Supreme Court rules against arbitration in "waiver" case

The Federal Arbitration Act says that arbitration agreements, including those governing employment, must be honored. The FAA's reach is so broad that most challenges to arbitration usually fail in the Supreme Court. Not this one. This unanimous ruling says the company waited too long to invoke the arbitration clause.

The case is Morgan v. Sundance, Inc., issued by the Supreme Court on May 23. Morgan worked for Taco Bell. She filed a lawsuit over unpaid overtime, and her attorneys framed the case as a nationwide collective action. Problem was that Morgan signed an arbitration agreement at the outset of her employment. Many workers sign such an agreement without giving it much thought. We think about it when it's time to sue and the lawyers realize that no lawsuit is forthcoming and that the only to litigate the dispute is in arbitration, which -- let's be honest -- usually favors the employer.

What happened here is that Sundance, which owns the Taco Bell franchise, did not move to compel arbitration when Morgan filed her lawsuit. Sundance initially acted as if the arbitration agreement never happened. It moved to dismiss the lawsuit on other grounds, that the case was duplicative of another collective action. Sundance then filed an answer with 14 affirmative defenses, none of which mentioned the arbitration agreement. Then the case went to court-ordered mediation. After mediation failed, Sundance waited another eight months before moving to stay the litigation and compel arbitration under the FAA. The lower court said arbitration was in order because Sundance's waiver did not prejudice Morgan as the parties were just getting started in the litigation.

The Supreme Court reverses and says there is no "prejudice" component to arbitration-related waivers. Look buddy, waiver is waiver. While the FAA's policy favors arbitration, "the Eighth Circuit was wrong to condition a waiver of the right to arbitrate on a showing of prejudice." In federal practice, we don't ask about prejudice to the other party when someone waives a procedural right. That is now the rule in arbitration cases. 

The Second Circuit angle is that the prejudice component that the Supreme Court struck down in this case emanates from Carcich v. Rederi, 389 F.2d 692 (2d Cir. 1968), a very old case. Carcich ruled as it did because of the "overriding federal policy favoring arbitration." That reasoning spread around the federal system over the years. After 54 years, the Carcich precedent is put to rest. 

On remand, the Court says, the parties now have to litigate in federal court whether Sundance knowingly relinquished the right to arbitrate by acting inconsistently with that right.The Court of Appeals may consider whether a different procedural framework, such as forfeiture, is appropriate. But the Eighth Circuit cannot "make up a new procedural rule based on the FAA's 'policy favoring arbitration.'"

Second Circuit rejects habeas petition in revenge killing

This is a habeas corpus petition filed by an inmate who was convicted of killing someone that he thought had sexually assaulted his girlfriend. The inmate's uncle was also convicted of the killing. At the murder trial in state court, the criminal defendant's lawyer began striking male jurors during the peremptory challenges. The prosecution objected to these challenges, claiming this focus on male jurors violated the Equal Protection Clause.

The case is Murray v. Noeth, issued on April 26. During criminal trials, the parties can strike a certain number of jurors without explanation. (You can also strike jurors for cause if the potential juror is obviously unsuitable to hear the case, such as a juror who knows the parties). If you strike too many white or black or male or female jurors, the other side will make a Batson challenge, named after a Supreme Court case from 1986 that says the lawyer seeking to strike these jurors must advance a race or gender neutral reason for his choices. The trial court has authority to grant or deny the Batson challenge.

Defendant here tried striking a series of male jurors. The thinking was probably that the defense thought these jurors were conservative and pro-prosecution. The trial court said some of these challenges were not legitimate and were based solely on the gender of these potential jurors. The jury that was finally empaneled found Murray guilty, and he then filed a habeas petition claiming the state criminal court violated his constitutional rights in denying him a fair jury. Habeas petitions are common in our world. There is always a constitutional argument that an inmate can make in challenging his conviction. The problem for the inmates is that most of these habeas petitions are dismissed.

