Monday, 1 October 2012
End of the Road for Gross v. FBL Financial Services
Ironically, the well traveled case, which started with a 2003 reassignment Mr. Gross felt was to a lower position, was finally decided on the question which many had hoped the Supreme Court would address -- how do you determine when you get a mixed motive instruction? In an unpublished opinion affirming a jury verdict in favor of Gross's former employer, the 8th Circuit held that it is a question for the Court, to be determined after all the evidence is presented. Not too surprisngly given the difficulty courts have had applying mixed motive, the Court failed to tell us on what basis it is to be determined.
I had to smile because one of the cases relied on by the 8th Circuit was Smith v. Xerox Corp, a 2010 decision from the 5th Circuit that has been criticized not only by me, see 5th Circuit En Banc Request on Smith v. Xerox, Please! but also by four members of the 5th Circuit, see Stirrings on Smith v. Xerox in 5th Circuit Internecine Squabble.
Although as expected, the initial Gross decision did result in some legislative stirrings, fortunately none passed. Three years ago next week, I testified before the Senate Judiciary Committee in opposition to such proposed legislation. I wish I could say it was my brilliant thoughts (you can judge for yourself here ,about 51:30 into the hearing) that forestalled such legislation, but I have my doubts. But last Friday's decision, as well as Smith v. Xerox, illustrate the point I made to the Senate Judiciary Committee. Mixed motive, created when discrimination cases were tried to the court, has not fared well in the world of jury trials. I testified then, and still believe, it is both complex and unneeded, and what should be done is to jettison it from all of employment law, not just ADEA claims, where fortunately, it has been.
Monday, 18 June 2012
Function Over Form: The Supreme Court's Realistic View of the FLSA
Although a critical decision for the pharmaceutical industry in its own right, the case has generally been viewed more importantly for its insight as to the weight the Supreme Court would give to agency views of the laws they enforce. Here the DOL had weighed in as amicus in a series of law suits arguing that the pharmaceutical sales reps were not exempt, although the DOL had given differing views as to why that was so.
The majority opinion begins with Justice Alito's description of why the DOL's position is not entitled to deference. Perhaps more significantly, the dissent written by Justice Breyer, the member of the court with the most claim to administrative law expertise, agrees. In fact, on this key point, it would be fair to say that this is a 9-0 decision. Justice Breyer writes:
In light of important, near-contemporaneous differences in the Justice Department’s views as to the meaning of relevant Labor Department regulations, I also agree that we should not give the Solicitor General’s current interpretive view any especially favorable weight.Although casting the blame on the Department of Justice, not the Department of Labor, it is clearly a rebuke to the DOL.
Having jointly rejected the DOL's view, the two wings of the Court still reach a different outcome on their own independent review of the exemption.
The problem is that we have a 1938 statute designed for a very simple economic model which existed at the time was adopted. The FLSA was designed for an even pre-Leave it to Beaver world, where a factory was divided between the white collar workers in the front office and the blue collar workers in the back, whose product was sold by the Willy Loman's of the world, who packed their sales bag and left on Monday through Thursday and returned to do their paper work on Friday. Trying to use regulations written for that world, in today's workplace results in often ludicrous results.
It seems clear to me that the Supreme Court understands this historical fact, at least as relevant to the outside sales exemption, as it noted that the DOL had been authorized by the statute to issue regulations, and that those regulations were issued in 1938, 1940 and 1949, and in 2004 "following notice-and-comment procedures, the DOL reissued the regulations with minor amendments." Although they limit that historical reference to the outside sales exemption, I think a review would indicate that it is applicable for much of the remainder of the FLSA and its regulations as well.
The points relied on by the majority in rejecting the formalistic view of the minority are significant and could be utilized by other courts to rein in what has been an overly mechanistic view of the FLSA:
- that until 2009, the pharmaceutical industry had "little reason to suspect that its longstanding practice of treating detailers as exempt outside salesmen transgressed the FLSA."
