BUSINESS FORMATION & SALES BLOG

The United States Court of Appeals for the Third Circuit recently affirmed in part and reversed in part the decision of the United States District Court for the Middle District of Pennsylvania.  Erdman v. Nationwide Ins. Co., No. 07-3796, 582 F.3d 500 (3d Cir. 2009). The issue the Court of Appeals addressed was whether an employer may be sued for denying an employee leave under the Family Medical Leave Act.

Brenda Erdman worked full-time for Nationwide Insurance from 1980 until 1998 when she requested part-time employment so she could care for her daughter Amber, whom was born with Down’s Syndrome.  Nationwide granted Erdman’s request and also permitted her to switch to a four-day work week a few years later.  Prior to 2002, Nationwide permitted Erdman to work extra hours and count that time towards “comp time”, rather than be paid for it.  In early 2003, Erdman was informed by her new supervisor that she was no longer permitted to accrue “comp time” and that her part-time position would be eliminated.  Erdman was given the option to return to work full-time and she did so.  Prior to returning to a full-time position, Erdman asked whether Nationwide was going to honor her previously approved vacation request for the entire month of August, which Erdman normally used to prepare Amber to return to school in the fall.  Erdman was told that it was unlikely her vacation would be approved, so she decided to request the time as leave under the Family Medical Leave Act (“FMLA”).

Shortly after Erdman returned to full-time employment in April 2003, she submitted paperwork requesting FMLA leave from July 7^th to August 29^th.  Initially, Human Resources told Erdman there were no problems with her FMLA leave.  Unfortunately, Nationwide terminated Erdman thereafter, on May 9, 2003, citing behavioral problems that allegedly culminated in a telephone call in which Erdman used profanity.  Specifically, Erdman said, “this is a personal call and should not be reviewed for quality purposes, a–holes.”  Erdman sued Nationwide in the United States District Court for the Middle District of Pennsylvania claiming she was unlawfully terminated under the Americans with Disabilities Act (“ADA”) for requesting leave pursuant to the FMLA.

The District Court dismissed Erdman’s case at Nationwide’s request on the grounds that Erdman had not accumulated sufficient hours to qualify as an eligible employee under the FMLA and on the grounds that Nationwide did not terminate her based upon “unfounded stereotypes and assumptions against employees who associate with disabled people.”  Id. at 6.  Instead, the District Court held that Nationwide’s termination of Erdman was motivated by Erdman’s prior modifications to her work schedule.  Erdman appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit.

The Court of Appeals initially determined that Erdman accumulated sufficient worked hours in the prior year to be eligible for FMLA leave.  Nationwide countered that Erdman could not recover under a retaliation theory since she never actually took FMLA leave.  The Court reasoned it would be absurd to permit an employer to escape liability for punishing an employee for taking FMLA leave simply because the employer fired the employee before the leave began.  Per the Court, the question was whether Nationwide’s actions amounted to interference with Erdman’s FMLA rights or retaliation for asserting them.

To succeed on an interference claim, Erdman had to show that she was 1) entitled to and 2) denied some benefit under the FMLA.

To establish a retaliation claim, Erdman had to show: 1) she was protected by the FMLA; 2) she suffered an adverse employment action; and 3) the adverse action was causally related to her exercise of FMLA rights.

The Court held that Erdman established all three factors of a retaliation claim.  It also held that Erdman did not have to actually begin FMLA leave to be protected by the law.  As a result, the Court held generally that terminating an employee for a valid FMLA request may constitute interference with the employee’s FMLA rights as well as retaliation against the employee.

In applying that reasoning to the facts, the Court determined that Erdman relied upon the ADA’s “association provision,” which prohibits “denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association.”  42 U.S.C. §12112(b)(4).  The Court reviewed the evidence to determine if it was sufficient to establish that Nationwide terminated Erdman because of Amber’s disability.  To establish that, Erdman was required to show that she would not have been terminated had she requested time off for a different reason.  In other words, Erdman had to show that Nationwide terminated her due to Amber’s disability and not due to Erdman’s stated intention to take leave.  The Court held that there was no evidence that Nationwide terminated Erdman because of Amber’s disability.  Therefore, the Court affirmed the District Court’s dismissal of Erdman’s ADA claim.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

The United States Court of Appeals for the Third Circuit was recently asked to prevent an individual from starting a new job after he was accused of stealing trade secrets from his old job.  Bimbo Bakeries USA, Inc. v. Botticella, No. 10-1510, 613 F.3d 102 (3d Cir. 2010).

