer and employee.28 Diana Gomez is a shareholder in the Houston office of Chamberlain Hrdlicka with over 15 years of experience handling labor and employment matters in federal and state courts. Endnotes
1. Fomine v. Barrett, No. 01-17-00401-CV, 2018 WL 6376500, 2018 Tex. App. LEXIS 10024, *7 (Tex. App.—Houston [1st Dist.] December 6, 2018). 2. Id. (citing Marsh USA Inc. v. Cook, 354 S.W.3d 764,768 (Tex. 2011)). 3. Tex. Bus. & Com. Code Ann. § 15.50(a). 4. Id. 5. Id. 6. Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 660 (Tex. App.—Dallas 1992, no writ); Gallagher Healthcare Ins. Servs. v. Vogelsang, 312 S.W.3d 640, 654 (Tex. App.— Houston [1st Dist.] 2009, pet. denied). 7. Fomine, 2018 Tex. App. LEXIS 10024, at *7; see Tex. Bus. & Com. Code Ann. §15.50(a). 8. In the case of covenants applied to a personal services occupation, such as that of a salesman, a restraint on client solicitation is overbroad and unreasonable when it extends to clients with whom the employee had no dealings during his or her employment. Peat Marwick Main & Co. v. Haass, 818 S.W. 2d 381, 388 (Tex. 1991); John R. Ray & Sons, Inc. v. Stroman, 923 S.W.2d 80, 85 (Tex. App.—Houston [14th Dist.] 1996, writ denied) (quoting Haass, 818 S.W.2d at 386-88); see Rimkus Consulting Grp., Inc. v. Cammarata, 255 F.R.D. 417, 440 (S.D. Tex. 2008) (holding non-solicitation covenant that extended to customers with whom former employee never dealt unenforceable and “broader than necessary”); see also SafeWorks, LLC v. Max Access, Inc., No. H-08-2860, 2009 WL 959969, at *4 (S.D. Tex. Apr. 8, 2009) (holding non-solicitation covenant that was not limited to clients with whom employee did business was overbroad and unenforceable). 9. Id. 10. Fomine v. Barrett, No. 01-17-00401-CV, 2018 WL 6376500, 2018 Tex. App. LEXIS 10024 (Tex. App.— Houston [1st Dist.] December 6, 2018) 11. Fomine, 2018 Tex. App. LEXIS 10024, 2018 WL 6376500 at *1. 12. Id. at *8. 13. GTG Automation, Inc. v. Harris, No. 11-16-00317-CV, 2018 WL 5624206, 2018 Tex. App. LEXIS 8876 (Tex. App. – Eastland October 31, 2018, no pet.) 14. GTG Automation, Inc. v. Harris, No. 11-16-00317-CV, 2018 WL 5624206, 2018 Tex. App. LEXIS 8876, *3 (Tex. Civ. App.—Eastland, Oct. 31, 2018, no pet.) 15. Id. 16. Id. 17. Id. at *4. 18. Id. 19. Cent. States Logistics, Inc. v. BOC Trucking, LLC, 573 S.W.3d 269, 277 (Tex. App.—Houston [1st Dist.] 2018, pet. filed). 20. Id. at 276-77. 21. Salas v. Total Air Services, LLC, 550 S.W.3d 683 (Tex. App. – El Paso, 2018 no pet.) 22. Salas, 550 S.W.3d at 691. 23. Salas, 550 S.W.3d at 691-692. 24. Id. at 690. 25. Id. at 691. 26. Act of June 2, 2019, 86th Leg., R.S., ch. 378, 2019 Tex. Gen. Laws 378 (codified at Tex. Civ. Prac. 550 S& Rem. Code Ann. § 27.001-27.011). 27. Act of June 2, 2019, 86th Leg., R.S., ch. 378, 2019 Tex. Gen. Laws 378, §11. 28. TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(a)(5).
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By Dominic Hodson and John Tomaszewski
International Employment Law:
A StillGrowing Concern for the MultiNational Employer
T
he label of “international employment law” is something of a misnomer. Lawyers intuitively know there is no such thing as a single set of international employment laws that applies uniformly across jurisdictions outside of the United States. Semantics aside, “international employment law” remains a useful label simply because practitioners in the United States use it frequently and know it as the field that refers to legal issues associated with the employment of individuals outside of the United States. A matter of perspective It is important to continue to apply this knowledge that there is no uniformity as the geographic emphasis narrows. For example, each country within the European Union has its own unique employment laws. While there is some uniformity in certain principles across jurisdictions as a result of EU directives, it is typically a fool’s errand to respond to a question about whether something is allowed “in Europe” without knowing where specifically in Europe the questioner means. In Asia, there is of course no organization remotely comparable to the European Union, and the region includes countries that are governed as republics, parliamentary democracies, constitutional monarchies and one-party communist states. There is no uniformity in employment law across Asia, and practitioners consider some countries’ laws to be employer-friendly, while many others are considered to be employee-friendly. Conversely, the shared colonial history of many countries in Central and South America means there are often shared employment law principles in the region. It is essential to approach the employment law requirements of each country with an open mind. Many misunderstandings are caused because: (1) a lawyer’s concerns about issues that would apply in her own jurisdiction cause her to over-emphasize those issues at the expense of more pressing issues in the foreign country; and (2) a lawyer’s famil-
iarity with a concept in one jurisdiction leads him to believe he understands how a similar concept works in a different jurisdiction, causing him to gloss over important distinctions and details. A lawyer must take care when obtaining advice from foreign counsel because foreign external counsel can regard certain rules and principles as axiomatic, causing the lawyer to be under-advised because foreign counsel assumes the lawyer shares the same knowledge of fundamentals. Legal advisors need to approach employment law issues in a new country with open eyes and without assumptions, and to always probe further if external counsel’s advice appears too brief or does not make sense. The growth in importance of international employment law The growth in this field for internal employment counsel and human resources staff in the United States appears to have been caused, unsurprisingly, by client behavior. Possible reasons for that growth in responsibility include: 1. Employers’ increasing expansion, both organic and M&A driven, into increasing numbers of international markets, coupled with the ever-increasing importance of those markets (particularly emerging markets) to the overall health of the corporation; 2. Increased internal demand for inhouse counsel to cover international employment issues, due (among others) to: • An increase in specialized employment counsel in employers’ legal departments and a diminution in the authority of human resources staff to engage outside counsel; • Regionalization and globalization of responsibilities among human resources and legal staff driven by leaner and/or centralized staffing models for business support functions; • The division of corporations into matrices or business organizations, coupled with a top-down decisionmaking process for important cor-
porate actions affecting staff, requiring support from human resources and legal staff working in corporate and regional headquarters; 3. Improvements in technology which have enabled corporations, in the name of efficiency, to adopt and apply employee processes and procedures that can apply globally throughout the corporation. These processes and procedures can encompass the whole gamut of an employee’s experience within the corporation, for example, employment documents and policies, compensation practices, performance management, and rewards and recognition. To ensure realization of the efficiencies of adopting these uniform processes and procedures, regional and local variations due to local employment laws must be minimized; and 4. The negative impact that harsh working conditions within the overseas supply chain has on the brand of the business that relies on that supply
chain, and a growth in voluntary industry associations and codes designed to ensure those businesses drive employment law compliance in the supply chain. The growth in responsibility means that in-house counsel in the United States—both generalists and employment specialists—are being confronted with an ever-increasing number of employment law issues outside of the United States. Law firms have responded by increasing the number of practitioners in the United States who can assist their inhouse clients with such issues. Recent trend in developed nations: demographics of the workforce and society This is an issue that is attracting the attention of employment law advisors globally. Generally, the workforce in developed nations is aging, individuals are living longer and the birthrate is falling. That has driven many countries to
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for the United States because direct change their employment laws to adapt inconsistency with local requirements to these societal changes. and policy is almost certainly assured. Recently, these changes have resulted Secondarily, other changes have in new laws and initiatives to encourage been caused by adaptation to the aging working parents to remain in the workand longer-living workforce. force. These laws and initiatives are varied and include the imposition of requirePension reform is not proceeding at the ments to allow flexible working, such as rate it once was, but there part-time work, work are continuing efforts from home, and flexible Legal advisors underway globally to: (1) start/finish times. These ensure that employers laws and initiatives have need to approach carry some responsibilalso led to the creation employment ity for contributing to of new or expanded private or semi-private leave entitlements, such law issues in pension funds for emas expanded parental ployees (in addition to leave rights associated a new country the responsibility to conwith birth and adoption, tribute to public social and leave rights given with open eyes security); and (2) convert to assist with the care and without defined-benefit and fior upbringing of young nal-pay pension schemes children or other depenassumptions, and to schemes with greater dents. economic viability, typiThese laws and initiato always probe cally direct-contribution tives give rise to two imfurther if schemes. Although the portant implications for concept of a mandatory counsel providing interexternal counsel’ s retirement age is anathnational employment law ema to people in the support: advice appears United States, it remains 1. It is essential to regucommon in international larly check and update too brief or does locations. Governments the leave policies of not make sense. all over the world are each location where raising these ages and the multinational implementing reforms encouraging or reemployer has employees; quiring employers to keep employees in 2. Recently, market forces in the United the workforce past the age at which they States have driven an increase in have traditionally retired. employers looking to create familyfriendly policies for their workforce. An important issue in Europe: GDPR Because these policies are seen as The changes in EU data protection law a top-down change based on the resulting from the General Data Protecemployer’s values, rather than caused tion Regulation (GDPR) took up a lot by any particular regulatory changes, of airspace in the first half of last year. there is often a desire to roll these These changes focused less on changing policies out globally. Such efforts, the obligations for protecting personal while good-intentioned, are fraught data (those were already in the law in with risk because of the large number broad brushstrokes), and more on introand variety of legal requirements asducing obligations designed to ensure sociated with family-friendly policies that businesses processing personal data internationally. Much care must be could demonstrate that they were protecttaken before rolling out on a global ing personal data. The main change that basis family-friendly policies designed
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resulted from GDPR for employers with a material footprint in the European Union was that they needed to design and implement auditable procedures to demonstrate how they fulfilled their data protection obligations to their employees (and other workers). Interestingly, this change was not as disruptive to US employers as might have been expected, because the concept of demonstrable “accountability” has existed as part of corporate governance in the United States for a number of years now. For example, Sarbanes-Oxley imposes similar requirements on companies with regard to auditable financial systems. US multinationals therefore understood the issues around needing demonstrably reliable systems, but prior to GDPR they just had not thought (or needed) to put them into practice with respect to personal data. Now that the initial buzz of GDPR has passed, it appears that ensuring compliance with personal data rules affecting the employment relationship is not a post-GDPR priority for regulators. The pre-GDPR status quo has thus been preserved in this respect. Unsurprisingly, data protection regulators have been focused on businesses that process large amounts of consumer data. Accordingly, employers’ attention to the requirements associated with the personal data of its employees appears to have resumed the level it held prior to GDPR. Look to Asia: reform in enforcement While Europe tends to grab headlines for how hard it is to be an employer there, Asia is not a lawless wild west when it comes to employment law. The public perception that the laws of many Asian countries are inadequate when it comes to employment laws is not one grounded in fact (they all tend to have well-developed and quite protective laws), but one arising due to problems with enforcement. Government agencies are often unable to effectively regulate employers, and employees often do not have access to a union, or sufficient funds or knowledge to pursue legal ac-
tion. These circumstances are changing. Many countries in Asia have, in the recent past, implemented significant employment/labor reforms designed to increase the protection the law affords employees with respect to their terms and conditions. While unionism was once either actively or indirectly discouraged by governments, employers in a number of Asian countries are now seeing more attempts to form unions at their operations. Governments are empowering regulators to step up enforcement of employment laws, recognizing that concerns over working conditions are now a significant concern for citizens. Employee litigation is increasing. Even in those countries with long and well-known histories of strict employment regulation, such as Korea and Japan, reform is continuing in response to public demand, with both countries implementing reforms to try to curb the prevalence of bullying and harassment in the workplace. The message for in-house counsel is that priorities are changing quickly in Asia, and it can no longer be viewed as a lowrisk region compared to the other regions of the world. Further, these changes are happening at a rate that is exceeding the capacity of local human resources staff to adapt, meaning that legal advisors need to take the reins to drive compliant behavior within the regional organization.
