Employees Cannot Bypass Title VII

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The Third Circuit is the most recent court to hold that employees cannot pursue Section 1983 claims for claims that also arise under Title VII of the Civil Rights Act.  Under Section 1983, a Plaintiff can proceed directly to court without going through the pre-lawsuit requirements of Title VII and the Americans with Disability Act (ADA).

The Third Circuit is the most recent of eight circuits to have considered whether employees could bypass Title VII and bring a claim against their employer for discrimination under Section 1983 instead.  Each of the eight circuits (including the Third Circuit) that have weighed in has concluded that plaintiff-employees cannot bypass Title VII.  This was a case of first impression in the Third Circuit.

In this case, the plaintiff, Cheryl Williams, filed a lawsuit against her former employer, the Pennsylvania Human Relations Commission (PHRC), and two of her former supervisor’s in their individual capacities as “state actors.”  She alleged that she was discriminated against on the basis of her race and disability.  Williams exhausted all her administrative remedies prior to filing suit.  Because there is no individual liability provision under either Title VII or the Americans with Disabilities Act (ADA), she relied solely upon Section 1983 to attach her two supervisors in the suit.

The Western District of Pennsylvania granted Summary Judgment to her former employer, PHRC, finding that Title VII and the ADA do not create an individually enforceable right under Section 1983.  On appeal to the Third Circuit, the Court affirmed the entry of Summary Judgment in favor of PHRC.  The Court explained that Section 1983 contains no administrative scheme like Title VII and the ADA, which include filing deadlines and limited liability for individual state actors.

According to the Court, by allowing Title VII or ADA claims to be filed as Section 1983 claims would thwart the carefully crafted administrative scheme enacted by Congress, and throw a backdoor open to our federal courts when the front door has been purposefully fortified.  In other words, plaintiffs cannot bypass Title VII to avoid administrative remedies under other provisions.

In short, plaintiffs who seek to recover for workplace discrimination must abide by the full administrative process outlined in Title VII and the ADA.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in Actions Filed Under Title VII and the ADA

To learn more about how the Philadelphia employment lawyers at Sidkoff, Pincus & Green can help, call us today at 215-574-0600 or contact us online.  We represent clients in all types of business litigation matters and employment related matters.

FINRA v. Morgan Stanley

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The Financial Industry Regulatory Authority (FINRA) is a non-profit organization that Congress has tasked with ensuring the securities industry operates in accord with government regulations. FINRA operates to ensure that investors receive basic protections. Recently, FINRA ordered the Wall Street investment bank and securities brokerage firm, Morgan Stanley, to pay $13 million in fines and restitution to clients of the bank for failing to properly supervise short-term trades. The regulatory body fined Morgan Stanley $3.25 million, and the remaining nearly $10 million was to be paid back to investors.

According to FINRA, between January 2012 and June 2015, brokers had given thousands of clients poor advice regarding unit investment trusts, or UITs. A unit investment trust pays investors a return based on how the investment performs, not unlike mutual and closed-end funds. They are designed to be held only for a certain period. They are designed to provide capital appreciation and in some cases, dividend income.

Morgan Stanley brokers advised clients to sell unit investment trusts before the products had matured. The brokers then instructed them to roll the trusts over into a new trust, resulting in higher sales charges over time.  After interviewing more than 65 Morgan Stanley employees, FINRA found that the practice was highly questionable. The agency was concerned that the practice was not in the best interests of Morgan Stanley investors.

In addition to finding that individual Morgan Stanley brokers made questionable decisions relating to unit investment trusts, FINRA also held supervisors accountable. Supervisors were not adequately trained to recognize unsuitable short-term rollovers. It also found that Morgan Stanley did not have a proper system in place to detect and stop the negligent transactions before they were carried out. Although Morgan Stanley consented to the agency’s findings, the company had refused to admit or deny the charges and the matter was resolved without admission of guilt on the bank’s behalf.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in FINRA and Securities Actions

Securities and investment management is complicated business. At Sidkoff, Pincus & Green P.C., we help our business clients resolve the most complex and daunting FINRA actions. We also represent investors in all types of securities fraud and misrepresentation actions. To schedule a consultation with a Philadelphia FINRA lawyer, call us today at 215-574-0600 or contact us online.

