Daily Archives: March 30, 2011

Texas-Based Fashion Accessory Company To Pay $95,000 To Settle EEOC Age Discrimination Suit

Tandy Brands Accessories Unlawfully Dismissed Several Workers Because of Age, Federal Agency Charged

HOUSTON – A Dallas-based fashion accessory designer and manufacturer will pay $95,000 and furnish other relief to settle an age discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.

According to the EEOC’s suit, Tandy Brands Accessories, Inc., a Delaware corporation headquartered in Dallas, violated federal law by terminating Merta Withrow, a 62-year-old manager, because of her age, supposedly as part of a “reduction-in-force,” while retaining a lesser qualified and substantially younger manager. During the course of the EEOC’s investigation, the agency discovered that, within four months, Tandy Brands terminated another five supervisors, whose ages ranged from 75 to 58, at its Victoria, Texas facility.

The company retained only two supervisors in the relevant location, both of whom were in their early 40s. One of these much younger supervisors assumed the position of receiving and returns supervisor, a position he had not previously held, despite the fact that Withrow had successfully held the position for several years, making her better qualified for the position. The EEOC alleges that Tandy Brands retained the younger, lesser qualified supervisor as part of its campaign to give the company a more youthful image, in line with images of staff prominently displayed on its website.

Age discrimination against persons age 40 and over violates the Age Discrimination in Employment Act (ADEA). Retaining a person who is substantially younger than a better-qualified employee who is terminated may violate the ADEA, even if the retained individual is within the protected age class (over 40). The EEOC filed suit in U.S. District Court for the Southern District of Texas, Houston Division ( Civil Action No. 4:10-cv-03506) after first attempting to reach a pre-litigation settlement through its conciliation process.

The two-year consent decree settling the suit was signed today by U.S. District Judge Keith P. Ellison. In addition to the monetary relief, the decree also contains provisions requiring posting of notice of non-discrimination in all company workplaces and offices; annual training for all managers, supervisors and employees; the implementation of effective anti-discrimination policies, complaint procedures and investigative procedures; and other curative measures.

“Qualified and productive workers must be recognized and retained regardless of age,” said EEOC Regional Attorney Jim Sacher of the agency’s Houston District Office. “Making employment decisions based on one’s age is unlawful, and there is no excuse for such a practice in the 21 st century.”

Senior Trial Attorney Connie Wilhite, who handled the case for the EEOC, added, “A company cannot avoid a claim of age discrimination by replacing a 62-year-old with a 40-something if age is the motivating factor. Although the younger person is within the protected class under the ADEA, the fact that he is much younger than the displaced person can and often does signal the company’s intent to discriminate based on age. That is what happened in this case.”

According to company information, Tandy Brands Accessories, Inc. designs, manufactures, and markets fashion accessories for men, women and children. The company sells its product lines under nationally recognized licensed brand names such as Wrangler®, Totes® and Dockers®, as well as its own proprietary brands such as Rolfs® and Princess Gardner®.

NFL Fans – Are You Ready for Some… Antitrust Litigation? Players Sue, Claiming Lockout is a Group Boycott

Following a breakdown in labor negotiations, a group of current and prospective NFL players have sued the league, claiming that a league-imposed lockout is a group boycott among horizontal competitors (the NFL teams), and a per-se violation of Section One of the Sherman Act. Brady v. National Football League, 0:11-cv-00639-SRN-JJG (D. Minn. filed March 11, 2011).

The named plaintiffs, including star quarterbacks Tom Brady, Drew Brees and Peyton Manning, seek to represent a class that includes current NFL players and next season’s rookie class. The players claim that the lockout – which halted players’ paychecks, stopped contract negotiations and shuttered teams’ training facilities – is a concerted refusal to deal.

In addition to the group boycott claim, the players assert that teams conspired to eliminate competition in the market for professional football players, through a series of anticompetitive restrictions, including:

  • The “entering player pool”, which establishes a league-wide limit on the total amount of salary that NFL teams can pay to sign rookies.
  • The “franchise player” designation, which prohibits a designated player from receiving a contract from any NFL team other than that player’s immediately prior team.
  • The “transition player” designation, which limits a designated player’s ability to receive a contract from any NFL team other than that player’s immediately prior team.
  • A salary “cap” that fixes maximum amounts for player salaries.Although these rules have been in place for years as part of the league’s previous labor agreement, the players claim that the NFL plans to unilaterally impose such restrictions if its lockout is unsuccessful. The players claim each of these restrictions would constitute an unreasonable restraint of trade in violation of Section One.

