Three Sleepers You Might Want to Put on Your Reading List - Articles

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Posted by: Christy Gibson on Nov 7, 2012

(one of the cases is from 2011, but it is worthy of mention)

1.Did we mean to subject ourselves to jurisdiction, really?

J. McIntyre Machinery: An important case for corporate counsel

12:11 pm Wed, August 31, 2011 By H. Ward Classen The Daily Record

[Last summer], the U.S. Supreme Court decided its first “minimum contacts” case in 24 years. The case, argued successfully by a Baltimore-based lawyer, is a powerful shield in the service of corporate defendants within the United States and abroad.

In J. McIntyre Machinery Ltd. v. Nicastro, 09-1343, the court held 6-3 that J. McIntyre Machinery, a United Kingdom company, did not purposefully avail itself of the New Jersey market when it shipped a three-ton metal shearing machine to its Ohio distributor, which then sold it to a New Jersey firm.

An employee of the New Jersey firm suffered an accident and sued the U.K. company in New Jersey state court. The New Jersey Supreme Court held that any company that marketed to the U.S. could be sued in product liability in New Jersey if it knew or reasonably should have known that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the 50 states.

The U.S. Supreme Court reversed on June 27, [2011], issuing its first decision on minimum contacts since Asahi Metal Industry Co. v. Superior Court in 1987.

While the result in Asahi was unanimous, it was announced in three separate opinions — one plurality and two concurring.

In J. McIntyre, too, there was no majority opinion. Instead, there was a plurality by Justice Kennedy, joined by the chief justice and justices Scalia and Thomas; and a concurrence by Justice Breyer, joined by Justice Alito. Justice Ginsburg wrote a dissent, joined by justices Sotomayor and Kagan.

The plurality decision is especially valuable for corporations who want protection against being dragged in to plaintiff-oriented courts. Since Asahi, lower courts have been building a plaintiff-friendly jurisprudence under the rubric of “stream of commerce.”

That is now gone: “stream of commerce,” all the justices concurring in the judgment agree, is nothing more than a metaphor.

In direct opposition to Asahi, some lower courts have eliminated the “minimum contacts” test and essentially ruled that marketing to the U.S. equals targeting every state. All those cases are now overruled.

The two-part test — jurisdiction and then fairness — is a thing of the past. The burden of proof to demonstrate jurisdiction is on plaintiff. In a key holding, Justice Kennedy held that “the defendant’s transmission of goods permits the exercise of jurisdiction only where the defendant can be said to have targeted the forum; as a general rule, it is not enough that the defendant might have predicted that its goods will reach the forum State.”

Justice Kennedy did not limit his holding to foreign defendants, noting that it would be equally impermissible for a Florida orange grower to be brought before the courts of Alaska merely because the grower had sold its oranges to a large distributor that then distributes them to all 50 states.

Arthur Fergenson, who practices in Baltimore with the Ansa Law Group, successfully argued the case before the Supreme Court for J. McIntyre Machinery. A former Supreme Court clerk for Chief Justice Warren Burger, Mr. Fergenson emphasized the importance of finding true minimum contacts before exercising jurisdiction over a party. All corporations and in-house counsel owe Mr. Fergenson a debt of gratitude for his efforts in having the New Jersey Supreme Court decision overturned.

J. McIntyre gives corporations in the United States and abroad powerful tools to avoid being compelled to appear in courts, state and federal, in jurisdictions, far-flung or near, where there is no purposeful availment. The plaintiffs’ bar is very unhappy with the decision — a measure of the justice finally, and appropriately, accorded defendants.

Mr. Classen is Deputy General Counsel of Computer Sciences Corporation. The views expressed herein are those of Mr. Classen and not those of Computer Sciences Corporation.

2.  You can’t really post that on Facebook, can you?

NLRB Upholds Facebook Firing, But Strikes Down "Courtesy," Social Media, And Other Workplace Policies

By Laura Lawless Robertson

In September, the National Labor Relations Board issued its first Board-level decision on a Facebook-related termination.  In Karl Knauz Motors, Inc., the Board found that the employer did not violate the National Labor Relations Act ("Act") when it terminated an employee for his Facebook commentary on a car accident at an adjacent, employer-owned dealership.  The Board affirmed the administrative law judge's decision (see October 2011 FEB) in which the ALJ observed that the posting was done "apparently as a lark, without any discussion with any other employee …, and had no connection to any of the employees' terms and conditions of employment."

Of particular concern to employers, however, is the Board's agreement that the employer's "courtesy" rule – which required employees be courteous, polite and friendly to customers, vendors and suppliers [and] fellow employees" and disallowed "disrespectful … or any other language which injures the image or reputation of the [employer]" – violated the Act.  A two-member majority of the Board concluded that an employee would reasonably understand the rule to prohibit communications about terms and conditions of employment that are otherwise protected by the Act.  Dissenting, Member Hayes took issue with the majority's ruling, observing that read in context the rule was "nothing more than a common-sense behavioral guideline."

The Karl Knauz, Inc. decision falls in line with the Board's ongoing intense scrutiny on employer policies, as most recently summarized in its General Counsel's memorandum (see June 2012 FEB).  Indeed, in the same month, the Board and an ALJ issued several other decisions invalidating employer policies as impermissibly broad due to their purported potential to chill Act-protected concerted activity:

  • In Costco Wholesale Corporation, the Board issued its first decision on an employer social media policy.  The policy prohibited employees from electronically posting "statements … (such as [to] online message boards or discussion groups) that damage the Company, defame any individual or damage any person's reputation" on the pain of discipline and possible termination.  The Board invalidated the policy, finding it "clearly encompasses concerted communications protecting [Costco's] treatment of its employees" and nothing in the rule "even arguably suggests that protected communications are excluded." 

