Imagine that you are an employee working your way up the corporate ladder. You’ve spent years following the rules, paying your proverbial dues, and seemingly excelling in your current position. With your sights set on a move to management, you apply for a promotion. It’s denied.
Disappointed but not defeated, you apply for a promotion again the next year. And the next several years after that. Each time, you are passed over for advancement while other people, colleagues with mediocre performance and less experience, are promoted over you. Although you tried to overlook it the first few times you lost the promotion, it is now undeniable that the company is only promoting people of a certain race — people who look nothing like you. Your patience runs thin, but then again, so does the company’s rationale for denying your promotion; their reasons simply don’t add up. You consider pursuing legal action, but the idea of playing David to your company’s Goliath is terrifying. You can’t afford to lose your job, and the only evidence you have is your own story.
Now imagine you later learn that a number of other employees at your company — coworkers who look like you, sought similar jobs, and reported to the same managers — were denied promotions under nearly identical circumstances. Armed with access to this additional evidence and backed by your peers, you see a clear pattern of misconduct and become more confident in your conclusion that the promotion denials were not a matter of bad luck or mere chance; the pattern is evidence of discrimination, and you set out to prove it as such. The battle undoubtedly will be difficult, but by joining your claim with similarly situated coworkers and accessing companywide data, information that was always in your employer’s possession, you have the potential to level the playing field.
One need not stretch the imagination very far to appreciate the core premise of this scenario and others like it. Whether it is confronting discriminatory denials of promotion, exposing dangerous working conditions, opposing policies that surreptitiously shave time off employee timesheets or challenging other workplace offenses, the idea of strength in numbers — that insurmountable challenges can be overcome when tackled by a group — is part of this nation’s DNA. Indeed, this country sprang from the revolutionary decision of a few individuals to unite against a foe so formidable that collective action was not just the best option, it was the only option. And for more than 80 years, the National Labor Relations Act has been protecting the rights of workers to engage in “concerted activity” — conduct such as picketing, striking and pursing legal claims together with other workers.
This right to join together to challenge workplace misconduct is under siege and its very survival will be before the U.S. Supreme Court in early October. The court will consider whether the NLRA allows employers to require that workers, as a condition of their employment, surrender their right to jointly pursue claims challenging workplace misconduct. If our ability to challenge workplace wrongs is to have any meaning, the answer to this question must be a resounding no.
In each of the three related cases, Epic Systems Corp. v. Lewis; Ernst & Young v. Morris and NLRB v. Murphy Oil USA, Inc., an employer demanded of its employees, as a condition of employment, that they submit every workplace dispute over the entire course of their employment to private arbitration. Their claims would only be tried individually and arbitration would be conducted in secret before a private arbitrator.
The right to join together to challenge common grievances has long been an essential component of our nation’s slow but deliberate progress toward a “more perfect union.” Without this bedrock right, our country would have fallen far short of achieving many of the protections against discrimination on which we now depend and may take for granted.
Many of the workplace protections we enjoy today were achieved through legal action brought by groups of workers. They include routine protections, such as the right to work as a flight attendant regardless of your gender; to work beyond the age of 60 as an engineer; to work in the front of a showroom regardless of your skin color; to be compensated when your boss asks you to stay past your shift to restock the shelves; to seek and keep certain jobs even if you’re pregnant, and many other protections established by courts through cases brought by workers who joined together to challenge a common injustice.
Achieving these victories would have been far more difficult, if not impossible, had the challenge fallen to a single person rather than a group of workers. It is rare that people who engage in discrimination or harassment publicly state their intentions. Much more often, claims of discrimination and other workplace misconduct rely on evidence of a pattern of misconduct that can be proven only when claims challenging the same conduct are tried together. And, where workers who proceed alone do succeed in proving discrimination, the remedy may be limited to the individual worker. The chance to eradicate more deep-seated discriminatory policies and longstanding bias is typically reserved for occasions where groups of workers prove a pattern of bias. Indeed, had the bans on bringing worker claims together, now before the Supreme Court, been the law of the land over the last half century, more than 120 landmark civil rights cases would never have been brought.
Barring workers from joining together to challenge injustice in their workplace could set back by a century this nation’s progress toward social justice for all Americans.
