Employer gets Immunity from Class Action

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Workers this week suffered another  potentially devastating blow when an influential appellate court ruled in Parisi v. Goldman Sachs & Co, that a former managing director could not file a class action lawsuit against  Goldman Sachs for sex discrimination because she had signed a contract agreement to arbitrate employment disputes.

The decision by the  Second Circuit Court of Appeals in New York creates a scenario that  allows a savvy employer to class-action proof itself.

The appellate court ruled that Lisa Parisi, a former managing director of Goldman Sachs, could not sue the company in a class action because she agreed to submit all employment disputes to binding arbitration when she signed a “managing director” agreement in 2003.  Since the “managing director” agreement is  silent as to class actions,  Parisi must proceed to arbitration  on an individual basis. Bottom line: Parisi can’t sue in class action and she can’t arbitrate in class action.

 Parisi, who was fired in 2008,  alleged Goldman Sachs conducted a “pattern and practice” of sex discrimination against top female employees in violation of Title VII of  the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. (“Title VII”) and the New York City Human Rights Law.  She said she could not proceed in arbitration with a class action claim without Goldman Sachs permission and thus was effectively being denied her right to sue the company for systemic sex discrimination.. In other words, she said the arbitration clause in her  agreement must be invalidated because arbitration would preclude her from vindicating a statutory  right to file a “pattern and practice” class action lawsuit.

The appellate court agreed with Goldman Sachs that no substantive statutory right exists for employees to pursue a class action “pattern-or-practice” claim.

The court’s decision reversed two earlier decisions by a federal magistrate and a  district court judge who both denied Goldman Sach’s motion to compel arbitration in the case.

 The ruling  is a  boon to employers who are prescient enough to force new hires or employees who are being promoted to sign over-reaching binding arbitration clauses;  it  effectively negates the possibility that the employee will participate in a costly class action lawsuit down the road.   

Goldman Sachs took the position that it could not be sued by Parisi in federal court because of the arbitration clause, and it could not be compelled to defend a class action suit in arbitration because the arbitration clause in the agreement Parisi signed  was silent as to the arbitration of class claims.

Goldman Sachs is not entirely of the woods. Parisi filed the class action lawsuit along with two other Goldman Sachs employees,  Shanna Orlich, an associate, and H. Christina Chen-Oster, a vice president, who reportedly did not sign binding arbitration agreements with Goldman Sachs and presumably could proceed without Parisi.

Parisi’s employment agreement  contained an  arbitration clause in which she agreed  to arbitrate any dispute, controversy or claim arising out of or based upon or relating to “Employment Related Matters.”  The agreement defined  “employment related matters” are defined as “matters arising out of or relating to  or concerning this Agreement, your hire by or employment with the Firm or the termination thereof,  or otherwise concerning any rights, obligations or other aspects of your employment relationship in respect of the Firm.”

 The appellate court reasoned that  the U.S. Supreme Court has consistently interpreted the Federal Arbitration Act as establishing a “federal policy favoring arbitration agreements.”  It also cited an earlier ruling in which the appeals court  concluded that in Title VII jurisprudence “pattern-or-practice” simply refers to a method of proof and does not constitute a “freestanding cause of action.”  Chin v. Port Authority of New York, 685 F.3d 135, 148 (2d Cir. 2012).

The arbitration clause in question states the Plaintiffs claims will be “finally settled by arbitration in New York City before, and in accordance with the rules . . . of, the New York Stock Exchange, Inc. (“NYSE”) or . . . the  National Association of Securities Dealers (“NASD”). If both the NYSE and NASD decline  to arbitrate the matter, the matter will be arbitrated before the American Arbitration Association  (“AAA”) in accordance with the commercial arbitration rules of the AAA. You agree that any  arbitration decision and/or award will be final and binding.”

Goldman’s appeal was supported by briefs from the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association. Parisi had support from the NAACP Legal Defense and Education Fund and the National Women’s Law Center.

The case is Parisi v. Goldman Sachs & Co, 2nd U.S. Circuit Court of Appeals, No. 11-5229.

Crime & Sexual Harassment

_41030565_mugging_203_bbcWhy isn’t sexual harassment a crime in the United States?

 It is in France.

 France’s General Assembly enacted a new sexual harassment law on July 31, 2012 that includes criminal penalties of up to three years in prison and a fine of approximately $56,000 for serious cases.

 The new French law defines harassment as imposing on someone, in a repeated way, words or actions that have a sexual nature and either undermine the person’s dignity because of their degrading or humiliating nature or create an intimidating, hostile or offensive situation.

 In the United States, sexual harassment is prohibited by Title VII of the 1964 Civil Rights Act. The remedy is civil, which means it is up to the victim to sue and the damages are monetary and/or  injunctive relief.  In criminal cases, a prosecutor sues on behalf of the state and may seek  fines and imprisonment.

It can be very difficult to win a sexual harassment case in the United States. The  U.S. Supreme Court has ruled that U.S. law doesn’t prohibit simple teasing, offhand comments, or isolated incidents that are not very serious.  This leaves a lot of room for interpretation by judges, especially with respect to whether sexually harassing conduct  is frequent enough  and severe enough to be actionable.

The U.S. Equal Employment Opportunity Commission (EEOC) recently announced that WirelessComm, a Northern California distributor for the Metro PCS cell phone service provider, had agreed to pay $97,000 to settle a sexual harassment lawsuit filed by the agency.

