As ES Law previously reported, the Federal Trade Commission issued a rule that would have taken effect on September 4, 2024 banning general non-competes nationwide. A federal court in Texas has now invalidated that rule. The court’s ruling applies nationwide; thus, the rule will not take effect. Many of our employer clients had been working to ensure their non-compete agreements would be compliant. We encourage employers to reach out to legal counsel to understand the full ramifications of this legal ruling and how the future landscape of this area is being shaped.
Court of Appeals Partially Vacates Arbitration Award in Complex Construction Payment Dispute
The Nebraska Court of Appeals recently considered whether to sever and vacate part of an arbitration award in a dispute brought to arbitration by a property owner against a general contractor and plumbing subcontractor.
In February 2017, Lund-Ross Constructors and the Duke of Omaha agreed Lund-Ross would be the general contractor to build an apartment complex in Omaha. In turn, Lund-Ross subcontracted Raymond Plumbing to construct the plumbing at the apartments. Upon finishing construction of the apartments, the Duke withheld payment of $952,599 from Lund-Ross.
Consequently, Lund-Ross filed a demand for arbitration against the Duke. Lund-Ross also included Raymond as a respondent since Raymond was demanding payment from Lund-Ross for its plumbing work. After the arbitration hearing in January of 2023, Raymond requested to file a counterclaim against Lund-Ross for breach of contract, breach of implied covenant of good faith and fair dealing, and quantum meruit/unjust enrichment. The arbitrator permitted the counterclaim to be filed in the arbitration proceedings and ruled on it based upon the evidence at the hearing. Lund-Ross objected since it had not had the opportunity to respond the counterclaim, but the arbitrator maintained the award notwithstanding Lund-Ross’s objection.
The award: The Duke owed Lund-Ross $307,103 and Lund-Ross owed Raymond $215,508.31.
Thereafter, Lund-Ross moved to vacate or modify the arbitration award in a Nebraska district court. In its final order, the district court denied Lund-Ross's requested relief. Lund-Ross then appealed.
In its appeal, Lund-Ross claimed several errors, but the primary issue considered by the Court of Appeals was whether the arbitration was a fair proceeding or whether improper procedures prejudiced Lund-Ross during it, which are grounds for a court to vacate arbitration awards under the Federal Arbitration Act, 9 U.S.C §10(a)(3).
When Raymond filed a counterclaim against Lund-Ross, the arbitrator entered the award without giving Lund-Ross the chance to answer the counterclaim and develop its rebuttal evidence. Based upon federal precedent, the appellate court concluded that the arbitrator
had indeed not given Lund-Ross a chance to respond with its own evidence and rebut the allegations made by Raymond. This would constitute improper conduct in the arbitration that prejudiced Lund-Ross and supported vacating the award entered by the arbitrator for Raymond.
Thus, the $215,508.31 that the arbitrator ordered Lund-Ross owed to Raymond was invalidated.
That led to the next legal question in the appeal: Is partial vacatur of an award allowed under the FAA and Nebraska law? This presented a novel issue for the Nebraska appellate court; it therefore relied upon opinions of the Connecticut Supreme Court to determine if an arbitration award against multiple parties could be severed. The court further looked to law developed by the Second Circuit, which has similar case law interpreting 9 U.S.C §10 of the FAA. See Scandinavian Reinsurance v. Saint Paul, 668 F.3d 60, 71 (2d Cir. 2012).
In the end, the Nebraska Court of Appeals severed and vacated the portion of the award on the subcontractor’s counterclaim. This case addressed the novel question in Nebraska of whether an arbitration award may be partially modified, with the court concluding that one may be. This case will inform those practicing in arbitrations reviewable by Nebraska courts in the future.
Compliance Update for Employers and Employees – Non-Competes under the Federal Trade Commission
Yesterday, the FTC issued a significant rule regarding non-compete agreements. This is a nationally applicable rule.
In a nutshell, the FTC's rule aims to bring more transparency and fairness to non-compete agreements, ensuring they're used appropriately and not to stifle competition or restrict an employee's ability to change jobs. While this is a new rule nationally, any stricter rules under state law will still apply to those under such a state's jurisdiction.
Here are the basics to know about the new federal rule:
Non-competes must be tailored to protect legitimate business interests.
They should be disclosed before a job offer is accepted.
Employees should have ample time to review and seek legal advice.
Unreasonable restrictions could face scrutiny.
Employers should review past non-compete agreements and may need to notify employees of the new rule's effect on them.
The rule goes into effect in 120 days. We expect legal challenges to be filed in federal courts to invalidate or limit this new rule, so stay tuned!
Nebraska employers who are abiding by Nebraska legal requirements for their non-compete and non-solicitation agreements are likely already compliant with this new federal rule. Nebraska has long required that non-competes be narrowly focused, permitting employers to prohibit from soliciting customers, clients, vendors, and employees for a limited period after their departure. Nebraska courts will not enforce generalized non-competes that amount to industry bans. Of course, some nuances could affect a particular employer or employee differently, and legal advice should always be sought.
The FTC's press release is available here: FTC Announces Rule Banning Non-competes | Federal Trade Commission.
At ES Law, we're committed to helping you stay compliant and navigate these changes smoothly. Contact us today to ensure your non-compete agreements align with the latest regulations.
Nebraska Paid Sick Leave Initiative: What Employers Need to Know
As the 2024 elections approach, several ballot initiatives are gaining momentum in Nebraska, with one particular initiative standing out - the Paid Sick Leave for Nebraskans. This initiative, if passed by the majority of Nebraska voters in November 2024, would significantly impact employers across the state. Here's what employers need to know to prepare for this potential change.