- that the DOL had never initiated any enforcement actions or otherwise suggested that it thought the industry was acting unlawfully.
- the realization that pharmaceutical sales reps, whose average income is $90,000 a year according to the opinion, "typically earn salaries well above the minimum wage" and enjoyed other benefits that "set them apart from the nonexempt workers entitled to overtime pay." Hardly the kind of employees the FLSA was intended to protect.
- That it would be "challenging, to say the least" for pharmaceutical companies to compensate reps for overtime going forward without significantly changing the nature of that position.
- Rejecting a legalistic argument, that requires title to pass, to instead taking a more "realistic approach" of what the outside salesman exemption is meant to reflect.
The biggest beneficiaries of course have been the repeat players, lawyers who represent the plaintiffs in those cases, who of course have taken their share of the extraction, and lawyers who represent the defendants (including me and my firm) in those cases.
In a world where there are many issues that call out for righting, for the most part mis-classification under the FLSA has not been in my mind a worthy fight. Today's decision is by no means the end, but it is at least a bright and correct light.
Thursday, 26 May 2011
Arizona Immigration Law Valid According to Divided Supreme Court
The nitty-gritty of the legal argument is this. When Congress passed the Immigration Reform & Control Act, it expressly pre-empted ""any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ . . . unauthorized aliens."
It is the parenthetical phrase "(other than through licensing and similar laws)" that the Arizona legislature has driven the proverbial truck through, and now the Supreme Court has backed them up.
I will leave it to the immigration experts to talk about the impact on that particular body of law. The politico's can talk about what will happen from a political standpoint. My amateur observation is that many states, including Texas, will pass similar laws, a move will be made in Congress to roll back the savings clause, and all of these actions will be more for political purposes than for resolution of a national problem.
From a positive perspective, it is possible given that the defendant in this case was the U.S. Chamber of Commerce that this will be the spark (or explosion) that leads to serious discussions to come up with a rational national solution. (And I say to myself, and pigs may fly.)
As a textbook statement of what the world should be like, I would not quarrel with the logic of Justice Robert's statement.The Chamber and JUSTICE BREYER assert that employers will err on the side of discrimination rather than risk the “‘business death penalty’” by “hiring unauthorized workers.” [cites omitted] That is not the choice. License termination is not an available sanction simply for “hiring unauthorized workers.” Only far more egregious violations of the law trigger that consequence. The Arizona law covers only knowing or intentional violations. The law’s permanent licensing sanctions do not come into play until a second knowing or intentional violation at the same business location, and only if the second violation occurs while the employer is still on probation for the first. These limits ensure that licensing sanctions are imposed only when an employer’s conduct fully justifies them. An employer acting in good faith need have no fear of the sanctions.
Wednesday, 27 April 2011
Arbitration As Protection Against Class Actions
Here, it was a consumer agreement under a system that could hardly be called unfavorable to the individual, in fact the district court had found that the individual couple who were attempting to lead a class action over the purchase of a phone, were undoubtedly better off in arbitration than as members of a class action that would last several years and likely result in a nominal payment to class members. Still to be fair, it is also hard to argue with the point made by Justice Breyer in dissent that it is unlikely that many lawyers would have been interested in taking such a case on an individual basis.
On first blush, given the rage of FLSA collective actions and the desire for larger systemic class actions reflected by the Dukes v. Walmart case, every company that does not have in place a requirement that all disputes be settled by arbitration, and in that arbitration agreement, a provision that prohibits class treatment, will now be considering it again.
This is not to say that arbitration is a panacea ---the cost advantage is being lost as more and more arbitrations are proceeding just like a lawsuit that is being litigated in court, and the lack of any ability to effectively appeal the decisions is a serious danger, both of which have to be weighed against the risk of large collective or class actions. What today's decision permits is a re-calculating those odds with more certainty that you can accomplish the aim of defusing collective/class action liability if you are willing to pay the price of accepting the downsides or arbitration in individual cases.
