Federal Court Certifies Disability Discrimination Class Action Challenging Employer's Fitness for Duty Program

On February 5, 2019, the U.S. District Court certified a class of employees challenging their employer's company-wide Fitness-for-Duty ("FFD") program in Harris, et al. v. Union Pacific R.R. Co., Case No. 8:16CV381. The important opinion is available here. The issues in the case are similar to a disability discrimination class action that has been litigated since 2006 by Bryan Schwartz against the State Department, challenging the State Department's Foreign Service policies that unlawfully screen out applicants with disabilities. See Meyer, et al. v. Clinton (Dept. of State), discussed on this blog here and here. The Harris decision is an important step toward courts recognizing that policies that discriminate based upon disabilities can be ideal for class-wide challenges - as we have argued on this blog and at the American Bar Association's National Conference on Employment and Education Law Impacting Persons with Disabilities. 

Union Pacific, the employer, has a FFD program that requires employees in certain positions to disclose specific health conditions. Union Pacific's policies automatically exclude any employee who discloses one of these health conditions from employment and require them to have a fitness-for-duty evaluation. After the employee is evaluated, the records are sent to Union Pacific's retained medical professional, Dr. John Holland in Olympia, Washington, where Dr. Holland and his staff make all decisions regarding who is fit for duty. Dr. Holland and his staff do not conduct physical evaluations, and Union Pacific routinely ignores the medical opinions of outside doctors. 

Plaintiffs and the Class are previous or current employees of Union Pacific. Despite working for years for Union Pacific with no performance problems, many of the Class members were pulled from their jobs under Union Pacific's FFD program, and then excluded from their positions by Union Pacific, even though they had no problem fulfilling the essential functions of their jobs. Plaintiffs and the Class specifically challenge Union Pacific's "1% Rule"--the standard policy used by Dr. Holland to find employees unfit for duty if the employee's disclosed health condition has a risk of sudden incapacitation greater than 1% in the coming year. Plaintiffs assert three class claims under the Americans with Disabilities Act: (1) disparate treatment - pattern or practice of discrimination by implementing the FFD program in a manner that screens out individuals with disabilities; (2) disparate impact - the FFD program has an adverse impact on individuals with disabilities; and (3) unlawful medical inquiry - the FFD program's policies are not job-related and consistent with a business necessity.

Plaintiffs moved to certify the class to include all individuals who have been or will be subject to Union Pacific's FFD program as a result of a reportable health event since September 18, 2014 (the date the challenged FFD program was implemented) through the final resolution of the action. 

In the Court's analysis of Plaintiff's motion, the Court found that Plaintiffs had easily met the numerosity requirement of Rule 23(a) by presenting evidence of potentially 7,000 class members. Harris, et al. v. Union Pacific R.R. Co., Case No. 8:16CV381, Dkt. 307 at pp. 5-6. For commonality, the Court rejected Union Pacific's argument that each fitness-for-duty evaluation decision will vary based on the individual employee and individual job--finding that the challenged FFD policies are uniformly carried out nationwide by the same group of decision-makers (Dr. Holland and his staff). Id. at pp. 7-8.

The Court also held that Plaintiffs satisfied the typicality requirement of Rule 23(a) because all of the Class members are alleging discrimination claims against the same policies that have either resulted in the employees being discharged or constructively discharged by the "1% Rule." Id. at pp. 8-10. Plaintiffs also satisfied the adequacy of representation required by Rule 23(a) by demonstrating common interest with the putative class and that, as class representatives, they will vigorously prosecute the interests of the class through qualified counsel. Id. at p. 10.

Finally, the Court conducted an analysis under Rule 23(b) to determine if "questions of law or fact common to class members predominate over any questions affecting only individual members", and that a class action is the superior method for adjudicating the controversy at issue. Rejecting Union Pacific's arguments that individual issues and facts predominate, the Court held that questions of law are common to the class and predominate over any questions affecting only individual members. Id. at pp. 12-13. Because of the common questions of law and facts regarding the putative class, the Court also found that a class action is the superior, efficient method for adjudicating these claims because they all rely on common proof.

