On January 11, 2012, the U.S. Supreme Court issued one of the most significant religious liberty decision in recent times.  In Hosanna-Tabor Church v. Equal Employment Opportunity Commission, No. 10-533, 2012 U.S. LEXIS 578, (Jan. 11, 2012), a unanimous decision, the Court recognized for the first time a “ministerial exception” to employment discrimination laws, saying that churches and other religious groups must be free to choose and dismiss their leaders without government interference.

Before this case, the high Court had never “had occasion to consider whether this freedom of a religious organization to select its ministers is implicated by a suit alleging discrimination in employment.”  The Courts of Appeals, in contrast, had addressed the issue extensively.

In Myers v. TooJay’s Management Corp, 640 F.3d 1278 (11^th Cir. May 17, 2011), the Eleventh Circuit  Court of Appeals held that the Bankruptcy Code does not prohibit a private employer from refusing to hire someone because that individual filed a bankruptcy petition.  While government employers are prohibited from denying employment to a person because of his or her bankrupt status, private employers are not.

 

According to the Court, the Bankruptcy Code does provide protection for actual employees – but not potential employees – of private employers.  The plain language of the statute does not provide a cause of action against private employers for persons who are denied employment due to their bankrupt status.

 

But if the person filing for bankruptcy is employed a the time of filing the petition, the employee is protected, irrespective of whether the employee works in the public or private sector.  Government and private sector employers are prohibited from discriminating against those persons who are already employees when the bankruptcy petition is filed.

 

Denise J. Bleau, Esq. 

Manager Litigation Department 

dbleau@warddamon.com

A New York couple that had divorced in 2006 was back in court after the former husband sued his former wife to set aside his marital settlement agreement based on what the former husband claimed was a “mutual mistake”.  The “mistake”, the former husband alleges, was that the account that the parties had with Bernard Madoff was real.

The couple split after 33 years of marriage.  One of the marital assets subject to equitable distribution was funds that the couple had invested with Bernard Madoff.  The couple split their marital assets pursuant to a marital settlement agreement but the former husband kept much of his funds invested in his account with Madoff.  The former wife, who had no desire to continue to invest with the former husband, received her equitable distribution award in cash. 

As is set forth in the opinion of the New York Supreme Court, Appellate Division:

In the amended complaint, the former husband alleges that at the time of their agreement the parties believed that they owned an account (hereinafter referred to as the “Madoff Account”) with Bernard L. Madoff Investment Securities which was their largest asset (purportedly $5.4 million as of the cut-off date). Of $6,618,000 that plaintiff paid defendant pursuant to the 2006 agreement, $2.7 million was attributable to defendant’s share of what the parties believed to be their $5.4 million Madoff Account. This account was titled in plaintiff’s name. Plaintiff alleges that in reality, there was no such account because Madoff was running a Ponzi scheme. . . He also asserts a claim for unjust enrichment/restitution claiming that the former wife has been unjustly enriched based on the mutual mistake concerning the Madoff account and that she should pay the former husband restitution that “would put the parties in the position they intended.

After the Madoff ponzi scheme came to light, the former husband learned that his share of the investment funds were worthless.  The former husband then contacted the former wife, advised her that he had been victimized by the Madoff fraud and filed an action to modify the terms of their marital settlement agreement on the theory that the parties were mistaken as to the existence of the Madoff account.  The former husband is asking a court to require the former wife to turn over to him millions of dollars that she received in cash under the marital settlement agreement.  From the former husband’s perspective, there was a mistake.  From the former wife’s perspective, the former husband made a bad business deal. 

Earlier this year, the New York court of appeal declined to dismiss the former husband’s lawsuit.  The court credited the former husband’s argument (for purposes of evaluating the sufficiency but not the merits of his claims) that the parties were mistaken as to the existence of an account.  According to the former husband, the funds that were available to him were really nothing more than funds deposited by a “more recent investor” in the ponzi scheme. 

