Supreme Court Watch

Wednesday, July 18, 2012

In the Supreme Court Watch, we summarize decisions from the U.S. Supreme Court in labor and employment cases, and we provide alerts on employment cases that are currently before the Court for argument.

 Decisions by the Court 2011-2012 Term
By Nina Joan Kimball, Kimball Brousseau LLP

Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, No. 10-553 (Jan. 11, 2012)
In a unanimous decision, written by Chief Justice Roberts, the Supreme Court recognized a “ministerial exception” based on the First Amendment that would exempt religious institutions from application of civil right laws to matters related to the employment relationship of their ministers.   In this case, the Court applied the “ministerial exception” to a claim brought under the ADA by a teacher at a religious elementary school who had been commissioned as a minister by the school and who taught both religious and secular classes. 

The teacher, Cheryl Perich, had been “called” by the Hosanna-Tabor Evangelical Lutheran Church and School to undergo religious training to become a commissioned minister.  The Church (which ran the school) distinguished its “called” teachers who had undergone theological training, from its “lay” teachers, who were not required to be trained by the Church.  Ms. Perich taught both secular and religious classes.  She took a leave of absence when she was diagnosed with narcolepsy, and the school hired a substitute.  When she tried to return to teaching, the school asked her to resign, fearing her health would place students at risk.  She refused and told the school she had hired an attorney and intended to assert her legal rights.  The school finally terminated her employment and she brought claims under the Americans with Disabilities Act alleging discrimination and retaliation.  The school claimed it was exempt from the ADA under the ministerial exception, which had been recognized by the Courts of Appeal.  The school was granted summary judgment by the federal district court applying the ministerial exception.  The Sixth Circuit reversed, though recognizing a ministerial exception, it found that Ms. Perich did not qualify as a “minister” under the exception.

A unanimous Supreme Court reversed the Sixth Circuit finding that there is a ministerial exception based on both the Free Exercise Clause and the Establishment Clause of the First Amendment, which provides “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”  The Court held that both religion clauses “bar the government from interfering with the decision of a religious group to fire one of its ministers.”  Because Perich was a minister within the meaning of the ministerial exception, the First Amendment required dismissal of the employment discrimination suit against her former employer.   In this case the Court did not adopt a rigid formula for deciding when an employee qualifies as a minister, but decided that here where there was a distinction between “lay” and “called” teachers, and called teachers had to undergo religious training, and participated in religious instruction, and where she played a substantial role in “conveying the Church’s message and carrying out its mission,” that was sufficient to qualify as a minister.

Coleman v. Maryland Court of Appeals, No. 10-1016 (Mar. 20, 212).
In a 5-4 decision authored by Justice Anthony Kennedy, the Supreme Court ruled that states are immune from suit brought under the self-care provision of the Family and Medical Leave Act (FMLA).  In reaching this conclusion, the Court distinguished its 2003 decision in Nevada Dep’t of Human Resources v. Hibbs, in which the Court ruled that states could be sued under the family-care provisions of the FMLA.  The family-care provisions of the FMLA are the provisions that allow an employee to take FMLA leave at the birth or adoption or foster placement of a child or to care for a spouse, child or parent with a serious health condition.  The self-care provision of the FMLA allows an employee to take FMLA leave for his or her own serious health condition.

To understand how the Court could reach a different result in Coleman from Hibbs, one must understand our federal system of government and how the 11th Amendment works.  The Court explained,

A foundational premise of the federal system is that States, as sovereigns, are immune from suits from damages, save as they elect to waive that defense.  As an exception to this principle, Congress may abrogate the States’ immunity from suit pursuant to its powers under § 5 of the Fourteenth Amendment.

