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Obama nominates Solicitor General Elena Kagan to Supreme Court

May 11th, 2010  |  Published in Blog

President Obama yesterday nominated Solicitor General Elena Kagan to the US Supreme Court to fill the seat of retiring Supreme Court Justice John Paul Stevens. “While we can’t presume to replace Justice Stevens’ wisdom or experience, I have selected a nominee who I believe embodies that same excellence, independence, integrity, and passion for the law—and who can ultimately provide that same kind of leadership on the Court,” Obama said, in remarks at a White House briefing announcing the nomination.

Obama described Kagan, who has served as Solicitor General since March 2009, as “one of the nation’s foremost legal minds,” adding that as the first woman to serve as Dean of Harvard Law School, she became “one of the most successful and beloved deans in its history.” (Kagan also earned her JD from Harvard, in 1986.)  Kagan also is the nation’s first female Solicitor General—a “superb” one, according to the President, who noted that during her tenure she has earned accolades from across the ideological spectrum. Indeed, Kagan was confirmed to the Solicitor General post by a bipartisan Senate vote of 61-31 in favor of her nomination.

Kagan previously served in the Clinton administration as Deputy Assistant to the President for Domestic Policy and, before that, as Associate Counsel to the President. She also clerked for the late Justice Thurgood Marshall. Along with her intellect and record of achievement, Obama praised Kagan’s temperament and her skills as a consensus-builder, noting “her openness to a broad array of viewpoints; her habit, to borrow a phrase from Justice Stevens, `of understanding before disagreeing.’” In a moment of levity, Obama noted, “This appreciation for diverse views may also come in handy as a die-hard Mets fan serving alongside her new colleague-to-be, Yankees fan Justice Sotomayor, who I believe has ordered a pinstriped robe for the occasion.”

Labor and empoyment impact. With no reputation as a jurist to precede her and a body of scholarship focused largely on First Amendment jurisprudence, Kagan’s nomination presents something of a challenge in discerning what her elevation to the High Court would mean for labor and employment law. However, in her fourteen months as Solicitor General, Kagan has submitted numerous briefs in labor and employment cases pending before the Court. To the extent they help illuminate her likely approach to workplace issues, they reflect a general pro-employee bent:

