Texas Employment Law Update : Texas Employment Lawyer & Attorney : Russell D. Cawyer : Kelly Hart & Hallman Law Firm : Dallas TX Labor Updates

The Texas Supreme Court held that unilateral contracts can be formed with at-will employees when employers make promises to employees and those employees perform based on that promise.  In Vanegas v. American Energy Services, Inc. the Supreme Court was asked to decide the enforceability of an employer's alleged promise to pay five percent of the proceeds of a sale or merger of the company to employees who were still employed at the time of the merger.  The alleged promise arose in the context of a period when the company was performing poorly and the employees were complaining about working long hours with antiquated equipment. 

According to the Court's opinion, a vice-president of the company, in an effort to encourage employees to stay with the company, promised those original employees (of whom there were eight) that if they stayed with the company, they would be paid five percent of the value of any sale or merger.  When the company was sold, the seven remaining employees demanded their share of the proceeds.  The company refused and the employees sued.

The company argued that because the employees were at-will, any promise to pay those proceeds to the employees was illusory and unenforceable because the employer could have avoided the promise by firing the employees at any time.  The employees argued that the promise represented a unilateral contract that, once performed, became a binding enforceable obligation on the part of the employer.

The Court agreed with the employees and held that where an employer makes a unilateral promise to an at-will employee and the employee performs, a binding contract is formed upon that performance.  

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Manpower has published its most recent research on jury verdicts and the news is not good for employers.  According to a summary of the full report:

• Employers won the lowest percentage of discrimination jury trials this decade; only 39 percent.  Employers won on 33 percent of age cases and 52 percent of disability discrimination cases.  Expect employer's winning percentage to decrease in disability discrimination cases in the next years as post-ADAAA cases make their way to juries.
• Age discrimination cases result in the largest verdicts followed by disability, sex and race.
• Employers are better off in federal court than state court.  Employers won 43 percent of the cases in federal court versus only 37 percent in state court.  The median federal jury award was also lower at $164,925 v. $270,000 in state court.
• Median settlement rose to the highest this past decade at $90,000.

Several reasons may explain Manpower's most recent findings.  First, the economy, and juror attitudes may be affecting outcomes.   In my two most recent jury trials this year, there was a significant number of potential jurors who were either out of work or had a close family member who was unemployed.  With the national unemployment rate topping 10 percent, the increase in the unemployment rate may signal that there are more prospective jurors who may sympathize with an unemployed plaintiff-employee. 

Second, in a poor economy, some employers may choose to try cases they might have settled in the past.  Some employers may elect to try those cases that can be tried to verdict for less than they can be settled.   This may be a fiscally sound decision only in the short term or if the employer prevails at trial.

Finally, the results may reflect the fact that employers are having to try tougher cases to defend.  In any event, Manpower's research suggests that juror attitudes in employment discrimination cases are swinging in favor of plaintiff-employees and against employers.

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The U.S. Supreme Court completed its 2008-09 term. On the docket were five cases of interest dealing with employment law.  Here is a summary of the holdings in those cases.

• Crawford v. Metropolitan Gov’t of Nashville and Davidson County, Tenn., (2009) An employee’s participation in an employer’s internal harassment investigation by responding to the employer's questions may constitute protected oppositional activity under Title VII that would support a retaliation claim. 
• 14 Penn Plaza LLC v. Pyett, (2009) Provisions in collective bargaining agreements that clearly and unmistakably require union members to submit statutory discrimination claims to the grievance and dispute resolution provisions of the agreement are binding and enforceable on the bargaining unit members.  More detail here.
• AT&T Corp. v. Hulteen, (2009) An employer does not necessarily violate the Pregnancy Discrimination Act when it calculates and pays pension benefits based on an accrual rule that applied only pre-PDA, and gives less retirement credit for pregnancy leave than for other medical leave.
• Gross v. FBL Financial Services, Inc., (2009)  A plaintiff asserting an age discrimination claim under a disparate (i.e., intentional) treatment theory must prove that age was the “but for” cause of the challenged employment action and the burden of proof never shifts to the employer to show that it would have taken the same action regardless of the age of the plaintiff.  More detail here.
• Ricci v. DeStefano, (2009)  An employer can avoid Title VII disparate-impact liability related to a promotional exam having a disparate impact on minorities if the employer can show a strong basis in evidence that, had it not certified the results, if would have been subject to disparate-treatment liability.  More detail here.

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In one of the most anticipated employment discrimination cases in years, the U.S. Supreme Court held that the City of New Haven discriminated against non-minority firefighters when it chose to ignore the test results of a racially-neutral promotional exam because too few minorities scored high enough on the test to be considered for promotion.  I previously wrote about this case and outlined its facts.  (See here for post).

In Ricci v. DeStafano, a majority of the Supreme Court began with the premise that the City's decision to ignore the results of its promotional testing because too few minority fire fighters scored well on the test, constituted intentional discrimination against the firefighters that scored well on the test.  There was no dispute that the City disregarded the test results because of the race of the test takers and the fact that no minorities scored high enough to qualify for promotion.  Concluding that this conduct constituted intentional discrimination, the Court examined whether the City had a legitimate justification for ignoring the test results. 

