Friday, January 15, 2021
According to this article in the L.A. Times, John Eastman, who has recently represented the President in connection with numerous lawsuits challenging election results, has agreed to resign his position as a professor of law at Chapman University. Professor Eastman joined Rudy Giuliani at the "Save America" Rally on January 6th. The L.A. Times reports that, at that rally, he made unsubstantiated claims of voter fraud in connection with the 2020 Presidential election.
More than 160 faculty members called for the University to take action, but Chapman's President Daniele Struppa refused, citing the limitations of his powers as university president and the important principles of academic freedom and contractual rights. President Struppa's statement is worth quoting at length.
I am not the Emperor of Chapman University, nor I am the Supreme Leader of Chapman University. I am the President of the university, and as such, I am bound by laws and processes that are clearly spelled out in our Faculty Manual. The Faculty Manual, despite its common name, is actually a contractually binding document that faculty, administration, and Trustees have agreed upon. This document contains the rules that determine how faculty are hired, and how they are disciplined, up to and including termination. The documents spell out cases under which such actions can be taken, and what process must be followed. The process includes a prominent role for the Faculty Personnel Committee and affords the faculty under discipline a process, and the right to grieve the decision in multiple settings.
I do not know anything about President Struppa (pictured), but if this statement is representative of his qualities, he is a very fine university president. I do have some concerns about wearing such a busy tie with a plaid sports jacket, but I would not question his leadership on that basis.
Happily, Chapman University and Professor Eastman were able to come to an agreement. He voluntarily resigned, and neither party will pursue legal action against the other. Some may think that Professor Eastman was strong-armed into forfeiting his position and some part of his academic freedom and freedom of expression. I choose to see this episode as one in which contract law and contractual negotiation play a starring role and put in a strong showing.
Monday, December 7, 2020
Over at Jotwell, Miriam Cherry has a post up about Jonathan Harris's very timely piece, Unconscionability in Contracting for Worker Training, 72 Ala. L. Rev. __ (forthcoming, 2021), available at SSRN).
In the article, Harris (pictured) looks at various training schemes that purport to assist new workers or job applicants as they enter the work force or transition to new work. Specifically, Harris discusses two new developments. First, training repayment agreements (TRA), require employees to reimburse the employer for outside trainings if the employee quits or is fired before a fixed period of time elapses. Secondm Income Sharing Agreements (ISAs), which require a trainee to pay a percentage of future income in exchange for the ability to participate in a computer coding course or program. The possibilities for exploitation are palpable. Read more over at Jotwell, or download the article. It's what all the cool kids are reading.
Friday, December 4, 2020
Contracts profs around the world are trying to de-mystify contracts and clarify their terms by creating graphic contracts analogous to graphic novels. This video explains the strategy (but you will have to click on it and go to YouTube to get it view it).
Thanks to J. Kim Wright for the link.
Tuesday, December 1, 2020
Both of these stories come from Bloomberg Law.
The first is a new podcast series from Bloomberg called Uncommon Law. Bloomberg does not seem quite sure of how it wants to characterize this occasional format, alternating between calling it a "podcast" and a "audio documentary." In any case, the episode from earlier this month on "virus exclusions" in insurance policies is a new twist on a theme we have explored in other posts here, here, and here.
Here is Bloomberg's summary of its podcast/audio documentary:
Businesses all across the country have been shutdown for days, weeks, or even months at a time due to the coronavirus pandemic. Many assumed their insurance policies would help them defray some of their lost revenue. But those assumptions were, by and large, wrong.
In this special audio documentary, “Business, Interrupted” we look at why insurers denied the claims of their shuttered policyholders. A team of reporters from Bloomberg Law and Bloomberg Tax look into the so-called “virus exclusion” clauses, that insurers quietly inserted into many of their business policies, and how those clauses are now creating strife between insurers and businesses.
We hear from several small business owners across the country about the shock they felt when their pandemic claims were denied, in some cases within hours after filing. We also hear from regulators and lawmakers about whether they will force insurers to retroactively honor these claims, a possibility that insurers view as an existential threat to their entire industry.
A second Bloomberg report summarizes developments in the gig economy, ranging from a review of court cases in which gig workers try to get courts to force employers recognize their status as employees to a discussion of California's Proposition 22 and a possible intervention by the U.S. Department of Labor.
Thursday, November 19, 2020
Yesterday, we linked to and summarized some of the findings of a New Yorker article by Eyal Press, highlighting Eugene Scalia's Labor Department's laissez faire approach to regulation of health and safety violations during the COVID pandemic.
Today, we noticed this related article from the Huffington Post by Sanjana Karanth(h/t Ben Davis). The article reports on a wrongful-death lawsuit filed by the family of a worker at a Tyson plant in Iowa who died from COVID, allegedly after exposure at work. The plaintiff was one of five workers from the same factory who died from COVID; about 1000 employees -- over a third of the workforce -- were infected. The complaint alleges that managers at the plant set up a betting pool in which managers would try to guess how many workers would become infected. The complaint also alleges that the plant manager called COVID "a glorified flu" and instructed workers to show up, even if they had symptoms.
And now the link to yesterday's post: here is the closing paragraph of the article:
The Occupational Safety and Health Administration and the Centers for Disease Control and Prevention issued guidance at the beginning of the pandemic recommending that meatpacking companies put up physical barriers, enforce social distancing and install more hand-sanitizing stations, among other steps. But the guidance is not mandatory and is mostly unenforceable.
Wednesday, November 18, 2020
We have posted in the past (as part of our virtual symposium) about the extent to which workers in essential positions have been left without legal recourse as their employers fail to take adequate precautions to protect them from COVID infection. Rachel Arnow-Richman covered the topic here and here. Jeff Sovern and Ben Davis posted about the possibility that third parties who patronize businesses can be without legal recourse if they contract COVID due to the business's lack of precaution.
One response to businesses failing to take reasonable precautions might be that individual suits seeking to hold employers liable for workplace infection are inefficient and are unlikely to succeed because the odds are stacked against lone employees who sue large corporations. The better response would be government regulation and sanction of negligent employers under the authority of the Occupational Safety and Health Administration (OSHA).
Unfortunately, according to this New Yorker article by Eyal Press, the Trump adminsitration's Labor Secretary, Eugene Scalia pictured), has no interest in investigating companies whose workers are exposed to COVID at work. According to the article, like many other Trump appointees, Mr. Scalia previously made a career of opposing the policies of the agency he now heads. Unlike some of the others, he is competent, experienced, and an expert in the legal issues that his agency addresses. His take on those legal issues is highly anti-regulatory. Some highlights:
- In response to over 10,000 complaints regarding OSHA violations since the pandemic began, the Department of Labor (the Department) has issued a grand total of two citations;
- On April 10th, the Department issued a memo relieving employers of the duty to keep records about "work-related" infections;
- That memo drew protests and so withdrawn, but it was replaced this Fall with one saying that employers do not have to report COVID-19 hospitalizations unless they occur within twenty-four hours of a workplace exposure (which almost never happens); and
- The Department now has the fewest inspectors it has had in 45 years, and 42% of its leadership positions are vacant.
The article is long but highly recommended.
Thursday, October 8, 2020
Here's something you don't see every day: In Warfield v. Icon Advisors, the federal District Court for the Western District of North Carolina struck down an arbitral award finding that the arbitration panel had, in part, exceeded its authority.
