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I hear a lot of interesting stories in my line of work:  there are as many interesting employment law problems as there are interesting people, which is to say, a lot.  A recent opinion from the United States Court of Appeals for the Fourth Circuit encapsulates this variety nicely, and serves as a reminder not to disregard unorthodox employee requests.

In EEOC v. Consol Energy, the Equal Employment Opportunity Commission sued Consol Energy on behalf of one of Consol’s employees, Beverly K. Butcher.  Mr. Butcher worked diligently for Consol Energy for 37 years when his employer decided to install a biometric hand scanner to track employee attendance.    Consol required each employee to have his or her hand scanned, and then, upon entering or departing the workplace, required the employee to wave the hand over the scanner.  

Mr. Butcher identifies as a devout evangelical Christian.  While the hand scanner seems like a fairly innocent and efficient way to track employees, Mr. Butcher did not see it that way.  Mr. Butcher’s faith informed his belief in an Antichrist, whose followers are condemned to everlasting punishment.  The followers of the Antichrist are identified by the Mark of the Beast.  Mr. Butcher feared that the use of the hand scanner would result in his receiving the Mark of the Beast.  No one disputed that Mr. Butcher’s belief were sincerely held.  Indeed, Mr. Butcher resigned rather than submit to the new hand scanning rules, after his employer failed to accommodate his request.

The EEOC sued on Mr. Butcher’s behalf, arguing that the failure to accommodate Mr. Butcher’s sincerely held religious belief violated Mr. Butcher’s civil rights.  A federal jury in West Virginia returned a verdict in excess of $550,000 in Mr. Butcher’s favor, finding that Consol had constructively discharged Mr. Butcher in violation of his rights to accommodations for his religious beliefs.   For want of a simple accommodation, Consol Energy risked a verdict in excess of a $550,000, not to mention the related legal fees and expenses.  Interestingly, Consol does not appear to have offered any operational reason for its failure to accommodate: other employees were permitted to clock in by entering their personnel numbers into a keypad, without additional cost or burden to the company.  Indeed, email produced in the case seems to indicate that the employer was scoffing at the religious objection.  

It would have been cheap and easy for Consol to accommodate the request.  The failure to do so appears to be based on a judgment about the validity of the request.  This type of fact pattern presents itself often in many contexts:  religious accommodations, disability accommodations, requests for medical leave.  It is easy, as Consol Energy appears to have done, to disregard requests as “kooky” or “odd.”  This is a mistake.  If the accommodation is not needed, or is overburdensome, or is not based in fact, that will come out in the accommodation process.  The danger lies in not following the process that such a request, however strange, requires.  Certainly, it is well worth the effort in the beginning to avoid the stress and expense of litigation later.

Reprinted with permission from the June 27th edition of the The Legal Intelligencer © 2017 ALM Media Properties, LLC. All rights reserved.Further duplication without permission is prohibited.

Earn out clauses in business acquisitions are notoriously fertile ground for disputes.  Complicated post-closing performance metrics, access to information, modifications to accounting methodologies after closing, tracking and collection of revenue information all present opportunities for buyer and seller to disagree.  The classic struggle of seller’s effort to maximize sale return juxtaposed against buyer’s focus on transforming the operations of the acquired enterprise for long term success necessarily create friction.  Both sides bring their unique perspectives to the interpretation of the exhaustively negotiated purchase agreement with the new benefit of hindsight. 

Certainly, arbitration pursuant to the Commercial Rules of the American Arbitration Association is common in any number of business contracts.  When the parties elect that process, they accept the applicable Rules and agree to adopt the procedures which have been developed by AAA.  In the earn out or deferred consideration context, however, acknowledging the sheer number of potential conflicts surrounding inherent accounting practices, scriveners often  incorporate a unique mechanism for dispute resolution in their  transactional documents.   When the issue is theoretically limited to a calculation, the parties go to great pains to define the applicable accounting terms and may design a system of dispute resolution which does not contemplate many of the applicable provisions of the Commercial Rules or empower any judicial or quasi-judicial third party to control the process. 

Indeed, transactional practitioners have developed language which seeks to avoid the intricacies of AAA arbitration in preference for what should be a predictable accounting calculation based on verified numerical results of operations.  In such cases, parties most commonly agree to submit any dispute related to the earn out to an informal resolution process using mutually agreed upon accountants to serve as “expert consultants and not as arbitrators.” The sole purpose of the accountants’ participation is the review of financial information relating to post closing operations and the calculation of deferred consideration; which calculation would be “final and binding”. 

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