LEGAL TRENDS, April 2007

Legal Trends Highlights New Supreme Court Case and Other Developments in Employment Law.

In this issue of Legal Trends, we analyze a new Supreme Court decision concerning whistleblower lawsuits, examine recent trends in discrimination claims and provide an update on the record verdict in the Buffone v. Rosebud Restaurants, Inc. case.

Supreme Court Law

Supreme Court Reigns In Awards In Whistleblower Claims.

Last month, the United States Supreme Court issued a landmark ruling making it more difficult for individuals to recover in whistleblower lawsuits.

James Stone was employed as an engineer at Rockwell International, Inc.'s Rocky Flats, Colorado nuclear weapons plant from November 1980 through March, 1986. During this time, Rockwell was under a contract with the Department of Energy ("DOE") to manage the facility. Most of Rockwell's compensation was derived from a semi-annual award fee, which was based upon the DOE's evaluation of Rockwell's performance in a number of areas, including environmental, safety and health concerns.

In 1982 Stone reviewed a company proposal involving disposing of toxic waste. He concluded that it would not work and communicated that to Rockwell management.

Notwithstanding Stone's opinion, Rockwell proceeded with the project during Stone's employment with the company. Stone was laid off in March, 1986. The evidence demonstrated that by October, 1986 Rockwell knew that their methodology for disposing of the toxic sludge was flawed. The DOE did not become aware of the problem until May, 1988.

In June, 1987, Stone went to the FBI with allegations of environmental crimes committed by his employer. Stone gave the FBI 2,300 pages of documents, including his 1982 engineering report which was critical of Rockwell's toxic waste disposal plan. Based in part on the information provided by Stone, the FBI obtained a search warrant for the Rocky Flats facility and conducted a raid. In March, 1992, Rockwell pled guilty to 10 environmental violations, and agreed to pay $18.5 million in fines.

In July, 1989, Stone filed a whistleblower lawsuit pursuant to the federal False Claims Act. The False Claims Act allows private citizens to file fraud suits against companies that do business with the government. He claimed that Rockwell knowingly submitted fraudulent claims to the government in order to get paid. In 1996, the U.S. government intervened on Stone's behalf to help prosecute the case. Stone's case proceeded to trial in 1999. The jury found in favor of Stone and awarded damages of almost $1.4 million. Pursuant to statute, the district court judge tripled the damage award. Rockwell appealed and the case wound up before the United States Supreme Court.

The high court considered Rockwell's argument that Stone was not the "original source" of the fraud allegations, since the jury found that the fraudulent conduct perpetrated by Rockwell occurred after Stone left the company. None of the documents which Stone provided to the FBI were introduced into evidence, nor did any of the witnesses whom Stone identified as having relevant knowledge testify. In a 6-2 decision, the Court accordingly reversed the jury verdict in Stone's favor.

While Rockwell is still liable for the fine, Stone will not be able to share in the award. Since 1986, False Claims Act cases have returned $11 billion to the government. The Court's decision will likely have a chilling effect on those who could potentially bring claims. An employee might be more inclined to take a pass on reporting a claim if she is fearful of being retaliated against and losing her job.

Discrimination Trends

EEOC Sees Slight Uptick in Charges

In order to initiate an employment discrimination claim against an employer, a plaintiff must file a document known as a charge of discrimination with the Equal Employment Opportunity Commission, ("EEOC"). The aggrieved employee must allege that he or she suffered some on-the-job discrimination based upon gender, race, national origin, religion, disability, or age. Once filed, the EEOC will investigate the charge and make a determination if there is "cause," or whether the claim has been substantiated.

Alternatively, the EEOC may conclude that the claim lacks merit and issue a "no cause" letter to the plaintiff that she has the right to sue her employer or former employer in federal court. The employee then has 90 days to commence her action in federal court. Regardless, the EEOC's investigation of a charge can take one year or longer.

A cause finding, however, is hardly the end of a typical employment discrimination claim. If the EEOC finds cause in a particular discrimination claim, the agency requests that the employer agree to voluntary mediation, or dispute resolution. Often, the employer will refuse an early request to resolve the claim. If the employer refuses to mediate the claim, the EEOC may file a lawsuit on the employee's behalf, but is far more likely to issue a right to sue letter to the plaintiff, again requiring him to file suit.

In fiscal year 2006, the EEOC received 75,768 charges of discrimination (compared to 75,428 in 2005). While the EEOC does not maintain statistics on the number of cause findings versus no cause findings, last year the federal agency only filed a mere 371 "merits" lawsuits on behalf of plaintiffs, which is likely a small fraction of those cases involving cause findings.

Race cases comprised the largest portion of all charges filed, (27,238, or 35.9% of the total). Compared to 10 years ago, plaintiffs filed 26,287 charges of race discrimination. Retaliation charges, however, have surged. Ten years ago, the EEOC recorded 16,080 such charges - today, 22,555 such claims were made. One likely reason for the increase in retaliation charges is that plaintiffs' attorneys realize that they have the most success on these claims.

Update On Record Verdict Additional damages awarded in Buffone v. Rosebud Restaurants, Inc.

In the November, 2006 issue of Legal Trends, we reported that a federal jury awarded Kristine Buffone $380,000 in damages for a case involving pregnancy discrimination and a violation of the Family and Medical Leave Act, ("FMLA"). That verdict was the second highest award in Chicago for such a case.

Since that time, Judge Suzanne Conlon awarded Ms. Buffone an additional $55,000 in liquidated damages under the FMLA. The FMLA provides that a successful plaintiff may recover such damages where the employer does not in good faith administer leave requested under the federal statute. Under those circumstances, the plaintiff's back pay award is doubled. In this case, the jury awarded Ms. Buffone $55,000 in backpay. The Court's ruling, in effect, doubled that portion of the jury verdict.

In two additional separate rulings, Magistrate Judge Sidney Schenkier recommended awarding The Law Offices of Eugene K. Hollander approximately $148,000 in attorneys' fees on top of the underlying $435,000 award. Most federal employment statutes, including the Pregnancy Discrimination Act and the FMLA provide that a successful plaintiff may recover attorneys' fees against the employer. With the total award likely to top out at $583,000, the parties reached a confidential settlement while the case was pending on appeal.

Office News

Eugene K. Hollander had an article published in the March, 2007 issue of the Illinois Bar Journal, "State Law Tort Claims - A New Weapon in Employment Discrimination Cases." Mr. Hollander's 2007 supplement to his treatise, Employment Evidence, was released in February by James Publishing Company.

About the author

Eugene Hollander is a trial attorney who currently heads his own law office in Chicago. Mr. Hollander has tried numerous cases in the state and federal courts. The Law Offices of Eugene K. Hollander is a full service law firm, concentrating its practice in employment discrimination claims, personal injury and medical malpractice suits, and various types of commercial litigation.

For more information, visit our web site at www.ekhlaw.com, or contact us directly at:

The Law Offices of Eugene K. Hollander
33 N. Dearborn
Suite 2300
Chicago, IL 60602
(312)-425-9100
E-mail

Copyright © 2007 The Law Offices of Eugene K. Hollander. This publication may be considered advertising material under the Illinois Code of Professional Responsibility and is not intended to create any attorney-client relationship. The reader should not rely upon any statement or opinion as legal advice, but rather, should consider it as generally informative.

Articles