Employment Case Notes

Bobo v. UPS: The Sixth Circuit and the “Cat’s Paw”

sturgillturner — Tue, 21 Feb 2012 19:24:10 +0000

Bobo v. United Parcel Service, 2012 WL 34264 (CA 6, Jan. 9, 2012) is the first appellate decision in the Sixth Circuit Court of Appeals, which consists of Michigan, Ohio, Kentucky and Tennessee, that applies the Supreme Court’s guidance from Staub v. Proctor Hospital, 131 S.Ct. 1186 (2011). You will recall that Staub resolved a three way split among the Federal Circuit Courts of Appeal concerning when an employer can be held liable for an adverse employment action that was influenced by, but not entirely under the control of, a biased supervisor or manager who was not the final decision maker. Dubbed the “Cat’s Paw” theory, the U.S. Supreme Court enunciated a three part test:

The biased individual must be an agent of the employer, not merely a same-level or lower level coworker.
The biased manager or supervisor must have intended to cause harm to the object of his/her discriminatory animus.
The plaintiff must present proof from which it may be reasonably inferred that the biased individual’s action or misinformation was the proximate cause of the adverse job action.

In Bobo v. UPS, the plaintiff was an African-American Army Reserve veteran, who alleged both discrimination and retaliation under USERRA, Title VII, and a race-based discrimination claim under the Tennessee Human Rights Act. Bobo was a supervisor of truck drivers for UPS in Memphis. Without question, Bobo produced initial evidence of anti-military bias on the part of his immediate supervisor, Morton, as well as a district manager, Wagner. Both supervisors expressed their displeasure, orally and in writing, that Bobo was continuing in the Army Reserves and with the three week annual military training leave it required. Following a return from annual training, Bobo was assigned twice as many truck drivers to supervise as any white supervisor had under his charge at the UPS Memphis, Tennessee facility.

The next year, after Bobo returned from his three week annual military training, an African-American driver, with whom Bob had experienced difficulty in scheduling a full safety ride, alleged that Bobo had directed him to sign a blank safety ride form, which was later filled out to indicate that a full safety ride occurred. Bobo was charged with falsifying the safety form and breaching UPS company policy. Bobo contended that six or more other driving supervisors, all Caucasian, had employed the practice of having drivers pre-sign safety ride forms, or had even falsified safety ride forms, but none of them were fired although one resigned. Bobo was fired by a district level committee of six UPS managers. The trial court granted summary judgment to UPS, based upon the appearance that there was no direct evidence of bias by the committee as decision-maker.

On appeal, the Sixth Circuit emphasized that the “same supervisor” standard is not an inflexible requirement of proof in a discrimination case and specifically found that Bobo had introduced evidence that would allow a jury to find UPS had violated USERRA under the “cat’s paw” theory. The court particularly considered the evidence that Morton and Wagner both harbored anti-military feelings and they had furnished information to one of the district managers on the committee of six that determined Bobo should be fired. The district manager who had received information from Morton and Wagner testified at deposition he considered Morton’s remark to be “absolutely inappropriate” and contrary to UPS policy indicating that he did not consider the statements.

Regardless of whether the district manager actually considered Morton and Wagner’s statements, the Sixth Circuit found that this was sufficient evidence to allow a jury to consider a USERRA violation by way of the “cat’s paw” theory. Consequently, the Court reversed and remanded the USERRA discrimination and retaliation claims for further proceedings, holding that a prima facie case had been established by the plaintiff.

Check back soon for a discussion of how Bobo v. UPS may result in a broadened definition of comparators in discrimination and retaliation cases and may entitle plaintiffs to obtain more documents and/or personnel files from employers during the discovery process.

Kentucky Court of Appeals Confirms Special Standard for Proving “Reverse Discrimination”

sturgillturner — Fri, 20 Jan 2012 16:37:54 +0000

By: Josh Salsburey

A wrongful discrimination claim in the employment setting typically is based on allegations that the employer discriminated against an employee who belongs to a protected class that is in the minority, such as women (in cases of gender discrimination) or African Americans (in cases of race discrimination). Sometimes, however, a claim for wrongful discrimination is based on allegations that the employer discriminated against an employee who belongs to a class that is in the majority, such as gender discrimination claims by men or race discrimination claims by Caucasians.