Chris Botticella was employed as Vice President of Operations for Bimbo Bakeries USA, Inc. (“Bimbo”) from 2001 to January 2010.  In early 2009, he signed a “Confidentiality, Non-Solicitation and Invention Assignment Agreement” (the “Agreement”) with Bimbo.  Bimbo claimed that he possessed a broad range of confidential information about Bimbo, its products and its business strategy; including the secret behind the “nooks and crannies” of Thomas’ English Muffins.  The Agreement restricted Botticella from competing directly with Bimbo, prevented him from disclosing confidential or proprietary information and required him to return to Bimbo every work-related document in his possession upon termination of his employment.  The Agreement did not include a restriction on where Botticella could work if he left Bimbo.

In October 2009, Botticella accepted a job with Hostess Brands, Inc. (“Hostess”).  He did not immediately tell Bimbo about this new position, so he continued receiving confidential and proprietary information from Bimbo.  Hostess made Botticella sign an “Acknowledgment and Representation Form” (“Form”) before he began working there.  The Form stated that Hostess was not interested in any confidential information, proprietary information or trade secrets that Botticella obtained from Bimbo.  The Form also prevented Botticella from disclosing any such information to Hostess.  Botticella gave Bimbo notice of his resignation on January 4, 2010 and he was officially terminated by Bimbo on January 13, 2010.

Bimbo sued Botticella after he began working for Hostess and requested a preliminary injunction to prevent him from working there.  The United States District Court for the Eastern District of Pennsylvania granted Bimbo’s request for a preliminary injunction.  That injunction prohibited Botticella from working for Hostess; from divulging to Hostess any of Bimbo’s confidential or proprietary information; and directed him to return any confidential or proprietary information in his possession to Bimbo.  Botticella appealed the District Court’s decision and all proceedings were stayed while the United States Court of Appeals for the Third Circuit heard the case.

The Third Circuit reviewed Pennsylvania law and determined that the District Court properly exercised its discretion in preventing Botticella from working for Hostess if it believed there was a threat he would expose Bimbo’s trade secrets.  The Third Circuit also determined that the District Court made the proper inquiry when deciding whether to grant the injunction, which is: “whether there is sufficient likelihood, or substantial threat of a defendant disclosing trade secrets.”  Id. at 26.

The Third Circuit held that Botticella’s position with Hostess was substantially similar to his position with Bimbo.  The record supported that conclusion since Botticella’s position with Hostess would involve broad oversight over bakery operations, just like his position with Bimbo.  The Third Circuit also agreed that the evidence supported the conclusion that Botticella intended to use Bimbo’s trade secrets while employed with Hostess.  This evidence included Botticella’s failure to immediately disclose his acceptance of a job from a direct competitor which permitted him to remain in a position to receive Bimbo’s confidential information.  The evidence also showed that Botticella received confidential information after accepting the Hostess job and that he copied Bimbo’s trade secret information from his work laptop onto external storage devices.  As a result, the Third Circuit concluded that Bimbo was likely to succeed against Botticella on its claim for misappropriation of trade secrets.

The Third Circuit similarly held that Bimbo would suffer irreparable harm without an injunction because disclosure of its trade secrets to Hostess would put it at a competitive disadvantage.  The Third Circuit also held that the potential harm to Botticella was outweighed by the potential harm to Bimbo and agreed that an injunction was warranted and the restraint necessary to prevent greater irreparable harm from befalling Hostess.

The Third Circuit agreed with the District Court’s conclusion that granting the injunction was consistent with the public interest.  The Third Circuit was “satisfied on the facts of this case that the public interest in preventing the misappropriation of Bimbo’s trade secrets outweighs the temporary restriction on Botticella’s choice of employment.”  Id. at 38.

In conclusion, the Third Circuit affirmed the preliminary injunction issued in favor of Bimbo which prevented Botticella from continuing to work with Hostess.  The case was remanded to the District Court with the injunction in place for a trial on whether Botticella actually misappropriated Bimbo’s trade secrets.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

In a decision on March 2, 2011, the United States Supreme Court held that a protest by church members at the funeral of an American serviceman was speech protected by the First Amendment.  Snyder v. Phelps, No. 09-751, 2011 WL 709517 (2011).

Marine Lance Corporal Matthew Snyder was killed in the line of duty in Iraq.  Fred Phelps, founder of the Westboro Baptist Church (“Westboro”), learned the location of the funeral in Maryland and planned to protest that funeral.  For approximately 20 years, Westboro members made it a point to picket at military funerals to express their dissatisfaction with the United States’ tolerance of homosexuality.  Westboro members picketed at approximately 600 funerals before the funeral for Matthew Snyder.

