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Minnesota nice vs. Business nice

No cases from Minnesota were decided by the U.S. Supreme Court during its 2012-2013 Term, but this state nonetheless made its presence felt at the high court during that period.

An article in the law review published by the University of Minnesota Law School this spring received considerable attention for its analysis and conclusion that the Supreme Court, since Chief Judge John Roberts took the helm in 2005, has been the most “business friendly” tribunal in nearly seven decades. “How business fares in the Supreme Court,” 97 Minn.L.Rev. 1431 (May, 2013).  The piece departs from the tradition of Minnesota “nice,” the tendency to be cheerful and eschew criticism of others, that characterizes many Minnesotans. The phrase, however, might not apply to the article. Although published here, it was authored by two non-Minnesotans, Seventh Circuit Federal Appellate Judge Richard Posner and University of Chicago economist Lee Epstein.

In academic law review fashion, they scathingly condemn the Roberts Court for its decidedly pro-business decision-making, calling it the most congenial to business interests since the end of World War II. Their analysis focuses on cases involving business cases in general, including consumer lawsuits and also embraces work-place cases adverse to employees.

Buckeye blog

But that reasoning was attacked by another analyst, Ohio attorney Jon Hyman, whose popular Ohio Employer’s Law Blog, reviewed a series of high-court rulings during the Roberts regime as generally favorable to employees suing under various federal laws and refuting the “conventional wisdom” that it has been a pro-business tribunal. But even the Buckeye blogger acknowledged that a pair of decisions at the end of the past term constituted significant setbacks for employees.

So who’s right: Are the rulings of the Roberts Court buoying up business interests or energizing employees? The preparation by the justices to begin their upcoming 2013-2014 term, set to start this week on the traditional first Monday of October, provides an opportune occasion for a retrospective of last term’s eight rulings involving workplace issues in light of the debate over the dichotomy of the High Court rulings.

Three triumphs

Although the cases do not fit into easy categories, employees fared poorly in the majority of them. Their triumphs were few and mainly confined to cases of lesser significance than the five in which the management side prevailed.

In Kloeckner v. Solis, 133 S. Ct. 596 (2012), decided early in the term, the justices, by a 8-0 vote, overturned a ruling of the 8th Circuit Court of Appeals requiring an aggrieved federal government employee to appeal adverse administrative rulings on “mixed” employment and discrimination case to the local federal District Court.  Holding for the employee, the court decided that the claimant need not, as the lower courts directed, appeal only through the federal Circuit Court of Appeals in the District of Columbia. The court rejected creating “such an obscure” path for a complaining employee.

In a criminal law case with workplace overtones, Sekhar v. United States, 133 S. Ct. 2720 (2013), the Court unanimously reversed the conviction of an employee at a private sector investment fund for blackmail under the Federal extortion law, the Hobbs Act, 18 U.S.C. sec. 1951, et. seq., for threatening to expose an official with an agency controlling state pension funds for having and extra marital affair if the official did not recommend that the agency invest funds with that firm. The conviction was overturned because the extortion did not involve “property,” as defined by the statute.

The most significant pro-employee ruling was not strictly a workplace case, but has major favorable implications for employees by another unanimous ruling, the court upheld the authority of an arbitrator to allow a class action to proceed on behalf of doctors aggrieved by a delay in insurance payments when the arbitration agreement was silent on class treatment. The decision in Oxford Health Plan v. Sutter, 133 S. Ct. 2064 (2013), clashes with a decision earlier in the term disallowing an anti-trust class action by credit card merchants in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), because their agreements required individual arbitral proceedings, a decision that the dissenters bemoaned established “a foolproof way of killing off valid claims.”

Employers encouragement

But employers drew encouragement from the five other workplace rulings.  Most of them of greater significance, and four were decided by a single vote.

The court’s adoration for arbitration was reflected in an early Term per curium ruling in Nitro-Lift Technologies v. Howard, 133 S. Ct. 500 (2012). It dismissively overturned an Oklahoma State Supreme Court ruling barring enforcement of two parallel non-compete contracts which involved arbitration clauses. The state court ruling was reversed because it “ignored a basic tenet” of the Federal Arbitration Rule, 9 U.S.C. sec. 1, et.seq., by creating an improper “exception” to the requirement of arbitration. This was one of the two decisions from the Eighth Circuit that the high court reviewed last term, both reversals.

Equitable defenses asserted by a employee against a subrogation claim by his employer’s ERISA to recover from a tort settlement funds its insurer paid for medical expenses due to the employee’s car accident, were given short shrift in U.S. Airways Inc. v. McCutchen, 133 S. Ct. 1537 (2013). In a 5-4 decisions, the court held that the employee cannot avert subrogation on an equitable defense that would limit reimbursement only to funds received by the employee that would constitute a “double-recovery,” although it allowed consideration of a “common fund” doctrine that might allow some set-off for the employee’s legal fee.

Employers were given potential roadmaps to scuttle collective actions, a form of class actions, under the Fair Labor Standards Act (FLSA), 29 U.S.C. sec. 201, et. seq., in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013). The court, in another 5-4 decision, held that offering to pay the full amount of the claim of the representative, or named plaintiff, under Rule 68 of the Federal Rules of Civil Procedure, whether accepted or not, extinguishes the entire case for all potential claimants. The court held that the ofer of judgment made the case “moot because [the plaintiff] lacked any personal interest in representing others in the action.” The four dissenters lamented that this lack of standing approach could be utilized in other class action cases as well.

A high standard for who constitutes a “supervisor” for discrimination and harassment claims under Title VII of the Federal Civil Rights Act was established by another 5-4 vote in Vance v. Ball State University, 133 S. Ct. 2434 (2013), requiring that the case classification is limited to those in the workplace hierarchy who can take “tangible” employment actions, such as hiring, firing, or promoting. The four dissenters complained that the ruling ignores the “realities of the workplace” and make it harder to impose vicarious liability on employers. This was one of the two end-of-term cases that the Ohio blogger, who refuted the high court’s “pro-business” outlook, recognized as very favorable for employers.

The case of University of Texas South Medical Center v. Nassar, 133 S. Ct. 2517 (2013), was the other one. By a 5-4 margin, the court required a “but for” standard for Title VII retaliation cases. The criterion, higher than the conventional test for harassment and discrimination claims, is the same as used in Age Discrimination in Employment Act cases and will make it much more difficult, the dissenters asserted, to pursue or succeed in these claims under a “test [that] is particularly ill suited to employment discrimination cases.”

Interestingly, the cases won by employees were all unanimous; four  of the five in which management prevails were by narrow 5-4 decisions.  This suggests that when the justices are united, the employee side is very likely to prevail, but when they are sharply divided, the decision tilts in favor of management.

Eight of the seventy-three cases decided with written opinions during the term were workplace-related — about 11 percent. This is within the range of the volume of employment law decisions of the high court annually.

It can be anticipated that approximately the same number will be addressed during the upcoming term. But how they are resolved remains to be seen.

Originally published in Minnesota Lawyer.