June 16, 2007
Oregon Enacts Public Employee Card Check Bill
Oregon Gov. Ted Kulongoski (D) is poised to sign legislation that will give the state’s public employees the freedom to form a union when the majority of employees at a workplace put their signatures on union authorization cards.
Yesterday, the Oregon Senate approved the majority sign-up legislation, which also allows workers to opt for an election if they so choose. It now goes back to the House, which approved it earlier, to bring it in line with the Senate bill. Kulongoski has promised to sign the legislation.
Oregon joins New Hampshire and other states to recently pass such legislation which mirrors the soon-to-be considered Employee Free Choice Act (EFCA) in many respects.
Female Law Firm Lawyers Considering Other Options
The Wall Street Journal Law Blog has the story about a recent feature in the National Law Journal (NLJ) about how female attorneys are increasingly avoiding the big law firm life:
“As big law firms struggle to retain women lawyers and boost them into leadership roles, they’re losing many to contract positions, smaller firms, in-house jobs, government posts and legal aid careers that women lawyers say give them more control over their work and personal lives,” says the NLJ. The story featured several examples of women who have left Big Law to pursue various paths. Here’s a summary (link unavailable):
Contract Attorneys: San Francisco attorney Mae O’Malley was an associate at MoFo and then worked in-house for a couple of tech companies. Having built up a client base from her years of practice, she struck out on her own so she could manage her practice along with her three kids. Then she created Paragon Legal Group last September, which has roughly 20 attorneys in its stable that it farms out in-house legal departments on a contract basis. Roughly 90% of the attorneys are women; O’Malley says she expects to have $1 million in revenue this year.
Read the rest of the post for examples of women-owned law firms, in-house positions, government positions, and legal aid positions. Clearly, more law firms are going to need to consider how to balance work and family issues.
June 15, 2007
7th Circuit: No Associational Discrimination Claim for Men Under PDA
In the case of Griffin v. Sisters of Saint Francis,Inc., 2007 WL 1611752 (7th Cir. June 6, 2007) (per curiam), the 7th Circuit in a case of first impression considered whether the Pregnancy Discrimination Act (PDA) protects a man who is fired because his girlfriend is pregnant.
Mitch Rubinstein at the Adjunct Law Prof Blog briefs the facts and decision in Griffin:
Two unmarried lay employees at Michaela Farm which is owned and operated by an order of Catholic Nuns were suspected of having an affair. The Director had warned them to be "discreet" in their personal relationship and at one point noticed the woman outside the man's apartment at 10:00 pm . . . .
The claim was that both plaintiffs were terminated because the woman got pregnant. Citing to Newport News Shipbuilding v. EEOC, 462 U.S. 669 (1983), the 7th Circuit held that the PDA applies to men and women, but to prevail a plaintiff must establish an adverse employment action because of sex. With respect to the man, the court held that this standard could not be met. The man could not claim that he was a victim of discrimination because the action was not taken because of his sex; rather the action was taken because his girlfriend got pregnant; i.e., because of her sex.
I agree with Mitch on the outcome in this one: "A man who is fired because his girlfriend is pregnant does not state a cause of action, but a woman who gets fired at the same time does. This is the same type of tortured reasoning that lead to the Supreme Court's decision in GE v Gilbert, 429 U.S. 125 (1976) (holding that classification on pregnancy does not necessarily violate Title VII), which was legislatively overruled by the enactment of the PDA.
Unfortunately, unlike Gilbert, I don't see this case being legislatively overruled.
Does ADA Protect All Misconduct Stemming from Disability?
The case involved an employee with bipolar disorder who was fired following a violent and profane outburst during a performance meeting. The employee claimed the discharge violated Washington State disability bias law. The employer argued that it legitimately terminated her for misconduct, disability or no disability.
The 9th Circuit ruled that the state law protected not only the disability, but also manifestations of the disability. Thus, if the conduct was caused by the disability, a jury could find that the disability was a reason for the discharge . . .
[E]ven though this new case was decided under Washington state law, the 9th Circuit's opinion sends a disturbing message that it would interpret the ADA similarly.
