Category: Litigation

Supreme Court’s Carpenter Decision Requires Warrant for Cell Phone Location Data

In a decision that defines how the Fourth Amendment applies to information collected in the digital age, the Supreme Court today held that police must use a warrant to obtain from a cell phone company records that detail the location and movements of a cell phone user.  The opinion in Carpenter v. United States limits the application of the third-party doctrine, holding that a warrant is required when an individual “has a legitimate privacy interest in records held by a third party.”

The 5-4 decision, written by Chief Justice John Roberts, emphasizes the sensitivity of cell phone location information, which the Court described as “deeply revealing” because of its “depth, breadth, and comprehensive reach, and the inescapable and automatic nature of its collection.”  Given its nature, “the fact that such information is gathered by a third party does not make it any less deserving of Fourth Amendment protection,” the Court held.

As we previously reported, Carpenter stems from a criminal investigation in Detroit in 2011, where the government acted without a warrant in obtaining 127 days’ worth of cell phone location records for two suspects.  The government obtained the data under the Stored Communications Act, 18 U.S.C. §§ 2703(c)(1)(B), (d), which requires a showing of reasonable suspicion — but does not require probable cause.  For one suspect, the records revealed 12,898 points of location data; for another, 23,034 location points.  Both suspects were convicted, based in part on cell phone location evidence that placed them near the crime scenes.

Sensitivity of Information

In requiring a warrant to obtain cell phone location information, the Court emphasized the sensitivity of that information, which it called “an entirely different species of business record” than bank records or phone numbers.  Cell phone location information “implicates basic Fourth Amendment concerns about arbitrary government power much more directly than corporate tax or payroll ledgers,” the Court explained.  Throughout the majority decision, Chief Justice Roberts invoked his 2014 opinion in Riley v. California to underscore the sensitivity of this information.  As Riley recognized, a cell phone today is almost a “feature of human anatomy” that “tracks nearly exactly the movements of its owner.”

The Court also focused on the “near perfect surveillance” achieved by cell phone location records — and lack of resource constraints in obtaining them.  Before the digital age, law enforcement officers could surveil a suspect for brief periods of time but doing so “for any extended period of time was difficult and costly and therefore rarely undertaken.”  Unlike traditional surveillance methods, “cell phone tracking is remarkably easy, cheap, and efficient,” the Court said.  “With just the click of a button, the Government can access each carrier’s deep repository of historical location information at practically no expense.”  Cell phone location records thus provide information “otherwise unknowable,” as if the Government “had attached an ankle monitor to the phone’s user.”  Moreover, the Court emphasized, cell phone location information is collected on all cell phone users — not just individuals under investigation — meaning the “newfound tracking capacity runs against everyone.”

Limits of Third-Party Doctrine

In concluding the third-party doctrine did not apply to cell phone location information, the Court said the information “does not fit neatly under existing precedents.”  Rather, it falls at the “at the intersection of two lines of cases.”  The first line addresses an individual’s expectation of privacy in his physical locations and movements.  The second line embodies the third-party doctrine, under which an individual has no legitimate expectation of privacy in information voluntarily turned over to third parties.

While Carpenter does not overrule the third-party doctrine, it substantially limits its application.  Applying the third-party doctrine to cell phone location information would not be a “straightforward application” as the Government urged, but a “significant extension” of the doctrine that the Court rejected.  The Government’s invocation of the third-party doctrine “fails to contend with the seismic shifts in digital technology,” the Court found.

According to the Court, there is “a world of difference between the limited types of personal information addressed in” the third-party doctrine cases and “the exhaustive chronicle of location information casually collected by wireless carriers today.”  Moreover, the information is “not truly ‘shared’ as one normally understands the term.”  In part, that is because “[v]irtually any activity on the phone” generates location information.  “Apart from disconnecting the phone from the network, there is no way to avoid leaving behind a trail of location data.”  As a result, the Court held that users do not voluntarily assume the risk of turning over a comprehensive dossier of their physical movements, the Court held.  It emphasized that the case is not about a person’s momentary location while “using a phone” but “about a detailed chronicle of a person’s physical presence compiled every day, every moment, over several years.”

