U.S. Supreme Court
Case No. 17-340
January 15, 2019

In an 8-0 decision by Justice Gorsuch, the Court affirmed the decision of the First Circuit and concluded that the exception to coverage of the Federal Arbitration Act (FAA) for “workers engaged in foreign or interstate commerce” applied to independent contractors as well as employees. The Court also concluded that the responsibility for determining whether an agreement fell within the scope of FAA coverage belonged to the court. 

Petitioner/Defendant New Prime operated an interstate trucking company. It engaged its drivers, including respondent/plaintiff Oliveria, as independent contractors under a written agreement which included an arbitration provision. Oliveira eventually brought a class/collective action under the FLSA and various state laws contending that he was misclassified and that the employer violated wage and hours laws. In response, the employer moved to compel arbitration. The district court denied the motion and the First Circuit affirmed. 

The case raised two issues. First, were the agreements excluded from coverage under the FAA by virtue of the language in Section 1 of the act providing that it did not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce”? Second, who was to decide this issue?

The Supreme Court addressed the procedural issue first. It found both the text and the sequencing of the act significant. The FAA only requires a court to stay proceedings and to compel arbitration of agreements meeting both the requirements of Sections 1 and 2 (the latter of which requires a written agreement.) Given this limitation of authority, the determination of whether the exclusion applied was a threshold issue that should be decided by courts prior to ordering arbitration. The Court was not persuaded that the delegation clause of the arbitration agreement, which purported to reserve this duty to the arbitrator, resolved the issue, distinguishing the decision in Rent-A-Center West, Inc. v. Jackson because that case did not involve a statutory exclusion from the FAA. 

As to the substantive issue, the Court concluded that the language should be interpreted according to its meaning at the time of enactment, and that review of relevant authorities revealed that the term “contracts of employment” did not in 1925 refer only to agreements with “employees” within the modern meaning. The term “contracts of employment” was not generally defined in 1925, but the word “employment” was generally understood broadly as a synonym for “work.” The Court’s own cases of that era applied the term “contracts of employment” to independent contractor agreements, as did many other cases and statutes. While New Prime cited cases of the era applying the term to contracts with individuals who would today be considered employees, those cases did not preclude the possibility that it also applied to contracts with non-“employees.” Thus, based on the historical meaning of the language of the exclusion, the Court concluded that the exclusion applied to independent contractors as well as employees. Finally, the Court rejected New Prime’s suggestion that it should order arbitration under its inherent authority outside the FAA, because that contention was not raised below.

Justice Ginsburg wrote a short concurrence agreeing with the Court’s use of historical reference in this case, but also opining that words in statutory language can “enlarge or contract their scope” as changing circumstances warrant. Justice Kavanaugh did not participate in the case.  

Eleventh Circuit Court of Appeals 
Weekly Update
January 26, 2019
Published Cases

There were no published labor or employment cases last week.
Unpublished Cases

No. 18-11392
January 17, 2019

The Eleventh Circuit affirmed summary judgment in favor of the employer on Borden’s claims of racial discrimination and retaliation brought under Title VII and 42 U.S.C. § 1981. 

In October 2010 Borden, an African-American female, filed a charge with the EEOC alleging her employer discriminated against her by choosing to promote a less-qualified white woman over her. She was terminated four years later for failing to perform her receptionist duties, and other issues. Borden filed a pro se complaint alleging race discrimination and retaliation for her 2010 EEOC charge. The Circuit Court affirmed summary judgment because Borden failed to challenge each of the district court’s multiple reasons for concluding her claims failed as a matter of law.

Notably, the district court concluded that Borden did not establish a prima facie case of discrimination because she was replaced by a member of her own race and she produced no evidence to show that employees of a different race that were accused of comparable misconduct were not punished. The Circuit Court opined that she abandoned her discrimination claim because she did not point to reversible error and instead simply disagreed with the reason for termination. The Circuit Court also concluded that Borden abandoned her retaliation claim on appeal because her brief, construed liberally, made only passing references to her allegations of retaliation, asserting that her supervisor “held a grudge” from the EEOC charge. The Court opined that even if the claim was not abandoned, the district court did not err by concluding that the 2010 charge occurred too long before the alleged retaliation to establish causation.
Case No. 18-11670
January 17, 2019

The Eleventh Circuit affirmed the district court’s orders denying Gonzalez’s pro se motion for relief from judgment under Rule 60(b)(3)&(6) and taxing costs in favor of the city. The city had discharged Gonzalez during his probationary period as police officer. He filed federal and state claims challenging his termination. After removal from state court, the district court dismissed the federal claims and remanded the remainder of the case. The Eleventh Circuit previously affirmed the dismissal of the federal claims. 