It does seem that qualified individuals with a disability should not get complete immunity for all bad behavior because of their disability. Indeed, special education children under the IDEA Act may be disciplined, albeit while still receiving services, for engaging in conduct caused by their disability. I think not only does an ADA case need to be examined to determine whether the disability actually caused the misconduct, but whether the employee had undertaken any mitigating measures in the meantime to make future occurrences less likely. Seems that an all-or-nothing approach does not work well in cases like this, as an employer must be able to terminate disabled employees under appropriate circumstances without facing liability. PS
It does seem that qualified individuals with a disability should not get complete immunity for all bad behavior because of their disability. Indeed, special education children under the IDEA Act may be disciplined, albeit while still receiving services, for engaging in conduct caused by their disability.
I think not only does an ADA case need to be examined to determine whether the disability actually caused the misconduct, but whether the employee had undertaken any mitigating measures in the meantime to make future occurrences less likely. Seems that an all-or-nothing approach does not work well in cases like this, as an employer must be able to terminate disabled employees under appropriate circumstances without facing liability.
Dog Sexual Harassment
No, I actually mean it (from Reuters):
Two Thai street mutts who became ace sniffer dogs at an airport near the notorious "Golden Triangle" opium-producing region have been fired for urinating on luggage and sexually harassing female passengers.
The pair, Mok and Lai, had been plucked from obscurity under a program initiated by King Bhumibol Adulyadej to turn strays into police dogs, the Bangkok Post said on Sunday.
Although they won plaudits from police for their work in sniffing out drugs at northern Thailand's Chiang Rai airport, near the border with Laos and Myanmar, so many passengers complained about their behavior they had to be fired.
"He liked to pee on luggage while searching for drugs inside," Mok's former handler, Police Lieutenant Colonel Jakapop Kamhon, said. "He also liked to hold on to women's legs."
Clear sexual harassment, but how do you "fire" sniffer dogs? I mean can you imagine how that termination meeting went? Did they have to escort Mok and Lai from the building?
Child Labor and the 2008 Olympics
Backpacks, caps and other licensed products for the 2008 Beijing Olympics are being made in Chinese factories that use child labor and force employees to work long hours for less than minimum wage, a report released yesterday said.
The report, compiled by PlayFair 2008 - an alliance of global trade unions and labor groups - identified four factories it says are abusing Chinese and international labor standards to produce Olympics-licensed products.
"It brings shame on the whole Olympics movement that such severe violations of international labor standards are taking place in Olympic-licensed factories," said Guy Ryder, general secretary of the Brussels-based International Trade Union Confederation, a PlayFair campaign member and worldwide union association.
Officials with the Beijing Olympic organizing committee declined to comment, saying they had not seen the report.
Of course, that the world could sit by and watch these labor abuses take place without much comment is unsettling. The Olympics should take the only right move and immediately disassociate itself from these products made by child labor.
Where's the outrage, people?
June 14, 2007
In-Depth Analysis of Supreme Court Davenport Decision on Union Fees
Thanks to Jeff for getting a summary of Davenport v. Washington Ed. Assn., Nos. 05-1589 and 05-1657 (U.S. June 14, 2007) (the Breyer concurrence is here) up so quickly. The case holds that the State of Washington was not prohibited under the First Amendment from keeping public-sector labor unions from using the agency-shop fees of a nonmember for election-related purposes unless the nonmember affirmatively consents (our previous posts about the case are here, here, here, and here).
Now I have had a chance to read the decision (and who in their right mind could pass on one of the few public labor law cases heard by the Court!), here are my thoughts:
1. Surprise. I thought this case would be remanded back to the lower courts without a decision as a result of the amendment to the Washington law in question. That amendment seems to moot the constitutional issue about whether Washington State could go beyond what Abood v. Detroit Bd. of Ed., 431 U. S. 209, 235–236 (1977) requires (giving nonmembers the chance to opt-out) and make union nonmembers opt-in before using their union fees for ideological purposes. The amendment clearly exempts union from having to follow the opt-in procedure, so what gives? It's all about money. Justice Scalia, writing for the court, explains in footnote 1: "As respondent concedes, . . . these cases are not moot. Because petitioners sought money damages for respondent’s alleged violation of the prior version of §760, it still matters whether the Supreme Court of Washington was correct to hold that that version was inconsistent with the First Amendment." But won't this opinion also act to put other states on notice about what they can and cannot do as far as public-sector union agency fees?
