Employment Law Matters : Employment Lawyer & Attorney : Ogletree Deakins Law Firm : Labor Law, Human Resources

It is generally understood that employees can bring claims for hostile environment, wrongful termination, or even “constructive discharge” – where an employee claims that an employer made working conditions so intolerable that a reasonable employee would feel compelled to resign. What is less clearly understood is the extent of the economic damages for which a hospital or health care system may be liable in an employment-related lawsuit. Because a successful litigant in an employment case often is entitled to compensatory damages, lost wages and, in some instances, front pay, a lawsuit by a physician-employee can create the potential for large monetary damage awards. In a clear example of this fact, a Texas jury recently awarded more than $3.6 Million to an Egyptian-born physician who claimed that he was forced to resign after race-based comments from another employed physician. Nassar v. Univ. of Texas Southwestern Medical Center at Dallas, N.D. Tex., No. 08-1337, jury verdict, 5/26/10.

Naiel Nassar, a U.S. citizen since 1990, was born in Egypt and attended medical school there. He then did a medical residency and a fellowship in infectious diseases at the University of California, Davis. In 2001, Nassar was hired by the University of Texas Southwestern Medical Center (UTSW) as an Assistant Professor of infectious disease medicine. Part of Nassar’s duties required that he provide patient care at the Amelia Court clinic, an outpatient HIV/AIDS clinic affiliated with UTSW.

In 2004, UTSW hired Dr. Beth Levine as the chief of its infectious disease program. In that role, Levine directed that Nassar begin billing for the services he provided to the HIV clinic. Nassar objected to the directive, arguing that his salary for clinical services was fully funded by a federal grant, and stating that billing the patients therefore would be “double dipping.” Nassar claimed that Levine also began to “harass” him, making derogatory statement about his race and his Muslim religion, including one comment that “middle easterners were lazy.” His allegations were supported by a clinical supervisor, whose affidavit described a “disconnect between Dr. Levine’s statements and the reality of Dr. Nassar’s work.” Based on his concerns about Levine, Nassar ultimately applied for employment at Parkland Health & Hospital System in 2006. Parkland made preparations to hire Nassar, even drafting a job offer letter, but never formally hired Nassar. Nassar contended that UTSW retaliated against him by blocking the offer from Parkland. Nassar ultimately filed a lawsuit in federal court alleging discrimination and retaliation. Levine strongly disputed Nassar’s allegations, as did UTSW.

At trial, the jury was presented with only two questions: (1) Whether Nassar was constructively discharged because of his race, national origin, or religious preference; and (2) Whether UTSW retaliated against Nassar by blocking or objecting to his employment by Parkland after Nassar complained about his treatment at UTSW. After one hour of deliberations, the jury answered “Yes” to both questions. Two days after the May 24, 2010 verdict, the same jury awarded $3.2 Million in compensatory damages and $438,000 in lost back pay to Nassar. The court now will determine whether Nassar’s claim for lost front pay – which could range from $200,000 to $4 Million – should be paid as part of the award. In addition, Nassar has made a claim for attorney fees, which also will be heard by the court. UTSW has already stated that it will be appealing the verdict and the resulting judgment.

Hospital and healthcare entities that are contemplating direct hiring of physicians should take the time to read the jury instructions and verdict sheet on which the decision in the jury’s decision was based. (Find a copy on my blog at www.employmentlawmatters.net.) Most notable is the court’s instruction in which it defines “constructive discharge” as a resignation from working conditions “so intolerable that a reasonable employee would feel compelled to resign.” The court goes on to point out that to prove constructive discharge, Nassar “need not show that his race, national origin, or religions preference was the sole or even the primary motivation for [UTSW’s] conduct.” He simply had to prove that his protected characteristics “played a motivating part in [UTSW’s] conduct, even though other factors may also have motivated [UTSW].

Employers, including health care entities, should ensure that supervisors and managers are trained to recognize and remedy discriminatory conduct, to assure that such conduct does not become viewed as a “motivating part” of any adverse employment action taken by the employer.
 

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Unless an individual can prove that she is meeting the expectations of her employer, that individual cannot set forth the prima facie case necessary to support a claim of workplace discrimination. The 7th U.S. Circuit Court of Appeals has found that an employee who was fired for insubordination was not meeting an employer’s legitimate business expectations after she engaged in arguments with her co-workers, the general manager, and the owner of the business. The Court further found that the insubordination was a non-discriminatory reason that overcame the employee’s claim that her termination for insubordination was a “pretext” for discrimination. Everroad v. Scott Truck Sys., Inc., 7th Cir., No. 08-3311, May 10, 2010.

Diana Everroad filed a federal lawsuit against her former employer, Scott Truck Systems, Inc., and against the company’s general manager, who also was the wife of the company’s owner. Everroad claimed that she had been discriminated against because of her age and gender, and that she was retaliated against for reporting that discrimination. The lower court granted summary judgment in favor of the defendants, and that decision was upheld on appeal.