Everyone has and continues to wait with concern the Court's decision in Dukes v. Walmart, which offers the Court an opportunity to put parameters on broad scale class litigation if it wishes. It might be argued that today's decision augurs well for the employer community on how that case may turn out. Many employers may well wait until July when that shoe drops to do the recalculation between barring class/collective actions via arbitration or continuing to take their chances in the court system. Assuming the Court decides that case fully, it should at a minimum give even more certainty when making that calculation.
Besides companies engaging in that rebalancing, the other thing that is likely to happen is renewed talk about passage of the Arbitration Fairness Act, which would ban pre-dispute arbitration agreements between employers and employees (and also with consumers and in franchise agreements.) It seems unlikely that bill will pass during this Congress, but the there will surely be more discussion.
If the American Arbitration Association were a traded stock today, its price would be soaring.
Tuesday, 1 March 2011
With a Friend Like Justice Scalia ... Cat's Paw Decision Not Very Employer Friendly
Nothing is rarely as bad as it appears on first blush, and perhaps a closer reading will lessen my angst over today's opinion. But at least I am not the only one feeling the same way. Jon Hyman at Ohio Employer's Law Blog, calls it a "huge victory" for employees.
One immediate concern is that the Court takes what is a relatively narrow range of cases, where a decision maker is deemed to have been "used" by another to carry out his or her discriminatory intent, and by focusing on the underlying disciplinary actions and the motives of those who carried them out, seems to invite numerous fights over each and every warning or other disciplinary activity that were given to an employee in the past and that might could arguably have been a factor in the termination decision. It is almost certain that there will be many more "Staub cat's paw cases" after today's decision than we have dealt with before.
Proponents will argue that this is not so, that it is only those that rise to the high level of proximate cause that are at issue. But those who do, probably do not deal with day to day employment litigation where every opportunity to raise a fact issue is yet another arrow in the plaintiff's quiver. Today, I am afraid, at least until courts below fill in the gaps, the Court has created more complexity and less certainty.
And in a time when there is confusion enough over what is the standard for determining the basic question "what is discrimination," the addition of the negligence tort doctrine of proximate cause into the mix seems to me less than a beneficial step.
Although as Paul Secunda of Workplace Prof Blog points out in his approving comment on the decision, there is an argument that it does not apply to ADEA cases, it appears likely that the Court intended it for Title VII and other statutes that use similar language:
If there is any good news, it is that the Court remanded the case to the 7th Circuit for application of its newly articulated rule in determining whether the jury verdict for Staub should be re-instated or a new trial granted. The basis is that the trial court's instruction did not conform to the "rule we adopt today". Perhaps that learned bench can shed some early guidance.The statute is very similar to Title VII, which prohibitsemployment discrimination "because of . . . race, color,religion, sex, or national origin" and states that suchdiscrimination is established when one of those factors "was a motivating factor for any employment practice,even though other factors also motivated the practice."
Goodness knows we will all need some.
This is another case where not only bad facts, but a bad procedural background made it an unfavorable case for employers. The Court was faced with a case where the appellate court had reversed a jury verdict, which meant that all facts had to be construed in the most favorable of light to the employee. Also the fact that it was a USERRA case, here a military reservist, is not the best context in today's world with two wars and numerous military personnel being asked for extraordinary measures, for any case focusing on the whether or not an employee was treated badly.
Although I have long felt this, I think today's decision makes it more clear that the Supreme Court although still adhering to the broad notion that courts should not function as super-human resources departments, second-guessing the decisions of an employer, have and continue to create a set of rules that at least encourages, if not requires, the lower courts to be just that.
Monday, 8 November 2010
Another Interesting Development from Last Tuesday - $4 MDV for FLSA Retaliation
Richard Romney had testified that he had followed the "unwritten policy" of denying officer's pay for less than a full hour of overtime. After his testimony, an investigation was initiated and he was ultimately discharged for violating the city's written rules on overtime. L.A. County jury awards $4 million to former LAPD officer.