Murray loses. The Court of Appeals (Nardini, Park and Sack) observes that the Supreme Court's constitutional framework for these cases does not actually allow you to make constitutional challenges like this. Judge Nardini writes, "The problem with Murray’s claim is that, as the Supreme Court held  in  Rivera  v.  Illinois,  556 U.S.  148,  158  (2009),  a  state  court’s improper  rejection  of  a  defendant’s  peremptory strike  does  not, without more, violate the defendant’s federal constitutional rights." In other words, "the erroneous denial of a peremptory challenge does not require automatic reversal of a defendant’s conviction as a matter of federal law because such an error does not implicate a defendant’s federal constitutional rights. Because a party’s peremptory challenges 'are within the States’ province to grant or withhold,' a defendant’s 'mistaken denial  of  a  state-provided peremptory  challenge  does  not,  without more, violate the Federal Constitution.'”

ADA associational discrimination case fails

The Americans with Disabilities Act makes it illegal to fire someone because of their association with someone who is disabled. These claims are infrequently decided in the Court of Appeals, however. This case raises that issue, but the plaintiff loses the case on summary judgment, and the Second Circuit affirms that dismissal.

The case is Blanton v. Education Affiliates, a summary order issued on May 12. Plaintiff was Campus President of St. Paul's School of Nursing in Staten Island. The school had a problem: it's passage rate for the nursing licensing exam was too low, which is why the state had denied the school permanent-degree-granting authority. Without that authority, the school will have a difficult time functioning. Plaintiff's job was to increase the passage rate to at least 75%. When plaintiff was fired, the school said it was because the pass rate had not improved on his watch.

Plaintiff said he was really fired because the school did not want to pay his wife's medical bills amounting to more than $200,000. That's the associational discrimination theory under the ADA. For a good summary of how these claims work, see Kelleher v. Fred A. Cook, Inc., 939 F.3d 465 (2d Cir. 2019). 

These competing motives are not enough to avoid summary judgment. Why? Because the Second Circuit (Wesley, Bianco and Perez) says the uncontroverted evidence is that, from the outset of plaintiff's employment as Campus President, "the primary focus of his job was improving the school's passage rate on the licensing exam." Plaintiff admitted this in deposition. He was also repeatedly warned that the passage rate needed to improve substantially. But that did not happen, the Court says. In contrast to this evidence, no one had ever questioned plaintiff about any medical costs the school was incurring as a result of his wife's medical issues. While plaintiff points to a text message that he sent to management that made reference to his wife's hospitalization, which he says supports the inference that the school knew about his wife's "long-term hospitalization and medical issues for which high cost is readily inferable." That argument cannot avoid summary judgment, the Court says, as it is too speculative and conjectural.

Fair Housing Act harassment case fails on the merits

In this Fair Housing Act case, the plaintiff -- who operates a home for disabled adults -- sues people who want the residential portion of the home shut down. The home for disabled adults takes up one-half the residence. The defendant-neighbors live in the other half of the residence. This is an ugly case, but the defendants win the case on summary judgment thanks to defendants' video evidence of problems at the home.

The case is Birch Family Services v. Wlody, a summary order issued on May 10. The Wlody's live in the part of the residence that does not house the home for disabled adults, known as Birch Family Services. "For over five years, the Wlodys photographed and videotaped Birch’s disabled residents and African-American  staff to document excessive noise, alleged abuse of the residents, and other complaints." Birch sued the Wlodys for housing discrimination under the Fair Housing Act, which prohibits disability harassment of residents in a home like this. Birch also says defendants were discriminating against the race of the staff, also in violation of the FHA. It certainly does not look good that the Wlodys were videotaping the residents and trying to document noise and other matters. But they win the case on summary judgment because the Court of Appeals finds that 

Defending themselves, the Wlodys offer up their videotapes as evidence to show they were not harassing anyone but trying to document wrongful conduct in the Birch home, claiming it shows that Birch's staff was abusing and not supervising residents, noise complaints, cars idling in the street, and cars blocking the Wodlys' driveway. This evidence convinces the Court of Appeals (Parker, Lee and Park) that defendants were not discriminating against anyone. 

