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?

An unconscionable arbitration agreement

Sometimes a court will refuse to enforce an arbitration agreement because it's unconscionable.

Here we have a plaintiff who sued with a wage claim. He'd signed an arbitration agreement. The boss wanted the court to order arbitration, but the court said the arbitration agreement was unconscionable. Subcontracting Concepts v. De Melo (California Ct App 04/10/2019) [PDF]

Procedurally unconscionable — which has to do with how the contract was formed in the first place — because it was non-negotiable, the guy spoke hardly any English, it was given to him on a take-it-or-leave-it basis, and it said that the AAA rules applied but didn't say which rules, and he didn't get a copy.

Also substantively unconscionable — which has to do with exactly what's in that contract — because it provided for three arbitrators (which is going to be very expensive), and he's not allowed to recover punitive damages, or equitable relief, or attorney fees, or costs — even if he wins.

So — unconscionable. And the court refused to just carve out the bad stuff and save the rest. They threw the whole arbitration agreement out. So this man gets to stay in court.

Overreaching has consequences.

Is obesity a disability? - Employment Law Case of the Week

Is obesity a disability? The New Jersey Appellate Division says (because a New Jersey statute says): only if it is caused by bodily injury, birth defect or illness. Dickson v. Community Bus Lines (New Jersey Ct App 04/04/2019) [PDF]. This is the Employment Law Case of the Week - Part of a series.

We have a bus driver who has been driving for 10 years, weighs between 500 and 600 pounds, and is obviously obese.

He failed his periodic medical exam which he needs for his commercial driver's license, and the doctor says he needs more tests.

He sued under the New Jersey Law Against Discrimination claiming that he was perceived as having a disability (obesity) and that there was a hostile work environment because of that.

The problem was that the New Jersey statute says that a disability has to be “caused by bodily injury, birth defect or illness.” Just being obese is not enough.

You may have a different outcome in other jurisdictions, but in New Jersey it's not enough just to be obese.

Fired for using medical marijuana - Employment Law Case of the Week

Employment Law Case of the Week: Wild v. Carriage Funeral Holdings (New Jersey Ct App 03/27/2019) [PDF].

An employee claims he was fired for off-duty marijuana use.

The employee uses medical marijuana as permitted by the New Jersey Compassionate Use Medical Marijuana Act.

He sued under the state law against employment discrimination saying he has a disability — cancer. He's legally treating his cancer with marijuana and he says he can't be fired for that.

Now the employer finds one sentence, which says “Nothing in this act shall be construed to require an employer to accommodate the medical use of marijuana in any workplace.”

So the employer is saying we can fire him for using medical marijuana according to that sentence.

But the New Jersey Court says that The Compassionate Use Act — which is where that sentence is — does not require accommodation, but the law against discrimination is a separate statute and that statute might require accommodation of his disabilities.

The employer might still be required under the law against discrimination to accommodate his medical marijuana use.

Cross-Examination : Arbitration Boot Camp

There are two reasons to do cross examination.

  • One I call constructive.

  • The other I call destructive.

Constructive cross-examination — sometimes called hitchhiking — is where you're basically going to use the other side's witness as if they were your witness. That witness has things you need to know (or the arbitrator needs to know) and you simply ask a series of questions to get that information from the witness.

The other one is called destructive cross-examination — it's sometimes called impeachment — where you're trying to discredit the witness. Maybe you can show that witness is a liar. That's difficult and infrequent. But you can show sometimes the witness has a poor memory by asking a series of questions and see if they remember, or you can show bias by showing they’re related to somebody or they socialize with somebody. You don't come right out and say “Oh, well, you must be biased.” No, you just let the arbitrator form the arbitrator's own conclusions on that.

If you're going to use constructive cross-examination, you're probably not going to want to then turn around and try to impeach that witness because you want the arbitrator to believe the constructive part of that testimony that you've got.

Let me give you six ideas.

Number one: Don't repeat the unfavorable information that the witness has already given. You’re just repeating stuff that you don't want to hear and you don't want the arbitrator to hear again.

Number two: Use short questions and use plain words. Don't go into great big long complicated stuff.

Number three: I want you to use leading questions. People say don't use leading questions. But this is cross-examination, and you you can — and Irving Younger the great expert says you must — always use leading questions that would elicit either a yes or no answer.

Q: ”You came to work at eight o'clock that morning?”
A: ”Yes.”
Q: ”The supervisor was already at her desk?”
A: ”Yes.”
And so on. Very simple questions.

Number four: You should usually know what the answer is going to be before you ask the question. Otherwise, you might get surprised — unfavorably.

Number five: I want you to listen to the answer. I see it happen all the time where an advocate has a series of questions they want to ask and they go bulling through that series of questions, but they miss one of the answers that would have led them down a different rabbit hole that could have been quite favorable.

Number six: Do not quarrel with a witness. Do not argue with the witness. It only makes you look bad. And it usually doesn't help your case at all. Save your argument for when the case is over and you get to make an argument to the arbitrator.

So, before the hearing starts, when you're thinking about your cross-examination, know why it is you're going to cross-examine — constructive / destructive — and then prepare a list of questions that will lead you down the proper path to the answers that you want to hear or that you want the arbitrator to hear.

Drinking at an office party + Car wreck. Employer liable?

An employee says she was pressured by her supervisor to go to an after-work event – so she could move up in the organization. She says the supervisor encouraged her co-workers to drink.

She got drunk, and then drove the wrong way on the interstate, got in a wreck, and was injured.

Of course, she sued the employer and the supervisor.

The defense was based on an Oregon "social host statute" which immunizes social hosts from lawsuits based on serving alcohol to someone who then goes out and gets injured.

The Oregon Supreme Court says the employee can still sue the employer and the supervisor for negligence for their acts OTHER THAN serving alcohol. Schutz v. La Costita III (Oregon 03/14/2019) [PDF].

She might not win, but the employer has no statutory immunity.

Selecting Your Arbitrator - Arbitration Boot Camp

You have an arbitration coming up, and it's time to select an arbitrator. Perhaps you got a list of potential arbitrators from AAA or FMCS.

Who are these people? What are they like? Which one(s) will be best for your case?

This 3 ½ minute video will give you some ideas.

Good hunting!

For more in the "Arbitration Boot Camp" series, go to They’re also on my YouTube channel.

The Death of Chevron deference

Here’s a wonkish comment about a US Supreme Court decision that heralds the death of Chevron deference.

 BNSF Railway v. Loos (US Supreme Ct 03/04/2019) [PDF] was a boring case about payroll taxes in the railway industry.

 The 7-Justice opinion for the Court was important for what it did not say.

 The case involved interpretation of a tax statute. And the IRS had issued a regulation interpreting that statute. You would think the Court would have dealt with what's called Chevron deference – named after Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). When an administrative agency interprets an ambiguous statute, Chevron says that courts should defer to that interpretation.

 But the Court Did. Not. Even. Mention. Chevron.

 So the death of Chevron deference was announced on March 4, 2019.

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


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).