Thursday, September 4, 2014
Thursday, July 3, 2014
Post-Hobby Lobby, Court Says Religious Non-Profit Need Not Notify Insurer that It Objects to Coverage
The Court has taken a number of actions already since issuing its decision in Hobby Lobby that suggest future directions on the issue in that case. First, the Court acted on six cert. petitions. As Lyle Denniston notes on ScotusBlog, the court remanded three cases to the courts of appeal, and denied cert in three. All six cases involved employers who objected to coverage for all forms of contraception, as well as sterilization for women, and pregnancy counselling. In the three won by employers, the Court denied cert. In the three won by the government, the Court ordered the courts of appeal to reconsider in light of the Hobby Lobby decision.
And today, the Court issued an additional order. In Wheaton College v. Burwell, the Court granted an injunction to this religious educational institution against enforcement of the women's preventive care provisions objected to, absolving the College from filling out the government's form and delivering notice to its insurer. The government's brief in opposition is here.
Particularly notable was a dissent by Justice Sotomayor, joined by Justices Ginsburg and Kagan. In it, the three justices note that the Court had indicated in Hobby Lobby that the accommodation which required an employer to notify its insurer that it objected to certain coverage was less restrictive, implying that it would satisfy RFRA. As Justice Sotomoayor noted,
After expressly relying on the availability of thereligious-nonprofit accommodation to hold that the contraceptive coverage requirement violates RFRA as applied to closely held for-profit corporations, the Court now, as the dissent in Hobby Lobby feared it might . . . , retreats from that position. That action evinces disregard for even the newest of this Court’s precedents and undermines confidence in this institution.
The whole dissent is worth a read.
Tuesday, July 1, 2014
The analyses here of yesterday's decisions, Jeff's in Harris v. Quinn and Charlie's in Burwell v. Hobby Lobby were spot-on and highlighted many of the legal implications of the cases going forward. There were some interesting facets that they did not discuss that I would like to think through a bit more.
One of the things that struck me about both decisions is their effect on women and particularly women of color. The workforce at issue in Harris is primarily female and heavily women of color. Similarly, lack of contraceptive access affects women most directly, and has larger impacts on women of color. Nearly half of the pregnancies in this country are unintended (a higher rate than other developed nations), and result in a large number of abortions and poorer health and economic, workplace-related consequences for the women who choose to continue their pregnancies and the children they deliver. The rates of unintended pregnancies among African American and Hispanic women are significantly higher than for white women because of lack of access to low cost, highly reliable contraception. And the health risks of pregnancy are significantly greater for women of color -- African American women are four times more likely to die in childbirth than are white women. Easy access (financially and logistically), reduces these effects significantly.
Unionization has been good, in general, for the home health care workers in Illinois. These are workers not covered by safety net statutes like the Fair Labor Standards Act and the Occupational Safety and Health Act, nor are most covered by anti-discrimination statutes like Title VII. They are not covered by the National Labor Relations Act, either, which is one reason that these workers have had little luck bargaining for better wages or working conditions. These workers who were allowed to organize in Illinois and to bargain with the state have seen their wages increase significantly, nearly tripling for some (from as low as $3.35 to now over $11 and set to reach $13 by the end of the year). They also have health insurance and other workplace benefits. The result has been good for the majority of those women, although the named plaintiff, a woman who cared for her own son at home, perceived the deduction from her paycheck as a reduction in medicaid benefits for her son. Overall, most people who need in home care, like the elderly -- who again, are disproportionately women, although white women, based on aggregate life expectancy data -- and people with disabilities, also benefitted by being able to retain workers long-term who can be reliable (able to rely on this as their primary income and not look for other or better paying work) and better trained. Those people who need care could remain in their homes and not have to live in institutional settings.
To the extent that the gender pay gap and the racial pay gap (and the racialized gender pay gap) are driven by horizontal labor force segregation, organization seemed the most promising force for change. The decision in Harris seems to minimize the effects of that progress. To the extent that these pay gaps are driven by either horizontal or vertical workplace segregation that results from pregnancy and caregiving responsibilities, or by the higher cost of health care for one sex, easy access to contraception seems a way to reduce those indirect and direct effects. The decision in Hobby Lobby seems to threaten that. If insurers do not continue to agree to absorb the costs of contraceptives, who will? And finally, aside from the effects on individuals (workers, those who need home health care, and the families of both), to the extent that these pay gaps lead to wealth disparities, health outcomes disparities, and an inability to live independently, the states face greater expenses in supporting those who need help.
