Is there a constitutional "right to engage in common occupations"?

When I see a cert petition assert a constitutional "right to engage in common occupations," that catches my attention. The case is Tiwari v. Friedlander. Cert petition here.

I’m reminded that "The Constitution does not prohibit legislatures from enacting stupid laws."

The facts are simple. The petitioners are two folks who own Grace Home Care, formed to provide same-language healthcare to Nepali-speaking folks in Louisville, Kentucky. But Grace could not open. Under the Certificate of Need law, Kentucky had determined that there was no “need” for any new home health services in Louisville.

The suit claimed that the Certificate of Need Law was a violation of the "right to earn a living" under the Due Process, Equal Protection, and Privileges or Immunities clauses of the Fourteenth Amendment. The district court and the 6th Circuit denied Grace's claim.

It's a long-standing rule that economic legislation passes constitutional muster if the government has a "rational basis" for the law. The petitioners are asking the Supreme Court to clarify how the rational basis test should actually be applied. They claim (with considerable justification I think) that the Supreme Court has described the rational-basis test inconsistently and that this has led to confusion in the lower courts, absurd results, and inconsistent outcomes.

In this very case, a trial court judge originally sided with Grace. However, that judge got elevated to the Circuit court and a new judge upheld the law under the rational-basis test. Then at the 6th Circuit the court ruled that "Kentucky's certificate-of-need law passes, perhaps with a low grade but with a pass all the same."

I don't expect the Supreme Court to grant certiorari in this case. The petitioners view the right they assert as somehow special, and want the rational-basis test to have sharper teeth. I think the Supreme Court is tired of "ranking" rights as more or less important, and prefers to let the democratic process work its wonders in the economic arena.

Grubhub delivery drivers are not exempt from FAA arbitration

Some former Grubhub delivery drivers sued Grubhub alleging various wage and hours violations. They had all electronically signed arbitration agreements, so Grubhub moved to compel arbitration.

The big question in the case was whether they fell within the definition of "any other class of workers engaged in foreign or interstate commerce" who are exempt from arbitration under § 1 of the Federal Arbitration Act (FAA).

The trial court reasoned that they were exempt by virtue of their transportation and delivery of prepackaged food items, some of which were manufactured outside the state.

The Massachusetts Supreme Court disagreed, and held that the drivers are required to arbitrate rather than litigate their dispute. Archer v. Grubhub (Massachusetts 07/27/2022) [PDF].

The dispositive point was that these drivers were not "actually engaged in the movement of goods in interstate commerce." Although the drivers transported goods that may travel across several states before landing in a meal prepared by a local restaurant and delivered by a Grubhub driver, they did not fall within the residual clause because they were not connected to the act of moving those goods across state or national borders.

The court cited several cases from other courts that reached the same conclusion.

Grubhub drivers are unlike "last-mile drivers" (e.g., Amazon drivers) who are transporting goods that – from moment the goods entered "the flow of interstate commerce," – were always "destined for" the customers to whom the last-mile drivers made deliveries.

Railroad Unemployment Insurance Act preempts California paid sick leave law

In 2014, the California legislature passed the Healthy Workplaces, Healthy Families Act, which requires employers to provide a minimum of 24 hours “paid sick leave” or three “paid sick days” per year to every employee working in California.

Six railroad companies brought suit against the California Labor Commissioner. The railroads alleged that the California Act was invalid as applied to their employees.

The 9th Circuit agreed with the railroad companies. National Railroad Passenger Corporation v. Brotherhood of Locomotive Engineers And Trainmen (9th Cir 07/26/2022). [PDF]

The federal Railroad Unemployment Insurance Act (RUIA) provides unemployment and sickness benefits to railroad employees, and it contains an express preemption provision disallowing railroad employees from having any right to “sickness benefits under a sickness law of any State.” Looking to the plain meaning of the statutory text, the court concluded that the preemption provision broadly refers to compensation or other assistance provided to employees in connection with physical or mental well-being. The court concluded that RUIA’s statutory framework and stated purposes confirm the breadth of its preemptive effect.

The court said: "Properly considered in light of RUIA’s plain text and structure, the California Act is a 'sickness law' that provides 'sickness benefits.'"

