In a case interpreting a statutory provision allowing district courts to award attorneys’ fees to defendants in employment discrimination actions under Title VII, Justice Kennedy, writing for the Supreme Court, held that a defendant need not obtain a favorable judgment on the merits in order to be a “prevailing” party. The Court reversed an Eighth Circuit decision holding that a Title VII defendant can be a prevailing party only by obtaining a “ruling on the merits” and that the district court’s dismissal of the EEOC’s claims against CRST Van Expedited, including those on behalf of 67 women that it found to be barred based on the Commission’s failure to adequately investigate or attempt to conciliate, was not a ruling on the merits. “Common sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant disposition is on the merits,” the Court observed, noting that plaintiffs and defendants come to court with different objectives and that a defendant has fulfilled its primary objective whenever the plaintiff’s challenge is rebuffed, irrespective of the precise reason for the court’s decision (CRST Van Expedited, Inc. v. EEOC, May 19, 2016, Kennedy, A.).
EEOC suit. In 2007, the EEOC filed a sweeping Title VII suit against trucking company CRST, after a female driver alleged that two male trainers sexually harassed her during an over-the-road training trip. During its investigation, the agency discovered that four other women had filed charges against the company. It ultimately informed the company that it found reasonable cause to believe it subjected the employee and a class of prospective employees to sexual harassment. After conciliation efforts failed, the EEOC sued CRST under Section 706 of Title VII, alleging it was responsible for severe or pervasive sexual harassment in its new-driver training program. The agency claimed CRST subjected approximately 270 similarly situated female employees to a hostile work environment.
In a series of rulings, the district court barred the EEOC from pursuing relief for individual claims on behalf of all but 67 of the women, based variously on discovery sanctions; the statute of limitations; judicial estoppel; CRST’s lack of knowledge of the alleged harassment; insufficient evidence of severe or pervasive sexual harassment; failure to report harassment; and because the EEOC failed to investigate, issue a reasonable cause determination, and conciliate the claims of a number of putative class members. It also found that the Commission had not established a pattern or practice of tolerating sexual harassment.
Attorneys’ fees vacated. Dismissing the suit, the district court held that CRST was the prevailing party. Finding that the Commission’s failure to satisfy its pre-suit obligations on behalf of the final 67 women was unreasonable, it subsequently awarded the company over $4 million in attorneys’ fees. On appeal, the Eighth Circuit reversed only the dismissal of claims on behalf of two women and vacated the attorneys’ fee award, finding that CRST was no longer a prevailing defendant because the Commission still asserted live claims against it.
On remand, the Commission settled the claim on behalf of one claimant and withdrew the other. CRST again sought attorneys’ fees, and the district court again awarded it more than $4 million. Holding that a Title VII defendant can be a prevailing party only by obtaining a ruling on the merits, the Eighth Circuit again reversed. It reasoned that because Title VII’s pre-suit requirements are not elements of a Title VII claim, the dismissal of the claims regarding the 67 women on the ground that the Commission failed to investigate or conciliate was not a ruling on the merits and CRST did not prevail on those claims.
Merits decision not required. In reversing and remanding the Eighth Circuit, the High Court found no indication that Congress intended that defendants should be eligible to recover attorney’s fees only when courts dispose of claims on the merits. “The congressional policy regarding the exercise of district court discretion in the ultimate decision whether to award fees does not distinguish between merits-based and nonmerits-based judgments,” the Court stated, noting that as it explained in Christiansburg Garment Co. v. EEOC, one purpose of the fee-shifting provision is “to deter the bringing of lawsuits without foundation.”
Thus, said the Court, it has interpreted the statute to allow prevailing defendants to recover whenever the plaintiff’s claim was frivolous, unreasonable, or groundless. “Congress must have intended that a defendant could recover fees expended in frivolous, unreasonable, or groundless litigation when the case is resolved in the defendant’s favor, whether on the merits or not. Imposing an on-the-merits requirement for a defendant to obtain prevailing party status would undermine that congressional policy by blocking a whole category of defendants for whom Congress wished to make fee awards available,” the Court wrote.
Noting that various courts of appeals have applied the Christiansburg standard when claims were dismissed for nonmerits reasons, the Court here explained that in cases like these, significant attorney time and expenditure may have gone into contesting the claim, and Congress “could not have intended to bar defendants from obtaining attorney’s fees” on the basis that, although the litigation was resolved in their favor, they were nonetheless not prevailing parties.