There was a dissenting opinion in the court which points out that at the time of the divorce, the amounts invested by the parties could have been withdrawn and, therefore, the mistake upon which the former husband relied did not exist when the parties signed the marital settlement agreement.  The dissent also argued that the approach taken by the court in this unique case undermined the desire to achieve finality in divorce cases.

Marital settlement agreements are subject to the same laws and rules of interpretation as any other contract.  In this case, the former husband is attacking the marital settlement agreement as a contract under a legal doctrine known as mutual; mistake.  While the court of appeals allowed the former husband’s claim to go forward, there has been no ruling on the merits of this case. 

The former husband’s position is that the Madoff account never really existed.  The issue is whether the demise of the account as a result of the fraud which came to light after the divorce was final constitutes grounds to revise the parties’ marital settlement agreement.

Under Florida law concerning contracts and marital settlement agreements, the parties are responsible for evaluating the assets and liabilities that are proposed to be awarded under a marital settlement agreement.   On the doctrine of mutual mistake, Florida courts have said, that the doctrine of mutual mistake was not created to relieve a party of “agreements entered into improvidently”.  The parties’ marital settlement agreement did not provide for the equal distribution of the Madoff account.  It would appear that the former husband chose to continue to invest his funds with Madoff after the divorce.  As stated by the dissenting opinion, “the former husband’s retention of the Madoff account and subsequent losses render this case no different than the legion of cases denying a spouse’s request to open up a divorce settlement where the final value of an asset was not what the parties believed at the time of the divorce.

The marital settlement agreement did not specify how the former husband was to pay the former wife.  Under those circumstances, the former husband may have difficulty when the time comes to try his case.  The former husband could have elected to liquidate the Madoff investment and invest the funds elsewhere at the time of divorce but he elected not to do so.  Are these circumstances much different than a spouse who elects to buy out his or her spouse’s marital interest in a business that later fails?  If the business later fails should that give rise to an action attacking the marital settlement agreement and the equitable distribution award? 

If the former husband is successful, this case will open the door to attacks on other agreements where the parties’ assumptions about the value and quality of assets prove wrong.  As for morals of this story, there are many – too numerous for this venue.

I have drafted many marital settlement agreements, prenuptial agreements, cohabitation agreements and post nuptial agreements and spent hundreds of hours litigating contested cases in Martin, Palm Beach, Broward and Miami Dade counties.  Although much of my practice involves divorce litigation, my ability to negotiate and draft comprehensive and well written agreements is as important to my clients as my skills in a courtroom.  Judges in Palm Beach County like to see qualified and well trained family lawyers in their courtrooms but they would prefer that the cases are settled voluntarily. 

The New York cases discussed here presents what appears to be a unique set of circumstances.  Nevertheless, the implications of this case can be addressed by a comprehensive and well drafted divorce settlement agreement.

Martin Kofsky is a partner with Ward Damon.  He is an experienced family law attorney handling divorce and other family law matters in Palm Beach, Broward and Miami-Dade counties and the treasure coast.

Sally Still

It is a common misperception that salaried employees don’t have to be paid overtime. Unfortunately, that’s not true.

Even though you pay your employees a salary, they may still be entitled to statutory premium pay for hours over forty in a work week. Salary is only part of the equation.

Many employers do not understand that salaried employees are not necessarily “exempt” from the Fair Labor Standards Act’s (“FLSA”) requirement to pay additional compensation when an employee works more than 40 hours in a week.  What determines an employee’s right to overtime compensation depends upon two things: first, whether they are paid on a salary basis, and second, the nature of their duties.  

In fact, overtime liability may present the single greatest risk of litigation to a  Florida  employer simply because South Florida leads the nation in FLSA lawsuit filings. The details of the various actual exemptions to the overtime law that permit employers to avoid overtime are identified in an article by Sally Still “Salaried Doesn’t Always Mean Exempt: How To Break The Bad News To Decisionmakers” from the Thompson Publication, Fair Labor Standards Handbook.  

