Good Things Come in Small Packages

Sep 26, 2012 Charles A. Sullivan

Charles A. Sullivan

Slightly off the mainstream of employment law scholarship is Margaret Lemos’s Interpretive Methodology and Delegations to Courts: Are “Common-Law Statutes” Different. This is a terrific, creative piece in only 14 pages. I am especially pleased to be able to highlight it on Jotwell because it will appear in a chapter entitled Intellectual Property And The Common Law (Shyam Balganesh ed., Cambridge University Press, 2012), and therefore might well be missed by most employment law types.

Professor Lemos starts with a commonplace of statutory interpretation, asks why, and comes up with answers that make one reconsider fundamental beliefs. What more could one ask?

The commonplace is that the normal methods of interpretation (whatever they happen to be at the time) are inapplicable when it comes to “common law statutes.” The paradigmatic example of such a statute is the Sherman Act, which is generally viewed as an enabling act — an authorization by Congress to the courts to create jurisprudence of “restraint of trade” largely unconstrained by common law precedents, textualist fussiness, or any need to discern legislative intent. In contrast, “normal” statutes, such as Title VII, are subject to a process of “statutory interpretation,” which these days requires an elaborate parsing of words in order to determine what the enacting Congress intended by the language it chose.

“Common law statutes,” in short, are viewed as delegations of law-making power to courts, a perspective with a number of implications. One is doubt about whether what has been called the “superstrong” version of stare decisis usually applicable to statutory interpretation ought to apply.  Common law courts are normally thought to be able to overturn or modify their precedents when appropriate without assuming that legislative acquiescence indicates approval, and that would seem to be true of common law statutes.

Another implication arises from the relationship between delegations to the courts via such statutes and delegations to agencies under Chevron. Professor Lemos argues that, under Chevron, “statutory ambiguity  is ‘agency-liberating’ in the sense that it converts the administrative inquiry from a search for what the statute means to a determination of what it ought to mean.” This is also true, in her view, for “common law statutes,” but not so for “normal” statutes.  Professor Lemos therefore asks why statutory ambiguity – wherever it might be found — doesn’t create a like authority for the courts.  

Another way to frame this basic question is, what makes a particular enactment a “common law statute?”  Professor Lemos concludes that the two usual justifications – open-ended text and common law background — are wholly inadequate. Take open-ended text. It’s not that some statutes aren’t more open-ended than others but, rather, that all statutes have open-ended aspects that could be viewed as a delegation by Congress to the courts to fashion common law-like rules.  For example, “restraint of trade” may be undefined in the Sherman Act, but “discrimination” is also undefined in Title VII. Recognizing this would permit the courts more leeway to generate policy rules without departing from their role of implementing congressional commands – the command would be, in this case, to define “discrimination” in the traditional common law manner. As for common law background, the Sherman Act builds on common law notions of restraint of trade, but Title VII would not exist but for its common law foundation in the notion of “employment,” and the courts regularly draw on common law concepts for concepts such as causation (including, most recently, proximate cause).

In short, Professor Lemos argues that “neither of the proposed distinctions is persuasive, as the relevant features are shared by many other statutes that do not appear on the privileged list.”  Rather than reflecting categorical differences, statutes exist on a continuum with most laws having some aspects of what are typically viewed as common law statutes.

Professor Lemos does not cite the decision, but a good test case for her ideas is General Dynamics Land Systems. v. Cline, 540 U.S. 581 (2004), which asked whether the ADEA’s prohibition of age discrimination barred discrimination favoring older workers within the age 40+ protected class vis-a-vis younger workers also within the protected class. The majority held no, but it struggled with the language of the statute, which the majority found capable of either barring age discrimination against anybody over 40 or barring only discrimination against older workers within that group. Ultimately, the majority chose the latter meaning because of a number of “interpretive clues” in the statute, its legislative history, and what the majority called the “social history” of the law. The dissent (authored by Justice Thomas and joined by Justice Kennedy) would have adopted the broader meaning of discrimination because of the “plain language” of the statute; it also condemned the use of “social history,” which it labeled “the Court’s new approach to interpreting anti-discrimination statutes.”  Then there was Justice Scalia’s dissent, which relied heavily on the EEOC’s interpretation.

While the Court might well have reached the same result in Cline had it viewed “discrimination” through a common law lens, the result would certainly have been very different opinions, and ones that might have better come to grips with the policy question undergirding the semantic debate – should older workers be favored?

For the author, the fact that statutes exist on a continuum means we should reconsider the sharp line we now draw between “normal” and “common law” enactments.  We should focus instead on the real institutional questions posed by any statute: whether there is a delegation to courts of law-creation power and whether the courts are institutionally competent to resolve these questions. Thus, she asks whether the patent system is well left to the courts and whether, given the complexities of economic analysis, the courts are the appropriate body to fashion antitrust policy.

Closer to the employment law setting, she also points out that the antidiscrimination laws might be better suited to a common law approach: “with no agency presently empowered to play a strong role in the interpretation and implementation of Title VII, the practical need for judicial policymaking is at least as strong as in the fields of patent and antitrust.”

Hard to disagree with that!  Of course, and without too much of a quibble in what is after all, a Jotwell post, one wonders exactly what kind of public policy would emerge from a Court newly-freed of constraints in interpreting the antidiscrimination laws.

Expanding Our Vision — and the Law’s Coverage — to Include “Marginal Workers”

Aug 16, 2012 Joseph Slater

Joseph Slater

A strange tension exists in U.S. labor and employment law.  On one hand, the number of laws granting rights to employees has increased considerably in recent decades.  On the other hand, many have argued that these laws have fallen far short of their expected goals and have failed to adequately protect a significant number of workers.  In Marginal Workers, Ruben Garcia goes further than any previous work in describing the various ways in which these laws fail to protect some of the most vulnerable workers in the country.

