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Employee’s contract stated that she had to arbitrate her claim

An employee brought an action against her former employer for violation of Title VII of the Civil Rights Act, alleging that she was terminated either because of her race or in retaliation for her complaints of discrimination.  The case was stayed to allow the parties to arbitrate the employee’s claims pursuant to an arbitration agreement contained in her employment contract, and the arbitrator ruled in favor of the employer.  Thus, the employee moved to vacate the arbitration award on grounds of fraud due to the employer’s failure to produce e-mails from her manager during the discovery phase of the arbitration, and employer moved to confirm the award. A district court vacated the award, and thus the employer appealed to the Fifth Circuit.

Trinidad Suyapa Barahona was a salesperson at a Dillard’s store until she was terminated by the store manager.  Ms. Barahona believed that she was terminated in violation of Title VII, and thus brought suit against Dillard’s, alleging that she was terminated either because of her race or in retaliation for her complaints of discriminationBarahona v. Dillard’s, Inc., 376 Fed. Appx. 395, 397 (5th Cir. 2010).  In Barahona’s employment contract with Dillard’s, there was an arbitration agreement, so the district court, with the parties’ consent, stayed her case to allow the parties to arbitrate her claims. During the arbitration proceedings, the parties conducted discovery, which included depositions and document requests, and the parties participated in a three-day arbitration hearing where they were given the opportunity to present their evidence and arguments.

On the third day of the hearing, the store manager appeared and testified as a witness. Ms. Barahona’s counsel questioned the store manager on a number of matters, including whether he ever communicated via e-mail with any Dillard’s employee regarding Ms. Barahona. Mr. Broussard answered, “Yes.”  Id. at 398.  Dillard’s, however, had not produced the e-mails during the discovery phase of the arbitration. Despite this, the arbitrator ruled in favor of Dillard’s, finding that Ms. Barahona did not carry her burden of proof on her discrimination and retaliation claims.

After the arbitrator announced his findings, Ms. Barahona moved the district court to vacate the arbitration award due to Dillard’s failure to produce the e-mails. After Ms. Barahona moved to vacate, Dillard’s produced the e-mails and argued that the contents of the e-mails showed that vacating was unwarranted.  Dillard’s also moved to have the arbitration award confirmed.  The district court initially chose not to vacate the arbitration award and instead remanded the case back to the arbitrator for reconsideration in light of the newly produced e-mails.  Id. at 399.  The arbitrator refused to reconsider the arbitration award, finding that he lacked jurisdiction to reconsider it.  After the arbitrator refused to reconsider the award, the district court granted Ms. Barahona’s motion to vacate.

On appeal, the Fifth Circuit found that the district court erred in vacating Dillard’s arbitration award.  The reason being that the facts concerning whether or not the alleged “non-production fraud” was discovered during the arbitration hearing are undisputed, further development of the record would not alter the result. Thus, the district court’s order vacating the arbitration award was reversed, and the case was remanded with instructions to enter an order confirming the arbitration award.

Police officers that worked for the City of Fort Worth and who took off duty assignments sued the City for violating the overtime provision of the FLSA

Several retired police officers filed a state court action against the city they worked for, alleging that, while working as police officers they also worked as security officers at two facilities owned by the city, but that the city failed to pay them overtime compensation when their combined off-duty and regular-duty hours exceeded 40 per week, in violation of Fair Labor Standards Act (FLSA).  After removing the action to federal court, the city moved for summary judgment.  The city gave its police officers the opportunity to earn extra income by performing assignments during their off-duty hours. Section 407.00 of the police department’s General Orders, titled “Off–Duty Police Employment,” explains the city’s general policy regarding off-duty assignments and established the procedures officers must follow to participate in such assignments.  Clark v. City of Ft. Worth, 4:10-CV-519-A, 2011 WL 3268110 (N.D. Tex. July 29, 2011).  Any officer who wished to perform off-duty work must follow the established procedures whether the anticipated off-duty employment is on public or private property.

