A String of Harassment Lawsuits Aimed Right at Tesla

Many only know Tesla as a company who has goals of changing the world, but more and more are rethinking their opinion of the company as news headlines point out another major component in the Tesla workplace: harassment. The company proudly claims to be forward thinking on environmental matters, dedicated to diversity and center-left politics, and the many ways in which advanced technology can support progress in all these areas of concern. But many are now labeling the company as being caught up in the “bro” culture – a culture that can still be found in many offices throughout California. Other companies experiencing similar accusations include: Uber, Google, Social Finance, Greylock Partners, etc. Major news outlets like Bloomberg and CNBC have actually implied that the problem is worse than we think.

The latest case at Tesla involves Jorge Ferro, an assembly line worker who claims he was harassed because he is gay. He claims he was taunted, told to “watch your back,” and eventually fired. Ferro states that an old scar (from a 16-year old injury) drew the notice of Tesla Human Resources, who promptly dismissed him. But Ferro alleges he was actually fired due to retaliation for reporting the harassment.

When contacted about the issue, Tesla first attempted to side step the issue by claiming that both Ferro and his supervisor were not employees, but independent contractors. They also insisted that Tesla, as a company, takes all forms of discrimination and harassment very seriously. In fact, the Guardian reported that the company responded in even further detail by referencing their own track record, “…no company on Earth [has] a better track record than Tesla…they would have to have fewer than zero cases where an independent judge or jury…found a genuine case of discrimination.”

While Tesla insists that the recent influx of harassment and discrimination claims are due to their own notoriety and the opportunity this presents for media outlets and attorneys seeking acclaim and higher profiles, there have been other accusations of similar behavior in the last few years.

Just a week before Ferro’s claim surfaced, three former African-American workers filed a California lawsuit that they were subjected to verbal and written racist slurs.

Another instance involved a former Tesla engineer who claimed she was fired because she presented examples of gender discrimination at the company to the human resources department.

If you need to discuss instances of discrimination in the workplace or have questions regarding harassment on the job, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

Harassment Claims Settled When California Assembly Paid $100,000

The California Assembly recently paid $100,000 to settle harassment, discrimination, and retaliation claims that were filed in 2014 against Steve Fox who, at the time, was an Assemblyman. Nancy Kathleen Finnigan, former legislative director for Fox, claimed he exposed himself to her and then terminated her employment when she reported his behavior.

The settlement was reached in April and effectively closed out the lawsuit. While settlement documentation does state it resolves the case, it does not contain specifics regarding Finnigan’s harassment claims against the then-Assemblyman. But Finnigan did allege in the lawsuit that at one point during her employment, she arrived at Fox’s apartment in order to pick him up for a legislative session when he overslept where she found him with his pants unzipped and unbuttoned and not wearing any undergarments. Finnigan also claimed that Fox made a number of unwanted sexual advances against another employee as well as requesting that she do work that was not related to her legislative duties in the office. The suit also included allegations that Finnigan was fired for reporting that harassing behavior.

Fox was elected in 2012 on the Democratic ticket in a northern Los Angeles County district. He had previously run as a Republican. After serving one term, he was defeated in 2014 and again in 2016 by Tom Lackey, Republican Assemblyman. Neither party wished to comment on the settlement agreement.

This news was released in the same week a letter was signed by close to 150 women (including lobbyists, lawmakers, and legislative staff) detailing just how pervasive the culture of harassment against women is in California’s Capitol. Various women told their stories of harassment including being groped and touched without consent, enduring inappropriate comments about their bodies or abilities, insults, sexual innuendo disguised as jokes…all of which undermined their professional positions and downplayed their capabilities on the job. The letter did not make accusations against any men by name.

The Finnigan settlement named Fox and his former Chief of Staff Ann Turtle, the Assembly and Lynda Roper, the Assembly’s deputy administrative officer, as Defendants. It wasn’t the first time similar accusations were made against Fox either. In 2015, the Legislature paid $110,000 to Kristina Zahn, former employee, who alleged she was asked to do “other” work on legislative time, not paid overtime, etc.

If you have questions about how to handle harassment in the workplace or if you need help handling a harassment lawsuit, contact one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

ERISA Deal’s $42M to St. Joseph’s Nurses Gets Initial OK

In recent news, the St. Joseph’s Nurses received preliminary court approval for a $42 million settlement of claims. The New Jersey St. Joseph’s Healthcare System nurses won the settlement regarding claims that the system underfunded the pension plan. The deal was reached after the court stated that church-affiliated entities are exempt from ERISA (Employee Retirement Income Security Act).

The initial approval was offered by U.S. District Judge John Michael Vasquez. The nurses indicate that the settlement would reduce the plan’s alleged underfunding by approximately 50%. The final fairness hearing was scheduled for March of 2018.

The deal was proposed in August by the St. Joseph’s nurses following a Supreme Court ruling that extended ERISA’s exemption for religious entities, which effectively negated one of the key arguments for the plaintiffs in the case. The nurses advised the court that St. Joseph’s already put an amount slightly more than the settlement amount into the plan. Under the settlement agreement, the hospital would also be required to ensure all benefits are paid out for the next seven years (at a minimum). 

