U.S. Supremes to Review Quon v. Arch Wireless

We posted about Quon v. Arch Wireless here. This was the 9th Circuit's opinion holding a county liable for auditing deputy sheriffs' text messages. The U.S. Supreme Court granted review of that case today (article here.) The court will have a decision out by June. We of course will keep track of it for you. But this could be a way for the court to issue a key privacy ruling about electronic communications. We shall see...


U.S. Supreme Court Clarifies Railway Labor Act Arbitration

If you have no interest in the Railway Labor Act or its arbitration procedures, skip this post.

The Supreme Court unanimously decided that under the Railway Labor Act, there is no jurisdictional requirement that the parties hold certain pre-arbitration proceedings, called "conferences." The arbitration panel erred when it held it had no power to decide 5 grievances because there was insufficient evidence of such conferences. However, the Court refused to consider the issue under the Constitution as a denial of due process. (I warned you to skip this post.)

The case is Union Pacific Railroad v. Brotherhood of Locomotive Engineers and the opinion is here.

9th Circuit: No Jury, Compensatory or Punitive Damages for ADA Retaliation

Alvarado sued his former employer, Cajun Operating Co., for retaliation because he complained to an internal hotline about discrimination based on disability, national origin, etc. Before trial, the court granted a motion in limine barring Alvarado's punitive damages, compensatory damage, and jury trial demand. The Ninth Circuit affirmed on appeal.

The analysis is interesting if you like statutory construction cases. I know what you're thinking: Zzz. If you just want the punchline - the Ninth Circuit joined the Seventh in holding that the Americans With Disabilities Act does not provide for compensatory or punitive damages in retaliation cases asserted under the ADA. As with pre-Civil Rights Act of 1991 cases, the only relief available is equitable, which removes the jury trial too. My bold prediction is that Congress will fix this issue in a few weeks or months.

The case is Alvarado v. Cajun Operating Co. and the decision is here.

California Supreme Court Takes on Harassment v. Discrimination

Roby sued McKesson for disability-based harassment and discrimination. The jury awarded over $3million in actual and $15million in punitive damages, including an award of damages for harassment against an individual defendant. The verdict, though, was a mess and was reduced because of overlapping, duplicative damages awards. In addition, there was an issue of whether the individual could be sued for harassment because much of the alleged conduct was in connection with personnel decisions.

One of the issues the Supreme Court addressed is whether a manager / supervisor's conduct during "personnel actions" is evidence not only of the discriminatory motive, but also harassment. The court explained the difference as follows: "discrimination refers to bias in the exercise of official actions on behalf of the employer, and harassment refers to bias that is expressed or communicated through interpersonal relations in the workplace. " * * *
"[H]arassment is generally concerned with the message conveyed to an employee, and therefore with the social environment of the workplace, whereas discrimination is concerned with explicit changes in the terms or conditions of employment"

Applying this standard, the court upheld Roby's harassment claim:

Roby's discrimination claim sought compensation for official employment actions that were motivated by improper bias. These discriminatory actions included not only the termination itself but also official employment actions that preceded the termination, such as the progressive disciplinary warnings and the decision to assign Roby to answer the office telephones during office parties. Roby's harassment claim, by contrast, sought compensation for hostile social interactions in the workplace that affected the workplace environment because of the offensive message they conveyed to Roby. These harassing actions included Schoener's demeaning comments to Roby about her body odor n10 and arm sores, Schoener's refusal to respond [*40] to Roby's greetings, Schoener's demeaning facial expressions and gestures toward Roby, and Schoener's disparate treatment of Roby in handing out small gifts. None of these events can fairly be characterized as an official employment action. None involved Schoener's exercising the authority that McKesson had delegated to her so as to cause McKesson, in its corporate capacity, to take some action with respect to Roby. Rather, these were events that were unrelated to Schoener's managerial role,
engaged in for her own purposes.

