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U.S. Supreme Court to Hear Employment-Related Cases

By Joanne Deschenaux  10/11/2012

In its 2012-2013 term, which got under way Oct. 1, 2012, the U.S. Supreme Court will consider several significant workplace-related issues. Currently, there are no “blockbuster” employment cases on the high court’s calendar, such as the 2012 case upholding President Barack Obama’s controversial health care reform law or the 2011 Dukes v. Wal-Mart case, which placed restrictions on class actions.

The court, however, will be called on to decide the definition of a supervisor for purposes of Title VII of the Civil Rights Act; whether employers may forestall Fair Labor Standards Act (FLSA) collective actions by settling with individual plaintiffs; and when, under the Employee Retirement Income Security Act (ERISA), a health benefits plan’s reimbursement for medical expense may be limited.

In addition, the court will hear two nonemployment cases—one involving affirmative action and one regarding class-action requirements—that may have ramifications for the workplace, too.

Definition of Supervisor

In Vance v. Ball State Univ., which will be argued Nov. 26, 2012, the court is asked to decide whether a “supervisor” under Title VII includes an employee who oversees and directs other workers’ daily tasks but has no authority over their formal employment status. The court granted review of a decision of the 7th U.S. Circuit Court of Appeals, which affirmed summary judgment to Ball State University on the Title VII claim of Maetta Vance, a black catering assistant who claimed that white co-workers and supervisors harassed her based on her race.

Vance had contended that one of the alleged harassers, Saundra Davis, actually was a supervisor and not a co-worker, because Davis directed her work and did not “clock in” as did other hourly employees. The 7th Circuit, however, found no material factual dispute about the supervisory status of Davis given the lack of evidence that she had the power to hire, fire, demote, promote, transfer or discipline Vance.

The 2nd, 4th and 9th U.S. Circuit Courts of Appeals have held that “supervisor” liability in harassment cases may be extended to those whom the employer vests with authority to direct and oversee their victim’s daily work. The 1st and 8th Circuits, along with the 7th in the Vance case, have held that the employer is liable only for the actions of those harassers who have the power to “hire, fire, demote, promote, transfer or discipline” their victim.

FLSA Collective Actions

Genesis HealthCare Corp. v. Symczyk, scheduled for argument on Dec. 3, will address whether an FLSA collective action is rendered moot if the defense makes an offer of judgment in the full amount of the representative plaintiff’s individual claim.

The defendant in the case offered the plaintiff $7,500 in alleged unpaid wages, plus attorneys’ fees, costs and expenses, to settle her claim. While she conceded that the offer would have fully satisfied her individual claim, she refused to accept it. In response, the defendant moved to dismiss the entire case.

The trial court sided with the defendant, dismissing the FLSA claim with prejudice, but on appeal, the 3rd U.S. Circuit Court of Appeals reversed, ruling that the offer of judgment did not moot the plaintiff’s claim. The appellate court expressed a concern that a contrary ruling would enable employers to avoid FLSA collective action claims by simply “picking off’ individual named plaintiffs.

The Supreme Court’s decision in this case thus may have a significant impact not only on FLSA collective actions, but also class actions under Rule 23.

Reimbursement Under ERISA

US Airways Inc. v. McCutchen raises the issue of whether a benefit plan administrator was entitled to full reimbursement for payments to a plan participant injured in an accident where the participant sued and recovered damages from a third party.

The US Airways benefit plan paid James McCutchen $66,866 for medical expenses after he was in a serious automobile accident. McCutchen filed an action against the driver of the car that caused the accident and settled for $10,000. He and his wife also received another $100,000 in underinsured motorist coverage, but after paying a 40 percent contingency attorneys’ fee and expenses, his net recovery was less than $66,000.

US Airways demanded reimbursement for the entire amount that it had paid. McCutchen did not pay the airline, which, in its capacity as administrator of the ERISA benefits plan, sued McCutchen.  

McCutchen claimed it would be unfair to reimburse US Airways in full when he has not been fully compensated for his injuries, including pain and suffering. He also argued that US Airways, which made no contribution to his attorneys’ fees and expenses, would be unjustly enriched if it were now permitted to recover from him without any allowance for those costs.

The district court rejected McCutchen’s arguments and granted summary judgment to US Airways, but the 3rd U.S. Circuit Court of Appeals reversed, agreeing with McCutchen. The McCutchen case will be argued Nov. 27.

Nonemployment Cases

Comcast Corp. v. Behrend, scheduled for argument on Nov. 5, is an antitrust case that may have significant implications for class-action employment cases. In the 2011 Wal-Mart decision, the court emphasized that district courts must conduct a “rigorous analysis” to ensure that plaintiffs can meet the requirements for class certification. This analysis includes engaging in a “merits analysis” bearing on the question of class certification, even if the plaintiffs will be required to prove these issues again at trial. In Comcast Corp., the court will decide whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.

In Fisher v. University of Texas, argued on Oct. 10, the court will weigh the constitutionality of the university’s consideration of race in its undergraduate admissions process. In 2003, the high court narrowly upheld the limited use of race in public university admissions policies. That five-four opinion was written by Justice Sandra Day O'Connor, who found diversity to be a compelling government interest. O’Connor has since retired from the high court, and has been replaced by Justice Samuel Alito, who has expressed skepticism of race-conscious admissions preferences.

In addition, Justice Elena Kagan is not participating, because she served as the solicitor general when the U.S. Department of Justice filed a friend-of-the-court brief in the Fisher case when it was pending in the 5th U.S. Circuit Court of Appeals. The remaining eight justices will hear the case.

Joanne Deschenaux, J.D., is SHRM’s senior legal editor.

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