Although all jury verdicts have a long way to go before they become collectable judgments, this one has an additional and somewhat unusual hurdle. It could be severely influenced by the Supreme Court's decision in Kasten v. Saint-Gobain Performance Plastics, which was argued on October 13th. The transcript of the argument is here.[pdf]
Part of the issue is that the FLSA was really the first statute to provide employee rights and a prohibition against retaliation outside the union context, and Congress had not yet had the ability to focus on all the aspects of what protected activity really needed to be covered. Whether the statute is applied as it was written or as Congress would no doubt write it now, may make all the difference.
And in this case, that's a big difference.
Monday, 19 April 2010
First Employment Law Test for Justice Steven's Replacement: Figuring Out the Cat's Paw
As is almost always the case, the first to bring it to my attention is Ross Runkel at his LawMemo Employment Law Blog, SCOTUS will review "cat's paw" case. The issue in the 7th Circuit case of Staub v. Proctor Hospital>(3/25/09):
In what circumstances may an employer be held liable based on the unlawful intent of officials who caused or influenced but did not make the ultimate employment decision?A couple of quick points. The underlying cause of action is USERRA which is not a statute that often comes under Supreme Court review. Since the Cat's Paw theory is more general in nature, I don't think that means we will necessarily get much insight into how the Supreme Court views USERRA. However, given the group that it protects, one would expect most courts to give it as pro-employee favorable view as any statute.
And one of the frequently mentioned candidates for the Supreme Court position is Judge Diane Wood of the 7th Circuit. She was not on the panel that decided Staub. It would be somewhat ironic if she were appointed and one of her first employment law cases as a Supreme Court Justice was reviewing the handiwork of her generally more conservative former peers.
Monday, 22 March 2010
Another Retaliation Case in the Supreme Court: Deja Vu All Over Again?
Paul says he has no idea how the case will come out. The issue is whether as the 7th Circuit says, only written complaints, not oral ones, qualify as protected activity under the FLSA. I think Paul may just being nice.
Consider the following posts on how retaliation has fared in the Supreme Court since the birth of this blog in July 2002.
- Supreme Court Unaminous in Retaliation Case, Crawford v. Metropolitan Government of Nashville (S.Ct. 1/26/09).
- Supreme Court Scoreboard: Retaliation 2, Employers 0, CBOCS West, Inc. v. Humphrey (S.Ct. 5/27/08) and Gomez v. Potter (S.Ct. 5/27/08).
- Supreme Court Answers the Question: What Is An Adverse Employment Action? , Burlington Northern Railway v. White (S.Ct. 6/22/06)
- Whistleblowing in the Supreme Court, A Good Day, Jackson v. Birmingham Board of Education (U.S. 3/29/05).
That's the view of another Paul, Paul Mollica, at Daily Developments in EEO Law.
But left out of the Supreme Court record above is Justice Thomas' decision in Graham County Soil & Water Conservation District v. United States ex. rel. Wilson (U.S. 6/20/05) (see No Federal Statute of Limitations for Retaliation Claims Brought Under Qui Tam Act.) That just happened to be a case that turned on statutory construction.If the Court follows its own in lead in its unanimous decision from last term, Crawford v. Metropolitan Government of Nashville, 129 S. Ct. 846 (2009), it will give the statute a common-sense construction that safeguards employees' rights to inquire or complaint about wage-and-hour violations. A decision affirming the Seventh Circuit's construction, though seemingly unlikely, would reverberate in all federal-law retaliation cases.
And the rest of Professor Secunda's sentence refusing to predict the outcome finishes, "but the decision may be an interesting example of how different Justices engage in the exercise of statutory construction."
So the decision may be more up in the air than I would initially think.
But I doubt it.
Update (3.25.10): For a little more factual background on the case itself check out the article in Corporate Counsel, Sooo, Just Keep My Mouth Shut: Can Workers Only Complain in Writing?