Plaintiff James Warfield was a mutual funds wholesaler employed at-will by the defendant. After six months, ICON terminated Warfield. Warfield was a broker regulated by the Financial Industry Regulatory Authority (FINRA), and when he was terminated, ICON provided grounds for his termination on a Form U5 filed with FINRA. Warfield brought an arbitration, alleging that the U5 was false and defamatory, and also alleging that ICON engaged in deceptive trade practices. He sought $5 million in relief.
The arbitration panel awarded him about $1.2 million, finding that he had been unjustly terminated without just cause. Citing to § 10(a)(4) of the Federal Arbitration Act, the District Court vacated the award in part, finding that the panel exceeded its powers. It did so because it recognized a cause of action for wrongful termination without cause, and no such cause of action exists under North Carolina law for at-will employees. The court upheld the portion of the arbitral award that directed ICON to expunge allegedly defamatory language from the U5 form.
H/T Charles Calleros
Tuesday, September 15, 2020
Individual Employee Rights and COVID-19
Part II (What we really want to know):
Can faculty be terminated for refusing to teach in person?
Part I of this symposium contribution addressed the general public and private law rules bearing on whether an employer can lawfully terminate an employee who refuses to return to work because of COVID. This Part focuses on a specific example of considerable interest to our community: tenured university faculty members seeking to teach remotely. But first, one brief (and final) digression . . .
I. Unforeseen circumstances
Those who focus primarily on B2B contracts may think that I gave short shrift to the unprecedented nature of a global pandemic in Part I. Much of the commercial world is consumed with the question of whether contractual obligations can be set aside due to catastrophic circumstances. But excuse doctrines are of less significance in the employment context where, under employment at will, the law imagines that parties have no long-term obligations to one another.
In the case of employees with contract rights, however, concepts like impracticability could conceivably be brought to bear. If this were an actual exam question rather than a real-life dilemma, I would expect students to invoke doctrines of excuse. I would also expect them to begin their invocation with two mantras that I force then to incant in class:
Contract liability is strict liability. It does not matter why a party fails to perform, only that the contract terms have not been satisfied. If we were to imagine that the contract clearly obligated the employee to work in person, then her failure to do so is a breach even if she is acting justifiably. The same holds for the employer: if it is contractually obligated to provide a safe work environment, it is liable for its failure to do so despite its inability to fully contain the risks that make the workplace unsafe.
Changed circumstances do not excuse contract performance. Rather, they are the reason we contract in the first place. In entering a contract, parties obtain a degree of security in the face of an uncertain world: whatever happens, the other side is obligated to perform. The tradeoff is that come “hell or highwater,” they must perform too.
Of course, those are baseline principles. There are exceptions, and COVID-19 would appear to be a textbook example. Doctrines like impracticability exist to absolve a party from breach when an event so outside the norm of what either party expected makes performance virtually impossible. A global pandemic surely fits the bill for an unforeseen event – one so extraordinary that neither party can be blamed for failing to anticipate it at the time of drafting.
Whether the employee’s performance is indeed impracticable is a more nuanced question. Coming to work is not physically impossible. Its practicability or impracticability depends on a number of fact-driven considerations ranging from the contact-intensiveness of the work, to the employer’s mitigation efforts, to the employee’s underlying health issues. But such matters need not detain us. At this point I hope students recall the difference between recission and breach. Impracticability generally operates as a shield not a sword, meaning the employee could use the doctrine to relieve herself of any continued commitment to serve the employer. But what the employee wants is either to continue the relationship on her terms (remotely rather than in person) or access the remedies associated with breach of contract. Recission is not the outcome anyone is seeking.
Or maybe it is. If any party is going to make a successful COVID-based impracticability argument, it is likely to be the employer, and not with regard to the safety or feasibility of in-person work. Rather an employer might be inclined to argue that the dire economic fallout from the virus has made it all but impossible to retain the employee for the duration of her contract. This argument may sound eerily familiar to readers whose universities have begun or threatened to lay off faculty pursuant to exigent financial circumstances provisions in their appointment and tenure policies. Such language is the faculty-employment-contract counterpart to a force majeure clause, and the prospect of its deployment is sobering. For present purposes, though, we will stick with the question of remote versus in-person work, rather than the dreaded scenario of no work at all. But word of warning to otherwise job-secure employees seeking to draw on excuse doctrines in the fight to obtain remote work: be careful what you wish for.
II. Are faculty a special case?
And now to the much-awaited question: what are the possible job consequences to faculty who decline to teach in person?
Tenured faculty members are similar to corporate executives. True, they earn less. But they have the equivalent of an individual written contract precluding termination absent specific grounds in the form of the university’s promotion and tenure policy. Unlike individual written contracts, it never ends. An executive at the top of the corporate hierarchy generally has a fixed term of employment. If the employer does not have the grounds or the stomach to terminate her during the life of the contract, it can wait it out and refuse to renew. The same goes for so-called “contract” faculty, whether or not they are on a tenure track. These employees can be terminated upon contract expiration absent any presumption of renewal. Not so with tenured faculty. If the university wishes to terminate a tenured professor for refusing to teach in person, it must establish that her conduct satisfies the narrow and exclusive criteria under which tenure may be stripped for performance-related cause.
In some cases, these causes may be even narrower than the already pro-employee definitions found in the high-level employment contracts of the corporate world. Consider the following publicly posted example from the tenure policy of a large public university in the southeast (that is not my employer):
Cause for termination must directly and substantially affect the fitness of the faculty member to function … in an academic community, or be related to a serious failure of a faculty member to discharge his or her obligations to [the University]. Examples include, but are not limited to, serious professional or personal misconduct, serious failure to perform academic duties in accordance with generally accepted norms, conviction of a serious crime and serious violations of [University] policy.
Just count the number of times the word “serious” appears to qualify the grounds for removal, and you see which way the deck is stacked. It will be extremely difficult for this university to revoke the tenure of a faculty member for refusing to teach in person but still genuinely seeking to fulfill those obligations in a different modality. This is particularly so if the faculty member is still fully performing her other “academic duties” – scholarship and institutional service.
In addition to having exceedingly narrow justifications for removal, university personnel policies on tenure revocation guarantee affected faculty a robust form of internal review. Depending on the type and culture of the institution (public or private, large or small, strong or weak traditions of faculty governance), this process will vary. It may be styled as a disciplinary proceeding or a grievance, it likely involves review by a particular faculty committee or governing body, and it probably concludes with an appeal to the university’s board of regents or trustees. Universities not being known for their institutional efficiency, this process can take a very, very long time. In addition, any failure to comply with the required procedural steps can itself create a breach of contract, potentially giving the professor another bite at the apple.
In sum, even if a university is confident that it has substantive grounds to remove a tenured faculty member, it may lack the ability to execute on it. By the time it dots and crosses every “i” and “t” of its procedures, the pandemic will surely be over. At that point one can imagine a simple resolution under which the university drops its charges and the professor quietly returns to the classroom.
Let us return to the not-so-hypothetical question that began Part I. I end all of my exams with the same instruction: Advise the client. If a colleague who fears both for her safety and her job asks me what to do about institutional pressure to teach in person, I need to provide a coherent response, not the meandering intellectual analysis we subject ourselves to grading (or which I have imposed on you here). This is where the true teaching moment lies: students learn that lawyers do not make decisions, but merely lay out the likely results of different scenarios. Ultimately the client must weigh the strength of her convictions against her tolerance for risk. All things considered, tenured faculty are well positioned to take the risk of refusing to return to in-person work. Most employees -- including many elite workers who enjoy just cause protection -- are not.
