Supreme Court Cases: The 10 Corporate Counsel Need to Know

Robert Devine, Winn Dixie Stores, Inc.

Hala Sandridge, Fowler White, Boggs P.A.

David Burns, Fowler White Boggs P.A.

Thursday May 3, 2012

Jacksonville, FL

Arbitration Cases

• Arbitration important to corporate counsel because

eliminate jury passion reduce expense eliminate protracted

pretrial procedure control location and speed

of resolution

Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (1983).

• Federal Arbitration Act (FAA), 9 USC §§ 1 to-16, expresses a “liberal federal policy favoring arbitration agreements.”

• FAA establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration Waiver Ambiguities

• Completed a federalization of arbitration law

• Since Moses Cone, Court has widened scope of the FAA to cover arbitration of many issues

Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Jr. Uni., 489 U.S. 468 (1989).

• Just as [parties] may limit by contract the issues which they will arbitrate, so too may they specify by contract the rules under which that arbitration will be conducted.

• Takeaway: you can change the following to your liking rules of procedure equitable relief attorney’s fees discovery appellate rights

Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995).

• Parties may contract to arbitrate dispute under the FAA even if state law would prevent arbitration.

• See also AT&T v. Concepcion, 131 S. Ct. 1740 (2011). California’s rule prohibiting contractual waivers of class actions in arbitration pre-empted by the FAA.

• See also Marmet Health Care v. Brown Marmet Health Care Center, Inc. v. Brown, 565 U.S. __ (2012), which invalidates West Virginia's prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes because it is a categorical rule prohibiting arbitration of a particular type of claim, contrary to the terms and coverage of the FAA.

Circuit City Stores, Inc. v. Adams, 532 U. S. 105 (2001).

• Agreements to arbitrate employment disputes as a condition of employment enforceable under the FAA. Includes statutory employment discrimination claims

(Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, (1991))

“specific arbitral forum provided under an arbitration agreement must nevertheless allow for the effective vindication of that claim.”

• e.g. unilateral control over the pool of potential arbitrators

• remember “pigs get fed, hogs get slaughtered.” See Hooters of America v. Phillips, 173 F.3d 933 (4th Cir. 1999), for example

of one-sided employer arbitration agreement.

Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000).• Where a party seeks to invalidate an arbitration agreement on the ground

that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs.

• Mere “risk” that a party will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement

• Takeaway: be careful of “fee splitting”: risk invalidating the arbitration provision

(although some courts will simply eliminate fee splitting and require defendant to bear all costs)

consider equating fees for arbitration to judicial filing fees permit arbitrator to apportion, defer, or reduce the administrative fees

based upon ability require that party show its financial resources argue overall costs in arbitration much less than in court

Raymond James v. Phillips, ___ So. 2d ___(Fla. 2d DCA, Nov. 16, 2011) (rev. pending).

• Statute of limitations may not apply Florida statutes of limitations only apply to “actions” Court held that arbitration not an “action” Florida S/L does not apply unless expressly

incorporated into arbitration provision Not enough to say “all state and federal statute of

limitations apply.”

Employment cases

• Employment cases important because

Expanded employer’s liability

Provide perimeters for employer to protect itself from this liability

Griggs v. Duke Power Co., 401 U.S. 424 (1971).

• Title VII proscribes “not only overt discrimination but also practices that are fair in form, but discriminatory in operation.”

• Employer has burden of showing that any given requirement must have a manifest relationship to the employment in question.

• Subsequent decisions required employment tests to be validated as job related and the Court finally extended a version of the disparate impact analysis to age discrimination cases in Smith v. City of Jackson, Mississippi, 544 U.S. 228 (2005)

• Takeaway: Corporate counsel, preferably in a privileged context, should statistically analyze

any tests used for selection or promotion to determine if they have a disparate impact on any protected group, and if so, make sure the tests are validated.

Similarly, counsel should review the impact on any protected category (especially age) in any proposed reduction in force.

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).