Ramifications of Decision

Chief Justice Roberts emphasized that the opinion of the Court was narrow, noting that it does not overrule the third-party doctrine or affect cases relating to foreign affairs or national security.  According to the majority, the decision also does not call into question “conventional surveillance techniques and tools” nor apply to “other business records that might incidentally reveal location information.”  Justice Kennedy disagreed with this characterization of the Court’s opinion, observing in dissent that the decision “will have dramatic consequences for law enforcement, courts, and society as a whole.”  According to Justice Kennedy, the majority’s reasoning will “extend beyond cell-site records to other kinds of information held by third parties.”

Justices Alito, Thomas, and Gorsuch also filed separate dissents.  Justice Gorsuch’s dissent advocated for a property-based approach to the Fourth Amendment that would abandon both the third-party doctrine and the reasonable expectation of privacy test.  That approach would focus on whether the individual has a property interest in the records at issue.  Under that framework it is “entirely possible a person’s cell site data could qualify as his papers or effects,” Justice Gorsuch observed, even though a cell phone carrier holds the information.  But Carpenter failed to raise a property-based argument before the district court, the court of appeals, or the Supreme Court, and therefore “forfeited perhaps his most promising line of argument,” according to Justice Gorsuch.

Like Justice Kennedy, Justices Alito and Thomas argued in separate dissents that cell phone location information belongs to cell phone companies, not to cell phone users, and thus did not qualify for protection under the Fourth Amendment.  Justice Thomas focused on the fact that Carpenter “did not create the records, he does not maintain them, he cannot control them, and he cannot destroy them.”  Justice Alito also cautioned that the majority’s decision was overly broad and would invite a “blizzard of litigation” because the majority opinion offered “no meaningful limiting principle, and none is apparent.”

 

© 2018 Covington & Burling LLP

Employment Litigation Impacted By U.S. Supreme Court Decision Reining In Successive Attempts at Class Litigation

In 1974, the U.S. Supreme Court decided in American Pipe & Construction Co. v. Utah, 414 U.S. 538, that the timely filing of a class action complaint tolls the applicable statute of limitations for all persons encompassed by that complaint. The impact of that ruling was that potential class members did not have to intervene as individual plaintiffs in the class representatives’ case unless and until the class ultimately was not certified (assuming the case remained pending at the time intervention was sought). Alternatively, as determined in later cases interpreting American Pipe, former class members can pursue their own individual claims rather than intervening in a former class action, even if their individual claim would otherwise be untimely.

American Pipe left unresolved whether a former putative class member can still pursue relief on a class basis after the statute of limitations has run on the underlying claim, or if the former putative class member is limited to bringing only his or her own individual claim. The Supreme Court answered that question on June 11, 2018 when it issued its unanimous opinion in China Agritech, Inc. v. Resh, 584 U.S. ___ (2018), in which the Court concluded that a putative class member cannot commence an otherwise untimely class action upon denial of class certification in the earlier-filed suit. His remedies are limited to promptly joining an existing suit or filing an individual action, but serial attempts at class certification after the statute of limitations has run are impermissible.

Resh was not an employment case, but instead involved three successive putative class actions brought on behalf of purchasers of China Agritech’s common stock, each alleging essentially the same violations of the Securities Exchange Act of 1934. Class certification was denied in the first of the three actions and it settled. Shortly thereafter, the lawyer in the first action filed a new complaint alleging nearly the same facts, but with new putative class representatives. Once again, the court denied class certification and the case settled. Plaintiffs’ counsel filed yet a third putative class lawsuit naming as putative class representative an individual, Michael Resh, who had not sought lead-plaintiff status in either of the two previous cases, but who would have been within the scope of the class had it been certified in either earlier case. There was no dispute Mr. Resh’s claim was untimely unless it had been tolled under American Pipe. The trial court dismissed his class claims as untimely but the Ninth Circuit Court of Appeals reversed, holding that the reasoning of American Pipe extends to successive class claims.

The Supreme Court disagreed and reversed, thereby resolving the Circuit split over the implication of American Pipe and its progeny on successive class litigation. The Court held that the “efficiency and economy of litigation” that supports tolling of individual claims until after class certification has been ruled on is not present where one seeks to litigate untimely successive class actions. Class certification is intended to determine early whether claims are better resolved individually or as a class, and whether certain putative representatives and their counsel are suited to represent the class’ interests. Class representatives who commence suit after expiration of the limitation period are not diligent in asserting claims and pursuing relief, for themselves or the putative class members. Therefore, the Court limited American Pipe to permitting only individual intervention or individual claim prosecution after the denial of certification of a class to which the individual otherwise would have belonged. In other words, although parties who were part of a proposed-but-ultimately-rejected class can bring claims after denial of class certification, they can only do so on their own individual basis, and not as a proposed class action.

