Whistleblower States A Claim Under New York Law

Demir v. Sandoz, Inc. ____A.D, 3d___(1st Dep't. Nov. 14, 2017), is an interesting decision for several reasons. First, the Appellate Division holds that a whistleblower states a claim under New York Labor Law Section 740 even if no violation of law is alleged. As the court states:

[P}laintiff adequately pleaded a Labor Law § 740 violation against defendants in alleging that its manufacturer and procurement of chemical ingredients for defendants' highest grossing product was not compliant with FDA regulatory requirements governing the drug's safety and efficacy, and she need not plead an actual violation of laws or regulations (see Webb—Weber v. Community Action for Human Servs., Inc., 23 NY3d 448 [2014]).

Next, the court held that by proceeding under Section 740, the plaintiff did not elect her remedies which would bar an employment discrimination claim:

The motion court correctly concluded that Labor Law § 740(7), the "election-of-remedies" provision, does not waive plaintiff's claim of discrimination under the New York State Human Rights Law (State HRL) (Executive Law § 296) because, in alleging discrimination on account of plaintiff's gender, national origin, and religion, plaintiff does not seek the same rights and remedies as she does in connection with her whistleblowing claim, notwithstanding that both claims allege that she was wrongfully terminated.

Finally, the court also held that the "relations back" doctrine applies to Section 740 cases and therefore, the case was not time-barred:

 Although that claim was not asserted until the Second Amended Complaint, filed on October 19, 2015, more than one year after her termination on February 4, 2014, the original complaint, filed on January 31, 2015, alleged that on February 3, 2014, plaintiff reported to the defendants' Business Practices Office defendants' improper practices regarding its procurement of chemicals to manufacture its highest grossing drug, and that those practices did not comply with FDA regulations. It further alleged that she was terminated the next day in retaliation for that conduct. This sufficed to give defendants notice of the transactions or occurrences to be proved in asserting the Section 740 claim in the later Second Amended Complaint (see Giambrone v Kings Harbor Multicare Ctr., 104 AD3d 546 [1st Dept 2013]). Nor is there any basis or sound policy reason to deem the relation back doctrine inapplicable to such whistleblower claims. The right to sue an employer for an allegedly retaliatory discharge predates enactment of that statute and thus is not the kind of "statute of repose" to which the relation back doctrine does not apply (Goldstein v New York State Urban Dev. Corp., 13 NY3d 511, 521 [2009]), nor is the time limit "so incorporated with the remedy given as to make it an integral part of it and the condition precedent to the maintenance of the action at all."

Importantly, this case involved a motion to dismiss and involved legal standards which requires that complaints be liberally construed in favor of the plaintiff. That same standard would not apply later in the litigation. In order to prevail, it appears that under Webber, plaintiff would still have to prove an actual violation of law.

Interesting 2d Circuit School District ADEA Decision

PFIZENMAYER v. HICKSVILLE PUBLIC SCHOOLS, ____F.3d____(2d Cir. Nov. 2, 2017), is an interesting decision. The court grants the school district summary judgement in an ADEA discharge case. I bring it to your attention because the court does an excellent job summarizing the applicable law. As the court stated:

