Legal Report July 2009
U.S. JUDICIAL DECISIONS
NEGLIGENT HIRING. In a California decision, an appeals court has ruled that a company cannot be held responsible for the actions of a former employee. In the case, a man who became romantically involved with a client shot and killed her two years after he was fired from his job.
In 1999, TLC Plumbing hired James Cain as a repairman. As part of his job, Cain was required to respond to service calls from homeowners. When he was hired, Cain was on parole stemming from a domestic violence attack on his wife who had subsequently divorced him.
In April 2003, Cain was sent on a repair call to Judith Phillips’ house. Cain began a romantic relationship with Phillips. TLC fired Cain in May 2003 for various misdeeds, including drug and alcohol abuse and threatening a coworker.
Cain and Phillips continued their relationship, though it was a rocky one. By 2005, Phillips had ended the affair and taken out a restraining order against Cain. On May 19, 2005, Cain shot and killed Phillips.
Phillips’ family sued TLC for negligent hiring and retention, arguing that the company owed a duty of care to its clients and should have protected Phillips from Cain.
TLC requested summary judgment—a hearing based on the facts of a case without a trial. The company contended that Cain was no longer employed by TLC when he murdered Phillips, so its negligence could not be the cause of her death. The Superior Court of San Diego County agreed with TLC and granted the summary judgment. The plaintiffs appealed the decision.
A California appellate court upheld the lower court’s verdict, ruling that TLC did not owe Phillips a duty of care for negligent hiring and retention for harm inflicted by a former employee. Because Cain killed Phillips two years after his employment was terminated, his employment with TLC could not have been a factor in the slaying, ruled the court. (Phillips v. TLC Plumbing, Inc., California Court of Appeal, No. D0503072, 2009)
RELIGIOUS DISCRIMINATION. A federal appeals court has ruled that a police department did not discriminate against a Muslim officer when it refused to let her wear a head covering as part of her uniform. The court ruled that allowing the officer to wear the head covering would compromise the city’s interest in maintaining religious neutrality.
The City of Philadelphia hired Kimberlie Webb, a practicing Muslim, as a police officer in 1995. In 2003, Webb requested that she be allowed to wear a headpiece called a khimar to cover her hair as required by her religion.
The police department denied her request, pointing out that the rules governing police uniforms in the city are specific: They prohibit officers from wearing religious symbols or clothing as part of the uniform.
In February 2003, Webb filed a religious discrimination lawsuit against the police department with the Equal Employment Opportunity Commission (EEOC). While the matter was still pending, Webb arrived at the morning roll call wearing a khimar. The lieutenant asked Webb to remove the garment, but she refused.
The police captain was called in, and he told Webb to go home and that she would not be permitted to work until she complied with the department’s regulations. Webb arrived for work the next day wearing the khimar. She was sent home again. Following these incidents, Webb came to work without the khimar and was allowed to continue her duties.
The police instituted disciplinary charges against Webb for insubordination arising from the two days she wore the khimar to work. Webb was suspended from duty for 13 days. Webb amended her EEOC complaint to include claims of a hostile work environment based on her suspension.
Defending against the religious discrimination charge, the police commissioner testified at trial that the dress code for police was more than 30 years old and that the uniform must be consistent to promote both a sense of mission in the officers and a sense of authority to the public.
The commissioner noted that the wearing of religious clothing would undermine these purposes and interfere with effective law enforcement.
The police department admitted that it had not offered Webb an accommodation to meet her religious requests. It argued that any accommodation would present an undue hardship.
The U.S. District Court for the Eastern District of Pennsylvania found in favor of the police department, ruling that the police had presented compelling nondiscriminatory reasons that it would suffer undue hardship by accommodating Webb’s request. The court also ruled in favor of the police on the hostile work environment claim. Webb appealed the decision.
The U.S. Court of Appeals for the Third Circuit upheld the lower court’s decision, ruling that allowing Webb to wear the religious head covering would impose an undue hardship. Specifically, the court pointed to the city’s argument that the appearance of religious neutrality is critical to its mission, and it agreed that the wearing of overtly religious clothing would undermine this neutrality. (Webb v. City of Philadelphia, U.S. Court of Appeals for the Third Circuit, No. 07-3081, 2009)
TRADE SECRETS. A federal appeals court has ruled that an injunction against a company accused of stealing trade secrets was inappropriate. The court determined that monetary damages were available for the plaintiffs if they prevailed in their claim.
The case centered around a longstanding contractual agreement between Faiveley Transport Malmo AB and Wabtec Corporation. Faiveley owned the plans for the manufacture of air brakes for mass transit systems and contracted with Wabtec to produce the brakes. When Faiveley terminated the relationship, Wabtec reverse engineered the products and began manufacturing and selling them without Faiveley’s permission.
