U.S. Supreme Court: Retaliation Causation

University of Tex. Southwestern Med. Ctr. v. Nassar (opinion here) is the Supreme Court opinion setting forth the "causation" standards that apply to retaliation cases under Title VII of the Civil Rights Act of 1964.

Nassar was a doctor and professor at Univ. of Texas. He also worked at the University's medical center.  He  complained of harassment and discrimination by Dr. Levine. He tried to work only at the hospital to avoid Dr. Levine's harassment at the University. But the University blocked his effort, claiming that University policy required attending doctors also to be professors at the medical school.

So, Nassar sued for retaliation, claiming discrimination / constructive discharge, and retaliation in that the University blocked his hiring at the hospital.  After Nassar won a verdict, the Supreme Court accepted review to determine whether the retaliation claim was decided under the correct "causation" framework.

The Court decided that in Title VII cases, the causation standard is "but for," which means that the employer would not have taken negative action against the employee "but for" the employee's engaging in protected activity. Put another way, the harm would not have occurred if the employee had not complained.

Along the way, the Supreme Court majority explained the causation standard that applies to Title VII discrimination cases.  This is known as the "motivating factor" standard:

An employee who alleges status-based discrimination under Title VII need not show that the causal link between injury and wrong is so close that the injury would not have occurred but for the act. So-called but-for causation is not the test. It suffices instead to show that the motive to discriminate was one of the employer’s motives, even if the employer also had other, lawful motives that were causative in the employer’s decision. This principle is the result of an earlier case from this Court, Price Water­house v. Hopkins, 490 U. S. 228 (1989), and an ensuing statutory amendment by Congress that codified in part and abrogated in part the holding in Price Waterhouse, see §§2000e–2(m), 2000e–5(g)(2)(B). 

Why the separate standards, you ask?  Because in Title VII, the discrimination provisions are covered by a specific statute, and that statute was amended to include the motivating reason standard.    The anti-retaliation section is in another part of Title VII.  So, what the Court really decided was that the 1991 amendment to Title VII's causation provision did not apply to the retaliation piece. 

It remains to be seen whether this decision will influence California courts' interpretation of the causation standard. Earlier this year, the California Supreme Court examined causation standards in "mixed motive" cases (discussed here). We will see what the lower courts do with Nassar in the coming months. 

DGV

 

U.S. Supreme Court: Pharmaceutical Sales Reps are FLSA Exempt

The Supreme Court resolved a split between circuit courts and held that pharmaceutical sales representatives engage in "sales" and therefore are exempt under the Fair Labor Standards Act.

Under the FLSA and California law (and other states' laws), "outside salespersons" are exempt from minimum wage and over time law.

The issue for the Supreme Court was that pharmaceutical reps do not really "sell" drugs to doctors. They "sell" to the doctor that the doctor should promise to prescribe the pharma company's medicine.  Plaintiffs argued that because the rep makes no "sale" he or she should not be considered a salesperson.  Rather, they are non-exempt "promoters."

The Department of Labor took the position that Pharmaceutical reps were non-exempt beginning in 2009.  But the DOL's reasoning apparently evolved as to "why."  According to the Court, the Agency argued:

“[a]n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.” Brief for United States as Amicus Curiae 1213 (hereinafter U. S. Brief).13 .

That would seem to remove from the exempt a whole lot of sales persons who previously were exempt, and it was much narrower than regulations and prior case law.  So, the Court refused to defer to the DOL interpretation.

The decision was 5-4.  The dissent agreed that the government's own interpretation was not worth much.  But the dissent's opinion was that the duties performed do not amount to "sales" but rather were promotion activities and non-exempt.

This decision may not directly affect California's outside sales exemption. But it should, because California law does not go into any level of detail regarding what is an "outside salesman."  Therefore, the courts and agencies may will follow the Supreme Court's opinion regarding what counts as a sale.

The case is Christopher v. Smithkline Beecham and the opinion is here.

U.S. Supreme Court on Federal Employees' Access to Court

WARNING - Most of you will not care about this. The Supreme Court held today that a federal government employee covered by the Civil Service Reform Act must bring employment claims before the Merit Systems Protection Board, rather than district court.

The MSPB is the exclusive forum, even if the employee is raising a constitutional law claim, and even if the employee is ineligible for federal employment. 

In this case, Elgin did not register for the draft and was fired because people who do not register are ineligible for federal employment.  He tried to bring a claim at the MSPB, but an ALJ held that MSPB had no jurisdiction over his claims. So, he sued in district court, which denied his claim on the merits.  He then appealed to the First Circuit Court of Appeals, which decided that both the district court and the First Circuit lacked jurisdiction.

The Supreme Court agreed, holding that the MSPB can decide constitutional law issues, and that MSPB rulings are subject to review by the Federal Circuit Court of Appeals and by the Supreme Court.

The case is Elgin v. Dept. of Treasury and the opinion is here. 

U.S. Supreme Court Holds No Self-Care FMLA Claims Against State

I know it's been a while. I'm on strike waiting for Brinker.  In the meantime, though, the U.S. Supreme Court held that the Family and Medical Leave Act's "self-care" provision is not applicable to the states (and their agencies) in federal courts because of the Eleventh Amendment to the Constitution.

