Indecent Conduct in Firing Employee Yields Jury Award, June 24, 2002
by Thomas A. Bowden
Intentional infliction of emotional distress is a notoriously hard claim to prove. It requires conduct on the defendant's part that so exceeds the bounds of decency as to be utterly intolerable in a civilized community, as well as severe emotional distress on the victim's part.
Richard Archer, who had worked 22 years as an employee of Farmer Bros. Co., was under investigation for misconduct, and so the company decided to fire him. Nothing wrong with that — but it's how they fired him that led a jury to award Archer more than $65,000 in damages, half of them punitive.
Archer, who had not missed a day of work in eight years, had missed four days recuperating from a heart condition. The company was anxious to fire him, so the top manager told his subordinates to find Archer at home and give him his pink slip. The subordinates hesitated, pointing out that Archer was ill, having had an apparent heart attack. "I don't give a shit if he's on his deathbed," the top manager said, "if I tell you to fire him, that's what you will do, or I'll get somebody who will."
Without calling ahead or giving Archer any advance notice, the two subordinates arrived at the home of Archer's mother-in-law, where he was recuperating. Entering the home uninvited and unannounced, they marched up to the bedroom, where they found Archer lying in bed, partially dressed. Without inquiring about his health or asking when he intended to return to work, they announced that they needed his initials on his termination papers.
Shocked and upset, Archer told the men to leave the house. Later that evening, Archer attempted suicide.
At trial, Archer's doctor told the jury that the company's conduct could have caused a fatal heart attack. The jury was convinced that the company had behaved indecently and should be punished.
Supreme Court Expands ADA "Direct Threat" Definition, June 11, 2002
On June 10, 2002, the United States Supreme Court expanded the Americans with Disabilities Act (ADA) to authorize employers to refuse to hire individuals whose performance on the job would endanger the employee's health. In Chevron v. Echazabal, No. 00-1406 (U.S. June 10, 2002), the Court adopted EEOC regulations which permit employers to screen out individuals using legitimate "qualification standards" which state that an individual not pose a direct threat to the health or safety of himself or other individuals.
Mario Echazabal applied for a job with Chevron U.S.A. to work in its oil refinery. Chevron agreed to hire Echazabal if he passed the company's physical examination. The examination showed that Echazabal had liver abnormality (i.e. Hepatitis C), which Chevron's doctors said would be aggravated by continued exposure to toxins in Chevron's refinery. As a result, Chevron withdrew its offer, and Echazabal sued, claiming that Chevron violated the ADA by refusing to hire him.
Echazabal argued, among other things, that the language in the ADA provided that an employer could screen out candidates for employment that posed a direct threat to others; it did not permit employers to screen out candidates that posed a direct threat to themselves. The Ninth Circuit agreed.
The Supreme Court, however, disagreed and held that the direct threat defense to the individual is permitted if it is "based on a reasonable medical judgment that relies on the most current medical knowledge and/or the best available objective evidence," and upon an "individualized assessment of the individual's present ability to safely perform the essential functions of the job" after considering, among other things, the immediate risk and severity of the potential harm. 29 CFR § 1630.2(r)(2001). The Court concluded by praising the EEOC for differentiating between rejecting workplace paternalism and ignoring specific and documented risks to the employee, even if the employee would take his chances for the sake of gaining employment.
Fourth Circuit Emphasizes Narrowness of 'Public Policy' Exception to Maryland's At-Will Doctrine, June 10, 2002
Bruce M. Luchansky
In Maryland, a discharged "at-will" employee may sue his employer for wrongful discharge if the termination violates a clear mandate of Maryland public policy. That exception is very narrow -- a point emphasized in a recent case by the Fourth Circuit Court of Appeals.
In Szaller v. American Red Cross Greater Chesapeake and Potomac Blood Servs. Region, No. 01-2014 (4th Cir. 6/5/02), a former Red Cross employee called a Red Cross hotline to report the alleged mishandling of blood and staff training deficiencies. He claimed that these problems violated federal FDA regulations and the provisions of a 1993 consent decree between the Red Cross and the FDA. He argued that these considerations -- the violation of federal regulations and of a consent decree approved by a federal judge -- are important enough to qualify as Maryland public policy and support his claim for wrongful discharge.