The Court's opinion in Hobby Lobby contained some additional food for thought on the interaction of RFRA and other federal laws. The Court stated in the early part of its opinion that the decision was confined in a number of ways, including that it was confined to the contraceptive mandate of the ACA. But the logic of the opinion and the language in the bulk of it has few bounds. As Justice Ginsburg's dissent pointed out, the logic of the opinion would allow any corporation, regardless of it's organization or corporate purposes, to challenge any federal law of general applicability, including, for example, Title VII. While the majority explained that Title VII's prohibition on racial discrimination in hiring was the least restrictive means to ensure equal opportunity in employment on the basis of race, the court left its analysis at that. Title VII also prohibits classifying and segregating employees in any way that would tend to deprive them of opportunities based on race. Is that narrowly tailored enough? Is the way that language has been interpreted to include disparate impact narrowly tailored enough?
Moreover, what about the other classes protected by Title VII? Sex is notably absent from that language. Is the Court anticipating the Title VII action brought by Hobby Lobby's female employees or the EEOC itself challenging a lack of access to contraception as sex discrimination? Such a suit could be a ways off if insurers will go along with the accommodation worked out for nonprofit religious entities and religious organizations in this context. However the process to take advantage of that opt-out is also currently being challenged. And based on the Court's decision, the Eleventh Circuit has suggested that it thinks that process will definitely fail. Yesterday, just hours after the Court's decision, the Eleventh Circuit granted the Eternal Word Television Network an injunction against complying with the opt-out because signing or indicating to an insurer or the government in any way that the Network would refuse to comply with the mandate would trigger that coverage to be provided in another way, thus facilitating the Network's employees in possibly engaging in acts the Network finds immoral--including having sex for any reason other than for procreation. Judge Pryor's concurrence quoted the majority's language at length, stating that it was clear the requirement would violate RFRA. It is no real stretch to extend that to for-profit corporations as well.
Moreover, what of the burgeoning case law on sex as including gender identity and sexual orientation at least when what is at issue is gender nonconforming behavior by the employee? Is that cut off at the knees for any company asserting that it finds gender nonconformity immoral for religious reasons?
These are just some preliminary thoughts of the additional effects of the two cases--and I didn't even get into the government efficiency, corporate law, corporate personhood, or issues of religion also running through the one or the other decisions I'd love to hear thoughts on any of this in the comments or follow-up posts.
Thursday, June 26, 2014
The issue is whether courts should apply a presumption of prudence or reasonableness (sometimes called the Moench presumption based on a similar case by that name in another circuit court) when a company, like Fifth Third, decides to retain investments in its own securities for its ESOP (employee stock ownership plan) when the stock's price dropped 74 percent because of the company's involvement in subprime mortgage lending. The employees in the retirement plan claim they were never alerted to the company's new riskier investment course.
Participants in Fifth Third's ESOP filed an ERISA class action, asserting that the company's actions violated their fiduciary responsibilities to plan participants and beneficiaries by imprudently investing in company stock. Initially, the U.S. District Court for the Southern District of Ohio had determined that Fifth Third did not violate ERISA because plan fiduciaries are entitled to a “presumption of prudence” permitting investment in their own stock and the plaintiffs had not overcome that presumption by showing that the company had plausibly abused their discretion in investing the ESOP money in the company stock.
A unanimous Court reversed the Sixth Circuit and remanded for further proceedings. Justice Breyer wrote the opinion. From the Supreme Court's syllabus:
1. ESOP fiduciaries are not entitled to any special presumption of prudence. Rather, they are subject to the same duty of prudence that applies to ERISA fiduciaries in general, §1104(a)(1)(B), except that they need not diversify the fund’s assets, §1104(a)(2). This conclusion follows from the relevant provisions of ERISA. Section 1104(a)(1)(B) “imposes a ‘prudent person’ standard by which to measure fiduciaries’ investment decisions and disposition of assets.” Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134, 143, n. 10. Section 1104(a)(1)(C) requires ERISA fiduciaries to diversify plan assets. And §1104(a)(2) establishes the extent to which those duties are loosened in the ESOP context by providing that “the diversification requirement of [§1104(a)(1)(C)] and the prudence requirement (only to the extent that it requires diversification) of [§1104(a)(1)(B)] [are] not violated by acquisition or holding of [employer stock].” Section1104(a)(2) makes no reference to a special “presumption” in favor of ESOP fiduciaries and does not require plaintiffs to allege that the employer was, e.g., on the “brink of collapse.” It simply modifies the duties imposed by §1104(a)(1) in a precisely delineated way. Thus, aside from the fact that ESOP fiduciaries are not liable for losses that result from a failure to diversify, they are subject to the duty of prudence like other ERISA fiduciaries. Pp. 4–15.