Marginal workers are those who “fall through the margins of different laws that are supposed to protect them, but lack the political power to fix the holes in the legislation.”  (p. 4).  This includes, among others, immigrant workers in post-Hoffman Plastics limbo, temporary workers, noncitizens, and a variety of low-wage workers who are covered by statutes (including the FLSA, Title VII, and the NLRA) but often get inadequate protection from them.  This includes, but is not limited to, those who should be covered by the statute, but who have been improperly classified as independent contractors or as exempt from the FLSA or NLRA.  The default “employment at-will” rule means that even at best, employment laws are a “patchwork quilt with some rather large holes.” (p. 6).

The book is informed by both practical experience and theoretical knowledge.  Garcia effectively weaves the stories of real workers in real cases (some from his own practice experience) in with  discussions of “rights talk,” “intersectionality,” and the “mutually constitutive nature of law and society.”  In so doing, he addresses a wide range of scholarship from the left, right, and center.

The book is not, however, simply a list of complaints about the practical and theoretical limits of employment laws.  Garcia provides ideas that lead to practical suggestions.  He articulates a “civil rights” approach to union rights that (among other things) could have yielded an intriguingly different result in Emporium Capwell that, in turn, might have further facilitated the participation of women and minorities in unions.  He calls for an expanded vision of anti-discrimination laws — which may result, as he notes, in something like an end to employment at-will, but which would be rooted in political movements.  He links abuse of guest workers to the “democracy deficit”:  their lack of representation in the country where the abuse takes place.  Here, he proposes an international labor rights approach with actual enforcement mechanisms.  He properly rejects a dichotomy of strategies focusing only on statutory rights or only on political movements.  Fundamentally, Garcia does much to show how the ideal, “labor rights are human rights,” should and could be made more real for more marginal workers.   In so doing, he provides an impressive and provocative view of employment law as a whole.

Dis-torting Discrimination Law

Jun 28, 2012 Marcia L. McCormick

Marcia L. McCormick

As courts increasingly import principles from common law torts into discrimination cases, Sandra Sperino’s new article, Discrimination Statutes, The Common Law, and Proximate Cause, is a welcome addition to a growing body of work pushing back against this trend. Her focus is on the Supreme Court’s recent forays into proximate cause in connection with federal employment statutes. Laying out the problems of the proximate cause doctrine and the features of statutory protections from employment discrimination, Sperino demonstrates that importing proximate cause is undesirable and an obstacle to enforcing Congress’ careful balance in enacting these statutes.

The article begins by describing what proximate cause is. Although the theoretical underpinnings of proximate cause are notoriously muddled, Sperino demonstrates that in a variety of ways, the doctrine appears to limit the reach of particular torts, depending on the type of tort at issue. As she notes, proximate cause is applied primarily in negligence actions in situations with multiple physical causes, where a potential plaintiff is far removed from the conduct of the defendant, or as a way to define the policy goals of the underlying cause of action. For intentional torts, proximate cause plays a much more limited role, in part because the actor’s state of mind makes the actor more blameworthy, and we are willing to extend liability farther.

The article’s bottom line is that these limiting and policy-expressing functions are simply not necessary for federal employment discrimination statutes, and in fact would interfere with their operation. Congress has built limits into these statutory regimes in a way that leaves no space for principles of proximate cause. Using Title VII as the primary example, Sperino shows how Congress defined the harm in a fairly specific and limited way, defined the causation standard, limited potential plaintiffs, and sped up the timeline for bringing an action.

One of the most important sections of the paper lays out the problems courts have had with causation much more fundamentally in the context of employment discrimination claims. While the bulk of the paper focuses on proximate cause, this concept is an added, more demanding limitation to the requirement of factual cause. There can be no liability if an employee’s protected status did not cause the adverse employment action the employee suffered. Generally speaking, the debate has focused on whether Title VII requires that protected status be a necessary cause (but-for the protected status, no result), a substantial cause (it made the result significantly more likely along with other causes), or just a contributing cause (it played some role in the process that led to the result but so did other causes). Much of this difficulty lies in the fact that the operative language seems to embody not just notions of causation, but also some form of state of mind.

Sperino also carefully debunks each of the arguments courts and commentators have raised in favor of importing proximate cause: there is no indication that Congress drew on common law torts in enacting these statutes; the statutory language the courts point to has been used by common law courts to refer to factual as well as proximate cause; and Congress most likely intended for all factually injured plaintiffs to recover because the statutes provide only very narrow protections. Finally, she demonstrates that employment discrimination claims are simply not analogous to common law torts. Some discrimination claims seem to create strict liability, and others require a higher mental standard than even intentional torts. Moreover, most torts deal with physical injuries. Employment discrimination, on the other hand, deals with economic injuries, dignity injuries, and more abstract injuries to equality norms and to groups.

To the extent that the article contains a weak point, it is in drawing on separation of powers principles but then treating all or nearly all judicial interpretations of Title VII (except for those related to proximate cause) as valid interpretations rather than the creation of law. Separation of powers arguments certainly have traction, especially in the federal context, because the role of the judiciary is more expressly limited than in states. Still, even there, the doctrine is somewhat problematic. While it is easy to define that principle at a high level – federal courts cannot exercise legislative power – and easy at the extremes to distinguish between a legislative action and a judicial action, it becomes challenging rather quickly to distinguish once there is some legislative action for a court to work with.

