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Bellum v. PCE Constructors, Inc. (5th Cir. 4/25/05)

PCE is in the construction industry. Its principal place of business is Baton Rouge, Louisiana, though it takes on projects across several southern states. During the time giving rise to the events in this case, PCE was building a facility for Fabricated Pipe, Inc (FPI) in Fernwood, Mississippi. Bellum was an employee of PCE, working at the FPI site. PCE had a staff of 14 at its headquarters in Baton Rouge and 41 at the FPI site. The company terminated Bellum while he was on leave for heart surgery. Bellum filed an FMLA action.

The defendant did not dispute that Bellum's heart problems qualify as a "serious health condition." What they did dispute, however, is whether Bellum is an "eligible employee." PCE maintains that Bellum falls within the exception to the definition of eligible employee: "any employee of an employer who is employed at a worksite at which such employer employs less than 50employees if the total number of employees employed by the employer within 75 miles of that worksite is less than 50." 29 U.S.C. § 2611(2)(B)(ii). This exception applies, PCE contends, because its headquarters, as measured over public roads, is more than seventy-five miles from the FPI worksite. Bellum counters that the exception does not apply because the linear distance, i.e. "as the crow flies," between FPI and the Baton Rouge headquarters is less than 70 miles.

The Fifth Circuit sided with the employer. Obviously, that is not too surprising to anyone who practices in the Fifth Circuit. What is a little odd, however, is the rather creative reasoning used to support the decision. Here it is:

"The error in Bellum's [the employee] approach may be illustrated as follows. Suppose that Company A had its headquarters along the south rim of the Grand Canyon and a branch office on the other side only 25 miles away as the crow flies. Suppose further, quite plausibly, that the shortest distance between the two by public roads is 120 miles. Now, imagine that Company B has its headquarters next to a straight-line interstate highway and a branch office 80 miles away also right along the interstate. Under Bellum's reading of the statute, Company A would be bound by the FMLA but Company B would not be. Given that the purpose of the exception at 29 U.S.C. § 2611(2)(B)(ii) is to relieve the burden of FMLA compliance [i.e. unpaid leave for employee recovering from heart surgery] on companies with widely dispersed operations, it would make no sense to construe the statute in away that subjects Company A but exempts Company B."

I'm stunned.

Employee Bellum pointed out that this same court previously concluded that measuring "as the crow flies" is the proper method for measuring the 100-mile distance for service of process under what was then FED. R. CIV. P. 4(f) and is now FED. R. CIV. P. 4(k)(1)(B). In point of fact, the court had specifically rejected the use of road miles because "that standard lacks uniformity and simplicity." Sprow v. Hartford Ins. Co., 594 F.2d 412 (5thCir. 1979).

Not content to rely solely on the canyon argument, the court declares the phrase "75-miles" to be ambiguous and therefore subject to interpretation by administrative regulation. In this case, the Secretary of Labor issued a regulation stating that the "75-mile distance is measured by surface miles, using surface transportation over public streets, roads, highways and waterways, by the shortest route from the facility where the eligible employee needing leave is employed." The regulation goes on to provide that the 75-miledistance should only be measured as the crow flies when there is no "available surface transportation between worksites." Giving the Secretary deference, the court elects to follow the regulation and pours the employee out.

This is interesting only in that the 5th Circuit is not known to be overflowing with deference for administrative agencies, Supreme Court opinions, etc. I am left wondering whether the same deference would have been shown if the Secretary's regulation conflicted with the court's Grand Canyon Rule.

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New Fifth Circuit case in which the Court appears to be backtracking on or just ignoring its own decision in Rachid v. Jack In The Box, Inc., 375 F.3d 305 (5th Cir. 2004). Keelan v. Majesco Software, Inc., No. 04-10317 (5th Cir. Apr. 12, 2005) is a national origin case in which several non-Indian employees of an Indian subsidiary were allegedly terminated on the basis of their national origin. They appeal a summary judgment in favor of the employer that was decided under traditional McDonnell Douglas grounds.

On appeal the main thrust of the Plaintiff's argument is that the district court improperly failed to utilize the appropriate mixed motive legal standard. The Fifth Circuit holds that the Plaintiffs did not preserve this argument sufficiently and therefore it was perfectly fine for the Defendant to argue in favor of the wrong legal standard and for the district court to utilize same.