Published in the September 25, 2017 edition of the The Los Angeles ❘ San Francisco Daily Journal. Joe Sellers is a partner and Shaylyn Cochran is an associate in the Civil Rights & Employment practice at Cohen Milstein Sellers & Toll PLLC.
Last month marked 45 years since the U.S. Supreme Court’s ruling in Affiliated Ute Citizens of Utah v. United States, which established a rebuttable presumption of reliance for securities fraud claims based on omissions of material fact. This Expert Analysis special series explores the decision’s progeny in the Supreme Court and various circuits.
Affiliated Ute Citizens of Utah v. United States held that investors need not prove they relied on a defendant’s omission of material information to establish their injury. Affiliated Ute v. United States, 406 U.S. 128 (1972). Instead, reliance is inferred from the importance of the information withheld.[1] Since that ruling, various courts of appeals have explained that Affiliated Ute offers only a presumption of reliance, which is rebuttable.[2] Once the presumption is invoked, the burden of proof then switches to a defendant who withheld information material to investment decisions despite having a duty to disclose. The defendant can only avoid liability by demonstrating that even if the investors had been fully informed, their investment decision would have remained the same.
The rationale underlying Affiliated Ute is common in civil law — a party that is unable to present evidence supporting her position will lose that issue. As a practical matter, it is nearly impossible for an investor to demonstrate that the opposite of the omission was the basis for her investment decision. Accordingly, Affiliated Ute relieves investors of that burden and deems reliance to exist where a defendant owes a duty to disclose the truth, yet omits material information.
The Seventh Circuit Court of Appeal has cited the Affiliated Ute decision 145 times.[3] The most significant of these decisions was the Seventh Circuit’s rejection of the “fraud created the market” theory as an extension of Affiliated Ute. Eckstein v. Balcor Film Investors, 8 F.3d 1121 (7th Cir. 1993) (Easterbrook, J.). What could have been a major blow for investors has had far less impact because the decision acknowledges that investors may establish reliance indirectly.
[1] Justice Harry Blackmun explained, “[u]nder the circumstances of this case, involving primarily a failure to disclose, positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in the making of this decision.” Affiliated Ute Citizens v. United States, 406 U.S. 128, 153-154 (1972) (citations omitted).
[2] See Panter v. Marshall Field & Co., 646 F.2d 271, 284 (7th Cir. 1981) (“The Mills-Ute presumption is essentially a rule of judicial economy and convenience, designed to avoid the impracticality of requiring that each plaintiff shareholder testify concerning the reliance element. Mills v. Electric Auto-Lite Co., 396 U.S. 375, 385 (1970); see Chris-Craft Industries Inc. v. Piper Aircraft Corp., 480 F.2d 341, 375 (2d Cir.), cert. denied, 414 U.S. 910, 94 S. Ct. 231, 38 L. Ed. 2d 148, 94 S. Ct. 232 (1973) (“These impracticalities are avoided by establishing a presumption of reliance where it is logical to presume that such reliance in fact existed”); Kohn v. American Metal Climax Inc., 458 F.2d 255, 290 (3d Cir.), cert. denied, 409 U.S. 874, 93 S. Ct. 120, 34 L. Ed. 2d 126, 93 S. Ct. 132 (1972) (Adams, J., concurring in part, dissenting in part) (10b-5 action). However, when the logical basis on which the presumption rests is absent, it would be highly inappropriate to apply the Mills-Ute presumption. “(W)here no reliance (is) possible under any imaginable set of facts, such a presumption would be illogical in the extreme.” Lewis v. McGraw, 619 F.2d 192, 195 (2d Cir. 1980).
Read Legal Issues in the Use of Pre-Employment Testing.
This paper, which was presented at the 2017 Pacific Coast Labor & Employment Conference, addresses pre-employment testing and the legal issues surrounding it.