Monday, September 14, 2020
Individual Employee Rights and COVID-19
Part I: The Basics
For those fond of mining current events for exam questions, the present moment makes a fitting hypothetical. Consider:
An employee declines to come to work for fear of serious or deadly illness. The employer has attempted to mitigate the risk, but cannot ensure the employee’s safety. The employee asks to perform her job from home, but the employer refuses. What are the parties’ rights and obligations?
Or, to make it acutely personal: If we refuse to teach in person out of a justifiable fear for our health, could we lose our jobs?
Like all COVID-related legal matters (and all law school exam questions), there are no definitive answers only arguments on each side. Unfortunately for most employees, those arguments largely favor the employer. Tenured professors, we will see, are a rare exception.
I. Default rules and public law considerations
A. It all begins with employment at will
Ordinary employees are hired at will. They can be terminated for a good reason, a bad reason, or no reason, as the saying goes. Firing someone for not coming to work would seem like a good reason if one were needed. The employee has a good reason for not showing up too, but sadly that is worth little: a contract requires the assent of both parties, and in the workplace, the employer is usually the party who dictates the terms. The employee’s bargaining power, such as it is, lies in her ability to walk away from the deal. It is true that current working conditions are wildly different from how they were at the start of employment. This distinguishes the current situation from one in which an employee knowingly takes an inherently risky job (such as an infectious disease physician who will be exposed to biohazards). But no matter. In courts’ absurdly formalistic conception, each moment of an at-will employment relationship is treated as a “new” contract. The employer is free to terminate the employee and insist on her acceptance of the new normal in exchange for reemployment. In other words, whatever the agreement was before COVID as to safety, location, work format, and all other conditions of the job, the offer now on the table is for work amidst a global pandemic.
B. The search for an exception
That is the contractual baseline. There are various public law “hooks” that can protect the employee in specific circumstances, even allowing an employee who wishes to stay at home some job-protected paid leave. These include Congress’s temporary expansion of the Family/Medical Leave Act (FMLA); the Occupational Health & Safety Act (OSHA), which protects workers who report dangerous working conditions; and state public policy and whistleblower laws that protect workers who refuse to engage in unlawful behavior at work or object to conduct that creates a public safety risk.
Yet none of these quite do the trick for the employee who wants to work from home. OSHA and other whistleblower-type protections make it illegal for an employer to terminate or otherwise retaliate against a worker for objecting to or reporting unsafe conditions or wrongful behavior. They do not protect a refusal to come to work even if for the same reasons. Congress’ pandemic-related legislation comes closer. Qualifying workers can take partially paid, job-protected leave for a maximum of 12 weeks (just a few weeks shy of a typical law school semester). But these apply only to small employers with fewer than 500 employees, which excludes most universities. Plus, the employee must have a qualifying COVID-related reason for leave, such as the need to quarantine due to exposure, not a general fear of contracting the virus.
In any event, leave from work is not the same as working from home. Employees wishing to perform their job remotely are effectively requesting an accommodation, much like what the Americans with Disabilities Act (ADA) guarantees disabled workers. Indeed, some employees might qualify for ADA protection, such as those who have immune disorders or other conditions that would make contracting COVID especially grave. But employees who are at risk due merely to age are not disabled, nor are accommodations available to employees living with or caring for a family-member who is disabled. Finally, ADA-qualifying employees are entitled to an accommodation, not necessarily the one they want. A court could find that an employer’s implementation of social distancing and sanitization protocols are a reasonable, and consequently sufficient, accommodation for the employee’s disability.
II. Contract-Based Job Security Rights
The questions, and in some cases the results, are different when the employee has some form of contractual job security. Teachers, for instance, regardless of tenure, usually are hired under a written contract for one academic year; top executives, multiple years from the date of hire. Other employees have implied contract rights to job security, meaning that the court treats the relationship as one that can be terminated only for just cause based on the reasonable expectations of the parties despite the absence of a formal agreement. Assuming the parties’ contract does not contain any express terms regarding the employee’s ability to work from home, their rights depend on whether a refusal to work in person constitutes cause for termination. If not, firing the employee is a breach of contract.
A. What is cause to terminate?
With a written contract, the “cause” question is often answered by express language. Some contracts simply state that the employee may be terminated upon just cause, but others contain a definition delineating the precise and exclusive grounds for termination. Failure to show up at work, or what the employer might describe as excessive absenteeism, would seem on its face to be “just cause,” at least in the usual course of things (more on COVID in a moment). But where the contract contains what I refer to as an “enumerated just cause provision,” ordinary cause to terminate usually will not suffice.
For instance, high-level executives often have contracts that define cause to include narrow performance-related grounds such as “incompetence,” “misconduct,” “failure to perform,” or “material breach,” none of which is quite on point for the remote work scenario. The employee is not incompetent (one might say that insistence on working from home demonstrates the opposite). If she is keeping up with work – completing tasks at home, meeting deadlines, interacting with colleagues virtually – then she is not failing to perform, which consequently means she is not in material breach. There is an argument for misconduct: the employer might say it ordered the employee to return to the office and she refused, an act of insubordination. But “misconduct” in this context is generally understood to mean intentionally wrongful behavior or violations of policy: misusing corporate assets, stealing trade secrets, or, of recent note, engaging in sexual harassment. An employer that relies on such language to terminate a worker who is still performing, albeit from home, is on shaky legal ground.
In contrast, employees with implied just-cause contracts or written agreements that do not define the term have less job security. The common law meaning of “cause” in such cases is any reasonable, good faith basis for terminating. Certainly, the employee can argue forcefully that cause is lacking: She is willing and able to perform and her reasons for avoiding the workplace are sound. But the suitability of working from home is a classic area of managerial discretion, and the legal standard, particularly in implied contract cases, is highly deferential to employers. Unless the employee is able to establish that the parties intended “just cause” to have a specialized meaning, neither the soundness – nor, in some jurisdictions, the accuracy – of the employer’s judgment is subject to review. Should the question prove a close one, the burden of proof lies with the employee to demonstrate breach of contract.
B. Wait…which breach came first?
But why begin with cause? As a practical matter it is always termination that triggers a lawsuit, but other aspects of the employer’s behavior bear scrutiny. How can the employer demand that the employee work under conditions that compromise her health? Might not the employer’s failure to provide a safe work environment itself constitute a breach of contract? If so, that could mean that the employee is within her rights to withhold performance altogether, stay at home, and sue for damages.
The answer turns on whether the employer has any contractual duties with regard to safety and whether it has materially breached. The parties’ contract is presumably silent as to COVID, as it is on so many terms of the relationship. Employment agreements, even written ones, are notoriously incomplete. In some unionized workplaces, however, the collective bargaining agreement requires that employers provide a safe work environment. It would not be hard to imply a similar obligation in an individual employment contract based on OSHA’s general duty clause or grounded in the implied duty of good faith.
The question then becomes what constitutes a breach of that obligation, one that is material in the context of the whole agreement. Clearly there is no way to fully eliminate the risk of contracting COVID for employees who physically interact with large groups of people, like teachers in the classroom. The employer that fails to take basic steps (like instituting social distancing and requiring masks) or that flagrantly fails to enforce their rules might be in material breach. But an employer that adopts measures consistent with existing medical protocols, limited though they may be, probably is not. This is especially so if the employee is not being deprived of the “principal benefit” of the contract – namely, her salary.
