Legal Update: Supreme Court, Fourth Circuit and

N.C. Courts

Brian S. ClarkeAssistant Professor of LawCharlotte School of Law

THE SUPREME COURT OF THE UNITED STATES

Nitro-Lift Techs. v. Howard (US 2012) Arbitration and Covenants Not to Compete Question of arbitrability of the covenant not to

compete dispute was a question for an arbitrator not a court

MORAL: If you want to carve the covenant out of the arbitration provision, do it explicitly

The Supreme Court

Pending Cases Vance v. Ball State University, No. 11-556 (June

25, 2012). Does the Faragher/Ellerth defense apply to . . .

harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work,

OR Is it limited to those harassers who have the power to

“hire, fire, demote, promote, transfer, or discipline” their victim.

PREDICTION: A supervisor does not necessarily have to have authority to hire and fire

The Supreme Court

Pending Cases Genesis HealthCare Corp. v. Symczyk, No. 11-

1059 (June 25, 2012). The validity of “tactical mooting” in the FLSA collective

action context to end a case FLSA collective actions are one the rise Several pending locally

PREDICTION: True tactical mooting effectively eliminates the “case or controversy” needed for Article III standing. However, true tactical mooting will likely be rare

Does plaintiff seek injunctive relief? Declaratory relief? Does the Rule 68 Offer of Judgment address those?

The Supreme Court

Pending Cases Sandifer v. U.S. Steel, No. 12-417.

What constitutes "changing clothes" within the meaning of section 203(o) of the FLSA? Deals with the donning and doffing of Personal Protective

Equipment in an industrial workplace In a collective bargaining agreement, the employer and the

union can agree that “changing clothes” is not compensable

PREDICTION: “Changing clothes” means donning and doffing of PPE and can be excluded from compensable time under 203(o) of the FLSA.

The Supreme Court

THE FOURTH CIRCUIT

The current makeup of the court . . . Regan (R) Nominee: 1

Wilkinson (Va.) G.H.W. Bush (R) Nominee: 1

Niemeyer (Md.) Clinton (D) Nominees: 3 ½

Traxler (S.C.) Motz (Md.) King (W.Va.) Gregory (Va.) [1/2] G.W. Bush (R) Nominees: 3 ½

Duncan (N.C.) Agree (Va.) Shedd (S.C.) Gregory (Va.) [1/2]

Obama (D) Nominees: 6 Davis (Md.) Keenan (Va.) Wynn (N.C.) Diaz (N.C.) Floyd (S.C.) Thacker (W.Va.)

The Fourth Circuit Bench

Ideologically, most people would categorize the current judges as follows . . . Liberal (general perception)

Three . . . Motz, Davis, Wynn Conservative (general perception)

Three . . . Shedd, Niemeyer, Wilkinson Moderate (general perception)

Nine . . . Traxler, Keenan, Diaz, Floyd, Thacker, Duncan, Agee, Gregory, King

The Fourth Circuit Bench

Overview of Decisions . . . Reversals of Judgments for the Employer

(pro-employee): 11 (of 40) [27.5%] Other Generally Pro-Employee Positions: 4

(of 40) [10%] TOTAL PRO-EMPLOYEE DECISIONS: 15 (of

40) [37.5%] Neutral Application of Well Established Law:

17 (of 40) [42.5%] Generally Pro-Employer Positions: 8 (of 40)

[20%]

The Fourth Circuit Bench

Themes over the last year . . . The moderation trend continues (or has stabilized)

The days of the Fourth Circuit as the most employer-friendly circuit are

OVER It is more important than ever for HR to do

things the right way on the front end.

The Fourth Circuit Bench

Computer Fraud & Abuse Act:

THE FOURTH CIRCUIT IS NOW DE-CFAA-NATED.

WEC Carolina Energy Solutions, LLC v. Miller, 687 F.3d 199 (4th Cir. 2012) One of three cases of first impression for the 4th Cir. this

year Miller was a Project Director for WEC

Had company laptop, etc. WEC had policies prohibiting employees from saving work

files to personal devices or using company resources for non-business purposes

Miller left WEC to go to a competitor and, allegedly, took a bunch of confidential information with him

Computer Fraud & Abuse Act

WEC Carolina Energy Solutions, LLC v. Miller Miller allegedly used WEC confidential information in a

customer presentation 20 days later on behalf of his new employer The new employer beat out WEC for the customer’s business

WEC sued, asserting various state law claims and a claim under CFAA CFAA creates a civil claim against any individual who accesses

a computer network without authorization or in excess of his authorization and causes damage of at least $5,000

Miller moved to dismiss the CFAA claim

Computer Fraud & Abuse Act

WEC Carolina Energy Solutions, LLC v. Miller Fourth Circuit adopted a narrow interpretation of CFAA

Joined the Ninth Circuit (YIKES!) Court concluded that CFAA only addresses “access” to the

network, not what a person does with information on the network

If an individual is authorized to access a computer network, that is the end of the discussion for CFAA purposes

“Exceeding Authorized Access” does not mean misusing data, files, etc. (or even misappropriating them)

CFAA claims are effectively dead in the employment context

Computer Fraud & Abuse Act

FAIR LABOR STANDARDS ACT:NO FLSA COMPLAINT

IS MINOR

Minor v. Bostwick Laboratories, Inc., 669 F.3d 428 (4th Cir. 2012). On May 6, 2008, Kathy Minor (and several others) met with

Bostwick’s COO Reported that Minor’s supervisor routinely altered

employees’ time sheets to reflect that they had not worked overtime when they had.

