Jan. 6, 2010 – When Dawn Sands took her employment discrimination complaint against Menard, Inc. to arbitration, she sought an amount for lost earnings rather than reinstatement to her old job as the company’s executive general counsel.
Both Sands and Menard agreed that their dispute over gender bias had left no basis for a working relationship. Yet, the arbitration panel of three employment lawyers directed Menard to give Sands her old job back to send a message that an employer cannot illegally fire an employee and remain rid of her.
In briefs before the Wisconsin Supreme Court, the parties ask the justices to consider whether the arbitration panel exceeded its authority. Given that reviewing courts will not disturb an arbitration award for mere errors of fact or law, Menard needs to convince the justices that the award “manifestly disregarded” the law or that it violated a strong public policy favoring the client’s right to choose counsel.
Willful violations
Sands stated that John Menard, the president and CEO of the family-owned corporation Menard, Inc., recruited her to oversee and assess the business’ in-house legal department. Despite his apparent enthusiasm for her services, Sands claimed that Menard paid a male attorney she supervised nearly twice as much and gave him better working conditions. When Menard fired this male attorney and Sands assumed his responsibilities in addition to those she already carried, Menard balked at adjusting Sands’ salary accordingly.
Eventually, Sands informed Menard and the company’s head of human resources that she believed she had a claim under the Equal Pay Act and Title VII of the 1964 Civil Rights Act. Sands reported company officials threatened to fire her and that after fruitless efforts to resolve the problem, a visibly agitated Menard came at her with “his hand in a fist” to remove her from the company’s premises. Sands said she was scared and humiliated.
Menard and Sands agreed to resolve their dispute through binding arbitration. The arbitration panel found that Menard willfully violated the federal anti-discrimination laws and fired Sands in retaliation for asserting her rights. The panel awarded compensatory and punitive damages totaling approximately $1.6 million, noting “the extreme reprehensibility” of Menard, Inc.’s conduct toward Sands and individuals the company feared might testify on Sands’ behalf.
Further, the panel awarded Sands a reinstatement at a certain salary to be followed by a specified raise. The panel stated that failing to reinstate Sands “would, in some sense, reward the company for its mistreatment of her” and would “send the wrong message to company employees who otherwise would be inclined to make meritorious complaints about unlawful conduct occurring within the company.”
The Eau Claire Circuit Court confirmed the award, but Menard refused to reinstate Sands, leading to a contempt citation. Menard appealed the reinstatement award to the Wisconsin Court of Appeals and lost.
Parties said they didn’t want reinstatement
Menard said that the panel ignored the remedies the parties agreed to in the arbitration agreement, exceeding its authority. “Sands herself repeatedly admitted that reinstatement was not a viable option,” Menard wrote, noting that Sands told the arbitration panel that she suffers extreme emotional distress even with the passage of time.
“The panel dispensed its own brand of justice when it ignored the parties’ agreement and disregarded Sands’ election of remedies,” Menard wrote.
Menard points out that even as the circuit court confirmed the award, it commented that the reinstatement was “really stupid” because “the relationship between the parties isn’t good at all.” The court of appeals believed that reinstatement was possible if only for a moment, at which point ethical rules for withdrawal or discharge would apply.
But Sands argued that the panel acted entirely within the arbitration agreement that authorized any remedy available at law. And case law instructs that reinstatement is the preferred remedy in employment discrimination cases, Sands said, citing Williams v. Pharmacia, Inc., 137 F.3d 944 (7th Cir. 1998), and Brockmeyer v. Dunn & Bradstreet, 353 N.W. 2d 834 (Wis. 1983). “At bottom, Menards contracted with Ms. Sands for the Arbitrators’ award and is now displeased with its bargain,” she wrote.
Sands argued that the arbitrators recognized Menard’s hostility toward her, “but also considered the broader implications of the reinstatement award.” She warned that without reinstatement, the arbitrators would effectively permit Menard to continue to unlawfully discriminate.
Client’s right to choose counsel
Menard said that the arbitration panel failed to consider that the Wisconsin Constitution preserves the client’s right to choose a lawyer and Sands no longer enjoys Menard’s trust or confidence.
Sands repeatedly referred to members of the Menard family as “idiots, liars and acting like the Mafia,” Menard wrote. Further, Sands’ sister had been engaged to John Menard and is now pursuing her own litigation against him.
But Sands responded that the right to choose one’s own counsel is not absolute, noting instances in which the court has denied a litigant’s motion to substitute counsel or revoked the pro hac admission of a client’s preferred counsel because the court’s schedule could not accommodate it.
In this instance, Sands said the state constitution’s right to choose counsel is superseded by the federal anti-discrimination laws. The Equal Pay Act and Title VII “reflect the broad Congressional intent that workplaces should be free of discrimination and that employees should not be retaliated against for asserting their rights to be free of discrimination at work,” Sands wrote. “That Congressional intent must preempt any alleged ‘right’ to discriminatorily select one’s counsel or to use the Ethical Rules to perpetuate an unlawful refusal to reinstate.”
“Menard argues that it cannot ‘trust’ Ms. Sands and, as such, should not be required to comply with the Arbitrator’s award of reinstatement,” Sands wrote. “Tellingly, Menard only stopped ‘trusting’ Ms. Sands after she asserted her right to equal pay. Prior to that time, Ms. Sands was Menard’s trusted lawyer of choice for nearly seven years. To reward Menard’s self-serving lack of trust argument by vacating the award of reinstatement would be to perpetuate and reward Menard’s discriminatory and retaliatory actions.”
Further, Sands argued that courts “have unanimously ruled” that in-house counsel can bring discrimination cases and so it makes little sense to find reinstatement is unavailable as a remedy. Such an incongruous result “would significantly undercut the authority of the decisions allowing in-house counsel to sue, and would improperly single out and bar these employees from the make-whole remedies available to other employees,” she wrote.
In a reply brief, Menard argued that the supreme court did not have to broadly conclude that discharged in-house counsel may never be reinstated. Rather, the justices should consider the circumstances of this case “to conclude that reinstatement is unwarranted and unworkable here.”
Ethics rules prohibit reinstatement?
Menard said that the panel ignored the state’s ethics rules that govern attorney behavior and protect the client’s ability to trust and confide in a lawyer.
Specifically, Menard said that the Supreme Court Rules impose on Sands an obligation to walk away from a representation once discharged by the client because the client has the sole discretion to hire or fire a lawyer. Further, Menard argued a lawyer cannot undertake or resume a representation in which the lawyer has a conflict of interest of which Sands has several. In addition to her legal work against Menard in the arbitration, Sands is seeking contempt damages against the company and is a witness in her sister’s suit against Menard.
But besides her insistence that federal anti-discrimination laws preempt the state ethics rules, Sands characterized as “tortured” Menard’s reading of the rules. For example, she noted that an attorney is not required to withdraw from a representation because of a concurrent conflict of interest. A lawyer may continue when she “reasonably believes” that she can provide competent and diligent representation, the client gives informed, written consent, and other conditions are met.
However, Menard indicated in his reply brief that he was not waiving the direct conflict posed.
Oral arguments in this case were scheduled for Jan. 5.
By Alex De Grand, Legal Writer, State Bar of Wisconsin