In an effort to avoid summary judgment, Birch points to evidence that one defendant texted Birch, stating "we feel like we live next to an asylum." Defendants also allegedly made racial comments about the Birch's staff. This will not persuade the Court of Appeals to certify this case for trial. "This evidence, combined with the fact that Birch did not show that the Wlodys’ proffered reasons were unworthy of credence, leads to the conclusion that no rational jury could find that the Wlodys’ conduct of taking pictures and videos  was  motivated  by  unlawful  discrimination  by  a  preponderance  of  the evidence.We thus find that Birch did not meet its burden of demonstrating pretext and affirm the district court’s entry of summary judgment on Birch’s FHA claim.:

Pro se disability discrimination plaintiff wins appeal

This pro se plaintiff alleged that he suffered disability discrimination and then retaliation for requesting a reasonable accommodation. He lost on a motion to dismiss under Rule 12(b)(6) but takes up an appeal. We have ourselves the rare case where a pro se appellant wins the appeal against an established law firm, as the Court of Appeals finds he can win the retaliation claim.

The case is Ibela v. Allied Universal, a summary order issued on May 5. Plaintiff alleged he is bipolar. But the Court of Appeals (Cabranes, Lee and Bianco) rejects the underlying disability discrimination claim arising from his bipolar disorder because "A diagnosis alone is insufficient to establish disability under the statute." The Circuit cites Toyota Mfg v. Williams, 534 U.S. 184 (2002), for that proposition. Plaintiff did not establish that his disorder impacted or substantially limited a major life activity, so that claim is gone.

But that does not mean plaintiff cannot win his retaliation claim. You can bring such a claim if you suffered an adverse action following a request for a reasonable accommodation provided you have a good faith belief that you suffered a disability. This rule ensures that no one will suffer retaliation unless their request for an accommodation was made in bad faith. Sort of a safety valve for employees in case they were wrong about their disability. The district court said that since plaintiff did not sufficiently allege he suffers a disability under the ADA, he cannot win his retaliation claim. But that is not the law, the Second Circuit says. What matters is you had a good faith belief that you did have a disability. Then you can sue for retaliation if something bad happens to you after requesting the reasonable accommodation.

Plaintiff has a retaliation case. Here is the Second Circuit's reasoning:

Ibela alleged that Nicholas began denying him work, reducing his hours, and denying him overtime after he requested a reasonable accommodation due to his bipolar disorder. These adverse actions occurred within two months of Ibela’s June 2019 reasonable accommodation request. 

 That two-month gap is enough to permit an inference of retaliation. The Court cites Gorman-Bakos v. Cornell Co-Op  Extension of Schenectady Cnty., 252 F.3d 545, 554 (2d Cir. 2001), for that proposition. Gorman-Bakos states, “[A] plaintiff can indirectly establish a causal connection to support a discrimination or retaliation claim by showing that the protected activity was closely followed in time by the adverse employment action.”

Habeas ruling in closed-courtroom case in favor of defendant is reversed

This habeas corpus case asks when it is constitutionally permissible for a criminal court to close the courtroom to the public. Normally, when criminal trials are closed to the public, even for brief time periods, that violates the constitutional right to a public trial, requiring a new trial for the defendant, even if the jury found him guilty.

The case is Jordan v. Lamanna, issued on May 5. The criminal defendant was charged with killing her eight-year old son by giving him pharmaceutical drugs. She was convicted of manslaughter. During trial, the prosecutor wanted to bring to the court's attention a website that said the very trial involving the defendant was a sham because evidence was being wrongly excluded. The prosecutors said the defendant had sent a link to this website to over 100 contacts. Because of this, the prosecutors said, the judge should remind the jury to avoid the media during trial so the website would not influence their opinion of the case. In all, the courtroom was closed for a few minutes for purposes of this discussion.

The district court granted the habeas petition, citing the Sixth Amendment's right to public trials. New trial for defendant! The Court of Appeals (Leval, Sack and Park) reverses. She remains guilty! 

 

You cannot win a habeas petition unless the constitutional violation during the state criminal trial violated clearly established constitutional law as defined by the Supreme Court. This means that some constitutional violations will not get you habeas relief if the violation had yet to be defined by the Supreme Court. This is one of those cases. 