Consider Title VII itself. The Supreme Court suggested most recently in Ricci v. DeStefano that the Court had essentially legislated the disparate impact theory – the majority in that case used the term “interpret,” to describe the creation of the theory, but stated that the text did not expressly prohibit disparate impact and referred to disparate treatment as the “principle nondiscrimination provision” rooted in the text of Title VII. By casting doubt on the textual foundations of the disparate impact, the Court subtly drew on separation of powers principles to suggest that perhaps the adoption of that theory improperly stepped into legislative territory. Justice Ginsberg in her dissent appears to have accepted this implicit definition of the proper judicial role, but disagreed with the majority’s conclusions about what the text meant.

The primary institutional competence point that the article raises in this context, however, is well taken and powerful. The product that we get from a common law process is significantly different from the product produced by the legislative process. The common law process involves the slow accretion and development over time of a body of policies created to allocate the costs of injury in individual disputes. It was also, at least at one time, designed to embody local concerns and norms. The legislative process uses deliberation, active information gathering, and consideration of multiple policy objectives to produce a comprehensive policy solution to an identified problem. And at the national level, those national policies are designed to supplant local policies where the local policies would conflict with the national ones. Sperino’s article explains quite forcefully why it is that common law tort principles do conflict with the language and policy of the federal discrimination laws. I hope the courts are listening.

Using the NLRA to Nip Anticipatory Retaliation in the Bud

May 23, 2012 Alex B. Long

Alex B. Long

I’m still fascinated by employment retaliation cases.  Not so much traditional labor law.  I’ve generally lost interest.  But Michael C. Duff’s forthcoming essay on the possible implications of the National Labor Relations Board’s decision in Parexel International serves as a reminder to me (and others) that the NLRA might still have some role to play in addressing retaliation even in non-union workplaces.

Parexel involved an employee who claimed she was fired for complaining about what she believed was employer favoritism on the basis of nationality.  Her complaint was internal, the workplace was non-union, and she had not yet mentioned her concerns about favoritism to her co-workers, let alone sought to rally their support.  These facts take the case outside the range of the typical charge of interfering with the right to engage in concerted activities.  Moreover, as Duff chronicles, existing Board precedent was only somewhat helpful to the employee’s claim that she had been fired for exercising her right to engage in protected concerted activity.  Yet, the Board found the employer had violated by Section 8(a)(1) of the NLRA by seeking to prevent protected concerted activity.  In other words, the employer violated the Act by trying to nip concerted activity in the bud.

While approving of the outcome, Duff questions the Board’s application of existing precedent in Parexel and offers an alternative rationale for the Board’s decision.  Duff argues that even if the employee in Parexel had not actually engaged in protected concerted activity, Section 7 of the Act provides more expansive protection.  Section 7 guarantees the right to engage in concerted activities, and it was that right the Parexel employer interfered with, Duff argues.  Given the fact that one employee’s complaints of unlawful employer behavior may benefit other workers, it is reasonable to presume that other employees would support the employee’s actions.  Thus, “the stamping out of a lone complaining worker may represent an attack on the right of all workers to engage in concerted activity for their mutual aid or protection.”

There are actually numerous retaliation cases brought under anti-discrimination statutes that involve similar employer behavior.  The decisions split as to whether this type of “anticipatory retaliation” is unlawful.  Compare Beckel v. Wal-Mart Assocs., Inc., 301 F.3d 621, 624 (7th Cir. 2002) (stating that anticipatory retaliation can be unlawful under Title VII), with Booker v. Brown & Williamson Tobacco Co., 879 F.2d 1304, 1313 n.3 (6th Cir. 1989) (stating that anticipatory retaliation cannot be unlawful under Michigan Civil Rights Act).  Courts have also split on the related question of whether an employer who retaliates against employee on the mistaken belief that the employee has or is about to complain about employer behavior has engaged in unlawful retaliation.  Compare Brock v. Richardson, 812 F.2d 121, 125 (3d Cir. 1987) (holding mistaken belief retaliation to be unlawful under FLSA), with Ackel v. Nat’l Commc’ns, Inc., 339 F.3d 376, 385 (5th Cir. 2003) (holding mistaken belief retaliation to be lawful under Title VII).   Therefore, Duff’s new essay contributes to the dialogue on the increasingly relevant issue of workplace retaliation.

But Duff’s most significant contribution with this essay is his reminder of the fact that the NLRA may have a role to play in such cases.  Indeed, Duff argues that retaliation claims most naturally find their home in traditional labor law.  Anticipatory retaliation, Duff argues, represents “an attack on the right of all workers to engage in concerted activity for their mutual aid or protection.”  Since labor law is “the only body of law explaining to workers by virtue of its very existence that there is indeed safety (and power) in numbers,” labor law should have a role to play in addressing the problem.

Labor Speech is Corporate Speech

Apr 23, 2012 Matt Bodie

Matt Bodie

Citizens United remains in the public consciousness long past the normal half-life for a Supreme Court decision.  The notion that “corporations are people” has become a punch line in a variety of contexts—proof of the absurdity of the Court’s opinion.  While the decision itself simply freed corporations from the constraint of political action committees in their election-related spending, it has engendered continued outrage and cynicism at both the political process and corporations themselves.  The fact that the opinion extended these rights to unions, as well, has received much less attention.  Perhaps more importantly, the decision has ramifications for the future of corporate and union political activity that are yet to be fully developed.  Two labor law scholars explore these ramifications in articles seeking to extend the principles of Citizens United to familiar labor law doctrines, with creative and thought-provoking results.

