Saturday, October 11, 2008
- Robert Novy-Marx & Joshua D. Raugh, The Intergenerational Transfer of Public Pension Promises (158).
- John R. Graham (left), Si Li (center), & Jiaping Qiu (right), Managerial Ability and Executive Compensation (95).
- Orly Lobel, Intellectual Property and Restrictive Covenants (90).
- Jonah B. Gelbach, Jonathan Klick, & Lesley Wexler, Passive Discrimination: When Does It Make Sense to Pay Too Little? (88).
- Robert Flannigan, Fiduciary Mechanics (81).
- Dwight Steward & Stephanie Botello, Back Pay and Front Pay Calculations in Employment Termination Cases: Accounting for Re-Employment and Mitigation Efforts (77).
- Randall S. Thomas, International Executive Pay: Current Practices and Future Trends (76).
- Orly Lobel, National Regulation in a Global Economy: New Governance Approaches to 21st Century Work Law (58).
- Kamala Dawar, Assessing Labour and Environmental Regimes in Regional Trading Arrangements (56).
- Ian L. Dew-Becker, How Much Sunlight Does It Take to Disinfect a Boardroom? A Short History of Executive Compensation Regulation (53)
Friday, October 10, 2008
As we've discussed previously, the UAW and Foxwoods Casino have been contesting whether the NLRB has jurisdiction over the tribal casino. We now learn, thanks to an e-mailed joint press release, that:
The UAW and the Mashantucket Pequot Gaming Enterprise agreed to enter into discussions for 30 days to determine if an agreement can be reached to bargain under tribal law without either party waiving any of their rights or legal positions under the National Labor Relations Act.The parties further agreed that they will not discuss the status of negotiations during this 30-day period.
As Daniel Schwartz at the Connecticut Employment Law Blog notes, the big deal here is the attempt to apply tribal law, which is what the casino has been seeking. Like him, I think that both parties have potential gains here. The casino keeps avoiding the NLRA, while the union may get what it's really after: the ability to start representing the casino workers.
Connecticut became the third state in the union today to declare that its state constitution prohibits limiting the right to marry to different sex couples. In Kerrigan v. Comm'r of Pub. Health, the Connecticut Supreme Court held 4-3 (the dissents can be found here, here, and here) that gays and lesbians had suffered a history of pernicious discrimination; that just as for gender under the federal constitution, sexual orientation was a quasi-suspect class; that classifications on that basis warranted heightened scrutiny; and that the state had not offered an important enough interest to warrant the classification.
As Paul noted in May when the California Supreme Court decision came down, this has significant employment law consequences. It will impact benefits issues, and it reinforces the state's employment discrimination laws that prohibit discrimination on the basis of sexual orientation in both the public and private sector.
Just a couple of hours ago, I was listening to a speech by Shannon Minter of the National Center for Lesbian Rights speak on this topic, a bit nervously remarking that no one knew why it was taking the Connecticut Supreme Court so long to decide the issue. He also noted that people interested in the issue should keep their eyes on the fight in California over Proposition 8, the initiative drive to amend the California Constitution to overturn that state's supreme court decision. Additionally, the Iowa Supreme Court is considering the same sex marriage issue in Varnum v. Brien, which is set for argument December 9.
Jonathan Harkavy (Patterson & Harkavy) has just posted on SSRN his article Supreme Court of the United States Employment Law Commentary: 2007 Term. This is a case-by-case description and analysis of the cases from the 2007 term. Harkavy is, among other things, co-author of the practice volume of Larson's Employment Discrimination.
NPR's Morning Edition this morning ran a story about Richard Trumka, UMW President and secretary-treasurer of the AFL-CIO, who for the last several months has been giving speeches on the issue of race and the presidential election. It's a reaction, he says, to racist comments he has personally encountered; he says he feels compelled to personally challenge anyone in the labor movement who may not vote for Obama because he is black. An excerpt from a speech at the United Steelworkers convention:
Our kids are moving away because there's no future here. And here's a man, Barack Obama, who's going to fight for people like us, and you won't vote for him because of the color of his skin? Are you out of your ever-loving mind?
Here's the NPR story. Hat tip: Danielle Lorenz.
Wednesday, October 8, 2008
The Supreme Court heard oral argument in the case of Crawford v. Metropolitan Government of Nashville yesterday afternoon. Scotusblog’s Scotuswiki page on the case can be found here. Crawford had cooperated with Metro’s internal investigation into allegations of harassment of a fellow employee by a supervisor. Crawford related details of that supervisor’s sexually harassing conduct toward her (Crawford) and her reactions to it. The issue on review concerns whether firing an employee for reporting this information in an internal investigation constitutes retaliation under Title VII. Title VII prohibits retaliation against an employee who “has opposed any practice made an unlawful employment practice by this subchapter,” or who has “participated in any manner in an investigation, proceeding, or hearing under this subchapter” 42 U.S.C. 2000e-3a. Eric Schnapper (Washington) argued the case for petitioner, and split his time with the Solicitor General’s Office, which came in on the side of the employee. The analysis that follows is based on my reading of the oral argument transcript in Crawford.
1. Counsel for Crawford argued that Crawford’s conduct would be protected under either the opposition clause or the participation clause of the retaliation provision, but focused mostly on the opposition clause. Counsel defined the test for whether conduct was opposition as determined by whether a reasonable person would conclude from the employee's statement or conduct that the employee disapproved of or objected to the employment practice in question. The court pushed heavily into hypotheticals about what conduct would be sufficient to “oppose” discrimination.
2. Here’s the first clue that at least Scalia is very concerned about creating opportunities for more litigation by employees:
JUSTICE SCALIA: But that doesn't solve the problem of having too broad an entry into this thing. You get to the jury by just showing that she said "Oh, if he did that, it's terrible," and then it's up to the jury all of a sudden whether that is the reason that the employer fired this person or not. I mean, that just leaves -- lays the employer open to a lot of jury determinations that he shouldn't be subject to, it seems to me.
And Scalia was not alone:
JUSTICE SOUTER: Then what is the limit? It seems to me you've got a cause of action in effect under the statute that would be virtually unlimited. . . .
4. Poor Justice Ginsburg had to rein everybody back in:
JUSTICE GINSBURG: But why are we -- why are we spending so much time on hypotheticals that are so far from this case? This was a person who appeared at an internal proceeding, she gave testimony, very specific testimony. She wasn't saying: I'm against harassment. She said: This boss harassed me. It is about as specific as you get. So we're dealing with a particular case of somebody who was a witness in an internal investigation. Why do we have to reach the outer boundaries of this claim in this case?
5. The Justices were also very concerned that only people whose statements were on the side of the complaining employee would be protected if the Court analyzed this issue under the opposition clause alone. To which counsel for Crawford replied that the protections in the opposition and participation clauses were meant to overlap and complement each other – concentric circles of protection in Chief Justice Roberts’ terms.
6. Counsel for the Government agreed that the conduct was protected under both clauses, but urged the Court to decide the case under the opposition clause precisely because that would cover fewer people than would be covered by the participation clause. Additionally, the test proposed by the Government was whether a reasonable person would understand that the employee has objected to sexual harassment in the workplace.
7. One of the issues addressed by counsel for the Government and counsel for the Respondent was the relationship between this potential protection under the participation clause and the Farragher and Ellerth defense in sexual harassment cases. If the statute as it’s interpreted now encourages employers to prevent and remedy discrimination, particularly sexual harassment, by adopting policies, enforcing them, and investigating allegations of sexual harassment thoroughly, what will happen if we include this investigation under the participation clause? On the one hand, it might discourage employers from doing investigations at all because every person who participates will be a potential plaintiff if later discharged. If employers don’t do the investigation, they will expose themselves to liability on the sexual harassment. In other words, employers are exposed to serious liability either way. On the other hand, if employees aren’t protected in internal investigations, they won’t cooperate, and the investigation won’t be effective to actually discover and prevent or remedy discrimination. The shield remains for the employer, but the purpose of the defense, for employers to internalize the norms of the act and self-enforce, is gutted. Additionally, any kind of enforcement of the act will be undermined because employees will be deterred further from revealing discriminatory conduct to the employer, which may even chill them from asserting their rights or filing charges with the EEOC at all.
8. In addition to the participation clause argument, counsel for the Respondent argued that opposition required some kind of attempt to stop the conduct opposed. The person would need to put the employer on notice in an effort to get the conduct to stop before the conduct could be termed “opposition.” That was met with some tough questioning by the justices.
9. The discussion then turned to the litigation floodgates with a series of questions by the Justices about the costs of litigation to employers:
CHIEF JUSTICE ROBERTS: My point is simply that the incentive system is skewed because if you lose you pay not only your attorneys' fees but the complainants'. If you win, you have to incur yours. . . . I'm not saying it shouldn't be. But in terms of the pressures towards settlement, it is a very strong incentive.
JUSTICE STEVENS: Is bringing frivolous cases cost-free for the plaintiffs? There are certain costs.
MR. YOUNG: Well, Your Honor, many of these types of cases are taken on a contingent fee basis except for hard costs.
JUSTICE BREYER: It is a mix. I mean, you know, a lot of plaintiffs might be afraid to bring these cases because they'll be accused of doing all kinds of bad things. They don't want their reputations ruined. They have lawyers who take contingent fees because they have to pay for it. Oh the other hand, you have problems with your costs and you have problems dismissing people who should be dismissed. Everybody has problems in this area. That's why we have law and lawyers. They try to minimize it. This doesn't seem fruitful to me.
JUSTICE SCALIA: Isn't it true that financially it is always cost-free for the plaintiff because she has an attorney who is taking it on a contingent basis? Now, you could say it's not cost-free to the lawyer; but even that's not always true because if the lawyer has nothing else to do he may as well be doing this, you know, whatever the odds are.
MR. YOUNG: I agree with that, Your Honor.
This is very much a policy-driven case. There are some statutory interpretation issues that could drive the analysis, particularly what “opposition” means as a practice, and what “an investigation under this subchapter” includes. But really, what’s at stake are fundamental policies about enforcing Title VII, harnessing informal employer processes to do so, and the role of litigation in enforcement and its cost to businesses.
The Court may find Crawford's conduct to satisfy the opposition clause, limit the holding to these facts–where the person reports conduct that he or she experienced which would probably have violated Title VII–and not open any real floodgates. Alternatively, this could go the way of Ledbetter, protecting employers (and the courts) from litigation at the cost of reducing the enforcement of Title VII. And ultimately for me personally, the most worrisome exchange in the argument is the discussion of how costless litigation is for employees and how easy at least Justice Scalia thinks it is to get attorneys to take frivolous Title VII cases, “because if the lawyer has nothing else to do he may as well be doing this.”
This is becoming a familiar refrain. Yesterday, ICE raided a South Carolina poultry processing plan, arresting about 300 apparently undocumented workers. According to BNA's Daily Labor Report (subscription required):
ICE agents executed federal search warrants at House of Raeford's Columbia Farms chicken processing plant, ICE said. Agents are searching for evidence relating to the unauthorized employment of illegal aliens and other crimes as part of an ongoing, 10-month criminal investigation into the company's employment practices, ICE said. . . .
Kenneth A. Smith, ICE special agent in charge of the Office of Investigations in Atlanta, agreed, calling the enforcement action the "latest step in a comprehensive criminal investigation focused on identifying the individuals involved in allowing unauthorized workers to gain employment." "ICE targets employers because the promise of employment draws illegal workers across our borders," Smith said. "By holding employers accountable, we are diminishing the magnet and discouraging others from breaking the law." . . .
So far, approximately 58 workers were released on humanitarian grounds, the agency said. These individuals still will be required to appear before a federal immigration judge who will determine whether or not they will be deported, ICE said. Additionally, ICE said that any juvenile workers found to be in the country illegally who cannot be released into the custody of an adult will be transferred into the custody of the Department of Health and Human Services' Office of Refugee Resettlement, ICE said.
ICE agents also will refer cases to the U.S. attorney's office for criminal prosecution upon identifying individuals who are in possession of stolen or unauthorized identification information, have previously been deported following a criminal felony conviction, or appear to be involved in other criminal activity, ICE said.
The Oct. 7 raid follows criminal charges filed against 12 House of Raeford employees earlier this year, ICE said. In June, arrest warrants were issued for 11 supervisors at the plant, alleging that the men--who were all nationals of Mexico--were in the country illegally and were engaged in aggravated identity theft and making false statements to ICE authorities, the agency said. . . . In July human resources manager Elaine Crump was indicted on 20 counts of filing false I-9 employment identification forms. Crump is awaiting trial, ICE said.
Maybe after the election we can get an immigration policy that doesn't give immigrants a wink and a nudge to come work in this country, then throw them in jail and break up their families for doing just that. It should happen right after the pigs stop flying.
Hat Tip: Dennis Walsh
General Counsel Meisburg has recently issued a memo offering guidance for regional attorneys' application of the St. George Warehouse case (see here for description of the decision). According to the description by BNA's Daily Labor Report (subscription required):
The board in St. George Warehouse reaffirmed that an employer attempting to show that the worker failed to mitigate back-pay damages must produce evidence that substantially equivalent jobs were available in the relevant geographic area during the relevant period, Meisburg said in the memo. However, the board for the first time "placed on the General Counsel the burden--once the [employer] produces evidence on the first element--to produce competent evidence that the discriminatee took reasonable steps to seek those jobs," Meisburg said. He explained that the employer "continues to bear the ultimate burden of proof as to its contention that the discriminatee failed to mitigate damages by making a reasonable search for work" . . . [and] emphasized that St. George Warehouse simply reinforces the current requirements of the NLRB Casehandling Manual "that Board agents should investigate a discriminatee's search for work and, to that end, remain in regular contact with discriminatees and remind them of their need to mitigate and keep records of their search." . . .
[Employer's Evidence of Substantially Equivalent Jobs]
To prove failure to mitigate, the employer must show that substantially equivalent jobs were available in the relevant geographic area during the relevant period, the general counsel said. He found that regional personnel during the investigation stage of the case should "seek to determine the specific evidence upon which the [employer] intends to rely," learn whether the employer intends to call an expert witness, and find out the data on which the expert intends to rely. If the employer intends to show a lack of diligence in looking for work, regional personnel "should be prepared, where appropriate, to argue that the proffered evidence does not reliably establish either that those jobs were substantially equivalent or that the particular discriminatee could have obtained those jobs," Meisburg said.
He explained that "[d]ifferences in specifics such as location, type of work, rate of pay, and other working conditions may demonstrate that the [employer's] proffered evidence does not establish that the jobs were substantially equivalent." In addition, regional personnel must conduct their own investigation regarding the availability of jobs, including by obtaining data from the Labor Department's Bureau of Labor Statistics and interviewing union officials and state and local government officials about the availability of employment for those with similar skills and experience, the general counsel said. He observed that regional personnel may have to call their own experts to rebut the employer's expert testimony.
[General Counsel's Showing of Reasonable Steps To Seek Work]
Under St. George Warehouse, the general counsel now has the burden of showing that the illegally fired worker took reasonable steps to seek work, Meisburg said. He explained that during the investigation stage of the case, regional personnel should advise alleged discriminatees of their responsibility to seek interim employment and direct them "to maintain careful notes and records of the entire search for work."
Relevant actions "include registering with state or private employment services, checking newspaper and internet advertisements, visiting employers, and seeking leads from friends and relatives," the general counsel said. He found that factors that may limit job opportunities--including age, health, education, job skills, language skills, employment history, disabilities, and access to a car--also must be taken into consideration. He pointed out that "a discriminatee is not normally required to move or to accept employment in a lower skilled or lower wage job."
I intentionally left much of the guidance to illustrate how complicated these cases will now be on a routine basis. There was always the possibility of disputes, but as I noted in my original post, things were simplified by the presumption that the wrongdoer bore the burden of any uncertainties. The Board's flipping of that burden in many instances will make things more complicated, more costly to litigate, and create more delay in employees receiving backpay. The Board also needs to be prepared for dueling testimony by economic experts, which it currently does not have to deal with much. Although I have no idea the extent to which ALJs and Board members will have the experience to weigh such testimony, I suspect that many do not, which is going to cause a serious problem because the economics involved are often highly technical and requires a lot of mathematical understanding. The NLRA's ban on the NLRB hiring economic researchers is indicative of the problems that may result.
Of course, the Board didn't leave the GC many options--perhaps a new Board will modify the rule after realizing its effects.
Hat Tip: Dennis Walsh
Last Wednesday, October 1, 2008, the Third Circuit Court of Appeals heard arguments Prowel v. Wise Business Forms, a case that has many implications for Title VII. In this case, Brian Prowel, an openly gay man, filed a federal lawsuit against his former employer, Wise Business Forms, Inc., alleging sex discrimination. He argued that he was discriminated against because he did not conform to his co-workers' sexual stereotypes in that "his conduct and appearance in many respects were effeminate."
He crosses his legs, and swings his foot. He files his nails if one has a snag. He has a high-pitched voice. Co-workers called Mr. Prowel "Rosebud" and "Princess." Someone left a feathered tiara on his workstation along with a a packet of personal lubrication. Graffiti was written about him on the bathroom walls. The U.S. District Judge Terrence F. McVerry dismissed Mr. Prowel's claims, saying that he was not discriminated against because of his sex. These examples of harassment, Judge McVerry found, were all examples of discrimination because of Mr. Prowel's sexual orientation. While the Supreme Court long ago determined in the famous (or infamous now) Price Waterhouse v. Hopkins case in 1989 that gender stereotyping is a subset of sex discrimination protected by by Title VII, sexual orientation is not protected by Title VII.
Mr. Prowel argues that making fun of him for being effeminate, calling him "Princess" and "Rosebud," and giving him a tiara all smack of gender stereotyping. Mr. Prowel's attorney, Timothy O'Brien argues that whether the harassment was based on gender stereotyping or sexual orientation is a decision to be made by a jury, not a judge. Mr. O"Brien feels like a jury would do a better job recognizing the complexity of the case and distinguishing between the two.
The main issue on appeal is whether anti-gay discrimination rests more on opinion of sexual orientation or gender stereotyping. If the court decides that anti-gay discrimination rests more on the latter, other problems will likely arise.
The district court has recognized one of the problems inherent in describing what appears to be anti-gay discrimination as gender stereotyping. First, gender stereotyping claims, when utilized by an openly homosexual plaintiff, can easily present problems for an adjudicator because stereotypical notions about how men and women should behave will often necessarily blur into ideas about heterosexuality and homosexuality. In this way, a gender stereotyping claims may be erroneously used to "bootstrap protection for sexual orientation into Title VII." Further, permitting a plaintiff to simply relabel a sexual orientation claim as one for failure to conform to gender stereotypes would evade what the courts have always claimed was the statutory intent of Congress.
Second, the district court's decision seems to cause two categorical splits: a split between gender conforming homosexuals and non-gender conforming homosexuals, and a split between openly gay homosexuals and "closet" homosexuals. In both splits, one category may receive protection under Title VII while the other category is left unprotected. The problem is obvious. Taking the facts from the Prowel case, if the 3rd Circuit finds that co-workers calling Mr. Prowel "Princess," "Rosebud" and placing to tiara at his workstation is gender stereotyping, then only those homosexuals who are effeminate or "in the closet" may be protected. This leaves the gender-conforming homosexuals and openly gay homosexuals unprotected from sexual harassment. This becomes a case of "what THEY do know can hurt YOU."
On the other hand, women advocacy groups are fearful of the detrimental effects the district court opinion, as it stands, could have on gender equality in the workplace - especially for women who work in non-traditional occupations. They assert that "if the reasoning of the district court in this case is upheld, employers who seek to lock women out of these well-paying fields could evade Title VII liability through the simple expedient of lacing their gender discrimination with enough anti-lesbian slurs." While this fear may be real, it is probably unwarranted. To this date, sexual orientation has not been protected under Title VII., though it is protected in at least 18 states. The district court opinion has maintained the status quo and therefore, it is unlikely that employers will start to use anti-gay epithets to discriminate against women based on gender merely because the district court's opinion stands.
I think a better way of handling this and similar cases would be for the court to send the case to the jury with only the evidence that clearly does not fall into behavior related to sexual orientation and let them decide whether the harassment was based on sexual orientation or gender stereotyping. While it is clear that some of the behavior in this case was based on sexual orientation, such as the personal lubricant. The other behavior, such as calling Mr. Prowel "Rosebud," "Princess," leaving the tiara on his work station and possibly the graffiti on the bathroom wall, could have been equally related to either sexual orientation or gender stereotypes and therefore should have gone to the jury. In a close case like this, I think it is better left up to the jury to make the decision in which category they think this belongs. Unfortunately for Mr. Prowel, I predict the 3rd Circuit is going to affirm the district court's decision. Few federal courts have found that a homosexual states a claim for sex discrimination based on gender stereotyping. However, there is hope for Mr. Prowel. In 2001, the 3rd Circuit in Bibby v. Philadelphia Coca Cola Bottling Co., mentioned in dicta that "a plaintiff may be able to prove that same-sex harassment was discrimination because of sex by presenting evidence the harasser's conduct was motivated by a belief that the victim did not conform to the stereotypes of his gender." Perhaps that is all the 3rd Circuit needs to rule in Mr. Prowel's favor. For most thought, It seems like a decision of whether gender stereotyping exists is directly related to whether the harasser knows your sexual orientation or not.
Diamonds may be a girls best friend, but perhaps Jared is not? You may know them by Jared The Galleria of Jewelry, Kay Jewelers, or JB Robinson but however you know them they are being sued by EEOC for employment discrimination. Sterling Jewelers, Inc., the largest specialty retail jeweler in this US is being sued by EEOC for allegedly discriminating against female employees in its stores nationwide. This lawsuit, which was filed on September 23, 2008, is alleging systemic discrimination in violation of Title VII.
In its suit, the EEOC asserts that Sterling Jewelers pays it female retail sales employees less than male employees performing equal work and denies female employees promotional opportunities for which they are qualified. Sterling Jewelers is alleged to have intentionally discriminated against female employees by maintaining a system for making promotion and compensation decisions that is excessively subjective, and through which Sterling Jewelers has permitted or encouraged managers to deny female employees equal access to promotion opportunities and the same compensation paid to similarly situated male employees.
The EEOC is reporting that they received 24,826 charges alleging sex discrimination, which was up 7%, in fiscal year 2007 to the highest level since fiscal year 2002. Spencer H Lewis Jr., the EEOC's New York District Director, stated that, "[i]t should be a 'no-brainer' in the 21st century workplace that women deserve pay and promotional opportunities based on merit, not gender. Employers who fail to grasp and abide by the letter of the law do so at great risk."
If it were really a no-brainer, why are sex discrimination claims up 7%?
As predicted, the Fashion Valley case has finally draw to a close. On Monday, the Supreme Court denied cert. on the case, thereby letting stand the California Supreme Court's holding that the state constitution limits a mall owners' ability to exclude union handbilling (see here for BNA's Daily Labor Report's--subscription required--summary of the proceedings).
Of course, Fashion Valley will live on as the NLRA will now have a parallel universe in California (a Bizarro Lechmere, if you will). We've already noted some post-Fashion Valley developments, but many more will no doubt come in the future.
Hat Tip: Dennis Walsh
In addition to my labor/employment courses, I also teach Civil Procedure. This semester, I gave students a take-home (one week) collaborative mid-term exam consisting of a single question raising four civil procedure issues. The question concerned a school board's proposal to redraw the boundary lines of a school district's high schools along existing racial housing patterns, creating a segregated school district and putting most minority students in a "new" school building built from a converted warehouse. A group of citizens brings a class action, based on the equal protection clause, against the school district to enjoin the new boundary lines.
One element of an injunction is that the plaintiff must show a "likelihood of success on the merits." The exam question provided students with the test for an equal protection violation and with facts that would support a finding of intentional discrimination. Those facts included some offensive comments made by school board members contemporaneous with their vote for the new boundaries. The most offensive was the following: "a Board Member ... was overheard saying that 'a warehouse is just what those people need – complete with bars on the windows and razor wire around the perimeter.'" I deliberately made these comments offensive, because I wanted them to support a finding of discriminatory intent.
Some of my students have complained about the question, and they raise good points. A person who has personally experienced or witnessed traumatic events is likely to react much differently to an exam question about those traumatic events than someone who has not. As one person pointed out, an exam question about rape might understandably cause a student who herself had been raped to "shut down" and have difficulty focusing on the legal issues raised by the question. For me, that raises the question of whether an exam question such as mine might have a "disparate impact" on minority students, or might otherwise be sufficiently offensive that it should not be asked regardless of its impact.
This certainly was not my intent. I have used civil rights problems for my Civil Procedure mid-term ever since I began teaching Civil Procedure, because I want to show that civil litigation is not just about companies and people suing each other for money, but that it can be a powerful agent for social change. And if it's off-limits to include, in exam questions, facts that reasonable people will find offensive, then it will be very difficult for me to write future exam questions for my employment discrimination course.
I'd appreciate comments -- especially critical ones.
Tuesday, October 7, 2008
Last week, the NLRB filed the first appellate brief defending its authority to issue cases decided by only two members (see here and here for previous posts on the topic). In Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, the employer directly challenged the NLRB's authority to issue two-member decisions. The Board's brief defends that authority--as described by its summary of argument:
Section 3(b) of the Act provides that the Board can delegate its powers to a group of three members; that vacancies do not impair the authority of remaining Board members to exercise the powers of the Board; and that two members shall constitute a quorum of any three-member Board group established pursuant to the Board’s delegation authority. Read in combination, the plain meaning of those delegation, vacancy, and quorum provisions authorize the Board’s action in this case. . . .
The legislative history supports that construction of Section 3(b) and confirms that Congress intended for the Board to have the option of adjudicating cases with a two-member quorum. Under the 1935 Wagner Act, which provided that a vacancy on the original three-member Board would not impair the quorum of the two remaining members from exercising all of the powers of the Board, the Board frequently decided cases with a quorum of two members when one of the three seats was not filled. In amending the NLRA in 1947 to expand the Board’s size from three to five members and to authorize the Board to delegate its powers to three-member groups, Congress acted solely to enable the Board to increase its casehandling capacity, and not because it believed more members were needed to determine federal labor policy. The 1947 Congress made no change to the 1935 Act’s vacancy provision. In practical terms, the 1947 amendment authorized the Board’s new three-member groups, who had been delegated the Board’s adjudicatory authority, to function as the original Board had done, i.e., to issue decisions and orders with only two of three seats filled.
Contrary to the Company’s contentions, the Board’s December 28, 2007 delegation of powers to the three-member Board group was not improper even though it was made with the expectation that the Board’s composition would soon be reduced to two members; courts have upheld similarly-timed actions under other statutes, and considered them prudent. Nor did the Board’s delegation of powers terminate with the departure of the third member of the three-member group. Under established common law principles, institutional delegations of power are not affected by changes in personnel; delegated powers are held not individually, but collectively among the members of a public board or commission. Moreover, the Company incorrectly relies on the statute governing the assignment of cases to federal appellate panels, which requires that each case be assigned to a three-judge panel. That statute does not apply to the Board, which is governed by the broader delegation authority set forth in Section 3(b).
Also mistaken is the Company’s argument that the Board cannot issue decisions and orders with less than three sitting members. Decisionmaking by a minority of the Board’s total membership is inherent in the statutory design that the 1947 Congress created for the Board. Indeed, this and other courts have upheld minority decisionmaking by other federal agencies, when they have similarly suffered multiple vacancies that leave the agency with a minority of their full complement of members. The Company’s argument moreover constitutes a misdirected attack on Congress’ determination that two members constitute a Board quorum under the present circumstances and provide an adequate safeguard against the potential abuses the Company posits.
The Board’s current exercise of its Section 3(b) authority to issue decisions and orders with a two-member Board quorum is also not undermined by the Board’s caution in previously choosing, under different circumstances, not to exercise that authority. The Board’s decision to exercise that authority now, when faced with an extended period of three vacancies potentially covering more than a year, not only is consistent with the view expressed in a 2003 opinion of the United States Department of Justice’s Office of Legal Counsel, but has enabled the Board to continue to promote the Act’s purpose of avoiding industrial strife.
The brief makes some reasonable arguments, but as I stated in an earlier post, I'm still somewhat doubtful whether the authority really exists. However, I'm also doubtful that the D.C. Circuit will throw out a big set of cases on this issue. Other cases are in the pipeline, so stay tuned.
The Supreme Court heard oral argument in the case of Kennedy v. Plan Administrator for DuPont Savings and Investment Plan this afternoon. The case concerns whether a divorcing spouse may waive her rights to spousal pensions benefits without going through the qualified domestic relations order (QDRO) process set out in the exceptions to ERISA's anti-alienation rule.
What follows is analysis of that oral argument transcript based on my reading of the oral argument transcript in DuPont:
1. Counsel for Kennedy argues that the Fifth Circuit erred in holding that the only way a divorcing spouse can waive the right to pension benefits is by executing a QDRO. In other words, counsel argues that the divorcing spouse's voluntary and knowing waiver should be enough even without filling out a formal QDRO without all the bells and whistles.
2. There is also a separate argument that appears to go against the petititoner - and pointed out by Justice Kennedy - that there were means for participants and beneficiaries to make a change, and they weren't
3. Not a good sign that Justice Alito does not seem to be buying the voluntary waiver argument: "JUSTICE ALITO: I'm not sure I'm getting this argument. There's not -- the argument isn't that there was a QDRO; the argument was that he could have disposed of this through a QDRO. And he could have done that, and he could have named an alternate payee in the QDRO. He could have named his daughter, for example."
4. Counsel for Kennedy responds: "the way pension planners understand it is that you use a QDRO for a
transfer of benefits, not for a bare waiver. And that's where the U.S. Solicitor General supports our position
and reads this and says that's consistent with Treasury's own, now harmonized with Labor's, interpretation of the anti-alienation clause."
5. Helpful as always, Justice Scalia provides Counsel with his argument: "JUSTICE SCALIA: And your point is this has been no assignment or agency, so we don't need the QDRO exception. There is nothing in here that violates anything in the statute. MR. FURLOW: I completely agree with that analysis."
6. Both petitioner and the solicitor general supporting the pettitioner spend some time considering the argument that the plan documents control and allow the change in beneficiarty designation without a QDRO. The Court is reluctant to hear that argument because it has not been fully briefed. In addition, the solicitor general does not agree with the petitioner that there should be a formulation of a Federal
common law rule on the matter.
7. Respondents also believe the plan documents question is rightly before the Court and think the case could be decided as an alternative on this ground even though the court did not grant cert on it, but the parties and amici brief it.
8. As to the QDRO issue, respondent DuPont takes the view that, "the rule of law that governs this case is that pension plan administrators must pay benefits in accordance with a qualified domestic relations order, and they may not pay benefits in accordance with a nonqualified order."
9. Respondent says whether it is a waiver of the benefits and the benefits go anywhere is irrelevant. Instead, "It doesn't say anything about where it goes. It just says if it's a QDRO, you pay it,
and if it's not a QDRO, you don't pay it." Counsel explains nicely the policy behind this straightforward rule: "It didn't want the plan administrators to have to try and divine the intention of the parties, didn't want the plan administrators to have to hold a factfinding hearing before it could pay plan benefits. That is completely foreign to the efficient and simple operation that Congress had in mind."
This is again one of these complicated ERISA cases concerning anti-alienation rules, beneficiary designation after marital dissolution, and the role waiver may or may not play. I have to say this is one of the best explanation of the issues that I have seen from a counsel - in this case, the respondent counsel. Usually, it appears the Justices are one step ahead in their questioning and are just validating their views.
In this case, on the other hand, the Justices were really learning about a complex area of ERISA law from the skilled practitioner.
As such, I think that this is a case that might turn on the competence of counsel. I foresee a 9-0 victory for the respondent and the view that benefits may only be paid in accordance with a qualified domestic relations order and the waiver in this case by the former spouse did not meet that standard.
The Association of Corporate Counsel and the Jackson Lewis law firm have released the results of their annual In-House Counsel Workplace survey. According to the press release, employment issues are a major concern to companies. And among those issues are the changes employers see coming in the next few years. A majority of respondents believed that who becomes our next president will affect the labor and employment laws, but a sizeable minority did not expect that to have an impact.
Among the potential changes cited by respondents were the possibility of increased costs for health benefits and mandatory paid sick days; a resurgence of workplace regulation generally; and passage of the Employee Free Choice Act, which would eliminate secret ballots in union organizing drives and strengthen labor's hand in negotiations over union representation.
These things aside, the survey tracked what day-to-day challenges corporate counsel faced,
On day-to-day challenges, corporate counsel cited workplace discrimination as the most time-consuming employment issue, followed by family and medical leave, wages and hours, and employee benefits. The most demanding issue for corporate legal department was cited as harassment/discrimination prevention and compliance, followed by Family and Medical Leave Act compliance and wage and hour compliance. Compliance with the Health Insurance Portability and Accountability Act and Sarbanes-Oxley rounded out the top five.
And on litigation in particular,
nearly three-quarters of corporate counsel surveyed said their companies had faced employment-related litigation over the past three years, with discrimination complaints being the most frequent.
According to the survey, 73.5 percent of the corporate counsel said their companies had been a defendant in employment-related litigation over the last three years. More than half of those, or 52.6 percent, said they had faced discrimination complaints, with wage and hour complaints being the second most frequent at 27.0 percent.
As to the number of discrimination complaints, 42.4 percent of respondents said they had remained steady over the past three years, while 27.2 percent had seen an increase and 11.1 percent had seen a decrease.
E-discovery rules, too, have complicated matters by changing the way some companies handle electronic records and data and by increasing the expense and difficulty of litigation management for some.
At the same time, over half of the respondents reported that they did not anticipate any reductions in force in the near future and a large majority did not anticipate increased outsourcing of jobs.
Jennifer Hendricks (Tennessee) has just posted on SSRN her essay (forthcoming Northwestern U.L.R. Colloq.) Instead of ENDA, a Course Correction for Title VII. Here's the abstract:
In September 2008, the D.C. federal court issued a landmark decision holding that discrimination against a transgender person was sex discrimination under Title VII. This decision throws into sharp relief the ongoing debates among supporters of the Employment Non-Discrimination Act about whether the compromise on including protection for gender identity claims. Consideration of ENDA in some form will likely be early on the agenda of the next Congress, especially under a Democratic administration likely to support the bill. This essay proposes an alternative to ENDA that would embrace the theoretical connections between sex, gender, and sexual orientation, with important practical consequences for the relief available to plaintiffs.
I agree. ENDA in its current form is too narrow because it excludes transgender discrimination. Amending Title VII to replace "sex" with "gender", as Jenifer suggests, or simply re-interpreting "sex" to include transgender and sex stereotyping, as Katie Koch and I have suggested (see Transgender Employment Discrimination), would be a better alternative to ENDA.
Here is the abstract:
Women in academia - among some of the best educated women in America - suffer from the same salary inequities as other women in society. The American Association of University Professors (AAUP) has found that women faculty "earn lower salaries on average even when they hold the same rank as men." Thus, the recent United States Supreme Court decision on pay equity, Ledbetter v. Goodyear Tire & Rubber Company, holds a number of important lessons for women in academia.
