$6.6 million wrongful discharge punitive damages

cropped-Img108_00141.jpgUPS’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.

upsOn 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 I assume the opinion was unpublished because UPS’s arguments were so clearly unsupportable.

Richard Birke to be JAMS Institute executive director

birkeRichard Birke will become Executive Director at JAMS Institute.

That’s the word from Jen Reynolds, writing at Indisputably. Jen says Rich will be moving to JAMS this fall.

Since 1993 Willamette Law Professor Richard Birke has been the Director of Willamette’s Center for Dispute Resolution. Professor Birke was a member of the Quality Assurance Team for the largest civil rights settlement in United States history (Glickman v. Pigman). He trained the neutrals for the appellate settlement programs at the Oregon Court of Appeals, and the First and Second Districts in California (San Francisco and Los Angeles). He continues to serve as a consultant and mediator for those programs. He has mediated many multi-party complex cases, including a 30-party land dispute over 150 acres of waterfront property in Mendocino, Calif., the relocation of the Cascade Head Trailhead and the creation of the Opal Creek Wilderness Area. In addition, he served as mediator in an $800 million dispute between a national railroad and an oil company and assisted with the process design aspects of an effort by a consortium of Oregon organizations to reform the state’s tax structure.

I like Rich as a person, and he is a talented mediator and trainer. I appreciate his scholarship on neuroscience and psychology as it relates to the mediation process.

It’s a loss for Willamette Law School and a gain for JAMS.

Good reads on employment law

cropped-Img108_00141.jpgGood reads so far this week:

EMPLOYMENT LAW BLOG CARNIVAL: THE APRIL SHOWERS EDITION – Ari Rosenstein at CPEhr’s Small Biz HR Blog.

When Do Volunteers Become “Employees” Under Anti-Discrimination Laws? – Daniel Schwartz at Connecticut Employment Law Blog.

Common Sense Trumps EEOC’s Position in ADA Telework Case – Michael J. Soltis at Disability, Leave & Health Management Blog.

NLRB vs. Right-to-Work

cropped-Img108_00141.jpg1976 decision will be overruled.

In right-to-work states a union cannot force non-members to pay union dues, or to pay anything in lieu of dues. Only union members pay dues, even though a union has a statutory duty to represent both members and non-members.

What happens when a union spends its money to represent a non-member during the grievance-and-arbitration process? Can the union refuse to do this work unless the non-member pays the costs? Or must the union go ahead even though the individual has paid nothing?

r-t-wSince 1976 the answer has been clear. The union must go ahead even though the individual has paid nothing. Machinists, Local No. 697 (H.O. Canfield Rubber Co.), 223 NLRB 832 (1976). In that case the NLRB held that if a union charges non-members a grievance-processing fee that it does not charge to members, then that is unlawful discrimination in violation of Section 8(b)(1)(A).

That is all about to change. The Board has invited amicus briefs in United Steel, Paper and Forestry  Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 1192 (Buckeye Florida) (12-CB-109654). [Notice and Invitation to File Briefs]

The issues to be decided:

  1. Should the Board reconsider its rule that, in the absence of a valid union-security clause, a union may not charge nonmembers a fee for processing grievances? Should it adhere to or overrule Machinists, Local No. 697 (H.O. Canfield Rubber Co.), 223 NLRB 832 (1976), and its progeny?
  2. If such fees were held lawful in principle, what factors should the Board consider to determine whether the amount of such a fee violates Section 8(b)(1)(A)? What actions could a union lawfully take to ensure payment?

There’s no doubt in my mind that the issuance of this notice means that the NLRB will overrule that 1976 case.

SCOTUS takes up an ERISA reimbursement case


cropped-Img108_00141.jpgWhat’s “equitable relief” under ERISA § 502(a)(3)?

Robert Montanile was a beneficiary of a welfare benefit plan administered by the Board of Trustees of the National Elevator Industry Health Benefit Plan. When Montanile was injured in a car accident, the Plan paid his initial medical expenses, totaling $121,044.02.