For Charlotte Garden, the Citizens United decision offers the opportunity to extend the argument she began in an early article¹: namely, that union speech deserves greater constitutional protection. In her Citizens, United piece, Garden uses the opinion as a springboard for reconsidering two significant restrictions on union speech: the prohibitions on union secondary activity and the objection rights of employees covered by union security clauses.  She argues that the distinction between “public-issue” picketing and boycotts (by groups such as the Westboro Baptist Church) and “economic” picketing and boycotts (by unions) is vulnerable in light of Citizen United, which held that the corporation’s motive is irrelevant to First Amendment protection.  Because both corporations and unions cannot be stopped from engaging in political speech, Garden suggests that union campaigns may be protected if they take on more public-interested oriented themes.  And she also points out that since Citizens United overrode the concerns of objecting shareholders to corporate political speech, that opinion undercuts the protections for employees who object to paying union dues that fund political speech. Although acknowledging that the analogy is “not an exact one,” Garden argues that protecting union objectors but not shareholder objectors is a tough distinction to maintain, given that in both cases speech rights are pitted against administrative burdens, but with differing results.

Benjamin Sachs explores this shareholder-employee distinction at length in Unions, Corporations, and Political Opt-Out Rights.  For Sachs, the symmetry of Citizens United in terms of union and corporate treasuries is a false one, given the asymmetrical opt-out rights.  Although quitting one’s job may seem a more significant burden than not investing in a stock, Sachs endeavors to show that, in terms of legal principle, the two burdens are more alike than has been appreciated.  Using philosophical notions of coercion, he argues that both the decision not to work and the decision not to invest have coercive features, and that in both cases economic power over certain economic opportunities is deployed to secure support for a political agenda.  He also points out that since states have significant control over the structure of corporate governance, there is no less state action in the corporate context than there is in the union context.  Rather than solving the asymmetry by liberating union treasuries, Sachs instead proposes that shareholder speech rights should be given more protection.  He discusses potential federal- or state-provided mechanisms for shareholders to remove their pro-rata share of assets from the pool of corporate money available for political speech.  He also argues that public employees should have the right to object to mandatory pension investments in funds that include corporate shares and, therefore, fund corporate speech.

Garden and Sachs do a nice job of problematizing the distinctions between corporate and union treasuries when it comes to political speech.  As they point out, economic power is used in both the union and the corporate context to secure support for political agendas.  However, I worry that their argument proves too much.  What do we do about other economic relationships?  The decision to purchase a car provides money for corporate political speech to the carmaker, as does the decision of employees to work for that carmaker.  Should consumers and employees have free speech opt-out rights, too?  It is hard to imagine where one might draw a principled distinction.

In my view, the best approach is to recognize that both unions and corporations engage in political speech to advance their economic interests.  SEIU did not support President Obama as an outside ideological lark; it supported him because it believed he would best promote its economic interests.  And its work paid off; during the time leading up to the passage of health care reform, no one had more access to the Oval Office than SEIU President Andy Stern.²  Because union representation is a heavily regulated industry, unions must give money to political candidates in furtherance of their economic interests.  Businesses understand this.³  Unions understand this as well.  It is the notion that political and representational funds can be segregated that needs to be pitched out the window.

Both Garden and Sachs have nicely used the Court’s analysis in Citizens United to raise questions about the future of corporate and union speech.  Their articles should push the Court to consider the ramifications of its decision beyond the immediate context.

1. See Charlotte Garden, Labor Values Are First Amendment Values: Why Union Comprehensive Campaigns Are Protected Speech, 79 Fordham L. Rev. 2617 (2011)
2. Chris Lehmann, Andy Stern: the New Face of Labor, Washingtonian, March 1, 2010, available here.
3. For a terrific exploration of this point, see Jill E. Fisch, How Do Corporations Play Politics?: The FedEx Story, 58 Vand. L. Rev. 1495 (2005).

Documenting What Really Goes on in the Workplace

Apr 9, 2012 Kerri Lynn Stone

Kerri Lynn Stone

Scholars who opine on issues of workplace discrimination know that the lifeblood of their scholarship is the work of those who conduct studies that capture and document the phenomena about which they write.  Those researchers who conduct such studies with an informed eye toward the law are thus invaluable to employment discrimination scholars, and it was with great interest that I read Gender Harassment: Broadening our Understanding of Sex-Based Harassment at Work by Emily A. Leskinen, Lilia M. Cortina, and Dana B. Kabat, 35 Law & Hum. Behav. 25 (2011).  The study, in the authors’ own words, seeks to “challenge[] the common legal and organizational practice of privileging sexual advance forms of sex-based harassment, while neglecting gender harassment.”

Citing to eminent scholars who have contended that gender harassment should be subsumed within the broader category of cognizable sexual harassment, the authors explain that gender harassment has been defined as “a form of hostile environment harassment that appears to be motivated by hostility toward individuals who violate gender ideals rather than by desire for those who meet them.”  Simply put, it is “hostility that is devoid of sexual interest.”  Proffering some much needed empirical support for the notion that gender harassment is at least as deleterious, if not more so, than its actionable counterpart, the authors advance ideas that may not have entered cultural consciousness, but that need to be properly understood by legislators, judges, advocates, scholars, and all others who shape and affect the law of workplace discrimination.  So, for example, the authors’ research enables them to posit that sexual harassment, in what they call “traditionally male domains,” mostly consists of gender harassment absent any sexual advances.  This compelling finding necessitates a shift in the popular conception of what sex-based harassment in the workplace truly looks like.  Moreover, the authors’ research enables them to posit that the negative personal and professional impact of gender harassment in the workplace on women is immense.

The article begins with a thorough and thoughtful recitation of the relevant types of harassing behavior and the relevant legal history of and perspectives on that which is cognizable harassment.  It concludes that while not formally precluded from inclusion in the category of actionable sexual harassment, gender harassment has been “routinely . . . neglected by the law,” with many federal judges averse or even hostile to the idea that “anti-female animus,” unacted upon, was ever intended by lawmakers to run afoul of Title VII. It discusses the failure of researchers and the subjects of their studies alike to recognize gender harassment as sexual harassment or as being as pernicious as sexual harassment.  It explores the ways in which and the reasons why gender harassment is corrosive to so many women’s sense of wellbeing in the workplace, observing that it transmits a message to women “that they are inadequate, out of place, and unable to perform at the level of men.”

With all of this in mind, the researchers developed two hypotheses: 1) that gender harassment, absent unwanted sexual overtures, would be the most commonly experienced type of sex-based harassment experienced by women; and 2) that even when women experienced gender harassment without a trace of sex-based harassment, they would report negative professional and personal results.  Moreover, the researchers carefully selected two traditionally male-dominated workplaces as the backdrop for their studies: the U.S. military and federal legal practice.  Their findings were compelling: the most common type of harassment experienced by women in the military and in federal legal practice was, in fact, gender harassment without sexual coercion or attention.  As the researchers put it, gender harassment “is not about misguided attempts to draw women into sexual relationships; quite the contrary, it rejects women and attempts to drive them out of jobs . . . .”  Further, gender harassment absent sexual behavior was, in fact, shown to have numerous negative outcomes, including, among others, lower levels of performance at work, psychological well-being, and professional and personal satisfaction.

In light of Title VII’s broad remedial goals, the work of those like Leskinen, Cortina, and Kabat is essential to advancing the jurisprudence that will permit the law to comport with the realities of the modern American workplace.  There should be much more work like theirs to support and further thought and scholarship in this field.

A Drive for Efficiency May Not Drive Inefficient Discrimination From the Marketplace

Mar 23, 2012 Henry L. Chambers, Jr.

Henry L. Chambers, Jr.

In Wal-Mart Matters, 46 Wake Forest L. Rev. 95 (2011), Lesley Wexler challenges the law and economic orthodoxy that suggests that inefficient employment discrimination tends to be driven out of the marketplace.  The typical rationale is that employers who discriminate will have higher costs of production based on their inefficient discrimination and will necessarily be less competitive than their competitors.  Professor Wexler describes how systematic sexual discrimination can exist indefinitely even when an employer’s successful business model focuses almost exclusively on efficiency and providing the lowest cost goods in the marketpalce.  Wal-Mart Matters is an article that I like lots because it discusses employment discrimination and law and economics in challenging a point of orthodoxy and explaining why the orthodoxy may not be convincing or correct in a particular situation.  To be clear, the article is not an exhaustive treatment of the issues and does not appear intended to be.  However, it makes the reader think  about how a theoretical point regarding markets may not work as well as expected in a real-world market.  The subject matter is of particular interest to me because I teach employment discrimination and have taught law and economics.  However, the article ought to be of interest to a wide variety of law professors and legal commentators.

The article is timely, but its title is a little unfortunate.  Given the article’s timing, its title may suggest to some that it is about the Wal-Mart litigation that was decided by the Supreme Court this past year.  Though Wal-Mart and its practices are at the core of this article, the litigation is only a point of departure.  Rather than analyze the substance of the class action against Wal-Mart, Professor Wexler asks that the reader assume that the allegations of sex discrimination in pay and promotion that are at the core of the litigation are supported or supportable.  Professor Wexler then examines how a widespread practice of seemingly irrational sex discrimination could exist at Wal-Mart given law and economics principles that claim that irrational discrimination will be driven out of the marketplace and given that Wal-Mart appears to follow a practice that focuses on efficiency as a business model.

Professor Wexler first discusses Wal-Mart’s corporate policies and suggests that Wal-Mart’s professed business model focused on efficiency is real.  That focus on efficiency allows Wal-Mart to squeeze as much productivity out of its workers and as much profit out of its business as possible. The result appears to be lower prices, significant market share and significant profits.  As Professor Wexler indicates, “The decision to focus on costs as a business model is rational and one that a fully competitive market would likely reward if a company could maintain low-price leadership.” (P. at 101).

The article then notes that a focus on lowering costs can trigger rational discrimination.  Indeed, a preference for low costs through hiring low cost workers is consistent with a focus on efficiency and rational discrimination.  Attempts to avoid workers with disabilities who need to be accommodated may lower costs if the employer is not caught.  Workers who are more likely to join unions or are less likely to conform to corporate culture may be viewed as more costly than other workers.  Not hiring them may lower costs.  Workers who may be thought to be likely to get pregnant or likely to leave the workforce may be thought more costly.  A low-cost employer may rationally and sometimes legally or illegally discriminate against all such workers mentioned above.  That type of discrimination can be pervasive precisely because it is rational.  Indeed, economic arguments recognize that rational discrimination may not be driven out of a competitive marketplace without regulation precisely because it is rational.

However, the article focuses on supposed irrational discrimination, the type of pervasive and widespread discrimination alleged in the Wal-Mart class action.  The Wal-Mart plaintiffs claimed that Wal-Mart’s “uniform corporate culture” includes gender stereotyping that has led to various assumptions that trigger discrimination.  Those assumptions include that customers and employees may prefer to work in somewhat sex-segregated departments.  Such assumptions may have led to assignments that left women in lower-paid departments at Wal-Mart.  Similarly, plaintiffs claimed that many Wal-Mart managers assumed that women were or should be secondary wage-earners in their families and could be paid accordingly.  These stereotypes, if applied systematically, could lead to the widespread sex-based pay and promotions disparities the class claimed.  However, such systematic discrimination would also appear to lead to pay and promotions being mismatched to Wal-Mart’s most productive workers.  That type of discrimination would appear to be the type that Wal-Mart would abhor as an efficiency-based business.  It is also the type of discrimination that law and economics scholars suggest would be driven out of the competitive marketplace as those who were undercompensated for their skills would move to competitors who would compensate them properly for their talents.