Does this clear things up? There was a bright line between personnel actions and harassing conduct before this case, supported by 15 years of authority. Does this mean that personnel actions now are evidence of harassment when the manager carrying them out is unpleasant? We will see how lower courts treat evidence of harassment after this decision.

Separately - the Court also analyzed punitive damages in employment law cases. After detailed analysis, the Court decided that a one-to-one ratio between actual and punitive damages was the constitutional limit. The Court based its conclusion on its conclusion that as a corporation, McKesson's conduct was not particularly "reprehensible." The Court also based its decision on the high damages award, warranting a lower ratio because of the actual damages' deterrence of similar conduct.

The Court also explained what a "managing agent" is for punitive damages purposes, clarifying prior rulings:

In this case, the Court of Appeal concluded that the jury could reasonably have found supervisor Schoener to be a "managing agent" of employer McKesson. On that basis, the court concluded that the jury's award of punitive damages could be justified based on Schoener's actions alone, regardless of whether more senior managers at McKesson were informed of Schoener's actions. We disagree.

At the time of Roby's termination, McKesson had over 20,000 employees; Schoener
worked at a local distribution center supervising four of them. When we spoke in White about persons having "discretionary authority over . . . corporate policy"
(White, supra, 21 Cal.4th at p. 577), we were referring to formal policies that affect a substantial portion of the company and that are the type likely to come to the attention of corporate leadership. It is this sort of broad authority that justifies punishing an entire company for an otherwise isolated act of oppression, {Slip Opn. Page 32} fraud, or malice. The record here does not support the conclusion that Schoener exercised that sort of broad authority or that she was a "managing agent" for purposes of awarding punitive damages under Civil Code section 3294, subdivision (b). Therefore, in assessing the reprehensibility of employer McKesson's conduct, we must look to what McKesson's more senior managers knew and did.

The case is Roby v. McKesson Corp. and the opinion is here.

IRS Standard Mileage Rate for 2010 is $0.50

The IRS dropped the standard mileage reimbursement rate to $0.50 from $0.505. So, beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

50 cents per mile for business miles driven
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

Those of you who don't believe me and who want an IRS cookie (yum) deposited on their computers may see the announcement here.


CA Supreme Court Upholds Attorney-Client Privilege

Costco hired a law firm to advise the company regarding the classification of certain managers as exempt. The lawyer interviewed two of the managers to analyze their duties and responsibilities. She then produced a 22-page report. The report was considered confidential and privileged from the start.

Later, Costco was the subject of a wage and hour class action regarding the alleged mis-classification of the managers. The plaintiffs sought disclosure of the opinion letter. Costco objected, asserting attorney-client privilege.

Lower courts held that portions of the letter, containing factual information rather than attorneys' advice or opinions, should be disclosed. The California Supreme Court accepted the case for review and reversed.

The court flatly rejected any attempt to "parse" the letter:

We hold the attorney-client privilege attaches to Hensley’s opinion letter in its entirety, irrespective of the letter’s content. Further, Evidence Code section 915 prohibits disclosure of the information claimed to be privileged as a confidential communication between attorney and client “in order to rule on the claim of privilege.” (Id., subd. (a).) Finally, contrary to the Court of Appeal’s holding, a party seeking extraordinary relief from a discovery order that wrongfully invades the attorney-client relationship need not also establish that its case will be harmed by disclosure of the evidence.

Without deciding whether the communications between the managers and lawyer during the wage and hour audit were privileged, the court held that the lawyer's discussion with Costco concerning the managers' interviews were still privileged:
In sum, if, as plaintiffs contend, the factual material referred to or summarized in Hensley’s opinion letter is itself unprivileged it may be discoverable by some other means, but plaintiffs may not obtain it by compelling disclosure of the letter.

This obviously is an important decision for employers seeking advice from lawyers without fear of having that advice disclosed in later discovery.

The case is Costco Wholesale Corp. v. Superior Court and the opinion is here.