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SCOTUS Ruling on Forum-Selection Clauses Good News for Employers

Posted by Sheldon N. SandlerOn December 9, 2013In: Delaware Specific, U.S. Supreme Court Decisions

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Many employment agreements contain forum-selection clauses naming the state or the court in which any disputes must be litigated, and what state's law will govern. Employers often name Delaware state courts as the exclusive forum, due to the high quality of Delaware courts and large number of corporations and other entities created in Delaware, and name Delaware law as the governing law.

Some courts have refused to enforce forum-selection clauses on the ground that another state would be more convenient than the named forum, based on the location of witnesses or documents. In a unanimous decision, the U.S. Supreme Court has strongly endorsed enforcement of these clauses. While the facts did not involve an employment dispute, the Court's reasoning will apply with equal force to such disputes.

The facts involved a construction contract between a firm in Texas and one in Virginia, for work to be performed in Texas. The contract contained a clause naming Virginia as the appropriate forum. When the Texas firm filed a lawsuit in Texas, the Fifth Circuit refused to enforce the forum-selection clause, explaining that the convenience of the parties justified keeping the case in Texas notwithstanding the clause. The Supreme Court reversed. The Court observed that a forum-selection clause must be

given controlling weight in all but the most exceptional cases. . . . When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause. Only under extraordinary circumstances unrelated to the convenience of the parties should a [motion to transfer] be denied.

Atl. Marine Constr. Co., Inc. v. U.S. Dist. Ct., No. 12-929 (U.S. Dec. 3, 2013).

Significantly, the Court pointed out that whether the forum-selection clause names another federal court or a state court, the same standard applies, that is, the existence of the clause is to be given great weight. Delaware has a specific statute on choice of law that should be invoked in any forum-selection clause. That statute, 6 Del. C. § 2709, applies to contracts involving $100,000 or more and sets out the language to be used in a forum-selection clause in order to establish the requisite relationship with Delaware. Especially in agreements with senior-level employees, employers would be well advised to consider the use of forum-selection clauses.

The Immediate Impact of the DOMA Ruling for Delaware Employers

Posted by Lauren Moak RussellOn July 8, 2013In: Benefits, Cases of Note, Discrimination, Sexual Orientation, U.S. Supreme Court Decisions

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Delaware began issuing marriage licenses to gay couples on July 1, 2013, less than a week after the U.S. Supreme Court's decision striking down the Defense of Marriage Act (DOMA). Delaware will no longer perform civil unions pursuant to the Civil Union Equality Act, which was passed into law in 2010. Couples who entered into a civil union prior to July 1 may convert their civil union into a legally recognized marriage or wait until July 1, 2014, when all remaining civil unions will be automatically converted.

The Court's DOMA ruling is expected to affect an estimated 1,138 federal benefits, rights, and privileges. For Delaware employers, the impact is potentially significant. Delaware employers must now extend all federal benefits to gay married couples that were previously made available to straight married couples. The impact also is immediate. Unlike with new legislation, there will be no delay between the Court's ruling and an employer's obligation to extend benefits.

Although the Supreme Court's decision will impact who is eligible for benefits, the procedures remain unchanged. For example, the process for requesting and reviewing FMLA leave, COBRA coverage, and other federally mandated benefits of employment will not change.

One step employers should consider is possible adjustments to tax and health-insurance forms. Spouses that could not previously "claim" one another on federal tax forms may need to submit new IRS Form W-4s. In addition, if your company offers ERISA-covered health-insurance plans and did not previously extend benefits to gay couples, those plans will now be open to the enrollment of gay spouses. This means that, if your company offers health insurance coverage to the straight spouses of its employees, the same benefits must now be extended to gay spouses. In addition, gay spouses will now be the primary beneficiary on all 401(k) plans.

In the end, Delaware employers are likely in a better position to adapt to the Supreme Court's decision, since benefits have been extended under State law since January 1, 2012. Employers should keep in mind that the same benefits must be extended and the same processes will still apply to same-sex married couples. In the event that you think it may be necessary to deviate from this rule of thumb for some unusual circumstances, consider consulting legal counsel before doing so.