Law and economics principles tell us that, over time, firms that pay based on something other than merit would arguably have an overpaid or underperforming workforce.  That would drive those firms’ costs up and make them less efficient and less profitable than their competitors.  Given Wal-Mart’s focus on efficiency and market position, the discrimination asserted in the lawsuit would seem inconsistent with economic theory and the reality of Wal-Mart’s focus on efficiency and low-cost production.

The article then explains how broad and pervasive sex discrimination could persist at Wal-Mart.  Professor Wexler posits a market failure in Wal-Mart’s case.  Market failure suggests that the market in which Wal-Mart operates does not operate as a perfectly competitive market.  This is a sensible conjecture.  Economists rarely assert that markets are perfectly competitive; they merely explain what would happen if a market were perfectly competitive.  Consequently, analyzing what might occur when the conditions necessary for a perfectly competitive market are not met is sensible.

The article suggests that the typical factors that might normally police discrimination and help drive it out of Wal-Mart may not exist.  Professor Wexler posits that Wal-Mart’s workers may not perceive any incentive to push to change policy.  In addition, they may have insufficient information or power to alter policy.  Additionally, market competition may not serve to alter Wal-Mart’s putative behavior.  Wal-Mart’s market position and the possibility that its competitors have similar policies may allow irrational discrimination to persist. Lastly, Professor Wexler suggests that consumers may not know about Wal-Mart’s practices or may not care enough given the benefits Wal-Mart confers in lower prices to collectively pressure Wal-Mart to change putative discrimination.  After suggesting that Wal-Mart is not functioning in a perfectly competitive market, the article suggests that the claim that discrimination will be driven out of a perfectly competitive market may not be applicable in Wal-Mart’s situation.

I like Professor Wexler’s challenge to a typical oversimplification that some make regarding law and economics.  By focusing on how markets actually work rather than on how markets that are perfectly functioning might work, Professor Wexler provides useful analysis of the real world.  Economic analysis is a wonderful tool for describing many varied types of situations.  However, some academics rarely use the entire economics toolbox.  Professor Wexler starts to do so by using market failure – another tool in the economist’s toolbox – to analyze the plausibility of the claims made in the Wal-Mart class litigation.  Challenging a standard analysis with additional analysis that sharpens and explains issues is what law professors do best.  Here, the sharpening of issues helps provides a possible explanation of how widespread sex discrimination may exist in a firm committed to efficiency even when such sex discrimination itself may be inefficient.  That is why Professor Wexler’s article is one I like lots.

Placing British Employment Law In Context

Mar 7, 2012 Michael C. Harper

Michael C. Harper

It is probably fair to generalize that the best American legal scholarship in the fields of labor, employment, and employment discrimination law has found little inspiration in the study of comparative law. Hugh Collins’s analytic and insightful but succinct overview of British employment law — republished in 2010 in a second edition to account for significant developments in response to European Union law — should teach any perceptive American reader that this need not be the case. This two hundred sixty page volume demonstrates that studying how other developed countries have addressed common issues presented by the employment relationship not only can help define practical and conceptual problems for American law to address but also can help spark creative thinking about solutions.

Professor Collins, who has served as general editor of the Modern Law Review and twice successfully led the law department at the London School of Economics, places the employment law of Britain in both an historical and political-social context. The historical context includes our common nineteenth century liberal tradition of free contracting and our common twentieth century response of industrial pluralism to the “commodification” of labor and the resultant threats to economic and political stability. The political-social context includes the sometimes divergent influences from America and Europe, with the latter becoming more dominant through European Union directives.

The volume has great breadth, ranging from employment discrimination law to labor relations law, from wrongful dismissal law to privacy law, from restrictions on employee competition to health and safety law. Collins covers all topics treated in any common American law course in labor, employment, or employment discrimination law. The book does not purport, however, to be a comprehensive treatise or any kind of definitive research source for those unfamiliar with British law. Instead, it is a descriptive and prescriptive review and conceptual organization of a field of law by a clever intellectual, equally comfortable with the tools of legal analysis and the findings of modern social science.

In an attempt to provide a conceptual underpinning for his review, Collins, who is also a scholar of contract law, illuminates what is distinct about the employment contractual relationship, including its general take-it or leave-it quality, its usual incompleteness and necessary assignment of authority, its frequent expectation of relatively long duration, and its necessary attendant distributive and time-control issues. Collins then uses three complementary goals of European Union law to organize the legal topics he addresses under three general headings: social inclusion (which features employment discrimination law); competitiveness (which features labor relations law as well as wrongful dismissal and economic security law); and citizenship (which features rights-based principles, including those protecting freedom of speech and association and privacy).

The book is written at a level of generality that makes a comparison with American law both easy and instructive. The description of the current British law governing collective bargaining, for instance, reveals its close tracking of the American system of work-place, rather than sector-wide, bargaining through exclusive agents who must fight employer resistance to achieve recognition and then rely on their own economic leverage rather than the coercive power of a state regulator to achieve more favorable terms for their constituents. This description also reveals the same limitations of the system in an age of global competitiveness and capital mobility. Yet, one difference in the systems, as presented by Collins, is suggestive of a possible change in American law that could help revivify American labor. Collins stresses that British law allows employers “to negotiate a recognition agreement that confines the scope of collective bargaining to topics where the employer can perceive advantages in more cooperation and consultation,” even while avoiding a topic such as pay. Imagine the possibilities for growth for American labor unions, protected by a robust section 8(a)(2) from the competition of company unions, if employers were both free of the constraints of Majestic Weaving and also desirous of some benefit that a union could provide, such as a fair arbitration system to handle employment discrimination grievances in the wake of Pyett.

