Suburban Chicago Hilton to Pay $195,000 to Resolve EEOC National Origin Harassment Suit

Agency Says Exec Chef Subjected Hispanic Kitchen Employees to Slurs and Insults

CHICAGO – The Equal Employment Opportunity Commission (EEOC) announced today that a federal judge has entered a $195,000 consent decree to resolve a national origin harassment lawsuit brought by the agency against the Hilton Lisle/Naperville Hotel in Lisle, Ill.

In its lawsuit, EEOC charged that the Hilton Lisle/Naperville violated federal law by subjecting Hispanic employees in the hotel kitchen to offensive comments. Specifically, the EEOC charged that the hotel’s executive chef regularly referred to Hispanic employees as “s–cs” and “wetbacks.”

National origin discrimination violates Title VII of the Civil Rights Act of 1964. The EEOC filed suit, captioned EEOC v. Fireside West, LLC d/b/a Hilton Lisle/Naperville, No. 09 cv-5979, on Sept. 28, 2009 in U.S. District Court for the Northern District of Illinois in Chicago, after first attempting to reach a pre-litigation settlement through its conciliation process.

The three-year consent decree resolving the suit, approved by District Judge Edmund Chang yesterday, May 5, 2011, provides that $195,000 in monetary relief, which includes attorney’s fees, be distributed among two employees who filed charges of discrimination with EEOC and another additional employee.

The decree also requires the Hilton Lisle/Naperville to report any further complaints of retaliation or national origin harassment to the EEOC. The decree requires remedial training for all employees at the hotel, and mandates that the executive chef, who was alleged to have engaged in the harassment of Hispanic kitchen employees, receive personal anti-discrimination training. The decree includes an injunction prohibiting further discrimination on the basis of national origin and barring retaliation for reporting or complaining about discrimination.

“Federal law clearly requires employers to take prompt remedial action when they learn of harassment,” said John Hendrickson, regional attorney for the EEOC in Chicago. “In this case, the EEOC was prepared to show that not only did multiple employees report the harassment, but also that the executive chef himself acknowledged doing it. That’s not acceptable, and it’s not legal.”

EEOC trial attorney Aaron DeCamp added, “Over the next three years, EEOC will keep a close eye on how the Hilton Lisle/Naperville implements the consent decree to make certain these issues do not recur.”

In addition to Hendrickson and DeCamp, the case was litigated by Supervisory Trial Attorney Greg Gochanour and Trial Attorney Laurie Elkin. The EEOC Chicago District Office is responsible for processing charges of discrimination, administrative enforcement, and the conduct of agency litigation in Illinois, Wisconsin, Minnesota, Iowa and North and South Dakota, with Area Offices in Milwaukee and Minneapolis.

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“Situs of the Injury” for Exercising Personal Jurisdiction over Defendant for Online Copyright Infringement Is Location of Copyright Owner

In a decision favorable to copyright owners based in the state of New York, the New York State Court of Appeals held that in copyright infringement cases involving the uploading of copyrighted literary works onto the internet, the situs of the injury for purposes of determining personal jurisdiction under New York’s long-arm jurisdiction statute is the location of the copyright holder and not the location of the infringing conduct.   Penguin Group (USA), Inc. v. American Buddha, 2011 N.Y. Slip Op. 02079, 2011 WL 1044581 (N.Y., March 24, 2011). (Graffeo, J.)

Plaintiff Penguin Group (USA) is a book publisher based in New York City.   Defendant American Buddha is an Oregon not-for-profit corporation with a principal place of business in Arizona.  American Buddha operates two websites, hosted on servers in Oregon and Arizona, that make available free of charge to its members a variety of publications.  Penguin Group brought a copyright infringement action in New York federal court, alleging that the defendant published complete copies of four of Penguin’s books on the defendant’s websites.  The electronic copying and uploading of the books occurred in Oregon or Arizona.

American Buddha moved to dismiss the complaint for lack of personal jurisdiction, arguing that as an Oregon company, it possessed insufficient ties to New York.   Further, the plaintiff had not alleged any infringing activity within New York.   Penguin Group claimed that jurisdiction was proper under New York’s long-arm jurisdiction statute, which provides jurisdiction over non-New York residents who commit tortuous acts outside of the state that result in injuries within New York.  The district court granted the defendant’s motion to dismiss, holding that the plaintiff was injured in Oregon or Arizona where the copying and uploading of the copyrighted works took place.