 According to the EEOC’s lawsuit, the store manager of WirelessComm in Watsonville, CA,    subjected then-19-year-old Deisy Mora to abuse throughout her seven months of employment at the store

He frequently commented about her physical  appearance, texted her photos of himself and the words “Te quiero” (‘I love  you’ in Spanish), and referred to women in general with slurs and epithets.

In addition, the EEOC said, the store owner  contributed  to the harassmen by inviting Ms. Mora to travel with him, asking her and others if  they were pregnant and, on one occasion, asking her to text photos of herself  and other female staff members.

The EEOC says Ms. Mora’s complaints were not addressed and she eventually quit her job  when she could no longer endure the harassment.

 What happened to the store manager and the store owner?

Under the consent decree, WirelessComm agreed to train the store owner and staff regarding anti-discrimination laws.  But there is no indication the WirelssComm store owner and store manager didn’t understand anti-discrimination laws in the first place, only that they didn’t place any importance on these laws and didn’t follow them.

The EEOC said  WirelessComm also  agreed to hire an equal employment opportunity consultant and a human resources consultant to revise its EEO policies; monitor the workplace; respond to any allegations of harassment arising during the three-year  pendency of the decree; and report harassment complaints to the EEOC.

In other words, WirelessComm will start following the law.

In  the final analysis, it seems like a small price  to pay for a campaign of a harassment waged by two adult men in positions of authority against a  vulnerable teenager.  If the store owner and store manager had mugged Ms. Dora while she was walking down a street, they’d probably spend at least some time in jail.  Here  they stole  her peace of mind and robbed her of  financial security in a time of high un employment.

 The United States recognizes two types of sexual harassment: (1) quid pro quo and (2) hostile environment.

 Quid pro quo is Latin for “this for that.” This type of harassment occurs when a  boss or supervisor asks for a sexual favor in return for a job benefit.

 Hostile environment sexual harassment occurs when the harassment is so severe or pervasive that it creates a sexually intimidating or abusive work environment. Hostile environment sexual harassment must be:

  • based on sex (sexual conduct, sexual comments, or nonsexual conduct that is based on your gender);
  • unwelcome (you must show that you do not enjoy the harasser’s attention and that you are not encouraging it); and either
  • severe (one or more serious incidents that affect your job) or pervasive (a pattern or series of smaller incidents that are so widespread that you have trouble doing your job as a result).

U.S. Civil Rights Laws & Workplace Bullying at Schools

The Office for Civil Rights of the  U.S. Department of Education issued a guidance on Oct. 26, 2010 reminding schools that federal civil rights laws also may protect students who are bullied.  Although the DOE does not address this in the guidance, federal civil rights laws also apply to workers at educational institutions receiving federal funds (this may also include libraries, training programs, etc.). Therefore, this guidance is relevant to victims of workplace bullying at educational institutions. PGB

Here is a short excerpt from the Office of Civil Rights guidance:

… In recent years, many state departments of education and local school districts have taken steps to reduce bullying in schools. The U.S. Department of Education (Department) fully supports these efforts. Bullying fosters a climate of fear and disrespect that can seriously impair the physical and psychological health of its victims and create conditions that negatively affect learning, thereby undermining the ability of students to achieve their full potential.

The movement to adopt anti-bullying policies reflects schools’ appreciation of their important responsibility to maintain a safe learning environment for all students. I am writing to remind you, however, that some student misconduct that falls under a school’s anti-bullying policy also may trigger responsibilities under one or more of the federal antidiscrimination laws enforced by the Department’s Office for Civil Rights (OCR).

… by limiting its response to a specific application of its anti-bullying disciplinary policy, a school may fail to properly consider whether the student misconduct also results in discriminatory harassment. The statutes that OCR enforces include Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits discrimination on the basis of race, color, or national origin; Title IX of the Education Amendments of 1972 (Title IX), which prohibits discrimination on the basis of sex; Section 504 of the Rehabilitation Act of 1973 (Section 504); and Title II of the Americans with Disabilities Act of 1990 (Title II). Section 504 and Title II prohibit discrimination on the basis of disability.

School districts may violate these civil rights statutes and the Department’s implementing regulations when peer harassment based on race, color, national origin, sex, or disability is sufficiently serious that it creates a hostile environment and such harassment is encouraged, tolerated, not adequately addressed, or ignored by school employees. School personnel who understand their legal obligations to address harassment under these laws are in the best position to prevent it from occurring and to respond appropriately when it does.

Although this letter focuses on the elementary and secondary school context, the legal principles also apply to postsecondary institutions covered by the laws and regulations enforced by OCR …

… The statutes that OCR enforces include Title VI of the Civil Rights Act of 1964 (Title VI), which prohibits discrimination on the basis of race, color, or national origin; Title IX of the Education Amendments of 1972 (Title IX), which prohibits discrimination on the basis of sex; Section 504 of the Rehabilitation Act of 1973 (Section 504); and Title II of the Americans with Disabilities Act of 1990 (Title II). Section 504 and Title II prohibit discrimination on the basis of disability. School districts may violate these civil rights statutes and the Department’s implementing regulations when peer harassment based on race, color, national origin, sex, or disability is sufficiently serious that it creates a hostile environment and such harassment is encouraged, tolerated, not adequately addressed, or ignored by school employees.

Note:  A complaint of discrimination can be filed by anyone who believes that a school that receives Federal financial assistance has discriminated against someone on the basis of race, color, national origin, sex, disability, or age. The person or organization filing the complaint need not be a victim of the alleged discrimination, but may complain on behalf of another person or group. Information about how to file a complaint with OCR is at http://www2.ed.gov/about/offices/list/ocr/complaintintro.html or by contacting OCR’s Customer Service Team at 1‐800‐421‐3481.