Follow the link in the highlighted text after this sentence to my recent article explaining that “salary” and “exempt from overtime” are not synonymous, and the discussion of the exemptions from the requirement to pay overtime. Salaried Doesn’t Always Mean Exempt Article

Employers should have periodic audits of their employee’s position descriptions, and actual duties, to assure that they are complaint with this technical law. We can assist with these reviews, and thus help avoid costly lawsuits.

Questions about this overtime law or other employment matters may be answered by contacting Ms. Still at 561-842-3000, or at sstill@warddamon.com.

I. JEFFREY PHETERSON

In a unanimous decision, the US Supreme Court, Justice Antonin Scalia overturned a lower appellate court ruling that had reversed a favorable jury verdict for an employee alleging discrimination based on hostility to his military service. Staub v. Proctor Hospital, No. 09-400, U.S. Supreme Court (March 1, 2011).

By Martin Kofsky, Matrimonial and Family Lawyer

On September 30, 2010, the Supreme Court of Florida issued its opinion in
Kaaa v. Kaaa, 2010 Fla. LEXIS 1628 (Fla. Sept. 30, 2010). In Kaaa the Court considered whether the post-marital appreciation of a piece of real property that was purchased prior to marriage was a marital asset subject to equitable distribution.

By I. Jeffrey Pheterson

 

A Florida appellate court held that the denial of the right to volunteer in a school as a mentor, after, and separate from, the employee’s termination, may be the subject of a suit for retaliation under Title VII.

The question – Does an ex-employee’s status as a non-paid volunteer disqualify her from raising a Title VII claim, or is she able to establish that material adverse action had been taken against her, even though it was only a volunteer position.

The Court found that Appellant’s status as a former employee qualifies her for Title VII protection from her former employer’s allegedly retaliatory postemployment actions in Gates v. Gadsden County School Board, 2010 Fla. App. Lexis 12162; 35 Fla. L. Weekly D 1865, (Fla. 1st DCA) August 18, 2010.
Gates (Appellant) was a schoolteacher in the Gadsden County School District who resigned from her teaching position. She filed a Title VII claim against her former employer. Despite her resignation, she continued to participate in a volunteer mentoring program within the School District. After her resignation, the School Board prohibited her from continuing as a volunteer. She sued, claiming the School Board violated the “anti-retaliation arm of Title VII” by taking “adverse action” against her when it barred her from the mentor program.

The School Board won at the trial level, as the court found (1) As a volunteer, Appellant could not maintain a claim under the Title VII anti-retaliation provision; and (2) Appellant was unable to demonstrate the School Board took “materially adverse employment action” against her. Summary judgment was entered for the employer.

The appellate court reversed, holding, “As to the first point, the circuit court was correct in finding volunteers do not qualify for protection under Title VII. However, Appellant is a former employee, and former employees enjoy Title VII protections where they can establish the requisite elements of a claim. Therefore, her volunteer status is irrelevant to this point.”

The appellate court found that Gates, as a former employee, may have been retaliated against, which violated Title VII. The court found, “Because Appellant is a former employee who allegedly suffered adverse, retaliatory action as a result of her filing a Title VII claim against her former employer, she is entitled to seek protection pursuant to the Title VII anti-retaliatory provision. Accordingly, the trial court erred in determining Appellant could not, as a matter of law, maintain a Title VII anti-retaliation claim.”

The message from this case is clear. Yogi was right on the money. It ain’t over til’ it’s over. Even after an employee has been terminated, an employer must be cautious as to the actions taken against an employee who has claimed discrimination.

Although it may not seem logical to managers, the reach of this anti-retaliation protection is a long one. Care should be exercised, and employers should consult with their human resources personnel or legal counsel before acting against terminated employees who have some measure of protection as they have filed a charge of discrimination with the EEOC, the Florida Commission on Human Relations or some other enforcement agency.

Link to case:

http://opinions.1dca.org/written/opinions2010/08-18-2010/09-3636.pdf

By

Denise J. Bleau, Esq.

