SCOTUS to decide Rule 68 offer of judgment case

special_offerDoes an unaccepted offer of judgment make a case moot?

The scene: Plaintiff brings a class action against a defendant. Defendant offers to pay the full amount of the individual plaintiff’s claim. Plaintiff does not respond, and the offer lapses by its own terms. Defendant then argues that the individual plaintiff’s case is moot, and the class’ claims are also moot. The 9th Circuit sides with the plaintiff.

Circuit courts are divided on how to answer this. The 3rd, 4th, 5th, 6th, and 7th Circuits say that if a defendant makes a Rule 68 offer that would fully satisfy the individual plaintiff’s claim, and plaintiff allows that offer to lapse, then the individual plaintiff’s claim becomes moot, and the class claims also become moot. The 2nd, 9th, and 11th say the claim is not moot because the plaintiff did not accept the offer.

The US Supreme Court granted certiorari in Campbell-Ewald Company v. Gomez (US Supreme Court 05/18/2015) to resolve this dispute, and will schedule oral arguments for some time in the Fall of 2015.

We saw a similar case in 2013: Genesis HealthCare v. Symczyk, 133 SCt 1523 (2013). In that case the parties stipulated that an unaccepted offer mooted the plaintiff’s individual action, and the Court held that this also mooted the class action. The difference in the new case is that there is disagreement on whether the unaccepted offer moots the plaintiff’s individual case.

I favor the rule that an unaccepted offer does not render a case moot. I can’t imagine a better explanation for this than the one articulated by four Justices in the dissent in  Genesis HealthCare:

By those measures, an unaccepted offer of judgment cannot moot a case. When a plaintiff rejects such an offer — however good the terms — her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer — like any unaccepted contract offer — is a legal nullity, with no operative effect. As every first-year law student learns, the recipient’s rejection of an offer “leaves the matter as if no offer had ever been made.”

SCOTUS: ERISA fiduciary’s continuing duty extends statute of limitations

erisaWhen does the six year limitation period begin? Every day?

ERISA fiduciaries just got a wake-up call in Tibble v. Edison International (US Supreme Court 05/18/2015).

Beneficiaries of a 401(k) plan sued the plan fiduciaries claiming breach of fiduciary duties. The claim was that the fiduciaries offered higher priced mutual funds when cheaper funds were available. Those funds were added to the plan in 1999 and 2002. ERISA has a six year statute of limitations, and the beneficiaries filed suit more than six years after these mutual funds were included in the plan.

Lower courts held that the beneficiaries’ claims were time-barred. Their theory had its focus on the initial selection of the investments.

The US Supreme Court reversed unanimously.

  • “Under trust law, a trustee has a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset.”
  • “In short, under trust law, a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones. A plaintiff may allege that a fiduciary breached the duty of prudence by failing to properly monitor investments and remove imprudent ones. In such a case, so long as the alleged breach of the continuing duty occurred within six years of suit, the claim is timely. The Ninth Circuit erred by applying a 6- year statutory bar based solely on the initial selection of the three funds without considering the contours of the alleged breach of fiduciary duty.”

Astonishingly simple.

Employer must pay union’s bargaining expenses

fallbrook_hospitalObstinate, pugnacious, and closed mind.

After Fallbrook Hospital refused to bargain in good faith with a union representing registered nurses, the NLRB issued an unusual order: The employer must reimburse the union for its negotiating expenses.

The DC Circuit upheld this order – Fallbrook Hospital v. NLRB (DC Cir 05/08/2015) – in a decision by Senior Judge Harry Edwards, an true expert on labor law.

The NLRB found as a fact that the employer had refused to bargain in good faith, and acted in an “obstinate and pugnacious manner,” “operated with a closed mind and put up a series of roadblocks designed to thwart and delay bargaining,” and that the totality of Fallbrook’s conduct made it “clear” that “there was no intent to bargain.”

Once in court, Fallbrook did not contest the underlying factual findings. Its point was that the Board’s order went too far. Typically, there are two purposes for a Board order to reimburse bargaining expenses: (1) to redress the effect of past conduct (which Fallbrook did not object to) and (2) to restore the economic strength that is necessary to ensure a return to the status quo ante at the bargaining table.

Fallbrook has now closed the facility where the nurses had worked, so its argument was that there is now no need to provide the union prospective strength at the bargaining table.

The court’s reaction:

This argument is not only meritless, it reflects real chutzpah. See, e.g., Harbor Ins. Co. v. Schnabel Found., 946 F.2d 930, 937 n.5 (D.C. Cir. 1991) (“It reminds us of the legal definition of chutzpah: chutzpah is a young man, convicted of murdering his parents, who argues for mercy on the ground that he is an orphan.”).

The Board’s order was designed to restore the status quo ante. It did. Also, there was nothing in the Board’s written order that mentions a second remedial purpose to restore strength to the Union solely for prospective bargaining sessions with Fallbrook.

