MEDIA

July 14, 2006

Hostile Work Place, Sexual Harassment Claims Held Insufficient

Published in: New York Law Journal | volume 236

In the U.S. District Court for the Eastern District of New York, Judge I. Leo Glasser held that plaintiff’s claims of hostile work environment and retaliation for her complaints about sexual harassment were insufficient to withstand a motion for summary judgment. In another decision, Judge Jack B. Weinstein gave claimants in a quasi-class action a 40-day deadline to submit properly documented claim forms where the delay was preventing other claimants from receiving escrowed funds under the terms of a settlement. Judge Arthur D. Spatt exercised jurisdiction under the All Writs Act to prevent improper interference with a court-appointed monitor whose term had expired. And Judge Joanna Seybert held that a company’s severance policy and supplemental executive retirement plan were subject to Employee Retirement Income Security Act (ERISA).

Title VII

In Garone v. United Parcel Service Inc. (UPS), 00 CV 6722 (EDNY, June 27, 2006), a Title VII action alleging hostile work environment and retaliation for complaints of sexual harassment, Judge Glasser granted defendants’ motion for summary judgment.

Plaintiff began working for defendant UPS as a part-time tracing clerk in 1993. In January 1997, she was promoted to a full-time operations management specialist at the Times Plaza center in Brooklyn. A few months later, defendant Stan Scigowski became the manager of that center. One of plaintiff’s coworkers was defendant Thomas Dullahan.

In October 1998, the division manager transferred plaintiff to the Kensington center in response to her complaints that she was unhappy at Times Plaza. The next day plaintiff left work on short-term disability because of emotional problems. Plaintiff returned to work at the Canarsie center in January 1999. After working there for four months, she suffered an emotional breakdown and has been unable to return to work.

In support of her Title VII claims, plaintiff alleged that, in her presence or the presence of others, Mr. Scigowski referred to her as an ‘office bimbette’ and used the term ‘office bitch’ with an implication that she fell into that category. Plaintiff also claimed that Mr. Scigowski made managerial decisions that unfairly excluded her from certain work and meetings.

Plaintiff similarly alleged that Mr. Dullahan made sexual jokes and comments to her, mocked her and challenged her authority. Added to all of this were other allegations of harassment and retaliation by supervisors and coworkers.

The allegations here, viewed objectively, did not amount to a hostile work environment. As Judge Glasser noted:

[Mr. Scigowski’s] occasional–and discontinued–use of the generic terms ‘office bitch,’ ‘Brooklyn bimbette,’ and ‘cat fight’ was neither severe, nor physically threatening, nor did it interfere with [plaintiff’s] job performance. Comments such as these, while bearing a connotation of sexuality, can only be questionably characterized as ‘mere offensive utterances.’ Slip op. 32.

The undisputed facts, moreover, belied the conclusion that Mr. Scigowski treated plaintiff unfairly because of her gender. ‘Title VII,’ the court stated, ‘simply does not concern itself with every blue or casually disparaging comment uttered in the workplace; nor does it prohibit every exercise of managerial discretion disapproved of by an employee who happens to be of a certain sex.’ Slip op. 33.

As to Mr. Dullahan and other coworkers, the alleged comments, though perhaps sexual and offensive, were ‘episodic in nature, over a two-year period,’ and not severe or pervasive enough to have created a hostile work environment.

Plaintiff failed as well to show a constructive discharge, an adverse employment action or retaliatory harassment. The imposition of a full schedule on plaintiff’s return to work at the Canarsie center established, at most, that UPS discontinued a privileged arrangement conditionally granted her that became unsupportable. That decision was neither an adverse action, nor retaliation for plaintiff’s complaints about her treatment.

In any event, defendants would be entitled to summary judgment ‘based on the Faragher/Ellerth affirmative defense: UPS exercised reasonable care to prevent and correct promptly any sexually harassing behavior and [plaintiff] unreasonably failed to take advantage of the preventative or corrective opportunities provided to her.’ Slip op. 38.

Settlement Controls: Mass Tort Case

In a mass tort case transferred to the Eastern District by the Judicial Panel on Multidistrict Litigation, Judge Weinstein issued a memorandum setting forth strict controls to be followed by numerous plaintiffs and their attorneys who, even after a final settlement was approved, failed to file documents to support their claims, to the prejudice of the many other settling plaintiffs. In re Zyprexa Products Liability Litigation, 04 MD 01596 (EDNY, June 8, 2006).

This action was brought on behalf of more than 8,000 plaintiffs against pharmaceutical manufacturer Eli Lilly and Co. In November 2005, the court and parties approved a final settlement of the bulk of the cases. Over 99 percent of the settling plaintiffs filed consents and releases and some $700 million was deposited into escrow to pay individual claims when approved by the four court-appointed special masters.

Largely because of inadequate documentary support, only about half of the claims have been approved for payment. But no money can be paid to any claimant under the settlement until the special masters have approved 7,193 of the claims, representing about 86 percent of the total. Of those 7,193 claims, 6,474 must be diabetes-related. Accordingly, an additional 3,106 claims–2,737 of them diabetes-related–must be approved before the court can release any money.

Judge Weinstein attributed much of the delay ‘to the failure of some participating attorneys’ to provide supporting documents in compliance with instructions. Many claimants did not even file claim forms.

As Judge Weinstein explained, this case is a ‘quasi-class action subject to the general equitable power of the court’–which must use ‘innovation and creativity’ in confronting the ‘novel challenges of aggregate litigation.’