  •  In Graham County Soil & Water Conservation Dist v United States ex rel Wilson (Dkt No 08-304), Kagan argued in support of a relator in a qui tam action that a county’s own internal audit and a state agency’s reports did not constitute “public disclosures” of wrongdoing in a False Claims Act case, and thus did not bar jurisdiction and potential recovery to the relator. “State and local administrative reports, audits, and investigations are not among the classes of documents that Congress identified as triggering the FCA’s public disclosure bar,” the brief urged. The Supreme Court ruled to the contrary, however, in a 7-2 opinion.
  • In Mohawk Industries, Inc v Carpenter (Dkt No 08-678), Justice Sotomayor’s first opinion, ruled that a discovery order requiring Mohawk Industries to provide information related to a shift supervisor’s interview with its outside counsel during an internal investigation into a separate RICO class action, and to provide information related to the company’s later decision to fire him, did not qualify for immediate appeal by the company until a final judgment had been entered in the underlying action. Kagan’s amicus brief argued such discovery orders did not warrant immediate appeal, noting “these numerous and routine orders are insufficiently important to outweigh the strong interest against pre-finality appeals.” A unanimous Supreme Court agreed.
  • Kagan supported the respondent employees in Conkright v Frommert (Dkt No 08-810), a case in which the High Court was asked to determine whether the appeals court correctly ruled that ERISA plan administrators were entitled to deference after their prior interpretation of the plans terms were deemed arbitrary and capricious. The Solicitor, in an amicus brief, argued the court of appeals correctly held the district court was not required to defer to the administrators’ views on how to remedy their ERISA violations in such cases.
  • In Lewis v City of Chicago (Dkt No 08-974), the High Court was asked to consider whether a plaintiff may bring an action under Title VII alleging that an employer’s use of an employment test has an unlawful disparate racial impact, when the employer uses the test results to hire employees during the statutory limitations period, but scores the test and announces the results outside the limitations period. The Solicitor urged the Court to grant cert, noting the question presented in the case was “important and recurring. As petitioners correctly note, the use of employment tests similar to the examination at issue in this case is `widespread.’” In a subsequent brief on the merits, the Solicitor argued in favor of plaintiff-employees that their charge was timely filed because it challenged an unlawful employment practice that occurred within the limitations period. “There is no reason why a potential plaintiff in a disparate-impact case—which by its nature focuses on consequences—should not be able to see, before deciding to file charges, whether and how an employment practice is used to make hiring or promotion decisions. A rule that permits plaintiffs to file within a few months after an employment practice is so used—in accordance with Title VII’s language—reduces the chances that plaintiffs will burden employers, the EEOC, and courts with potentially divisive complaints that later prove unnecessary.”
  • The Solicitor General issued her sole argument in the employer’s favor in City of Ontario v Quon (Dkt No 08-1332), a closely-watched case addressing the reasonable privacy expectations of public employees who use government-issued electronic devices for both work-related and personal uses. The amicus brief contended the municipality had “a constitutionally valid basis for searching the employee’s text messages, and that basis extends to all of the messages, irrespective of who sent them.”
  • In New Process Steel, LP v NLRB (Dkt No 08-1457), the Solicitor argued on behalf of the NLRB that Congress authorized the Board to operate with a two-member quorum, in an employer’s challenge to the agency’s authority to issue unfair labor practice findings and orders. While the brief rejected as irrelevant the employer’s assertions as to the wisdom of allowing the Board to operate with two members, noting what mattered was whether the statute allowed the Board to do so, she also wrote “Congress had good reason to give the NLRB the discretion (which it may or may not exercise) to continue operating in these circumstances. That authority enables the NLRB to continue to perform its statutory responsibilities even in the face of multiple vacancies.”
  • In Staub v Proctor Hospital (Dkt No 09-400), Kagan recommended that cert be granted in the case of a US Army reservist who relied on the “cat’s paw” theory of liability in his USERRA suit. The Solicitor General noted the stringent “singular influence” standard applied by the Seventh Circuit below did not appear in the text of USERRA and was inconsistent with the plain text of the statute, which requires a plaintiff to show nothing more than that his or her military status was a “motivating factor” in the employer’s adverse action.
  • In Hardt v Reliance Standard Life Ins Co (Dkt No 09-448), a group long-term disability benefits case, the court will decide whether an employee-plaintiff was a prevailing party entitled to attorney’s fees under ERISA where, although she was not awarded relief in court, she ultimately obtained relief when the plan administrator granted the disability benefits she sought on remand from the district court. Kagan’s brief favored the employee-plaintiff, noting that ERISA does not have a strict “prevailing party” requirement, and that its absence is consistent with ERISA’s purpose “of protecting plan beneficiaries’ access to courts.”

“During the last year as I have served as Solicitor General, my longstanding appreciation for the Supreme Court’s role in our constitutional democracy has become ever deeper and richer,” Kagan said. “And within that extraordinary institution, Justice Stevens has played a particularly distinguished and exemplary role. It is, therefore, a special honor to be nominated to fill his seat.”

Obama expressed hope that the Senate will act “in a bipartisan fashion, as they did in confirming Elena to be our Solicitor General last year, and that they will do so as swiftly as possible.” Senate Republican Leader Mitch McConnell quickly set a different tone, however. “She has been nominated for a lifetime appointment on the nation’s highest court, and we will carefully review her brief litigation experience, as well as her judgment and her career in academia, both as a professor and as an administrator,” he said, following the announcement of Kagan’s nomination. “Fulfilling our duty to advise and consent on a nomination to this office requires a thorough process, not a rush to judgment.”

Congress wrestles with age-old age bias problem that seems to have taken a turn for the worse

May 7th, 2010  |  Published in Blog

Congress should pass legislation to overturn a US Supreme Court decision that has made it more difficult for older Americans alleging employment discrimination to get their day in court, witnesses told the House Committee on Education and Labor’s Health, Employment, Labor and Pensions Subcommittee at a May 5 hearing on the Protecting Older Workers Against Discrimination Act (POWADA).

