By John R. LaBar*

In advising your clients on HR matters, you will find that most of them are familiar with the list of categories protected from employment discrimination under Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act of 1990 (ADA), GINA, and the Civil Rights Act of 1991.  These laws prohibit discrimination based on race, color, sex, religion, national origin, age, disability, and genetic information, as well as reprisal for protected activity.  Absent from this list is any mention of sexual orientation or gender identity.

However, the EEOC has held that discrimination against an individual because that person is transgender (also known as gender identity discrimination) is discrimination because of sex and therefore is covered under Title VII.[i]  The EEOC has also found that claims by lesbian, gay, and bisexual individuals alleging sex-stereotyping state a sex discrimination claim under Title VII.[ii]

Federal legislation, the Employment Non-Discrimination Act (ENDA), has been proposed for years to protect transgender, lesbian and gay employees, against employment discrimination on the basis of sexual orientation and gender identity.  But while ENDA has been introduced in every Congress since 1994 (except the 109^th), it has never mustered enough votes to make it to the President’s desk. 

It now appears that the EEOC has decided to take matters into its own hands, and made history on September 25, 2014, by filing its first lawsuits against businesses accused of sex discrimination against transgender employees.

The two lawsuits involve Michigan-based R.G. & G.R. Harris Funeral Homes, Inc.[iii] and Lakeland Eye Clinic.[iv] The EEOC has alleged in each case that the employer discriminated based on sex in violation of federal law by firing an employee because she is transgender, because she was transitioning from male to female, and/or because she did not conform to the employer’s gender-based expectations, preferences, or stereotypes. 

Harris Funeral Homes had employed Amiee Stephens as a Funeral Director/Embalmer since October 2007 and the employee had always adequately performed the duties of that position.  In 2013, the employee gave Harris a letter explaining she was undergoing a gender transition from male to female, and would soon start to dress in appropriate business attire at work, consistent with her gender identity as a woman.  Two weeks later, the owner of employer fired the employee, telling her that what she was “proposing to do” was unacceptable.  

According to the complaint, Lakeland’s employee had performed her duties satisfactorily throughout her employment.  However, after she began to present herself as a woman and informed the clinic she was transgender, Lakeland fired her. 

In both cases, the EEOC has alleged that the employers’ conduct violates Title VII, which prohibits sex discrimination, including that based on gender stereotyping.  The EEOC filed suit in both cases seeking both monetary and injunctive relief.

The EEOC announced in its news releases for the Harris and Lakeland cases that these cases are part of the EEOC’s ongoing efforts to implement its Strategic Enforcement Plan (SEP) adopted in December of 2012, which included “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions, as they may apply” as a top Commission enforcement priority.[v]

Until now, the EEOC has made its position known that it believes that transgender individuals are protected by Title VII’s gender discrimination provisions.  However, such a position is not clear on the face of Title VII.  As such, the EEOC’s position does not carry the weight of law.  The EOC now wishes to test its position in the courts in order to give its position more force.

While these cases work their way through the courts, employers should be ready to deal with issues that arise with transgender employees in their workplace.  These issues can range from decisions about whether or not a transitioning employee may use the restroom corresponding to their gender presentation, to an employer’s duty to change a transitioning employee’s first name on their employment records at their request.

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*John R. LaBar is a named member at Henry, McCord, Bean, Miller, Gabriel & LaBar, P.L.L.C. in Tullahoma, Tennessee and is a member of the Labor & Employment Law Section of the TBA.  He is a frequent speaker at legal and human resource seminars on employment law topics.  He can be reached at jlabar@henry-mccord.com or (931) 455-9301.

By Bruce Buchanan*

The National Labor Relations Board (NLRB or Board) issued its Final Rule governing representation-case procedures on December 12, 2014. According to the NLRB, the Final Rule is designed to remove unnecessary barriers to the fair and expeditious resolution of representation questions, streamline Board procedures, eliminate or reduce unnecessary litigation, duplication and delay, and update the Board’s rules on documents and communications. It is very similar to the proposed rules of 2011, which were invalidated by a federal court due to the Board's lack of a quorum.

The Final Rule is scheduled to take effect on April 14, 2015. However, on January 5, 2015, the Coalition for a Democratic Workplace filed a lawsuit in the D.C. Federal District Court seeking to block the Final Rule’s implementation. On January 13, a similar lawsuit was filed in federal court in Texas. So stay tuned on these lawsuits.

If the Final Rule is implemented, these are the most important aspects:

Identifying Disputed Issues – The non-petitioning parties will be required to respond to the petition and state their positions generally the day before the pre-election hearing opens. The petitioner will be required to respond to the issues raised by the non-petitioning parties at the opening of the hearing. Litigation inconsistent with the positions taken by the parties will generally not be allowed. Previously, the parties did not have to identify the issues for the pre-election hearing until the hearing commenced.

Scheduling of Hearings – Except in cases with unusually complex issues, pre-election hearings will generally be set to open eight days after a hearing notice is served on the parties. Under the old rules, pre-election hearings were usually held within 10 to 14 days after the petition was filed.

Post-election hearings will generally open 14 days after objections are filed. Previously, there was not a set amount of time between objections and post-election hearings.

Election Voter List – The employer must include available personal email addresses and phone numbers of voters on the voter list in order to permit non-employer parties to communicate with prospective voters through other forms of communication. Under the old rules, email addresses and phone numbers did not have to be provided.

Litigation of Eligibility and Inclusion Issues – Generally, only issues necessary to determine whether an election should be conducted will be litigated in a pre-election hearing. A Regional Director may defer litigation of eligibility and inclusion issues affecting only a small percentage of the appropriate voting unit to the post-election stage, if those issues do not have to be resolved in order to determine if an election should be held. Previously, the parties could insist on litigating voter eligibility and inclusion issues that did not have to be resolved in order to determine whether an election should be held.

Post Hearing Oral Argument and Briefs – All parties will be provided an opportunity for oral argument before the close of the hearing. Written briefs will be allowed only if the Regional Director determines they are necessary. Previously, the parties had an opportunity to file a brief within seven days after the pre-election hearing closed.

Review of Regional Director Rulings – The parties may seek review of all regional representation case rulings through a single post-election request, if the election results have not made those rulings moot. Under the old rules, the parties waived their right to challenge the Regional Director’s pre-election decision if they did not file a request for review before the election.

Stay of Election - The election will no longer be stayed after the Regional Director issues a Decision and Direction of Election, in the absence of an order from the Board. Previously, elections could be delayed 25-30 days to allow the Board to consider any request for review of the Regional Director’s decision that may be filed.

Members Philip A. Miscimarra and Harry I. Johnson III dissented from the new election rules and stated that the majority’s primary purpose and intended effect of the rules are for representation elections to occur as soon as possible. The dissent stated it favored the following points: (i) making representation procedures more effective; (ii) having most representation elections occur at least within 30 to 35 days after petition-filing; (iii) changing the Board's internal procedures so virtually all elections—disputed or not—would occur within 60 days after petition-filing; and (iv) adopting stricter, more expansive remedies for unlawful election conduct. The dissent also made these observations:

Election Now, Hearing Later - The Rule impermissibly conducts expedited representation elections before any hearing can address fundamental questions, such as who is eligible to vote. This “election now, hearing later” approach was twice rejected by Congress, in 1947 and 1959, and is contrary to the NLRA's requirement mandating an “appropriate hearing” prior to any election.

Vote Now, Understand Later - The Rule improperly shortens the time needed for employees to understand relevant issues, compelling them to “vote now, understand later.”

Infringing on Protected Speech - By requiring elections to occur as quickly as possible, the Rule curtails the right of employers, unions and employees to engage in protected speech, which is impermissible or at least ill-advised.

Lack of Need for the Rule - The Rule leaves unanswered the most fundamental question regarding any agency rulemaking, which is whether and why rulemaking is necessary. Objective evidence demonstrates that the overwhelming majority of existing elections occur without any unreasonable delay (substantially more than 90 percent of elections occur within 56 days after petition-filing).

Due Process - The changes are fundamentally unfair, denying parties due process by unreasonably altering long-established Board norms for adequate notice and opportunity to address election-related issues.

Disclosures and Employee Privacy - The Final Rule's justification for the expanded disclosure requirements of personal email addresses and cell phone numbers to protect concerted activity in the workplace, is irreconcilable with Purple Communications, 361 NLRB No. 126 (2014).  Moreover, the Final Rule adopts the expanded disclosure requirements without any employee “opt-out” or unsubscribe link.

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*Bruce E. Buchanan is an attorney at the Nashville and Atlanta offices of Siskind Susser, P.C., where he represents employers in employment/labor law matters and all aspects of immigration law, with a special emphasis on immigration compliance. He graduated from Vanderbilt School of Law in 1982. Mr. Buchanan is the editor of this publication. He may be reached at bbuchanan@visalaw.com or (615) 345-0266.

