The National Law Forum

A federal judge has ruled that the First Amendment prohibits President Donald J. Trump from blocking Twitter users because of political disagreements.

Last summer, seven individual plaintiffs—Twitter users who had been blocked from the President’s account, @realDonaldTrump, after tweeting criticism about the President or his policies—together with the Knight First Amendment Institute, sued Trump and Daniel Scavino, the White House’s Director of Social Media, for blocking them from reading, replying, or otherwise responding to the President’s tweets. The individual plaintiffs argued that the President had unconstitutionally interfered with their ability to speak on matters of public concern, in violation of the First Amendment.

In her decision this week, District Judge Naomi Reice Buchwald ruled that the President’s tweets are government speech, noting that President Trump exercises substantial control over the account and uses it to announce major government policy decisions. The court continued that, because the “interactive space” in his Twitter account permits unblocked users to read, reply, and respond to the President’s tweets, it is a designated public forum. Finally, the court noted that the President did not dispute that he blocked the individual plaintiffs based on their criticism of him.

Following traditional constitutional analysis, which narrowly restricts President Trump from discriminating against speech in a public forum, the court determined that the “continued exclusion of the individual plaintiffs based on viewpoint is, therefore, impermissible under the First Amendment.” Although the court recognized “the President’s personal First Amendment rights,” it warned that “he cannot exercise those rights in a way that infringes the corresponding First Amendment rights of those who have criticized him.”

Judge Buchwald issued a declaratory judgment in the plaintiffs’ favor, but she declined to enter an injunction against the President or Mr. Scavino, explaining that while the court has that authority, “because no government official is above the law and because all government officials are presumed to follow the law once the judiciary has said what the law is, we must assume that the President and Scavino will remedy the blocking we have held to be unconstitutional.”

The case is Knight First Amendment Institute at Columbia University, et al., v. Trump, et al., Southern District of New York, Case No. 17-cv-5205(NRB).

Yesterday the U.S. Senate confirmed Dana Baiocco (pronounced “Bee Awe Co”) as a Commissioner for the U.S. Consumer Product Safety Commission with a term that runs through October of 2024. The confirmation took over eight months from Baiocco’s initial nomination last September and came over sixteen months into the Trump administration. Baiocco’s confirmation signals the shift to an eventual Republican majority at the CPSC for the first time since 2006.

Baiocco, a Republican, is replacing Democratic Commissioner Marti Robinson whose term expired in October of 2017. Robinson has remained on the Commission in a hold-over year but will roll off once Baiocco is sworn in as a Commissioner.

Once Baiocco is sworn in, the CPSC will be balanced equally with two Republicans and two Democrats. The Republicans will be Baiocco and Acting Chairman Ann Marie Buerkle. The two Democrats will be Commissioner, and former Chairman, Elliot Kaye and Commissioner Bob Adler.

The Senate is also still considering President Trump’s nomination of Acting Chairman Buerkle for the permanent Chairman position and a second term as Commissioner. Because Buerkle’s nomination has been pending since last July and she has been in the minority as Acting Chairman since last February, there has been growing unrest among and mounting pressure from major industry groups to swiftly push her nomination through the Senate.

The fifth Commissioner position, which became vacant after the departure of former Commissioner Joe Mohorovic last October, still remains open. President Trump is expected to nominate a new Republican Commissioner to fill this position soon. Once the fifth Commissioner is confirmed, the agency will have a Republican majority for the first time during Buerkle’s tenure as Chairman.

The CPSC issued a press release about Baiocco’s confirmation in which Acting Chairman Buerkle said “Ms. Baiocco brings to the Commission strategic experience in product safety, extensive knowledge of public policy with consumer products and a deep understanding of how companies can be proactive in improving the safety of their products.”

Baiocco also included a statement in the CPSC’s press release, stating:

I am honored to be joining an agency with an enduring and proud legacy of protecting consumers. At a time of ever more complex and technically advanced products coming to market, I look forward to working with the leadership of Acting Chairman Buerkle and the Commission to meet emerging challenges in product safety as well as ensuring that CPSC’s core mission of protecting the public is done in the most responsive manner.”

Anticipating Baiocco’s confirmation, Commissioner Robinson sent an agency wide email on Monday afternoon saying thank you to CPSC staff. Notably, the email did not say goodbye and, in her final blog post, she closed by saying: “Although my term as CPSC Commissioner is now coming to a close, I am not done advocating for safe consumer products. I look forward to continuing this conversation about safety and working with all stakeholders in the future.”

Lydia Turnier contributed to the post.

In a recent decision, the Massachusetts Supreme Judicial Court ruled that governmental entities have great flexibility to terminate agreements with contractors where the agreement includes a “termination for convenience” provision. Many family-owned enterprises do business with the Commonwealth of Massachusetts or other governmental entities, and should be aware that the parties to those arrangements will have greater freedom to terminate these arrangements as a result of this decision.