Preclusive judgment. As to the Commission’s argument that a defendant must obtain a preclusive judgment in order to prevail, the Court declined to decide this issue, noting that the Commission changed its argument between the certiorari and merits stage and may have forfeited the preclusion argument by not raising it earlier.
The court left the ultimate decision on attorneys’ fees for the Eighth Circuit to consider.
Justice Thomas’ concurrence. In a separate opinion, Justice Thomas agreed that the Court correctly vacated the Eighth Circuit’s ruling and joined its opinion in full. He asserted, however, his belief that Christiansburg “is a ‘dubious precedent’ that I will ‘decline to extend’ any further.”
Impact on employers. Commenting on the decision, Employment Law Daily advisory board member David Wachtel (Trister, Ross, Schadler & Gold, PLLC) noted that the CRST decision “should not result in an increase in fee awards for employers, or discourage employees from filing suits, because the Court leaves intact the requirement that a defendant can only obtain fees after showing that the employee’s position was ‘frivolous.’” Only Justice Thomas expressed a desire to overturn that heightened standard for defendants, he observed.
“EEOC seems to have survived to fight another day. In the Court of Appeals, they may argue that CRST did not prove that the case was frivolous, or that CRST does not get fees because it did not obtain a judgment with preclusive effect,” he stated, noting that the Court mentioned that the latter argument might get knocked out because it was not raised until EEOC’s Supreme Court brief.
“It sounds strange that the Court, about 16 years ago, rejected the ‘catalyst theory’ for plaintiffs and now accepts it–or something like it—for defendants. But whether that holding is one-sided or not, I believe it won’t change the number of cases employees file,” Wachtel suggested.
In a Fair Credit Reporting Act (FCRA) case with clear implications for employers who rely on consumer reporting agencies to run background checks (and so must follow the Act’s notice requirements), the Supreme Court held that the Ninth Circuit erred in analyzing whether a plaintiff suing over inaccuracies in his credit report had Article III standing. Specifically, the appeals court analyzed whether the alleged injury (a statutory violation) was particularized but failed to also consider if the injury was “concrete”—both are required. Remanding for further analysis, the High Court noted that “bare” procedural statutory violations will not automatically confer standing, but they may be enough if there is a risk of real harm (Spokeo, Inc. v. Robins, May 16, 2016, Alito, S.).
Spokeo, a consumer reporting agency, operates a “people search engine” which searches various databases to gather and provide personal information about individuals to a variety of users, including employers wanting to evaluate prospective employees. According to the plaintiff, Spokeo violated the FCRA by generating a personal profile for him that contained inaccurate information (for example, it stated that he is married, with children, in his 50s, and has a job, all of which was incorrect). He filed a federal class action alleging the company willfully failed to follow reasonable procedures to assure maximum possible accuracy of consumer reports.
Proceedings below. Dismissing the suit, the district court held that the plaintiff did not allege injury in fact as required to establish standing to sue under Article III. The Ninth Circuit reversed. Based on the plaintiff’s allegation that “Spokeo violated his statutory rights” and the fact that his “personal interests in the handling of his credit information are individualized,” the appeals court found that he adequately alleged injury in fact.
Standing requires “concrete and particularized” injury. Reversing, the Supreme Court found that the Ninth Circuit’s injury-in-fact analysis was incomplete because it focused only on whether the alleged injury was “particularized” and left out the independent requirement that the injury be “concrete.” The High Court explained that a “concrete” injury need not be a “tangible,” but a plaintiff will not automatically satisfy the injury-in-fact requirement whenever a statute grants a right and purports to authorize a suit to vindicate it. Thus, while Congress plays an important role in identifying injuries and creating causes of action, there must still be a concrete injury, even in the context of a statutory violation. Thus a plaintiff cannot show a concrete injury by alleging a bare procedural violation, divorced from any concrete harm.
Risk of injury may be enough. That said, the High Court further explained that a risk of real harm can in some circumstances satisfy the requirement that an injury be concrete. Thus, a plaintiff in that type of case would not need to allege any additional harm beyond the one that Congress identified.
