Source: http://www.nelfonline.org/docket/archives/10-2013
Timestamp: 2019-04-19 14:16:15+00:00

Document:
This case, which the Massachusetts Supreme Judicial Court (SJC) paired for hearing with the Court’s reconsideration of its 2009 decision in Feeney v. Dell (in which NELF filed an amicus brief in support of Dell, see above), raises the same essential issue—the enforceability of a class arbitration waiver—but in the context of employment.
The dispute arises out of the plaintiff’s franchise agreement with System4 and NECCS, Inc. (collectively “System4”) to provide commercial janitorial services. The agreement included a mandatory pre-dispute arbitration clause that restricted arbitration only to individual claims (a class-arbitration waiver). In 2010 the plaintiff filed a putative class action in the Massachusetts Superior Court primarily alleging that System4 misclassified him and similarly situated individuals as independent contractors in violation of the Massachusetts Wage Act, G.L. c. 149, § 148B. System4 moved to stay the litigation so that arbitration could proceed, but the Superior Court denied the motion on the ground that the class-action waiver in the arbitration provision was contrary to public policy under Feeney v. Dell. The Superior Court subsequently denied reconsideration of this decision in light of the Supreme Court’s holding on the enforceability of class arbitration waivers inAT&T Mobility, LLC v. Concepcion. The SJC took the matter and solicited amicus briefs in this case, as in Feeney, on whether the public policy exception announced in Feeney survives Concepcion.
NELF filed an amicus brief in this case, again as in Feeney, arguing that the SJC’s invalidation of class arbitration waivers in the 2009 decision has been invalidated by Concepcion, which held that, under the Federal Arbitration Act (FAA), class arbitration waivers contained in valid arbitration agreements are uniformly enforceable.
In this connection, NELF’s brief addressed the view recently expressed by the NLRB in its D.R. Horton decision that the National Labor Relations Act trumps the FAA. To the contrary, NELF argued that the command of Concepcion is not limited to state law claims, but applies equally to class waivers in the arbitration of federal statutory claims, absent a “contrary congressional command” on the face of another federal statute that bars or limits the application of the FAA to disputes arising under that statute. CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012). The NLRA’s general language protecting employees’ rights to engage in “concerted activity . . . for mutual aid and protection” falls far short, and is entirely unrelated to, the CompuCreditstandard, which would have to expressly create a nonwaivable right to class actions to limit the FAA’s mandate under Concepcion.
In a decision issued before the Supreme Court Amex case, discussed above, the SJC enforced the class waiver. The SJC held that, although it interpreted Concepcion as permitting a case-specific challenge to class waivers, the plaintiffs in this case had failed to carry their burden of proof under such a challenge. Subsequently, the Supreme Court decided Amex, the SJC requested briefing to reconsider its decision, and the SJC then affirmed its decision enforcing the waiver, but on the ground that the FAA compels such a result.
Jane B. McInnes v. LPL Financial LLC, et al.
The plaintiff, who died during this appeal, was a 78-year-old resident of Massachusetts who has sued her former investment/financial advisor and his firm, alleging, inter alia, fraud and deceit, intentional misrepresentation, breach of fiduciary duty, and violation of the Massachusetts Consumer Protection Law, Mass. G.L. c. 93A. The defendants moved to compel arbitration, based on an arbitration agreement in the contracts that the plaintiff entered into with LPL Financial. The defendants’ motion was denied (and denied again upon rehearing) on two grounds: first, that a question exists as to whether a valid arbitration agreement exists and, second, that under a 1982 Supreme Judicial Court decision, Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813 (1982), an agreement to arbitrate a consumer claim under c. 93A is unenforceable on the grounds of public policy.
The defendants appealed the denial of their motion to compel arbitration to the Massachusetts Appeals Court, and then applied to the Supreme Judicial Court for direct appellate review. Their application was granted and the Court subsequently issued an invitation for amicus briefs on the following two issues: (1) whether its 1982 Hannon ruling remains viable under subsequent holdings by the United States Supreme Court and (2) whether the existence of an arbitration clause is a question of fact to be determined in the first instance by a court.
