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Employment Law

April 2007

In this Issue

1 New York Court of Appeals Holds Form U-5 Statements Are Absolutely Privileged

New York Court of Appeals Holds Form U-5 Statements Are Absolutely Privileged

2 The EEOC and the Financial Services Industry

3 The Stray Comment Strut: The Second Circuit Clarifies How to Analyze Alleged “Stray” Comments in Discrimination Cases

4 New French Immigration Rules For Foreign Workers

5 ALJ Awards Front Pay to SOX Whistleblower Who Rejected Reinstatement

6 Joint Employer Status: Minimize the Risk of “Their” Employees Becoming Your Employees

7 Last Chance Agreements — Protecting Employers While Giving Employees a Second Chance

9 Interaction of the FMLA and the ADA — Employers May Hold Employees’ FMLA Leave Against Them in Making ADA Determinations

11 Pending Before the Supreme Court: When Can Employers Be Held Liable for the Biases of Individuals Other Than Decision-Makers

Resolving an issue of significance to employers in the financial services industry that has long divided New York state and federal courts, the New York State Court of Appeals definitively held that “[s]tatements made by an employer on a NASD employee termination notice [(Form U-5)] are subject to an absolute privilege in a suit for defamation.” In a 4-2 decision in Rosenberg v. Metlife Inc., the Court of Appeals agreed with Metlife that an absolute, and not qualified, privilege applies to Form U-5 statements because (1) the filing of a Form U-5 with the NASD is a preliminary step in a quasi-judicial process, and (2) an absolute privilege best serves the public interest in encouraging full and truthful disclosure.

In 1999 and again in 2000, Metlife internal audits revealed that its all-boro agency accepted third-party checks for the payment of premiums for life insurance policies – payments that can be indicative of speculative insurance practices and possible money-laundering activities. As a result of its findings, Metlife closed the agency and relocated its employees, including Rosenberg, to another office. Following another internal audit in 2003, Metlife fired Rosenberg. The Form U-5 Metlife filed with the NASD stated that the reason for Rosenberg’s termination was that Rosenberg “appeared to have violated company policies and procedures involving speculative insurance sales and possible accessory to money laundering violations.”

12 Alive and Well: New York’s Employee Choice Doctrine


f you have any questions or would like more information concerning any of these topics, please contact:

Kevin B. Leblang 212.715.9306 kleblang@kramerlevin.com

Robert N. Holtzman 212.715.9513 rholtzman@kramerlevin.com

The contents of this pdate are intended for general informational purposes onl , and individualized advice should be obtained to address any specific situation.

Rosenberg filed suit in the Southern District of New York seeking damages for, among other claims, libel against Metlife. Rosenberg asserted that the statements made on his Form U-5 were defamatory and made with malicious intent. At the time the district court considered Rosenberg’s motion, New York case law was sharply divided. While a number of New York courts had applied absolute immunity to statements on Form U-5 and wholly immunized communicants from liability in a defamation action, other courts held that statements made on Form U-5 were protected only by qualified immunity and thus actionable if made with malice. The district court granted Metlife’s motion to dismiss Rosenberg’s libel claims,

continued on page 10

Kramer Levin Naftalis & Frankel LLP

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