* * * *
Reader, you have waited patiently for an assessment of your personal employment rights. But the customary law of the blogosphere forbids posts in excess of 1500 words. Please see Part II of this symposium contribution.
Wednesday, August 19, 2020
In a previous post, I blogged about the legal (and particularly, legislative) constraints on private parties to recharacterize legally defined relationships such as calling an employee an independent contractor. In CA, the issue has been heating up and reached a critical point when AB 5, a new law addressing the classification of employees v. independent contractors, went into effect. As I mentioned in that prior post, the California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco sued Uber and Lyft, arguing that they had misclassified their drivers as independent contractors when they should be employees under AB 5. Last week, a California judge agreed and issued a preliminary injunction compelling the companies to classify their drivers as employees immediately (due to the pandemic, this issue has even greater urgency given have financially stressed many drivers are. Uber and Lyft ridership is also way down). The Verge has the story and a copy of the complaint.
The takeaway is that parties to a contract may allocate their rights and responsibilities but only in areas where they have the authority to do so. Private parties do not have the right to characterize their relationship in a way that doesn’t reflect reality (as defined by statute). Facts matter, even in contracts.
Tuesday, July 28, 2020
Tesla recently sued its competitor, Rivian, claiming that Rivian was poaching its former employees and encouraging them to misappropriate Tesla’s trade secrets. What struck me was that many of the alleged trade secret misappropriation claims in the complaint (available here ) involved information relating recruitment and retention efforts, including compensation. Tesla’s employees sign an NDA that requires them not to disclose Tesla’s “Proprietary Information” which is defined rather broadly to include “all information, in whatever form and format, to which have access by virtue of and in the course of" employment and encompassing, “technical data, trade secrets, know-how,…plans, designs,. .. methods, processes, data, programs, lists of or information relating to, employees, suppliers…financial information and other business information.”
Note that the definition of “proprietary information” is greater than “trade secret” so that the employee’s contractual obligation is greater than it would otherwise be under trade secret law alone. Perhaps not surprisingly, Tesla filed breach of contract claims against the individual defendants (the former Tesla employees) as well as an intentional interference of contract claim against Rivian.
In a case involving Fidelity, a former employee left Fidelity to join Merrill Lynch. The employee allegedly took information regarding customer accounts and also contacted Fidelity clients and tried to solicit their business. That employee’s contract included a non-solicitation clause that stated that he would not “directly or indirectly … solicit in any manner or induce or attempt to induce any customer or prospective customer with whom Employee had personal contact or about whom Employee otherwise learned during the course of the Employee’s employment with the Fidelity Companies.”
In both cases, the alleged trade secrets involved information that could be referred to as relational and closely tied to the services side of the business, rather than the product development or technical side. The Tesla employment contracts are governed by California law which essentially finds non-compete and non-solicitation clauses unenforceable. The Fidelity contract, on the other hand, was governed by Georgia law which permits non-solicitation clauses if they are reasonable (i.e. if the employee had worked with the client while employed at Fidelity) but takes a tougher stance on non-compete clauses (although not as tough as California).
These two situations led me to wonder whether companies are using confidentiality clauses in their employment agreements as a way to achieve the same result as a non-compete and/or non-solicitation clause. As states have increasingly restricted or, in the case of California, essentially prohibited the enforceability of non-compete clauses and non-solicitation clauses, companies seem to be increasingly leaning on trade secret law and confidentiality clauses in employment agreements to keep their former employees from joining competitors.
Monday, June 29, 2020
David Heller, the plaintiff in Uber Technologies, Inc. v. Heller is an Uber driver who provides food delivery services in Toronto. When he signed up to work for Uber, Mr. Heller was required to sign Uber's services agreement, which provided for dispute resolution through mediation and arbitration in the Netherlands. We looked it up. The Netherlands is far away from Toronto. It's a different country entirely. In addition, in order to participate in the Dutch arbitration process, Mr. Heller would have to pay administrative and filing fees of US$14,500, plus whatever other costs he would incur in connection with the proceeding. The fees alone would come to about 2/3 of Mr. Heller's annual income. The arbitration fee might as well be $1 million.
In 2017, Mr. Heller initiated a class action suit against Uber (right), alleging violation of Canadas Employment Standards Act (ESA). Uber moved to stay the litigation in favor of Dutch Arbitration. Mr. Heller responded that the arbitration provision was unconscionable and that it attempts to contract around mandatory provisions of the ESA. The trial court granted Uber's motion, leaving it to the Dutch arbiter to determine the issue of unconscionability. The Court of Appeal reversed, noting that Mr. Heller would never get such a determination if he could not afford the cost of the arbitration. By a vote of 8-1, the Supreme Court of Canada agreed wit the Court of Appeal.
The Court's finding of unconscionability focused on two aspects of Uber's services agreement. First, the agreement imposes prohibitive fees for initiating arbitration. Second, those fees are hidden in the fine print of a complex contract of adhesion.
Speaking of hidden terms, the Court buries in paragraph 50 of its 100-paragraph majority opinion the following hint to future corporate litigators:
If Uber had adduced evidence of Dutch law, then under the two exceptions to arbitral referral recognized in Dell, this Court would have had to grant the stay in favour of an arbitrator determining the unconscionability argument.
If I am reading this correctly, Uber would have won if it had insisted on its choice of law clause, which specified that its services agreement applicable in Toronto is to be governed by Dutch law. Welcome to the gig economy, Mr. Heller.
The Court then proceeded to apply Canada's law of unconscionability to the agreement between Uber and Mr. Heller. The Court found that both elements of the Canadian test for unconscionability were met. There was a clear inequality of bargaining power, and the arbitration clause was clearly improvident.
The lone dissent sounded in theories of freedom of contract.
Friday, June 26, 2020
HOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
Final Guest Post (for now) by Joshua Silverstein (left)
Part I is here.
Part II is here.
Part III is here.
Part IV is here.
Part V: Textualism vs. Original Expected Application and Some Concluding Thoughts.
There is one other argument in Bostock that warrants analysis. The defendants and Justice Alito (below, right) contend that no person in 1964 and for many years after anticipated that Title VII bars employment discrimination based on sexual orientation and transgender status. Maj. Op. at 23, 26; Alito Dis. at 4, 6, 33, 35. But statutes (and constitutional provisions) are regularly applied beyond the scope of circumstances “expressly anticipated” by the enactors, especially when the statute is broadly written, as is the case with most civil rights laws. Maj. Op. at 24, 30. And Title VII in particular “has repeatedly produced unexpected applications,” including results that were long rejected by the courts before being accepted. Maj. Op. at 29-30. For example, courts denied claims of sexual harassment brought under Title VII for years before finally concluding that sexual harassment in indeed unlawful under the statute. There is thus nothing that unusual about federal courts finally realizing today that Title VII bans discrimination based on sexual orientation and transgender status as forms of sex discrimination after rejecting that position for more than five decades. And to find otherwise by relying on the expectations of the enactors and/or the public at large “seeks to displace the plain meaning of the law in favor of something lying beyond it,” Maj. Op. at 26, which is improper under textualist statutory interpretation.
The idea that a law can apply in ways that a legislature could never have intended or in ways the public could not have foreseen strikes some people as surprising. But it is a natural feature of any practice employing general rules of conduct, including both law and games.