2. On remand, the Sixth Circuit should reconsider whether the complaint states a claim by applying the pleading standard as discussed in Ashcroft v. Iqbal, 556 U. S. 662, 677–680, and Bell Atlantic Corp. v. Twombly, 550 U. S. 544, 554–563, in light of the following considerations. Pp. 15–20.
(a) Where a stock is publicly traded, allegations that a fiduciary should have recognized on the basis of publicly available information that the market was overvaluing or undervaluing the stock are generally implausible and thus insufficient to state a claim under Twombly and Iqbal. Pp. 16–18.
(b) To state a claim for breach of the duty of prudence, a complaint must plausibly allege an alternative action that the defendant could have taken, that would have been legal, and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it. Where the complaint alleges that a fiduciary was imprudent in failing to act on the basis of inside information, the analysis is informed by the following points. First, ERISA’s duty of prudence never requires a fiduciary to break the law, and so a fiduciary cannot be imprudent for failing to buy or sell stock in violation of the insider trading laws. Second, where a complaint faults fiduciaries for failing to decide, based on negative inside information, to refrain from making additional stock purchases or for failing to publicly disclose that information so that the stock would no longer be overvalued, courts should consider the extent to which imposing an ERISA-based obligation either to refrain from making a planned trade or to disclose inside information to the public could conflict with the complex insider trading and corporate disclosure requirements set forth by the federal securities laws or with the objectives of those laws. Third, courts confronted with such claims should consider whether the complaint has plausibly alleged that a prudent fiduciary in the defendant’s position could not have concluded that stopping purchases or publicly disclosing negative information would do more harm than good to the fund by causing a drop in the stock price and a concomitant drop in the value of the stock already held by the fund. Pp. 18–20.
692 F. 3d 410, vacated and remanded.
Thursday, June 19, 2014
The Supreme Court issued its decision in Lane v. Franks, today, holding unanimously that a public employee is entitled to First Amendment protection for testifying in court where testifying is not a part of that employee's regular job duties. The Court further held that the individual defendant had qualified immunity because circuit court precedent was not clear enough. Here is the syllabus:
1. Lane’s sworn testimony outside the scope of his ordinary job duties is entitled to First Amendment protection. Pp. 6–13.
(a) Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U. S. 563, 568, requires balancing “the interests of the[employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.” Under the first step of the Pickering analysis, if the speech is made pursuant to the employee’s ordinary job duties, then the employee is not speaking as a citizen for First Amendment purposes, and the inquiry ends. Garcetti v. Ceballos, 547 U. S. 410, 421. But if the “employee spoke as a citizen on a matter of public concern,” the inquiry turns to “whether the relevant government entity had an adequate justification for treating the employee differently from any other member of the general public.” Id., at 418. Pp. 6–8.
(b) Lane’s testimony is speech as a citizen on a matter of public concern. Pp. 8–12.
(1) Sworn testimony in judicial proceedings is a quintessential example of citizen speech for the simple reason that anyone who testifies in court bears an obligation, to the court and society at large, to tell the truth. That obligation is distinct and independent from any separate obligations a testifying public employee might have to his employer. The Eleventh Circuit read Garcetti far too broadly in holding that Lane did not speak as a citizen when he testified simply because he learned of the subject matter of that testimony in the course of his employment. Garcetti said nothing about speech that relates to public employment or concerns information learned in the course of that employment. The critical question under Garcetti is whether the speech at issue is itself ordinarily within the scope of an employee’s duties, not whether it merely concerns those duties. Indeed, speech by public employees on subject matter related to their employment holds special value precisely because those employees gain knowledge of matters of public concern through their employment. Pp. 9–11.
(2) Whether speech is a matter of public concern turns on the “content, form, and context” of the speech. Connick v. Myers, 461 U.S. 138, 147–148. Here, corruption in a public program and misuse of state funds obviously involve matters of significant public concern. See Garcetti, 547 U. S., at 425. And the form and context of the speech—sworn testimony in a judicial proceeding—fortify that conclusion. See United States v. Alvarez, 567 U. S. ___, ___. Pp. 11–12.
(c) Turning to Pickering’s second step, the employer’s side of the scale is entirely empty. Respondents do not assert, and cannot demonstrate, any government interest that tips the balance in their favor—for instance, evidence that Lane’s testimony was false or erroneous or that Lane unnecessarily disclosed sensitive, confidential, or privileged information while testifying. Pp. 12–13.
2. Franks is entitled to qualified immunity for the claims against him in his individual capacity. The question here is whether Franks reasonably could have believed that, when he fired Lane, a government employer could fire an employee because of testimony the employee gave, under oath and outside the scope of his ordinary job responsibilities. See Ashcroft v. al-Kidd, 563 U. S. ___, ___. At the relevant time, Eleventh Circuit precedent did not preclude Franks from holding that belief, and no decision of this Court was sufficiently clear to cast doubt on controlling Circuit precedent. Any discrepancies in Eleventh Circuit precedent only serve to highlight the dispositive point that the question was not beyond debate at the time Franks acted. Pp. 13–17.