It is meant to provide certain and immediate relief to the class through removing the uncertainty associated with continued litigation and improving the plan participants’ retirement security.

The suit is the result of a consolidation of two proposed class actions, both filed in May of 2016. One filed on behalf of Donna Garbaccio, a nurse out of the Paterson, New Jersey St. Joseph’s Hospital and Medical Center from 1978 through 1998. This suit claimed that the pension plan was underfunded by more than $180 million. The second was filed on behalf of Mary Lynne Barker, nurse for St. Joseph’s from 1968 through 2003, Anne Marie Dalio, nurse for St. Joseph’s from 1984-1994, and Dorothy Flar, nurse for St. Joseph’s from 1990 through 1995. This suit claimed the plan was underfunded by a more substantial $210 million.

Plaintiffs alleged that St. Joseph’s violated ERISA law by denying protections to participants and beneficiaries of the pension plan through incorrect claims that the plan was exempt under ERISA due to qualifying as a “church plan.” This was one of the plaintiffs’ main arguments – that a church plan must be established by a church to qualify for the ERISA exemption. 

In the Supreme Court’s June 5th opinion, ERISA’s religious exemption provision was extended to plans that are maintained by church affiliates – even when an actual church did not actually establish the plan. This decision overturned federal circuit court rulings that the exemption would only apply in cases where the church itself actually established the benefit plan.

If you have questions about ERISA violations or if you need to discuss the intricacies of California employment law, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

Judge Refused to Rethink Certification of Class in Franklin Templeton ERISA Suit

U.S. District Judge Claudia Ann Wilken refused to rethink the certification of a class of Franklin Templeton retirement plan participants. Plaintiffs allege the investment management company favored its own funds over cheaper and more efficient outside funds – in violation of the Employee Retirement Income Security Act (ERISA).

The company, Franklin Resources, Inc. filed a motion that the court amend the order to deny lead plaintiff Marlon H. Cryer’s motion for class certification. The motion was denied with the judge ruling that a class action waiver in a severance agreement signed by Cryer cannot be used against him since claims he brought were in accordance with ERISA Section 502(a)(2) and on behalf of the plan. She specifically stated that the decision regarding such a claim’s filing under that particular section of code couldn’t be bargained away without the consent of the plan.

Preventing individual plan participants from bringing Section 502(a)(2) claims as a class action could effectively prevent fiduciaries from being held accountable in court in the event that they are involved in wrongdoing. The judge previously ruled that the claims Cryer made were typical of the proposed class and that the common issues of law were appropriately identified. It was also noted that if each of the thousands of proposed class members were forced to litigate individually, it would result in a significant risk of inconsistent judgments.

The class members include plan participants from July 28, 2010 through the date of an eventual judgment.

The lead plaintiff, Cryer, is a former Franklin Templeton employee. He was terminated from his position in February 2016 and filed the lawsuit the following July alleging the company violated its fiduciary duty to its plan participants. Specifically, he claims that the company invested in in-house funds with unreasonable fees that were, in fact, paid to the company itself and some of its subsidiaries. The fees associated with the in-house funds were significantly higher than the fees that were being charged by other, similar mutual funds that were available.

Cryer alleges that retirement plan participants were offered a Franklin Templeton money market funds in the place of a stable value fund, which is not the norm and resulted in higher fees that were routed back to the company.

If you have similar allegations or need to ask questions about ERISA violations, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

Class Certified in Deutsche Bank ERISA Suit

Class certification was granted by a New York federal judge in the ERISA suit against Deutsche Bank. Class members are participants of a Deutsche Bank Americas Holding Corp. 401(k) plan and are accusing the bank of mismanaging the plan in violation of ERISA or the Employee Retirement Income Security Act.

Class certification was granted by U.S. District Judge Lorna G. Schofield enabling the case to go forward as a class action representing participants and beneficiaries of the Deutsche Bank Matched Savings Plan after December 21, 2009, the individual accounts of which suffered losses. Lead plaintiffs and class members share an interest in remedying mismanagement and claims originate from the same events, i.e. participation in the plan. It was also noted that there are questions of law or fact that are common to the class. Together the judge ruled this warranted class certification.

Questions Seeking Class-wide Resolution:

·       Whether or not each defendant was a fiduciary

·       Whether or not the company’s process for assembling the plan menu and investment options was tainted by conflict of interest/imprudence

·       Whether or not the company’s process for monitoring the plan menu and investment options was tainted by conflict of interest/imprudence

·       Whether the company behaved imprudently when failing to control recordkeeping expenses

The resolution of these questions should generate common answers that would drive the investigation of defendant liability.

The company argued that the plaintiffs did not have an adequate understanding of the case – depending on their lawyers heavily for specifics, but the court found this argument unpersuasive considering that the claims involve technical financial decisions that would be difficult for plaintiffs to answer questions about on their own.

Plan participants were offered 22 core investment options. 10 of the options were mutual funds affiliated with DBAHC – proprietary funds that charged investment management and administrative fees that are actually paid out to DBAHC subsidiaries. (*Information regarding core investment options current as of December 2009).