Collins’s review of the British law governing the topics encompassed by American employment discrimination law also is both instructive and suggestive. The development of British law has generally followed the lead of American law on these topics, disparate treatment is denominated direct discrimination, disparate impact is termed indirect discrimination, retaliation is victimization, and affirmative action is positive discrimination. The concepts are the same, however, and the defenses seem to be similar as well, though all encompassed within an ostensibly vague principle of proportionality derived from European Union law. As described by Collins, British employment discrimination law highlights the same legal problems, but seems not to have offered solutions beyond those offered by American law, except perhaps for the problem of unequal pay for work of comparable value. Here, the more flexible concept of proportionality may offer a balance that allows employers to account for labor market constraints without being completely unfettered in the depression of wages in female-dominated jobs.

Perhaps the most interesting and suggestive section of the volume for American readers is the treatment of British law on discipline and dismissal, including chapters on wrongful dismissal and on economic dismissals. British law on these topics, though derived from similar common law traditions, has been more influenced by the European Union and thus varies more from American law than do current British labor or employment discrimination law. Collins description of British dismissal law is sufficiently rich to infer multiple ideas for legislation to mitigate the less employee-protective American common law. But Collins does not overstate the efficacy of the British variations. As a good lawyer, he understands the importance of limited remedies and the lack of bite in standards like a “band-of-reasonable responses” test for assessing employer reasons for disciplinary dismissals. Thus, even while his description of British law suggests possible reforms in American law, Collins highlights potential difficult unresolved issues such reforms would present.

Collins, I should add, is a felicitous writer. If one reads this volume as one should, not as some heavy tool for research, but for inspiration, as one might read a good novel or history, it reads as easily and with as much, or at least almost as much, forward impetus. I can suggest some good relevant British novels or histories for inspiration for those who wish to email me. For those who wish inspiration from a book on law, however, I suggest this work.

Public Pension Plan Problems

Feb 15, 2012 Paul M. Secunda1 comment

Paul M. Secunda

One of the more noticeable effects of the on-going global financial crisis is the increased attention being paid to the amount of money being spent by state governments on public pension plans. Unlike private sector pension plans, which are governed by the federal Employee Retirement Income Security Act of 1974 (ERISA), public pensions are instead covered by a vast array of complex state laws and regulations.  So while most people are pointing out that something must be done about the burgeoning public pension funding deficits, many have been stymied about how to undertake the amendment of these plans in a legal fashion.

Part of the problem is that states have adopted different legal theories to protect public pension rights. To some states, pension rights are property rights, while in other states, pension rights are contractual in nature.  Still a few states adhere to the traditional approach and see public pensions as mere gratuities.  In any event, and as many states have found out much to their dismay, the business of amending a public pension plan is a tricky one, filled with legal minefields. Just ask the states of Colorado, Minnesota, and South Dakota, which have been all sued after seeking to reduce the annual cost-of-living- adjustment (COLA) for current retirees.

All this chaos in the public pension plan world requires some ordering principles. At least as far as organizing states’ various legal approaches to public pension plans, Amy Monahan’s paper, Public Pension Plan Reform: The Legal Framework, does exactly that.  Understanding that many states are either currently going through a process, or contemplating a process, to amend their public pension plans to save money in these difficult economic times, Monahan first explains the difference between private pension plans and public pension plans, and then effectively explains the primary legal approaches states have taken to protect public employee pension rights.

As Monahan points out, regardless of which legal theory a state has adopted to protect pension rights, most state pension plans in the United States have done a poor job securing the retirement security of its public employees.  More specifically, because “each state’s law is responsible for setting the applicable limits on changes to its own public pension plans,”  these “approaches are generally far less clear than the federal approach, often provide less flexibility, and are often administratively unwieldy.” (P. 619)

Monahan does an excellent job surveying the typical approaches to amending public pension plans and pointing out many of the problems with these approaches, especially in financially difficult times.  For example, where states treat their pension promises as contracts, she discusses federal and state constitutional contract clause challenges when states seek to amend their state pension plans. She points out, quite rightly, that such states are subject to these constitutional challenges because pension changes tend to cause a substantial impairment of the contract without being able to show that it was reasonable and necessary to an important public purpose (i.e., saving money alone has not been deemed an important public purpose).  The upshot is that it is very difficult for states with pensions based on contractual theories to reform their public pension plans even when the need to do so is obvious and dire. On the other hand, public employee’s pension rights are protected too little where states have adopted property theories because challenges to pension reforms based on the Takings Clause or based on substantive and procedural due process have generally proved to be unsuccessful.

Although a few previous articles have discussed legal issues surrounding public pension reform, what sets Monahan’s article apart is its comprehensiveness, clarity, and innovation in setting out new suggestions for reform.  More precisely, Monahan suggests that a specific version of the contract approach be adopted by states.  Identifying the problem with current contract-based approaches as being the lack of a definite time period, she maintains that states should find “a contract to exist but specify[ ] that the contract is formed on an ongoing basis as services are performed.” (P. 642)  The advantage of this approach is that it allows either side to modify the terms of the contract and makes future pension reform possible.  In other words, pension plan participants would be protected in already accrued benefits, but public employers would have more flexibility in changing the future rate of benefit accrual.   Monahan’s overall point is that, “advocates for reform [should] . . . argue for jurisprudential changes based on changing conditions.  Public sector plans have not kept pace with the market as a whole, in large part because state jurisprudence has fixed such plans in time.” (P. 646).