2. No surprise. On the merits, I thought this case would come out against the union. The only surprise here is that I predicted 7-2 and it was 9-0 (albeit with three judges concurring). But to be fair to Rick Hasen who predicted a 9-0 outcome (and to Eugene Volokhn, who wrote an amici brief for the winning side), the concurrence does not represent a substantive disagreement (see point #5 below).
3. Whatever the merits in deciding this case, the important point is that States can beyond what is constitutionally required at the minimum and provide more restrictions when the constitution only sets the floor and not the ceiling:
The notion that this modest limitation upon an extraordinary benefit violates the First Amendment is, to say the least, counterintuitive. Respondent concedes that Washington could have gone much further, restricting public-sector agency fees to the portion of union dues devoted to collective bargaining . . . . Indeed, it is uncontested that it would be constitutional for Washington to eliminate agency fees entirely . . . . For the reasons that follow, we conclude that the far less restrictive limitation the voters of Washington placed on respondent’s authorization to exact money from government employees is of no greater constitutional concern . . . .
The mere fact that Washington required more than the Hudson minimum does not trigger First Amendment scrutiny. The constitutional floor for unions’ collection and spending of agency fees is not also a constitutional ceiling for state-imposed restrictions.
This is an important point not only for this case, but also for other cases which rest on the distinction between what is required and what is permitted by the Constitution (see, for instance, the Establishment Clause case of Locke v. Davey).
4. This case only applies to public-sector unions not under the jurisdiction of the National Labor Relations Act (NLRA). Justice Scalia in his majority opinion was clear that this decision has no impact on agency fee arrangements in the private-sector:
We emphasize an important limitation upon our holding: we uphold §760 only as applied to public-sector unions such as respondent. Section 760 applies on its face to both public- and private-sector unions in Washington. Since private-sector unions collect agency fees through contractually required action taken by private employers rather than by government agencies, Washington’s regulation of those private arrangements presents a somewhat different constitutional question. We need not answer that question today, however, because at no stage of this litigation has respondent made an overbreadth challenge.
5. Justice Breyer's concurrence, joined by the Chief Justice and Justice Alito, was not about disagreeing with the outcome of the case, but a disagreement over Supreme Court procedure. Justice Breyer did not believe that certain arguments (involving election law and content-based discrimination under the First Amendment) should be addressed because they were not raised below. The surprise here is that Justices Scalia and Thomas, usually sticklers for this type of procedure, did not follow this usually sound piece of appellate practice.
6. The Court found that the Supreme Court of Washington improperly relied on the expressive association case of Boy Scouts of America v. Dale, 530 U. S. 640 (2000) because "Section 760 does not compel respondent’s acceptance of unwanted members or otherwise make union membership less attractive."
All in all, I guess an important outcome for those nonmembers who wanted their money back from the union, but the greater import of this case will depend on how many states in the future decide to use the affirmative opt-in procedure that Washington initially adopted and subsequently amended out its statute for unions.
Union Loses Davenport Case
States may force public sector labor unions to get consent from workers before using their fees for political activities, the Supreme Court said Thursday. The court unanimously upheld a Washington state law that applied to public employees who choose not to join the union that represents them in contract talks with state and local governments. The workers are compelled to pay the equivalent of union dues, a portion of which the union uses for political activities.
Justice Antonin Scalia, writing for the court, said the law does not violate the union's First Amendment rights. But the state's Democratic governor and Democratic-controlled legislature recently changed the law to eliminate the provision that was upheld Thursday, blunting the impact of the court ruling.
The narrow issue before the justices was whether, as the law formerly prescribed, employees must opt in, or affirmatively consent, to having some of their money used in election campaigns. The justices said that a state could indeed require such consent. But there also is nothing to bar the state from putting the onus on nonmember workers to opt out, or seek a refund of a portion of their fees. That, in effect, is what Washington law now requires after the recent change.
The outcome is no surprise (except, perhaps for the lack of dissents). However, I find it a bit odd that the Court went ahead with its ruling given that the law they were looking at no longer exists. Hopefully the decision will help explain what's going on.
