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Legal Report April 2008


HARASSMENT. The California Court of Appeal has overturned a $1.5 million harassment verdict and ordered a new trial. The court found that the jury was given incorrect instructions on what constitutes sexual harassment.

Janet Orlando was hired by Alarm One in Fresno, California, as a salesperson. After ten days on the job, Orlando was promoted to field supervisor. She supervised a team of salespeople who went door to door selling home alarm systems.

Each morning before the teams went out to sell, the company held training and motivational sessions. These events took place in a raucous atmosphere with yelling and cheering. Some of the motivational techniques included giving out bonuses, singing in front of the group, throwing pies, wearing diapers, and spanking. Employees would also be spanked if they lost sales or arrived late for a meeting.

Orlando had been spanked on a few occasions. But on January 14, 2004, after she was spanked with a competitor’s sign, Orlando claimed that she sustained a cut and a bruise from the incident. She complained and filed an injury report. The company decided to stop the spankings after Orlando complained.

In February 2004, Orlando resigned from the company and filed a lawsuit for, among other things, sexual harassment and intentional infliction of emotional distress. A jury found in favor of Orlando awarding her $500,000 in compensatory damages and $1 million in punitive damages.

Alarm One appealed the decision, arguing that the jury was given the wrong instructions on the sexual harassment claims because it was not told that the harassment had to be based on Orlando’s gender. The company contended that it did not harass Orlando or subject her to emotional distress, because everyone in the company, both male and female, participated in the spanking incidents and that the incidents were not harassment but motivational tools. Thus, argued the company, the spanking could not have been based on Orlando’s sex.

The prosecution noted, however, that witness testimony during the trial indicated that when women were spanked, the action was often accompanied by sexual comments or derogatory remarks.

The California Court of Appeal found that the jury should have been explicitly told that one of the elements of sexual harassment is that the person is subjected to the harassment because of gender. Based on this finding, the court overturned the lower court’s decision and ordered a new trial. (Orlando v. Alarm One, Inc., California Court of Appeal, No. F050759, 2008)

EMOTIONAL DISTRESS. A federal appeals court has ruled that an employee may sue his employer for intentional infliction of emotional distress after he was fired for refusing to confess to a crime he did not commit. The employer threatened to revoke the employee’s visa if he did not play along with a scheme to lie to a federal regulatory agency.

Fady Kassem was employed as a nuclear medical technologist at Washington Hospital Center in Washington, D.C., in 2003 when another technician was injected with radioactive dye without the approval of a doctor, a violation of Nuclear Regulatory Commission (NCR) rules.

Kassem, an Australian citizen who was in the United States on a work visa, was wrongly accused of injecting the dye. (Witnesses at the subsequent trial indicated that Kassem was accused because he told authorities about a different regulatory violation by the hospital.)

Hospital investigators told Kassem that if he would agree to take the blame, they would not report the incident as a visa violation. Kassem refused. The hospital fired him.

Ten days later, officials from the Washington Hospital Center testified at an NRC hearing and implicated Kassem, even though they knew he was innocent. After conducting its own investigation, the NRC dismissed the complaint against Kassem and opened and pursued charges against the hospital.

Kassem sued the hospital for wrongful discharge and intentional infliction of emotional distress. The U.S. District Court for the District of Columbia found in favor of the hospital on both counts. It ruled that Kassem was an at-will employee and could be fired at any time. The court ruled that the hospital’s actions did not rise to the level of infliction of emotional distress because they dealt with standard occupational concerns. Kassem appealed the decision.

The U.S. Court of Appeals for the District of Columbia upheld the lower court’s decision on the wrongful discharge claim but overturned the verdict on infliction of emotional distress. The court ruled that the hospital’s actions included lying to a federal regulatory agency and did not affect only Kassem’s occupation but his entire career. In the written opinion of the case, the court noted that after the hospital fired Kassem, it “intentionally filed a false charge against him with the NRC—a charge that could have prevented him from working as a nuclear technologist and subjected him to criminal penalties.” (Kassem v. Washington Hospital Center, U.S. Court of Appeals for the District of Columbia, No. 06-7161, 2008)


TERRORISM INSURANCE. A bill (H.R. 2761) that would reauthorize the government-based terrorism insurance program for seven more years has been signed into law (P.L. 110-160).

Under the law, the terrorism insurance program, which was slated to expire at the end of 2008, will be extended until the end of 2015. A study of how to move terrorism insurance into the private market had concluded that private terrorism insurance was highly unlikely in the foreseeable future and that the government program was the only way to provide such insurance.

The terms of the previous program (including deductibles and co-pays), which was reauthorized in 2006, will remain in place under the new law. However, the previous distinction between foreign and domestic acts of terrorism—the prior bill covered only the former—have been eliminated.

AIRPORT SECURITY. A bill (H.R. 1413) that would establish an airport security pilot program has been approved by the House of Representatives and is now pending in the Senate Commerce, Science, and Transportation Committee.

The program, which would be carried out at five commercial airports, would screen all airport workers with access to sensitive areas within the airport and would then conduct a vulnerability assessment of each airport to determine how well the screening programs worked.

GUN CONTROL. In response to the Virginia Tech shootings, the President has signed a bill into law that would require all states to submit information to the National Instant Criminal Background Check System (NICS).

According to statements by Rep. Carolyn McCarthy (D-NY), the law was necessary because not all states submit complete information into the NICS system, omitting, for example, records of those deemed mentally defective. And for some states that do have complete information, the data is not automated, so it cannot be entered into the NICS system.

The law will provide grant money for states to input these records, making NICS more comprehensive. States will input criminal records that make it illegal for persons to own firearms.

Those convicted of a crime carrying at least a one-year prison term will be prohibited from owning a firearm. Those identified as drug addicts and those deemed mentally defective or previously committed to a mental institution will also be prohibited from owning firearms.

HOMELAND SECURITY. A bill (H.R. 1392) designed to track the use of homeland security grant money was included in the Department of Homeland Security (DHS) appropriations bill, which became law (P.L. 110-161) in December.

The provision requires that homeland security grant recipients submit quarterly reports describing the nature and amount of each expenditure made using grant funds. This information will be published and made available on the DHS Web site.

IDENTITY THEFT. A bill (S. 2168) introduced by Sen. Patrick Leahy (D-VT) that would increase penalties for identity theft has been approved by the Senate and is now pending in the House Judiciary Committee.

The bill would provide restitution for victims of identity theft for the time spent dealing with the issue as well as actual monetary damages. The bill would also expand the identity theft laws to include organizations that are victimized rather than just individuals as under current law. The bill also provides for criminal and civil forfeitures of property used to commit computer fraud offenses.

Under the bill, more actions would be classified as identity theft. For example, making or possessing counterfeited securities, mail theft, and tax fraud would be considered predicate offenses for aggravated identity theft.

The bill would make it easier to pursue identity theft cases. Prosecutors would be able to pursue computer fraud offenses even if the conduct did not involve interstate or foreign communications. S. 2168 would also eliminate the requirement that damage to a victim’s computer total $5,000 before a prosecution could proceed.



BACKGROUND SCREENING. A new Oklahoma law (formerly H.B. 1927) would require that special advocates—those appointed by the court to represent the best interest of a child—undergo a criminal background check.


RFID. A bill (A.B. 488) introduced in the Wisconsin Assembly would prohibit the sale of consumer goods equipped with RFID tags unless the seller renders the tags inoperable before the consumer takes possession of the items.

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