Introduced in October 2009, the POWADA would restore civil rights protections for older workers in the face of the US Supreme Court’s holding in Gross v FBL Fin Servs, Inc. In Gross, the High Court held that plaintiffs bringing ADEA disparate treatment claims must establish by preponderance of evidence that age was the “but for” cause of the adverse employment action; age cannot simply be a “motivating factor” in the adverse action. Victims of age bias face a higher burden of proof than those alleging race, sex, national origin or religious bias because they must prove that age is, in fact, the reason for the adverse decision, according to the bill’s sponsors. Mirroring Title VII’s mixed-motive burden-shifting rubric, the bill’s provisions clarify that a plaintiff can establish an adverse action by demonstrating by a preponderance of the evidence that age was a “motivating factor” for the action, even if other factors also contributed to the decision. Alternatively, the plaintiff can establish by a preponderance of the evidence that the challenged action would not have occurred absent the employee’s age.

“Today we heard testimony calling on Congress to reject the Supreme Court’s misguided decision in the Gross case and restore justice for American workers of all ages,” said Rep. Rob Andrews (D-NJ), chair of the subcommittee. “Older workers, who are already struggling enough to keep their jobs in this economy, deserve the same protections as those discriminated against on the basis of race, ethnicity or religion. The Supreme Court turned decades of well-established law on its head when it held that age discrimination is permissible if it is merely a motivating factor in an adverse employment decision. H.R. 3721 prevents claims like Mr. Gross’ from being dismissed based on sheer semantics and guarantees that all legitimate victims of age discrimination will not be shut out of the courthouse.”

Witnesses, including Gail Aldrich, member of the board of directors of the AARP, and Michael Foreman, Clinical Professor and Director of the Civil Rights Appellate Clinic, testified that the protections laid out in the bill are especially important for older workers because they often face an uphill battle of holding onto jobs in a struggling economy and can have a harder time finding new employment opportunities. “Once out of work, older persons are more likely than the younger unemployed to stop looking for work and drop out of the labor force,” said Alrich. “If they do find work, they are more likely than younger job finders to earn less than they did in their previous employment.”

“[The Supreme Court decision] undermined Congress’s legislative intent and immediately impacted older workers, relegating them to second-class status among victims of discrimination,” said Foreman. “Congress should take positive steps to ensure that our civil rights and employment laws protect all American workers.”

Not all agree. Eric Dreiband, of Jones Day in Washington, DC, said the Gross decision would not eliminate protections at all. “Before the Gross decision, age discrimination defendants could prevail, even when they improperly considered a person’s age, if they demonstrated that they would have made the same decision or taken the same action for additional reasons unrelated to age,” he said. “The Court in the Gross case eliminated this so-called “same decision” or “same action” defense. For this reason, since the Gross decision issued, the federal courts have repeatedly ruled in favor of age discrimination plaintiffs and against defendants.” He also said that the Protecting Older Workers Against Discrimination Act, as proposed, would restore the “same action” defense and may render the “motivating factor” standard nearly irrelevant. In addition, he said the bill is overly broad, vague, and ambiguous. It purports to apply to “any federal law forbidding employment discrimination,” and several other laws, said Dreiband, but the bill does not identify which laws the bill will amend; “Congress can fix this vagueness problem rather easily by amending the bill to apply solely to the [ADEA].”

Is the problem getting worse with age? Testifying a day later, before the Senate Committee on Health, Education, Labor and Pensions, EEOC Chair Jacqueline A. Berrien put the problem in real-life perspective: Over 40 years after Congress passed the ADEA, age bias “may be at historic highs,” she said. Berrien cited the “at or near record-levels” of ADEA charge received by the EEOC. In fiscal year 2008, age bias charges soared nearly 30 percent over the prior year, representing almost 26 percent of all charges received by the agency that year. In 2009, age bias charges were at their second-highest level ever (exceeded only by the prior year) – they constituted over 24 percent of all receipts.

“It is difficult to pinpoint the causes of this surge in age discrimination charges,” Berrien told the committee members. “It is clear, however, that negative stereotypes about older workers remain deeply entrenched.” She ticked off a list of unwarranted stereotypic assumptions: older workers are more costly, harder to train, less adaptable, less motivated, less flexible, more resistant to change, and less energetic than younger employees. Berrien also pointed to employers’ possible reluctance make investments in training and other developmental opportunities for older workers due to a perception that they have limited time remaining in their careers.

