New Jersey District Court Denies Employer’s Motion to Dismiss Plaintiff’s Cause of Action After Employee’s Supervisor Gains Unauthorized Access to Employee’s Facebook Account

By: Jerrold J. Wohlgemuth

In Ehling v. Monmouth-Ocean Hospital Service Corp., the District Court in New Jersey recently denied the employer’s motion to dismiss the plaintiff’s cause of action for invasion of privacy in connection with a supervisor having gained unauthorized access to her private Facebook account.  The plaintiff nurse, who was also the union president at the hospital, had posted comments on her Facebook wall about the news story out of Washington, D.C. in 2009 concerning the killing of a security guard at the Holocaust Museum by a white supremacist in which she expressed her opinion or rant that the paramedics in D.C. should have let the shooter die rather than help him after he was shot during the incident:  “He survived [and] I blame the DC paramedics.  I want to say 2 things to the DC  medics.  1.  WHAT WERE YOU THINKING?  and 2.  This was your opportunity to really make a difference!  WTF!!!!  And to the other guards…. go to target practice.”  The supervisor apparently wanted access to plaintiff’s Facebook comments because of her leadership role with the union, and convinced a co-worker to give him access to her private account so he could copy her postings. When he saw the comments about the D.C. incident he sent a copy to the State Board of Nursing suggesting that it represented an improper disregard for patient safety.

On the employer’s motion to dismiss the invasion of privacy claim on the grounds that there can be no expectation of privacy with respect to Facebook postings, the court decided that the question whether the plaintiff had a reasonable expectation of privacy was for a jury to decide based on the circumstances, including the number of “friends” who had access to her Facebook wall where the plaintiff claimed that she had restricted access to her friends but did not provide access to any supervisors or members of management.  The court did not address the separate question whether a rant expressing an opinion about a news report could be considered an expression of one’s “private affairs” subject to protection under invasion of privacy law, and did not address the fact that Facebook specifically includes in its Privacy Policy a disclaimer to the effect that there is no guarantee of privacy and that users make postings at their own risk inasmuch as anyone with access can copy or share comments with anyone they choose.

Georgia’s Pro-Employee Restrictive Covenant Law Is Back (If Only Briefly)

By: David J. Woolf

Just when it seemed safe for companies with employees in Georgia to try to enforce their restrictive covenant agreements, the Eleventh Circuit has brought back to life – if only for one last hurrah – the old Georgia law that made non-competition and other restrictive covenant agreements virtually impossible to enforce.  The Court did so in Becham, et al. v. Synthes USA, et al., No. 11-14495, 2012 U.S. App. LEXIS 11225 (11th Cir. June 4, 2012), by holding that Georgia’s first attempt to re-write the State’s non-competition law was unconstitutional and that the second attempt did not apply to the agreement at issue.

The backdrop, well known to those who practice in Georgia, is a frustrating one for employers who have attempted to enforce restrictive covenant agreements.  For years, Georgia statutory and constitutional law disfavored non-competition and other restrictive covenants and, through a very narrow view of what is reasonable and a refusal to reform overly broad agreements, made them nearly impossible to enforce.  This changed beginning in 2009 when the Georgia legislature approved a law allowing the enforcement of previously unenforceable covenants, by, among other things, creating presumptively reasonable time periods for restrictions, removing the requirement of an expiration date for certain confidentiality covenants, and, perhaps most importantly, giving Georgia courts the ability to reform overly broad agreements.  The law was subject to a constitutional amendment permitting the change, which occurred on November 2, 2010 through Georgia’s citizens’ ratification of the amendment.

The confusion then began.  The new law went into effect on November 3, 2010, the day after the constitutional amendment was ratified.  The constitutional amendment, however, did not take effect until January 1, 2011.  Fortunately, the Georgia General Assembly recognized the gap and passed a second law that repealed the first law and authorized a second, virtually identical law effective May 11, 2011.  Problem solved, right?

Not so fast.  Unfortunately for Synthes, the restrictive covenants at issue were reaffirmed on December 1, 2010, after the effective date of the first law, but before the effective date of the second law.  The Eleventh Circuit thus focused on the first law and held that, because the law was implemented before the constitutional amendment went into effect, it “was unconstitutional and void the moment it went into effect.”  The Court then went back to “old” Georgia law, and like so many agreements before it, found Mr. Becham’s restrictive covenant agreement unenforceable.

Although the result was an unfortunate one for Synthes, the impact can be managed going forward by making note of the critical May 11, 2011 date.  Restrictive covenant agreements entered into on or after May 11, 2011 will be subject to the second new law, and hence subject to more favorable court review.  Agreements entered into prior to that date, even if after the November 2, 2010 constitutional amendment, will be judged under “old,” pro-employee Georgia law.  Employers of Georgia employees will therefore want to make sure that their restrictive covenant agreements are effective on or after May 11, 2011 and, where they are not, arrange for the execution of new agreements.

New Jersey’s Highest Court Rejects “Absolute Liability” Standard for Employee Assault of Patient

By: Lynne Anne Anderson and Jerrold Wohlgemuth

The New Jersey Supreme Court in Davis v. Devereux Foundation, 209 N.J. 269 (2012), recently rejected an attempt to impose absolute liability against a residential health care facility for a criminal assault committed by an employee against a resident patient.  The Court determined that the facility should be held to the traditional reasonable duty of care towards its patients.   Further, the traditional “scope of employment” analysis should be applied to determine whether the employer could be held liable for the tortious conduct of its employee.

In Davis, a resident counselor employed by Devereux, a residential institution for the developmentally disabled, engaged in a pre-meditated act of aggression when she assaulted a residential patient by pouring boiling water on him.  The counselor was arrested and imprisoned for criminal assault, and the patient’s guardians obtained a default judgment against her for assault in the ensuing civil action.