Montanile sued the drunk driver that caused his injuries, and recovered a $500,000 settlement. Much of that went toward attorney fees and costs, yet more than $235,000 remained. After Montanile spent it all, the Plan sued to get reimbursed.

erisaThe Plan documents say that the Plan is entitled to be reimbursed, but Montanile refused to do so. The 11th Circuit sided with the Plan. The US Supreme Court granted certiorari and will schedule oral argument for the Fall of 2015. Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan.

Here are the basic arguments:

  • The Plan says it has an equitable lien on the settlement proceeds, so Montanile must pay the Plan back.
  • Montanile says the Plan cannot enforce the lien because he has spent all the funds.
  • The Plan responds saying that the lien attached as soon as Montanile had the funds in his possession, and the lien is not destroyed simply because Montanile spent the money.
  • Montanile responds saying that at the time the Plan brought its suit there was no fund to which an equitable lien could attach.

It’s interesting to see how the two parties express the issue.

  • Montanile: Does a lawsuit by an ERISA fiduciary against a participant to recover an alleged overpayment by the plan seek “equitable relief” within the meaning of ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3), if the fiduciary has not identified a particular fund that is in the participant’s possession and control at the time the fiduciary asserts its claim?
  • The Plan: Whether a beneficiary of a benefit plan governed by the Employee Retirement and Income Security Act of 1974 can defeat enforcement of the plan’s valid equitable lien by agreement—after the lien attaches—by dissipating the fund subject to the lien.

What we know for sure is that there is a clear-cut Circuit split on resolving this issue.

(Un)Equal Protection: Why Gender Equality Depends on Discrimination

kcpI just read a wonderful article: (Un)Equal Protection: Why Gender Equality Depends on Discrimination,  by Willamette Law Professor Keith Cunningham-Parmeter.

The key to the piece is advocacy for “fatherhood bonuses” — laws that give families additional parental leave when fathers stay at home with their newborns. The basic idea is that laws that may on their face appear to favor men actually are beneficial to women as well.

Professor Cunningham-Parmeter points out that in countries where such fatherhood bonuses exist, women with children spend more time at paid work, advance in their careers, and get higher wages. Well, of course they do.

The article spends plenty of time and creativity chewing on US Supreme Court decisions with the goal of persuading us that fatherhood bonuses would not be unconstitutional. I’m persuaded.

The big deal is in the last few pages, where we are told how such fatherhood bonuses could be crafted so as to satisfy (or at least mollify) various constituencies.

The take-away quote from the article: “The masculine norm that directs men to avoid domestic work causes a large number of women to assume a disproportionate share of that work.”

SCOTUS puts pregnant workers on more equal footing

Or is it “an interpretation that is as dubious in principle as it is senseless in practice”?

How does the Pregnancy Discrimination Act work? If a pregnant woman can’t do her regular job and asks for a light duty assignment, and many (but not all) other workers get light duty as an accommodation for a disability or on-the-job injury, must the employer also accommodate the pregnant woman? The two word answer: Probably yes.

Young v. United Parcel Service (US Supreme Court 03/25/2015) (6-3).

  • Pregnancy Discrimination Act clause #1: Title VII’s prohibition against sex discrimination applies to discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions.”
  • Pregnancy Discrimination Act clause #2: Employers must treat “women affected by pregnancy . . . the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.”

Lots of folks have struggled with that second clause. It make a great law school exam question. The US Supreme Court rejected all three potential answers provided by the litigants:

  • The woman said she should be accommodated if any other workers are accommodated. The Court said that’s too broad, and would apply if only one or two “others” were accommodated.
  • The employer said the second clause simply defines sex discrimination to include pregnancy discrimination. The Court said that can’t be so, because the first clause already does that.
  • The Government was pushing a recently-adopted EEOC interpretation, which the Court rejected because it was an unexplained deviation from prior interpretations.

So, how does the PDA work?