In deciding whether Congress had abrogated the States’ immunity from suit under its power to remedy discrimination under the Fourteenth Amendment, the majority decision distinguished the FMLA’s self-care provision from the family-care provisions.  The majority determined that Congress had the authority to abrogate the States’ immunity from suit for the family care provisions under its power to enact laws to “remedy or prevent” sex discrimination under the Fourteenth Amendment.  By contrast, the majority determined that the self-care provision was not aimed to end sex discrimination in employment as there was insufficient evidence before Congress that there was any pattern of sex discrimination in how States administered their sick leave plans and policies.  Rather, the self-care provision was aimed at ending discrimination on the basis of illness.  Therefore, Congress did not have the authority under the Fourteenth Amendment to abrogate States’ immunity from suit when enacting the self-care provisions of the FMLA.

The dissent, written by Justine Ginsberg, disagreed that there was insufficient evidence that the self-care provision of the FMLA was aimed at remedying sex discrimination, pointing out, for example, that the self-care provision provided leave due to pregnancy-related medical conditions, which Congress found was a fertile ground for discrimination against female employees, and that the statutory provisions had to be read as an integrated whole in achieving the goal of remedying sex discrimination.

Filarsky v. Delia, No. 10-1018 (April 17, 2012)
Ruling unanimously, the Court held that a private lawyer retained by the government to work with government employees in conducting an internal investigation is entitled to the same qualified immunity that the government employees enjoy.  Here Steve Filarsky was a private attorney retained by the city to assist in an investigation of a city firefighter, Delia.  During the course of the investigation, Delia claimed his civil rights were violated by a search of  materials from his home.  He sued the individuals who were conducting the investigation.  The Ninth Circuit ruled that all were immune from suit except Filarsky, solely on the ground that he was a private attorney, not a government employee.  In a 9-0 decision, the Supreme Court reversed, holding that private attorneys retained by the government on a part-time basis are just as entitled to qualified immunity as the full-time city attorneys with whom they are working.

Elgin v. Department of Treasury (June 11, 2012). 
Affirming a decision by the First Circuit, the Court ruled in a 6-3 decision that federal employees cannot challenge their terminations on constitutional grounds in federal court.  Instead their exclusive remedy is to bring a claim before the Merit Systems Protection Board under the Civil Service Reform Act (CSRA).  The Court determined that the comprehensive regulatory scheme set up under the CSRA provides the exclusive remedy for federal employees challenging terminations unless there is a specific statutory exception, such as for discrimination claims, which can be brought under other statutes such as Title VII or the ADA or the ADEA.  Because there is no such exception for constitutional claims, such claims can and must be brought to the MSPB.  This decision is significant in that it allows a federal agency to hear a constitutional challenge to a federal statute, and that reasoning could apply to other federal agencies.   

Christopher v. SmithKline Beacham Corp. (June 18, 2012). 
The Court ruled 5-4 that sales representatives working for a pharmaceutical company are exempt under the Fair Labor Standards Act (FLSA).  At issue in this case was the meaning of the “outside sales” exemption under the FLSA as applied in the highly regulated pharmaceutical industry.  The question was whether pharmaceutical sales representatives whose primary duty was to obtain nonbinding commitments from physicians to prescribe their employer’s prescription drugs were actually engaged in “making sales” so as to be covered by the exemption.  Changing decades of treating such employees as exempt, the Department of Labor had argued in recent amicus filings that they were not exempt because, although they performed many of the functions of a salesperson, their activity did not actually result in a “consummated” sale since they were not selling the drugs to the end users—the patients who actually bought the drugs.  Notably all the justices (the majority and the dissent) agreed that the DOL’s position taken in amicus briefs and reversing a long-standing view of such employees as exempt, was not entitled to deference.  In an opinion written by Justice Alito, the majority rejected the DOL’s position, concluding that the term “making sales” had a broader connotation, and in the context of the type of work that these sales representatives performed, they were engaged in making sales.  Because the FLSA defines “sale” broadly to include “any sale, exchange, contract to sell, consignment for sale, shipment for sale or other disposition,” the term “other disposition” could include commitments by physicians to prescribe drugs. 