The Court flatly rejected his argument. The Court iterated that for a mandate of public policy to be well-established enough to support a wrongful discharge action, it must be a policy adopted by the State of Maryland, not the federal government. If a public policy has not been expressed by a Maryland statute, or by a Maryland court, it will not serve as a basis for challenging the discharge of an at-will employee, no matter how "important" the policy might be.
Gossip-Based Depression Not Covered by Workers' Compensation, June 6, 2002
Carrie Geredes, a bus driver for the Atascadero Unified School District in California, became the topic of conversation at work after co-workers learned that she was having an affair with a colleague. She learned of the gossip when the affair ended, and claimed this caused her depression.
Geredes filed a workers' compensation claim alleging that her cumulative psychiatric injury (i.e. depression) lasted for eight months and resulted from a hostile work environment and sexual harassment. Under the California labor code, an injured employee can claim workers' compensation only if the injury arose out of and in the course of employment.
Ultimately, the California Court of Appeals denied her claim. It stated that Geredes' off-duty affair had nothing to do with her employment, and as a matter of law, gossip about an employee's personal life is not part of the employer-employee relationship. See Atascadero Unified Sch. Dist. v. Workers' Comp. Appeals Bd., No. B155026 (Cal. Ct. App., No. 2d, May 28, 2002).
Man with Prosthetic Leg Fails in Bid To Become Police Officer, June 6, 2002
by Thomas A. Bowden
A person cannot be the victim of disability discrimination unless he is first eligible for the job. So, a man with a prosthetic leg who applies for a police officer's position can be turned down if an objective evaluation reveals that he would have trouble performing a peace officer's work.
"The police department is the sole judge of whether it wishes to assume the risk of hiring an officer whose prosthetic leg may rotate or, even worse, fall off while he is running on uneven ground, climbing six-foot fences, jumping over obstacles, or climbing an embankment," the California court said.
Christensen v. City of Los Angeles, Cal. Ct. App., No. B149031, unpublished opinion 5/30/02.
Prevailing Plaintiffs Liable To IRS For Fees Paid to Lawyers, June 1, 2002
Prevailing plaintiffs, depending upon their geographical location, may be liable for taxes on contingent attorney's fees paid directly by defendants to the plaintiff's attorney. For the third time in two years, the United States Supreme Court has refused to settle the split among circuits over the taxability of contingent attorney's fees in nonphysical injury cases.
In 1993, Nancy Hukkanen-Campbell of Shawnee, Kansas, won a $150,000 Title VII judgment against her employer on a claim that her supervisor threatened to rape her at gunpoint. See Hukkanen-Campbell v. Commissioner, 274 F.3d 1312 (10th Cir. 2001), cert. denied, No. 01-1348 (May 13, 2002). Hukkanen-Campbell paid income taxes on the money she received, but then later received a bill from the IRS stating that she owed an additional $35,000 in taxes and interest on the $73,399 paid directly to her lawyer.
In Tax Court, she argued that she had no proprietary interest in the contingency fee payment received by her lawyer. The Court, instead, applied the federal "assignment of income" doctrine, and held that the defendant's contingent fee payment to her lawyer was a transfer of income from the taxpayer to a creditor. Hukkanen-Campbell v. Commissioner Tax Court, No. 12371-98 (unpublished, June 12, 2000). The Tenth Circuit affirmed, and the Supreme Court denied review of the decision.
The 1st, 3rd, 4th, 7th, 9th, 10th and Federal Circuits agree. Opposing that view are the 5th, 6th and 11th Circuits which have held that contingency fees recovered in litigation may be excluded from the taxpayer-plaintiff's gross income. Plaintiff's lawyers complain that the majority rule amounts to an unfair double tax because both plaintiffs and their attorneys' must pay income tax on the contingency fee payment.
Unless Congress or the Supreme Court resolves the issue, defendants are advised to file IRS Form 1099s reporting contingent fee payments to plaintiffs' lawyers as income to plaintiffs.
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