3. The Eleventh Circuit declined to consider the District Court’s dismissal of the claims against respondent Burrow in her official capacity as CACC’s acting president, and the parties have not asked this Court to consider them here. The judgment of the Eleventh Circuit as to those claims is reversed, and the case is remanded for further proceedings. P. 17.
523 Fed. Appx. 709, affirmed in part, reversed in part, and remanded
Justice Sotomayor wrote the opinion. Justice Thomas wrote a short concurrence that Justices Scalia and Alito concurred in, explaining that because Lane was not testifying as part of his job duties, the case was a straightforward application of Garcetti v. Ceballos, 547 U.S. 410 (2006). Justice Thomas further wrote,
We accordingly have no occasion to address the quite different question whether a public employee speaks “as a citizen” when he testifies in the course of his ordinary job responsibilities. See ante, at 8, n. 4. For some public employees—such as police officers, crime scene technicians, and laboratory analysts—testifying is a routine and critical part of their employment duties. Others may be called to testify in the context of particular litigation as the designated representatives of their employers. See Fed. Rule Civ. Proc. 30(b)(6). The Court properly leaves the constitutional questions raised by these scenarios for another day.
I'll admit that I'm a bit relieved by the decision, and I'm not alone--Paul expressed concern when cert was granted. The decision seemed to track my impressions from the oral argument, but that's not always the way it turns out, and the Court has not ruled in favor of public employees lately on this issue.
It will be interesting to see what the Eleventh Circuit does with the claims against the office of the President of the Community College on remand.
Tuesday, May 13, 2014
The NLRB is asking for amicus briefs on the issues in the Northwestern football players election case by June 26. It would be a great opportunity for those interested to weigh in.
h/t Charlotte Garden
Sunday, March 16, 2014
Paul Secunda (Marquette), Scott Bauries (Kentucky), and Sheldon Nahmod (Chicago-Kent) have posted on SSRN their amicus brief in Lane v. Franks. Joshua Branson of Kellogg, Huber, Hanson, Todd, Evans & Figel also is an attorney of record on the brief, and more than sixty additional law professors signed on.
The case involves a public employee who was subpoenaed to testify in a fraud prosecution, and who alleged he was fired for truthfully testifying. The matter he testified about was information he had because of his work. The district court granted the defendant summary judgment, reasoning,
Mr. Lane’s testimony did not occur in the workplace, but he learned of the information that he testified about while working as Director at C.I.T.Y. Because he learned the information while performing in his official capacity as Director at C.I.T.Y., the speech can still be considered as part of his official job duties and not made as a citizen on a matter of public concern.
The Eleventh Circuit affirmed. The questions the Court granted cert on are: (1) Whether the government is categorically free under the First Amendment to retaliate against a public employee for truthful sworn testimony that was compelled by subpoena and was not a part of the employee’s ordinary job responsibilities; and (2) whether qualified immunity precludes a claim for damages in such an action.
For more on the case, see ScotusBlog here.
Wednesday, February 26, 2014
The EEOC has asked for public comments to its proposed revised management directive in federal sector proceedings. The EEOC acts as an adjudicator for federal sector claims. From the press release,
The U.S. Equal Employment Opportunity Commission (EEOC) has announced that it is seeking public comment on significant revisions to Management Directive 110 (MD-110), which provides federal agencies with EEO policies, procedures and guidance related to the newly revised 29 C.F.R. Part 1614 (federal sector EEO regulations). The full text of the proposed revisions is available on the Regulation.gov website at http://www.regulations.gov/#!docketDetail;D=EEOC-2014-0001.
These revisions represent the first major changes to MD-110 since 1999; they can be categorized into three areas:
- Implementation of Revised Regulations:
- new procedures for agencies to submit, and the EEOC to approve, requests to conduct pilot projects for processing complaints in ways other than those prescribed in Part 1614;
- revised procedure making an administrative judge's decision on the merits of a class complaint a final decision;
- a new compliance section;
- updated retaliation language in the dismissal section;
- notice to complainant when an agency is untimely in completing an investigation; and
- information on digital filings of appeals and complaint files.
- Conflict of Interest:
- addressing EEO director reporting relationship;
- EEO and HR conflicts;
- complaint processing of matters involving EEO officials or high-level agency officials; and
- conflicts between agency legal and EEO programs.