"However, based upon our careful review of the record, we agree with Majesco that Appellants did not properly raise in the district court the argument that showing similarly situated employees were more favorably treated to meet the fourth element of McDonnell Douglas is not required to prove up a prima facie case of discrimination. While Appellants objected that their case should be treated under a mixed-motive theory perDesert Palace, they did not object to the similarly situated disparate treatment formulation of the fourth element of the prima facie case. Because Appellants did not sufficiently object below, the district court did not have any opportunity to rule on their argument; appellants' legal argument on formulation is thus waived."

So while the "District Court acknowledged the request, it still was not preserved. Umm...yeah.

The Court then went on to analyze the case under mixed-motive analysis and held that even if they had preserved the argument, they would have lost b/c there was no evidence of any discriminatory motive in their termination of the Plaintiffs. Here is some of the non-evidence cited by the Court:

"Keelan and Sullivan also complained to P.N. Prasad ('Prasad'), an Indian Majesco executive, about what they perceived to be discrimination against non-Indians. Keelan said Prasad also stated that 'Americans have never worked out' at the company. Sullivan spoke to Ketan Mehta ('Mehta'), Majesco's CEO and an Indian, about the apparent discrimination; Mehta's response was, 'I can see how you would feel that way.'"

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Tuesday was Equal Pay Day, the symbolic date established by the National Committee on Pay Equity to show how many extra months into the year a woman would have to work to earn as much as a man does in a year. Relative to male earnings, the first nearly four months worked by a woman count for nothing. In other words, women worked through Tuesday of this week to equal what men earned by December 31st of last year.

The ratios may fluctuate, but some kind of wage gender gap has always persisted since women entered the workforce in numbers. In the early 1970s, women in America made 57 percent of what men made. The latest Census Bureau figures from 2003 put women's earnings at 75.5 cents to the male dollar, which is a 50-cent bigger gap than the year before. For women of color, the gulf was bigger - 66 cents to the male dollar for African-American women, 55 cents for Latinas.

Here is a good Article by Nikki Katz giving some of the background and economic data both for and against the view that the gap exists.

In reality nobody other than certain Fox News commentators dispute that the pay gap exists. The real issues is whether and what should be done about it.

Every time the pay-gap issue is raised, it sets off testy exchanges between those who blame sex discrimination and those who point out that women either take themselves out of the work force to raise children or gravitate toward jobs that pay less. When George W. Bush took office, his budget cut funding for the EEOC, which enforces federal laws against discrimination and upholds the equal pay. In 2002, the Bush budget decreased funding for the EEOC by $9 million below the level needed to maintain its services, according to an analysis by the House Democratic Policy Committee.

President Bush did not support Democratic efforts to improve the Equal Pay Act. The Department of Labor under President Bush eliminated a program to train women in high paying jobs. He opposes increasing the minimum wage, which would benefit working women who are in lower-paying jobs. He does not support the Pay Fairness Act.

Diana Furchtgott-Roth, one of the members of Bush's Council of Economic Advisers, stated before the Equal Employment Opportunity Commission in April, 1999 that "The average wage gap is not proof of widespread discrimination, but of women making choices about their educational and professional careers in a society where the law has granted them equality of opportunity to do so."But even if that argument holds a thimble full of water, sexism remains a factor. Maybe women are the ones staying home with children because they'd be earning less than their husbands or partners if working. Or maybe because of societal biases about men's and women's respective roles.

And doesn't sexism play a part in the fact that women, especially women of color, predominate in sales, clerical and service jobs, which pay less? Studies show that the more an occupation is dominated by women or people of color, the less it pays. Part of the wage gap results from differences in education, experience or time in the workforce. But a significant portion cannot be explained by any of those factors; it is attributable to discrimination. In other words, certain jobs pay less because they are held by women and people of color. Link to NCPE That theory holds up when you consider that college-educated women in full-time jobs still earn only 72 percent as much as college-educated men, according to a study by the American Association of University Women Educational Foundation.

So congratulations and happy Equal Pay Day ladies. You may now begin earning money for THIS year!

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Yes, I know this is the "Employment Law Bulletin." But you also know that I can't help the occasional political posting whenever I come across something as interesting as the following quote from the last time the West did some serious dabbling in the Middle East:"The people of England have been led into a trap in Mesopotamia from which it will be hard to escape with dignity and honour. They have been tricked into it by a steady withholding of information. The Baghdad communiques are belated, insincere and incomplete. Things have been far worse than we have been told, our Administration more bloody and inefficient than the public knows. It is a disgrace to our Imperial record and may soon be too inflamed for any ordinary cure. We are today not far from a disaster. Our unfortunate troops, both Indian and British, under hard conditions of climate and supply are policing an immense area, paying dearly every day in lives for the willfully wrong policy of the Civil Administration in Baghdad but the responsibility, in this case, is not on the Army which has acted only upon the request of the civil authorities."