June 13, 2007
Request for Proposals For Lady Duff Contracts Conference
Pace Law School is hosting a conference and symposium this November on Wood v. Lady Duff Gordon, the chestnut contract case by J. Cardozo recognizing an implied duty of good faith in every contract. The organizer, Prof. Jim Fishman, is committed to including a panel on good faith in employment relationships and other employment law implications of the case. I have committed to participating, as have a number of contracts scholars, and I expect the event to be a wonderful forum for an exchange of ideas between experts in the contracts and employment fields.
If you are interested in participating in this conference, please drop an email and short proposal directly to Jim at firstname.lastname@example.org by June 25.
First Annual Dispute Resolution Works in Progress Conference
Hot on the heels of the successful First Annual Colloquium on Current Scholarship in Labor & Employment Law, Andrea Schneider (Marquette) brings news that Marquette will be hosting the First Annual Dispute Resolution Works in Progress Conference. Here are the details:
Law School is proud to announce the First Annual Dispute Resolution Works in Progress Conference, October 19 – 20, 2007, an opportunity for scholars from all over the country to meet others who are teaching and researching in dispute resolution. Join us and present your recent scholarship or works in progress, get feedback from colleagues, and learn about other research projects underway. Although we encourage you to share your current endeavors, you do not need to be a presenter to attend . . . .
No registration fee is required, however you must register by August 3rd in order to attend. You can register through the Conference website at http://law.marquette.edu/jw/mulsadr, which also includes links to hotels in the area. We will provide breakfast and lunch both days of the conference; you are responsible for making your own hotel and travel arrangements. Titles and abstracts should be sent to Natalie Fleury at email@example.com by August 3rd. Full papers or any other materials to be distributed are due no later than September 14th. PowerPoint presentations must be submitted by October 15th and presenters must provide their own handouts. If there are a large number of proposals for presentations, priority may be given to those who submit early.
Sounds like a great conference. I hope many of you out there can attend.
Oppenheimer on Racial Equality in the European Union
David Oppenheimer (Golden Gate), who is teaching a comparative equality class at the University of Paris X this summer, has an interesting op-ed piece on racial inequality in the European Union in the National Law Journal.
Here's a taste:
The European Union has declared 2007 the "European Year of Equal Opportunities for All." In January, the E.U. equality ministers met in Berlin for their first "Equality Summit" to call attention to their anti-discrimination efforts. And, while global warming wasn't on the agenda, by the end of the first day the discussions had generated enough heat to make the French delegates very uncomfortable . . . .
[W]hen Trevor Phillips, chairman of the British Commission for Equality and Human Rights, opened the afternoon session by arguing that "opinion is valuable, but facts are essential. And we can only deal with them if we collect data," the room started buzzing. And when Ursula von der Leyen, the German federal minister for family affairs, agreed, the French delegate made it clear he took it personally. Why? The French prohibit government collection of data about race, ethnicity or religion, because it is inconsistent with the French ideal of "citizenship" as the only legitimate form of identity. But in the absence of data, this "colorblindness" allows the French to be blind to the impact of color, even as it distorts the lives of French citizens with dark skin, and undermines the equally essential French ideal of equality.
David argues that collecting facts and data about ethnic groups is essential to overcoming the myth that we live in a color-blind world. David concludes that, "Measuring the extent of racial inequality hasn't eliminated the problem in the United States, nor will it in Europe. But it does make it harder to ignore."
Congressional Hearing on Ledbetter Decision
Yesterday, the House Education & Labor Committee had a hearing on whether legislation was needed to overturn the Ledbetter pay discrimination decision. A webcast of the House Education & Labor Committee's June 12th hearing is available here.
Here are some highlights (from the Daily Labor Report):
Calling the court's decision "a painful step backwards for civil rights in this country," Rep. George Miller (D-Calif.), who is chairman of the House Education and Labor Committee, said at a press conference that "[w]e will not allow this injustice to stand." He said at a committee hearing later that afternoon that the Supreme Court's decision does not "reflect what Congress intended" when it passed Title VII and amended it in 1991 . . . .
Miller said he will "soon" introduce legislation specifying that discrimination occurs whenever an employee is issued a paycheck that discriminates on the basis of sex, race, color, religion, age, or disability--all the types of discrimination prohibited by Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act . . . .
At the committee hearing later in the day, Rep. Howard McKeon (R-Calif.) warned against making "a quick fix and a quick headline, over-reaching in the process and setting into motion a series of unintended consequences that may do more harm than good in the long run." He expressed "hope" that no member of the committee "believes that we should put in place legislation that would keep employers indefinitely on the hook for employee claims of discrimination."
