The latest Supreme Court term, which ended in July 2013, produced a series of 5-4 decisions that changed the employment law landscape regarding: (1) an employer’s vicarious liability for sexual harassment allegedly perpetrated by a supervisor; (2) burdens of proof in retaliation cases; (3) Fair Labor Standards Act collective actions; and (4) Rule 23 class actions.

Vance v. Ball State University

The plaintiff alleged that the university was vicariously and strictly liable for a co-worker’s sexual harassment because the co-worker qualified as a “supervisor” for purposes of Title VII.  Writing for a 5-4 majority, Justice Alito reviewed the following rules regarding attributing liability to employers: (1) an employer is liable for a non-supervisor’s conduct only if the employer was negligent in controlling the working conditions; (2) an employer is strictly liable if a supervisor’s harassment culminates in a tangible employment action; and (3) an employer may avoid liability where no such action occurred if it exercised reasonable care to prevent or correct harassment and the plaintiff unreasonably failed to use the preventative or corrective measures provided by the employer.  As a consequence, the alleged perpetrator’s status as a supervisor or a co-worker is a significant issue.

The Court held that an employee is a supervisor for purposes of imposing vicarious liability only if the individual was empowered to take tangible employment actions against the plaintiff.  Those actions include terminating, demoting, failing to promote, or reassigning with significantly different responsibilities to the employee or making decisions causing a significant change in the employee’s benefits.  By doing so, the Court rejected the approach articulated by the EEOC, which imposed liability on an employer if an individual merely exercised “significant discretion over the plaintiff’s daily work.” 

The Court explained that it was adopting that standard because it could be more easily applied by trial courts when ruling on summary judgment motions and at trial in order to dispose of claims without the need for additional litigation.  The Court also stated that the standard would enable juries to better understand what must be determined when resolving disputed factual issues relevant to the alleged perpetrator’s supervisory status.

The dissent—written by Justice Ginsberg—characterized the rule adopted by the majority as diminishing the force of Faragher and Ellereth, ignoring the conditions under which the workforce labors, and disserving of the objectives of Title VII to prevent employment discrimination.  The dissenters favored using the criterion which had been applied by the EEOC.

University of Texas Southwestern Medical Center v. Nassar

Writing for a 5-4 majority, Justice Kennedy held that the “But For” burden of proof standard governs retaliation claims under Title VII, even though discrimination claims under that law can be proven by showing that a plaintiff’s membership in a protected class was only a “motivating” or “substantial” factor in an employment decision.  Justice Kennedy predicated that holding on the difference in the language of the Title VII provisions that deal with discrimination and retaliation claims after Congress amended the law to reverse the Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989)

Justice Kennedy insisted that the more stringent burden of proof standard for retaliation claims was necessary for a fair and responsible allocation of judicial and litigation resources because such claims were being filed with ever-increasing frequency.  He explained that a lower standard would make it far more difficult to dismiss “dubious claims” at the summary judgment stage. 

 Justice Ginsberg’s dissenting opinion criticized the majority for engaging in a hyper-technical reading of Title VII.  She observed that Congress had obviously amended the law in order to strengthen the protection provided to employees and yet the Court was using the amendment to reduce the force of the ban on retaliation.  Justice Ginsberg insisted that the majority decision constituted a departure from prior cases that had held that the ban on discrimination encompassed retaliation and misconstrued the language of Title VII.  Hence, the dissenters would have adopted the EEOC’s guidance on this issue, which applied the same causation standard to discrimination and retaliation claims.

Genesis Healthcare Corp. v. Symcyk

The Fair Labor Standards Act permits employees to maintain what are called “collective actions,” which differ from Federal Rule of Civil Procedure 23 class actions where members must opt out of the litigation if they do not want to participate.  See 29 U.S.C. § 216; Fed. R. Civ. P. 23(c)(2).  In collective actions, class members must affirmatively choose to participate in the litigation, but the FLSA also provides as follows:

An action to recover the liability prescribed in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated

See 29 U.S.C. § 216(b)[Emphasis added].

A nurse employed at a Genesis Healthcare facility, filed a collective action that alleged that the employer had violated the FLSA by automatically deducting a 30-minute lunch break from employees’ hours of work, even when they performed compensable work during that period.  When Genesis Healthcare filed an answer, it made a Federal Rule of Civil Procedure 68 offer of judgment to the nurse that would have fully compensated her for the $7,500 in wages she was allegedly owed and for the attorneys’ fees she had incurred. 