By Greg Grisham*

On December 11, 2014 the NLRB (“Board”), by a 3 to 2 decision[i] in Purple Communications, Inc., [ii] overruled its prior decision in Register Guard[iii] which held employers may prohibit employees from using the employer’s email system for activities protected by the National Labor Relations Act (NLRA) provided the rule is enforced in a nondiscriminatory manner.

Background

The Employer, Purple Communications, Inc. (“Purple”), provides sign-language interpretation services. Its employees provide two-way, real-time interpretation of telephone communications between deaf or hard-of-hearing individuals and hearing individuals.  They work at 16 call centers that process calls on a nationwide 24-hour basis.

Since June 2012, Purple maintained an employee handbook that contained the following electronic communications policy in pertinent part[iv]:

Computers, laptops, internet access, voicemail, electronic mail (email), Blackberry, cellular telephones and/or other Company equipment is provided and maintained by the [sic] Purple to facilitate Company business. All information and messages stored, sent, and received on these systems are the sole and exclusive property of the Company, regardless of the author or recipient. All such equipment and access should be used for business purposes only.

Employees are strictly prohibited from using the computer, internet, voicemail and email systems, and other Company equipment in connection with any of the following activities:

2. Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company.

5. Sending uninvited email of a personal nature.

Purple assigned its interpreters individual email accounts on its email system that used the accounts every day at work. The interpreters were able to access their company email accounts on the computers at their workstations, on computers in the call centers’ break areas and on personal computers and smartphones. The interpreters had Internet access on the break-area computers but very limited access at their workstations.

In the fall of 2012, the Communication Workers of America (“Union”) filed petitions to represent the interpreters that resulted in Board representation elections at seven of the Respondent’s call centers. The Union filed objections to the elections results and an unfair labor practice charge at Purple’s Corona and Long Beach facilities. One objection and the charge filed asserted that Purple’s electronic communications policy interfered with the interpreters’ freedom of choice in the election and violated Section 8(a)(1) of the NLRA. After a Complaint was issued, a hearing was conducted before an Administrative Law Judge (“ALJ”). The ALJ found Purple’s electronic communications policy lawful under the Board’s Register Guard decision.[v] The case was then appealed to the Board.

Board’s Decision

To begin its analysis, the Board majority stated the “issue is the right of employees under Section 7 of the NLRA to effectively communicate with one another at work regarding self-organization and other terms and conditions of employment.”[vi] The Board further stated “[t]he workplace is ‘uniquely appropriate’ and ‘the natural gathering place’ for such communications” and recognized that email communications at work has dramatically increased and become commonplace.[vii] Consequently, the Board held “employee use of email for statutorily protected communications on non-working time must presumptively be permitted by employers who have chosen to give employees access to their email systems.”[viii] The Board reasoned that its Register Guard decision “focus[ed] too much on employers’ property rights and too little on the importance of email as a means of workplace communication.”[ix] By doing so, the Board stated its Register Guard decision “failed to adequately protect employees’ rights under the Act and abdicated its responsibility to adapt the Act to the changing patterns of industrial life.”[x]

Despite the reversal of precedent, the Board described its decision as “carefully limited” seeking “to accommodate employees’ Section 7 rights to communicate and the legitimate interests of their employers.”[xi] The Board noted its decision applied to only those employees who have been provided access to the employer’s email system and does not mandate employers to provide access.[xii] Moreover, the Board noted that as a further limitation “an employer may justify a total ban on non-work use of email, including Section 7 use on nonworking time, by demonstrating that special circumstances make the ban necessary to maintain production or discipline.”[xiii]The Board stressed “because limitations on employee communication should be no more restrictive than necessary to protect the employer’s interests [the Board] anticipate[s] that it will be the rare case where special circumstances justify a total ban on non-work email use by employees.” [xiv] In addition, the Board stated “an employer contending that special circumstances justify a particular restriction must demonstrate the connection between the interest it asserts and the restriction.” [xv] Even where justification does not exist for a “total ban, the employer may apply uniform and consistently enforced controls over its email system to the extent such controls are necessary to maintain production and discipline.”[xvi] The Board ruled that its decision would be applied retroactively finding that there would be no manifest injustice in doing so.[xvii]

Take Aways

At a minimum, the Board’s decision in Purple calls for employers to promptly reexamine existing email use policies to avoid potential future challenges to their validity under the NLRA. The decision also creates a potential conflict between existing employer email monitoring policies and practices and the NLRA prohibition on surveillance of union activity.

*J. Gregory Grisham is Of Counsel to Leitner Williams Dooley & Napolitan, PLLC and practices in its Nashville Office. He received his J.D. at University of Memphis, Cecil C. Humphreys School of Law in 1989.Greg may be reached at greg.grisham@leitnerfirm.com or (615) 255-7722.

By: John R. Bode and Jennifer W. Terry[i]

On December 9, 2014, the U.S. Supreme Court ruled employees who are required to wait in line to pass through a security check before leaving at the end of their shift are not entitled to compensation for that time.[ii] In a unanimous decision written by Justice Thomas,[iii] the Court held that such time was not “integral and indispensable” to the employees’ principal activities, and was, therefore, non-compensable under the Fair Labor Standards Act.[iv]

In Integrity Staffing Solutions, Inc. v. Busk,[v] the plaintiffs worked for a staffing agency at an Amazon.com warehouse in Nevada. As warehouse employees, the plaintiffs picked merchandise to fill orders and packaged those orders for shipment. At the end of each shift, employees were required to wait up to 25 minutes a day to go through a security check to make sure that merchandise was not being stolen. During these checks, employees were required to remove items such as wallets, belts, and keys from their persons and pass through metal detectors.[vi]

The employees filed a putative class action, alleging they should be paid for the time spent waiting for and undergoing these security checks because they were conducted for the employer’s benefit to prevent employee theft. They also alleged that the security check time could have been reduced dramatically if the employer had hired more security checkers to expedite the process or staggered employee shift end times to avoid bottlenecks.[vii]

The Court held that, although the security checks were an employer requirement which benefitted the employer, the time spent waiting for and going through them was not integral and indispensable to the employees’ principal activity, which was to pull merchandise off of shelves and to ship orders. The fact that the employer benefitted from the security checks, or could have substantially reduced the wait time by altering its check-out process or hiring more people, did not change the nature of the activity or its relationship to the principal activities the employees were employed to perform.[viii]

In so holding, the Court explained that the Portal-to-Portal Act provides that employers need not compensate employees for time spent on “activities which are preliminary to or postliminary to said principal activity or activities.”[ix] The phrase “principal activity or activities” is defined as “all activities which are an ‘integral and indispensable part of the principal activities.’”[x] In strict constructionist fashion, Justice Thomas referred to the Oxford English Dictionary’s definition of “integral,” holding an activity is integral and indispensable where it is an “intrinsic element of those [principal] activities and one which the employee cannot dispense if he is to perform his principal activities.”[xi]

The Court explained this definition is consistent with prior precedent indicating, for example, that time spent showering and changing clothes at a chemical plant where the toxic nature of the chemicals required such activity would be compensable,[xii] while time spent washing up or showering as a convenience to employees would not be compensable.[xiii] Given precedent and the aforementioned definition, the Court explained that the security screenings were not “integral and indispensable” to the employees’ duties as warehouse workers — that the screenings could have been eliminated altogether without impairing the employees’ ability to complete their work.[xiv]

Integrity Staffing has big implications for companies that use security checks at the end of their shifts (and more than a dozen class action lawsuits pending against them).[xv] Although the ruling is a clear victory for these companies, employers should exercise caution when applying this holding to other post-shift activities. In so doing, employers should consider whether the post-shift activity in question is an intrinsic part of the employee’s principal activity and one with which the employee cannot dispense if he or she is to perform that principal activity.

Here’s the latest newsletter from TBA’s Labor and Employment Section.  I want to thank this issue's authors for their insightful articles – John Bode, Jennifer Terry, Greg Grisham and John LaBar. If you have an article or idea for an article, I urge you to e-mail me at bbuchanan@visalaw.com or call me at 615-345-0266.

A quick reminder - TBA’s Labor and Employment Section will be holding its annual forum on April 24 with a number of speakers - the Honorable Kevin Sharp, Stan Graham, John Bode, Bob Boston, Michael Russell, Jon Harris, and Brian Hayes.

Bruce Buchanan

The April 26, 2015 seminar is specifically designed for both lawyers who are experienced immigration lawyers, and for lawyers who are just getting started in immigration law.

The three federal immigration government agencies that will be represented at the seminar are:

1. U.S. Citizenship & Immigration Services (USCIS)
2. Immigration & Customs Enforcement’s (ICE) Office of the Principal Legal Advisor;
3. Immigration & Customs Enforcement/Homeland Security Investigations Enforcement.

