Title VII – cert petition on "ultimate employment decisions"

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Sometimes a US Supreme Court cert petition catches my eye. Today it was Peterson v. Linear Controls [briefs]

Formally, the question presented is "Whether the 'terms, conditions, or privileges of employment' covered by Section 703(a)(1) of Title VII of the Civil Rights Act of 1964 are limited only to hiring, firing, promotions, compensation and leave."

The 5th Circuit, in an unpublished opinion, reiterated its stingy interpretation of Title VII's anti-discrimination language. In this race discrimination lawsuit, the court said it "strictly construes adverse employment actions to include only 'ultimate employment decisions,' such as 'hiring, granting leave, discharging, promoting, or compensating. '” Peterson v. Linear Controls (5th Cir 02/06/2019) [PDF]

Peterson alleged that he was on a team of five white employees and five black employees, and the black employees had to work outside and were not permitted water breaks, while the white employees worked inside with air conditioning and were given water breaks. The 5th Circuit ruled that – assuming the allegations are true – it was not error for the trial court to hold that these working conditions are not adverse employment actions because they do not concern ultimate employment decisions.

Of course, the 5th Circuit is wrong, but that's usually not enough to rally the four Justices needed to grant certiorari. The fact that there is a split of authority among the circuits will be a major factor in deciding whether to grant certiorari. The 3rd Circuit is almost as strict as the 5th (some say it's just as strict). Seven other Circuits reject the 5th Circuit's restrictive approach – the 2nd, 6th, 7th, 8th, 9th, 10th, and 11th Circuits.

The key statutory language:

“to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual” with respect to “compensation, terms, conditions, or privileges of employment” because of the individual’s race, religion, sex, or other protected status.

The brief from Linear Controls isn't due until September 9, so we have a bit of a wait before we know whether the Supreme Court will take up this case.

SCOTUS: EEOC exhaustion is not jurisdictional

Monday's unanimous US Supreme Court Title VII decision in favor of the employee does not give employee-plaintiffs a free pass. Exhaustion of EEOC administrative processes is still required. All the Court did was say exhaustion is not a jurisdictional question that can be raised after five years of litigation. Employers can still get cases dismissed for failure to exhaust if they raise the issue early on in the litigation.

Fort Bend County v. Davis (US Supreme Ct 06/03/2019) [PDF]

The employee filed an EEOC charge claiming sex harassment. Later she wanted to add religion. So she wrote “religion” on the intake form, but she never revised the formal EEOC charging document.

Then she sued claiming religious discrimination, and the employer — after years of litigation — raised the question that the EEOC form had not been properly filled out. So the question was: is this a jurisdictional issue that the employer can raise at any time even the years later? Or is it a claims processing rule that the employer waived by waiting so long?

The US Supreme Court says it's non-jurisdictional.

So this is something the employer can raise but – use it or lose it.

Class arbitration is available only when there is an affirmative contractual basis for concluding that the parties agreed to it (5-4).

Another 5-4 arbitration decision from the US Supreme Court: No class-action arbitrations based on ambiguity. There must be an affirmative contractual basis for concluding that the parties agreed to class arbitration. Lamps Plus v. Varela (US Supreme Ct 04/24/2019) [PDF].

Varela filed a putative class action against his employer on behalf of employees whose tax information had been disclosed to a hacker. Varela's employment contract contained an arbitration agreement, so the employer moved to compel arbitration on an individual – not class – basis. The trial court authorized class arbitration and dismissed Varela's claims. The 9th Circuit affirmed. The US Supreme Court (5-4) reversed, holding that under the Federal Arbitration Act (FAA), an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration.

The 9th Circuit recognized that Stolt-Nielsen S. A. v. Animal Feeds Int'l Corp., 559 U. S. 662 (2010), held that a court may not compel arbitration on a classwide basis when an agreement is "silent" on the availability of such arbitration. But the 9th Circuit ruled that Stolt-Nielsen was not controlling because the agreement in this case was ambiguous rather than silent on the issue of class arbitration.

The US Supreme Court pointed out that courts must give effect to the intent of the parties, and it is important to recognize the "fundamental" difference between class arbitration and the individualized form of arbitration envisioned by the FAA. Class arbitration "sacrifices the principal advantage of arbitration – its informality – and makes the process slower, more costly, and more likely to generate procedural morass than final judgment." Like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to sacrifice the principal advantage of arbitration. Instead, there must be an affirmative contractual basis for concluding that the parties agreed to class arbitration.

The dissent would allow the application of California's "plain-vanilla rule of contract interpretation" which would require interpreting an ambiguous contract against the drafter.

