UNIVERSITY OF MISSISSIPPI

SCHOOL OF LAW

EMPLOYER-EMPLOYEE RELATIONS

Professor Secunda

FINAL EXAM

Date: April 29, 2004 Time Allowed: 3 Hours, 30 minutes

Instructions

1. This is an open book examination. All outside information and materials are permitted.

2. Please "sign" the following pledge by writing your examination number on the line after the pledge. DO NOT write your name on this examination or on any part of your bluebook or computer exam.

By the act of submitting my examination, I do pledge, on my honor, that I

have neither given nor received any improper assistance and that I will

report any improper assistance given or received by others of which I am

aware.

Exam No. ______________

3. No examinations may leave the examination room during the exam. Return your examination with your bluebooks or your floppy disk after you have finished.

4. The first thirty (30) minutes of the examination is recommended for the purpose of reading over the examination and organizing your thoughts.

GOOD LUCK AND HAVE A GREAT SUMMER!

DO NOT TURN TO THE NEXT PAGE UNTIL INSTRUCTED

THREE QUESTIONS

QUESTION ONE (One Hour; worth 35 points)

Dialoft is a remarkable new drug marketed by Ackerman Labs, a large pharmaceutical company with over 1000 employees. In recent years, Dialoft has had excellent success in fighting arthritis and other pain syndromes.

Carmine Carlito was hired by Ackerman on a full-time basis four and half years ago as both in-house counsel and regulatory affairs director. Carmine left a very lucrative career at a posh corporate firm in order to come to work for Ackerman. Although Carmine signed a non-compete provision at the beginning of his employment, limiting him from competing with any direct competitor against Ackerman for 3 years in the United States following his employment, Carmine did not sign any other type of employment agreement.

Recently, it came to Carmine's attention that Dialoft was causing bladder tumors in about 5% of patients who take Dialoft. He immediately went to his boss, Howie Cheatem, explained the problem, and asked that Dialoft be pulled from the market until further studies could be completed on the drug. When Cheatem refused, Carmine threatened, "C'mon, Howie. We've known each other for a long time. Remember when I was hired you said that we would grow old together? Don't make me report this to the FDA." Howie said he would think about the Dialoft situation overnight.

Next day, an inter-office memo was dropped off at Carmine's desk, stating:

You are terminated immediately as in-house counsel and regulatory affairs director. I no longer have faith in your leadership and can no longer trust you as in-house counsel. I've also heard through the grapevine that your personality is grating and many people will be happy to see you go. Best, Howie.

Carmine, who still had not reported Ackerman to the FDA, is stunned by his termination because he was about to fully vest in Ackerman's employee pension benefit plan. He also believes that he was terminated because a week ago he told Howie that he had prostate cancer and that he would be missing a large number of days at work to treat his illness. In fact, two days ago, Carmine had asked for medical leave to have surgery done in a month's time on his prostate and informed Howie he would need two weeks off to undergo surgery and recover from the surgery. Howie did not seem pleased at the time.

Unbeknownst to Carmine, two days before his termination (the day before he told Howie about the Dialoft problem), Howie had terminated the company's pension benefit plan and, after paying off all pension obligations and responsibilities, had added a cool one million dollars to the company's coffers. At the same time, Howie had also amended the employee health benefit plan so that male-type cancers were no longer covered under the health plan's provisions.

A. Carmine comes to your law office to seek legal advice. He asks you to evaluate what claims he can possibly assert against Ackerman Labs. What are his chances of success? What additional information (if any) do you need to know? Regardless of your analysis, please inform Carmine about possible remedies he has for each claim.

B. Based on Rubin and Shedd's human capital theory, would Rubin and Shedd be in favor of enforcing the non-compete agreement against Carmine under these circumstances?

QUESTION TWO (One Hour; worth 35 points)

Bricks and Mortar Co. ("BMC") is a family-owned brick and mortar manufacturer, employing about 500 workers. Most of these workers are hourly workers who are in production and maintenance, but there also about 50 salaried employees and 50 part-time employees.

All is well at BMC until there are reports from the field that one of its batches of mortar was defective and bricks are now falling off houses built with BMC mortar in all parts of the country. Attempting to fix the problem as quickly as possible, BMC offers incentives to all of its employees to work longer hours in order to replace the defective mortar and deliver new bricks to affected clients and customers. BMC offers a $1000 bonus for any employee who works more than 80 hours in any one workweek. All hourly and part-time employees make $10 per hour, while all salaried employees make $50,000 per year.

Pesha Pestle is a Brick Supervisor, who supervises three Brick Production Workers, although she does not exercise any meaningful discretion in carrying out her duties. Believing she is eligible for the $1000 bonus, she works 100 hours in one workweek, only to be told by BMC she is not eligible for the bonus. To make matters worse, thoroughly exhausted at the end of her 100 hour week, she ends up tripping on some bricks on the plant floor and hitting her head on one of the giant iron vats that makes the mortar mix. She is knocked unconscious and suffers a concussion because she was not wearing her hard hat.

BMC is unsympathetic to Pesha because she was orally told on many occasions that there was a clear federal hard hat standard that required her to wear her hard hat at all times in the plant. Already upset that she was never paid additional compensation for her 100 hour workweek, Pesha files an employee complaint not only with the Wage and Hour Division of the U.S. Department of Labor, but also files a complaint with OSHA for good measure complaining about dangerous work conditions.

Two weeks later, Isabella Inspector from OSHA shows up to inspect the entire plant based on Pesha's complaint. BMC refuses to allow Isabella access to any part of the plant without a warrant. Isabella says she does not need a warrant and threatens to judicially force BMC to open its entire plant for inspection.

The following week, when news gets out to the public that BMC manufactured defective mortar and had dangerous conditions in the workplace, BMC's stock plummets and BMC is forced to lay off 125 workers immediately.

A. You are in-house counsel for BMC. BMC wants to know its potential legal exposure with regard to Pesha Pestle, OSHA, and the laid-off workers.

Because BMC plans to fight the OSHA complaint, please discuss the manner in which BMC can challenge not only Pesha's complaint, but also the legality of the hard hat standard itself (which it never agreed with in the first place). Make sure you also discuss potential remedies regardless of the way you believe the various claims are likely to be resolved, including how the OSHA enforcement process works with regard to finding violations and the imposition of penalties.

B. Pesha later quits her job at BMC in protest of the dangerous work conditions at the plant. She thereafter applies for unemployment compensation benefits. Is she eligible for benefits? Regardless of your conclusion, describe how her compensation will be calculated, and how long benefits will last, if she is found to be eligible?

Question Three (One hour; worth 30 points)

Comment critically on the following statement:

"A sweeping overhaul of many employment laws and doctrines are now well over-due. Many statutes and common-law doctrines are based on assumptions from the 19th and 20th century which no longer reflect the current realities of the 21st century workplace. Such changes will help to reduce confusion between workers and employers, help businesses do better economically, and, most importantly, do a better job of protecting worker rights. As U.S. Secretary of Labor Elaine Chao has recently stated: 'When workers know their rights and employers know [their obligations], everybody wins.'"

In your answer, you should discuss the following: What is the current state of the law in two major areas of employment law we have discussed this semester? Do you favor changing or retaining these present legal approaches? What arguments support your positions, and what is your response to the best argument that could be mustered against your positions? Integrate cases, statutes, and policy arguments in supporting your answer.