While interesting to constitutional law scholars and state governments, the Court's decision in Coleman v. Court of Appeals of Maryland (opinion here) does not affect FMLA claims against private employers at all.  It also does not disturb the Court's prior decision in Nevada Dept. of Human Resources v. Hibbs, 538 U. S. 721 (2003), in which the Court held that FMLA claims based on leave to care for family members or baby bonding are authorized against the states.

The difference between this case and Hibbs is that the Fourteenth Amendment to the U.S. Constitution permits Congress to implement its guarantee of due process and equal protection via "appropriate legislation."  In Hibbs, the Court decided that baby-bonding and family care leave are "appropriate" because Congress was concerned with sex discrimination, and that there was evidence that states were engaging in sex discrimination against parents and women caring for family members.  The "self-care" provision, though, is applicable to both sexes and is intended to remedy the costs of losing a job when one is ill.  That subject is not appropriate for legislation under the Fourteenth Amendment. As the plurality opinion put it:

what the family-care provisions have to support them, the self-care provision lacks, namely evidence of a pattern of state constitutional violations accompanied by a remedy drawn in narrow terms to address or prevent those violations.

There, you're all constitutional lawyers now.  The decision was fractured, with only 4 justices signing the lead opinion (Kennedy, Thomas, Roberts and Alito).  Four justices dissented, joining an opinion written by Justice Ginsburg (Kagan, Sotomayor, and Breyer).  Justice Scalia did not join the opinion, but agreed that the FMLA's self-care section does not apply to the states.  Justice Scalia's concern is that the analysis the Court uses to decide if the Eleventh Amendment bars a lawsuit against a state is mushy and should be revised.

New U.S. Supreme Court Opinion May Signal End of California Courts' Arbitration Jurisprudence

In West Virginia, the state Supreme Court held that, as a matter of "public policy," pre-dispute arbitration agreements covering claims for personal injury arising from nursing home patronage are void.  In a terse, unsigned opinion, the U.S. Supreme Court reversed the state high court.

West Virginia's prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is a cate- gorical rule prohibiting arbitration of a particular type of claim, and that rule is contrary to the terms and coverage of the FAA.

 

The West Virginia Supreme Court alternatively held that the arbitration agreement at issue was "unconscionable,"  a state law defense that is a valid exception to the Federal Arbitration Act. 
The U.S. Supreme Court also vacated that alternative holding:

in its discussion of the alternative holding, the state court found the arbitration clauses unconscionable in part because a predispute arbitration agreement that applies to claims of personal injury or wrongful death against nursing homes "clearly violates public policy." Id., at 91a.

On remand, the West Virginia court must consider whether, absent that general public policy, the arbitration clauses in Brown's case and Taylor's case are unenforce-able under state common law principles that are not specific to arbitration and pre-empted by the FAA

Here's why you may care - In California, the Supreme Court and the courts of appeal have fashioned special rules for enforcing arbitration of certain kinds of employment claims (arising from statute or public policy).  Rather than banning agreements to arbitrate outright (as in the West Virginia case), the California courts have come up with a gauntlet of impediments, making it easy to hold arbitration agreements "unconscionable" based on criteria that would not apply to any other kind of contract.  Thus, the California courts apply different rules to agreements to arbitrate certain kinds of claims, but not others. 

Given the Supreme Court's recent case law, these state law rules may not be long for this world. Of course, Congress could amend the Federal Arbitration Act or the Supreme Court's membership might change, in which case all bets are off.

This case is Marmet Healthcare Center v. Brown and the opinion is here.

U.S. Supreme Court on Ministerial Exception to Title VII

The U.S. Supreme Court decided for the first time that there is a "ministerial exception" to anti-discrimination laws such as the ADA. The lower courts for many years recognized that exception.

At issue was Hosanna-Tabor Evangelical Lutheran Church and School and its discharge of a former teacher, Cheryl Perich. Perich was classified as a "called" teacher, rather than a "lay" one. Called teachers have to satisfy certain requirements, cannot be removed except for cause and by a vote of the congregation, and hold the title “Minister of Religion, Commissioned.”

As a called teacher, Perich 

taught math, language arts, social stud- ies, science, gym, art, and music. She also taught a reli- gion class four days a week, led the students in prayer and devotional exercises each day, and attended a weekly school-wide chapel service. Perich led the chapel service herself about twice a year.

Perich developed symptoms of narcolepsy, which resulted in her inability to perform her job. She later was discharged, after she threatened to file a Charge. The EEOC took up her case and sued on her behalf.

The District Court dismissed the case; the Sixth Circuit reversed, holding that a retaliation claim under the ADA could proceed against the Church.
The unanimous Court, recognizing there is a ministerial exception, put it this way:

We agree that there is such a ministerial exception. The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments.

The Court did not set out a specific test, but noted that (1) the Church held Perich out to be a minister (2) the Church had a ceremony and the congregation was involved in her investiture (3) she had significant religious training as a prerequisite (4) she held herself out to be a minister and even took a special tax deduction applicable only to members of a ministry (5) her duties involved significant religious teaching activities.