A Unanimous Supreme Court - What a Concept

Posted by Sheldon N. SandlerOn January 25, 2011In: Retaliation, U.S. Supreme Court Decisions

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In an all too rare unanimous ruling (save for Justice Kagan, who recused herself), the U.S. Supreme Court has held that the anti-retaliation provision of Title VII extends to employees who are in the “zone of interest” with an employee who has filed a charge of discrimination. The facts and findings follow.

A female employee filed a charge of sex discrimination against her employer. A few weeks later, the employer fired the complainant's fiancee, who had also been a company employee. The fiance then filed a retaliation charge with the EEOC and a subsequent lawsuit. 

Justice Scalia, writing for the Court, held that a reprisal against a third party such as the fiancee was covered retaliation under Title VII.  The Supreme Court further held that the fiancee was an “aggrieved person,” who had standing to sue under Title VII.  Justice Scalia pointed out that the text of the anti-retaliation provision is broader than the substantive provision and that any person who comes within the “zone of interest” that the statute seeks to protect can file suit. The Court leaves it to future cases to determine how far this “zone of interest” extends. The case is Thompson v. North American Stainless, No. 09-291.

Supreme Court Watch: Part 3

Posted by Maribeth L. MinellaOn October 13, 2010In: Retaliation, U.S. Supreme Court Decisions

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The U.S. Supreme Court will hear oral arguments on several important employment-law cases this term. Last week, we posted about the upcoming Kasten v. Saint-Gobain Performance Plastics Corp., in which the Court will address the requirements for an employee who claims retaliation based on the FLSA. And, on Monday, we posted about Staub v. Proctor Hospital, in which the Court will address the cat's-paw theory in the USERRA context. 

The third and final post in this series discusses Thompson v. North American Stainless, LP. In a 10-to-6 decision, the Sixth Circuit held that Title VII does not create a cause of action for third-party retaliation for persons who did not themselves engage in protected activity. In its decision, the Sixth Circuit joined the Third, Fifth, and Eighth Circuit Courts of Appeal in holding that the authorized class of claimants is limited to persons who have personally engaged in a protected activity.

Thompson argued that he was fired because is fiancée, who worked for the same employer, filed an EEOC charge of discrimination. His employer argued that Thompson was discharged for performance-based reasons. Thompson filed his own charge of discrimination with the EEOC, and the administrative agency found reasonable cause that North American Stainless violated Title VII. The EEOC issued Thompson a right to sue notice, and Thompson filed a cause of action against his employer.

North American Stainless eventually moved for summary judgment on the ground that Thompson’s claim – that he was terminated as retaliation for his fiancée’s charge of discrimination – was insufficient as a matter of law under Title VII. The district court granted the employer’s motion, holding that Thompson failed to state a claim for which relief could be granted. Thompson appealed to the Sixth Circuit Court of Appeals. The appellate court affirmed the district court’s opinion.

Thus, on December 7, 2010, the Court will hear argument on whether Title VII creates a cause of action for third-party retaliation for persons who did not themselves engage in protected activity.

Supreme Court Watch: Part 2

Posted by Maribeth L. MinellaOn October 11, 2010In: Retaliation, U.S. Supreme Court Decisions, Uniformed Services (USERRA)

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The U.S. Supreme Court will hear oral arguments on several important employment-law cases this term. Last week, we posted about the upcoming argument in Kasten v. Saint-Gobain Performance Plastics Corp., in which the Court will address the requirements for an employee who claims retaliation based on the FLSA.

In this, the second part of this series, we look to an equally anticipated case, Staub v. Proctor HospitalStaub, like Kasten, is on appeal from the Seventh Circuit.  In Staub, the Supreme Court will examine   under what circumstances may an employer be held liable based on the unlawful intent of officials who caused or influenced, but did not make, the ultimate employment decision.

Staub sued his employer, alleging that he was discharged in violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA). Staub prevailed after a jury trial. His employer appealed, and the Seventh Circuit reversed the trial decision.

At trial, Staub proceeded under the “cat’s paw” theory. That theory, derived from the 17th century French fable “The Monkey and the Cat,” is understood today to mean "when one is used by another to accomplish his purposes." The cat’s paw theory is a way of proving discrimination when the actual decisionmaker is unbiased, but the discriminatory animus of a non-decisionmaker is imputed upon the decisionmaker, typically where the non-decisionmaker has singular influence on the decisionmaker.

