Legal Update: Supreme Court, Fourth Circuit and N.C. Courts Legal Update: Supreme Court, Fourth Circuit and N.C. Courts Brian S. Clarke Assistant Professor of Law Charlotte School of Law

T HE S UPREME C OURT OF THE U NITED S TATES

 Nitro-Lift Techs. v. Howard (US 2012)  Arbitration and Covenants Not to Compete  Question of arbitrability of the covenant not to compete dispute was a question for an arbitrator not a court  MORAL: If you want to carve the covenant out of the arbitration provision, do it explicitly The Supreme Court

 Pending Cases  Vance v. Ball State University, No (June 25, 2012).  Does the Faragher/Ellerth defense apply to...  harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, OR  Is it limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim.  PREDICTION: A supervisor does not necessarily have to have authority to hire and fire The Supreme Court

 Pending Cases  Genesis HealthCare Corp. v. Symczyk, No (June 25, 2012).  The validity of “tactical mooting” in the FLSA collective action context to end a case  FLSA collective actions are one the rise  Several pending locally  PREDICTION: True tactical mooting effectively eliminates the “case or controversy” needed for Article III standing.  However, true tactical mooting will likely be rare  Does plaintiff seek injunctive relief? Declaratory relief? Does the Rule 68 Offer of Judgment address those? The Supreme Court

 Pending Cases  Sandifer v. U.S. Steel, No  What constitutes "changing clothes" within the meaning of section 203(o) of the FLSA?  Deals with the donning and doffing of Personal Protective Equipment in an industrial workplace  In a collective bargaining agreement, the employer and the union can agree that “changing clothes” is not compensable  PREDICTION: “Changing clothes” means donning and doffing of PPE and can be excluded from compensable time under 203(o) of the FLSA. The Supreme Court

T HE F OURTH C IRCUIT

 The current makeup of the court...  Regan (R) Nominee: 1  Wilkinson (Va.)  G.H.W. Bush (R) Nominee: 1  Niemeyer (Md.)  Clinton (D) Nominees: 3 ½  Traxler (S.C.)Motz (Md.)King (W.Va.) Gregory (Va.) [1/2]  G.W. Bush (R) Nominees: 3 ½  Duncan (N.C.) Agree (Va.)Shedd (S.C.) Gregory (Va.) [1/2]  Obama (D) Nominees: 6  Davis (Md.) Keenan (Va.) Wynn (N.C.)  Diaz (N.C.) Floyd (S.C.)Thacker (W.Va.) The Fourth Circuit Bench

Ideologically, most people would categorize the current judges as follows...  Liberal (general perception)  Three... Motz, Davis, Wynn  Conservative (general perception)  Three... Shedd, Niemeyer, Wilkinson  Moderate (general perception)  Nine... Traxler, Keenan, Diaz, Floyd, Thacker, Duncan, Agee, Gregory, King The Fourth Circuit Bench

Overview of Decisions (of 40) [27.5%]  Reversals of Judgments for the Employer (pro-employee): 11 (of 40) [27.5%] 4 (of 40) [10%]  Other Generally Pro-Employee Positions: 4 (of 40) [10%]  TOTAL PRO-EMPLOYEE DECISIONS: 15 (of 40) [37.5%] 17 (of 40) [42.5%]  Neutral Application of Well Established Law: 17 (of 40) [42.5%] 8 (of 40) [20%]  Generally Pro-Employer Positions: 8 (of 40) [20%] The Fourth Circuit Bench

Computer Fraud & Abuse Act: T HE F OURTH C IRCUIT I S N OW D E -CFAA- NATED.

WEC Carolina Energy Solutions, LLC v. Miller, 687 F.3d 199 (4th Cir. 2012)  One of three cases of first impression for the 4th Cir. this year  Miller was a Project Director for WEC  Had company laptop, etc.  WEC had policies prohibiting employees from saving work files to personal devices or using company resources for non- business purposes  Miller left WEC to go to a competitor and, allegedly, took a bunch of confidential information with him Computer Fraud & Abuse Act

WEC Carolina Energy Solutions, LLC v. Miller  Miller allegedly used WEC confidential information in a customer presentation 20 days later on behalf of his new employer  The new employer beat out WEC for the customer’s business  WEC sued, asserting various state law claims and a claim under CFAA  CFAA creates a civil claim against any individual who accesses a computer network without authorization or in excess of his authorization and causes damage of at least $5,000  Miller moved to dismiss the CFAA claim Computer Fraud & Abuse Act

WEC Carolina Energy Solutions, LLC v. Miller  Fourth Circuit adopted a narrow interpretation of CFAA  Joined the Ninth Circuit (YIKES!)  Court concluded that CFAA only addresses “access” to the network, not what a person does with information on the network  If an individual is authorized to access a computer network, that is the end of the discussion for CFAA purposes  “Exceeding Authorized Access” does not mean misusing data, files, etc. (or even misappropriating them)  CFAA claims are effectively dead in the employment context Computer Fraud & Abuse Act