More information needed. As to the FCRA, Congress plainly sought to curb dissemination of false information by adopting procedures to reduce that risk. On the other hand, the plaintiff could not satisfy Article III by alleging “bare” procedural violations, because a violation of one of the Act’s procedural requirements might result in no harm. For example, wrote the Court, “even if a consumer reporting agency fails to provide the required notice to a user of the agency’s consumer information, that information regardless may be entirely accurate. In addition, not all inaccuracies cause harm or present any material risk of harm.” Because the Ninth Circuit failed to fully analyze whether the alleged injury was both particularized and concrete, the case was remanded.
Dissent. Justice Ginsburg, with whom Justice Sotomayor joined, agreed with “much of the Court’s opinion,” but parted ways as to the necessity of remand. Judging by what the Court said about “concreteness” as a reference to “the reality of an injury, harm that is real,” though not necessarily tangible, the plaintiff’s allegations crossed that threshold, found the dissent. He did more than allege a “bare” procedural violation—he complained of misinformation about his education, family situation, and economic status that affected his ability to find a job, including making it appear that he was overqualified for work he was seeking.
Experts react: “Mixed bag” ruling? Employment Law Daily reached out to advisory board member and experienced labor and employment attorney Chris Bourgeacq (The Chris Bourgeacq Law Firm) for his reaction: “The Court’s ruling may prove to be a mixed bag for employers and employees alike. Instead of bright-lining for both parties what is or is not a ‘concrete’ injury sufficient to satisfy Article III standing, the Court leaves us to guess in future cases—except where the only alleged violation is an incorrect zip code! The takeaway does not appear to strongly favor either side for FCRA claims, although we will certainly see some really creative descriptions of ‘intangible’ harm in future cases.”
What about mere “technical” FCRA violations? Asked about the impact of Spokeo on cases against employers that involve only technical violations—such as those involving non-substantive extraneous language in a pre-background check notice, which the FCRA requires must consist solely of a disclosure that a background check may be used in employment decisions—Bourgeacq opined that “[p]arties will continue to debate whether the plaintiff has alleged or can prove any concrete injury, even if only intangible, from a technical violation of the FCRA.” He suggested that examples can be gleaned from class actions involving data breaches, where plaintiffs argue numerous tangible and intangible harms due to a breach, including emotional distress, and time and money spent correcting credit reports.
Attorney Stephen Woods, chair of Ogletree Deakins’ Background Check Practice Group, found a slightly more positive effect for employers: “The Spokeo decision helps employers—by making it harder for plaintiffs’ lawyers simply to point to either extraneous information in a background check disclosure form/screen or an adverse action without the required pre-adverse action letter and attachments, and by doing so, automatically establish a “concrete” harm. The decision, however, leaves the door open on what the Ninth Circuit and other courts will decide qualifies as a concrete harm. A court may find the inclusion of a ‘liability release’ sentence satisfies the requirement if, for example, a plaintiff alleges the sentence distracted her from the required disclosure.”
Woods also cautioned: “Employers also should remember that Spokeo does not diminish state and local mini-FCRA requirements (e.g., the California ICRAA, New York’s Article 23-A, and New York City’s Fair Chance Act); as with the federal FCRA (especially until we see how lower courts will interpret Spokeo), employers should continue to be vigilant in complying with these local, state, and federal requirements.”
Expect more creative plaintiffs, not fewer FCRA cases. Bourgeacq gave this takeaway: “Don’t expect FCRA class actions to subside anytime soon as a result of today’s Spokeo decision. If nothing else, the decision calls for even more creativity in establishing intangible harms from hyper-technical missteps in FCRA compliance. Perhaps the real fix should be correcting the FCRA and eliminating the pitfalls for technicalities? But as a wise jurist once said, ‘One man’s technicality is another’s substantive right.’ And so it seems.”
Meanwhile . . . comply with FCRA requirements. While the effects of Spokeo play out, employers that rely on credit reporting agencies will justifiably remain concerned with the hyper-technical notice requirements of the Act. Briefly, the key FCRA provisions that seem to lead to lawsuits include the following requirements for employers:
- Before obtaining a consumer report with credit or criminal background info: In a stand-alone document, state that the information may be used for employment decisions. Do not put the notice in an application, and avoid extraneous language in the notice. Importantly: present any release form in a separate document to be read separately. If seeking an “investigative report” (based on personal interviews) disclose the individual’s right to a description of the nature and scope of the investigation. In a separate document get written permission to do the background check. Certify to the company supplying the report that you gave notice; got permission; complied with FCRA requirements; and will not violate federal or state laws.