Staub, an Army reservist, alleged that the reasons given for his discharge where mere pretext for discrimination based on his association with the military. USERRA prohibits adverse action based upon a prohibited criterion, in this case military status. Like other discrimination law, a plaintiff alleging a USERRA claim must show that the decisionmaker harbored animus toward him and relied upon that animus in choosing to take action against the plaintiff.

Staub won at trial, and his employer appealed. On appeal, the hospital argued, inter alia, that the trial court mishandled the cat’s paw theory. The Seventh Circuit agreed, finding that to succeed on a cat’s paw theory, a plaintiff must demonstrate that the decisionmaker blindly relied upon the non-decisionmaker’s influence. The appellate court also held that prior to admitting evidence of a non-decisionmaker’s animus, a trial court should determine whether a reasonable jury could find the presence of a singular influence over the decisionmaker.

This case is scheduled for oral argument on November 2, 2010. The Court will examine the circumstances which must be present for an employer to be held liable for the unlawful intent of officials who caused or influence, but did not make, the ultimate employment decision.

Retaliation and the FLSA: U.S. Supreme Court Grants Cert

Posted by Molly DiBiancaOn March 25, 2010In: Fair Labor Standards Act (FLSA), Retaliation, U.S. Supreme Court Decisions

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Wage-and-hour lawsuits filed under the Fair Labor Standards Act (FLSA), are the hottest thing going for plaintiffs’ lawyers. And a worst-case scenario for an employer named as a defendant. FLSA cases can be very difficult to defend; the law imposes what is almost strict liability under most circumstances. So, when a court issues a decision in favor of an employer, it is worthy of notice. And when the U.S. Supreme Court grants certiorari of such a decision, it’s definitely worthy of notice. U.S.S.C. Building

In Kasten v. Saint-Gobain Performance Plastics Corp., a Wisconsin factory worker filed suit alleging that he was unlawfully terminated in retaliation of his FLSA-protected activity (i.e., an FLSA-retaliation claim). The protected activity, he alleged, was his oral complaint about the placement of time clocks. Specifically, he alleged that he complained that employees were not being properly compensated for “donning and doffing time” because of the location of the time clocks.

The employer argued that the oral complaint was not sufficient—that only written complaints were protected by the FLSA. The trial court disagreed, finding that oral complaints were protected but the Seventh Circuit reversed and held that only a written complaint could trigger the protections of the FLSA. (Kasten v. Saint-Gobain Perform. Plastics Corp., No. 08-2820 (7th Cir. Oct. 15, 2009)) (pdf)

The law prohibits employers from retaliating against an employee “who has filed any complaint” against the employer. The Seventh Circuit concluded that an oral complaint cannot be “filed.” The conclusion seems perfectly logical, based on the plain language of the statute.

But, on the other hand, other employment laws do extend retaliation protection to oral complaints. For example, under Title VII, an employee is protected from unlawful retaliation for making an oral complaint about discrimination or harassment in the workplace.

The Supreme Court’s decision could redirect the course of FLSA litigation, either expanding the types of suits commonly brought to include retaliation claims—or by preventing retaliation claims from becoming the next-big-thing in employment-law litigation.

Scott Holt, Adria Martinelli, and I will be sure to cover this development in our panel discussion, Wage and Hour Update, at the Annual Employment Law Seminar on April 28, 2010. We hope to see you there!

What Is the Burden of Proof In Age-Discrimination Cases?

Posted by Sheldon N. SandlerOn March 18, 2010In: Cases of Note, U.S. Supreme Court Decisions

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In Gross v. FBL Financial Services, Inc., the U.S. Supreme Court ruled that a plaintiff claiming a violation of the ADEA must do more than prove that age was "a motivating factor" in the adverse employment action. Rather, the plaintiff must prove that the action would not have occurred "but for" the employee's age, making ADEA cases harder for plaintiffs to win than other kinds of discrimination cases. Legislation to overturn the Gross case has been introduced and is pending in the Senate and House.