NELF has long supported the freedom of contracting parties to enter into binding arbitration agreements. Consistent with that position, NELF filed an amicus brief supporting the defendants and answering the SJC’s amicus question as follows. First, basing its argument on established principles set forth by the United States Supreme Court under the Federal Arbitration Act (FAA), NELF argued that, except where the contracting parties have expressly agreed otherwise, it is the role of the court, not of an arbitrator, to determine whether a valid agreement to arbitrate exists. Second, NELF argued that, as set forth clearly by the United States Supreme Court in Southland Corp. v. Keating, 465 U.S. 1 (1984) and in numerous subsequent decisions, where the FAA applies, as here, a court cannot refuse, on alleged state public policy grounds, to enforce an otherwise valid agreement to arbitrate a category of claims.
In its August 2013 decision, the Court agreed with NELF that Supreme Court law had overruled Hannon, and the Court recognized that, where the FAA applies, any state rule of law that prohibits a trial court from compelling arbitration of state claims is preempted.
This case dealt with the same unsettled question of Massachusetts anti-discrimination law as did Scott v. Encore Images, Inc., a Massachusetts Appeals Court case that NELF briefed in 2010. See 80 Mass. App. Ct. 661 (2011). Because the Appeals Court declined to rule on the question, no Massachusetts appellate court had yet ruled on whether an individual who is not handicapped has standing to sue for handicap employment discrimination under Mass. G. L. c. 151B, § 4(16) solely on the basis of that person’s association with someone else who is handicapped.
Here, Flagg alleges that he was fired not because of his repeated absences from work, as his employer contends, but because his wife’s disability would cost his employer’s health plan a great deal of money (the wife herself is not an employee). The trial court dismissed his claim on the grounds that Flagg was not handicapped and therefore lacked standing to bring a handicap discrimination claim on his own behalf. Flagg appealed to the Appeals Court, and the Supreme Judicial Court took the case sua sponte and issued a request for amicus briefing.
Flagg’s argument rests largely on the fact that the Massachusetts Commission Against Discrimination (“MCAD”), which is the agency charged with implementing c. 151B, recognizes such associational standing and advocated for it vigorously in a letter the agency filed in Scott.
NELF filed an amicus brief supporting AliMed and arguing that the plain language of the statute renders it impossible for Flagg to have a claim under c. 151B. As NELF demonstrated, the clear, unambiguous language of § 4(16) and related sections of c. 151B give only a handicapped person a claim for handicap employment discrimination when the discrimination has occurred “because of his handicap.” It is unlike the federal Americans with Disabilities Act, which expressly provides for claims based on association.
NELF also argued that no deference is owed to the MCAD’s view of this issue because deference is not warranted where the language of a statute is clear and unambiguous, as here, much less when the agency’s reading of the statute is directly contrary to the statutory language, as is also the case here. NELF undertook a rebuttal of the reasoning the MCAD used its administrative decisions recognizing this type of claim. Since Flagg has incorporated into his argument the letter the MCAD filed with the Appeals Court in Scott, NELF also rebutted the arguments the MCAD makes there.
In both instances, the main theme of NELF’s rebuttal was that the agency’s view of the law in this case has been determined exclusively by broad policy considerations and that the agency has not paid even token heed to the actual text of the law.
In its July 2013 decision, the Court held that Flagg stated a claim. Sidestepping the plain language of the statutes, the Court looked to a few select decisions decided under the “analogous” federal Rehabilitation Act. In those cases a handicapped person who was the primary object of the act’s protection was undisputedly discriminated against because of his handicap, and the cases dealt solely with consequential harms flowing to third parties from that clearly unlawful act. The Court did not explain in what way this is an analogy to a situation in which no handicapped employee protected by c. 151B was discriminated against “because of his handicap.” The Court’s decision also creates a question about what grounds justify other rulings of the MCAD, unrelated to handicap discrimination, in which the agency has found associational standing, again, directly contrary to the plain language of c. 151B.
