Supreme Court Offers Guidance Regarding Numerous Employment Issues

Sunday, June 1, 2008 - 01:00

The current United States Supreme Court term is a watershed for employment law jurisprudence. The Court has ruled on or granted certiorari to address a wide variety of issues ranging from claims of employment discrimination, matters of labor law, questions arising in connection with arbitration, equal protection claims and disputes concerning employee benefits.

Is 'Me, Too' Evidence Admissible? Sometimes Yes, Sometimes No

In Sprint/United Management Co. v. Mendelsohn , 128 S. Ct. 1140 (Feb. 26, 2008), a unanimous Supreme Court addressed the admissibility of "me, too" evidence in an Age Discrimination in Employment Act ("ADEA") action. In Sprint/United Management , the district court had excluded evidence regarding claims of discrimination by nonparties allegedly at the hands of supervisors who played no role in the discrimination alleged by the plaintiff. Because the district court failed to provide any explanation of its decision, the appellate courts were unable to determine whether it had applied a per se rule in excluding the "me, too" evidence.

In ordering that the case be remanded to the District Court, the Court rejected any suggestion that the admissibility of such evidence could be the subject of a per se rule - that is, that such evidence is neither always admissible nor always inadmissible. Rather, such evidence "requires a fact-intensive, context-specific inquiry." Specifically, a trial court is required to analyze such evidence under Rules 401 and 403 of the Federal Rules of Evidence to determine whether the evidence is relevant and, even if it is, whether the prejudicial effect of such evidence outweighs its probative value.

Review Of Arbitration Awards

Of great interest to employers who arbitrate employment disputes is the Court's decision in Hall Street Associates, L.L.C. v. Mattel, Inc. , 552 U.S. __, 2008 WL 762537 (Mar. 25, 2008). In Hall Street , the Court addressed whether parties can contractually agree to expand the very narrow grounds prescribed in the Federal Arbitration Act (the "FAA") for judicial review of an arbitration award.

The arbitration agreement at issue in Hall Street mandated that the court reviewing any arbitration award was required to vacate, modify or correct the award "where the arbitrator's conclusions of law are erroneous." Under Section 9 of the FAA, a court must confirm an arbitration award unless it is vacated, modified or corrected as prescribed in Sections 10 and 11. The grounds enumerated in Sections 10 and 11 of the FAA are extremely narrow and seek to capture egregious conduct by arbitrators, including, without limitation, corruption, fraud, evident partiality, misconduct, exceeding of powers and evident material miscalculation; mere legal error does not satisfy the standards set forth in Sections 10 and 11.

The Supreme Court held that the limited grounds for vacatur, modification or correction of an arbitral award set forth in Sections 10 and 11 of the FAA are exclusive and that parties could not expand such grounds - here, on the basis of legal error - via contract. In reaching its decision, the Court rejected the argument that the commonly accepted "manifest disregard" standard of review indicates that the FAA's provisions are generally "expandable." Instead, the Court reasoned that the plain language of Sections 9, 10 and 11 of the FAA "substantiat[es] a national policy favoring arbitration with just the limited review needed to maintain arbitration's essential virtue of resolving disputes straightaway."

EEOC Intake Questionnaire May Constitute A "Charge"

The Supreme Court's decision in Federal Express Corp. v. Holowecki , 128 S. Ct. 1147 (Feb. 27, 2008), was the first of the term addressing employment law issues. There, Federal Express appealed a decision of the Second Circuit Court of Appeals holding that a plaintiff fulfilled the requirement of filing a "charge" under the ADEA by submitting to the Equal Employment Opportunity Commission ("EEOC") a four-page affidavit and an EEOC intake questionnaire, even though no formal charge was filed.

The Supreme Court affirmed the Second Circuit's ruling over a dissent by Justices Scalia and Thomas. The Court noted that the EEOC's ADEA regulations provide that a charge is sufficient when "EEOC receives a 'writing' (or information that an EEOC employee reduces to a writing) from the person making the charge that names the employer and generally describes the allegedly discriminatory acts." In addition, to be deemed a "charge" under the ADEA, the submission must reasonably be construed as a request for the EEOC to take remedial action to protect the employee's rights or otherwise settle a dispute between the employer and the employee. Thus, the writing must reflect that the person "seeks to activate the administrative investigatory and conciliatory process." In Holowecki , the Court found that the EEOC's determination that an intake questionnaire and detailed affidavit was a "charge" was a reasonable exercise of its authority to apply its own regulations and procedures in the course of routine administration of the ADEA.

Arbitrability Of Reality Television Star's Contract Dispute

At issue in Preston v. Ferrer , 128 S. Ct. 978 (Feb. 20, 2008), was the preemptive effect of the FAA and the arbitrability under California law of a contract dispute between former Florida judge Alex Ferrer, who now presides over a television reality show called "Judge Alex," and his manager.

