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This post was contributed by Brett E. Younkin, Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio. On May 17, 2011, Brett reported that the United States Supreme Court was considering an important decision regarding class action suits.

UPDATE:

You may have heard the cheers emanating from Bentonville, Arkansas (the location of Wal-Mart's corporate headquarters), and the corporate headquarters of other large employers following the United States Supreme Court’s announcement of its decision in Wal-Mart, Inc. v. Dukes, __U.S. ___ (2011) (PDF). On June 20, 2011, the Court decertified the class-action status of the 1.6 million current and former female employees in their decade-old suit against the world’s largest private employer. Betty Dukes and her two co-plaintiffs had alleged a nationwide pattern of discriminatory pay and promotion practices by the company, despite its published policy of non-discrimination. However, the Court unanimously disagreed and overruled the Ninth Circuit Court of Appeals, which had allowed the case to proceed as a class action. The decision created what may be viewed as a higher burden of proof for establishing class action status.

While the Court was unanimous in deciding that this particular class should be decertified, only five of the justices joined in the entire ruling. In the majority opinion authored by Justice Scalia, the Court found that commonality was the key to certifying a class under Federal Rule of Civil Procedure 23 – “claims must depend on a common contention . . . 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.” To attempt to resolve “literally millions of employment decisions at once” would not result in a unified answer for why a particular employee was disfavored. “Without some glue holding together the alleged reason for those [discriminatory] 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.” The Court noted that the dissent from the lower court was correct in that the plaintiffs had “little in common but their sex and this lawsuit.”

Additionally, the opinion strongly rejected the plaintiffs' expert witness testimony because, among other things, a litany of the expert’s peers had denounced his approach, analysis, and conclusions. The Court also concluded that while anecdotal evidence may be relevant, a hundred stories out of millions of employment decisions throughout 3,400 stores did not prove a pattern of discrimination.

What does this decision mean for employers? It certainly will have an impact in the litigation context if an employer finds itself in the unfortunate position of facing a class action lawsuit. In addition, the Court's decision affirmed the use of anecdotes as evidence of discrimination and, therefore, inappropriate comments made by corporate leaders may be used as evidence of a corporate-wide discriminatory practice. As a result, employers are well advised to include corporate executives in refresher training regarding discrimination and harassment.
 

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This post was contributed by Tony D. Dick Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

In a 6-2 decision, the United States Supreme Court recently ruled in Kasten v. Saint-Gobain Performance Plastics Corp., ___ U.S. ___, No. 09-834 (2011) (pdf), that an employee’s verbal complaint about alleged wage and hour violations can be sufficient to trigger the anti-retaliation protections under the Fair Labor Standards Act (“FLSA”).

At issue was the provision in the statute that makes it illegal “to discharge . . . any employee because such employee has filed any complaint” alleging a violation of the Act. 29 U.S.C. § 215(a)(3). Plaintiff Kevin Kasten, a former employee of Saint-Gobain, alleged he was terminated in retaliation for making oral complaints to his supervisors and human resources personnel regarding the location of the company’s time clocks, which Kasten alleged prevented employees from recording time spent “donning and doffing” protective equipment. The question before the Court was whether the phrase “filed any complaint” in the statutory text of the FLSA included both verbal and written complaints. The District Court granted Saint-Gobain’s motion for summary judgment, concluding the FLSA's anti-retaliation provision did not cover verbal complaints. The Seventh Circuit affirmed the lower court’s decision.

In reversing the Seventh Circuit’s decision, the Supreme Court first analyzed the actual text of the statute but, finding the text to be open to multiple interpretations, ultimately relied on an examination of congressional intent and the Department of Labor’s and the Equal Employment Opportunity Commission’s interpretation of the phrase. With respect to Congress’s intended purpose in enacting the anti-retaliation provision of the FLSA, the Court stated specifically:

Several functional considerations indicate that Congress intended the anti-retaliation provision to cover oral, as well as written, “complaint[s].” First, an interpretation that limited the provision's coverage to written complaints would undermine the Act's basic objectives. The Act seeks to prohibit “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). It does so in part by setting forth substantive wage, hour, and overtime standards. It relies for enforcement of these standards, not upon “continuing detailed federal supervision or inspection of payrolls,” but upon “information and complaints received from employees seeking to vindicate rights claimed to have been denied.” And its anti-retaliation provision makes this enforcement scheme effective by preventing “fear of economic retaliation” from inducing workers “quietly to accept substandard conditions.”

Slip op. at 7.

The Court articulated a test to determine whether a complaint is “filed” for FLSA purposes. Under the test, if a reasonable and objective person would have “fair notice” that the employee is asserting statutory rights, the employee is protected under the FLSA. “Fair notice” is achieved where a “complaint [is] sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights.”

