EEOC Naughty, But Employer Gets Lump of Coal 2013-12-27T19:46:41-07:00

Posted on December 27, 2013

A federal court of appeals recently broke ranks with other federal appellate courts, holding that the EEOC’s failure to obey its statutory duty to conciliate before filing a lawsuit does not serve as a defense to the lawsuit. EEOC v Mach Mining, LLC, No. 3:11-cv-879 (S.D. Illinois December 20, 2013) Title VII plainly states that, if the EEOC finds cause to believe that discrimination occurred, it must first attempt to conciliate the dispute with the employer before it runs to court to file a lawsuit. The purpose of this provision is to fulfill Title VII’s overarching goal to expeditiously resolve workplace discrimination short of costly litigation. In this case, the employer argued that the EEOC did not attempt to conciliate the dispute in good faith (although the opinion appears purposely silent on the EEOC’s conciliation behavior). The employer maintained that the EEOC’s failure to attempt to resolve the dispute short of running into the courthouse prevented the EEOC from bringing the lawsuit entirely. The Seventh Circuit disagreed, and concluded that a court may not question the EEOC’s conciliation efforts (or even its complete refusal to conciliate), and an employer may not use the EEOC’s failure to conciliate as a defense to a Title VII claim.

The Seventh Circuit’s decision could not come at a worse time. As the EEOC has been more and more prone to give short shrift to its statutory duty to conciliate rather than litigate, this decision can only serve to empower the EEOC’s non-conciliatory bent. The Grinch wins, and employers lose.

Another Win for FLSA Class Action Waiver 2013-12-26T18:03:09-07:00

Posted on December 26, 2013

By Lori Phillips

In Porreca v. Rose Group, No. 13-1674 (E.D. Penn. Dec. 11, 2013), an employee attempted to bring class claims for violations of the wage and hour provisions of the FLSA against its restaurant employer in federal court. The restaurant moved to compel arbitration, and the employee fought it, arguing that the arbitration agreement was unconscionable. The court, despite its apparent distaste for such agreements in the big fish versus small fry context, compelled arbitration. In Pennsylvania, as in many states, a finding of unconscionability relies on a sliding scale of both procedural and substantive unconscionability. The agreement was procedurally unconscionable due to its “take it or leave it” nature and the inequality of bargaining power among the parties. However, the court could not find the agreement substantively unconscionable. Despite the provision waiving the employee’s right to collective action under the FLSA, the court recognized that it was bound by both Supreme Court and Third Circuit precedent to conclude one’s FLSA rights are waivable.

Court Nixes Non-Appealability Clause in Arbitration Agreement 2013-12-23T22:23:24-07:00

Posted on December 23, 2013

By Lori Phillips

Generally speaking, arbitration is a matter of contract, and arbitration agreements must be enforced according to their terms. The Ninth Circuit recently issued a caveat, however. In In re Wal-Mart Wage & Hour Employment Practices Litigation, No. 11-17718 (9th Cir. Dec. 17, 2013), an issue of first impression, the Ninth Circuit held that a non-appealability clause in an arbitration agreement that eliminates all federal court review of arbitration awards, including review under § 10 of the Federal Arbitration Act, is not enforceable. Federal court review of arbitration awards is already limited to the grounds enumerated in the FAA and to very limited circumstances in which an arbitrator manifestly disregards the law. Allowing parties to contractually eliminate all judicial review of arbitration awards, the court stated, would disregard the text of the FAA and take away the assurance of a minimum level of due process for the parties. This case shows that, while courts do strongly favor enforcing arbitration agreements according to their terms, there are still limits on the terms to which parties can agree.

Restaurant Managers in Hot Water 2013-12-19T20:58:15-07:00

Posted on December 19, 2013

By Bryan Stillwagon

Business owners are often sued personally in FLSA suits, but a recent case shows there’s a significant risk for restaurant managers, as well. In Jang et al. v. Woo Lae Oak, Inc., et al., No. 12-cv-00782, 2013 WL 6577027 (N.D. Ill. Dec. 12, 2013), former employees sued the restaurant and the general manager for minimum wage and overtime compensation violations. The GM asked the court to dismiss the claim against her, arguing she was not an “employer” under the FLSA. The court found the GM told customers she was in charge of everything, interviewed job applicants, overruled other managers’ decisions, told one plaintiff that she would pay the back wages, offered to pay another plaintiff higher wages if the plaintiff did not quit, prepared payroll checks for some employees, and oversaw aspects of the restaurant’s financial transactions and accounting. Based on those allegations, the court found a significant factual issue over whether the GM was legally responsible, at least in part, for the alleged FLSA violations.

This case provides a powerful persuasion tool for manager training on wage and hour issues. Even site managers might be held individually liable for a restaurant’s wage and hour violations. Managers who encourage or tolerate practices such as off-the-clock work and unpaid overtime among restaurant employees cannot just point their finger at the company.

Administrative Law Judge “Anti-intellectual?” 2013-12-18T16:53:17-07:00

Posted on December 18, 2013

By Bill Wright

Clearly annoyed, the 7th Circuit Court attacked an ALJ’s ruling on expert evidence as “circular,” “unscientific” and “anti-intellectual.” At issue was a conflict between the prevailing medical view on the cause of elbow injuries (repetitive motion plus force) and the idiosyncratic opinion of an OSHA-endorsed expert that repetitive motion alone must cause elbow injuries. Asked about seemingly contrary evidence that no one else performing the same work had an elbow injury, the expert stated that, while evidence of other workers’ injuries might confirm his view, evidence of the absence of other injuries could not disprove it. The 7th Circuit took exception: “Such a heads-I-win-tails-you-lose declaration does more to make a witness look like a quack than it does to support reliance on the witness’s approach.”