The suit also asserts a breach-of-contract claim for players under contract to play NFL football in 2011, and a claim for tortious interference with prospective contractual relations on behalf of free agents and rookies. The suit seeks an injunction prohibiting the lockout and restraints on free-agent movement and player salary; treble damages incurred as a result of the antitrust violations; and damages for the contract and tort claims.

The Court is scheduled to hear the players’ motion for preliminary injunction on April 6, 2011.

Defendants, including the NFL and its 32 member teams, argue that the court must reject the players’ injunction request, because the Norris-LaGuardia Act prevents courts from enjoining work stoppages. Moreover, the NFL argues, the players cannot prevail on the merits of their antitrust claims, because courts do not subject labor decisions reached through collective bargaining to antitrust scrutiny.

Players argue that the so-called non-statutory labor exemption does not apply here, because they have renounced their union, sufficiently distancing the dispute from the collective bargaining process. But the NFL calls this decertification a tactical decision, designed to gain leverage in the bargaining process itself. The labor exemption is designed to shield the entire bargaining process from antitrust scrutiny, the league argues, and so it must extend to the current dispute, notwithstanding the players’ assertion that the bargaining relationship is over.

The NFL also argues that the NLRB (National Labor Relations Board) has primary jurisdiction over the dispute. The NFL has a complaint pending before the NLRB, claiming the players did not bargain in good faith, and alleging that the players’ decertification is a sham. The NFL maintains that the antitrust suit should be stayed pending a ruling from the labor board.

Both sides have latched onto court decisions from the league’s long history of antitrust and labor litigation. The NFL relies heavily on Brown v. Pro Football, Inc., 518 U.S. 231 (1996), in which players asserted an antitrust challenge to league rules fixing salaries for players on developmental squads. The Supreme Court held that federal labor laws prevented such an attack.

The players also cite a host of cases involving the NFL and antitrust issues. For instance, they cite McNeil v. National Football League, 1992 WL 315292 (D. Minn. Sept. 10, 1992), in which a Minnesota jury rendered a verdict in favor of players in their antitrust challenge to NFL rules restricting free agency.

Both sides claim to find support in American Needle, Inc. v. NFL, 130 S.Ct. 2201 (2010), in which the U.S. Supreme Court held that joint licensing of teams’ intellectual property, conducted through a corporation separate from the teams, constituted concerted action that was not categorically beyond the reach of Sherman Act Section One.

The players cite American Needle to show that the NFL teams are independent entities for antitrust purposes, capable of conspiring with each other. The teams point to a passage in American Needle stating that their common interests – the success of the league, competitive balance among teams – “provide a perfectly sensible justification for making a host of collective decisions.” The league maintains that the salary cap, for instance, is designed to promote competitive balance among the teams.

The labor strife prompted one Congressman to introduce legislation to revoke the antitrust exemption that allows the NFL to jointly negotiate television rights. U.S. Rep. John Conyers (D-Mich.) says his “Prevent Lockout of Athletes This Year” bill is necessary to level the playing field between players and the NFL, because the league used broadcast revenues to build up a war chest to weather the lockout.

Whatever the ancillary fallout, legal pundits have generally predicted that no court will reach the merits of the antitrust issues. Both sides have strong incentives to protect their $9 billion industry, the thinking goes, and neither side is truly willing to risk the 2011 season, which is set to kick off in early September.

Honesty Is the Best Policy (Along with Documentation) – Reporting Injuries From Nursing Home Falls

A quick Internet search reveals that the old adage, “honesty is the best policy,” is attributed to numerous sources. When it comes to reporting injuries from nursing home falls, however, it’s clear that Congress turned that policy into law. An Ohio lawsuit is now garnering national attention because the family of a nursing home resident alleges the facility failed to follow such law not once or twice, but 16 times.

The Lawsuit

According to the lawsuit, 83-year-old Gladys Feran, suffering from dementia, was a resident at Cleveland’s Larchwood Village Retirement Community. In April 2009, Feran fell and broke her pelvis. She died two weeks later. Her family alleges that the cause of death was “blunt impact to trunk with fracture of pelvis.”

