Troublesome employes who have been warned, "You'll never work in this industry again!" may have been handed the grounds for a very lucrative lawsuit.
The U.S. Court of Appeals in San Francisco, ignoring what may have been a signal from the U.S. Supreme Court to rule the other way, on Aug. 15 gave the green light to just such litigation waged by the former marketing director of a label-printing firm. The ruling should make it easier for other workers to sue if they think they have been blackballed from employment by an entire industry.
It wasn't the first time the San Fransisco circuit judges considered the complaints of Frank J. Ostrofe, who says he roiled the label business by refusing to go along with the custom of fixing bids in secret negotiations so that preselected printers would get certain contracts. He went after business that had not been allocated to his employer, H. S. Crocker Co., and says his efforts drew such loud yelps from the other firms that Crocker's top management eventually forced him to resign.
A trial court threw out his suit under the antitrust laws, saying he had no right to raise the price-fixing issue because it was not directed at any market in which he was a buyer. The court also ruled that he could not win on claims that companies had ganged up to keep him from working. The latter ruling came at least in part because Ostrofe, in the wake of the acrimony surrounding his refusal to play ball in the bid-rigging schemes, did not even apply for marketing jobs at other label makers.
The appellate court reversed the trial court, but was told last year by the Supreme Court to reconsider the case in light of a high court ruling making it harder for those indirectly injured by antitrust violations to bring suits and collect damages.
One of the three San Francisco judges hearing the Ostrofe case thought the Supreme Court really was saying that the case should be thrown out, but the other two did not agree. After reconsideration, they came to the same conclusions they had originally reached.
Their newest ruling says that "although Ostrofe was not a competitor or consumer in the labels market," the scheme to allocate customers and fix prices could not succeed as long as he was marketing director for Crocker, so the injuries he suffered from being forced out were quite directly related to the unlawful plan.
But the ruling opens the way for those fired for other reasons, too, because it also focuses on the market for the employment services of Frank J. Ostrofe. If the companies all refused to compete in that market, that can be an antitrust violation too, the court said. And it is not even necessary for Ostrofe to seek a job in the industry if he has good indications that such a search would be fatal.
There's one big plus in bringing such a suit under the antitrust laws rather than the increasingly liberal concept of unjust dismissal: A winning plaintiff in an antitrust suit gets three times the amount of his or her actual losses, while in other kinds of suits, only actual damages are awarded.
In other cases, courts ruled that:
* Lower-level employes can be prosecuted under criminal laws against unauthorized storage and disposal of hazardous wastes . But it is going to be hard for the government to win convictions. In the first circuit court ruling on whether or not such charges can be laid against workers who are not owners or operators of dump sites, the U.S. Court of Appeals in Philadelphia took a broad reading of the word "persons" in the provisions banning unlicensed waste-disposal locations. But at the same time, the judges said the government must prove in any cases against non-managers that the workers knew both that the company had a legal obligation to get a permit for the site and that it had not gotten one.
(U.S. v. Johnson & Towers, August 15)
* Some tax liabilities leapfrog ahead of all other claims in a liquidation of bankrupt operation. When a troubled company has been run under the protection of the bankruptcy laws in a reorganization effort, administrative expenses racked up during that period have first priority when it finally comes to selling off the assets and distributing the proceeds. The federal government got into a fight with other creditors over whether Social Security taxes withheld from employes during the reorganization attempt -- but not paid to the Treasury -- were to be treated as administrative expenses.
The bankruptcy court said no, and lumped them with claims of the sixth priority, meaning that the government's chances of collecting were slim. But the U.S. Court of Appeals in Richmond reversed, ruling not only that the money should be paid off before other claims, but that the government got similar first-priority treatment for interest and penalties due because of the late payment of the withheld funds.
(U.S. v. Friendship College, July 5)
* Charities are going to have to pay up when they cause injuries, just like any other organizations. The Ohio Supreme Court voted to jettison in that state the old English concept that charitable organizations should be immune from tort suits. The idea behind the ancient concept was that because such groups serve the public good, all of their resources should be marshaled for that primary purpose.
But the justices decided that such a policy puts too much of a burden on the person who, for instance, slips on the ice on the walkway to an orphanage. Protecting the charity from a damage suit means that accident victims are, in effect, being forced to make a contribution to the charity equal to the amount of damages they could collect against some other property owner, and that is simply not just, the court said.
(Albritton v. Neighborhood Centers, August 1)
* Employer demands that workers take lie detector tests were unlawful in West Virginia even before the state legislature said so. In 1983, West Virginia lawmakers decided that, except for law enforcement agencies and companies distributing drugs, no employer could demand that either job applicants or those on the payroll submit to polygraph examination. But the state's Supreme Court of Appeals had little difficulty finding unlawful a firing for refusal to take such a test, even when the incident occurred before the polygraph statute was enacted. The demand violates a state policy against invasion of privacy that was clear even before the new law, the jurists said.
(Cardle v. General Hugh Mercer Corp., July 13)