Key Provisions of the Paid Sick Leave Initiative:
Accrual of Paid Sick Leave: Under this initiative, all Nebraska businesses would be required to offer paid sick leave to employees. Employees would earn one hour of paid sick leave for every 30 hours worked.
Carryover of Unused Leave: Employees may carry over unused paid sick leave to the following year, but it should not exceed the maximum number of hours specified in the policy.
Protection from Retaliation: The initiative would put into law the ability for employees to earn and use paid sick days without retaliation.
Effective Date: If passed, paid sick leave would go into effect on October 1, 2025.
Exemptions: This policy would not interfere with collective bargaining agreements, contracts, or policies that provide employees with more generous paid sick time. It also does not apply to federal, state, or county employees.
Who Benefits:
Paid sick leave is aimed at benefiting working families and businesses alike. It ensures that employees do not have to choose between their paycheck and their family's health. It applies to full-time, part-time, and temporary employees. Businesses can benefit because paid sick leave may help attract a qualified workforce to the many open jobs across Nebraska, including appealing to workers from other states.
Leave Entitlements:
Under the proposal, the amount of paid sick leave employees would earn varies depending on the size of the employer:
For employers with fewer than 20 employees, workers may earn up to five days of paid sick leave per year.
For employers with 20 or more employees, workers may earn up to seven days of paid sick leave per year.
Funding and Support:
The Paid Sick Leave for Nebraskans initiative has gained significant funding support, raising more than $1.7 million since its launch in July. The Sixteen Thirty Fund, a national organization supporting social change goals, has contributed over $1.6 million to the campaign. Local groups such as the Nebraska Appleseed Action Fund, the Women's Fund of Omaha, the Civic Engagement Table, the ACLU of Nebraska Foundation, and Raise the Wage Nebraska have also supported the campaign.
Implications for Employers:
Employers in Nebraska should be aware of the potential changes brought about by the Paid Sick Leave for Nebraskans initiative. If the initiative passes, businesses will need to adjust their policies and practices to comply with the new paid sick leave requirements. This may include implementing a tracking system for accrued leave, ensuring compliance with carryover limits, and updating company policies to prevent retaliation against employees for using paid sick leave.
In conclusion, the Paid Sick Leave for Nebraskans initiative has the potential to impact employers significantly. With fundraising support and growing public interest, this initiative could change the landscape of paid leave in the state. Employers should stay informed about the progress of this initiative and be prepared to adapt their policies accordingly if it becomes law in Nebraska.
Piercing the Corporate Veil - Can you collect from the individuals that own the company that owes you money?
If you obtain a judgment against a company, you can collect that judgment from the company's owners under certain circumstances. This is a legal concept called piercing the corporate veil. It comes up with corporations, LLCs, and other types of limited liability companies (businesses formed to protect owners from liability for business debts). However, it is the exception to the general rule that owners of a limited liability business are not liable for the business’s debts. Specific facts must be proven to pierce the corporate veil. The Nebraska Supreme Court recently reviewed these in the case of 407 N 117 Street, LLC v. Harper et al.
A Nebraska court may pierce the corporate veil to hold owners liable “only where the corporation has been used to commit fraud, violate a legal duty, or perpetrate a dishonest or unjust act in contravention of the rights of another.” 407 N 117 Street, 314 Neb. 843, 849 (2023)(citation omitted). Often, fraud is alleged as the grounds for piercing. Nebraska courts will consider the following factors to determine whether to disregard the corporate entity based on fraud:
Was there grossly inadequate capitalization of the company?
Was the company insolvent at the time the debt was incurred?
Did a shareholder/owner divert company funds or assets for their own use or other improper use?
Was the company a mere façade for the personal dealings of the shareholder/owner, and were company operations conducted by the shareholder disregarding the corporate entity?
Because this is the exception to the general rule of limited liability, the party seeking to collect against the shareholders/owners must prove these facts. While possible, it can be challenging to establish absent clear, strong evidence of the above, as the recent case described here shows. The court entered summary judgment in favor of the individual owners and did not pierce the corporate veil. The result in cases like this can be that the creditor does not recover any of its judgment at all, where a company has little or no assets remaining to collect. Early strategies in litigation and collection efforts can be developed in many cases to ensure against this kind of result. On the other hand, legal advice from an experienced attorney in this field can help business owners be sure they will not become subject to claims to pierce the corporate veil of their business and hold them individually liable for company obligations.
Students for Fair Admissions, Inc. v. President and Fellows of Harvard College
On June 29, 2023, the Supreme Court of the United State issued an opinion holding that the admissions programs at Harvard College and the University of North Carolina (“UNC”) violated the Equal Protection Clause of the Fourteenth Amendment. This decision highlights the appropriate criteria under the Equal Protection Clause that higher education institutions may evaluate when considering a candidate’s admission.
Harvard College and UNC are two of the oldest and most elite institutions of higher learning in the United States. Every year tens of thousands of students go through the application process with only few being admitted. Both ivies have an extensive and selective application process, where committees meet, and rank applicants based on a number of categories. The Court stated that in the Harvard admissions process, “race is a determinative tip for “a significant percentage” of all admitted African American and Hispanic applicants.” The Court also stated that UNC offers students a “plus” based on their race, which in some cases may have a significant effect on the individual’s admission.