The Court based its decision on the fact that Plaintiffs' allegations demonstrate there are common central issues among the class that predominate over any other ancillary issues: namely, whether the company-wide fitness-for-duty program and uniformly applied "1% Rule" unlawfully discriminate against employees with disabilities. The Court also explained that class action prosecution is favored here, where the Plaintiffs are challenging a single cohesive policy using common proof and seeking common injunctive relief. The Court underscored that class action treatment is not prohibited just because some ancillary matters, like damages, vary among the Class, because they can be tried separately.

If you believe you have been subjected to disability discrimination by your employer, please contact Bryan Schwartz Law today. 

SCOTUS Allows Millions of Transportation Workers to Have Their Day in Court.

In recent decades, the U.S. Supreme Court has largely sided with big business over workers, consumers, and small businesses when victims of wage theft, fraud, and monopolist market abuses[1] band together to prove their case in open court. This past week was a rare exception for potentially millions of transportation workers across the United States.

Brief Background

The FAA generally requires courts to enforce arbitration clauses according to the terms of such clauses, which businesses have forced on individuals in the workplace, in consumer contracts, and in many other contexts (e.g., nursing homes that allegedly cause their residents to die from substandard care). However, Section 1 of the FAA provides an important exception to this general rule, exempting “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from the otherwise strict enforcement of arbitration agreements. 9 U.S.C. § 1.

Upshot of the New Prime Decision

Writing for an 8-0 majority, Justice Gorsuch’s opinion in New Prime Inc. v. Oliveira contains two key takeaways: (1) transportation workers are entitled to their day in court even if both sides signed an arbitration agreement and the transportation workers are classified (or arguably misclassified) as independent contractors, and (2) before ordering workers, consumers, and others to secret, one-on-one binding arbitration under the Federal Arbitration Act (“FAA”), courts still have the power to decide whether any exceptions apply that would allow these groups to have their day in open court.

The Majority’s Reasoning in New Prime

The New Prime majority relied heavily on the text and structure of Sections 1-4 of the FAA to hold that a business cannot take away a court’s authority to decide whether the exception contained in Section 1 applies to a particular dispute. No. 17-340, 2019 WL 189342, at **3-4 (U.S. Jan. 15, 2019). The Court noted that Section 3’s mandate to enforce arbitration agreements according to their terms is limited by Section 1’s exclusion for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Id. at *4 (citing 9 U.S.C. § 1).[2] Based on the FAA’s “terms and sequencing” of its statutory provisions, the Court concluded that “a court should decide for itself whether § 1's ‘contracts of employment’ exclusion applies before ordering arbitration.” Id.

Finding that it has authority to review whether the exception in Section 1 applies to Mr. Oliveira’s arbitration agreement with his former employer, the Court went on to address whether Mr. Oliveira’s written agreement with New Prime was a “contract[] of employment” as the term is used in Section 1 of the FAA. Here, the Court determined that the original meaning of “contracts of employment” in 1925 included both the modern idea of an employer/employee relationship and also true independent contractors. Id. at **6-7. The Court swatted down the company’s attempt to argue that the Court should ignore the plain text of the FAA, and instead make from whole cloth a general federal policy of compelling all disputes to arbitration. (“Unable to squeeze more from the statute's text, New Prime is left to appeal to its policy. … By respecting the qualifications of § 1 today, we respect the limits up to which Congress was prepared to go when adopting the Arbitration Act.”) (internal citations and quotation marks omitted). Id. at *9.

If you are a transportation worker like the lead plaintiff in the New Prime, Dominic Oliveira,[3] know that you are entitled to your day in court to recover your lost wages and expenses.

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[1] Justice Kagan’s dissent in this case, Italian Colors, sums up the state of play well:

Here is the nutshell version of this case, unfortunately obscured in the Court's decision. The owner of a small restaurant (Italian Colors) thinks that American Express (Amex) has used its monopoly power to force merchants to accept a form contract violating the antitrust laws. The restaurateur wants to challenge the allegedly unlawful provision (imposing a tying arrangement), but the same contract's arbitration clause prevents him from doing so. That term imposes a variety of procedural bars that would make pursuit of the antitrust claim a fool's errand. So if the arbitration clause is enforceable, Amex has insulated itself from antitrust liability—even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.

And here is the nutshell version of today's opinion, admirably flaunted rather than camouflaged: Too darn bad.

Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 240 (2013) (emph. added).