On the day of the funeral, Westboro members picketed on public land adjacent to public streets near the Maryland State House, the United States Naval Academy and Matthew Snyder’s funeral.  Westboro members carried signs that stated, among other things, GOD HATES THE USA/THANK GOD FOR 9/11; THANK GOD FOR DEAD SOLDIERS; YOU’RE GOING TO HELL; and GOD HATES YOU.  Westboro notified the authorities in advance of its planned protest and complied with all police instructions in staging its protest.  The protest took place approximately 1,000 feet from the church; several buildings separated the picketers from the church; none of the protesters entered the church or went to the cemetery; none of the protesters yelled or used profanity; and there was no violence associated with the picketing.  The funeral procession passed within 200 to 300 feet of the picket site but Snyder’s father, Albert, testified he could neither see the signs nor read what they said.  He did not learn the content of the signs until he watched a news report later that night.

Albert Snyder sued Phelps and Westboro in the United States District for the District of Maryland for defamation; publicity given to private life; intentional infliction of emotional distress; intrusion upon seclusion; and civil conspiracy.  Westboro made a motion to dismiss on the ground that Westboro’s speech was protected by the First Amendment.  The District Court dismissed Snyder’s claims for defamation and publicity given to private life, but permitted a trial on the remaining claims.  The jury returned a verdict in favor of Snyder, holding Westboro liable for compensatory damages of $2.9 million and punitive damages of $8 million for intentional infliction of emotional distress, intrusion upon seclusion and civil conspiracy.

Westboro appealed the jury’s verdict to the Court of Appeals which disagreed with the District Court and held that Westboro’s speech was protected by the First Amendment.  The Court of Appeals reasoned that Westboro’s statements were entitled to First Amendment protection because they were on matters of public concern, were not provably false and were expressed solely through “hyperbolic rhetoric.”  Snyder sought to appeal that decision to the United States Supreme Court.

The Supreme Court decided to hear the case and affirmed the decision of the Court of Appeals.  Per the Supreme Court, the issue was whether Westboro’s speech was protected by the First Amendment.  The answer to that question depended on whether the speech was “of public or private concern, as determined by all the circumstances of the case.  Speech on matters of public concern  . . . is at the heart of the First Amendment’s protection . . . Accordingly, speech on public issues occupies the highest rung of the hierarchy of First Amendment values, and is entitled to special protection.”  Id. at *5.

The Court analyzed the speech – the use and content of the signs – of Westboro and determined that the issues raised by them – the political and moral conduct of the United States and its citizens, the fate of the Nation, homosexuality in the military and scandals involving the clergy – were matters of public importance.  The fact that Westboro’s speech took place at a funeral did not change the analysis; the speech still dealt with matters of public concern no matter where it took place.

There was also no evidence of a pre-existing conflict between Westboro and Matthew Snyder that might suggest Westboro’s speech on public matters was intended to mask a private attack on Matthew.  The Court also noted that the protest took place upon public streets, which are “the archetype of a traditional forum” having been used for centuries for public assembly and debate.  Id. at *8.  As a result of this analysis, the Court set aside the jury verdict in favor of Snyder for intentional infliction of emotional distress.

The Court similarly set aside the jury’s verdict in favor of Snyder on the claims of intrusion upon seclusion and civil conspiracy.  Snyder argued that as a “member of a captive audience” at his son’s funeral he was unable to avoid Westboro’s speech.  The Court disagreed and refused to extend the definition of a “captive audience” to include Mr. Snyder under these facts.  Here, Westboro stayed “well away” from the memorial service; Mr. Snyder could only see the tops of the signs and could not read their contents while driving to the funeral; and there was no evidence the picketing interfered with the funeral in any way.  Id. at *10.  As a result, Snyder could not demonstrate that he was a member of a captive audience.

In summary, the Court stated,

Westboro addressed matters of public import on public property, in a peaceful manner, in full compliance with the guidance of local officials.  The speech was indeed planned to coincide with Matthew Snyder’s funeral, but did not itself disrupt that funeral, and Westboro’s choice to conduct its picketing at that time and place did not alter the nature of its speech . . . As a nation we have chosen a different course – to protect even hurtful speech on public issues to ensure that we do not stifle public debate.  That choice requires that we shield Westboro from tort liability for its picketing in this case.

Id. at 10-11.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

The Supreme Court of New Jersey was asked to determine whether a Lawrence Township ordinance prohibiting the display of balloons or inflated signs – except in very limited circumstances – violated the free speech clause of the First Amendment.  State v. DeAngelo, 197 N.J. 478 (2009).

The ordinance in question prohibited portable signs, balloon signs or other inflated signs, but excepted grand opening signs.  During union activity at a Gold’s Gym in Lawrence Township in 2005 a ten-foot-tall inflatable rat-shaped balloon – which has long been the symbol of union unrest – was displayed on the sidewalk in front of the location.  The union was protesting the presence of a non-union contractor working in the gym.  Police officers initially instructed the union members to deflate the rat and they did.  Officers returned approximately one-hour later and saw that the rat was re-inflated.  As a result, officers gave Wayne DeAngelo, the union official in charge of the demonstration, a summons after he admitted re-inflating the balloon.  DeAngelo was found guilty of violating the ordinance by the Municipal Court of Lawrence Township and ordered to pay a fine.