FAIR LABOR STANDARDS ACT: N O FLSA C OMPLAINT IS M INOR

Minor v. Bostwick Laboratories, Inc., 669 F.3d 428 (4th Cir. 2012).  On May 6, 2008, Kathy Minor (and several others) met with Bostwick’s COO  Reported that Minor’s supervisor routinely altered employees’ time sheets to reflect that they had not worked overtime when they had.  Six days later, Bostwick fired Minor  The reason given: “too much conflict with her supervisors and the relationship just was not working.”  Bostwick also claimed to have met with Minor’s co-workers and “had determined that she was the problem.” Fair Labor Standards Act

Minor v. Bostwick Laboratories, Inc.  Minor sued for retaliation under the FLSA  Bostwick moved to dismiss on the ground that an informal, intracompany, oral complaint was not protected activity under the FLSA  FLSA prohibits retaliation against any employee “because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter...”  The District Court agreed and dismissed the claim Fair Labor Standards Act

Minor v. Bostwick Laboratories, Inc.  While Minor’s appeal was pending, the Supreme Court decided Kasten v. Saint-Gobain Performance Plastics  Kasten focused on the “filed” part of the anti-retaliation provision  Held than an oral complaint is “filed” when it is made  Left open the question of whether an informal, intracompany complaint satisfies the “any complaint” part of the statute  Fourth Circuit had to close the hole left by the Supreme Court Fair Labor Standards Act

Minor v. Bostwick Laboratories, Inc.  So, is making an informal, oral, intracompany complaint of FLSA violations protected conduct?  YES...  As long as the complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection” Fair Labor Standards Act

N ORTH C AROLINA

Pierce v. The Atlantic Group, Inc., 724 S.E.2d 568 (N.C. App.), disc. rev. denied, 731 S.E.2d 413 (N.C. 2012).  Howard Pierce was a rigging supervisor for Atlantic  Worked on maintenance projects at Nuclear Powerplants  Last assignment was at Duke Energy’s McGuire Nuclear Station on Lake Norman  OSHANC issued regulations regarding crane operators and riggers – required certification REDA and Wrongful Discharge

Pierce v. The Atlantic Group, Inc.  Pierce was concerned about how to get the certifications completed without disruption to maintenance operations at McGuire  He formulated a training plan in order to get the certifications done with minimal disruption  Atlantic and Duke did not respond to his plan  He then was asked to take a vacation and then, while on vacation, asked to come back for a limited assignment at a lower pay rate REDA and Wrongful Discharge

Pierce v. The Atlantic Group, Inc.  Shortly thereafter, he was fired for falsifying his timecard (although he claimed his action was approved by his supervisor)  Basically, entered a full day of work on a Friday but then left work for a family emergency  Sued, asserting claims for violation of REDA, wrongful discharge in violation of public policy, defamation and IIED/NIED  Ds moved to dismiss, which was granted REDA and Wrongful Discharge

Pierce v. The Atlantic Group, Inc.  REDA CLAIM Issue of FIRST IMPRESSION  Can an internal complaint satisfy the “initiate any inquiry” prong of protected conduct under REDA?  HELD: NO, it cannot.  More than an internal complaint, or suggestion, is required.  Wrongful Discharge Claim  P must plead a specific N.C. public policy that D allegedly violated  Broad, general statutes will not suffice REDA and Wrongful Discharge

F EDERAL L EGISLATION

 Nothing on the horizon.  ACA is coming on-line over the next 2 years.  The effect will be minimal outside of the benefits area  The primary provision that is generally applicable is the breastfeeding break requirement added to the FLSA Federal Legislation

N ORTH C AROLINA O THER [?]

 N.C. State Bar Formal Ethics Opinion  Deals with an employee’s s to the employee’s personal attorney sent using the employer’s business system  Generally, if the employer has a clearly written and clearly communicated policy stating that all s sent or received on its system are the property of the employer and EE has NO expectation of privacy...  These s are NOT privileged Employee s to Counsel

 N.C. State Bar Formal Ethics Opinion  VERY different rules for s sent by an employee using an internet account (live.com, gmail.com, etc.) accessed from the ER’s computer system  These remain privileged  Can be SIGNIFICANT legal liability for accessing these  Primarily under the federal Stored Communications Act Employee s to Counsel

N ORTH C AROLINA L EGISLATION

 H.B. 4 – signed by Gov. McCrory on Feb. 18,  Goes into effect on July 1, 2013  Significant changes to benefits  Reduced maximum weekly benefit amount  Reduced maximum duration  Changed calculation of benefit amount  Eliminated several “non-charging” benefit categories  Small increase in SUTA tax (o.o6% per year). Unemployment Insurance

 Pending... S.B. 91  Passed N.C. Senate (48-2) on March 5, 2013  Now pending in N.C. House  Would prohibit employers from requiring an applicant for employment to disclose information concerning any arrest, criminal charge, or criminal conviction that has been expunged.  Seems likely to pass. Expunged Criminal Records

 Several bills pending that would...  allow concealed handguns in places where they are currently banned  prevent an employer from banning hand guns in employees’ cars in the employer’s parking lot Gun Control