Six days later, Bostwick fired Minor The reason given: “too much conflict with her

supervisors and the relationship just was not working.”

Bostwick also claimed to have met with Minor’s co-workers and “had determined that she was the problem.”

Fair Labor Standards Act

Minor v. Bostwick Laboratories, Inc. Minor sued for retaliation under the FLSA Bostwick moved to dismiss on the ground that an

informal, intracompany, oral complaint was not protected activity under the FLSA FLSA prohibits retaliation against any employee

“because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter . . .”

The District Court agreed and dismissed the claim

Fair Labor Standards Act

Minor v. Bostwick Laboratories, Inc. While Minor’s appeal was pending, the Supreme

Court decided Kasten v. Saint-Gobain Performance Plastics Kasten focused on the “filed” part of the anti-retaliation

provision Held than an oral complaint is “filed” when it is made Left open the question of whether an informal,

intracompany complaint satisfies the “any complaint” part of the statute

Fourth Circuit had to close the hole left by the Supreme Court

Fair Labor Standards Act

Minor v. Bostwick Laboratories, Inc. So, is making an informal, oral, intracompany

complaint of FLSA violations protected conduct?

YES . . . As long as the complaint is “sufficiently clear and

detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection”

Fair Labor Standards Act

NORTH CAROLINA

Pierce v. The Atlantic Group, Inc., 724 S.E.2d 568 (N.C. App.), disc. rev. denied, 731 S.E.2d 413 (N.C. 2012). Howard Pierce was a rigging supervisor for Atlantic Worked on maintenance projects at Nuclear

Powerplants Last assignment was at Duke Energy’s McGuire

Nuclear Station on Lake Norman OSHANC issued regulations regarding crane

operators and riggers – required certification

REDA and Wrongful Discharge

Pierce v. The Atlantic Group, Inc. Pierce was concerned about how to get the

certifications completed without disruption to maintenance operations at McGuire

He formulated a training plan in order to get the certifications done with minimal disruption

Atlantic and Duke did not respond to his plan He then was asked to take a vacation and

then, while on vacation, asked to come back for a limited assignment at a lower pay rate

REDA and Wrongful Discharge

Pierce v. The Atlantic Group, Inc. Shortly thereafter, he was fired for falsifying

his timecard (although he claimed his action was approved by his supervisor) Basically, entered a full day of work on a Friday

but then left work for a family emergency Sued, asserting claims for violation of REDA,

wrongful discharge in violation of public policy, defamation and IIED/NIED

Ds moved to dismiss, which was granted

REDA and Wrongful Discharge

Pierce v. The Atlantic Group, Inc. REDA CLAIM Issue of FIRST IMPRESSION

Can an internal complaint satisfy the “initiate any inquiry” prong of protected conduct under REDA? HELD: NO, it cannot. More than an internal complaint, or suggestion, is

required. Wrongful Discharge Claim

P must plead a specific N.C. public policy that D allegedly violated

Broad, general statutes will not suffice

REDA and Wrongful Discharge

FEDERALLEGISLATION

Nothing on the horizon.

ACA is coming on-line over the next 2 years.

The effect will be minimal outside of the benefits area

The primary provision that is generally applicable is the breastfeeding break requirement added to the FLSA

Federal Legislation

NORTH CAROLINAOTHER[?]

N.C. State Bar Formal Ethics Opinion 2012-5 Deals with an employee’s emails to the

employee’s personal attorney sent using the employer’s business email system Generally, if the employer has a clearly written

and clearly communicated policy stating that all emails sent or received on its system are the property of the employer and EE has NO expectation of privacy . . .

These emails are NOT privileged

Employee Emails to Counsel

N.C. State Bar Formal Ethics Opinion 2012-5 VERY different rules for emails sent by an

employee using an internet email account (live.com, gmail.com, etc.) accessed from the ER’s computer system

These remain privileged Can be SIGNIFICANT legal liability for accessing

these Primarily under the federal Stored Communications

Act

Employee Emails to Counsel

NORTH CAROLINALEGISLATION

H.B. 4 – signed by Gov. McCrory on Feb. 18, 2013.

Goes into effect on July 1, 2013 Significant changes to benefits

Reduced maximum weekly benefit amount Reduced maximum duration Changed calculation of benefit amount Eliminated several “non-charging” benefit

categories Small increase in SUTA tax (o.o6% per year).

Unemployment Insurance

Pending . . . S.B. 91 Passed N.C. Senate (48-2) on March 5, 2013 Now pending in N.C. House Would prohibit employers from requiring an

applicant for employment to disclose information concerning any arrest, criminal charge, or criminal conviction that has been expunged.

Seems likely to pass.

Expunged Criminal Records

Several bills pending that would . . . allow concealed handguns in places where

they are currently banned prevent an employer from banning hand guns

in employees’ cars in the employer’s parking lot

Gun Control

QUESTIONS?