Kudos to Deborah Brake (Pitt) for being asked to testify at the hearing. Here's some of what she had to say:
Law professor Deborah L. Brake of the University of Pittsburgh said "[d]iscriminatory pay decisions are not separate and distinct from the paychecks that follow them." She cited a study by researchers at Carnegie Mellon University showing "how a discriminatory pay decision can continue to produce an ever-widening pay disparity throughout an employee's career" because of subsequent percentage-based pay adjustments.
Check out also Wade Henderson’s testimony. Wade is the President and CEO of the Leadership Conference on Civil Rights and will be advocating for a legislative fix to the Ledbetter decision.
Hat Tip: Hank Leland and Antoine Morris
June 12, 2007
Largest Disability Discrimination Suit Settled by Postal Service
These multi-million dollar employment discrimination settlements seems to be popping up everywhere today. Here is the latest one, a $61 million dollar settlement between the Postal Service and some 7,000 postal workers (from the LA Times):
More than 7,000 postal workers will be notified within the next two weeks that the U.S. Postal Service has agreed to pay $61 million in what lawyers say is the country's largest disability discrimination class-action settlement.
The settlement reached late last month, if approved by a judge, could break new ground under the Americans With Disabilities Act and the Rehabilitation Act, which require employers to make "reasonable accommodations" for disabled employees.
"It is now clear that just as in race discrimination cases, disability discrimination can be extremely expensive for employers," said Brad Seligman, the Berkeley lawyer who negotiated the settlement.
The plaintiffs claim that the postal service — the second-largest employer in the U.S. after Wal-Mart Stores Inc. — routinely moved workers injured on the job to menial positions that gave them no chance of advancement.
Kudos to Chris Cameron (Southwestern) for being quoted in the article. Here's what Chris had to say:
Christopher Cameron, who teaches employment law at Southwestern Law School in Los Angeles, said the agency was "a victim of it's own goodwill: They rehired the folks but they didn't properly accommodate them."
If there's a message in the settlement, Cameron said, "for most employers in the long run it will be cheaper to provide reasonable accommodation than to defend this type of litigation."
Let's hope Chris is right and there is more equitable treatment of disabled employees in the workplace as a result of this settlement.
Labor Fights New Fights in Today's Corporate World
This article, focusing on the increasing use by labor unions of corporate-types, was on the front page of the Sunday Washington Post.
Here are some highlights:
The Steelworkers union has an investment banker working down the hall from its president. A Service Employees International Union organizer is becoming an expert on leveraged buyouts. The Machinists are loading up their research department with MBAs.
The embattled labor movement is learning to think like capitalists, but not by choice. As burgeoning private equity funds bought U.S. companies last year worth more than half a trillion dollars -- a tenfold increase in only three years -- unions are shoring up their diminished bargaining power to try to negotiate worker-friendly financial deals with these new masters of the universe . . . .
Strategies are evolving as fast as the deals. The strongest unions have traded concessions for a share of eventual profits and for limits on how much money investors can take out of a business. Others have formed alliances with investors who honored labor commitments, becoming finders for potentially lucrative deals elsewhere.
I'm glad to see that unions are seeking to move quickly with this evolving market for the benefit of their workers. The one thing that I would take issue with is the first sentence on the second paragraph where it states that the labor movement is "learning" to think like capitalists.
The labor movement in the United States has always thought like capitalists and believe that this system generates the most wealth. But under its unique conception of "bread-and-butter" unionism, the idea is to distribute a larger share of the profit to the workers through meaningful collective bargaining. Few want a Labor Party as in England or Israel. American labor seeks to harness the productivity of capitalism in order to arrive at more equitable results (read, not where CEO make 400x more than the average worker).
University of Melbourne Centre for Employment & Labour Relations Law
Colin Fenwick (Melbourne) writes to tell us about the University of Melbourne's Centre for Employment & Labour Relations Law.
From the Centre's webpage:
The Centre for Employment and Labour Relations Law was established in the Faculty of Law in 1994. Its broad aims are to consolidate the teaching of, and research into, labour law at the University of Melbourne, to contribute to the development of labour law teaching and research throughout Australia, and to engage with labour law scholars throughout the world. Centre Members are responsible for teaching labour law subjects in the undergraduate and graduate programmes in the Faculty of Law, with the graduate programme leading to both Masters Degrees and Graduate Diplomas specialising in labour law.
