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Roquet and Robinson filed a class-action complaint in federal district court alleging that Anderson had violated the WARN Act by failing to give 60 days' notice to its workers before laying them off. In response to both parties' motions for summary judgment on the issue of whether Andersen was exempt from liability under the WARN Act's 'unforeseen business circumstances' exception, the district court found that the need for layoffs was not reasonably foreseeable 60 days before the decision was made, and therefore granted summary judgment in favor of Andersen. Following the plaintiffs' appeal, the Seventh Circuit affirmed the district court's decision finding that because the DOJ's indictment of the firm was not 'reasonably foreseeable' within the timeframe specified in the statute, and because this indictment was the root cause of the firm's ultimate downfall, Andersen's layoffs fell within the WARN Act's 'unforeseen business circumstances' exception. In so holding, the court determined that a reasonable company in Andersen's position, '[c]onfronted with the possibility of an indictment that threatened its very survival,' would 'continue[] to negotiate with the government until the very end and turn[] to layoffs only after the indictment became public.'

Tenth Circuit Requires Proof of Harasser's Sexual Desire in Same-Sex Harassment Suit

The Tenth Circuit has held that a plaintiff who can prove that his/her harasser acted out of sexual desire establishes that workplace sexual harassment took place because of the plaintiff's gender, regardless of whether the plaintiff has also demonstrated that his/her harasser is homosexual. Dick v. Phone Directories Company, Inc., 2005 WL 3277-2 (Feb. 11). Plaintiff Diane Dick sued her employer Phone Directories Company, Inc. (PDC) alleging hostile work environment same-sex discrimination under Title VII of the Civil Rights Act of 1964. Dick, a sales representative for PDC, claimed that she was sexually harassed by her immediate supervisor and three coworkers, all of whom are female. The harassment allegedly involved making lewd sexual gestures toward Plaintiff, attempting to pinch her breasts, and making references to oral sex and simulating sexual activity in Plaintiff's presence. While most of Plaintiff's allegations regarding the sexual orientation of the women were deemed inadmissible hearsay at the district court level, Plaintiff properly admitted evidence that the office bulletin board was decorated in rainbow colors, symbolizing gay pride, and that she witnessed her supervisor and an openly gay coworker lock themselves in various rooms at the office for extended periods of time.

Finding that Plaintiff had not shown that the harassment was because of her sex, the District Court granted summary judgment in favor of PDC on Plaintiff's Title VII hostile work environment claim. In reversing this holding, the Tenth Circuit began by citing the Supreme Court's decision in Oncale v. Sundower Offshore Serv., Inc., 523 U.S. 75, 81 (1998) for the proposition that when supporting a claim for same-sex sexual harassment in the workplace, the plaintiff “'must always prove that the conduct at issue was not merely tinged with offensive sexual connotations, but actually constituted 'discrimina[tion] ' because of ' sex.'” The Oncale court laid out the following three evidentiary routes in which an inference of discrimination because of sex can be drawn in the hostile work environment context: where the harasser and the harassed employee are of opposite sexes, “at least when the conduct at issue involves 'explicit or implicit proposals of sexual activity;'” where the people involved are of the same sex “'if there [is] credible evidence that the harasser [is] homosexual;'” and when the harassed is able to offer proof that his/her harasser treats men and women differently in the workplace (quoting Oncale, 523 U.S. at 80-81).

While acknowledging that some courts, including the Seventh Circuit, have held that the most important component of Oncale's first evidentiary route requires that the victim show that his/her harasser is homosexual, the Tenth Circuit cited courts, including the Third Circuit, which require a victim using the first evidentiary route to show that the harasser was motivated by sexual desire and those, including the Fifth Circuit, which require both showings. Considering all three approaches, the Tenth Circuit held that “Oncale's first evidentiary route regarding whether same-sex harassment is because of the victim's sex hinges on whether the harasser's conduct is motivated by sexual desire,” and that the plaintiff need not in every case establish that his/her harasser is homosexual in order to meet this burden. The court found that a plaintiff that makes this showing establishes that he/she was harassed because of her sex, whether or not he/she has also proved that the harasser is homosexual. Thus finding that the record contained evidence sufficient for the trier of fact to conclude that the harassing conduct was motivated by sexual desire, the Tenth Circuit reversed the district court's holding.

Seventh Circuit Holds That Lawyer is Not 'Employee' Under Title VII

The Seventh Circuit has held that a lawyer suing his former law partners for retaliation is not an “employee” entitled to relief under Title VII. Solon v. Kaplan, 2005 WL 352433 (Feb. 15).

James Solon, a former general managing partner at the firm of Kaplan, Begy & Von Ohlen, brought this action under Title VII alleging that his fellow general partners, Larry Kaplan, Robert von Ohlen, and Fred Begy (together, Defendants), terminated his interest in the firm in retaliation for Solon's opposition to von Ohlen's alleged sexual harassment of two of the firm's secretaries. Finding that Solon was an “employer,” and not an “employee” entitled to protection under Title VII, the district court granted summary judgment in favor of Defendants.