- General Updates & Clarification:
- revisions to the remainder of MD-110 to reflect current policies, procedures, laws and case precedents.
These revisions are a part of the EEOC's ongoing efforts to improve the federal sector process. The agency encourages interested parties to review these proposed changes and provide feedback for EEOC consideration. The agency specifically urges stakeholders to provide feedback on the conflict-of-interest section, as this is the EEOC's first attempt to provide clarity in this area, and stakeholder input will be valuable in determining the final approach.
Public comments on revisions to MD-110 should be provided through Regulation.gov (http://www.regulations.gov/#!docketDetail;D=EEOC-2014-0001) no later than April 25, 2014 for appropriate consideration.
Further information about EEOC is available on its website www.eeoc.gov. The EEOC's Office of Federal Operations also maintains a Twitter handle @EEOC_OFO for general news and information updates.
Thursday, February 20, 2014
The Departments of Labor, Treasury, and Health and Human Services have announced the publication of final regulations implementing a 90-day limit on waiting periods for employer provided health coverage.
The final regulations require that no group health plan or group health insurance issuer impose a waiting period longer than 90 days after an employee is otherwise eligible for coverage. The rules do not require coverage be offered to any particular individual or class of individuals, and it doesn't affect non-time-period conditions for eligibility, such as meeting certain sales goals, earning a certain level of commission, or successfully completing an orientation period. Requiring employees to complete a certain number of hours before becoming eligible for coverage is generally allowed as long as the requirement is capped at 1200 hours. The rules also address situations in which it cannot be determined that a new employee will be working full-time.
The departments are issuing a companion proposed rule for comment. That rule would limit the maximum duration of an otherwise permissible orientation period to one month. This proposal will be open for public comment. Comments must be filed by April 25, 2014.
Both the final and proposed rule are scheduled to be published on Monday, February 24, 2014.
Monday, December 16, 2013
According to Fedscoop, Seth Harris, Deputy Secretary of Labor for the last four-and-a-half years is stepping down to return to teaching, writing, and practice. Seth had been at NYLS before his appointment, but according to BNA's Daily Labor Report (241 DLR A-5), he will be remaining in the DC area. Thank you for your great work, Seth, I hope the DOL continues to benefit from your voice, and keep us all posted on your plans.
h/t Susan Bisom-Rapp (Thomas Jefferson)
Friday, December 13, 2013
Early yesterday morning, Chai Feldblum was re-confirmed to another 5-year term at the EEOC. Congratulations, and great news for the EEOC, which will remain fully staffed. Chai has been a great resource for the Commission, having been instrumental in negotiating the ADA and ADAAA, an expert on ENDA, and a voice for cooperation and public outreach with Commissioner Lipnic.
Tuesday, November 5, 2013
After years of no news, it looks like there is suddenly movement on the Employment Non-Discrimination Act. The current version, introduced in both the House (H.R. 1755) and the Senate (S. 815) on April 25th of this year, was voted out of committee in July and then had stalled, when Monday, the Senate overwhelmingly voted to invoke cloture and move forward to a vote. The Senate version is expected to pass as early as this week.
John Boehner has apparently said that he'll oppose the bill in the house, arguing that it will lead to frivolous litigation and hurt small businesses. Another frequent critique of the legislation is that it will interfere with religious freedom, although it does not apply to religious organizations that are allowed to discriminate on the basis of religion under Title VII.
Interestingly, according to polls, most people support a ban on LGBTQ discrimination, and in fact 80% of those polled think this protection already exists. There are certainly arguments that Title VII's ban on sex discrimination prohibits at least some discrimination on the basis of sexual orientation and identity (see here, here, and here for some of the EEOC's views supporting that). But the courts have not always agreed, and according to this infographic, only 21 states (and DC) have a ban on sexual orientation discrimination while 16 states (and DC) ban discrimination on the basis of gender identity.
Tuesday, October 15, 2013
Update: Thanks to blog reader, Albert Feuer, for bringing to my attention Tejinder Singh’s commentary on the oral argument, Argument analysis: Nobody seems worried about ERISA limitations periods, SCOTUSBLOG (Oct. 17, 2013).
OK, hold onto your seats for some flat out ERISA law excitement. This morning, the United States Supreme Court heard oral argument in Heimeshoff v. Hartford Life & Accidental Insurance Company [Briefs at SCOTUSblog], concerning statute of limitation accrual issues for benefit claims under Section 502(a)(1)(B) of ERISA.
RossRunkel.com, as always, gets to the heart of the matter (which is really impressive when you consider it is ERISA after all):
Heimeshoff's disability policy, administered by Hartford, says that a court suit for wrongful denial of benefits has to be filed within three years of when the claimant files a proof of loss with the plan administrator.