On appeal, the U.S Court of Appeals for the Second Circuit recognized a split of authority in New York district courts concerning the application of New York’s long-arm statute to copyright infringement cases involving out-of state defendants and certified the issue for consideration to the New York Court of Appeals.   After reviewing the applicable New York cases, the New York Court of Appeals determined that the jurisdictional analysis required in internet cases is different than that used in traditional commercial tort cases.   Because the infringed works were made available to internet users everywhere there was internet access, it was “difficult, if not impossible, to correlate lost sales to a particular geographic area,” as would be the focus in a more traditional commercial tort case. Therefore, in internet copyright infringement cases the court determined that it was more reasonable to determine that the injury caused by the infringement was suffered where the copyright owner is located.  The decision clarifies that New York copyright owners may bring infringement actions in New York for online infringement of their literary works, even if the infringing download or use occurs outside of the state.

NLRB’s Acting General Counsel Lafe Solomon Releases Statement on Boeing Complaint

NLRB Acting General Counsel Lafe Solomon today responded to inquiries regarding a complaint issued April 20 against the Boeing Company with the following statement:

“Contrary to certain public statements made in recent weeks, there is nothing remarkable or unprecedented about the complaint issued against the Boeing Company on April 20. The complaint involves matters of fact and law that are not unique to this case, and it was issued only after a thorough investigation in the field, a  further careful review by our attorneys in Washington, and an invitation by me to the parties to present their case and discuss the possibility of a settlement. Only then did I authorize the complaint alleging that certain statements and decisions by Boeing officials were discriminatory under our statute.

It is important to note that the issuance of a complaint is just the beginning of a legal process, which now moves to a hearing before an administrative law judge. That hearing, scheduled for June 14 in Seattle, is the appropriate time and place to argue the merits of the complaint. The judge’s decision can further be appealed to the Board, and ultimately to the federal courts. At any point in this process, the parties could reach a settlement agreement and we remain willing to participate in any such discussions at the request of either or both parties.  We hope all interested parties respect the legal process, rather than trying to litigate this case in the media and public arena.”

Mr. Solomon made the same point today in a brief written response to a letter received earlier this month from Boeing General Counsel J. Michael Luttig.

NLRB files Lawsuit Against the State of Arizona

We’ve been covering the NLRB‘s dispute with four states over recently-enacted constitutional amendments guaranteeing the right to a secret ballot in union elections. On Friday, May 6, the NLRB filed a lawsuit against the state of Arizona seeking to invalidate the state’s constitution amendment entitled “Right to secret ballot; employee representation.” As we’ve previously reported, NLRB Acting General Counsel Lafe Solomon has taken the position that  the constitutional amendment passed in Arizona (as well as similar amendments in South Carolina, South Dakota, and Utah) are preempted by the National Labor Relations Act.

This  lawsuit comes at a time when the Board is facing increased scrutiny from Congress over this litigation and other recent enforcement actions. We will continue to monitor and report on this issue.

The Costs of Employment Litigation and the Benefits of Litigation Prevention and Employment Audits

The economic and non-economic business justifications for reviewing your company’s employment practices are plentiful. Litigation for employment and labor based claims subject the corporate treasury to the risk of paying damages, including punitive damages and substantial attorney fees for both the employee’s and the company’s counsel. The non-economic costs of employment litigation that can be independently taxing and not as measurable include current employee-witnesses spending significant time talking with the employer’s attorney(s), giving depositions or attending court proceedings in connection with the litigation instead of spending time conducting the business of the employer. In addition, the employer is required to gather and produce every document potentially relating to the plaintiff’s employment with the employer, including electronically stored documents (which can be an expensive and onerous burden for which the company may not be prepared). Finally, in some cases (particularly involving EEOC lawsuits), employment practice changes may actually be compelled through a consent decree.

With a modest investment of time and money, an employer can create and implement appropriate policies and practices concerning all facets of the employment relationship (e.g., interviewing, hiring, personal conduct of employees, social media, privacy concerns, and disciplining and terminating employees). Social media and employee privacy issues as well as workplace retaliation are areas particularly ripe for an explosion of litigation. The tangible benefits that can be achieved from reviewing and, as appropriate, implementing or modifying current policies and practices include improved employee relations, increased productivity and a reduction in litigation.

Proactive measures from the start until the end of the employment relationship are the best way to avoid these expenses. Here are some basic ideas to consider, which can be implemented with the assistance of counsel familiar with the policies and law.

Prior to interviewing potential employees, employers should have their applications reviewed to be sure they are legally compliant and avoid elicitation of inappropriate information from potential employees (e.g., the potential employee’s age, information that could lead the employer to learn about the potential employee’s age, or any other information relating to a legally protected status). For those within the organization conducting employee interviews, there should be training regarding permissible and impermissible questions to ask or avoid during interviews. For example, interviewers should be trained in avoiding questions that could elicit information relating to a potential employee’s age, national origin, religion, disabilities, or any other potentially protected status.