Faiveley filed a lawsuit accusing Wabtec of stealing intellectual property and requested an injunction to prevent Wabtec from selling the brakes. While the trade secrets case proceeded, the U.S. District Court for the Southern District of New York granted an injunction against Wabtec.
Attorneys for Wabtec appealed the decision, arguing that an injunction was unnecessary, because the company had an economic incentive to keep the information secret, and if the trade secrets case found that Wabtec had misappropriated Faiveley’s property, monetary damages would be assessed.
The U.S. Court of Appeals for the Second Circuit agreed that an injunction was unnecessary and overturned the lower court’s ruling. According to R. Mark Halligan, a partner with Nixon Peabody in Chicago, who specializes in intellectual property law, the court took an opportunity to make it clear that injunctions are not automatic in cases involving trade secrets.
“The courts must determine whether there is an adequate remedy available before issuing an injunction,” says Halligan. “In this case, the parties had a contractual relationship, and they both had the same incentive to protect the information. Under these circumstances, the court found that there was no risk of irreparable injury.”
Halligan also notes that this case was tried under common law, because New York has yet to adopt the Uniform Trade Secrets Act, a model law that has been enacted in most U.S. states. New York, New Jersey, Massachusetts, and Texas are the only states that have not passed a version of the law. (Faiveley Transport Malmo AB v. Wabtec Corporation, U.S. Court of Appeals for the Second Circuit, No. 08-5126 cv, 2009)
U.S. CONGRESSIONAL LEGISLATION
WHISTLEBLOWERS. A provision of the recently approved economic stimulus law (P.L. 111-16) requires that nonfederal employers who receive stimulus money implement whistleblower protection programs. Under the law, these employers cannot retaliate against employees who report what they believe to be evidence of wrongdoing with public funds. The law covers gross mismanagement or waste, dangers to public health or safety, abuse of authority, and violations of laws or regulations.
The law makes it illegal to fire, demote, or otherwise discriminate against an employee who reports the wrongdoing. However, the law does not define what it means to “otherwise discriminate against” an employee. This factor will be determined by the courts as cases get litigated.
Unlike other whistleblowing measures, this law does not establish a statute of limitations nor does it impose a statutory cap on damages.
BIOTERRORISM. A bill (S. 485) introduced by Sen. Richard Burr (R-NC) would require that biocontainment laboratories, which handle highly toxic or dangerous substances, undergo evaluation by the government. Based on these evaluations, the government would report to Congress on the current level of security at the country’s biocontainment labs. The government would also establish regulations for safety and security training for lab personnel.
Under the measure, the government would establish a reporting system through which employees could report safety or security incidents. The system would be administered through an independent third party.
S. 485 is cosponsored by Sen. Edward Kennedy (D-MA), the chair of the Senate Health, Education, Labor, and Pensions Committee, to which the bill has been referred.
CYBERSECURITY. A bill (S. 773) that was introduced by Sen. John D. Rockefeller (D-WV) would establish a high-level cybersecurity office in the government and encourage public-private partnerships to improve cybersecurity.
The bill would establish the cabinet-level position of national cybersecurity advisor. This new office would be responsible for developing a comprehensive national strategy for cybersecurity, overseeing a cybersecurity review that would be conducted every four years, and undertaking a threat and vulnerability assessment of public and private-sector critical infrastructure.
S. 773 would establish a public-private clearinghouse to facilitate sharing of cyberthreat and vulnerability information. The National Institute of Standards and Technology would be charged with setting cybersecurity standards that would be applicable to both the government and the private sector. Those working in cybersecurity would be licensed and certified under a national program.
The bill has three cosponsors and has been referred to the Senate Commerce, Science, and Transportation Committee.
TRADE SECRETS. A bill (S.B. 2149) introduced in Illinois would amend the state’s trade secrets act to prevent litigants in trade secrets cases from redefining what they consider to be intellectual property in the middle of a trial. This tactic has been used to hide information from opposing counsel.
S.B. 2149 would require that plaintiffs in legal actions set out what they believe to be intellectual property in writing before the discovery phase, which is not currently required; this provision would require that the trade secrets be identified with “reasonable specificity.” The declaration could only be altered for good cause, within 180 days of the original disclosure but before the close of discovery, and with the permission of the court.
EMPLOYMENT. A bill (H.B. 6185) pending in the Connecticut General Assembly would impose monetary penalties on employers who violate a state employee privacy law.
Under the law, employers are allowed to disclose dates of employment, job titles, and salary information, but they must keep other employee personnel and medical records private. Employers must also allow an employee access to his or her own files.
H.B. 6185 would establish a $300 fine for each violation of the act. The bill would also allow employees to sue their employers for civil damages if records were illegally released.
This column should not be construed as legal or legislative advice.