Movie review: Leviathan


I can see why this elegant film won the Golden Globes award for best foreign language film, and a host of other awards for cinematography, director, actor, actress. Although the Russian Ministry of Culture partially funded it, the Minister says he doesn’t like it. Hard to imagine any Putin-appointed official saying otherwise.

Set on the edge of the spectacularly beautiful Barents Sea, in and near a not-so-charming fishing village that features elegant government buildings and rundown Soviet style apartment buildings.

Kolya runs an auto repair shop next to his ancestral home on the edge of the sea. His teen son is typically rebellious and makes it clear that Kolya’s wife – Lilya – is not his mother. The wife cleans fish at the fish factory, and seems somewhat distant from Kolya and the boy.

The well-fed and fabulously corrupt mayor – who rules with a stereotypical combination of Russian law and raw thuggery – has brought condemnation proceedings against Kolya’s property so the city can build one more government palace. Kolya’s old army buddy, now a slick Moscow lawyer, arrives just before the mayor-dominated court reads out the decree that will take away everything Kolya owns.

The lawyer understands both law and blackmail, and has arrived with a damning dossier of dirt on the mayor. The mayor also knows more than law, and rallies both city employees and loyal thugs to his cause.

The lawyer and Lilya are attracted to each other, and we are aware of an off-screen scene in which Kolya catches them in the act. Kolya threatens to kill them both. Still, everyone tries to keep themselves in their life roles, and the strain is palpable.

Kolya and his pals are determined to drink up all the vodka in Russia while using photos of former Soviet leaders for target practice. Orthodox priests dispense advice on truth, God’s will, and the moral of the Book of Job. The courts dispense mechanical justice. The cops live on bribes. The mayor’s trophy wife has the only fur coat in town. Whales play in the sea.

The mayor’s hooligans beat up the lawyer, and he scoots back to Moscow. Lilya thinks about joining him, but stays with Kolya. She wants a baby with him, yet he is strangely silent.

Closing scenes: Lilya stands on a cliff, watching a whale. Lilya’s body washes up on shore. The local prosecutor charges Kolya with murder. Lilya’s best friend takes the son under her wing. A Swedish backhoe moves in on Kolya’s house.

Russian with English subtitles.

OK for arbitrator to award punitive damages

Finding: willful and malicious misappropriation of plaintiff’s trade secrets.

NXEGEN won an arbitration award against John Carbone, its former chief operations officer. After finding that Carbone maliciously misappropriated trade secrets in violation of the Connecticut Uniform Trade Secrets Act, the arbitrator awarded punitive damages.

Carbone went to court, claiming that the arbitrator had acted in manifest disregard of the law. The trial court affirmed the award, and the Connecticut Court of Appeals affirmed. NXEGEN v. Carbone (Conn Ct App 02/03/2015).

To get punitive damages under the Trade Secrets Act, you have to prove willfulness and malice. Carbone claimed that the arbitrator used the wrong definition for “malice,” and therefore acted “in manifest disregard of the law.”

The court said there were three things Carbone had to prove in order to vacate the award under the “manifest disregard of the law” doctrine:

(1) the error was obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator;

(2) the arbitration panel appreciated the existence of a clearly governing legal principle but decided to ignore it; and

(3) the governing law alleged to have been ignored by the arbitration panel is well defined, explicit, and clearly applicable.

Here, the arbitrator set forth the reasons he found that Carbone’s conduct was malicious. So there was no obvious error, and the arbitrator did not consciously ignore the law.

This case is another example that shows that courts do not review arbitration awards the same way they review lower court decisions. In reviewing a lower court decision, an appellate court will reverse if the lower court was wrong on the law. In reviewing an arbitration award, it is not enough to show that the arbitrator was wrong. You also have to show that the arbitrator appreciated the existence of a clearly governing legal principle but decided to ignore it.

Lifetime benefits? Not so fast.

“Ordinary contract principles” apply to collective bargaining agreements.

It should be no surprise that the US Supreme Court reversed M&G POLYMERS USA, LLC, ET AL. v. TACKETT (US Supreme Court 01/26/2015).

A collective bargaining agreement  provided that certain retirees, along with their surviving spouses and dependents, would “receive a full Company contribution towards the cost of [health care] benefits”; that such benefits would be provided “for the duration of [the] Agreement”; and that the agreement would be subject to renegotiation in three years.  The 6th Circuit had held that this  created a vested right to lifetime contribution-free health care benefits.

The Supreme Court said that the 6th Circuit reached its conclusion by using  principles that are incompatible with ordinary principles of contract law. In particular, the 6th Circuit followed the reasoning in its famous International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc., 716 F.2d 1476 case.

The Court had this to say about Yard-Man:

Yard-Man violates ordinary contract principles by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements. That rule has no basis in ordinary principles of contract law. And it distorts the attempt “to ascertain the intention of the parties.”

And the decision was unanimous.


NLRB tightens deferral to arbitration

 As expected, the NLRB has narrowed the standard for deferral to arbitration.