Based on that, the Court decided that Perich met the standards of the ministerial exemption.  The Court was careful to note that the term "minister" was misleading because the exception applies to religions that do not include "ministers."  The Court also refused to address the "parade of horribles" the EEOC argued, such as that Church employers would be exempt from wage-hour or criminal violations towards "ministerial" employees.  


The case is Hosanna-Tabor Evangelical Lutheran Church and School v. Perich and the opinion is here.

U.S. Supreme Court on FELA Liability

Most of you don't care about this, but when the U.S. Supremes decide an employment law case, I just have to post.

The Federal Employers’ Liability Act (FELA), 45 U. S. C. §51 et seq. renders railroads liable for employees’ injuries or deaths “resulting in whole or in part from [carrier] negligence.”  This is basically in lieu of workers' compensation benefits for railroad employees covered by the FELA.

Robert McBride, a locomotive engineer, injured his hand while operating a manual brake.  He brought suit against his employer, CSX.

The issue was what is the causation standard under the FELA.  Must the railroad's negligence be the "proximate" cause of the injury (i.e., the harm was the probable consequence of the risk), or does some other standard apply?  

The Court held that a much lower standard applies under FELA than under traditional negligence cases. Surveying years of precedent, the Court upheld the lower courts' jury instruction:  

defendant railroad “caused or contributed to” a railroad worker’s injury “if [the railroad's] negligence played apart—no matter how small—in bringing about the injury.” That, indeed, is the test Congress prescribed for proximate causation in FELA cases. 

Again, this decision is limited to injuries under the FELA. So, it is not applicable to most employers.  

The case is CSX Transportation, Inc.  v.  McBride and the opinion is here. 

Supreme Court Rules on Dukes v. Walmart

The U.S. Supreme Court issues its opinion in Dukes v. Walmart.  Here is the opinion.

Wal-Mart, the country's largest employer, faces the largest employment law class action ever.  We've posted about it a number of times as it made its way through the courts.  The U.S. Supreme Court decided to review the case to see if the Federal Rules of Civil Procedure authorizes a class action under the facts presented.  

The facts that give rise to the discrimination claims are as follows:

Pay and promotion decisions at Wal-Mart are generally committed to local managers’ broad discretion, which is exercised “in a largely subjective manner.” 222 F. R. D. 137, 145 (ND Cal. 2004). Local store managers may increase the wages of hourly employees (within limits) with only limited corporate oversight. As for salaried employees, such as store managers and their deputies, higher corporate authorities have discretion to set their pay within preestablished ranges. 

Promotions work in a similar fashion. Wal-Mart permits store managers to apply their own subjective criteria when selecting candidates as “support managers,” which isthe first step on the path to management. Admission to Wal-Mart’s management training program, however, does require that a candidate meet certain objective criteria,including an above-average performance rating, at least one year’s tenure in the applicant’s current position, and a willingness to relocate. But except for those requirements, regional and district managers have discretion to use their own judgment when selecting candidates for management training. Promotion to higher office—e.g., assistant manager, co-manager, or store manager—is similarly at the discretion of the employee’s superiors after prescribed objective factors are satisfied.

Thus, there is no "corporate wide" policy of intentional or even unintentional discrimination. Rather, the plaintiffs asserted the following theory regarding class-wide discrimination on behalf of hundreds of thousands of store level employees and supervisors:

local managers’ discretion over pay and promotions is exercised disproportionately in favor of men, leading to anunlawful disparate impact on female employees, see 42 U. S. C. §2000e–2(k). And, respondents say, because Wal-Mart is aware of this effect, its refusal to cabin its managers’ authority amounts to disparate treatment, see §2000e–2(a). . . . [T}the discrimination to which they have been subjected is common to all Wal-Mart’s female employees. The basic theory of their case is that a strong and uniform “corporate culture” permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers—thereby making every woman at the company the victim of one common discriminatory practice.

The plaintiffs sought injunctive relief, monetary relief that is considered "equitable" such as back pay, and punitive damages. They did not seek individual compensatory damages for emotional distress or front pay, because doing so would be unauthorized by Federal Rule of Civil Procedure 23.

Federal Rule of Civil Procedure 23,  contains a number of requirements.  The plaintiff must satisfy all of the 23(a) provisions:

“(1) the class is so numerous that joinder of all members is impracticable,“(2) there are questions of law or fact common to the class, “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and “(4) the representative parties will fairly and adequately protect the interests of the class”

The Supreme Court held that there was insufficient common law or fact questions.  5-4, the Court explained what "common questions of law or fact" means:

Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously,the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwideresolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

The  Court, 5-4, squarely rejected that a common policy of decentralized decisions can support a class action where the standard requries proof of common issues of fact:

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters.On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.