While Supreme Court cases have held that a closed jury selection process violates the Sixth Amendment, as well as suppression hearings that take place prior to the criminal trial itself, it has never ruled on whether a closed proceeding like this violates the Sixth Amendment. Such a proceeding does not discuss trial evidence; it instead was a conference among counsel and the court about whether to charge the jury to avoid the media during trial. The public was not shut off from any testimony or other proceedings that went directly to the defendant's guilt or innocence.

When the district court granted the habeas petition, the defendant was set free from prison. If the prosecutor so chooses, and I assume it will, defendant will undergo another trial.

2d Circuit clarifies "transportation exception" under Federal Arbitration Act

 The Federal Arbitration Act says that courts must honor arbitration clauses, including those governing employment relationships. So the arbitration clause that an employee signs with management on her first day of employment means she cannot sue the company in court for discrimination or other claims. One exception to that is the "transportation industry" exception. We have few cases that interpret that exception. This is one of them.

The case Bissonette v. LePage Bakeries Park St., LLC, issued on May 5. Plaintiffs deliver baked goods to stores and restaurants by truck. They claim the defendant denied them overtime pay and other wage and hour violations in violation of the Fair Labor Standards Act and Connecticut law. They want to sue in federal court, however, and not submit to arbitration. The common wisdom is that court is a more favorable forum for plaintiffs than arbitration. Management wants the case sent to arbitration. Plaintiffs claim the transportation industry exception allows them to sue in court. The district court granted defendants' motion to compel arbitration, and the Court of Appeals affirms in a divided vote.

While the FAA says transportation workers are not required to arbitrate, the Supreme Court has never defined what that phrase means. Under the FAA, employment contracts are not subject to arbitration involving "seamen, railroad employees and any other class of workers engaged in foreign or interstate commerce." The class of workers encompassed by the residual clause is "transportation workers." As the Second Circuit sees it, the two examples in the FAA, seamen and railroad employees "locate the 'transportation worker' in the context of a transportation industry." In Erving v. Virginia Squires Basketball, 468 F.2d 1064 (2d Cir. 1972), the Second Circuit said the FAA exclusion is limited to workers involved in the transportation industry. That is still good law, the Court of Appeals says. 

The holding: "an individual works in a transportation industry if the industry in which the individual works pegs its charges to the movement of goods or passengers, and the industry's predominant source of commercial revenue is generated by that movement." Under this interpretation, plaintiffs are in the baking industry, not the transportation industry. Yes, they drive the baked goods to stores and restaurants, but these places are paying for the baked goods, not the transportation that brought the baked goods to these locations. 

Writing for the majority, Judge Jacobs notes this holding leaves open other issues for review: what about (1) people work work in the transportation industry but do not themselves move the goods or passengers, like supervisors, ticket salespersons, and luggage attendants; (2) workers who transport goods and passengers within a state when the goods or passengers originate out of state; (3) people who work for major retailers who transport goods intrastate within a larger transportation network that is interstate, like Amazon? Cases from around the country have addressed these issues, but none in the Second Circuit. If you have a case that deals with these issues, take a look at this ruling and choose from the cases that suit your fancy.

Judge Pooler dissents, stating that the plaintiffs in this case are transportation workers, relying on Justice Barrett's formulation when she sat on the Seventh Circuit:

Both we and our sister circuits have repeatedly emphasized that transportation workers are those who are actually engaged in the movement of goods in interstate commerce. To determine whether a class of workers meets that definition, we consider whether the interstate movement of goods is a central part of the class members’ job description. Then, if such a class exists, we ask in turn whether the plaintiff is a member of it. Sometimes that determination is easy to make—as it is for truckers who drive an interstate route. Sometimes that determination is harder—as it is for truckers who drive an intrastate leg of an interstate route. Whether easy or hard, though, the inquiry is always focused on the worker’s active engagement in the enterprise of moving goods across interstate lines. That is the inquiry that Circuit City demands.

Under this test, Judge Pooler writes, "the plaintiffs here are paradigmatic transportation workers" in part because their work consists of delivering baked goods and their daily work is centered on the transport of goods in interstate commerce. 

Boston's City Hall religious flag denial violates the First Amendment

The Supreme Court has ruled that the City of Boston violated the First Amendment when it disallowed a Christian flag from the flagpole display outside City Hall. 