Founded in 2014, Students for Fair Admissions (“SFFA”) is a nonprofit organization whose purpose is “to defend human and civil rights secured by law, including the right of individuals to equal protection under the law.” In 2014, SFFA filed suits against Harvard College and UNC arguing that their admissions tactics violated both Title VI and the Equal Protection Clause. However, the lower courts concluded that both Harvard’s and UNC’s admission programs comported with precedent and were permissible under the Equal Protection Clause as the Fourteenth Amendment prohibits States from denying to any person within its jurisdiction the equal protection of the laws.
Under the Equal Protection Clause of the Fourteenth Amendment, equality of treatment before the law for all persons without regard to race is required. In the Courts analysis of Harvard and UNCs admission process, strict scrutiny was applied. This means that for the admission tactics to be Constitutional they must serve a compelling interest and the tactics must be necessary and narrowly tailored to those achieving those interests. Prior to this case, courts followed the Grutter v. Bollinger standard when addressing admission criteria, in which the court upheld the University of Michigan law School’s consideration of race “as one factor among many, in an effort to assemble a student body that is diverse in ways broader than race.”
Here, a vote of 6-2 reversed the Court of Appeals for the First Circuit and the District Court for the Middle District of North Carolina judgments, ruling the use of affirmative action in college admissions violates the Constitution’s Equal Protection Clause. Chief Justice John Roberts delivered the opinion for this case clarifying and refining the Court findings in prior decisions. Roberts stated that the Court only allowed universities to use race-based admissions programs “within the confines of narrow restriction.”
Roberts’ dissatisfaction with Harvard’s and UNC’s admission process starts with the vague goals the institutions state will be achieved by it. The Court could not measure whether “training future leaders in the public and private sector” and “promoting the robust exchange of ideas” were compelling interests that would be accurately achieved by an admission process that gives higher acceptance to minority races.
The majority also stated that Harvard and UNC admission programs did not have a “logical end point,” which was the original idea when the Court issued the opinion in Grutter. In fact, UNC suggested that it might soon use race to a greater extent than it currently does in the admission process. Without a logical end point the Court was unable to say that the admission process used by these institutions was necessary and narrowly tailored to the already vague goals.
Although this decision limited the weight higher education institutions can place on race during the admission process, Roberts stated that applicants are still able to explain how their race influenced their character in a way that would have concrete effect on the university.
Additional insights provided by ES Law clerk, Emily Todd.
How Businesses Can Prepare for the Pregnant Workers Fairness Act
A new federal law known as the Pregnancy Workers Fairness Act goes into effect June 27, 2023. The Act builds upon existing laws such as the Pregnancy Discrimination Act of 1978 and the Americans with Disabilities Act. Its primary objective is to protect pregnant workers from discrimination, ensure reasonable accommodations, and promote a healthy and supportive work environment during pregnancy and childbirth.
Severance Agreements, Confidentiality, and Promises Not to Disparage Under NLRB Scrutiny
Employers crafting severance agreements or employees considering entering into such agreements should think carefully about rights they may give up or obligations they may take on through the agreements. Consulting with an experienced attorney to draft or review any proposed agreement is highly advisable.
Nebraska Minimum Wage to Increase January 1, 2023 – Must Know Info for Employers
Nebraska voters approved a ballot measure in November to increase the minimum wage in steps each January 1 from 2023 through 2026. On January 1, 2023, the minimum wage will increase from its current $9.00 per hour to $10.50 per hour. Employers must be aware of this change and must comply with it in paying their employees.
The minimum wage for Nebraska employees will increase according to the following schedule:
January 1, 2023, will increase to $10.50 per hour
January 1, 2024, will increase to $12.00 per hour
January 1, 2025, will increase to $13.50 per hour
January 1, 2026, will increase to $15.00 per hour
This increase in Nebraska’s minimum wage standards follows a trend among many states throughout the country of raising their minimums. Moving forward, Nebraska’s minimum wage will be tied to the consumer price index, or CPI, which measures the average change over time in prices paid by urban consumers for consumer goods and services, influencing inflation.
There are minimal exceptions to the minimum wage, and compliance with wage laws can get complicated. Given penalties and liability risks for non-compliance, it is vitally important that employers understand these laws and have clear policies to meet them. Bonnie Boryca and E|S’s employment attorneys are well-versed in these laws and happy to assist in compliance reviews for employers in Nebraska. Bonnie can be reached at 402-397-2200 or boryca@eslaw.com.
Quandt and Reilly recognized by Best Lawyers® in America 2023
Matthew Quandt and Matt Reilly of Erickson | Sederstrom
Erickson | Sederstrom is proud to announce Matt Quandt and Matt Reilly were recognized by Best Lawyers® in America 2023. They were both selected by their peers and included in the Best Lawyers: Ones to Watch in America™ 2023. These awards are recognitions given to attorneys who are earlier in their careers for outstanding professional excellence in private practice in America. Matt Quandt was selected for his work in Personal Injury Litigation - Defendants. His practice concentrates on trucking accidents, including wrongful death and personal injury; he represents some of the biggest motor carriers and insurers in the nation. Matt Reilly was selected for his work in Personal Injury Litigation – Defendants and Construction. The two main focuses of Mr. Reilly’s practice are in representing contractors across Iowa and Nebraska in construction disputes and in defending complex and severe personal injury claims.
