Source: https://www.workplaceclassaction.com/
Timestamp: 2019-04-26 04:19:00+00:00

Document:
Seyfarth Synopsis: Today the Supreme Court issued a 5-4 decision in the Lamps Plus, Inc. v. Varela class action arbitration case. The holding and rationale are important to employers because the Court decisively ruled that class arbitration “fundamentally” changes the nature of the “traditional individualized arbitration” envisioned by the Federal Arbitration Act and, for that reason, requires an express agreement of the parties to be compelled. In so ruling, the Court rejected the basis of the Ninth Circuit’s contrary ruling, which had found the arbitration agreement at issue to be ambiguous and, applying California state contract law that contractual ambiguities should be construed against the drafter, held that the agreement allowed for class arbitration. Relying on its prior class action arbitration decisions, the Court found that such an approach is “flatly inconsistent with the ‘foundational FAA principle that arbitration is a matter of consent.’” How this part of today’s decision will impact Plaintiffs’ efforts to use state laws to invalidate arbitration agreements will undoubtedly be the subject of future litigation, but it is now clear that courts can no longer order class arbitration unless there is an arbitration agreement expressly authorizing it.
What Did The Supreme Court Hold?
The Supreme Court held today that courts cannot order an arbitration to be conducted on a class-wide basis unless there is an arbitration agreement that expressly authorizes class arbitration. The Supreme Court previously held in its Stolt-Nielsen decision that a court may not compel class arbitration when an agreement is “silent” on the availability of such arbitration. Now the Supreme Court has gone a step further. Courts cannot compel arbitration when an arbitration agreement is ambiguous about the availability of class arbitration.
The parties — Lamps Plus and Varela, an employee of Lamps Plus — had an arbitration agreement that was ambiguous about the availability of class arbitration. Certain phrases, particularly the use of “I” and “my” throughout the agreement, seemed to contemplate purely individual arbitration. Other phrases, such as one stating that “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my employment,” the employee argued, were broad enough to suggest class arbitration. The employee sued Lamps Plus on behalf of a class of employees whose personal information had allegedly been compromised.
The Ninth Circuit affirmed the district court’s order compelling not individual arbitration, as the company had sought, but class arbitration. In deciding whether to compel class arbitration, the Ninth Circuit relied on California state law principles in applying a doctrine know as contra proferentem, which means that ambiguous terms in a contract should be construed against the drafter. In applying this doctrine, the Ninth Circuit found that the ambiguous terms of the parties’ agreement should be interpreted against Lamps Plus — the drafter of the agreement — and in favor of the employee, who argued for class arbitration.
The Supreme Court reversed the Ninth Circuit’s decision with five justices joining in the opinion. Relying on its past decisions in Stolt-Nielsen, Concepcion, and Epic Systems, the Court made clear that class arbitration “fundamentally changes” the nature of “traditional individualized arbitration” envisioned by the Federal Arbitration Act in several ways, including making the process slower, more costly, and “more likely to generate procedural morass than final judgment.” Because arbitration under the Federal Arbitration Act is strictly a matter of the parties’ consent, the Court found that applying contra proferentem to allow class arbitration under an ambiguous agreement is “flatly inconsistent with the ‘foundational FAA principle that arbitration is a matter of consent.’” The Court, therefore, found that the Ninth Circuit decision ordering class arbitration was improper and reversed.
In a footnote, the Court stated that it was not deciding whether the availability of class arbitration is a “question of arbitrability” that is presumptively for courts (rather than arbitrators) to decide. The Court pointed out that the parties had agreed that a court should decide the issue, and therefore concluded that the question was not at issue. Thus, while every circuit court that has addressed the issue has found that the availability of class arbitration is a “question of arbitrability” for courts to decide in the absence of an express agreement to the contrary, the Supreme Court still has not decided the issue.
What Does The Lamps Plus Decision Mean For Employers?
