Nevada Complex Litigation

Smith Barney Agrees to $33 Million Gender Discrimination Settlement

Female financial advisors employed by Smith Barney (now part of CitiGroup) between August 30, 2003 and March 1, 2008 are likely to qualify for part of a $33 million settlement stemming from a 2005 class action lawsuit.  The lawsuit, originally filed by 4 female financial advisors, alleged that Smith Barney branch managers “allocated a disproportionate share of account distributions and other benefits to male financial advisors, impairing female advisors' ability to build a business.”

The settlement also includes a diversity manager and industrial psychologist to oversee changes in account distribution, partnership, branch manager promotions, diversity training and complaint processing.

Outlined in May of this year, U.S. District Court Judge Phyllis Hamilton approved the final settlement earlier this month.  As of the date of approval, 1219 current and former Smith Barney (female) financial advisors were part of the class.

Amounts of individual payouts will vary based on the length of time an individual was employed by Smith Barney between 2003 and 2008, and the severity of emotional distress.

Smith Barney has claimed no wrong doing.  The suit was filed less than 10 years after it settled another class action discrimination lawsuit which was known as the “Boom Boom Room” lawsuit. 

There are certain industries and professions which have less than stellar track records in the area of gender discrimination.  As such, when gender discrimination occurs, lawsuits follow.  The greater the number of employees telling stories portraying even a perception of discrimination, the larger the settlement. 

Whistleblower to Receive $56 Million from Amerigroup Settlement

Cleveland Tyson, a former Amerigroup employee filed a lawsuit under the federal False Claims Act and the Illinois Whistleblower Reward and Protection Act as a private party (legally known as a relator).  Tyson’s lawsuit alleged that while administering the Illinois Medicaid program, Amerigroup systematically avoided enrolling pregnant women and those with expensive medical conditions.  These actions were contrary to state and federal laws.

Lawyers from the U.S. Attorney’s Office, Illinois Attorney General’s Office, and Justice Department Civil Division joined the lawsuit against Amerigroup.

Amerigroup claimed that its enrollment policies were responsive to state officials who were concerned about the enrollment of too many pregnant women in their third trimester.

In October 2006 the case went to trial.  An Illinois jury found that Amerigroup defrauded the Illinois Department of Public Aid and a $334 Million judgment was entered against them. Amerigroup appealed.

Federal and state prosecutors announced this week that Amerigroup has agreed to pay $225 Million to settle all claims and will drop the appeal. 

Admitting no wrongdoing, Amerigroup Chairman James Carlson stated, “Our responsibility to our shareholders, associates, members, providers and government partners is to close this chapter now and move toward the future."  Amerigroup has ceased all business operations in Illinois.

Cleveland Tyson, the former employee who filed the whistleblower suit stands to collect a 25% share of the settlement, about $56.25 million.

Will Nevada Equal Rights Commission Sexual Discrimination Ruling Bring Change?

Everyone agrees that in most cases discrimination is wrong.  It is certainly wrong in issues related to employment, education, housing and lending. 

The question is this, when a health club, night club or clothing optional pool charges men more than women, is that discrimination wrong and/or illegal?

In August of 2007, Todd Phillips filed a complaint with the Nevada Equal Rights Commission (NERC).   Phillips claimed that the Las Vegas Athletic Club’s practices of charging women less than men, and providing a private workout area for women but not for men were discriminatory.

On Monday in a five page ruling (found HEREcourtesy of LasVegasWeekly.com) the NERC ruled that the health club enrollment fee structure DID discriminate against men.  It also found that the private workout area for women did NOT discriminate against men.

A similar complaint was filed in May of this year by Adam Russin of New York.  Russin’s complaint is about access to the topless pool at The Mandalay Bay Resort which charges $50 for men and $10 for women. More on that story can be found HERE.

In 1985 the California Supreme Court ruled all such disparities illegal.  Judges in many states have followed suit while judges in Illinois and Washington have disagreed.

It was only 3 years ago that the Nevada Legislature banned sexual discrimination.  

What should area businesses do in light of this ruling?  That is yet to be seen in Nevada.

Gary Peck, executive director of the American Civil Liberties Union of Nevada interprets Nevada statutes as stating that discrimination based on sex is against public policy, but not against the law.

Dennis Perea, NERC administrator agrees that there is some conflict between the law and public policy.  He believes the ruling will reduce confusion.  “This particular issue is completely untested waters,” Mr. Perea said. “I am certain whether through the judicial side or legislative side, the commission will have a lot more clarity in the near future.”