Although a securities case, the Resh decision has (welcome) implications for employers. Should one or a group of employees seek certification of a class with respect to a particular employment practice, such as for employment discrimination affecting a broad class of workers or for alleged wage and hour violations, and should the motion for class certification be denied, the would-be class members must promptly move to intervene in the representatives’ non-class lawsuits or promptly file lawsuits on their own individual behalves, or else their right to proceed will be time-barred. The decision eliminates the uncertainty – the “endless tolling of a statute of limitations” – that employers would face if plaintiffs’ lawyers could continually refile putative class actions related to the same policy or incident notwithstanding the statute of limitations having run, until they define the class sufficiently well or find adequate representatives such that the trial court grants class certification. After Resh, once the statute of limitations on a claim has run, so too has the threat of further class action litigation.

 

© Copyright 2018 Squire Patton Boggs (US) LLP.

Needless Gamble: Eleventh Circuit Uses Exceedingly Broad Language to Address Narrow Issue of Arbitration in TCPA Text Suit

In Gamble v. New Eng. Auto Fin., Inc., No. 17-15343, 2018 U.S. App. LEXIS 14608 (11th Cir. May 31, 2018) the Eleventh Circuit upheld denial of arbitration of a TCPA claim involving text messages offering a consumer a new auto finance contract. While the Eleventh Circuit used unnecessarily broad language–discussed below– the holding is actually quite narrow; calls made to offer a consumer a second finance agreement do not arise out of a first finance agreement for arbitration purposes. The panel’s decision to reach this narrow conclusion through the vehicle of broadly-worded analysis might mean trouble for defendants seeking to compel future TCPA cases to arbitration in the Eleventh Circuit, however.

The arbitration clause at issue  in Gamble required arbitration of any “claim, dispute or controversy whether preexisting, present or future, that in any way arises from or relates to this Agreement or the Motor Vehicle securing this Agreement.”  The contract also contained a separate provision with a separate signature line appearing below the signature line for the auto loan agreement relating to consent to receive texts.  This separate provision was not signed by Plaintiff.

Defendant apparently emphasized the unsigned text message consent provision as the crux of its legal position. By offering Plaintiff the right to opt-in to text messages in the contract–the argument goes–the resulting text messages must have arose out of that contract. That’s a terrible argument, of course, and the Eleventh Circuit made short work of it concluding roughly that “no agreement regarding text messages exists between the parties.”

Unfortunately the Court did not stop there–although it could have–and used unnecessarily broad language in passing on the dispute before it. For instance, the Court made the express finding that the Plaintiff’s claim “does not arise from any right implicated by the Loan Agreement nor from the parties contractual relationship.”  While that is undoubtedly true, the reason that is the case is because the texts at issue were unrelated to this contract and pitched a wholly different contract. Yet the Court’s failure to emphasize this critical fact makes it seem as if TCPA cases–which almost never arise from a right implicated in a loan agreement–are per se non-arbitrable.

Complicating matters further, the Court also emphasized, in seemingly gratuitous fashion, that TCPA claims arise “from post-agreement conduct that allegedly violates a separate, distinct federal law.”  Again, this is undoubtedly true, but that is not a predicate basis for denying arbitration–claims related to purported statutory violations are commonly compelled to arbitration, including by the Eleventh Circuit. See generally Walthour v. Chipio Windshield Repair, LLC, 745 F. 3d 1326 (11th Cir. 2014). And texts often arise out of contracts–such as where a consumer goes into default under the terms of a loan agreement resulting in text messages from a servicer seeking to collect. The loose language in Gamble needlessly implies, therefore, that claims related to such text messages are not subject to arbitration merely because the underlying right being enforced is a federal statutory right, rather than a contractual right. That’s an unnecessary–if not dangerous–implication, and surely not one that comports with the Congressionally-mandated policy favoring arbitration.

It remains to be seen exactly what district courts in the Eleventh Circuit do with Gamble, but one thing is for sure– Gamble just made defense efforts to compel arbitration of TCPA cases there a whole lot less certain. Care to roll the dice?

 

Copyright © 2018 Womble Bond Dickinson (US) LLP All Rights Reserved.
This post was written by Eric Troutman of Womble Bond Dickinson (US) LLP.