Consider a very simple example. Suppose a state legislature passes a law saying that all buildings made of concrete are entitled to a tax break. Suppose further that the legislature and every citizen in the state is absolutely convinced at the time of enactment that there are only fifteen concrete buildings in the state. Thus, they all expect the tax break to apply exclusively to the fifteen existing concrete buildings. Five years after the law is passed, another building is discovered that was made of concrete. Everyone missed it previously because the building was constructed decades ago and the concrete was covered by a metal sheath that was subsequently removed. Under the language of the statute, the owners of that building are entitled to the tax break. And the fact that the legislature and the populace never expected any other concrete buildings to receive the tax break is simply irrelevant.
Here is a more sophisticated example. The 14th amendment to the U.S. Constitution, which provides that all persons are entitled to equal protection of the laws, generally bars racial discrimination. But the drafters of the amendment believed that this prohibition did not bar racially segregated schools. Indeed, the very same Congress that drafted the 14th Amendment, segregated the schools in Washington DC. This reflected the general understanding of the equal protection clause held throughout the country in 1868. And thirty years later in 1896, the Supreme Court ruled that racial segregation was constitutional in Plessy v. Ferguson. But the Court reversed this decision in Brown v. Board of Education in 1954. Living constitutionalists have no trouble explaining that result because they believe that constitutional text can change in meaning over time. But even originalists, who contend that the meaning of each constitutional provision is fixed at the time of its adoption (much like a statute), generally accept that Brown was correctly decided.
While originalists have developed a number of arguments for why Brown is right under their theory, the one I find most persuasive is analogous to my concrete building example. The drafters of the 14th Amendment, the general American citizenry in the late 1860s, and the Supreme Court in 1896, all believed that the 14th amendment allowed segregated schools not because of the meaning of the words “equal protection of the laws,” but because they believed as an empirical matter that it was possible for racially segregated schools to be equal. How can segregated schools violate equal protection if the schools are in fact equal? By 1954, however, we had learned that, as an empirical matter, racially segregated schools are essentially always unequal. And the Supreme Court expressly relied on social science evidence in arriving at this conclusion in the Brown opinion. The meaning of “equal protection” did not change between 1868 and 1954. Rather, our factual understanding changed, just as in my concrete building example. In the case of racially segregated schools, we learned that separate-but-equal schools are effectively an impossibility. And thus, to treat people of all races equally, as required by the Fourteenth Amendment, segregated schools must be outlawed. Likewise, in the case of tax breaks for concrete houses, we learned that another concrete building existed. Thus, to comply with the law as written, the sixteenth building that no one believed existed must receive the tax break.
The concrete building example and Brown v. Board demonstrate a basic point about statutory and constitutional interpretation: laws can apply in ways never contemplated by the enactors and society at large because those persons were mistaken about key facts relating to the law. In these types of cases, the meaning of the law doesn’t change. The ordinary meaning of the words is exactly the same at the point of enactment and the subsequent point of application. What changes in the intervening period is our understanding of the facts. Put simply, unchanged legal meaning combined with changed facts often leads to different and unanticipated legal results.
This analysis extends to Bostock and discrimination based on sexual orientation and transgender status discrimination. The mistake Congress, lawyers, judges, and most everyone else made in 1964 (and for decades afterwards) was that we failed to appreciate that, as a conceptual matter, it is impossible to discriminate on the basis of sexual orientation or transgender status without also discriminating on the basis of sex. That is a conceptual mistake rather than an empirical mistake. But a mistake is a mistake, and the impact on legal analysis generally will be the same regardless of the precise type of mistake. To use phrasing that parallels what I wrote in the last paragraph, unchanged legal meaning combined with changed concepts often leads to different and unanticipated legal results. Hence the holding in Bostock.
One might ask in response, how could so many people have missed a conceptual problem like this for so long? See Kav. Dis. at 20 (“Did the Court in all of those sexual orientation cases just miss the obvious answer—and overlook the fact that sexual orientation is actually a form of sex discrimination? That seems implausible.”). The answer is that we make mistakes all the time as a society generally and within the legal system specifically, including over points we now deem obvious. Isn’t it now clear that racially segregated schools can never be equal? We got that one wrong for 90 years. Isn’t it now obvious that sexual harassment is a form of sex discrimination? We got that one wrong for several years too. Universal or nearly universal mistakes are all too common in our culture, particularly when it comes to outsider groups, such as racial minorities and sexual minorities that have faced striking levels of discrimination throughout history.
Indeed, Justice Alito explained that the concept of “gender identity . . . was essentially unknown” in 1964. Alito Dis. at 3. Likewise, he wrote that “in 1964, homosexuality was thought to be a mental disorder, and homosexual conduct was regarded as morally culpable and worthy of punishment.” Alito Dis. at 28; see also Alito Dis. at 28-33 (offering multiple examples of the poor treatment homosexuals have faced in America). Given these points, it would be surprising if America of the last 50 years was not critically mistaken about numerous aspects of sexual orientation and gender identity, including their relationship to sex. And because our understanding of sexual orientation and transgender status is constantly and rapidly evolving, we should expect that many more “obvious” factual and conceptual beliefs concerning these subjects will be overturned in the coming years.
Thursday, June 25, 2020
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I is here.
Part II is here.
Part III is here.
Part IV: Supplemental Thoughts Regarding the Majority’s Conceptual Claim About Discrimination Based on Sexual Orientation or Transgender Status.
This post sets forth my own analysis designed to bolster the majority conceptual claim in Bostock that discrimination based on sexual orientation or transgender status necessarily involves discrimination based on sex. To keep today’s discussion to a manageable length, I focus on sexual orientation and largely set aside transgender status.
Let’s start by returning to Justice Gorsuch’s key example. Recall that the defendants and Justice Alito objected to that example by contending that proper analysis requires changing the sex of the employee (from male to female), while preserving the sexual orientation of the employee (homosexual), so that only one characteristic of the employee has been altered rather than two. That means that we must shift from a male attracted to men to a female attracted to women. Notice that while this does keep sexual orientation constant when altering the employee’s sex, it still results in a second change to the employee: the sex of the people the employee is attracted to is different. Under the initial facts, the employee is attracted to men. In the revised facts that we shift to in order to test for but-for causation, the employee is attracted to women. This is an extremely important factual change.
The defendants and Justice Alito assert that changing the sex of the employee in the key example but not changing the sex of the people the employee is attracted to alters two things—both the employee’s sex and the employee’s sexual orientation. The but-for causation test asks whether sex standing alone makes a difference, so we must only change one thing—the sex of the employee. In addition to the majority’s response discussed yesterday, which I find persuasive, my point today is that changing the sex of the employee and keeping sexual orientation constant also alters two things—the employee’s sex and the sex of the people the employee is attracted to.
On the surface this suggests that we have to decide which alteration enables us to better apply the but-for test: (1) change the employee’s sex, but keep the employee’s sexual orientation constant (homosexual), as the defendants and Justice Alito argue, which necessarily also changes the sex of the people the employee is attracted to; or (2) change the employee’s sex, but keep the sex of the people the employee is attracted to constant (men), as the majority initially argues, which necessarily also changes the employee’s sexual orientation. How do we decide? In my view, there is no logical way to do so. But it doesn’t matter. That is because the lack of grounds to decide which way to alter the hypo itself further demonstrates the unavoidable conceptual connection of sex and sexual orientation (and transgender status).