The case is Shurtleff v. City of Boston, decided on May 2. The City flies the American flag and the Commonwealth flag outside its municipal building. A third flagpole allows community organizations and other entities to have their own flag on display. This includes the Pride Flag, banners honoring emergency service members, and and dozens of other different flags. When a religious entity wanted to fly their own flag at City Hall, the City said no, worried about an Establishment Clause violation, i.e., the public might interpret the flag as the City's endorsement of religion.

Many years ago, the Establishment Clause objection might have carried the day. That was before the Supreme Court in the 1990s ruled that the government discriminates under the First Amendment when it excludes religious organizations from programs that are also extended to non-religious organizations. So that is no longer an issue in these cases. The issue now is whether the City can reject the flag under the "government speech" doctrine, which says the government can adopt its own political message without having to accommodate or make room for competing or other messages at the same forum. Under this principle, "when the government wishes to state an opinion, to speak for the community, to formulate policies, or to implement  programs, it naturally chooses what to say and what not to say." Permanent monuments in a public park, for example, are government speech, and you do not have the free speech right to build a competing monument on that property. But this is not an easy call when the government invites other people to speak or express themselves on government property. As Justice Breyer writes for the unanimous Court:

Our past cases have looked to several types of evidence to guide the analysis, including: the history of the expression at issue; the public’s likely perception as to who (the government or a private person) is speaking; and the extent to which the government has actively shaped or controlled the expression.

Under this test, the religious organization wins. Yes, the government often flies its own flag at municipal buildings. As for the public's perception of whether the third-party flag conveys a governmental message, that issue seems to be a wash, the Court says. The deciding factor is that the City does not control who can raise these flags. The public is always invited to have their particular flag on display. The decisionmaker at City Hall does not even consider what the flag says or symbolizes in granting people's applications. Everyone gets their flag raised. This means the outside flags are not government speech but free speech for anyone with a flag.

A little-known defense to defamation cases

Defamation law is so complex that one defense to a defamation claim is that you disparaged someone based on something that happened in a court proceeding. If your defamatory statement is a reasonable interpretation of a court ruling, there is no case. This is not a case law concept but a statutory concept, which means the State Legislature actually gave this serious thought.

The case is Daleiden v. Planned Parenthood, a summary order issued on April 5. Plaintiff is an anti-abortion activist. He sues over two statements. One article said that a judge had denied his motion to quash a search warrant for his apartment arising from a criminal case against him. The article had a statement from Planned Parenthood that plaintiff and a co-defendant in that criminal matter should face the consequences of their "multiyear illegal effort to manufacture a fake smear campaign against Planned Parenthood." The other alleged defamatory statement appeared on Planned Parenthood's Twitter feed, which linked to PP's similar statement that plaintiff "created a false smear campaign against Planned Parenthood" and "broke multiple" state and federal laws. The defamation lawsuit alleges that plaintiff's reputation was damaged when PP said he had "manufactured a fake smear campaign against Planned Parenthood."

Is this defamation? No, said the district court. The Court of Appeals agrees, citing the principle under N.Y. Civil Rights Law that alleged defamatory statements are privileged as "fair and true reports of a judicial proceeding." The "fair and true" privilege has been extended to statements made by "those connected with the suit." Also to publications such as tweets. 

What is "fair and true" under this doctrine? Something is fair and true if it is "substantially accurate" even with minor inaccuracies, and "does not produce a different effect on a reader than would a report containing the precise truth." This all comes from state and federal cases, by the way. That's a lot of wiggle room for a defamation defendant. 

The challenged statements in this case are privileged. One article, "while not a verbatim recitation of the charges in the California criminal case, provided background to the misconduct attributed to Plaintiffs in that case and therefore fell within the statutory privilege afforded to a fair and true report of a judicial proceeding.” In the decision that was the subject of that article, "the state court discussed how Daleiden and his co-defendant conspired to obtain fake driver’s licenses, used a fictitious company, and assumed fake identities with the intent to defraud Planned Parenthood.”  As for the November 2019 tweet, Planned Parenthood’s “characterization of the verdict accurately reflect[ed] the jury’s findings that [Daleiden and others] perpetuated a fraud that was designed to (and did) result in substantial harm” to Planned Parenthood."