Just when we are starting to get our heads around employment law cases decided by the Supreme Court of the United States (SCOTUS) in the 2014-2015 term… it’s time to get acquainted with cases on the Court’s docket for the 2015-16 term. As always, these can have significant implications for at least some of you. Learn more by joining The EmpLAWyerologist after the jump…
Let’s jump right in and start with a case scheduled for argument during the October Sitting:
Direct TV v Imburgia: Technically this is a consumer arbitration case. Bear with me and hear me out, though. This case could have impact in the employment area too. The court heard arguments last week– Tuesday, October 6, to be exact. This is a class action lawsuit alleging false advertising and unfair competition. Direct TV, relying on the US Supreme Court’s ruling in AT&T v Concepcion is seeking to compel individualized arbitration based on its contract with its customers. Now, here lies the twist: the contract also says “If, however, the law of your state would find the agreement to dispense with class arbitration procedures unenforceable, then [the entire section requiring arbitration] is unenforceable.” This seems to mean that in those states that find class action arbitration waivers unenforceable, Direct TV could not compel individualized arbitration. While that appears to be a sound reasoning based on application of solid contract principles, there is only one problem: courts, and in particular, SCOTUS, have consistently and steadfastly held that the Federal Arbitration Act, in which there is –surprise–a presumption in favor of arbitration, pre-empts state law. (Click here, here and here to review my previous posts on mandatory arbitration in employment agreements.)
For those of you who either have or are considering using arbitration agreements with your employees, the ruling of this case and the reasoning behind it, could easily extend to employment arbitration. That’s why you might care about what SCOTUS does with this case.
Spokeo v Robins, scheduled for argument on November 2. This too is a class action lawsuit, and this too, is not in and of itself an employment law case. Like Direct TV, however, the ruling in this case could have significant impact on employers and employees. Spokeo aggregates consumer information, including credit information, using social media, real estate listings, phone book listings and other sources into an online database. This information is often collected and used in consumer reports. As you know reports on one’s creditworthiness or criminal history may be used by creditors and employers. You may also know that the Fair Credit Reporting Act (FCRA) governs certain aspects of this process. The named claimant in this case alleges that Spokeo violated the FCRA, and that such violations will negatively affect his credit, insurance and employment prospects. He has not, however, alleged an actual injury. SCOTUS has long held that one cannot bring a claim unless s/he either has suffered or is in immediate danger of suffering an actual injury. The Ninth Circuit Court of Appeals, however ruled that the statutory violation itself is the injury. SCOTUS will determine if that is enough for one to have “standing” to sue (i.e. whether that is enough to render one a proper plaintiff). We are not, however just talking about an arcane legal term of art. OK, we are, but here is how it could affect you as an employer: If you conduct criminal background checks or credit checks in your hiring process, and you violate the FCRA, you may now be more vulnerable to a class action lawsuit (if you violate the FCRA enough times) because your applicants/employees may not have to allege an actual injury separate and apart from your violation. In other words, it has been assumed in the past, that one might violate a law, but s/he will not be liable to one or more private individuals if the individual(s) in question cannot show concretely how they were actually hurt by the violation. This case, depending on SCOTUS’ ruling, could change that.
SCOTUS will hear oral arguments on Montanile v. v. Bd. of Trustees of the National Elevator Industry Health Benefit Plan, No. 14-723. This is an Employee Retirement Income Security Act (ERISA) case. Mr. Montanile was in a car accident and received approximately $120,000 from his employee welfare plan to cover medical expenses. He sued the other driver and received a $500,000 settlement. The plan administrator, the Board of Trustees of the National Elevator Industry Health Benefit Plan (can you say that 10 times, fast?) sued for reimbursement of the $120,00 disbursement. ERISA allows trustees or plan administrators (also known in legal-ese as “fiduciaries”) to recover overpayments from a beneficiary when the recovery would be “appropriate equitable relief”. Mr. Montanile alleges that the recovery is not appropriate equitable relief, because the settlement had been spent or disbursed to other parties. Per the trial court, since the Plan identified a source of funds within Montanile’s possession, i.e. the $500,000 settlement, recovery of the $120,000 was “appropriate equitable relief”. Montanile appealed. The 11th Circuit Court of Appeals found that the Plan itself allowed for such recovery, as does ERISA and therefore a lien against the settlement attached before Montanile spent or disbursed the funds. SCOTUS will therefore decide whether the expenditure or disbursement of an identified source of reimbursement makes any difference regarding a Plan’s right to reimbursement under ERISA. Now, as an employer, if you do not have any such employee welfare plans, you may not care so much about this case– but those of you who do, might take some interest.
These are only a few of the cases before SCOTUS this term. C’mon back next week for a discussion of those cases!
Disclaimer: This post and all its contents are for educational/informational purposes only, are not intended as legal advice, do not create an attorney-client relationship, and are not intended to replace consultation with competent employment counsel in the state(s) in which you employ people
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