In January, we reported that the Supreme Court granted review of three conflicting Court of Appeal decisions to settle the question of whether an agreement requiring that employees resolve employment-related disputes through individual arbitration violates the National Labor Relations Act (“NLRA”).
Last week, the Supreme Court set oral argument for October 2, 2017 to resolve the circuit split on whether mandatory class action waivers violate the NLRA. The Fifth, Second and Eight Circuits rejected the National Labor Relations Board’s (“NLRB”) position that class action waivers unlawfully interfere with employees’ NLRA rights to engage in concerted activity. See Murphy Oil USA, Inc. v. NLRB, 808 F.3d. 1013 (5th Cir. 2015); Cellular Sales of Missouri, LLC v. NLRB, 824 F.3d 772 (8th Cir. 2016); Patterson v. Raymours Furniture Co., Inc., 2016 WL 4598542 (2d Cir. Sept. 2, 2016). The Ninth and Seventh Circuits however, held that an arbitration agreement precluding class actions violates the NLRA and is not preempted by the Federal Arbitration Act (“FAA”). See Morris v. Ernst & Young, 834 F. 3d 975 (9th Cit. 2016) Epic Systems Corp. v. Lewis, 823 F.3d 1147 (7th Cir. 2016). The Ninth Circuit’s opinion distinguishes mandatory class action waivers from those agreements that permit employees to opt-out.
In June, Ernst & Young, Murphy Oil and Epic Systems filed their opening briefs with the Supreme Court, requesting that the Court affirm the Fifth Circuit’s decision and reject the Seventh Circuit’s decision. The companies argued that the FAA requires enforcement of class action waivers because it requires enforcement of agreements to arbitrate according to their terms and the NLRA’s provisions protecting employees’ right to act in concert do not override the FAA. The U.S. Department of Justice filed one of 17 amicus curiae briefs last month in support of the enforceability of class action waivers. The Department of Justice’s argument that the NLRB’s position contradicts the FAA is especially significant given its previous contrary position under the Obama administration.
In a recent oral argument before the U.S. Supreme Court, the justices considered a narrow procedural issue that could have broader implications for the subpoena power of the U.S. Equal Employment Opportunity Commission (“EEOC”).
At issue in McLane Company, Inc. v. EEOC is the standard of review applicable to district court decisions in proceedings brought to compel compliance with EEOC subpoenas issued in administrative investigations. While all the other circuits to have considered the issue have applied an abuse-of-discretion standard, the Ninth Circuit held that such decisions are subject to de novo review. READ MORE
In August of 2016, we reported that the Ninth Circuit created a deeper circuit-split on whether class action waivers in arbitration agreements violate the National Labor Relations Act (“NLRA”) with its decision in Morris v. Ernst & Young LLP.
As expected, the Supreme Court granted review today of three of the conflicting Court of Appeals decisions. It granted review of the Fifth Circuit’s decision in Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015). The Fifth Circuit rejected the National Labor Relations Board’s (“NLRB”) position that class action waivers unlawfully interfere with employees’ NLRA rights to engage in concerted activity, agreeing with the Second and Eighth Circuits. The Ninth and Seventh Circuits, on the other hand, adopted the NLRB’s position that class action waivers violate the NLRA.
The Supreme Court also granted review in Morris v. Ernst & Young, 834 F.3d 975 (9th Cir. 2016) and Epic Systems Corp. v. Lewis, 823 F.3d 1147 (7th Cir. 2016). The Seventh Circuit held that an arbitration agreement precluding collective arbitration or collective action violates section 7 of the NLRA and is unenforceable under the FAA. The Ninth Circuit agreed and concluded that compulsory class action waivers violate sections 7 and 8 of the NLRA by limiting workers’ rights to act collectively, noting in footnote 4 that agreements containing an “opt-out” clause for pursuing class claims do not violate the NLRA.
All three cases have been consolidated and will be argued together.
On August 26, 2016, a North Carolina federal judge blocked the University of North Carolina (UNC) from enforcing a state law requiring transgender people to use bathrooms and locker rooms corresponding to the sex on their birth certificates.
