September 2018 Legal Report
ARBITRATION. Employees may not band together with other employees to enforce claims of wage and hour violations if they have signed arbitration agreements to resolve them on an individual basis, the U.S. Supreme Court ruled.
"The policy may be debatable, but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written," wrote Justice Neil Gorsuch for the Court.
The ruling stems from three cases brought before the Court that dealt with employees who had signed contracts with their employers agreeing to resolve any disputes through arbitration—instead of lawsuit—on an individual basis.
The employees, however, filed lawsuits against their employers, alleging various violations of wage and hour laws. They also sought to file these lawsuits on behalf of themselves and other potentially affected employees.
The cases were taken up together by the U.S. Supreme Court, which held that through the U.S. Arbitration Act, Congress had made it clear that arbitration agreements must be enforced, and the employees must arbitrate their claims on an individual basis.
"In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings," Gorsuch wrote. "Nor can we agree with the employees' suggestion that the National Labor Relations Act (NLRA) offers a conflicting command."
Gorsuch added that the Court has "never read a right to class actions into the NLRA," and that neither the NLRA or the Arbitration Act allowed the Court to declare the employers' arbitration agreements illegal.
"The respective merits of class actions and private arbitration as means of enforcing the law are questions constitutionally entrusted not to the courts to decide but to the policymakers in the political branches where those questions remain hotly contested," Gorsuch wrote. (Epic Systems Corp. v. Lewis, U.S. Supreme Court, No. 16-285, 2018)
ASSAULT. A jury awarded a rape survivor $1 billion in compensatory damages in a civil action against a contract security provider.
Six years ago, Hope Cheston was visiting a friend at Pointe South Apartments in Clayton County, Georgia, when she was sexually assaulted by Brandon Lamar Zachary, a Crime Prevention Agency security guard contracted to the apartments.
Zachary was convicted and sentenced to 20 years in prison for rape, statutory rape, and child molestation because Cheston was 14 at the time of the incident.
After the criminal case, Cheston's mother filed suit against the Crime Prevention Agency. The suit alleged that the company was negligent in its training, performance, and failure to keep her daughter safe from Zachary. A judge ruled in Cheston's favor and brought in a jury to deliberate about the damages Cheston would receive.
The jury awarded Cheston the $1 billion in damages, but she is unlikely to receive the full amount, which could be reduced by the judge. (Cheston v. Crime Prevention Agency, Inc., State Court of Clayton County, No. 2014cv01498D, 2018)
DOMESTIC VIOLENCE. U.S. Attorney General Jeff Sessions issued a decision that reverses previous U.S. policy allowing victims of domestic abuse and gang violence entrance to the United States via asylum.
"Generally, claims by aliens pertaining to domestic violence or gang violence perpetrated by non-governmental actors will not qualify for asylum," Sessions wrote. "The mere fact that a country may have problems effectively policing certain crimes—such as domestic violence or gang violence—or that certain populations are more likely to be victims of crime, cannot itself establish an asylum claim."
Sessions has the authority to reverse the policy because the U.S. Department of Justice (DOJ) controls the U.S. immigration court system. Judges in this system must follow policies that the DOJ prescribes.
Sessions issued the ruling in response to a court's decision to grant a woman from El Salvador—named A-B- in court documents—asylum after she came to the United States claiming her husband had abused her.
"An alien may suffer threats and violence in a foreign country for any number of reasons relating to her social, economic, family, or other personal circumstances," Sessions added. "Yet the asylum statute does not provide redress for all misfortune. It applies when persecution arises on account of membership in a protected group and the victim may not find protection except by taking refuge in another country." (Matter of A-B-, DOJ Office of the Attorney General, No. #3929, 2018).
CLEARANCES. U.S. President Donald Trump signed legislation into law that requires the National Background Investigation Bureau (NBIB) to report on the security clearance backlog.
The SECRET Act of 2018 (Security Expediting Clearances Through Reporting Transparency) instructs the NBIB report to the Executive Office of the President on the current security clearance backlog. The bureau must then create a mitigation plan to identify the cause of the backlog, along with recommendations to address it.
Additionally, the law requires the U.S. Office of Personnel Management, which oversees the NBIB, to report on the cost of maintaining background investigations capabilities at the NBIB and the U.S. Department of Defense, compared to the cost of a single background investigations enterprise.