[2] The Court also drew upon the then-contemporary 1925 legal landscape in which “Congress had already prescribed alternative employment dispute resolution regimes for many transportation workers. And it seems Congress “did not wish to unsettle” those arrangements in favor of whatever arbitration procedures the parties' private contracts might happen to contemplate.” Id.

[3] You can learn more about Mr. Oliveira’s personal story here.

Supreme Court Favors Delegation Clauses, But Courts Retain Jurisdiction Over Formation Disputes

On January 8, 2019, the Supreme Court reversed the Fifth Circuit decision in Henry Schein, Inc. v. Archer and White Sales, Inc., Case No. 17-1272. 

The case is a business dispute in which plaintiff Archer and White seeks both money damages and injunctive relief. Defendant Schein moved to compel arbitration and Archer and White opposed, arguing that the dispute was not subject to arbitration because the complaint seeks injunctive relief, at least in part. The relevant contract provision states:

Disputes. This agreement shall be governed by the laws of the State of North Carolina. Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of [Schein]), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association. The place of arbitration shall be in Charlotte, North Carolina.

Schein argued that because of the contract's express incorporation of the American Arbitration Association's rules, the parties agreed that questions of arbitrability, including the arbitrability issue raised by Archer and White, would be decided by an arbitrator. Archer and White responded that because they seek injunctive relief, which is excluded in the above provision, the court may resolve a threshold question of arbitrability if the argument for arbitration is "wholly groundless." The district court agreed and Schein's motion to compel was denied. The Fifth Circuit affirmed, citing its own precedent for a "wholly groundless" exception to enforcing a delegation clause. 

In his first Opinion, Justice Kavanaugh writes for a unanimous Supreme Court that when parties contract to delegate arbitrability questions to an arbitrator, a court may not override this agreement even if the court believes that arbitrability of the particular dispute is "wholly groundless." He explains that "[j]ust as a court may not decide a merits question that the parties have delegated to an arbitrator, a court may not decide an arbitrability question that the parties have delegated to an arbitrator."

However, citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), and Rent-a-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), the Opinion clearly states that courts retain the power to decide whether there is "clear and unmistakable evidence" of a meeting of the minds to delegate arbitrability questions to an arbitrator. Rather than ordering the lower courts to grant Schein's motion to compel, the Court remanded to the Fifth Circuit to consider, in the first instance, the issue of whether the contract in fact delegated the arbitrability question to the arbitrator.

In employment law, workers' rights attorneys generally seek to avoid arbitration because of the ways in which arbitration agreements are being used not only to stop workers and consumers from vindicating their rights in a concerted manner, but also to exert control over the dispute resolution process, primarily by companies building repeat-customer relationships with certain preferred arbitrators.    

The Supreme Court's decision in Schein is prompting defense attorneys to advise their employer clients to review their arbitration agreements and include a clearly worded delegation clause. However, employers cannot circumnavigate the courts merely through the presence of a provision attempting to delegate questions of arbitrability to an arbitrator. Workers remain able to argue defenses to formation of such an agreement, and courts must hear these arguments. Workers, if you can argue that the defendant lacks "clear and unmistakable evidence" that the parties agreed to arbitrate, or that the parties agreed to delegate issues of arbitrability to an arbitrator, the Supreme Court has made clear, unanimously, that this argument must be heard by the court before compelling arbitration.

Ninth Circuit Holds Catholic School Teacher fired after Cancer Diagnosis Can Sue School for Discrimination, Not Barred by First Amendment

On December 17, 2018, the Ninth Circuit reversed a decision by the United States District Court for the Central District of California in Biel v. St. James School, A Corp., et al., Case No. 17-55180.

Plaintiff Kristen Biel, a fifth-grade teacher for Defendant, filed a claim under the Americans with Disabilities Act (“ADA”) when St. James Catholic School fired her after she told the School that she had breast cancer and needed time off from work to undergo chemotherapy. The district court dismissed Biel’s claims at summary judgment—holding that her lawsuit under the ADA was barred by the First Amendment’s “ministerial exception.” After her case was dismissed, Plaintiff Biel appealed to the Ninth Circuit.

