Today’s News & Commentary — April 25, 2019


Published April 25th, 2019 - 04.25.195


In Lamps Plus v. Varela, the Supreme Court held yesterday that “[u]nder the Federal Arbitration Act, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration.”  In the case, Lamps Plus fell prey to a hacker’s scheme and disclosed the tax information of about 1,300 Lamps Plus employees.  One employee, Frank Varela, filed a putative class action against the company.  Because Varela had signed an employment contract with an arbitration agreement, Lamps Plus sought to compel individual arbitration of Varela’s claim.  But the arbitration agreement appeared ambiguous as to whether Varela had waived his right to class arbitration even if he clearly waived his right to a class action in court.  The agreement specified that arbitration would be used “in lieu of any and all lawsuits or other civil legal proceedings” for any claims “that, in the absence of this Agreement, would have been available to the parties by law.”  It also permitted the arbitrator to “award any remedy allowed by applicable law.”  The district court authorized class arbitration.  The Ninth Circuit affirmed, basing its decision “on the state law contra proferentem doctrine, which counsels that contractual ambiguities should be construed against the drafter.”  The Supreme Court reversed.  First, the Court cited its 2010 decision in Stolt-Nielsen v. Animalfeeds Int’l Corp., in which it held that a court cannot compel class arbitration when an arbitration agreement was silent as to its availability.  Ambiguity, like silence, does not provide the necessary affirmative consent for group proceedings.  The Court also rejected the Ninth Circuit’s application of the state law doctrine, claiming that even though it afforded equal treatment to arbitration agreements and other contracts, the outcome of compelling class arbitration “sacrifices the principal advantage of arbitration—its informality.”  Absent clear agreement between the parties to pursue class arbitration, the FAA’s (court-fashioned) default rule of individual arbitration applied.  Each of the four liberal justices wrote his or her own dissent.

Bloomberg Law reports that the Equal Employment Opportunity Commission (EEOC), which in recent years has interpreted Title VII as protective of LGBTQ workers, may not be able to share its views before the Supreme Court when the justices consider three cases on the question next term.  The decision of whether to invite the EEOC to participate in briefing is ultimately up to the Department of Justice, which has taken the opposite position on Title VII’s reach.  Predictions for the DOJ’s course of action vary.  Employment lawyer Carolyn Wheeler told Bloomberg Law that the chances the DOJ involves the EEOC “are zero,” while Professor Anthony Michael Kreis reasoned that sidelining the agency might cause unnecessary trouble for the DOJ since the EEOC’s position is already well known.

Writing for The New York Times this morning, Linda Greenhouse provides a more optimistic take on the Title VII LGBTQ cases than most Supreme Court watchers have expressed.  The decision to take up the cases, Greenhouse begins, “was no snap judgment.”  The Court only granted cert after a rare eleven conferences of deliberation.  “If the court didn’t make a snap judgment,” she contends, “neither should we when it comes to understanding what just happened and what might come next.”  Greenhouse “believe[s] that there was an extended negotiation among the justices, aimed at crafting questions that would open up the case rather than skew it in the employer’s direction.”  In the Harris case, she points positively to the Court’s rejection of the Alliance Defending Freedom’s narrow framing of the questions presented, which focused on whether “sex” meant “gender identity” at the time of Title VII’s passage and whether Price Waterhouse bars employers from applying sex-specific policies, such as dress codes, on the basis of an employee’s sex (as distinct from gender identity).  Instead, the Court asked “[w]hether Title VII prohibits discrimination against transgender people based on (1) their status as transgender or (2) sex stereotyping under Price Waterhouse v. Hopkins.”  Greenhouse believes that the Court’s framing of the question reflects “a broad view of stereotyping, well beyond the dress code issue.”  Ultimately, she suggests her analysis is less “a prediction than a caution against jumping to conclusions.”

Full-time, non-tenure-track faculty at Northeastern University have again withdrawn a petition for a union representation election out of fears that the Republican-dominated Board will overturn Pacific Lutheran.  Under that 2014 decision, the Obama Board adopted a new test for determining whether full-time adjuncts are managerial employees ineligible to unionize under the National Labor Relations Act.  In its 1980 Yeshiva University ruling, the Supreme Court held that the crucial inquiry for managerial status is whether university faculty exercise “effective[] control” over central university policies.  In Pacific Lutheran, the Board established a “majority status rule” for “effective control.”  Under this test, the faculty have to constitute a majority on university committees that exercise decision-making power with respect to “central” university policies, and the committees’ recommendations must “routinely” become “operative without independent review.”

5 recommended
bookmark icon