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Tipped Off: No Private Right of Action Under Tennessee Tip Statute

Edward Phillips and Brandon Morrow of Kramer Rayson LLP look into the Tennessee Tip Statute and how it was applied in Hardy v. TPC Southwind. Find the full article here.

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Tipped Off: No Private Right of Action Under Tennessee Tip Statute

In Hardy v. TPC Southwind, [1] Justice Kirby, writing for a unanimous court, held that the Tennessee Tip Statute [2] does not create an implied private right of action against employers. In reaching this conclusion, the court examined the legislative history of the statute, expressly overruled a 1998 Court of Appeals decision on the same issue, and provided an in-depth analysis on the doctrine known as “legislative inaction.”

The Tip Statute provides in relevant part:

(1) If a business, including a private club, lounge, bar or restaurant, includes on the bill presented to and paid by a customer, member or a patron, an automatic percentage or specific dollar amount denominated as a service charge, tip, gratuity, or otherwise, which amount is customarily assumed to be intended for the employee or employees who have served the customer, member or patron, that amount should be paid over to or distributed among the employee or employees who have rendered that service ….

A violation of this section is a Class C misdemeanor. Each failure to pay an employee constitutes a separate offense. [3]

The plaintiff, Ms. Hardy, filed suit alleging that TPC Southwind, a private club with dining and banquet facilities, distributed a portion of the gratuity money to “non-tipped” employees (i.e, cooks or managers) in violation of the Tip Statute. The trial court granted TPC Southwind’s motion to dismiss, holding that the Tip Statute did not provide for a private right of action. In a divided opinion, the Court of Appeals found that the Tip Statute created an implied private right of action. [4] The Court of Appeals relied on a 1998 decision from the Court of Appeals, Owens v. University Club of Memphis, [5] holding that the Tip Statute did provide for a private right of action. The Court of Appeals’ rationale in Hardy was rooted in the legislative inaction doctrine: “This Court’s holding in Owens has not been overruled; the General Assembly did not amend §107 when it amended §101 in 2013; and the General Assembly amended §107 in 2012 and did not legislatively overrule our holding in Owens.”

Because the Tip Statute obviously did not expressly grant the right to employees to file private lawsuits, the question before the Tennessee Supreme Court was whether Hardy had an implied private right of action under the Tip Statute. [6] Following the guidance of its previous opinion in Brown v. Tennessee Title Loans Inc., [7] the court set out on a mission to analyze the statutory structure and legislative history of the Tip Statute. Specifically, the court sought to determine: (1) whether Hardy was an intended beneficiary within the protection of the statute; (2) whether there was any indication of legislative intent, express or implied, to create or deny the private right of action; and (3) whether applying such a remedy was consistent with the underlying purposes of the legislation.[8] In examining the statutory language, the court noted that while the statute did not specifically call for a private right of action, it did specify that a violation of the Tip Statute constitutes a Class C Misdemeanor.[9]

In evaluating the three factors outlined in the Brown decision, the court first held that Hardy clearly falls within the class of persons intended to benefit from the protections of the Tip Statute. This was not the end of the court’s analysis, however: “The mere fact that the Legislature enacted the Tip statute to protect and benefit employees such as Ms. Hardy is not alone sufficient … to imply a private right of action.” [10]

As to the second Brown factor, the court was tasked with determining whether there was any indication of legislative intent, expressed or implied, to create or deny a private right of action. To determine legislative intent, the court examined “the context, language and legislative history” of the statute at issue. [11] The court turned its attention to the legislative archives, reviewing statements made by Tip Statute sponsors Sen. Ray Albright and Rep. Bob Davis. In this regard, the court noted as follows:

Clearly, the Legislature intended to require the targeted business establishments to distribute tips to the employees who provide the service to the customer who left the tip, with a governmental remedy in the form of fines. … However, we find nothing in the “context, language, and legislative history” of the Tip Statute indicating one way or another whether the Legislature envisioned individual employees filing suit under the statute to recover their unpaid tips, gratuities or service charges from their employers. [12]

As to the last Brown factor, the court examined whether implying a private remedy was inconsistent with the underlying purposes of the legislation. Here, the Supreme Court began to tackle the Court of Appeals’ previous decision in Owens, decided in 1998. The court recognized that there had been an ideological shift in determining implied rights of action between the time of the Owens decision in 1998 and the time of the Brown decision in 2010. Specifically, the court held:

By the time Brown was decided, however, the scales had tipped against recognizing a private right of action under a statute and the absence of “manifest” legislative intent to permit it, particularly where a statute includes express governmental mechanisms for enforcing it. [13]

Because of this shift, the Tennessee Supreme Court held that Owens was inconsistent with its current jurisprudence and expressly overruled it.

Enter the doctrine of legislative inaction. Hardy argued that the Owens decision was still important because the General Assembly was presumed to be aware of that decision, and yet it took no action to expressly overrule Owens when it certainly had opportunities to do so. As the court put it, “We consider … whether to infer legislative acquiescence in Owens from the General Assembly’s inaction.”[14] Again, harkening back to the shift in jurisprudence between Owens and Brown, and the fact that the Owens’ rationale is (now) inconsistent with the court’s current line of reasoning, the court declined “to apply the legislative inaction doctrine to presume that the Legislature knew of the Court of Appeals’ interpretation of the Tip Statute in Owens and acquiesced in it.”[15] In rejecting application of the legislative inaction doctrine, the court ultimately concluded that employees have no private right of action under the Tip Statute.

The court’s decision in Hardy provides much needed clarification on the Tip Statute, welcome guidance especially for those practitioners representing clients in the restaurant industry. Moreover, this decision makes clear that Tennessee’s current high court will be hesitant to hold that statutes imply private rights of action, absent a legislative intent to permit it. The Supreme Court seemed to follow the lead of Judge Brandon O. Gibson, who dissented from the earlier Court of Appeals decision. [16] The court’s role is to enforce the remedy already on the books, not create a new one — that is a task left to the General Assembly.


Edward G. Phillips is a partner with Kramer Rayson LLP in Knoxville, where his primary areas of practice are labor and employment law. He received his law degree from the University of Tennessee College of Law in 1978 with honors, and as a member of The Order of the Coif. He is a former chair of the Tennessee Bar Association’s Labor and Employment Law Section.

Brandon L. Morrow is an associate with Kramer Rayson LLP in Knoxville where his primary areas of practice are labor and employment, and litigation. He earned his law degree from UT College of Law in 2012.


1.     Hardy v. Tournament Players Club at Southwind Inc., No. W2014-02286-SC-R11-CV, 2016 Tenn. LEXIS 985 (Tenn. Mar. 8, 2017).

2.     Tenn. Code Ann. § 50-2-107.

3.     Tenn. Code Ann. § 50-2-107(a)(1) and (b).

4.     2015 Tenn. App. LEXIS 524, at **14-16.