Employers should have job descriptions for each category of employee that include the following information:

  1. An accurate reflection of the educational and practical requirements of the position.
  2. An accurate reflection of the essential functions of the position.
  3. Supervisory authority, if any, of the position.
  4. The category of employee to which the position reports.
  5. Whether the position is exempt or non-exempt.
  6. The employee’s signature acknowledging receipt of the job description.

Review of job descriptions can be particularly important if jobs have changed in any meaningful way, which can be a relatively typical phenomenon. Moreover, if the company conducts employee performance reviews, it is important to have an accurate and objective statement of the work that is being evaluated.

On a related note, employers too often assume that job titles, job descriptions or simply categorizing an employee as “salaried” automatically enables the employer to categorize employee as exempt, thus avoiding overtime pay. This is not the case. The Fair Labor Standards Act and the Department of Labor have very specific guidelines for classifying employees as exempt or non-exempt and failure to comply with those guidelines can result in unnecessary litigation expenses, paying employees for unpaid overtime, civil penalties, and paying the attorney fees of the suing employee(s). This is a problem that can be avoided with proper analysis prior to categorizing an employee as exempt or non-exempt.

With respect to handbooks, employers should have employee handbooks that provide for proper avenues of complaint for employees concerned with discrimination, retaliation, harassment, and any other employment-related issues. Where an employer has proper avenues of complaint for employees – avenues that (1) allow employees to avoid complaining to the alleged wrongdoer, and (2) allow the employee to complain to a hierarchy of employees if the problem is not investigated and addressed — The employer can create a proper defense to discrimination and harassment lawsuits should the employee fail to use the available avenues of complaint.

Likewise, employment handbooks should have proper procedures to enable employees with disabilities to request and engage the employer about obtaining reasonable accommodations. While the Americans with Disabilities Act applies to employers with 15 or more employees, many state laws apply similar or identical standards to much smaller employers. Where an employee requests an accommodation for a disability, the employer must engage the employee and work with him/her to resolve the issue in question. Ignoring the requested accommodation or simply concluding that the requested accommodation is “unreasonable” without making honest and good faith efforts to work with the employee to find a reasonable accommodation can lead to a lawsuit.

In addition to discrimination policies and complaint mechanisms, the handbook and other separate written policies represent the employer’s best opportunity to put employees on notice of various other employment policies and rules, including progressive discipline, drug testing, leave and other benefits or terms and conditions of employment. Social media and privacy policies are becoming more and more appropriate for purposes of outlining an employee’s expectations concerning use of employer-owned electronic devices. Clear communication of these myriad topics to the employee can create a better understanding between the employer and employee during employment, aid in the administration of discipline and be an invaluable piece of evidence should litigation occur.

All employers with payrolls approaching 50 employees or more must be cognizant of the Family Medical Leave Act (“FMLA”). If an employer has 50 or more employees in 20 or more workweeks in the current or preceding calendar year, including joint employers and successors of covered employers, the employer must provide up to 12 weeks of unpaid leave to qualifying employees (and 26 weeks of unpaid leave to qualifying employees who must care for a family member injured on active duty in the military). Furthermore, employers subject to the FMLA must provide written notice of its application to employees and must have procedures in place to meet the applicable deadlines relating to the employer’s response to requests for such leave. Failure to properly honor a request for such leave, failure to comply with the deadlines relating to such requests, or retaliating against an employee for requesting or exercising his/her right to such leave can result in violations of the law and ultimately lead to unnecessary lawsuits. However, proper written policies and training for employees supervising the application of FMLA leave can prevent such lawsuits from ever arising.

Employers should be sure to keep separate personnel files and medical files relating to employees. Comingling all documents relating to an employee’s employment can result in an inference that an employer considered improper medical information when making an employment decision. All documents relating to an employee’s medical history (e.g., doctor notes, FMLA forms, requests for accommodations due to disabilities, etc.) should be kept separate and apart from personnel files and only select employees should have access to those documents to avoid their consideration when making an employment decision.

If an individual is alleged to have discriminated against, harassed, or retaliated against another employee, the alleged wrongdoer, if possible, should not have any influence over or provide information resulting in an adverse employment action against the complaining employee. A growing area of litigation has arisen over the past few years that implicates a new theory of liability commonly referred to as the “cat’s paw” theory. Where an alleged discriminator, harasser, or retaliator is permitted to provide information leading to an adverse employment action against the complaining employee, his/her wrongful conduct can be imputed to the employer even if he/she is not the ultimate decisionmaker. By allowing an alleged wrongdoer to influence an adverse employment action against the complaining employee, the employer creates unnecessary liability and business expense.