What does the Court’s decision mean for employers? It should be clear that the case expands the bounds of potential employer liability under the FLSA. The Court’s decision may also have farther reaching implications beyond the FLSA as several other federal statutes, including Occupational Safety and Health Act and the Clean Air Act, contain similar anti-retaliation provisions. A cautious employer will treat a verbal complaint the same as a written complaint. In disciplinary investigations, employers should ask supervisors whether the particular employee has made any oral complaints to determine whether the employee may make an argument in the future that any disciplinary action was in retaliation for making the complaint. As always, employers should document the specific reasons for employee terminations and disciplinary actions and follow established company policies to limit later arguments by a terminated employee that he or she was terminated because of a retaliatory motive on the part of the employer.

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This post was contributed by Brett E. Younkin, Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

The receipt of a federal lawsuit is generally viewed as a bad day for any employer; seeing that a plaintiff is seeking class action status on behalf of hundreds or thousands of current and past employees is enough to turn a bad day into an unenviable nightmare. Such was the situation when Wal-Mart, one of the country’s largest employers, was notified that a female manager, Betty Dukes, was suing the company on behalf of all female managers alleging a pattern and practice of discriminatory pay and promotion practices. Ms. Dukes alleged that despite the company’s non-discrimination policy, the Arkansas-based employer paid their female managers at lower rates than their male counterparts on a nationwide scale and women were promoted less often than men.

Recently, the issue of certifying the class of female employees became the focal point of what many view to have been one of the liveliest oral arguments before the United States Supreme Court in years. During each side’s hour-long presentation, it seems that the Justices spoke almost as much as the attorneys, often-times overlapping each other’s questions and even interrupting a colleague’s question in an attempt to make their own point. However, the result of the heated debate is far from clear. Will Wal-Mart be faced with a multi-million dollar class action for discriminatory practices or will it be just another single-litigant against one of the world’s largest retail empires?

Class certification is governed by Rule 23 of the Federal Rules of Civil Procedure and generally requires (1) that there to be too many potential members to identify and join each of them; (2) a common question of law or fact; (3) a commonality of claims or defenses; and (4) that the representative parties will adequately protect the interests of the entire class. It’s generally agreed that the potential plaintiffs here would meet most of these requirements. However, the focus of the discussion before the Court was whether the proposed class of female managers truly shared common legal and factual issues. One key question from Justice Kennedy has led many to speculate that Ms. Dukes and her potential class members have a fatal flaw in their argument.

During the plaintiffs' presentation, Justice Kennedy asked the rather straight-forward question: “What is the unlawful policy that Wal-Mart has adopted?” The response was that the store managers have “unchecked discretion” in the decision-making process and have used that power to create a culture of discrimination throughout the corporation. The problem with this response is that it contradicts the position that Wal-Mart’s headquarters enforces a consistent, nationwide policy, which is a key aspect of the plaintiffs' case and may be necessary to establish corporate-wide liability.

The plaintiffs' attorney tried to argue both sides of an opposing view – that there is a top-down corporate culture to discriminate against females, and that the actual decision-makers in the individual stores themselves have too much power and discretion. It was on this point where Justice Scalia accused the plaintiffs' counsel of trying to “whipsaw” the Court stating that the power given to store managers is too subjective while there is a corporate culture to guide those same managers to discriminate against women. While the commonality issue appeared to weigh in Wal-Mart's favor, how the court will decide the case is unclear at this time. A decision is expected sometime this summer, and we will be sure to provide an update when it is issued.
 

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This post was contributed by Anthony D. Dick, Esq., an Associate and a member of McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

The number of retaliation-based charges of discrimination filed with the Equal Employment Opportunity Commission (the “EEOC") has doubled from approximately 18,000 to 36,000 in the last ten years.  Last week, the United States Supreme Court issued a decision that surely will cause this trend to continue.  In a unanimous decision, the Court held in Thompson v. North American Stainless (pdf) that an employee who claimed he was terminated because his fiancée engaged in protected activity, could bring a retaliation claim against their mutual employer under Title VII of the Civil Rights Act of 1964 ("Title VII").

Plaintiff Eric Thompson met and eventually became engaged to Miriam Regalado while both worked for North American Stainless (“NAS”).  Subsequently, Regalado filed a charge of discrimination with the EEOC, claiming NAS discriminated against her because of her sex. Approximately three weeks later, NAS fired Thompson.  Thompson filed suit, alleging his termination was in retaliation for his fiancée’s protected activity.

Both the U.S. District Court for the Eastern District of Kentucky and the Sixth Circuit Court of Appeals ruled that Thompson did not have standing to sue for retaliation under Title VII because he had not engaged in any protected activity under the law.  The Sixth Circuit reasoned that the plain language of Title VII did not contemplate third-party retaliation claims.  The statute specifically provides that:  “It shall be an unlawful employment practice for an employer to discriminate against any of his employees . . . because he has opposed any practice made an unlawful employment practice by this title, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this title.” 