In affirming the district court's decision, the Seventh Circuit found that while Title VII's definition of “employee,” “an individual employed by an employer,” is circular, the American with Disabilities Act of 1990's (the ADA) definition, which uses nearly identical language, was interpreted in the recent Supreme Court decision, Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440 (2003). The Clackamas Court, in addressing whether shareholder-directors of a professional corporations could be deemed “employees” under the ADA, looked to the element of control in the common-law definition of the master-servant relationship and emphasized the following six non-exhaustive factors to consider when making the determination: 1)”Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work”; 2)”Whether and, if so, to what extent the organization supervises the individual's work; 3)”Whether the individual reports to someone higher in the organization;” 4)”Whether and, if so, to what extent the individual is able to influence the organization;” 5)”Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts”' and 6)”Whether the individual shares in the profits, losses, and liabilities of the organization.” The six factors, taken from an EEOC compliance manual, were selected by the Clackamas Court because, aside from their usefulness in determining the classification of the shareholder-directors, they provided more general guidance as to whom would be considered an employee or employer under common law and related statutory law.

Using these factors, the Seventh Circuit found that no reasonable juror could find that Solon was an “employee” of the firm. As general partner, Solon held one quarter of the voting power, exercised extensive control in allocating the firm's profits and determining its capital contributions and financial commitments, and had significant say in amending the partnership agreement and dissolving the firm. Solon held an equity interest and shared in firm profits, attended partnership meetings, and was privy to the firm's private financial records. The Seventh Circuit found that plaintiff “substantially controlled the direction of the firm, his employment and compensation, and the hiring, firing, and compensation of others.” Thus, the court found that under the facts of the case, Solon was an employer as a matter of law.

Arthur Anderson Exempt from Liability Under WARN Act

The Seventh Circuit has held that where an employer's need for layoffs was not reasonably foreseeable 60 days before the decision to layoff employees was made, the employer was exempt from liability under the unforeseen business circumstances exception of the Worker Adjustment and Restraining Notification Act (the WARN Act). Roquet v. Arthur Andersen LLP, 2005 WL 295546 (Feb. 9).

In November 2001, Arthur Andersen LLP (Anderson or the firm), a direct accounting and consulting services firm, found itself in the middle of an SEC and Department of Justice (the DOJ) investigation when one of its major clients, the Enron Corporation (Enron), a Houston energy marketer, was exposed for grossly misstating its earnings. Because Andersen had audited Enron's publicly filed financial statements and provided internal counseling, the SEC subpoenaed its Enron-related documents and soon discovered that Andersen employees had destroyed thousands of relevant documents in the 6 weeks leading up to its receipt of the subpoena. On March 1, 2002, the DOJ filed a sealed indictment charging Andersen with obstructing the SEC investigation by destroying and withholding documents. The unsealing of the indictment on March 14 brought massive client defection, which resulted in a massive loss of business and the layoffs of thousands of employees, including Nancy Roquet (Roquet) and Coretta Robinson (Robinson), the two named plaintiffs in this class-action suit. After receiving notice, Roquet remained on the payroll for 2 weeks and Robinson for 5 weeks.

Roquet and Robinson filed a class-action complaint in federal district court alleging that Anderson had violated the WARN Act by failing to give 60 days' notice to its workers before laying them off. In response to both parties' motions for summary judgment on the issue of whether Andersen was exempt from liability under the WARN Act's 'unforeseen business circumstances' exception, the district court found that the need for layoffs was not reasonably foreseeable 60 days before the decision was made, and therefore granted summary judgment in favor of Andersen. Following the plaintiffs' appeal, the Seventh Circuit affirmed the district court's decision finding that because the DOJ's indictment of the firm was not 'reasonably foreseeable' within the timeframe specified in the statute, and because this indictment was the root cause of the firm's ultimate downfall, Andersen's layoffs fell within the WARN Act's 'unforeseen business circumstances' exception. In so holding, the court determined that a reasonable company in Andersen's position, '[c]onfronted with the possibility of an indictment that threatened its very survival,' would 'continue[] to negotiate with the government until the very end and turn[] to layoffs only after the indictment became public.'

Tenth Circuit Requires Proof of Harasser's Sexual Desire in Same-Sex Harassment Suit

The Tenth Circuit has held that a plaintiff who can prove that his/her harasser acted out of sexual desire establishes that workplace sexual harassment took place because of the plaintiff's gender, regardless of whether the plaintiff has also demonstrated that his/her harasser is homosexual. Dick v. Phone Directories Company, Inc., 2005 WL 3277-2 (Feb. 11). Plaintiff Diane Dick sued her employer Phone Directories Company, Inc. (PDC) alleging hostile work environment same-sex discrimination under Title VII of the Civil Rights Act of 1964. Dick, a sales representative for PDC, claimed that she was sexually harassed by her immediate supervisor and three coworkers, all of whom are female. The harassment allegedly involved making lewd sexual gestures toward Plaintiff, attempting to pinch her breasts, and making references to oral sex and simulating sexual activity in Plaintiff's presence. While most of Plaintiff's allegations regarding the sexual orientation of the women were deemed inadmissible hearsay at the district court level, Plaintiff properly admitted evidence that the office bulletin board was decorated in rainbow colors, symbolizing gay pride, and that she witnessed her supervisor and an openly gay coworker lock themselves in various rooms at the office for extended periods of time.