That can be tough, given the fact that it's possible for the three-year period to begin to run before the claimant has gone through the administrative procedure that must be followed before bring a suit. I suppose it's even possible in some cases that the three years would run out before the claimant got a final denial.
Hartford has a simple response, which is that ERISA plans usually get enforced the way they are written.
There's really no statutory text that's much help.
The petition for certiorari points out that lower court have adopted three conflicting approaches to answer the question of accrual:
(1) A plan’s statute of limitations cannot begin running until the claimant has exhausted administrative remedies and the plan has issued a formal, final adverse determination (Fourth and Ninth Circuits);
(2) A plan’s pre-denial statute of limitations is enforceable if “reasonable,” as determined on a case-by-case basis (Second, Sixth, Seventh, Eighth, and Tenth Circuits);and
(3) The plan must notify the claimant of the time limits for judicial review, in the SPD and adverse determinations, in compliance with ERISA regulations; and if it does not, the court will not allow the plan to assert the plan’s limitations defense or will equitably toll the limitations period (First Circuit and a District Court in Second Circuit).
I don't see any clear path for the Court on this one.
Also see Argument preview: When can an ERISA limitations period start to run? at SCOTUSblog.
I agree wth Ross that this area of ERISA law is a mess. The ERISA written plan requirement rule suggests that the plan administrator follow the terms of the plan as written, but to do so, at least conceivably in some cases, the administrator could drag their feet and wait for the statute of limitations to run before finally deciding the internal appeal and thereby prevent the employee to ever file a benefits denial claim in court.
Equitable tolling might be one way with dealing with the potential unfairness of the rule, but its implementation would also be messy. Also, it is unavailing to say with a straight face that plan administrators and employee should be bound by terms of the plan because if the employee wanted a different type of SOL they could just bargain for it. Everyone knows that employees don't bargain over plan language. They are classic adhesion contracts, presented on a take-it-or-leave-it basis.
To me, the best rule would be to start the SOL to run once the internal administrative process has been finalized and the employee is free to sue in court. This approach has the advantages of both providing a clear point when the SOL starts to run, plus provides incentive for the plan administrators to complete claims processing as quickly as possible.
No predictions on this one, folks, but I fear this pro-employer/pro-plan sponsor court will adopt the written plan requirement rule and permit the plan sponsor to unilaterally set in the plan document an accrual date and a length for the statute of limitations which will further undermine employee rights under ERISA.
Monday, September 23, 2013
Last week, the Securities and Exchange Commission (SEC) released a rule requiring companies to disclose the CEO-to-worker pay ratio. Despite objections by many corporations, the rule covers all employees including seasonal, international, and part-time workers. The SEC provides companies the option of using the entire workforce or a representative sample in the calculation.
There will now be a 60-day comment period. The SEC voted for the rule 3-2, with the two Republican Commissioners who voted against the proposal calling it a special interest provision and proclaiming “shame on the SEC.”
Proponents of the rule argue that it will give shareholders and other stakeholders a clear line of sight into human capital management and worker pay. For instance, CalPERS, the California State Pension Plan, has issued a release, welcoming the rule as a valuable tool which will “help shareholders to keep management accountable” and “shed light on an element of pay which is currently shrouded from view.” John Liu, the NYC Comptroller, stated that the rule would allow “shareowners to make informed decisions about compensation and may rein in excessive corporate practices.”
From my point of view, and quoting Justice Brandeis, "Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman."
Wednesday, September 18, 2013
The Employee Benefits Security Administration (EBSA) released today guidance (Technical Release 2013–04) defining the meaning of the terms “spouse” and “marriage” under ERISA in light of the U.S. Supreme Court's decision in June in U.S. v. Windsor.
Here is the pertinent text from the Technical Release:
In general, where the Secretary of Labor has authority to issue regulations, rulings, opinions, and exemptions in title I of ERISA and the Internal Revenue Code, as well as in the Department's regulations at chapter XXV of Title 29 of the Code of Federal Regulations, the term 'spouse' will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term 'marriage' will be read to include a same-sex marriage that is legally recognized as a marriage under any state law....
The terms 'spouse' and 'marriage,' however, do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union, regardless of whether the individuals who are in these relationships have the same rights and responsibilities as those individuals who are married under state law.
DOL Secretary Thomas Perez suggests that the DOL plans to issue additional guidance in the near future.