DeAngelo appealed the decision of the Municipal Court to the Law Division of the Superior Court.  A trial was held before the Law Division which held that DeAngelo violated the ordinance.  DeAngelo appealed that decision to the Appellate Division of the Superior Court.  The Appellate Division affirmed the decision of the Law Division that DeAngelo violated the ordinance and should pay a fine.  DeAngelo appealed to the Supreme Court of New Jersey, which agreed to hear the case to decide the free speech issue.

New Jersey’s Supreme Court held that the ordinance was content-based because it prohibited a union from displaying a rat balloon while permitting a similar display as part of a grand opening.  Under the ordinance, whether such a sign is authorized “is justified only by reference to the person or entity displaying the sign.”  Id. at p. 488.  The ordinance also favored commercial over non-commercial speech and, “because the ordinance is based on the purpose for which the sign is displayed,” the ordinance is content-based.  Id.

The Court held that there was no evidence that a rat balloon was more harmful to aesthetics or safety than a similar item displayed as an advertisement for a seven-day grand opening promotion.  There was also no evidence that the ordinance was “necessary to serve a compelling state interest and that it is narrowly drawn to achieve that end.”  Id. at 489.

The Court also held that the ordinance was overbroad because it prohibited a “substantial amount of protected speech.”  Id.  An ordinance that prohibits an entire medium of expression “will be upheld only if narrowly drawn to accomplish a compelling governmental interest.”  Id. at 490.  Lawrence Township’s ordinance virtually eliminated all signs except for grand openings of businesses and other minor exceptions.  Its “elimination of an entire medium of expression without a readily available alternative renders the ordinance overbroad.”  Id. at 491.

Thus, the Court held that the ordinance violated the First Amendment and could not be enforced.  As a result, DeAngelo’s conviction for violating the ordinance was overturned and the case remanded to the Law Division for dismissal of the summons issued to DeAngelo.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Updated: May 9th, 2024

In late 2010, the New Jersey Legislature enacted a regulation for use of time clocks and “rounding” of hours worked by employees.  N.J.A.C. 12:56-5.8.  “Rounding” is the practice of recording employees’ starting and stopping times to the nearest five minutes or to the nearest one-tenth or quarter of an hour when using a time clock.  Before the regulation came into effect, New Jersey’s regulations simply required that employees be paid for “all hours worked” without guidance on the use of time clocks or the practice of rounding.

The new regulation permits the practice of rounding, provided employees are properly compensated for all time worked.  New Jersey’s regulation is now identical to the Federal regulation regarding the use of time clocks and the practice of rounding. New Jersey’s use of the same language used in the Federal regulation is intended to assure that employers currently complying with the Federal regulation will also be in compliance with New Jersey’s new regulation.  The new regulation should prevent employers from incurring administrative penalties as a result of violating New Jersey’s wage and hour regulations.

New Jersey’s new regulation also states that employees voluntarily arriving before their shift and/or voluntarily remaining after their shift are not to be paid for that time.  Their early or late clock-punching is to be disregarded unless they actually perform work before or after their shift.

Comments/Questions: gdn@gdnlaw.com

© 2024 Nissenbaum Law Group, LLC

Recently, a Federal District Court for the District of New Jersey ruled that a letter from a debt collector to a consumer’s attorney is a communication that is subject to the Fair Debt Collection Practices Act (FDCPA).  Allen v. LaSalle Bank, N.A., No. 09-1466, 2011 WL 94420 (3d Cir. 2011). As a result, the consumer was permitted to sue the debt collector under the FDCPA for inaccuracies in the collection letter.

In that case, the letter overstated the amounts due for attorney’s fees, search fees, recording fees and process service fees.  Such inaccurate information in a demand letter sent by a debt collector to a consumer is prohibited by the FDCPA.

The debt collector argued that the FDCPA did not apply since the letter had been sent to the attorney for the consumer, rather than the consumer herself. It elaborated that the consumer’s attorney would have easily recognized the overcharges and protected the consumer.  Therefore, the public policy underlying the law; namely, to protect consumer debtors from being misled, was satisfied.

The Court did not accept this argument and held that the letter was an improper communication under the FDCPA regardless of who received it.  The Court reasoned that the FDCPA is a strict liability statute; in other words, it imposes liability without proof of an intentional violation.  Thus, permitting an improper communication to escape FDCPA liability simply because the communication was sent to a consumer’s attorney, rather than the consumer herself, would undermine the deterrent effect of the statute.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC