Supreme Court Decisions, (Non)-Quirky Question # 138

Quirky Question # 138:

I saw you recently described some legislation pending before Congress that could affect the employment relationship.  I have a similar non-quirky question – what cases are before the U.S. Supreme Court that bear upon the employment relationship?

Dorsey’s Analysis:

In 2009, the U.S. Supreme Court rendered a number of important decisions involving employment issues (Crawford – retaliation issue; Gross – age discrimination; Ricci – affirmative action; 14 Penn Plaza – arbitration of discrimination claims in union context). While 2010 may not bring decisions of comparable significance from the nation’s high court, there are a number of cases before the Supreme Court that could be important to employers and employees alike. We are monitoring four cases in particular.

In City of Ontario vs. Quon (review granted on December 14, 2009), the Court is considering several inter-related employee privacy issues. The facts of the case are relatively straightforward. The City of Ontario police department provided pagers to certain employes, including members of its SWAT team. The City did not have an official policy regarding text messaging with the pagers but did have a policy providing that information sent via email on City communications systems was not confidential. However, at least one official in the Department allowed the employees to use the pagers for personal use. The City conducted an audit of employees who regularly exceeded monthly character limits on their pagers. During this audit, the City reviewed the transcripts of the texts sent on the pagers.

As a result of this audit, the City’s employees brought suit against the City for conducting an unreasonable search under the Fourth Amendment. The Ninth Circuit held that the search was unreasonable.

The Supreme Court is reviewing three issues:

a) Does a SWAT team member have a reasonable expectation of privacy in messages transmitted on his SWAT pager, when police department has official no-privacy policy but non-policymaking lieutenant announced informal policy of allowing some personal use of pagers?

b) Did Ninth Circuit contravene the Supreme Court’s Fourth Amendment precedents and create circuit conflict by analyzing whether the police department could have used “less intrusive methods” of reviewing text messages transmitted by SWAT team member on his SWAT pager? and,

c) Do individuals who send text messages to SWAT team member’s SWAT pager have reasonable expectation that their messages will be free from review by recipient’s government employer?

The Supreme Court’s resolution of these issues should be instructive both for public and private employers and should provide employers some guidance regarding employees’ privacy rights with respect to employer issued electronic devices and electronic media.

Another case we’re monitoring is Lewis v. Chicago (oral argument occurred on Feb. 22, 2010). Lewis is another case involving a test that had a disparate impact on minority applicants for firefighters; though the issue in Lewis focuses on the timeliness of the Charges of Discrimination. The Seventh Circuit held that the plaintiffs’ EEOC charges were untimely because the applicants were required to file their charges within 300 days after they learned that their test scores had placed them in the “qualified” category, and that the city would only be hiring “well-qualified” applicants.

Plaintiffs filed their administrative charges 420 after learning those facts, but within 300 days of the City actually beginning to hire the “well-qualified” applicants. The question presented in Lewis is: When an employer adopts an employment practice that discriminates against African Americans in violation of Title VII’s disparate impact provision, must a plaintiff file his/her EEOC charge with 300 days after the announcement of the practice, or may a plaintiff file his/her charge within 300 days after employer’s use of discriminatory practice?

Here, too, the Supreme Court’s analysis is very likely to have ramifications beyond the public employer context and should help define the appropriate statute of limitations with regard to discriminatory practices that are announced but not immediately implemented or put into practice.

A third case before the nation’s high court is Rent-A-Center West Inc. v. Jackson (review granted Jan. 15 ,2010). In Rent-A-Center West, an employee brought suit against his employer under § 1981 alleging race discrimination and retaliation. The employer had an arbitration agreement in place that governed discrimination claims. Based on this agreement, the District Court granted the employer’s motion to dismiss and compel arbitration, notwithstanding the employee’s argument that the arbitration provision was unconscionable. The Ninth Circuit reversed, holding that whether a mandatory arbitration provision within a larger contract is “unconscionable” is for a court , and not an arbitrator, to decide.

The specific question presented in the Rent-A-CenterWest case is whether a district court is required in all cases to determine claims that an arbitration agreement subject to the Federal Arbitration Act is unconscionable, when the parties to the contract have clearly and unmistakably assigned this ‘gateway’ issue to the arbitrator for decision? The decision has significance for any employer that uses mandatory arbitration agreements with its employees because it has the potential for shifting the issue of unconsionability from the arbitral to the judicial forum.

The last case currently before the U.S. Supreme Court that we’re monitoring is Granite Rock Co. v. Int’l Bhd of Teamsters (oral argument occurred on Jan. 19, 2010). This case focuses on the interaction between a local and international union, and implicates additional arbitration issues.

In Granite Rock, the employer sued the local union and international union under Section 301(a) of the Labor Management Relations Act (LMRA) claiming that (1) the international union tortiously interfered with a collective bargaining agreement (CBA) between the employer and the local union, and (2) the local union breached the CBA by going on strike. The Ninth Circuit held that the employer failed to state a claim under Section 301(a) against the international union because the tortious interference claim did not “arise under” the CBA between the employer and the local. The Court also held that the entire dispute between the employer and local union should go to arbitration because both parties consented to arbitration whether or not CBA had been ratified: the employer by suing under the contract and the union by moving to compel arbitration.

The two specific questions presented are:

a) Does a federal court have jurisdiction to determine whether a collective bargaining agreement was formed when it is disputed whether any binding contract exists, but no party makes an independent challenge to the arbitration clause apart from claiming it is inoperative before the contract is established?

b) Does Section 30l(a) of the LMRA, which generally preempts otherwise available state law causes of action, provide a cause of action against an international union that is not a direct signatory to the collective bargaining agreement, but effectively displaces its signatory local union and causes a strike, breaching a collective bargaining agreement for its own benefit?

While these issues may not be critical to non-unionized employers, for employers with employees working pursuant to a collective bargaining agreement, the decision has the potential to clarify some important issues affecting the employer/unionized employee relationship.

As we all have seen in the last 12 months, the U.S. Supreme Court is ideologically divided. We will have to see how the complex issues described above play out in the Court but if one made predictions solely on the basis of parties and ideology, one might predict the following outcomes:

Quon: Employer wins; no violation of employees’ Fourth Amendment rights against unreasonable search and seizure by public employer’s review of text messages sent on pagers;

Lewis: Employer wins; charges untimely because they were not filed within 300 days of the adoption of the policy;

Rent-A-Center West: Employer wins; the issue of the unconscionability of an arbitration agreement should be decided in the first instance by the arbitrator, not the federal courts; and,

Granite Rock: Employer wins (but likely not on all issues). It’s hard to imagine that this high court is going to do any favors for the labor movement.

We’ll see how these cases are decided within the next several months and you can assess whether my predictions, based largely on the general ideology of the majority of the Court, were accurate or misguided. As the Court renders its decisions on these four cases, we will provide you additional analyses to ensure that you understand the decisions and their practical consequences.

Dorsey & Whitney

Dorsey is a business law firm, applying a business perspective to clients' needs. We make it our first priority to know the context in which you do business - your market, your competitors, your industry.

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