The speakers will highlight recent developments regarding the three different, but interrelated, federal immigration government agencies.

by Marnie Huff*

A.  Public Service Award Announcement; Access to Justice; Mediation Statistics

Public service award: Steve Shields will be honored.  Congratulations to Memphis mediator Stephen Shields who was selected to receive the 2015 Grayfred Gray Public Service in Mediation Award. The award will be presented by the Coalition for Mediation Awareness (CMAT) on March 6, 2015 at the TAPM annual meeting in Nashville. The TBA Dispute Resolution Section is a member of CMAT.

Pro bono mediation - AJC Mediation Committee. The Tennessee Supreme Court Access to Justice Commission established a Committee on Mediation under its March 31, 2014 Strategic Plan. Commission Member Gail Vaughn Ashworth is chairing the Committee to implement the ATJ Strategic Plan Directive on additional pro bono mediation: “The Commission shall encourage the Alternative Dispute Resolution Commission and other groups to provide pro bono and reduced-rate mediation services to self-represented litigants, and to litigants who, although represented, have modest means or who are pro bono clients.” The ATJ Commission 2014 Strategic Plan is  at: http://www.tsc.state.tn.us/programs/access-justice. If you are interested in the ATJ Mediation Committee or opportunities to provide or request pro bono and reduced-rate mediation services, contact Gail Vaughn Ashworth at gail@wisemanashworth.com or Anne-Louise Wirthlin, ATJ Coordinator, Administrative Office of the Courts at Anne.Louise.Wirthlin@tncourts.gov.

Mediation data. The ADR Commission reports “there were 5,606 mediations reported for 2013. Of those, 3,542 (63.2%) had all issues resolved; 521 (9.3%) had issues that were partially resolved; and 1,542 (27.5%) had no issues resolved. There were 350 pro bono mediations plus 4 additional court ordered pro bono mediations conducted in 2013. The online mediation report is at: http://www.tncourts.gov/programs/mediation/resources-mediators. 

ADR jobs outlook 2012-2022.  According to the Bureau of Labor Statistics, there were 8,400 jobs available nationally for arbitrators, mediators, and conciliators as of May 2012. The median wage was $61,280, or $29.46 per hour. Employment of arbitrators, mediators, and conciliators was projected to grow 10 percent from 2012 to 2022, about as fast as the average for all occupations. But state and local government budget constraints may limit employment growth.  Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Arbitrators, Mediators, and Conciliators, at http://www.bls.gov/ooh/legal/arbitrators-mediators-and-conciliators.htm.

B.  Ethics and Professionalism

Rule 31 mediation reports – need your password? If you have lost your username and password and are unable to submit an online mediation report, contact Claudia Lewis at (615) 741-2687 or at claudia.lewis@tncourts.gov.

Rule 31 a bit confusing on reporting requirements.  You need to look at both Section 5 and Section 18 of Rule 31.  Section 5 reports are required when a court orders mediation.  But Section 18 requires a different, statistical report which is required for all mediations done by a Rule 31 mediator, including ones that are not court-ordered.  Co-mediators should keep in mind that only one statistical report should be submitted by one of the co-mediators per advice from the ADRC office.  Here are the two rules:

     Section 5. Reports

     (a) The Order of Reference shall require the Rule 31 Neutral to file a final report pursuant to Rule 5.06, Tenn. R. Civ. P., with the court at the conclusion of the Rule 31 ADR Proceeding. The final report shall state only: (i) which parties appeared and    participated in the Rule 31 ADR Proceeding; (ii) whether the case was completely or partially settled; and (iii) whether the Rule 31 Neutral requests that the costs of the Neutral's services be charged as court costs. The report shall be filed within the time specified by the court in the Order of Reference. In the event the Order of Reference does not specify a deadline, the final report shall be filed within 60 days of the initial meeting with the parties.

     (b) Unless otherwise directed by the Order of Reference, the Rule 31 Neutral shall file status reports with the court every 30 days until the Rule 31 ADR Proceeding is concluded.

     (c) For an Eligible Civil Action mediated by a Rule 31 Mediator, a final report shall be filed in the manner described within this section.

     Section 18. Additional Obligations of Rule 31 Mediators

     . . .

     (e) Reports Required of Rule 31 Mediators. In addition to compliance with Section 5 of this Rule, Rule 31 Mediators shall be required to submit to the ADRC reports of any data requested by the ADRC consistent with the requirements of Section 19(a)(8) as to any mediation conducted by a Rule 31 Mediator, including those mediations which are not subject to Rule 31. The report forms will be available on the AOC website and from the AOC.

Rule 31, Sections 5 and 18 (emphasis added). Rule 31 is available online at http://tncourts.gov/rules/supreme-court/31.

“Sue and Be Sued”/Arbitration of fee disputes. For a discussion of programs for fee arbitration  and the risk of suing a client for non-payment of fees, including the possibility that your professional liability insurance might forbid such suits, see Susan Michmerhuizen and Peter Geraghty, ABA ETHICSearch, "Sue and Be Sued" at http://www.americanbar.org/publications/youraba/2014/july-2014/sue-and-be-sued.html 

“Competence:  Acquire it or Hire it!” discusses ABA Model Rule 1.1 (competence), Rule 1.6 (confidentiality), and state and local bar ethics opinions on how lawyers should approach competence and confidentiality  issues when using cloud computing. See Ethics Tip of the Month (May 2014) at http://www.americanbar.org/groups/professional_responsibility/services/ethicsearch/ethicstipofthemonthmay2014.html

C.  Articles and Resources for ADR Professionals

1.  ABA Section of Dispute Resolution’s November delegation to Cuba

In a well-timed trip, an ABA Section of Dispute Resolution delegation traveled to Cuba in mid-November 2014. For some musings on the trip, see Prof. John Lande’s “Cuba Diaries” posts at http://www.indisputably.org/?p=6199.

2.  Articles/guides – arbitration

Managing arbitrations. The ICC Arbitration Commission has published “Effective Management of Arbitration: A Guide for In-House Counsel and Other Party Representatives” (2014), available at  http://www.iccwbo.org/Search/?q=effective%20management%20of%20arbitration#gsc.tab=0&gsc.q=effective%20management%20of%20arbitration&gsc.page=1 (click on link for report). The Commission also has a Report on Techniques for Controlling Time and Costs in Arbitration” (2012), available at http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2012/ICC-Arbitration-Commission-Report-on-Techniques-for-Controlling-Time-and-Costs-in-Arbitration/ (click on link to report)

Dealing with an outmoded arbitration clause. While a contract’s arbitration clause may have been well drafted, circumstances may have changed by the time a dispute arises.  Zee Claiborne’s article “Is Your Arbitration Clause Outmoded?”, explains that parties can stipulate to modifications that will make their process better suited to their conflict. Parties can agree to meet the parties’ current needs on arbitrator selection, choice of ADR provider, applicable rules, and other issues such as discovery. Article at http://www.jamsadr.com/files/Uploads/Documents/Articles/Claiborne_Arbitration-Clause-Outmoded_Law_2014-07-14.pdf.

Arbitration clause in law firm’s retainer agreement unenforceable. As reported in Bloomberg BNA News, the New Jersey Supreme Court decided on September 23  in Atalese v. U.S. Legal Servs. Grp., LP, 219 N.J. 430, 99 A.3d 306 (2014) that an arbitration clause in a debt relief law firm’s retainer contract is unenforceable because it did not explain in a “sufficiently broad way” that a party signing it “is giving up her right to bring her claims in court or have a jury resolve the dispute.” “Debt-Relief Firm's Arbitration Clause Voided Because Implications Weren't Fully Explained," Bloomberg BNA (October 8, 2014) available at http://www.bna.com/debtrelief-firms-arbitration-n17179895799/?utm_source=LPC_Update&utm_medium=email&utm_campaign=news101014.

No mandatory employment dispute arbitration for certain federal government contractors. President Obama signed a new Fair Pay and Safe Workplaces Executive Order refusing to grant government contracts of over a million dollars to companies who mandate their employees arbitrate disputes involving discrimination, accusations of sexual assault, or harassment. See short article at http://www.mediate.com/articles/HinshawAbl20140808.cfm

3.  Articles - mediation

Lawyer-Mediator “scribing.” A recent law review Comment argues that the Washington State Bar Association should revisit its Advisory Opinion 2223 (2012). Opinion 2223 concludes that an attorney-mediator violates the Washington Rules of Professional Conduct (RPC) when drafting complex, customized provisions using original language and choices in legal documents such as Property Settlement Agreements, Orders of Child Support, or Parenting Plans for unrepresented parties. The Comment asserts that Opinion 2223 omits relevant comments to the RPC and fails to consider certain extra-jurisdictional authority, including NY Ethics Opinion 736. It notes the variety of conflicting ethics guidance among the states, with four states, including Tennessee, having amended professional conduct rules that permit attorney-mediators to be scriveners. See Tenn. RPC 2.4(e).  Caitlin Park Shin, “Drafting Agreements as an Attorney-Mediator: Revisiting Washington State Bar Association Advisory Opinion 2223,” 89 Wash. L. Rev. 1035 (October 2014). 

Pilot Flying J.  ADR-related articles reporting on the Pilot Flying J case have included:

• "Case of truckers suing Pilot Flying J ordered to mediation" (July 31, 2014 Cleveland Plain Dealer), at http://www.cleveland.com/metro/index.ssf/2014/07/case_of_truckers_suing_pilot_f.html;
• “Pilot Flying J settlement conference set for November in Covington, Kentucky” at http://www.newsnet5.com/money/business-news/pilot-flying-j-settlement-conference-set-for-november-in-covington-kentucky;
• "Pilot Flying J seeks dismissal of fraud lawsuits" (Sept. 19, 2014) at http://www.newsnet5.com/money/pilot-flying-j-seeks-dismissal-of-fraud-lawsuits_99197513; and
• "Cleveland Browns owner Jimmy Haslam rejects fraud claims in connection with Pilot Flying J suit" (Dec. 5, 2014) at http://www.newsnet5.com/money/cleveland-browns-owner-jimmy-haslam-rejects-fraud-claims-in-connection-with-pilot-flying-j-suit

New mandatory mediation program in NY complex commercial cases. The New York Supreme Court Commercial Division, a Manhattan-based state trial court that exclusively hears complex commercial cases, adopted a proposal for mandatory mediation. An 18 month pilot program became effective on July 28, 2014, with one in every five cases filed in the Commercial Division will be subject to mandatory mediation.  See “New York state court green-lights mandatory mediation pilot programme."    

Take a second look at form MOUs. A short online article explains reasons defense counsel may not be willing to sign a mediator’s form MOU in a products liability case and recommends revising the form to state that any settlement is conditioned on the parties signing a post-mediation release or mutually satisfactory settlement agreement. See “It’s the mediator’s form agreement – not yours” (Lexology June 16, 2014) at http://www.lexology.com/library/detail.aspx?g=9f9fe243-e1fa-470b-8133-86a01ba4657b.

Advice for mediators - leave yourself an out. Jim Melamed suggests mediators include understated approaches in their toolbox, e.g. ask “Might one option, among others I am sure, be something along the lines of …” rather than “Why don’t you. . .” Although a directive approach may be ethical, it does not leave the mediator with any elegant planned next move if the parties resist the mediator’s recommendation. See “Incremental Progress in Mediation: Baby Steps, Strategic Mediation & Less is More (July 2014).

Tips on non-verbal communication in ODR video conferences.  With the growing use of video conferencing in online dispute resolution, non-verbal communication becomes important to establish rapport and build trust among negotiation participants. Tips from Noam Ebner and Jeff Thompson, falling in five METTA categories (movement, environment, touch, tone, and appearance), include: make eye contact with the webcam (not a party’s image), ensure each party participates from a quiet location, avoid fidgeting, be prepared and confident (to help ensure a positive paralanguage), and dress suitably. Ebner and Thompson’s article includes a review of the literature on trust in mediation. Ebner, Noam and Thompson, Jeff, “@ Face Value? Nonverbal Communication & Trust Development in Online Video-Based Mediation” (February 14, 2014). Forthcoming, International Journal of Online Dispute Resolution. Available at SSRN: http://ssrn.com/abstract=2395857.

Food as an ingredient for mediations.  Jan Frankel Schau suggests asking the law firm hosting a mediation to supply lunch and validate parking cards. It can help move the parties to negotiate  cooperatively.  The “Value of a Gesture of Good Faith.”  

4.  Resources

Featured website – ADR Hub at The Werner Institute. The Werner Institute at Creighton University’s School of Law maintains an excellent website called ADRhub.com. It features various resources, including "What's Happening in Conflict Resolution" is a weekly roundup of  ADR news, jobs, and events. Check it out at http://www.adrhub.com/.

Online ADR clause builder. The American Arbitration Association provides an online “Clause Builder” designed to assist individuals and organizations in developing clear and effective arbitration and mediation agreements by offering a tool to draft a dispute resolution clause. The online screens guide you through options related to the development of a customized dispute resolution clause. At this time, the tool is limited to providing assistance with commercial and construction arbitration and mediation clauses.  See www.Clausebuilder.org.

ODR featured during annual Cyberweek. The Cyberweek 2014 program included discussion forums and other activities on integration of technology and dispute resolution in online dispute resolution. Cyberweek’s November 2014 archived content is at http://www.adrhub.com/page/cyberweek-2014.

Ken Feinberg, compensation administrator for GM ignition recall discusses claims processes. Veteran mediator Kenneth R. Feinberg, appointed to administer the General Motors ignition switch compensation program, was the featured speaker at the inaugural meeting of the Mid-Atlantic Regional Chapter of the American Bar Association Section of Dispute Resolution on October 27 in Washington, DC. In his remarks Feinberg recounted the various roles he played in the aftermath of a string of tragic incidents, provided insights into the claims process in the GM ignition switch case, and raised concerns about the fairness of 9/11 compensation and other funds. The ABA videotaped his full remarks which are also available in short segments:

1. Specific protocols help guide resolving GM ignition claims
2. Post-settlement, intramural fights pose new problem, opportunity
3. Emotions can run high in mediation disputes
4. Getting the parties to ‘yes’ takes good listening
5. Mediation not panacea, but plays important role

ABA initiatives affecting ADR

Futures Commission  The ABA Commission on the Future of Legal Services (see http://www.americanbar.org/content/dam/aba/images/office_president/issues_paper.pdf) set up six working groups, one of which is devoted to dispute resolution:

Dispute Resolution. This working group will assess developments, and recommend innovations, in: (a) court processes, such as streamlined procedures for more efficient dispute resolution, the creation of family, drug and other specialized courts, the availability of online filing and video appearances, and the effective and efficient use of interpreters; (b) delivery mechanisms, including kiosks and court information centers; (c) criminal justice, such as veterans’ courts and cross-innovations in dispute resolution between civil and criminal courts; (d) alternative dispute resolution, including online dispute resolution services; and (e) administrative and related tribunals.

November 3, 2014 Memorandum from ABA Commission on the Future of Legal Services at 2, available at http://www.americanbar.org/content/dam/aba/images/office_president/issues_paper.pdf.

Access to Justice.  A coalition of ABA entities launched the Blueprint Project, exploring policy and procedure changes to make legal services more affordable and accessible. For example, would forming bar committees on unbundled legal services create greater opportunities for representation? Is it possible to use crowd-funding to expand access? Could we lower costs by redesigning court processes? See examples of possible changes on the Project’s Ideas page at http://www.americanbar.org/groups/delivery_legal_services/initiatives_awards/blueprints_for_better_access/ideas_page.html. The Blueprint Project Steering Committee launched an Access Challenge, reaching out for help in identifying avenues for change. The ABA President has asked:

     Please put the Access Challenge on your agenda, lead a discussion to generate ideas and perhaps create a committee within your group to explore policy changes and procedural improvements that will lead to increased access on a sustainable basis. Perhaps you have discussed these issues and have shovel-ready ideas.

When ideas are generated, go to www.ambar.org/blueprint and contribute them through the contact information on that page. The ABA will use its website to further discussions and move those ideas to platforms for change.

D.  ADRC Advisory Opinion and Policies

1.  New policies

The ADR Commission has adopted Policy Nos. 18-20:

     18.  An applicant deferred for Rule 31 listing must cure the specific listing deficiency requirement within one (1) year of being placed on deferral status.  If the specific listing deficiency is not cured within one (1) year, applicant must reapply for listing. For an applicant deferred for Rule 31 listing before the adoption of this policy, he/she must reapply for listing if the specific listing deficiency requirement is not cured on or before one (1) year from the approval date of this policy. (Adopted 07/29/14)

     19.  A Rule 31 listed mediator must renew his/her listing on or before December 31 of each year. The renewal fee for renewal applications received on or before December 31 of each year shall be $100.00. The renewal fee for renewal applications received between January 1 –January 31 shall be $125.00. The Rule 31 listed mediator who renews his/her listing during this time will still be in “active” status and can conduct Rule 31 mediations. If a renewal application and fee are not received by January 31 for the current renewal year, the Rule 31 listed mediator shall be placed on inactive status.The renewal fee for renewal applications received on or after February 1 for the current renewal year shall be $200.00.(Adopted 07/29/14)

     20.  The renewal fee for renewal applications received from inactive Rule 31 listed mediators shall be $200.00.(Adopted 07/29/14)

All ADRC policies are available at http://www.tsc.state.tn.us/programs/mediation/resources-mediators/policies.

