Employment / Labor Alert:

Litigation Holds: Spoliation Can Spoil Your Business! 

In today’s business environment, most data is developed and stored electronically, due to the increased use of e-mail, computerized voicemail, Blackberries, and instant messaging.  Electronic data normally undergoes automatic overwriting on backup tapes.  The overwriting process may automatically destroy deleted documents and files.  But many of these documents are discoverable.  Once potential litigation is foreseeable, a litigation hold must be put in place in order to preserve discoverable information.

            When litigation is foreseeable, courts require employers and attorneys to identify “key players” to the litigation and to implement steps that will preserve and retain relevant documents once the duty to preserve attaches.   As the court held in Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y., 2003), this duty attaches once a litigant is made aware that evidence is relevant to a litigation or when the litigant should have known of its relevance.  A “litigation hold” may instruct employees to retain any backup tapes that may contain discoverable documents, as well as to make mirror images of key employees’ hard drives.  A company’s failure to issue a litigation hold and to adhere to it can result in the court’s issuing to the jury an adverse inference that the missing evidence would have been beneficial to the plaintiff’s case, or the court might impose sanctions on the employer or even issue a default judgment in favor of the plaintiff! 

            For example, a granted adverse-inference sanctions based on the defendant’s continued deleting and overwriting procedures, which had resulted in deletion of discoverable e-mails after the defendant had issued its staff a letter instructing staff to preserve all emails and the like.  See KCH Servs., Inc. v. Vanaire, Inc., 2009 WL 2216601 (W.D.Ky. July 22, 2009).

Another court issued to the jury an adverse jury instruction against the employer with regard to all evidence that was contained on a particular computer, after the company failed to issue litigation holds to its key players, thereby resulting in three computers being discarded.  The pro se plaintiff was allowed submit a list of expenses—to be paid by the employer—relating to his motion seeking spoliation sanctions. See Goodman v. Paxair Servs., Inc., 2009 WL 1955805 (D. Md. July 7, 2009).

            It is imperative that businesses identify key players and issue litigation holds once litigation is anticipated or initiated. All discoverable electronic evidence is to be retained, thereby suspending the normal document-retention and destruction procedures.  Mirror images of key players’ hard drives should be made.  The litigation hold should regularly be re-issued to keep all new staff aware, as well as reminding key employees. An adverse-inference instruction to the jury is very damaging and difficult to overcome, since the jury is instructed to infer that the spoliator purposly destroyed the evidence upon realizing it was not in its favor.

 

NLRB CLARIFIES RULES FOR FINDING SUPERVISORY STATUS UNDER THE LABOR ACT

 The NLRB significantly increases the number of employees under the Labor Act who will be deemed “supervisors,” by defining a “supervisor” as one who “assigns” and is given significant overall duties, is “responsible” or accountable for individual decisions and uses “independent judgment.” 

The National Labor Relations Board recently set forth guidelines for determining whether an individual is a supervisor under the National Labor Relations Act.   

In Oakwood Healthcare, Inc., 348 NLRB No. 37 (2006), the Board held that twelve RNs assigned as “permanent charge” nurses by their employer, exercised supervisory authority in assigning employees within the meaning of Section 2(11) of the Act, and therefore, should not be included in the bargaining unit. In 2001, the Supreme Court criticized the Board’s interpretation of the term “independent judgment” when it reviewed NLRB v. Kentucky River Community Care, 532 U.S. 706 (2001).  The Board used Oakwood Healthcare, Inc. as an opportunity to revisit and clarify its interpretation of the term “independent judgment” along with the terms “assign” and “responsibly to direct,” as set forth in Section 2(11).  The Board also issued two other decisions on the same day applying the guidelines from Oakwood.  

Under the National Labor Relations Act “supervisors” are excluded from most of the Act’s protections.  A “supervisor” is defined through different functions, and the Board focused its analysis on three terms in particular:  Assign, responsibly to direct, and the supervisor’s use of independent judgment when exercising. 

Assign 

The Board defined the term “assign” as the act of “designating an employee to a place (such as a location, department, or wing), appointing an individual to a time (such as a shift or overtime period), or giving significant overall duties, i.e. tasks, to an employee.”  Additionally, the Board determined that an employee who gives only, “ad hoc instruction that an employee may perform a discrete task” will not typically fall within the Act’s definition of a supervisor. 

Responsibly to Direct 

The Board found that “responsible” required a finding of accountability to the point where the putative supervisor had the authority to direct work and take corrective action, in addition to any adverse consequences he/she may face in the direction of other employees.  The Board provided an example of “responsibly to direct,” “If a person [who is both responsible and using independent judgment] on the shop floor has men under him, and if that person decides what job shall be undertaken next or who shall do it, that person is a supervisor.”

 Independent Judgment 

The Board defined “independent judgment” to be judgment exercised without the control of another authority.  The Board went on to note that the degree of discretion exercised must rise above the “routine or clerical” in order to constitute “independent judgment” under the Act.  Under the Act, independent judgment exercised using professional or technical expertise will suffice. 

The Decision 

The Board, in finding that the twelve permanent charge nurses were supervisors under the Act, determined that as a regular part of their duties as charge nurses, they assigned nursing personnel to the specific patients for whom they would care during their shift.  According to the Board, such assignments consisted of giving “significant overall duties” to an employee and met the statutory definition of “assign” under the Act.  The Board also found that the Employer met its burden, showing that its charge nurses exercised independent judgment in making such assignments. The Board further stated that employees, who work supervisory shifts only on a rotating basis, may not qualify as supervisors under the Act. The Board noted that the supervisory status of such employees would depend on the frequency and consistency of the supervisory shifts. 

Tips for Employers 

The Board’s decision in Oakwood has many implications for employers. It may now be easier to establish the supervisory status of some employees.  Supervisory employees do not enjoy the protections of the Act and can not be included in a bargaining unit with rank and file employees. This will likely lead to more threshold challenges over unit composition and post election objections and voter challenges. However, the high level of scrutiny used in determining the outcome of these cases will lead to a very detailed, fact specific examination of each situation. The party urging supervisory status will have the burden of proof on the issue. Therefore, employers who wish to exclude certain employees from the unit on the grounds he/she is a supervisor must be prepared to produce evidence that the employees meet the criteria under Section 2(11) as interpreted by the Board. Nonunion employers should carefully review and clarify particular job descriptions, responsibilities, and any uncertain classifications or terms about whether certain employees exercise supervisory authority. This is important in developing and implementing union avoidance strategies. Unionized employers should also reevaluate whether certain employees are or are not in supervisory positions under the new terms laid out by the Board.