Each of the plaintiffs worked off-duty assignments while employed by the city as police officers.  Although the city approved the applications of officers who wished to be included on the off-duty assignment list, once an officer’s name is on the list, he or she decided whether to accept or reject a particular off-duty assignment.  The city leased or rented the facilities to public and private third parties (“Licensees”) for use in a variety of events, such as  charity balls, bridal shows, dog shows, concerts, corporate gatherings, etc.  The Licensees at issue in this case are entities and individuals who are legally separate from, and in no way affiliated with the city.  Id.

Prior to renting or leasing the Facilities, a Licensee entered into a written contract with the city.  The contract required the Licensee to comply with all “federal, state, and local laws, statutes including all ordinances, charter provisions, rules and regulations of the City of Fort Worth; including all rules, regulations and/or requirements of the City of Fort Worth Public Events, Police and Fire Departments.”  Of particular importance in this case is that the contracts and Guidelines and Regulations for the Facilities require the Licensee, at its “sole cost and expense,” to provide security personnel comprised of “off-duty Fort Worth Police Officers.”  Id. A Licensee is additionally required to provide security in the form of off-duty police officers for the Licensee’s move-in/move-out of the Facilities, or any time alcohol is served.

When contracting for use of the Facilities, Licensees generally work directly with event coordinators employed by the city, and do not contract directly with the police officers.  The city determines the minimum number of off-duty officers required for an event; however, the Licensee is then afforded an opportunity to provide input as to its specific requirements, such as any additional officers needed above the minimum, specific locations at the event where the officers are to be stationed, and the officers’ start and end times.  A form summarizing the Licensee’s requirements is prepared and submitted to the Licensee to approve or make such changes as the Licensee desires. When all requested changes are made, or if no changes are made, the Licensee is required to sign a form indicating its final approval of the number of officers to be used for the event, the officers’ work schedule, the amount of the officers’ pay, and the time frame within which payment is to be made.

Licensees are responsible for paying the off-duty officers directly.  On the majority of occasions the Licensees issue checks, drawn on the Licensees’ bank accounts, directly to the police officers who performed the off-duty assignment.  Licensees require the off-duty officers to provide their tax identification numbers and execute an IRS Form W–9 prior to issuing payment.  The city does not maintain a record of the hours officers work in off-duty assignments, nor does it report those wages to any taxing authority such as the Internal Revenue Service.

The district court stated that it appeared that the plaintiffs were “cherry-picking select lines and phrases from the General Orders and the Licensees’ contracts to bolster their argument that defendant controls the off-duty officers’ employment.”  Id. Thus, when considered in light of all the evidence, there simply was no question that the Licensees control the off-duty officers’ employment, and that the Licensees, rather than defendant, are the “separate and independent” off-duty employers.  Consequently, the court granted the city’s motion for summary judgment.

Former Employee of the YMCA brought a FLSA suit against the YMCA for failing to pay him for overtime hours

An employee brought action against his employer, alleging claims for employment discrimination and failure to pay overtime under Title VII, the Fair Labor Standards Act (FLSA), and Texas state law.  A district court granted the employer’s summary judgment motion and thus the employee appealed.  William Noack claimed that the YMCA began discriminating against him shortly after he was hired as a part-time childcare employee in March of 1999.  First, he claims that in the summer of 2000, he was mockingly presented with a gag “Bee Charmer” award for having reported a beehive at the base of a tree located approximately twelve feet from a main hiking trial used by children at a YMCA day camp.  Second, he says that in 2000, he was improperly disciplined for taking a young girl to the bathroom in violation of the YMCA’s policies.  In lieu of termination for his misconduct, Noack was transferred to a new facility.  Third, also in 2000, he says he was refused a promotion to the “site director” position at a specific location he desired because he was a male, although he was in fact promoted to site director at a different YMCA facility (and later to multi-site director).  Fourth, in 2005 he was given a gag “Mr. Handy Man” award, allegedly evidencing that he was demoted to menial labor.  Fifth, he was reprimanded for sending personal e-mails on work time, although others engaging in the same conduct were not.  Noack v. YMCA of Greater Houston Area, 418 Fed. Appx. 347, 350 (5th Cir. 2011).

