June, 2010 Issue of Legal Trends

Legal Trends Focuses on Recent Race Discrimination Case and Latest High Court Opinion

In this issue of Legal Trends, we highlight a recently filed lawsuit against American Bottling Company alleging that it maintained a hostile work environment, and two significant court opinions. The first discusses the taxability of severance payments, and the latter held that damage caps on medical malpractice cases were unconstitutional.

Employment Law

Hollander Law Offices Files Suit Against American Bottling Company For Hostile Work Environment.

For Robin Murray and his fellow African American co-workers, going to work has been anything but a walk in the park. Murray has been a forklift operator at the American Bottling Company, (ABC), Northlake, Illinois plant since September, 2007. The company manufactures and distributes beverages such as Snapple and Dr. Pepper. Almost from the outset of his start date, Murray claims that he was subjected to a racially hostile work environment.

Murray was primarily supervised by three Hispanic managers. One of his supervisors called him and the other African American forklift operators, “burro,” Spanish for donkey. Another supervisor rode around the plant in a go-kart, and would slap a stick behind the black employees like he was a plantation owner.

Other employees have testified during the course of the case that they were subjected to other racial slurs, such as the n-word, monkey, and clean-up bitches. The factory workers also claim that the supervisors gave better work assignments to their Hispanic counterparts. Racial hostility boiled to the top when the employees found racist graffiti written across their lockers in January and May, 2009.

The employees testified that they tried to call Human Resources about the discrimination, but because they worked the night shift, there was no one to take the call. Complaints to their supervisors and union steward did nothing to alleviate the situation.

On December 16, 2009, Murray and six other African American forklift operators filed a civil rights lawsuit against the company for race discrimination. The suit was expanded shortly thereafter to include two more co-workers, for a total of nine employees. Archie Hayes, another one of the plaintiffs, said “I felt like it was kind of setting us back 100 years.” Most of the plaintiffs are still employed at the plant because they cannot find work at a comparable wage and need to pay bills.

This is not the first time that ABC has had to confront the race issue. In 2003, the EEOC filed suit against the company for maintaining a racially hostile work environment. In December, 2004, the company and the EEOC reached an agreement, known as a consent decree, wherein ABC agreed to take steps to

stop the racial harassment. Apparently, that was not successful as in June and July, 2009, seven other lawsuits involving nine plaintiffs, were filed against ABC alleging that they, too, were subjected to a racially hostile work environment. Those case were ultimately resolved and dismissed.

For now, Murray and his co-workers, continue to work at the plant as the case progresses. Two of the Hispanic supervisors were terminated on December 1, 2009, but neither for uttering the racial epithets. The third supervisor is still employed by ABC. The plaintiffs are seeking compensatory damages and $1,000,000 each in punitive damages in the case. No trial date has yet been set.

Federal District Court Rules That Severance Payments Are Not Taxable.

In this economy, many employees have lost their jobs.
When they do, companies often extend severance payments to them in exchange for a release of claims. While the loss of employment may strike an employee hard, a recent court ruling holding that such payments are not taxable income, may soften the blow.

Quality Stores, a large retail chain concentrating in agricultural products, closed 60 stores when it faced an economic downturn. It initially terminated about 75 employees, and later, all of its remaining employees who were left on the payroll. The terminated employees received severance payments, and the company later filed refund claims for overpaid employment taxes.

The Court ruled that the wages should not be characterized as wages for employment tax purposes. The Court reasoned that since the payments were made to support the workers who lost their ability to earn wages, it did not make sense to impose taxes on these benefits. The Internal Revenue Service is expected to appeal the ruling.

Employees who have brought discrimination claims against a former employer, and later settle them, similarly face the same dilemma. In this situation, the employee who is likely unemployed, resolves her claim. Once attorney’s fees and costs are deduced, and taxes are withheld from the net proceeds, the client obtains a mere fraction of the gross settlement. Though legislation has been proposed to ease this burden for these plaintiffs, Congress has yet to pass any law to cure this problem.

Personal Injury Law

Illinois Supreme Court Strikes Down Caps On Medical Malpractice Cases

In 2005, the Illinois legislature passed a law limiting the amount of damages which could be recovered in a medical malpractice case. The law provided that an injured party could not recover noneconomic damages against a doctor in excess of $500,000, and no more than $1,000,000 against a hospital. Noneconomic damages include losses for things such as pain and suffering and disability, as opposed to lost wages.

In a lawsuit filed in November, 2006 by Abigail Lebron, the plaintiff claimed that the hospital and doctors who were involved during her childbirth were negligent. As part of her lawsuit, the plaintiff asked the court to determine that the cap on noneconomic damages was unconstitutional.

The Illinois Supreme Court reviewed the case. It reasoned that noneconomic damages were difficult to assess, but that the problem was not alleviated by placing noneconomic damage caps on all cases. The Court further reasoned that the law impinged on the authority of the courts – if a verdict was excessive, the trial court has the authority to reduce an excessively large jury verdict with the consent of the plaintiff. If the plaintiff does not consent, the trial court could order a new trial. Chief Justice Thomas Fitzgerald, writing for the majority, held that since the legislature overstepped its bounds by violating the separation of powers doctrine encroaching on judicial authority, the law could not stand.

While supporters of the law argue that doctors will flee the state because of excessively large medical malpractice insurance premiums, in fact, insurance carriers are more profitable than ever. Further, other research has demonstrated that damages caps do not reduce the overall cost of health care.

For now, damage caps on medical malpractice claims and other types of personal injury cases do not appear to be on the horizon.


Office News

The Law Offices of Eugene K. Hollander is proud to announce that Gina M. Shawver has joined the firm as an associate. Ms. Shawver is a 2005 graduate of Purdue University and a 2009 graduate of Valparaiso University School of Law. She concentrates her practice in employment law and personal injury cases.

About the author

Eugene Hollander is a trial attorney who currently heads his own law office in Chicago. Mr. Hollander has tried numerous cases in the state and federal courts. The Law Offices of Eugene K. Hollander is a full service law firm, concentrating its practice in employment discrimination claims, personal injury and medical malpractice suits, and various types of commercial litigation. For more information, visit our web site at www.eugenekhollanderlaw.com, or contact us directly at:

The Law Offices of Eugene K. Hollander
33 N. Dearborn, Suite 2300
Chicago, IL 60602
E-mail: EHollander@ekhlaw.com

Copyright © 2010 The Law Offices of Eugene K. Hollander. This publication may be considered advertising material under the Illinois Code of Professional Responsibility and is not intended to create any attorney-client relationship. The reader should not rely upon any statement or opinion as legal advice, but rather, should consider it as generally informative.