Sherlock Holmes Would Be Appalled: Workplace Investigations?

Federal and state statutes and case law generally anticipate that a workplace investigation is an important employer tool that will prevent discrimination and harassment, and even result in some discipline of offenders.  I'm sorry to say I have a different impression of just how these investigations actually work.  They are more often used by employers as "weapons of defense" rather than as "tools of prevention."

Federal law has long given an employer an affirmative defense that an employer is not liable for harassment which is not reported by the alleged victim [at least in cases where there has been "no tangible economic harm."].  California follows an affirmative defense of "Avoidable Consequences."  To the extent the harassment victim could have herself or himself prevented the harassment by reporting it to the employer, the employee is barred from recovery of damages for the period of non-reporting.  Bottom line:  the courts want employers to police themselves.

Instead, many Human Resource departments place their priority on creating legal documents under the direction of legal counsel. The result is an nearly inevitable conclusion of "no evidence" to support the allegations or at best, that there is "some information" of inappropriate conduct but not sufficient to find discrimination or harassment.  These findings, unsurprisingly, seem more likely to be made when the accused is high in the management hierarchy.   In my 17 years of employment law practice, I have not seen one investigation conclude that sexual harassment or other discrimination have occurred.

I really wonder what standard many so called "investigators" actually use in reaching conclusions of "no harassment.".  While proof by admissible evidence in court is not required (or desirable), it seems to me that the standard, at least in California, is whether the employer "acted reasonably" in making a decision to discipline (or forego discipline) of an accused.  That "reasonableness" standard has to be examined in the context of the legal definitions of harassment.  An investigator who does not at least know what "harassment" and "discrimination" are under the law is in a very poor position to reach conclusions.

I have had situations where my clients explain to me that they felt they were under cross-examination by the "investigator" who seemed to challenge their accusation by demanding that my client must have a direct statement by the discriminator of dislike of persons of my client's age, race, or gender.  That is not the law itself, which allows for indirect and circumstantial evidence, such as different treatment, and lack of evidence to support disciplinary action against the protected employee.

Also, many investigators seem to think that by surprising the employee with the investigation, they somehow get better, more reliable information.  Surprising an employee simply serves to get unreliable and incomplete information because the employee has not had time to recollect and organize the information.  The situation is even worse then an attorney is selected to conduct the investigation.  Then the questions seem even more adversarial.

For example, one client shared with me that the interrogator asked repeatedly:  "Is that all the information you have to support your charge of harassment?"  or  "Is there anything else you can think of that would support your charge?" or even:  "What evidence do you have that discrimination occurred?"  These are "deposition style" questions used to "lock in" a witness early to a position to prevent more information coming to light later as the employee remembers other matters.  The questions are not intended or designed to elicit all the facts impartially.   The reason the questions are unfair is that most employees do not know the legal definitions of discrimination and harassment, and think they must have direct evidence, and so will answer:  "Well, I guess that's all.  I don't know of anything else."  If you are an employee in such an "investigation" be sure to say "I may think of more later, and I will let you know," or "I felt these actions were discriminatory, and so I'm listing them all, even if you don't agree."

Another gripe of mine is that an investigation delayed is no investigation at all.  The investigation is part of a general duty to prevent discrimination and harassment, and to take prompt corrective action.  There are two goals:  protect employees from discrimination, and yes, let the harasser and others like him or her know that such conduct is punished.  I have seen many H.R. departments simply ignore or casually respond to complaints that the law requires to be promptly investigated.  The result is liability upon the employer for failure to prevent harassment or retaliation that may thereafter occur.

In conclusion, if Sherlock Holmes were asked why many workplace investigations fail to meet the requirements of the law, I suspect he would answer:  "Elementary my dear Watson."  

The Exciting Part of Practicing Law

I communicate weekly with an "accountability partner."  We use a written and mental checklist just to account for how we're reaching goals or dealing with "issues;"  Last week, out of one of these conversations concerning my practice, I connected two dots:  I love to write, and I love to write creatively.  I love looking for the unusual angle, the interesting story line, the unexpected event that results in a breakthrough.