Tuesday, June 25, 2013
Today the Supreme Court put another nail in the coffin of the withering body of consumer rights. In the American Express v. Italian Colors case, the Court furthered its trend that permits corporations to use arbitration to prevent consumers from challenging their unlawful conduct. The case arose when a group of merchants brought a class action against American Express alleging that the credit card company imposed on them an illegal tying arrangement, in violation of the antitrust law. The merchants' contracts with Amex contained a clause that required all disputes be subject to arbitration and that all disputes be arbitrated on an individual basis. It also prohibited parties from sharing the costs of any litigation or otherwise consolidating their legal claims. The merchants wanted to void the class action waiver and arbitrate as a group because it would cost many hundreds of thousands of dollars to mount an antitrust action yet the average recovery would be only $5000. Hence, they argued, without the ability to bring a class or collective action, they would lose their substantive rights. The Second Circuit agreed. It held that the class action ban could not be enforced "because to do so would grant Amex de facto immunity from antitrust liability by removing the plaintiffs' only reasonably feasible means of recovery."
The Second Circuit decision rested on an established Supreme Court precedent that says that under the Federal Arbitration Act, arbitration is only appropriate when it entails no loss of substantive rights. The Supreme Court first expressed this principle in 1985 in Mitsubishi Motors v. Solar Chrysler-Plymouth, a case in which a party was required to arbitrate a claim arising under the Sherman Antitrust Act. In Mitsubishi, the Court stated that arbitration could be ordered only if the litigant "may vindicate its statutory cause of action in the arbitral forum." The Court further explained that "[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute."
There is a lot more good analysis. You should read the whole thing.
Monday, June 24, 2013
The Supreme Court handed down opinions in two Title VII cases today, both of which will benefit employers. You should read both cases because they are really interesting. I'll just offer a general overview here.
First was Vance v. Ball State. In Vance, the Court considered who would be a supervisor for purposes of vicarious employer liability under Title VII. It held that only those employees empowered to take tangible employment action would be supervisors. Other employees with some supervisory authority are "merely" co-employees even if they are labeled supervisors by the employer. And an employer is liable for harassment by coworkers only if the employer is negligent in allowing the harassment to happen. The negligence inquiry must take into account the degree of authority and control the harasser had, and the greater the amount, the more likely the employer may be found negligent, as long as it also had constructive notice of that harassment. Thus, the Court reaffirmed the agency principles it had adopted in Farragher and Ellerth.
The second case was University of Texas Southwestern Medical Center v. Nasser. That case involved the causation standard for retaliation cases under Title VII. The Court held that plaintiffs had to prove that retaliation was the but-for cause of the adverse employment action taken against them, using the reasoning we are familiar with from Gross v. FBL Fin. Servs. The Court presumed that Congress incorporated the general tort causation standard in Title VII when it enacted the law, and the 1991 amendments which adopted the motivating factor standard used it in connection with discrimination on the basis of protected status and did not mention the word retaliation. The Court further relied on its decision in Gross, holding that if "because" meant but-for there, it must mean but-for in the retaliation context. Although the Court had previously held in Price Waterhouse that "because" could mean motivating factor or substantial factor, it said in this case that decision had no continuing effect. Congress essentially erased Price Waterhouse with the Civil Rights Act of 1991.
In both decisions, the Court rejected interpretations provided by the EEOC as unpersuasive, giving them no deference. Both decisions were decided 5-4, and Justice Ginsburg wrote the dissents for both. In both cases, Justice Ginsburg charged the majority with ignoring the realities of the workplace--the conditions under which people work--and of narrowing Title VII's protection well beyond what Congress had intended. She called on Congress to remedy both decisions.
My impression on reading both cases is that the decisions read as fairly instrumental, adopting highly technical statutory readings only when convenient and playing somewhat loose with prior precedent and lower court decisions. Clearly, the majority views Title VII cases as a problem for employers, a problem Congress must not have intended to cause, and a problem that the Court has to fix. I'm not sure that Justice Ginsburg's solution is workable, either. In the current climate, I would be surprised if Congress could do anything. And, it seems, no matter what Congress does, it seems that the Court has its own picture of what Congress should do. That motivated reasoning would be difficult to overcome even if the statute is amended. Consider what the Court did with the 1991 amendments. Instead of codifying the reasoning behind the causation analysis from Price Waterhouse, something Congress must have believed it was doing, those amendments were considered by the Court to have erased it completely.
Monday, June 10, 2013
The Supreme Court issued three opinions today, and among them was Oxford Health Plans LLC v. Sutter.
Here is the syllabus from the opinion:
Respondent Sutter, a pediatrician, provided medical services to petitioner Oxford Health Plans’ insureds under a fee-for-services contract that required binding arbitration of contractual disputes. He nonetheless filed a proposed class action in New Jersey Superior Court, alleging that Oxford failed to fully and promptly pay him and other physicians with similar Oxford contracts. On Oxford’s motion, the court compelled arbitration. The parties agreed that the arbitrator should decide whether their contract authorized class arbitration, and he concluded that it did. Oxford filed a motion in federal court to vacate the arbitrator’s decision, claiming that he had “exceeded [his] powers” under §10(a)(4) of the Federal Arbitration Act (FAA), 9 U. S. C. §1 et. seq. The District Court denied the motion, and the Third Circuit affirmed.