The City's sole justification for the ignoring the test results was that if it recognized the results it would face litigation from the minority firefighters who took, and scored poorly, on the test.  The minority firefighters, the City predicted, would sue the City claiming that the racially-neutral test had a disparate impact on minority firefighters and therefore discriminated against them.  The City argued that it was faced with a Hobson's choice where no matter what it elected to do it would be faced with a discrimination lawsuit (i.e., either being sued by the white firefighters who scored well and were denied promotional opportunities because the test results were ignored or by the minority firefighters who claimed the test unintentionally discriminated against them by recognizing a test that had a disparate impact on minorities).

The Court explained that if the City had a "strong basis in evidence" that its recognition of the test results would subject it to disparate-impact liability in the absence of it taking the race-conscious, discriminatory action --not necessarily that it would lose an disparate impact case.  To make this showing, there would need to be a showing of a significant statistical disparity; and the tests were no job related and consistent with business necessity; or there existed an equally valid, less-discriminatory alternative that served the City's needs that it refused to adopt.  Applying this standard to the Ricci case, the Court concluded that City lacked a strong basis in evidence that it would be subjected to disparate-impact liability if it recognized the test results.  Therefore, it found that City discriminated against the non-minority firefighters when it threw out the test results.    

The lesson from Ricci is that when an employer is faced with qualification or promotional exam that may have a disparate impact on a protected class, the employer must build a strong record and attempt to ferret out the reasons for the disparity before deciding whether to ignore the results.  A strong case would begin with a test that was designed in such a way as to avoid a disparate impact as was the case in Ricci.  The Court's opinion makes clear that it is not intended to prohibit an employer from considering (before test administration) a way to design a test that provides a fair opportunity for all individuals, regardless of their race.  Instead, the legal analysis encourages employers (and gives them broad latitude) at the test-design phase to invite comments to ensure the test is fair.  This would tend to help to identify aspects of the prospective test that might not be job-related and consistent with business necessity or other equally effective, less discriminatory alternatives.  

With a strong record in this regard, an employer assert and prevail with the new defense announced by the Ricci court when it faced with the prospect of being sued for disparate treatment (i.e., intentional) or disparate impact (i.e., unintentional) discrimination.   

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In Gross v. FBL Financial Services, Inc., the U.S. Supreme Court was asked to decide whether a plaintiff must present direct evidence of discrimination in order to obtain a mixed-motive instruction in a non-Title VII discrimination case.

In the case, Plaintiff Gross was employed by FBL Financial Group since 1971. In 2001 he held the title of claims administration director. Gross was reassigned in 2003 to the position of claims project coordinator. He was 54 years old.  Many of the job duties Gross previously performed were transferred to a newly created position and that position was given to a female former subordinate of Gross who was in her early 40’s. While Gross and the co-worker received the same compensation, Gross considered his reassignment and reallocation of job responsibilities a demotion. Consequently he filed suit alleging age discrimination under the Age Discrimination in Employment Act. At trial, the jury was asked to decide whether age was “a motivating factor” in the decision to reassign and reallocate Gross’s job responsibilities. This permitted the jury to find in Gross’ favor if even one of many reasons for the job changes was Gross’ age. FBL requested a jury instruction that would have only permitted the jury to find for Gross if he showed that the challenged job actions would not have occurred “but for” Gross’ age. The jury found for Gross.

On appeal, the U.S. Supreme Court found that it was improper to charge the jury under “a motivating factor” standard of causation. The U.S. Supreme Court held that a plaintiff asserting an age discrimination claim under a disparate (i.e., intentional) treatment theory must prove that age was the “but for” cause of the challenged employment action and the burden of proof never shifts to the employer to show that it would have taken the same action regardless of the age of the plaintiff. 

This is a significant, but perhaps short-lived, win for employers at the Supreme Court. Like other decisions of the Supreme Court that the Democratically-controlled Congress dislikes, expect quick legislation to be proposed to amend the ADEA to reinstate the “motivating factor” standard of causation.

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By now most of  you have read or heard that President Obama nominated Sonia Sotomayor for the U.S. Supreme Court to replace Justice David Souter.  Judge Sotomayor is currently an appellate judge on the U.S. Court of Appeals for the Second Circuit based in New York.  She also served on the federal district bench before joining the Court of Appeals.  The following links are useful to anyone who wants to get up-to-speed on Judge Sotomayor and her judicial philosophy.

• Michael Fox has done a good summary of Judge Sotomayor's appellate opinions in employment cases.  You can find that summary here.
• The Supreme Court of the United States Blog has done a comprehensive review of Judge Sotomayor's civil opinions.  You can find a four part review of those opinions at Part 1, Part 2, Part 3 and Part 4.  For extra credit, here is the blog's summary of Judge Sotomayor's civil opinions with dissents (here).
• The WSJ.com discusses what effect, if any, Judge Sotomayor's diabetes might have on the confirmation process.  The article can be found here.  The WSJ.com also has views of Judge Sotomayor's appointment from commentators on the Left and Right.

Given that Judge Sotomayor has twice obtained Senate confirmation, most commentators are expecting that her appointment will be confirmed.  

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