I am learning to create that "feeling" in my writing, but am I creating that spirit of adventure in the practice of law?  You may of course ask that question in your own line of work.  What is the unique contribution I make to the "cookie cutter" work that I must do each day?

If it were easy, it wouldn't be as satisfying to succeed in the challenge.  Of course it is not easy to bring a spirit of creativity and possibility to the many mundane and often repetitious tasks of the day.  Those "basic" tasks never go away.  We all have unpleasant parts of our daily work.

But we can add "flavor" to those days of routine work by applying some aspect of our unique talents to the day. We can build a block of time to cultivate a spirit of "unique contribution."  It might be our ability to strategize a new marketing campaign, or it might be the way we communicate to our customers as we serve them at the counter.  Maybe it is our sense of humor, or ability to build a "team" or just the way we use our tone of voice and facial expressions to make a different impact during a group discussion.  Whatever it might be, we leave an "imprint" of ourselves for good or ill.

I look at the world in all its complexity and constant change as an unfolding "story."  I love to tell stories:  to bring out the emotions of people as they respond to the story.  The practice of employment law is a wonderful opportunity to build the "story of the case."  There are many mundane aspects of litigation, such as answering tedious, endless, and often useless discovery questions, but there is also the opportunity to place those mundane activities within the large context of an exciting, unfolding story that I get to "write" as I present it to various persons:  mediator, judge, arbitrator, jury, and even opposing counsel.

The exciting part of practicing law, or serving coffee, or cutting hair, or deciding a vision for the corporation, or offering ski lessons, or selling medical equipment, or just living, is YOU.


"If the pink slip doesn't fit, get redressed!"
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Do you own a body part or cell after it is removed by medical procedure?

This quote basically explains why I love the practice of law: 

[Moore v. Regents of the University of California (1990) 51 Cal3d Page 120, at 135]

____________________________________________

“No court, however, has ever in a reported decision imposed conversion liability for the use of human cells in medical research.^*fn15 While that fact does not end our inquiry, it raises a flag of caution. (See fn. 16.) In effect, what Moore is asking us to do is to impose a tort duty on scientists to investigate the consensual pedigree of each human cell sample used in research.^*fn16 To impose such a duty, which would affect medical research of importance to all of society, implicates policy concerns far removed from the traditional, two-party ownership disputes in which the law of  conversion arose.^*fn17 Invoking a tort theory originally used to determine whether the loser or the finder of a horse had the better title, Moore claims ownership of the results of socially important medical research, including the genetic code for chemicals that regulate the functions of every human being's immune system.^*fn18”

_______________________________________

By the way, the Supreme Court declined to recognize a continuing property interest in one’s own body parts once they are removed by medical procedures.  Thus, the Court did not extend the “Conversion” tort to cover those parts, stating that the person undergoing the procedure lost any continuing property interest on removal.  Instead, the liability, if any, the Court concluded, would arise out of a researcher’s or physician’s duty to disclose before the removal what the intended use of the body part was to be. 

© 2010 FXP

 "If the pink slip doesn't fit, get redressed!"
Click to see my wardrobe of remedies. Link

U.S. Supreme Court to Corporations: "You've Got A Lot of Nerve!" -- But Where Is It?

In my practice, a question arises from time to time:  Is this case appropriate to file in U.S. District Court?  The answer is not a matter of whim, but statutory duty:  if a defendant is resident outside the state of California, and my client (the party suing the defendant) is resident within California, and no other defendant resides in California, then the action must be filed in federal court (assuming the claim is sufficiently large).   This requirement is jurisdictional, and was originally thought necessary by Congress to avoid an out-of-state defendant being treated unfavorably by a  local court system biased in favor of its own citizens. 

Ah, but lawyers are ever parsing the meaning of seemingly plain words, such as "residency."  Where in heaven's name, is a "corporation" resident?  Where it is incorporated?  Where it does most of its business?  Where it maintains its corporate headquaters?  Where its top executives meet to run the operation?   Where oh where can my corporation be?   Plaintiff employees care about questions like these because their lawyers generally feel more comfortable in local state courts--and well they should.  The rules of evidence, the rules of pleading, and the rules of procedure are also sometimes foreign to attorneys accustomed to practicing in State courts.  Federal courts also have a nasty reputation of finding ways to dismiss employment law cases by summary judgment.  Maybe they find them somewhat parochial compared to big white collar crime or anti-trust cases.  