To sustain a class action under the federal rules, the plaintiff must establish one of the elements under Rule 23(b).  The plaintiffs in Dukes relied on Rule 23(b)(2):

Rule 23(b)(2) allows class treatment when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” 

Therefore, Dukes did not rely on (b)(3), which is the familiar standard permitting damages when "common issues" predominate.  This is the basis for most class actions seeking money.  Unlike (b)(2), classes under (b)(3) are entitled to "opt out," and must receive adequate notice.  Rule 23(b)(2) is more concerned with injunctive and declaratory relief.

The question was whether the monetary relief that the plaintiffs sought was authorized under  Rule 23(b)(2). The Court (9-0) held that it was not:

Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.

The Supreme Court held that "backpay" was not authorized generally by Rule 23(b)(2), and the only monetary relief available would be when it was intertwined with a particular injunction.  In Dukes' case, the injunction would not be common to each member of the class, anyway, so there could be no common monetary relief either.

So, we'll have an article, and you'll be hearing a lot about this case in the coming days.  I hope this brief summary was helpful.  It will result in less blockbuster class actions in federal court.  However, it does not necessarily mean that smaller class actions will be limited when there is a common practice causing a common injury.

Supreme Court Unanimously Limits Employers' Right to Attorneys' Fees in Discrimination Cases

In federal cases alleging discrimination, harassment, retaliation and violations of civil rights, when may a defendant employer recover attorneys' fees?  It is long settled that defendants may recover only when the plaintiff's claims are "frivolous, unreasonable or without foundation."  What about when just some of the claims are frivolous?  The Supreme Court answered that question, unanimously, with Justice Kagan writing the opinion:

Section 1988 allows a defendant to recover reasonable attorney’s fees incurred because of, but only because of, a frivolous claim. Or what is the same thing stated as a but-for test: Section 1988 permits the defendant to receive only the portion of his fees that he would not have paid but for the frivolous claim.

The Court then went on to hold that if the defendant spends fees on issues that deal with both frivolous and nonfrivolous claims simultaneously, the defendant may not recover fees:

But if the defendant would have incurred those fees anyway, to defend against non-frivolous claims, then a court has no basis for transferring the expense to the plaintiff. Suppose, for example, that a defendant’s attorney conducts a deposition on matters relevant to both a frivolous and a non-frivolous claim—and more, that the lawyer would have taken and committed the same time to this deposition even if the case had involved only the non-frivolous allegation. In that circumstance, the work does not implicate Congress’s reason for allowing defendants to collect fees. The defendant would have incurred the expense in any event; he has suffered no incremental harm from the frivolous claim. In short, the defendant has never shouldered the burden that Congress, in enacting §1988, wanted to relieve. The basic American Rule thus continues to operate.

Thus, the Supreme Court unanimously made sure that defendants will have a tough time recovering fees in cases including both frivolous and non-frivolous claims, just like the Ninth Circuit decided in Harris v. Maricopa County, which I discussed  here. Yes, I thought the Court of Appeals was out to lunch. I was wr-wr-wr... incorrect.  No wonder I don't have a vote on either court.  My opinion, though, remains the same. The Supreme Court joins the Ninth Circuit in making it very difficult for defendants to recover attorneys' fees in frivolous discrimination cases, unless the case is entirely frivolous. There is little incentive for the plaintiff to dismiss the frivolous component.

The Supreme Court decision is Fox v. Vice and the opinion is here.

U.S. Supreme Court: States May Require E-Verify

Arizona has a mandatory "E-verify" law. Arizona's law suspends or revokes businesses' licenses if they employ illegal aliens unauthorized to work in the U.S. It also mandates the use of "E-Verify," a federal program permitting electronic verification of an employee's authorization to work in the US.
The Chamber of Commerce and civil rights groups argued that the Arizona law is preempted by federal immigration law.  All lower courts disagreed, and so did the Supreme Court.
In a fractured opinion, the Court held that the federal Immigration Reform and Control Act does not stop Arizona from either suspending business licenses or requiring use of E-Verify. In fact, the law only requires employers to use E-Verify if they wish to rely on a "good faith" defense to proof that the employer is employing unauthorized workers. 
Justice Kagan did not participate, and only four justices concurred in parts of the opinion. However, the continued viability of the Arizona law was upheld 5-3.  So, Arizona is free to require employers to employ only authorized workers or risk losing the right to operate in Arizona.
The case is Chamber of Commerce v. Whiting and the opinion is here.

Welcome Back, Arbitration?

I think the rumors of the demise of employment arbitration might have been exaggerated. I for one am guilty of presuming arbitration was dead. And who can blame me, what with the California courts and the 9th Circuit?

Well, today, the U.S. Supreme Court breathed new life into employment arbitration. The Court held that the Federal Arbitration Act preempts California case law prohibiting arbitration agreements that exclude class actions.

So, if arbitration agreements can require only individual arbitration, that means that employers may avoid those expensive California wage and hour class actions by properly implementing arbitration agreements.