In November 2013, Plaintiff Biel received a positive teaching evaluation from the School’s principal, noting that Biel was “very good” at promoting a safe and caring learning environment for her students. Less than six months after that evaluation, Biel was diagnosed with breast cancer. When she disclosed her diagnosis to the School’s administrators, she was told her employment contract would not be renewed because “it was not fair … to have two teachers for the children during the school year.”

Biel sued St. James in the United States District Court for the Central District of California, alleging that her termination violated the ADA, which prohibits employment discrimination based on disability. St. James moved for summary judgment, arguing that the First Amendment’s ministerial exception to generally applicable employment laws barred Biel’s ADA claims. The district court agreed and granted summary judgment for St. James.

On appeal, the Ninth Circuit reversed, finding that the total circumstances of Biel’s employment did not qualify her as a minister for the purposes of the ministerial exception.

In Hosanna-Tabor, the only case where the U.S. Supreme Court has applied the ministerial exception, the Court focused on four major considerations to determine if the ministerial exception applied: (1) whether the employer held the employee out as a minister, (2) whether the employee’s title reflected ministerial substance and training, (3) whether the employee held herself out as a minister, and (4) whether the employee’s job duties included “important religious functions.” Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 565 U.S. 171, 192 (2012).

In Hosanna-Tabor, Cheryl Perich, a teacher for a Lutheran school, was fired after she was diagnosed with narcolepsy and brought ADA claims against the school. The Supreme Court found that the ministerial exception did apply because Perich was more than just a teacher in the Lutheran school. She had a special title of “Minister of Religion” conferred to her by the congregation and distinct from other teachers. Perich led her students in daily prayer, and she also led the school wide mass that occurred twice each school year. Perich claimed a federal tax benefit for employees earning compensation in the "exercise of the ministry" on her tax returns, and she also had to complete extensive religion training in the Lutheran doctrine that took her six years to complete in order to be a commissioned minister. In light of these circumstances, the Supreme Court held that Perish was a minister covered by the ministerial exception.

The Ninth Circuit found that Biel, by contrast, had no sort of credentials, training or titles like Perich. Biel was Catholic, but St. James Catholic School did not require its employees to be Catholic to teach. Biel did not have any extensive training in religion or the Catholic pedagogy. Biel taught all fifth-grade subjects, including a thirty-minute religion class using a workbook on the Catholic faith prescribed by the school administrators. And while Biel joined her students in prayer twice daily, Biel did not lead her students in prayer, and her only job duties at the School’s monthly mass were to keep her class orderly and quiet.

After a holistic examination of her training and duties demonstrated that Biel had a limited role in her student’s spiritual lives, the Ninth Circuit held the ministerial exception did not apply, reversing and remanding her case back to the district court. Biel’s lawyer, Andrew Pletcher, said Biel is still struggling with cancer but is delighted by the Ninth Circuit's ruling.

New York Times Investigation Supports Bryan Schwartz Law's Race Harassment Class Action Against Tesla

One year ago, Bryan Schwartz Law, along with co-counsel Larry Organ and the California Civil Rights Law Group, filed a rare racial harassment class action, because use of the "N-word" and other harassment are so common at Tesla's Fremont auto manufacturing plant. Today, after an in-depth investigation, the New York Times published a feature discussing the disturbing pattern at Tesla.

The story begins:

Owen Diaz had seen swastikas in the bathrooms at Tesla’s electric-car plant, and he had tried to ignore racist taunts around the factory. "You hear, ‘Hey, boy, come here,’ ‘N-i-g-g-e-r,’ you know, all this," said Mr. Diaz, who is African-American.

Similar accounts of race harassment follow, profiling a number of the witnesses in Bryan Schwartz Law’s case. 

If you have information about race harassment at Tesla, contact Bryan Schwartz Law today.

Pass the Gravy, But Don't Hold the Wages

Tomorrow, many Americans will prepare their Thanksgiving feast from a box of assembled ingredients, opting to skip the crowded grocery store frenzy by ordering their Thanksgiving meal from a meal kit delivery service. However, customers may be left with a bad taste in their mouths to learn that many of the workers that assemble their meals are being subjected to unsafe, unlawful working conditions and unfairly compensated for their work. 

That is the subject of a recent class action lawsuit filed in Northern California against Blue Apron, claiming that Blue Apron failed to pay workers overtime and failed to provide them with mandatory meal and rest breaks.