After the nurse failed to accept that offer within the allotted time, Genesis Healthcare moved to dismiss the collective action on the grounds that the offer of judgment had effectively mooted her claim.  Thus, she and the other potential class members, who remained unpaid, were no longer “similarly situated” and no justiciable controversy existed because she was still the only named plaintiff.

The district court granted the motion to dismiss, but the Third Circuit reversed that ruling.  In doing so, the appellate court characterized the strategic offer of judgment used by Genesis Healthcare as a calculated attempt to frustrate the goals of collective actions by “picking off” named plaintiffs before class certification occurred.  The Third Circuit conceded that the nurse’s claim was moot, but the court remanded the case in order to allow her to seek a conditional certification after inducing other employees to become named plaintiffs.

In a 5-4 decision written by Justice Thomas, the Supreme Court reversed the Third Circuit after observing that the Circuit Courts disagree about whether an offer of judgment that fully satisfies a plaintiff’s claim moots it.  The Court, however, did not resolve that split because the parties had not challenged the Third Circuit’s holding that the nurse’s claim had become moot, meaning that that legal question was not properly before the Court. 

As a consequence, the Court concluded that the nurse’s claim, which sought only damages and not any injunctive relief personal to her, was moot and stated as follows:

A straightforward application of the well-settled mootness principles compels our answer.  In the absence of any claimant’s opting in, [the nurse’s] suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in the action.  While the FLSA authorizes an aggrieved employee to bring an action on behalf of himself and “other employees similarly situated,” [cite omitted] the mere presence of collecti
ve action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied. 

133 S. Ct. 1523, 1530 (2013).

The dissent written by Justice Kagan took issue with the majority’s assumption that the nurse’s failure to accept the Rule 68 offer automatically mooted her claim.  In that regard, Justice Kagan correctly observed that the nurse’s rejection of that offer did not result in the entry of a judgment in her favor.  That rejection did not moot the nurse’s claim, but merely precluded her from recovering costs if she ultimately failed to recover damages that exceeded the amount of the offer of judgment. 

Moreover, the offer of judgment would not have provided the nurse with all of the relief that she had sought, namely, an award of the total amount of compensation to which the other employees were entitled under the FLSA.  For those reasons, the nurse could serve as the named plaintiff in a collective action and a justiciable controversy still existed because she continued to have personal stake in the outcome of the litigation until the court entered a judgment on her entire damages claim.

Comcast Corporation v. Behrend

Customers filed a class action antitrust claim alleging that Comcast had monopolized the Philadelphia market through transactions that allocated parts of the regional cable market among the company’s competitors in a way that eliminated competition.  In a 5-4 decision written by Justice Scalia, the Court held that the customers could not maintain a Rule 23(b)(3) class action because they had failed to show that, after common issues relevant to liability had been resolved, the same method could be used to compute the damages sustained by each and every class member.  Hence, the questions of individual damage calculations would inevitably overwhelm questions common to the class.  Justice Scalia wrote that, when asked to certify a Rule 23(b) class, trial courts must conduct a rigorous analysis, which may require probing behind the pleadings to assess the merits of a claim, in order to determine whether the prerequisites of that rule have been met.

According to the dissenting opinion of Justices Ginsberg and Breyer, the majority had departed from the traditional approach that permitted certification of class actions if common issues of liability predominated over individualized damages questions unique to only some class members.  That opinion also challenged the majority’s assertion that courts should engage in a rigorous analysis of the merits at the preliminary stage of class certification, which would inevitably make it more difficult to obtain certification.

 Although this case dealt with an antitrust claim, lower courts have already cited the majority opinion in the context of employment law actions where a Rule 23(b) class certification was sought.  For example, in Forrand v. Federal Express Corp., 2013 WL 1793951 (C.C. Cal. 4/25/13), the court denied class certification because the plaintiff had failed to show that the same method could be used to calculate the amount of pay all class members were entitled to recover pursuant to the California wage and hour law for time spent working off the clock and for being denied paid lunch breaks.  The court pointed out that factual questions existed regarding whether individual employees had performed work before clocking in and whether they were subject to the employer’s control at the time they did so.  For that reason, such individualized inquiries would predominate over liability issues related to FedEx’s policies and procedures, which were common to all of the class members.  Cf. Leyva v. Medline Industries, Inc., 716 F.3d 510 (9th Cir. 2013) (class certified damages owed to individual members could be easily calculated using method and data relied upon by employer to remove); Parra v. Bashas’, Inc., 118 FEP Cases 1372 (D. Az. 2013) (Class certification granted where damages entitlement could be calculated using a mechanical formula based on the difference in hourly wage rates between Hispanic and non-Hispanic employees, but denied for discriminatory working conditions claim where such a method could not be used for all class members).