Knox v. Service Employees Int’l Union (June 21, 2012). 
The issue in this case was whether a public sector union violated the First Amendment rights of non-union member employees when it used the non-union member employees’ state-mandated fees to finance political actions (such as campaign contributions).  California state employees are required to pay agency fees to the Service Employees International Union (SEIU), their collective bargaining agent.  The Supreme Court agreed with the non-union members finding that their First Amendment rights were violated because the union had not provided them with sufficient notice to make an informed choice whether or not to object to additional fees that were assessed for the political purposes.  The result of the case is that public sector unions will have to take additional steps to notify non-union members when making campaign contributions. 

National Federation of Independent Businesses v. Sebelius (June 28, 2012). 
The Supreme Court upheld the constitutionality of the health care reform law (the Patient Protection and Affordable Care Act) in a close 5-4 decision, with the deciding vote contributed by Chief Justice John Roberts, joining the four liberal justices on the Court.  Though the Chief Justice agreed with the four conservative dissenting justices that Congress did not have power under the Commerce Clause to enact the key provision, the individual mandate, he agreed with the liberal wing of the Court that Congress could enact that provision under its taxing power.  A summary of the decision is beyond the scope of this piece.  However, for anyone who is interested in a broad discussion of Congress’s powers under the Commerce Clause and the taxing power, and the power of the judiciary to interpret the law, the three opinions in this case – the Opinion of the Court by the Chief Justice, Justice Ginsberg’s concurring opinion, and Justice Scalia’s dissent, make for very interesting reading—no doubt much fodder for first year Constitutional Law classes. 

Some provisions of the statute have already gone into effect, such as requiring health plans to cover children up to 26 years of age, and removing pre-existing condition limits for children up to 19 years of age.  Now that the statute has been upheld, employers need to be aware of the many provisions that go into effect over the next two years related to providing health insurance benefits to their employees, including:

  • Summary of health benefits and coverage: starting with open enrollment periods that begin on or after September 23, 2012, employers must issue a new uniform 4-page summary of benefits.
  • W-2 reporting: must include information about health coverage, for information purposes, not compensation purposes.
  • Flexible spending accounts: beginning in 2013 are limited to $2500.
  • Non-discrimination: IRS to issue regulations to prevent discrimination in favor of highly paid employees regarding coverage and benefits.
  • Pay or play: Beginning in 2014, employers with 50 or more employees must either provide certain level of health insurance coverage or pay a penalty.
  • Automatic enrollment: Beginning in 2014, employers with 200 or more employees must automatically enroll employees in group health plans unless the employee opts out.
  • Individual mandate: the law will require individuals to purchase health insurance coverage or pay a penalty.
  • FICA: Medicare contributions will increase for employees with incomes over $200,000 and couples with incomes over $250,000 (though employer employment taxes will not increase).
  • Small employer tax credits: small employers with 25 or fewer employees may be eligible for tax credits in connection with health insurance premiums paid for employees.


Cases to be Argued in 2012-2013 Term

Fisher v. University of Texas, No. 11-345. 
The Supreme Court will revisit affirmative action policies in this case brought by Abigail Fisher, a white student, who claims that the University of Texas denied her admission because of her race.  This case raises questions whether the Supreme Court’s 2003 decision in Grutter v. Bollinger will survive, which held that colleges and universities could not use a point system to increase minority enrollment, but they could take race into account in other ways in order to promote academic diversity.

Cert granted in Vance v. Ball State University (June 25, 2012). 
The Supreme Court granted cert in a Title VII case (to be decided next Term) that will determine the meaning of  “supervisor” so as to make the employer strictly liable for the supervisor’s discriminatory conduct.  Some Circuit courts (including the First Circuit here) have defined the term narrowly, to include only those supervisors who have the authority to hire and fire and discipline an employee.  Other Circuit courts have defined the term more broadly, to include coworkers who have authority over an employee’s work – thus broadening the field of persons whose discriminatory conduct the employer is strictly liable for under Title VII, i.e., without notice or an opportunity to correct the conduct.