Court Report

Jun 1, 2007

HR Magazine, June 2007Dillard’s is sued over clerk’s discriminatory conduct; Fendi must pay more than $1 million for firing immigrant; more.

Fired Fendi Manager Bags Over $1 Million
Incalza v. Fendi North America Inc., 9th Cir., No. 04-57119 (March 6, 2007).

The 9th U.S. Circuit Court of Appeals upheld a jury’s verdict of more than $1 million to an immigrant who claimed that his termination, rather than being required by the Immigration Reform and Control Act of 1986 (IRCA), violated an implied contract that he be fired only for good cause.

Giancarlo Incalza worked for Fendi, a handbag maker, for nearly 13 years. He began his employment in Italy, then moved to New York on an E-1 visa. Fendi assisted Incalza in renewing his visa several times. After 10 years of employment in New York, Incalza was promoted in August 2000 to manager of the Fendi Beverly Hills, Calif., store.

In mid-2002, a French company purchased a majority interest in Fendi. Several months later, Fendi’s attorney advised the company that the E-1 visas for the two Italian nationals working in the United States, one of whom was Incalza, were no longer valid because the company was now French. Fendi was advised that H-1B visas were possible, and a determination could be obtained within 15 days as to whether the two employees would qualify.

Fendi decided to proceed with the H-1B visa for the other employee, but not for Incalza. Rather, Fendi fired Incalza, explaining that his E-1 visa was no longer valid and that he was unauthorized to work.

Incalza requested that he be allowed to take an unpaid leave of absence because he was going to marry an American citizen in one month and would be eligible for a green card at that time. Fendi refused.

About a month later, Incalza again requested that he be allowed to return to his former job once his visa situation was cleared up. Fendi once again refused. By the time Incalza got married and received his work authorization, Fendi still had not filled Incalza’s position.

Incalza sued Fendi under California law, claiming that he was wrongfully terminated in violation of an implied contract that he be fired only for good cause. Incalza introduced evidence that:

  • Fendi’s policy is not to terminate without good cause.
  • The custom of the fashion industry is not to terminate without good cause.
  • Fendi management gave Incalza oral assurances of continued employment.

Fendi took the position that IRCA required it to terminate Incalza once he no longer had a valid visa. Fendi also argued that if California law required a different result, it was required to follow IRCA.

Incalza’s case was tried in federal court, based on diversity of citizenship, and the jury awarded Incalza more than $1 million. The jury did not believe Incalza really was terminated because of IRCA, and the 9th Circuit refused to overturn the verdict.

The court explained in this case that the employer’s obligations under IRCA did not really conflict with California law. The 9th Circuit held that to comply with IRCA did not necessarily mean that the employer had to terminate the employee when there were less drastic options, such as allowing Incalza to take the unpaid leave of absence to resolve work authorization issues.

However, if the worker is “indisputably not authorized to work” and has no basis for, or prospect of, obtaining work authorization, he must be discharged immediately.

By Susan H. Roos, a partner with the firm of Cook Roos Wilbur Thompson LLP, an affiliate of Worklaw® Network in San Francisco.

Retailer Sued over Clerk’s Conduct
Green v. Dillard’s Inc., 8th Cir., No. 06-1918 (April 5, 2007).

A jury could find an employer liable for the discriminatory conduct of its salesperson, the 8th U.S. Circuit Court of Appeals decided.

On Aug. 11, 2002, Rodney and Charlan Green, a black couple, visited a Kansas City, Mo., Dillard’s store to purchase a wristwatch and accessories for Charlan. After waiting for service at the watch counter, Charlan Green asked an idle clerk, who allegedly was leaning against a wall with her arms folded, whether she would assist them.

When that clerk, Linda McCrary, answered with a definitive “no,” a second clerk, Veronica Aguero, yelled, “Ma’am, I’ll help you when I’m finished here.” Aguero eventually assisted Charlan Green in choosing a purse, a wallet and a keychain for purchase.

McCrary, who had then approached the purse counter, commented on the number of items and asked, “How are they going to pay for it?” Rodney Green wrote a check for the total purchase.