This case dealt with the question of when, under the Wage Payment Act, those who run a business are personally liable for the business’s wage-payment obligations. The plaintiff argued that the Wage Payment Act, which requires the timely payment of wages, permits him to hold two managers of the limited liability company for which he once worked personally liable for the company’s alleged violations of the statute. The statute itself says expressly only that certain officers “of a corporation” may be held personally liable. The Superior Court construed the statute by its plain language and dismissed the plaintiff’s claim. The plaintiff, arguing that the corporate officer provision is merely illustrative, not limiting, and that the scope of personal liability is actually determined by the expansive opening phrase of the statute (“Every person having employees in his service shall, etc.”), asked the SJC to reverse the dismissal. The predominate note struck by the plaintiff is that the statute should be read expansively because it is remedial, but he also argues that the true list of liable parties is given in a separate statute, to which the Wage Payment Act expressly refers for its civil fines and penalties.
The importance of the issue is shown by the fact that the SJC took the appeal sua sponte from the Appeals Court and then issued a call for amicus briefing. In its amicus brief supporting the defendants, NELF marshaled a wealth of evidence from statutory history, case law, and contemporary usage from the time of the act’s enactment to prove that the opening phrase of the statute means, and has always meant, only actual, literal employers. NELF also defended the trial court’s plain-language interpretation of the corporate officer provision, showing that it is only one of a number of such provisions in the Massachusetts statutes creating personal liability only for corporate officials for violation of employment and labor laws and that nothing about its wording, history, or placement suggests it is to be understood as merely illustrative or as the beginning of an open-ended list of liable persons. Finally, NELF explained that the statute to which the Wage Payment Act refers for its penalties does not enlarge the list of parties liable for wage payment violations, as the plaintiff believes. Examining statutory language and statutory history, NELF showed that Wage Payment Act is one of several laws that look to that statute solely for penalties, not for persons liable. Moreover, the penalty statute is part of an entirely distinct comprehensive enactment dealing with public works and related public contracts; if it has any bearing on liability, it is limited to violations of employment laws that occur in the course of public works.
In its July 2013 decision, the Court, apparently agreeing that the corporate officer provision considered in itself has limited scope, chose, for policy reasons, to read into the provision the broader scope of the following, unrelated provision dealing with the liability of public employers. On that basis, it found that a claim could be stated against the LLC’s managers. As a result of the decision, a new uncertainty looms over the scope of all the other corporate officer provisions found elsewhere in the employment statutes.
In yet another exciting victory for NELF, the Court embraced the arguments in NELF’s brief and held that an employee alleging retaliation under Title VII of the Civil Rights Act of 1964 must prove “but-for” causation (i.e., that the employer would not have taken the adverse employment action absent the retaliatory motive). The Court agreed with NELF in rejecting the alternative view, followed by many lower courts, that the employee needs only to prove that retaliation was a “motivating factor” in the decision, even if other, legitimate factors played a part. In Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) (plurality opinion), a plurality of a fractured Court espoused this lesser standard of mixed-motive liability for Title VII discrimination claims. In the 1991 Civil Rights Act, Congress codified the Price Waterhouse “mixed motive” standard, but only with respect to Title VII discrimination claims. Congress did not add the “mixed motive” standard to the Title VII retaliation provision, or to any other federal anti-discrimination statute. Under the “motivating factor” standard, the burden of persuasion shifts to the employer to prove that it would have made the same decision regardless of any unlawful motive. The difference in these standards decides whobears the difficult burden of proof with respect to but-for causation: must the employee prove but-for causation to prevail, or must the employer disprove but-for causation to avoid liability? In this case, the Fifth Circuit affirmed the trial court’s jury instruction that shifted the burden of persuasion onto the employer to disprove but-for causation, under Price Waterhouse. The jury returned a verdict against the employer, the petitioner University of Texas Southwestern Medical Center.
Agreeing with NELF, the Supreme Court held that Congress in the 1991 Act apparently rejected Price Waterhouse except for Title VII discrimination claims. As NELF argued, the Court explained that it had effectively already decided this issue in Gross v. FBL Fin. Servs., Inc., 557 U.S. 167 (2009). In that case, the Court held that an employee suing under the Age Discrimination in Employment Act (“ADEA”) must prove but-for causation, based on the fact that Congress did not add any “mixed motive” standard to the ADEA in the 1991 Act, as it did with Title VII discrimination claims. Therefore, concluded the Court, the background common-law standard of but-for causation must apply to the ADEA. The Fifth Circuit in this case, however, concluded that Gross did not apply to Title VII retaliation claims and instead applied Price Waterhouse’s “motivating factor” standard of causation. Consequently, the jury in this case received a Price Waterhouse “mixed motive” instruction and returned a verdict against the university, finding that the university failed to prove that it would have made the same decision absent any unlawful animus.