2. It is usually not easy to reduce compensation and benefits. Exercise caution if a proposal comes across your desk which involves reducing employees’ terms and conditions of employment, especially compensation and benefits. The consent of employees will often be needed. Sometimes consent is not enough and the change can’t be implemented even with consent. 3. There is no uniform concept for who is an “exempt” employee. In some coun-
tries, nearly all employees are entitled to overtime. Other countries do not have statutory overtime pay at all. Do not assume that simply because an employee is professional, well-paid or a manager that she will not be entitled to overtime. 4. It is not always easy to work with works councils in Europe, but being deliberately adversarial will often backfire. The idea that an employer has to talk to, or obtain the opinion or even consent
Some practical tips when handling employment law issues Big picture issues are well and good, but most employment law issues upon which an advisor will be asked to counsel are more routine. There are a number of things that lawyers can do to make handling routine international employment law issues easier. These include: 1. Recognize that the language in the documents that employees have signed or had issued to them is important. These documents will create additional legal obligations beyond those imposed by statute. Take care in drafting them and review them when an issue about an employee comes up. thehoustonlawyer.com
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of, employee representatives for routine employment actions strikes many with trepidation. But employment law systems with works councils are designed to function this way, and this process is considered “normal” for them. Works councils usually want their employer to succeed, and a collaborative approach to works councils —where possible—will pay off in the long run. 5. Trust but verify what your foreign human resources colleagues tell you. Your foreign human resources colleagues might well understand the basic parameters of their country’s laws better than you. But they are not lawyers and can make mistakes. 6. Make sure you understand what is being said. You will often be dealing with someone (an employee, a colleague, external counsel) for whom English is a second language. Even if their command of English is good, words can be misused. Do not be afraid to ask for clarification. On a re-
lated point, when issuing documents to employees internationally, always know whether you should or are required to issue them in the employees’ native language. 7. It is usually going to be more difficult to terminate an employee internationally, but “more difficult” does not mean impossible. A lot of countries have requirements to ensure that employers not only have sufficient reason to terminate employment, but also to ensure that a specific process is followed prior to termination. Be prepared to adapt to this and do not assume that unilateral action is your best way forward. Severance costs may also surprise you, and simply because an employee receives a large amount of severance does not mean that he will not have a valid claim against his employer. Final Message Most difficulties that arise when handling employment law issues internation-
ally arise because there is a disconnect between the internal or external client’s expectations and what is legally achievable. Lawyers who ensure that they understand early what is legally achievable will place themselves in a position where they can mold their client’s expectations before they harden. Dominic Hodson is one of the founding partners of Seyfarth Shaw’s International Employment Law practice group. For nearly 20 years he has helped large and small multinational employers manage employment law issues associated with their business transactions and daily operations outside of the United States. John Tomaszewski is a partner in the International Data Protection Practice Group, and the Co-Leader of the Global Privacy & Security Special Team of Seyfarth Shaw LLP. He has significant experience counseling companies regarding data protection and information security throughout the Americas, Europe, and Asia.
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COLO 4C
By G. Mark Jodon and Kevin Little
FLSA:
An Overview of Hybrid Actions
T
he Fair Labor Standards Act (FLSA) has long been a breeding ground for class litigation, due to the statute’s collectiveaction procedure. Recently, companies have faced additional class issues when dealing with wage-and-hour lawsuits due to the rise of hybrid actions —actions combining opt-in FLSA collective actions with opt-out class actions under state laws. This article discusses FLSA actions, Rule 23 actions, and hybrid actions combining the two, and offers a solution to complex class litigation—rolling out arbitration agreements with class waivers under the Federal Arbitration Act, which require claims to be adjudicated individually (which is further discussed in this article’s companion piece).
I. An Overview of the FLSA and Opt-In Collective Actions The FLSA was first drafted by Senator Hugo Black in 1932. A revised version of the law was passed in 1938, by which time Senator Black had become Justice Black on the U.S. Supreme Court. The law sets a minimum wage to be paid to workers who do not fall within one of the exemptions to the law, the most common of those exemptions being the “white collar” exemptions for executive, administrative, and professional employees. The FLSA further dictates that overtime be paid to nonexempt employees, calculated at one-and-a-half times an employee’s regular rate of pay. The FLSA expressly authorizes “collective actions.”1 While neither the statute nor the Fifth Circuit has specified the proper method for collective-action certification under Section 216(b) of the FLSA, many courts employ the two-step procedure formulated in Lusardi v. Xerox Corp.2 The two-stage Lusardi process consists of a “notice” or “conditional certification” stage followed by a “decertification stage.”3 At the first, or “conditional certification,” stage, the Court determines whether notice of the action should be given to potential class members.4 At this stage, the plaintiff must make a showing of “some identifiable facts or legal nexus [that] bind the claims so that hearing the cases together promotes judicial efficiency.”5 At the second, or “decertification,” stage, plaintiffs must prove they are similarly situated to each other and to the putative class members they seek to represent by a preponderance of the evidence.6 At the decertification stage, the court conducts a “rigorous determination” as to whether the plaintiffs are similarly situated such that the action should be tried collectively.7 The key feature of FLSA collective actions is that they are “opt-in” actions. Even after a class is conditionally certified and the class members receive notice, they are not automatically added to the lawsuit. In-
stead, putative class members must opt in—typically filling out a written form or completing an online consent—to become party plaintiffs in the lawsuit. II. Adding a Second Option: The Rise of Hybrid Actions More and more, opt-in collective claims under the FLSA are being joined by opt-out class claims under Rule 23 of the Federal Rules of Civil Procedure or analogous state-law procedural rules. In Texas, frequently added claims include common-law causes of action for breach of contract, unjust enrichment, and quantum meruit. In other states, claims are brought under state wage-and-hour statutes. For example, many oil and gas companies have operations not only in Texas, but also in New Mexico and Pennsylvania, two states which (unlike Texas) have state statutes addressing wage and hour issues. Accordingly, plaintiffs who worked in those states often bring claims under the FLSA and under New Mexico or Pennsylvania state laws. Whether under federal or state law, opt-out claims in a hybrid action typically seek compensation for “gap time”—that is, alleged unpaid wages for hours worked under 40 in a workweek, as the FLSA already covers claims for overtime hours over 40 in a workweek. Adding a state-law class claim, however, introduces a procedural tension into the proceedings. Under Rule 23, a class may be maintained if the plaintiff can show that: “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Rule 23 actions are, of course, opt-out actions, where, once the class is certified, the putative class members are automatically added to the lawsuit unless they take affirmative action to opt out. For this reason, the Fifth Circuit has held that there is
a “fundamental, irreconcilable difference” between a Rule 23 class action and an FLSA collective action.8 Specifically, under the FLSA, an individual only becomes a party to a collective action if he or she affirmatively requests to be made a party; therefore, an individual’s rights are not adjudicated unless and until he or she agrees and advises the court that he or she wants them to be adjudicated.9 Rule 23, on the other hand, operates in a directly contrary manner. Under Rule 23,
unless putative plaintiffs affirmatively exclude themselves from a proposed suit, they become plaintiffs and parties to the certified class action. As a result, under Rule 23, any judgment on the underlying issues binds putative plaintiffs who do not properly advise the court that they do not wish their rights to be adjudicated in the proposed action. Courts recognize that managing a hybrid action with two different procedures for class members to join the law-
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suit can be tricky, to say the least. As the court in Jackson v. City of San Antonio explained, “the simultaneous management of the two ‘irreconcilable’ procedures for class formation is unwieldy, would detract from the efficient resolution of the substantive dispute and, most importantly, is frowned upon by the Fifth Circuit.”10 Other courts, however, have permitted Section 216(b) collective actions and Rule 23 class actions to coexist in the same case, leading many employers to seek solutions to what they view as overly complex and vexing litigation.
arbitration, and admonished that “courts may not infer consent to participate in class arbitration absent an affirmative contractual basis for concluding that the party agreed to do so.”13 Accordingly, even an arbitration agreement that is silent on class issues may be used to avoid class litigation. This ruling adds an additional arrow to the quivers of companies seeking to avoid FLSA collective actions and Rule 23 class actions —not to mention the specter of hybrid actions asserting both.