In the underlying action, a California court held that the California Talent Agencies Act provided to the state labor commissioner exclusive original jurisdiction to determine the legality and arbitrability of contracts between "artists" and their "agents." The court found that the dispute "involve[d] an administrative agency with exclusive jurisdiction over a disputed issue" and considered "whether a challenge to a contract as a whole should first have been made to an administrative agency where there is a statute vesting the agency with exclusive jurisdiction to decide a challenge based on specific grounds." Accordingly, the court issued an injunction terminating the arbitration.

On February 20, 2008, the Supreme Court reversed. In a decision written by Justice Ginsburg, the Court held that when parties agree to arbitrate all questions arising under a contract, the FAA supersedes state laws lodging primary jurisdiction in another forum, whether it be judicial or administrative.

Can An Employee State A Claim For Retaliation Under Section 1981?

In CBOCS West Inc. v. Humphries , the Supreme Court will consider whether Section 1981, as amended by the Civil Rights Act of 1991, permits an employee alleging race discrimination to also pursue a claim of retaliation.

In the decision below, the Seventh Circuit Court of Appeals held that claims of retaliation for opposing race discrimination are cognizable under Section 1981. The Seventh Circuit reasoned that the statute was amended in 1991 specifically to supercede earlier Supreme Court precedent that had held Section 1981 could not be used to challenge an employer's conduct after the employment relationship had been established. The Seventh Circuit's decision in CBOCS echoes the reasoning of a number of other circuit courts. Oral argument was held before the Supreme Court on February 20, 2008; a decision has yet to be issued.

Which Party Carries The Burden Of Proof In Cases Arising Under The ADEA?

On January 18, 2008, the Supreme Court granted certiorari in Meacham v. Knolls Atomic Power Laboratory . At issue in Meacham is whether employees alleging disparate impact discrimination in violation of the ADEA bear the burden of proving that their employers did not rely on "reasonable factors other than age" or, alternatively, whether proving the existence of "reasonable factors other than age" is a burden carried by the employer as an affirmative defense. The relevant portion of the ADEA prohibits "an employer to take any action otherwise prohibited" by the statute "where the . . . differentiation is based on reasonable factors other than age."

In the underlying action before the Second Circuit Court of Appeals, the court held that the "business necessity" test does not apply to ADEA disparate impact claims - the proper test, according to the Second Circuit, is whether the employer's reliance on "reasonable factors other than age" constituted a reasonable means to achieve the employer's legitimate goals. The Second Circuit found that the workers, not the employer, had the burden of proof and that they failed to carry it.

Oral argument was heard on April 23, 2008.

Court to Consider Title VII's Anti-Retaliation Provisions

In Crawford v. Metropolitan Government of Nashville & Davidson County , the Supreme Court agreed to consider whether Title VII's anti-retaliation prohibition protects an employee from being discharged after she cooperated with her employer's internal probe into sexual harassment rumors, notwithstanding that no charge of discrimination had been filed with the EEOC at the time she provided such cooperation.

In the underlying decision, the Sixth Circuit Court of Appeals held that Title VII only prohibits retaliation against employees who (a) "oppose" any unlawful employment practice or (b) "made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing." The court reasoned that because Crawford neither engaged in "active, consistent opposition" to the alleged harassment nor participated in an EEOC proceeding, those protections did not extend to Crawford and she could not sustain a claim for retaliation under Title VII.

In an amicus brief, the Solicitor General urged the Supreme Court to re-visit what he characterized as the Sixth Circuit's "misinterpretation" of Title VII's anti-retaliation clause that, if left undisturbed, would leave unprotected employees who cooperate with an employer's internal investigation prior to the filing of an EEOC charge. Oral argument is expected to be heard in the fall.

Court To Revisit Alexander v. Gardner Denver

On February 19, 2008, the Supreme Court granted certiorari in 14 Penn Plaza LLC v. Pyett , in which the Court will decide whether an arbitration clause in a collective bargaining agreement, which waived union members' rights to a judicial forum for statutory discrimination claims, is enforceable.

In Pyett , union employees filed a federal lawsuit alleging that their job transfers were the result of age discrimination. The defendants' efforts to compel arbitration pursuant to the collective bargaining agreement's arbitration provision were rejected by the district court and the Second Circuit Court of Appeals.

The employers appealed to the Supreme Court, arguing that the lower courts' rulings were based on Alexander v. Gardner-Denver , 415 U.S. 36 (1974), Supreme Court precedent that has been undercut in recent years. Argument has yet to be scheduled and will likely be heard in the fall.

Kevin B. Leblang is a Partner at Kramer Levin and heads the Employment Law department. He focuses his practice exclusively on employment law litigation and advisory matters. He counsels employers on matters ranging from the adoption and application of employee relations policies to the evaluation and minimization of litigation risks of employment decisions. Robert N. Holtzman, Partner, concentrates exclusively on representing management in employment law matters. He represents employers in federal and state court litigations, administrative proceedings and arbitrations.

Please email the authors at kleblang@kramerlevin.com or rholtzman@kramerlevin.com with questions about this article.