A recent decision by the United States Court of Appeals for the Third Circuit reminds us that when we want an arbitration clause to apply in certain situations or to certain parties, we have to build that intention into the plain terms of the contract. In White v. Sunoco, Inc., — F.3d —, No. 16-2808, 2017 WL 3864616 (3d Cir. Dec. 5, 2017), Sunoco promoted the “Sunoco Awards Program,” under which customers who used a Citibank-issued “Sunoco Rewards Card” credit card were supposed to receive a 5-cent per gallon discount on gasoline purchased at Sunoco gas stations. The promotional materials included a document entitled “Terms and Conditions of Offer,” which indicated that Citibank issued the Sunoco Rewards Card and applicants had to meet Citibank’s creditworthiness criteria to obtain the credit card. Continue reading “A Lesson from the Third Circuit on Arbitration Clauses: Say What You Mean”
The Third Circuit recently joined the growing consensus of courts recognizing that the First Amendment protects the act of recording police officers conducting their official duties in public. In Fields v. City of Philadelphia, — F.3d —, 2017 WL 2884391 (3d Cir. July 7, 2017), two individuals brought claims against the City of Philadelphia and certain police officers for violating their First Amendment rights to record public police activity. Continue reading “First Amendment Protects Right to Record Police Activity, Third Circuit Holds”
The Third Circuit Court of Appeals recently held that a single isolated use of a racial slur may be sufficient to establish unlawful workplace harassment.
Background and Analysis:
On July 14, 2017, a three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled that a single racial slur may be sufficient to state a claim for unlawful workplace harassment.
In Castleberry v. STI Group, the plaintiffs—two African American general laborers working on a pipeline project—alleged that they were subjected to a hostile work environment when they were told by a supervisor that they would be fired if they “[n-word]-rigged” a fence that they had been instructed to remove. Defendants argued there was no precedent for a finding that a single racial epithet could be enough to create a hostile work environment. Judge Thomas Ambro, writing for the panel, rejected the defendants’ position, holding that the United States Supreme Court’s adoption of the “severe or pervasive” standard in harassment claims suggested that a “supervisor’s single use of a racial slur could be adequately ‘severe’ and sufficient to state a claim” for harassment.
The Third Circuit’s ruling clarified case law within the circuit (covering Delaware, New Jersey, and Pennsylvania) that has been somewhat in conflict for decades. Between 2001 and 2012, district courts within the circuit have used a number of different standards for determining whether a plaintiff has adequately pled workplace harassment. Some used the “severe or pervasive” standard, at least three used the “pervasive and regular” standard, and at least one case used the “severe and pervasive” standard. In its decision, the Court in Castleberry made clear that the proper standard for evaluating hostile work environment cases is whether the conduct is “severe or pervasive.”
In reversing the U.S. District Court for the Middle District of Pennsylvania’s dismissal of the plaintiffs’ claims, the Court held that the racially charged slur used in the presence of non-African American coworkers, coupled with threats of termination, could constitute sufficiently severe conduct that could result in the creation of a hostile work environment.
The Castleberry decision reminds employers that even a single isolated incident, such as a repugnant comment, can result in legal liability for discrimination or harassment. Employers should take affirmative steps to train employees, especially management personnel, that slurs and epithets based on any protected category (for example, race and/or color) are not appropriate in the workplace.
Employers should do the following:
- Clearly communicate through employee handbook policies that discrimination and harassment will not be tolerated, and ensure that all employees receive a copy of the handbook and sign an acknowledgement.
- Immediately and thoroughly investigate any complaints of discrimination (including harassment) and implement prompt remedial measures, which are designed to correct any prior issues and prevent similar conduct from occurring in the future.
- Periodically train all supervisors and employees regarding discrimination and harassment recognition and prevention.
Restrictive covenants are common in many industries. Under New Jersey and Pennsylvania law, a defendant may be liable for tortious interference with a restrictive covenant only if it has actual knowledge of the contract with which it allegedly interferes. In Acclaim Systems, Inc. v. Infosys, Ltd., the Third Circuit reaffirmed this rule in the context of IT consulting non-competes and expressed its reluctance to recognize any exceptions.