The decision is an important victory for employers. Courts can no longer order class arbitration under the Federal Arbitration Act unless the employers’ arbitration agreement unambiguously authorizes class arbitration. Under the Lamps Plus decision, employers no longer face the risk that ambiguous phrases in their agreements will lead to class arbitration. Only express agreements can lead to class arbitration. While many employers have revised existing arbitration agreements or adopted new ones since Epic Systems that include express class arbitration waivers, those employers with older clauses using generic language to the effect that all employment disputes are subject to arbitration benefit from today’s opinion.
Additionally, Justice Ginsburg argued in her dissenting opinion that Congress should act to “correct” the elevation of the FAA over “the rights of employees and consumers” to bring class actions. Congress could, therefore, someday pass legislation that would make class arbitration more widely available.
Thus, despite the fact that the Lamps Plus decision makes it less likely that employers will face class arbitration, we continue to urge employers to have their employment agreements reviewed by experienced counsel and revised consistently with this and prior Supreme Court opinions.
Seyfarth Synopsis: A federal district court in Arkansas recently denied an employer’s motion for summary judgment on two EEOC-initiated ADA claims – in EEOC v. Crain Automotive Holdings LLC, No. 4:17-CV-627, 2019 U.S. Dist. LEXIS 62513 (E.D. Ark. Apr. 11, 2019) – for failure to provide a reasonable accommodation and discharge based on disability, following a supervisor’s comments to an employee that “it was not working out” and to take care of herself after the employee’s hospitalization. Id. at *1. For employers and management personnel, this ruling illustrates how courts might find seemingly innocuous comments to be direct evidence of discrimination, thus raising the stakes in ADA litigation initiated by the EEOC.
In EEOC v. Crain Automotive Holdings LLC, an employee of Crain who suffered from anxiety, depression, and panic attacks began experiencing chest pains and went to the emergency room, fearing she was having a heart attack. Id. After two days of treatment, she ultimately reported back to work. Upon her return, she began experiencing a panic attack and left work, after she emailed her supervisor. When she returned to work a few days later, she met with two supervisors and was terminated. According to the employee, the supervisors told her that “it was not working out” due to her health problems and that she needed to take care of herself. Id.
The EEOC brought a lawsuit on behalf of the employee alleging that Crain violated the Americans With Disabilities Act, as amended by the Americans with Disabilities Act Amendments Act of 2008 (“ADA”) because it (1) failed to provide a reasonable accommodation for the employee, and (2) that it discharged her because of her disabilities.
Crain moved for summary judgment on both of the EEOC’s claims, arguing that: (i) the employee was not disabled under the ADA; (ii) even if the employee was disabled, she could not have been fired because of her disability since Crain did not know about it; and (iii) the EEOC had no direct evidence of discrimination, and under the McDonnell-Douglas framework, the disability claim could not survive.
The Court denied Crain’s motion for summary judgment on both of the EEOC’s claims. First, the Court rejected Crain’s argument that the employee was not disabled within meaning of the ADA, noting that she had been diagnosed with anxiety, depression, and panic attacks. Id. at *4-5. Crain supported its position by arguing that she had been able to perform other demanding activities, such as handling her parents’ estates, and further noted that she did not have constant panic attacks. The Court rejected Crain’s position, holding that a reasonable jury could find that the employee was disabled within the meaning of the ADA based on her testimony regarding the difficulty caused by her impairments. Id. at *6.
Crain further argued that even if the employee was disabled, she could not have been fired because of her disability since Crain did not know about it. Id. at *6-7. In response, the EEOC presented the following evidence: on Tuesday, the employee told her supervisor she had experienced chest pains the day before; on Wednesday, the employee told her supervisor she had anxiety, depression, and had suffered a panic attack; on Friday, the employee emailed her supervisor before leaving work, saying “I can’t do this” because she was “still hurting too bad,” and further, she emailed another supervisor explaining that she had had a heart catheterization, which was supported by a doctor’s note attached to that email. Id. at *7. The Court held that taking all these facts as true, a reasonable jury could infer that at the time the employee was fired the following week, Crain knew about her anxiety, depression, and panic attacks.