Meal kit delivery services are growing in popularity, and there are number of brands to choose from like Blue Apron, Martha and Marley Spoon, HelloFresh, or Sun Basket. Forbes reports the trend for these online meal-kit delivery services will continue, forecasting online sales of meal kits to top $10 billion by 2020, up from about $1 billion in 2015. These meal kit delivery services have capitalized on their success by reinventing dinner, making it easy and accessible for cooks of all skill levels. 

However, there is one group of people who have plenty of complaints about this new industry: the workers. 

Blue Apron employs over 1000 employees at their warehouse center in Richmond, California where nearly 8 million meal kits are assembled each month. Even under fair conditions, the job is difficult. Blue Apron workers assemble the perishable meal kit boxes inside warehouses kept at a temperature below 40 degrees. According to an investigative report by Buzzfeed, Blue Apron employees reported working 12 hour shifts, five to six days each week on the assembly line in order to meet production deadlines. 

On October 5, 2018, a class action lawsuit was filed against Blue Apron in the Alameda County Superior Court, alleging that Blue Apron failed to properly pay its workers, failed to provide its workers with meal and rest breaks, and failed to provide workers with accurate itemized wage statements. The lawsuit covers all Blue Apron hourly employees that work/worked in California from October 5, 2014 to the present. Plaintiff and the putative class are represented by the Turley & Mara Law Firm, APLC. The case was removed to the United States District Court for the Northern District of California on November 19, 2018 (Fairley v. Blue Apron, Inc., Case No. 3:18-cv-07000).

If you believe you have been subjected to employment discrimination, unfair pay or unsafe working conditions, please contact Bryan Schwartz Law today. 

Ignorance of the Law is no Excuse

“Ignorance of the law is no excuse,” particularly when it comes to an employer’s responsibility to pay its workers according to current wage laws. That’s the upshot from the California Court of Appeal’s opinion in Diaz v. Grill Concepts Services, Inc., 23 Cal. App. 5th 859 (2018).

In Diaz, the employer claimed its failure to pay timely its workers was not “willful” – an element of proof for a waiting time penalty claim under Labor Code § 203 – because the employer was purportedly unable “to locate” an amendment to a local Los Angeles ordinance. This amendment to the local wage law required employers to pay certain hotel workers a specific living wage which exceeded the state minimum wage law. The court was unpersuaded.

The court explained several circumstances under which an employer’s failure to pay all wages due upon termination or resignation are not “willful,” including: (1) uncertainty in the law, (2) representations from a taxing authority that no further payment is warranted, and (3) “the employer’s ‘good faith mistaken belief that wages are not owed’ grounded in a ‘good faith dispute,’ which exists when the ‘employer presents a defense, based in law or fact which, if successful, would preclude any recovery on the part of the employee.” Id. at 868. None applied in this case.

To the contrary, the “undisputed facts show that Grill Concepts suspected it was underpaying its employees and went so far as to confirm that the living wage law was in the midst of being amended, but then did nothing else.” Id. at 869. The employer just kept running the same web search which failed to produce information about the amended statute. Id. Because the employer ignored multiple, obvious ways to inform itself of a change in the living wage law, the court affirmed that the employer’s “inability to locate the amended ordinance does not preclude the finding that its failure to pay was willful” for purposes of establishing Labor Code § 203 waiting time penalty liability. Id. [1]

While it should not have taken a court of appeal to state the obvious, nevertheless, workers and workers’ advocates should find comfort in knowing that California courts will not allow an employer to bury its head in the sand to avoid properly paying its workers.

If your employer refuses to pay you earned wages because it claims not to know the law, please contact Bryan Schwartz Law for a free case evaluation to determine if we can assist you.

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[1] The court also rejected the employer’s argument that the amended statute was unconstitutionally vague, in part because of “the absence of any evidence that any other hotelier or restauranteur had any problem reading the ordinance to pay its employees the proper living wage.” Id. at 873. In addition, the court rejected the employer’s misreading of Labor Code § 203 as purportedly allowing a trial court to waive waiting time penalties “for equitable reasons” when the relevant statutory language lacks any such discretionary authority and instead includes language mandating the imposition of such penalties upon a finding of willful violation, as was the case here. Id. at 874-75.