Think about it this way. It is logically impossible to change the sex of the employee in the majority’s key example without changing either the employee’s sexual orientation or the sex of the people the employee is attracted to. In other words, it is impossible to change only the sex of the employee in a hypo that attempts to test whether sex or sexual orientation is the but-for cause of an adverse employment decision. We must also change either the employee’s sexual orientation (and thus not change the sex of the people the employee is attracted to) or the sex of the people the employee is attracted to (and thus not change the sexual orientation of the employee). If sex is that closely connected to sexual orientation—if it is literally impossible to construct an employment discrimination hypothetical involving sex and sexual orientation in which the only fact that gets changed is the sex of the employee—then it should not be surprising that discrimination based on sexual orientation necessarily involves discrimination based on sex. To once again use the majority’s language, sex is “inextricably bound up” with sexual orientation (and transgender status).
Note that I agree with the majority’s concession that “homosexuality and transgender status are distinct concepts from sex.” Maj. Op. at 19. And there certainly isn’t a perfect overlap between the various types of discrimination. Most obviously, not all types of sex discrimination involve sexual orientation or transgender status discrimination. But the majority’s point—correct in my view—is that even though you can have sex discrimination without sexual orientation or transgender status discrimination, you cannot have sexual orientation or transgender discrimination without having sex discrimination. (Think Venn diagrams where discrimination based on sexual orientation or transgender status are circles inside the circle that constitutes sex discrimination.)
Tomorrow’s final post addresses why Title VII can prohibit discrimination based on sexual orientation and transgender status even though no one in 1964 believed that the statute would have this impact.
Wednesday, June 24, 2020
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I is here.
Part II is here.
Part III: The Dissents’ Response to the Majority’s Conceptual Claim About Discrimination Based on Sexual Orientation or Transgender Status, and the Majority’s Reply.
Unsurprisingly, the defendant-employers in Bostock and both dissents challenge the majority’s conceptual claim that discrimination based on a person being homosexual or transgender is always based on sex as well. Justice Kavanaugh says very little on this point, so between the two dissents, I focus here on Justice Alito’s. Justice Alito (right) offers a number of arguments that sexual orientation and transgender status discrimination do not inherently involve sex discrimination, nearly all of which I find completely unpersuasive (see, e.g., Alito Dis. at 9-10). But one argument has some merit, and it is the same argument offered by the defendants and implied by Justice Kavanaugh. Alito and the defendants assert that the majority’s key example that I discussed in yesterday’s post is invalid. Recall that the majority stated that there is only one difference between the two employees in the hypo: sex. The majority further stated that if we change only the sex of the employee from male to female, the employee would not be terminated, showing that sex is the but-for cause of the dismissal.
The defendants and Justice Alito respond that this is not so; there are actually two differences between the male and female employees in the hypo: (1) sex, and (2) sexual orientation. Alito Dis. at 14-15. Because both employees are attracted to men, the male is homosexual and the female is heterosexual. And if we change the male employee into a female, but leave the employee attracted to men, we are not just changing the employee’s sex from male to female. We are also changing the employee’s sexual orientation from homosexual to heterosexual. “If the aim is to isolate whether a plaintiff’s sex caused the dismissal, the employers stress, we must hold sexual orientation constant—meaning we need to change both his sex and the sex to which he is attracted.” (emphasis added)). Maj. Op. at 21. And if we change the employee from a man attracted to men to a woman attracted to women, the employee would still be fired due to the employee’s sexual orientation. It follows, the defendants and Justice Alito claim, that only sexual orientation, and not sex, plays a causal role in the termination. After all, “[h]ow could sex be necessary to the result if a member of the opposite sex . . . [would] face the same outcome from the same policy?” Maj. Op. at 21-22. Put another way, firing employees based on sexual orientation or transgender status results in men and women being treated exactly the same; such policies, the defendants assert, “have the same adverse consequences for men and women. Maj. Op. at 21; accord Alito Dis. at 15-17, 40 (“An employer who discriminates equally on the basis of sexual orientation or gender identity applies the same criterion to every affected individual regardless of sex.”); see also Kav. Dis. at 12-13 (implying the same point). Ergo, no sex discrimination.
The majority replies principally with a reductio ad absurdum argument—an argument that the premises of one’s opponents lead to an absurd conclusion that all would reject. The structure of the argument is as follows: The reasoning of the defendants and Justice Alito necessarily results in sex not being a but-for cause when an employer makes adverse employment decisions based on traditional gender roles. But since no one believes that to be the case, no one could accept the argument of the defendants and Justice Alito that sex is not a but-for cause when an employer makes an adverse employment decision based on sexual orientation or transgender status. Let me explain.
The central piece of the majority’s reply is the following example: Suppose an employer wants to “revive workplace gender roles of the 1950s. He enforces a policy that he will hire only men as mechanics and only women as secretaries.” Maj. Op. at 22. If the employer denies a qualified woman a position as a mechanic, sex discrimination is clear under the but-for standard of Title VII since a qualified man would have received that job. The same is true if the employer denies a qualified man a position as a secretary. The reasoning of the defendants and Justice Alito with respect to sexual orientation and transgender status commits them to respond that there is a problem with this conclusion, just as they contend there is a problem with the majority’s key example discussed yesterday. “By comparing the woman who applied to be a mechanic to a man who applied to be a mechanic, we’ve quietly changed two things: the applicant’s sex and her trait of failing to conform to 1950s gender roles.” After all, a man applying to be a mechanic is actually following 1950s gender roles. Maj. Op. at 22-23. A proper comparison, under the reasoning of the defendants and Justice Alito, thus requires changing both sex and gender non-conformity. This means that “[i]nstead of comparing a disappointed female applicant to a man who applied for the same [mechanic] position, the employer would say, we should compare her to a man who applied to be a secretary. And because that jobseeker would be refused too, this must not be sex discrimination,” but rather only discrimination based on failing to conform to traditional gender roles. Maj. Op. at 23. More precisely, the defendants and Justice Alito are logically committed to the proposition that sex was not a but-for cause of the decision not to hire the female who sought to be a mechanic (or the male who sought to be a secretary); the only cause was non-compliance with traditional gender roles. Maj. Op. at 23.
But, the majority observes, “[n]o one thinks” that termination based on traditional gender roles is permitted by Title VII. Maj. Op. at 23. To the contrary, everyone admits that sex is a but-for cause when an adverse employment decision is based on traditional gender roles. Termination based on either sexual orientation or transgender status is indistinguishable from termination based on traditional gender roles. Therefore, sex must be a but for cause in all three circumstances. And thus Title VII legally bars all three types of dismissal—again, those based on gender non-conformity, sexual orientation, and transgender status—for precisely the same reason.
Note that the majority’s analysis here is grounded, in part, on the fact that Title VII is concerned with discrimination against individual men and women on the basis of sex. Even if an employer treats men as a class the same as women as a class, the employer can still be unlawfully discriminating on the basis of sex. Maj. Op. at 7-8, 11-12. To illustrate, “an employer who fires a woman, Hannah, because she is insufficiently feminine and also fires a man, Bob, for being insufficiently masculine may treat men and women as groups more or less equally. But in both cases the employer fires an individual in part because of sex. Instead of avoiding Title VII exposure, this employer doubles it.” Maj. Op. at 9. That helps to explain why it is no defense to liability for sex discrimination that an employer treats homosexual (or transgender) men and women in exactly the same manner. Maj. Op. at 11-12. An employer that fires both men and women due to sexual orientation (or transgender status) has doubled its liability rather than eliminated it. Maj. Op. at 12.
In tomorrow’s post, I will supplement the majority’s reasoning with some of my own thoughts regarding the conceptual connection between discrimination based on sex and discrimination based on sexual orientation and transgender status.