US Supreme Court will decide whether Title VII prohibits discrimination based on (1) sexual orientation and (2) transgender status

The United States Supreme Court is going to be deciding two big Title VII cases (1) involving sexual orientation and (2) involving transgender status. The announcement was made on April 22, 2019.

The question in both cases is whether Title VII applies to these cases because Title VII talks about discrimination “because of sex.”

In the sexual orientation case — Altitude Express v. Zarda [briefs] —  which is really a consolidation of two cases, we had two men who allege they were fired because they were gay. One of the lower courts said — Yes, that violates Title VII because sexual orientation discrimination is just a subset of sex discrimination. In the other case the court said — No, Title VII does not apply at all.

In the transgender case — R.G. & G.R. Harris Funeral Homes Inc. v. EEOC [briefs] —  we have a funeral director who was working as a male and wanted to transition to becoming a female and wear women's clothes. And the boss said — No, we're going to fire you because wearing women's clothes would violate our dress code, and it would violate God's commandments.

These two big cases will be argued in the fall of 2019 and decided sometime in 2020.

I would urge the Court to make an analogy to discrimination "because of … religion." If an employer treats a Catholic married to a Jew differently than a Catholic married to a Catholic, it seems that would be discrimination "based on religion." If an employer treats a Catholic transitioning to becoming a Jew differently from a Catholic who remains a Catholic, it seems that would be discrimination "based on religion." What am I missing?

Railway employee's recovery of working time lost due to an on-the-job injury is taxable "compensation" (7-2)

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The US Supreme Court has brought us a decision that we may actually remember for about five minutes. It's that exciting.

The Court holds that a railroad's payment to an employee for working time lost due to an on-the-job injury is taxable "compensation" under the Railroad Retirement Tax Act (RRTA). BNSF Railway v. Loos (US Supreme Ct 03/04/2019) [PDF].

Loos sued BNSF Railway under the Federal Employers' Liability Act (FELA) for injuries he received while working at BNSF's railyard. A jury awarded him $126,212.78, ascribing $30,000 of that amount to wages lost during the time Loos was unable to work. BNSF asserted that the lost wages constituted "compensation" taxable under the RRTA and asked to withhold $3,765 of the $30,000 to cover Loos's share of the RRTA taxes. The District Court and the Eighth Circuit rejected the requested offset, holding that an award of damages compensating an injured railroad worker for lost wages is not taxable under the RRTA. The Supreme Court reversed, 7-2.

The Court noted that the statutory foundation of the railroad retirement system mirrors that of the Social Security system. Thus, the term "compensation" in the RRTA was given the same meaning as the term "wages" in the Federal Insurance Contributions Act (FICA) and the Social Security Act (SSA). Therefore, as is true for backpay, FELA damages for lost wages are "compensation" taxable under the RRTA.

DISSENTING, Justice Gorsuch (joined by Justice Thomas) said,

"When an employee suffers a physical injury due to his employer’s negligence and has to sue in court to recover damages, it seems more natural to me to describe the final judgment as compensation for his injury than for services (never) rendered."

After all, the RRTA taxes an employee’s "compensation," which it defines as "money remuneration . . . for services rendered as an employee to one or more employers." 26 U. S. C. §3231(e)(1).

Another attack on public sector unions

There's a petition for certiorari pending at the US Supreme Court asking the Court to take up the issue of "Whether it violates the First Amendment to appoint a labor union to represent and speak for public-sector employees who have declined to join the union." Uradnik v. Inter Faculty Organization [Briefs]

Kathleen Uradnik sought a preliminary injunction challenging the constitutionality of an exclusive collective bargaining representative in the public sector, asserting that “the University and State of Minnesota [should] not appoint the Union to speak for her and not force her into an expressive association with it.”

The trial court denied the preliminary injunction, and the 8th Circuit affirmed in December 2018, having decided that Uradnik "cannot show a likelihood of success on the merits of her compelled speech argument."

The Supreme Court may or may not want to hear this case, so we'll just hide and watch.

Is Uber next? US Supreme Court case could be a game changer.

Is Uber next? US Supreme Court case could be a game changer.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

New Prime v. Oliveira (US Supreme Ct 01/15/2019) [PDF] held that an interstate truck driver does not have to arbitrate his wage and hour claim – even though he signed an arbitration agreement.

This could have a big effect on lawsuits between Uber and their drivers. It probably turns on whether the drivers are IN interstate commerce.

Some pundits were surprised that the Court would issue a "pro-worker," "anti-arbitration" decision, failing to understand that the Justices all do their best to be faithful to the words Congress puts into its statutes.