G. Mark Jodon, a shareholder at Littler III. Sidestepping the Hybrid Action with Mendelson, is board certified in Labor Arbitration Agreements and Employment Law by Arbitration agreements the Texas Board of Legal In Texas, with class waivers eleSpecialization. frequently added gantly solve the problem Kevin Little is a staff atof collective and class littorney at the Fourteenth claims include igation—or both simulCourt of Appeals. The common-law taneously. Arbitration opinions expressed herein agreements are governed do not purport to reprecauses of action by the Federal Arbitrasent the opinions or views tion Act (FAA). Under of the Fourteenth Court of for breach of the FAA, arbitration Appeals. contract, agreements are enforced according to their terms unjust enrichment, 1. Endnotes See 29 U.S.C. § 216(b). —including terms pre2. 118 F.R.D. 351 (D.N.J. 1987); and quantum cluding class litigation. see Heeg v. Adams Harris, Inc., 907 F. Supp. 2d 856, 860–61 Indeed, in a 2018 decimeruit. In other (S.D. Tex. 2012). sion, Epic Systems Corp. 3. Heeg, 907 F. Supp. 2d at 861. states, claims 4. Id. v. Lewis, the Supreme 5. McKnight v. D. Houston, Inc., Court reaffirmed a long 756 F. Supp. 2d 794, 801 (S.D. are brought line of precedent requirTex. 2010). 6. Vanzzini v. Action Meat Dising arbitration agreeunder state tribs., 995 F. Supp. 2d 703, 720 ments to be enforced as (S.D. Tex. 2014). wage-and-hour written, including agree7. Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1214 (5th Cir. ments for individual arstatutes. 1995). bitration instead of class 8. LaChapelle v. Owens-Ill, Inc., 513 F.2d 286, 288 (5th Cir. 1975). litigation.11 Furthermore, the Supreme 9. See 29 U.S.C. § 216(b) (“No employee shall be a Court has recently strengthened the apparty plaintiff to any [FLSA] action unless he gives plicability of the FAA to class litigation. consent in writing to become a party and such consent is filed in the court in which such action In a 2019 decision, Lamps Plus, Inc. v. Vais brought”) (emphasis added). rela, the Supreme Court held that even if 10. 220 F.R.D. 55, 59–61 (W.D. Tex. 2003) (citing La Chapelle, 513 F.2d at 288-89 (finding that the Rule an arbitration agreement is ambiguous as 23 class action and the section 216(b) representato whether classwide arbitration is pertive action are “mutually exclusive and irreconcilmitted, that is insufficient to find that the able”)). 11. See Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1632 parties consented to class arbitration.12 (2018). The Court explained that such ambigu12. 139 S. Ct. 1407, 1416 (Apr. 24, 2019). ity is not enough to pave the way for class 13. Id.
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ReedSmith LLP Sidley Austin LLP Winstead PC Winston & Strawn LLP
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Law Office of Peter J. Bennett Law Office of J. Thomas Black, P.C. Burford Perry, LLP The Dieye Firm The Ericksen Law Firm Law Office of Todd M. Frankfort Hasley Scarano L.L.P. David Hsu and Associates The Jurek Law Group, PLLC Law Firm of Min Gyu Kim PLLC The LaFitte Law Group, PLLC Law Firm of Catherine Le PLLC C. Y. Lee Legal Group, PLLC Law Office of Gregory S. Lindley Martin R. G. Marasigan Law Offices Law Office of Evangeline Mitchell, PLLC Rita Pattni, Attorney at Law Law Office of Robert E. Price The Reece Law Firm, PLLC Sanchez Law Firm Law Office of Jeff Skarda Angela Solice, Attorney at Law Diane C. Treich, Attorney at Law Law Office of Norma Levine Trusch Law Office of Cindi L. Wiggins, J.D. Trey Yates Law
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By Patrick Yarborough and Christy M. Ho
FLSA Arbitration Clauses:
Class-Action Waivers Become Class-Notice Waivers
I
n a pair of recent cases decided by the Supreme Court and the Fifth Circuit, the trend of ever-broader enforcement of arbitration clauses continues to change the landscape for employment lawyers litigating wage-and-hour cases. While employers have cheered these landmark decisions, employees must adapt to the new status quo. I. The U.S. Supreme Court Enforces Class-Action Waivers: Epic Systems Corporation v. Lewis After the issue of the effect of Fair Labor 24
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Standards Act (FLSA) class-action waiver provisions in arbitration agreements percolated in lower federal courts for years, in mid-2018, the Supreme Court finally settled the question in favor of their enforceability in Epic Systems Corporation v. Lewis.1 In a majority opinion by Justice Neil Gorsuch, the high court considered three FLSA cases, each with plaintiffs alleging their employers violated the FLSA by misclassifying them as exempt from the law, depriving them of overtime pay. Because each of the plaintiffs entered into an agreement that specified bilateral (i.e. non-collective) arbitration procedures for employment disputes, the high court decided the plaintiffs waived their right to bring or join collective actions under the FLSA. In rejecting the employees’ arguments that the National Labor Relations Act (NLRA) made the class-action waivers in arbitration agreements illegal in the employment context, the Supreme Court noted “the absence of any specific statutory discussion of arbitration or class actions [in the NLRA] is an important and telling clue that Congress has not displaced the Arbitration Act.”2 Instead, the Supreme Court maintained that the NLRA is about the right to organize unions and bargain collectively at work, “but it says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum.”3 Accordingly, the Supreme Court concluded the NLRA had no direct application to invalidate the class-action waivers, and the Court declined to find an implicit repeal of the FAA.4 In the FLSA context, however, whether class-action waivers preclude courtordered notice to class members at the conditional certification stage is arguably more important than the classaction procedure itself. Thus, when the Fifth Circuit became the first federal appeals court to resolve that issue after hundreds of district court opinions had weighed in, the national employment bar took notice.
II. The Fifth Circuit Says No III. Houston Practitioners React to Notice to Arbitration Class Epic Systems and JPMorgan Members: In re JPMorgan Chase David B. Jordan of Littler Mendelson P.C., & Company who represents employers in FLSA colIn a significant development less than lective actions, endorses the reasoning of a year after Epic Systems, the Fifth CirJPMorgan: cuit in February became Notice[s] of collective the first federal appeals actions are invitations ...the Supreme court to decide whether from a federal court Court concluded arbitration agreements to participate in litigawith FLSA class-action tion, not arbitration. the NLRA had no waivers prohibit courtBy inviting those with ordered notice to class arbitration agreements direct application members who have to breach those agreesigned such agreements.5 ments and join litigato invalidate the tion, it corrodes the In an opinion by Judge class-action fundamental rights of Jerry Smith, the Fifth the parties to contract Circuit held in JPMorgan waivers, and the for arbitration and Chase that the trial court undermines Congress’s erred when it ordered Court declined to express direction rethat notices be sent to find an implicit garding those rights all class members, inunder the Federal Arbicluding the majority of repeal of tration Act. whom signed arbitration agreements that inthe FAA. And regarding the encluded FLSA class-action 6 waivers. In their mandamus briefing, JPMorgan argued after the district court conditionally certified an FLSA collective action where 85 percent of the class members signed arbitration agreements with class-action waivers (the “Arbitration Employees”), those agreements should preclude notice to the Arbitration Employees.7 The panel agreed and decided that the district court exceeded its discretion by ordering notice to the Arbitration Employees.8 Furthermore, the panel added that the FLSA’s language does not provide Arbitration Employees a right to be given notice of any FLSA claims they might have if they cannot join the current collective action.9 The court then concluded that by sending Arbitration Employees notice, a court might give the appearance of a judicial endorsement of the merits of the action, and by “alerting those who cannot ultimately participate in the collective” the court might needlessly “stir[] up litigation,” which is what the Supreme Court “flatly proscribes.”10
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forcement of class-action waivers by Epic Systems, Jordan maintains that aggrieved employees still have many cards to play, even without the class-action procedure: It is not as if employees, for example, have no remedy at all without a class action. Indeed, even if a truly aggrieved employee feels underwhelmed by the notion of individual ADR instead of global thermonuclear war, that employee can always walk into the nearest state or federal labor department and find an eager investigator who is typically quick to help the employee resolve its concerns and get the relief the employee may deserve. Presenting an alternative perspective, Clayton Craighead of the Craighead Law Firm, PLLC, who represents employees in FLSA cases, laments the Fifth Circuit’s decision in Epic Systems: This is a huge win for employers because wronged employees may never receive notice that their employer might be violating their federally pro-
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bitration, paying several times for their own lawyers’ fees, individual arbitration fees, and individual employees’ lawyers’ fees—not to mention back-wages and damages—in multiple arbitrations. Nevertheless, there are many problems with not sending notice to FLSA classes... Note that we embrace public notice all the time in other areas, even where no lawsuits are filed, such as for dangerous products.