That proposal, called "The Protecting Older Workers Against Discrimination Act," would adopt the burden of proof currently used in mixed motive disparate treatment cases under Title VII. Under that approach, once a plaintiff proves that age was a "motivating factor" for the adverse action, he or she would win unless the employer proved by a preponderance of the evidence that the same decision would have been made if age had not been considered. 

At Young Conaway’s Annual Employment Law Seminar on April 28, we will discuss the prospects for passage of the POWADA and how it would affect the defense of ADEA cases.

U.S. Supreme Court Decisions Go Digital

Posted by Molly DiBiancaOn October 7, 2009In: Internet Resources, Resources, Tech Tips, U.S. Supreme Court Decisions

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The U.S. Supreme Court has taken another step towards “digital enlightenment.” The Court’s website now includes links to pdf files containing the United States Reports, volumes 502 and later.  The U.S. Reports contain the final and official version of the Court’s decisions, typically three to five volumes per Term. Each volume is between 800 and 1,200 pages long, making each pdf file very large.  Large, but packed with valuable information, including, according the Court’s site:

In addition to all of the opinions issued during a particular period, a volume may contain a roster of Justices and Court officers during that period; an allotment of Justices by Federal Circuit; announcements of Justices' investitures and retirements; memorial proceedings for deceased Justices; a cumulative table of cases reported; orders in cases decided in summary fashion; reprints of amendments to the Supreme Court's Rules and the various sets of Federal Rules of Procedure; a topical index; and a statistical table summarizing case activity for the past three Court Terms.

For those who are familiar with Adobe’s Acrobat can create a tremendous resource for themselves by saving these files locally and creating an electronic index for super-quick searches later.  This appears to be yet another mile marker in the road to more easily accessible legal references.

Supreme Court Rules for Employers in Age-Discrimination Case

Posted by Molly DiBiancaOn June 21, 2009In: Age (ADEA), Purely Legal, U.S. Supreme Court Decisions

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The Supreme Court issued its opinion in Gross v. FBL Financial Services last week, holding that a plaintiff bringing an age-discrimination claim must prove, by a preponderance of the evidence, that age was the “but-for” cause of the challenged adverse employment action. The burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age, even when a plaintiff has produced some evidence that age was one motivating factor in that decision.

Title VII permits plaintiffs to prove that the employer had several motive.  So long as the plaintiff shows that at least one of the motives was discriminatory, he has met his burden to show cause.  The Supreme Court's ruing in Gross, on the other hand, makes clear that the ADEA does not provide for a mixed-motive analysis.

The decision will have positive implications for employers who find themselves defending against an age-discrimination claim.

Supreme Court Issues Pregnancy Discrimination Decision in AT&T v. Hulteen

Posted by Adria B. MartinelliOn May 21, 2009In: Cases of Note, Pregnancy (Title VII), U.S. Supreme Court Decisions

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Pregnancy discrimination took center stage at the country's highest court earlier this week, when the U.S. Supreme Court issued its decision in AT&T v. Hulteen.   (See my previous post about the case when the Supreme Court first granted certiorari last summer).   On May 19, 2009, the Court reversed the Ninth Circuit’s decision and held that AT&T did not violate the Pregnancy Discrimination Act of 1978 (PDA) by calculating the accrual of pension benefits in a way that gives less retirement credit to employees who took pregnancy leave before enactment of the PDA than to employees who took other kinds of medical leave.6a00e5502a8001883300e5534ed9f98833-320pi

The Court rejected the plaintiffs’ argument based on the Lily Ledbetter amendments to Title VII. The Court held that the Lily Ledbetter Fair Pay Act, which made it “an unlawful employment practice … when an individual is affected by application of a discriminatory compensation decision or other practice, including each time … benefits [are] paid, resulting … from such a decision”…. [did] not help Hulteen. AT&T’s pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory, with the consequence that Hulteen has not been ‘affected by application of a discriminatory compensation decision or other practice.’”

The bottom line is that there are few employers likely to be implementing retirement plans whose accrual policies pre-dated enactment of the PDA in 1978. Obviously, over time, the number of employers facing this situation will only get smaller.

Should an employer be in this situation, however, they can rest easy knowing that as long as any continuing effect of a pre-PDA retirement compensation system is pursuant to a bona fide seniority system, and not the result of an intentional employer to apply different standards of compensation, they will not be in violation of the PDA.