Centre Members are engaged in research in diverse aspects of the broad field of labour law and labour market regulation. Areas of particular interest and expertise include the regulation of individual work relationships, discrimination in the labour market, the operation of courts and other dispute resolution institutions, the regulation of occupational health and safety, collective labour relations, comparative labour law, international labour standards, and unemployment law and policy. The Centre is engaged in ongoing research on the constitution and regulation of labour markets, both in Australia and abroad, with work being done on labour law in the Asia-Pacific region, Southern Africa, and Europe.
I look forward to hearing great things coming out from this institute. We will soon add a link to the Centre on the left-hand column of the blog so everyone can stay up-to-date on its work.
Canadian Supreme Court Constitutionalizes Bargaining Rights
With the active day for labor and employment in the United States yesterday, lost in the shuffle was the equally important labor decision that came down from the Supreme Court of Canada, British Columbia Health Services. Because I know little of Canadian Labour Law, I leave it to Michael Lynk (Western Ontario - Faculty of Law) to fill in the details:
[There has been a] landmark ruling by the Supreme Court of Canada this past Friday on trade union rights to collectively bargain, and its constitutional protection under the freedom of association guarantee in s. 2(d) of the Canadian Charter of Rights and Freedoms . . . .
The Court essentially tossed out 20 year old constitutional caselaw precedents that had narrowly and ungenerously interpreted trade union and collective rights. Its new ruling has significantly expanded the meaning and protection offered by the Charter in the realm of collective bargaining. The central issue in B.C. Health Services was whether the British Columbia provincial government was acting within its constitutional jurisdiction when it significantly rolled back collective agreement provisions on seniority, contracting out, layoff rights and bumping in the provincial contracts for public sector health care workers during a period of government fiscal exigency. The British Columbia Supreme Court and Court of Appeal had dismissed the unions' constitutional claims, basing their rulings on the extremely narrow scope of collective associational rights in the workplace etched by the Supreme Court of Canada in a series of Charter rulings dating back to 1987.
To the shock of many -- and I can say this with actual authority, as I was in a meeting of Canadian labour law scholars from across the country on Friday when the judgement was released -- the Supreme Court explicitly buried much of its former jurisprudence and opened a new door to freedom of association issues, and to constitutional protection for some aspects of Canadian labour and employment law. The Court provided a detailed, sophisticated and sympathetic history of the emergence of labour law in England and North America (dividing the history in the eras of repression, tolerance and recognition), it approvingly quoted Karl Klare and his classic analysis of the Wagner Act principles, and it paid particular attention to the freedom of association principles in international labour and human rights law . . . .
There are several important trade union constitutional challenges to government legislation that are presently in the lower courts, waiting for the direction in B.C. Health Services from the Supreme Court of Canada. These cases include challenges to legislative prohibitions to unionization by agricultural workers in Ontario and Royal Canadian Mounted Police officers in the federal sector. The changes of success in these cases has just improved significantly. Stay tuned.
Wow, well I don't think we are close to constitutionalizing collective bargaining rights in this country, but one can dream, can't he?
June 11, 2007
Supremes Take "Me Too" Employment Discrimination Case
In a busy day for labor & employment lawyers everywhere (2 unanimous decisions (here and here) and 1 cert.!), the Supreme Court has decided to weigh in on another important issue under employment discrimination law.
Ross Runkel at Supreme Court Times describes the case, Sprint/United Management Co. v. Mendelsohn, 06-1221, this way:
This case presents a recurring question of proof in employment discrimination cases: whether a district court must admit "me, too" evidence - testimony, by non-parties, alleging discrimination at the hands of persons who played no role in the adverse employment decision challenged by the plaintiff. The Tenth Circuit panel majority held that a court commits reversible error by excluding "me, too" evidence. This decision conflicts with those of other circuits. Specifically, four circuits have held "me, too" evidence wholly irrelevant. Five circuits have [held] that "me, too" evidence may be excluded under Federal Rule of Evidence 403. The US Supreme Court granted certiorari to review the 10th Circuit's judgment. Oral arguments will be scheduled for October 2007 or later.