tected rights. A lot of employees will remain entirely unaware that there are issues with their pay absent such a notice under the FLSA, and this ruling gives employers tremendous aid in keeping those employees in the dark, right where employers want them. However, not all attorneys that represent employees view Epic Systems and JPMorgan as entirely employer-friendly. Plaintiffs’ attorney Matthew S. Parmet downplays the negative impact of the decisions on employees who actually bring cases: The practical effect of JPMorgan is that the only winners are the lawyers. Employees usually find out about their coworkers’ wage cases through word of mouth, and under the FLSA, the prevailing plaintiffs’ lawyers’ fees are the employer’s responsibility so [they] get paid regardless. It’s actually employers who often get left holding the bag, since class cases are easier for them to dispose of in one court case [rather] than in ar-
Notwithstanding the enforceability of class-action waivers at the conditional certification stage in the Fifth Circuit, a number of district courts have resolved the issue differently in the other circuits that have not yet opined on the matter.11 Thus, notice to FLSA class members who have signed arbitration agreements is likely to remain a hot issue until the Supreme Court has its say. Patrick Yarborough is a trial lawyer at Ahmad, Zavitsanos, Anaipakos, Alavi &
Mensing, P.C. and a director of the Houston Young Lawyers Association. He can be reached at pyarborough@azalaw.com. Christy M. Ho is a third-year law student at the University of Houston Law Center and a law clerk at Coane and Associates, PLLC. She can be reached at christyho95@gmail.com. Endnotes
1. 2. 3. 4. 5.
See Epic Sys. Corp. v. Lewis, 138 S.Ct. 1612 (2018). Id. at 1616–17. Id. at 1619. Id. at 1617. In re JPMorgan Chase & Co., 916 F.3d 494, 499–500 (5th Cir. 2019). 6. Id. at 503–04. 7. Id. at 497. 8. Id. at 501. 9. Id. at 503. By contrast, some district courts in other circuits have ordered notification of employees who have signed arbitration agreements, on the basis that such employees have a “right to receive notice” of potential FLSA claims. See, e.g., Williams v. Omainsky, No. 150123-WS-N, 2016 WL 297718, at *8 (S.D. Ala. Jan. 21, 2016). 10. JP Morgan Chase & Co., 916 F.3dat 502. 11. See id. at 499 n.5 (“Federal courts, in at least 210 decisions, have wrestled with the applicability of arbitration agreements at the conditional-certification stage of FLSA suits.”); see also id. at 499 n.6 (“District courts have resolved the issue in at least three ways...”).
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I Investigation By Molly Holub
Best Practices in the Wake of #MeToo
f you are a human resources professional, general counsel, or employment attorney, you may have wondered how the #MeToo movement that started in 2017 will impact your work or clients. You have likely revised harassment policies, rewritten investigation procedures—perhaps with emphasis on sexual harassment complaints—and admonished against retaliation.1 You have trained and retrained employees, supervisors and Csuite officers. You have helped foster a respectful organization that embraces diversity and inclusion. And yet…and yet…a casual call or breakroom discussion reveals a chink in the armor. Someone feels harassed; someone feels discriminated against. The process that will put all that careful planning and preparation to the test unfolds. This article will discuss some “best practices” to keep in mind as you navigate the sexual harassment complaint investigation process. I. The Complaint It is important to recognize a complaint even when it does not look like the “textbook version” of what you believe a complaint to be. Employees who feel they are being treated unfairly or inappropriately at work may utilize a complaint hotline or approach a human resources business partner with their concerns. Or an employee may simply tell a co-worker, who in turn tells another co-worker, who then casually mentions it to a supervisor. In either case, it is imperative that the appropriate individual becomes aware of the concerns and takes appropriate action, starting with the policies and procedures listed below regarding the investigation of complaints of sexual harassment. Initially, a company should err on the side of caution when considering whether a rumor or casual conversation constitutes a “complaint.” At a minimum, the company must take steps to gather additional informa-
that is affected. If it is difficult for the tion regarding the rumor or converinvestigation to be conducted objecsation. Ignoring, minimizing, or distively using an internal couraging complaints resource, a third-party can have devastating This article investigator may be consequences for the will discuss some the most appropriate employer. In a recent option. Actual or percase, repeated com“best practices” ceived bias of the inplaints about sexual vestigator can derail an comments and porto keep in mind investigation from its nography within the as you navigate outset and/or skew its organization, which outcome. Worst-case were ignored, resulted the sexual scenario, a jury may in punitive damages 2 award punitive damagagainst the company. harassment es if it finds a biased incomplaint vestigator affected the II. Avoid (Even the Apoutcome of the invespearance of) Bias investigation tigation. For example, Start by utilizing the in Gyulakian v. Lexus appropriate investiprocess. of Westchester, Inc., the gator. Investigators Massachusetts Supreme Judicial Court should be neutral factfinders who are considered a case where a Lexus dealfar-removed from all things related ership utilized an investigator who to the complaint, including the comadmitted to being biased in that he plainant, any witnesses, the accused, did not believe the complainant’s asand the department or organization
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sertions, warned the complainant that her complaint might jeopardize her future with the company, and failed to interview pertinent witnesses. The investigator’s behavior resulted in a significant punitive damages award against the company.3 As addressed in Gyulakian, in order to avoid the appearance of bias and in order to conduct a thorough investigation, an investigator should hear all sides of “the story.” In almost every investigation, the witness list should include the complainant, any fact witnesses, and the accused. Witnesses often come to interviews with a file full of documents, which could include a written summary of their version of events, copies of emails or other forms of communication, performance evaluations and copies of company policies. While not all documents provided by witnesses are useful to the investigator, it is important to at least review these submissions
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and consider the relevant information that witnesses provide. Failure to do so could give the appearance of bias.4 III. The Investigation Plan Another way to avoid bias and ensure a thorough investigation is to create an investigation plan. The investigator should create the investigation plan after receiving the complaint and prior to engaging in any fact-finding activities. The plan should lay out the road map of the investigation, including a brief summary of the background and issues to be investigated, logistical contacts, report recipients, identity and order of witness interviews, method of interviews (in most cases, an inperson interview is ideal, especially if there are any credibility concerns associated with the witness), anticipated documents to be reviewed, and a timing estimate for the fact-finding portion of the investigation. The investigation plan does not have to be set in stone, so changes may be made to it as the investigation progresses. Once the investigation plan is in place, the investigator should follow the plan. If the investigator fails to interview a witness listed in the plan, the investigator should document the reason the witness was not interviewed. Conversely, additional witnesses who were not originally listed in the plan may be interviewed if during the course of the investigation they are identified as potentially having relevant information, and their names should be added to the witness list contained in the plan. Witnesses should be encouraged to provide information on any concern raised in the complaint, and should have the opportunity to comment on any documents, policies or evidence on which they may be able to shed light. This meticulous planning is in an effort to conduct a thorough investigation as courts have found employers liable for failure to do just that. For example, in Meng v. Aramark, an Ara30
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mark employee complained that graffiti depicting her engaged in sex acts and being sexually assaulted appeared on a bathroom wall in the workplace. Additionally, she alleged that photos of the graffiti were being circulated around the organization and had appeared on Facebook posts. Evidence revealed that when the employee complained, a company human resources director and a company supervisor did not conduct a thorough investigation in that they failed to take notes during witness interviews and refused to look at evidence including photographs and the actual Facebook posts. Consequently, the U.S. District Court denied the employer’s motion for summary judgment and held that a reasonable jury may find that the conduct created a hostile work environment.5 IV. The Report A thorough, unbiased investigation based on a solid investigation plan should yield a thorough, unbiased report. The report may come in different formats but all reports should contain sufficient details to explain and justify the factual findings. If requested by the company, a report may measure the factual findings against relevant company policies to determine whether the stated behaviors are inconsistent with relevant company policies. Taking this concept further, the information contained in the report should support any remedial action taken as a result of the investigation. It generally falls outside the scope of the investigator’s responsibility to recommend appropriate remedial action, and the goal of the report should be to give the decisionmaker enough information to make an informed decision. In Serrano v. Cinemark USA Inc,6 the employer investigated and found that several assistant managers at a movie theater violated the company non-fraternization policy. Two females who were terminated claimed discrimination because no male employees were
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terminated. A review of the investigation showed the female employees had committed more serious violations than their male counterparts, which justified their terminations, and the female managers’ claims failed as a matter of law. Thus, a thorough investigation and factually complete report provided protection for the employer when making appropriate remedial decisions. V. Completing the Investigation and Retaliation While fact witnesses involved in the investigation may be curious as to the results of the investigation, confidentiality considerations dictate that, by and large, fact witnesses should never know the outcome of an investigation. The complainant should be told generally whether or not the complaints were substantiated and whether remedial action (but not what type of action) was taken. Finally, the accused also should be told whether the results of the investigation substantiated the allegations, and if so, what remedial action will be taken. Although the investigation may be complete at this point, the obligation continues for employees to refrain from engaging in acts of retaliation against witnesses or other participants in the investigation. Because retaliation currently is the most common form of discrimination alleged with the EEOC, employers should take steps to ensure all participants in an investigation are treated fairly so that employers avoid even the appearance of retaliation. Regardless of the results, those who advise the employer should consider updating and delivering anti-harassment and sensitivity training to remind employees of their rights and obligations under company policies. The #MeToo movement has created the impetus to sharpen best practices relating to harassment and discrimination. As investigations are a key
component in addressing and preventing harassment within organizations, examining and revisiting investigatory best practices is a key step in creating a respectful organization in the wake of #MeToo and beyond. Molly Holub joined Employment Practices Solutions in 2012 as a consultant delivering training and investigations in addition with her work as a solo practitioner in Houston. Prior to her solo career, Molly practiced employment and governmental entities law with a firm in the Houston/Galveston area. Endnotes
1. Tex. Susan Hance Sorrells, Special Considerations in Sexual Harassment Investigations, Aug. 2018, EPS Whitepaper. 2. Scuffle v. Wheaton & Sons, Inc., No. 2:14cv708, 2015 WL 1245831 (W.D. Pa. Mar. 18, 2015). 3. Gyulakian v. Lexus of Westchester, Inc., 475 Mass. 290, 56 N.E.3d 785 (2016). 4. Wheat v. Fifth Third Bank, 785 F.3d 230 (6th Cir. 2015). 5. Meng v. Aramark, No. 12-cv-8232, 2015 WL 1396253 (N.D. Ill. Mar. 23, 2015). 6. Serrano v. Cinemark USA Inc, No. 2:12-cv-00146, 2015 WL 1349984 (N.D. Ind. Mar. 25, 2015).