In A.L. Prime Energy Consultant, Inc. v. Mass. Bay Transportation Authority(SJC 12370) (May 2, 2018), the plaintiff sued the MBTA over the MBTA’s termination of a contract to supply fuel oil. The contract contained a provision entitling the MBTA to terminate for convenience, and the MBTA notified A.L. Prime that it was terminating in order to obtain lower prices on the fuel oil from another contractor.  A.L. Prime argued that the “Federal” standard in such cases should be applied. The Federal standard provides that a governmental agency that terminates an agreement for convenience can be liable for damages where the termination constitutes bad faith or an abuse of discretion, and terminating simply to obtain a lower price was often determined as acting in bad faith.

The SJC rejected the plaintiff’s argument, and ruled in favor of the MBTA. The SJC held that the plain language of the agreement was controlling, and that the termination for convenience provision would stand on its own.  The Court also ruled that the termination did not constitute a breach of the implied covenant of good faith and fair dealing, based on the plain and unambiguous language in the agreement.

This ruling is significant for any entities that do business in Massachusetts with a governmental agency.

The decision is not specific to the product supplied (i.e., fuel oil), so contracts covering everything from building supplies to software development are now at risk.  Parties doing business with the government should focus on negotiating contractual provisions that eliminate the right to terminate for convenience, and in the alternative should aim to include language that provides for recouping breakage costs, lost profits, and non-cancellable expenses when the termination for convenience right is exercised.

In three separate cases involving airline employers, the U.S. Ninth Circuit Court of Appeals recently certified five questions to the California Supreme Court for guidance on whether California’s labor code provisions apply to non-residents who may be temporarily working in the state for an out-of-state employer because of the mobile nature of a company’s operations.  See Vidrio et al. v. United Airlines Inc. et al., (Case No. 17-55471); Ward v. United Airlines Inc., (Case No. 16-16415); and Oman v. Delta Air Lines Inc., (Case No. 17-15124).  The rulings by the California Supreme Court will be critical to airlines because their workforces inherently cross state lines, potentially requiring compliance with a patchwork of state laws and regulations.   The importance of these decisions reaches beyond the airline industry to any out-of-state employer that has employees who work, at least in part, in California and could arguably be subject to California’s employment laws.

The Vidario and Ward cases

In the consolidated Vidrio and Ward cases, unionized pilots and flight attendants working for United Airlines (“United”) sued their employer, alleging various wage and hour violations under California law even though they did not principally work in California.  Indeed, the undisputed statistics showed that the plaintiff classes worked only 12-17% of their working time in California or California airspace.

The Plaintiffs further alleged that United violated California Labor Code § 226 by issuing noncompliant wage statements.  Plaintiffs also brought a claim under the Private Attorneys General Act and sought penalties and other remedies under the California Labor Code.  The District Court certified the cases as class actions, then granted summary judgment in United’s favor after finding that the California Labor Code could not apply to employees who do not principally work in California and whose employer is not headquartered nor operating primarily in California.  Plaintiffs appealed to the Ninth Circuit, which heard oral argument in March 2018.

After considering the issues raised and the lack of controlling California precedent on the extraterritorial application of California law under these circumstances, the Ninth Circuit certified two questions to the California Supreme Court:

(1) Wage Order 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement (CBA) in accordance with the Railway Labor Act (RLA). See 8 C.C.R. §11090(1)(E). Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code §226 by an employee who is covered by a CBA?

(2) Does California Labor Code §226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, and pays California income tax on her wages, but who does not work principally in California or any other state?

The Oman case

In the Oman case, the Plaintiffs sued Delta Airlines (“Delta”) in federal court, alleging that Delta’s flight pay calculation for its non-union flight attendants violated California minimum wage law by failing to pay the minimum wage “per hour for all hours worked.” They argued that the flight pay formula impermissibly averaged a flight attendant’s wages for paid, productive time and unpaid, unproductive time. They also contended that Delta failed to pay their wages on time, in violation of California Labor Code § 204, and failed to issue them wage statements that complied with California Labor Code § 226.

The Plaintiffs sought to apply California law to their claims based solely on the location of their work – work that lasted only for hours and minutes, not days, in California. They argued that California Labor Code §§ 204 and 226 apply to any pay period in which they performed work in California and the California minimum wage law applied to any work performed in California, however short the duration.  The District Court granted summary judgment to Delta and Plaintiffs appealed.  Following oral argument, the Ninth Circuit determined that there was no controlling California precedent that answered the legal questions in the case.  Accordingly, the Ninth Circuit asked the California Supreme Court for guidance on three questions:

(1) Do California Labor Code §§ 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? See Cal. Labor Code §§ 1182.12, 1194; C.C.R, § 11090(4).

(3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? See Gonzalez v. Downtown LA Motors, LP, 155 Cal Rptr. 3d 18, 20 (Ct. App. 2013); Armenta v. Osmose, Inc., 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005).

Employer Takeaways

While the California Supreme Court is considering these questions, out-of-state employers with employees who work at least some of the time in California should carefully consider whether to comply with California’s labor and employment requirements.