The interesting question that the Supreme Court did not decide today is what about California case law imposing lots of other conditions and burdens on employment arbitration. The "Armendariz" line of cases impose special burdens on arbitration that do not apply equally to other kinds of contracts. If you read Concepcion a certain way, Armendariz will not be around long. For example consider this statement in the opinion:


Parties could agree to arbitrate pursuant to the Federal Rules of Civil Procedure, or pursuant to a discovery process rivaling that in litigation. Arbitration is a matter of contract, and the FAA requires courts to honor parties’ expectations. Rent-A-Center, West, 561 U. S., at ___ (slip op., at 3). But what the parties in the aforementioned examples would have agreed to is not arbitration as envisioned by the FAA, lacks its benefits, and therefore may not be required by state law.

Of course, I've been wrong before. Like when I thought arbitration was dead.

The case is AT&T Mobility LLC v. Concepcion and the opinion is here.

U.S. Supreme Court Grabs Cat's Paw

There goes Justice Scalia again, ruling for... employees!  Writing for a 6-2 majority, Justice Scalia says:

When the company official who makes the decision to take an adverse employment action is personally acting out of hostility to the employee’s membership in or obligation to a uniformed service, a motivating factor obviously exists. The problem we confront arises when that official has nodiscriminatory animus but is influenced by previous company action that is the product of a like animus in someone else.

Basically, two lower level supervisors were hostile towards Vincent Staub, an xray tech at a hospital. they were annoyed at his reserve duty, which caused absences that had to be covered.  As a reservist, Staub was entitled to job protection under USERRA.  USERRA protects against discrimination against members of the military, basically under the same standards as Title VII.  Thus, if anti-military bias is a "motivating factor" in a negative employment decision, the plaitniff can win.

Here, a non-biased manager fired Staub, but based on a report by the biased supervisors.  The hospital argued that discrimination was therefore not a motivating reason.   This presented a "cat's paw" theory, where the employer claims that the innocent supervisor's decision is independent from the biased supervisor's motivations.

The Supreme Court held:

that if a supervisor performs an act motivated by anti military animus that is intended by the supervisor to cause an adverse employment action,3 and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA

The court did say that the biased supervisor has to have some causation for the negative employment decision or the "motivating reason" standard fails.

Bonus: Those of us unfamiliar with Aesop now know the meaning of the "Cat's Paw" theory.

1The term “cat’s paw” derives from a fable conceived by Aesop, put into verse by La Fontaine in 1679, and injected into United States employment discrimination law by Posner in 1990. See Shager v. Upjohn Co., 913 F. 2d 398, 405 (CA7). In the fable, a monkey induces a cat by flattery to extract roasting chestnuts from the fire. After the cat has done so, burning its paws in the process, the monkey makes offwith the chestnuts and leaves the cat with nothing. A coda to the fable (relevant only marginally, if at all, to employment law) observes that the cat is similar to princes who, flattered by the king, perform serviceson the king’s behalf and receive no reward.

Although this is a USERRA case, given the similiarities with anti-discrimination laws, look for this theory to be applied in Title VII cases as well

The case is Staub v. Proctor Hosp. and the opinion is here.

U.S. Supreme Court Recognizes Third-Party Retaliation Claims

Justice Scalia for a unanimous Supreme Court wrote that employees may claim retaliation when they are associated with someone ELSE who engaged in protected activity.  What?

Miriam Regalado was engaged to Eric Thompson. They both worked for North American Stainless.  So, Miriam filed a charge with the EEOC alleging sex discrimination. NAS fired Thompson three weeks later. 

Thompson then filed a retaliation charge. But Thompson did not actually engage in protected activity. Regalado was the one who filed with the EEOC. 

So, was it retaliation under Title VII to fire Thompson?  The Supreme Court said yes. Relying on the Court's expansive definition of retaliation set forth in Burlington N. & S. F. R. Co. v. White, 548 U. S. 53 (2006),the court said:

“the antiretaliation provision, unlike the substantive provision, is not limited to discriminatory actions that affect the terms and conditions of employment.” Id., at 64. Rather, Title VII’s antiretaliation provision prohibits any employer action that “well might havedissuaded a reasonable worker from making or supporting a charge of discrimination.” Id., at 68 (internal quotation marks omitted).

And of course, they found that firing a fiance "well might have dissuaded" the complainant from making or supporting a charge: NAS argued, where do you draw the line?  Trusted co-worker? Girlfriend? What third parties are close enough to the complainant.  The Court could not find any language in Title VII to support setting down a blanket rule.
 

We must also decline to identify a fixed class of relationships for which third-party reprisals are unlawful. We expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.

The court next decided that Thompson had standing to sue under Title VII because he was a "person aggrieved."  The Court knew it was opening a can of worms to let third parties sue. So, it limited Title VII standing to those covered by the "zone of interests" Title VII seeks to protect.  Thompson was an employee at the same company as his fiance, and, most importantly, according to the complaint, the company fired him for the purpose of hiring the fiance who filed the charge.
 
The case is Thompson v. North American Stainless Inc. and the opinion is here.
DGV

U.S. Supreme Court Upholds Background Check Questions

The U.S. Supreme Court ducked deciding whether the U.S. Constitution protects individuals' right to privacy in personal information.  Instead, they "assumed" that there was such a protection and then decided that NASA's background questions were constitutional no matter what.  This provoked a concurrence in the judgment only from Justice Scalia (and another, short one from Justice Thomas), as both of them wanted the court to decide the constitution contains no such right.