The issue comes up when an employer disciplines an employee and there is a claim that the discipline violates both a collective bargaining agreement (CBA) and the National Labor Relations Act (NLRA). Two separate cases can get going in two separate forums. The CBA claim goes before a private arbitrator. The NLRA claim goes to the National Labor Relations Board.

The question is: Should both cases be allowed to play themselves out? Or should the NLRB simply drop its proceedings (“defer”) and let the arbitrator’s decision take care of things?

The new rules go like this: If the arbitration procedures appear to have been fair and regular, and if the parties agreed to be bound, the Board will defer to an arbitral decision if the party urging deferral shows that: (1) the arbitrator was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) Board law reasonably permits the award. Babcock & Wilcox Construction Company (NLRB 12/15/2014).

Employer advocates are moaning that this new standard will lead to far fewer deferrals (true), unduly delay the final resolution of issues (true), and change the dynamics at the bargaining table (not likely).

I’m curious about whether the new rule will alter the parties’ tactics during the arbitration proceedings. Up until now it has been rare for the parties to explicitly authorize an arbitrator to decide a statutory unfair labor practice issue. Will they now start doing so?

NLRB: Employees can use the boss’ email system for union organizing

emailThis is a game changer.

The NLRB has reversed course, allowing employees to use the employer’s email system on non-working time to communicate about working conditions, unionizing, and other Section 7 protected matters.

Purple Communications (NLRB 12/11/2014):

At issue in this case is the right of employees under Section 7 of the National Labor Relations Act to effectively communicate with one another at work regarding self-organization and other terms and conditions of employment. The workplace is “uniquely appropriate” and “the natural gathering place” for such communications, and the use of email as a common form of workplace communication has expanded dramatically in recent years. Consistent with the purposes and policies of the Act and our obligation to accommodate the competing rights of employers and employees, we decide today that employee use of email for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their email systems. We therefore overrule the Board’s divided 2007 decision in Register Guard to the extent it holds that employees can have no statutory right to use their employer’s email systems for Section 7 purposes.

$1 in nominal damages plus $300,000 in punitive damages

moneyFor Title VII case, this does not violate due process.

A jury found the employer liable for sexual harassment and awarded only nominal damages (one dollar) plus $868,750 in punitive damages. The trial court cut the punitive damages to $300,000 due to a statutory cap. On appeal to the 9th Circuit, a three judge panel found the amount of punitives was constitutionally excessive and reduced the award to $125,000.

The en banc 9th Circuit resinstated the $300,000 punitive damages award. State of Arizona v. ASARCO LLC (9th Cir en banc 12/10/2014).

The 9th Circuit explicitly declined to “rigidly apply” the three guideposts set out by the US Supreme Court in BMW v. Gore, 517 U.S. 559 (1996). Why? Because the 9th Circuit was dealing with a statute that “rigidly dictates the standard a jury must apply in awarding punitive damages and narrowly caps hard-to quantify compensatory damages and punitive damages.” Thus, there is a satisfaction of the Supreme Court’s concern that a defendant “receive fair notice not only of the conduct that will subject him to punishment, but also the severity of the penalty” that may be imposed.

AS the 9th Circuit summarized it:

The statute [42 U.S.C. § 1981a] provides specific notice of proscribed conduct. It specifies the maximum amount of damages that can be awarded, and incorporates both specified compensatory and punitive damages within the cap. The $300,000 dollar amount of the cap provides an extremely limited potential for recovery, and has not changed, nor been adjusted for inflation, since its adoption in 1991. There is nothing in our consideration of the Gore factors that would alter that conclusion.

SCOTUS: No pay for 25-minute post-shift security screening

flsaUnanimous. Security screenings are noncompensable postliminary activities.

Integrity Staffing employs warehouse workers who work in warehouses. At the end of each shift the employer requires these employees to empty their pockets and go through a metal detector, and it’s claimed that it takes 25 minutes to wait for and go through this process.

The employees sued to get paid for this post-shift time, citing the Fair Labor Standards Act (FLSA). Although the 9th Circuit decided this time must be paid for, the US Supreme Court unanimously held that the time that the employees spent waiting to undergo and undergoing security screenings is not compensable under the FLSA. Integrity Staffing Solutions v. Busk (US Supreme Court 12/09/2014).

The Portal-to-Portal Act exempts employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the performance of the principal activities that an employee is employed to perform.

The Supreme Court previously held that the term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.”

Keeping to this narrow view of what is compensable, the Court decided that —

An activity is therefore integral and indispensable to the principal activities that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.

Examples of compensable time: the time battery-plant employees spent showering and changing clothes; the time meatpacker employees spent sharpening their knives.

Example of noncompensable time: the time poultry-plant employees spent waiting to don protective gear.

These ideas as applied in this case:

  1. Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from warehouse shelves and package those products for shipment to Amazon customers.
  2. The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment.
  3. The 9th Circuit improperly focused on the fact that the employer required this activity. That kind of analysis would swallow up the whole rule.

And, in a bow to collective bargaining (even though these workers are not represented by a union), the Court said that any argument that the employer could have drastically reduced the amount of time involved is “properly presented to the employer at the bargaining table, . . . not to a court in an FLSA claim.”