In a “typical” wrongful discrimination claim, such as a female employee’s claim of being terminated because of her gender, the burden and order of proof usually works like this: First, the employee must prove what is called a prima facie case of discrimination. As Black’s Law Dictionary explains, this means the employee must make an initial showing that she will prevail unless contradicted and overcome by other evidence. In other words, the employee must show she has enough facts to warrant having her case heard by a jury. Second, if the employee proves her prima facie case, the burden shifts to the employer to state a legitimate, non-discriminatory reason for terminating the employee. Third, if the employer states such a reason, the employee must prove that the employer’s reason was not true, but rather, was just a pretext for discrimination.

To meet her burden in the first step—that is, to prove her prima facie case—the employee must show she belongs to a minority group (here, female); that she was qualified for the job at issue; that she suffered an adverse employment action (here, termination); and that she was treated differently than similarly situated co-workers who belonged to the majority.

In a published decision that became final last year, the Kentucky Court of Appeals confirmed that the requirements for proving a “prima facie” case of reverse discrimination (such as a terminated male employee claiming gender discrimination) are somewhat different. In Flock v. Brown-Forman Corp., 344 S.W.3d 111 (Ky.App. 2010)(discretionary review denied August 17, 2011) a male employee sued his employer for age and gender discrimination and retaliation. The Court held that to establish his prima facie case for a reverse discrimination claim like that, the employee had to show (1) his employer was the “unusual employer” who discriminates against men, and (2) he was treated differently than similarly situated female co-workers.

While Flock is not the first Kentucky case to recognize the “unusual employer” standard, it is significant because it is the first published Kentucky case—that is, the first Kentucky case that can be cited freely as binding authority—to both recognize and apply the standard. Decisions from other cases indicate that proof of the “unusual employer” can be found in things like “meaningful statistics” of the employer’s hiring and promotion practices, as well as proof about the class to which the decision maker (e.g., the supervisor who fired the employee) belongs and whether the employer treats that class more favorably than others.

U.S. Supreme Court Recognizes “Ministerial Exception” to Employment Claims

sturgillturner — Thu, 12 Jan 2012 16:02:50 +0000

By: Katherine M. Coleman

This week the United States Supreme Court issued a unanimous decision upholding the application of the “ministerial exception” to claims of employment discrimination against church employers. In Hosanna-Tabor v. EEOC, the Supreme Court has recognized a ministerial exception grounded in the religion clause of the First Amendment which acts as a bar to claims of employment discrimination brought by a church minister challenging the church’s employment related actions. The Court ruled that judicial review of a church’s employment actions as they relate to its ministers amounts to “government interference with an internal church decision that affects the faith and mission of the church itself.”

While recognizing a ministerial exception, the Supreme Court declined to adopt a bright line test for determining when an employee qualifies as a “minister” for purposes of the exception. The Court did find that the exception applied to the employee at issue in this case, a teacher for Hosanna-Tabor Evangelical Lutheran Church and School. While teaching both secular and religious classes, she was in a designated teaching category which recognized her as having distinct ministerial roles. She had received specific religious education and training and was endorsed as a minister by the church. She further held herself out as a minister and her job duties clearly reflected a role in “conveying the church’s message and carrying out its mission.” In light of these facts and circumstances, the Supreme Court concluded that she was subject to the ministerial exception. The Supreme Court expressly limited its ruling to claims of employment discrimination brought on behalf of a minister challenging an employment decision, specifically declining to express an opinion whether the ministerial exception may act as a bar to other actions by employees such as those alleging breach of contract or tortious conduct by their religious employers.

To read the full Supreme Court Opinion, click here.

Wal-Mart v. Dukes: What will the long-term impact be?

sturgillturner — Mon, 09 Jan 2012 20:40:18 +0000

By: Martha L. Alexander

The last year saw arguably one of the most important employment decisions in the last several years. In June 2011, the United States Supreme Court decided the Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2545, 180 L. Ed. 2d 374 (2011) case. In this case, a group of women sought certification as a class to file what would likely have been the largest employment class action suit in history for gender discrimination.