This article explores the intersection of these findings with the Court's opinion in Ledbetter. The article examines the revealing rhetorical choices in the majority opinion, written by one of the Court's newest members, Justice Samuel Alito, and the dissent, written by the Court's only remaining woman, Justice Ruth Bader Ginsburg. It explores the question of whether former Justice O'Connor might have come to a different conclusion had she still been a member of the Court. It also explores existing norms in academia for setting salaries, negotiating for increased pay, and determining what factors constitute merit. In considering these norms, it evaluates how academic recruiting practices like competing offers and market forces have a disproportionately negative effect on women's pay. Finally, it explores how academia can effectuate voluntary change in such norms and concludes that through such normative change women in academia may fare better in terms of pay equity in the future.
It is remarkable that the gender pay discrimination we see in our society is not just relegated to the Lily Ledbetter's of the world, but as this article points out, it occurs to the best educated women in America. It is a national shame and one that I hope Congress and the new President make a priority in the next Congress.
I am hopeful that Ledbetter has seen its last days.
- Catherine Albiston, Kathryn Burkett Dickson, Charlotte Fishman, & Leslie F. Levy, Ten Lessons For Practitioners About Family Responsibilities Discrimination and Stereotyping Evidence, p. 1285.
- Joan C. Williams & Stephanie Bornstein, The Evolution of "FReD": Family Responsibilities Discrimination and Developments in the Law of Stereotyping and Implicit Bias, p. 1311.
- Stephen Benard, In Paik, & Shelley J. Correll, Cognitive Bias and the Motherhood Penalty, p. 1359.
- David L. Faigman, Nilanjana Dasgupta, & Cecilia L. Ridgeway, A Matter of Fit: The Law of Discrimination and the Science of Implicit Bias, p. 1389.
- Tristin K. Green & Alexandra Kalev, Discrimination-Reducing Measures at the Relational Level, p. 1435.
- Noreen Farrell & Genevieve Guertin, Old Problem, New Tactic: Making the Case for Legislation to Combat Employment Discrimination Based on Family Caregiver Status, p. 1463.
- Mary C. Still, Family Responsibilities Discrimination and the New Institutionalism: The Interactive Process Through Which Legal and Social Factors Produce Institutional Change, p. 1491.
Kye Pawlenko has just posted on SSRN his essay (forthcoming Hamline L. Rev.) The Non-Viability of State Regulation of Workplace Captive Audience Meetings: A Response to Professor Secunda. Here's an excerpt from the abstract:
In his recent article entitled Toward the Viability of State-Based Legislation to Address Workplace Captive Audience Meetings in the United States, Professor Secunda argues that state "Worker Freedom Act" legislation -legislation currently pending in numerous state legislatures that would prohibit an employer from holding captive audience meetings about unionization with its employees -should not be held preempted by the National Labor Relations Act. In this essay, I argue that state regulation of workplace captive audience meetings about unionization should be held preempted by the Act.
Monday, October 6, 2008
Vaden v. Discover Bank, 07-773 presents the issue of whether a federal court has jurisdiction over a suit to compel arbitration when the suit to compel arises under state law (the Federal Arbitration Act does not independently confer federal jurisdiction), but the underlying dispute between the parties involves federal law. The case involves an attempt by a credit-card-issuing bank that sought to compel arbitration of a class-action lawsuit arising from an alleged failure to pay a credit card balance. Here's the oral argument.
Daniel Ortiz, arguing for the debtors, argued that looking through the arbitration issue to the underlying dispute would be "so broad as to allow parties to compel arbitration in Federal court of nearly any dispute concerning credit card debt." His textual argument was that the "save for" language in the FAA Section 4 means "save for the arbitration agreement but for the jurisdictional doctrine of ouster." It didn't take long for Justices Ginsburg, Roberts, and Souter to express skepticism:
JUSTICE STEVENS: The text says nothing about the ouster doctrine.
MR. ORTIZ: No. But read in its historical context, Your Honor --
JUSTICE STEVENS: Rather than literally.
MR. ORTIZ: Well, literally at the time it would have been understood to refer -- to refer to that....
CHIEF JUSTICE ROBERTS: This is a tough -- it's a tough sell.
Carter Phillips, arguing for the bank, tried to argue that this was an "easy" case that could be resolved by interpreting the statute textually. He quickly, however, ran into two problems, raised by Ginsburg, Roberts, Kennedy, and Scalia. First, if "save for" means that courts should "look through" the arbitral controversy to the underlying dispute, who gets to define that underlying dispute, and how is that dispute to be determined? In the present case, for example, would the underlying dispute be the state claim for the debtor's failure to pay the balance, or federal counterclaim for the bank's alleged assessment of excessive fees? And what would happen when "look through" jurisdiction was predicated not on federal question jurisdiction, but diversity jurisdiction -- how is a court supposed to figure out who the "proper" parties are? And if a court includes all the potential parties, wouldn't that deprive a plaintiff of the right to frame her suit to get (or avoid) federal jurisdiction?
JUSTICE SCALIA: It's close to inconceivable to me that Congress wanted us to -- to construct litigation that is not yet in existence.
Look for a compromise. I don't think the Court is going to buy the argument that the "save for" language in Section 4 refers to the ouster doctrine. On the other hand, "look through" can't mean that federal courts must conjure jurisdictional facts out of thin air. Look for the Court to adopt "look through," but to find some way of cabining "look through", such as by looking only to the lawsuit (if any) predating the suit to compel arbitration.