Pennsylvania Supreme Court Rules

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Only Physicians Can Obtain Informed Consent From Patients

A recent Pennsylvania court ruling found that only physicians, not their subordinates, can obtain informed consent from patients prior to procedures. In Shinal v. Toms, 162 A.3d 429 (Pa. 2017), Plaintiff, Shinal, was a patient of Defendant, Dr. Toms. Shinal had consulted with Dr. Toms to discuss removal of a new tumor growth in her brain. In this consultation, Dr. Toms advised her of the risks associated with surgery and reviewed alternatives including a less aggressive approach called a subtotal resection (safer in the short run) versus a more aggressive approach called a total resection, which would be more dangerous in the short run but offer a better chance of resecting the entire tumor. After this consultation, Shinal decided to have the surgery but had not decided on the approach.

Following this consultation, Shinal’s interactions were entirely with Dr. Toms’ physician assistant. The assistant discussed potential scarring, whether radiation therapy would be necessary, and the date of the surgery. The assistant also answered Shinal’s questions about the craniotomy incision, and met with Shinal to obtain her medical history, conduct a physical and provide her with more information regarding the surgery. In this meeting, Shinal signed an informed consent form granting Dr. Toms permission to perform a resection of her tumor and the risks associated with this procedure. The form also acknowledged that Shinal had discussed the advantages and disadvantages of alternative treatments and that she understood the form’s contents, had an opportunity to ask questions and had sufficient information to give her informed consent to the operation. The form did not address the specific risks of total versus subtotal resection.

When Shinal underwent the procedure, the surgeon conducted a total resection and perforated her carotid artery resulting in hemorrhage, stroke, brain injury and partial blindness. Shinal initiated this medical malpractice lawsuit alleging that Dr. Toms failed to obtain her informed consent for the procedure. Shinal stated that if she had known the alternative approaches and risks of the total resection, she would have chosen the subtotal approach (less aggressive) alternative.

The Supreme Court of Pennsylvania held that a physician cannot rely upon a subordinate to disclose the information required to obtain informed consent, and cannot delegate to others his obligation to provide sufficient information to a patient prior to a procedure. The court ruling additionally stated that “without direct dialogue and two-way exchange between the physician and patient, the physician cannot be confident that the patient comprehends the risks, benefit, likelihood of success and alternatives.” The defendant’s actions ultimately violated the Medical Care Availability and Reduction of Error (MCARE) Act.

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Wrongful Termination In Violation Of Public Policy Needs Particularity

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In Spyridakis v. Riesling Group, Inc., 2009 WL 3209478 (E.D. Pa. 2009), the plaintiff-employee brought a claim for wrongful termination on the basis of defendant-employer’s alleged violations of public policy, specifically the right to free speech and to petition government under the U.S. and Pennsylvania constitutions. Additionally, Spyridakis claimed that federal and state labor, employment, and tax laws were also violated. Spyridakis alleged that Riesling Group terminated her for “inquiring with the Bureau about whether defendant properly treated her employment as that of an independent contractor” and the defendant evaded federal and state laws by “classifying workers as independent contractors, but treating them as employees.”

The U.S. District Court for the Eastern District of Pennsylvania dismissed Spyridakis’ wrongful termination claim because of her failure to identify a particular statute, or other source of public policy, that proscribes such conduct. The court explained that under Pennsylvania law, a plaintiff, under these circumstances, must point to specific violations of federal or state law to the extent they embody public policy, and show that they have been violated. The court further explained that Pennsylvania law limits claims of constitutional violations of public policy to incidents involving state actors (and here, the employer was not a state actor).

For more information, call our employment lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Letters And Phone Calls Regarding Intent To Not Follow Agreement

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Enough To Find Anticipatory Breach Of Contract

In General Diversifield, Inc. v. Poole Truck Line, Inc., 1991 WL 53673 (E.D. Pa 1991) General Diversified (“Diversified”), a motor carrier broker, sued Poole Truck Lines (“Poole”), a motor carrier of freight, for Poole’s anticipatory breach of contract, because of its intent to not provide transportation of solid waste for a Diversified customer, as required in an agreement between Diversified and Poole.

Four days after signing the agreement, the Regional Sales Manager of Poole discovered that one of Poole’s main competitors was hauling waste for Diversified at a higher rate than Poole had agreed to (allowing the competitor to make more money than Poole). After complaining about the price difference, Poole’s Manager sent a letter to Diversified stating that they were left with “no other choice than to cancel our agreement” and “the atmosphere is not just one in which I nor Poole can do business.” Poole’s Manager also contacted Diversified customer that Poole was to do work for under the agreement, and informed them “the deal was off” and “Poole would not haul [the customer’s waste] on behalf of [Diversified].”