The bottom line is there are a myriad of employment laws and regulations that require the employer’s attention. Compliance with those laws and regulations and the adoption of proper procedures for hiring, disciplining, reviewing, and terminating employees can avoid litigation following whatever employment decision is made. While litigation is never totally avoidable, compliance with laws, regulations and best practices relating to employment decisions is the best and most cost-efficient defense to potential litigation or actual litigation.

No Likelihood of Confusion or Dilution Between CITIBANK and CAPITAL CITY BANK

Although the majority of the relevant likelihood of confusion factors favored an opposer, the U.S. Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s denial of an opposition filed by opposer Citigroup Inc. against four service mark applications filed by Capital City Bank (CCB).   Citigroup Inc. v. Capital City Bank Grp., Inc., Case No. 10-1369 (Fed. Cir., March 28, 2011) (Gajarsa, J.)

Citigroup began using the mark CITIBANK in 1897 and adopted “Citibank” as its official company name in 1967.   Citigroup owns multiple federally registered trademarks for financial services containing the CITI prefix, including CITI, CITICORP and CITIBANK.   Many of Citigroup’s registrations have become “incontestable,” and the CITIBANK brand has been recognized as one of the most valuable brands in the world.  Capital City Bank Group offers banking services through 69 branches in three U.S. states.  Capital City Bank Group applied to register four marks, including CAPITAL CITY BANK, CAPITAL CITY BANK INVESTMENTS, CAPITAL CITY BANK GROWING BUSINESS and CAPITAL CITY BANC INVESTMENTS.  As standard character marks, the applications were not limited to a particular font style, size, color or design element.

Citigroup filed a notice of opposition with the TTAB against each of CCB’s applications, alleging likelihood of confusion with and likelihood of dilution of its CITIBANK marks.   The TTAB treated all four applications as one for evaluating likelihood of confusion under the DuPont factors.  The TTAB found that four of the six relevant factors favored Citigroup, namely, the fame of the CITIBANK marks, the similarity of the parties’ financial products and services, the similarity of the parties’ trade channels and the similarity of the parties’ target customers.  However, the TTAB determined that no likelihood of confusion or dilution would result from registration of CCB’s marks because the two remainingDuPont factors, i.e., the nature and extent of any actual confusion and the similarity of the marks, favored applicant CCB.

On appeal, Citigroup challenged the TTAB’s factual determinations concerning actual confusion and the similarity of the parties’ marks.   The Federal Circuit affirmed the TTAB’s finding that the similarity of the marks factor favored applicant CCB, as the record detailed the distinctive spellings of the parties’ marks and common third-party usage of the phrase “City Bank” within the banking industry.  Concerning actual confusion, the Court found again that substantial evidence, namely the concurrent use of the respective marks in the same geographic markets since 1975, supported the TTAB’s finding of an absence of actual confusion.  Finally, the Court also rejected Citigroup’s approach of “mechanically tallying” the DuPont factors as improper, holding in accordance with Federal Circuit precedent, that not all of the DuPont factors are necessarily relevant in every case and that any one of these factors may control.

NLRB Initiates Litigation Against the State of Arizona on Amendment Limiting Method for Choosing Union representation

The Acting General Counsel of the National Labor Relations Board today submitted for filing a complaint in U.S. District Court in Phoenix seeking a declaration that an Arizona constitutional amendment conflicts with federal labor law and is therefore preempted by the Supremacy Clause of the U.S. Constitution.

The state constitutional amendment, passed by Arizona voters on November 2, 2010, limits the means by which employees can choose union representation to one option – a secret ballot election.

In January 2011, Acting General Counsel Lafe Solomon advised the Attorneys General in Arizona and three other states with similar amendments – South Carolina, South Dakota and Utah – that the new provisions were in conflict with the National Labor Relations Act, and that the Board had authorized the Acting General Counsel to pursue litigation if necessary.

After attempts to negotiate a resolution failed, Mr. Solomon on April 22, 2011 advised the Attorneys General of Arizona and South Dakota that he would soon proceed with litigation in those states, while reserving the right to sue the remaining states at a later time. A complaint is expected to be filed in South Dakota in the coming weeks.

Under the 1935 National Labor Relations Act, private-sector employees have two ways to choose a union: They may vote in a secret-ballot election conducted by the NLRB, or they may persuade an employer to voluntarily recognize a union after showing majority support by signed authorization cards or other means.

The state amendments prohibit the second method and therefore interfere with the exercise of a well-established federally-protected right.

As the complaint submitted to the Court today explains,

“The NLRA permits but does not require secret ballot elections for the designation, selection, or authorization of a collective bargaining representative where, for example, employees successfully petition their employer to voluntarily recognize their designated representative on the basis of reliable evidence of majority support.”

For more information on the state amendments and litigation, please see this NLRB Fact Sheet.