A Ruling of Epic Proportions: Supreme Court Upholds Employment Class Action Waivers

On May 21, 2018, the Supreme Court ruled in Epic Systems Corp. v. Lewis that employees can agree to: (1) arbitrate employment disputes; and (2) waive their right to resolve those disputes through class and collective actions. This decision represents an epic victory for employers and may limit an employer’s financial exposure in employment disputes.

In Epic Systems Corp., Epic Systems required its employees to sign an arbitration agreement that included a class and collective action waiver. Employees who signed the agreement thus agreed to resolve their employment disputes through individual arbitration and also waived their right to participate in or receive benefit from any class, collective or representative proceedings.

An Epic employee, Jacob Lewis, signed such an agreement with Epic. After his employment ended and despite the agreement, Lewis filed a class/collective action against Epic, claiming he and other Epic employees had been denied overtime wages in violation of the Fair Labor Standards Act (FLSA) and Wisconsin wage and hour laws.

Epic moved to dismiss the claim and to compel arbitration, citing the arbitration/class waiver agreement. The district court denied Epic’s motions, stating that the waiver was unenforceable because it interfered with employees’ right to engage in “concerted activities” for “mutual aid or protection” under the National Labor Relations Act (NLRA).

On appeal, the Seventh Circuit Court of Appeals agreed with the district court, becoming the first appellate court to agree with the National Labor Relations Board’s (NLRB) 2012 position in D.R. Horton (previously discussed here and here) that such waivers were unenforceable. As a result, employers in Wisconsin, Indiana and Illinois have been bound by this ruling since 2016.

In a 5-4 opinion authored by Justice Neil Gorsuch, the Supreme Court overturned the Seventh Circuit and ruled that the NLRA did not grant employees a right to class or collective actions, nor did the waiver of class rights violate any provision of the NLRA. According to the Court, the NLRA does not address class/collective action issues. Instead, the NLRA focuses on collective bargaining issues. In short, the Court gave its approval to arbitration agreements that require resolution of employment disputes on an individual basis.

Employers who currently use arbitration agreements with their employees should consult with legal counsel to ensure those agreements meet their needs and preferred outcomes. For employers who do not currently use such agreements, the Epic decision provides a perfect opportunity to implement such agreements. Before making changes to existing agreements, relying on such agreements going forward or implementing new agreements, employers should consult with legal counsel to discuss the potential benefits and drawbacks of arbitrating employment disputes. With the Epic decision, however, employers now know for certain that they have class action waivers at their disposal.

 

Copyright © 2018 Godfrey & Kahn S.C.
This post was written by Rufino Gaytán of Godfrey & Kahn S.C.

MURPHY V. NCAA: Supreme Court Update

It’s not every day that a Supreme Court decision gets covered not only in the pages of The New York Times, but also ESPN.com and Sports Illustrated. But Murphy v. NCAA (No. 16-476), which struck down the federal Professional and Amateur Sports Protection Act (PASPA) and opened the door (for now) to legalized sports betting across the country, is no ordinary decision. Beyond green-lighting a potential billion-dollar industry, the Court’s decision breathes new life into the anti-commandeering principle (once a favorite of states-rights conservatives and now suddenly popular on the Left) and highlights a divide among the justices with respect to the severability of unconstitutional statutory provisions. (We’re pretty sure it’s that last part that the sportswriters were interested in.) Because it’s a biggie, we’ll devote this entire missive to summarizing the Murphy decision, but we’ll be back tomorrow with summaries of the other decisions handed down this week.

Enacted in 1992, PASPA was borne out of a growing concern from legislators—most notably star basketballer and New Jersey Senator Bill Bradley—that if the trend of increased gambling extended to sports, it could have detrimental effects on young people and the integrity of the games. The Act made it unlawful for a State “to sponsor, operate, promote, license, or authorize by law or compact” a gambling or wagering scheme based on competitive sporting events. Just in case a State disobeyed, the law also made it unlawful for “a person to sponsor, operate, or promote” any sports-betting scheme pursuant to state law. However, PASPA did not make sports betting itself a crime, and was enforceable only by civil actions, which could be brought by the Attorney General, as well as sports leagues. It also contained a “grandfather” provision, permitting sports betting to continue in four states where it already existed, and it gave New Jersey—which was, at the time, considering proposals to legalize sports books—one year in which to legalize sports betting and benefit from the grandfather clause. But New Jersey dropped the ball on the one-year window. Nevertheless, two decades later the State decided to swing for the fences by enacting a law legalizing sports gambling, notwithstanding PASPA’s prohibition. After the major professional sports leagues and the NCAA successfully enjoined that legislative authorization, New Jersey called an audible and crafted a new law that did not technically authorize sports gambling, but instead repealed the existing state law prohibiting it. The NCAA and leagues sued again and the lower courts called New Jersey’s bluff, concluding that the repeal law violated PASPA in the same way a direct authorization of sports betting would. The State threw down its red challenge flag and the Supreme Court accepted the case for further review.