A plaintiff asserting an employment discrimination claim under the ADEA must plausibly allege that her employer took adverse action against her and that her age was the “but-for” cause of the adverse action. See Vega v. Hempstead Union Free Sch. Dist., 801 F.3d 72, 86–87 (2d Cir. 2015). “A plaintiff sustains an adverse employment action if he or she endures a ‘materially adverse change’ in the terms and conditions of employment. To be ‘materially adverse’ a change in working conditions must be ‘more disruptive than a mere inconvenience or an alteration of job  responsibilities.’” Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 238 (2d Cir. 2007) (quoting Galabya v. N.Y.C. Bd. of Educ., 202 F.3d 636, 640 (2d Cir. 2000)). Here, the district court correctly determined that the conduct described in Pfizenmayer’s complaint either could not form the basis for a timely claim or did not rise to the level of an adverse employment action. Further, Pfizenmayer has not plausibly alleged, for the purposes of a constructive discharge claim, that the defendants discriminated against her “to the point such that [her] ‘working conditions bec[a]me so intolerable that a reasonable person in [her] position would have felt compelled to resign.’” Green v. Brennan, 136 S. Ct. 1769, 1776 (2016) (quoting Pa. State Police v. Suders, 542 U.S. 129, 141 (2004)). Second, Pfizenmayer contends that the district court erred in dismissing her ADEA hostile work environment claim. “An actionable discrimination claim based on hostile work environment under the ADEA is one for which ‘the workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently pervasive to alter the conditions of the victim’s employment . . . .’” Kassner, 496 F.3d at 240 (quoting Brennan v. Metro. Opera Ass’n, 192 F.3d 310, 318 (2d Cir. 1999)). Here, though certain aspects of Pfizenmayer’s claimed treatment are troubling, Pfizenmayer has not plausibly alleged that her “workplace [was] permeated with discriminatory intimidation, ridicule, and insult” of a kind that “alter[ed] the conditions of [her] employment.” Id. (quoting Brennan, 192 F.3d at 318). Third, Pfizenmayer argues that the district court erred in dismissing her ADEA retaliation claim. However, Pfizenmayer has not plausibly alleged that she engaged in any protected activity of which the defendants were aware. See Kessler v. Westchester Cty. Dep’t of Soc. Servs., 461 F.3d 199, 205–06 (2d Cir. 2006). “[I]mplicit in the requirement that the employer have been  aware of the protected activity is the requirement that it understood, or could reasonably have understood, that the plaintiff’s opposition was directed at conduct prohibited by” the ADEA. Galdieri-Ambrosini v. Nat’l Realty & Dev. Corp., 136 F.3d 276, 292 (2d Cir. 1998).  

Mistaken Perception of Alcoholism Is Not Protected Under The NYC Human Rights Law

Makinen v. City of New York, ___N.Y.3d___(Oct. 17, 2017), is an interesting case to be aware of. The case addressed a certified question from the Second Circuit, namely whether the mistaken perception of alcoholism is protected under the NYC Human Rights Law and the Court concluded that it was not. As the Court explained:

As the Second Circuit noted, there is no ambiguity about the plain language of the NYCHRL, which is only open to one reasonable interpretation: the disability of alcoholism "shall only apply to a person who (1) is recovering or has recovered and (2) currently is free of such abuse" (Makinen, 857 F3d at 496). Indeed, by its plain language, the NYCHRL does not regulate employer actions  motivated by concern with respect to the abuse of alcohol. Rather, the NYCHRL covers circumstances in which employers unfairly typecast alcoholics who have sought treatment and who are not presently abusing alcohol, so as to ensure that such persons are afforded a fair opportunity at recovery. Said differently, the NYCHRL provides that, with respect to alcoholism, a person is considered to be disabled (so as to trigger the protections of that law) only when he or she "is recovering or has recovered" and "currently is free of such abuse" (§ 8-102 [16] [c]; see § 8-107 [1] [a] [3]).

Duty of Fair Representation Does Not Preempt NYS Human Rights Law

Figueroa v. Foster, ____F.3d____(2d Cir. July 17, 2017), is an interesting decision. The Duty of Fair Representation outlaws unions actions that are arbitrary, discriminatory or in bad faith. But the NYS Human Rights law also outlaws discrimination. Is it preempted? No, says the 2d Circuit, in an exhaustive opinion reasoning, in part:

As noted above, the anti‐discrimination roots of the duty of fair representation are long‐established. In Vaca, the Supreme Court observed that the “statutory duty of fair representation was developed [in the 1940s] in a series of cases involving alleged racial discrimination by unions certified as exclusive bargaining representatives under the Railway Labor Act [(“RLA”)], and was soon extended to unions certified under the [NLRA].” 386 U.S. at 177 (citations omitted). As this Court more recently explained, “[a] union breaches its duty of  fair representation if its actions with respect to a member are arbitrary,  discriminatory, or taken in bad faith.” Fowlkes, 790 F.3d at 388. The purpose of  the duty of fair representation, therefore, can easily be said to encompass a  purpose of prohibiting discrimination. Indeed, the Local and the Commissioner agree that the NYSHRL serves the  same purpose of prohibiting discrimination as does the NLRA’s duty of fair representation. Each serves to reinforce the anti‐discriminatory purpose of the other. This mutual service is not a conflict such that the duty of fair representation and the NYSHRL “cannot be reconciled or consistently stand together.” In re MTBE Prod. Liab. Litig., 725 F.3d at 102. Instead, the two work in tandem to protect union members from invidious discrimination in all of its forms. This opinion addresses only the Local’s claim that the duty of fair representation preempts the NYSHRL in its entirety when applied to unions acting in their capacity as collective bargaining agents. We do not purport to address every potential conflict between the NYSHRL and federal law. For  example, NYSHRL claims are subject to a one‐year statute of limitations, see N.Y.  Exec. Law § 297(5), whereas private duty of fair representation claims are subject to a six‐month statute of limitations, see 29 U.S.C. § 160(b); DelCostello v. Int’l Bhd. 13 of Teamsters, 462 U.S. 151, 154‐55 (1983), and overlapping Title VII claims filed  with the SDHR are subject to a 300‐day statute of limitations, see Vega v. Hempstead Union Free Sch. Dist., 801 F.3d 72, 78‐79 (2d Cir. 2015). We need not decide today which of these statutes of limitations applies to NYSHRL claims against unions because the present appeal does not raise facts that implicate any  such conflict. We hold only that the NYSHRL presents no potential conflict so incompatible with federal labor laws that all of its provisions must fall. We leave for other cases to resolve more specific conflicts between the NYSHRL and federal law as they arise.  