The court added:

Inaction on the part of almost half the plaintiffs who agreed to be bound by the Final Settlement Agreement thwarts the ability of the remainder of the claimants–some of whom have established serious illness and who are in need of prompt compensation–to recover. To avoid continued frustration of the few by the many, those plaintiffs who accepted the Final Settlement Protocol must submit proper claims to the Special Settlement Masters by July 17, 2006….

The court stated that it would dismiss with prejudice claims not properly supported by that date, on grounds of equitable estoppel. Any claim thus ‘abandoned’ could be reopened only upon a showing (among other things) of good cause for the delay.

All Writs Act

In In re Stabile and Saracco (United States v. The New York Racing Ass’n), 03 CR 1295 (EDNY, June 15, 2006), Judge Spatt granted the court-appointed monitor’s application for the court to exercise jurisdiction under the All Writs Act, 28 USC § 1651(a) (the act), and hold an evidentiary hearing on whether to permanently enjoin respondent Anthony Stabile (and his lawyer) from having any further communications or contact with the monitor or any members of the monitor’s team.

The New York Racing Association (NYRA) was indicted for fraud involving misconduct by employees of its Pari-Mutual Department. As part of a deferred prosecution agreement (DPA), the court appointed the law firm Getnick & Getnick to serve as monitor of the NYRA. In light of wide-ranging fraud, systemic weaknesses and illegal activities at the NYRA, ‘the Monitor was given the authority to (1) monitor the NYRA’s compliance with the terms of the DPA; (2) monitor the NYRA’s business and operations for compliance with federal, state, and local laws; and (2) suggest structural reforms to help ensure compliance after the term of the monitor ended.’ Slip op. 5. During the course of the monitor’s investigation, Stabile refused to cooperate with and verbally threatened investigators for the monitor. As a result, the NYRA caused Stabile’s NYRA credentials to be revoked.

After the monitor filed its final report and the monitorship ended, Stabile allegedly telephoned a member of Getnick & Getnick, the former monitor, and threatened to disseminate false and disparaging information about agents of the monitor unless he received certain information from the monitor. Stabile also allegedly threatened to sue members of the monitor’s team unless the monitor exerted pressure on NYRA to reinstate Stabile and compensate him for lost time.

The monitor petitioned the court under the act to hold a hearing, and respondents challenged the court’s jurisdiction to hear the matter after the monitor’s term had ended. Pursuant to the order of appointment, the monitor had the authority to petition the court to address violations of that order. The monitor’s status, however, had expired, and the underlying criminal case had been dismissed with prejudice. Exercising its discretion to address potential violations of its order, Judge Spatt tolled the term of the monitorship, thereby maintaining subject matter jurisdiction. The court also found that it had ancillary jurisdiction over matters arising from the prior criminal prosecution.

As Judge Spatt noted, under the act, a federal court has the power to issue orders to effectuate and prevent frustration of prior orders, including orders against third parties. Although the court’s power under the act is limited to circumstances where no other authority exists, Judge Spatt found its application appropriate and necessary here to address threats to the court-appointed monitor after dismissal of the criminal case. Criminal contempt was inapplicable because the monitor sought no criminal sanctions, only an injunction. And, beyond dispute, respondents knew that the court had appointed the monitor when they took acts to influence the monitor.

Concluding, the court stated:

Court-appointed monitors provide an indispensable and important service that saves both judicial and prosecutorial resources. The remedial measures and oversight that court-appointed monitors impose on corporate defendants aid in the administration of justice. A monitorship of a corporate defendant provides reasonable punishment that a court would otherwise be incapable of imposing on a corporation. Slip op. 25.

The monitorship here achieved those goals through ‘corporate restructuring, reform of operating practices, policies and procedures, and adequate oversight to ensure continuing compliance.’ Slip op. 26.

ERISA Claims

In Giordano v. Thomson, 03 CV 5672 (EDNY, Sept. 6, 2005), Judge Seybert held, as a matter of law, that defendant’s severance policy was an ’employee welfare benefit plan’ subject to ERISA and that its supplemental executive retirement plan (SERP) was also subject to ERISA. Judge Seybert also denied summary judgment to both parties because of competing factual evidence.

Plaintiff alleged that defendant Thomson Industries Inc. (TII) terminated him as CFO because he refused to sign a release statement waiving potential claims, including ERISA claims, against TII, its acquirer Danaher Corp. and their officers at the time of the closing of the acquisition.

In the court’s view, ERISA applied to TII’s severance plan, because there was an internal written severance memorandum and a past practice of awarding severance. This informal undertaking to pay severance required discretion in its application; was acknowledged as an obligation by the acquiring corporation; had created an expectation of a severance payment by plaintiff; and established criteria to consider in awarding severance.

Judge Seybert determined that the SERP was not maintained ‘solely’ for the purpose of providing benefits beyond the contribution limits imposed by 26 USC § 415, because contributions were used for other purposes as well. As long as the purpose of the SERP was not simply to avoid Internal Revenue Code nondiscrimination rules, it was not an unfunded excess benefit plan and, accordingly, was governed by ERISA.

Harvey M. Stone and Richard H. Dolan are partners at Schlam Stone & Dolan. Bennette D. Kramer, a partner of the firm, assisted in the preparation of the article.

[This article is reprinted with permission from the July 14, 2006, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]