Scott Truck is a family-owned and operated commercial trucking company. Everroad was hired as a dispatcher in 2004 – at the age of 51 – by defendant Hantzis, the general manager and wife of the owner, David Scott. Within the first months of her employment, Everroad experienced conflicts with her co-wrokers, and was complained about by two of the Company’s largest customers. Scott and Hantzis ultimately moved Everroad from the dispatcher position to a newly created “data administrator” job with the same pay and hours, but with a more flexible schedule. In her new position, Everroad worked in close proximity with a younger female employee who, according to Everroad overused the phone for personal calls. She complained to Scott and Hantzis, who called a meeting with Everroad and the co-worker to attempt to resolve the issue. The Court colourfully described the meeting by saying that “Voices were raised, accusations were exchanged, tears were shed, and eyes were rolled.” Apparently, it didn’t go well. Upset by Everroad’s antics, and concluding that Everroad had been insubordinate, Scott and Hantzis decided to terminate her employment. When they informed her of that fact, Everroad told Scott that he and his wife were “nuts, crazy, insane” and “sick” and called Hantzis a derogatory female term, beginning with the f-word as a descriptive adjective. Later that evening, Everroad called Scott, asking for severance pay. Scott declined.

The Company’s motion for summary judgment against Everroad’s ensuing lawsuit was granted, and the case was dismissed. On appeal, the Seventh Circuit found that Everroad’s insubordination undermined the discrimination claims in two ways: first, insubordination precluded Everroad from proving that she “met her employer’s legitimate job expectations,” which is an element of the required prima facie case; second, insubordination is a non-discriminatory reason for termination, which meant that Everroad was unable to show that the Company’s actions were simply a pretext for discrimination. Further, although Everroad claimed that she was treated differently than “similarly situated” male/younger employees, she was unable to show that anyone else had been similarly insubordinate and treated more favourably.

Insubordination is a non-discriminatory reason for termination in most circumstances. The relevant inquiry at the summary judgment level is not whether a reasonable jury would conclude that an employee’s conduct was insubordinate, but whether the employer genuinely believed it to be so at the time of the complained-of adverse action. A jury may disagree with a company’s decision to terminate an employee for insubordination or may think that the decision was in error, but so long as the employer “genuinely believed the truth of their stated reason for the decision,” the reason is not pretextual, and the employee will be unable to prove discrimination. The most effective way to support an employer’s genuine belief is complete, contemporaneous, and objective documentation of the employee actions and statements on which the decision is based.
 

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In a case in which over $3 Million in compensatory damages already had been awarded to a group of 12 female former employees claiming gender discrimination, the same jury awarded $250 Million in punitive damages to a class of 5600 female employees and former employees of Novartis Pharmaceutical Corporation for the same claims. Velez v. Novartis Pharma. Corp., S.D.N.Y., No. 04-civ.9194, punitive damages verdict 5/19/10. The case, filed as a class action in 2005 in the Southern District of New York, was a “sex plus” case, meaning that the gender discrimination was brought in tandem with related claims, such as pregnancy discrimination or family leave interference. The plaintiffs in the case against Novartis made claims based upon unequal pay, lack of promotion, and adverse treatment after pregnancy leave.

The number of “sex plus” cases has risen steadily over the past ten years, but the verdict and damages against Novartis has eclipsed previous verdicts. The claims against that company included a demand for monetary damages, along with a restructuring of Novartis’ pay and promotion practices. Novartis, which has been on a national “best companies for working mothers” list for over 10 years, defended against the claims by citing its policies and procedures, and by arguing that while 70 percent of its sales representatives are men, that dis-proportionality was not the result of discrimination.

After a six-week trial, a unanimous jury awarded $3.3 Million as compensatory damages to the 12 named plaintiffs in the case, finding that the women had been treated differently than their male counterparts. Compensatory damages are damages for actual losses, but can include amounts for “pain and suffering,” as well. Because that award opens the door for others in the 5600-member class to claim compensatory damages of their own, the total damages in this case could conceivably approach – and possibly exceed - $1 Billion.

While there is a question regarding whether the jury’s verdict in the case will be upheld on appeal, the jury’s message should be received and understood by employers: claims of widespread discrimination – whether real or perceived – should be investigated, remedied, and kept from reoccurrence. This case comes at a time when the Obama Administration has taken an aggressive stance on an issue that it perceives to require that attention. Federal courts are responding to this attention, and have become more likely to grant class certification in cases that historically have been brought as single-plaintiff claims, or by small groups of employees. The 9th U.S. Circuit Court of Appeals recently ruled that a “gender plus” discrimination claim that could eventually involve as many as one million current and former female employees of Wal-Mart can go forward as a class action in federal court in California.
 

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Employers often are hesitant to discipline or fire an employee who is in a protected class, knowing that the potential for lawsuit can be higher in those circumstances. This issue was addressed directly by the 6th U.S. Circuit Court of Appeals in an unpublished opinion in which an employee failed to prove that the company’s reason for not re-hiring him after a layoff – that he was a “troublesome employee” – was a pretext for age discrimination. Viergutz v. Lucent Technologies, Inc., 6th Circ., No. 08-3626, unpubl., 4/23/10.