-Colonel T.E. Lawrence, August 22, 1920, Sunday Times (UK)

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Frivolous litigation is not a major problem in the federal court system, according to an overwhelming majority of federal judges who participated in a recent survey.

The survey, conducted by the Federal Judicial Center, was based on the responses of 278 federal district court judges. Seventy percent of the respondents called groundless litigation either a "small problem" or a "very small problem," and 15% said it was no problem at all. Only 1% called it a "very large problem," 2% called it a "large problem" and the rest rated it as a "moderate problem" in their courts.

The survey asked judges their opinion on proposed changes to Rule 11 of the Federal Rules of Civil Procedure, which since 1993 has allowed, but has not required, judges to impose sanctions on attorneys who bring frivolous lawsuits. Eighty-seven percent said they favored retaining Rule 11 in its current form. In addition, 91% of the judges surveyed opposed provisions in the Lawsuit Abuse Reduction Act, which won House approval in the last Congress, that would require judges to impose mandatory sanctions on attorneys who bring frivolous lawsuits.

The Washington-based Federal Judicial Center is the research and education agency of the federal court system. Download the FJC Survey

Link to the BusinessInsurance.com site

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In Garza v. Exel Logic, Inc. (Tex, 4/8/05) the Texas Supreme Court issued an interesting opinion regarding the application of the Texas Workers' Compensation Bar to situations involving an employee provided by a staffing company to a client company who suffers a workplace injury. I know that many staffing companies and most client employers believe that the client employer is covered by the staffing company's workers compensation coverage and therefore need not worry about workplace injuries of temporary employees. As this case makes clear, this is not necessarily the case.

In this case, Interim Services Pacific LLC, a temporary employment agency, employed Jose Garza as a laborer and assigned him to perform general labor at Exel Logistics, Inc., one of Interim's clients. Garza sued Interim and Exel after he was injured while crossing over a moving conveyor belt to turn off a machine at the request of an Exel supervisor. The trial court granted summary judgment for the agency and its client, concluding that the Workers' Compensation Act's exclusive remedy provision bars the worker's common law claims. The court of appeals affirmed. In this opinion, however, the Supremes affirmed the court of appeals' judgment as to the temporary employment agency but "because the client company did not establish that it is "covered by workers' compensation insurance coverage," which is necessary to come within the exclusive remedy provision", reversed the court of appeals' judgment as to the client company and remanded the case to the trial court for further proceedings.

The client employer argued that the contract between it and the staffing company "required [the client company] to pay [the staffing company] for the costs associated with maintaining workers' compensation insurance," and therefore, "the client provided worker's [sic] compensation insurance for Garza, albeit through [the staffing company." The Court held that the Workers' Compensation Act "does not permit a temporary employment agency like Interim to obtain coverage for a client simply by obtaining coverage for itself. There must be explicit coverage for the client."Time to run and check those contracts people.

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In Baldridge vs. SBC Communications Inc, No 04-10819 (5th Cir. Mar. 28, 2005) the plaintiffs, employees of Cingular Wireless LLC filed an action for overtime pay under the FLSA. After discovery had commenced, the district court certified the case as a collective action under § 216(b), then modified the certification by drastically narrowing the scope of the class. The Defendants sought and the court declined to certify an interlocutory appeal under 28 U.S.C. § 1292(b). Defendant brought an interlocutory appeal anyway, pursuant to the "collateral order" exception to the final judgment rule and drawing analogy to F.R.C.P. 23(f), which has been specifically amended to allow for interlocutory review of class certification decisions in Rule 23 class actions.

The panel rejected resort to the collateral order doctrine, because the certification decision does not conclusively determine the disputed question. The court also rejected any analogy to the policies animating Rule 23(f) to allow interlocutory appeals of class certification in cases where the potential "costs and pressures on the defendant to settle" tipped the balance. "Although such policy concerns may be proper for legislative attention, they are irrelevant to the issue of whether the Cohen collateral order exception applies."

From a policy standpoint, the court noted that a critical difference between a FLSA class action and a rule 23 class action is that the former requires each class member to opt in as a party plaintiff, but the latter includes all absent class members who do not affirmatively opt out. Consequently, Congress could rationally conclude that the default rule allows rule 23 certification orders, on average, to result in larger, more financially onerous classes, thereby giving stronger policy justification for a special procedural rule allowing interlocutory appeals of those orders and trumping the final judgment rule of § 1291.

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