Is an Order to Mediate a Final Order? Nebraska Supreme Court Re-Visits Final Orders Yet Again
In June of 2022, the Nebraska Supreme Court found it was without jurisdiction over an appeal because a district court’s order for mediation and further determination is not considered a final judgment. Tegra Corp. v. Boeshart, 311 Neb. 783 (2022). The decision stemmed from a dispute over what authority a committee has under Neb. Rev. Stat. § 21-168, which governs special litigation committees for corporations, and whether that authority was analyzed with regard to Neb. Rev. Stat. § 25-1902, which defines a final order.
Patrick Boeshart is the president and sole manager of Lite-Form Technologies, LLC, based in Sioux City, Nebraska. Tegra, 311 Neb. 783 at 787. His wife, Sandra, is the office manager and bookkeeper. Id. Boeshart Management Company is an Iowa LLC owned by Patrick and Sandra. Id. Pat Boeshart Construction is an Iowa LLC that is wholly owned by Patrick. Id. Tegra Corporation is an Iowa corporation in Sioux City, Iowa, and is a minority shareholder of Lite-Form. Id.
Tegra, individually and on-behalf of Lite-Form, filed a complaint against the Boeshart’s alleging breach of fiduciary duty, misappropriation and waste of corporate assets, unjust enrichment, and conversion. Id at 788. Based on Tegra’s claims and pursuant to Neb. Rev. Stat. § 21-168, the manager-defendants appointed Cody Carse to the special litigation committee for the corporation. Tegra, 311 Neb. 783 at 788. Carse determined that it was in Lite-Form’s best interests to settle. A term of settlement included disclosing certain issues to the LLC members and conducting a majority vote on how the issues should be resolved. Id at 792.
When the District Court reviewed the committee’s report, it found the committee acted with enough disinterested independence and good faith, but that its recommendations went beyond the authority of a committee under Neb. Rev. Stat. § 21-168. Tegra, 311 Neb. 783 at 794. The District Court ordered the parties to attempt mediation and report back. Id. Tegra appealed the order and the defendants cross-appealed. Id.
The Supreme Court selected this case to address the scope of final judgments under Neb. Rev. Stat. § 25-1911 and how they apply to the Court’s jurisdiction. First, the Court determined that to be appealable, the order in question must satisfy the requirements of Neb. Rev. Stat. § 25-1902 and when applicable, Neb. Rev. Stat. § 25-1315(1). Id at 796. Under § 25-1315, an express determination by the court about lack of reason for delay in making a final judgment must exist which would be “fatal to [the Court’s] jurisdiction over the appeal.” Id at 798. The Court found there was no express determination here. Further, the Court found the order was not final under § 25-1902. Id.
To determine if the order to mediate was final under § 25-1902, the Court analyzed whether a derivative action is a “special proceeding” that “affected a substantial right.” Id. A special proceeding includes every special statutory remedy that is not in itself an action. While the plea may be connected with an action through application of the proceeding, it is not the integral part of an action. Id at 799. Prior to Tegra, the Court had not addressed if a derivative action was a special proceeding. The Court stated they “will no longer reason that a proceeding is special by the sole virtue of being governed by statutes outside of chapter 25.” Id at 802.
Ultimately, the Court concluded derivative actions are not special proceedings, but an equitable proceeding a member asserts on behalf of the LLC. Id at 802. While a derivative action requires the extra steps of making a demand of other members to enforce the right and requires the complaint to state a demand or state the action is futile, the derivative action is an action nonetheless. Id. The derivative action is a proceeding in a court by which one party prosecutes another for enforcement. It is still possible that orders under § 21-168 are made during a special proceeding, but this is because a special proceeding may be “connected with” an action; not because it, in itself, is an action. Id at 803. Whether a special proceeding is connected with an action or is an action depends on whether the proceedings under § 21-168 are an integral part of the main derivative action or just one of the many steps taken to commence the action. Id.
The four options available to a committee under § 21-168 are: (1) the action continue under the control of the minority-member plaintiff who brought it, (2) the action continue under the control of the committee, (3) the action be settled on terms approved by the committee, and (4) the action be dismissed. Id at 806. After analyzing the four options, the Court determined any proceedings under § 21-168 are just a step in the underlying derivative action and not itself an action. Therefore, orders made pursuant to § 21-168 are not made during a special proceeding. Id at 807.
The Court also held an order under § 21-168 does not impact a substantial right. Id. A substantial right is “an essential legal right...[that is] affected if an order affects the subject matter of the litigation, such as by diminishing a claim or defense that was available to an appellant before the order from which an appeal is taken.” Id at 807. Determining whether an order is substantial depends on if it affects, with finality, the rights of the parties in the subject matter. Id at 810. The Court held that enforcing special litigation committee determinations lead to final judgments, but their effect as independent orders is limited in duration and any delay in their enforcement does not affect any substantial right. Id.
Both parties in this suit attempted to argue the Court’s order of mediation exceeded its authority, but the Supreme Court found it did not affect a substantial right because any alternative dispute resolution is voluntarily entered into. Id at 811.
Ultimately, the Court found the order of the lower court was not a final order because there was not a “special proceeding” that “affected a substantial right.” This means reviewing courts’ rulings issued about a corporate committee decision under § 21-168 are not part of special proceedings for purposes of the final order doctrine. Id at 812.
The Nebraska Supreme Court continues to clarify and update its stance on final orders for purposes of appeals. Erickson | Sederstrom’s litigation attorneys are well-versed in this law and happy to review any appeal issues for clients in the region as lead counsel, for out-of-state attorneys as local counsel, or for Nebraska attorneys needing expert appellate co-counsel for their clients’ matters.