So, why is this significant? First, as indicated by the 2d Circuit itself, different statute of limitations apply to DFR claims than to discrimination claims. But, second and more importantly, much more deference is paid to union actions under the DFR standard than under a discrimination standard. Undoubtedly, that is why  the plaintiff here was the President of a large labor union seeking to declare that in DFR cases alleging discrimination, state law was preempted, leaving the DFR standard which is more favorable towards unions.

Stay tuned as this issue is not over. Law review commentary would be most welcome.

Teacher who Reported That Another Teacher Improperly Coached Students is not Protected Under First Amendment

Cohen v. NYC Department of Education, ____Fed. Appx.____(2d Cir. Sept. 20, 2017), demonstrates just how narrow the protection are for public employees under the First Amendment. There, a teacher noticed that students in another teacher's class received perfect scores. He suspected that the teacher improperly coached his students. He then received negative ratings and argued that was because of his report. The 2d Circuit held that the teacher's conduct here was not protected under the First Amendment, reasoning:

Only certain types of speech made by government employees are protected by the First Amendment: it is necessary (but not sufficient) that the government employee “sp[eak] ‘as a citizen’ rather than solely as an employee.” Matthews v. City of New York, 779 F.3d 167, 172 (2d Cir. 2015) (quoting Jackler v. Byrne, 658 F.3d 225, 235 (2d Cir. 2011)). There is no “brightline rule” to determine whether or not “a public employee is speaking pursuant to [his] official duties,” i.e., speaking as an employee rather than as a citizen. Ross v. Breslin, 693 F.3d 300, 306 (2d Cir. 2012). “Courts must examine the nature of the plaintiff’s job responsibilities, the nature of the speech, and the relationship between the two.” Id. 

In Weintraub v. Board of Education, a teacher alleged retaliation after complaining that a school administrator had declined to punish a student who had thrown books at the teacher. 593 F.3d 196, 198 (2d Cir. 2010). The teacher’s complaint was made “pursuant to his official duties because it was part-and-parcel of his concerns about his ability to properly execute his duties as a public school teacher-- namely, to maintain classroom discipline.” Id. at 203 (citation and quotation marks omitted). Consequently, the teacher spoke as an employee rather than as a citizen.

So too here. Cohn and the other earth science teachers were responsible for setting up the laboratory exam, creating the answer key, and grading the exam. As in Weintraub, Cohn’s speech was “part-and-parcel” of his job responsibilities--here, ensuring the fair and proper administration of a test for which he had some responsibility. Id. The alert to school officials that another teacher may have helped students cheat was therefore “pursuant to his official duties.” Id. Accordingly, Cohn was speaking as an employee--rather than as a citizen--and his speech is unprotected by the First Amendment.