This is an interesting case because it involves a reduction-in-force (RIF) and subsequent ADEA challenge. The 10th Circuit majority suggests that because the plaintiff was terminated under a company-wide RIF, it should not matter that she was not terminated by the same supervisor because the other individual's testimony helps to establish a discriminatory environment at the employer. The majority concluded that: "Age as a motivation for Sprint's selection of Mendelsohn to the RIF becomes more probable when the fact-finder is allowed to consider evidence of (1) an atmosphere of age discrimination, and (2) Sprint's selection of other older employees to the RIF."
Early impression: look for the majority of the Supreme Court to agree with the dissenting circuit court judge and find that, "testimony from other employees not similarly situated is [not] admissible . . . where the plaintiff has made no independent showing of a company-wide policy of discrimination." In other words, judges should be free to apply F.R.E. 403 and exclude this evidence without appellate court interference.
The important phrase here is "independent showing," which refers apparently to a showing beyond the testimony of the plaintiff or the proposed evidence from others she seeks to have admitted. This seems to be a heavy, and unnecessary, burden in a circumstantial case such as this, but given Ledbetter and especially Justice Alito's cramped views of employment discrimination law, this is where I initially (oral argument may change my mind) think the Court will (wrongly) come out.
Unanimous Supreme Court: ERISA Fiduciary Did Not Need to Consider Merger Option
Further clarifying the scope of fiduciary responsibility under the statute, a unanimous Supreme Court issued its decision today in Beck v. PACE Int'l Union, No. 05-1448 (U.S. June 11, 2007), which holds, per Justice Scalia, that the implementation of a decision to terminate by purchasing annuities rather than merging with a union's multiemployer plan does not violate any ERISA fiduciary duty (previous posts here and here).
Here are some highlights from the decision:
We decide in this case whether an employer that sponsors and administers a single-employer defined-benefit pension plan has a fiduciary obligation under the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U. S. C. §1001 et seq., to consider a merger with a multiemployer plan as a method of terminating the plan.
It is well established in this Courts cases that an employers decision whether to terminate an ERISA plan is a settlor function immune from ERISA's fiduciary obligations. And because "decision[s] regarding the form or structure" of a plan are generally settlor functions, Hughes Aircraft Co., 525 U. S., at 444, PACE acknowledges that the decision to merge plans is "normally [a] plan sponsor decisio[n]" as well . . . . But PACE says that its proposed merger was different, because the PIUMPF merger represented a method of terminating the Crown plans. And just as ERISA imposed on Crown a fiduciary obligation in its selection of an appropriate annuity provider when terminating through annuities, see 29 CFR §§2509.951, 4041.28(c)(3) (2006), so too, PACE argues, did it require Crown to consider merger.
There is, however, an antecedent question. In order to affirm the judgment below, we would have to conclude (as the Ninth Circuit did) that merger is, in the first place, a permissible form of plan termination under ERISA . . . .
And we would have to do that over the objection of the PBGC, which (joined by the Department of Labor) disagrees with the Ninth Circuit, taking the position that §1341(b)(3)(A) does not permit merger as a method of termination because (in its view) merger is an
alternative to (rather than an example of) plan termination . . . .
In reviewing the judgment below, we thus must examine whether the PBGCs policy is based upon a permissible construction of the statute. Id., at 648. We believe it is.
For all of the foregoing reasons, we believe that the PBGCs construction of the statute is a permissible one, and indeed the more plausible. Crown did not breach its fiduciary obligations in failing to consider PACEs merger proposal because merger is not a permissible form of termination. Even from a policy standpoint, the PBGCs choice is an eminently reasonable one, since termination by merger could have detrimental consequences for plan beneficiaries and plan sponsors alike.
I actually did not see this one coming (though I barely predicted the outcome), but the Court reached unanimity in this case by turning this complex ERISA question into an easier one of Chevron deference under administrative law (a tact Justice Breyer suggested in oral argument). I thought the decision would come down under the settlor-function and find that Crown was not a fiduciary under the circumstances. Instead, the Court seems to assume, for the sake of argument, that Crown is a fiduciary, but could not have breached any fiduciary duty by not accepting the merger proposal because merger was not a permissible course Crown could have taken consistent with its fiduciary obligations under the Act.