ADRC Advisory Opinion. On April 16, 2014 the Tennessee ADR Commission issued Advisory Opinion 2014-002 on 1) whether a psychiatrist who is a Rule 31 mediator may conduct mediation at her medical practice, and 2) whether she may provide post-mediation psychiatric services to a participant in a mediation. The Commission advised that no current Rule 31 provision prohibits mediating in the physical space of a medical office, noting that mediations are routinely conducted in law offices. It further stated that it is difficult to imagine how a psychiatrist could treat a patient who was a party to a prior mediation, but noted that the second question would be a medical ethics question, not one for the ADRC. Copy of opinion at http://www.tsc.state.tn.us/sites/default/files/docs/adrc_ethics_advisory_opinion_2014-0002-04-22-14.pdf.

E.  Caselaw Update

2.  Selected Federal Court Cases and State Cases other than Tennessee

Arbitration

Res judicata. In W.J. O'Neil Co. v. Shepley, Bulfinch, Richardson & Abbott, Inc. No. 13-2320, (6th Cir. August 28, 2014), after losing millions of dollars building a hospital, W.J. O’Neil Company arbitrated claims against its construction manager. The architect and a design subcontractor (defendants) were added on indemnity claims. O’Neil did not formally assert claims against those defendants, but its claims against the construction manager did arise from the defendants’ defective and inadequate design work. O’Neil won an arbitration award against its construction manager. The construction manager did not establish its indemnity claims, so the defendants were not held liable. No party sought judicial confirmation or review of the arbitration award. O’Neil then sued the defendants in federal court. The court dismissed, finding the claims barred by res judicata. The Sixth Circuit reversed. O’Neil did not agree to arbitrate the claims at issue, so the arbitrator did not have authority to decide those claims. The arbitration award cannot bar the claims that the arbitrator lacked authority to decide. The dissenting opinion, on the other hand, asserts that, given that O’Neil agreed to a standard “flow through” provision in its contract with the construction manager, res judicata should apply.

Contract providing for arbitrator to decide arbitrability not ambiguous. In Milan Express Co. v. Applied Underwriters Captive Risk Assurance Co., Case No. 14-5193 (6th Cir. October 23, 2014) (not for publication) the Court of Appeals reversed the district court’s decision that it (not an arbitrator) had jurisdiction to rule on arbitrability. The district court ruled that the parties’ agreement was ambiguous as to who should decide this gateway issue. On appeal, the Court noted that the district court failed to identify what was ambiguous about the agreement.  Per the parties’ contract, “[a]ll disputes,” including disputes over “enforceability of any provision,” were to be determined “exclusively by binding arbitration.” The district court did not discuss the U.S. Supreme Court’s Rent-A-Center case, which involved similar contract provisions. The parties manifestly intended to submit the threshold question of arbitrability to the arbitrator. The district court lacked authority to rule on the arbitration clause.

No judicial admission or judicial estoppel preventing arbitration. In Trimas Corporation v.  William E. Meyers, No. 12-2420 (6th Cir. July 11, 2014) (not for publication), Meyers, a retired executive, sought arbitration of his claim for retirement benefits under a 1995 Supplemental Executive Retirement (SERP) agreement. The Court of Appeals reversed the district court’s denial of Meyers's motion to compel arbitration and the summary judgment for TriMas. The district court misapplied cases regarding the effect of a party’s admission to a fact in a pleading. No such admission occurred here. Nor does judicial estoppel apply, even though Meyers is involved in a related pending case where he claims that he is entitled to retirement benefits pursuant to a 2000 SERP agreement. On remand, the district court will have to decide whether the 2000 SERP is a void or voidable agreement that was substituted for a valid pre-existing obligation, and whether the 2000 SERP was then rescinded, causing the pre-existing agreement to be restored. After that determination, the district court is to determine whether a valid arbitration agreement exists and whether the parties’ dispute falls within the scope of that agreement.

Party seeking arbitration fails to supply evidence of what was subject to arbitration. In Robert Kay v. The Minacs Group (USA), Inc., No. 13-1974 (6th Cir. September 5, 2014) (not for publication), the district court dismissed the plaintiff's age discrimination suit and ordered arbitration. The Court of Appeals reversed. The parties’ arbitration agreement, assuming it is even valid and enforceable, does not apply to the employee's claims. The employer had moved to compel arbitration based on a “Receipt of Policies and Procedures.” It failed to submit a copy of the Policies and Procedures, so there was no evidence of what claims the arbitration clause covered.

Failure to complete arbitration before seeking injunction not a jurisdictional defect. In Workforce Development Cabinet, Office for the Blind v. United States of America, No. 12-6610 (6th Cir. July 21, 2014)  a dispute arose under the Randolph-Sheppard Act, 20 U.S.C. § 107–107e, which gives blind persons a priority in winning contracts to operate vending facilities on federal properties. In 2012, the Army solicited bids to provide dining-facility-attendant services at a Fort Campbell cafeteria. Rather than doing so under the Act, the Army issued the solicitation as a set aside for Small Business Administration Historically Underutilized Business Zones. The Kentucky Office for the Blind (OFB), representing a blind vendor who had the prior contract with the Army, filed for arbitration under the Act, and then filed suit to prevent the Army from awarding the contract. The district court held it lacked jurisdiction to consider a preliminary injunction request because OFB had not exhausted its administrative remedies. OFB appealed. Meanwhile, the arbitration resulted in a decision in favor of OFB. The Sixth Circuit determined its case was not moot because the challenged activity was capable of repetition yet evading review. The district court erred: the exhaustion requirements of 20 U.S.C. § 107d-1(b) are not jurisdictional under the U.S. Supreme Court’s clear-statement rule articulated in Arbaugh v. Y & H Corp, 546 U.S. 500, 515 (2006). Therefore, failure to complete the arbitration did not deprive the district court of jurisdiction in the injunction lawsuit. The Court of Appeals vacated and remanded the district court’s judgment.

Mediation

Case of first impression for Sixth Circuit permitting partial recusal after judge involved in settlement mediations. Paul Decker, et al v. GE Healthcare Inc. et al, No. 13-4002 (6th Cir. October 20, 2014) is part of a multi-district products liability litigation. The district court had been involved in mediations resulting in settlement of over 600 cases in the MDL. The Decker case went to trial, resulting in a jury verdict in favor of the plaintiffs against GE Healthcare (GEHC). On appeal, one of the issues involved the district judge’s sua sponte recusal from ruling on the plaintiffs' prejudgment interest motion. GEHC argued that this partial recusal required vacating the judgment. It claimed that since the judge recused himself from ruling on the prejudgment-interest motion, he should have also recused himself from ruling on GEHC's  motion for a new trial. Rejecting GEHC’s arguments and following the majority view in other circuits, the Court of Appeals held that 28 U.S.C. § 455 does not prohibit piecemeal recusal. Therefore, the district court's recusal on plaintiffs' prejudgment interest motion did not categorically require recusal from all other rulings in the case, including GEHC's motion for a new trial. Under § 455(a), "[a]ny justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." 28 U.S.C. § 455(a). Section 455(d)(1) states that a "'proceeding' includes pretrial, trial, appellate review, or other stages of litigation." Construing § 455(a), the Court found that the reasons for questioning judicial impartiality in one "proceeding" of a case do not necessarily apply in every "proceeding" of that case. Rather, in the appropriate instance, partial recusal serves the interests of case management and judicial economy. Here, the recusal was not based on any financial or other conflict, or any actual or perceived bias. The recusal had no bearing on the judge’s impartiality at the trial.

Section 455 recusal of magistrate not required where he conducted unsuccessful mediation,  then issued recommendation on summary judgment motion. In Ruby Blackmon v. Eaton Corporation, No. 13-6303 (6th Cir. October 16, 2014) (not for publication) the district court granted summary judgment in favor of the employer on Title VII hostile work environment and retaliation claims. The court had also decided that the magistrate judge, who issued a report and recommendation concerning the summary judgment motion, was not required to recuse himself solely because he had earlier presided over a mediated settlement conference between the parties. The Court of Appeals held that recusal was not required under 28 U.S.C. § 455, although it did not approve of the district judge referring the summary judgment to the same magistrate who conducted the mediation that included ex parte discussions. On the merits of the summary judgment, the Court reversed and remanded the case.