Finally, Crain argued that the EEOC had no direct evidence of discrimination, and under the McDonnell-Douglas framework, the disability claim could not survive. The Court noted that when the employee met with two supervisors in order to discuss why she had left work early the previous Friday, she was terminated. The employee testified that at this meeting, a supervisor told her that “due to [her] health, it wasn’t going to work out and [she] should take time for [her]self.” Id. at *8. The Court held that this comment was direct evidence of discrimination, as opposed to falling within the categories of “stray remarks in the workplace, statements by non-decision-makers, and statements by decisionmakers unrelated to the decisional process,” which would have precluded the comments from being considered direct evidence of discrimination. Id. at *9 (citation omitted). The Court further held there was no reason to suspect that the suggestion that the employee should take care of her health or take time for herself was made “with the intent of attempting to preserve and promote” her, as she was fired in the same conversation. Id. Accordingly, the Court denied Crain’s motion for summary judgment as to the discriminatory discharge claim.
Turning the EEOC’s failure to accommodate claim, the Court noted that the employee emailed a doctor’s note to a supervisor, and that the doctor’s note stated that she needed three weeks off work. The Court held that because Crain did not follow up whatsoever on the recommendation contained in the doctor’s letter before firing the employee, the EEOC generated a genuine dispute of fact on whether the employee requested an accommodation Accordingly, the Court denied Crain’s motion for summary judgment as to the failure to accommodate claim.
This ruling serves as cautionary tale for employers regarding both the handling of employee health issues and comments made by supervisory personnel during terminations. In instances where employees present doctors’ notes, as was the case here, employers must be diligent to review those and properly provide any necessary accommodations.
Further, although the comments made during this employee’s termination – “it wasn’t going to work out” and “[she] should take time for [her]self” may seem innocent in nature – the Court here analyzed those comments in the context of the employee’s condition and recent attendance history, and found that such remarks constituted direct evidence of discrimination. Id. at *8-9. Employers should thus be prudent to educate supervisors and other relevant personnel about carefully selecting their words during termination and disciplinary situations, especially in instances involving health issues.
Seyfarth Synopsis: On March 29, 2019, in Ahad v. Board of Trustees of Southern Illinois University, et al., Case No. 15-CV-3308 (C.D. Ill. Mar. 29, 2019), Judge Sue E. Myerscough of the U.S. District Court for the Central District of Illinois decertified a collective action under the Equal Pay Act involving a group of female physicians. Although Plaintiff alleged that she and a class of female physicians employed by Defendants were paid less than male counterparts for similar work under Defendants’ centralized Compensation Plan, the Court found that the individual physicians who opted-in to the collective action had specialized practices, job duties, and compensation that required too many individualized inquiries, and as a result, they could not maintain a collective action. The decision is an important read for all corporate counsel focused on equal pay compliance and litigation.
In October 2015, a physician employed by Southern Illinois University and SIU Physicians & Surgeons, Inc. (“Defendants”) brought a class and collective action against Defendants alleging that she and other female faculty physicians working for Defendants were paid substantially lower compensation than male physicians for the same or similar work, in violation of the Equal Pay Act and Illinois Equal Pay Act, Title VII, and the Illinois Human Rights Act. Central to the claims of Plaintiff and the three other physicians opting-in to the litigation (“Plaintiffs”) were contentions that all female faculty physicians were required to perform similar core duties, and that all were compensated based on the use of a centralized “Compensation Plan” administered by Defendants. Initially, the Court conditionally certified Plaintiffs’ Equal Pay Act claim as a collective action under § 216(b) of the Fair Labor Standards Act, but later denied Plaintiffs’ Rule 23 motion for class certification under the Illinois Equal Pay Act, Title VII and the Illinois Human Rights Act, for failure to show commonality and typicality of claims.
Defendants subsequently moved to decertify the collective action under § 216(b), arguing that Plaintiffs were not similarly-situated, that individual inquiries predominated the litigation, and that Plaintiffs had not identified a common policy or practice responsible for the alleged unequal pay.
The Court agreed with each of the Defendants’ contentions, and ordered decertification of the collective action. While Plaintiffs argued that the Court should view their positions with a high level of generality in that all members of the collective action performed core duties of administration, teaching, research and service, the Court agreed with Defendants’ argument that in decertification proceedings, it is proper to examine more closely the similarities and differences in job titles and duties, work locations, supervision, and compensation.