- Before taking an adverse action based on the report: Provide a copy of the consumer report and “A Summary of Your Rights Under the Fair Credit Reporting Act.” Give the individual a chance to challenge or explain negative information.
- After taking the adverse action: tell the individual (orally, in writing, or electronically) that he or she was rejected because of information in the report; provide the name, address, and phone number of the company that sold the report; and state that he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.
Additional information on the FCRA’s requirements can be found in a joint publication from the EEOC and FTC: “Background Checks: What Employers Need to Know.” The FTC has also provided a summary of FCRA requirements in “Using Consumer Reports: What Employers Need to Know,” as well as information on recordkeeping requirements and proper disposal of background reports in “Disposing of Consumer Report Information? Rule Tells How.” Obviously, employers are well advised to seek the advice of an experienced employment law attorney before relying on consumer reports for background checks.
The U.S. Chamber of Commerce’s Workforce Freedom Initiative (WFI) on May 12 released a report that underscores labor law reforms that states can enact “to foster a favorable business environment.” The report is a virtual playbook for lawmakers who want to enact labor reforms, especially those aimed at curbing union activity, while still avoiding conflicts with federal law. The study, State Labor Law Reform: Tools for Growth, reviews 10 specific reforms that have been adopted by various states in recent years—for example, the right-to-work laws passed in Indiana, Michigan, West Virginia, and Wisconsin. Right-to-work laws generally bar requirements that workers must join unions or pay union fees as a condition of employment.
In the interest of fairness … From the employee perspective, however, “workforce freedom” and “right-to-work” laws may look a little different. “The interest of state governments in right-to-work laws is understandable,” according to the report. “Government data indicates a positive correlation between job growth and right-to-work.” According to an August 2015 briefing paper, The Union Advantage For Women, released by the Institute for Women’s Policy Research, however, “right to work” states are associated with lower wages for all workers (both union and nonunion), especially women.
However, in the context of the public at large, a January 2014 Gallop poll showed that Americans widely support right-to-work laws.
High- and low-profile reforms. Returning to the WFI report, it highlights not only high-profile state labor law reforms, but also lesser-known ones, such as the Nevada legislature’s passage of a mass picketing statute in 2015, a Tennessee statute that allows threats associated with union organizing to be prosecuted under the state’s bribery and extortion law, and state preemption statutes.
The 10 state labor law reforms featured in the report include: right-to-work laws; state franchise law reform; prohibitions on “labor peace” agreements; prohibitions on “project labor” agreements; state preemption of minimum wage and other city ordinances; state preemption of “wage theft” laws; mass picketing legislation; trespassing legislation; classifying “neutrality” and “card check” agreements as “things of value”; and prohibiting “card check” union organizing for public employees.
Picking up where federal law leaves off. The report also provides roadmaps for each the various state labor law reforms that, presumably, help lawmakers understand where federal law leaves off and state law picks up. “Many states have decided to take the lead in boosting their business climates by passing critical labor law reforms,” said Glenn Spencer, vice president of WFI. “Given the record of the past seven years, they’ve realized that Washington doesn’t always know best.”
Keeping unions in check. The majority of the featured labor reform laws are aimed at keeping unions in check—mostly music to the business community, which tends to view unions as a hindrance rather than a help. Still, a January 2015 Gallop poll found that Americans always have been more likely to say that they approve than disapprove of labor unions, and historically, have sympathized with unions over companies in labor disputes. Nonetheless, Gallop called the public’s appetite for strengthening unions “moderate at best.” Its data showed that 35 percent of Americans say they would personally like to see labor unions have more influence than they have today (January 2015), versus 27 percent who prefer less influence, and 23 percent who would like union influence to remain the same.
About the WFI. The Workforce Freedom Initiative calls itself “a grassroots mobilization and advocacy campaign to preserve democracy in the American workplace, restrain abusive union pension fund activism, and block the anti-competitive agenda advocated by many labor unions.”
