Background

According to Madison’s complaint, SEIU had posted a press release online titled “Massive Wage Theft Scheme Alleged at Downtown St. Paul Buildings Run by Madison Equities.” The press release stated that security officers at buildings managed by Madison had made “wage theft complaints” to the Minnesota Attorney General and that Madison “had employees work 40 hours under one company” and then work for a different company “for time that should have been overtime time-and-a-half pay,” resulting in the workers being underpaid by thousands of dollars.  Madison alleged that the press release (and a flyer making similar statements) contained false and defamatory statements that interfered with its business relationships.

In response, SEIU asserted that Madison’s state-law defamation claims were preempted by the National Labor Relations Act (“NLRA”).  Based on that argument, they moved for judgment on the pleadings.  The district court denied the motion, concluding that Madison’s claims were not preempted by federal law.

The Court of Appeals’ Decision

The Court of Appeals ultimately ruled in favor of Madison and found that its state-law claims were not preempted.

SEIU argued that Madison’s claims were preempted under the Garmon preemption doctrine.  The court explained that, under Garmon, state-law claims are presumptively preempted if 1) they concern conduct that is actually or “arguably” protected under Section 7 of the NLRA or 2) prohibited under Section 8 of the NLRA.  Section 7 protects employees’ rights to organize, while Section 8 prohibits unfair labor practices by employers and labor organizations.

The Court analyzed the conduct at issue – i.e., SEIU’s speech criticizing Madison’s wage practices – to first see if that conduct was protected by the NLRA.

Section 7 of the NLRA broadly provides that employees have the right to form, join, or assist labor organizations, and to otherwise engage in protected concerted activities pertaining to their terms and conditions of employment. The Court first concluded that SEIU could not identify a single provision within Section 7 that arguably protected their conduct, and further rejected the Union’s citations to prior decisions which held that Section 7 provides unions with freedom-of-speech protections on the basis that those decisions were decided in the context of union-organizing efforts, which was not the case in the matter at hand.

The Court further noted that SEIUs conduct was not a violation of Section 8 of the NLRA, and therefore Madison would not have been able to seek protection from the National Labor Relations Board, leaving the Court as its only avenue for relief.

SEIU further attempted to broadly argue that “a labor organization’s speech criticizing conditions of employment is always preempted and that Garmon preemption forecloses state court jurisdiction over any labor dispute.”  The Court of Appeals was again unpersuaded, stating SEIU’s “attempt to invoke Garmon preemption based on the alleged existence of a labor dispute without articulating how their conduct is either protected or prohibited under the NLRA is inconsistent with Minnesota precedent.”

Because SEIU could not identify a provision of the NLRA which arguably protected or prohibited their public statements regarding Madison’s alleged wage theft, Madison’s state-law tort claims were held to not be preempted under Garmon.

Bottom Line

The Court of Appeals’ decision, while unpublished and therefore nonprecedential, makes clear that if a party to a lawsuit wishes to argue that state-law claims are preempted by the NLRA, they must be able to point to specific provisions within Section 7 or 8 of the NLRA that arguably protect or prohibit the conduct at issue, thereby placing the dispute within the jurisdiction of the NLRB.

Counsel for SEIU has indicated they will seek review from the Minnesota Supreme Court.  We will continue to monitor this case for any further developments.

The post Minnesota Court of Appeals Rules that Defamation Claim Against Union Not Preempted by NLRA appeared first on Felhaber Larson.

The Players

Ron Darling pitched for 13 years for the New York Mets, Toronto Blue Jays and Oakland A’s. In perhaps his best season, he helped lead the Mets to a World Series championship over the Boston Red Sox in 1986. After retirement he pursued a successful business career, then moved into broadcasting baseball in New York, as well as on a national level.

Lenny Dykstra played in the outfield on the same Mets team that won the 1986 series, and was later traded to the Philadelphia Phillies. He was known for his tough and gritty style of play (hence the nickname “Nails”).  Dykstra’s post-career life has been marked with multiple business and legal problems, including but not at all limited to:

• Numerous lawsuits against his business for credit card fraud, unpaid rent and other financial disputes.
• Chapter 7 bankruptcy that included fraudulently hiding and selling assets.
• Conviction for bankruptcy fraud and money laundering.
• Conviction for grand theft auto and providing false financial information.
• Conviction for lewd conduct/public exposure.
• Numerous accusations of sexual assault and offensive behavior regarding African Americans, women and gay people.

