Legal Report June 2006

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U.S. JUDICIAL DECISIONS

DISCRIMINATION. A federal appeals court has ruled that a company violated the Americans with Disabilities Act (ADA) when it refused to reinstate an employee that it found had been in a mental institution for a violent crime.

In late 1997, Joshua Josephs applied for a job as a service technician with Pacific Bell Telephone Company (PacBell). A service technician’s job entailed performing unsupervised telephone installation or repair in a customer’s home. Josephs had been performing the same job for Cox Communications since 1987. On his employment application, Josephs checked a box indicating that he had not been convicted of a felony or a misdemeanor. PacBell hired him in January 1998.

After Josephs had started working, PacBell requested a criminal background check on him. Three months later, the company received the report. It indicated that Josephs had been arrested in 1982 for attempted murder. A trial court found him not guilty by reason of insanity. Josephs was convicted for misdemeanor battery on a police officer, an incident that also occurred in 1982.

PacBell suspended Josephs while it investigated the veracity of the report. PacBell confirmed the criminal record and found that Josephs had spent more than two years in a state mental hospital and then six months in a board-and-care mental facility—in which patients can come and go and are not attended by nurses or doctors. He was released in July 1986.

Internal investigators questioned Steve Maches, Josephs’ direct supervisor. Maches recommended that Josephs be given his job back because he was performing well and was an asset to PacBell. However, Robert Shive, who supervised Maches, said that Josephs should be fired to eliminate the possibility that an “emotionally dysfunctional” employee be allowed into customers’ homes. Investigators determined that Josephs should be fired for lying on his employment application. He was terminated for refusing to note his misdemeanor conviction.

Josephs filed a grievance with PacBell through the company’s union. During the grievance process, Linda Sexton, the union representative, suggested that Josephs be given a different job at PacBell where he did not have contact with customers. PacBell’s general manager, Jeff Smith, refused. He said that people could still walk by and that there was still a chance that Josephs could “go off.” Sexton asked whether Josephs could have his misdemeanor conviction expunged and then return to work, a practice that had been used in the past with other employees. Smith did not answer.

Josephs successfully petitioned to have his misdemeanor conviction expunged. At the final hearing of the grievance process, Sexton argued that he should be treated similarly to other employees who had been reinstated after having their records expunged. The company representative, Augie Cruciotti, refused to reinstate Josephs. She said that the other employees had not spent time in a “mental ward” and that the company could not afford to have employees who had “been released from a mental institution.”

Josephs filed a lawsuit claiming discrimination under the ADA. Josephs contended that PacBell both terminated him and refused to reinstate him because management considered him mentally disabled. Josephs noted that three other PacBell employees had been terminated for failing to disclose criminal convictions on their applications. However, all of them had been reinstated after having their records expunged. One employee had a conviction for possession of marijuana with intent to sell, another had a petty theft conviction, and the third had a felony domestic violence battery conviction. Josephs contended that the real reason behind his termination was a perceived mental disorder.

PacBell argued that Josephs was fired because he lied on his application rather than because of his medical history. However, during the trial, PacBell’s in-house attorney testified that she believed that “somebody who has attempted to kill another individual should not be in a service technician position.” The attorney admitted to sharing this thought with Smith during Joseph’s grievance process.

The jury found that while PacBell’s termination of Josephs was nondiscriminatory, the company’s refusal to reinstate him violated the ADA. The jury determined that, when deciding whether to rehire Josephs, the company based its decision on its belief that Josephs was mentally disabled. PacBell appealed the decision.

The U.S. Court of Appeals for the Ninth Circuit upheld the jury verdict. The jury’s decision was valid, ruled the court, because of the evidence that PacBell considered Josephs unfit for any job within the company. For example, when the union representative suggested that Josephs be given a job that did not involve contact with customers, PacBell rejected the notion because “people could still walk by.” This attitude, determined the court, indicates that PacBell viewed Josephs as having a mental disability that precluded any kind of work for the company.