A growing gig economy. An April 20, 2016, Boston Globe article quotes a 2014 study commissioned by the Freelancers Union saying that 53 million Americans are independent workers, about 34 percent of the total workforce. It also cites a study from Intuit predicting that by 2020, 40 percent of U.S. workers will be independent workers. The Wall Street Journal suggests that although there has been a large growth in “tenuous work arrangements,” that growth has taken place largely offline—in traditional jobs and industries where more and more workers find themselves in contract jobs. As for the online gig economy, however—pundits estimate that it might be “mostly Uber.”
What does it mean for employment law? Perhaps because of its bellwether status, Uber is facing litigation on a number of fronts. Below are some of the most notable examples, which can serve as an illustration of the types of issues a company operating in the new model may face:
Misclassification—Uber proposes $100M settlement. Just weeks after a federal district judge for Northern California denied preliminary approval to a $12M class action settlement to resolve Lyft drivers’ misclassification claims—because the settlement was based on an “artificially low estimate” of damages (Cotter v. Lyft, Inc.)—Uber said April 21st that it was prepared to pay up to $100M to drivers in California and Massachusetts to settle their Rule 23 class actions, also based fundamentally on charges it misclassified its drivers as independent contractors. Notably, however, the proposed settlement agreement maintains the drivers’ status as independent contractors, the same approach taken by plaintiffs’ counsel in both the Lyft and Uber proposed settlements.
What’s the deal? In a proposed settlement agreement filed in the Northern District of California, Uber says it is ready to resolve two class actions: O’Connor v. Uber Technologies, Inc., No. CV 13-03826-EMC, a suit brought by California drivers, and Yucesoy v. Uber Technologies, Inc., No. 3:15-00262-EMC, involving Massachusetts drivers. According to the motion for approval, the settlement entails significant nonmonetary relief in addition to the $100m haul: Uber will only be able to deactivate drivers from the Uber platform for sufficient cause. Also, Uber will fund and facilitate the creation of a “driver association.” Uber has agreed to meet on a quarterly basis with elected driver leaders, who can create a dialogue for further programmatic relief that comes from the drivers themselves, to discuss and, in good faith, try to address driver concerns. The organization will not be a union and it will have no right or capacity to bargain collectively, according to court documents. (This type of apparently employer-dominated “meet and confer” association potentially could be considered unlawful under the National Labor Relations Act Section 8(a)(2), but in any event, because the proposed agreement retains the drivers’ classification as independent contractors rather than employees, the NLRA would not apply.)
Enter the Teamsters. With the ink barely dry, the Teamsters union announced it is willing to help create those “driver associations” the settlement contemplates. Teamsters Joint Council 7 on April 22 announced it will help create a so-called driver “association,” despite the fact that the Uber settlement expressly preserves the drivers’ status as independent contractors (thus, not covered employees under the NLRA). But the union said it has received “overwhelming outreach” from Uber drivers and, accordingly, has announced plans to form an association for workers in the California rideshare industry generally.
The union already has formed an association for Uber drivers in Seattle under the App-Based Drivers Association (ABDA). In the past year, San Leandro, California-based Teamsters Local 853 has organized hundreds of tech company drivers in Silicon Valley, adding to the union’s 1.4 million members in the U.S. and Canada.
CEO must face price-fixing claims. Weeks before Uber’s proposed $100M settlement of misclassification claims designed to protect the company’s business model, a federal district court in New York ruled that the CEO and co-founder of the now-ubiquitous rideshare app must defend class allegations that he orchestrated and facilitated an illegal price-fixing conspiracy with Uber drivers. Denying the CEO’s motion to dismiss an antitrust suit brought under the Sherman Act and New York’s Donnelly Act, the court found the plaintiff, a rideshare consumer, adequately alleged both a horizontal and vertical price-fixing conspiracy between the technology company and its drivers—who may or may not be “employees,” a dispute currently unfolding in district courts elsewhere. “The fact that Uber goes to such lengths to portray itself—one might even say disguise itself—as the mere purveyor of an ‘app’ cannot shield it from the consequences of its operating as much more,” wrote the court, rejecting a defense that has failed Uber in employment suits against the company as well (Meyer v. Kalanick).