The employment law issue here is whether NASA's questions were appropriate issues to ask applicants and employees. Most federal government employees are subjected to a standard background check. But contract employees were only recently added, following the 9/11 attacks.  NASA employed a number of contract employees at its Jet Propulsion Lab, and had to implement the checks for current employees, some of whom were employed for many years.

The questions included standard background information, but then asked about drug use, sales, etc., and asked for explanations if the employee admitted to involvement with illegal drugs.  After the employee answered the questions, the agency sent out questionnaires to landlords and references on a standard form. That standard form contains a number of questions to which plaintiffs objected:

the form asks if the reference has "any reason to question" the employee’s "honesty or trustworthiness." Id., at 97. It also asks if the reference knows of any "adverse information" concerning the employ. If "yes" is checked for any of these categories, the form calls for an explanation in the space below. ... That space is also available for providing "additional information" ("derogatory" or "favorable") that may bear on "suitability for government employment or a security clearance." Ibid.

The Ninth Circuit held that the request for an explanation by the employee about drug treatment or counseling did not serve a legitimate interest sufficient to overcome the employee's privacy rights. The court of appeals also decided that the reference forms contained open ended questions that infringed on privacy rights without sufficient linkage to the job.

On review, the Supreme Court decided that these questions do not infringe upon privacy rights even if they were protected by the Constitution:

The questions challenged by respondents are part of a standard employment background check of thesort used by millions of private employers. See Brief for Consumer Data Indus. Assn. et al. as
*** [W]e conclude that the chal-lenged portions of both SF–85 and Form 42 consist of reasonable, employment-related inquiries that further the Government’s interests in managing its internal opera-tions. See Engquist, 553 U. S., at 598–599; Whalen, 429 U. S., at 597–598. As to SF–85, the only part of the formchallenged here is its request for information about “any treatment or counseling received” for illegal-drug use within the previous year. The “treatment or counseling”question, however, must be considered in context. It is a followup to SF–85’s inquiry into whether the employee has“used, possessed, supplied, or manufactured illegal drugs” during the past year. The Government has good reason toask employees about their recent illegal-drug use. Like any employer, the Government is entitled to have itsprojects staffed by reliable, law-abiding persons who will“‘efficiently and effectively’” discharge their duties. See Engquist, supra, at 598–599. Questions about illegal-drug use are a useful way of figuring out which persons havethese characteristics.Amici Curiae 2 (hereinafter CDIA Brief) ("[M]ore than 88% of U. S.companies . . . perform background checks on their employees"). The Government itself has been conducting employment investigations since the earliest days of the Republic.

The court's decision is important to private sector employers looking to justify personal questions and investigative consumer reports. The court recognized the legitimacy of these issues, including questions about drug use.  That should help private-sector and public employers with invasion of privacy claims related to drug testing and background investigations.

Of course the court did not deal with the issue of "adverse impact" discrimination claims here. But the defense to adverse impact is "job related and consistent with business necessity." Language in this opinion should help estasblish this defense.

The opinion is NASA v. Nelson and it is here.
 DGV

U.S. Supremes Grant Review of Walmart Class Action

So, I have posted on Dukes v. Walmart for a few years now... here and here.  This is the class action involving potentially 1.5 million current and former Walmart employees all over the country.
The U.S. Supreme Court decided to consider some issues that arise in federal class actions:

Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.

and 

Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).

Here's a comprehensive post with cites to all kinds of relevant information from Ross Runkel's Employment Law blog. 

Federal Rule of Civil Procedure 23 governs class actions. So, that's what the court is referring to above. In essence the court is deciding whether and to what extent a court can order money to be paid if a class action is certified under Rule 23(b)(2), which is supposed to apply only to class actions seeking injunctions.

Yes, on the surface, the legal issues may read like real snoozers for HR and most employment lawyers. But the case is gold for civil procedure junkies.  And don't let all that civil procedure jargon fool you. The stakes  are incredibly high and the court has the opportunity to shape how federal class actions in discrimination cases may be asserted. The court's decision could well shape how multi-state employers implement policies to avoid class action treatment of seemingly unrelated decisions.... So, stay tuned!

DGV

U.S. Supreme Court Issues Two More Arbitration Decisions

The U.S. Supreme Court closed out its employment cases for the 2010 Term with two arbitration decisions. The Court held in one opinion that the arbitrator must resolve an arbitrability issue. The Court reached the opposite result in the other. Here's what happened.

In Granite Rock Co. v. Teamsters, the company and its union agreed on a new contract. But the Company would not agree to hold the union harmless for strike-related damage. The union continued to strike. The company argued the strike violated the "no-strike" clause in the parties' new contract, which also contained an arbitration clause. The union believed the agreement was not properly ratified and, therefore, not a contract when the strike occurred.

Granite sued the Teamsters in federal court alleging breach of contract against the local union, and interference with contract against the International. District court allowed a jury to decide when the agreement was ratified - which determined if the strike was arbitrated or resolved in court. Once the jury decided the agreement was properly ratified, the district court sent the case to arbitration over the merits of the breach of contract issue. The Ninth Circuit, though, held that the arbitrator should have decided the ratification issue.

