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Supreme Court makes it Harder to Sue for Age Discrimination

Last week, the U.S. Supreme Court issued a ruling in the case of Gross vs. FBL Financial Services which makes it much harder for employees to prevail on claims of age discrimination.  A plaintiff used to have to prove that age was a factor in their adverse job action — but it did not need to be the only factor. The employer, in response, could show that it had other reasons for the termination or demotion beyond the age of the employee.

In a 5-4 ruling, the court said that plaintiffs in ADEA cases  have the complete burden of proving that age was the deciding factor in their dismissal or demotion.  Given that the employee did not take part in the internal company deliberations leading to the termination or demotion, it will be very hard if not impossible to prove.

Age discrimination complaints to the Equal Employment Opportunity Commission (EEOC) rose by 29% in 2008 as the economy led to more layoffs. Congress may consider a change in the law to re-instate the older methodology.

Take arbitrations seriously or you can lose $4.1 Billion

A California court recently upheld an award by an arbitrator for an amount in excess of $4 billion.  Paul Thomas Chester had sued his former employer, affiliated companies and company founder Timothy Ringgenberg for wrongful termination.  The case ended up in front of an arbitrator (a private judge).  How did an award like this end up being so large for a single plaintiff?  A number of compounded mistakes by the defendant.

First, the defendant apparently terminated a high level employee without cause and after he sued, moved to compel arbitration.  Then the defendant did not participate in discovery as requested.  Then the defendant decided to fire his attorney and represent himself and his companies (court rules require companies to be represented by counsel, but this was not the case in a private arbitration).  Finally, the defendant opted not to attend the arbitration nor meaningfully participating in his defense.

Since the arbitrator — a retired judge — had no defense information to work from, he essentially had to fill in the gaps with the information he did have.  Most of this was done adversely to the defendant.  The plaintiff’s employment agreement provided for a commission which was 5% of gross sales. The agreement also stated that if he was terminated without cause, he would be entitled to the commission on a permanent basis.  So the arbitrator had to guess what the on-going sales of the company would be — in absence of any information from the defendant.  The defendant had sent a letter to shareholders claiming revenue in one month being $535,000 with expected growth rates of 20 or 10 percent a month.  Assuming a 10% per month growth rate in perpetuity, the damages came out to about $1 billion with triple that in punitive damages. Hence a $4billion award.

Arbitration awards can only be appealed on very narrow grounds (essentially fraud).  Thus, the court upheld the award.

The takeaway:  arbitrations are just like trials and equal seriousness should be given to arbitrations as to trials.  Don’t ignore arbitrations.

A Chance Election Win — ADR at work

While Iranians have taken to the street to protest their disputed presidential election results, an election in Arizona was settled in a different sort of way.  In the run-off ballot for the last city council seat, both candidates tied with 660 votes.  To settle the matter, they each cut a deck of cards after a judge had shuffled it six times.  High card won.

This is alternative dispute resolution at work.

I am now a Mentor Mediator

I am pleased to announced that I have been added to the NJ Superior Court’s roster of mentor mediators.  When a new mediator is accepted to the court’s civil roster (strangely, no such requirement exists for divorce mediators on the court roster), the mediator is required to be mentored in 2 cases and 5 hours of mediation by a mediator on the mentoring roster.  I will now be available to do so.

Chrysler, Fiat, Lenders, UAW & U.S. Government need a Mediator

Most people do not think about mediation when they think about bankruptcy.  However, the courts do have a mediation program within the bankruptcy court.  I am not sure if the Chrysler filing was sent to mediation given that the filing was somewhat pre-packaged at the behest of the US government.

At this point, 3 of the senior creditors are challenging the judgment of the bankruptcy court.  They are claiming that junior creditors are receiving more than they are, bankruptcy laws were violated and that “TARP” funds meant for finance companies were illegally used to help Chrysler.  Fiat, the company buying what’s left of Chrysler, has set a deadline for the sale to be finalized.  The senior lenders have lost their appeal, but won a stay at the US Supreme Court.  An adverse ruling from the Supreme Court could affect the pending General Motors bankruptcy.  Each party to this transaction has something significant to lose and there are time constraints.

All of the parties to this case should get a mediator to find the win-win or the middle ground.  And quickly.