Federal Employee's Discrimination & Retaliation Claims Dismissed
Federal employee Robert T. Perry (“Perry”) had a long-running legal battle with his federal employer, the Pension Benefit Guaranty Corporation (“PBGC”). After three lawsuits, two of which were settled, Perry’s claims of hostile work environment and retaliation have now been dismissed on summary judgment.
The case, Perry v. Gotbaum, was the third lawsuit brought by Perry against the PBGC and centered around Perry’s allegations that the PBGC discriminated and retaliated against him based upon a Settlement Agreement entered into by the parties to settle the first two lawsuits. As required under the Settlement Agreement, the PBGC provided Perry with a grade and step increase in salary, paid for $10,000 worth of training, paid Perry a lump sum of $60,000, and placed him on Leave Without Pay (“LWOP”) Status for a time-period not to exceed six months. In addition to proving Perry with a salary increase and training, it appears that the impetus behind the Settlement Agreement was to provide Perry with an opportunity to find employment outside of the PBGC and give him a lump sum payment during his job search. Per federal government regulations, the personnel actions required under the Settlement Agreement had to be documented using a federal government Standard Form 50 (“SF-50”).
In his third lawsuit, Perry complained, inter alia, that the comments section of the SF-50 forms used to process the personnel actions included information referencing his prior lawsuits and the Settlement Agreement. According to Perry, such comments would have a chilling effect on his ability to seek employment outside of the PBGC because it would be clear that he had engaged in protected activity. Further, Perry complained that the PBGC had used a more generic code when processing SF-50 forms for other employees, and therefore he should have been afforded the same treatment.
While the Court agreed with Perry that he engaged in protected activity regarding his prior lawsuits and the resulting Settlement Agreement, the Court ruled in favor of the PBGC finding that the Agency actually went back and corrected the SF-50 forms to respond to Perry’s concerns about the remarks placed on the forms. Further, since the Settlement Agreement was not confidential and had been filed with the Court, it was a public record and Perry could not base his claims of a retaliatory and/or discriminatory disclosure upon information that was generally available to the public. In addition, the Court found that there was no basis to find the PBGC’s “honest mistake” was an attempt to hamper Perry’s future job opportunities since it was in the Agency’s interest to have Perry find employment outside of the PBGC as soon as possible. As such, the Court dismissed Perry’s federal employment discrimination and retaliation claims.
It should be noted that the legal standard applied by the Court in this public sector case applies to private sector Virginia businesses as well.
Fourth Circuit Court of Appeals: Employer May be Liable for Harassment by Customer
In an unpublished decision, the Fourth Circuit Court Appeals recently held that an employer may be liable for third-party harassment by a customer if the employer knew or should have known of the harassment and failed to take appropriate actions to halt it. The evidence of repeated complaints to supervisors and managers by the employee created a triable issue as to whether the employer had notice of the harassment, and thus, the Appeals Court allowed this claim to go forward to trial.
In EEOC v. Cromer Food Services, Incorporated, a route driver for a southeastern vending machine company alleged he suffered daily sexual harassment at the hands of two housekeeper employees of one of the company’s largest customers – a hospital. According to the driver, the harassment began after a co-worker left a note in the hospital cafeteria calling him gay. Following this incident, the two male hospital employees allegedly began harassing him with unwanted sexual comments.
The driver claims he complained to numerous people at CFS, including his supervisor, his direct supervisor, another supervisor, a manager of the company, and the chairman of the Board. As the harassment continued, he took more drastic measures by reporting the harassment directly to a human resources professional at the hospital and to the supervisor of the two hospital employees. But, the hospital employees were unrelenting.
In response to this lawsuit, the company asserted that it did not have actual or constructive knowledge of the harassment because the complaints by the driver were vague and insufficiently detailed for action to be taken. In addition, the company pointed out that the employee failed to report the harassment to its President in accordance with the company’s written sexual harassment protocol.
The Fourth Circuit reversed the trial court’s dismissal of the claim. In doing so, it noted that the District Court focused on only one snippet of the driver’s deposition testimony which stated that he did not provide details of the harassment to the company. The Appeals Court acknowledged that although anti-harassment law requires notice to the employer – it should not require it to be pellucid.
The Fourth Circuit also pointed out the flaws in the employer’s approach in this matter. The Court stated that harassment claims could not be avoided by utilizing a “see no evil, hear no evil” strategy, and it criticized the protocol requiring reports to be made to the President by recognizing that such requirement may likely intimate an employee. Moreover, the Court drew attention to the fact that management failed to report the harassment up the chain of command as required by company policy.
This case illustrates to employers within the Fourth Circuit (which includes Virginia, Maryland, North Carolina, West Virginia and South Carolina) that a company’s written policy for reporting harassment may not provide insulation from liability under Title VII. Virginia businesses must ensure that they have a reasonable process in place to address allegations of harassment by its employees and third parties.
Non-Compete Ruled Unenforceable by Virginia Circuit Court
For several years now, many practitioners that advise and/or draft non-competes for their business clients have stopped including language in non-compete provisions which prohibit a former employee from being an “owner” or “shareholder” in a competing business. Virginia Courts have routinely held that including language which prohibits a former employee from essentially owning stock in a competing business was overbroad and not necessary to protect an employer’s legitimate business interest. Therefore, such non-competes have regularly been invalidated.
Consistent with prior court opinions, a Virginia Beach Circuit Court recently invalidated a non-compete provision which prohibited a former employee from, inter alia, being an owner or shareholder in a competing business. The case, Patient First Richmond Medical Group, LLC v. Ameanthea Rica Blanco (Virginia Beach Circuit Court, Feb. 15, 2011), involved Defendant Blanco, a family nurse practitioner who was employed by Plaintiff Patient First. According to the allegations in the case, Blanco, while still working at Patient First, began formation of a competing healthcare practice which was to provide primary and urgent care treatment at reasonable or fixed fees during extended weekday and weekend hours without the need for an appointment.
Blanco also solicited two doctors from Patient First to come work with her at the new medical practice. After she resigned her position with Patient First, Blanco opened up the competing business within seven miles of her former place of employment. Patient First brought suit alleging that Blanco violated her employment agreement which contained non-competition and non-solicitation provisions.
The covenant not to compete prohibited Blanco from performing medical services of the type performed for Patient First (though the term “medical services” was not defined) for two years after her employment and within a seven-mile radius as an “agent, officer, director, member, partner, shareholder, independent contractor, owner, or employee” of the competing business. The Court found that the non-compete provision was overbroad because its provisions went beyond occupations and businesses that were in competition with Patient First. The Court reasoned that by barring Blanco from being a shareholder in a competing business, she would be barred from merely owning stock in a publically traded company, even if she were not providing medical services for the company and thus not competing with Patient First.
The Court also held that a number of the terms in the provision were not defined and left too much uncertainty as to which activities of the former employee would, or would not, be in violation of the covenant. Therefore, an employee would essentially have to guess at which conduct was prohibited. The Court held that in such cases, the non-compete was unenforceable as offending sound public policy, and sustained Blanco’s demurrer without leave for Patient First to amend.
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