Report to bankruptcy court on bad faith in mediation results in sanctions. In Phaedra Spradlin, solely in her capacity as the Chapter 7 Trustee of Alma Energy, LLC, et al v. Gary J. Richard, et al, Nos. 13-5629, 13-5630, and 13-5728 (6th Cir. July 15, 2014) (not for publication), one of the issues involved a bankruptcy court order awarding sanctions to a plaintiff in an adversary proceeding. The sanctions against three parties were for bad faith and unpreparedness during a court-ordered mediation. The district court affirmed the award, and Sixth Circuit Court of Appeals affirmed the district court on that issue.  NOTE: this case involved a mediator filing a report with a bankruptcy court in Kentucky. Compare Tennessee ADR Commission formal grievance decision which states that Tenn. Sup. Ct. Rule 31(5)(a) “specifically provides that a final report of a mediator to the court shall include only the following: ‘(i) whether both parties appeared and participated in the Rule 31 ADR Proceeding; (ii) whether the case was completely or partially settled; and (iii) whether the Rule Neutral or Rule 31 Neutrals request that the costs of the neutral services be charged as court costs.’ The Rule does not permit the mediator to provide any further information to the court.” In Re: James R. Finney (January 3, 2006).

Mediator’s duty to disclose. In CEATS, Inc. v. Continental Airlines, Inc. et al, No. 2013-1529 (Federal Circuit June 24, 2014), a case was mediated, did not settle, and went to trial on a patent action. The losing party, the patent holder, moved for relief from the judgment under Fed. R. Civ. P. 60(b) based on an alleged relationship between the court-appointed mediator and the law firm representing most of the accused patent infringers. The trial court denied the motion, finding that the mediator had no duty to disclose his dealings with one of the firms involved in the patent litigation. On appeal, the Court disagreed with that finding, but left the patent holder with no relief. The Court stated that mediators “are bound by disclosure requirements similar to the recusal requirements of judges.” Slip op. at 10. It therefore examined the mediator’s disclosure obligations under the U.S. Supreme Court’s opinion in  Liljeberg v. Health Servs. Acquisition Corp., 486 SU.S. 847 (1988). It found that the mediator had a duty to disclose a conflict of interest. Applying the Liljeberg factors, however, it first held there was no risk of injustice because the patent holder had been able to litigate its claims in court and had no evidence that the mediator had disclosed confidential information to counsel for opposing parties. Second, denial of relief would not risk injustice in other cases. Third, although public confidence in the mediation process will be undermined to some extent by the Court’s failure to put greater teeth in the mediators’ disclosure obligations, it did not find that this justified extraordinary relief to the patent holder in this case. Copy of opinion at http://www.cafc.uscourts.gov/images/stories/opinions-orders/13-1529.Opinion.6-20-2014.1.PDF.

Confidentiality waived or trumped by due process notwithstanding strict California law.  In Craig Milhouse et al v. Travelers Commercial Insurance Company, No SACV 10-01730-CJC (ANx) (C.D. Cal. November 5, 2013), the trial court held that statements made during a mediation proceeding were admissible at trial because: 1) Milhouse had failed to object to the evidence and therefore waived any privilege claim; and 2) even if a proper objection were made, Travelers had a due process right to defend a bad faith and punitive damages claim by presenting evidence of statements made during the mediation. The parties have appealed to the Ninth Circuit in Milhouse v. Travelers Commercial Insurance, No. 13-56959. On September 11, 2014 the Southern California Mediation Association filed an amicus brief in the case, copy available at http://www.scmediation.org/wp-content/uploads/2014/10/Milhouse-amicus-brief.pdf

Confidentiality; proving legal malpractice after mediation.   In Alfieri v. Soloman, 263 Or. App. 492, 329 P.3d 26 (Ct. App. 2014) the Oregon Court of Appeals held that a plaintiff may be able to prove a malpractice claim against his lawyer, even though he was prohibited from disclosing the terms of an alleged inadequate settlement or any communications that occurred in the course of or in connection with a mediation. The parties had agreed that the settlement would be confidential. The Oregon mediation confidentiality statute did not prevent disclosure of post-signing communications between the plaintiff and his lawyer (other than ones regarding the terms of the settlement) where the lawyer allegedly did not inform the client that the other party's noncompliance with certain settlement terms raised settlement enforceability questions. See “Law Shielding Mediation Communications Doesn't Make Malpractice Claim Unprovable” (Bloomberg BNA June 19, 2014), discussing.  Copy of opinion at http://www2.bloomberglaw.com/public/desktop/document/Alfieri_v_Solomon_No_A152391_2014_BL_161201_Or_Ct_App_June_11_201.

3.  Tennessee Cases

Arbitration

Morgan Keegan & Company, Inc. v. William Hamilton Smythe, III, et al., No. W2010-01339-COA-R3-CV (Tenn. Ct. App. May 29, 2014) involved the remand of of  Morgan Keegan & Co. v. Smythe, 401 S.W.3d 595 (Tenn. 2013) (“Smythe I”). On remand from Smythe I, the trial court vacated the arbitration award on evident partiality grounds and remanded the matter for re-arbitration by a different panel. The Court of Appeals reversed and remanded the case to the trial court for confirmation of the arbitration award. The Tennessee Uniform Arbitration Act does require a reviewing court to vacate an award where there was evident partiality. Tenn. Code Ann. § 29-5-313. The party challenging the award must show that “’a reasonable person would have to conclude that an arbitrator was partial’” to the other party to the arbitration. Slip op. at 4, quoting Bronstein v. Morgan Keegan & Co., No. W2011-01391-COA-R3-CV, 2014 WL 1314843, at *3 (Tenn. Ct. App. April 1, 2014). The challenger of the award must establish specific facts indicating improper motives. The partiality must be direct, definite and capable of demonstration.  An “’amorphous institutional predisposition toward the other side’ is not sufficient” since is it not enough to establish an appearance of bias. Slip op at 5. Here, the trial court’s judgment was premised on its “perception of an overall appearance of bias.” The fact that two of the arbitrators had participated in prior arbitrations involving awards against Morgan Keegan, where the hearings involved similar evidence, was insufficient. Their awarding punitive damages against Morgan Keegan in a separate case was insufficient to show evident partiality. Although one of the arbitrators had been a broker for a separate claimant against Morgan Keegan in a different proceeding, that broker relationship did not involve the Morgan Keegan investments at issue and had terminated prior to the Smythe arbitration proceedings. Copy of opinion at smythem_052914.pdf.

In Morgan Keegan & Company, Inc. v. Michael Starnes, et al., No. W2012-00687-COA-R3-CV (Tenn. Ct. App. June 20, 2014), an arbitration panel had denied all claims against Morgan Keegan. The claimants opposed Morgan Keegan’s subsequent petition in the trial court to confirm the arbitration award. They asserted three grounds: 1) an arbitrator’s evident partiality, 2) misconduct, and 3) an exceeding of powers by the panel of arbitrators. The trial court vacated the arbitration award on only the “evident partiality” grounds and remanded the case for re-arbitration before a different panel. Citing Morgan Keegan & Co. v. Smythe, 401 S.W.3d 595 (Tenn. 2013), the Court of Appeals determined it had jurisdiction to hear the case under Tenn. Code Ann. § 29-5-319(a)(2012) because the trial court’s order necessarily denied Morgan Keegan’s petition to confirm the award. It next noted that the trial court had not adjudicated all of the claimants’ claims and piecemeal appeals are disfavored. Nevertheless, pursuant to Tenn. R. Civ. P. 2, the Court suspended the finality requirements of TRAP 3 in light of the “tortured history of the case” and chose to review the trial court’s decision. Reversing the trial court, the Court of Appeals ruled that the claimants had failed to establish evident partiality. The Court declined to address the claimants’ other arguments for vacatur and remanded the case to the trial court for adjudication of the misconduct and exceeding powers issues. Copy of opinion at starnesm_062014.pdf.

Enforceability of arbitration clause in employment contract that included buyout of executive’s equity interest. In Darrell Trigg v. Little Six Corporation et al, No. E2013-01929-COA-R9-CV (Tenn. Ct. App. July 28, 2014), a wrongful termination action, the plaintiff challenged the enforceability of an arbitration clause in an agreement with his former employer. That clause provided that unresolved disputes would be resolved by a three-arbitrator panel under the AAA commercial rules and the parties would evenly split arbitration costs. The plaintiff argued the arbitration clause was unenforceable due to alleged excessive, prohibitive costs of arbitration. The Court of Appeals affirmed the trial court’s decision that the agreement was freely negotiated, not a contract of adhesion, and not unconscionable under the facts in this case. The plaintiff was a highly paid, well-educated executive who negotiated his new employment contract, including a $1,578,599 buyout of his equity interest in the employer’s corporations and an annual salary of $154,472. It was not a take-it-or-leave-it contract. As required by the contract, the employer paid $50,000 to the employee when he was terminated without cause. Since the contract was governed by the Tennessee Uniform Arbitration Act, unconscionability was a question for the court, not the arbitrator. The contract was not unconscionable. The plaintiff did not meet has burden of showing the arbitration costs would be prohibitive. Although he asserted his income was now $25,000 per year and he had been forced to dip into retirement savings to make ends meet, he did not claim that he could not afford the estimated $10-30,000 up-front costs of arbitration. The AAA commercial arbitration rules provide possible deferral or reduction of administrative costs in the event of extreme hardship. The plaintiff had reaped the financial benefits from the employment agreement. He had time to read and consider his contract with the benefit of legal counsel and had easy access to the AAA commercial arbitration rules and the applicable fee schedule. There was no manifest inequality in the bargain that would shock the judgment of a common sense person. Although the $10-30,000 arbitration cost was concerning in the abstract, the plaintiff had not shown they were prohibitively expensive to him. Lastly, the contract is not void on public policy grounds. Copy of opinion at triggd_072814.pdf.