Noack also alleged that the YMCA’s discriminatory actions continued throughout 2007 and afterward.  In August of that year, Noack complained to his supervisor about his work load and inability to work paid overtime.  She reminded him about the YMCA’s budget constraints and its policy against employees working overtime.  Despite that conversation, Noack worked two hours of unauthorized overtime the next week.  When the supervisor was made aware of the situation, she sent him home because he had completed the maximum number of workable hours that week.  The next week, the supervisor gave Noack a written reprimand regarding the incident.  Noack asserted that this reprimand was retaliation for having requested payment for the number of overtime hours he had worked.

Shortly after receiving the written reprimand, Noack wrote his supervisor an e-mail alleging that the YMCA engaged in discriminatory hiring practices.  In that e-mail, Noack alleged that she had instructed him not to hire too many African–American people and to keep African–American employees separated from each other.  Id. at 352.  Noack also testified on appeal that his supervisor made a similar statement regarding hiring men.  The supervisor replied to the email by expressing her support for hiring a diverse staff that would reflect the diverse community that the YMCA served.

Approximately a month after receiving the written reprimand, Noack met with human resources (HR) personnel to express several more complaints.  In this meeting, Noack complained about both the overtime policy and the YMCA’s alleged discriminatory hiring practices.  He also complained about being transferred to a different facility in 2000 after the incident in which he took the young girl to the restroom.  Then about two weeks after his meeting with HR, Noack tendered his resignation.  His resignation e-mail stated that he was leaving voluntarily “to go on and do other things.”  That same day, an HR employee met with Noack and asked him to provide an estimate of the amount of unpaid overtime he had worked in the last three years.  Noack estimated the unauthorized overtime at 138 hours.  The YMCA paid him for the requested amount despite the fact that Noack did not have any documentation to indicate the number of hours that he worked or the tasks that he completed.  Id. 353.

Subsequently, Noack filed this lawsuit, contending that the YMCA violated Title VII by discriminating against him based on his sex.  He also claimed under the same statute that the YMCA systematically discriminated on gender and racial grounds, affecting his employment by hindering him from hiring male or black employees.  That discrimination, Noack claims, led to a hostile work environment and to his constructive discharge.  In addition, he alleged that the YMCA illegally retaliated against him pursuant to the FLSA after his request for his unpaid overtime pay.

The YMCA filed for summary judgment on all counts.  In a detailed report, the magistrate judge recommended granting the YMCA’s summary judgment motion.  After reviewing Noack’s objections to the recommendation, the district court adopted the magistrate judge’s memorandum and recommendation and entered final judgment in favor of the YMCA.  Noack appealed, arguing that the district court improperly granted the YMCA’s motion for summary judgment because the district court improperly excluded admissible evidence and wrongly considered inadmissible evidence.  In the alternative, Noack argued that the motion for summary judgment was improperly granted because genuine issues of material fact were in dispute.  However, the Fifth Circuit found that the lower court did not err in its granting of the summary judgment and thus affirmed the lower court’s decision.

It should be noted that pursuant to 5th Cir. R. 47.5, the Court of Appeals for the Fifth Circuit determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.

Court decided that just because a Plan Administrator made a mistake on one ERISA plan, does not mean his duties should be stripped

Participants in an Employee Retirement Income Security Act (ERISA) pension benefit plan, who had stopped working for their employer, received lump-sum distributions and later were rehired, sued the plan administrator and others for improper calculation of their benefits.  The petitioners were Xerox Corporation’s pension plan and the Plan’s current and former administrators.  The respondents were employees who left Xerox in the 1980′s, received lump-sum distributions of retirement benefits earned up to that point, and were later rehired.  To account for the past distributions when calculating respondents’ current benefits, the Plan Administrator initially interpreted the Plan to call for an approach that has come to be known as the “phantom account” method.  Conkright v. Frommert, 130 S. Ct. 1640, 1646 (2010).  The respondents challenged that method in an action under ERISA, with the district court granting summary judgment for the Plan, but the Second Circuit vacated and remanded that opinion.