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By Sidd Rao
The Complex Web of Social Media and Employment Law
I
n our increasingly digital world, social media has become ubiquitous. Many people get their news, connect with their friends, and keep up with “trends” by using social media platforms such as Instagram, LinkedIn, Facebook, Twitter, Tumblr, Blogger, YouTube, and other similar services. Some of these services are geared toward professionals, and others have a more casual feel. All of them are used for a variety of purposes including engagement, expression, networking, protesting, recruitment, promotion, and communication. One defining trait of social media, as compared to older forms of communication, is the nature of social media posts to become publicly accessible. Indeed, the allure of “going viral” and “being seen” are
some of the reasons why many people use social media in the first place. For all its benefits, however, social media also creates unique risks. Some of those risks are legal risks, and especially in the employment context, many questions abound as to what rights both employers and employees have with respect to social media use. Let us begin with one of the most common questions employment lawyers receive about this area: “Can an employee be lawfully fired for his or her Facebook post?” Whether one is talking specifically about Facebook or any other social media platform, the short answer is, it depends on the nature, content, and context of the post. There is a difference between an unprotected outburst and a legitimate complaint over the terms and conditions of the workplace. In a line of cases known as the Meyers cases, the National Labor Relations Board (NLRB) set forth the classical formulation for concerted activity. In these cases, the NLRB explained that an activity is concerted when an employee acts “with or on the authority of other employees, and not solely by and on behalf of the employee himself.”1 In 2007, the NLRB determined that protected activity does not change if employee statements were communicated via the internet.2 Then, in 2011, the NLRB began to draw connections between classically defined concerted activity and online social media activity.3 In one such case, an employee sought input from fellow employees on Facebook regarding their responsibilities and performance and whether certain actions might result in discipline. The NLRB determined that the comments of the other employees in response to the coworker’s initial Facebook post were directly related to criticisms of job performance, staffing, and workload issues. Because the social media post was found to have implicated the “terms and conditions” of employment and because they were arguably made in preparation for meetings with the employer, the NLRB concluded that they were entitled to protection under the law. Therefore, it will generally be unlawful for an
employer to terminate or otherwise discipline employees for directly talking about issues in the workplace or concerns they may have regarding the work environment. For example, such issues can range from employee pay to employer policies and from discrimination or harassment (sexual or otherwise) to promotional opportunities. As a general rule, an employer should consult labor counsel before taking action against an employee who is posting about the workplace or experiences in the workplace on social media. In another case, an employee posted negative remarks about her supervisor on Facebook. Other employees chimed in with their agreement, and further negative comments ensued. The employer in this instance, angered with what it viewed as insubordination and disruption of the workplace, terminated the employee who made the initial post. The NLRB found that despite some disparaging language in the posts, the overall character and nature of the communications constituted a protest as to the employees’ working conditions, and thus gained protection as concerted activity. Disparaging or offensive remarks, however, sit on a fine line. In this example, the NLRB determined that the offensive remarks were not extremely severe, and moreover, were not the focus of the posts. In other instances, however, an egregiously offensive remark can form a legitimate basis for employers to act. Generally speaking, if the employee is posting purely offensive commentary or making directed offensive remarks toward others, which are unconnected to any protected activity, then the law will not fault the employer for taking umbrage in such instances. That said, employers should still be careful before taking action against employees due to social media posts. For one thing, even a post that ostensibly includes no protected activity must still be analyzed in terms of pretext. It is not lawful for an employer to discriminate against an employee or terminate an employee on the basis of race, color, national origin, gender, religion, disability, or the like. If an employee is otherwise complaining of dis-
crimination against a protected category, or has evidence that he or she is incurring such forms of discrimination, then it may be arguable that the employer took action against the employee for such reasons, and that the social media post constituted a pretextual cover story for ulterior motives. Alternatively, an employer may successfully argue that the social media post formed a legitimate and independent rationale for the termination. Both employers and employees should proceed with caution under such circumstances, since it is unadvisable to casually flip this two-sided coin. Similar caution attaches when the social media post could be seen as whistleblowing or announcing a refusal to participate in illegal activities. Even if the activity is protected, sometimes an employee can go too far. The NLRB has extended a longstanding rule in the context of protected activity to online activity as well. This rule states that if an employee’s otherwise protected activity rises to an extreme level of disparagement or offense, it can lose its protected
character and constitute a lawful basis for discipline.4 Here too, however, there is a flipside. Employers should be careful that they do not construe legitimate forms of protest as disparagement permitting discipline. In regard to the line drawn here, NLRB has said that “the fact that the authors used the literary techniques of satire and irony to make their point, as opposed to a more neutral factual recitation of their dissatisfaction, does not deprive the communication that they produced of any protection.”5 This line has also been extended into the online sphere in order to cover social media posts. Hence, satirical or ironic posts, “memes,” or other forms of protest that use offense as a form of expression may enjoy protection under the law. Within this overall framework, there are additional reasons for employees to be careful before they post on social media. As indicated, there are several instances in which an employee’s social media post lawfully resulted in his or her termination. The primary metric upon which lawfulness is measured comes down to
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whether the termination was retaliatory toward protected conduct. As discussed above, outright offense, standing alone, is not protected. Neither are embarrassing or degrading remarks that are unconnected with the terms and conditions of the working environment. Sometimes an employee argues that he or she engaged in both, and a fact-intensive line drawing occurs. The archetypical example is the case of the BMW salesman.6 In this instance, a salesman for Knauz BMW made two posts. In one Facebook post, the salesman mocked an event that occurred at a neighboring facility where a salesperson was showing a car to a customer and allowed the customer’s 13-yearold son to sit in the driver’s seat while the salesperson was in the passenger’s seat. The customer’s son drove the car down a small embankment, over the customer’s foot, and into an adjacent pond. The salesperson was thrown into the water. In another post, the salesman mocked a company event at which hot dogs and Doritos were served, commenting that “our clients could attain a over cooked wiener and a stale bun.” The judge in this case determined that the post about the car was not related to the terms and conditions of the workplace, but that the post about the hot dog event was related to the terms and conditions of the workplace. However, the judge credited testimony and evidence provided by the BMW dealership indicating that the termination decision was made because of the first post and not the second post. Had the judge believed otherwise, this case may well have resulted in a win by the salesman. This example highlights the primacy of motive and the importance of the credibility of witnesses. It also demonstrates how difficult it can be to have hard and fast rules for dealing with these situations, as each social media scenario requires a careful consideration of what aspect of which post mattered most. It is important for employees to remember that there is no blanket First Amendment right to free expression against a private employer. This is often misunderstood, 34
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as American workers commonly think they have the right to free speech, which can include political speech. The right to free speech is a right against the government, so unless one is employed by the state, or the issue is specifically covered in a union agreement, it may not be possible to raise such a defense to a termination. It is also permissible for an employer to terminate an employee for violating neutral employment policies. For instance, engaging in discriminatory behavior such as posting racial slurs, gendered jokes, or humiliating “memes” about someone’s characteristics may form a reasonable basis for an employer to terminate an employee, as this could constitute a violation of the employer’s equal employment opportunity or anti-harassment policies. It is also a bad look for any future employment opportunities. Remember, the internet does not forget. Similarly, violating confidentiality policies, sharing client or company protected information online, or divulging employer trade secrets can all lead to a legitimate termination, in addition to potential legal action by the employer against the employee. To further explore the use of social media and hiring decisions, it is generally permissible for an employer to research an employee’s posting history and other publicly available information prior to extending an offer of employment. According to a 2018 CareerBuilder survey, often cited reasons for refusal to hire included social media pictures and posts connecting the job candidate to inappropriate or sexually explicit material, drinking and drug use, discriminatory comments, and discrepancies in job qualifications or resumes. It is now more common than not for an employer to investigate a job candidate’s social media presence. However, the EEOC has warned against using social media searches to engage in unlawful discrimination. In response to a letter from Senators Charles Schumer and Richard Blumenthal, the EEOC reiterated its long-standing position that personal information, such as that gleaned from social media postings, may not be used to
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make employment decisions on prohibited bases.7 There are other factors to consider as well. The use of social media screening may remove some defenses the employer may otherwise have had to a potential discrimination claim. For instance, if the prospective employee complains that he or she was not hired because of his or her race, the employer may not be able to claim ignorance of the applicant’s race if such information is readily gleaned from a review of the applicant’s social media profile. As always, care should be taken to ensure that employment decisions are not made on the basis of protected categories. Employers should carefully examine their employee handbooks and company policies to ensure that their social media policies are lawful. In the Knauz BMW case described above, while the dealership evaded liability on the charge of unlawful termination, it did incur liability as to its social media policy. This is because its social media policy instituted a blanket prohibition on any disparaging comments regarding the company. The NLRB had determined that such forms of blanket prohibition could have a “chilling effect” on employees seeking to contest the terms and conditions of the workplace or from seeking mutual aid or protection in relation to their workplace concerns. Therefore, it is advisable for social media policies to carve out an exception for employees to engage in concerted activity as defined by the National Labor Relations Act. Recently, the NLRB has updated its stance on this matter.8 Now, policies are considered generally lawful if they are not targeted at interfering with protected employee rights. Such policies include civility rules, rules against harassment or disparagement of other employees, rules against insubordination, rules against disruptive behavior, and rules against protecting confidential or propriety information. However, it is still important to consider whether in any particular instance, the application of one of these rules might be overridden by the specific application of the employee in question.