Agreeing with NELF, the Court held that Gross establishes that an employee suing under any federal employment discrimination statute must prove but-for causation, unless Congress has expressly provided otherwise. According to Gross, Congress in the 1991 Act apparently rejected Price Waterhouse’s “motivating factor” burden shifting scheme as the default standard of causation for the federal employment discrimination statutes. This is so because, according to Gross, Congress deemed it necessary to authorize “motivating factor” claims in the liability section for Title VII discrimination claims. If indeed “motivating factor” claims had already constituted a basis for liability under Title VII, as Price Waterhouse concluded, then Congress would not have deemed it necessary to authorize “motivating” factor liability in the first place, and it would have merely limited the employer’s affirmative defense in the remedies section. The Court agreed with NELF’s careful reading of Gross on this crucial issue.
In this case, another exciting victory for NELF, the Supreme Court, in a 5-4 decision, agreed with NELF that an employer cannot be held vicariously liable for an employee’s harassment of another employee under Title VII unless the harassing employee is capable of firing, demoting, or taking other such tangible employment action against the plaintiff employee.
Agreeing with NELF, then, the Court defined “supervisor” for Title VII vicarious liability purposes as limited to an employee is capable of taking tangible employment action against the plaintiff employee. In this case, none of the harassing employees was capable of taking such tangible action against the plaintiff. Thus, her claim was dismissed. Agreeing with NELF, and resolving a nationwide Circuit split, the Court explained that it had effectively already answered the question of “who is a supervisor under Title VII” in a prior case from 1998, in which the Court had first announced the standards of employer liability for workplace harassment based on the status of the wrongdoer.
As argued in NELF’s brief, the Court stated that vicarious liability is justified only when the harassing employee has been delegated the official duty to make economic decisions for the employer, such as firing or demoting an employee.
American Express Company, et al. v. Italian Colors Restaurant, on Behalf of Itself and all Similarly Situated Persons, et al.
In this case, a resounding victory for NELF and the business community generally, the U.S. Supreme Court, in a 5-3 decision (with Justice Sotomayor recusing herself) agreed with NELF and held that the FAA mandates the enforcement of class action waivers in the arbitration of federal statutory claims. As NELF had argued, the Court also held that courts have no discretion to override the FAA’s mandate when the costs of proving a federal statutory claim on an individual rather than aggregated basis may be prohibitive. The Court reversed the decision of the Second Circuit, which had invalidated a class action waiver in the arbitration of federal antitrust claims under the Sherman Act, based on the plaintiffs’ projected expert costs in proving their case. The Court agreed with NELF that the Second Circuit failed to heed both AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), under which the FAA requires enforcement of class action waivers, and CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012), under which only Congress, and not the judiciary, can override the FAA’s mandate enforcing class waivers with respect to the arbitration of federal statutory claims. Congress has not exercised that power in the Sherman Act at issue here. Thus, the disputed class action waiver in this case must be enforced. The Court also agreed with NELF that the FAA and Concepcion forbid both a per-se rule against class waivers (the issue in Concepcion) and a case-specific invalidation of a class waiver based on the plaintiff’s projected costs of proof (the issue in Amex).
As NELF had also argued, the Second Circuit misinterpreted the Supreme Court’s decisions in Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (2000), and Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985). In those cases, the Court stated that arbitration agreements should be enforced so long as they allow for the vindication of federal statutory rights. Agreeing with NELF, the Court held that, the “vindication” principle discussed in Mitsubi shi and Green Treedoes not consider the inherent costs of proving a claim, whether on an individual or class-wide basis. Those costs would apply as much in court as they would in arbitration. Once again agreeing with NELF, the Court noted that the antitrust laws do not guarantee an affordable procedural path and that the “effective vindication” exception does not refer to the expenses involved in proving a claim. Embracing NELF’s analysis, the Court limited the “vindication of rights” dictum to whether the arbitration agreement forgoes substantive statutory rights and also, possibly, to whether the agreement imposes prohibitive costs that do not apply in court litigation, such as arbitrators’ fees.

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