Individual’s bankruptcy did not deprive trial court of jurisdiction to rule on arbitration award involving party in capacity as trustee of a trust; arbitrator’s award was a final, binding decision; TUAA judicial review provisions are more restrictive than FAA. In Rafia N. Khan, Individually, and in her capacity as Trustee of the Rafia N. Khan Irrevocable Trust v. Regions Bank, No. E2010-01837-COA-R3-CV (Tenn. Ct. App. November 12, 2014), the trial court had vacated a disputed arbitration award. Mrs. Khan, individually and as trustee of a trust, had sued Regions Bank, alleging it violated the Tennessee Consumer Protection Act (TCPA) by refusing to release a lien on property owned by the Trust and pledged to secure Mr. and Mrs. Khans’ line of credit with the Bank. Mr. Khan had withdrawn $40,000 on the joint line of credit, a move Mrs. Khan opposed. The Khans later divorced and Mrs. Khan received a discharge in bankruptcy. Per the loan documents and by an agreed order, the Bank and Mrs. Khan arbitrated the dispute. Mrs. Khan successfully opposed the Bank’s attempt to include Mr. Khan as a party in the arbitration. The arbitrator, in a detailed final award, found that the Bank was not liable for any TCPA violations, Mrs. Khan was not personally liable for the $40,000 loan, and Mrs. Khan was not entitled to an order requiring the Bank to release the lien. The Court of Appeals reversed the trial court’s decision to vacate the arbitration award and addressed several issues. First, Mrs. Khan’s individual bankruptcy did not result in the Court losing jurisdiction to decide the appeal with respect to the Trust. Second, the arbitrator rendered a sound, well-reasoned decision and award. The Court rejected Mrs. Khan’s argument that the arbitrator declining to address certain issues constituted a failure to make a final, binding decision. The arbitrator correctly ruled that Mrs. Khan was not personally liable on Region’s $40,000 loan to her husband. He did not err by declining to decide whether Mr. Khan (a non-party to the arbitration) was personally liable for the debt and whether a Deed of Trust held by the Bank secured any debt owed by Mr. Khan. The Court discussed how the Tennessee Uniform Arbitration Act’s provisions on judicial review of an arbitral award are more restrictive than the Federal Arbitration Act. Third, the arbitrator did not exceed his power under the TCPA by awarding attorney fees to the Bank. He awarded attorney fees pursuant to the parties’ contract, not the TCPA. Copy of opinion at khanr_111214.pdf.

Settlements

Non-modification clause in MDA prevents modification of transitional alimony. In Barbara M. Hicks Vick v. Brandon P. Hicks, No. W2013-02672-COA-R3-CV (Tenn. Ct. App. November 17, 2014), the trial court dismissed the ex-husband’s petition under Tenn. Code Ann. § 36-5-121(g)(2)(C) to terminate his transitional alimony obligation after his ex-wife remarried. The parties’ marital dissolution agreement (“MDA”) had an unambiguous non-modification clause with respect to the alimony obligation. The Court of Appeals affirmed the dismissal for failure to state a claim, rejecting the ex-husband’s argument that the non-modification clause in the MDA was merely a restatement of Tenn. Code Ann. § 36-5-121 that transitional alimony is generally not modifiable. The alimony statutes do not apply here where the parties agreed in an MDA to terms different from those in the statutes. Copy of opinion at hicksb_11142014.pdf.

Tennessee Structured Settlement Protection Act. In a case of first impression interpreting the Tennessee Structured Settlement Protection Act (SSPA), Tenn. Code Ann. § 47-18-2601 et seq., In re A Transfer of Structured Settlement Payment Rights by Laurel J. Shanks, No. E2013-01702-COA-R3-CV (Tenn. Ct. App. May 27, 2014), the Court of Appeals upheld a court order approving transfer of structured settlement payment rights to a financial services company and its assignee. A separate financial services company had objected to the transfer. The trial court found that the transfer at issue met all statutory requirements. The Court of Appeals rejected the objecting company’s claims that the transfer order contravened two prior court orders partially transferring the payee’s structured settlement payment rights to the objecting company, in contravention of applicable law under the SSPA. Copy of opinion at shanksl_052714.pdf.

By Kerry Krauch*

The Community Legal Center (“CLC”) is a pro bono legal services nonprofit organization in Shelby County, Tennessee. The CLC was started in 1994, and in the beginning primarily handled civil cases. The Immigrant Justice Program (“IJP”) was added when the Memphis Immigration Judges recognized that the people appearing before them desperately needed the assistance of an attorney to successfully navigate the immigration justice system. Since the IJP was started, we have assisted hundreds of immigrants with issues ranging from asylum to naturalization.

IJP clients are screened to ensure that they make less than 125% of the Federal Poverty Guidelines and, therefore, qualify for free legal services. Once the clients are screened they are scheduled for a legal clinic that we host two evenings a month at a local church. At the clinic, attorneys give advice and determine whether the case is appropriate for placement with a pro bono attorney.

Currently, the CLC employs two IJP staff attorneys and two interpreters so we rely on outside attorneys to handle many of our client’s cases. The IJP serves the jurisdiction of the Memphis Immigration Court which includes Tennessee, Arkansas, North Mississippi, and Western Kentucky. IJP staff attorneys have limited capacity and resources to serve clients outside of the Memphis area, therefore, we need attorneys from other areas of the state and the region to assist these clients. The IJP does not limit the kind of immigration assistance we offer, however, the most common kind of issues we encounter are humanitarian and family-based.

Immigration Reform

On November 20, 2014, President Obama announced immigration relief that will be available for several classes of immigrants in 2015. The CLC is preparing to help clients that will qualify for this relief. We are currently identifying and informing our clients of the upcoming immigration opportunities, and we will need attorneys to assist our clients once the new process is announced.

Special Immigrant Juvenile Status (SIJS)

The IJP recently started assisting minor children who qualify for SIJS in Memphis. SIJS is immigration relief for children present in the United States who cannot be reunified with one or both of their parents due to abandonment, neglect, and/or abuse by one or both of their parents, it is not in their best interests to be returned to their home country, and they have been declared dependent on a state court or have been placed under the custody of an individual appointed by a state court. In Memphis, the minor’s parent or family member files a petition for guardianship in Probate Court. The Probate Court judge then makes the SIJS findings in the order which is the basis for the SIJS application that goes to U.S. Citizenship and Immigration Services (“USCIS”). IJP attorneys have personally filed 28 guardianship petitions and 15 of the minors have already received some form of immigration relief. IJP attorneys have also trained Memphis attorneys on SIJS. These volunteer attorneys are preparing and filing the state court petitions as well as serving as guardian ad litem. We have the potential to help many more children if we had more volunteer attorneys willing to serve. We especially need attorneys to assist children outside the Memphis area.

Deferred Action for Childhood Arrivals (“DACA”)

The CLC has been assisting young immigrants brought to the U.S. as children with their DACA applications since it was announced by President Obama in 2012. DACA allows these young immigrants an opportunity to come out of the shadows by allowing them to legally work in the U.S. and offering protection from deportation for two to three years. We have recently begun helping them apply for their DACA renewals. We have assigned many DACA clients to our volunteer attorneys, and we have many clients waiting for an attorney to assist them.

U Visas & VAWA

The CLC received a Legal Assistance for Victim’s Grant through the Department of Justice in 2012, in conjunction with Memphis Area Legal Services and the YWCA-Immigrant Women’s Services. This grant enables the CLC to provide immigration services to victims of domestic violence and sexual assault. The majority of our LAV clients apply for a U Visa, which is a form of immigration relief for victims of crime who cooperate with law enforcement and/or criminal justice system. A U Visa entitles the immigrant to a work permit for four years and they can apply for lawful permanent residence after three years.