During the transaction, McCrary stared and muttered under her breath. Charlan Green then asked Aguero to help her choose a watch, and the two women walked to the watch counter. Rodney Green and McCrary remained at the cash register where Rodney tried to converse with McCrary, telling her that he was a police officer and a bona fide customer.

In response, McCrary made a comment that included the “n” word and walked off. Charlan Green and Aguero, who had returned to the cash register, both overheard the comment. Aguero apologized and told the Greens that McCrary had been disciplined for similar behavior in the past. A sales manager also apologized and said the store had had similar problems with McCrary before. Upset, the Greens returned the items that they had purchased and left.

In August 2004, the Greens brought a lawsuit against Dillard’s, alleging that the store had violated Section 1981 of the Civil Rights Act of 1866. Section 1981 guarantees that “all persons within the jurisdiction of the United States shall have the same right in every state and territory to make and enforce contracts.”

After the district court granted summary judgment in Dillard’s favor, the 8th Circuit reversed, holding that there were material questions of fact that could allow the jury to find in favor of the Greens. While there was no evidence of discriminatory policies or specific acts by managers for which Dillard’s could be held accountable, the Greens produced enough evidence for a jury to determine that Dillard’s let McCrary continue to deal with customers even though the company was aware of McCrary’s “hostile propensities.” Further, a jury might infer that Dillard’s inaction had contributed to the incident with the Greens.

By Maria Greco Danaher, an attorney with the firm of Dickie, McCamey & Chilcote in Pittsburgh.

Handling of Unsubstantiated Harassment Charge Upheld
Baldwin v. Blue Cross/Blue Shield of Alabama, 11th Cir., No. 03-02621 (March 19, 2007).

Courts should not micromanage employers’ sexual harassment complaint and investigation procedures, according to the 11th U.S. Circuit Court of Appeals, upholding a company’s handling of an unsubstantiated harassment charge.

Susan Baldwin worked as a marketing representative for Blue Cross/Blue Shield of Alabama. Baldwin alleges that her new manager asked her to spend the night with him in a hotel room during a business trip, invited her to his office and requested that she perform a sexual act, and moved the zipper on his pants fly up and down when he saw her. The manager also sprinkled office conversation with vulgarities ranging from the mild to the extreme, according to Baldwin.

Over three months later, Baldwin reported this conduct to the company’s human resource department. The company investigated but was unable to substantiate her complaint. As a remedy, the company offered to conduct counseling for both Baldwin and her manager. Alternatively, the company would let Baldwin transfer to another office.

When Baldwin rejected both options and refused to continue working for her manager, the company terminated her. Baldwin then sued the company under Title VII for sexual harassment. The court approved the remedies offered by Blue Cross/Blue Shield as reasonable even though Baldwin found them unacceptable.

Baldwin also had failed to take advantage of the corrective opportunity because she had waited three months plus two weeks to report the harassment, the court found. Baldwin’s fear that she would lose her job did not excuse the delay.

By W. Brian Holladay, an attorney with the firm of Elarbee Thompson, an affiliate of Worklaw® Network in Atlanta.

Web Extras

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Professional Pointer: Fired Fendi Manager Bags Over $1 Million

This holding is consistent with the recent 10th Circuit case, Zamara v. Elite Logistics (No. 04-3205 (Feb. 26, 2007)). In Zamara, the 10th Circuit held that it was reasonable under IRCA for the employer to suspend an employee and request that he provide additional documentation to establish work authorization where the documentation originally presented was irregular.

Professional Pointer: Retailer Sued over Clerk’s Conduct

An employee’s inappropriate treatment of customers cannot be minimized or ignored. That behavior can form the basis of employer liability under Section 1981 of the Civil Rights Act of 1866.

Professional Pointer: Handling of Unsubstantiated Harassment Charge Upheld

A reasonable anti-harassment policy is vital in avoiding liability. With the policy in place, the employer can conduct a reasonable investigation and reach a conclusion as to the proper remedy. The employer will not be liable for harassment if the employee does not report the conduct soon after it occurs.​


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