At the Supreme Court, one of our oldest and most storied legal rivalries was reignited: state vs. federal law. In the leagues’ corner, the well settled doctrine of federal preemption, long a staple of the playbook for arguing that federal law supersedes conflicting state law. On the opposite side, New Jersey placed its chips on the lesser known “anticommandeering” doctrine, which was once used to prevent the Feds from requiring States to enforce federal gun-control legislation and has been more recently touted by “sanctuary city” advocates who argue that States and municipalities are under no obligation to enforce federal immigration laws. Against the odds, the Supreme Court sided rather definitively with New Jersey, with seven justices agreeing that PASPA violated the anticommandeering doctrine, and no justice expressly disagreeing. (The dissenters were more miffed about severability than the Tenth Amendment.)

Writing for a majority including the Chief, Kennedy, Thomas, Kagan, Gorsuch (and mostly Breyer), Justice Alito acknowledged that “the anticommandeering doctrine may sound arcane,” but insisted that “it is simply the expression of a fundamental structural decision incorporated into the Constitution, i.e., the decision to withhold from Congress the power to issue orders directly to the States.” PASPA violates this principle, he concluded, because it “unequivocally dictates what a state legislature may and may not do.” Though the leagues and the United States argued that prohibiting States from enacting legislation is different from compelling them to enact legislation, Justice Alito rejected this argument with a Dikembe Mutumbo finger-wag, noting that the “distinction is empty.” Nor could the preemption doctrine save PASPA. Every form of preemption (express, conflict, field) is based on a federal law that regulates the conduct of private actors, not the States. The PASPA provision prohibiting state authorization of sports betting, on the contrary, “is not a preemption provision because there is no way in which [it] can be understood as a regulation of private actors.” It is, instead, a “direct command to the States,” which “is exactly what the anticommandeering rule does not allow.”

That left the second provision of PASPA, which prohibited “a person” from sponsoring a sports-betting operation, even if authorized by state law. This certainly would qualify as a preemption provision, in that it regulated private conduct, but Alito (now with a slimmer majority) concluded that the rest of the statute could not be severed from the unconstitutional authorization bar, because the provisions were meant to work hand-in-glove. “If Congress had known that the latter provisions would fall, we do not think it would have wanted the former to stand alone.”

It was the severability issue that sparked a volley of separate opinions. Justice Thomas first weighed in with a concurring opinion questioning the constitutional basis for the Court’s severability doctrine, which he considered to be in sharp tension with traditional limits on judicial authority. Because no party had raised the issue, Justice Thomas joined the majority opinion in full, but he called for a review of the severability doctrine was called for in some future case.

The dissenters also focused on severability—so much so that it’s not really clear they dissented from the majority’s anticommandeering holding. Though styled a “dissent,” Justice Ginsburg’s opinion (joined by Sotomayor) did not address the anticommandeering argument at all. Instead, she maintained that, even assuming that PASPA’s anti-authorization prohibition was unconstitutional, there was no reason “to deploy a wrecking ball destroying” the entire statutory scheme. Rather than strike down the entire statute, the dissenters would have severed the offending provision and permitted the rest of the law to effectuate Congress’s intent of “stopping sports-gambling regimes while making it clear that the stoppage is attributable to federal, not state, action.” Justice Breyer joined the opinion “in part,” but wrote separately to clarify that he concurred with the majority’s anticommandeering holding. Although he joined the majority opinion striking down the authorization bar, Breyer (like Ginsburg and Sotomayor) would have allowed the ban on private sponsoring of sports-betting schemes to remain in effect. As he explained, it is perfectly reasonable to assume that Congress intended that provision as an alternative means of achieving its goal of prohibiting the expansion of sports gambling. Because there was no constitutional impediment to its doing so through the private bar, Breyer would have preferred to hand New Jersey a “pyrrhic” victory.