The Supreme Court held the district court got it right. The court was required to decide if the parties agreed to arbitrate the breach of the no-strike clause issue, because courts enforce arbitration only to the extent the parties agreed. The date the contract was ratified amounted to a dispute over the applicability of arbitration to the dispute. If ratified, there would be a valid contract. Here's how the court put it:

a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute. See First Options, supra, at 943; AT&T Technologies, supra, at 648−649. To satisfy itself that such agreement exists, the court must resolve any issue that calls into question the formation or applicability of the specific arbitration clause that a party seeks to have the court enforce. See, e.g., Rent-A-Center, West, Inc. v. Jackson, ante, at 4−6 (opinion of SCALIA, J.). Where there is no provision validly committing them to an arbitrator, see ante, at 7, these issues typically concern the scope of the arbitration clause and its enforceability. In addition, these issues always include whether the clause was agreed to, and may include when that agreement was formed.

So, the court, not the arbitrator, had to decide when the contract was ratified.

This decision was 7-2, authored by Justice Thomas. Justices Sotomayor and Stevens dissented from this part of the opinion, but joined in the unanimous decision that there is no claim for tortious interference under federal law.

The opinion in Granite Rock Co. v. Teamsters is here.

Just a couple of days earlier, though, the Court held in Rent-a-Center West, Inc. v. Jackson that the arbitrator must decide arbitrability, albeit in a different context. Granite was decided under Section 301 of the LMRA. Rent-a-Center is a Federal Arbitration Act case. But the Court cites FAA decisions in Granite, too. So, the analysis is probably the same.

Jackson sued for employment discrimination in Nevada federal court. Rent-a-Center sought to compel arbitration. Jackson argued the agreement was "unconscionable" under Nevada law, which is a defense to the enforceability of the arbitration agreement.

But the arbitration agreement provided: "[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable."

So, unlike in Granite, the parties' agreement expressly gave the arbitrator the authority to determine whether the agreement was void, or enforceable. The Court held that, given the parties' "clear and unmistakable" agreement, any dispute over this provision was itself a question for the arbitrator to resolve:

The delegation provision is an agreement to arbitrate threshold issues concerning the arbitration agreement. We have recognized that parties can agree to arbitrate"gateway" questions of "arbitrability," such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.

The Court then analyzed whether the FAA permitted the court to permit the arbitrator to decide if the agreement was unconscionable. The Court held that the FAA did permit this. In particular, the court decided that Jackson alleged the entire arbitration agreement was invalid, not exclusively the provision conferring on the arbitrator the right to decide unconscionability. Had Jackson been able to argue this delegation provision alone was unconscionable (and how would he do that?) the court may have come down a different way.

Therefore, Jackson's challenge to the arbitration agreement as "unconscionable" must be decided by the arbitrator.

If arbitration agreements reserve the power to decide unconscionability to the arbitrator, that will certainly affect courts' power to decide "unconscionability" claims by plaintiffs seeking to avoid arbitration agreements.

This one was 5-4. The dissent argued the majority simply got it wrong, synthesizing the law as follows:

questions related to the validity of an arbitration agreement are usually matters for a court to resolve before it refers a dispute to arbitration. But questions of arbitrability may go to the arbitrator in two instances: (1) when the parties have demonstrated, clearly and unmistakably, that it is their intent to do so; or (2) when the validity of an arbitration agreement depends exclusively on the validity of the substantive contract of which it is a part.

The majority believed this rule required arbitration because both prongs were satisfied. But the dissent argued (1) because the agreement was alleged to be unconscionable, Jackson could not have "clearly and unmistakably" submitted arbitrability to the arbitrator. The dissent also argued

when a party raises a good-faith validity challenge to the arbitration agreement itself, that issue must be resolved before a court can say that he clearly and unmistakably intended to arbitrate that very validity question. This case well illustrates the point: If respondent’s unconscionability claim is correct—i.e., if the terms of the agreement are so one-sided and the process of its making so unfair—it would contravene the existence of clear and unmistakable assent to arbitrate the very question petitioner now seeks to arbitrate. Accordingly, it is necessary for the court to resolve the merits of respondent’s unconscionability claim in order to decide whether the parties have a valid arbitration agreement under §2. Otherwise, that section’s preservation of revocation issues for the Court would be meaningless.

The bottom line: unless or until Congress overturns this decision, it appears employers will be able to avoid courts' rulings on unconscionability and have arbitrators decide them instead.

The opinion in Rent-a-Center West, Inc. v. Jackson is here.

U.S. Supreme Court: NLRB Must Have 3 Members to Rule

So, what are we going to do about the over-500 - count 'em - NLRB decisions issued by the 2-member panels??

The NLRB normally has 5 members. At the end of 2007, the Board had 4 members, and anticipated the terms of 2 recess appointments would expire shortly. So, the 4 members "delegated" its powers to a three-member panel.