In a dissenting opinion, one judge argued that the jury did not determine whether PacBell’s concerns about Josephs were unfounded. In his written dissenting opinion, the judge noted that “this case requires that PacBell reinstate as a service technician a person it believes may pose a danger to its customers. I dissent because unless it is determined that PacBell’s concern that Josephs is dangerous is unreasonable, PacBell should not be required to send him into its customers’ homes.” (Josephs v. Pacific Bell, U.S. Court of Appeals for the Ninth Circuit, No. 03-56412, 2005)

REGULATORY ISSUES

PRIVACY. The Federal Communications Commission has issued a proposed rule that would require companies to take additional steps to protect consumer privacy. The proposed rule suggests five requirements: passwords set by customers, audit trails for customer records, encryption by all parties that host or transmit customer data, limits on data retention, and notice to all customers whose information might have been compromised.

U.S. CONGRESSIONAL LEGISLATION

PRIVACY. Several bills that would prohibit the sale of telephone records to third parties have been approved by congressional committees. Though the bills vary slightly in detail, they all would impose stiff penalties on violators.

The Senate Judiciary Committee has approved S. 2178, which would prohibit obtaining confidential phone records by fraud or any other unauthorized means from a telecommunications carrier or IP-enabled service provider. Under the measure, the sale of such records by anyone is punishable by up to five years in prison. The penalty doubles for repeat violations within a 12-month period, and for violations involving more than $100,000 or more than 50 customers. Law enforcement activities are exempt under the bill.

Two related bills (H.R. 4709 and H.R. 4714) have been approved by the House Judiciary Committee.

COUNTERFEITING. A bill (H.R. 32) that would prohibit trafficking in labels or similar packaging, with knowledge that a counterfeit mark has been applied to them, has been approved by both the House of Representatives and the Senate. It has been sent to President Bush for his approval.

Under the bill, the definition of “counterfeit mark” includes any mark on a label or packaging that is substantially indistinguishable from a trademarked design, and that is likely to mislead consumers. Under H.R. 32, any article that bears a counterfeit mark will be subject to forfeiture.

PUBLIC TRANSIT. A bill (S. 2032) that would require the U.S. Department of Transportation (DOT) to submit all public transit security assessments to the Homeland Security Department (DHS) has been approved by the Senate Banking, Housing, and Urban Affairs Committee. The Senate has agreed to consider the measure.

Under the bill, DHS would review the assessments and use them as the basis for allocating funds for security assistance grants. After receiving the first assessments, DHS would be required to update them, conduct new ones for all public transportation agencies considered to be at greatest risk of a terrorist attack, and use them to develop public transportation security guidelines and design a security improvement strategy.

Under the bill, each public transportation agency that receives a grant must identify a security improvements coordinator and develop a comprehensive plan for operating and maintaining the equipment purchased with grant money.

S. 2032 would also establish grants for public or private entities to conduct research into technologies and methods to reduce and deter terrorist threats or mitigate damages resulting from terrorist attacks against public transit systems.

STATE LEGISLATION

Massachusetts

BODY ARMOR. A bill (H.B. 1858) currently pending before Massachusetts lawmakers would require that security officers working at special events or on premises that serve alcohol be provided body armor for protection. The body armor would be paid for by the employer.

Colorado

RELIGION. A Colorado bill (H.B. 1314) would prohibit employers from requiring their workers to attend religious or political meetings. Employers would not be able to penalize employees who refuse to attend these meetings as so-called “captive audiences.” The bill has been referred to two committees. The House Business Affairs and Labor Committee has approved the bill. However, it is still pending in the House State, Veterans, and Military Affairs Committee.

Missouri

BIOTERRORISM. A new Missouri law (formerly H.B. 413) requires that the state set up a vaccination program for first responders who would be deployed to disaster areas as a result of bioterrorism. Participation in the program is voluntary except for those first responders identified by their employers as personnel who cannot safely perform their emergency duties without the vaccinations.

Virginia

FIREARMS. A new bill (H.B. 146) introduced in the Virginia House of Delegates would prohibit anyone who is carrying a concealed weapon into a restaurant or club from consuming alcohol on the premises. Certain people would be exempt under the bill including the owner of the premises in question and law enforcement officers. Members of targetshooting organizations and gun-collecting clubs would be exempt only if their weapons are unloaded and securely wrapped.

This column should not be construed as legal or legislative advice.