The 7th Circuit had already remanded this issue to the ALJ once for an explanation of how, in this case, the minority view should prevail over the majority view. The ALJ’s explanation on remand merely parroted the expert’s opinion on the (lack of ) effect of contrary evidence and noted that even if the complainant were peculiarly susceptible to elbow injury based only on repetitive motion, the employer “takes [the] workers as they are.” The Court rejected the ALJ’s arguably unreasoned reliance on the expert and vacated the OSHA citation. The 7th Circuit says, “[j]udges and other lawyers must learn how to deal with scientific evidence and inference.” Caterpillar Logistics, Inc. v. Perez, No. 13-1106 (7th Cir. December 12, 2013).

So much for going to law school because you are not good at math.

The Plaintiff’s Bankruptcy as a Bar to Later Lawsuits 2013-12-17T21:57:25-07:00

Posted on December 17, 2013

By Lori Wright Keffer

When does a plaintiff’s bankruptcy bar a later discrimination claim? The Ninth Circuit recently framed the issue with two cases:

In Ah Quin v. County of Kauai Department of Transportation, No. 10-16000 (9th Cir. 2013), a plaintiff-debtor failed to list her pending employment lawsuit as an asset in her bankruptcy case. When the employer-defendant moved to dismiss the employment lawsuit because the claim really belonged to the bankruptcy estate, the plaintiff-debtor filed an affidavit explaining that her failure to disclose the employment lawsuit to the bankruptcy court was a harmless mistake. Accepting the affidavit at face-value, the Ninth Circuit held in July 2013 that omitting the case from the bankruptcy might have been inadvertent, and remanded the case for further factual development. However, in Dzakula v. McHugh, No. 11-16404 (9th Cir. Dec. 11, 2013), the plaintiff-debtor offered no evidence, by affidavit or otherwise, explaining why she omitted her employment claim from her bankruptcy filing. Unlike in Ah Quin, the Ninth Circuit held that no reasonable fact-finder could conclude the omission resulted from mistake or inadvertence. The plaintiff in Dzakula was barred by judicial estoppel from proceeding with the employment claim.

The rule then is: if a plaintiff fails to disclose a pending lawsuit in bankruptcy filings, judicial estoppel might bar the assertion of the claims – unless the plaintiff presents evidence the omission resulted from mistake.

A WARNing for Related Entities 2013-12-11T22:58:08-07:00

Posted on December 11, 2013

By Bryan Stillwagon

When are related entities part of one “employer” under the WARN Act? When they function as one employer. In Guippone v. BH S&B Holdings LLC et al., No. 12.183-cv, 2013 WL 6439354 (2nd Cir. Dec. 10, 2013), the 2nd Circuit Court had to decide whether an employer and the holding company that had sole responsibility for managing the employer would be liable together for failure to notify workers of a mass layoff. The court applied a five factor test, derived from the Department of Labor: (1) common ownership, (2) common directors and/or officers, (3) de facto exercise of control, (4) unity of personnel policies emanating from a common source, and (5) the dependency of operations. The evidence showed that the employer had no board of directors. Instead, the holding company chose the employer’s management and negotiated the employer’s financing, and—most importantly—there was evidence that the holding company actually made the layoff decision. A jury will ultimately have to decide the issue, but the decision is a reminder that separate incorporation does not separate the corporation.

NLRA vs Federal Arbitration Act: Arbitration Wins 2013-12-06T23:55:16-07:00

Posted on December 6, 2013

By Lori Phillips

In D.R. Horton, Inc., v. NLRB, No. 12-60031 (5th Cir. 2013), the Fifth Circuit overturned an NLRB decision that an employer infringed on employees’ rights by requiring them to sign an arbitration agreement in which they waived their right to maintain joint, class, or collective employment-related actions in any forum, judicial or arbitral. The court stated that though it defers to the Board’s interpretation of labor statutes, it does not owe the same deference to the Board’s interpretation of the Federal Arbitration Act (FAA). The Board’s decision requiring the availability of class actions effectively guts the purpose of arbitration, i.e. streamlined proceedings, and therefore contravenes the FAA. The court did, however, agree with the NLRB order that the employer revise the agreement’s language to clarify that, despite the employees’ waiver of collective action, they are not prohibited from filing unfair labor practice charges with the Board.

It appears the Fifth Circuit has gotten the Supreme Court’s message that federal policy favors arbitration. Though the Board might maintain that the NLRA is different—perhaps more important?—than other federal statutes, the Fifth Circuit has soundly rejected that notion.

Wal-Mart Plaintiffs Seek to Change the Rules 2013-12-05T21:28:09-07:00

Posted on December 5, 2013

By Andy Volin

After the Supreme Court rejected a nationwide class action by female Wal-Mart workers in the 2011 Dukes case, the plaintiffs filed smaller class actions in different parts of the country. Wal-Mart has persuaded several of the trial courts that these “second chance” class actions were filed too late. The courts have relied on a long standing rule, adopted by many federal appellate courts, that one class action does not pause the statute of limitations for a possible second class action.

Naturally, the plaintiffs want to overturn this “no-piggybacking” rule; it is blocking their class actions. Recently, the plaintiffs persuaded a district court to let them file an immediate appeal on the lateness issue. The next question is whether the appellate court will agree to decide the issue now. We will keep you posted. Love v. Wal-Mart Stores, Inc., No. 12-cv-61959-RNS (S.D. Fla. Dec. 3, 2013).

Posted on December 27, 2013

Posted on December 26, 2013

Posted on December 23, 2013

Posted on December 19, 2013

Posted on December 18, 2013

Posted on December 17, 2013

Posted on December 11, 2013

Posted on December 6, 2013

Posted on December 5, 2013

Email Disclaimer

Email Disclaimer