Employers defending FLSA lawsuits brought under the Fair Labor Standards Act (FLSA) need the help of an experienced FLSA lawyer to defend lawsuits filed in Palm Beach, Broward, Miami-Dade and Martin County, Florida. Depending upon the kind of business that they are in, employers may have different obligations under the FLSA. For example, the obligations of a transportation company under the FSLA may be different from the obligations of a municipality or a hotel under the FSLA.

Employers or companies that provide local transportation for tourist or visitors from out of state should be aware of recent developments in the overtime laws.

In an action alleging violations of the overtime pay provisions of the Fair Labor Standards Act by an airport shuttle driver, the federal Eleventh Circuit Court of Appeals upheld a ruling in favor of the employer, finding that the airport shuttle van drivers were exempt from, or not covered by, the overtime provisions of the law. Abel v. Southern Shuttle Services, http://caselaw.findlaw.com/us-11th-circuit/1538787.html?DCMP=NWL-pro_11th 

The FLSA exempts from the overtime pay requirement any employee for whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of the Motor Carrier Act (“MCA”) exemption.  The key to this exemption is whether the Secretary has the power to regulate, not on whether the Secretary has actually exercised such power. 

There are two requirements for an employee to be subject to the motor carrier exemption:  (1) his employer’s business must be subject to the Secretary of Transportation’s jurisdiction under the MCA; and (2) the employee’s business-related activities must directly affect the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the MCA.

Under certain circumstances, purely intrastate local transport of passengers to and from an airport may constitute interstate commerce and thus bring the transportation company within the jurisdiction of the Secretary of Transportation.  The Court in Abel v. Southern Shuttle Service concluded that this was such a case.

“Many of Southern Shuttle’s passengers to and from the airport have either just flown from, or are about to fly to, places outside the state of Florida.   A large portion of Southern Shuttle’s reservations are made via travel websites on the internet.   Travelers buy package deals from these internet travel companies that include hotel accommodations and airfare in addition to transportation to and from the airport.   The internet travel companies provide their package-deal customers with a voucher for free airport transportation, which the customers use to board Southern Shuttle’s airport shuttles.   Southern Shuttle then uses the collected vouchers to invoice the internet travel company for payment.   In other words, Southern Shuttle’s local transport of these package-deal travelers has a ‘practical continuity of movement’ with the overall interstate journey.”

Furthermore, Southern Shuttle’s arrangement with internet travel companies to provide airport shuttle service for their package-deal customers meets the “common arrangement” requirement discussed in prior case law. “Indeed, Southern Shuttle’s voucher system resembles in many respects the voucher system the bus company used for cruise ship passengers.” 

Finding that the second requirement was satisfied as well – that Abel “engaged in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act” the Court concluded that the exemption applies.

As an experienced FLSA attorney, Denise Bleau has successfully defended employers against many different claims under the FLSA in and around Palm Beach County, Broward County and Miami-Dade County.

By

Michael J Posner

            The Florida legislature recently added a new weapon in the arsenal of homeowner associations collecting delinquent accounts. Florida Statute §720.3085(8) provides:

If the parcel is occupied by a tenant and the parcel owner is delinquent in paying any monetary obligation due to the association, the association may demand that the tenant pay to the association the future monetary obligations related to the parcel. The demand is continuing in nature, and upon demand, the tenant must continue to pay the monetary obligations until the association releases the tenant or the tenant discontinues tenancy in the parcel. A tenant who acts in good faith in response to a written demand from an association is immune from any claim from the parcel owner.

            The purpose of the new law is to prevent homeowners from avoiding payment of Association assessments while collecting rent from a tenant residing within the community. The law requires the Association to notify the tenant in writing of the demand for the assessment which demand will specifically state that it is an ongoing or continuing obligation and that if the tenant fails to pay the applicable portion of the rent to the Association to pay the assessment then due, the Association has the right, under the new statute, to evict the tenant from the property.  A sample demand letter is as follows (be sure to send a copy to the owner as well):”

            We represent XXX Association in connection with the past due assessments owed by your landlord for the above reference property.  Pursuant to Florida Statute §720.3085(8) this letter shall serve as formal written demand for you to pay all future rent to the Association to cover the past due assessments, fees and costs of $_________ due, as well as payment of future assessments of $___________ per _______ commencing ______________, 2010 until otherwise notified.

