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.

Who’s The Boss: Third Circuit Announces Joint Employer Test for FLSA Cases, Opening the Door to Broader Exposure to Wage and Hour Liability

By:  Meredith R. Murphy

On June 29, 2012 the Third Circuit responded for the first time to a question pondered by many employers and courts within its judicial districts: what constitutes a “joint employer” under the FLSA?  In a case captioned In re: Enterprise Rent-a-Car Wage & Hour Employment Practices Litigation, the Third Circuit announced a four part, multi-factor test as an answer to this question.

In the Enterprise case, the joint employer question was raised as a result of the filing of a collective action by assistant branch managers at subsidiaries of Enterprise Holdings, Inc., seeking overtime pay under the Fair Labor Standards Act (FLSA).  While these assistant managers were employees of Enterprise Holdings’ subsidiaries, they nevertheless sought relief from Enterprise Holdings on the theory that it was a joint employer.

In answering whether Enterprise Holdings falls within the category of “joint employer,” the Third Circuit noted that the definition of “employer” under the FLSA is “the broadest definition that has ever been included in any one act.”  Emphasizing that the definition of employer focuses on “control,” the Third Circuit concluded that ultimate control over employees is not necessarily required and even “indirect” control may be sufficient

To determine whether a party is a “joint employer,” and thereby subject to FLSA liability, the Third Circuit adopted the following analysis:

Does the alleged employer have:

  1. Authority to hire and fire employees;
  2. Authority to promulgate work rules and assignments, and set conditions of employment, including compensation, benefits, hours and work schedules, including the rate and method of payment;
  3. Day-to-day supervision, including employee discipline; and
  4. Control of employee records, including payroll, insurance, taxes, and the like.

The Third Circuit emphasized that the factors identified do not constitute an exhaustive list and should not be “blindly applied.”  Rather, under the Third Circuit’s guidance, courts are to look to the “total employment situation” and “economic realities of the work relationship.”

How did Enterprise Holdings, the sole stockholder of thirty-eight domestic subsidiaries, avoid the label of “joint employer”?  Even despite finding that a three-member board of directors for each subsidiary consisted of the same people who sat on Enterprise Holding’s three-member board, the Third Circuit focused on other key facts in support of its decision:  (i) Enterprise Holdings had no authority to hire or fire assistant managers; (ii) Enterprise Holdings had no authority to promulgate work rules or assignments; (iii) Enterprise Holdings had no authority to set compensation benefits, schedules, or rates or methods of payment; (iv) Enterprise Holdings was not involved in employee supervision or employee discipline; and (v) Enterprise Holdings did not exercise or maintain any control over employee records.  Among these factors, the Third Circuit emphasized that Enterprise Holdings only “suggested” various Human Resources and salary policies and that the adoption of such suggestions was not mandatory, rendering the parent company more akin to a third-party consultant.

In light of this decision, employers and, in particular, parent corporations, should be aware of the fact that courts within the Third Circuit (Delaware, New Jersey and Pennsylvania) will apply the “Enterprise” test going forward.  Notwithstanding, while the test has been articulated, the analysis remains highly fact intensive and courts are by no means limited to consideration of the factors identified in the Enterprise decision.  Employers unsure of their FLSA joint employer status should contact their labor and employment counsel.

New Jersey Court Affirms Sanction Against Law Firm For Losing Emails

By: Jerrold J. Wohlgemuth

The New Jersey Appellate Division has affirmed an order imposing sanctions against defense counsel for losing attorney-client emails that were relevant to the question whether a settlement had been reached between the parties and that had been identified on defendants’ privilege log.  When the judge directed that the emails be submitted for in camera inspection, defense counsel replied that they were not available because they had been in the file of the defendants’ prior counsel and could no longer be located.

Plaintiffs’ counsel then retained a forensic expert and incurred over $10,000 in costs and attorneys’ fees to recover the emails from backup tapes on the hard drive of the original defense counsel’s firm.  The judge then determined after in camera inspection that the emails were admissible, and ordered the defendants and the law firm representing them to jointly reimburse plaintiffs for that expense. The emails ultimately formed the foundation for the trial court’s ruling in plaintiffs’ favor at trial.

On appeal, the defense firm argued that the sanction was improper because it had not violated any Court Rule in connection with its handling of the emails, and because there was no evidence of intentional spoliation.  The Appellate Division disagreed.