Implausible? The plaintiff alleged that Uber CEO and co-founder Travis Kalanick conspired with Uber drivers to use a pricing algorithm to set the prices charged to riders, thereby restricting price competition among drivers to the detriment of riders. In the court’s view, the plaintiff adequately alleged both a horizontal conspiracy and a vertical conspiracy. While the defendant argued that such a conspiracy was “wildly implausible” and “physically impossible,” as it would require an agreement “among hundreds of thousands of independent transportation providers all across the United States,” to the court, the plaintiff convincingly countered that “the capacity to orchestrate such an agreement is the ‘genius’” of the company which, “through the magic of smartphone technology, can invite hundreds of thousands of drivers in far-flung locations to agree to Uber’s terms.”
The plaintiff adequately pleaded a plausible relevant market—the “mobile app-generated ride-share service market”—and adverse effects in the relevant market, alleging that the CEO’s actions have further restrained competition by decreasing output; Uber’s market position has already helped force a competitor out of the marketplace; and Uber’s dominant position and considerable name recognition has also made it difficult for potential competitors to enter the marketplace.
But arbitration agreement does its job for Uber. Federal district courts in Florida and Maryland very recently compelled drivers to individually arbitrate their claims against Uber. In Maryland, putative state law tort, contract, and statutory class action claims by an Uber driver were forced into individual arbitration by virtue of the arbitration provision in its Rasier Agreement (Rasier is a subsidiary of Uber). The court found the agreement neither procedurally nor substantively unconscionable, upheld the class action waiver, and found the provision’s delegation clause clear and unmistakable. The arbitration provision was not a condition of employment and drivers were expressly given 30 days to opt out, the court pointed out (Varon v. Uber Technologies, Inc.).
Similarly, Florida-based Uber drivers were required to individually arbitrate claims they were wrongly denied minimum wages and overtime. Granting Uber’s motion to compel arbitration and strike the drivers’ class/collective allegations, the Florida court noted that the drivers could have opted out of the arbitration provisions of the company’s driver services agreement, but they failed to do so, and so must proceed accordingly (Suarez v. Uber Technologies, Inc.).
An applicant is not required to agree to the arbitration provision as a condition of becoming a driver. Drivers may opt-out of the arbitration provision within 30 days, and that option is pretty clear: There is a notice in larger font in the first section of the arbitration provision, entitled “Important Note Regarding this Arbitration provision,” and in a large font, bold, and uppercase, it states:
WHETHER TO AGREE TO ARBITRATION IS AN IMPORTANT BUSINESS DECISION. IT IS YOUR DECISION TO MAKE, AND YOU SHOULD NOT RELY SOLELY UPON THE INFORMATION PROVIDED IN THIS AGREEMENT AS IT IS NOT INTENDED TO CONTAIN A COMPLETE EXPLANATION OF THE CONSEQUENCES OF ARBITRATION. YOU SHOULD TAKE REASONABLE STEPS TO CONDUCT FURTHER RESEARCH AND TO CONSULT WITH OTHERS – INCLUDING BUT NOT LIMITED TO AN ATTORNEY – REGARDING THE CONSEQUENCES OF YOUR DECISION, JUST AS YOU WOULD WHEN MAKING ANY OTHER IMPORTANT BUSINESS OR LIFE DECISION.
Another section is entitled “Your Right to Opt Out of Arbitration.” It specifically states: “Arbitration is not a mandatory condition of your contractual relationship with the Company. If you do not want to be subject to this Arbitration Provision, you may opt out of this Arbitration Provision by notifying the Company in writing of your desire to opt out of this Arbitration Provision.” The 30-day period is explicitly explained, the provision states drivers who opt out will not be subject to retaliation, and there is even a specific email address: email@example.com.
As arbitration provisions go, this one took pains to ensure that drivers know what they are consenting to and are doing so freely. The Maryland court crisply observed that had the driver “truly believed” that any aspect of the arbitration provision “was unconscionable or otherwise not to her liking, she had no obligation whatever to agree to it.”
Plausible allegations that Uber is ‘common carrier’ responsible for drivers’ sexual assaults.
But Uber was not so successful, at least at the motion to dismiss stage, against claims it was legally responsible for sexual assaults committed by two of its drivers. “Like a police officer who rapes a detained woman, an employee who throws a hammer at a fellow worker in a fit of irritation, or an asylum officer who abuses his role to corner female immigrants and molest them, sexual assault by an Uber driver may be incidental to the operation of its business,” a federal district court in California reasoned, refusing to dismiss claims asserting vicarious liability against the self-proclaimed “broker of transportation services” (Doe v. Uber Technologies, Inc.).