Although I believe Monahan’s paper to be an indispensable read for anyone contemplating the legal problems surrounding the amendment of public pension plans, I do have some minor criticisms.  First, some states, like Wisconsin, have adopted more than one type of legal theory upon which to base their public pension plans. Some case law in Wisconsin recognizes the contractual basis of pension rights, while other cases focus on pension rights as property rights.  Does such a hybrid approach do a better job of protecting accrued pension rights while at the same time providing public employers the needed flexibility to amend plans in difficult financial times?

Second, I would have liked more discussion about whether public pension plans should switch from a defined benefit approach to a defined contribution approach as part of the solution to the larger problem of underfunded public pension plans.  A high percentage of private-sector pension plans are now defined contribution plans, meaning that employers are generally not responsible for having sufficient funds on hand when employees retire. These employers simply make a one-time contribution and there are no subsequent pension funding responsibilities. On the other hand, because most public pension plans are defined benefit plans, employers are responsible for maintaining the financial health and actuarial soundness of these plans so that sufficient funds exist to pay their employees pensions during their retirements.  For instance, would a shift to defined contribution plans in the public sector solve the financial issues without undermining the “significant labor market effects [of] influencing who enters public service and how long they remain employed[?]” (P. 618)

Nevertheless, with these additional ideas for extending the reach of this article placed to one side, Monahan acquits herself exceedingly well in reviewing this complex, and often neglected, regulatory landscape.  Additionally, we certainly concur in believing that the time is well past nigh “for state courts to revisit their public pension plan jurisprudence.” (P. 646)

Plausibility, Civil Rights, and Discovery

Jan 18, 2012 Joseph Seiner

Joseph Seiner

In Bell Atlantic v. Twombly, 127 S. Ct. 1955 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court substantially altered the pleading standard for civil litigants.  To proceed with a civil claim, plaintiffs must now allege enough facts in the complaint to state a “plausible” claim for relief. In her article, Front Loading and Heavy Lifting: How Pre-Dismissal Discovery Can Address the Detrimental Effect of Iqbal on Civil Rights Cases, Professor Suzette Malveaux  superbly discusses how these recent cases have had a particularly dramatic impact on civil rights litigation.  The impact of Iqbal on this area of the law is often overlooked, and she does an excellent job of explaining how the plausibility standard will impact these litigants.

In her Article, Professor Malveaux begins by critiquing the Iqbal case, highlighting some of the many problems with this decision.  She notes that the Iqbal Court failed to consider the allegations in the case “as a whole,” that in practicality it is often difficult to separate out conclusory from nonconclusory assertions as the decision requires, and that the standard adopted by the Court appears to be a “probability test” rather than a plausibility inquiry. (P. 81-83.) She further accuses the Court of endorsing “judicial fact-finding” at the early stages of the proceedings. (P. 84.)

As Professor Malveaux correctly observes, “[w]hile the Federal Rules of Civil Procedure are trans-substantive, their impact is not.” (P. 67.)  One area where that impact has been noticeable is in the civil rights context.  Professor Malveaux believes that the plausibility standard “threatens the viability of potentially meritorious civil rights claims.”  (P. 85.) In her paper, she highlights how these claims are particularly susceptible to dismissal under the Court’s plausibility analysis.  Most notably, intentional discrimination claims often involve the pleading of factual information that is consistent with both lawful and unlawful conduct.  Similarly, it can be difficult for plaintiffs – without access to discovery – to plead facts supporting intentional discrimination.  This is true because discrimination is often “subtle” and the facts which would typically support this type of claim are “often in [the defendant’s] exclusive possession.” (P. 89-91.)  Finally, determining plausibility is a subjective process, and “personal perception, rather than the law, threatens to become outcome determinative.” (P. 93.) This may be particularly problematic for civil rights plaintiffs, as the judiciary can be hostile to such claims.

Professor Malveaux does an excellent job of identifying the difficulty civil rights plaintiffs face with the new plausibility standard.  Her paper goes further, however, and provides a potential solution to this problem.  Professor Malveaux argues that permitting some discovery early in the proceedings will help alleviate many of the difficulties faced by plaintiffs – a process that she terms “plausibility discovery.” (P. 108.) She maintains that this approach is necessary “to insure that the trans-substantive application of the Rules does not work an injustice against those cases involving informational inequities.” (P. 108.) Professor Malveaux further outlines what this type of “narrow, targeted plausibility discovery at the pleadings stage” might look like. (P. 108.) More specifically, she explores how pre-merits discovery has been permitted to proceed in various other contexts, including class-certification, qualified immunity, and jurisdictional disputes.  She concludes that where necessary, judges have already “adeptly managed” this type of discovery.  (P. 122.) Professor Malveaux further discusses how plausibility discovery comports with both the federal rules and policy considerations, and effectively explains how this process could work in practice.

The plausibility standard announced by the Supreme Court has generated significant confusion and debate both in the courts and in academia.  Professor Malveaux’s contribution to this debate is substantial.  The impact of the Court’s standard on civil rights claims is one of the most important issues currently facing plaintiffs, and Professor  Malveaux does an outstanding job of identifying the potential problems in this area, as well as offering a workable solution.  Plausibility discovery is itself quite plausible, and it should be closely considered by the courts to allow valid civil rights claims to proceed.  This paper was one of several excellent pieces in a symposium issue of the Lewis & Clark Law Review.  All of these articles can be downloaded here.