6 US Supreme Court employment cases during 2021-2022 session

[View the video]

This 90-second video covers six cases from the US Supreme Court during the 2021-2022 session.

Four of them provide us with more guidance about the preemptive role of the Federal Arbitration Act (FAA).

1. An airline ramp supervisor is exempt from the Federal Arbitration Act, so she does not have to arbitrate because she's in a" class of workers engaged in interstate commerce."

2. In deciding whether a litigant can enforce or vacate an arbitration award in federal court, the court cannot “look through” to the underlying controversy to decide whether it has jurisdiction.

3. In deciding whether a litigant has waved its right to arbitrate, a court cannot impose an additional requirement that there has to be a showing of prejudice.

4. A plaintiff in a California Private Attorney General Act case has got to arbitrate her individual case separate from her representation case on a non-class basis.

5. The football coach who said a prayer at the end of the game on the fifty yard line cannot be suspended because he has rights under the first amendment.

6. In suits under the Uniformed Services Employment and Reemployment Act (USERRA), the states have given up their sovereign immunity to suits in their own courts.

"Cannot alter" language does not make arbitration agreement unconscionable

Gist v. ZoAn Management (Oregon Supreme Court 07/08/2022) [PDF] is a case that looked like a run-of-the-mill allegation that a driver claimed to be an employee but was wrongly classified as an independent contractor, and the defendant wanted to enforce an arbitration agreement.

But the plaintiff claimed the arbitration agreement was unconscionable, and had an interesting argument.

The agreement stated that the arbitrator "cannot alter, amend or modify the contract." From that, the plaintiff argued that the arbitrator lacked the power to grant him relief on his claims, and so the agreement was unconscionable. Specifically, the argument was that the contract classified the plaintiff as an independent contractor and the arbitrator lacked authority to conclude he was an employee and to enforce his rights as an employee under Oregon's wage and hour statutes.

The Oregon Supreme Court had little trouble brushing the plaintiff's argument aside because the defendant conceded that "An arbitration agreement that limits the arbitrator's authority to 'alter, amend, or modify' the terms of the contract does not limit any statutorily mandated rights." The court agreed with that interpretation of the "cannot alter" clause.

The court said, “the [contract] does not prevent the arbitrators from concluding that the [contract]'s provisions classifying the drivers as independent contractors are invalid or unenforceable and that plaintiff was an employee. If the arbitrators so conclude, then they can resolve plaintiff's claims under Oregon's wage and hour statutes.”

Oh, yes, then there's this: For the first time on appeal the plaintiff argued that drivers are exempt from the Federal Arbitration Act because they qualify for the transportation worker exception to the FAA. However, this was never raised below, the argument was not preserved, and the Supreme Court simply did not address it.

Mixed reactions to SCOTUS's 5-4 USERRA decision

I'm having mixed reactions to Torres v. Texas Department of Public Safety (US Supreme Ct 06/29/2022) [PDF] — the US Supreme Court case holding that a military servicemember can bring a suit against a State in State court to enforce his rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA), in spite of the State's claim of sovereign immunity.

While serving in Iraq, Torres was exposed to toxic burn pits, a method of garbage disposal that sets open fire to all manner of trash, human waste, and military equipment. Torres received an honorable discharge. But he returned home with constrictive bronchitis, a respiratory condition that narrowed his airways and made breathing difficult. These ailments, Torres says, left him unable to work his old job as a State trooper, so he asked the State to accommodate his condition by reemploying him in a different role. The State refused, asserting sovereign immunity.

The US Supreme Court held (5-4) that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the Armed Forces, so Congress may exercise this power to authorize private damages suits against nonconsenting States, as in USERRA.

Two reactions:

1. I'm delighted that Torres can bring his suit. Those who have served in the armed forces deserve to have service-related injuries accommodated by their employers (whether private employers or State employers), and State court seems the logical place to bring a suit.