For those who wish to learn more, the Workplace Prof Blog and SCOTUS Blog have excellent posts covering the decision.  For more general information on the ins and outs of the Pregnancy Discrimination Act, see these previous posts or take the Pregnancy Discrimination Quiz at H.R. Hero:

New Study on Trends in Pregnancy-Discrimination Lawsuits

Pregnancy Discrimination Act Includes Infertility Treatments

Case Alert: Pregnancy Discrimination Act Extends to Abortion

U.S. Supreme Court Administers Coup de Gras to Alexander v. Gardner-Denver. . . Or Does It?

Posted by Sheldon N. SandlerOn April 1, 2009In: U.S. Supreme Court Decisions, Union and Labor Issues

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Employers have another U.S. Supreme Court decision to contend with, 14 Penn Plaza LLC v. Pyett.   In a 5-4 decision written by Justice Thomas, the Supreme Court today held that, at least in some circumstances, its 35-year old decision in Alexander v. Gardner-Denver Co. does not prevent a unionized employer from forcing an employee belonging to the bargaining unit to arbitrate his age discrimination claim rather than pursuing it through an ADEA lawsuit, where the union entered into a collective bargaining agreement that included a clear and express provision prohibiting discrimination.  Depending on the prism through which one views the decision, it is either a giant step in overruling Gardner-Denver or a very narrow ruling that depends entirely on the specific facts and the language contained in the CBA.

Justice Thomas’ opinion makes a distinction between substantive rights and the forum in which those rights are pursued, and holds that allowing an age discrimination claim to proceed in an arbitral forum rather than in court does not affect the individual’s substantive right to be free from age discrimination. “The right to a judicial forum is not the nonwaivable ‘substantive right’ protected by the ADEA.” Since that is now the law of the land, would the Court also uphold individual employment agreements that contain an explicit waiver of the right to the judicial forum? One suspects that the current majority would see no difference, since the majority opinion states that “[N]othing in the law suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative.”

Such individual waiver agreements have had a checkered history, but may gain new life as a result of the Pyett decision. No doubt the dissenters would say that such an agreement, signed by the individual in order to obtain employment, is a contract of adhesion. But for the moment, it seems likely that any clear and unmistakable waiver of the right to pursue a discrimination claim in court will be upheld. As the dissent points out in what may be nothing more than a bit of wishful thinking, the majority left itself some wiggle room and the decision “may have little effect” since the court took pains to point out that it was not deciding whether a CBA’s waiver of a judicial forum is enforceable when the union has exclusive control over access to and presentation of employees’ claims in arbitration. So the door remains open a crack for unionized employees to continue to file Title VII, ADEA and ADA lawsuits. Whether Congress will react to this decision with another Ledbetter Act remains to be seen. Unions may be unwilling to make it an issue, since the decision increases the importance of the union’s role.

Supreme Court Grants Cert in Pregnancy Discrimination Case

Posted by Adria B. MartinelliOn June 24, 2008In: Cases of Note, Discrimination & Harassment, Pregnancy (Title VII), U.S. Supreme Court Decisions

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Pregnancy Discrimination is back in the news, courtesy of the U.S. Supreme Court's grant of certiorari in the case of AT&T v. Hulteen, No. 07-543.  Employees who took maternity leave, pursuant to the company's decades-old policy, were not given the same credit towards their pension as employees who took other kinds of disability leave.

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The Pregnancy Discrimination Act (PDA) was not enacted until 1979 and, since then, AT&T’s maternity leave has been credited toward retirement, in compliance with the law. At issue is whether AT&T must now give female retirees credit for maternity leave taken from 1968-1976, preceding enactment of the PDA.

The Ninth Circuit held that the benefits system violated the PDA.  AT&T appealed and the Solicitor General recommended that cert be granted.  The SCOTUS Blog covers AT&T v. Hulteen and provides more details as well as links to the previous filings.

A ruling against AT&T would seem to be contrary to the Court’s recent ruling in Ledbetter v. Goodyear, related to the timeliness of discrimination claims whose effects may not be apparent for many years later. Further, it is generally held that statutes are not retroactive absent statutory language otherwise. In light of these precedents, a ruling in favor of the employees in this case may signal a real interest in this type of discrimination. Stay tuned!

