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Supreme Court Review:
2005-2006 Employment Law Cases 

By Ross Runkel   Bio   email
Editor, Employment Law Memo

Cases Decided

Retaliation - Court adopts "could well dissuade a reasonable worker" definition of retaliation.

Burlington Northern v. White (06/22/2006): The issue was whether two employer actions were retaliatory actions of the type forbidden by Title VII. (a) White was working as a fork lift operator, and the employer changed her duties to standard track laborer. (b) Later, the employer suspended White without pay for 37 days. After she filed a grievance, the employer reinstated her and gave her full back pay. The Supreme Court announced two significant holdings: (1) Title VII's anti-retaliation provision [Section 704] does not confine the actions and harms it forbids to those that are related to employment or occur at the workplace. (2) The anti-retaliation provision covers those (and only those) employer actions that would have been materially adverse to a reasonable employee or job applicant. In the present context that means that the employer’s actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination.

1st amendment - 1st amendment gives no protection to statements made pursuant to employee's official duties.

Garcetti v. Ceballos (05/30/2006) (5-4): Ceballos, a deputy DA, sued his employer claiming retaliation in violation of the 1st amendment. Ceballos wrote a memorandum to his supervisor in which he claimed that a deputy sheriff had lied in an application for a search warrant. Ceballos claimed that he was demoted in retaliation for this. The US Supreme Court held that Ceballos was not speaking "as a citizen," and his statement has no constitutional protection.

The Court said, "The controlling factor in Ceballos' case is that his expressions were made pursuant to his duties." "We hold that when public employees make statements pursuant to their official duties, the employees are not speaking as citizens for First Amendment purposes, and the Constitution does not insulate their communications from employer discipline." Because Ceballos' speech had no constitutional protection, there was no need to apply the balancing test used in Pickering v. Board of Educ., 391 US 563 (1968) and Connick v. Myers, 461 US 138 (1983). Four Justices wrote three DISSENTING opinions arguing that Ceballos' speech should not be categorically excluded from 1st amendment protection, and that a balancing test should be applied.

ERISA - ERISA Plan can get reimbursement from a participant after the participant recovers a settlement from a third-party.

Sereboff v. Mid Atlantic Medical Services (05/15/2006): An ERISA Plan paid about $75,000 to two participants (the Sereboffs) to cover medical expenses connected to accident-related injuries. The Sereboffs recovered $750,000 in a settlement with a third-party tortfeasor, and placed those funds into an investment account. The Plan then sued the Sereboffs to get reimbursed for the benefits it had paid. The Plan sued under ERISA Section 502(a)(3) which allows a Plan to recover "other equitable relief." The Sereboffs argued that the Plan could not recover because it was seeking "legal" rather than "equitable" relief, citing Great-West Life v. Knudson, 534 US 204 (2002). The Knudson facts were similar except that under the terms of the settlement the proceeds went into a trust for the medical care of one of the Knudsons. In the Sereboff case, a share of the third-party recovery was set aside in a separate account. The US Supreme Court unanimously held that the Plan could recover because recovery was sought through a constructive trust or equitable lien on a specifically identifiable fund.  As a result, the Court held that the type of relief sought by the plan administrator in Sereboff's case was "equitable" in nature. 

Title VII - Title VII's 15-employee threshold is not jurisdictional.

Arbaugh v. Y & H Corp (02/22/2006): Arbaugh sued in federal court under Title VII and state tort law. After a jury verdict for Arbaugh, the trial court granted summary judgment for the defendants and vacated the verdict because the defendant corporation did not employ 15 or more employees and thus was not an "employer" under Title VII. The 5th Circuit affirmed. The US Supreme Court reversed, holding that Title VII's 15-employee threshold does not determine federal court subject matter jurisdiction. It is a matter going to the merits of a Title VII claim, so it must be raised by the defendant no later than the end of the trial.

1st amendment - Schools cannot exclude military recruiters without losing federal funds

Rumsfeld v. Forum for Academic and Institutional Rights (03/06/2006): The Court unanimously held that the Solomon Amendment is constitutional. The Solomon Amendment requires that colleges and universities that receive federal funds must treat military recruiters no differently than they treat other recruiters. Most law schools have policies against discrimination on the basis of sexual preference, and many prohibit military recruiters because of the military's position on gay and lesbian personnel. In response the government threatens to cut off federal funds for the entire university of which the law school is part. A group of schools sued to enjoin enforcement of the Solomon Amendment on the ground that it violates the first amendment rights of the schools. Although there are limits to Congress' ability to place conditions on the receipt of federal funds, a funding condition cannot be unconstitutional if it could be imposed directly. The Court held that this condition was one that Congress could have imposed directly without violating the 1st amendment.

Proof of bias - "Boy" can be probative of racial bias. 
Comparing qualifications - "Slap you in the face" test of superior qualifications is rejected.