Therefore, while it may be generally permissible to prohibit disruptive behavior, a social media post that overtly engages in protected activity (and therefore counts as being “disruptive” in the literal sense) can still provide a bulwark against adverse employment actions. And it is still verboten to prohibit employees from posting about their wages, benefits, or working conditions, or to prohibit the use of social media with regard to union activity or otherwise organizing in their collective interests. It is also permissible for employers to set rules around the manner in which employees use social media during working hours. Employers can lawfully restrict an employee’s use of social media for nonwork or workplace related purposes during the employee’s working hours. Employers can also restrict employees from using the employer’s imprimatur online for unauthorized purposes. To the extent that the employee is using the employer’s branding in connection with his or her social media activity, the employer can require that the employee consider the impression upon
the employer’s reputation and good will in connection with the post. Ultimately, social media is a groundbreaking tool for human communication and connectivity. However, like most advancements, it presents its own set of problems and pitfalls. Employees should consider the consequences of their social media activity by asking themselves if they would be comfortable with their employers or potential employers reading their posts, assuming, of course, that the post is not specifically intended to draw attention to shared problems in the workplace and to coordinate and confer with other employees about such issues. Employers should carefully assess their options before taking adverse action against employees based on their social media activity to ensure that they are not incurring liability for retaliation against protected activity and to ward against the use of social media as a conduit or proxy for otherwise unlawful discrimination. Everyone involved should consider and commit before they click submit.
Sidd Rao is a senior associate at Shellist Lazarz Slobin LLP, where he practices labor and employment law on behalf of individuals, executives, and small businesses. He is board certified in Labor and Employment Law by the Texas Board of Legal Specialization and currently serving as chair of the Labor and Employment section of the Houston Bar Association. Endnotes
1. See, e.g., Meyers Indus. (Meyers I), 268 NLRB 493 (1984), rev’d sub nom. Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985), cert. denied, 474 U.S. 948 (1985), on remand Meyers Indus. (Meyers II), 281 NLRB 882 (1986), aff’d sub nom. Prill v. NLRB, 835 F.2d 1481 (D.C. Cir. 1987), cert. denied, 487 U.S. 1205 (1988). 2. See, e.g., Valley Hosp. Med. Ctr., 351 NLRB 1250, 1252-54 (2007), enforced sub nom. Nev. Serv. Emps. Union, Local 1107 v. NLRB, 358 F. App’x 783 (9th Cir. 2009). 3. See Report of Lafe E. Solomon, Acting NLRB General Counsel: Memorandum 11-74, August 18, 2011. 4. Allied Aviation Serv. Co. of N.J., Inc., 248 NLRB 229, 231 (1980). 5. Pontiac Osteopathic Hosp., 284 NLRB 442, 452 (1987). 6. See, e.g., Karl Knauz Motors, Inc. d/b/a Knauz BMW & Robert Becker, 358 NLRB 164 (2012). 7. See https://www.eeoc.gov/eeoc/newsroom/release/3-1214.cfm. 8. See Guidance of Peter B. Robb, NLRB General Counsel: Memorandum GC 18-04, June 6, 2018.
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By Carly Milner
had retreated there for safety. Other historical stops included fter setting foot on Antarctica earlier this year, Patty 1 Omaha Beach in Normandy and the inn room of Vincent van Hair, a senior partner at Phelps Dunbar, had accomGogh in Arles, France. plished an incredible feat: she had visited each of the One of Patty’s most memorable and transformative trips seven continents. Along the way, Patty deepened her however, was when she traveled to China nearly 40 years ago. appreciation for the rich, diverse cultures that have She had visited in 1980, when Mao Zedeveloped over millennia, as well as for dong’s policies still held sway, even after the extraordinary prosperity we enjoy as his death. Everyone she saw wore a set Americans. of blue serge trousers and loose-fitting Patty undertook these travels with coat, an outfit known as “Mao pajamas.” her husband, fellow lawyer Ron Woods. The sight of Patty, an American woman Although the couple have traveled inin a skirt, certainly attracted attention. ternationally before, Panama was the Most people rode bicycles; few had cars. first stop on their plan to visit all seven The cities had low buildings and shops continents. They toured the Panama with few items for sale. When Patty and Canal before heading north to Costa Ron returned to China 35 years later, Rica. Later trips took them to familiar the landscape had changed entirely. destinations like Paris, but also to placSteel and glass skyscrapers and 30-story es less commonly visited by American apartment buildings had replaced the travelers. Patty and Ron’s South America low buildings. Instead of streets crowded trip for instance, included a stop in Uruwith bicycles, they saw 12-lane guay, where Patty recalls the skies being freeways filled with Audi, Merblack with doves. But even in these lesscedes, and Lexus cars. Patty traveled places, Patty saw the impact and Ron’s Western clothes did of globalization: McDonald’s and IKEA not draw any stares; blue jeans, stores were sprinkled throughout the mini-skirts, and T-shirts had recities, and she often would hear placed the “Mao pajamas.” They elementary-school students singeven saw a Wal-Mart where ing If You’re Happy and You Know shoppers could purchase fullyIt in their efforts to learn English. cooked Peking ducks—a real By experiencing the unique culmelding of cultures! tures in which historical events Patty and Ron’s adventook place, Patty uses her intertures also have taken them national trips as a way to better to Africa, namely Tanzania. understand and appreciate hisWhile visiting the East Afritory. During a trip to Russia for can country, the couple went example, Patty saw the system of to the Ngorongoro Crater, canals and locks linking St. Pewhere large herds of zebras tersburg with Moscow—canals and gazelles and flocks of built by Stalin in the 1930s using slave labor. In Germany, Patty Hair and her husband, Ron Woods, flamingos ignored the hushe stood inside a gas chamber at Auschwitz, and while have visited all seven continents man intruders entirely. Herds of elephants had the right-of-way in Berlin, she visited a parking lot built over the remains of on the road, while Patty and Ron had to wait patiently in their Adolf Hitler’s World War II bunker. In Ireland, she stood inContinued on page 43 side churches that had been burned by Cromwell after villagers 36
September/October 2019
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A Profile
in pro f e s s i o n a l i s m
F
Mo Aziz Abraham, Watkins, Nichols, Sorrels, Agosto & Aziz
or over 10 years, I have witnessed my good friend and partner, Benny Agosto, exemplify professionalism. I feel honored to have been chosen to write for this issue by someone who is so effortlessly “professional.” Throughout my career of representing clients, professionalism remains the driving force. Although relentless work ethic is integral to successful representation, relationships with clients and within the legal community are of equal importance. I believe that the relationships I strive to have with each client fuels my passion to diligently represent them. The time spent in preparation of each case is essential; however, when paired with an understanding of what it means to be professional, the two will have a lasting impact. Trust, respect, and attitude have the potential to define who we are as attorneys and affect the impression that we have on those that we encounter. It has always been my goal to zealously advocate for those who have been wronged, and I am humbled by the faith they have in me to do so. This confidence that my clients have bestowed in me is maintained largely in part by the interactions I have with them and others within the legal community. The legal system is adversarial in nature, but the integrity of it is founded upon respect. Respect must be given not only to your client, but to the judge, opposing parties, and juries, as receiving respect is best achieved by giving it. Success is often measured by favorable verdicts, but the underlying tool is professional character, which is carelessly taken for granted from time to time. However, attorneys who are honest with themselves and their clients, respect their peers, and possess a commendable attitude, embody the type of advocate we all should aspire to be. The responsibility that accompanies being a “professional” can seem heavy, but professionalism alone can relieve much of this weight simply by being truthful, respectful, and humbly idealistic.