Some of our clients are married to an abusive U.S. citizen or a lawful permanent resident spouse. In an abusive relationship, the citizen or LPR spouse might withhold petitioning for the foreign spouse as part of the pattern of abuse. VAWA (Violence against Women Act) allows the battered, foreign spouse to self-petition for themselves. We have received over 100 individual referrals for services for LAV clients. We rely on pro bono attorneys to take some of our cases to expand our capacity to serve these deserving clients.

Alternative Spring Break (“ASB”)

Every year the University of Memphis Law School hosts Alternative Spring Break which provides pro bono opportunities for law students from around the country. The CLC typically conducts two tracks including the immigration track. CLC attorneys and staff members identify potential ASB clients and provide legal assistance during the week. We are currently preparing for 2015 ASB and need immigration attorneys to volunteer to work with the law students.

IJP staff attorneys are dedicated to helping our clients and to helping attorneys who assist our clients. IJP attorneys are available to mentor and train attorneys on unfamiliar areas of immigration law. Attorneys who take pro bono cases from us also qualify for CLE hours. If you are interested in assisting a deserving CLC client, please call 901-543-3395 or email info@clcmemphis.com.

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*Kerry Avens Krauch is a staff attorney at the Community Legal Center. She is a graduate of the University of Memphis School of Law. She can be reached at 901-543-3395 or kerryk@clcmemphis.com.

By Bruce E. Buchanan**

Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI) created IMAGE (ICE Mutual Agreement between Government and Employers) in July 2006 to build relationships with employers that strengthen hiring practices and encourage employer compliance in ensuring a lawful workforce.

Initial IMAGE Program

Initially, IMAGE got off to a slow start with very few employers enrolling in the program.  One of the initial problems was that employers were agreeing to an ICE inspection as part of IMAGE but ICE was not agreeing to waive any fines or penalties for substantive errors.  Thus, most employers could not see any real advantage to enrolling in IMAGE.

ICE Changes IMAGE to be More Employer-Friendly

Most likely as a result of low enrollment, ICE changed the IMAGE program several years ago to waive any fines if substantive violations were discovered on fewer than 50% of the I-9 forms.  However, ICE still has the authority to issue fines if more than 50% of the I-9 forms contain substantive violations although the fines would be at the statutory minimum of $110 per violation. Don Baker, the Section Chief for Worksite Enforcement in Washington, D.C., stated at a recent seminar in Atlanta, ICE-HSI has not fined any employer with more than 50% error rate even though it has the authority.  As the Mr. Baker stated, no employers would enroll in IMAGE if they knew they were going to be fined. And this is exactly why most employers have been reluctant to enroll in IMAGE.

What is IMAGE?

In order to enroll in IMAGE, an employer must sign the IMAGE Agreement. In signing the Agreement, an employer is agreeing to a number of actions. Specifically, they are:

     1. Within 60 days of signing the agreement, enroll in the Department of Homeland Security’s E-Verify program and process all future employees though the E-Verify program;

     2. Within 120 days of signing the agreement, establish a hiring and employment eligibility verification program, or provide evidence of an existing program, that includes (a) at least one annual internal I-9 form audit and (b) hiring procedures to prevent the employment of   unauthorized workers.

     3. Agree to fully implement the IMAGE program for a minimum of two years;

     4. Submit to an ICE I-9 inspection and to resolve any identified deficiencies;

     5. Participate in the Social Security Number Verification Service (SSNVS) but only to be used for payroll, not for employee verification;

     6. Establish an internal compliance and training program related to the hiring and verification process;

     7. Establish self-reporting procedures to inform ICE of violations or deficiencies;

     8. Establish a tip line for employees to report activity, which relates to the employment of unauthorized workers and a protocol for responding to credible employee tips;

     9. Report immediately to ICE the discovery of credible information of suspected criminal misconduct in the employment eligibility verification process;

    10. Ensure that contractors and subcontractors establish procedures to comply with employment eligibility verification requirements. Encourage contractors and subcontractors to use IMAGE best practices, including E-Verify;

    11. Establish appropriate policies to avoid anti-discrimination allegations during the I-9 form, E-Verify and SSNVS processes; and

    12. Maintain copies of any documents accepted as proof of identity and employment authorization with the I-9 form for all new hires.

ICE agrees to the following:

     1.  Waive any applicable files if substantive violations are discovered on fewer than 50% of the Forms I-9 reviewed as part of the inspection. In instances where more than 50% of the Forms I-9 contain substantive violations, ICE agrees to either mitigate any applicable files or issue fines no higher than the statutory minimum of $110 per substantive violation;

     2. Refrain from conducting an additional I-9 form inspection for a minimum of two years, absent the existence of specific and credible evidence of knowingly employing undocumented workers; and

     3. Grant the employer ample time to resolve discrepancies discovered during the I-9 form inspection.

ICE-HSI is actively promoting IMAGE. They have IMAGE coordinators and are holding seminars with employers and some attorneys promoting IMAGE.

Conclusion

Each employer, with the advice of immigration compliance counsel, needs to make their own decision as to whether to enroll in IMAGE. Many of its aspects, use of E-Verify, conduct an annual internal audit, establish an I-9 Compliance policy, train personnel on the correct procedures, do not engage in citizenship status or national origin discrimination, and maintain copies of documents supplied for employment authorization, should be incorporated in a sound I-9 Compliance policy.

The major drawback is granting ICE access to your facility to conduct an I-9 audit. As one HSI-ICE official stated their agency is there to help employers. However, it reminds me of the old saying, “I’m with the government and I’m here to help you.” Thus, the decision to enroll in IMAGE is a difficult one.

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*This article was adapted from my article written for HR Professionals Magazine, which can be found at http://hrprofessionalsmagazine.com/what-is-ices-image-program-and-should-employers-enroll/.

**Bruce E. Buchanan is an attorney at the Nashville Office of Siskind Susser, P.C.  He is a graduate of Vanderbilt University School of Law. Bruce is the Chair of the Immigration Law Section.  He writes a blog on employer immigration compliance for ilw.com, located at www.EmployerImmigration.com, and is a contributor toLawLogix’sI-9 and E-Verify Blog, located athttp://www.lawlogix.com/blog and HR Professionals Magazine. Bruce may be reached at bbuchanan@visalaw.com or (615) 345-0266.

By Terry Olsen*

During 2014, approximately 50,000 to 70,000 undocumented children entered the United States, and were placed in detention centers, or with relatives throughout various areas in the United States.  Many of these children are now in removal proceedings, or are in fear of being issued Notices to Appear (NTAs) to appear in immigration court.

This situation has placed greater pressure on immigration lawyers to determine which if any immigration relief option is most appropriate for these undocumented children, and for other children who previously entered the United States during 2013 or before. Furthermore, immigration lawyers have found prosecutorial discretion to be harder to obtain, and it is not a long term solution for the undocumented children.  Therefore, immigration lawyers have pursued the Special Immigrant Juvenile category as an immigration relief option more and more.

It is essential to note that in 1990 the U.S. Congress enacted federal law to assist undocumented children in obtaining lawful permanent residence through the Special Immigrant visa category of Special Immigrant Juvenile Status (SIJS).  In 2008, the statutory definition of SIJS was clarified, and expanded under new reauthorized legislation.

Currently, in order to obtain permanent residence as a Special Immigrant Juvenile, a state court order must be obtained declaring that the juvenile is a dependent of the court, or the juvenile has been placed with a state agency, private agency, or a private person (as a guardian).  The state court may be a juvenile court, family court, orphan’s court, or a probate court.  Overall, the court must have the authority under state law to decide on the custody, and care of children.  Furthermore, the child cannot be reunited with his parent(s) due to abuse, abandonment, or neglect.

In order to qualify as a Special Immigrant Juvenile, and thereby file both the Special Immigrant Petition along with the Adjustment of Status Application, the juvenile applicant must be under 21 years of age, unmarried, and be present in the United States.  As noted previously, the juvenile must have the state court order, and must be prepared to discuss the facts and circumstances of the state court order during a mandatory interview that will occur after the filing of the Adjustment of Status Application.

Overall, the Special Immigrant Juvenile category is an option that must be considered with great caution, and review because the immigration attorney must understand both the state court’s process & requirements, and the USCIS’s process & requirements.  With this said, the immigration attorney must be prepared to explain the immigration process to the state court, and must be ready to prepare the juvenile to explain the facts, and circumstances of the state court’s order to the USCIS.  Lastly, with the increased filings of these SIJS packets, the immigration attorney must also be prepared to demonstrate to the USCIS the validity of the SIJS packet, and demonstrate that its facts, and circumstances are completely accurate.

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*Terry Olsen is the founder of his own immigration law practice, Olsen Law Firm, in Chattanooga, Tennessee.  His practice areas include both employment immigration law and family immigration law.  Mr. Olsen is the past Chair of the TBA’s Immigration Law Section. He may be contacted at tolsen@tlolaw.com or (423) 648-9390.