After this Court decided Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662—holding that an arbitrator may employ class procedures only if the parties have authorized them—the arbitrator reaffirmed his conclusion that the contract approves class arbitration. Oxford renewed its motion to vacate that decision under §10(a)(4). The District Court denied the motion, and the Third Circuit affirmed.
Held: The arbitrator’s decision survives the limited judicial review allowed by §10(a)(4). Pp. 4−9.
(a) A party seeking relief under §10(a)(4) bears a heavy burden. “It is not enough . . . to show that the [arbitrator] committed an error—or even a serious error.” Stolt-Nielsen, 559 U. S., at 671. Because the parties “bargained for the arbitrator’s construction of their agreement,” an arbitral decision “even arguably construing or applying the contract” must stand, regardless of a court’s view of its (de)merits. Eastern Associated Coal Corp. v. Mine Workers, 531 U. S. 57, 62. Thus, the sole question on judicial review is whether the arbitrator interpreted the parties’ contract, not whether he construed it correctly. Here, the arbitrator twice did what the parties asked: He considered their contract and decided whether it reflected an agreement to permit class proceedings. That suffices to show that he did not exceed his powers under §10(a)(4). Pp. 4−6.
(b) Stolt-Neilsen does not support Oxford’s contrary view. There, the parties stipulated that they had not reached an agreement on class arbitration, so the arbitrators did not construe the contract, and did not identify any agreement authorizing class proceedings. This Court thus found not that they had misinterpreted the contract but that they had abandoned their interpretive role. Here, in stark contrast, the arbitrator did construe the contract, and did find an agreement to permit class arbitration. So to overturn his decision, this Court would have to find that he misapprehended the parties’ intent. But §10(a)(4) bars that course: It permits courts to vacate an arbitral decision only when the arbitrator strayed from his delegated task of interpreting a contract, not when he performed that task poorly. Oxford’s remaining arguments go to the merits of the arbitrator’s contract interpretation and are thus irrelevant under §10(a)(4). Pp. 6−9.
675 F. 3d 215, affirmed.
KAGAN, J., delivered the opinion for a unanimous Court. ALITO, J., filed a concurring opinion, in which THOMAS, J., joined.
I'll admit to being a bit surprised at the outcome here. The language of prior decisions on arbitration suggested that the Court thought arbitration and class actions were incompatible and that contractual language would have to explicitly allow class actions in arbitration before they could go forward. The contractual language in this case was not that clear. The arbitrator in this case interpreted this arbitration clause as allowing class actions (just one of the universe of civil actions) to proceed in arbitration:
No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator.
The rule on deferring to the arbitrator trumped what may be the majority of Justices' own view on class actions.
Friday, May 24, 2013
Congratulations to Chai Feldblum (EEOC, Georgetown) for her nomination to the EEOC for a second term. President Obama announced the nomination yesterday along with a group of other positions here. Given her extensive background on antidiscrimination issues in the legislative clinic at Georgetown and her central involvmement in drafting, coalition building, and passage of the ADA and ADAAA, Chai has been a very effective commissioner. She and Commissioner Lipnic, one of the President's Republican nominees, in particular have been able to work with business and employee advocates on enforcement issues. Here's hoping the Senate confirmation process goes smoothly this time around as well.
h/t Marcy Karin (Arizona State)
Wednesday, May 22, 2013
This past Friday, the United State Supreme Court granted cert. in the case of Lawson v. FMR LLC. The case concerns whether the Sarbanes-Oxley Act (SOX), which protects employees of publicly traded companies from retaliation for reporting financial improprieties, also protects the employees of private contractors of those companies. In the case, two fund investment advisors blew the whistle on a publicly-traded mutual fund which contracted for their services. The First Circuit found that the fund advisors were not covered by SOX protections.
The Court had asked the U.S. Solicitor General's views on the case, and the SG recommended that the Court bypass the case in order to allow the issue to percolate among more circuit courts. The case, however, was granted.
Among the issues to be decided: whether protecting the employees of contractors is mandated under the plain meaning of SOX and whether a finding of no coverage for such employees will discourage whistleblowers from bringing financial fraud allegations to the attention of the public. It should also be an interesting case because it is one of the first to examine the whistleblower protections of SOX and will likely provide guidance on how broadly or narrowly SOX should be interpreted to protect whistleblowers in the financial services industry.