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September/October 2019
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SECTION spotlight
The Labor and Employment Law Section:
Bringing Both Sides of the Bar Together to Learn and Network
T
The Houston Lawyer
By Sidd Rao
hank you for your interest in our corner of the Houston can come together as professionals and as friends, learn together, Bar Association. I would like to share with you a little bit converse together, and challenge one another. about the Labor and Employment (“L&E”) Section, who The benefits of mutual collaboration and respect flow to our we are, what we do, and what benefits membership in our members’ clients as well. The L&E Section members have a repuSection can provide. tation for working well with each The L&E Section’s memberother, which can be helpful when ship includes attorneys from we become opposing counsel in both the plaintiff and defense cases. In a perfect world, we acbars. You will meet in-house cord each other the latitude to counsel, public sector/governzealously represent our clients ment attorneys, and mediators without devolving into petty and arbitrators with experisquabbles, discovery disputes, ence in labor and employment and other fights, which waste law. The L&E Section strives to the Court’s time and the client’s provide labor and employment money. We more easily reach law attorneys, in Houston and amicable resolutions in cases surrounding areas, with cutwhen we are able to draw on ting edge and topical seminars shared professional experiences for CLE credit through monthly The HBA Labor and Employment Law Section brings together attor- and relationships. We often use neys from both the plaintiff and defense bars. meetings. the monthly CLE meetings to Our monthly lunch meetings are held on the second Monday schedule conferences, meetings, and mediations. In short, we beof every month at the Magnolia Hotel in the heart of downtown lieve our Section to be a living example of the principles embodied Houston. CLE topics range from recent case rulings, best pracin the Lawyer’s Creed. tices, class actions, wage and hour matters, and ethical employee I would like to repeat that it is not just employment counsel and management representation, to the latest in hot topics like who comprise our Section. Are you a mediator? Come get to know sexual harassment and more. those who might bring their cases to you. Are you in-house? In addition to our monthly lunch meetings, the L&E Section Come meet your potential outside counsel. Employment issues offers social functions for its members, including an annual Holiare everywhere. What we do touches all lives. We are honored and day Party, and other networking and educational opportunities. privileged to have all who wish to attend. I hope to see you at the Furthermore, we have provided scholarships to several Houston next meeting! law schools for students who display an interest and aptitude in entering labor and employment law. Sidd Rao is a senior associate at Shellist Lazarz Slobin LLP, where A major reason to join the L&E Section is to network with other he practices labor and employment law on behalf of individuals, labor and employment lawyers. Most importantly, our network is executives, and small businesses. He is board certified in Labor and not limited to one side of the bar, as would be the case in many Employment Law by the Texas Board of Legal Specialization and legal organizations. We strongly value the diversity and “neutral currently serving as chair of the Labor and Employment section of ground” that the L&E Section represents. Both sides of the bar the Houston Bar Association. 38
September/October 2019
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LEGAL TRENDS
Mandatory, Jurisdictional, or Just Exhausting?: Fort Bend County v. Davis
I
By Lloyd Van Oostenrijk
The Houston Lawyer
f you loved your first-year federal civil procedure course, you will enjoy this opinion, unless you are a Fort Bend County taxpayer. On June 3, 2019, the U.S. Supreme Court held, in a unanimous decision written by Justice Ginsburg, that Title VII’s requirement for an individual to file a charge with the Equal Employment Opportunity Commission (“EEOC”) prior to filing a lawsuit is mandatory, but not jurisdictional. In other words, it is the defendant’s obligation to timely raise the plaintiff’s failure to exhaust administrative remedies or forfeit the defense. Background Facts Ms. Davis worked for Fort Bend County as an IT supervisor. She made an internal complaint of sexual harassment and assault against the IT director, which led to the director’s resignation. Davis also filed a charge of discrimination with the Texas Workforce Commission (“TWC”) alleging sexual harassment and retaliation. The charge was dual-filed with the EEOC.
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Subsequently, Fort Bend required its IT staff to work through a weekend as part of its courthouse move. Davis informed her new supervisor (a friend of the old IT director) that she could not work on Sunday due to a “previous religious commitment” to attend a special church service. After Davis attended the service and failed to report to work, Fort Bend fired her. While her charge was pending, Davis amended her intake questionnaire by adding the word “religion” in the section labeled “Employment Harms or Actions.” Davis never amended her formal charge. Mandatory or Jurisdictional Davis filed suit in district court alleging, in relevant part, retaliation and religious discrimination under Title VII. The district court granted summary judgment on all claims, and Davis appealed. The Fifth Circuit affirmed the summary judgment on Davis’s retaliation claim but reversed on her religious discrimination claim.1 Fort Bend County’s petition for writ of certiorari to the Supreme Court was denied.2 On remand, Fort Bend County argued for the first time that Davis failed to exhaust her administrative remedies on her religious discrimination charge, because that issue was not included in her formal charge with TWC. The district court agreed and dismissed the claim, holding that administrative exhaustion at the EEOC is a jurisdictional prerequisite in Title VII cases that can be made at any time. Davis appealed to the Fifth Circuit. On appeal, in Davis v. Fort Bend County, 893 F.3d 300 (5th Cir. 2018), the Fifth Circuit reversed, holding that a Title VII plaintiff’s failure to exhaust her administrative remedies is not a jurisdictional bar, but rather a prudential prerequisite to suit. Here, the Fifth Circuit found that Fort Bend forfeited its exhaustion requirement by waiting five years and an entire round of appeals
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before asserting its affirmative defense. Fort Bend County filed a petition for writ of certiorari, arguing that the failure to exhaust administrative remedies is a jurisdictional bar to suit that cannot be waived, and noting a circuit split on the issue. In its briefing, the United States argued that the charge-filing requirement is not jurisdictional prerequisite to suit. In its 9-0 opinion, the Supreme Court agreed. As with the 15-employee rule in Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), the Court held that this was a mandatory claim-processing rule but not a truly jurisdictional one. The Court held that an issue is not deemed jurisdictional unless Congress clearly identifies it as such in the statutory text. Unlike the MSPB, NLRB, and other agencies with truly jurisdictional claims, the EEOC does not adjudicate the claim. Lessons Learned Plaintiffs must ensure amendments are made to the formal charge and determine whether the amendment relates back to an earlier charge or if a new charge is required. Defendants must identify which issues to raise in a motion to dismiss and which must be raised as affirmative defenses. We still do not know when equitable exceptions such as estoppel and tolling might apply. Keep an Eye Out for Religious Accommodation Cases The Supreme Court is considering whether to grant certiorari in Patterson v. Walgreens, a religious accommodation case out of the Eleventh Circuit. This could be significant because when the Court denied certiorari in Kennedy v. Bremerton School District, Justice Alito wrote a concurrence joined by Justices Thomas, Gorsuch, and Kavanaugh. They indicated their interest in revisiting the Court’s prior rulings in Employment Division, Department of Human Resources of
LEGAL TRENDS
Oregon v. Smith, 494 U.S. 872 (1990) and Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977). These cases involved the level of scrutiny to be applied in free exercise clause cases, and the de minimis burden defense in religious accommodation cases under Title VII. Lloyd Van Oostenrijk is a trial attorney with the Houston District office of the EEOC. The views expressed are solely those of the author. Endnotes
1. Davis v. Fort Bend Cty., 765 F.3d 480, 491 (5th Cir. 2014). 2. Davis v. Fort Bend Cty., 135 S. Ct. 2804 (2015).
Raise a Glass to Beer-To-Go
“H
By Jennifer McCammon
ere is a toast to freedom itself in the Lone Star State,” Governor Abbott proclaimed.1 The historic “beer-to-go” law was signed by Governor Abbott on June 15, 2019, after a dramatic last-minute addition to the Texas Alcoholic Beverage Commission’s (“TABC”) sunset review legislation by the Texas Senate. The sunset review process works by setting a date on which an administrative agency is abolished unless the Legislature passes a bill to continue it. The passage of House Bill 1545 allows the TABC to continue regulating the alcoholic beverage industry for the next 12 years. The TABC was created in 1935 following repeal of Prohibition. Texas created a three-tier system to regulate alcoholic beverages by distinguishing between producers, distributors, and retailers. The three-tier system generally prohibits cross-ownership between the tiers
in an effort to move away from laterally integrated pre-Prohibition saloons. The Sunset Advisory Commission lamented that “[s]ince then, the Legislature has taken a piecemeal approach to responding to the evolving alcoholic beverage industry—carving out exceptions for various activities and creating ever more complicated nuances in the law.”2 In reviewing the TABC, the Sunset Advisory Commission recognized a serious need for modernization. In addition to the passage of beer-to-go, House Bill 1545 removes the nonsensical distinction between ale and beer and reduces the number of different license and permit types from 75 to 36.3 As of September 1, 2019, the beer-togo law allows patrons of craft breweries to purchase roughly one case of beer for off-site consumption per day. Sale of alcoholic beverages for off-site consumption was already allowed for wine and distilled spirits manufacturers and those holding a brewpub license—but not small brewing manufacturers. Under former law, breweries that produced less than 225,000 barrels per year were allowed to sell 5,000 barrels of their beer at on-site tasting rooms but could not sell beer for off-site consumption. Breweries can operate under a number of different licenses and permits, each with its own set of rules. That is why some craft breweries, such as Eureka Heights Brewing Company, already offered beer for off-site consumption while the majority of craft breweries could not. The change to the law means that Texas is now the 50th state in the Nation to allow craft breweries, including small brewing manufacturers, to sell their own beer to-go.