5.     Owens v. University Club of Memphis, No. 02A01-9705-cv-00103, 1998 Tenn. App. LEXIS 688, at *11 (Tenn. Ct. App. Oct. 15, 1998); 2015 Tenn. App. LEXIS 524, at * 6.

6.     Id. at ** 10-11.

7.     328 S. W. 3d 850, 853 (Tenn. 2010).

8.     Id. at **13-14 (citing Brown at 855-56).

9.     Tenn. Code Ann. § 50-2-107(b).

10.  Id. at * 23 (citing Brown, 328 S.W. 3d at 858).  11.

11.  Id. at * 25 (quoting Thompson v. Thompson, 484 U.S. 174, 180 (1988).

12.  Id. at * 25 (quoting Thompson, 484 U.S. at 180).

13.  Id. at * 30.

14.  Id. at ** 33-34.

15.  Id. at 40-41.

16.  Hardy, 2015 Tenn. App. LEXIS 524 (Tenn. Ct. App. July 2, 2015) (Gibson, J., dissenting) (“Perhaps a private cause of action is the most sensible method of protecting tipped employees; if the General Assembly agrees, it is free to expressly provide such a remedy instead of or in addition to the criminal enforcement mechanism currently provided by section 107. Regardless of whether we believe the enforcement mechanism provided by the General Assembly is the best among various alternatives, we should be “especially reluctant” to imply additional remedies”).

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Does the ADA Require Reassignment Without Competition?

Federal Circuit Split: Does the ADA Require Reassignment Without Competition? Jennifer Vallor Ivy examines this important issue. Find the full article here.

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Federal Circuit Split: Does the ADA Require Reassignment Without Competition?

Federal Circuit Split: Does the ADA Require Reassignment Without Competition?

Dwight was a nurse in a psychiatric ward at Dunder Mifflin Hospital when he had to have hip replacement surgery. Unfortunately, after the surgery, Dwight had to use a cane at work to help ease his back pain. His boss Michael thought a patient could steal the cane from Dwight and use it as a dangerous weapon. Michael told Dwight that he could no longer use the cane at work. Without the cane, Dwight could no longer do his job in the ward. He was deemed unqualified for his position.

HR told Dwight that he could apply for another position in the Hospital for reassignment. There were over a hundred open positions at the Hospital, but Dwight did not even get one interview. Instead, the positions went to more qualified applicants. Has Dunder Mifflin Hospital violated the ADA?

According to the EEOC, yes. The EEOC has been steadfast in its position that, where reassignment is a reasonable accommodation, the employer must place the employee in the vacant position for which he or she is qualified, without requiring the employee to compete with other applicants for the open position. The Sixth Circuit’s holdings are very fact-specific on this issue, typically concluding that reassignment without competition where it would violate a legitimate, non-discriminatory policy is not mandated by the ADA.[1] However, as you will see below, a circuit split exists as to whether the EEOC’s position is the correct position.

Circuits Rejecting the EEOC’s Approach – 5th, 6th, 8th, and 11th Circuits

The facts set forth above involving Dwight at Dunder Mifflin Hospital are taken from the Eleventh Circuit’s decision in EEOC v. St. Joseph’s Hospital, Inc.[2] The case ultimately went to a jury but involved some interesting cross-motions for summary judgment prior to getting there. The Eleventh Circuit’s opinion encompassed analysis on both of the motions for summary judgment, the jury trial (including the jury instructions), and the post-trial motions.

At its core, the Eleventh Circuit’s ruling stands for the proposition that the ADA does not require an employer to reassign an employee to another position as a reasonable accommodation without competition. The Court noted there were multiple ways in which an employer could reasonably accommodate an employee, with reassignment being one of those ways. Still, the Court gave itself some leeway for subsequent cases presenting different facts, opining that the ADA’s language supports that “reassignment will be reasonable in some circumstances but not in others.” 

Similar reasoning is present in the Fifth Circuit’s Daughterty v. City of El Paso[3] and the Eighth Circuit’s Huber v. Wal-Mart Stores, Inc.[4] The Eighth Circuit’s holding was expressed more strongly than St. Joseph’s, which gave some leniency for different facts as explained above. The Huber Court firmly stated: “[T]he ADA is not an affirmative action statute and does not require an employer to reassign a qualified disabled employee to a vacant position when such reassignment would violate a legitimate nondiscriminatory policy of the employer to hire the most qualified candidate. . . . In assigning the vacant [] position to the most qualified applicant, Wal-Mart did not discriminate against [Plaintiff]. On the contrary, [Plaintiff] was treated exactly as all other candidates were treated for the Wal-Mart job opening, no worse and no better.” The Huber Court stated that to hold otherwise was “affirmative action with a vengeance.”

As stated above, the Sixth Circuit’s opinions generally fall in line with those Circuits rejecting the EEOC’s approach.

Circuits Favoring the EEOC’s Approach – 7th, 8th, and D.C. Circuits

Still, the Seventh,[5] Tenth, and D.C.[6] Circuits agree with the EEOC that the ADA requires employers to give preferential treatment to a disabled employee when considering him or her for a vacant position as part of a reasonable accommodation.

In Smith v. Midland Brake, Inc.,[7] the Tenth Circuit honed in on the definition of a “qualified individual with a disability” to support its conclusion that preferential treatment was mandatory. The ADA defines a “qualified individual with a disability” as “an individual with a disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.”[8] Because of the “or desires” language the Court held that the “inquiry is not limited to the employee’s existing job.” According to the Court, reading the statute otherwise would render the phrase “or desires” meaningless, in contravention of basic statutory interpretation principles. This is something that the circuits holding otherwise either do not address or make short shift of. It is important to note, however, is that the Smith Court was not presented with a company policy that required reassignments go to the best-qualified applicant, as in some of the cases reaching an opposite conclusion.

What will the U.S. Supreme Court do?

Many of the cases cited above reference the 2002 Supreme Court decision in U.S. Airways, Inc. v. Barnett.[9] Although Barnett is not completely analogous, it is instructive. In Barnett, the Court considered whether the ADA required reassignment in the context of a seniority system. Barnett injured his back while a cargo handler for the airline. He transferred to a less physically demanding position in the mailroom. However, his new position became open to seniority-based bidding under the airline’s seniority system. Barnett ultimately lost his job and brought suit, claiming that U.S. Airways violated the ADA by failing to reasonably accommodate his disability.

Essentially, the Court was tasked with deciding whether the employer’s seniority system took precedence over the reasonable accommodation requirement of the ADA. The majority opinionestablished a framework under which the employee must first show that an accommodation seems facially reasonable.  The employer must then show circumstances that demonstrate undue hardship under the particular circumstances.  The employee remains free to show that, despite the alleged hardship, special circumstances warrant a finding that the requested accommodation is reasonable on the particular facts. The most pertinent language on the issue of whether reassignment without competition is mandatory is the Supreme Court’s statement that:

We answer that ordinarily the ADA does not require that reassignment. Hence, a showing that the reassignment would violate the rules of a seniority system warrants summary judgment for the employer—unless there is more. The plaintiff must present evidence of that “more,” namely, special circumstances surrounding the particular case that demonstrate the assignment is nonetheless reasonable.