In Acclaim Systems, Time Warner Cable (“TWC”) was looking to cut costs on its Sales Force Dot Com (“SFDC”) project by switching providers for certain IT services. When TWC switched from Acclaim to Infosys, TWC asked Infosys to consider retaining four individuals who were already working on SFDC on behalf of Acclaim. All of these individuals had non-competes with Acclaim that prohibited them from working on SFDC on behalf of Infosys. Continue reading “Employer Cannot Be Liable for Interfering with Non-Compete It Doesn’t Know Exists, Third Circuit Holds”
The Third Circuit’s January 10, 2017 decision regarding an employer’s age-based liability under the Age Discrimination in Employment Act (“ADEA”) should serve as a call to action to employers to evaluate and review their policies to ensure that they do not inadvertently violate the ADEA by discriminating against individuals who are in “subgroups” over 40 years old.
Most employers know that the plain language of the ADEA protects “individuals who are at least 40 years of age,” and its disparate impact provision prohibits an employer from “adversely affect[ing an employee’s] status . . . because of such individual’s age.” But in Karlo v. Pittsburgh Glass Works, the Third Circuit made employers’ lives a little more complicated by holding that “‘subgroup’ disparate-impact claims are cognizable under the ADEA.” In other words, the Third Circuit held that under the ADEA, employees in a subgroup older than 40 years old—in Karlo, the subgroup of employees was 50-and-older—can bring disparate impact claims against their employer alleging that they were “disfavored relative to younger employees,” even if the younger employees were 40 years old or older. Continue reading “Third Circuit Recognizes “Subgroup” ADEA Disparate-Impact Claims”
The United States Court of Appeals for the Third Circuit’s recently held in Sikkelee v. Precision Airmotive Corp., 822 F.3d 680 (3d Cir. 2016) that aircraft manufacturers may be held liable for state products liability claims. In this case, the defendant averred that products liability claims fell within the “field of air safety” and were thus preempted by federal aviation law. Sikkelee, 822 F.3d at 685. The Third Circuit held that products liability claims under state law involving aircraft are not automatically preempted by federal law, although they may be preempted on an individual basis if they conflict with a specific federal statute or regulation. Id. at 709.
In Sikkelee, the widow of a pilot sued the manufacturer of an aircraft engine which she alleged was improperly designed, resulting in the plane’s crash and her husband’s death. Id. at 685-86. The United States Court for the Middle District of Pennsylvania granted summary judgment in favor of the engine manufacturer on the question of defective design. Id. at 686. It held that the standard of care was a “type certificate,” a certification from the Federal Aviation Administration that the design of an aircraft or aircraft part meets the safety standards imposed by Federal Aviation Administration (“FAA”) regulations. Id. at 684, 686. Since the subject engine was granted a type certificate, the standard of care had been satisfied as a matter of law. Id. at 686. Critical to the District Court’s decision was its finding that it must apply some federal standard of care pursuant to Abdullah v. American Airlines, Inc., 181 F.3d 363 (3d Cir. 1999). Id. at 686. Continue reading “Third Circuit Affirms That State Products Liability Law Can Apply to Plane Crashes”
A Discussion of the Third Circuit’s Recent Decision in Chassen
In Chassen v. Fid. Nat’l Fin., Inc., 2016 U.S. App. LEXIS 16489 (3d Cir. N.J. Sept. 8, 2016), Plaintiffs represented a putative class of New Jersey real estate purchasers and refinancers who were allegedly overcharged fees in connection with the recording of their deeds and mortgage instruments. Plaintiffs alleged that Defendants charged them more than it cost to record these documents with the county clerk and pocketed the difference. Plaintiffs also alleged that the class claims totaled over $50 million.
In 2009, Plaintiffs filed a complaint in the U.S. District Court for the District of New Jersey alleging both breach of contract and violation of New Jersey law. Defendants moved to dismiss some of these claims and raised various affirmative defenses. Defendants did not seek to compel arbitration based upon arbitration clauses contained in contracts with Plaintiffs. The parties litigated the case for two and a half years, focusing primarily on class certification, during which the parties conducted broad discovery and filed several motions on the merits. Continue reading “Arbitration of Claims to Avoid Costly Putative Class Action Lawsuits”