And so, I present this information to my readers.  The U.S. Supreme Court has elected to "brighten the line" of when "diversity of citizenship" exists where the "citizen" is a corporation.  Hint:  Look for the phrase "nerve center."  Who said corporations can't "feel"?   

 

The following was written by Michael J. Holmes

 and Heather Sullivan Riley

 Allen Matkins Leck Gamble Mallory & Natsis LLP

 San Diego Office

Source: Martindale-Hubbell

 

This decision sets out a simplified, more predictable jurisdictional rule for determining whether certain cases involving corporations that operate in multiple states can be removed to federal court. It clarifies what is often an unpredictable and expensive phase of litigation. Affected companies should review their policies and procedures in light of this decision.

 

Hertz Corp. v. Friend

 

In early 2010, the U.S. Supreme Court unanimously ruled that a corporation's "principal place of business" (i.e., where it is a citizen for jurisdictional purposes) is the place where the corporation's high level officers direct, control, and coordinate the corporation's activities - the corporation's "nerve center." Hertz Corp. v. Friend (February 23, 2010).

 

Essentially, the decision clarifies the rule concerning federal diversity jurisdiction by:

 

• Uniformly defining a corporation's "principal place of business" as the place where the corporation's activities are controlled;

 

• Limiting a corporation's "principal place of business" to only one state; and

 

• Disregarding the total amount of business activity a corporation may conduct in particular states, as well as other factors previously considered by the various circuit courts to determine a corporation's citizenship.

 

Various Tests Previously Employed By The Circuits

 

Before the Hertz decision, the circuits (and sometimes different courts within a single circuit) applied general multifactor tests in different ways to try to determine the citizenship of a corporation for diversity jurisdiction purposes. Some courts looked to where a corporation's "nerve center" was located - the place from which "it radiates out to its constituent parts and from which its officers direct, control and coordinate all activities without regard to locale." Other courts focused more heavily on where a corporation's actual business activities were located and examined a large list of factors, including, for example, plant location, sales or servicing centers, transactions, payrolls, or revenue generation. Because these tests were not uniform, a corporation's citizenship could be different depending on the circuit deciding the question. Further, the expense of determining corporate citizenship was often unnecessarily high due to the complexity and unpredictability of some of these tests.

 

The Hertz Decision: Applying The "Nerve Center" Test

 

In Hertz, two California citizens sued Hertz Corporation in state court alleging violations of California's wage and hour laws. Hertz sought to remove the case to federal court because of diversity jurisdiction. In support of their request, Hertz filed a declaration showing that although Hertz did business in California, Hertz' "principal place of business" was in New Jersey, the location of its corporate headquarters and the place where its core executive and administrative functions are carried out.

 

The District Court applied Ninth Circuit precedent that looked at the amount of a corporation's business activity state by state. Because the amount of Hertz' business activity was significantly larger in California than in other states, the District Court determined that California was Hertz' "principal place of business," and, thus, Hertz was a California citizen. The Ninth Circuit affirmed the decision, and the U.S. Supreme Court granted a writ of certiorari.

 

To address the split in the circuits and to try to simplify the jurisdictional test, the Supreme Court concluded:

 

. . . "principal place of business" is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that Courts of Appeals have called the corporation's "nerve center." And in practice it should normally be the place where the corporation maintains its headquarters - provided that the headquarters is the actual center of direction, control, and coordination, i.e., the "nerve center," and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).

 

The Supreme Court explained that this approach would avoid the complex jurisdictional tests that complicate a case, eat up time and money, produce appeals and reversals, encourage gamesmanship, waste judicial resources, and diminish the likelihood that a definite outcome can be predicted. Predictability, the Supreme Court noted, is valuable to corporations making business and investment decisions, and it benefits plaintiffs deciding whether to file in state or federal court.