The District Court for the Eastern District of Pennsylvania held that these facts were sufficient to prove anticipatory breach of the agreement by Poole. The Court explained that between the letter and the phone conversation by Poole’s Manager, Poole made the decision not to haul under the terms of the agreement prior to the date on which performance was due, and communicated this to Diversified unequivocally. To make Diversified whole, the Court awarded damages to Diversified in the amount of its lost profits on loads hauled for its customer in the time Poole was to be hauling such loads.

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

District Court Issues Preliminary Injunction to Enforce a Non-Compete Clause

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The Eastern District of Pennsylvania issued a preliminary injunction to enforce a non-compete clause in a dealer agreement when Defendant was persuading the Plaintiff’s customers to cancel their agreements with Plaintiff to switch to an agreement with other alarm companies. Vector Sec., Inc. v. Stewart, 88 F. Supp. 2d 395, 402 (E.D. Pa. 2000). In Vector Sec., Plaintiff sought a preliminary injunction to enforce a non-compete clause in an agreement between Vector Security Systems and City-Wide Home Security Services. Defendant conceded that he had persuaded Vector’s subscribers to terminate their agreement with Vector and switch to an agreement with other alarm companies. Vector had bought from City-Wide ninety-seven accounts that have now been terminated.

The Court held that Vector had showed that it “has a reasonable probability of success on the issue of the covenant’s enforceability.” Vector showed that it had an interest in maintaining long-lasting relationships with its customers. Further, Vector showed that if the preliminary injunction is not issued, Vector will be “irreparably harmed” because of the loss in business. Vector depends on long-lasting relationships with its customers, referrals for new customers, and additional services to current customers. The Court reasoned that the “relative harm to interested parties” is not sufficient to deny the preliminary injunction because Defendants can still sell alarm systems and is only prohibited from seeking Vector’s customers. Therefore, preliminary injunction will be granted to enforce the non-compete clause.

For more information, call our non-compete lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

PA Supreme Court Agrees to Examine Contractual Relationships Between Law Firms and Non-Lawyers

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The Pennsylvania Supreme Court has agreed to evaluate whether an alleged fee-splitting arrangement between a law firm and a non-lawyer was proper, and whether the arrangement violated state law and public policy.

In SCF Consulting, LLC v. Barrack, Rodos & Bacine, No. 1413 EDA 2015, 2016 WL 4962900 (Pa. Super. Ct. July 8, 2-16), Plaintiff, SCF Consulting, LLC (SCF), alleged it was entitled to a promised share of profits for cases SCF had worked on as part of an oral consulting contract with Defendant, Barrack, Rodos and Bacine (“Barrack”). The contract regarded representation of various institutional investors who sought to bring class actions alleging securities violations. Pursuant to this contract, SCF claims it was paid a yearly consulting fee, plus “a five percent (5%) share of the firm’s annual profits attributable to the cases originated and worked on by Barrack, and a 2.5% of cases originated by other members of the firm.” Based on this compensation package, SCF assisted Barrack in becoming legal counsel for the class representatives in virtually all of its cases. SCF admitted that Barrack paid them their fixed annual consulting fee for each of the years worked, but alleges that Barrack failed to pay the share of profits due at the end of 2014.

SCF filed this suit claiming that Barrack breached the parties’ agreements by refusing to make the promised profit share payments for cases that were originated, worked on and resolved by SCF.

The trial court sustained Barrack’s demurrer to all counts of SFC’s complaint on the basis that the compensation plan they entered into was against public policy due to violation of Pennsylvania Rule of Professional Conduct, 5.4. The rule prohibits a lawyer or law firm from sharing legal fees with a nonlawyer exclusive of various exceptions. While SFC claimed the plan was an express exception to the rule [under section (a)(3)], both the Trial Court and Superior Court disagreed.

On February 1st, 2017, SCF appealed to the Supreme Court of Pennsylvania to determine “whether the trial court and superior court erred in sustaining Barrack’s demurrer to all counts of SFC’s complaint, even assuming that the compensation plan was in violation of 5.4., Pennsylvania law, public policy and the interests of justice require such an agreement to be enforced because an attorney must not be shielded from liability, nor financially rewarded for violating the Rules of Professional Conduct.”