Tuesday, June 23, 2020
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I is here.
Part II: Exploring the Majority’s Conceptual Claim about Discrimination Based on Sexual Orientation or Transgender Status.
To see why the Bostock majority concluded that adverse employment decisions based on sexual orientation or transgender status are necessarily also based on sex, start by returning to the language of Title VII. The statute bars adverse employment actions “because of” various characteristics, including race and sex. “Because of” is understood to establish a “but-for” causation standard. Maj. Op. at 5. “[A] but-for test directs us to change one thing at a time and see if the outcome changes. If it does, we have found a but-for cause.” Maj. Op. at 5. In other words, if changing a person’s sex and nothing else would reverse an adverse employment decision, then the employee’s sex was a but-for cause of the decision. To illustrate, if employer A would not have fired employee X if X were a man rather than a woman—and no other facts are changed—then X’s sex was a “but-for cause” of the dismissal. The employer fired X “because of” X’s sex in violation of Title VII. Maj. Op. at 9.
Two notes of elaboration are in order. First, sex need not be the sole basis for an adverse employment decision. Indeed, sex (or any other characteristic identified in Title VII) need not be the primary cause. As long as sex is a but-for cause of the decision, then the decision is barred under Title VII. Maj. Op. at 5-6, 10-11. Second, an employer need not specifically intend to discriminate based on sex. It is thus irrelevant that an employer was consciously concerned only with homosexual or transgender status when terminating an employee. Once again, if sex is a but-for cause of a decision, then Title VII makes the decision unlawful. Maj. Op. at 17-18.
In light of this analysis, here is how Justice Gorsuch (right) described the requirements of Title VII: “[A]n employer who intentionally treats a person worse because of sex—such as by firing the person for actions or attributes it would tolerate in an individual of another sex—discriminates against that person in violation of Title VII.” Maj. Op. at 7; accord Maj. Op. at 9 (“An employer violates Title VII when it intentionally fires an individual employee based in part on sex.”). Under that rule, Justice Gorsuch continued, “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.” Maj. Op. at 9. Gorsuch demonstrates this point with an example that is the heart of the entire majority opinion, and thus I will refer to it as the “key example” throughout the rest of these posts.
“Consider, for example, an employer with two employees, both of whom are attracted to men. The two individuals are, to the employer’s mind, materially identical in all respects, except that one is a man and the other a woman. If the employer fires the male employee for no reason other than the fact he is attracted to men [i.e., on grounds of sexual orientation], the employer discriminates against him for traits or actions it tolerates in his female colleague [i.e., attraction to men]. Put differently, the employer intentionally singles out an employee to fire based in part on the employee’s sex, and the affected employee’s sex is a but-for cause of his discharge.” Maj. at 9-10 (bracketed language added). (The majority offers another essentially identical example involving a transgender person at the same location in the opinion.)
To unpack this, the only distinguishing feature between the two employees in this hypothetical, the majority argues, is their sex. The two individuals have comparable abilities, skills, and other traits, including that both are sexually attracted to men. If the employer fires the man for being attracted to other men, but not the woman for being attracted to the exact same people (men), then the employer has necessarily taken adverse employment action against the man “because of such individual’s . . . sex.” The man’s sex is a “but-for cause” of his termination because if we changed his sex and nothing else—if we changed the man into a woman and left everything else constant, including who the employee is attracted to—he would not have been fired. That violates Title VII.
According to the majority, this example demonstrates that “homosexuality and transgender status are inextricably bound up with sex.” Maj. Op. at 10. Any time an employer makes an adverse employment decision based on sexual orientation or transgender status, the employer is inherently making the decision, at least in part, based on sex; sex is at least one but-for cause of the decision. And adverse employment decisions based on sex are forbidden by the plain language of Title VII.
Note that the crucial point here is not one of linguistic meaning. As I said yesterday, there is no dispute between the majority and the dissenters over the meaning of the word “sex.” Nor is there any dispute over the meaning of any other term in Title VII. Maj. Op. at 25 (“[T]he employers agree with our understanding of all the statutory language . . . . Nor do the dissents offer an alternative account about what these terms mean.”). The majority’s claim is conceptual. Discrimination on the basis of sexual orientation or transgender status is conceptually tied to discrimination on the basis of sex. To repeat, the majority’s point is that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against the individual based on sex.” Maj. Op. at 9 (emphasis added); accord Maj. Op. at 10 (“[T]o discriminate on these grounds [sexual orientation and transgender status] requires an employer to intentionally treat individual employees differently because of their sex.”) (emphasis added). And that is not a claim about the meaning of Title VII. The two dissents spend many pages challenging the majority as to the meaning of various terms in the statute. See, e.g., Alito Dis. at 4-5, 21-28, 33, 35; Kav. Dis. at 5-21, 24-25. But all of that analysis is irrelevant if the majority is correct about the conceptual connection between (1) sex discrimination, and (2) sexual orientation and transgender status discrimination.
One final note for today: One might plausibly conceptualize the dispute in the case as being about the meaning of “because of” in Title VII, or about the nature of the “but-for cause” test. But there really is no disagreement about the meaning of “because of,” nor any dispute over what constitutes but-for causation. Instead, I think the case is best understood as concerning whether but-for causation is actually satisfied when a person is fired because of homosexuality or transgender status. The majority claims the answer is yes, and does so for conceptual reasons. The defendants and the dissent, as I will explain in tomorrow’s post, claim otherwise.
Monday, June 22, 2020
Part I: Justice Gorsuch’s Textualism and the Critical Conceptual Issue in Bostock.
In Bostock v. Clayton County, the U.S. Supreme Court held that Title VII, the principal federal employment discrimination statute, bars discrimination on the basis of sexual orientation and transgender status. In this and the following posts, I provide rather detailed comments regarding the legal analysis in the case as a supplement to articles and blog posts I’ve seen across the web that focus on other aspects of the decision.
Title VII makes it “unlawful . . . for an employer to . . . to discriminate against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” (Emphasis added.) The plaintiffs in the various lawsuits that constitute the Bostock case argued that the prohibition on discrimination based on “sex” also bars discrimination based on sexual orientation and transgender status. The Supreme Court agreed by a 6-3 margin, with the four liberals and Chief Justice Roberts joining the majority opinion written by Justice Gorsuch (pictured, right). Justice Alito wrote a dissent, joined by Justice Thomas, and Justice Kavanaugh wrote a separate dissent. I think the majority’s position is more persuasive and thus I believe the case was correctly decided.
In this first post, I lay out some basic principles of statutory interpretation and provide an overview of the critical conceptual issue at the center of Bostock.
Justice Gorsuch adopts a textualist approach to the construction of statutes in the majority opinion. Under textualism, courts interpret “a statute in accord with the ordinary public meaning of its terms at the time of its enactment.” Maj. Op. at 4. Legislative history regarding (1) what the adopters of the law intended it to mean, (2) what they sought to accomplish in passing the law, and (3) how they understood the scope of the law (i.e., to what cases they expected it to apply), is not controlling. Indeed, legislative history isn’t even relevant if the statutory language is clear. It is “the provisions of our laws rather than the principal concerns of our legislators by which we are governed.” Maj. Op. at 14.
The primary justification for textualism is that it advances the rule of law. An essential feature of the rule of law is that people are governed by the rules of law, and not by something else that may be undiscoverable by the citizenry, such as what legislators think about the rules. “The people are entitled to rely on the law as written, without fearing that courts might disregard its plain terms based on some extratextual consideration.” Maj. Op. at 24 (emphasis added).
