Supreme Court Beat

As I have opined before, with the Democratic majority running for the hills, and the Administration keen on spending whatever capital it has left on health care, we're unlikley to see any employment law legislation this year. But that doesn't mean that other branches haven't been busy. Here's a brief synopsis of cases pending before the Supremes, some of which I have discussed previously.

City of Ontario v. Quon looks to be the decision with the most blockbuster potential, although there is certainly latitude to bring it well within precedent. The question presented is whether employees have a reasonable expectation of privacy in personal text messages transmitted over employer-supplied devices, against a background of a formal no-privacy policy in conflict with a practice that sanctioned personal use. Although this case involves public employees -- police officers -- it may have implications for all employers, both public and private.

New Process Steel v. NLRB raises an issue of considerable import to labor lawyers and their clients. The National Labor Relations Board has an authorized strength of five members, and three is generally considered to be a quorum to decide cases. For the past couple of years, however, the NLRB has had only two sitting members. During that time they have decided around 400 cases. The question before the court is whether those two-member decisions were valid. It's not a clear-cut question, and there are good arguments on both sides. The three circuit courts to have considered the question have split. A ruling against the Board could cause a thermonuclear legal mess.

Lewis v. City of Chicago presents the Court with another firefighter qualification test case, like last year's Ricci v. DeStefano. Lewis deals with the more abstract question of whether the 300-day limit to file a claim with the EEOC runs from the date the test results were announced or the date that hires were made based upon those test results.

We're likely to hear more about these cases in the spring.

caring about your standard of care, again

Last Wednesday, petitioners (Xerox’s ERISA plan administrators) contended that the Second Circuit “got it backwards” when it afforded deference to the district court’s – but not the Plan Administrator’s – interpretation of the company’s ERISA plan.

This case continues a recent trend of the Court taking on ERISA cases that pose very finite issues, ones that aren’t likely to recur frequently but that pose the opportunity to present some sense of what are the outer guidelines of ERISA litigation - how broad is deference, does it apply when there is a conflict, what kind of conflict matters, how much room does the administrator get to work with plan language, and what is the proper balance between the plan administrator and the district courts (and eventually the circuit courts) in deciding factual and plan language issues in ERISA cases. Much of this goes back to Firestone, and the universe governing ERISA cases that it spawned; what we are likely to see are cases like this one being decided in a manner intended to reign in the outer limits of the universe spawned by Firestone, which means I call this one for the participants, with a finding that the plan administrator gets deference only the first time around.

Many of the justices seemed to follow what the Chief Justice characterized as “one strike and you’re out” approach, which seemed to be the trend of the Seventh Circuit in Gross as well.

The upshot is, again, like Gross, the 'due deference' that a court is likely to give a plan administrator is not going to be much. Plan administrators are going to need solid cases in making their determinations and not rely on 'arbitrary and capricious standards' to do the work for them.

Conkright v. Frommert (08-810);

A much needed boost for lobbyists

The Supremes have struck down campaign spending bans on corporations--the holding stuck down a prohibition against firms airing their own campaign ads, but left in place a prohibition against direct contributions to a candidate.

The next question is whether/when the same principle is applied to prohibitions against union spending. There is no legal difference between the two and I expect courts will hold now that broad bans on union spending are also unconstitutional. Unions obviously have to be careful not to use objectors' dues for political campaigns, but beyond that this appears to open the door significantly for both labor and management to pour more resources into the political process.

Just what we need...more money in politics!

Citizens United v. FEC, No. 08-205

Of Interest

The Supremes recently heard attorneys argue whether Section 301 of the Labor-Management Relations Act, which allows federal courts to hear lawsuits "for violation of contracts" between employers and labor unions, gave a court jurisdiction to hear a claim that the International Brotherhood of Teamsters interfered in contract talks between a California company and a Teamsters
local.

Granite Rock Co. counsel argues lower courts improperly denied the company an opportunity to pursue a tort claim against the IBT. He says the claim was "grounded" in the local union's collective bargaining agreement and therefore fell within the scope of Section 301.

IBT argues that allowing Granite Rock to pursue a tort claim under a statute that refers only to the enforcement of contracts would effect a "big change" in the framework that Congress has established. Major issues of labor law "such as ... economic weapons that parties can use should be decided by Congress through statute and by the National Labor Relations Board through the application of the statute."
But several justices question whether failing to allow such claims would leave
employers without redress for misconduct by international unions.

Granite Rock Co. v. Int'l Bhd. of Teamsters, U.S., No. 08-1214, oral
argument 1/19/10


The Supremes also denied review of a 401(k) plan fees case against Deere & Co. that has drawn a considerable amount of attention after the Seventh Circuit last year upheld the dismissal of fiduciary breach claims against Deere. Basically, the lower court found that providing a very expansive list of mutual funds for 401k participants, satisfied the plan administrator/employer's duty of fiduciary care to plan participants.

The denial of Supreme Court review comes as a surprise to many as the case has spawned a large-scale debate among ERISA practitioners, fiduciaries, and academics over the fiduciary responsibilities tied to the investment choices made for 401(k) plans. In my opinion, the Supremes passed up a good opportunity to offer some much needed guidance to the community.