U.S.S.C. Is Hardly Anti-Employee: Supreme Court Expands Retaliation Claims

Posted by Barry M. WilloughbyOn May 28, 2008In: Public Sector, Race (Title VII), Retaliation, U.S. Supreme Court Decisions

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The United States Supreme Court is anything but anti-employee.  The Supreme Court's decisions in Cracker Barrel and Gomez-Perez, filed yesterday, continue to broaden the limits of Section 1981 in favor of employees.

Recently, employee-advocate groups have made great sport out of attacking the Supreme Court’s employment-discrimination decisions--using them to raise the hue and cry for legislative reform. This week's rulings in CBOCS West, Inc v. Humphries (the “Cracker Barrel” case), and Gomez-Perez v. Potter show that employee advocates and plaintiffs’ lawyers have little to complain about.

The Background of Section 1981U.S.S.C. Building

The Court's 7-to-2 ruling in the Cracker Barrel case addressed a novel question of law: Whether there can be a claim of unlawful retaliation based on Section 1981. Section 1983, originally known as the Ku Klux Klan Act, was passed in 1871 during Reconstruction following the civil war.  The law was intended to provide a federal remedy for private conspiracies such as those being committed by the KKK, which the Southern state courts had been unsuccessful in prosecuting. In short, the law prohibits discrimination based on race in all aspects of contractual relationships, including written and unwritten employment contracts.

But Section 1981 contains no anti-retaliation language at all. What’s more, when Congress amended the law in 1991, it did not add an anti-retaliation provision.  By that time, many other anti-discrimination statutes had been enacted to explicitly included anti-relation provisions. Nevertheless, in yesterday's Supreme Court opinion by Justice Breyer, the Court concluded that retaliation claims may brought under the statute and are “well embedded in the law.”

The Significance of the Cracker Barrel Decision

The ruling is significant in at least two ways. First, unlike the perhaps more familiar racial discrimination claim under Title VII, damage awards under Section 1981 do not include monetary caps. Employers are therefore exposed to substantially higher damage claims.

Second, Section 1981 claims do not require an administrative filing with the EEOC. The statute of limitations for such claims is much longer for these claims as compared to Title VII.  The statute of limitations in a Section 1981 claim is borrowed from state law.  The limitations period from the analogous intentional tort claim is applied unless the limitations periods vary for different intentional torts.  In that case, the state's general personal injury statute of limitations should apply.

For Delaware employers, that means that, whereas a Title VII employee-plaintiff has 300 days to file a Charge of Discrimination, a Section 1981 plaintiff has more than twice as long, four years, to file a complaint in federal court. Further, since no administrative filing requirement exists under Section 1981, the employer may be unaware of a potential claim for a lengthy period of time.

The Significance of the Gomez Ruling

The Gomez decision is less significant in that it only applies to federal employees. In Gomez, the U.S. Supreme Court, in a 6 to 3 ruling, found that a cause of action for retaliation existed for claims brought pursuant to the Age Discrimination in Employment Act (“ADEA”). The ADEA has an explicit anti-retaliation provision applicable to private sector employees but no anti-retaliation provision applicable to federal workers. The High Court, nevertheless, concluded that Congress “intended” that retaliation be considered another form of “intentional discrimination” under the law.

Cracker Barrel and Gomez continue the Supreme Court trend that began with the Burlington and Faragher decisions, issued in 1998.  Since those rulings, the Court has taken an expansive view of anti-retaliation claims.  It will be interesting to see whether pro-employee groups and Plaintiffs' lawyers will be satisfied by these decisions in light of the decidedly expansive view of employee-retaliation rights that the Court has adopted.

 

Additional Resources:

The Legal Information Institute (LII) at Cornell has an excellent summary of the Cracker Barrel decision, as well as links to the actual decision and the numerous briefs.  The Gomez decision is also posted at the LII website.

HR Hero is an excellent resource for more information on the broader topics that were addressed in these cases, including Section 1981, Employment Retaliation, and Age Discrimination in Employment (ADEA).