Wednesday, 27 February 2008
Supreme Court in a Deferential Mood in Employment Law Decisions
It did take quite a bit more explanation, a suggestion to the EEOC that it could do better, and lost two justices along the way. Justice Thomas dissented and was joined by Justice Scalia. Hopefully there wasn't anything in Justice Thomas background as the former head of the EEOC that made him feel as if the agency was not deserving of deference.
To the extent that any hope remained that an employer could argue it was protected against a lawsuit because the EEOC failed to give it notice, it was extinguished. Here, the company only learned about the charge when a suit was filed, a fact Justice Kennedy described as "unfortunate" but obviously not irreparable.
Although this opinion could have some significance, I again don't see it as a "sea change,*" to use a term recently in play in the current presidential contest, but I suppose time will tell.
*Since the phrase is almost always improperly used and is greatly over-used, it has suffered a swamp change into something dull and tiresome. Avoid the phrase; otherwise you will irritate those who know it and puzzle those who do not.
Tuesday, 26 February 2008
"Me Too Evidence" - A Do Over
The issue was one that comes up frequently -- so called "me too" evidence about discrimination occurring to employees other than the particular plaintiff. If such evidence is admissible it is a boon for plaintiffs; exclusion is a winner for employers.
The question whether evidence of discrimination by other supervisors is relevant in an individual ADEA case is fact based and depends on many factors, including how —————— closely related the evidence is to the plaintiff’s circumstances and theory of the case. Applying Rule 403 to determine if evidence is prejudicial also requires a fact-intensive, context-specific inquiry. Because Rules 401 and 403 do not make such evidence per se admissible or per se inadmissible, and because the inquiry required by those Rules is within the province of the District Court in the first instance, we vacate the judgment of the Court ofAppeals and remand the case with instructions to have the District Court clarify the basis for its evidentiary ruling under the applicable Rules.Sprint United Management Co. v. Mendelsohn (S.Ct 2/26/08) [pdf].
In other words -- the equivalent of a judicial mulligan.
Spinning it (irony intended) another way, although it will depend on the particular judge, for those appearing in front of judges who are concerned about trials spilling out of control, which includes most federal judges, the fact that the Supreme Court today emphasized the discretionary nature of the ruling should favor employers.
Thursday, 31 May 2007
Payday Blues at the Supreme Court
I suppose I had not taken this case seriously enough as I am somewhat surprised at the heat that it is drawing. I would have been extremely surprised if it had come out any other way. If it had, it would have been disastrous for employers (although not their lawyers).
Professor Secunda starts with what he says is the critical question: "under Morgan, is pay discrimination a discrete act like a termination or failure to promote or is it more like a cumulative series of individual events like hostile work environment sexual harassment?" He argues that Justice Ginsburg (the cumulative view) has the better of the argument. I see it differently. In a hostile environment case, a single action may or may not be actionable depending on what happens later. See for example, Clark County School District v. Breeden, U.S. (2000).
However, if an employer makes a decision about pay based on gender, it is clearly actionable even if the amount of damage is small or it is hard to know that it is discrimination at the time. The latter two facts do not change the actionable nature of the event, and once you have an actionable event the time limit starts.
The "hard to discover" argument really would be more appropriately addressed in the context of whether there should be a "discovery rule" in discrimination cases. The Court clearly notes (footnote 10) that question is not before them:
A few other points from the commentary, some theoretical, others more practical-We have previously declined to address whether Title VII suits are amenable to a discovery rule. National Railroad Passenger Corporation v. Morgan, 536 U. S. 101, 114, n. 7 (2002). Because Ledbetter does not argue that such a rule would change the outcome in her case, we have no occasion to address this issue.
- I was interested in Linda Greenhouse's comment in the New York Times that if Justice O'Connor had been on the Court instead of Justice Alito, who authored the majority opinion, she "would almost certainly have voted the other way, bringing the opposite outcome." Interestingly two commentors on the Scotus Blog took her to task noting that Justice O'Connor had dissented in Morgan on the relevant point, and it is unlikely that she would have reversed herself.