Then, one of the panel members left because his term expired. That left just two - a quorum of the panel of three...right?

Well no. Several litigants challenged the Board's power to function as a two member panel. The Courts of Appeals split on the issue. The Supreme Court ruled today that the two-member decisions were improper:

we find that the Board quorum requirement and the three-member delegation clause should not be read as easily surmounted technical obstacles of little to no import. Our reading of the statute gives effect to those pro-visions without rendering any other provision of the statute superfluous: The delegation clause still operates to allow the Board to act in panels of three, and the group quorum provision still operates to allow any panel to issue a decision by only two members if one member is disqualified. Our construction is also consistent with the Board’s longstanding practice with respect to delegee groups. We thus hold that the delegation clause requires that a delegee group maintain a membership of three in order to exercise the delegated authority of the Board.

So, what happens to the 500+ decisions issued by the 2-member panel? We'll see how many of the litigants attempt to challenge them. Or, perhaps the Board, which has been staffed by 4 members since March 2010, will find some way to re-affirm the decisions. We shall see.

The case is New Process Steel LP v. NLRB and the opinion is here.

DGV

U.S. Supreme Court on Timeliness of Disparate Impact Claims

The U.S. Supreme Court unanimously held that disparate impact claims were timely even though the plaintiffs did not challenge the original implementation of the alleged discriminatory practice. Justice Scalia wrote the opinion. So there, Scalia haters.

The City of Chicago conducted an examination for firefighters in 1995. It announced it would begin selecting from among the highest scorers, called "well-qualified." The middle tier was called "qualified." Applicants who scored in this range would be kept on an eligibility list. No one brought suit attacking the examination at the time it was given.

Over time, the city exhausted the "well-qualified" list. On March 31, 1997, some African-American applicants filed a charge with the EEOC. They claimed the use of the "well qualified" score had a disparate impact on black applicants - i.e., it resulted in exclusion of a disproportionate number of black applicants. After receiving right to sue letters, they brought a class action on behalf of 6,000 "qualified" applicants.

The Court framed this issue like this:

We consider whether a plaintiff who does not file a timely charge challenging
the adoption of a practice—here, an employer’s decision to exclude employment
applicants who did not achieve a certain score on an examination—may assert
a disparate-impact claim in a timely charge challenging the employer’s later
application of that practice.

The city argued the charges were untimely and that the scoring was justified by business necessity. The city lost at trial. The district court rejected the business necessity of the test as a justification for the admittedly "severe" disparate impact.

Regarding timeliness, the plaintiffs were timely regarding the city's more recent selections of well-qualified applicants, but were untimely regarding the city's initial classification of qualified and well qualified persons.

The Supreme Court decided that the city's use, rather than adoption, of the practice was the discriminatory act. Therefore, the decision that the City's selection of well-qualified applicants within the limitations period was sufficient to establish a disparate impact claim.

The issue in Ledbetter v. Goodyear Tire & Rubber Co., 550 U. S. 618 (2007), in contrast, was whether a plaintiff could allege disparate treatment - intentional discrimination - based on time-barred past decisions. The court distinguished Ledbetter because the disparate impact claim is based on the use of neutral, but discriminatory, criteria, without the need to prove intent. So, Ledbetter is not in conflict with this decision.

The case is Lewis v. City of Chicago and the opinion is here.

U.S. Supreme Court Breathes Life Into Removal Statute

Employers usually prefer federal court over California state court. Federal court practice includes a unanimous jury, tough rules that drive plaintiff attorneys nuts, judges that seem to grant summary judgment more readily, and other perceived benefits.

Federal courts don't routinely hear state law claims unless they are tied to a federal claim, or unless the plaintiff and defendant are "diverse" citizens. But federal courts often prefer not to litigate relatively simple state-law based claims. So, they have limited jurisdiction to hear those matters based on "diversity" of the parties' citizenship.

The Supreme Court stepped in to clarify how to determine a corporation's citizenship for diversity jurisdiction. The case arose in California. Melinda Friend and other sued Hertz for wage and hour violations. Hertz sought to remove the case on the ground that Friend was a California Citizen, and Hertz was a citizen of New Jersey. The lower federal courts determined that Hertz was the equivalent of a California citizen, because it had substantial activities in California.

On review, the Supreme Court rejected the analysis. The Court concluded:

“principal place of business” is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.” And in practice it should normally be the place where the corporation maintains its head-quarters—provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).

So, that's a much more straightforward analysis, which will result in the limitation of corporations' citizenship to its state of incorporation and the state where the officers/ senior management primarily do business. As a result, employers with lots of operations in different states will be able to remove cases to federal court based on diversity of citizenship jurisdiction.

The case is Friend v. Hertz Corporation and the opinion is here.

U.S. Supremes to Review Quon v. Arch Wireless

We posted about Quon v. Arch Wireless here. This was the 9th Circuit's opinion holding a county liable for auditing deputy sheriffs' text messages. The U.S. Supreme Court granted review of that case today (article here.) The court will have a decision out by June. We of course will keep track of it for you. But this could be a way for the court to issue a key privacy ruling about electronic communications. We shall see...

DGV