The Supreme Court was deeply divided, resulting in a 5-4 decision. Still, the Supreme Court emerged with the aforementioned burden-shifting analysis that purports to award precedent to the employer’s policy on the right facts.

Both Justice Scalia and Justice Souter authored colorful dissents. In essence, Justice Scalia opined the ADA does not mandate affirmative action in favor of individuals with disabilities. He concluded the multi-step analysis “does not merely give disabled employees the opportunity to unmask sham seniority systems; it gives them a vague and unspecified power . . . to undercut bona fide systems.”

Thus, while we have some guidance from the High Court, the facts of Barnett are still distinguishable in cases where no seniority system exists. The multiple opinions from the Supreme Court, however, do shed some light on the varied analyses we will see should this issue come up again.

Closing Words

The split in authority provides guidance to employees and employers alike. For employees, it is a reminder that reassignment is a viable option but it is not without hurdles. For employers, it is a reminder of the importance of well-drafted company policies and the need to consult legal counsel before making seemingly innocent personnel changes that affect employees with disabilities. While the Supreme Court may take notice at the increasingly varied opinions on this issue, we are left without a consistent procedure until then.


Jennifer Vallor Ivy is an associate attorney at Rainey, Kizer, Reviere & Bell, PLC, in its Jackson office. She earned her law degree from the University of Memphis School of Law in 2014. She concentrates her practice on employment law, tort litigation, and appellate work. Jennifer may be reached at (731) 426-8159 or jivy@raineykizer.com.


[1]Hedrick v. W. Case Reserve Care Sys., 355 F.3d 444 (6th Cir. 2004) (holding that employer need not waive a legitimate, non-discriminatory hiring practice in order to accommodate disabled employee); Burns v. Coca-Cole Enters., 222 F.3d 247 (6th Cir. 2000) (same); Bratten v. SSI Servs. Inc., 185 F.3d 625 (6th Cir. 1999) (opining that ADA does not require employer to reassign disabled employee if it would violate another employee’s right under collective bargaining agreement).

[2]842 F.3d 1333 (11th Cir. 2016).

[3]56 F.3d 695 (5th Cir. 1995).

[4]486 F.3d 480 (8th Cir. 2007).

[5]EEOC v. United Airlines, 693 F.3d 760 (7th Cir. 2012).

[6]Aka v. Washington Hosp. Ctr., 156 F.3d 1284 (D.C. Cir. 1998).

[7]180 F.3d 1154 (10th Cir. 1999).

[8]42 U.S.C. § 12111(8) (emphasis added).

[9]535 U.S. 391 (2002).

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Title VII and Sexual Orientation

Heath Edwards and Brittany Stancombe take an in-depth look at Title VII and sexual orientation. Find the full article here.

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Title VII and Sexual Orientation; To Be or Not to Be? That is Still the Question

Title VII and Sexual Orientation - To Be or Not to Be? That is Still the Question.

For most employers, whether or not sexual orientation is technically a “protected class” in the eyes of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., (“Title VII”) is irrelevant to their everyday practices in the workplace because it makes no difference. Employers are simply committed to the equal treatment of every employee, regardless of the group with which a particular employee identifies. They implement written policies memorializing this commitment. They instill workplace practices to put these words into action. And they train their employees to share in this commitment. These are all good practices! But do they further the purposes of federal anti-discrimination laws? When it comes to sexual orientation discrimination, the answer to that question is still up for debate. 

Title VII protects certain classes of employees and applicants, called “protected classes”, from discrimination and harassment based on their membership in such classes. One of these protected classes is “sex,” but the plain language of the statute neither expressly identifies “sexual orientation” as a protected class nor specifies whether “sexual orientation” falls within the meaning of the term “sex.” The ambiguity over whether sexual orientation is a protected class under Title VII has lingered for years because the final arbiter on issues of statutory construction, the United States Supreme Court, has yet to resolve this issue. Many courts have, of course, historically recognized that gender and/or sex-stereotyping based on an employee's “failure” to conform to gender norms violates Title VII, but the jury is still out on whether discrimination based on an individual’s sexual orientation alone violates Title VII.

For proponents of treating sexual orientation as a protected class under Title VII, the winds of change have started to blow. On April 4, 2017, the Seventh Circuit Court of Appeals issued a landmark decision extending the protections of Title VII to sexual orientation.[1] Writing for the majority, Chief Judge Diane Wood made clear the underlying rationale for placing sexual orientation on the same playing field as other protected classes:

[A] policy that discriminates on the basis of sexual orientation does not affect every woman, or every man, but it is based on assumptions about the proper behavior for someone of a given sex. The discriminatory behavior does not exist without taking the victim’s biological sex (either as observed at birth or as modified, in the case of transsexuals) into account. Any discomfort, disapproval, or job decision based on the fact that the complainant, woman or man, dresses differently, speaks differently, or dates or marries a same-sex partner, is a reaction purely and simply based on sex. That means that it falls within Title VII’s prohibition against sex discrimination, if it affects employment in one of the specified ways.[2]

While the Seventh Circuit is not the first court to hold that Title VII prohibits sexual orientation discrimination, its ruling is still significant because it is the highest one to reach this conclusion. Before the Seventh Circuit’s ruling in Hively, every appellate court facing this issue had ruled that sexual orientation was not a protected class under Title VII. Indeed, the appeal in Hively stemmed from a petition for rehearing en banc of an earlier opinion in the case issued by a three-judge panel, which had held that sexual orientation discrimination was not cognizable under Title VII.[3]

There is another reason why Hively is significant. It creates a split among the federal circuits over whether sexual orientation is a protected class under Title VII. Most recently, on March 10, 2017, the Eleventh Circuit, while acknowledging that discrimination based on gender stereotyping is prohibited by Title VII, held that Title VII’s protections do not extend to sexual orientation discrimination.[4] After the plaintiff in Evans moved for reconsideration en banc, the Eleventh Circuit issued a per curiam order on July 6, 2017, declining to reconsider its position on sexual orientation discrimination. The holding in Evans is consistent with those from courts in the First, Second, Third, Fourth, Fifth, Sixth, Eighth, Ninth, Tenth, and D.C. Circuits, all of which have reached the same or similar conclusions as the Eleventh Circuit.[5]

Now that there is a clear split in authority between the federal appellate courts, the U.S. Supreme Court may have to resolve the issue once and for all. If it does, proponents of classifying sexual orientation as a protected class under Title VII may not have the support of the federal government behind them.  In April 2017, the Second Circuit reaffirmed its earlier position that Title VII’s protections did not encompass sexual orientation discrimination.[6] In May 2017, however, it agreed to rehear the appeal in Zarda en banc.[7] On June 23, 2017, the Equal Employment Opportunity Commission (“EEOC”) filed an amicus brief in Zarda arguing that sexual orientation discrimination should be included as a protected class under Title VII.  But, on July 26, 2017, the Department of Justice (“DOJ”) muddied the waters by filing an amicus brief in in the same case arguing that Title VII’s prohibition against “sex” discrimination does not include sexual orientation. 