Craft beer has entered a renaissance period following years of dominance by Big Beer. There were just 35 craft breweries in Texas in 2008; today, there are 283.4 Saint Arnold Brewing Company Founder and CEO Brock Wagner said, “Fifteen years ago we were the only craft brewery in the city of Houston. Today, there’s over 50 in the metropolitan area.”5 Craft beer has not only proliferated, it is also big business. The Texas Craft Brewers Association estimated that in 2018 craft beer had a $4.54 billion economic impact – ranking Texas 3rd in the Nation.6 The beer-to-go law is expected to have profound effects for craft breweries, both in increasing revenue and promoting brand recognition and loyalty. So, next time you stop into your neighborhood craft brewery, raise a glass (and get one to-go) to the beer-to-go law. Jennifer McCammon practices consumer and commercial litigation at Hughes, Watters & Askanase, L.L.P. Her passion for craft beer comes, in part, from her husband Dustin McCammon, operations and quality manager for Buffalo Bayou Brewing Company. Endnotes
1. TEXAS CRAFT BREWERS GUILD, https://www.texascraft brewersguild.org/ (last visited Aug. 12, 2019). 2. SUNSET ADVISORY COMMISSION STAFF REPORT WITH FINAL RESULTS: TEXAS ALCOHOLIC BEVERAGE COMMISSION 2018-2019 86TH LEGISLATURE (2019). 3. Id. 4. State Craft Beer Sales & Production Statistics, 2018, BREWERS ASSOCIATION.ORG, https://www.brewersassociation. org/statistics-and-data/state-craft-beer-stats/ (last visited Aug. 12, 2019). 5. Katie Watkins, Will 2019 Be The Year Texas Breweries Can Sell Beer-to-Go?, KUT 90.5 (Jan. 16, 2019), https://www.kut.org/ post/will-2019-be-year-texas-breweries-can-sell-beer-go. 6. State Craft Beer Sales & Production Statistics, 2018, BREWERS ASSOCIATION.ORG, https://www.brewersassociation.org/ statistics-and-data/state-craft-beer-stats/ (last visited Aug. 12, 2019).
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September/October 2019
41
Media Reviews
From the Trenches III: Pretrial Strategies for Success Edited by Sawnie A. McEntire ABA Book Publishing, 2018 Reviewed by Trey Holm
The Houston Lawyer
S
IMPLE. EARLY. CREATIVE. These three words describe prominent themes interwoven through the third volume of the American Bar Association’s popular From the Trenches book series edited by Sawnie A. McEntire. Each chapter in Pretrial Strategies for Success takes the fresh perspective that the reader understands the fundamentals of litigation and thereby focuses his or her advice on the intangibles or novel approaches to standard procedures. While organized loosely around the trajectory and essential elements of pre-trial preparation, McEntire and his team of authors elude the typical timeline, which uses an every-technicalstep approach of many “How To” tomes, by focusing the topics on strategies, techniques, and tips honed in the heat of countless courtroom battle fields. Every litigator knows thorough pre-trial preparation is necessary for success, but many lawyers begin this pre-trial preparation at the outset of the lawsuit or upon the setting of a trial date. However, according to Pretrial Strategies for Success, pretrial preparation begins long before filing a lawsuit and in some instances even before the germination of the underlying dispute 42
September/October 2019
itself. The early chapters explore pre-suit topics such as internal investigations, presuit discovery, pre-suit mediation, and litigation holds. Yet, pretrial success even starts earlier at the initial client interview and investigation. It is at this point the lawyer is to pause, look forward to the day of trial and start developing the case theme. Before the hard work of fact gathering begins, the lawyer aligns her or his compass to the initially chosen cardinal point, which guides the lawyer through the fact gathering. As the litigation process unfolds, the narrative will change as facts develop. However, the lawyer who waits until all the facts are in has lost the opportunity for the narrative to influence the discovery and vice versa. Facts not discovered are facts lost to the narrative and sometimes lost to the jury. Moving forward into the heart of pretrial preparation, the authors weave the notion of simplicity through their dissemination of techniques and strategies. In his chapter on discovery themes, McEntire writes, “The goal is to reduce the complex to the simple, while giving the jury something interesting to consider, focusing its attention on believable acts that support a favorable verdict.” At the outset, the ultimate audience – the jury – must always be in the lawyer’s mind. From crafting written discovery to the closing arguments and every step in between, the inevitable consumption by a collection of disparate lay individuals should inform the design of every theme, every question, and every statement. For the authors, the bedrock of this exercise is simplicity. Whether a seasoned litigator or a first timer, the reader will discover fresh perspectives on pre-suit tasks or powerful strategic approaches to pretrial issues that
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would otherwise take years to discover. Through it all, the reader will hear the drum beat of keep it simple, start early, and be creative. Thomas Jefferson once asserted, “A lawyer without books would be like a workman without tools.” Without question, Pretrial Strategies for Success will be a rewarding addition to any lawyer’s toolbox. Trey Holm is the supervising attorney for the Harvey Legal Relief Project of Houston Volunteer Lawyers. His team coordinates free legal services to low-income families affected by Hurricane Harvey with volunteer attorneys. He is a member of The Houston Lawyer editorial board.
The Chief: The Life and Turbulent Times of Chief Justice John Roberts By Joan Biskupic Basic Books, 2019 Reviewed by Kimberly A. Chojnacki
T
he Chief: The Life and Turbulent Times of Chief Justice John Roberts pulls on the inquisitive thread we all have about the man. He was fervent in the Reagan White House to advance conservative principles, yet demurred in his confirmation hearings that he simply was doing what he’d been hired to do. As he has managed the highest court, we have seen the expected conservative opinions at his hand. But we also have been surprised by his opinions upholding decidedly not conservative statutes. So, who is he?
Media Reviews
OFF THE RECORD From page 36
Joan Biskupic takes the reader through the Chief’s upbringing, including his social status, his early education, on through his time at Harvard for undergrad and law school, and his time in the Reagan Administration and private practice. By her telling, each of these has played a part in who Roberts is and how he views his role on the Court. He is private, perhaps bordering on secretive, and intensely focused on maintaining the integrity and legitimacy of the Court and his leadership of it. At its better moments, The Chief even welcomes us into the justices’ conferences and postoral argument negotiations to understand how some of the most significant opinions of the past ten years came to be. Unfortunately, the ultimate question remains unanswered: how will he lean on any given topic? Instead, the reader is left to speculate about what to expect Roberts to do as the faces on the Court change over the coming years based on his past remarks, moves, and principles. Roberts stands to hold the role of Chief Justice for years to come, in which case each of us would do well to learn more about the man tasked with leading the Court through some of the most divisive years in recent history. The Chief gives us this very insight; we are left to piece it together and wait for the opinions to be handed down. Kimberly A. Chojnacki is is an associate of Baker Donelson in Houston and a member of The Houston Lawyer editorial board. She represents corporate clients in eminent domain proceedings, complex commercial litigation, and insurance defense disputes.
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safari car for them to pass. Lions, on the other hand, took advantage of the tourists and napped undisturbed in the shade of the Range Rover, gifting Patty and Ron with the opportunity to lean out of the open roof to snap a photograph. The next stop in their Tanzanian adventure was floating in a hot-air balloon in Serengeti over a great migration of wildebeests, where packs of lions watched intently in the grass, waiting to pounce on the passing herd. Witnessing the dynamic between these fearless animals gave Patty a new and refreshing perspective on her place in the world, including her interactions with other attorneys in the working sphere: “It made the occasional squabbles among lawyers seem inconsequential and unnecessary,” she explains. Despite Patty’s extensive traveling adventures, she still had saved one place in particular on her list of places left to explore: Antarctica. “It was a different world,” Patty shared of her trip to the frigid and mysterious continent, “full of gleaming glaciers, icebergs and ice floats inhabited only by penguins and seals. The ice was incredibly beautiful as a pale blue light emitted from cracks or depressions.” One of her most memorable experiences in Antarctica was when, despite the clear blue sky, she heard what sounded like thunder—the sound of glaciers calving, breaking the peaceful silence. In Antarctica’s pristine environment, visitors, like Patty, must take great care to avoid leaving a mark. During her visit, she and Ron were required to walk through shallow pools of disinfectant when leaving and returning to their cruise ship to avoid contaminating the land. And although Antarctica is not a place that brings to mind souvenirs, one of Patty’s stops on her trip was to a small gift shop whose proceeds supported a museum dedicated to scientists who were stationed there in the 1950s. Patty can now drink her morning coffee in a mug from Antarctica! But despite her exotic and fascinating travels, Patty has not yet finished exploring. She will be headed to Egypt and the Middle East in the near future, and then to India and Southeast Asia. Carly Milner is counsel at Vinson & Elkins LLP, where she also practices commercial litigation. She is a member of The Houston Lawyer’s editorial board. Endnotes
1. Patty Hair is a senior partner at Phelps Dunbar where she practices commercial litigation and arbitration.
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GALLERIA area office space for sharing arrangement. Attorney’s spaces are available with space for support staff and files. Attorney offices are about 14’ X 15’ with large windows. We have conference rooms, kitchen, and other common areas. This is not an executive suite. Email Kurt Arbuckle, kurt@kurtarbuckle.com. SPACE(S) AVAILABLE: Established Houston Energy Corridor law firm with business law, litigation, and estate planning/probate practices has office space available for practicing attorney(s) in need of (1) a furnished office with telephone, (2) access to copier/scanner and two conference rooms on a scheduled basis, and (3) the possibility of overflow legal work from time to time depending on attorney’s skills and experience. Would prefer attorney who is licensed 5+ years in TX and has business transaction and litigation experience, but it is not essential. The office is a professional and friendly law firm environment that is a great platform for continued development of your practice. Available on a month-to-month basis plus payment of copy cost. If interested, please send email to bcampbell@mlpllp.com, after which you will be contacted.
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