Applying this level of scrutiny, the Court found that the four Plaintiffs each worked in different medical disciplines, such as bariatric surgery, colon and rectal surgery, family practice and osteopathy. Each Plaintiff also worked in one of several faculty positions in one of two different departments, each with its own duties, and each requiring different time commitments in the areas of administration, teaching, research, and service. Furthermore, each department was supervised by a different department chair responsible for hiring and compensation decisions.
The Court also found that compensation decisions were based on a variety of rated factors particular to medical specialty, position, department, and whether the employee served as an assistant professor, associate professor, professor, or director. Individual compensation decisions also were affected by productivity, including the ability to take on Medicare and Medicaid patients.
Moreover, the Court opined that Plaintiffs failed to identify a common policy or practice responsible for the alleged unequal pay. While Plaintiffs pointed to Defendants’ Compensation Plan as a gender neutral, “single” or “centralized” process for setting and adjusting compensation, the Court observed that department chairs were given discretion under the Compensation Plan to make compensation recommendations based on a variety of objective and individualized factors, such as salary survey data, funding sources, background and qualifications, and market factors. Although Plaintiffs noted that the Dean of Southern Illinois University and CEO of Southern Illinois University Physicians & Surgeons, Inc. were responsible for the administration of the Compensation Plan, the Court concluded that Plaintiffs failed to establish that the discretion shown by these high-level individuals caused a disparate impact disfavoring women in pay.
Finally, the Court, following Wal-Mart v. Dukes, 564 U.S. 338 (2011), ruled Plaintiffs’ statistical evidence of disparate impact unhelpful, because it “does not and cannot show whether a common cause existed regardless of the statistically significant showing of pay disparities based on gender.” Id. at 25.
The decision in Ahad underscores the importance of tying employee compensation decisions to objective, measurable criteria, that are utilized and documented in the exercise of properly delegated managerial discretion. To minimize the risk of unequal pay problems, employers are well served to review their position descriptions, hiring and compensation tools and training, and compensation decisions for both for disparate impact and for success in obtaining and retaining talent.
Seyfarth Synopsis: To take an immediate appeal from a federal district court’s order granting or denying class certification, a party must first seek permission from the applicable court of appeals “within 14 days after the order is entered.” Fed. Rule Civ. Pro. 23(f). In Nutraceutical Corp. v. Lambert, No. 17-1094, 2019 WL 920828, at *4 (U.S. Feb. 26, 2019), the U.S. Supreme Court addressed the question of whether a court of appeals may equitably toll that deadline when an opposing party objects that the appeal is untimely. Because Rule 23(f)s’ deadline was meant to be rigorously enforced, the Supreme Court concluded that Rule 23(f) is not subject to equitable tolling – even where good cause for equitable tolling might otherwise exist. The Supreme Court’s ruling in Lambert is therefore a “must read” for all corporate counsel involved in workplace class action litigation.
The facts in Nutraceutical Corp. v. Lambert, No. 17-1094, 2019 WL 920828, at *1 (U.S. Feb. 26, 2019), are straightforward. Troy Lambert sued Nutraceutical Corporation in federal court and was initially successful in obtaining class certification. Id. The District Court subsequently revisited its order and later decertified the class. Id. At that point, Lambert had 14 days under Rule 23(f) to ask the Ninth Circuit for permission to appeal the decertification order. Id.
Instead, Lambert filed a motion for reconsideration, and did so eight days after Rule 23(f)’s 14-day window, but within the timeframe ordered by the District Court. Id. The District Court ultimately denied Lambert’s motion for reconsideration, and within 14 days of that decision, Lambert petitioned the Ninth Circuit for permission to appeal the decertification order. Id. Nutraceutical argued that Lambert’s petition was untimely because more than four months had elapses since the District Court’s order decertifying the class, far more than the 14 days that Rule 23(f) allows. Id.
Nevertheless, the Ninth Circuit deemed Lambert’s petition timely, reasoning that Rule 23(f) is non–jurisdictional and subject to equitable tolling. Under the circumstances, the Ninth Circuit concluded that Lambert acted diligently and tolling was warranted. On the merits, the Ninth Circuit reversed the District Court’s decertification order. Id.