Dominic Oliveira is an interstate truck driver whose contract with New Prime designates him as an independent contractor. The contract contains a mandatory arbitration provision and contains a "delegation clause," giving the arbitrator authority to decide threshold questions of arbitrability. Oliveira filed a class action claiming that New Prime failed to pay statutory minimum wage. The trial court denied New Prime's motion to compel arbitration; the 1st Circuit affirmed. The US Supreme Court affirmed unanimously. New Prime v. Oliveira (US Supreme Ct 01/15/2019) http://case.lawmemo.com/us/Oliveira.pdf

The Federal Arbitration Act (FAA) directs courts to compel arbitration, but §1 says that "nothing" in the Act "shall apply" to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

The Supreme Court held that the trial court – not the arbitrator – must first decide whether FAA §1 excludes Oliveira. This is because the contract's delegation clause (which is merely a specialized type of arbitration agreement) can be enforced only if the FAA applies in the first place.

The Supreme Court also held that FAA §1 excludes Oliveira. The FAA's term "contract of employment" refers to any agreement to perform work. At the time of the FAA's adoption in 1925, the phrase "contract of employment" was not a term of art, and dictionaries tended to treat "employment" more or less as a synonym for "work." Contemporaneous legal authorities provide no evidence that a "contract of employment" necessarily signaled a formal employer-employee relationship.

At SCOTUS: Title VII Exhaustion: Jurisdictional? Waivable?

At SCOTUS: Title VII Exhaustion: Jurisdictional? Waivable?

Part of a series - Employment Law Case of the Week - by Ross Runkel.

The US Supreme Court has granted certiorari to decide whether Title VII’s administrative exhaustion requirement is a jurisdictional prerequisite to suit, as three Circuits have held, or a waivable claim processing rule, as eight Circuits have held. Title VII requires plaintiffs to exhaust claims of employment discrimination with the EEOC before filing suit in federal court. Fort Bend County v. Davis (US Supreme Ct cert granted 01/11/2019) [Order].

The 4th, 9th, and 11th Circuits hold that exhaustion is jurisdictional, so courts lack subject matter jurisdiction over claims that were never presented to the EEOC. The 1st, 2nd, 3rd, 5th, 6th, 7th, 10th, and DC Circuits treat failure to exhaust as a claim processing rule that is subject to waiver, forfeiture, and other equitable defenses. The Department of Justice is on record as describing Title VII’s exhaustion requirement as jurisdictional, and the EEOC has taken the position that it is not jurisdictional.

The Court will review the 5th Circuit's judgment in Davis v. Fort Bend County (5th Cir 06/20/2018) [PDF], which held that the defendant forfeited its exhaustion argument by not raising it in a timely manner before the district court.

Justice Kavanaugh’s 1st opinion: Arbitration

Justice Kavanaugh’s 1st opinion: Arbitration.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

The US Supreme Court has held – unanimously – that courts must enforce an arbitration delegation clause even if the merits appear to be "wholly groundless." Henry Schein v. Archer & White (US Supreme Ct 01/08/2019) [PDF]. This is Justice Kavanaugh's first Supreme Court opinion. Eight pages.

[This is not an employment law case, yet it will have an impact on employment agreements that contain an arbitration clause.] Archer & White Sales sued Henry Schein alleging antitrust violations and seeking both money damages and injunctive relief. Schein moved to compel arbitration, citing an arbitration clause in the parties' contract. Archer & White argued that the dispute was not subject to arbitration because its complaint sought injunctive relief, at least in part, and the arbitration agreement had an exception for injunctive relief. Schein contended that because the rules governing the contract provide that arbitrators have the power to resolve arbitrability questions, an arbitrator – not the court – should decide whether the arbitration agreement applied. Lower courts held that the argument in favor of arbitration was "wholly groundless," and so the trial court could – and did – decide that the arbitration agreement did not cover this dispute. The US Supreme Court unanimously reversed.

The US Supreme Court held that the "wholly groundless" exception to arbitrability is inconsistent with the Federal Arbitration Act (FAA) and the Court's precedent. Under the FAA, arbitration is a matter of contract, and courts must enforce arbitration contracts according to their terms. The parties may agree to have an arbitrator decide not only the merits of a particular dispute, but also "gateway" questions of arbitrability. Therefore, when the parties' contract delegates the arbitrability question to an arbitrator, a court may not override the contract, even if the court thinks that the arbitrability claim is wholly groundless. "[A] court may not 'rule on the potential merits of the underlying' claim that is assigned by contract to an arbitrator, 'even if it appears to the court to be frivolous.'"