With bankruptcy filings at record levels, a situation that seems to be arising more frequently in my practice is the representation of a client who has recently filed for bankruptcy protection.

More often than not, my employment clients have failed to disclose their employment claim in their bankruptcy filings. When I ask my client whether their bankruptcy attorney asked them about the existence of any employment related claims the answer is universally, “no”. I then proceed to explain the following:

1. Federal bankruptcy law requires all debtors to file “a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of the debtor’s financial affairs.” 11 U.S.C. § 521(1).

2. A legal claim or cause of action is an asset that must be listed under 11 U.S.C. § 521(1). Thus, a claim for employment discrimination or sexual harassment is a claim that must be listed in the schedule of assets.

3. Furthermore, the duty on the part of debtors to disclose the existence of claim is a continuing duty. This means that a debtor is required to disclose all potential causes of action, even claims that arise after the bankruptcy petition is filed.

4. Failure to promptly amend the bankruptcy petition and disclose the existence of the employment claim will likely result in the dismissal of the case. Why is that? That’s where the judicial estoppel doctrine comes into play.

The doctrine of judicial estoppel prohibits a party from (1) asserting a position that is contrary to one that the party has asserted under oath in a prior proceeding, where (2) the prior court adopted the contrary position either as a preliminary matter or as a part of a final disposition. Browning v. Levy, 283 F.3d 761, 775 (6th Cir.2002). The purpose of the doctrine of judicial estoppel is to ensure the integrity of the courts by prohibiting a party from abusing the judicial process through gamesmanship. Browning, 283 F.3d at 776. Importantly, however, the doctrine of judicial estoppel is not appropriate in cases of mistake or inadvertence. Id.

Accordingly, many courts have applied the judicial estoppel doctrine to dismiss employment related claims where the client bringing the action previously asserted under oath in their bankruptcy filing that they did not have any employment related claims and the bankruptcy court then adopted a contrary position in its order confirming the client’s bankruptcy plan.

Fortunately, as noted above, an absence of bad faith, as well as mistake and inadvertence, are factors that should be considered by courts when applying judicial estoppel. Therefore, if an attorney learns that his client has filed for bankruptcy and that the bankruptcy petition did not disclose the claim that the attorney is handling, the attorney should promptly advise the client to amend the bankruptcy petition to disclose the existence of the claim. (Hopefully, the client’s bankruptcy attorney will assist in this process). Such a gesture will demonstrate the lack of bad faith on the client’s part and will establish that the client did not attempt to evade or deceive his or her creditors. As a result, the client will be able to go forward with their employment related claim.

I am presently involved in two FLSA collective action cases seeking overtime pay for cable installers paid on a piece-rate basis. I am working the cases with the Nichols Kaster firm based in Minneapolis. Click here.

On March 17, 2009, the district court for the Western District of Tennessee issued an opinion affirming a report and recommendation certifying a nationwide class in the case of Monroe et al. v. FTS USA, LLC et al. The case can be found on Westlaw at 2009 WL 736003 (W.D. Tenn. Mar. 17, 2009). Notice of the lawsuit will soon be sent to all current and former installers of FTS USA advising the installers of the right to joint the lawsuit.

And on April 23, 2009, the district court for the Western District of Tennessee certified a nationwide class in the case of Brasfield et al. v. Source Broadband Services, LLC and C-Cor, Inc. conditional-cert-order.pdf. Notice of the lawsuit will soon be sent to all current and former installers of Source Broadband and C-Cor from February 12, 2005 to the present. Once the notice is received by the installers, they will have a 60 day window to decide whether to join the suit by signing a consent to opt-in and returning the firm to the attorney’s attention for filing.

Should a plaintiff prevail in a wrongful termination case against a defendant, the plaintiff may be entitled to reinstatement. “The clearest way to make the plaintiff whole is to supplement the back pay award with reinstatement to the job.” Coffey v. Fayette Tubular Prods., 929 S.W.2d 326, 331 (Tenn. 1996). Reinstatement, where feasible, is the preferred remedy rather than front pay. Sasser v. Averitt Express, Inc., 839 S.W.2d 422, 432 (Tenn. Ct. App.1992). But in situations where reinstatement is not feasible, a plaintiff may be entitled to an award of front pay.

If an employer extends an offer of reinstatement, the burden is on the plaintiff to establish that reinstatement is not feasible. Newcomb v. Kohler Co., 222 S.W.3d 368, 403 (Tenn. Ct. App. 2006). According to the Kohler court, there are a number of instances in which reinstatement may not be feasible, including (1) “where the employer has demonstrated such extreme hostility that, as a practical matter, a productive and amicable working relationship would be impossible,” (2) “where no comparable job is available,” (3) “when it disrupts the employment of others,” (4) “when the employment relationship has been irreparably damaged by animosity associated with the litigation,” (5) “when the plaintiff is relatively close to retirement,” and (6) “when the plaintiff is a high management employee.” Id.. The hostility expressed by the employer toward the employee is perhaps the most common circumstance where reinstatement will not be feasible, Coffey, 929 S.W.2d at 331-32, but “[t]he discord between the parties must rise above the friction normally associated with litigation,” Sasser, 839 S.W.2d at 433 n. 9.