SDNY Approves FLSA Collective Action For Unpaid Overtime

Garcia v. 34th Street Coffee, ____F. Supp. 2d ____(S.D.N.Y. Aug. 30, 2017), NYLJ Sept. 11, 2017 (registration required), is brought to your attention because the Court does an excellent job of summarizing the standards for a collective action under the FLSA for unpaid Overtime. As the Court stated:

The Second Circuit has endorsed a two-step process for determining whether an action may proceed collectively under Section 216(b). See, e.g., Myers, 624 F.3d at 554. In the first stage of the analysis, a district court must make an initial determination as to whether the named plaintiffs are "similarly situated" to the putative collective members. Id.; see also Gauman v. DL Rest. Dev. LLC, No. 14 Civ. 2587 (RWS), 2015 WL 6526440, at *1 (S.D.N.Y. Oct. 28, 2015) ("The Court is not concerned with weighing the merits of the underlying claims, but rather with determining whether there are others similarly suited who could opt into the lawsuit and become plaintiffs."); Cunningham v. Elec. Data Sys. Corp., 754 F. Supp. 2d 638, 644 (S.D.N.Y. 2010) (quoting Lynch v. United Servs. Auto. Ass'n, 491 F. Supp. 2d 357, 368 (S.D.N.Y. 2007)). If a plaintiff makes a "modest factual showing" that she and the potential opt-in plaintiffs "together were victims of a common policy or plan that violated the law," conditional certification and court-facilitated notice is appropriate. Myers, 624 F.3d at 555 (citation omitted); see also Cunningham, 754 F. Supp. 2d at 644; Lynch, 491 F. Supp. 2d at 368. This initial phase is often termed the "notice stage." Lynch, 491 F. Supp. 2d at 368.
The second stage, after discovery is completed, is where "if it appears that some or all members of a conditionally certified class are not similarly situated," a "defendant may move to challenge certification, at which point a court will conduct a more searching factual inquiry as to whether the class members are truly similarly situated." Viriri v. White Plains Hosp. Med. Ctr., No. 16 Civ. 2348 (KMK), 2017 WL 2473252, at *2 (S.D.N.Y. June 8, 2017) (internal quotation marks omitted) (quoting Jenkins v. TJX Cos., 853 F. Supp. 2d 317, 320-21 (E.D.N.Y. 2012)). At that time, "[i]f the claimants are indeed similarly situated, the collective action proceeds to trial, and if they are not, the class is decertified, the claims of the opt-in plaintiffs are dismissed without prejudice, and the class representative may proceed on his or her own claims." Malloy v. Richard Fleischman & Assocs. Inc., No. 09 Civ. 322 (CM), 2009 WL 1585979, at *2 (S.D.N.Y. June 3, 2009) (citing Lee v. ABC Carpet & Home, 236 F.R.D. 193, 197 (S.D.N.Y. 2006).

Confidentiality Rule That Prohibits Discussions About Salary Violates The NLRA

NLRB v. Long Island Association, ___F. 3d___(2d Cir. Aug. 31, 2017, is an interesting decision. The Court holds that an employer violated 8(a)(1) of the NLRA for discharging an employee who refused to sign an employer's confidentiality rule. That rule, among other things, stated that employees cannot disclose salaries. Of interest is that this employer was not organized and this is yet another example of the application of the NLRA to non-union employers. As the court stated:

 “The [NLRB] has long adhered to and applied the principle that discipline  imposed pursuant to an unlawfully overbroad rule is unlawful.” The Cont’l Grp., 3 Inc., 357 N.L.R.B. 409, 410 (2011). This is called the Double Eagle rule after Double  Eagle Hotel & Casino, 341 N.L.R.B. 112 (2004). See The Cont’l Grp., Inc., 357 N.L.R.B. 5 at 410. One of the central concerns animating the Double Eagle rule is that “the  mere maintenance of an overbroad rule tends to inhibit employees who are  considering engaging in legally protected activities by convincing them to refrain  from doing so rather than risk discipline.” Id. at 411. Thus, “[a]n employer is not free to evade liability through the device of utilizing a rule prohibiting activity protected by Section 7 of the [NLRA] and by then basing its discipline on the fact that the employee has violated the rule, thereby being insubordinate.” Kolkka  Tables & Finnish‐Am. Saunas, 335 N.L.R.B. 844, 849 (2001). In other words, “an employer may not discharge an employee for refusing to comply with an unlawful order prohibiting protected activity.” Quantum Elec., Inc., 341 N.L.R.B. 15 1270, 1280‐81 (2004). The rule that has emerged, therefore, is “that an employer  may not take coercive action against an employee . . . for refusing to comply with a policy that . . . itself deters protected activity” in violation of Section 8(a)(1)

Court Invalidates Obama's Over-Time Rules

In Nevada v. U.S. Dep’t. of Labor, ____F. Supp. 2d____(E.D. Tx. Aug. 31, 2017), the court declared President Obama's Over Time Rule, 81 Fed Reg. 32, 391 invalid.