Since before reading either Greenhouse's article or the comments, I had made a similar statement to a reporter who called for my thoughts on Ledbetter, I checked out the dissent and see where the commentors are coming from. I am not sure that I am convinced however that if she had been on the Court the out come might not have been different; probably not a complete reversal, but some "middle way" which might well have done nothing more than muddied the waters. Like the outcome of Ledbetter or not, one thing we can all agree on — it is clear, a quality whose value is often overlooked.
- I also have noted the lack of commentary on how there is in fact a statute that is designed specifically for Lebetter's problem — the Equal Pay Act which is one year older than Title VII and focuses exclusively on discrimination in pay based on gender. As the majority notes that claim was not time barred, Ledbetter urged it and lost, but did not appeal it. The dialogue between Justice Ginsburg and Ledbetter's counsel on this issue is instructive.
JUSTICE GINSBURG: Why didn't you ask for the equal pay claim? As I understand the magistrate judge he said, yes, you had made it across the first hurdle, you had a prima facie case. You showed that you're a woman, and you're getting this and all the men are getting much higher. But the employer has come forward with any other factor other than sex and the other factor is that, your inadequate performance.
Thanks to Chris McKinney at the HR Lawyer's Blog for the link to transcript of oral argument.MR. RUSSELL: We should have objected to the failure to reinstate the Equal Pay Act claim. We didn't; we didn't think it was that important at the time because we still had the Title VII claim.
Justice Ginsburg's sole retort in her dissent is that Title VII is not limited to sex, so today's decision will impact those who bring race, religion and national origin claims. But differences in remedial statutes is not limited to those two — for example § 1981 allows uncapped damages for discrimination based on race without any administrative procedures (meaning a racial victim of pay discrimination would have four years to bring a claim), but there is no § 1981 claim for gender discrimination. If a statute needs addressing, perhaps it should be the Equal Pay Act which specifically focuses on compensation, not Title VII.
- More practically speaking, my rule of thumb is that any legal argument, such as Justice Ginsburg's, which argues that the dangers of adopting it can be cured by the appropriate application of the doctrine of laches — relying on the proposition that "no sensible judge would tolerate such inexcusable neglect," is written by a judge who is far removed from the reality of everyday litigation.
- Finally, although it makes no real difference except to make the arguments against the decision on the grounds that people will not know that they are discriminated against less doomworthy, the press has not frequently enough pointed out that more than half of the states have deferral agencies which means the time period for filing a claim is 300 days not 180 (or as pointed out above, 4 years if based on race).
And for those who claim that employers will hide their discrimination by prohibiting employees from talking about their wages — they may do so, but they do it in violation of another law, the National Labor Relations Act. They of course also risk extending the statute of limitations under other equitable doctrines of "waiver, estoppel and equitable tolling."
Maybe there was more to say about the case than I thought.
Update: The NYT's editorial page really goes off the hyperbolic deep end in their desire to paint the Supreme Court as evil doers — Injustice 5, Justice 4:
I think most employers and their lawyers would be surprised to know that Title VII has been stripped of its potency or can figure out which "long standing precedents" were "tossed aside." If the NYT's wants to object on policy grounds — fine — but notwithstanding the impassioned and certainly deeply held views of Justice Ginsburg and the three who joined her dissent, an attempt to paint this as some wacky right wing reading of the law is off the mark.The Supreme Court struck a blow for discrimination this week by stripping a key civil rights law of much of its potency. The majority opinion, by Justice Samuel Alito, forced an unreasonable reading on the law, and tossed aside longstanding precedents to rule in favor of an Alabama employer that had underpaid a female employee for years. The ruling is the latest indication that a court that once proudly stood up for the disadvantaged is increasingly protective of the powerful.
It's a clever headline, but far from accurate or helpful.