The Office of the Director of National Intelligence is also instructed to report to Congress and the president about implementing "governmentwide continuous evaluation programs" and U.S. agency initiatives to meet requirements for "reciprocal recognition to access classified information," according to the law.
INVESTMENT. The U.S. House of Representatives Financial Services Committee passed a bill that would modernize the Committee on Foreign Investment in the United States (CFIUS).
The Foreign Investment Risk Review Modernization Act of 2018 (H.R. 5841) would make changes to CFIUS to better guard against national security risks to the United States posed by foreign investment.
The bill would give CFIUS jurisdiction over joint ventures, minority position investments, and real estate transactions near U.S. military bases and national security facilities. It would also update CFIUS's definition of "critical technologies" to include emerging technologies essential for the United States to maintain a technological advantage over its adversaries.
"The bill is a compromise legislation that creates a process by which countries of special concern—which would include China—would have increased oversight when attempting to purchase critical technology companies in the United States," said U.S. Representative Robert Pittenger (R-NC) in a statement. "The bill also helps create an interagency process, through export controls, to review overseas joint ventures—a process that is absent under our current system."
Pittenger introduced the bill, which has one Republican cosponsor, and the bill is now being considered by the House Energy and Commerce, Foreign Affairs, Intelligence, and Oversight committees.
CLEARANCES. Arizona Governor Doug Ducey signed legislation into law designed to expand job opportunities for nonviolent criminal offenders.
The law (formerly H.B. 2311) prevents employers from requesting information about independent contractors' or employees' criminal offenses or convictions before hiring them, except for violent and sexual offenses.
The law also includes provisions to shield employers from liability in certain instances, such as the misuse of funds or property by an employee who was previously convicted for fraud and violent offenses or improper use of excessive force by an employee hired as a law enforcement officer or security guard.
NOTIFICATION. Louisiana Governor John Edwards signed an amendment that updated the state's data breach notification law. The law protects against the disclosure of personal information, requires specific security practices, and updates violations, among other things.
The amendment (formerly S.B. 361) requires people who conduct business in Louisiana or who own or license computerized data that includes personal information to create and maintain reasonable security procedures and practices to protect that information from unauthorized access. The amendment also instructs people to take "reasonable steps" to arrange for the destruction or destroy data that contains personal information.
The amendment expands the definition of personal information to include "an individual resident of this state" and state identification card numbers, passport numbers, and biometric data, such as fingerprints, voice prints, eye retina or iris, and other biological characteristics used to authenticate an individual's identity.
The amendment also sets a new notification requirement of no later than 60 days from the discovery of a breach, which can be accomplished through email, posts to the organization's website, and statewide media.
Elsewhere in the Courts
Discrimination. Amsted Rail Co. will pay $4.4 million and other relief to settle a class disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC).
Amsted was charged with disqualifying job applicants based on the results of a nerve conduction test for carpal tunnel syndrome, instead of an individualized assessment of the applicant's ability to perform the job safely. A U.S. district court ruled that the test was a violation of U.S. federal disability law. (EEOC v. Amsted Rail Co., Inc., U.S. District Court for the Southern District of Illinois, No. 14-cv-1292-JPG-SCW, 2018).
Disclosure. A chocolate maker did not have a duty to disclose if child-slave labor was used to manufacture its products, the U.S. Ninth Circuit Court of Appeals ruled. A class action lawsuit challenged Mars to comply with a California transparency law to disclose its labor practices; Mars sources cocoa beans from the Ivory Coast where child labor is used.
"In the absence of any affirmative misrepresentations by the manufacturer, we hold that the manufacturers do not have a duty to disclose the labor practices in question, even though they are reprehensible, because they are not physical defects that affect the central function of the chocolate products," Judge A. William Tashima wrote for the court. (Hodsdon v. Mars, Inc., U.S. Court of Appeals for the Ninth Circuit, No. 16-15444, 2018).
Discrimination. A transportation company will pay $3.2 million and other relief to settle a sex discrimination lawsuit that alleged an irrelevant strength test discriminated against female applicants for conductors, material handlers, clerks, and other job positions.
Under the consent decree, the company will pay the relief into a settlement fund for women in more than 20 states who were denied positions due to its testing practices. It will also cease its tests and hire expert consultants to conduct studies before adopting new physical abilities testing programs. (EEOC v. CSX Transportation, Inc., U.S. District Court for the Southern District of West Virginia, No. 3:17-cv-03731, 2018).