** This article was researched and primarily written by E|S law clerk Amelia Rens. Amelia is starting her third year at Creighton University School of Law and will join E|S as an associate attorney in the fall of 2023 after becoming licensed. We look forward to it! **
Back to the Basics - No retaliation claim if no protected activity
Retaliation claims are among the most numerous types of employee claims processed through the Equal Employment Opportunity Commission and state EEO agencies. Central to these claims are whether an employee engaged in protected activity and how the employer responded to it. A recent Eighth Circuit case involving Nebraska law on retaliation is exemplary.
In Walker v. First Care Mgmt. Grp., LLC, the United States Court of Appeals for the Eighth Circuit held that employees’ conduct in response to a facility resident’s abuse upon another facility resident did not constitute protected conduct to support a retaliation claim under Nebraska law. 27 F.4th 600 (8th Cir. 2022).
Two caregivers employed by a retirement community witnessed a resident sexually assaulting other residents several times. Per company policy, employees had to report resident abuse immediately, by reporting any incident to a supervisor, completing an incident report, and making a note in the resident’s chart. The two employees claimed they reported observing the abuse, but on at least one occasion, they waited to make their report until day after the incident.
The Nebraska Department of Health and Human Services (“DHHS”) responded to an anonymous complaint about the resident’s abuse and made an unannounced site visit of the facility. Shortly after, a retirement community manager claimed she was unaware of the abuse that led DHHS to the facility. Several employees stated the manager must have been aware of the abuse because the employees reported such abuse. Upon completion of the visit and a staff meeting, the two caregiver employees were terminated.
The employees filed suit alleging, among other claims, unlawful retaliation after engaging in a protected activity. The retirement community moved in the District Court for summary judgment, which was granted, resulting in a judgment against the employees and dismissing their claims. The employees appealed.
On appeal, the Eighth Circuit considered whether the lower court erred in granting the retirement community’s motion for summary judgment. Under Nebraska law, an employer may not discriminate against an employee who opposed or refused to carry out any unlawful action of the employer. Neb. Rev. Stat. § 48-1114(1)(c). In other words, employees claiming retaliation must demonstrate that they opposed an unlawful practice of their employer.
The two employees alleged engaging in the following activities: the report made to DHHS, internal complaints to supervisors about the abuse, and confronting a manager about her alleged ignorance of their report of abuse. However, none of these acts were found to have opposed unlawful activity of the retirement community. Nor did they amount to acts of refusing to carry out an unlawful action. Thus, there was no protected activity on which to base a retaliation claim. Accordingly, the Eighth Circuit upheld the summary judgment because the employees’ conduct in response to the abuse of the facility resident did not constitute protected conduct under Nebraska law.
Obviously, the facts of the case suggest egregious acts of abuse. However, a retaliation claim is closely focused on the activities of employees and the response of the employer. Any time an issue arises, employers are cautioned to involve their attorneys at an early stage to avoid or minimize potential claims of retaliation and to appropriately respond to abuse, to complaints, or to protected activity of employees.
Thanks to Rob Toth, current law clerk and joining E|S as an associate attorney in the fall of 2022, for assistance in preparing this article.
Bonnie Boryca and E|S employment attorneys can be reached at 402-397-2200.
Law or equity – whether a jury decides the claim in light of the equitable ‘clean up’ doctrine
In Schmid v. Simmons, the Nebraska Supreme Court held that the common law “clean up” doctrine is still good law, discussed when a party is entitled to a jury trial on civil disputes, and clarified how a litigants may waive the right to jury trial on legal claims. 311 Neb. 48 (2022).
The Nebraska Constitution guarantees the right to trial by jury. However, on civil matters, which are generally disputes about money or other non-criminal matters, the state Constitution allows the Legislature to modify this right to allow juries less than 12 to decide matters in courts inferior to the District Courts, and, in such cases, the decision may be rendered by five-sixths majority of the jury. Neb. Const. art. I, § 6.
Litigants still have a right to seek a jury trial on legal claims—those involving disputes over specific real or personal property and money damages—but not on equitable claims, which may be tried “to the bench” without a jury. Whether a claim is legal or equitable rests upon the “main object” of the claim, which is shown by the issue the lawsuit seeks to resolve.
Under the “clean up” doctrine, a court may determine equitable issues and then “clean up” other legal issues in the case, even where a defendant asserts a legal claim as a defense or counterclaim. The purpose of this doctrine is to preserve judicial efficiency by allowing the same court to hear and determine all disputed issues in a single lawsuit.
Applied to the facts, the Court found proper the district court’s decision to resolve plaintiff’s equitable claims (quiet title, declaratory judgment, LLC accounting, and judicial dissolution) and then “clean up” defendant’s amended counterclaims seeking damages for breach of contract, a legal claim. Because the District Court retained jurisdiction to quiet title and determine rights of LLC members, and because the parties agreed the matter before the court was equitable, the District Court correctly applied the “clean up” to resolve any remaining legal claims all equitable claims were decided.
The Court further clarified the manner in which parties may waive the right to trial by jury on a breach of contract action, or with the court’s agreement in other actions, finding that waiver could be accomplished in three ways: (1) by consent of a party where the other party fails to appear, (2) by written consent delivered to the clerk of court, or (3) by oral consent in open court on the record. Neb. Rev. Stat. § 25-1126.
E|S attorneys are experts in civil trials, whether to a jury or to a judge, whether in equity or common law. Bonnie Boryca and E|S litigators can be reached at 402-397-2200.
Thanks to E|S law clerk Ross Serena for contributing to the above article.