[For a list of current employment law cases, see US Supreme Court Watch.]

2013-2014 Labor & Employment Supreme Court Review

Professor Jeffrey M. Hirsch (University of North Carolina School of Law) has written an interesting piece reviewing the US Supreme Court’s 2013-2014 labor and employment law decisions.

The Supreme Court’s 2013-2014 Labor and Employment Law Decisions: Consensus at the Court

Abstract: “This Article is a review of the Supreme Court’s 2013-2014 labor and employment law decisions. Among the cases discussed are Harris v. Quinn, Lane v. Franks, Lawson v. FMR, Fifth Third Bancorp v. Dudenhoeffer, Heimeshoff v. Hartford Life & Accident Insurance Co., Sandifer v. United States Steel Corp., NLRB v. Noel Canning, and Burwell v. Hobby Lobby Stores. The Article notes the relative lack of sharp divisions among the Justices — a result that appears to largely be the result of a less controversial labor and employment docket. However, as some of even this year’s decisions show, sharp divisions on the Court still exist, and we’re likely to see a return to the usual ideological decisions in later terms.”

Definitely worth reading.


Block’s NLRB nomination is blocked, Lauren McFerran nominated

nlrbSharon Block never had a chance after the Noel Canning decision.

Republican Senators were unhappy that then NLRB Member Sharon Block continued in office even after lower courts had ruled that her recess appointment was constitutionally invalid, and more unhappy after the US Supreme Court’s Noel Canning decision confirmed the invalidity of her appointment. She stayed in office until August 2013, and became Senior Counselor to the Secretary of Labor. Anyhow, the President went ahead and nominated her to get back on the Board, and the GOP folks made it clear they would do whatever necessary to prevent Senate confirmation.

After the mid-term elections swept Republicans into control of the Senate, the President backed off, and dropped Block.

The new nominee is Lauren McFerran — nominated to replace Nancy Jean Schiffer, whose term expires December 16, 2014.

Lauren McFerran is Chief Labor Counsel for the Senate Committee on Health, Education, Labor, and Pensions (HELP Committee), a position she has held since 2010.  Since 2012, she has also served as Deputy Staff Director for the HELP Committee.  Ms. McFerran began on the HELP Committee as Senior Labor Counsel for Senator Ted Kennedy and Senator Tom Harkin in 2005, and served in that capacity until 2010.  Before her work for the United States Senate, Ms. McFerran was an Associate at Bredhoff & Kaiser, P.L.L.C. from 2002 to 2005.  From 2001 to 2002, she was a Law Clerk for Chief Judge Carolyn Dineen King on the United States Court of Appeals for the Fifth Circuit.  Ms. McFerran received a B.A. from Rice University and a J.D. from Yale Law School.

With the Senate’s new no-filibuster rule for such nominations, it is possible that the Senate might confirm McFerran before January when the Republicans take over. If not, the NLRB will be in a 2-2 Democrats-Republicans deadlock which will bring to a halt any new groundbreaking decisions.

An easy prediction: Between now and December 16 the Democrat-dominated Board will come out with several 3-2 decisions that will move everything to the left.

Law school closure

lawschoolThe future is not what it used to be.

Law school applicants are fewer each year. For many schools there are three choices: reduce the number of enrolled students, lower the minimum credentials of enrolled students, or close up operations.

Thomas M. Cooley Law School may have some advantage in that it has multiple campuses. So it makes sense to them to close one campus and have students finish out their law school careers at another campus. Any way you slice it, this is not the happiest news.

Here’s the story directly from Cooley:

Statement of Intent to Close

Western Michigan University Thomas M. Cooley Law School has notified its students that it intends to cease operations at its Ann Arbor campus on December 31, 2014, subject to the approval of teach-out plans submitted to its accrediting agencies, the Higher Learning Commission and American Bar Association – Section of Legal Education and Admission to the Bar.

This action follows implementation of a financial management plan announced July 1, 2014.

Anticipating the possibility of the closure, the Law School told its Ann Arbor students in August of accommodations it would provide them should the campus close. Those include:

  • early registration at other campuses
  • $1,500 cash stipend to help cover costs of attending a different campus
  • $3,500 stipend for a bar review course for graduates
  • specialized advising for registration, financial aid, housing and other issues
  • possible adjustment to available financial aid
  • additional consideration to students with special circumstances.

Starting January 2015, the affected Ann Arbor students may choose to take their classes at any of the Law School’s other campuses, including Lansing or Auburn Hills located about an hour away from Ann Arbor, Grand Rapids located about two hours away, or at its Tampa Bay, Florida campus. Travel to other campuses has historically been common amongst students, with more than 60 percent of Ann Arbor-based graduates over the last three years taking classes at more than one campus. The Law School has always admitted students to the school as a whole and not to a particular campus.

Announcement of the intent to cease operations at Ann Arbor awaited the required formal notice recently given by the school to its accrediting agencies, which must review the arrangement. The school and the accreditors will ensure that the affected students are provided the full range and quality of curriculum, instruction, and student services as all other students receive.