The family also brought a civil action against the health care facility.  Reversing the trial court’s grant of summary judgment in favor of the facility, the Appellate Division remanded for trial and imposed an absolute liability standard on the employer under the common law “non-delegable duty” analysis, which imposes a duty on the master to protect those entrusted to its care in an in loco parentis relationship, such as a school or health care facility, and subjects the master to liability for the acts of its employees whenever they fail to meet their duty of care.  Under that common law approach, the non-delegable duty imposed on the employer cannot be satisfied by any level of care taken by the employer in hiring or supervision of its staff, but is based solely on the level of care taken by the employee.

The Supreme Court reversed and reinstated summary judgment in favor of the health care facility.  The Court observed that the “non-delegable duty” would unfairly impose absolute liability on the employer regardless of the level of care engaged in by the employer.  “Once an employee has committed a tortious act, the duty would effectively impose absolute liability upon residential institutions” even if the employer had acted reasonably in screening applicants and supervising its employees.

The Court instead determined that traditional principles of the duty of reasonable care should be followed with respect to the actions of employees of facilities responsible for in loco parentis care.  The Court observed that such facilities are expected to take reasonable measures to assure that their staff members are not endangering the safety of the patients entrusted to their care, and that liability for the tortious acts of their employees would be determined under traditional “scope of employment” principles.  Finding in this case that Devereux acted reasonably in screening individuals prior to hiring, and in supervising the relationship of its employees with the residential patients, the Court determined that the facility had met its duty of care to its patients.  The Court further determined that the counselor had acted far outside the scope of her employment in pouring boiling water on the patient where she acted out of personal anger and frustration, and not in any way to further the interests of her employer.

New York High Court: No At-Will Exception For Complaining Hedge Fund Executive

By: William R. Horwitz

The New York State Court of Appeals declined this week to recognize an exception to the at-will employment doctrine for a hedge fund’s Chief Compliance Officer who alleged that he was fired for objecting to his employer’s unlawful trading practices.  In Sullivan v. Harnisch, Plaintiff Joseph Sullivan was an employee and minority owner of Defendants Peconic Partners LLC and Peconic Asset Managers LLC (collectively, “Peconic”), holding various titles including Chief Compliance Officer.  Defendant William Harnisch was the majority owner, President and Chief Executive Officer.  Sullivan filed a lawsuit for wrongful discharge, alleging that Peconic fired him for objecting, in his capacity as Chief Compliance Officer, to Harnisch’s “manipulative and deceptive trading practices.”  The trial court denied Defendants’ motion for summary judgment seeking to dismiss the claim.  The Appellate Division, First Department, reversed and Sullivan appealed.

According to the Court of Appeals, the “gist of Sullivan’s claim is that the legal and ethical duties of a securities firm and its compliance officer justify recognizing a cause of action for damages when the compliance officer is fired for objecting to misconduct.”  The Court reiterated the at-will employment doctrine, explaining that, “absent violation of a constitutional requirement, statute or contract,” an employer has the right to terminate employment at will.  The Court indicated that it has “recognized an exception” to this doctrine “only once.”

That exception arose in Wieder v. Skala, in which a law firm had allegedly fired a lawyer for insisting that it comply with the profession’s ethical obligations.  According to the Court, that decision “stressed both the ethical obligations of members of the bar and the importance of those obligations to the employment relationship between a lawyer and a law firm.”  Moreover, the decision focused on the legal profession’s “unique function of self-regulation.”

In Sullivan, the Court emphasized the narrow scope of the Wieder decision.  Although the Court left open the possibility that “there are some employment relationships, other than those between a lawyer and a law firm, that might fit within the Wieder exception,” the Court concluded that “the relationship in this case is not one of them.”  Distinguishing Wieder, the Court explained that Sullivan’s regulatory and ethical obligations were not inextricably tied to his duties as an employee.  Indeed, the Court observed, Sullivan “was not even a full-time compliance officer.”  The Court also stated that regulatory compliance was not at the “very core” and the “only purpose” of Sullivan’s employment.

The Court affirmed the Appellate Division’s decision.  In a strongly-worded dissent, Chief Judge Lippman charged that the “majority’s conclusion that an investment adviser like defendant Peconic has every right to fire its compliance officer, simply for doing his job, flies in the face of what we have learned from the Madoff debacle, runs counter to the letter and spirit of this Court’s precedent, and facilitates the perpetration of frauds on the public.”

Notwithstanding the dissent’s alarm that New York employers are now free to fire employees who allege wrongdoing, prudent employers – particularly in highly regulated fields like the securities industry – take such allegations seriously and investigate them, and are careful to avoid allegations of retaliation.

$100 Million Pattern-or-Practice Gender Discrimination Suit Doomed By Company’s Arbitration Agreement

A federal district court in Massachusetts effectively gutted a prominent plaintiff’s class action firm’s attempt to avoid arbitration agreements and litigate on a class-wide basis in federal court in Boston. This ruling comes on the heels of a series of class and collective actions filed in federal courts against major U.S.-based and international employers by the Sanford Wittels & Heisler law firm.

In Karp v. CIGNA Healthcare, Inc., the plaintiff-employee was a senior contract manager at CIGNA who asserted discrimination claims in a proposed $100 million putative class action alleging systemic gender discrimination in violation of Title VII of the Civil Rights Act of 1964. Karp’s efforts to represent a class of potentially thousands of current and former female employees were halted when, the district court effectively foreclosed her from proceeding on a class-wide basis either in federal court or in arbitration.

To read the full alert authored by John Ridley and Larry Del Rossi click here.