EEOC to interact with employers on line

eeocEEOC Takes First Steps in Digital Charge System

Let today’s EEOC press release tell the story:

WASHINGTON – The U.S. Equal Employment Opportunity Commission (EEOC) announced today that 11 of its 53 offices will begin a pilot program called ACT Digital to digitally transmit documents between the EEOC and employers regarding discrimination charges.  This is the first step in the EEOC’s move toward an online charge system that will streamline the submission of documents, notices and communications in the EEOC’s charge system.  This system applies to private and public employers, unions and employment agencies.

The EEOC receives about 90,000 charges per year, making its charge system the agency’s most common interaction with the public.  The EEOC’s ACT Digital initiative aims to improve customer service, ease the administrative burden on staff, and reduce the use of paper submissions and files.

The first phase of ACT Digital allows employers against whom a charge has been filed to communicate with the EEOC through a secure portal to download the charge, review and respond to an invitation to mediate, submit a position statement, and provide and verify their contact information. The newly designed EEOC notice of a charge will provide a password-protected log in for the employer to access the system in the pilot offices. Employers will also have the option of opting out of the pilot program and receiving and submitting all documents and communications in paper form.

EEOC Chair Jenny R. Yang commended ACT Digital as an innovative first step in streamlining the agency’s charge system.

“The EEOC’s pilot of a digital charge system is an important step forward that will benefit the public and our staff,” Chair Yang noted. “This will improve our responsiveness to the public, efficiently utilize our resources, and protect the security of documents in our online system.  We encourage employers to provide candid feedback and suggestions during the pilots so we can make adjustments to strengthen the system.”

The pilot begins May 6, 2015 in the following EEOC offices: Charlotte, Greensboro, Greenville, Norfolk, Raleigh, Richmond and San Francisco.  The EEOC offices in Denver, Detroit, Indianapolis and Phoenix will also begin their pilots by the end of May 2015.

Questions and Answers on Phase I of ACT Digital, EEOC’s Digital Charge System

EEOC Respondent Portal User’s Guide

Uniform Bar Exam comes to New York

passedEroding the parochial bar exam.

I doff my hat to the state of New York for adopting the Uniform Bar Exam (UBE) beginning in 2016. Fifteen other states have adopted the UBE: Alabama, Alaska, Arizona, Colorado, Idaho, Kansas, Minnesota, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Utah, Washington and Wyoming.

The virtue of the UBE is that bar exam passage becomes portable. You pass in one state, and you can carry your score over to the next state without re-taking the exam. This is an important step for a profession that needs greater mobility.

The UBE has three parts: Multistate Essay Exam (six 30-minute questions); the Multistate Performance Test (two 90-minute analysis questions) and the Multistate Bar Exam (six hours, 200 multiple-choice questions). Notably missing is any testing on local law, but states are free to add that in if they wish.


“Yawn,” “Pyrrhic victory” greet EEOC conciliation decision

eeocThe smart, objective bloggers are greeting yesterday’s Mach Mining, LLC v. EEOC case with a yawn, and calling it a Pyrrhic victory for employers.

Don’t Worry, Be Happy: Supreme Court’s Decision on Conciliation a Yawn for Connecticut Employers – Daniel Schwartz at Connecticut Employment Law Blog.

Supreme Court ruling on EEOC conciliation obligations is a Pyrrhic victory for employers – Jon Hyman at Ohio Employer’s Law Blog.

Supreme Court (Sort of) Allows Courts To Review EEOC Mediation Efforts – a Fisher & Phillips LLP Legal Alert.

Others are writing long entries that seem less designed to inform than to impress potential clients with how dangerous and risky it is out there without a lawyer.

As I said yesterday: “Friends, if this decision gets you excited, then you need to bring something new into your life.”


EEOC’s conciliation duty is reviewable (barely)


eeocThis year’s least important SCOTUS decision.

Before suing an employer to enforce Title VII, the EEOC must first “endeavor to eliminate [the] alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.”

Can courts review the adequacy of the EEOC’s efforts? If so, what is the scope of that review?

Mach Mining, LLC v. EEOC (US Supreme Court 04/29/2015) gives us the answer in a unanimous opinion.

The syllabus puts it quite nicely:

“The proper scope of review thus matches the terms of Title VII’s conciliation provision. In order to comply with that provision, the EEOC must inform the employer about the specific discrimination allegation. Such notice must describe what the employer has done and which employees (or class of employees) have suffered. And the EEOC must try to engage the employer in a discussion in order to give the employer a chance to remedy the allegedly discriminatory practice. A sworn affidavit from the EEOC stating that it has performed these obligations should suffice to show that it has met the conciliation requirement. Should the employer present concrete evidence that the EEOC did not provide the requisite information about the charge or attempt to engage in a discussion about conciliating the claim, a court must conduct the factfinding necessary to resolve that limited dispute. Should it find for the employer, the appropriate remedy is to order the EEOC to undertake the mandated conciliation efforts.”

Friends, if this decision gets you excited, then you need to bring something new into your life.

Supreme Court seeks Attorney General’s response in anti-Abood case

facultystaff-banner-sm-twoThe frog is in the water, and the water is warming up.

In Friedrichs v. California Teachers Association a group of non-union teachers is asking the US Supreme Court to overrule  Abood v. Detroit Bd. of Ed. (US Supreme Court 1977) and hold that public-sector “agency shop” arrangements violate the 1st Amendment.