• Supreme Court disapproves class comprising about one and a half million plaintiffs, current and former female employees of petitioner Wal-Mart who allege that the discretion exercised by their local supervisors over pay and promotion matters violates Title VII by discriminating against women because common contention was not of such a nature that it was capable of class-wide resolution.

• Holding militates in favor of large multi-location operations having de-centralized employment decision-making; however, inconsistent approaches at different locations can create other legal problems in the employment context.

Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57 (1986).

• Two distinct types of sexual harassment recognized under Title VII: quid pro quo discrimination and hostile work environment

• For harassment to be actionable, it must be sufficiently severe or pervasive to alter the conditions of [the victim's] employment and create an abusive working environment

• Recognized the futility of grievance procedure where the first step is to the alleged harasser.

• Later Supreme Court cases effected an affirmative defense where the employer communicates an effective complaint procedure and the claimant fails to use it, e.g., Faragher v. City of Boca Raton, 524 U.S. 775 (1998).

• .

Meritor Savings Bank continued

• Takeaway: ensure policies in place prohibiting sexual and other

unlawful harassment which contains a complaint procedure with at least two avenues for complaints.

education and training on the policy is important (required in California)

those who would be tasked to investigate harassment claims need to be well trained in being thorough and as confidential as possible in the investigation and with authority to make or effectively recommend any corrective action.

Attorney/Client Privilege

• Why it’s important to understand the process:

need full and frank communication between attorneys and their clients

ability to conduct thorough investigation depends upon the lawyer's being fully informed

applies to civil and criminal matters, increasingly important in internal investigations

Upjohn Co. v. United States, 449 U.S. 383 (1981).

• Communications by a corporation's employees to its counsel governed by the attorney-client privilege; however: lawyers represent company, not witness individually privilege belongs to the company, not the witness company may disclose information discovered during

interview at the company’s sole discretion• When do in-house attorneys need to provide an Upjohn

warning to employees? similar to interviews conducted by outside counsel generally, the more substantive the interview, senior the

witness or involvement of employee in question, greater likelihood need Upjohn warning

Upjohn takeaway:• Very early in any internal investigation, assess whether

potential conflicts of interest might arise

• When interviewing a company employee, always administer a full Upjohn warning

• Upjohn warnings generally necessary to employee witness in federal court cases, check rule in different states

• Warning should explain that: lawyer represents the company, not the individual anything revealed during the course of interview is only

privileged between lawyer and company. employee has no control over whether company decides to

waive privilege

Upjohn takeaway continued……

• Advise that might be in best interest to obtain separate counsel

• Consider getting Upjohn notice in writing • Written Upjohn warning not necessarily

replacement for a conflict waiver; if you decide to represent both the company and

an individual employee, obtain a written conflict waiver.

possibly employ separate counsel for employee

American Bar Association’s White Collar Crime Committee Working Group Upjohn warning,

• I am a lawyer for Corporation A. I represent only Corporation A, and I do not represent you personally.

• I am conducting this interview to gather facts in order to provide legal advice for Corporation A. This interview is part of an investigation to determine the facts and circumstances of X in order to advise Corporation A how best to proceed.

• Your communications with me are protected by the attorney-client privilege. But the attorney-client privilege belongs solely to Corporation A, not you. That means Corporation A alone may elect to waive the attorney-client privilege and reveal our discussion to third parties. Corporation A alone may decide to waive the privilege and disclose this discussion to such third parties as federal or state agencies, at its sole discretion, and without notifying you.

• In order for this discussion to be subject to the privilege, it must be kept in confidence. In other words, with the exception of your own attorney, you may not disclose the substance of this interview to any third party, including other employees or anyone outside of the company. You may discuss the facts of what happened but you may not discuss this discussion.

• Do you have any questions?• Are you willing to proceed?

Select material on Upjohn warning

• Upjohn Warnings: Recommended Best Practices When Corporate Counsel Interacts With Corporate Employees, http://meetings.abanet.org/webupload/commupload/CR301000/newsletterpubs/ABAUpjohnTaskForceReport.pdf

• Upjohn’s Importance, Inside Counsel Magazine, June 2011, http://www.insidecounsel.com/2011/06/01/upjohns-importance