Instead, the Court handed New Jersey—and other states that are betting on betting to shore up their coffers—a big win. That said, with the exception of Justice Thomas, every justice agreed that Congress could achieve its earlier goal of stopping sports betting through a direct ban, under the Commerce Clause. Given the stakes for the losers in Murphy—the NCAA, major sports leagues, and Nevada, among others—odds are good that there will be some serious lobbying for a direct federal ban. In legislation, as in sports, it ain’t over til it’s over.

 

© 1998-2018 Wiggin and Dana LLP
This post was written by Kim E. Rinehart, Tadhg A.J. Dooley and David Roth of Wiggin and Dana LLP.

Federal Jurors Get 25 Percent Pay Hike

For the first time in 28 years, jurors in federal court will receive a pay hike of 25 percent. That means that for each day that a person sits as a juror in federal court, he or she will receive a check for $50, up from $40 that has been in effect since 1990.

President Trump signed the bill into law that takes effect May 7. The raise was included in a bill that provided the federal judiciary with $7.1 billion in discretionary spending, an increase of $184 million from the previous fiscal year, according to a news release from the U.S. Courts that provides support to federal courts across the country.

Jurors who serve in Cook County Circuit Court receive $17.50 per day for their service.

Federal court jurors in the Chicago area serve at the Dirksen U.S. Courthouse in Chicago’s Loop. They also receive reimbursement for travel (54.5 cents a mile) as well as a paid lunch at the Fresh Seasons Cafe, on the courthouse’s second floor.

“This is an excellent result and enables the Judiciary to fulfill its mission,” James C. Duff, Director of the U.S. Courts Administrative Office in Washington, D.C., said in a statement. “We are especially pleased that Congress recognized the critical public service provided by the citizens who serve on juries as well as the attorneys who represent defendants who can’t afford a lawyer.”

 

© 2018 by Clifford Law Offices PC.
This post was written by Robert A. Clifford of Clifford Law Offices PC.

D.C. Circuit Amends Opinion on EPA’s Definition of Solid Waste Rule

On March 6, 2018, the United States Court of Appeals for the District of Columbia Circuit (the D.C. Circuit) issued a ruling amending its July 7, 2017 opinion on challenges to the U.S. Environmental Protection Agency’s (EPA or Agency) 2015 rule on the Definition of Solid Waste (DSW) (the 2015 Rule). See American Petroleum Institute v. EPA, No. 09-1038 (D.C. Cir. 2018) (API Opinion). The 2015 Rule revised a DSW Rule promulgated by EPA in 2008 (the 2008 Rule). See KEAG Bulletin No. 2014-98, dated December 17, 2014. Both industry and environmental groups challenged the 2015 Rule. SeeKEAG Bulletin No. 2017-12, dated July 13, 2017. In the D.C. Circuit’s 2017 opinion, the court upheld some aspects of the 2015 Rule and vacated others. Id.

Following the issuance of the court’s 2017 opinion, petitions for rehearing were filed by the American Petroleum Institute, EPA, environmentalists, and other industry groups. API Opinion at 2. After reviewing the petitions, the court amended its decision in three ways: (1) it severed and affirmed EPA’s removal of the spent catalyst bar from the vacated portions of the Verified Recycler Exclusion (VRE), (2) it vacated “Legitimacy” Factor 4 in its entirety, and (3) it clarified the regulatory regime that replaces the now-vacated Factor 4. Id.

With respect to spent petroleum catalysts, the court granted industry’s request to exclude these catalysts from strict hazardous waste regulation for third‑party recyclers. In its original opinion, the court vacated the VRE from the 2015 Rule, and reinstated the Transfer-Based Exclusion (TBE) from the 2008 Rule. See KEAG Bulletin No. 2017-12, dated July 13, 2017. Spent catalysts were excluded from RCRA under the VRE, but not in the TBE. Id. In the court’s reconsideration of whether spent catalysts should be granted an exclusion, the court cited EPA’s various statements on catalysts and found that EPA’s revised containment standard, which the court upheld despite eliminating other aspects of the VRE, is sufficient for spent catalysts to be included in the TBE. Id. at 6-8.

