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Legal Update: Supreme Court, Fourth Circuit and N.C. Courts

Legal Update: Supreme Court, Fourth Circuit and N.C. Courts. Brian S. Clarke Assistant Professor of Law Charlotte School of Law. The Supreme Court of the United States. The Supreme Court. Nitro-Lift Techs. v. Howard (US 2012) Arbitration and Covenants Not to Compete

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Legal Update: Supreme Court, Fourth Circuit and N.C. Courts

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  1. Legal Update: Supreme Court, Fourth Circuit and N.C. Courts Brian S. Clarke Assistant Professor of Law Charlotte School of Law

  2. The Supreme Court of the United States

  3. The Supreme Court • Nitro-Lift Techs. v. Howard (US 2012) • Arbitration and Covenants Not to Compete • Question of arbitrability of the covenant not to compete dispute was a question for an arbitrator not a court • MORAL: If you want to carve the covenant out of the arbitration provision, do it explicitly

  4. The Supreme Court • Pending Cases • Vance v. Ball State University, No. 11-556 (June 25, 2012). • Does the Faragher/Ellerthdefense apply to . . . • harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, OR • Is it limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim. • PREDICTION: A supervisor does not necessarily have to have authority to hire and fire

  5. The Supreme Court • Pending Cases • Genesis HealthCare Corp. v. Symczyk, No. 11-1059 (June 25, 2012). • The validity of “tactical mooting” in the FLSA collective action context to end a case • FLSA collective actions are one the rise • Several pending locally • PREDICTION: True tactical mooting effectively eliminates the “case or controversy” needed for Article III standing. • However, true tactical mooting will likely be rare • Does plaintiff seek injunctive relief? Declaratory relief? Does the Rule 68 Offer of Judgment address those?

  6. The Supreme Court • Pending Cases • Sandifer v. U.S. Steel, No. 12-417. • What constitutes "changing clothes" within the meaning of section 203(o) of the FLSA? • Deals with the donning and doffing of Personal Protective Equipment in an industrial workplace • In a collective bargaining agreement, the employer and the union can agree that “changing clothes” is not compensable • PREDICTION: “Changing clothes” means donning and doffing of PPE and can be excluded from compensable time under 203(o) of the FLSA.

  7. The Fourth Circuit

  8. The Fourth Circuit Bench • The current makeup of the court . . . • Regan (R) Nominee: 1 • Wilkinson (Va.) • G.H.W. Bush (R) Nominee: 1 • Niemeyer (Md.) • Clinton (D) Nominees: 3 ½ • Traxler (S.C.) Motz (Md.) King (W.Va.) Gregory (Va.) [1/2] • G.W. Bush (R) Nominees: 3 ½ • Duncan (N.C.) Agree (Va.) Shedd (S.C.) Gregory (Va.) [1/2] • Obama (D) Nominees: 6 • Davis (Md.) Keenan (Va.) Wynn (N.C.) • Diaz (N.C.) Floyd(S.C.) Thacker (W.Va.)

  9. The Fourth Circuit Bench Ideologically, most people would categorize the current judges as follows . . . • Liberal(general perception) • Three . . . Motz, Davis, Wynn • Conservative(general perception) • Three . . . Shedd, Niemeyer, Wilkinson • Moderate(general perception) • Nine . . . Traxler, Keenan, Diaz, Floyd, Thacker, Duncan, Agee, Gregory, King

  10. The Fourth Circuit Bench Overview of Decisions . . . • Reversals of Judgments for the Employer (pro-employee): 11 (of 40) [27.5%] • Other Generally Pro-Employee Positions: 4 (of 40) [10%] • TOTAL PRO-EMPLOYEE DECISIONS: 15 (of 40) [37.5%] • Neutral Application of Well Established Law: 17 (of 40) [42.5%] • Generally Pro-Employer Positions: 8 (of 40) [20%]

  11. The Fourth Circuit Bench Themes over the last year . . . • The moderation trend continues (or has stabilized) • The days of the Fourth Circuit as the most employer-friendly circuit are OVER • It is more important than ever for HR to do things the right way on the front end.

  12. Computer Fraud & Abuse Act: The Fourth Circuit Is Now De-CFAA-nated.

  13. Computer Fraud & Abuse Act WECCarolina Energy Solutions, LLC v. Miller, 687 F.3d 199 (4th Cir. 2012) • One of three cases of first impression for the 4th Cir. this year • Miller was a Project Director for WEC • Had company laptop, etc. • WEC had policies prohibiting employees from saving work files to personal devices or using company resources for non-business purposes • Miller left WEC to go to a competitor and, allegedly, took a bunch of confidential information with him

  14. Computer Fraud & Abuse Act WECCarolina Energy Solutions, LLC v. Miller • Miller allegedly used WEC confidential information in a customer presentation 20 days later on behalf of his new employer • The new employer beat out WEC for the customer’s business • WEC sued, asserting various state law claims and a claim under CFAA • CFAA creates a civil claim against any individual who accesses a computer network without authorization or in excess of his authorization and causes damage of at least $5,000 • Miller moved to dismiss the CFAA claim

  15. Computer Fraud & Abuse Act WECCarolina Energy Solutions, LLC v. Miller • Fourth Circuit adopted a narrow interpretation of CFAA • Joined the Ninth Circuit (YIKES!) • Court concluded that CFAA only addresses “access” to the network, not what a person does with information on the network • If an individual is authorized to access a computer network, that is the end of the discussion for CFAA purposes • “Exceeding Authorized Access” does not mean misusing data, files, etc. (or even misappropriating them) • CFAA claims are effectively dead in the employment context

  16. FAIR LABOR STANDARDS ACT: No FLSA Complaint is Minor

  17. Fair Labor Standards Act Minor v. Bostwick Laboratories, Inc., 669 F.3d 428 (4th Cir. 2012). On May 6, 2008, Kathy Minor (and several others) met with Bostwick’sCOO Reported that Minor’s supervisor routinely altered employees’ time sheets to reflect that they had not worked overtime when they had. Six days later, Bostwick fired Minor The reason given: “too much conflict with her supervisors and the relationship just was not working.” Bostwick also claimed to have met with Minor’s co-workers and “had determined that she was the problem.”

