Wyatt Employment Law Report

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Sixth Circuit Reversed in Union Benefits Health Case: Supreme Court Rules Against Retired Workers

By Amanda Warford Edge

On Monday, in M&G Polymers USA, LLC v. Tackett, No. 13-1010, the U.S. Supreme Court ruled that ambiguous provisions in union contracts should not be automatically interpreted in favor of a company’s retired workers. The case concerned a union contract from the 1990s that provided free health care benefits to the retirees of a chemical plant in Apple Grove, West Virginia who received pensions. In 2000, M&G bought the plant, and in 2006, it sought to make its retirees contribute to the health care costs. The retirees sued, alleging that they had been promised free benefits for life. The contract, of course, did not directly state whether the parties intended lifetime investiture.

Medical Records & StethoscopeThe district court found for M&G—but according to the Sixth Circuit, the retirees’ benefits had, in fact, vested for life. The Sixth Circuit relied on a long line of precedent, dating back to 1983, in support of this holding. Essentially, this precedent presumed the existence of lifetime benefits, even when the contracts at issue did not specify them. In Tackett, the Sixth Circuit expanded upon this presumption, holding that Continue reading

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Supreme Court Dismisses Case Involving Employer Neutrality Agreement

By Edwin S. Hopson

U.S. Supreme Court Building, Washington, D.C. ...

U.S. Supreme Court Building, Washington, D.C. (LOC) (Photo credit: The Library of Congress)

On December 10, 2013, the U.S. Supreme Court issued an order in UNITE HERE Local 355 v. Mulhall, 571 U.S. ___ (2013), No. 12-99, dismissing the writ of certiorari as improvidently granted.  The case involved the question of whether an employer who agrees with a union (1) to remain neutral should the union seek to organize its employees, (2) that the union will be given access (for organizing purposes) to nonpublic areas of the company’s premises, and (3) that the union will receive a list of employees’ names and contact information, is in violation of the Labor Management Relations Act.  This statute makes it a crime for an employer “to pay, lend, or deliver, or agree to pay, lend, or deliver, any money or other thing of value” to a union that represents or seeks to represent the company’s employees.  29 U.S.C. §186(a)(2).  The lower court, the 11th Circuit Court of Appeals, had held that such commitments by the company violated the LMRA.

The Supreme Court had already received briefs in the case and had heard oral argument before it decided to dismiss the case without deciding it.  Three Justices, Breyer, Sotomayor and Kagan, dissented and argued that the Court should have kept the case and requested additional briefing on several issues.

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Supreme Court Affirms Arbitrator’s Holding That Contract Permitted Class Relief

The U.S. Supreme Court on June 10, 2013, issued its decision in Oxford Health Plans v. Sutter, 569 U.S. ___, No. 12-135 (2013), holding unanimously that once an arbitrator decides that a contract permits a class arbitration proceeding, the parties are bound by that decision under the Federal Arbitration Act’s very narrow scope of judicial review. In this commercial arbitration case involving a healthcare provider’s claim against a medical plan, Justice Kagan, speaking for the Court, stated, in part:

“Because the parties ‘bargained for the arbitrator’s construction of their agreement,’ an arbitral decision ’even arguably construing or applying the contract’ must stand, regardless of a court’s view of its (de)merits. Eastern Associated Coal Corp. v. Mine Workers, 531 U. S. 57, 62 (2000) (quoting Steelworkers v. Enterprise Wheel & Car Corp., 363 U. S. 593, 599 (1960); Paperworkers v. Misco, Inc., 484 U. S. 29, 38 (1987)…. Only if ‘the arbitrator act[s] outside the scope of his contractually delegated authority’—issuing an award that ‘simply reflect[s] [his] own notions of [economic] justice’ rather than ‘draw[ing] its essence from the contract’—may a court overturn his determination. Eastern Associated Coal, 531 U. S., at 62 (quoting Misco, 484 U. S., at 38). So the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.”

Significantly, the cases relied upon by the Court in this commercial arbitration case were prior labor and employment law decisions.

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Supreme Court Rules Drug Company Sales Employees Are Not Entitled to Overtime Pay

By Edwin S. Hopson

In Christopher et al. v. SmithKline Beecham Corp., d/b/a Glasxosmithkline, 567 U.S. ___ (2012), No. 11-204, decided June 18, 2012, the U.S. Supreme Court, in a 5-4 decision, ruled that certain drug sales employees are to be treated as “outside salesmen” under the Fair Labor Standards Act (FLSA) and therefore are exempt from the overtime requirements of the law.  The drug sales employees had filed a private action against their employer under the FLSA seeking unpaid overtime pay.  The U.S. Department of Labor had filed an amicus brief supporting the employees’ claims.

The court’s opinion was authored by Justice Alito, who was joined by Chief Justice Roberts, and Justices Scalia, Kennedy and Thomas.  Justice Breyer wrote a dissenting opinion that was joined in by Justices Ginsburg, Sotomayor and Kagan.

The majority, after rejecting any deference to the Department of Labor’s interpretation, reviewed the FLSA and its regulations and concluded that the drug sales employees were exempt even though they only obtained non-binding commitments from doctors to prescribe their drugs to their patients (who actually were the purchasers in most cases).  The statutory provision in question, 29 U. S. C. §203(k), states that “‘[s]ale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” [Emphasis added].  The majority seized upon the “or other disposition” phrase and ruled for the drug company defendant, pointing out, “Petitioners—each of whom earned an average of more than $70,000 per year and spent between 10 and 20 hours outside normal business hours each week performing work related to his assigned portfolio of drugs in his assigned sales territory—are hardly the kind of employees that the FLSA was intended to protect.” Slip Opinion Page 22.