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Pennsylvania Supreme Court Finds Strict Liability

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Improper Basis of Recovery Against Medical Device Manufacturers

Pennsylvania courts consider strict liability to be an improper basis for recovery in cases where manufacturers fail to provide adequate warnings regarding prescription drugs. In Hahn v. Richter, 543 Pa. 558 (Pa. 1996), the Plaintiff, Hahn, was treated for back pain by one of the defendants, Dr. Richter. The treatment included several surgical procedures and multiple intrathecal injections of Depo-Medrol, a drug manufactured by the other defendant involved in the case, Upjohn. A package insert accompanying the drug provided warnings to physicians that a condition called “arachnoiditis” was reported after doctors administered the drug by way of intrathecal injection, and that this method was not an approved usage by the Federal Drug Administration. Following his treatment, Hahn developed the condition “arachnoiditis”, which required further surgery and ultimately resulted in serious, permanent injury. Hahn filed a suit against both Dr. Richter and Upjohn alleging that his condition was caused by the Depo-Medrol and that Upjohn failed to provide adequate warnings to physicians regarding intrathecal use of the drug.

The court ruled that where the adequacy of warnings associated with prescription drugs is at issue, the failure of the manufacturer to exercise reasonable care to warn of dangers (i.e. manufacturer’s negligence) is the only recognized basis of liability. The court ruled that a “manufacturer of drugs is not strictly liable for unfortunate consequences attending the use of otherwise useful and desirable products which are attended with a known but apparently reasonable risk.”

For more information, call our Philadelphia business lawyers at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Racial Discrimination Claim Dismissed

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Failure to Exhaust Administrative Remedies

The District Court will dismiss claims of racial discrimination if a plaintiff has failed to exhaust all administrative remedies. In Jones v. Thomas Jefferson Univ. Hosp., the Plaintiff was Khalia Jones, an African American woman who worked for Defendant Thomas Jefferson University Hospital. No. CIV.A. 13-4316, 2015 WL 505491, at *1 (E.D. Pa. Feb. 6, 2015). Jones requested accommodations at work to avoid endoscopy procedures that had radiation due to her pregnancy. Jones’ supervisors had provided these accommodations for white technicians when they were pregnant. The supervisors rejected Jones’ requests and later, terminated her, reasoning that she did not perform her job, “misrepresent[ed] information” to the supervisor, and “walk[ed] [away] from the job.”

Jones failed to exhaust all of the administrative remedies because she neglected to allege racial discrimination in her complaint to the Equal Employment Opportunity Commission and the Pennsylvania Human Rights Commission before bringing this lawsuit. The only allegation alleged in Jones’ EEOC and PA HRC complaint was based on sex discrimination – that Jones’ employer discriminated against her because of her pregnancy by rejecting her requests for accommodations. Due to Jones’ failure to raise claims of racial discrimination at the EEOC level, the District Court dismissed the claims of racial discrimination.

For more information, call our employment lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Third Circuit Defines “Willful” FLSA Violation

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The issue of whether an employer “willfully” violated the Fair Labor and Standards Act (“FLSA”) by failing to pay overtime wages is important because a willful violation allows a plaintiff to recover an additional year of lost wages. See 29 U.S.C. § 255(a). The question of what a willful violation is appeared recently in a Third Circuit Court decision in Souryavong v. Lackawanna Cty., No. 15-3895, 2017 WL 4159604 (3d Cir. Sept. 20, 2017). The issue in Souryavong arose because Lackawanna County failed to properly aggregate hours worked of county employees, who held two different part-time jobs, resulting in a failure to pay overtime. There was testimony on behalf of the county which said they were generally “aware” of their obligations under the FLSA, and there was also an e-mail from another county official that recognized this error in tracking time of these employees and the county took measures to address and fix the issue.

In order to find the county liable for a willful violation, the county must have known its conduct was prohibited, or “showed reckless disregard for the matter.” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). Acting only “unreasonably” is insufficient—some degree of actual awareness is necessary. The Third Circuit determined that willful violations of the FLSA require a more specific awareness of the legal issue than was present in this case. The Court further explained that the county lacked a level of egregiousness, which had been found in other willful violations in sister courts. Weighing these factors together, the Court determined there was no “willful” violation of the FLSA by the county.

For more information, call our overtime lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.