During oral arguments on September 26, 2017, the EEOC argued that Title VII’s reference to “sex” encompassed sexual orientation because “the two are one and the same."  By way of example, the EEOC argued that if a heterosexual female employee would not be fired for disclosing her sexual orientation, then a homosexual male employee who was fired for disclosing his sexual orientation would be the victim of sex discrimination.  The EEOC also argued that sexual orientation was protected by Title VII because same-sex attraction transgressed gender stereotypes. The DOJ, on the other hand, dismissed the notion that the term “sex” included sexual orientation. To make its point, it noted that someone would be called “racist” if they opposed interracial marriage. But, if they opposed same-sex marriage, they would not be called “sexist.” 

Notwithstanding the EEOC’s and DOJ’s opposing positions on sexual orientation discrimination before the Second Circuit, the DOJ is the agency responsible for representing the federal government before the U.S. Supreme Court. Therefore, unless the DOJ changes course and adopts the EEOC’s position, the federal government may oppose extending the protections of Title VII to sexual orientation. Time will tell.   

How the U.S. Supreme Court may rule on this issue also remains to be seen. In 2015, the Court ruled 5-4 that the Constitution’s Due Process and Equal Protection Clauses protected same-sex couples’ right to marry.[8] Justice Antonin Scalia has since passed away, but he was replaced on the bench by Justice Neil Gorsuch, who has a similar judicial philosophy to the late Justice. Thus, the ideological makeup of the Court remains largely unchanged since it issued its ruling in Obergefell. As in Obergefell, Justice Anthony Kennedy may prove to be the deciding vote. Until then, Congress is the only other institution endowed with the legal authority,  through legislative action, to answer the question, “Is sexual orientation discrimination illegal.” They appear to be in no rush to do so.      


Heath H. Edwards is an associate in the Labor & Employment Group at Waller Lansden Dortch & Davis, LLP. He is a 2009 graduate of University of Cincinnati College of Law. Heath may be contacted at 615-850-8729 or heath.edwards@wallerlaw.com

Brittany R. Stancombe is an associate in the Labor & Employment Group at Waller Lansden Dortch & Davis, LLP. She is a 2012 graduate of Samford University, Cumberland School of Law. Brittany may be contacted at 615-850-8730 or brittany.stancombe@wallerlaw.com

 


[1] See Hively v. Ivy Tech Comm. Coll., 853 F.3d 339 (7th Cir. 2017)

[2] Id. at 346-47. 

[3] Hively v. Ivy Tech Comm. Coll., 830 F.3d 698 (7th Cir. 2016)

[4] Evans v. Ga. Reg’l Hosp., 850 F.3d 1248 (11th Cir. 2017)

[5] See, e.g., Higgins v. New Balance Ath. Shoe, Inc., 194 F.3d 252 (1st Cir. 1999); Zarda v. Altitude Express, 855 F.3d 76 (2d Cir. 2017) (per curiam); Bibby v. Phila. Coca Cola Bottling Co., 260 F.3d 257 (3d Cir. 2001); Wrightson v. Pizza Hut of Am., Inc., 99 F.3d 138 (4th Cir. 1996); Brandon v. Sage Corp., 808 F.3d 266 (5th Cir. 2015); Vickers v. Fairfield Med. Ctr., 453 F.3d 757 (6th Cir. 2006); Williamson v. A.G. Edwards & Sons, Inc., 876 F.2d 69 (8th Cir. 1989); De Santis v. Pacific Tel. & Tel. Co., 608 F.2d 327 (9th Cir. 1979); Medina v. Income Support Div., 413 F.3d 1131 (10th Cir. 2005); Diaz v. Metro Are Transit Auth., 243 F. Supp. 3d 86 (D.D.C. 2017)

[6] Zarda, 855 F.3d 76

[7] Zarda v. Altitude Express, No. 15-3775, 2017 U.S. App. LEXIS 13127 (2d Cir. May 25, 2017)

[8] Obergefell v. Hodges, 135 S. Ct. 2584 (2015)

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U.S. Department of Labor Updated “Persuader Rule” In Jeopardy

U.S. Department of Labor Updated “Persuader Rule” In Jeopardy
 
Under the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”), no report is required regarding the services of a consultant giving or agreeing to give “advice” to an employer. Previous the U.S. Department of Labor (“DOL”) guidance held that a consultant incurs a reporting obligation only when it directly communicates with employees with the objective of persuading them.
 
DOL’s March 2016 Persuader Rule
 
On March 24, 2016, DOL issued its final “Persuader Rule” which narrowed the “advice” exemption under LMRDA and greatly expanded reporting obligations. The 2016 Persuader Rule identified several examples of previously exempted indirect persuader activities, including activities typically undertaken by labor management attorneys during union organizing campaigns. The following activities would now be subject to reporting: (1) drafting, revising, or providing written materials, speeches, audiovisual or multi-media presentations, or web content for presentation, dissemination, or distribution to employees; (2) training supervisors or employer representatives to conduct individual or group employee meetings; (3) coordinating or directing the activities of supervisors or employer representatives; (4) developing employer personnel policies or practices; and (5) conducting a seminar for supervisors or employer representatives. 
 
Litigation over 2016 Persuader Rule
 
The 2016 Persuader Rule took effect on April 25, 2016 and was set to apply to arrangements, agreements, and payments made on or after July 1, 2016. On June 27, 2016, in National Federation of Independent Business et al. v. Perez et al, the U.S. District Court for the Northern District of Texas issued a temporary injunction prohibiting the DOL from implementing the rule on the grounds that it exceeded the DOL’s authority under the LMRDA by requiring employers to report “advice” information specifically protected by the Act. The Court issued a nationwide permanent injunction against enforcement of the 2016 Persuader Rule on November 16, 2016.
 
Trump Administration’s Intent to Rescind Persuader Rule
 
Under the Trump administration, the DOL has expressed an intent to rescind the 2016 Persuader Rule. On June 12, 2017, the DOL published a notice of proposed rulemaking seeking comments regarding rescission of the 2016 Persuader Rule. The notice identifies several reasons for the proposed rescission, including: (1) an opportunity to give more consideration to effects of the Rule on the regulated parties (e.g. the 2016 Persuader Rule made many labor relations consultants and attorneys who had previously not been required to file reports under the LMRDA responsible for filing both Form LM-20 and Form LM-21s, which impose unique record keeping and reporting burdens on the filer); (2) an opportunity to engage in further statutory analysis regarding the interaction “between the coverage provisions of the LMRDA, and the Act’s exemption for advice”; (3) an opportunity to consider the interaction between Form LM-20 and Form LM-21; (4) an opportunity for a more detailed consideration of attorneys’ activities, as many regulated entities expressed concern regarding the interaction between the new category of “indirect” persuasion and the role of attorneys in advising their clients; and (5) the DOL’s limited resources, as the 2016 Persuader Rule would have resulted in significantly more reports being filed.  
 