On Thursday, April 20, 2017 a federal jury returned a verdict in the first of the test trials against DynCorp International, the defense contractor that did the aerial fumigations in Plan Colombia. The International Rights Advocates (IRAdvocates) first filed this case in 2001 on behalf of over 2,000 Ecuadoran farmers who live near the border with Colombia and allege that they had their farms destroyed when the toxic chemicals used by DynCorp to kill coca and poppy plants was also sprayed on their farms. The Ecuadoran farmers also alleged that they received personal injuries and suffered battery and intentional infliction of emotional distress. After many delays and a lengthy appeal process, the case was finally set for trial on behalf of six (6) test plaintiffs. Theodore Leopold, Leslie M. Kroeger and Poorad Razavi from Cohen Milstein joined the case in late 2016 to prepare the case for the April 3, 2017 trial.
The issues of battery and intentional infliction of emotional distress proceeded to trial. DynCorp’s major defense was that they were not responsible for any of the damages to the Ecuadoran farmers because they were not flying the spray missions themselves. They asserted the missions were flown by two groups of pilots, one from EAST, a U.S. subcontractor, and the other from the Colombian National Police (CNP). DynCorp argued the pilots were not under their control and they could not be held liable if the pilots wrongfully fumigated the Ecuadoran farmers. The jury concluded that DynCorp was responsible for the EAST pilots, but that the CNP pilots were independent contractors and not under the control of DynCorp. The jury also found that in April, 2003, EAST took over control of the CNP pilots, making DynCorp liable for all spray pilots fumigating after that date. Unfortunately, all of the first six test Plaintiffs had claims that pre-dated April, 2003, so they could not determine whether DynCorp or the CNP was responsible for spraying them. The jury was accordingly unable to award damages to these Plaintiffs because they could not prove which group of pilots sprayed them.
Moving forward, DynCorp will be estopped from arguing they are not responsible for any harm caused by the spray pilots post-April, 2003. We look forward to the future trials for the remaining 2,000 Ecuadoran farmers that will focus on damages and the reckless actions of the DynCorp pilots.
Terry Collingsworth, Executive Director of the IR Advocates stated, “we have been fighting for justice for the 2,000 Ecuadoran farmers for over 16 years, and we will continue the fight until we achieve justice.”
Contact: Desmond Lee or Denise Luu at cohenmilstein@berlinrosen.com.
Here we go again. H.R. 985 places a bulls’ eye squarely on the back of every securities class action. It does so under the guise of attempting to fix a supposedly broken litigation system for class actions, which the bill’s proponents allege is rife with abuse. But in fact this bill is designed to eliminate all class actions — including securities class actions. Not only is the “abuse” the bill’s proponents claim exists illusory; they ignore the critical role securities class actions play in maintaining the integrity of our financial markets and providing recourse to investors, retirees, pension funds, health and welfare funds, states and municipalities invested in the market when fraud is committed.
H.R. 985 shot out of the House at record speed. In fact, the bill was introduced on a Thursday and voted out of committee the following Wednesday without so much as a hearing. The House voted along mainly party lines, with fourteen Republican members joining all Democratic members in opposing the legislation. H.R. 984 is now in the Senate, before the Judiciary Committee, where one can only hope that Senators will reject this brazen attempt to close the courthouse doors.
There is much to say about the H.R. 985. It shamelessly seeks to erect hurdles where none should exist, complicates class certification proceedings, buries the judiciary with class certification appeals and data collection and seeks to tie up the payment of attorneys’ fees and require funding disclosures. This is all with a view to make cases much more difficult to litigate and take far longer to resolve than they do now, and disincentivize plaintiffs’ firms from taking on these cases, thereby denying investors their ability to hold those who defraud them accountable.
This paper was presented at the 2017 NELA Spring Seminar “Litigating Wage & Hour Cases: Challenges & Opportunities.”
This paper, presented at the American Bar Association EEO Committee Mid-Winter Meeting, addresses the process of obtaining and analyzing data in class action litigation.
The Numbers Game: Demystifying the Use of Data in Class Actions
On March 11, 2016, Florida legislators voted unanimously to approve House Bill 7027. When that bill was signed on April 4, 2016, and went into effect on July 1, 2016, Florida became the nation’s first state to legalize fully autonomous vehicles on public roads without a driver behind the wheel.
