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Supreme Court Term Promises a Range of Labor and Employment Cases

October 24, 2012 Leave a comment

The U.S. Supreme Court opened its 2012-2013 term on October 1st. The Court is likely to hear a number of cases with significant implications for employers. Already selected to hear this term are the following key labor and employment cases:

  • Vance v. Ball State Univ
  • Genesis Health Care Corp. v. Symczyk
  • U.S. Airways, Inc. v. McCutcheon
  • Comcast Corp. v. Behrend

Please click here to read more about each of these cases and how the outcomes may affect your business.

No Wrongful Termination Claim for Failure to Renew Employment Contract

September 18, 2012 Leave a comment

Touchstone Television Productions v. Nicolette Sheridan Court of Appeals, State of California Second Appellate District

In a recent case decided by the California Appellate Court, actress Nicolette Sheridan who appeared as Edie Britt in the program Desperate Housewives did not have her contract renewed because she had complained about a battery allegedly committed upon her by Desperate Housewives creator, Mark Cherry. Not only did they not renew her contract for a sixth season, in one of the episodes, they had her die off in a car accident. Then in a subsequent episode she returned as a ghost! Due to earn $4.2 million for a sixth season, when her contract was not renewed, she cried foul and filed suit.

The court ruled that Ms. Sheridan was not entitled to sue for wrongful termination in violation of public policy because of the fixed contract nature of her employment. The court did, however, allow her to amend her complaint under Labor Code §6310(d) which permits “an action for damages if the employee is discharged, threatened with discharge, or discriminated against by his or her employer because of the employee’s complaints about unsafe work conditions.” Here it is alleged that the defendant discriminated against the plaintiff by not renewing her employment contract. To prevail on the claim, she must prove that, but for her complaints about unsafe work conditions, the defendant would have renewed the contract. Damages, however, are limited to ‘lost wages and work benefits caused by the acts of the employer.’”

Looks like Hollywood doesn’t just produce dramas for us, it creates their own too!

Wal-Mart Stores, Inc. v. Dukes

Respondents, current or former employees of petitioner Wal-Mart, sought judgment against the company for injunctive and declaratory relief, punitive damages, and backpay, on behalf of themselves and a nationwide class of some 1.5 million female employees, because of Wal-Mart’s alleged discrimination against women in violation of Title VII of the Civil Rights Act of 1964. They claim that local managers exercise their discretion over pay and promotions disproportionately in favor of men, which has an unlawful disparate impact on female employees; and that Wal-Mart’s refusal to cabin its managers’ authority amounts to disparate treatment. The District Court certified the class, finding that respondents satisfied Federal Rule of Civil Procedure 23(a), and Rule 23(b)(2)’s requirement of showing that “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” The Ninth Circuit substantially affirmed, concluding, inter alia, that respondents met Rule 23(a)(2)’s commonality requirement and that their backpay claims could be certified as part of a (b)(2) class because those claims did not predominate over the declaratory and injunctive relief requests. It also ruled that the class action could be manageably tried without depriving Wal-Mart of its right to present its statutory defenses if the District Court selected a random set of claims for valuation and then extrapolated the validity and value of the untested claims from the sample set.

Held:

1. The certification of the plaintiff class was not consistent with Rule 23(a). Pp. 8–20.

(a) Rule 23(a)(2) requires a party seeking class certification to prove that the class has common “questions of law or fact.” Their claims must depend upon a common contention of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke. Here, proof of commonality necessarily overlaps with respondents’ merits contention that Wal-Mart engages in a pattern or practice of discrimination. The crux of a Title VII inquiry is “the reason for a particular employment decision,” Cooper v. Federal Reserve Bank ofRichmond, 467

U. S. 867, 876, and respondents wish to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question. Pp. 8–12.

(b)

General Telephone Co. of Southwest v. Falcon, 457 U. S. 147, describes the proper approach to commonality. On the facts of this case, the conceptual gap between an individual’s discrimination claim and “the existence of a class of persons who have suffered the same injury,” id., at 157–158, must be bridged by “[s]ignificant proof that an employer operated under a general policy of discrimination,” id., at 159, n. 15. Such proof is absent here. Wal-Mart’s announced policy forbids sex discrimination, and the company has penalties for denials of equal opportunity. Respondents’ only evidence of a general discrimination policy was a sociologist’s analysis asserting that Wal-Mart’s corporate culture made it vulnerable to gender bias. But be-cause he could not estimate what percent of Wal-Mart employment decisions might be determined by stereotypical thinking, his testimony was worlds away from “significant proof” that Wal-Mart “operated under a general policy of discrimination.” Pp. 12–14.

(c)

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of giving local supervisors discretion over employment matters. While such a policy could be the basis of a Title VII disparate-impact claim, recognizing that a claim “can” exist does not mean that every employee in a company with that policy has a common claim. In a company of Wal-Mart’s size and geographical scope, it is unlikely that all managers would exercise their discretion in a common way without some common direction. Respondents’ attempt to show such direction by means of statistical and anecdotal evidence falls well short. Pp. 14–20.