Conclusion
 
Because the 2016 Persuader Rule was enjoined before its application became mandatory, no reports have even been filed or are currently due under it. And it is readily apparent, through the June 12, 2017 notice, that there will be no change from past interpretations of the Persuader Rule. Thus, the reporting requirements will remain the same as they were before the 2016 Persuader Rule was implemented and only activities involving direct communication with employees with the objective of persuading them will be subject to reporting.

 
Katie Parham is a senior associate at Ford & Harrison’s Memphis office, where she concentrates her practice on representing management in employment matters before administrative agencies and in employment litigation in state and federal court. She is a graduate of University of Tennessee College of Law, magna cum laude, 2010. Katie may be reached at KParham@fordharrison.com or 901-291-1519.
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U.S. Department of Labor Updated 'Persuader Rule' In Jeopardy

Katie Parham, a senior associate at Ford & Harrison’s Memphis office, takes a look at how the U.S. Department of Labor's updated "Persuader Rule" is in jeopardy. Find the full article here.

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Letter from the Editor

 
Here’s the latest newsletter from TBA’s Labor and Employment Section. I want to thank this issue's authors for their insightful articles: Heath Edwards, Brittany Stancombe, Katie Parham, Edward Phillips, Brandon Morrow and Jennifer Ivy. If you have an article, I invite you to e-mail me at bbuchanan@sblimmigration.com
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Court Amends Procedure for Setting Post-Discovery ADR in Worker’s Comp Claims

As of Oct. 1 in the Court of Worker’s Compensation Claims, attorneys no longer need to file an amended Petition for Benefit Determination (PBD) to initiate post-discovery mediation. In all scheduling orders issued after Oct. 1 where the judge sets a trial date, the judge will also set a date and time certain for a post-discovery mediation. This date will be chosen sufficiently in advance of the trial date to allow time to object to the contents of the Dispute Certification Notice and have it amended if necessary. This eliminates the need for a mandatory second PBD to be filed.
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Free Legal Advice Clinic in Maryville

Volunteer attorneys from the Blount County Bar Association will join staff attorneys from Legal Aid of East Tennessee to provide free advice on various legal matters. The public will be able to seek advice on topics such as adoption, child custody and support, divorce, elder law, foreclosure, identity theft, personal injury, VA benefits, wills, worker’s comp, and more.  Legal help will be available on a first come, first served basis. The clinic is open to the public. No appointment is necessary. The Advice Clinic is part of LAET’s Pro Bono Project, and is offered in celebration of Pro Bono Month. The event is Oct. 14 from 9 a.m. to 12 p.m.
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Sessions Says Title VII Does Not Protect Trans Individuals from Discrimination

A new memo from Attorney General Jeff Sessions says that Title VII of the Civil Rights Act does not protect transgender individuals from workplace discrimination, the ABA Journal reports. The memo retracts a previous interpretation from the Obama administration. American Bar Association President Hilarie Bass released a statement expressing disappointment with the decision. “For decades, the ABA has vigorously opposed such discrimination and, more recently, has urged the enactment of legislation to strengthen protections for LGBT workers to further the ABA’s belief that all Americans – regardless of sexual orientation or gender identity – should be protected from discrimination in the workplace,” Bass said.
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U.S. Supreme Court to Consider Mandatory Union Contributions for Public Employees

The U.S. Supreme Court today agreed to revisit the issue of mandatory collective bargaining fees for public employees, the ABA Journal reports. The Court was split 4-4 in March 2016 when it first looked at whether public sector employees who aren’t members of a union can be required to pay for collective bargaining. Now with conservative Justice Neil Gorsuch on the bench, the case has the potential to “deal a crushing blow to organized labor.”
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Pinnacle, First Tennessee Resolve Legal Battle

Nashville-based Pinnacle Financial Partners and Memphis-based First Tennessee Bank have ended their long-standing legal feud over recruitment, the Nashville Business Journal reports. It is unknown at this time whether Pinnacle paid any damages. The dispute began when First Tennessee sued a former employee who had defected to Pinnacle, shortly after Pinnacle entered the Memphis market, alleging that he recruited his former coworkers to Pinnacle while still employed by First Tennessee.
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ABA Fact Check Site Adds 'Free Speech in the Workplace' Resources

The American Bar Association updated its new web-based legal fact check service today by exploring conflicting issues regarding free speech in the workplace. The site, ABA Legal Fact Check, debuted a week ago and is the first fact check website focusing exclusively on legal matters. The new item offers a brief legal history of speech in the workplace and notes that the extent of free speech protection in the workplace depends on many factors, such as whether the employee works in the public or private sector, the state in which the individual works, applicable federal and state statutes and whether the worker is protected by a union.
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Letter from the Chair

As we start the new TBA year, I wanted to reach out to Labor & Employment Section Members to encourage you to become more involved in Section activities and to share any ideas you have on how we can make Section Membership more beneficial. One important way to contribute is to volunteer to write articles for our Section Newsletter, which is published on a quarterly basis.  
 
We are always looking for writers willing to contribute articles to the TBA Labor & Employment Section newsletter. It’s a great way to get published and get your name in print. Our next issue is scheduled to be published during September. You can pick your own topic or our editor, Bruce Buchanan, can propose a topic. Two possible topics without authors are :
 
1) EEOC-OFCCP merger: Should it occur? Is it a wise idea?; and
2) the Trump Administration’s efforts to rescind and possibly revise the Obama Administration’s “Persuader” regulation.
 
If you are interested in writing an article contact Bruce at bbuchanan@sblimmigration.com.
 
In addition to our quarterly newsletter, the Section plans to produce two webcasts this TBA year and will be holding its annual CLE on a date to be determined in late spring. Please feel free to suggest topics for the webcasts and the annual CLE.
 
I look forward to serving as chair of the L&E Section this year and welcome your feedback. You can reach me by email at ggrisham@fordharrison.com or on my direct line 615-574-6707, if you have ideas or suggestions for our Section.
 
Best Regards,
Greg Grisham
Chair, TBA Labor & Employment Section

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15-Hour Annual Review CLE Set for Knoxville

On Aug. 25, a special Tennessee Bar Association CLE will provide 15 hours of combined live and online continuing legal education. Attend for seven live hours and receive an additional eight online credits to complete at your convenience. Topics for the live portion include cyber security, real estate, unemployment compensation, probate and more.

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DOJ: Job Bias Law Does Not Cover Sexual Orientation

The U.S. Justice Department has filed an amicus brief with a federal appeals court explaining that Title VII of the Civil Rights Act does not protect workers from employment bias based on sexual orientation, the ABA Journal reports. The brief, filed with the en banc 2nd U.S. Circuit Court of Appeals in New York, goes against the position of the U.S. Equal Employment Opportunity Commission and the Obama administration’s Justice Department. 