In its opinion in Goldmark v. Brach Eichler LLC, the Court observed that the trial judge had inherent power to impose discovery sanctions, and held that the sanctions were proper even in the absence of intentional spoliation because counsel had an obligation to preserve the documents identified on its privilege log and produce them as required for in camera inspection.  The Court concluded that “[i]t would make a mockery of our discovery rules to allow a party or
its counsel – after identifying privileged information – to destroy or carelessly lose or misplace the materials in question.”

Courts consistently hold that litigants and in-house counsel must preserve documents that bear a relationship to issues in litigation.  Consistent with that, the Goldmark opinion reminds counsel of record to preserve all potentially relevant emails – including privileged client communications – during litigation.

EEOC’s Guidance on the Use of Criminal History Records Under Title VII Comes as New News to Many Small Businesses

By: Frank Nardulli

In our post on April 30, 2012, we highlighted the EEOC’s recent guidance on the use of criminal history records to discriminate against job applicants.  To read our original post click here.  As businesses large and small now look to make sense of the new guidance, and to tailor appropriate policies, many are discovering that they may have been unknowingly violating the law.  For some interesting thoughts on the EEOC’s Guidance on the use of criminal history records under Title VII from the perspective of small businesses, check out this well-sourced post by New York Times reporter Robb Mandelbaum and his related article.

Cheryl Orr Interviews Kaplan In-House Counsel For Cover Story in First Chair Magazine

Cheryl Orr’s  interview of Janice Block, General Counsel & Executive Vice President of Kaplan, Inc., and Stephanie Hart, Vice President & Associate General Counsel, is the cover story in the inaugural issue of First Chair magazine.
Cheryl, co-chair of the Labor and Employment Practice Group, sat down with Janice and Stephanie to discuss the impact of a changing business and regulatory environment on the for-profit higher education industry generally, and Kaplan’s labor and employment department, specifically. The three also discussed keys to success for outside counsel and the need for work-life balance.
Janice noted, “We view our external counsel as true partners for us on the matters we work on together.  The same respect, collegiality, support, shared objectives, and open communication (Stephanie discussed as existing in their legal department) has to carry forward in our relationships with our law firm lawyers.”
First Chair magazine is an annual publication for members of the legal community that features profiles of the recipients of the First Chair Awards as well as articles drafted by members of the community.  Janice Block was pictured on the magazine’s cover as she received the prestigious honor of being voted Best General Counsel.  Kaplan, Inc. also received the award for best Law Department.  The magazine  is distributed in all 50 states to in-house counsel (estimated at a readership of 50,000) and partners at 250 of America’s largest law firms.
To read the full article click here.

Seventh Circuit Expands § 1981 Coverage to Include Individual Liability for Retaliation Under “Cat’s Paw” Theory

By: Frank M. Nardulli

The Seventh Circuit has held that an employee with an unlawful retaliatory motive may be individually liable under § 1981 for causing an employer to retaliate against a co-worker.  Section § 1981 prohibits racial discrimination in contractual relations and has been held applicable to employment matters.

In Smith v. Bray, the Seventh Circuit tackled this issue of first impression by looking to recent Supreme Court precedent endorsing the “cat’s paw” theory of employer liability under Title VII and the holdings of five circuits that the “cat’s paw” theory supports individual liability under § 1983, which provides redress for individuals whose federally protected rights have been violated.  As such, the Court held that “recognizing cat’s paw liability under § 1981 is consistent with our parallel approaches to these [non-discrimination] statutes.”

The “cat’s paw” theory, which was recognized by the Supreme Court in Staub v. Proctor Hosp., 131 S. Ct. 1186 (2011), says that an employer may be liable for discrimination under Title VII where an adverse employment decision is based on a biased or improperly motivated recommendation by a subordinate or supervisor.  “Cat’s paw” liability may be established where a plaintiff can show that an employee with a discriminatory purpose or bias provided information that may have affected an adverse action.  The theory comes from a French fable wherein a monkey (the biased employee) convinces a cat (the employer) to pull chestnuts from a hot fire.  The cat’s paw is then burned and the monkey enjoys the fruits of the cat’s labor.  In holding that the “cat’s paw” theory can support individual liability under § 1981, the court inquired, “Why should the ‘hapless cat’ (or at least the employer) get burned but not the malicious ‘monkey’?”

This decision is noteworthy not just because it endorses individual liability under § 1981, but also because it provides an arrow in a plaintiff’s quiver which is not available under Title VII as most circuits have held that an individual cannot be liable under Title VII.  As far as race discrimination is concerned, however, Smith v. Bray opens the door for suits against supervisors and co-workers under a “cat’s paw” theory.