On motion to dismiss, the court would not find as a matter of law that the Uber drivers who sexually assaulted two female passengers were independent contractors, nor would it rule out a finding that the company operated as a common carrier for purposes of tort liability. As for the women’s direct negligence claims, the court threw out the negligent hiring, retention, and supervision claims involving one driver because no facts sufficiently alleged foreseeability, but those same claims involving another driver, as well as fraud claims against Uber, also survived
Employee status. Uber argued that the women had not alleged sufficient facts to establish an employment relationship between Uber and the two drivers alleged to have sexually assaulted them when they were Uber passengers, but the court disagreed. It cited the following allegations: Uber sets fare prices without driver input and drivers may not negotiate fares, but Uber may modify the charges to the customer under certain circumstances; Uber retains control over customer contact information; Uber’s business model depends upon having a large pool of non-professional drivers with no apparent specialized skills; and Uber retains the right to terminate drivers at will. Uber allegedly also controls how drivers may offer rides through the Uber App, including when they must accept ride requests when logged into the App or face potential discipline, and requires drivers to dress professionally, send customers text messages, play only certain types of music, if any, and open the door for customers. Uber asserted that drivers are independent contractors, but its evidence was not enough to convert the question into a matter of law.
Vicarious liability. Alternately, Uber claimed that the alleged assaults were outside the scope of a driver’s duties and could not support vicarious liability. Carefully reviewing the state of California law, the court found no state law rule that sexual misconduct would always bar vicarious liability on the part of an employer, as Uber argued. Instead, at the pleading stage, the court found reason to allow the complaint to move forward, especially where, unlike in cases of sexual harassment, the women here did not have separate remedies under Title VII or state law. It could not determine as a matter of law that sexual assault by Uber drivers was always outside the scope of employment if the drivers were ultimately found to be employees.
Common carrier liability. The complaint also alleged that Uber was a common carrier vicariously liable for its employees’ and agents’ intentional and negligent torts, whether or not they were committed within the scope of employment. Uber said it was merely a “broker” of transportation services, but the court was not persuaded. Common carrier liability is imposed based on a broad duty to protect passengers from assault. Here, the women alleged critical underlying facts, including that Uber’s services are available to the general public and that Uber charges customers standardized fees for car rides, which supported the claim that Uber “offers to the public to carry persons.” Reiterating that these were “close questions,” the court found them more appropriately resolved later in the litigation, and it would not dismiss the women’s vicarious liability claims of assault, battery, false imprisonment, and intentional infliction of emotional distress.
Louisiana executive order protects state employees from sexual orientation and gender identity discrimination
State employees in Louisiana are now protected from sexual orientation and gender identity discrimination, thanks to an executive order signed by Governor John Bel Edwards last month.
Executive order JBE 2016-11 provides employment protections for state employees and employees of state contractors on the basis of race, color, religion, sexual orientation, gender identity, national origin, political affiliation, disability or age. The executive order, signed on April 13, also prohibits discrimination in services provided by state agencies and recognizes an exemption for churches and religious organizations.
Similar executive orders were signed by former Governors Edwin Edwards and Kathleen Blanco. Currently, there is no state law protecting lesbian, gay, bisexual, or transgender (LGBT) Louisianans from employment discrimination.
Former Governor Bobby Jindal issued an executive order extending provisions included in Mike Johnson’s Marriage and Conscience Act rejected by the House Committee on Civil Law and Procedure during last year’s regular legislative session. Governor Edwards voiced his opposition to that executive order and said the previous administration’s order was “meant to serve a narrow political agenda,” threatened business growth and was against everything Louisiana stood for, “unity, acceptance, and opportunity for all.”
Louisiana passed the strongest religious liberty protections in the country in 2010, the Preservation of Religious Freedom Act, which Governor Edwards supported. This executive order (E.O. JBE 2016-11) does not conflict with that law. Additionally, Governor Edwards has reportedly said that he supports the Pastor Protection Act (HB 597), currently pending in the Louisiana legislature. On April 19, the House passed the bill in an 80-18 vote after more than an hour of debate over the merits and potential impact. HB 597 is now pending before the Senate. If successful, the measure would allow clergy members to refuse to conduct marriages that they oppose because of their religious beliefs.