On November 14, 2006, the 6th Circuit issued an under the radar per curiam decision dismissing Vicky Crawford’s Title VII retaliation case against Metropolitan Government of Nashville and Davidson County. See 211 Fed. Appx. 373 (6th Cir. 2006). That had to be an incredibly difficult day for Ms. Crawford.

Fortunately, Ms. Crawford’s petition for cert was accepted by the U.S. Supreme Court, which unanimously reversed the 6th Circuit’s decision on January 26, 2009. See Crawford v. Metropolitan Government of Nashville and Davidson County, 129 S.Ct. 846 (2009). The case was remanded for a jury trial on Ms. Crawford’s retaliation claim.

And yesterday, after a week long trial in Nashville federal court, the jury returned a verdict in favor of Ms. Crawford on her retaliation claim. Ms. Crawford was awarded over 1.5M in damages (420k in compensatory damages; 408k back pay; and 727k front pay). Crawford Verdict Form

If punitive damages were permitted against governmental entities under Title VII, which they are not according to 42 U.S.C. 1981a(b)(1) (click here), I can only imagine that the verdict would have been even bigger.

Congrats to Ms. Crawford and her trial attorney, Ann Buntin Steiner of Nashville, as well as Professor Eric Schnapper of Seattle, who handled Ms. Crawford’s appeal at the U.S. Supreme Court.

A recent Tennessee Court of Appeals decision involving a claim for unemployment benefits reiterated the general principle that ordinarily, an employee’s conduct off the working premises and outside the course and scope of his employment is not considered misconduct connected with work. Dura Auto Sys. v. Neeley

In Dura Automotive Systems v. Neeley, the claimant was terminated by his employer after it learned that the claimant admitted to smoking marijuana outside of work. The employer had a policy prohibiting its employees from using illegal drugs.

After termination, the claimant filed for unemployment benefits. His claim was denied by the Agency, which found that the claimant engaged in work related misconduct under Tenn. Code Ann. 50-7-303(a)(2)(A). The Appeals Tribunal reversed the Agency’s decision finding that the claimant had passed the company’s drug test (even though the claimant had admitted to smoking marijuana in the past) and that the claimant’s work performance had not been affected by his use of marijuana. Therefore, the claimant had not committed “misconduct connected with the claimant’s work” as required by Tennessee law to disqualify a claimant from receiving unemployment benefits.

The Board of Review affirmed the decision of the Appeals Tribunal awarding unemployment benefits, but the Chancery Court reversed the decision finding that the claimant had committed misconduct.

On appeal to the Tennessee Court of Appeals, the court agreed with the Appeals Tribunal finding that the employer had failed to demonstrate that the claimant’s drug use actually had any adverse effect on the claimant’s work and that the claimant had also passed the drug test required by the employer. Thus, the court of appeals concluded that the claimant’s conduct may have provided the employer an adequate basis to discharge him, but it did not warrant denying the claimant unemployment compensation.

In sum, despite an employee’s off site illegal conduct serving as a legitimate basis for termination, unless the conduct is connected to the employee’s work, it will not disqualify the employee from recovering unemployment benefits.

As reported by SCOTUSBLOG, the U.S. Supreme Court granted cert yesterday in a case arising out of the 4th Circuit: Hardt v. Reliance Standard Life Insurance Company.

This is a very important case to attorneys handling denial of benefit claims governed by ERISA. At issue is whether a party must “prevail” in court in order to be awarded attorney’s fees under ERISA’s attorney’s fee provision, which is found at 29 U.S.C. 1132(g)(1).

Frequently, courts “remand” cases for further review by the claim’s administrator rather than reversing the denial decision outright. In such a case, the claimant has certainly acheived a significant measure of success although not a victory in the sense of a final judgment in the claimant’s favor. Should the claimant’s attorney be awarded fees in this instance of a remand? Many courts interpreting ERISA’s attorney’s fee provision have said yes, see, e.g., Miller v. United Welfare Fund, 72 F.3d 1066, 1074 (2d Cir. 1995), but others such as the 4th Circuit Court of Appeals in the Hardt case have said no.

Since typical “prevailing party” language found in most federal law attorney’s fee provisions, such as Title VII’s attorney’s fee provision at 42 U.S.C. 2000e-5(k) (click here), is not found in ERISA’s attorney’s fee provision, I believe that the 4th Circuit’s holding, that claimants are not entitled to an award of attorney’s fees where a court remands the claim for further review, will be reversed.