While the appeal was pending, Gonzalez filed his motion contending that the city had obtain the dismissal by fraud, but his sole factual support was speculation that the city had withheld documents from him in discovery based on his interpretation of a single email. The Eleventh Circuit concluded that the district court did not abuse its discretion in denying the motion as Gonzalez’s speculation was well short of the clear and convincing proof of fraud required . It also concluded that the record did not reflect exceptional circumstances as required under Rule 60(b)(6).

The Court also found no error in the taxation of costs. Of note was the magistrate judge’s interpreting the city’s argument in its reply brief as a nunc pro tunc motion to extend the time for service under Rule 6(b) and granting the same, where the city had attempted timely email service of the motion to tax which was not completed due to computer error, and had re-served Gonzalez when it became aware of the error. The Court concluded this act was within the trial court’s discretion. 
Case No. 18-10673
January 15, 2019

The Eleventh Circuit affirmed the district court’s judgment in favor of plaintiff Jackson on her FLSA claim for unpaid minimum wage and the denial of the employer’s motion for judgment as a matter of law. 

Jackson worked as a server at a nightclub that operated on a cash basis, issued no payroll or tax documents to employees, and kept no time records. She was promised $25 per night in wages and told she could keep all her tips. However, she testified that she was never told anything about the tip credit or that her tips would be considered part of her wages. The employer provided no written notices of FLSA rights or the tip credit. Jackson also testified that she was not always paid the agreed $25 in cash wages per night. After a jury found in her favor and awarded $6,308 in unpaid back pay, the district court also awarded liquidated damages and attorneys’ fees of $116,129.56 and denied the employer’s post-trial motion. 

The Court concluded that the record was sufficient to support the jury’s verdict. Given the statutory requirement that an employer advise employees of the tip credit in order to claim the credit, Jackson’s testimony supported a finding in her favor as to non-applicability of the tip credit, and her testimony that on some nights she was not paid any wages by the employer also supported her claim as to the required employer-paid minimum even if the tip credit were applicable. As to liquidated damages, the employer erroneously argued lack of willfulness, but the Court concluded that good faith could hardly have been established given the employer’s complete lack of FLSA-required recordkeeping and its failure to track tips. As to the fee award, the Court concluded that the employer’s general arguments that the fees were excessive failed to identify specific hours or tasks that were not reasonably performed as necessary for the lodestar calculation. The Court also concluded that while the fee was large, the employer’s failure to maintain records and its litigation tactics increased the work necessary on the case. Thus, it held the district court did not abuse its discretion in not reducing the full lodestar to account for results obtained. 
Case No. 18-11612
January 16, 2019

The Eleventh Circuit affirmed the district court’s grant of summary judgment in favor of the employer on Payne’s claims of race discrimination under Title VII and § 1983 and disability discrimination under the ADA, and further concluded the district court did not abuse its discretion in denying Payne’s discovery motions seeking additional documents from the employer.

Payne, an African-American, suffered from Lupus. As a result of his illness, he received a kidney transplant in 2012. Goodyear hired Payne in 2015, on a probationary basis, and Payne was medically cleared to work with no restrictions. Goodyear terminated Payne within the probationary period after he received two evaluations which contained almost all “unacceptable” ratings. 

The Eleventh Circuit affirmed summary judgment on the ground that Payne did not establish a prima facie case of race or disability discrimination as he failed to identify a similarly-situated comparator, and he proffered no evidence establishing race discrimination was related to management’s decision to fire him or that management knew of his disability. The Eleventh Circuit further found Payne did not create a genuine issue with respect to his poor performance.

As to the discovery issue, the Eleventh Circuit concluded the district court did not abuse its discretion by denying Payne’s discovery motions where the first motion was untimely filed and procedurally improper under Federal Rule of Civil Procedure 34 and the second, though timely filed, was vaguely worded, a deficiency which Payne did not cure even after explicit instructions from the district court as to how to do so.
The Eleventh Circuit Weekly Update was prepared by Reemployment Assistance Appeals Commission staff: case summaries by Chairman Frank E. Brown, and Appellate Counsel Cristina A. Velez and Katie E. Sabo; editing by Amanda L. Neff; research and layout by Research Attorney Lesley Blanton.