2. I'm amazed at the slender reed upon which the majority rests its opinion. I won't go into great detail here, yet the majority was able to brush aside a number precedents by latching on to three words — "complete in itself" — contained in one of those cases. The four dissenting Justices do a good job of making the point: "[T]he Court brushes aside a 23-year-old, pathbreaking precedent, while elevating a single phrase, made in passing in a one-year-old, highly circumscribed precedent. It then uses that phrase to fashion a test for plan-of-the-Convention waiver that mimics earlier attempts by this Court to deny States the dignity owed to them in our system of dual federalism."

Praying football coach wins at US Supreme Court

The Bremerton School District fired Joseph Kennedy, a high school football coach, after he knelt at midfield after games to offer a quiet personal prayer.

The US Supreme Court (6-3) held that terminating Kennedy violated the Free Exercise and Free Speech Clauses of the First Amendment. Kennedy v. Bremerton School District (US Supreme Ct 06/27/2022) [PDF].

The District Court found that the “‘sole reason’” for the District’s decision to suspend Kennedy was its perceived “risk of constitutional liability” under the Establishment Clause for his “religious conduct” after three games in October 2015. The 9th Circuit affirmed, and denied a petition to rehear the case en banc over the dissents of 11 judges.

The US Supreme Court said, "Here, a government entity sought to punish an individual for engaging in a brief, quiet, personal religious observance doubly protected by the Free Exercise and Free Speech Clauses of the First Amendment. And the only meaningful justification the government offered for its reprisal rested on a mistaken view that it had a duty to ferret out and suppress religious observances even as it allows comparable secular speech. The Constitution neither mandates nor tolerates that kind of discrimination. Mr. Kennedy is entitled to summary judgment on his First Amendment claims."

Three DISSENTERS argued that the Establishment Clause prohibits the District from firing Kennedy, and claimed that the majority disregarded "overwhelming precedents."

NLRB seeks nationwide cease and desist order against Starbucks

Here is the June 21, 2022 announcement from the NLRB:

Today, National Labor Relations Board Region 3-Buffalo Regional Director Linda M. Leslie petitioned in United States District Court for injunctive relief for seven former Starbucks employees in Buffalo, New York who were unlawfully fired for exercising their right to form a union. Section 10(j) of the National Labor Relations Act (NLRA) authorizes the NLRB to seek injunctions against employers and unions in federal district courts to stop unfair labor practices where, due to the passage of time, the normal Board processes are likely to be inadequate to effectively remedy the alleged violations.

The petition explains that, after learning about the organizing effort, Starbucks immediately set its vigorous antiunion campaign in motion, employing an expansive array of illegal tactics such as raising wages, promising benefits, bringing in a cadre of managers to monitor employees and discourage union activity, closing stores with active organizing drives, and threatening employees—culminating in the discharge of seven union activists at five different stores over the course of six weeks.

The Regional Director is seeking an interim Gissel bargaining order for Camp Road employees because traditional Board remedies will be unable to restore “laboratory conditions” to enable the NLRB to conduct a free and fair rerun election. She is also seeking a broad nationwide cease-and-desist order that would be applicable to all the Employer’s facilities in the United States along with a national posting of the district court’s decision and order at all Starbucks facilities to fully notify employees of their NLRA rights and the protections being afforded by the court’s order.

“Absent immediate interim relief, Starbucks will achieve its goal, through unlawful means, of irreparably harming the campaign in Buffalo, and sending a clear chilling message to its employees across the country,” said Region 3’s Regional Director Linda M. Leslie. “We are asking the Court to swiftly grant the injunction so that the unlawfully discharged workers can return to work and effectively exercise their right to engage in union activities, including collectively bargain a union contract.”

If granted, the injunction would provide interim relief while the case is being litigated. Regional Director Leslie issued a consolidated complaint on May 19, 2022 containing over 200 allegations of unfair labor practices by Starbucks. A hearing on the complaint before an Administrative Law Judge is set for July 11, 2022.  

SCOTUS: PAGA plaintiff must arbitrate

As I expected, the US Supreme Court has held (8-1) that the Federal Arbitration Act (FAA) preempts a rule of California law that invalidates contractual waivers of the right to assert representative claims under California's Labor Code Private Attorneys General Act (PAGA). Viking River Cruises v. Moriana (US Supreme Ct 06/15/2022) [PDF].

