Synopsis of 2017 Supreme Court Commentary: Employment Law

Published August 31st, 2017 -  - 08.31.1710


Last term’s Supreme Court decisions, particularly in the employment area, suggest that the Court was simply marking time while it functioned without a ninth Justice and Presidential politics occupied center stage. But to this observer, the thin and relatively uncontentious body of employment work is as ominous as it is anodyne.  In short, last term may be best regarded as a quiet prelude to a dramatic reshaping of employment jurisprudence. Judge for yourself from the following brief synopsis of the 2016-2017 employment cases.

The only significant labor law case was actually an administrative law decision. NLRB v. SW General, Inc., 137 S. Ct. 929 (2017), cast doubt on hundreds of decisions made by or on behalf of Lafe Solomon, as acting General Counsel of the National Labor Relations Board, by holding that the Federal Vacancies Reform Act made him ineligible to serve in an “acting”capacity after President Obama nominated him as General Counsel on a permanent basis.  While the Court’s ruling disqualifying Presidential nominees from serving in an “acting” capacity is important on its own footing, the practical labor law consequence of its decision is a huge body of NLRB decisions left open to challenge.

In the usually busy area of employment discrimination the Court failed to resolve a single substantive issue for the first time in many years.  It did, however, unanimously rule in McLane Co., Inc. v. EEOC, 137 S. Ct. 1159 (2017), that district court decisions enforcing (or quashing) EEOC investigative subpoenas should be reviewed only for abuse of discretion, and not on a de novo basis.  The Court also reminded that a district court must not use its discretion to test the strength of a charge, but shall only satisfy itself that that the charge is valid and that the requested material is relevant.  A subpoena should be enforced unless the employer establishes that it is too indefinite, has been issued for an illegitimate purpose or is unduly burdensome.

Employee benefits and compensation was the most active aspect of employment law last term.  Advocate Health Care Network v. Stapleton, 137 S. Ct. 1421 (2017), unanimously broadened ERISA’s “church plan” exemption to include benefit plans that were originated by secular employers, thus depriving countless thousands of employees of statutory protection and putting religious-affiliated employers at a market advantage.  Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2017), held that the Bankruptcy Act’s priority scheme must be respected and that Bankruptcy judges may not approve distributions from an employer’s estate that ignore the Act’s
priority for wages without consent of the affected creditor-employees.  Although the workers in this case may wind up only with a pittance, if anything at all, this decision puts a welcome damper on creditor ploys ignoring wage claims altogether. Coventry Health Care of Missouri, etc. v. Nevils, 137 S. Ct. 1190 (2017), unanimously held that the Federal Employees Health Benefits Act preempts state prohibitions on subrogation or reimbursement of a federal employee’s medical expenses.  The upshot is that health insurance carriers’ liens against tort settlements received by federal employees are enforceable despite state attempts to limit them.  BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017), held that an employer neither incorporated, headquartered nor “at home” in Montana was not subject to personal jurisdiction in Montana when sued under the Federal Employees Liability Act by employees who reside in other states.  This decision effectively inoculates multi state employers against forum shopping and its possible untoward consequences.

Adjective decisions turned out splendidly for employers.  In Kindred Nursing Centers, etc. v. Clark, 137 S. Ct. 1421 (2017), the Court ruled that Kentucky’s “clear statement” rule invalidating a nursing home arbitration agreement was unenforceable because it singled out arbitration for unfavorable treatment in violation of the Federal Arbitration Act (“FAA”).  No surprise here, as the Court’s romance with arbitration continues unabated, despite the fact that prior decisions dealt with contract enforcement, while this case was concerned solely with contract formation. For workers this decision is bad news because its rationale supports a similar outcome for employee arbitration agreements. Similarly, class action plaintiffs seeking to overturn a certification denial can no longer dismiss their individual claims and then appeal the denial as a final judgment, according to the Court’s unanimous decision in Microsoft v. Baker, 137 S. Ct. 1702 (2017), a non-employment decision.  The Court’s rationale for halting this tactic (i.e., because it tends to force defendants into potentially ruinous class settlements) would likely apply in putative employment class actions, too.

In the miscellaneous category, Perry v. Merit Systems Protection Board, 137 S. Ct. 1975 (2017), held that when the MSPB dismisses a so-called “mixed case” (i.e., civil service and discrimination claims together), the proper review forum is a district court, not the Federal Circuit.  The real story here, however, is not the result, but a startling dissenting opinion by Justice Gorsuch.  “Startling” is a soft euphemism, as his opinion outright lectures Justice Ginsburg and the majority about the fundamentals of American government and the appropriate way that members of the Court should decide cases.  Judge for yourself when you read the opinion, but Linda Greenhouse captured its essence in an op-ed for the New York Times: “He [Justice Gorsuch] is in his colleagues’ faces pointing out the error of their ways, his snarky tone oozing disrespect toward those who might, just might, know what they are talking about.”  An ominous debut, indeed.

Finally, the real employment topper of the Term was not a merits decision, but the Court’s grants of certiorari in three cases consolidated for argument on the first day of the upcoming term.  At stake is whether employee claims can lawfully be forced into mandatory individual arbitration.  The issue in Epic Systems Corp v. Lewis (No. 16-285), Ernst & Young LLP v. Morris (No. 16-300) and NLRB v. Murphy Oil USA (No. 16-307) is whether agreements waiving class and collective actions and requiring resolution of employment disputes by individual arbitrations are enforceable under the FAA, notwithstanding the NLRA’s protection for employee concerted activity (read more of OnLabor’s ongoing coverage of the case here).  To say the least, this case may alter labor and employment law in ways that could materially impair enforcement of workers’ rights.  And, finally, in like fashion it’s just a matter of time before the Court seeks again to reshape the jurisprudential landscape by overruling Abood v. Detroit Bd. of Educ., 431 U.S. 209 (1977), thus completing a task that Justice Scalia’s death interrupted in early 2016.  Taken together, these two developments pose an existential moment for employment and labor rights.  That’s why the past term seems more a prelude to explosive developments than simply a slender docket of uninteresting decisions.

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