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Dozens of Sick, Dying Coal Ash Cleanup Workers Sue Company That Handled Spill

More than 50 sickened workers and the survivors of deceased workers are suing Jacobs Engineering, the California company that handled the cleanup of the 2008 Kingston Coal Ash Spill on behalf of the Tennessee Valley Authority. The Knoxville News Sentinel reports that the complainants allege workers weren’t told to wear protective clothing or masks despite the highly toxic conditions they were working in and warnings from the Environmental Protection Agency. At least 17 workers from the site have died since 2008. The case is set for trial in 2018.
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Item of Interest

Below is an article that was published in the the Disability Section Connect. We thought it had information that would be of interest to those of you in this section as well.  

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One Day Before Whistleblower Protections Signed, Memphis VA Whistleblower Fired

One day before President Donald Trump signed a new law protecting whistleblowers at Veterans Affairs facilities, one such whistleblower in Memphis was fired, The Commercial Appeal reports. The Memphis VA alleges Sean Higgins demonstrated “disruptive behavior,” but Higgins claims the firing was in retaliation from administrators who he had accused of unethical behavior. 
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SCOTUS Decision May Aid UAW in Chattanooga

A U.S. Supreme Court action this week in a labor case involving Macy's department store workers may strengthen a United Auto Workers’ case with Volkswagen in Tennessee, the Chattanooga Times Free Press reports. The automaker is currently appealing a National Labor Relations Board decision that paved the way for a vote among about 160 skilled-trades workers at the plant. The company has refused to bargain with the UAW while it argues that union representation decisions should only be made by the entire hourly workforce. Macy's made much the same arguments in its unsuccessful 5th Circuit appeal and the Supreme Court declined to take the case.

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Supreme Court Holds NLRB's Acting General Counsel Had No Authority to Act After Being Nominated for the Position

In National Labor Relations Board v. SW General, Inc.[1] the U.S. Supreme Court recently considered the question of whether the acting general counsel of the NLRB had authority to issue an unfair labor practice complaint after being nominated by President Obama to fill the position.

Fact Summary

In June 2010, following the resignation of the NLRB’s general counsel, President Obama directed Lafe Soloman, then-director of the NLRB’s Office of Representation Appeals, to temporarily serve as the NLRB’s acting general counsel. The president relied on the Federal Vacancies Reform Act of 1998 (FVRA) [2], in making the appointment. Soloman met the requirements under the FVRA for the appointment because he held a senior position at the agency. On Jan. 5, 2011, the president nominated Soloman to serve as the NLRB’s general counsel on a permanent basis and submitted his name to the Senate for consideration; however, Soloman’s nomination was not acted on during the 112th Congress. The president resubmitted Soloman’s name for consideration in the spring of 2013, but no action was taken and the nomination was subsequently withdrawn; eventually a new nominee was submitted and confirmed. However, Soloman continued to serve as acting general counsel until the new nominee was confirmed by the Senate.[3]

In January 2013, during Soloman’s tenure as acting general counsel, an NLRB regional director, exercising authority on behalf of Soloman, issued an unfair labor practice complaint against SW General Inc. Thereafter, an administrative law judge found that a violation of the National Labor Relations Act had occurred and the NLRB affirmed the decision. The employer filed a petition for review in the United States Court of Appeals for the District of Columbia Circuit and argued that Soloman had no authority to issue the unfair labor practice complaint once he was nominated by the president to fill the general counsel position. The Court of Appeals agreed holding that Soloman was “ineligible to serve as Acting General Counsel once the President nominated him to be General Counsel.”[4] An appeal to the U.S. Supreme Court followed.

The Supreme Court’s Opinion

The court began its analysis by noting Article II of the U.S. Constitution’s “Advice and Consent” requirements and examining the history of legislation addressing the process of temporarily filing vacancies pending Senate confirmation of the president’s appointments, including the FVRA.The court noted that under Subsection (b)(1) of the FVRA “a person who has been nominated for a vacant PAS office [one requiring president appointment and Senate confirmation] [may not perform] the duties of that office in an acting capacity.”[5] The court held “that the prohibition in subsection (b)(1) applies to anyone performing acting service under the FVRA” and not just to “first assistants performing acting service under subsection (a)(1)” as the NLRB argued.[6] In reaching its conclusion, the court examined the plain language of the statute and rejected the NLRB’s invitation to utilize legislative history.[7] The court considered but rejected the NLRB’s other arguments, including its reliance on practice following the enactment of the FVRA.[8] The court concluded its analysis by noting that once President Obama submitted Soloman’s nomination to the Senate to fill the NLRB general counsel position on a permanent basis, subsection (b)(1) of the FVRA “prohibited him from continuing his active service.”[9] Therefore, the court affirmed the judgment of the Court of Appeals and concluded that Soloman’s service as acting general counsel following his nomination violated the FVRA.[10]

Take-Aways

The Supreme Court’s ruling in SW General (and its earlier decision in NLRB v. Noel Canning[11]) demonstrate the court’s willingness to curb executive overreach when it runs counter to clear constitutional or statutory authority. Moreover, the ruling underscores the importance of raising threshold technical defenses before the agency or lower court, since a failure to do so may result in a waiver of the defense and its non-consideration by the appellate court.

--------------------------

J. GREGORY GRISHAM is a partner in the Nashville and Memphis Offices of Ford Harrison LLP, and focuses his practice on the representation of employers in all aspects of labor and employment law. He received his Juris Doctor (with honors) from the University of Memphis, Cecil C. Humphreys School of Law in 1989. Greg may be reached at ggrisham@fordharrison.com or 615-574-6707.


[1] __ U.S. __, 137 S.Ct 929 (2017).

[2] 5 U.S.C. §3345 et seq.

[3] id.On Nov. 4, 2013, Richard F. Griffin Jr. was sworn in as general counsel of the National Labor Relations. https://www.nlrb.gov/who-we-are/general-counsel/richard-f-griffin-jr

[4] id. at 937-38 [quoting SW General Inc. v. NLRB, 796 F.3d 67, 78 (Cir. D.C.2015)].

[5] id.at 938.5 U.S.C. § 3345(b)(1).

[6] id. at 938.5 U.S.C. § 3345(a)(1).

[7] id. at 938-42.

[8] id. at 942-43.

[9] id. at 944.

[10] id.

[11] 573 U.S. ___, 134 S.Ct. 2550 (2014).

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Fry v. Napoleon Community Schools: U.S. Supreme Court Makes Challenging Schools’ Failure to Accommodate Disabled Students Easier

On Feb. 22, 2017, the U.S. Supreme Court released its much-anticipated (among a certain segment, anyway) decision in Fry v. Napoleon Community Schools.[1] The case concerned the most adorable plaintiffs one can imagine: a smiling little girl with a mop of dark curls, Ehlena Fry (known in the litigation as E.F.), and her fluffy white goldendoodle, Wonder. Wonder was prescribed as a service dog for E.F., who has cerebral palsy. Wonder was supposed to help E.F. with everyday tasks, such as standing up, balancing, opening doors and picking up items. However, E.F.’s Michigan elementary school refused to allow Wonder to come to kindergarten with her. The Frys eventually moved E.F. to a school where Wonder was welcome and filed suit, seeking damages for the first school’s failure to accommodate Wonder.