Moriana filed a PAGA action against her former employer. Because her employment contract contained a mandatory arbitration agreement, the employer moved to compel arbitration of Moriana's individual PAGA claim and to dismiss her other PAGA claims.

The California courts denied that motion, holding that categorical waivers of PAGA standing are contrary to California policy and that PAGA claims cannot be split into arbitrable "individual" claims and nonarbitrable "representative" claims, relying on Iskanian v. CLS Transp, 59 Cal. 4th 348 (2014).

The Supreme Court put its focus on that portion of Iskanian that precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. The Court said that "Iskanian's indivisibility rule effectively coerces parties to opt for a judicial forum rather than 'forgo[ing] the procedural rigor and appellate review of the courts in order to realize the benefits of private dispute resolution.' This result is incompatible with the FAA."

As for the claims that were not individual to Moriana, the Court pointed out that PAGA provides no mechanism to enable a court to adjudicate nonindividual PAGA claims once an individual claim has been committed to a separate proceeding. "As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims."

Waiting for SCOTUS

Expecting decisions June 15 in these three employment law cases:

Kennedy v. Bremerton School District [Briefs]: A high school football coach was fired for saying post-game prayers on the 50-yard line. Is his speech protected by the 1st amendment? If so, does the establishment clause compel the school to prohibit it?

Torres v. Texas Department of Public Safety [Briefs]: When a returning soldier sued the state of Texas claiming a USERRA violation, the Texas Court of Appeals held that USERRA’s cause of action is unconstitutional because Congress lacks the power to authorize lawsuits against nonconsenting states pursuant to its War Powers. The question presented is whether Congress has the power to authorize suits against nonconsenting states pursuant to its War Powers.

Viking River Cruises v. Moriana [Briefs]: Does the Federal Arbitration Act require enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the California Private Attorneys General Act?

I predict wins for Kennedy, Torres, and Viking River Cruises.
UPDATE: I was right on all three.

No arbitration for cargo ramp supervisor

Watch 60 second video: https://youtu.be/uRb7HU80NXc

A unanimous United States Supreme Court says that an airline cargo ramp supervisor does not need to arbitrate her wage claim even though she signed an arbitration agreement. Southwest Airlines v. Saxon (US Supreme Ct 06/06/2022) [PDF]

So her claim stays in federal court.

The Federal Arbitration Act requires courts to enforce arbitration agreements. But  there's a big exception for contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.

She belongs to that class of workers in interstate commerce. She frequently unloads and loads cargo onto and off the airplane.

Now, the court was clear.

This does not cover all of the employees of the airline, and it's not only those employees who actually cross state lines.

She works on goods that are actually in interstate commerce. 

SCOTUS: FAA exempts airline ramp supervisor from having to arbitrate

In general, the Federal Arbitration Act (FAA) requires courts to enforce agreements to arbitrate. The big exceptions appear in FAA §1: "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

Southwest Airlines v. Saxon (US Supreme Ct 06/06/2022) [PDF] raised the question of whether "any other class of workers engaged in foreign or interstate commerce" included Latrice Saxon, an airline ramp supervisor who frequently loads and unloads cargo alongside the ramp agents.

Although Saxon signed an agreement to arbitrate wage claims, a unanimous US Supreme Court holds that Saxon is indeed exempt, so she can bring her overtime claim in federal court rather than being required to arbitrate. Saxon belongs to a "class of workers engaged in foreign or interstate commerce" to which §1's exemption applies.

Both sides advanced extreme arguments, and the Court rejected both.

The airline argued that the exemption should cover only those workers who physically move goods or people across foreign or international boundaries—pilots, ship crews, locomotive engineers, and the like. To that, the Court said, "Here, §1's plain text suffices to show that airplane cargo loaders are exempt from the FAA's scope, and we have no warrant to elevate vague invocations of statutory purpose over the words Congress chose."

Saxon argued that all of the airline's workers – everyone from cargo loaders to shift schedulers to those who design Southwest's website – are covered by the exemption. To that, the Court compared the use of the word "seamen." Because "seamen" includes only those who work on board a vessel, they constitute a subset of workers engaged in the maritime shipping industry.