Arbitration versus Litigation
The terms ‘arbitration’ and ‘litigation’ are often paired off against each other. When or if a dispute arises, we recommend knowing the general differences and similarities between these procedures.
Litigation is a lawsuit filed in a court of law. People may be self-represented, but more often, attorneys represent their clients in moving through the phases of litigation. Phases include filing a complaint (or petition, depending on the court and type of issues involved), answer, discovery, motions, and may eventually involve a trial to a judge or jury.
Arbitration is like litigation in that it is a process to resolve a dispute between two or more parties. It is a private means of resolving disputes. Arbitration may occur non-publicly. It usually takes place when parties have agreed in advance, through a written contract, to arbitrate future disputes on a specified subject matter, in lieu of bringing a lawsuit in court. The arbitrators are paid by the parties to assist in resolving the matter. Pros of arbitration can be that it moves more quickly, can be less expensive, and results in a final resolution earlier. A major con for some is that there is no means of appeal or review after an arbitrator enters an award. The exception to that would require showing deceit or fraud or major errors in the fairness of the process, within very limited circumstances.
More and more, large employers may require new employees to enter arbitration agreements in the onboarding process at start of employment. They will often cover possible future employment-related disputes. Employees should think carefully about rights they give up doing so. Employers should think carefully about how to draft these kinds of agreements and about how to present them to employees for their review and agreement. Courts and policy makers in our legislatures continue to consider how, whether, and to what extent these kinds of arbitration contracts should be enforced.
If you are faced with arbitration in lieu of litigation, or are considering entering an agreement to arbitrate claims, or would like to craft a valid arbitration clause for your business, an attorney may be able to help. An experienced attorney can ensure your rights are fully addressed and you are fully informed about what you give up and what you gain in arbitration versus litigation.
Bonnie Boryca and Erickson | Sederstrom, PC’s team of attorneys are well-versed in these issues.
Erickson | Sederstrom represented at the Trucking Industry Defense Association’s annual meeting
Erickson | Sederstrom partner Matthew D. Quandt recently attended TIDA’s Annual Seminar in Philadelphia, PA. The Trucking Industry Defense Association (TIDA) is a nonprofit association that is devoted to sharing knowledge/resources for defense of the trucking industry and committed to reducing the cost of claims and lawsuits. This year’s seminar featured presentations regarding the state of the industry, accident reconstruction experts, orthopedic experts, fraudulent claims, fleet management, jury psychology, and more.
From the initial accident investigation, following a rapid response team call in the middle of the night, to pre-suit negotiations and litigation of catastrophic injury and wrongful death cases through discovery and trial, Matt handles all aspects of trucking and transportation litigation. He is committed to making sure his clients are comfortable with the litigation process and emphasizes early resolution of all claims in an efficient, cost-effective manner whenever possible.
Late Paycheck or Unpaid or Withheld Wages? Nebraska Laws Might Be on Your Side
Nebraska Revised Statute §§ 48-1228 to 48-1234 constitute the Nebraska Wage Payment and Collection Act. The Act applies to employees and a broad range of employers, including the state or any individual or entity that employs anyone in Nebraska as an employee. It defines wages as compensation for labor or services, including fringe benefits, when previously agreed to and conditions stipulated have been met by the employee, whether such wages are on a time, task, fee, commission, or other basis. Wages include earned but unused vacation leave. And wages include commissions on all orders delivered or on file with the employer at the time of an employee’s separation, unless the employer and employee agreed otherwise in an employment contract.
Fringe benefits include sick and vacation leave plans, disability income protection plans, retirement, pension or profit-sharing plans, health and accident benefit plans, and any other employee benefit plans or benefit programs regardless of whether the employee participates in such plans or programs.
The substance of the Act is its requirement that an employer designate and timely pay employees on regular paydays, and that an employer must pay a terminated employee all unpaid wages on the next regular payday or within two weeks of termination, whichever is sooner. See § 48-1230. If the wages consist of commissions, the employer must pay the employee any earned commissions on the next regular payday following receipt of payment for the goods or services on which the commissions were based. See § 48-1230.01.
The enforcement mechanism in the Act is it authorization of employee lawsuits for unpaid wages in § 48-1231. As an incentive to bring wage claims, which may consist of only a couple of week’s wages in some instances, the Nebraska Legislature has authorized awards of attorney’s fees to employees who prevail in court. If the employee prevails and he or she has employed an attorney to do so, the must award attorney’s fees in an amount not less than 25% of the unpaid wages. Courts can award more if they determine a higher fee is justified; 25% is the minimum required by the statute. In addition, if the case is appealed, and the employee wins on appeal, the employee can recover a 25% attorney’s fee for the appeal, as well. An employee cannot recover fees if the employer had tendered the unpaid wages within thirty days of the regular payday when they were due.
If the employee prevails in the lawsuit, damages are equal to the wages owed. If nonpayment of wages is found to have been willful, then an employer may be held liable for twice the amount of unpaid wages (though the employee only recovers the amount of wages and the "doubled" amount is remitted to the Nebraska State Treasurer because it amounts to punitive damages, which may not be retained by private parties under the Nebraska constitution).
The potential for the "double" damages and attorney’s fees can transform a wage claim seeking a couple weeks of unpaid wages into a much larger liability for employers who do not tread carefully.
Whether you are an employee who is owed wages by his or her employer, or an employer dealing with wage issues, attorneys at Erickson | Sederstrom can assist you. Attorneys Bonnie Boryca or Paul Heimann can be reached (402) 397-2200.