In a twenty-seven page opinion authored by Justice Antonin Scalia, the court decided that the women, approximately 1.5 million current and former employees of Wal-Mart, could not sue the employer as a class. Justice Scalia held that the inherent fact specific nature of gender discrimination claims caused the employees claims to lack the commonality required for certification under Federal Rule of Civil Procedure 23(a)(2). The Court also found that certification as a class action pursuant to Federal Rule of Civil Procedure 23(b)(2) was impermissible because the claims for back pay were not merely incidental to the claims for injunctive and/or declaratory relief.

Although the case was immediately lauded as a boon for employers and criticized as an example of judicial activism, it’s too early to predict what impact the case will actually have on employment discrimination and class action cases. At least one federal court has already rejected Dukes’ interpretation regarding the use of expert testimony in class action certifications, Fosmire v. Progressive Max Ins. Co., 80 Fed. R. Serv. 3d 1351 (W.D. Wash. 2011), and it remains to be seen whether state courts will interpret state class action rules in the same manner as the U.S. Supreme Court interpreted the federal rule. Here in Kentucky, the civil rules regarding class action formation are substantially similar to the federal rule, making it likely that Kentucky courts interpret the rule in line with the United States Supreme Court’s. Regardless of the eventual impact of the decision, the fact remains that the Dukes case has the potential to change litigation of both individual gender discrimination claims and class action suits.

The Dukes case captured the attention of the legal community and we’re carefully watching to see how the law in this area progresses. We’ll continue to provide updates as the case law develops.

Supreme Court Decision May Allow Arbitration Clauses in Kentucky Employment Contracts

sturgillturner — Wed, 14 Dec 2011 21:03:24 +0000

by Stephen L. Barker, Carly Sparks and Otis Grigsby[1]

A recent United States Supreme Court case decided on April 27, 2011 may profoundly affect the ability of Kentucky employers to require arbitration of all employment-related disputes. The case, AT&T Mobility v. Concepcion, likely preempts or makes unenforceable a Kentucky statute barring arbitration agreements in employment contracts.

Arbitration allows parties to resolve their disputes in an arbitration forum rather than in a courtroom before a jury. With its speed, simplicity, cost efficiency and customizability, arbitration can be an advantage for employers as opposed to lengthy litigation. Further, arbitration is often more desirable than other forms of alternative dispute resolution, such as mediation, because decisions in arbitral forums are binding. That means that an unhappy party can’t take the same claim to court for a second “bite of the apple.” Absent very specific problems with an arbitration agreement or process, a court must uphold the decision made in arbitration. For these reasons, employer use of arbitration for employment disputes has become commonplace in the United States and around the world.

In Kentucky, however, a state law has prohibited the use of arbitration agreements in employment contracts. The statute, K.R.S. 336.700, states, “[N]o employer shall require as a condition or precondition of employment that any employee or person seeking employment waive, arbitrate, or otherwise diminish any existing or future claim…to which the employee or person seeking employment would otherwise be entitled[.]”

Because of the statute, many employers have been wary of including such provisions in employment agreements for fear of unenforceability. That fear may now be eliminated in light of the Supreme Court’s Concepcion decision.

In Concepcion, a California couple sued AT&T in Federal District Court because they had to pay $30.22 in sales tax on phones AT&T promised would be “free.” The suit was consolidated with a class action brought against AT&T based on AT&T’s allegedly false advertising. In response, AT&T sought enforcement of its arbitration agreement with the Concepcions, which allowed only individual actions and prohibited class action arbitration. The lower courts determined that the class action wavier was “unconscionable” and therefore unenforceable because it was contained in a consumer “adhesion” contract; involved a dispute of small amount and required a party (the Concepcions) with an inferior bargaining position to submit to arbitration.