The Lawsuit

In 2019, Darling published a book entitled 108 Stitches: Loose Threads, Ripping Yarns, and the Darndest Characters from My Time in the Game.  In one portion of the book, Darling called Dykstra “one of baseball’s all-time thugs” and described a point in the 1986 World Series where Dykstra began heckling Dennis “Oil Can” Boyd, an African American pitcher for the Red Sox.  Darling recalled Dykstra:

“shouting every imaginable and unimaginable insult and expletive in his direction — foul, racist, hateful, hurtful stuff…the worst collection of taunts and insults I’d ever heard — worse, I’m betting, than anything Jackie Robinson might have heard, his first couple times around the league.”

Dykstra was not pleased with this characterization and sued Darling and the publisher for defamation, a claim requiring proof of (1) a false statement;  (2) the statement was communicated to a third party; (3) the statement  harmed person’s reputation or held him up to scorn, ridicule or contempt; and (4) damage occurred.  Some types of defamation are considered defamatory per se, meaning that damages are presumed and need not be proved.  These include claims that the person has committed a serious crime, has a terrible disease or is incompetent in their job or profession.

The Decision

Justice Robert D. Kalish in New York Supreme Court in Manhattan skipped right over most of the elements to dismiss the case for the following reason:

Dykstra was infamous for being, among other things, racist, misogynist, and anti-gay, as well as a sexual predator, a drug-abuser, a thief, and an embezzler…[A]s a matter of law, the reference in the book has not exposed Dykstra to any further “public contempt, ridicule, aversion or disgrace,” or “evil opinion of him in the minds of right-thinking persons,” or “deprivation of friendly intercourse in society.”

The judge suggested instead that “given Dykstra’s celebrity and apparent attraction to the spotlight, [his] remedy lies in telling his own story to the public.”

Dykstra did not take the dismissal well, reportedly claiming that the judge must have been paid off.  In addition, he is now threatening to release secret information that he says proves that Darling’s 2018 diagnosis for thyroid cancer is a “fraud.”

Bottom Line

No real employment law lessons here but perhaps a life lesson courtesy of Will Rogers: “It takes a lifetime to build a good reputation, but you can lose it in a minute.”  Lenny Dykstra may need a few more lifetimes.

The post When it Comes to Reputation, You Can’t Lose What You Never Had appeared first on Felhaber Larson.

Supervisor Learns Employee Opened a Competing Business

While working as a pharmacist for national pharmacy chain CVS, Stephani Martinsen founded her own pharmacy.  Martinson’s pharmacy mainly created compounded pharmaceuticals that CVS did not dispense but which treated similar conditions to products sold by CVS. For example, Martinsen’s business sold the drug sublingual sildenafil, which was used to treat the same condition as Viagra, which CVS did sell.

Martinsen’s supervisor, Kara Engleka, discovered Martinsen’s side-business and immediately conducted an investigation, interviewing Martinsen and reviewing the side-business’s website. Engleka determined that Martinsen’s side-business was in violation of CVS’s conflict-of-interest policy on the basis that the pharmaceuticals sold by Martinsen competed for CVS’s customers. Engleka recommended to CVS Human Resources that Martinsen be terminated. CVS agreed terminated Martinsen’s employment.

Martinsen then sued Engleka for tortious interference with contract and defamation related to Engleka’s actions during the investigation. Engleka moved for summary judgment (early dismissal) which the trial court granted, prompting Martinsen to appeal.

She Was Just Doing Her Job

The Minnesota Court of Appeals affirmed the trial court’s dismissal of the tortious interference claim, citing to the general principle that “[i]n Minnesota, a discharged employee may not sue the supervisor who fired her, because, if acting in good faith, the supervisor simply acts in furtherance of their employer’s best interests.” The Court found that Engleka was simply acting within the scope of her employment with CVS in investigating an alleged violation of company policy and recommending a course of action in response ot the findings of that investigation.

In regard to the defamation claim, the Court explained that “[t]ruth is a complete defense against defamation” and although the truth or falsity of a statement is generally a question for the jury, it was undisputable that Martinsen, through her side-business, was directly competing with CVS.

The Court additionally found that Engleka’s statements made during her investigation were legally privileged. A statement is subject to a conditional privilege and thus immune from a defamation claim if it is 1) made upon a proper occasion, 2) based on a proper motive, and 3) based upon reasonable or probable cause. The court found that Engleka’s statements were entitled to qualified privilege because they were based on a sufficient investigation conducted as part of Engleka’s job duties.

The Court additionally determined that there was no evidence to establish that Engleka acted with malice, which would have potentially defeated Engleka’s privilege defense. Accordingly, Martinsen’s defamation claims failed as a matter of law.

Bottom Line

This case reminds us that as long as they are acting without malice and within the scope of their employment, supervisors are generally protected from liability regarding events arising out of employment termination decisions. Here, because Engleka’s position required her to investigate incidents of employee misconduct, Martinsen was unable to successfully sue her when she did not like the conclusions that were reached or the consequences that followed.