The Fry's suit involved two statutes, both of which are familiar to all employment attorneys: the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973. Title II of the ADA forbids any public entity, including public schools, from excluding from participation, denying benefits to, or otherwise discriminating against individuals based on disability.[2] Similarly, Section 504 of the Rehabilitation Act prohibits discrimination by any federally funded “program or activity,” including in schools.[3] Regulations and court decisions interpreting Title II and Section 504 require public entities to make “reasonable modifications” in existing programs, practices, and procedures in order to accommodate individuals with disabilities.[4]

But, while the Frys did not invoke it, there was also a third act specifically directed at disabled students lurking in the background: the Individuals with Disabilities Education Act (IDEA).[5] The IDEA is the main law through which students receive special education services. The IDEA requires that states receiving federal education funds provide children with intellectual and physical disabilities with a “free appropriate public education,” or FAPE.[6] If parents are dissatisfied with their disabled child’s education, they can file a complaint with an administrative agency (in Tennessee, the state Department of Education), culminating in a “due process hearing” before an administrative law judge.[7] If either party is unhappy with the ALJ’s findings, they may appeal to a district court for a “modified de novo” review of the ALJ’s decision.[8] The IDEA purports to make its administrative process the sole path for parents challenging issues with a disabled student’s school, stating in part, “[B]efore the filing of a civil action under such laws seeking relief that is also available under this part, the [administrative procedures] shall be exhausted to the same extent as would be required had the action been brought under this part.”[9]

If you follow that jumble of overlapping protections and jurisdictions, you may spot the issue: the IDEA, ADA and Section 504 all require schools to provide services and accommodations for disabled students, such as letting Wonder the service dog come to school, but they all provide different methods for getting the accommodation. So, in a case like the Fry's, what is a plaintiff to do? Must the IDEA and its administrative procedure be invoked in all cases involving disabled students? The question has stumped courts, advocates and parents for years and made “failure to exhaust administrative remedies” a go-to argument for attorneys defending school districts against any special education claim, regardless of which statute the plaintiff claims was violated.

In Fry, a unanimous Supreme Court in an opinion authored by Justice Kagan finally articulated when a parent must seek an IDEA due process hearing for a denial of an accommodation or service for their child, holding, “[A] plaintiff [must] exhaust the IDEA’s [administrative] procedures before filing an action under the ADA, the Rehabilitation Act, or similar laws when (but only when) her suit seeks relief that is also available under the IDEA. … [T]o meet that statutory standard, a suit must seek relief for the denial of a FAPE, because that is the only relief the IDEA makes available.”[10]

To determine if a case is really about the denial of a FAPE, the court said lower courts should look to the “gravamen” of the plaintiff’s complaint, regardless of what “labels” the plaintiff uses. If the complaint shows that what the plaintiff is really saying is that the school’s failure to offer services to or accommodate the student means that the child is being denied “meaningful access to education based on her individual needs,”[11] than the plaintiff must follow the IDEA administrative procedure. If, however, the plaintiff simply seeks an accommodation, exhaustion is not required.

But how does a lower court determine what the “gravamen” of a complaint is? To begin with, courts should “attend to the diverse means and ends of the statutes” and determine whether the IDEA, ADA or Rehabilitation Act best offer the relief the plaintiff seeks.[12] The court summarized the acts this way: “In short, the IDEA guarantees individually tailored educational services, while Title II and §504 promise non-discriminatory access to public institutions.”

Then, courts should look at two “clues” to determine the gravamen of the complaint. First, courts should ask themselves a pair of hypothetical questions: “First, could the plaintiff have brought essentially the same claim if the alleged conduct had occurred at a public facility that was not a school — say, a public theater or library? And second, could an adult at the school — say, an employee or visitor — have pressed essentially the same grievance?”[13] When the answers are yes, the complaint is not about denial of FAPE; but if the answers are no, it probablyis about FAPE, since the only thing that makes a child in school unique is their educational requirements. However, the court was quick to caution courts against confusing a FAPE with “educational consequences,” using the example of a child in a wheelchair who cannot get into the school building without a ramp: of course the child cannot learn without being inside the building, but it is the lack of access to the building, not the child’s educational experience, that is really at issue, making that a proper claim for the ADA and Rehabilitation Act, not the IDEA.

Second, lower courts should look at the history of the proceedings in the case before them.[14] If the plaintiff did indeed invoke IDEA administrative procedures but “switched” to court before achieving full exhaustion, it is a sign that they were seeking a FAPE.

In Fry, the court remanded the case for the lower court to find out the answers to those questions, so the fate of Wonder the Goldendoodle remains uncertain. But the decision has far-reaching consequences for cases involving a school’s failure to accommodate disabled children. Essentially, Fry clarifies that straightforward ADA and Rehabilitation Act lawsuits filed by public school students should be treated exactly like all other ADA and Rehabilitation Act cases; they are not automatically subjected to the IDEA’s process simply because a disabled student is involved.

As this case law develops, overlap between this newly opened area of ADA law and the well-established rules of disability discrimination in employment is inevitable. Employment lawyers should be on the lookout for ways these cases might impact the law of disability discrimination and accommodation in public places.

____________

CARALINE RICKARD is an associate attorney at Gilbert Russell McWherter Scott & Bobbitt, in its Franklin office. She received her law degree from Vanderbilt Law School in 2015. She concentrates her practice on labor and employment law, with other work in special education law. Caraline may be reached at 615-354-1144 or crickard@gilbertfirm.com.


[1] 580 U.S. __, 137 S. Ct. 743, 197 L.Ed.2d 46 (2017).

[2] 42 U.S.C. §§ 12131–12132.

[3] 29 U.S.C. § 794(a).

[4] See Fry, 137 S. Ct. at 749–50 (citing sources).

[5] 20 U.S.C. § 1400 et seq.

[6] § 1412(a)(1)(A).

[7] § 1415(f).

[8] § 1415(i)(2)(A).

[9] § 1415(l).

[10] Fry, 137 S. Ct. at 752 (internal quotation marks omitted).

[11] Id. at 753–54.

[12] Id. at 755–56.

[13] Id. at 756–57.

[14] Id. at 757.