 

The Supreme Court recognized, however, that the test will not always be simple. For example, in this age of video conferences, email and telecommuting, corporate officers may work at several different locations, dividing the company's command and coordinating functions. Further, a company's business activities may be very visible to the public in one state, while its top officers quietly direct those activities in another state. Such situations will require greater discovery and expense as opposed to the simpler situation addressed by Hertz.

 

"If the pink slip doesn't fit, get redressed!"
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The Sovereign Fox Among the Chickens: The University of California.

The University of California is a special creature of the State Constitution. Our Supreme Court in 2008 described it as having broad autonomy in self-governance, even to the extent of devising internal quasi-judicial procedures and remedies for the resolution of employer-employee disputes. The Supreme Court has interpreted the California Whistleblower Protection Act [section 8547.10, subdivision (c), pertaining to employees of the University of California.] to confer upon the University uniquely the power to establish its own investigative procedure and fact finding to arrive at a final decision, unreviewable except by Writ of Mandate, and when reached, ending an employee’s further recourse. That is, there is no cause of action in common law tort or under the Whistleblower Protection Act to bring a separate and independent court action for damages.

This special conferral of nearly autonomous power reflects the power invested in the Board of Regents as uniquely suited to govern the affairs and practices of the University system. The State Personnel Board likewise has substantial autonomy to oversee employment relations of the other state agencies, but not the kind of nearly unreviewable power given to the Regents. In 2001 the Legislature accorded an aggrieved an employee the right to pursue a court action even if the Agency reached a decision on the employee’s internal complaint. The Legislature however did not give that same right to University employees.

The result is that the “exhaustion of remedies” behind Govt. C. Section 8547.10 has real teeth. It is the exclusive remedy available to the University employee if the University reaches a decision. Only if the University fails to reach a decision within the time accorded by the statute is the employee allowed the “back up” remedy of bringing a court action.

In conclusion, the University of California stands apart from other state agencies in that it may conclusively determine if it, as an employer, has violated the employment rights of a University employee in retaliating against an employee under the Whistleblower Protection Act. This quasi-sovereign fox must surely enjoy the taste of the hapless chickens.

See generally: Miklosy v. Regents of University of California (2008) 44 Cal.4th 876, 900.

© 2010 FXP

"If the pink slip doesn't fit, get redressed!"
Click to see my wardrobe of remedies. Link

Maybe Home Depot Execs Now Feel the Need "to Sit Down".

Home Depot brought a demurrer [attack by motion that the complaint does not allege facts sufficient to state a cause of action] to allegations that its failure to provide its retail employees seating accommodations was a violation of Labor Code Section 1198 and Wage Order 2-2001.  Specifically, Home Depot alleged that the plaintiffs could not, as a matter of law, allege a violation of the "Private Attorneys General Act of 2004" ["PAGA"] because that Act did not contemplate actions to recover penalties by private action where: a) the Wage Order stated the employer duty as an affirmative obligation rather than a prohibition and b) the Wage Order contained its own penalty provision, so the "default remedy" under "PAGA" did not apply.  The Court of Appeal rejected both arguments based on careful statutory interpretation getting to the question of what the Legislature intended. 

What does this summary mean in plain English used by non-lawyers?  The decision establishes that violations of the Labor Code and Wage Orders for matters other than wage violations will also be covered by PAGA.  This decision invites an attack by employees upon company wide practices for a wider category of violations.  The court's analysis was that the Legislature wanted exactly that, because of inadequate Agency resources to enforce the penalty provisions.  The incentive to lawyers and clients:  share in the penalties, and collect sizable fees, either as a percentage, or by "lodestar" hourly rates. [75% goes to the State, and 25% to the employees.  See generally Labor Code Sec. 2699(j).]

In the Home Depot case, the wage order, long ignored, will now be taken seriously.  The Order requires an employer to provide reasonable seating arrangements at counters in the immediate work area for employees where to do so would not interfere unduly with the business operation and work to be done.  The penalties are $100 for the first violation "per each aggrieved employee" for the first payperiod, and $200 for each violation "for each aggrieved employee" for each payperiod thereafter.  