  • In Flex Frac Logistics, LLC, the Board considered a confidentiality rule that prohibited employees from disclosing confidential "financial information, including costs" and "personnel information and documents" outside the company.  A two-member majority found the policy to chill Act-protected conduct, specifically citing communications with union representatives who would be "outside the company."  Dissenting, Member Hayes recognized the legitimate business purpose of the rule to ensure the company's ability to competitively bid for contracts by keeping its cost structure from being disclosed to third parties.  He observed:  "I fail to see anything in the record to indicate why [employees] would reasonably be inclined to so contort the context and stated purpose of the confidentiality rule as to preclude the discussion of wages."

  • In EchoStar Technologies, L.L.C., an ALJ invalidated several policies, including a social media rule that prohibited employees, in their personal social media activities, from (a) "disparaging" EchoStar, its employees and certain other individuals and entities affiliated with EchoStar or (b) engaging in such activities on "EchoStar resources and/or on company time" absent company authorization.  It rejected EchoStar's attempt to invoke a savings clause, commenting that "a general clause or other language asserting that a document should be applied and interpreted in such a manner that it is legal[ly] proper does not save an otherwise invalid rule under the Act."

The final word on how broadly employer policies will ultimately be interpreted in assessing whether they chill conduct protected by the Act rests with the courts – guidance much awaited by employers.  Until then, with the Board largely following the aggressive course set by its General Counsel, employers should partner with counsel in crafting policies that carefully balance legal compliance, risk, and business needs.

Laura Lawless Robertson’s practice focuses on labor and employment issues and general litigation matters. Laura represents employers facing claims by employees alleging sexual harassment, retaliation, wrongful termination, breach of contract, and wage and hour violations. She also represents employers against discrimination claims on the basis of disability, gender, age, race, national origin and religion.

Laura serves on the Board of Directors for the Arizona Foundation for Behavioral Health, the Harvard University Club of Phoenix, Recovery Innovations, Inc., and the Labor and Employment Law Section of the Maricopa County Bar Association. She is also a member of the Harvard University Phoenix Area Schools and Scholarship Committee and the Speakers on Healthcare Speakers’ Bureau.

She has been selected by her peers for inclusion in Southwest Super Lawyers, a distinction honoring the top 5 percent of lawyers in the region. In 2006 she was also listed in the Phoenix Business Journal’s “Forty Under 40.”

3. But I Was Just Trying to Comply With The Law…

First reported E-Verify-related retaliation charge brings lessons for employers

By Valentine A. Brown

A building maintenance company in Tampa, has paid the first E-Verify- related  fine for immigration related discrimination.  The DOJ Office of Special Counsel for Immigration Related Discrimination (OSC) filed suit against the company in an effort to  resolve allegations that the company  had retaliated against a former employee by refusing to rehire her and therefore was in violation of the anti-discrimination provision of the Immigration and Nationality Act (INA).  The terms of the settlement agreement  included a $2,000 civil penalty and $6,800 in monetary relief to the employee.  The company will also receive training on the anti-discrimination provision and proper E-Verify procedures.

The facts of the case are set out step by step below. They provide a good opportunity for all E-Verify users to review their own company procedures to ensure that a similar scenario does not occur:

  1. Company received a tentative non-confirmation from E-Verify for a social security mismatch  

  2. Employee was informed verbally, but was not provided with the paper notice (as required by law)

  3. Employee attempted to resolve in person at the Social Security Administration (SSA), but was unable to do so without the paper notice

  4. E-Verify provides erroneous final non-confirmation, stating that the employee did not have work eligibility because no action was taken by the SSA

  5. Employee was terminated due to final non-confirmation

  6. Employee complained to Office of Special Counsel (OSC)

  7. OSC confirmed work authorization and informed employer that employee was authorized to work

  8. Employer refused to reinstate employment

  9. OSC charged retaliation and the dispute was settled.

There are several reminders for employers, in order to avoid a similar situation, (1) It is crucial to provide the employee with the appropriate E-Verify paper notice if a tentative non-confirmation is received.  Without the paper notice, the employee will be unable to remedy the issue thus causing E-Verify to issue a “final non-confirmation” of the employee’s work eligibility.   (2) If a company receives a “final non-confirmation” based upon no show at the agency in question, the employer should follow-up with the employee regarding the steps that were taken to resolve the issue prior to terminating. (3) When the OSC calls, listen. If an employee feels as though they were wrongfully terminated, they may contact the OSC.  The OSC investigates every call to its hotline. In this instance, the OSC contacted the employer and verified the employee’s work eligibility; however, the employer refused to reinstate employment. If the OSC calls, follow their guidance.  If you choose not to comply, it is possible that you will violate provisions set forth in the immigration law and subsequently allow for an OSC investigation, which in turn often leads to an I-9 audit by Immigration and Customs Enforcement.


Valentine A. Brownis a partner at Duane Morris LLP in the Employment, Labor, Benefits and Immigration Practice Group. She serves as global immigration law counsel to a diverse group of multi-national and domestic corporations and their employees, providing advice, compliance audits and representation to help navigate the intricacies of US and foreign immigration laws. Ms. Brown also represents individuals in all types of immigration proceedings, including persons of extraordinary ability; spouses, fiancées and children of US citizens; naturalization and political asylum applicants; as well as respondents in deportation and immigration appellate proceedings.