Posts by: Rachel Muoio

Sixth Circuit Reverses Cintas Pattern-or-Practice Case

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Last week, the Sixth Circuit Court of Appeals reversed summary judgment orders in a Title VII sex discrimination case against Cintas Corporation, holding that the EEOC (the intervening plaintiff) should have been allowed to pursue a pattern-or-practice claim under §706 of Title VII using the analytical framework set forth in Int’l Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). The decision rejects the notion that the Teamsters framework can only be used in cases brought under § 707 of Title VII, paving the way for the EEOC to pursue pattern-and-practice claims under § 706, which allows for the recovery of punitive and compensatory damages.

In Serrano et al. v. Cintas Corp., the EEOC challenged hiring practices used for women who applied to work as truck-driving sales representatives in Michigan. The district court dismissed the EEOC’s pattern-or-practice claim on the grounds that the agency pled the claim under § 706 rather than § 707, which provides specific authorization for such claims. The district court also granted summary judgment for Cintas on thirteen individual claims that the EEOC had pursued, analyzing them under the McDonnell-Douglas framework. READ MORE →

California Computer Software Employee Overtime Exemption Rate to Increase 2.6% on January 1

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The California Department of Industrial Relations (DIR) released its 2013 hourly rate and minimum salary requirement adjustment for exempt computer software employees. Beginning January 1, 2013, the minimum hourly rate of pay will increase to $39.90 to qualify for exemption, the minimum monthly salary will increase to $6,927.75, and the annual minimum salary will increase to $83,132.93. The 2.6 percent increase is based upon the California Consumer Price Index for Urban Wage Earners and Clerical Workers pursuant to California Labor Code § 515.5(a)(4).

In addition to the salary requirements, computer software employees must meet the remaining criteria set forth under Labor Code § 515.5 in order to be exempted from state overtime requirements.

SEC Pays First Ever Dodd-Frank Whistleblower Bounty Award

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Whistle

On August 21, 2012, the Securities and Exchange Commission (SEC) announced that it has awarded its first whistleblower bounty, just over one year after the SEC’s Dodd-Frank whistleblower rules became effective. The SEC’s Claims Review Staff issued a short order, Release No. 34-67698, granting the whistleblower’s award, which notes that the SEC declined to award a claim to a second whistleblower involved in the action. READ MORE →

Dodd-Frank Anti-Retaliation Provision Does Not Apply Extraterritorially

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Whistle

On June 28, 2012, a Texas District Court held that the Dodd-Frank’s anti-retaliation provision per se does not apply extraterritorially. In Asadi v. G.E. Energy (USA), LLC, Case No. 4:12-cv-00345 (S.D. Tex. June 28, 2012), the district court determined that Dodd-Frank’s anti-retaliation provision did not extend to or protect the plaintiff’s extraterritorial whistleblowing activity. Note that this decision does not apply to Dodd-Frank’s whistleblower bounty provisions, pursuant to which whistleblowers outside of the U.S. may be eligible for bounties for making reports of violations to the SEC.

The complaint alleged that Asadi was a U.S.-based employee who was working from an office in Jordan to secure and manage energy contracts with the Iraqi government. Asadi alleged that he notified his supervisors and a company ombudsperson of a potential violation of the Foreign Corrupt Practices Act (“FCPA”), whereupon GE Energy pressured him to step down, attempted to negotiate a severance, and eventually terminated his employment.

Applying the Supreme Court’s 2010 decision in Morrison v. National Australia Bank, Ltd., 130 S. Ct. 2869 (2010), the district court held that the absence of language regarding the extraterritoriality of Dodd-Frank’s anti-retaliation provision led to a presumption that it did not apply extraterritorially. The district court noted that Section 929P(b) of Dodd-Frank gave extraterritorial jurisdiction over specific enforcement actions brought by the SEC or the DOJ, but not to private actions such as the plaintiff’s. The district court also found persuasive a Department of Labor Administrative Review Board en banc holding that, because Dodd Frank’s amendments to SOX were silent as to extraterritoriality, the amendments could not be construed to extend the reach of SOX extraterritorially. See Villanueva v. Core Labs, NV, 2001 WL 6981989, ARB Case No. 09-108, ALJ Case No. 2009-SOX-6 (ARB Dec. 22, 2011). Thus, the district court concluded that Dodd-Frank’s anti-retaliation provision did not protect Asadi from alleged retaliation and granted GE Energy’s motion to dismiss.

Dodd-Frank Amendment Applies Retroactively, “Clarifies” SOX Section 806

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Whistle

On July 9, 2012, a Southern District of New York court held that the Dodd-Frank Act applies retroactively to protect whistleblowers employed by subsidiaries of publicly-traded companies.

In Leshinsky v. Telvent GIT, S.A., Case No. 1:10-cv-04511-JPO (S.D.N.Y. July 9, 2012), the plaintiff, an employee of a non-publicly-traded subsidiary of a public company, brought a retaliation claim under Sarbanes-Oxley (“SOX”) Section 806. The plaintiff’s claims arose prior to Dodd-Frank’s amendments to Section 806 providing that no public company, including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company, may retaliate against a whistleblowing employee.

In analyzing whether the Dodd-Frank amendment to SOX applied to the plaintiff’s claims, the court explained that generally speaking, a statute does not apply retroactively to conduct that occurred prior to a statute’s enactment; there is a presumption against retroactive legislation. When an amendment merely clarifies existing law, rather than substantively changing existing law, however, retroactivity may be appropriate. The court applied three factors to determine whether Dodd-Frank clarified Section 806: (1) whether Congress expressed legislative intent that Dodd-Frank Section 929A was a clarification that should be applied retroactively; (2) whether there was a conflict or ambiguity in the pre-amendment statutory text; and (3) whether the amendment was consistent with a reasonable interpretation of the original statute. The court determined that the Dodd-Frank amendment clarified the legislative intent of Dodd-Frank’s predecessor retaliation provision under SOX.

The court noted that the First Circuit’s April decision in Lawson v. FMR LLC, 690 F.3d 61 (1st Cir. 2012), did not preclude its holding and arguably supported its conclusion that the Dodd-Frank amendments were a necessary clarification to prevent an improper reading of the statute’s protections. See previous blog entry.

California Court of Appeal Says No to Class Certification of Independent Contractors

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3 Minutes to 12:00

The California Court of Appeal has affirmed a trial court’s order denying class certification on the alleged misclassification of independent contractors. The Court of Appeal provides a lengthy analysis of ascertainability and predominance of common issues of law and fact under California’s class action laws.  READ MORE →