With the passage of House Bill 2 (HB2) in March 2016, North Carolina became the first state to ban people from using restrooms consistent with their gender identity in government buildings and schools. News of HB2 stirred up a public outcry, including a Department of Justice lawsuit and the NBA’s decision to relocate the 2017 All-Star game from Charlotte, North Carolina to another location.
After the passing of Justice Antonin Scalia, we predicted: “Justice Scalia’s passing will immediately impact several employment-related cases pending before the Court.” Specifically, cases in which Scalia was expected to provide the needed fifth vote were at risk of ending in a tie. After two recent rulings from the Court, this prediction appears to have come true.
While the Supreme Court in Tyson Foods, Inc. v. Bouaphakeo dashed employers’ hopes that the Court would broadly preclude statistical evidence and severely limit wage and hour class actions in a fashion similar to its restriction of discrimination class actions in Wal-mart v. Dukes, the Court was also clear that this type of evidence will not be appropriate or probative in all wage and hour claims. In ruling for the class action claimants, the Court affirmed a $2.9 million jury award for overtime claims related to donning and doffing at an Iowa pork processing plant. In so ruling, the Supreme Court refused to adopt the position advanced by Tyson Foods and several of its amici that class actions cannot be resolved by reliance upon representative evidence or statistical samples. It also refused to embrace Tyson Food’s reading of Wal-mart v. Dukes as standing for the proposition that representative sample is an impermissible means of establishing class-wide liability. But the Court also made clear whether statistical evidence could be used for liability depends on the claims asserted and the particular evidence. While the decision is not unsurprising after oral arguments, it seems likely that employers will see an uptick in plaintiffs aggressively relying on “representative” statistical evidence in wage and hour collective and class cases. There are, however, several “lessons learned” based upon the majority’s decision.
The EEOC seeks public comment on its new Enforcement Guidance on Retaliation and Related Issues, which will supersede the agency’s last-issued guidance on the topic from 1998. The updated guidance addresses several significant rulings by the Supreme Court and lower courts from the past two decades. The guidance was also informed by public input on retaliation and best practices that the Commission gathered from its June 17, 2015 meeting on “Retaliation in the Workplace: Causes, Remedies, and Strategies for Prevention.” The 30-day input period on the guidance ends on February 24, 2016.
California employers should keep an eye on a new challenge to arbitration provisions on its way to the Governor’s desk. On August 24, 2015, the California Senate passed AB 465, which would make it unlawful for any employer or other company to “require another person to waive any legal right, penalty, remedy, forum, or procedure for a violation of any provision of [the California Labor Code], as a condition of employment, including the right to file and pursue a civil action or complaint with, or otherwise notify, the Labor Commissioner, state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity.” The Senate version eliminates the originally proposed $10,000 per violation penalty, but continues to authorize an award of injunctive relief and attorneys’ fees to a prevailing plaintiff seeking to enforce the section. The Assembly concurred in the Senate’s amendments on August 27, 2015, and the bill will reach the Governor shortly.
The ability to preserve privilege for highly sensitive internal investigations conducted at the direction of attorneys is alive and well. In a closely watched decision on the scope of the attorney-client privilege as applied to internal investigations, the D.C. Circuit granted defense contractor Kellogg Brown & Root’s (“KBR”) petition for a writ of mandamus and vacated a district court’s order that privileged documents from an internal investigation must be produced.
On the heels of the landmark decision by the Supreme Court in favor of gay marriage, the EEOC held on July 15, 2015 that sex discrimination under Title VII includes discrimination on the basis of sexual orientation. Even though the decision is not binding precedent in federal court, and runs contrary to a significant body of case law holding that Title VII does not prohibit discrimination on the basis of sexual orientation, it could be regarded by some courts as persuasive authority. The decision could also have an impact on employers in the form of an increased number of administrative charges of discrimination filed with the EEOC based on sexual orientation, as courts determine whether to adopt the EEOC’s interpretation.