It was a good start to the week for employers. That is because on Monday the U.S. Supreme Court issued its long-awaited decision in Lewis v. Epic Systems, and two other related cases, and held that class action waivers in employment agreements with arbitration clauses must be enforced as written. In reaching this conclusion the Court flatly rejected the National Labor Relations Board’s position that class action waivers are invalid because they violate an employee’s right to engage in protected concerted activity under Section 7 of the National Labor Relations Act (NLRA).

After six years of uncertainty, those employers with appropriate class action waivers in their employment agreements can breathe a collective sigh of relief. For all other employers, it may be time to reconsider whether an employment agreement that includes a class action waiver can reduce your liability exposure.

Background

The question of whether a class action waiver in an employment agreement is enforceable was addressed by the NLRB in its decision in D.R. Horton. There, the NLRB invalidated such clauses in employment agreements, holding that they violated employee rights to engage in protected concerted activities under Section 7 of the NLRA. On appeal, however, the U.S. Court of Appeals for the Fifth Circuit overruled the decision on two grounds. First, the Fifth Circuit found that the right to proceed collectively is a procedural, not substantive, right that can be waived. Second, the court found that the NLRB’s interpretation invalidating such waivers in employment agreements conflicted with the Federal Arbitration Act (FAA), which favors the enforcement of employment agreements. The Fifth Circuit reaffirmed its position in Murphy Oil USA, Inc.

In 2016, however, the Seventh Circuit and Ninth Circuits ruled the opposite. In Lewis v. Epic Systems Corp. and Morris et al. v. Ernst & Young LLP et al., the courts held that the right to proceed collectively is a substantive right that an employee cannot be forced to waive.

The Supreme Court’s Decision

The circuit split led to the U.S. Supreme Court granting certiorari on Epic Systems, Ernst & Young, and Murphy Oil, and consolidating the cases. The majority decision, written by Justice Neil Gorsuch, held that:

• Courts are required to enforce terms of employment agreements under the FAA, including terms requiring individualized arbitration.

• The FAA’s savings clause, which permits courts to invalidate employment agreements “upon such grounds as exist at law or in equity for the revocation of any contract” only applies to contract defenses, such as “fraud, duress or unconscionability.”

• There is no evidence that Congress intended for the NLRA to “override” the FAA.

• Class actions are not concerted activities protected by Section 7 of the NLRA. Instead, Section 7 focuses on the right to “organize and bargain collectively” and it does not address (1) arbitration, (2) the right to bring class or collective actions; or (3) overriding the FAA.

• The NLRB is not entitled to Chevron deference when it interprets the NLRA in a way that limits the purpose of other statutes such as the FAA.

This decision provides a powerful tool for employers that already have class action waivers in their employment agreements. Because the Supreme Court has now weighed in, the NLRB can no longer attempt to interfere in pending matters by ruling that the agreements are invalid. For those employers without an employment agreement that includes a class action waiver, it may be time to consider whether such agreements are appropriate for your business.

In State, County, or Municipal projects, payment bonds are typically required of the general contractor, as the commercial Construction Lien Law is inapplicable to these projects. Copies of the payment bond are always provided to the relevant government agency, as well as to all direct subcontractors or suppliers with whom the general contractor has directly contracted.

On the other hand, copies of the payment bond are not typically provided to other subcontractors or material suppliers with whom the general contractor does not have a direct contractual relationship. In general, a subcontractor who has a direct contract with a subcontractor to the general contractor, or a material supplier who likewise has a direct contract with a subcontractor to the general contractor has a right to bring a claim against the bond in the event of non-payment. Before they are able to bring such a claim against the bond, however, specific notifications are required relevant statute.

N.J.S.A. 2A:44-145 provides a detailed procedure that a potential beneficiary of the bond must follow in order to be entitled to bring a claim against the bond should there be payment issues in the future. If this procedure is not followed, the right to file a bond claim could be waived entirely by the subcontractor or material supplier. The statute specifically states that any person who may be a beneficiary of the payment bond, as defined in this article and who does not have a direct contract with the contractor furnishing the bond shall, prior to commencing any work, provide written notice to the contractor by certified mail or otherwise, provided that he shall have proof of delivery of same, that said person is a beneficiary of the bond. The statute further explains that if a beneficiary fails to provide the required written notice, the beneficiary shall only have the rights and benefits available hereunder from the date notice is actually provided. On the other hand, if notice is never provided no rights to claim to the bond will ever accrue.

As to delineated by the statute, this is a very simple notification requirement by any subcontractor or supplier who does not have a direct contractual relationship with the party who posted the bond. This is a simple procedural step that should be taken by any subcontractor or supplier on a state, county or municipal project. It is suggested that the notification be done via certified mail, or overnight mail with signature confirmation. Also, the timing of this notification should be done prior to performing any work or providing any materials to the project. Under such instances, this would entitle the subcontractor or supplier to bring a claim against the bond. Should this party fail to provide such notification, they may later provide it, however, they would be limited to bond claims only from the date of notification thereafter.

As such, it is important that a subcontractor or material supplier follow the relevant state law as to notification to the contractor who provided the payment bond. If this contractor or supplier has any questions, they should consult with an attorney who can assist them in this regard.