In Kohler, the court of appeals upheld the trial court’s decision to award the plaintiff front pay since reinstatement was not feasible. Specifically, the court of appeals affirmed the trial court’s finding that the defendant had demonstrated hostility toward the plaintiff and “that he could potentially face future efforts by [the defendant] to terminate his employment if he were reinstated.” Id. at 403.

A question that I get asked from time to time concerns whether it is lawful under Tennessee law for one person to tape record a conversation with another. The question is frequently asked in the context of an employment dispute. For example, I might be asked by a client or prospective client whether they can tape record a conversation with their boss. So what’s the answer?

Under Tennessee law, a person who is a party to a wire, oral, or electronic communication, or who has obtained the consent of at least one party, can lawfully record a communication and divulge the contents of the recorded conversation unless he has a criminal or tortious purpose. See Tenn. Code Ann. § 39-13-601(5).

Interestingly, Tennessee’s Rule of Professional Conduct also address whether an attorney can surreptitiously record a conversation. The Comment to RPC 4.4 provides in relevant part:

For example, a lawyer may not secretly record a conversation or the activities of another person if doing so would violate state or federal law specifically prohibiting such recording. Otherwise, this Rule does not prohibit secret recording so long as the lawyer has a substantial purpose other than to embarrass or burden the persons being recorded. It would be a violation of Rule 4.1 or Rule 8.4(c), however, if the lawyer stated falsely or affirmatively misled another to believe that a conversation or an activity was not being recorded. By itself, however, secret taping does not violate either Rule 8.4(c) (prohibition against dishonest or deceitful conduct) or Rule 8.4(d) (prohibition against conduct prejudicial to the administration of justice.) Click here..

Also, Comment [5] to RPC 8.4 (which addresses attorney misconduct) states that “[t]he lawful secret or surreptitious recording of a conversation or the actions of another for the purpose of obtaining or preserving evidence does not, by itself, constitute conduct involving deceit or dishonesty.”. Click here..

In determining whether a prospective client has a case a diligent attorney will want to talk to with witnesses. In my line of work, i.e., representing individuals in employment disputes, this often means talking to persons who formerly worked at my client’s current or former employer.

As all Tennessee attorneys should know, Tennessee’s Rules of Professional Conduct regulate an attorney’s communications. Indeed, Rule 4.2 of the Tennessee Rules of Professional Conduct specifically governs an attorney’s communications with a person represented by counsel. Click here. The rule provides as follows:

In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.

It is unclear from this language whether attorneys are ethically permitted to speak with former employees and agents of a corporation represented by an attorney. Fortunately, this precise situation is addressed in Comment [4] to RPC 4.2. The comment provides as follows:

If an agent or employee of an organization is represented in the matter by his or her own counsel, consent by that counsel will be sufficient for purposes of this Rule. Consent of the organization’s lawyer is not required for communication with a former agent or employee. See Rule 4.4 regarding the lawyer’s duty not to violate the organization’s legal rights by inquiring about information protected by the organization’s attorney-client privilege or as work-product of the organization’s lawyer. In communicating with a current or former agent or employee of an organization, a lawyer shall not solicit or assist in the breach of any duty of confidentiality owed by the agent to the organization. See RPC 4.4.

Accordingly, RPC 4.2 permits an attorney to speak with the former employees and agents of a company represented by counsel. But as the comment also states/warns, extreme caution must be exercised to avoid causing any attorney-client privileged information (or other privileged info) from being divulged. As a matter of practice, when speaking to a former employee or agent, I always start the conversation by instructing the person to not reveal any information that the company’s attorney communicated to the individual. This way I can fulfill my ethical duties to my client by diligently investigating the case, while making sure I do not cause the breach of any attorney client or other privileged information.

April 15 is around the corner. It’s a good time to remember that 26 U.S.C. 62(a)(20) permits employees to fully deduct attorney’s fees and court costs paid by, or on behalf of, the employee in connection with any action involving a claim of “unlawful discrimination”. Click here.

What constitutes “unlawful discrimination”? The term is defined at 26 U.S.C. 62(e) and includes virtually all of the laws that are used by employees when suing their employers such as Title VII; ADEA; ADA; Rehabilitation Act; FMLA; FLSA; NLRA; ERISA; WARN; Federal laws governing members of the uniformed services; Federal Whistleblower Protection laws; and any “Federal, State, or local law, or common law claims permitted under Federal, State, or local law (i) providing for the enforcement of civil rights, or (ii) regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits, or prohibiting the discharge of any employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted by law.