  18. Fair Labor Standards Act Minor v. Bostwick Laboratories, Inc. • Minor sued for retaliation under the FLSA • Bostwick moved to dismiss on the ground that an informal, intracompany, oral complaint was not protected activity under the FLSA • FLSA prohibits retaliation against any employee “because such employee has filedany complaint or instituted or caused to be instituted any proceeding under or related to this chapter . . .” • The District Court agreed and dismissed the claim

  19. Fair Labor Standards Act Minor v. Bostwick Laboratories, Inc. • While Minor’s appeal was pending, the Supreme Court decided Kasten v. Saint-Gobain Performance Plastics • Kasten focused on the “filed” part of the anti-retaliation provision • Held than an oral complaint is “filed” when it is made • Left open the question of whether an informal, intracompany complaint satisfies the “any complaint” part of the statute • Fourth Circuit had to close the hole left by the Supreme Court

  20. Fair Labor Standards Act Minor v. Bostwick Laboratories, Inc. So, is making an informal, oral, intracompany complaint of FLSA violations protected conduct? YES . . . As long as the complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection”

  21. North Carolina

  22. REDA and Wrongful Discharge Pierce v. The Atlantic Group, Inc., 724 S.E.2d 568 (N.C. App.), disc. rev. denied, 731 S.E.2d 413 (N.C. 2012). Howard Pierce was a rigging supervisor for Atlantic Worked on maintenance projects at Nuclear Powerplants Last assignment was at Duke Energy’s McGuire Nuclear Station on Lake Norman OSHANC issued regulations regarding crane operators and riggers – required certification

  23. REDA and Wrongful Discharge Pierce v. The Atlantic Group, Inc. Pierce was concerned about how to get the certifications completed without disruption to maintenance operations at McGuire He formulated a training plan in order to get the certifications done with minimal disruption Atlantic and Duke did not respond to his plan He then was asked to take a vacation and then, while on vacation, asked to come back for a limited assignment at a lower pay rate

  24. REDA and Wrongful Discharge Pierce v. The Atlantic Group, Inc. • Shortly thereafter, he was fired for falsifying his timecard (although he claimed his action was approved by his supervisor) • Basically, entered a full day of work on a Friday but then left work for a family emergency • Sued, asserting claims for violation of REDA, wrongful discharge in violation of public policy, defamation and IIED/NIED • Ds moved to dismiss, which was granted

  25. REDA and Wrongful Discharge Pierce v. The Atlantic Group, Inc. • REDA CLAIM Issue of FIRST IMPRESSION • Can an internal complaint satisfy the “initiate any inquiry” prong of protected conduct under REDA? • HELD: NO, it cannot. • More than an internal complaint, or suggestion, is required. • Wrongful Discharge Claim • P must plead a specific N.C. public policy that D allegedly violated • Broad, general statutes will not suffice

  26. Federal Legislation

  27. Federal Legislation Nothing on the horizon. ACAis coming on-line over the next 2 years. The effect will be minimal outside of the benefits area The primary provision that is generally applicable is the breastfeeding break requirement added to the FLSA

  28. North Carolina Other[?]

  29. Employee Emails to Counsel • N.C. State Bar Formal Ethics Opinion 2012-5 • Deals with an employee’s emails to the employee’s personal attorney sent using the employer’s business email system • Generally, if the employer has a clearly written and clearly communicated policy stating that all emails sent or received on its system are the property of the employer and EE has NO expectation of privacy . . . • These emails are NOT privileged

  30. Employee Emails to Counsel • N.C. State Bar Formal Ethics Opinion 2012-5 • VERY different rules for emails sent by an employee using an internet email account (live.com, gmail.com, etc.) accessed from the ER’s computer system • These remain privileged • Can be SIGNIFICANT legal liability for accessing these • Primarily under the federal Stored Communications Act

  31. North Carolina Legislation

  32. Unemployment Insurance • H.B. 4 – signed by Gov. McCrory on Feb. 18, 2013. • Goes into effect on July 1, 2013 • Significant changes to benefits • Reduced maximum weekly benefit amount • Reduced maximum duration • Changed calculation of benefit amount • Eliminated several “non-charging” benefit categories • Small increase in SUTA tax (o.o6% per year).

  33. Expunged Criminal Records • Pending . . . S.B. 91 • Passed N.C. Senate (48-2) on March 5, 2013 • Now pending in N.C. House • Would prohibit employers from requiring an applicant for employment to disclose information concerning any arrest, criminal charge, or criminal conviction that has been expunged. • Seems likely to pass.

  34. Gun Control • Several bills pending that would . . . • allow concealed handguns in places where they are currently banned • prevent an employer from banning hand guns in employees’ cars in the employer’s parking lot

  35. QUESTIONS?

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