Lucent Technologies hired Brian Viergutz in 1997 as an installer. Viergutz was 43 years old at that time. In December 2002, Viergutz was laid off as part of a reduction in force. During his employment, Viergutz admittedly had numerous personal conflicts with his peers.

In 2005, and in response to a job posting by Lucent, Viergutz applied for re-employment as an installer at Lucent. Upon receipt of Viergutz’ application, Melissa Reznick, Lucent’s hiring manager, recognized Viergutz’ name because she had briefly supervised him during his initial period of employment. Based upon her own knowledge, and because she had heard comments from other managers about him, Reznick decided not to interview Viergutz. She specifically informed the HR department that Viergutz had a “bad reputation” and “would not be a good candidate” for the job. In addition, Viergutz’ level of experience was much higher than required in the new position. Lucent ultimately hired an individual who was under the age of 40, and had background as a general laborer.

Viergutz ultimately filed complaints in both state and federal courts, alleging age discrimination and various state court causes of action, including one labeled “Harassment/Defamation of Character” based upon what he alleged to be “rumors and lies” related to his reputation as a technician. The actions were consolidated in federal court, and the district court granted Lucent’s motion for summary judgment. Viergutz filed a timely appeal to the Sixth Circuit, which upheld the lower court’s decision.

In its opinion, the appellate court outlined the three-step burden-shifting process, and held that Viergutz had set forth a prima facie case of age discrimination, thereby filling the first step. Therefore, the burden shifted to Lucent to state a legitimate non-discriminatory reason for not hiring Viergutz. To fulfill that burden, the company submitted evidence and testimony, including an affidavit averring that Veirgutz’ supervisors indicated that he “did not work well with others” and “needed constant supervision.” At that point, the burden shifted back to Viergutz to prove that the reason provided by Lucent was a pretext for discrimination. The Court held that Viergutz failed to show that Lucent’s decision had a basis in fact. Viergutz was unable to show that his superior skills made him more qualified for the open position, because the job posting stated specifically that the person hired would “free up higher skilled installers for higher skilled jobs.” Further, Viergutz was unable to factually dispute his poor reputation, or that he had been sent by the company for evaluation and counseling after an incident with a co-worker in 2002. Viergutz’ own testimony chronicled multiple disputes with co-workers, although he disputed the characterization of the disagreements.

In considering whether to re-hire a former employee, employers should recognize that courts do not require that the decisional process of the company is optimal or perfect. Instead, the key is whether the employer made a “reasonably informed and considered decision” regarding the action taken. In this case, the company was able to support its position with written documentation of prior incidents, and an affidavit of a former supervisor of the applicant. Further, the written job posting, which detailed the level of experience being sought for the position, was instrumental in supporting the Court’s decision that Lucent had provided sufficient rationale for its decision.

[One additional and interesting point in this case is that Viergutz was unrepresented by counsel. In its opinion, however, the Court specifically points out that it “devoted significant effort to ensure that dismissing Mr. Viergutz’s claims is the right result under the law. . . .” and that the result “would have been the same even had Mr. Viergutz had the services of a lawyer, the only difference being that Mr. Viergutz has saved himself substantial expense in attorney’s fees.”]
 

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The EEOC announced on May 5, 2010 that Ohio-based Everdry Marketing and Management, Inc., has paid over $500,000 in damages in interest to satisfy a judgment against that company stemming from a 2006 jury trial. The original claims were filed by 13 women, mostly teenagers at the time of the incidents, who worked at the company’s Rochester, N.Y., location as telemarketers. EEOC v. Everdry Mktg. & Mgmt., Inc., W.D.N.Y., No. 01-cv-6329, judgment satisfied, 5/5/10.

The case originally was filed by the EEOC in 2001 as part of its “Youth@Work” initiative, targeted at training young people about illegal workplace discrimination and harassment. The complaint included claims that male managers and co-workers at the Rochester franchise of Everdry verbally and physically harassed the young women between 1998-2002, making numerous sexual remarks and jokes, and on one occasion, promising a raise in return for sexual acts. Following a multi-week trial in federal court in New York in October of 2006, a jury originally awarded $585,000 in damages to the 13 plaintiffs; that amount ultimately was reduced to $471,096. The jury concluded that the Rochester affiliate at which the incidents occurred was part of an “integrated enterprise,” and that Everydry therefore violated Title VII of the Civil Rights Act by allowing the harassment.

Afterwards, Everdry appealed the verdict on the basis that as a franchise, the Rochester affiliate was not part of the Everdry company. The 2d U.S. Circuit Court of Appeals rejected that argument and affirmed the jury verdict, specifically affirming the award of punitive damages assessed by the jury against the company. Everydry corporate headquarters has paid the judgment - although none of the complained-of incidents occurred at its corporate facilities in Ohio - plus $86,581 in post-judgment interest. The Rochester affiliate is no longer in operation.

This case points out two things: first, that sexual harassment training is extremely important, especially if a company has related or affiliated entities in other geographic locations, and for which it ultimately may be held responsible; and second, that the EEOC is persistent in enforcing federal laws banning workplace discrimination.
 

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