 

[Update May 29, 2008:  SCOTUS Blog also has an in-depth analysis of both cases from the plaintiff-employee perspective.]

Four Justices Recuse Themselves: Justice denied is justice denied

Posted by Sheldon N. SandlerOn May 14, 2008In: Delaware Specific, U.S. Supreme Court Decisions

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Yesterday four members of the Supreme Court had to recuse themselves from a case, and as a result, no decision could be made. Apparently the Justices have not heard of the “rule of necessity.” That rule of thumb says, in essence, that if a court is unable to decide a case because the justices have conflicts, it is more equitable to have a judge with a conflict rule on the case, rather than leaving it undecided. A Supreme Court Justice should be able to render an objective decision even though he or she has some stock in one of the litigants. While not the optimum situation, that is far preferable to saying to the adversaries that the lower court decision is unreviewable.

Plaintiff Gets a Pass From the Supreme Court to Proceed Without a Charge

Posted by Molly DiBiancaOn March 11, 2008In: Cases of Note, U.S. Supreme Court Decisions

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On Wednesday, the US Supreme Court decided the question, "When Is a Charge a Charge?" According to the Supreme Court's decision in Federal Express v. Holowecki, the answer may leave some employers wanting for more.

Current and former FedEx employees filed an "intake questionnaire" withthe Equal Employment Opportunity Commission (EEOC), alleging that they had been subject to unlawful discrimination based on their ages. The Age Discrimination in Employment Act (ADEA), requires an employee to exhaust her remedies at the administrative level, either with the EEOC or the local state agency, before she can proceed with a civil lawsuit.

The administrative process begins with the complainant going to the EEOC or state agency and completing a Charge of Discrimination. A "Charge" form is a simple, one-page form designed to capture only the most basic information about the allegations; i.e., employer's name and address, number of employees, protected class asserted, adverse action, and a brief narrative.

Here, the plaintiffs filed an "intake questionnaire," instead of a Charge. The former is a "fill-in-the-blank" question and answer form that the complainant would normally fill out after her initial intake interview and Charge are completed.

The EEOC says that a filing will be considered a Charge, "so long as it reasonably be construed to request agency action and appropriate relief on the employee's behalf." The EEOC failed to notify FedEx about the allegations--meaning that FedEx had no opportunity to respond to the claims before being sued. The Court held that the plaintiff should not be penalized for the EEOC's mistake:

The Federal Government interacts with individual citizens through all but countless forms, schedules, manuals, and worksheets. Congress, in most cases, delegates the format and design of these instruments to the agencies that administer the relevant laws and processes. An assumption underlying the congressional decision to delegate rulemaking and enforcement authority to the agency, and the consequent judicial rule of deference to the agency's determinations, is that the agency will take all efforts to ensure that affected parties will receive the full benefits and protections of the law. Here, because the agency failed to treat respondent's filing as a charge in the first instance, both sides lost the benefits of the ADEA's informal dispute resolution process.

The employer's interests, in particular, were given short shrift, for it was not notified of respondent's complaint until she filed suit. The court that hears the merits of this litigation can attempt to remedy this deficiency by staying the proceedings to allow an opportunity for conciliation and settlement. True, that remedy would be imperfect. Once the adversary process has begun a dispute may be in a more rigid cast than if conciliation had been attempted at the outset.

This result is unfortunate, but, at least in this case, unavoidable. While courts will use their powers to fashion the best relief possible in situations like this one, the ultimate responsibility for establishing a clearer, more consistent process lies with the agency. The agency already has made some changes to the charge-filing process. ... To reduce the risk of further misunderstandings by those who seek its assistance, the agency should determine, in the first instance, what additional revisions in its forms and processes are necessary or appropriate.

This decision is disappointing, though not necessarily surprising. The courts are always hesitant to dismiss a plaintiff's claim because of a procedural defect--especially when that defect was not caused by the plaintiff. Despite the sense of unfairness to the employer that results from this case, the Court's decision did contain one small trinket of employer victory. In it's opinion, the Court scolded the Commission to get its act together by evaluating its internal processes in an effort to avoid this sort of beaurocratic oversight again in the future. A small victory for sure. Read the full text of the Court's decision here.