Eighth Circuit Denies Relief for Female Employee Who Was Paid Less for Doing More
In Perry v. Zoetis, the United States Court of Appeals for the Eighth Circuit upheld the United States District Court for the District of Nebraska’s decision finding that a female employee was not discriminated against for receiving less compensation than her male co-workers when she voluntarily chose to complete tasks that were not required of her. See Perry v. Zoetis, LLC, No. 20-2232, 2021 WL 3435535 (8th Cir. Aug. 6, 2021).
Barbara Perry, a former employee of Zoetis, LLC, became upset upon discovering she was making less money than her male co-workers. Perry met with the company’s human resource manager and requested a raise, arguing she was performing more job duties and receiving less compensation than her male co-workers. Soon after her requests were denied, Perry quit her job and brought suit against Zoetis under the Nebraska Equal Pay Act (“NEPA”) and the Nebraska Fair Employment Practices Act (“NFEPA”), alleging she was discriminated against because she received less compensation for performing more duties than her male peers.
When bringing a claim under NEPA, a plaintiff must establish that they completed equal work on jobs requiring equal skill, effort, and responsibility. When comparing Perry’s position to those of her higher-paid, male co-workers, the facts revealed that the male co-workers’ positions required different skills and responsibilities than Perry’s. Perry argued she completed the same duties as her male co-workers, but the record showed such duties were not required of her; rather, she volunteered to take on those extra tasks.
The court stated that “[w]hile Perry’s work ethic is laudable, the fact that she was not paid more for the extra tasks, or for her skill in completing them, is not proof of sex discrimination.” Perry needed to provide evidence that showed she was doing equal work requiring equal responsibility, which she failed to do since her position did not require her to take on the additional duties of her co-workers.
For similar reasons, Perry’s claim under the NFEPA was also rejected. Perry could not meet her burden to prove that she was treated differently than male employees who were “similarly situated” because the male co-workers had different duties and responsibilities.
The Eighth Circuit further relied on facts showing that one male co-worker earned more than Perry because new employee rates were based on differing levels of responsibility, education, and related experience. Another male co-worker earned more than Perry because Zoetis has an internal policy to keep an employee’s pay rate the same when transferring the employee from a different department. Ultimately, Perry failed to provide evidence that Zoetis “offered a phony excuse” for the disparate treatment in pay, and she was denied relief.
Bonnie Boryca is an employment and litigation attorney with Erickson & Sederstrom, PC in Omaha, Nebraska. She was assisted in the above article by law clerk Alison Clark, who will be joining the firm in 2022 as an associate. Bonnie can be reached at 402-397-2200 or boryca@eslaw.com.
E|S Attorney Patrick Guinan Wins on All Appeal Issues Before the Nebraska Supreme Court today
Congratulations to attorney Patrick Guinan for his win on all appeal issues before the Nebraska Supreme Court today. E|S is proud of his efforts and results for Planet Bingo, LLC and Melange Computer Services, Inc. The opinion is found here: https://supremecourt.nebraska.gov/courts/supreme-court/opinions
No Recovery for Alleged Demotion of Military Servicemember Upon Return from Deployment
A former Union Pacific employee wasn’t entitled to judgment as a matter of law (i.e., a ruling in his favor) or attorneys’ fees after a job change following his return from military deployment, the U.S. 8th Circuit Court of Appeals (which covers Nebraska employers) recently decided, reversing the lower court’s opinion.
Facts
Rodolfo Quiles began working for Union Pacific as a general manager of safety analysis in 2014. He supervised other employees and received “D-band” level compensation. With A-band pay being the lowest, his salary slotted him just below E-band (or executive-level) compensation.
Quiles served in the U.S. Marine Corps Reserve and left Union Pacific in 2015 for voluntary deployment. While deployed, the company underwent a reduction in force (RIF), which eliminated all general manager titles, reclassifying many of them as directors instead. In addition, the company:
· Adjusted the general director position to require five years of field experience; and
· Hired a new employee for the position of general director of safety analysis, who Quiles believed was intended to be his replacement.
After the deployment, Quiles returned to work at Union Pacific under a new role as director of safety analysis. Although he received the same benefits and his compensation remained at the D-band level, he viewed the new job as a demotion. He claimed he was given less responsibility and status than in his previous position as general manager.
Quiles didn’t qualify for the general director job because he lacked the five years of field experience necessary to meet the new requirement for the position.
Unhappy with the new job title, Quiles became insubordinate, and his work performance declined, leading to his termination from Union Pacific in 2016. He then sued the company claiming it violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by effectively demoting him during his military leave.
How USERRA works
Under USERRA, military servicemembers are entitled to reemployment when they return from service that doesn’t exceed five years. Upon returning to work, they’re entitled to return to a job based on the “escalator position” principle, which places them in the job they “would have attained with reasonable certainty if not for the absence due to uniformed service.” The principle covers pay, benefits, seniority, and other job perks they would have attained if not for the period of service.
There are exceptions to the rule. You don’t have to reemploy a servicemember if:
· The company’s circumstances “have so changed as to make such reemployment impossible or unreasonable”;
· Employment would “impose an undue hardship” on your company; or
· The servicemember’s previous employment was “for a brief, nonrecurrent period” with no reasonable expectation it would continue for a significant length of time.
The district court ruled in Quiles’ favor, finding Union Pacific demoted him upon his return in violation of USERRA and awarding attorneys’ fees. The case proceeded to trial on the remaining claims, and the jury returned a verdict in the employer’s favor, concluding Quiles was fired for cause and not entitled to any damages.