ERISA’s attorney’s fee provision does not contain a “prevailing party requirement”; it simply provides that “the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.” Click here.

Thus, I believe that the plain language of ERISA’s attorney’s fee provision will persuade a majority of justices to find that a court does not abuse discretion by awarding attorney’s fees to a claimant who merely achieves a remand rather than a final judgment. Hopefully, this will be the result. Because if the 4th Circuit result is allowed to stand, claims administrators will be perversely incentivized to deny claims and if the claimant acheives a remand, then claims administrator can simply reverse its decision and foreclose any an award of attorney’s fees to the claimant.

An argument that I see from time to time is the contention by employers that position statements submitted to the EEOC are not admissible at trial. Often, inartfully drafted position statements contain evidence supporting a plaintiff’s claim of discrimination or retaliation.

The two primary bases for this argument is that position statement is inadmissible because it constitutes a settlement communication under Rule 408 of the Federal Rules of Evidence or it is hearsay. In an order issued today, Judge Donald, of the W.D. of Tenn., rejected these arguments. Order Denying Mot in Limine

In a short, to-the-point order, Judge Donald addressed the specifc position statement at issue and held that the position statement did not constitute a settlement communication under Fed. R. Evid. 408.

In addition, addressing the hearsay challenge, Judge Donald held that “position statements cannot be excluded as hearsay as an ‘employer’s position statement in an EEOC proceeding may be admissible to the extent it constitutes an admission, or to show the employer has given inconsistent statements in justifying its challenged decision, which may tend to prove that its stated reasons are pretexts.” (Order at 1-2).

Notably, a position statement submitted by an employer is generally not considered hearsay, but instead is considered an admission by a party opponent, which is admissble at trial under Fed. R. Evid. 801(d)(2)(A) because it is the party’s own statement or Fed. R. Evid. 801(d)(2)(D) because it is a statement by the party’s agent, e.g., attorney. See, e.g., Mugavero v. Arms Acres, Inc., 2009 WL 1904548, *4 (S.D. N.Y. July 1, 2009).

When, if ever, does providing poor service to a restaurant’s customers amount to “misconduct” under Tennessee’s unemployment compensation law? That’s the subject of a recent case (Doji, Inc. v. Neeley et al.) decided by the Tennessee Court of Appeals. Doji dba Demos v JG Neeley TDLWD and Ruffin OPN

As an initial matter, termination for “misconduct” will disqualify a claimant from receiving unemployment benefits under Tennessee law. See T.C.A. 50-7-303(a)(2)(A).

The court of appeals first noted that until recently, the term “misconduct” has not been defined by statute. [Note: Effective 1/1/2010, a definition of "misconduct" has been added to the Tennessee Code].

Instead, the court of appeals noted that the term “misconduct” had been defined by Tennessee case law to mean “conduct evincing such wilful and wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employer.”

In contrast, the court of appeals noted that “mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertences or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed “misconduct” within the meaning of the statute.”

Applying the facts of the case to the definition of “misconduct” established by case law, the court of appeals held that “we are convinced that the sporadically poor quality of service provided by [the claimant] to [the employer's] customers is not the sort of deliberate violation of an employer’s policies that constitutes misconduct within the meaning of the unemployment statutes.”

As noted above, the Tennessee Code now contains a definition of “misconduct”. The new definition of “misconduct” tracks the case law definition for the most part and provides as follows:

Per T.C.A. 50-7-303(b)(3)(A):

“Misconduct” includes, but is not limited to, the following conduct by a claimant:

(1) Willful or wanton disregard of the rights or interests of the employer;

(2) Deliberate violations or disregard of standards of behavior that the employer has the right to expect of an employee;

(3) Carelessness or negligence of such a degree or recurrence to show an intentional or substantial disregard of the employer’s interest or to manifest equal culpability, wrongful intent or evil design;

Per T.C.A. 50-7-303(b)(3)(B):

“Misconduct” also includes any conduct by a claimant involving dishonesty arising out of the claimant’s employment that constitutes an essential element of a crime for which the claimant was convicted;

And, finally, per T.C.A. 50-7-303(b)(3)(C):

“Misconduct” does not include:

(1) Inefficiency, or failure to perform well as the result of inability or incapacity;

(2) Inadvertence or ordinary negligence in isolated instances; or

(3) Good faith errors in judgment or discretion.