Hecker v. Deere & Co., U.S., No. 09-447, cert. denied 1/19/10

Of Interest

The Supreme Court has granted certiorari on two issues pertinent to the concerns of this blog.

Ever wonder about the meaning of "prevailing party" under Section 502(g) of ERISA? The U.S. Supreme Court is about to take on this issue, perhaps as soon as April, in Hardt v. Reliance Standard Life Ins. Co., 09-448, a case from the Fourth Circuit. More details from the SCOTUS blog:

Issues: (1) Whether ERISA § 502(g)(1) provides a district court with discretion to award reasonable attorney’s fees *only* to a prevailing party; and (2) whether a party is *entitled* to attorney’s fees pursuant to § 502(g)(1) when she persuades a district court that a violation of ERISA has occurred, successfully secures a judicially ordered remand requiring a redetermination of entitlement to benefits, and subsequently receives the benefits sought on remand.

Also, last Friday, the Supremes granted cert on Rent-A-Center West v. Jackson (09-497). An employee sued for race discrimination and argued that the predispute arbitration agreement he had signed was unconscionable. A provision in the agreement gave arbitrators exclusive authority to resolve disputes over enforceability of the agreement. The Ninth Circuit ruled 2-1 last September that a court, not an arbitrator, should have ruled on the issue of unconscionability.

Seventh Circuit applies Gross

The Seventh Circuit overturned its precedent and held that a plaintiff in an ADA case alleging that she was discriminated against by an employer who regarded her as disabled had to demonstrate that the perceived disability was the but-for cause of the adverse employment action taken against her.

The court reasoned that the Supreme Court in Gross v. FBL Fin. Servs., had essentially held that the importance that the court attached to the express incorporation of the mixed-motive framework into Title VII suggests that when another anti-discrimination statute lacks comparable language, a mixed-motive claim will not be viable under that statute. The upshot is that unless a statute provides otherwise, demonstrating but-for causation is part of the plaintiff’s burden in all suits under federal law.

While the ADA explicitly incorporates the remedies in Title VII available for disparate impact cases, it did not expressly incorporate the codification of mixed motives liability in 42 U.S.C. § 2000e-2(m). Because the plaintiff did not demonstrate that the plaintiff's perceived disability was the but-for cause of her termination, the district court's decision that the defendant was liable for discrimination had to be reversed.

Stay tuned: we'll see how ADA amendments may alter this result in the future.

Serwatka v. Rockwell Automation Inc., No. 08-4010 (2010)

Supremes not ready for Prime Time

In a per curiam opinion, the Supremes voted 5-4 to stay the broadcast of the Proposition 8 trial in San Francisco. The heart of the underlying suit is whether Proposition 8 violates the due process and equal protection clauses of the Constitution.

The dissent was written by Breyer, and joined by Sotomayor, Stevens, and Ginsburg.

Looking into my crystal ball, watch for a decision on the merits of the case to break down the same way. Anybody want to take the over or under on that one?

the case for revisiting workplace policies

Recently, the Supremes agreed to hear a case that will permit it to provide guidance to employers about their right to monitor its employees' electronic communications, at least in the public employer context. The Supremes will review a Ninth Circuit finding that a city police officer had a reasonable expectation of privacy in personal text messages that were sent from his city-issued pager.

Like most employers, the City had a written electronics communications policy that expressly prohibited personal use of its computers and notified employees that they had no expectation of privacy with respect to any communications using the city's computer systems. The City's policy, however, did not make clear that this policy applied to its police officers' pagers or to text messaging. Instead, the city informally permitted the use of pagers for personal reasons. After reviewing transcripts of messages, the city was shocked, shocked to learn the pagers were used for personal purposes. Upon learning that their texts had been reviewed, Sergeant Quon sued the city under the Fourth Amendment and the Stored Communications Act.

The Ninth Circuit's decision seems contrary to the general trend permitting employers to monitor employees' emails on employer computers once they put employees on such notice. But the City's electronics communications policy did not explicitly address text messages. Then, the City permitted an informal practice to develop. By not updating its electronics communications policy and by permitting informal practices to develop, the City let the horses out the barn door.

This case seems pretty straightforward under present law--the City should have revisited its policies. Quon is likely going to get a Phyrric victory here. So why grant cert.? Maybe to provide a clue to provide guidance in this context. Federal district courts continue to reach conflicting results when addressing whether employees waive the attorney-client privilege by communicating with a personal attorney using their employer’s electronic resources. The upshot is that with yet another federal court recently finding no waiver, employers should revisit and revise their electronic resources policies to increase their chances of winning the waiver battle.

Again, as I stated recently, it's important for employers to have workplace policies in place before a problem develops, and to follow those policies consistently.

Convertino v. United States DOJ, 2009 U.S. Dist. LEXIS 115050 (D.C. Dec. 10, 2009)
Alamar Ranch, LLC v. County of Boise, 2009 U.S. Dist. LEXIS 101866 (D. Idaho Nov. 2, 2009)
Quon v. Arch Wireless Operating Company, Quon v. Arch Wireless Operating Company, Inc., Ninth Circuit, No. 07-55282 (2009)