According to Berrien, “extensive research has shown that these negative age-based stereotypes have little basis in fact.”  But, as she noted, these stereotypes “undoubtedly influence far too many employment decisions.” Older individuals typically receive lower ratings in interviews and performance appraisals than younger counterparts, despite their same or similar qualifications, Berrien said.  And it’s no surprise that these stereotypes work against older workers in downsizing scenarios. Once older workers are laid off, they again must face age-based stereotyping when they look for new jobs. 

Legal landscape aging poorly. “Unfortunately, older workers who are victims of such age-based decision-making now must seek to assert their ADEA rights in a legal landscape that increasingly minimizes the significance of age discrimination,” Berrien asserted. “The prevailing judicial approach distinguishes ADEA claims from those brought under Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, sex, religion, or national origin.” Berrien pointed to none other than our very Highest Court as an example: “[I]n a statement that appears to reflect the erroneous but widespread stereotypes about older workers, the Supreme Court has said that a lower level of protection under the ADEA than under Title VII is ‘consistent with the fact that age, unlike race or other classifications protected by Title VII, not uncommonly has relevance to an individual’s capacity to engage in certain types of employment.’” Ouch!  

“This judicial antipathy to age discrimination claims also can be seen in lower court decisions in which courts apply crabbed interpretations of the ADEA to rule against plaintiffs even when plaintiffs present evidence of age-based comments by managers,” Berrien said. “Given this relatively inhospitable legal climate, it is perhaps not surprising that while all discrimination plaintiffs face enormous challenges in proving their claims, success seems to be especially elusive for age discrimination plaintiffs,” Berrien observed. 

“Don’t get old,” my grandmother used to say (she walked this earth for 95 years) – maybe she was right.

Congress and DOL ARB now tackling issue of SOX subsidiary coverage

May 4th, 2010  |  Published in Blog

Legislation is currently pending in Congress that would eliminate a defense now raised in a substantial number of SOX actions brought by whistleblowers and clarify that the SOX whistleblower protections apply to both companies and their subsidiaries and affiliates. Moreover, the DOL’s Administrative Review Board (ARB) has recently issued an order inviting amicus briefs in a case that presents the issue of whether, under current law, an employee of a non-public subsidiary of a publicly held company may bring a SOX whistleblower action against that non-public subsidiary.

The SOX whistleblower provision, Section 806, now codified as 18 USC, Section 1514A, states, “[n]o company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 USC §781) or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 USC §780(d)), or any officer, employee, contractor, subcontractor, or agent of such company” may discriminate against an employee based on that employee’s reporting of fraudulent conduct.

 In the order inviting amici curiae, the ARB noted its decision in Klopfenstein v PCC Flow Tech Holdings, Inc (DOL ARB, 04-149, May 31, 2006; CCH Employment Practices Guide ¶5216) where it found a non-public subsidiary to be an agent of a publicly-traded company where common managers were involved in the termination decision at issue. Notwithstanding Klopfenstein, “ALJs and the courts have struggled with this question, resulting in a variety of diverging and conflicting opinions,” the ARB observed. Amicus briefs in the case, Johnson v Siemens Bldg Techs, Inc (ARB No 08-032, ALJ No 2005-SOX-15), are due on July 15, 2010. In addition to briefings from the parties and amici curiae, the ARB specifically requested briefings from OSHA and the SEC.

A September 9, 2008 letter from Senators Charles Grassley (R-IA) and Patrick Leahy (D-VT), authors of SOX’s whistleblower provisions, to the DOL emphasized that federal whistleblower protection extends to employees of subsidiaries of companies and that the DOL should not interpret the statute otherwise.

Currently, the Senate Banking Committee is considering revised draft financial reform legislation (at Section 929A), which would specifically state that any subsidiary or affiliate whose financial information is included in the consolidated financial statements of a SOX-covered company is also covered by the statute. The House passed (223-202) a similar measure as part of the Wall Street Reform and Consumer Protection Act (HR 4173) on December 11, 2009.