2. Respondents’ backpay claims were improperly certified under Rule 23(b)(2). Pp. 20–27.

(a) Claims for monetary relief may not be certified under Rule 23(b)(2), at least where the monetary relief is not incidental to the requested injunctive or declaratory relief. It is unnecessary to decide whether monetary claims can ever be certified under the Rule be-cause, at a minimum, claims for individualized relief, like backpay, are excluded. Rule 23(b)(2) applies only when a single, indivisible remedy would provide relief to each class member. The Rule’s history and structure indicate that individualized monetary claims be-long instead in Rule 23(b)(3), with its procedural protections of pre-dominance, superiority, mandatory notice, and the right to opt out. Pp. 20–23.

(b)

Respondents nonetheless argue that their backpay claims were appropriately certified under Rule 23(b)(2) because those claims do not “predominate” over their injunctive and declaratory relief re-quests. That interpretation has no basis in the Rule’s text and does obvious violence to the Rule’s structural features. The mere “pre-dominance” of a proper (b)(2) injunctive claim does nothing to justify eliminating Rule 23(b)(3)’s procedural protections, and creates incentives for class representatives to place at risk potentially valid monetary relief claims. Moreover, a district court would have to reevaluate the roster of class members continuously to excise those who leave their employment and become ineligible for classwide injunctive or declaratory relief. By contrast, in a properly certified (b)(3) class action for backpay, it would be irrelevant whether the plaintiffs are still employed at Wal-Mart. It follows that backpay claims should not be certified under Rule 23(b)(2). Pp. 23–26.

(c)

It is unnecessary to decide whether there are any forms of “incidental” monetary relief that are consistent with the above interpretation of Rule 23(b)(2) and the Due Process Clause because respondents’ backpay claims are not incidental to their requested injunction. Wal-Mart is entitled to individualized determinations of each employee’s eligibility for backpay. Once a plaintiff establishes a pattern or practice of discrimination, a district court must usually conduct “additional proceedings . . . to determine the scope of individual relief.” Teamsters v. United States, 431 U. S. 324, 361. The company can then raise individual affirmative defenses and demonstrate that its action was lawful. Id., at 362. The Ninth Circuit erred in trying to replace such proceedings with Trial by Formula. Because Rule 23 cannot be interpreted to “abridge, enlarge or modify any substantive right,” 28U. S. C. §2072(b), a class cannot be certified on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims. Pp. 26–27.

603 F. 3d 571, reversed.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined, and in which GINS-BURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined as to Parts I and III. GINSBURG, J., filed an opinion concurring in part and dissenting in part, in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined.

http://www.supremecourt.gov/opinions/10pdf/10-277.pdf

DFEH’s 2010 Settlements/Judgments Exceed Those of Prior Years

Preliminary statistics from 2010 shows that during a year of three-day furloughs, hiring freezes and budget cuts, the DFEH increased its 2010 settlements from its typical $7-9 million to over $11 million. The success is due to the implementation of the Department’s Case Grading System, the settlement of the four group/class actions (not including Verizon), the establishment of a new Mediation Division, and ongoing prosecution and settlement by the Legal Division.

Some Damn Expensive Seating!

November 15, 2010 Leave a comment

A California appellate court just granted a class action opportunity against 99 Cents Only Stores which I believe will invite a number of copycat claims. It boils down to this: If 99 Cents Only Stores didn’t provide its employees with seats they can sit on when nobody needs help or nothing needs to get done (when, I ask, is that?) then they have violated the Labor Code and can be assessed a penalty of $100-$200 per pay period. Figure 25 pay periods per year and for every employee you are looking at roughly $5,000 in penalties per year for up to 3 years! Even if each store has only 5 employees/day subject to the suit my math says the award can be as high as $75,000 per store…not including the inevitable attorney fees! Again, unless my math is way off, the total penalty can be as high as $15,000,000. For not supplying employees at a retail establishment with seats. According to their website they have over 200 stores in California. Now you can see why an attorney may be interested in what seems like a trivial matter.

Here’s what the Wage Order states:

Wage Order No. 7, subdivision 14 provides: “(A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats. [¶] (B) When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.”

Here’s what the Labor Code penalty provision states:

Section 2699, subdivision (f), which was added in 2003, provides in pertinent part: “For all provisions of this code except those for which a civil penalty is specifically provided, there is established a civil penalty for a violation of these provisions, as follows: … (2) If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.”

But of course…

The trial court has discretion to award less than the maximum amount of the civil penalty if “to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory” in the circumstance of the particular case. (§ 2699, subd. (e)(2).) Let’s hope they use that discretion in this case.

So, my question is: Did 99 Cents Only really say, “Sorry, you can’t have seats?” I can’t believe it was because of the cost. They can probably get them from China, like everything else they sell, for 10 bucks each. Did they do that so employees worked on something instead of sitting down? Or did they say “no” for no good reason? Was it really a corporate-wide policy that somebody thought about in advance? How many people complained and what was the response like? So many questions!

I can see many employers being exposed to this exact same claim. Hopefully you are not one of them! You can read the case by going to http://www.courtinfo.ca.gov/opinions/documents/B220016.PDF.