 

US Court of Appeals Upholds Termination of Employee Found “Sleeping” on Job

David McNary suffers from Diabetes and Graves’ Disease.  He worked for Schreiber Foods as a sanitation employee on its dairy equipment.  His co-workers knew of these conditions and would occasionally pitch in to help when he needed it.  He was free from any work restrictions related to his health.

In September 2005, while cleaning trash compactors, McNary felt dizzy and light headed.  He left the compactor area, put his feet up on a table and closed his eyes.

Two supervisors found him with his head back, his mouth open, and his eyes shut.  McNary explained his medical conditions and denied he was sleeping. The Company subsequently terminated him for sleeping on the job.

In January, 2006 McNary filed a complaint against Schreiber alleging a violation of the Americans with Disabilities Act (ADA).  McNary claimed discrimination based on his physical condition.  He also claimed to have informed management and co-workers about his conditions and need to take brief breaks to relieve eye pain and dizziness.

Following discovery, The District Court found that Schreiber provided a legitimate nondiscriminatory reason for McNary’s termination; sleeping on the job in violation of company policy and granted Schreiber’s motion for Summary Judgment.

McNary appealed. 

The United States Court of Appeals for the Eighth Circuit stated “We review de novo the district court's grant of summary judgment to [Schreiber]. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.”

Notably, the Court of Appeals added,

"[F]ederal courts do not sit as a super-personnel department that reexamines an entity's business decisions." One reason we emphasize this point is that a number of plaintiffs present a sympathetic situation in which the employer's judgment in imposing discipline may appear poor or erroneous to outsiders. It is tempting to think that the role of the federal courts is to offer a remedy in that sort of case. Whether we might believe that [Schreiber] was unduly harsh in its treatment of [McNary], however, is not a matter to be considered in deciding this appeal. Our authority is to determine only whether there is a genuine issue for trial on the question whether [Schreiber] discharged [McNary] because of his [disability].

It could be inferred from that statement that McNary might have seen a better result if he had claimed that Schreiber failed to provide reasonable accommodation for his disability.  But, he sued for wrongful termination and lost in District Court and on appeal.

McNary v. Schreiber Foods, Inc. (8th Cir. 8/1/08)

Nevada Supreme Court Rules Against Clark County “Taking” of Eminent Domain Interest

In 1995 the City of Las Vegas declared eminent domain on a half-acre lot owned by Paul Moldon, near the Stratosphere.  Moldon challenged that action resulting in the city depositing $725,000 (the city’s assessment of value) into a Clark County trust account.

In this type of action, Moldon had the option of drawing those funds out of the trust account, but chose to leave them on deposit with the court pending final determination relating to the legalities of the “taking” and the actual value of the property.

Moldon challenged the legality of using eminent domain to take his land for no apparent public use since the city of Las Vegas only planned on transferring/selling it to the Stratosphere for future expansion.

Moldon lost that challenge, and later (2005) in an unrelated case the US Supreme Court in the landmark Kelo decision ruled that government entities could use eminent domain to transfer ownership of property from one private owner to another.

The value of Moldon’s property was determined by a jury in 2005 to be $1,570,000 on the date of “Taking”  (April 1995). In November of 2005, Moldon requested an order directing the District Court clerk to release $725,000 deposited 10 years earlier and the interest earned on that deposit.

Clark County opposed this request citing NRS 355.210, which directed that interest earned on money deposited with the court be placed in the applicable local government’s general fund.

The District Court denied Moldon’s request regarding accrued interest.  Moldon appealed.

Last Month, the Nevada Supreme Court ruled in Moldon’s favor.

The Supreme Court Opinion states:

            “The Moldons are entitled to the interest earned on the condemnation deposit because they had a property interest in the condemnation deposit.  The district court clerk’s act of placing the interest earned from the condemnation deposit into Clark County’s general fund caused a taking in violation of the Fifth and Fourteenth Amendments.  Consequently, former NRS 355.210 was unconstitutionally applied to allow such takings.
            Accordingly, we reverse the district court’s order providing that the Moldons were not entitled to the interest earned on the condemnation deposit, and we remand this matter to the district court so that the district court may determine the amount of interest owed to the Moldons on the condemnation deposit.”

More history on the Moldon property eminent domain saga can be found in this 2004 Review-Journal article.  Also, according to the Review-Journal, Stratosphere owner Carl Icahn “flipped” this property and sold it for $18 million and it remains undeveloped.