Note that this doesn’t mean that legislative history is always irrelevant. If a law is ambiguous, many judges believe that legislative history can be used to assist in resolving the ambiguity. Maj. Op. at 24. This history can, for instance, explain how at least some competent users of English understood the words of a statute. See Kav. Dis. at 16. But what legislative history cannot do, among other things, is override clear statutory language.
The principles of textualism required the Supreme Court in Bostock to determine the ordinary public meaning of Title VII in 1964, the year the statute was adopted. Maj. Op. at 4. And if the statute’s language is unambiguous, then what members of Congress intended or expected Title VII to accomplish (or not accomplish) by including “sex” in the law is irrelevant to the analysis.
Critically, however, the central issue in the case is not the ordinary meaning of “sex” in the mid 1960s. All nine of the justices agreed with the defendants that the word “sex” does not include sexual orientation and transgender status as a matter of linguistic meaning. See Maj. Op. at 5 (“[W]e proceed on the assumption that ‘sex’ . . . refer[s] only to biological distinctions between male and female.”); Alito Dissent at 5; Kavanaugh Dissent at 11.
Instead, the case primarily turns on the conceptual relationship of discrimination based on sex to discrimination based on sexual orientation and transgender status. In the majority’s view, sex discrimination is necessarily connected to both sexual orientation discrimination and transgender status discrimination. More specifically, the majority found that it is impossible to discriminate on the basis of sexual orientation or transgender status without also discriminating on the basis of sex. Here is one of Justice Gorsuch’s statements of this point: “An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.” Maj. Op. at 2 (emphasis added). Accordingly, when an employer makes an adverse employment decision because of an employee’s sexual orientation or transgender status, the employer has discriminated against the employee “because of such individual’s . . . sex,” in violation of Title VII.
Tomorrow’s post explores the reasoning underlying Justice Gorsuch’s claim that discrimination based on sexual orientation or transgender status necessarily involves discrimination based on sex.
Monday, June 15, 2020
In a 6-3 opinion authored by Justice Gorsuch, SCOTUS, the Supreme Court affirmed decisions of the 2nd and 6th Circuit allowing Title VII claims brought by people alleging discrimination based on sexual orientation or gender identity to proceed.. Justice Gorsuch's commitment to textualism clearly informed his opinion:
Those who adopted the Civil Rights Act might not have anticipated their work would lead to this particular result. Likely, they weren’t thinking about many of the Act’s consequences that have become apparent over the years, including its prohibition against discrimination on the basis of motherhood or its ban on the sexual harassment of male employees. But the limits of the drafters’ imagination supply no reason to ignore the law’s demands. When the express terms of a statute give us one answer and extratextual considerations suggest another, it’s no contest. Only the written word is the law, and all persons are entitled to its benefit.
The opinion is 33 pages long. The dissents, with appendices, take up an additional 135 pages. There is much to digest, but this is a very important decision affecting employment contracts and conditions of employment nationwide.
Thursday, June 4, 2020
Russomano v. Novo Nordisk, which the First Circuit decided this week, is a cautionary tale. When Novo Nordisk (NN) hired Thomas Russomano, the terms of his contract prohibited him from working for a competitor for one year after his employment with NN ended and prohibited him from disclosing confidential information. NN briefly laid off Russomano on August 3, 2018, a Friday. When NN rehired him in a new position the following Monday, he was not required to sign a new non-compete and confidentiality agreement.
When Russomano left the company in early 2020 to work for a competitor, he sought assurances that NN would not seek to enforce its non-compete and confidentiality agreement. NN refused to grant such assurances. Russomano sought a declaratory judgment in state court.
NN responded by removing the case to federal court, filing counterclaims, and bringing a third-party suit against Russomano's new employer, alleging tortious interference unfair competition, and misappropriation of trade secrets. NN then brought a motion seeking a temporary restraining order and preliminary injunction to enforce its non-compete and confidentiality agreement. NN claimed that Russomano was never laid off but merely transferred to a different position within the company. The District Court denied the motion, finding that NN was unlikely to succeed on the merits, and the First Circuit affirmed.
The District Court's key finding, which the First Circuit upheld, as that NN unambiguously terminated Russomano's employment on August 3, 2018 and unambiguously made a new offer of employment to him on August 6, 2018. Russomano's obligations under his non-compete and confidentially agreement accordingly terminated in August 2019. Despite the lack of ambiguity in the relevant documents, the First Circuit checked its work against extrinsic evidence and found the extrinsic evidence consistent with the unambiguous documents. Russomano's employment was terminated. He was then offered a new position under new terms and conditions which did not include the non-compete and confidentiality agreement.
Friday, May 22, 2020
A few stories caught my eye this week.
First, Paige Smith and Robert Iafolla bring us news that refusing to wear a mask at work can cost you your job. Companies that are re-opening are following CDC guidelines by requiring that returning workers wear masks.
The story suggests that there has been little resistance from workers; on the contrary, workers are more likely to complain that their employers are taking too few precautions against contagion rather than too many. There are apparently religious and medical exemptions (don't those usually require face coverings rather than prohibit them?), but workers cannot claim a free-speech right to refuse to wear a mask. So long as the requirement that employees wear masks is generally applicable and generally enforced, with appropriate accommodations where reasonable, it is likely to survive any legal challenge.
Two quick points: first, I am always struck by the lack of outrage at private actors who do things that spark outrage when the government does them, even though the private actors are motivated by profit and the government is motivated, at least in part, by concerns like public safety or national security. The supposed difference is that workers consent to their terms of employment, but when you combine the ubiquity of at-will employment, form employment contracts that eliminate recourse, and a 15% unemployment rate, it is hard to take seriously claims that workers give meaningful consent to terms of employment. Nancy Kim and I explored this topic in the context of data-mining in connection with consumer contracting in a pre-Covid world.
Second, I wonder if the Bloomberg article underestimates the power of the argument that refusing to wear a mask is symbolic political speech. When I go shopping these days, only about half of the people in the store wear masks. Their refusal to do so puts me and other shoppers at risk. It's possible that they just don't know where to get a mask (try Etsy!), but it is hard not to view their choice not to wear mask as a statement, and perhaps they view my mask as a mark of my self-subordination to the nanny-state as well.
What do you do if you need to have someone to do some work in your home, and they show up without a mask? Do you tell them to leave and come back with a mask? Do you hide in the bathroom until they finish and then disinfect all surfaces with which they might have come in contact? Do you leave a Yelp review and give them a low rating in the public health and safety category? Confronting them seems like borrowing trouble. They have access to the same information that you have. Telling adults that they've made a poor decision (or implying that they have) rarely goes over well.
Meanwhile, Jef Feeley and Joshua Fineman report on another acquisition now on hold because of the pandemic. In Forescout Technologies Inc. v. Ferrari Group Holdings LP, 2020-0385, Delaware Chancery Court (Wilmington), Forescout, a cybersecurity company, is claiming that private equity group, Advent International, ought not to be permitted to back out of its $1.9 billion deal to acquire Forescout. Forescout claims that Advent assumed the risks associated with any possible impact that the pandemic might have on the deal. According to the report, this is one of at least nine deals that resulted in Covid-related litigation in May, including $10 billion in disputed mergers and acquisition deals that landed in Delaware's Chancery Court during one seven-day period in May. "Material adverse effect" clauses need to be carefully drafted or they will be carefully scrutinized by a court or arbiter.