In this vein, and significantly, the decision is not a complete loss for employees under ERISA. The Court seems to be saying, though not expressly, that the implementation of a decision to terminate a plan is a fiduciary act, subject to normal fiduciary obligations.
The sleeper in this decision may be footnote 3, which instructs employers in the future to draft their ERISA plans in a way that disallows plan mergers under any circumstances:
We would not have to decide that question of statutory interpretation if Crowns pension plans disallowed merger. Any method of termination permitted by §1341(b)(3)(A)(ii) must also be one that is in accordance with the provisions of the plan. Crown thus could have drafted its plan documents to limit the available methods of termination, so that merger was not permitted.
Very Firestone-like in instructing what employer should do in the future to have a more favorable state of affairs in these cases. My thought is that going forward more plans will do this in order to avoid coming close to the fiduciary line again in these cases when they terminate their plans.
Supreme Court Decides Unanimously to Uphold FLSA Homecare Worker Regulation
The United State Supreme Court issued today a unanimous ruling, per Justice Breyer, in the case of Long Island Care at Home v. Coke, No. 06-593 (U.S. June 11, 2007) (written about previously here and here). At issue, was the validity of exempting homecare healthworkers from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA).
The Second Circuit had ruled the standard promulgated by the Department of Labor was invalid, but the Supreme Court reversed. Some highlights from the opinion:
A provision of the Fair Labor Standards Act exempts from the statutes minimum wage and maximum hours rules "any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary [of Labor])." 29 U. S. C. §213(a)(15). A Department of Labor regulation (labeled an interpretation) says that this statutory exemption includes those companionship workers who are employed by an employer or agency other than the family or household using their services. 29 CFR §552.109(a) (2006). The question before us is whether, in light of the statutes text and history, and a different (apparently conflicting) regulation, the Departments regulation is valid and binding. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 843844 (1984). We conclude that it is.
The statutory language refers broadly to domestic service employment and to companionship services. It expressly instructs the agency to work out the details of those broad definitions. And whether to include workers paid by third parties within the scope of the definitions is one of those details.
When promulgating the rule, the agency used full public notice-and-comment procedures, which under the Administrative Procedure Act an agency need not use when producing an interpretive rule. 5 U. S. C. §553(b)(A) (exempting interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice from notice-and-comment procedures). Each time the Department has considered amending the rule, it has similarly used full notice-and-comment rulemaking procedures. 58 Fed. Reg. 69310 (1993); 60 Fed. Reg. 46797 (1995); 66 Fed. Reg. 5485 (2001). And for the past 30 years, according to the Departments Advisory Memorandum (and not disputed by respondent), the Department has treated the third-party regulation like the others, i.e., as a legally binding exercise of its rulemaking authority.
This is a sweeping victory for the Department of Labor and the employer and an equally devastating loss to Coke and those who believe home healthcare workers provided by third parties should not be exempted from the FLSA.
Expect this battle to now move back to the DOL, where advocates for homecare health workers will continue to try to change this DOL regulation.
June 10, 2007
Recent Third Circuit ERISA Case Cites Pittman and Medill
Thanks to Roy Harmon at Health Plan Law for pointing out a recent Third Circuit opinion (actually, a concurring opinion) discussing the scope of ERISA remedies, and in the process, citing a number of scholars, including Colleen Medill (Nebraska) and Larry Pittman (Mississippi).
Here's what Roy reported:
Note: In a concurring opinion in Eichorn v. AT&T Corp., — F.3d —-, 2007 WL 1574869 C.A.3 (N.J.)(May 31, 2007), Circuit Judge Ambro collects the following scholarly treatment of ERISA remedies:
Colleen E. Medill, Resolving the Judicial Paradox of “Equitable Relief” under ERISA Section 502(a)(3), 39 J. Marshall L.Rev. 827 (2006) . . . .
Larry J. Pittman, ERISA’s Preemption Clause and the Health Care Industry: an Abdication of Judicial Law-Creating Authority, 46 Fla. L.Rev. 355 (1994)
Congratulations to both Colleen and Larry. I saw Colleen present this impressive paper at the John Marshall Employee Benefits Symposium last year and Larry has visited with my Employee Benefits class at Ole Miss and discussed his ERISA papers.