The Court found that the exemptions for executive, administrative and professionals set forth in 29 U.S.C. 213(a)(1) were meant by Congress to be defined by the duties that the employees performed. The Department of Labor has long had a Salary Basis test which required that employees earn a certain salary in order to be exempt. The Final Rule more than doubled the previous minimum salary level, increasing it from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) and the court found that this would make the employees duties irrelevant if it fell below the minimum level. Interestingly, the court found that the prior salary test ($ 455 per week), was consistent with Congressional intent because the Department used that level of salary to identify a category of employees Congress intended to exempt.

 It would appear no salary basis test is currently in place in the Eastern District of Texas. 

7th Circuit Holds That Cosmetology Students Are Not Employees Under The FLSA

The Seventh Circuit Court recently held that cosmetology students are not employees. In Hollins v. Regency Corp., ___ F.3d ___, No. 15-3607, 2017 WL 3474266 (7th Cir. Aug. 14, 2017), Chief Judge Diane Wood wrote the opinion of a unanimous panel of the Seventh Circuit affirming the grant of summary judgment against former cosmetology students who alleged they were employees of their cosmetology schools when they 1) were practicing skills on paying members of the public and 2) were performing “menial tasks,” such as sanitation, greeting guests and selling products. The Court applied the economic realities test. The lower court ruled against the students.

It is Discrimination To Fire a Woman Because She Is Too Cute

Edwards v. Nicolai, ____A.D.3d___(1st Dept. Aug. 22, 2017), is likely to become a landmark employment discrimination. There, a female therapist was fired for being "too cute" Significantly, no sexual harassment or even a relationship existed between the Plaintiff and her supervisor who fired Plaintiff at his wife's insistence. As the court explained:

The court erred, however, in dismissing the causes of action for gender discrimination under the NYSHRL and the NYCHRL. It is well established that adverse employment actions motivated by sexual attraction are gender-based and, therefore, constitute unlawful gender discrimination (see e.g. Williams v New York City Hous. Auth., 61 AD3d 62, 75 [1st Dept 2009], lv denied 13 NY3d 702 [2009] [sexual harassment is "one species of sex- or gender- based discrimination"]; see also Oncale v Sundowner Offshore Servs., Inc., 523 US 75, 80 [1998]; King v Board of Regents of Univ. of Wis. Sys., 898 F2d 533, 539 [7th Cir 1990]). Here, while plaintiff does not allege that she was ever subjected to sexual harassment at WSCW, she alleges facts from which it can be inferred that Nicolai was motivated to discharge her by his desire to appease his wife's unjustified jealousy, and that Adams was motivated to discharge plaintiff by that same jealousy. Thus, each defendant's motivation to terminate plaintiff's employment was sexual in nature.
Defendants' reliance on certain cases in the "spousal jealousy" context is misplaced. Because these cases involve admitted consensual sexual affairs between the employer and the employee, they are distinguishable (see Rainer N. Mittl, Ophthalmologist, P.C. v New York State Div. of Human Rights, 100 NY2d 326, 332 [2003]; see also Mauro v Orville, 259 AD2d 89, 92-93 [3d Dept 1999], lv denied 94 NY2d 759 [2000]; Tenge v Phillips Modern Ag Co., 446 F3d 903, 910 [8th Cir 2006]). In such cases, it was the employee's behavior - not merely the employer's attraction to the employee or the perception of such an attraction by the employer's spouse - that prompted the termination. Here, assuming the truth of the allegations of the amended complaint, as we are required to do upon a motion to dismiss, plaintiff had always behaved appropriately in interacting with Nicolai, and was fired for no reason other than Adams's belief that Nicolai was sexually attracted to plaintiff. This states a cause of action for gender discrimination under the NYSHRL and the NYCHRL.

A New York Law Journal article about this case is available here.  (registration required). The lower court decision, available here, reached a contrary result and extensively analyzed case law. My view is that this issue was wide open in New York and the Appellate Division is correct.

What is significant about this case, from a legal prospective, is that it potentially involves an entire new class of cases involving appearance based discrimination. And if someone is fired because they are not "cute enough," a cause of action may also be stated.