Legitimacy Factor 4 is one of the four criteria the EPA applies to determine if recycling of hazardous secondary materials is legitimate and not sham recycling. Factor 4 requires that a recycled product be comparable to or lower in contaminant levels than a legitimate product or intermediate, and if the former contains higher levels of contaminants, it requires additional procedures and tests (a.k.a., the “toxics along for the ride” test). Id. at 8; see also KEAG Bulletin No. 2017-12, dated July 13, 2017. In its original opinion, the court found those additional procedures to be unauthorized under RCRA and vacated Factor 4 “insofar as it applies to all hazardous secondary materials via § 261.2(g),” which is the section of the RCRA rules that defines sham recycling. See KEAG Bulletin No. 2017-12, dated July 13, 2017. Nevertheless, Factor 4 still applied to those specific exclusions in which it was specifically included. Id. In its amended opinion, the court vacated Legitimacy Factor 4 under all circumstances, even those written into specific exclusions. API Opinion at 9.

Finally, the court clarified the effect of its vacating Factor 4. Id. at 9-10. The net result is that (1) the 2015 version of Factor 4 is vacated (in its entirety); (2) the 2015 change making the legitimacy factors applicable to all exclusions remains; (3) Factor 3 remains mandatory per the 2015 changes; and (4) the 2008 version of Factor 4, which requires only that the factor be “considered,” replaces the now-vacated 2015 version. Id. at 10.

 

©2018 Katten Muchin Rosenman LLP
This post was written by Danny G. Worrell of Katten Muchin Rosenman LLP.

Supreme Court Limits Scope of Dodd-Frank Whistleblower Protections

On February 21, the US Supreme Court decided Digital Realty Trust, Inc. v. Somers (583 U.S. ____ (2018)), which resolved a circuit split related to whether the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 (Dodd-Frank) extend to individuals who have not reported a securities law violation to the Securities and Exchange Commission and, therefore, falls outside of Dodd-Frank’s definition of a “whistleblower.”

Paul Somers alleged that Digital Realty Trust, Inc. (Digital Realty) terminated his employment shortly after reporting suspected securities-law violations to the company’s senior management. Somers filed a case in the US District Court for the Northern District of California (District Court) alleging that his termination amounted to whistleblower retaliation under Dodd-Frank. Digital Realty moved to dismiss the claim on the grounds that Somers did not qualify as a “whistleblower” for purposes of Dodd-Frank because (1) the statute defines a “whistleblower” as someone “who provides . . . information relating to a violation of the securities laws to the [SEC];” and (2) Somers failed to report the allegations to the SEC prior to his termination. The District Court denied Digital Realty’s motion and the Ninth Circuit affirmed on the grounds that Dodd-Frank’s whistleblower protections should be read to protect employees regardless of whether they provide information to the SEC.

Reversing the District Court and the Ninth Circuit, Justice Ruth Bader Ginsburg, writing for the Court, explained that Dodd-Frank’s whistleblower retaliation provisions do not extend to an individual who has not reported alleged securities law violations to the SEC. Citing Dodd-Frank’s definition of a “whistleblower,” the Court determined that the statute explicitly required an individual to report such violations to the SEC in order to receive whistleblower protections. The Court found this interpretation of the whistleblower definition to be corroborated by Dodd-Frank’s intended purpose of motivating individuals to report securities law violations directly to the SEC.

The text of the decision is available here.

©2018 Katten Muchin Rosenman LLP
Read more Litigation news on the National Law Review Litigation page.

Whistleblower Fired for Disclosing Improper Asbestos Removal Wins at Trial

A jury awarded approximately $174,00 to a whistleblower who was fired for reporting improper asbestos removal practices at asbestos abatement and demolition company Champagne Demolition, LLC.  OSHA brought suit on his behalf under Section 11(c) of the Occupational Safety and Health Act, and the jury awarded $103,000 in back wages, $20,000 in compensatory, and $50,000 in punitive damages.  The jury instructions are available here.

According to the complaint, the company fired the whistleblower one day after he raised concerns about improper asbestos removal at a high school in Alexandria Bay, NY, and entered the worksite when it was closed to take pictures of the asbestos. The whistleblower also removed a bag containing the improperly removed asbestos.  A few weeks after Champagne Demolition terminated the whistleblowers’ employment, they sued him for defamation.  Champagne Demolition subsequently stipulated to the dismissal of the defamation claim.  OSHA alleged that both the termination of the whistleblower’s employment and the filing of a defamation action were retaliatory acts prohibited by Section 11(c) of the Occupational Safety and Health Act.