The Second Circuit found that the Plan Administrator’s interpretation was unreasonable and that the respondents had not received adequate notice that the phantom account method would be used to calculate their benefits.  On remand, the Plan Administrator proposed a new interpretation of the Plan that accounted for the time value of the money respondents had previously received.  Id. at 1648.  However, the district court declined to apply a deferential standard to this interpretation, and adopted instead an approach proposed by the respondents that did not account for the time value of money.  Affirming in relevant part, the Second Circuit held that the district court was correct not to apply a deferential standard on remand, and that the district court’s decision on the merits was not an abuse of discretion.

The U.S. Supreme Court heard this case and decided that the district court should have applied a deferential standard of review to the Plan Administrator’s interpretation of the Plan on remand.  The court stated that “People make mistakes, even administrators of ERISA plans.  That should come as no surprise, given that the Employee Retirement Income Security Act of 1974 is ‘an enormously complex and detailed statute,’ and the plans that administrators must construe can be lengthy and complicated. (The one at issue here runs to 81 pages, with 139 sections.)”  Id. at 1645.  Consequently, the main question that the U.S. Supreme Court evaluated was whether a single honest mistake in a plan interpretation justifies stripping the administrator of his deference for subsequent related interpretations of the plan. The court held that it did not.  Thus, the court held that the Court of Appeals erred in holding that the District Court could refuse to defer to the Plan Administrator’s interpretation of the Plan on remand, simply because the Court of Appeals had found a previous related interpretation by the Administrator to be invalid.

Was requiring police officers to be cleanly shaved discriminatory?

African-American officers who suffered from pseudofolliculitis barbae, a skin condition which caused infection after shaving, sued the Houston police department, city and the police chief, alleging racial discrimination arising from the department’s grooming policy, which prohibited officers in four divisions from having beards.  A district court granted summary judgment to the defendants on all claims, and thus the officers appealed.  The City of Houston Police Department stated that their reasoning behind the “no-beard policy” was that the respirators purchased for response to a possible chemical, biological, radiological, or nuclear attack cannot be safely worn with beards.  Stewart v. City of Houston Police Dept., 372 Fed. Appx. 475, 478 (5th Cir. 2010).  The four divisions with the restriction are those deemed most likely to serve as first responders to such an attack.

Four police officers filed suit challenging this policy, with two other officers joining later.  The officers are all African-American males who suffer from pseudofolliculitis barbae, a skin condition causing infection after shaving. They alleged that the no-beard policy discriminates against African-American males, who are disproportionately affected by the condition.  They claimed that the policy violates the Rehabilitation Act of 1973, and Title VII of the Civil Rights Act.  Adopting the report and recommendations of the magistrate judge, the district court granted the department’s motion for summary judgment on all claims.

In order to show discrimination under the Rehabilitation Act, the officers had to show that they “(1) have a disability, (2) were otherwise qualified for the particular job, (3) worked for a program or activity that receives federal financial assistance, and (4) were discriminated against solely on the basis of the disability.”  Furthermore, an individual has a disability under the Act if he or she “(1) has “a physical or mental impairment that substantially limits one or more major life activities; (2) has a record of such impairment, or (3) is regarded as having such impairment.” Id. at 450.

Consequently, on appeal, the Fifth Circuit found that the district court properly found no showing of a substantial limitation in working.  Furthermore, the officers did not carry their burden under Title VII of showing that the Department’s safety and security justifications for the grooming policy are pretextual or that there is an equally effective, less discriminatory alternative to the chosen respirators.  Thus the judgment was affirmed in favor of the police department.