The post Court Rules That Employee Can Not Sue Supervisor Who Fired Her appeared first on Felhaber Larson.

Background

Ann Wayt worked as a Registered Nurse at Affinity Medical Center in Massillon, Ohio.  In more than 30 years, she had never been disciplined and actually won a prestigious nursing award in 2008.  In 2012, she actively and visibly was involved in a campaign to unionize the nurses at the Hospital, which resulted in a narrow victory (100-96) for the union.

The day of the election, a nurse who worked as a “sitter” with one of Wayt’s patients the previous day complained that Wayt had not relieved her on time.  The Hospital investigated Wayt’s care for the patient and concluded that she had (1) falsified documentation on the patient’s chart by stating that she had performed a “head-to-toe” assessment when she had not; (2) failed to perform her hourly rounds on the patient; and (3) had posted several inaccuracies  in the patient’s chart.

Despite never actually interviewing Wayt, Hospital management concluded that she should be terminated but asked their Human Resources Department to review the decision.  HR responded that this was a “a weak case for termination” and asked for additional information, including Wayt’s disciplinary history and a description of how similar situations had been handled in the past. Management never responded, choosing instead to revise its description of the events in question (with several inaccuracies) and proceed to terminate Wayt for “substandard patient care and falsification of patient documentation.” Management then filed a report with the Ohio BON asserting that the patient was “not observed for an unsafe period of time.”

BON Reporting Requirements

In Ohio (like Minnesota), if a hospital believes that a nurse’s behavior would result in discipline from the state Board of Nursing, the hospital must report that nurse to the BON. By law, the hospital will not be liable for damages because of the report, unless the report is submitted in “bad faith.”

Ohio Jury and NLRB Both Find the Hospital Broke the Law

Following her termination, Wayt sued, claiming among other things that the BON report defamed her.  After a trial, the jury agreed and awarded her $800,000 in compensatory damages and $750,000 in punitive damages, while also ordering the Hospital to pay her attorney’s fees.

At the same time, the Hospital was facing Unfair Labor Practice charges stemming from the union election, one such charge being that Wayt’s termination and the BON report were retaliatory due to her involvement with the union.   An Administrative Law Judge (“ALJ”) and ultimately the NLRB found that the hospital’s actions were in fact discriminatory and violated the National Labor Relations Act for the following reasons:

• The timing of the Hospital’s actions relative to the union election was suspect and the Hospital could not prove that their reasons were true;
• The Hospital did not conduct “an unbiased investigation, but [rather] an inquiry . . . that was focused on getting support for the decision it had already made . . .”; and
• Even if the Hospital’s reasons had been true, the hospital had hardly ever terminated a nurse and made a report to the BON in similar circumstances, namely “a first offense that had no bearing on the patient’s health.”

The NLRB ordered the Hospital to offer the Nurse reinstatement, make her whole for any loss of earnings or benefits, compensate her “for the adverse tax consequences, if any, of receiving a lump-sum backpay award,” formally withdraw the BON Complaint against the Nurse, and reimburse the Nurse for any legal fees that she may have incurred at the BON.  See Affinity Medical Center, 362 NLRB No. 78 (April 30, 2015).

Bottom Line

Although making BON reports is mandatory, Minnesota health care employers must still conduct a legitimate investigation of the matter in order to be sure that their report is in good faith and subject to the immunity that the law provides.

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That is the story of what happened to Shirley Sherrod and President Obama, who got dragged into the mess after Sherrod was terminated for making allegedly racist remarks based on a video from an NAACP speech given last March. The video was released by a notoriously right-wing blogger Andrew Breitbart on his  website BigGovernment.com, leading to an immediate and frenzied cry for her termination.  We don’t know whether Agriculture Secretary Tom Vilsack called Human Resources before he made the snap decision.  But if he had, we can only hope that Human Resources would have urged caution and advised that certain cautionary steps should be taken prior to termination, even if the proof appeared irrefutable.

Here’s what the USDA got wrong.

Always, and we mean always, ask the employee who is about to be fired for his or her side of the story. This applies even in circumstances where you can’t think of a reason which would justify the employee’s actions and where there is immense pressure to take immediate action.  Although it doesn’t happen every time, many times there are circumstances which justify the employee’s actions.

In this case, if the Secretary had watched the entire video before firing Sherrod, he would have learned that she was in fact making the point that every farmer needs to be helped, regardless of race.  Sherrod, who was offered another job with the USDA, hasn’t decided whether to accept one. She could decide to file an employment lawsuit–in addition to her defamation suit against Mr. Breitbart–which would have plaintiff attorneys salivating at the chance to represent her.  We hope you wouldn’t make the same mistake.

The post Shirley Sherrod and the Rush to Judgment: Could it Happen at Your Organization? appeared first on Felhaber Larson.