What is the money at stake?  Assume for example 3000 retail employees in the 300 Home Depot Stores in California.  Assume a one year statute of limitations on a "penalty" recovery provision.  Assume 26 pay period per year.  $5,100 per "aggrieved employee" per year times 3000 employees times 3 years equals $45,900,000.00.   Only $11,475,000.00 of that would go to the employees themselves.  If a percentage of 40% is used for attorney's fees, those would be $4,590,000.00.   With numbers like these, it is possible to understand the incentive behind the PAGA action, and Home Depot's furious effort to stop it at the demurrer stage.  

The Case:  Home Depot USA Inc., v. Superior Court (2010) 2010 DJDAR 19245. 

  


"If the pink slip doesn't fit, get redressed!"
Click to see my wardrobe of remedies. Link

The Logic of Scarcity.

Here is the logic of scarcity: I hurt, therefore you should hurt too. If this is the prism by which I see the world, then I will allocate, measure, and divide according to the limitations I experience. If I am poor, I too will seek for you to be poor by my choices. In my scarcity mindset, that is only “fair” because I, that is, my ego, am the measure of what is available.

This is not abstract spirituality. This mindset plays out in jury verdicts during hard economic times when people either are unemployed or fear becoming unemployed. This “scarcity mindset” operates from the language of fear that “there is not enough.”

Now, the reality is that jurors are awarding less in damages during these difficult days. I admit that it is pure speculation on my part as to why. Any reputable social scientist would begin by asking the jurors themselves about their attitudes. Whatever the cause, my brethren in the trial bar are reporting a common trend: jurors are awarding less, and more often, awarding nothing.

The main arm of the plaintiff’s personal injury bar, the “Consumer Attorneys of California” [Note how that dirty phrase “personal injury attorney” is omitted by the name] reports that the number of personal injury cases filed has dropped 24 per cent in the last decade. Even so, trial lawyers are getting feedback from disgruntled jurors that they are more cynical, less compassionate, more withholding. Jamie Court, president of the Santa Monica based consumer rights group “Consumer Watchdog” states: “If you’re out of work and trying to find a job, why should someone who has been injured get money when you’re hurting too?”

A more systematic investigation is needed to draw reliable conclusions. Such inquiry would include some social psychology to interpret the results as well. But the reports of trial lawyers who are well known in Southern California, such as Browne Greene in Los Angeles, are that “It’s harder today for a plaintiff to get justice than it was before.” Mr. Greene also says it is harder to weed out cynical, angry jurors because the courts have reduced the time and scope of voir dire [jury selection].

The cynicism is aggravated by poorly selected cases, overreaching requests for damage awards, and delays in trial caused by overtaxed courts. People are just getting pissed off.

A good trial lawyer will feel passionately about his case, and that passion has to come through as sincerity in the presentation of the case. An excellent trial lawyer I know takes negative attitudes of jurors during voir dire, and uses them as springboards to explore why that negative attitude should not operate in his particular case. I think recent juror feedback indicates too that careful preparation, efficient use of time when qualifying documents and witnesses as evidence, and a reputable demonstration of the actual harm done to a client, will aid the trial lawyer in getting past the scarcity mindset.

Yet, I am disturbed by the logic that states that I will have less if I award you more. If that is the explanation for recent reduced jury verdicts, it does not reflect well upon the community spirit.

[Quotes are taken from the Los Angeles Daily Journal, Vol. 123, No. 249, Mon. Dec. 27, 2010, page 1]

"If the pink slip doesn't fit, get redressed!"
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Disclaimer: This contest, the prize, and the rules are completely random.

I am preparing a mediation brief.  Each case has its own theme.  In this one I have constructed a line adapted from a classic tale:  "If you play croquet by the Queen's rules, all is well."  Trivia quiz:  What was the full real name of the author?  I will send a prize to the first person who posts the correct response on this page. 

"If the pink slip doesn't fit, get redressed!"
Click to see my wardrobe of remedies. Link