Bottom line: under federal tax law an employee gets an “above the line” deduction for all attorney’s fees and costs paid by the employee to his/her attorney in cases involving unlawful discrimination.

I am preparing for an upcoming trial. To prevail, I must establish that the defendant/employer took an illegal action against my client. I intend to do so by establishing that the defendant/employer has offered a false explanation for my client’s termination. In other words, I want to establish that the reason offered by the employer for my client’s termination was a pretext for an illegal motive.

According to one commentator, “pretext can be shown by such weaknesses, implausible points, inconsistencies, incoherencies, or contradictions in the employer’s proffered legitimate reasons for its action that a reasonable fact-finder could rationally find them unworthy of credence and hence infer that the employer did not act for the asserted non-discriminatory reasons.”

For example, one way to demonstrate pretext, i.e., that the legitimate, non-discriminatory reason asserted by the employer did not actually motivate the employer when it took the adverse action, is to establish that the employer’s reason(s) have shifted over time. See Asmo v. Keane, Inc., 471 F.3d 588, 596 (6th Cir. 2006)(changing rationale for adverse employment action evidence of pretext); See Cicero v. Borg-Warner Automotive, Inc., 280 F.3d 579, 592 (6th Cir. 2002) (holding that by showing that defendants’ justification for firing changed over time, plaintiff had shown genuine issue of fact that defendants’ proffered reason was not only false, but that the falsity was a pretext for discrimination.); Thurman v. Yellow Freight Sys., 90 F.3d 1160, 1167 (6th Cir. 1996)(“An employer’s changing rationale for making an adverse employment decision can be evidence of pretext.”).

Another way to establish pretext is to establish that the decisionmaker is not credible. Tuttle v. Metropolitan Government of Nashville, 474 F.3d 307, 319 (6th Cir. 2007)(finding inconsistencies in supervisor’s sworn testimony established evidence of pretext).

An employer’s deviation from standard, normal procedures when taking an employment action may also be used to establish pretext. Skalka v. Fernald Environmental Restoration Management Corp., 178 F.3d 414, 422 (6th Cir. 1999)

Under the First Amendment to the U.S. Constitution, public employees are protected from retaliation by their government employers for speaking out about matters of public concern. A recent opinion by the 6th Circuit illustrates this point. See Miller v. City of Canton, 2009 WL 899805 (6th Cir. Apr. 3, 2009).

In Miller, the plaintiff issued a seven-page press release alleging that Chief of Police for the City of Canton discriminated against black officers. The plaintiff was suspended for 60 days without pay as a direct result of the press release. The City of Canton argued that the plaintiff violated various departmental rules in issuing the press release.

On appeal, the 6th Circuit reversed the district court’s finding that the plaintiff had not engaged in constitutionally protected speech. According to the court, “[t]o show that a public employee’s speech is protected, a plaintiff must make two threshold showings. First, the plaintiff must show that the speech involves a matter of public concern. Second, the plaintiff must show that the speech was made outside the duties of employment. If both of these threshold showings are made, then we must balance the individual’s interest against the government’s interest.” Id. at *4.

After finding the plaintiff’s speech involved a matter of public concern and that the plaintiff was not speaking out about a matter outside the duties of his employment, the court balanced the plaintiff’s interest against the City of Canton’’s interest. Weighing in the plaintiff’s favor, the court found that the “majority of the press release was devoted to issues of pressing importance-racial discrimination in the police department.” Id. at *6. Weighing in the City of Canton’s favor, the court found that “these issues were presented in a manner that personally attacked” the police chief. Id. Weighing all the evidence, the court found that the “City’s interest in maintaining loyalty within the police force did not outweigh [the plaintiff's] interest in exposing racial discrimination by the City. The City has cited no evidence that the press release actually disrupted its effectiveness or otherwise impaired working relationships, nor of any other interest that would justify restricting [the plaintiff's] speech.” Id. As a result, the court found that the plaintiff’s speech was protected by the First Amendment and remanded the case for trial.

On April 1, 2009, the U.S. Supreme Court issued an opinion in a closely watched case involving arbitration of employment claims: 14 Penn Plaza LLC v. Pyett, 556 U.S. _____ (2009). penn-plaza.pdf. In a 5 to 4 decision, the Court held that a provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate age discrimination claims under the ADEA is enforceable as a matter of federal law.

The impact of the case is quite significant. Essentially the case holds that a union can bargain away (and thus waive) its individual members’ rights to pursue federal anti-discrimination claims against the employer. I would not be surprised at all to see this case garner the attention of our elected officials in Washington. Because at this juncture, the preservation of an individual’s right to pursue a federal anti-discrimination claim in court is solely in the hands of Congress.