However, the Supreme Court sided with AT&T, deciding that the Federal Arbitration Act (FAA), passed in 1924 preempted the California law preventing class action arbitration waivers. While the court addressed California law, the reasoning of the case regarding preemption may be equally applicable to Kentucky law.

Justice Scalia, who wrote the majority opinion, emphasized that under the FAA contracts to arbitrate must be enforced according to their terms and cannot be treated differently from other contracts. Accordingly, the FAA cannot be thwarted by state statutes applying special rules to arbitration. “Although [federal law] preserves generally applicable contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives,” including a “liberal federal policy favoring arbitration.”

This holding is not limited to consumer contracts. In fact, in E.E.O.C. v. Waffle House, decided in 2002, the Supreme Court stated explicitly that the FAA applies to employment contracts. Further, even before Concepcion, one lower court had already found that the FAA invalidated the aforementioned Kentucky statute. In view of Concepcion, it is likely other courts will agree.

Therefore, Kentucky courts are likely to treat agreements to arbitrate employment disputes the same way as other contracts. This means they will be enforceable according to their terms absent circumstances which would void any other contract, such as fraud, duress, unconscionability or other similar circumstances under contract law.

However, not every employment agreement containing an arbitration agreement will be automatically enforceable. The Supreme Court made it clear that an agreement must contain “user friendly” provisions that are fair to both parties.

This means that an employer cannot enjoy the benefits of an arbitration agreement unless that agreement preserves and protects its employees’ legal rights. Clearly an agreement which attempts to unduly restrict rights an employee would otherwise have in a traditional litigation setting will not be enforceable. Determining the appropriate balance is not a simple process but employers can look to AT&T’s customer arbitration agreement cited favorably by the Supreme Court as a guide.

As a general rule, an agreement should provide for the expeditious resolution of complaints. The process should include a simple claims initiation procedure. AT&T made it easy for customers to initiate their claims via a one-page form made available on the company’s website. If the customer’s claims were not resolved voluntarily by AT&T within thirty days of the Complaint the customer could then invoke the arbitration process through a “Demand for Arbitration” form.

The agreement should also include employee friendly fee-shifting and settlement provisions that incentivize quick and fair resolutions for legitimate claims. Employers should tailor these provisions to their individual needs. For example, AT&T agreed to pay all arbitration costs for non-frivolous claims. Additionally, AT&T provided that in the event a customer receives an arbitration award greater than its last written settlement offer, AT&T would pay a $7,500 minimum recovery and the customer’s attorney’s fees. This provision made individual arbitration more valuable than class arbitration to the individual consumer, and represented a generous consideration for waiving the right to class arbitration.

All employee arbitration agreements should specify both the procedural rules and the location of the arbitration proceedings. A failure to keep arbitration hearings accessible to employees will be a red flag for courts. Employers should agree to conduct the arbitration in a location that is a reasonable distance from the employee’s home to protect the enforceability of the agreement. AT&T did this by allowing arbitrations to be held in the home county of the customer in the dispute. Also, customers with claims of less than $10,000 were given the option to proceed by telephone, in person or by written submission.

The agreement should provide that the arbitrator has the power to award a broad range of individual relief to the employee. The agreement should include severability provisions to save the enforceability of the rest of the agreement if the court finds a particular provision to be invalid. The employer can include the right to unilaterally modify the agreement but such modifications should be used sparingly.

The Supreme Court has cleared a path for employers and employees across the country to reap the benefits of arbitration and avoid costly and lengthy litigation. While there are no guarantees, an employer who follows the guidelines cited above should reasonably expect Kentucky courts to uphold the enforceability of its employee arbitration agreements.

[1] Stephen L. Barker is a partner in the Lexington law firm of Sturgill, Turner, Barker & Moloney, PLLC. Carly Sparks is a third year law student at the University of Kentucky, College of Law. Otis Grigsby is a second year law student at the University of Kentucky.

Welcome!

sturgillturner — Tue, 13 Dec 2011 15:51:14 +0000

Welcome to Employment Case Notes, Sturgill, Turner, Barker & Moloney’s employment law blog. We are still working on our first substantive post, so please check back for our forthcoming commentary on developments in the area of employment law.