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U.S. Supreme Court Decides Standard of Review Related to EEOC’s Subpoena

When the EEOC seeks to enforce a subpoena, the district court’s review of the subpoena is highly deferential. “If the charge is proper and the material requested is relevant, the district court should enforce the subpoena unless the employer establishes that the subpoena is “too indefinite,” has been issued for an “illegitimate purpose,” or is unduly burdensome.”[1] Prior to April 2017, the majority of circuits agreed a district court’s decision to enforce or deny an EEOC subpoena is reviewed for abuse of discretion.[2] Only the Ninth Circuit Court of Appeals applied a different review, choosing instead to review de novo.[3]

On April 3, 2017, the Supreme Court used the case of McClane Co. v. Equal Employment Opportunity Commission to clarify district court decisions regarding whether to enforce an EEOC subpoena should be reviewed for “abuse of discretion.”[4]

In McClane, a former employee of McClane Co., a supply-chain services company, asserted a claim of sex discrimination arising from the company’s choice to subject her to a physical strength test before she returned to work from maternity leave. In the course of its investigation, the EEOC sought information from McClane, including “pedigree information” -- names, genders, social security numbers, contact information, reasons for separation, etc. -- for all employees who had taken the test. The company refused to provide names, contact information, and the reasons for separation for each employee who took the test. The EEOC issued a subpoena for the requested information, which it sought to enforce in the Arizona District Court.

The district court denied enforcement as to the “pedigree information” on the grounds that it was irrelevant to the subject matter of the charge because “ ‘an individual's name, or even an interview he or she could provide if contacted, simply could not shed light on whether the [evaluation] represents a tool of ... discrimination.’ ”[5] On appeal, the Ninth Circuit reversed, applying a de novo review, consistent with that Circuit’s precedent, and determined the pedigree information was relevant and therefore subject to subpoena.[6]

The Supreme Court unanimously agreed with the majority of the circuits that “abuse of discretion” is the appropriate review standard for district court decisions reviewing agency subpoenas.[7]  Writing for the court, Justice Sotomayor noted the court’s decision was in line with the “longstanding practice of the courts of appeals” which predated Title VII.[8] Justice Sotomayor noted Title VII confers the same authority upon the EEOC as the National Labor Relations Act (NLRA) confers upon the National Labor Relations Board, and the circuits were unanimous in holding that a district court's decision whether to enforce an NLRB subpoena should be reviewed for abuse of discretion.[9] Thus, the same review should apply to the EEOC.

According to Justice Sotomayor, the court’s decision was also rooted in the “basic principles of institutional capacity” as determining whether the evidence sought is relevant to the specific charge or whether the subpoena is unduly burdensome in light of the circumstances are “[b]oth tasks … well suited to a district judge's expertise.”[10] Furthermore, the district courts’ “considerable experience” in making similar decisions such as whether particular evidence is admissible at trial gave district courts an “institutional advantage” over the appellate courts in making such determinations and thus, vesting district courts with discretion in these decisions “streamline[s] the litigation process by freeing appellate courts from the duty of reweighing evidence and reconsidering facts already weighed and considered by the district court.”[11] Accordingly, the Supreme Court sent the case back to the Ninth Circuit to review the district court’s decision for abuse of discretion.[12]

Interestingly, on remand, the Ninth Circuit reaffirmed the result of its prior ruling, this time determining the district court had indeed abused its discretion by denying enforcement of the subpoena.[13] Taking a cue from Justice Ginsburg’s concurrence, Judge Watford held the district court's ruling was “predicated on an erroneous view of the legal standard governing relevance in this context” and therefore should be overturned for abuse of discretion.[14] The alleged erroneous view held by the district court concerned the extent of the relevance limitation imposed by Title VII.[15] According to the Ninth Circuit, the appropriate question was not whether the evidence sought would tend to prove a charge of unlawful discrimination, as would be the case at trial, but whether the evidence would tend give the agency “reasonable cause … to believe that the charge is true.”[16]  The court held that under this inquiry, which “sweeps more broadly” at the subpoena stage than it would at trial, the universe of “relevant” information encompasses “virtually any material that might cast light on the allegations against the employer.”[17] Thus, under this review, the EEOC’s subpoena for “pedigree information” was appropriate.

Unlike Justice Ginsburg’s separate concurrence, the majority did not opine on whether the district court’s decision was appropriate, but rather focused only on the appropriate framework for review. It remains to be seen whether the Ninth Circuit’s doubling down on its earlier decision under the newly minted standard will cause the Supreme Court to take the case back up for a second review. Review may be necessary, however, to provide clear guidance as to how far district courts should expect to be able to run with the nationwide standard created by McClane.

____________

JOSH SUDBURY is a senior associate at Ford Harrison in its Nashville office, where he concentrates his practice on representing management in a variety of labor and employment matters. He received his J.D. at University of Memphis School of Law in 2009. Josh may be reached at jsudbury@fordharrison.com or 615-574-6705.


[1]McClane Co. v. EEOC, 137 S. Ct. 1159, 1165 (April 3, 2017).

[2]See, e.g., EEOC v. Kronos Inc., 620 F.3d 287, 295–296 (3rd Cir. 2010); EEOC v. Randstad, 685 F.3d 433, 442 (4th Cir. 2012); EEOC v. Roadway Express, Inc., 261 F.3d 634, 638 (6th Cir. 2001); EEOC v. United Air Lines, Inc., 287 F.3d 643, 649 (7th Cir. 2002); EEOC v. Technocrest Systems, Inc., 448 F.3d 1035, 1038 (8th Cir. 2006); EEOC v. Dillon Companies, Inc., 310 F.3d 1271, 1274 (10th Cir. 2002); EEOC v. Royal Caribbean Cruises, Ltd., 771 F.3d 757, 760 (11th Cir. 2014) (per curiam).

[3]EPA v. Alyeska Pipeline Serv. Co., 836 F.2d 443, 445–446 (9th Cir. 1988) (holding that de novo review applies).

[4]McClane at 1170.

[5]Id. at 1166 (quoting EEOC v. McLane Co., 2012 WL 1132758, *5 (D. Ariz., Apr. 4, 2012)).

[6]See 804 F.3d 1051, 1057 (2015).

[7]Justice Ginsburg wrote a separate opinion agreeing that “abuse of discretion” standard was appropriate but noting she would have affirmed the Ninth Circuit’s judgment to reverse the lower court’s decision regarding enforcement of the subpoena. See 137 S. Ct. 1159, at 1170 (Ginsburg, J., concurring in part and dissenting in part).

[8]Id. at 1166.

[9]Id. at 1167 (citing NLRB v. Consolidated Vacuum Corp., 395 F.2d 416, 419–420 (2nd Cir. 1968); NLRB v. Friedman, 352 F.2d 545, 547 (3rd Cir. 1965); NLRB v. Northern Trust Co., 148 F.2d 24, 29 (7th Cir. 1945); Goodyear Tire & Rubber Co. v. NLRB, 122 F.2d 450, 453–454 (6th Cir. 1941)). 

[10]Id. at 1168.

[11]Id. (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 404 (1990)).

[12]Id. at 1170.

[13]--- F.3d ---, 2017 WL 2261015, *1 (May 24, 2017).

[14]Id. at *2.

[15]Id.

[16]Id.

[17]Id.

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