Although for procedural reasons the court did not rule on whether the filing of the defamation action against the whistleblower was retaliatory, the Secretary’s motion for summary judgment   stakes out an important position on retaliatory lawsuits against whistleblowers:

Lawsuits filed with the intent to punish or dissuade employees from exercising their statutory rights are a well- established form of adverse action. See BE & K Constr. Co. v. NLRB, 536 U.S. 516, 531 (2002) (Finding that a lawsuit that was both objectively baseless and subjectively motivated by an unlawful purpose could violate the National Labor Relations Act’s prohibition on retaliation); Torres v. Gristede’s Operating Corp., 628 F. Supp. 2d 447, 472 (S.D.N.Y. 2008) (“Courts have held that baseless claims or lawsuits designed to deter claimants from seeking legal redress constitute impermissibly adverse retaliatory actions.”); Spencer v. Int’l Shoppes, Inc., 902 F. Supp. 2d 287, 299 (E.D.N.Y. 2012) (Under Title VII, the filing of a lawsuit with a retaliatory motive constitutes adverse action).

OSHA should be commended for taking the case to trial and obtaining punitive damages.  As approximately 4,379 workers in the U.S. are killed annually due to unsafe workplaces, it is critical for OSHA to vigorously enforce Section 11(c) of the Occupational Safety and Health Act and counter retaliatory lawsuits against whistleblowers, an especially pernicious form of retaliation.

 

© 2017 Zuckerman Law
Written by Jason Zuckerman of Zuckerman Law.
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Yoga and Massage Therapist Fired for Being “Too Cute” Sees Gender Discrimination Revived on Grounds of Unjustified Spousal Jealousy

A New York appeals court recently ruled in Edwards v. Nicolai (153 A.D.3d 440 (N.Y. App. Div. 1st Dep’t 2017)) that an employment termination motivated by the sexual jealousy of an employer’s spouse may support a claim for gender discrimination under the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”).

Defendants Charles Nicolai and his wife Stephanie Adams – a former Playboy model – were co-owners of a chiropractic center located in New York City. In 2011, Nicolai hired plaintiff Dilek Edwards, a female yoga and massage therapist, and was her direct supervisor. Edwards’s complaint alleged that during the course of her employment, her relationship with Nicolai was “purely professional” and that Nicolai “regularly praised [her] work performance.”

However, in June 2013, Nicolai purportedly told Edwards “that his wife might become jealous of [her], because [Edwards] was too cute.” Several months later, Adams sent plaintiff a text message saying, “You are NOT welcome any longer at Wall Street Chiropractic, DO NOT ever step foot in there again, and stay the [expletive] away from my husband and family!!!!!!! And remember I warned you.” A few hours later, Edwards allegedly received an email from Nicolai stating, “You are fired and no longer welcome in our office. If you call or try to come back, we will call the police.” One day later, Adams filed an allegedly false complaint with the New York City Police Department claiming that Edwards placed “threatening” phone calls to Adams which caused Adams to change the locks at her home and business. Edwards’s complaint alleges that she has “no idea what sparked . . . Adams’ [sic] suspicions.”

Edwards’s NYSHRL and NYCHRL gender discrimination claims were dismissed at the trial court level. However, that decision was overturned on appeal, with the court holding that “adverse employment actions motivated by sexual attraction are gender-based, and therefore, constitute unlawful gender discrimination.” The court explained that while Edwards does not allege that she was subjected to sexual harassment, it can be inferred that Nicolai was motivated to terminate Edwards “by his desire to appease his wife’s unjustified jealousy.” Further, it can also be inferred that Adams was motivated to terminate Edwards based on Adams’s own jealousy. Accordingly, the court found it plausible that each defendant’s motivation to terminate Adams was sexual in nature and therefore unlawful.

In reaching its decision the court observed that, “while it is not necessarily unlawful for an employer to terminate an at-will employee at the urging of the employer’s spouse,” a plaintiff may find relief for such a discharge if the spouse requested the termination for unlawful, gender-related reasons. Here, assuming Edwards’s allegations are true, her termination was unlawful not because Adams asked Nicolai to fire Edwards, but because she did so for no other reason than her belief that Nicolai was sexually attracted to Edwards.

Laura Doyle contributed to this post.

This post was written by Jonathan Sokolowski of Sheppard Mullin Richter & Hampton LLP., Copyright © 2017
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