Ash v. Tyson Foods (02/21/2006): Two African-Americans were superintendents who were denied promotions. They sued claiming race discrimination in violation of Title VII and 42 USC Section 1981. They prevailed in a jury trial, but the trial court granted the employer a new trial. The 11th Circuit affirmed in part and reversed in part. The US Supreme Court granted certiorari and remanded the case for correction of two errors in the 11th Circuit opinion. (1) There was evidence that the plant manager (the decisionmaker) referred to each of the employees as "boy." The 11th Circuit held that use of "boy" alone (without adding "white" or "black") was not evidence of racial animus. The US Supreme Court said this was error because "The speaker's meaning may depend on various factors including context, inflection, tone of voice, local custom, and historical usage." (2) The employees submitted evidence that their qualifications were better than the two whites that were promoted. This evidence was designed to prove pretext. The 11th Circuit's rule is: "Pretext can be established through comparing qualifications only when 'the disparity in qualifications is so apparent as virtually to jump off the page and slap you in the face.'" US Supreme Court said that this visual image "is unhelpful and imprecise." The Court rejected the 11th Circuit's standard without suggesting what the proper standard is.

FLSA - Pre-shift waiting time not compensable, all other time is compensable.

IBP, Inc v. Alvarez and Tum v. Barber Foods (11/08/2005): In the meat cutting industry employees must wear special protective clothing. The daily pattern is that employees (1) wait to pick up and don the clothing, (2) don the clothing, (3) walk to the individual work station, (4) work, (5) walk back to where they started, (6) wait to doff the clothing, (7) doff the clothing. The issue was whether the walking and waiting time was compensable time under the Fair Labor Standards Act (FLSA) and the Portal-to Portal Act. In a unanimous decision, the US Supreme Court held that the pre-shift waiting-to-don time was not compensable, and that all other time was compensable.

42 USC Section 1981 - Individual who was not a contracting party has no standing to sue under 42 USC 1981.

Domino's Pizza v. McDonald (02/22/2006): The Court holds (unanimously) that a plaintiff who lacks any rights under an existing contractual relationship with the defendant, and who has not been prevented from entering into such a contractual relationship, cannot bring suit under 42 USC Section 1981. Domino's Pizza had entered into several contracts with JWM Investments, a corporation.. McDonald, an African-American, was an officer and the sole shareholder the JWM corporation. McDonald personally was not a party to the contracts. McDonald sued Domino's claiming that Domino's terminated its contracts with JWM because of race. The suit was brought under 42 USC Section 1981 which provides that "All persons within the jurisdiction of the United States shall have the same right ... to make and enforce contracts ... as is enjoyed by white citizens."

No federal court jurisdiction for health plan's reimbursement case (5-4)

Empire HealthChoice v. McVeigh (06/15/2006): Under the Federal Employees Health Benefits Act, the US Office of Personnel Management (OPM) negotiates health benefit plans for federal employees. OPM contracts with Blue Cross to provide a nationwide health plan, and Empire administers the plan in New York. McVeigh's decedent was injured and received medical benefits under the plan, and later McVeigh recovered a settlement against third parties who allegedly caused the injuries. Empire sued McVeigh in federal court seeking reimbursement, and asserting jurisdiction under 28 USC Section 1331 (actions arising under the laws of the United States). The Court held that federal courts do not have jurisdiction under Section 1331. Empire's claim was based on provisions in the contract between OPM and Blue Cross, and is governed by state law. Empire's claim is not a creature of federal law.

Bankruptcy - Workers comp premiums have no bankruptcy priority (6-3).

Howard Delivery Service v. Zurich American Ins (06/15/2006): An employer went bankrupt, owing unpaid workers compensation insurance premiums to its insurer. The Court held that workers compensation premiums were not unpaid "contributions to an employee benefit plan" under 11 USC Section 507(a)(4), and thus were not entitled to a priority in bankruptcy. 

RICO - Employee v. employer RICO case sent back to 11th Circuit.

Mohawk Industries v. Williams (06/05/2006): The Court did not decide this case, and remanded it to the 11th Circuit for reconsideration in light of Anza v. Ideal Steel Supply Corp (US Supreme Court 06/05/2006). 

Federal Employees - Civil Service Reform Act jurisdiction case sent back to the 9th Circuit.

Whitman v. Department of Transportation (06/05/2006): The Supreme Court said that the 9th Circuit was correct in saying that the Civil Service Reform Act does not confer federal court jurisdiction. However, 28 USC Section 1331 confers jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." Therefore, the question is not whether the Civil Service Reform Act confers jurisdiction, but whether it removes the jurisdiction granted by Section 1331. This, in turn, may require findings as to whether Whitman's allegations state a "prohibited personnel practice." The Court remanded for consideration of this issue, and suggested several other issues that may be addressed on remand.

Case Pending

In the following case the United States Supreme Court has granted certiorari to review the decision of a lower court. Subscribers to Employment Law Memo receive a summary of the decisions on the same day the decisions are announced.

Title VII statute of limitations - How does Title VII's 180-days statute of limitations apply to periodic paychecks alleged to be discriminatory?

Ledbetter v. Goodyear Tire & Rubber (No. 05-1074): Ledbetter claimed her employer paid her a smaller salary than it paid male co-workers because of her sex. Her periodic paychecks were based on annual salary reviews over a period of several years. The 11th Circuit held that her claim was time barred because she could not prove intentional discrimination in either (1) the one decision during the limitations period or (2) the last decision preceding the limitation period. The US Supreme Court will review the 11th Circuit decision during its 2006 Term which begins in October. Decision below: Ledbetter v. Goodyear Tire & Rubber (11th Cir 08/23/2005).

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