If the vehicle can drive itself without input from a driver, then Florida statute 316.003(2) considers it to be an autonomous vehicle:
Any vehicle equipped with autonomous technology [is an autonomous vehicle]. The term “autonomous technology means technology installed on a motor vehicle that has the capability to drive the vehicle on which the technology is installed without the active control or monitoring by a human operator. The term excludes a motor vehicle enabled with active safety systems or driver assistance systems, including, without limitation, a system to provide electronic blind spot assistance, crash avoidance, emergency braking, parking assistance, adaptive cruise control, lane keep assistance, lane departure warning, or traffic jam and queuing assistant, unless any such system alone or in combination with other systems enables the vehicle on which the technology is installed to drive without the active control or monitoring by a human operator.
Florida law also allows any person that possesses a valid driver’s license to operate an autonomous vehicle in autonomous mode. No specialized safety education is required before a person is legally permitted to operate an autonomous vehicle on Florida’s roadways. Furthermore, the person operating the autonomous vehicle does not even have to be in the vehicle when it is driving in Florida autonomously.
Under the law, it appears to follow that an operator and/or owner of an autonomous vehicle could be liable for a crash despite not being in or near his or her vehicle at the time it occurred.
A year ago, the U.S. Supreme Court issued a per curiam order in Amgen Inc. v. Harris 136 S. Ct. 758 (2016). The Amgen decision came in the wake of the Supreme Court’s determination that there is no special presumption of prudence for employee stock ownership plan fiduciaries. Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 2467 (2014). In Dudenhoeffer, the Supreme Court also defined what plaintiffs must plead to pass muster for a fiduciary breach claim under the Employee Retirement Income Security Act. Although very few circuit courts even had a chance to consider Dudenhoeffer, the Supreme Court followed less than two years later with a three-page admonishment of the Ninth Circuit’s purported application of that decision. Amgen, 136 S. Ct. 758.
Amgen warned practitioners and courts alike that complaints must be carefully pled and will be closely scrutinized at the motion to dismiss stage. In particular, the Supreme Court rejected the Ninth Circuit’s inference that, because a complaint adequately stated a claim under the federal securities laws, it also must state a claim for a fiduciary breach under ERISA. Despite some initial setbacks since Amgen was decided, plaintiffs are beginning to tackle this strict pleading requirement head-on. In the future, we expect complaints can survive motions to dismiss if they allege precisely why a prudent fiduciary could not have concluded that taking an alternative action (such as refraining from purchasing or disclosing the truth) would do more harm than good. This will entail relying on financial experts to demonstrate the amount of losses that could have been avoided had alternative actions been taken.
Grappling with the credibility of witnesses has been a focal point of legal systems for thousands of years.[1] Despite all this practice, however, our legal system has not yet established a uniform approach to dealing with a witness credibility issue in a somewhat new context — a securities class action complaint governed by the Private Securities Litigation Reform Act, Pub. L. No. 104-67, 109 Stat. 737, codified at 15 U.S.C. § 78u-4. This article explores why this issue has arisen since the passage of the PSLRA, enumerates the different approaches taken by a number of courts and defense counsel grappling with this issue, and explains why the approach taken recently in Union Asset Management Holding AG v. SanDisk LLC, Civ. No. 15-01455, 2017 U.S. Dist. LEXIS 977 (N.D. Cal. Jan. 4, 2017) makes sense.
The PSLRA simultaneously raised the pleading standards for surviving a motion to dismiss to a very high level and forbids discovery in most cases until and unless a complaint survives a motion to dismiss.[2] As courts have recognized, the “combined effect of the high scienter standard in securities fraud litigation and the strict PSLRA discovery stay is to place great weight at the pleading stage on the statements of confidential witnesses.” Union Asset, 2017 U.S. Dist. LEXIS 977, at *6. In the absence of discovery, these confidential witnesses or whistleblowers, often former employees of the defendant companies, are often the only sources of information as to what the defendants knew and when they knew it — normally key pieces of information for a securities fraud complaint to move past the motion to dismiss. Plaintiffs counsel, working with investigators or otherwise, locate and interview these witnesses and then include allegations based on the information gleaned from the interviews in their complaints. Generally, in an attempt to protect the witness from retaliation, unwanted publicity, and other potential negative repercussions stemming from whistleblowing on their former employees, these whistleblower witnesses are listed as confidential witnesses along with descriptions (usually of title, dates of employment, and scope of responsibilities) of the past employment that gave them access to the information that is being used as the basis for allegations in the complaint.