In an opinion written by Justice Scalia, the Supreme Court determined that NAS’s alleged conduct was prohibited by Title VII.  The Court ruled that the anti-retaliation provision of Title VII must be construed broadly to prohibit any employer action that would “have dissuaded a reasonable worker from making or supporting a charge of discrimination.”  Applying this rule, the Court found that a reasonable employee certainly would be dissuaded from engaging in protected activity if she knew that the consequence would be her fiancé’s termination from the company.

NAS argued unsuccessfully that this standard will force employers into an unenviable position of having to try to identify whether an employee who is about to be terminated has a close relationship with someone who recently engaged in protected activity before taking an adverse action that could expose it to a third-party retaliation claim.  In rejecting this argument, the Court noted that, "[a]lthough we acknowledge the force of this point, we do not think it justifies a categorical rule that third-party reprisals do not violate Title VII." 

The Court refused to articulate a bright-line rule concerning how close a relationship must be to afford third-party retaliation protection, stating in pertinent part, “[w]e expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.”

In analyzing Thompson’s standing to sue under Title VII, the Supreme Court went on to find that the term “person aggrieved” under the statute includes a plaintiff who falls within the "zone of interests" sought to be protected by Title VII.  Thus, if Title VII “arguably sought” to protect that person’s rights, he or she has standing under Title VII; however, if the individual has interests that are only “marginally related to or inconsistent” with the purposes of law, no standing to sue exists.

According to the Supreme Court, Thompson had standing to pursue his own retaliation claim against NAS because he fell within the amorphous “zone of interests” contemplated by Title VII.

It should be clear that this case expands the bounds of employers’ potential liability under Title VII.  Now, more than ever, employers should use caution when taking adverse action against an employee whose spouse, family member, domestic partner or fiancé(e) recently engaged in protected activity.  And, as always, employers should document the specific reasons for employee terminations and follow established company policies to limit later arguments by a terminated employee that he or she was terminated because of a retaliatory motive on the part of the employer.

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On June 17, 2010 the United States Supreme Court issued the highly anticipated decision City of Ontario v. Quon (pdf). The case was closely watched by many in the human resources and employment law spheres because it was thought that the case would shed valuable light on employees' privacy rights in the area of employer-provided electronic devices. The Court admitted that the case raised issues of "far-reaching significance," but nonetheless unanimously decided the case on previously established legal principals, and left many questions unanswered.

Quon was appealing for many reasons, not the least of which were the facts of the case. In 2001, the City of Ontario, California, Police Department issued members of the SWAT team two-way pagers in an effort to help the team mobilize and respond to emergencies quickly. The City had a contract with Arch Wireless Operating Company (Arch), also a party to the litigation, to provide wireless services for the pagers. The City's "Computer Usage, Internet, and E-Mail Policy" applied to text messages sent via the pagers, and the policy specifically put employees on notice that they should have no expectation of privacy or confidentiality.

Quon and other officers exceeded the monthly text message limit many times, but a Lieutenant informed Quon, and others, that if they paid for the excess text messages, he would not audit the text message records to determine whether the excess messages were work-related or personal. Quon and other officers took advantage of this opportunity and paid for the excess text messages. After several months, the Chief of Police determined that an audit should be conducted to determine whether the text message limit was too low, or whether the officers were using the pagers for personal reasons too often. The audit revealed that Quon was "sexting" his wife and his mistress while on duty. Presumably, Quon was disciplined for his actions.

Quon and others filed suit against the City, the Department and the Chief, alleging that the audit violated their Fourth Amendment right to be free from unreasonable searches. Quon also filed suit against Arch, alleging a violation of the Stored Communications Act, because Arch turned over the transcripts of the text messages to the Chief. The Ninth Circuit Court of Appeals reversed the District Court (pdf) and held that the City, the Department and the Chief did in fact violate Quon's Fourth Amendment rights, and held that Arch violated the Stored Communications Act by turning over the text transcripts.

The Supreme Court agreed to review the case only on the Fourth Amendment issue, and therefore, the Stored Communications Act judgment against Arch Wireless remains intact. The Court made many assumptions in its decision, and therefore failed to answer many questions presented by the case. Instead, the Court focused on one narrow issue, i.e. whether the search was "reasonable," to determine the outcome. The Court determined that the review of Quon's text messages was reasonable, and therefore, not a violation of the Fourth Amendment.