Well, the Court came up with a modification of the well-known McDonnell Douglas framework: Plaintiff’s prima facie case, employer’s “legitimate, nondiscriminatory” reasons, plaintiff’s showing that the employer’s proffered reasons are in fact pretextual. Way too long for a blog post. In the end, the Court sent the case back, saying that there is a genuine dispute as to whether the employer provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from Young’s.

Three dissenting Justices ripped the majority decision, saying it displayed “Inventiveness posing as scholarship—which gives us an interpretation that is as dubious in principle as it is senseless in practice.”

My view: A long overdue recognition that the PDA usually requires employers to accommodate pregnant women on the same basis that they accommodate other employees. Pregnancy has a cause that is different from an ADA disability or an on-the-job injury, yet the impact on the individual is essentially the same. The PDA was designed to recognize this.

SCOTUS: Notice-and-comment unnecessary for DOL change in interpretive rule

Huge power shift to administrative agencies.
Mortgage-loan officers do not qualify for FLSA administrative exemption.

Unanimous decision: Perez v. Mortgage Bankers Assoc. (US Supreme Court 03/09/2015.

The Administrative Procedure Act (APA) establishes the procedures federal administrative agencies use for “rule making,” defined as the process of “formulating, amending, or repealing a rule.” The APA distinguishes between two types of rules: So-called “legislative rules” are issued through notice-and-comment rulemaking, and have the “force and effect of law.” “Interpretive rules,” by contrast, are “issued . . . to advise the public of the agency’s construction of the statutes and rules which it administers,” do not require notice-and-comment rulemaking, and “do not have the force and effect of law.”

In 1999 and 2001, the Department of Labor’s Wage and Hour Division issued letters opining that mortgage-loan officers do not qualify for the administrative exemption to overtime pay requirements under the Fair Labor Standards Act. In 2004, the Department issued new regulations regarding the exemption.

Mortgage Bankers Association (MBA) requested a new interpretation of the revised regulations as they applied to mortgage-loan officers, and in 2006, the Wage and Hour Division issued an opinion letter finding that mortgage-loan officers fell within the administrative exemption under the 2004 regulations.

In 2010, the Department again altered its interpretation of the administrative exemption. Without notice or an opportunity for comment, the Department withdrew the 2006 opinion letter and issued an Administrator’s Interpretation concluding that mortgage-loan officers do not qualify for the administrative exemption.

MBA filed suit contending that the Administrator’s Interpretation was procedurally invalid under the D.C. Circuit’s decision in Paralyzed Veterans of Am. v. D.C. Arena L. P., 117 F. 3d 579. The Paralyzed Veterans doctrine holds that an agency must use the APA’s notice-and-comment procedures when it wishes to issue a new interpretation of a regulation that deviates significantly from a previously adopted interpretation.

The District Court granted summary judgment to the Department, but the D.C. Circuit applied Paralyzed Veterans and reversed.

The US Supreme Court unanimously reversed and held that the Paralyzed Veterans doctrine is contrary to the clear text of the APA’s rulemaking provisions and improperly imposes on agencies an obligation beyond the APA’s maximum procedural requirements.

Oh.
Yes.
We’re supposed to read and follow the statute.
Who would have guessed?

Law school death spiral

As Pogo said, “We have met the enemy and he is us.”

Emory law prof Dorothy A. Brown has joined the chorus: “While faculty could be part of the solution to legal education’s woes, we are actually the problem.”

Her Washington Post article, “Law schools are in a death spiral. Maybe now they’ll finally change.“, contains some great quotes:

  • Law schools are currently in a bidding war for the students with the highest LSATs and GPAs because U.S. News heavily emphasizes those factors in its rankings.
  • poorer law students lose out on scholarships and end up paying full tuition, financed through student loans, subsidizing their richer classmates.
  • While law firms can fire lawyers, law schools cannot cut their largest expense: faculty.
  • Legal scholarship is in a terrible state, with counter-intuitive incentives for faculty. Status comes with publishing, but more publishing means less teaching and interacting with fewer students.
  • very few articles are cited for their ideas.
  • Law schools are run by the faculty for the faculty.
  • In three years, a top law school will close. Then watch how quickly things change.

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.