Nutraceutical thereafter appealed and the U.S. Supreme Court granted certiorari. Justice Sotomayor, writing for a unanimous Supreme Court, reversed and remanded on February 26, 2019. Id.
The Supreme Court agreed with the Ninth Circuit that Rule 23(f)’s time limitation is non–jurisdictional because it is found in a procedural rule, not a statute. Id. at *2. Nevertheless, the Supreme Court found that Rule 23(f) is not subject to equitable tolling. Id. The Supreme Court reasoned that although a non–jurisdictional rule is subject to waiver and forfeiture, that does not mean the rule is not mandatory or that it is therefore subject to equitable tolling. Id.
“Whether a rule precludes equitable tolling,” explained the Supreme Court, “turns not on its jurisdictional character but rather on whether the text of the rule leaves room for such flexibility.” Id. at *3. Because Rule 23(f) conditions an appeal on filing a petition within 14 days, and because Appellate Rule 26(b) expressly states that a court of appeals “may not extend the time to file . . . a petition for permission to appeal,” the Supreme Court concluded that there is “clear intent to compel rigorous enforcement of Rule 23(f )’s deadline, even where good cause for equitable tolling might otherwise exist.” Id. at *4.
As evidence that Rule 23(f) is amenable to tolling, Lambert argued that every court of appeals to consider the issue has accepted Rule 23(f) petitions filed within 14 days of the resolution of a motion for reconsideration that was itself filed within 14 days of the original order. Id. at *5. Although Lambert’s reconsideration motion was not filed within 14 days of the certification ruling, Lambert argued there was no reason to relax the 14 day limit in one situation but not the other. Id. The Supreme Court rejected this argument. It explained that a motion for reconsideration filed within the window to appeal “does not toll anything: it renders an otherwise final decision . . . not final for purposes of appeal.” Id. As a result, the Supreme Court declined to address the effect of a motion for reconsideration filed within the 14-day window or whether Lambert’s motion would be timely if that had occurred. Id. at *5 fn. 7.
Lambert also argued that the District Court’s decision was itself an order granting or denying class action certification under Rule 23(f). Id. at *6. Because the Ninth Circuit did not rule on these grounds, the Supreme Court declined to address these arguments. Id. Instead, the Supreme Court left open the possibility for the Ninth Circuit to address these issues on remand.
At the end of the day, the Supreme Court explained that the “relevant Rules of Civil and Appellate Procedure clearly foreclose the flexible tolling approach on which the Court of Appeals relied to deem Lambert’s petition timely.” Id. Hence, the Supreme Court reversed and remanded.
The takeaway from Lambert is that a court of appeals cannot alter the time for a party to file a petition for permission to appeal under Rule 23(f) – even if good cause might otherwise exist. Employers who wish to appeal an order granting class certification must be sure to do so within the 14-day period allowed by Rule 23(f). Although many courts of appeal have held that a motion for reconsideration filed within fourteen days of the order granting or denying class certification can toll a Rule 23(f) deadline, the Supreme Court’s opinion is clear that this nomenclature is not correct. Instead of tolling the Rule 23(f) deadline, a motion for reconsideration simply renders a class certification decision not final for purposes of appeal. The Supreme Court’s reluctance to address the effect of a motion for reconsideration filed within the 14-day window should give employers some pause before relying exclusively on a motion for reconsideration. The safest course is to file a petition for permission to appeal within the 14-day time period under Rule 23(f).
Seyfarth Synopsis: The impact of the #MeToo Movement was the fifth major class action development of 2018, as well as the newest trend in our 15th Annual Workplace Class Action Litigation Report (“WCAR”). By way of its groundbreaking emergence on social media, the #MeToo Movement profoundly impacted the workplace and made its way into the class action arena. Today, we conclude our exclusive video series by posting WCAR author Jerry Maatman’s analysis of this trend from Seyfarth Shaw’s “Top Trends In Workplace Class Action Litigation” book launch event held on January 30, 2019. Click the link below to see and hear Jerry discuss the #MeToo Movement’s effect on complex litigation in 2018!

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