In order to be reasonable, a public sector employer's work-related search must be justified before the search, and the search must be reasonably related to the justification and cannot be excessively intrusive. The Court held that the search of Quon's records was justified because many officers exceeded the text message limit, and the Chief needed to determine whether that was because the limit was too low, or because the officers' personal usage was too high. The Court also concluded that the scope of the search was appropriately limited. Importantly, the Court noted that it would not have been reasonable for Quon to have concluded that his messages were in all circumstances immune from review. Thus, the search was justified and not excessive, and therefore, there was no Fourth Amendment violation.

While the Quon decision was highly anticipated for many reasons, including the interesting facts and the potentially far-reaching implications of any decision outlining employees' privacy rights in the workplace, it left many observers wanting more. The decision did leave the door open for both employees and employers to further define the landscape of employees' privacy rights in the workplace, and dropped clues as to what the Court will consider when the issue of employee privacy appears again.

In addition, the decision was important for public sector employers that provide electronic communication devices to employees. Public sector employers are permitted to "search" electronic records when the search is justified and appropriately limited in scope to the justification. In other words, although not every search is permissible, a well-justified and well-tailored search will not be found to be a violation of the Fourth Amendment.

Finally, all employers, public and private, should make certain that supervisors and managers are properly trained regarding policies related to electronic resources and devices to ensure that they are not waiving any of the employer's rights to enforce the policy. Therefore, all employers should review the Court's decision and determine what, if any, policy and procedure changes are necessary. 

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This post was contributed by Bruce D. Bagley, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

It's not often that all nine members of the U.S. Supreme Court agree on the disposition of an employment law matter, but that's what happened in Lewis v. City of Chicago, issued on May 24, 2010 (No. 08-974) (pdf). 

The City of Chicago gave a written test in 1995 to 26,000 applicants for firefighter positions. In January 1996, the City notified the applicants of their test results, and depending on their scores, applicants were designated well-qualified (scoring 89 or above), qualified (scoring between 65 and 88), or not qualified (scoring below 65). They were further informed that only the well-qualified were likely to be hired but that the list of those who were merely qualified would be retained in case the well-qualified list was exhausted as positions were filled.

On March 31, 1997, Crawford Smith, a Black applicant who had scored in the qualified range and had not been hired, filed an EEOC Charge along with five other similarly situated applicants. They alleged that the City's practice of hiring only applicants who scored over 89 had a disparate impact on Black applicants. Under Title VII of the Civil Rights Act, an employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin is unlawful, unless the employer can demonstrate that the challenged practice is job-related for the position in question. 42 U.S.C. §2000e-2(k)(1)(A). Smith argued that since he was deemed qualified there was no job-related reason to limit hiring to those who scored over 89.

The EEOC issued a right-to-sue notice and the applicants filed suit in federal district court. The City filed a motion for summary judgment, contending that the applicants had waited too long to file with the EEOC. There is a 300 day limitations period under Title VII for filing with EEOC, and in this case the Charge was filed more than a year after the applicants had received their test results. But, the City hired applicants from the well-qualified pool during the 300 day period prior to the filing of the Charge, and continued to periodically hire from the pool as additional fire fighters were needed.

At the district court level, Crawford and the other applicants prevailed. The court denied the City's summary judgment motion, finding that the City's "ongoing reliance" on the 1995 test results constituted a continuing violation under Title VII. On appeal, the Court of Appeals for the Seventh Circuit reversed the district court, holding that "the hiring only of applicants classified 'well-qualified' was the automatic consequence of the test scores rather than the product of a fresh act of discrimination." The Court of Appeals found that the applicants should have filed their Charge with EEOC within 300 days of receiving the test results.

The Supreme Court strongly disagreed with the Seventh Circuit Appeals Court. Even if a plaintiff does not file a timely charge challenging the adoption of a practice, the Court stated, the plaintiff may nevertheless assert a disparate impact claim in a timely charge challenging the employer's application of that practice. Writing for the unanimous Court, Justice Scalia was unmoved by arguments from the City and its amici (or "friends of the court") that employers could now face disparate impact suits for practices they have used regularly for years, noting "…it is not our task to assess the consequences of each approach and adopt the one that produces the least mischief. Our charge is to give effect to the law Congress enacted."

It is fair to say that few observers would have predicted such a unanimous holding in this matter by the Court. Could the Court have been influenced by Congress' enactment of the Lilly Ledbetter Fair Pay Act, reversing the Court's 2007 decision in Ledbetter v. Goodyear Tire and Rubber (pdf)? In Ledbetter the Court had held a gender-based discrimination claim was not timely filed where the employee claimed her wage disparity with male co-workers resulted from personnel decisions made years earlier.

In any event, employers must now devote even greater attention to determining whether seemingly benign practices such as relying on higher test scores may disproportionately impact members of a protected class. Years can go by but each time the employer applies that practice employees will have a fresh 300 day period in which discrimination allegations can be raised. 

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