Finding that Plaintiff had not shown that the harassment was because of her sex, the District Court granted summary judgment in favor of PDC on Plaintiff's Title VII hostile work environment claim. In reversing this holding, the Tenth Circuit began by citing the Supreme Court's decision in Oncale v. Sundower Offshore Serv., Inc., 523 U.S. 75, 81 (1998) for the proposition that when supporting a claim for same-sex sexual harassment in the workplace, the plaintiff “'must always prove that the conduct at issue was not merely tinged with offensive sexual connotations, but actually constituted 'discrimina[tion] ' because of ' sex.'” The Oncale court laid out the following three evidentiary routes in which an inference of discrimination because of sex can be drawn in the hostile work environment context: where the harasser and the harassed employee are of opposite sexes, “at least when the conduct at issue involves 'explicit or implicit proposals of sexual activity;'” where the people involved are of the same sex “'if there [is] credible evidence that the harasser [is] homosexual;'” and when the harassed is able to offer proof that his/her harasser treats men and women differently in the workplace (quoting Oncale, 523 U.S. at 80-81).

While acknowledging that some courts, including the Seventh Circuit, have held that the most important component of Oncale's first evidentiary route requires that the victim show that his/her harasser is homosexual, the Tenth Circuit cited courts, including the Third Circuit, which require a victim using the first evidentiary route to show that the harasser was motivated by sexual desire and those, including the Fifth Circuit, which require both showings. Considering all three approaches, the Tenth Circuit held that “Oncale's first evidentiary route regarding whether same-sex harassment is because of the victim's sex hinges on whether the harasser's conduct is motivated by sexual desire,” and that the plaintiff need not in every case establish that his/her harasser is homosexual in order to meet this burden. The court found that a plaintiff that makes this showing establishes that he/she was harassed because of her sex, whether or not he/she has also proved that the harasser is homosexual. Thus finding that the record contained evidence sufficient for the trier of fact to conclude that the harassing conduct was motivated by sexual desire, the Tenth Circuit reversed the district court's holding.

Seventh Circuit Holds That Lawyer is Not 'Employee' Under Title VII

The Seventh Circuit has held that a lawyer suing his former law partners for retaliation is not an “employee” entitled to relief under Title VII. Solon v. Kaplan, 2005 WL 352433 (Feb. 15).

James Solon, a former general managing partner at the firm of Kaplan, Begy & Von Ohlen, brought this action under Title VII alleging that his fellow general partners, Larry Kaplan, Robert von Ohlen, and Fred Begy (together, Defendants), terminated his interest in the firm in retaliation for Solon's opposition to von Ohlen's alleged sexual harassment of two of the firm's secretaries. Finding that Solon was an “employer,” and not an “employee” entitled to protection under Title VII, the district court granted summary judgment in favor of Defendants.

In affirming the district court's decision, the Seventh Circuit found that while Title VII's definition of “employee,” “an individual employed by an employer,” is circular, the American with Disabilities Act of 1990's (the ADA) definition, which uses nearly identical language, was interpreted in the recent Supreme Court decision, Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440 (2003). The Clackamas Court, in addressing whether shareholder-directors of a professional corporations could be deemed “employees” under the ADA, looked to the element of control in the common-law definition of the master-servant relationship and emphasized the following six non-exhaustive factors to consider when making the determination: 1)”Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work”; 2)”Whether and, if so, to what extent the organization supervises the individual's work; 3)”Whether the individual reports to someone higher in the organization;” 4)”Whether and, if so, to what extent the individual is able to influence the organization;” 5)”Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts”' and 6)”Whether the individual shares in the profits, losses, and liabilities of the organization.” The six factors, taken from an EEOC compliance manual, were selected by the Clackamas Court because, aside from their usefulness in determining the classification of the shareholder-directors, they provided more general guidance as to whom would be considered an employee or employer under common law and related statutory law.

Using these factors, the Seventh Circuit found that no reasonable juror could find that Solon was an “employee” of the firm. As general partner, Solon held one quarter of the voting power, exercised extensive control in allocating the firm's profits and determining its capital contributions and financial commitments, and had significant say in amending the partnership agreement and dissolving the firm. Solon held an equity interest and shared in firm profits, attended partnership meetings, and was privy to the firm's private financial records. The Seventh Circuit found that plaintiff “substantially controlled the direction of the firm, his employment and compensation, and the hiring, firing, and compensation of others.” Thus, the court found that under the facts of the case, Solon was an employer as a matter of law.