As with any lawsuit, the family, in order to prevail, must establish that the facility was negligent. That is, the family must prove the facility failed to take reasonable steps to prevent Feran’s accident. The facility’s policies, Feran’s care plan and the training of the facility’s staff will all be fair game for the jury to examine.

What makes this case so different from other cases, though, is that Feran had fallen at least 16 times during her 17-month stay at Larchwood. Feran’s family claims they were not notified of any of these falls, and that they only learned of them once Feran was transported to the hospital after her final fall. In attempting to discover what had happened, the family learned that at least two earlier falls occurred when Feran, at the facility’s direction, was pushing other residents in wheelchairs. Feran had also suffered a fractured clavicle and hip in prior falls.

In the lawsuit, the family will want to use the facility’s failure to report the prior falls in an effort to persuade the jury that the facility was negligent. The facility, however, contends such evidence should be reserved for a separate trial on punitive damages. In other words, the facility believes the jury should focus only on the specific events that may have contributed to Feran’s final fall. Only if the jury finds that the facility was negligent could it then consider past events and failures. Splitting the trial in such a manner is common in cases involving significant damages, and whether such a split should occur in Feran’s case has now reached the Ohio Supreme Court. It may therefore be months, or even years, before the case goes to trial.

Lessons Learned

It is estimated that each year, a nursing home with 100 beds will report 100-200 falls. According to the Centers for Disease Control and Prevention, up to 20 percent of these falls result in serious injuries. Given the frequency of such falls, and their severity, nursing home facilities will have a number of opportunities to notify family members of a resident’s change in condition.

In Ohio, Feran’s family contends that the facility, when faced with such opportunities, engaged instead in an effort to conceal the accidents. The facility of course denies such a cover-up, but why allow your facility to be in such a position to begin with? A lawsuit over a fall may well be unavoidable, but following protocol when it comes to reporting will dispel any allegation of a cover-up and greatly reduce the risk that a case involving your facility will wind up in national headlines. Of course, all notifications should be documented in the resident’s file, so as to avoid a he-said, she-said dispute. This is also occurring in the Feran case, as the facility claims it did notify the family of a prior fall. Honesty and documentation are indeed the best policies.

Patent Owner Reexamination Requests with Parallel Litigation

You have worked hard and obtained a patent for your company.  You do your homework and believe that your competitor is infringing your patent.  You ultimately engage the help of a litigation team and sue the competitor for patent infringement.  But your competitor is now a defendant and responds with allegations of invalidity based on publication prior art.

Your patent counsel provides some options.  One option is to plow ahead with the litigation and maintain course.   Another option is to file a reexamination request with the publication prior art and ask for a stay of the litigation pending the outcome of the reexamination.

You decide that latter course is the course of action you will take.  After all, if the prior art doesn’t pose a substantial new question of patentability (SNQ), then that is ammunition for your litigation because you can argue that the publication prior art is weak.  And if it does raise a SNQ, that is not equivalent to a prima facie case of unpatentability.  (In re Etter, 756 F.2d 852, 857.)  As long as you have claims that are confirmed by the reexamination, then you think you have a stronger patent position.

So your reexamination counsel drafts a reexamination request and files it.  And you get the stay you wanted.  But the reexamination request gets bounced by the Patent Office for not properly raising alleged SNQ’s posed by the publication prior art.  Now what do you do?  Should you quit now or argue more strenuously for the SNQ’s in a compliant response (due in 30 days)?  If you quit now, has this effort proven anything you can use in court?  And isn’t the Judge going to be a bit irritated that you did not file a compliant brief to get the Patent Office to truly consider the request?

If you instead argue the SNQ’s more assertively so the Patent Office might consider the request complete, then how hard should you argue?  If you push too hard, are you ditching your own litigation?

Faced with similar facts, the patent owner/requester in Reexam Control No. 90/009,881 (relating to U.S. Pat. No. 7,423,588**) tried an argument similar to this:

With respect to claim 1, the Reference discloses a [first thing], a [second thing], a [third thing], a [fourth thing], and a [fifth thing], as recited in claim 1 (pages 7-9 of the Reference). Thus, because the teachings of the Reference provide subject matter of the ’588 patent claims that was not taught in any prior art cited during the prosecution of the ’588 patent, the teachings of the Reference raise a substantial new question of patentability.  However, claim 1 is still believed to be patentable for the reasons stated herein.