 

            Should you fail or refuse to make such payments to the Association, you will be considered in default of your obligations and the Association may pursue eviction so as to terminate your possession of the property in accordance with Florida Statute §720.3085(8).  If you make the required payment due herein, we will, upon request, provide you with written receipts for payments made to the Association.

 

            Your assistance and cooperation are greatly appreciated and if you have any questions please feel free to contact the undersigned.

            One issue unaddressed by the new statute is whether the claim against the tenant is only for assessments that are coming due at the same time as the rent. Until this issue is addressed we are seeking all past due balances from the tenant but there is a possibility that a court could determine that in the future an Association may only collect from the tenant the current Assessment from the rent that is being paid.

            With this new mechanism Associations have another avenue to seek collection. So far our experience been very positive with this new statute, as tenants do not wish to be evicted from their premises and as long as the Association agrees to protect the tenant from backlash from the owner, most tenants will readily cooperate with the Association in this collection effort.

By: Rana M. Gorzeck, Business, Finance and Real Property Law Attorney at Ward Damon, West Palm Beach 

 

Can parties to a Florida Contract agree in advance to subject a non-Florida-resident to the jurisdiction of the Florida courts in the event of a dispute?  The answer is YES, provided that the requirements of Sections 685.101-102 of the Florida Statutes are met.  These statutes, enacted in 1989, are satisfied if the Contract between the Florida resident and the non-Florida resident:  (1) provides that Florida law applies to the transaction; (2) provides that the non-resident expressly agrees to submit to the jurisdiction of the courts of Florida; (3) involves consideration of not less than $250,000; (4) does not violate the United States Constitution (primarily as to due process concerns); and (5) either bears a reasonable relationship to the State of Florida or one of the parties to the Contract is residing or organized in Florida.

Companies hoping to negotiate a Florida contract containing jurisdiction, venue, and choice of law provisions that will be entered into by non-resident persons or entities should keep the above-noted statutory requirements in mind.  Provisions of this type are preferred by business in Florida, so that, if a dispute arises, it will be resolved where the company does business—here in Florida, and not where the non-resident happens to reside.

In past cases, non-residents have successfully argued that they should not be subjected to the in personam jurisdiction of the Florida Courts merely as a result of a contract they entered into because of their right to due process under the United States Constitution.  Their reasoning was that non-residents should not be brought into the Florida Courts unless they have notice of their need to appear, and that it is unreasonable to subject them to the long arm jurisdiction of a foreign court, many miles from their home state.  In 2004, a Federal Court in Florida held that due process is nevertheless met in such a case if the choice of forum is “freely negotiated” by the parties and is not “unreasonable and unjust.”  Stellar Group, Inc. v. Mid-Ohio Mech., Inc., 2004 WL 568557, at 3 (M.D. Fla. Jan. 28, 2004).  As a result, a standard “boilerplate” pre-printed contract would not pass the Stellar Group test for due process since it is not “freely negotiated”.  Additionally, small consumer purchase contracts would not satisfy the personal jurisdictional requirements of Section 685, since the consideration involved in such contracts is typically less than $250,000.

In 2009, five years after the Stellar Group case, Florida’s Third District Court of Appeal construed Section 685 and permitted parties to a Contract to restrict personal jurisdiction to the Florida courts by contract alone, since the requirements of Section 685 were met.  Jetbroadband WV, LLC v. Mastec North America, Inc., 13 So.3d 159 (Fla. 3d DCA 2009).  As a result of the Jetbroadband case, assuming the requirements of Section 685 are met, and at least one of the parties is a Florida resident or entity, it should not even be necessary to show that the subject matter of the Contract bears a reasonable relationship to Florida in order for the Florida Courts to obtain jurisdiction.  This new case law in Florida, based upon Section 685, takes the Florida Courts one step further to achieving long arm personal jurisdiction over non-residents.