Plaintiffs also alleged that the bank favored high-cost proprietary funds that were to their own benefit – at the expense of plan participants. According to Judge Schofield, the plan has about 22,000 participants and 10,000 former participants that were affected by the design and management of the plans.

Plaintiffs allege the bank served as fiduciaries of the plan and that they breached their duties of care and loyalty when selecting and monitoring plan investments biased for the bank and against plan participants. They also allege that DBAHC engaged in self-dealing transactions, which are prohibited.

If you have questions regarding class certification or ERISA, please get in touch with an experienced California employment law attorney at Blumenthal, Nordrehaug & Bhowmik.

ERISA Suit Against Ascension Health Settled at $29.5M

In early September 2017, Ascension Health agreed to a $29.5 million dollar settlement deal to settle claims in putative class lawsuits based on allegations that the faith-based health care company denied ERISA (Employee Retirement Income Security Act) protections to plan participants and beneficiaries.

The judge granted preliminary approval of the proposed class action settlement in consolidated putative class action suits when participants and beneficiaries of the Wheaton Franciscan Retirement Plan requested it in September. Ascension Health, a Missouri based organization, acquired the Wheaton Franciscan Services’ health care subsidiaries in the southeastern region of the Wisconsin state in spring of 2016.

According to plaintiff statements in court documents, the company guaranteed $29.5 million payment of benefits to members of the proposed settlement class in the event that trust assets attributable to the plan were insufficient to cover benefits.

In the original approval bid, plaintiffs made it clear that the obligation held by Ascension Health under the plan benefit guarantee would continue so long as the plan was sponsored by any of the releases. It was further noted that if plan assets and liabilities covering the settlement class members was transferred to a successor due to any type of corporate transaction, Ascension Health should ensure the successor honored the commitment/guarantee.

Plaintiffs filed suit initially in April 2016. This was followed by another putative class complaint in June 2016. The two cases were consolidated in January 2017. Allegations stated that Wheaton and Ascension denied ERISA protections to plan participants while claiming that the plan qualified as an ERISA-exempt “church plan.”

Plaintiffs alleged that the Defendants underfunded the plan by over $134.5 million. Allegations also stated that plan participants were improperly required to finish 5 years of service prior to becoming fully vested in their accrued benefits. In addition, plaintiffs state that the organization violated ERISA when they decreased accrued benefits by adding several amendments and filing to provide class members with required reports and/or statements.

The consolidated action was stayed by the court, pending the outcome of Advocate Health Care Network v. Stapleton in the U.S. Supreme Court. In June 2017, the opinion was issued stating that pension plans do not have to be established by churches in order to qualify as ERISA-exempt church plans.

Once this opinion was issued, the parties reached an agreement to settle the case.

If you have questions about ERISA or your rights in regards to the retirement plans provided by your employer, please get in touch with one of the experienced employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

Allina Health System Hit with ERISA Suit in Connection to Retirement Plans

In August 2017, Allina Health System faced a proposed class action in Minnesota federal court filed by former employees alleging that Allina Health flouted ERISA (the Employee Retirement Income Security Act). The employees allege that Allina failed to make sure that the options available were not detrimental to retirement plan participants.

Judy Larson, Janelle Mausolf, and Karen Reese are all ex-employees of Allina Health System. All named Allina Health System (provider of medical care in Minnesota and Wisconsin), the Allina board of directors, the company’s chief administrative officer, chief human resources officer, and entire retirement committee as defendants in the suit. Within the extensive complaint (91 pages in full), the plaintiffs stated that the two defined contribution retirement plans they have an issue with, have more than $1 billion in combined assets, making them jumbo plans. In fact, this makes them amongst some of the largest plans in the entire nation. The sheer size of the plans means Allina has significant buying power regarding expenses and fees that are charged against their participants’ investments.

In spite of this and the opportunity it created to potentially reduce the plans’ costs and otherwise manage the offered investment options in the most prudent fashion, Allina abdicated its fiduciary oversight to Fidelity, the plans’ trustee.

Under Fidelity’s oversight, the plans saw high-cost, non-Fidelity mutual funds through which Fidelity themselves received millions in revenue sharing. The situation also enabled Fidelity to add any Fidelity mutual fund that was available no matter if the funds duplicated other options or not, had higher than norm costs, had low performance, or were otherwise not beneficial to plan participants.

In the end, the plan participants ended up paying fees that were much higher than those from comparable retirement plans with similar asset amounts. The plaintiffs allege the Allina breached its duties of loyalty and prudence through a systematic failure to monitor performance and costs for the retirement plans’ investment options and by including high-cost options that were not only not beneficial, but actually detrimental to participants. The company’s failure to negotiate lower fees and expenses associated with the plans and failing to swap out high-cost/low performance options for better performing, more fiduciary prudent options was also noted in the plaintiffs’ allegations.

The plaintiffs in the case seek class action status that would include tens of thousands of people.

If you have similar allegations or need to ask questions about employment law violations in the workplace, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.