The Supreme Court Vacancy and Labor: Paul Watford

Published March 9th, 2016 -  - 03.09.1615


This post is part of an ongoing series on the labor decisions and positions of some of the likely potential picks to replace Justice Scalia on the Supreme Court.

Paul Watford has been a judge on the 9th Circuit since his nomination by President Obama in 2012.  He was confirmed by the Senate by a vote of sixty-one to thirty-four, with nine Republicans voting in favor of his nomination.  48 years old and African American, Judge Watford clerked for Judge Kozinski, a Ronald Reagan-appointee, and for Justice Ginsburg.  While serving as an Assistant United States Attorney, Judge Watford worked in the Criminal Division and in Major Frauds before heading to Munger, Tolles & Olson.  Watford notably co-authored an amicus brief on behalf of doctors, clinical ethicists, and other medical professionals in support of death row inmates challenging Kentucky’s lethal injection practices.  Additionally, he assisted with a brief for minority business owners as amici in a case about what actions Congress can take to remedy racial discrimination.

Arbitration Agreements

Although Judge Watford doesn’t have an extensive paper trail when it comes to labor and employment decisions, he did author the opinion for one of California’s hot button employment cases in 2014.  In two separate, but concurrent suits — one alleging Bloomingdale’s violated California wage law and another alleging Nordstrom violated federal and state employment laws — the Ninth Circuit, a frequently employee-friendly bench, sided with the retailers and compelled individual arbitration of claims brought by workers as putative class actions.

Judge Watford wrote the opinion for Johnmohammadi v. Bloomingdale’s, Inc., holding that a former sales associate who filed a putative class action to recover unpaid overtime had entered into a valid arbitration agreement and forfeited her class action rights with respect to employment disputes.  Since the arbitration clause had an opt-out provision that the employee failed to exercise, Judge Watford held that the NLRB’s decision in D.R. Horton was inapplicable, and that “by not opting out within the 30-day period, she became bound by the terms of the arbitration agreement.”  Since the employee was admittedly fully informed of the consequences of failing to opt-out, “and she did so free of any express or implied threats of termination or retaliation,” the waiver was upheld.

The facts of Davis v. Nordstrom are slightly different, and although the court did not raise the issue, the particulars of the class action waiver do seem to implicate NLRA and D.R. Horton concerns.  The case, in which Judge Watford voted with the majority but did not author the opinion, involved an arbitration policy that Nordstrom revised in light of the Supreme Court’s 2011 ruling in AT&T Mobility v. Concepcion.  The new arbitration provision, which did not include an opt-out, required employees to arbitrate “nearly all claims” individually, and precluded employees from filing most class action lawsuits.  Nordstrom sent letters to employees informing them of the policy change, but several weeks later, an employee filed a wage-related putative class action alleging violations of federal and state employment laws.  The Ninth Circuit found that although Nordstrom did not explicitly tell workers the arbitration policy would change 30 days from the notice, since it refrained from enforcing the new policy until after the 30-day period, the rollout met the minimum notice requirement.  The court chastised Nordstrom for not being a model of clarity in implementing the new rule, but held that continued employment constituted acceptance of new terms of employment, even though the employee’s only real options were to submit to the new terms or quit.  Given that there was no opt-out provision, the employee also argued that the arbitration agreement was unconscionable under California case law.  The district court never reached the unconscionability issue, and the Ninth Circuit declined to exercise discretion to address the issue on appeal.

Judge Watford avoided potential D.R. Horton concerns in the Bloomingdale’s case due to the explicit opt-out, but the Nordstrom case does seem to more directly implicate NLRA issues.  It’s possible Horton is inapposite to Nordstrom because the arbitration clause required employees to waive their collective action rights only in “nearly all” instances.  But by not addressing the issue head on and refusing to evaluate the claims of unconscionability, the court approved an arbitration clause that might be unlawful under the NLRA.  However, the Ninth Circuit has not overtly ruled on the issues raised in D.R. Horton, which the Fifth Circuit has since reversed and a number of others have also rejected.

Aside from potential NLRA issues, both opinions certainly open the door for employers to impose alterations to practically mandatory arbitration provisions on existing employees, as well as new hires as long as there is reasonable notice.  This run of cases gives employers great latitude to alter existing practices, and to impose extremely restrictive class action waiver requirements on employees who have little recourse short of quitting.

A Grant of Latitude to the EEOC

In U.S. EEOC v. McLane Co., Judge Watford wrote an opinion upholding an expansive subpoena for personnel information by the EEOC against an employer in relation to a sex discrimination case.  The EEOC was investigating a Title VII claim filed against McLane Co. Inc., a grocery and foodservice company, by a former employee, who was fired when she failed to pass a potentially discriminatory physical strength test after returning from maternity leave.  McLane refused to release certain data to the EEOC, including the gender of each test taker and the reasons employees were terminated after taking the test.  In a unanimous ruling, Judge Watford held that the information (including contact info, social security numbers, gender, and reasons for termination) was relevant to the EEOC’s investigation as it might cast light on the allegations against the grocery chain.  As a result of this ruling, it seems the EEOC has latitude to be much more aggressive in demanding contact and personal information of employees in future discrimination cases.

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