8th Circuit’s ruling
After the favorable jury verdict, Union Pacific appealed the district court’s grant of judgment as a matter of law and award of attorneys’ fees to Quiles. In reversing the lower court’s decision, the 8th Circuit held it was impossible to reemploy him to his previous position because:
· It had been eliminated; and
· A reasonable jury could find “Union Pacific attempted to fit Quiles into an appropriate job within the corporation’s reorganized structure upon his return from deployment” in accordance with the escalator-position principle and for which he was qualified.
Because Quiles wasn’t entitled to judgment as a matter of law, the court further held he didn’t qualify as a prevailing party for purposes of attorneys’ fees. Quiles v. Union Pac. R.R. Co., Inc., No. 19-3489 (8th Cir., July 6, 2021).
Bottom line
You should take care in responding to servicemembers’ requests for leave and be aware of USERRA’s strict requirements. When in doubt, call your employment law attorney.
Bonnie Boryca is one of Erickson Sederstrom’s employment attorneys and can be reached at boryca@eslaw.com or 402-397-2200. This article was written with assistance of law clerk Ali Clark, who will be joining the firm as an associate in the fall of 2022.
No Double Liability to Amputee for Loss of Foot and Toes in Workers’ Compensation Matter
In a recent decision, the Nebraska Supreme Court considered whether the discontinuance of temporary partial disability benefits triggered the payment of permanent partial disability payments in a Workers’ Compensation case involving an employee who endured an amputation below his knee as a result of a work-related injury.
In Melton v. City of Holdrege, Mr. Benjamin Melton (“Employee”) was employed by the City of Holdrege (“City”) as a journey-man lineman where he sustained a work-related injury resulting in an amputation of his left leg just below the knee. 309 Neb. 385, 386-87 (2021). Thereafter, Employee obtained a prosthesis; however, he endured issues with the prosthesis including shrinking, swelling, sweating, and obtaining a good fit. Just over six years later, Employer provided City medical documentation from his physician indicating he reached maximum medical improvement (“MMI”). City paid Employee permanent partial disability benefits for a one hundred percent loss of his foot and an additional five percent loss to his leg upon receipt of such documentation.
The trial court waded through conflicting evidence concerning Employee’s impairment rating and when Employee reached MMI. It was determined Employee’s amputation below the knee entitled him to statutory benefits for 150 weeks under Neb. Rev. Stat. Ann. § 48-121(3). The trial court reasoned that Employee had not lost all functional use of his left leg, but his loss of thigh strength and atrophy combined with his knee pain reduced the function of his leg beyond the loss of his foot. Employee suffered a twenty percent loss of function to his leg, entitling him to forty-three weeks of disability benefits. Employee was awarded a combined total of 193 weeks of compensation, rejecting Employee’s argument that he was entitled to an award for the loss of each toe on his left foot in addition to the loss of that foot.
On appeal, Employee argued the trial court (1) failed to evaluate loss of use of his leg without the prosthesis attached when determining his impairment; (2) should have awarded him compensation for the total loss of use of his leg; and (3) erred in failing to award him consecutive disability benefits for a total loss of all his toes, his foot, and use of his left leg.
The Nebraska Supreme Court held the trial court did not err in failing to evaluate Employee’s loss of use of his leg without his prosthesis attached since Employee did not lose all functional use of his left leg. The court reasoned Employee, without his prosthesis, could pick his left leg up waist high, crawl up stairs, climb ladders, and navigate uneven terrain by crawling, scooting, or sliding. Accordingly, the trial court was not in error in determining Employee’s loss based on the use of his prosthesis.
To bolster his argument in favor of an award for a total loss of use for his left leg, Employee turned to the practical intents and purposes test, which derived from Pennsylvania, and was cited in Jacob v. Columbia Ins. Group, a Nebraska Court of Appeals case. 2 Neb. App. 473, (1994). In essence, the test has been used to determine whether a disability to a claimant’s body renders such a body part to serve “no real purpose.” Applied in Melton, Employee argued he sustained a 100 percent loss of use of his left leg. However, the court held Employee’s left leg could not be rendered “useless” because he retained enough strength in his left leg to successfully use the prosthetic device by being able to bend his knee and support weight on the residual limb. Therefore, although Employee’s leg was not useless, Employee suffered an additional twenty percent loss of function in his leg that went beyond what would have otherwise been expected after amputation of his left leg below the knee.
Finally, Employee asserted he was entitled to consecutive amounts of disability benefits for the loss of his five toes, the loss of his left foot, and the total loss of his left leg under Neb. Rev. Stat. Ann. § 48-121(3). However, the court directed Employee to the four corners of the law and held § 48-121(3) explicitly stated a below-the-knee amputation was the equivalent of a loss of a foot and did not equate to the loss of one’s entire leg. The court turned to the policy behind the law and reasoned a party may not have double recovery for a single injury. Accordingly, Employee’s loss of his leg below-the-knee would obviously include the loss of his toes under § 48-121(3) since the legislature limited the loss to the foot.
Ultimately, the court upheld the trial court’s determinations that Employee did not suffer a total loss of use of his leg because it appropriately compensated Employee for the functional loss of his leg that was not already accounted for in the compensation for the loss of his foot. Further, the court upheld the trial court’s award of loss of use benefits for the leg and refused to extend double recovery to Employee.
This article was prepared by Erickson Sederstrom’s law clerks Alison Clark and Rob Toth under the direction of employment attorney Bonnie Boryca, who can be reached at 402-397-2200.