First, the Court has to grant certiorari, agreeing to even hear the case.

After a bunch of briefs were filed, the California Attorney General waived her right to respond. Aha! The Court will have none of that. Today the Court requested the California Attorney General to respond by May 27.

This case is a big deal because it is a head-on challenge of the 1977 Abood decision which upheld a state statute that allows an “agency shop” arrangement, whereby every employee represented by a union, even though not a union member, must pay to the union, as a condition of employment, a service charge equal in amount to union dues.

Last June 30, I wrote that I thought the decision in  Harris v. Quinn (US Supreme Court 06/30/2014) contained “an anti-Abood manifesto.”

Here is the majority’s anti-Abood manifesto:

  • Abood relied on Railway Employes v. Hanson, 351 U. S. 225 (1956), but Hanson‘s first amendment analysis was “thin.”
  • Abood relied on Machinists v. Street, 367 U. S. 740 (1961), but Street was a private sector case.
  • The Abood Court fundamentally misunderstood Hanson‘s narrow holding.
  • Abood failed to appreciate the difference between public sector union speech and private sector union speech.
  • Abood failed to appreciate the conceptual difficulty in public sector cases of distinguishing union expenditures for collective bargaining from those designed for political purposes.
  • Abood did not anticipate the administrative problems involved in classifying union expenditures as chargeable and non-chargeable
  • Abood did not anticipate the practical problems that arise from the heavy burden facing objecting nonmembers wishing to challenge the union’s actions.
  • The Abood Court’s critical “labor peace” analysis rests on the unsupported empirical assumption that exclusive representation in the public sector depends on the right to collect an agency fee from nonmembers.

SCOTUS will decide timelines of discrimination claim

sctCircuits split on filing period for a constructive discharge claim.

The US Supreme Court has granted certiorari in Green v. Donahoe, which raises this issue:

Whether, under federal employment discrimination law, the filing period for a constructive discharge claim begins to run when an employee resigns, as five circuits have held, or at the time of an employer’s last allegedly discriminatory act giving rise to the resignation, as three other circuits have held.

Federal employees have special rules  as to the time lines they must follow when filing employment discrimination claims. A federal employee “must initiate contact with a Counselor within 45 days of the date of the matter alleged to be discriminatory or, in the case of personnel action, within 45 days of the effective date of the action.”

Green was a Postal Service employee who claimed he was constructively discharged. He says he was forced to resign due to harassment and bullying by the Postal Service. All the allegedly discriminatory actions occurred by December 16, 2009. On February 9, 2010, Green submitted his retirement papers, effective March 31, 2010. He made his contact with an EEO counselor on March 22, 2010.

If the 45 days began to run on the date of the last discriminatory action, then Green’s claim is time barred. If the 45 days began to run when he announced his resignation, then his claim was timely.

The 10th Circuit held that the claim was time-barred because all the allegedly discriminatory actions occurred by December 16, 2009, so his March 22, 2010 contact with the EEO office about his constructive discharge was beyond the 45-day deadline. Green v. Donahoe (10th Cir 07/28/2014).

The US Supreme Court granted certiorari to the review the 10th Circuit judgment, and will schedule oral arguments for the Fall of 2015.

My bet is that the Supreme Court will affirm — by a lopsided margin — and hold that the clock begins to run on the date of the last alleged discriminatory action by the employer, not on the later date when the employee decides to quit or resign. Why? Simple. It is the employer’s conduct, not the employee’s conduct, that constitutes “the matter alleged to be discriminatory.”

$6.6 million wrongful discharge punitive damages

upsUPS’s Vice President and District Manager a “managing agent” under California law.

In a wrongful termination case, a federal jury awarded punitive damages against UPS of $15.9 million, which the judge reduced to $6.6 million. The 9th Circuit affirmed, in an opinion which the court said is “not appropriate for publication.” Marlo v. United Parcel Service, Inc. (9th Cir 04/23/2015).

Marlo had been involved in filing a class action suit which initially sought $400 million in class-wide damages. Vice President and District Manager Tim Robinson fired him.

On appeal, UPS argued against punitive damages on the ground that Robinson was not a “managing agent” under California law.

There was plenty of evidence that Robinson was a “managing agent.”

  • Robinson was the highest-ranking supervisor in a 7,000-employee district that covered a vast geographic area from downtown Los Angeles to the inland deserts to California’s Central Coast.
  • Robinson’s responsibilities included, in his own terms, “managing a complex business,” which required him “to talk about running the business every day.”
  • Robinson managed supervisors and employees in charge of the various departments in his territory, including operations, sales, marketing, engineering, automotive, finance and accounting, human resources, and labor relations.
  • “Robinson viewed part of his role as maintaining a company ‘culture’ — in essence, a company policy — of supervisors acting as ‘owners.'” Marlo’s class-action lawsuit threatened to upend that culture.
  • “The jury could thus reasonably conclude that Robinson’s decision to terminate Marlo was a policymaking decision aimed at protecting the company ‘culture.'”

$6.6 million is a lot. I assume the opinion was unpublished because UPS’s arguments were so clearly unsupportable.