SCOTUS rejects rule that arbitration waiver must involve prejudice

When she was hired, Robyn Morgan, a Taco Bell employee, signed an agreement to arbitrate any employment dispute. Despite that agreement, Morgan filed a nationwide collective action asserting a violation of federal law regarding overtime payment.

The employer initially defended against the lawsuit as if no arbitration agreement existed, filing a motion to dismiss (which the trial court denied) and engaging in mediation (which was unsuccessful). Then—nearly eight months after Morgan filed the lawsuit— the employer moved to stay the litigation and compel arbitration under the Federal Arbitration Act (FAA). Morgan opposed, arguing that the employer had waived its right to arbitrate by litigating for so long.

The courts below applied 8th Circuit precedent, under which a party waives its right to arbitration if it knew of the right; acted inconsistently with that right; and prejudiced the other party by its inconsistent actions.

The prejudice requirement is not a feature of federal waiver law generally. The 8th Circuit adopted that requirement because of the "federal policy favoring arbitration."

The US Supreme Court unanimously held that the 8th Circuit erred in conditioning a waiver of the right to arbitrate on a showing of prejudice. Morgan v. Sundance, Inc. (US Supreme Court 05/23/2022) [PDF].

The Court said: "Outside the arbitration context, a federal court assessing waiver does not generally ask about prejudice. Waiver, we have said, 'is the intentional relinquishment or abandonment of a known right.' To decide whether a waiver has occurred, the court focuses on the actions of the person who held the right; the court seldom considers the effects of those actions on the opposing party. That analysis applies to the waiver of a contractual right, as of any other." Thus, the 8th Circuit applied a rule that applies only to arbitration.

Courts that have required a showing of prejudice have relied on the "federal policy favoring arbitration." However, that policy, the Court said, "is merely an acknowledgment of the FAA's commitment to overrule the judiciary's longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts."

The "federal policy favoring arbitration." is to make arbitration agreements as enforceable as other contracts, but not more so. Accordingly, a court must hold a party to its arbitration contract just as the court would to any other kind. But a court may not devise novel rules to favor arbitration over litigation.

Harassment: $1 million awarded to 15-year-old nude dancer

An adult entertainment club hired a 15-year-old victim of child sex trafficking as a nude dancer. The Bureau of Labor and Industries (BOLI) entered an order holding the club and three of its owners liable for subjecting her to sex discrimination in violation of ORS 659A.030(1)(b).

BOLI awarded $1 million in damages against the club, and also jointly and severally against the owners for aiding and abetting the unlawful sexual harassment.

The club is liable for $1 million.

The Oregon Court of Appeals upheld the award against the club, applying the following statute:

“An employer is liable for sexual harassment by nonemployees in the workplace when the employer or the employer’s agents knew or should have known of the conduct unless the employer took immediate and appropriate corrective action. In reviewing such cases the division will consider the extent of the employer’s control and any legal responsibility the employer may have with respect to the conduct of such non-employees.”

The owners are off the hook — for now.

However, the court concluded that BOLI erred in holding the owners liable for aiding and abetting. The relevant statute provides that it is unlawful "to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under this chapter." However, BOLI applied different language that it took from a previous agency decision: “to help, assist, or facilitate the commission of an unlawful employment practice.”

The court found this error to be "fundamental" — applying the meaning of three terms (help, assist, and facilitate) that are not even in the statute. So that part of the case was remanded.

For all the gory details: Frehoo, Inc. v. BOLI (Oregon Ct App 05/18/2022) [PDF].

SCOTUS will decide whether highly paid employee gets FLSA overtime

The US Supreme Court granted certiorari [Order] on May 2 to decide whether the Fair Labor Standards Act (FLSA) overtime requirement applies to an employee making over $200,000 per year on the ground that he was paid based on a daily rate, not a weekly, monthly, or annual rate. The case is Helix Energy v. Hewitt.

FLSA regulations have an exemption for certain highly paid employees who perform executive, administrative, or professional duties. The 5th Circuit applied a regulation that states that the exemption applies only if the employee is paid on a "salary basis," and held that being paid on a daily rate is not being paid on a "salary basis."

I expect oral arguments to be scheduled for the fall.