An excerpt cannot provide all of the arguments, so you should review the matter yourself which is available at www.USPTO.gov.  The Patent Office recently (March 8, 2011) decided that the ex parte reexamination request was not compliant and gave the requester 30 days to resubmit its request.  Time will tell what the requester does next.

New ADA Regulations Become Effective May 24, 2011

The long-awaited final regulations implementing the ADA Amendments Act (ADAAA) were published in the Federal Register on Friday, March 25, 2011. The regulations become effective sixty days from the date, on May 24, 2011.

Background

The ADAAA was passed by Congress in 2008, became effective on January 1, 2009, and amended the Americans With Disabilities Act (ADA).  The purpose of the ADAAA was to make it easier for an individual to establish that he or she has a disability within the meaning of the ADA by requiring a broad and more lenient interpretation of disability under the law.  The Equal Employment Opportunity Commission (EEOC) issued proposed regulations under the ADAAA on September 23, 2009.

After reviewing more than 600 public comments to the proposed rules, the EEOC published the final regulations, along with an Appendix containing the EEOC’s interpretive guidance.  According to the EEOC, the Appendix “will continue to represent the Commission’s interpretation of the issues discussed in the regulations, and the Commission will be guided by it when resolving charges of discrimination under the ADA.”

Employer groups have generally found the final regulations to include improvements over the regulations as initially proposed.

Highlights of the final regulations

• References to “a qualified individual with a disability” have been deleted, consistent with the ADAAA.

• Under the “regarded as” prong of the definition of disability, an individual is no longer required to show that he/she is regarded by the employer as being substantially limited in a major life activity.  Rather, the individual must merely show that that he/she has been subjected to an action prohibited by the ADA because of an actual or perceived impairment that is not both “transitory and minor.”

• The EEOC has made clear that where an individual is not seeking a reasonable accommodation, but only complaining about discrimination, then the case should normally proceed under the “regarded as” prong and it is generally unnecessary to invoke prongs one or two, i.e., the “actual disability” or “record of” disability prongs.  Under the ADAAA, an individual who proceeds under the “regarded as” prong is not entitled to a reasonable accommodation as a remedy.

• The EEOC has deleted the long-standing definition of major life activities as those basic activities that most people in the general population “can perform with little or no difficulty,” as being an irrelevant consideration.  As a result, the final regulation simply provides examples of activities that qualify as “major life activities” because of their relative importance.

• The final regulations do not define “substantially limits.”  Rather, the final regulations set out nine “rules of construction” to be used in determining whether an impairment is substantially limiting.

• The EEOC has made clear in the Appendix that the fact that an individual elects not to utilize mitigating measures is irrelevant to the determination of whether an impairment is substantially limiting.  However, the EEOC has clarified that the use or non-use of mitigating measures may be relevant in determining whether the individual is qualified or poses a direct threat to safety.

• In the proposed regulations, the EEOC included a list of impairments that would “consistently meet the definition of disability.”  In the final regulations, the EEOC has clarified that the analysis of whether any of these impairments substantially limits a major life activity still requires an individualized assessment.  However, the individualized assessment will, in virtually all cases, result in a finding that the impairment substantially limits a major life activity.

• The final regulations deleted the proposed regulations (a) listing impairments that may be substantially limiting for some individuals but not others; and (b) providing examples of impairments that “are usually not disabilities.”

• The final regulations reinstated use of the terms “condition, manner, or duration” as concepts that may be relevant to the determination of whether an impairment is substantially limiting.

• The final regulations move the discussion of how to analyze the major life activity of working to the Appendix and have retained the original formulation of “class or broad range of jobs” in analyzing whether an individual is substantially limited in this major life activity.  The proposed regulations sought to replace the concepts of “class” or “broad range” of jobs with the concept of “type of work.”  The EEOC concluded that this change would create confusion.

• The final regulations make clear that even if ADA coverage is established under the “regarded as” prong of disability, the individual must still establish the other elements of a claim of discrimination, e.g., the individual is qualified, he/she has been discriminated against because of the impairment, etc., and the employer may raise any available defenses, e.g., the impairment was transitory and minor.  However, the final regulations also point out that the concepts of “major life activities” and “substantially limits” are not relevant in evaluating coverage under the “regarded as” prong.