Supreme Court Outlook for 2005-2006

This term, the United States Supreme Court will consider a number of cases that may impact employers and employees. Here is an in-depth rundown.

Arbaugh v. Y& H Corp.

In Arbaugh v. Y&H Corp., U.S., No. 03-30365, the Court will settle a split among the U.S. Appellate Courts and decide whether Section 701(b) of Title VII of the Civil Rights Act of 1964 (which defines “employer” as a person who employs 15 or more employees for at least 20 weeks of the relevant time period) is relevant to federal subject matter jurisdiction or if it is an element of the merits of the case. The Court's ruling will impact the stage of litigation at which courts may hear challenges to the case's Section 701(b) compliance. The Court of Appeals for the Fifth Circuit, where this case arose, held that the employee census is relevant to federal subject matter jurisdiction. In the Second and Seventh Circuits, the courts have held that determination is an element of the merits of the case. Oral argument is scheduled for Nov. 7, 2005.

Buckeye Check Cashing, Inc. v. Cardegna

In Buckeye Check Cashing, Inc. v. Cardegna, U.S., No. 04-1264, the Court will decide whether the Federal Arbitration Act allows a party to avoid arbitration by claiming that the underlying contract containing an arbitration clause (but not the arbitration clause itself) is void for illegality. In Buckeye, the Supreme Court of Florida stated that the court had to resolve whether the underlying contract was valid before compelling arbitration pursuant to an arbitration provision. The court held that if the underlying contract was void under Florida law, the courts could not separately enforce an arbitration provision. Oral argument is scheduled for Nov. 29, 2005.

Domino's Pizza, Inc. v. McDonald

In Domino's Pizza, Inc. v. Mc-Donald, U.S., No. 04-593, the Court considers in the absence of a contractual relationship with the defendant, whether allegations of personal injuries alone are sufficient to confer standing on a plaintiff pursuant to 42 U.S.C. ' 1981. In this case, the president and sole shareholder of JWM Investments sued Domino's Pizza alleging that Domino's Pizza terminated its contract with JWM for race-based reasons. The president and sole shareholder did not have a contract directly with Domino's Pizza. The issue before the Court is whether the plaintiff has standing under Section 1981 to bring this claim. The Ninth Circuit held that the plaintiff had standing because he alleged injuries distinct from that of the corporation. Thus, under the Ninth Circuit's analysis, the plaintiff could seek recovery for injuries that were separate and distinct from contract damages suffered by JWM Investments. Oral argument is scheduled for Dec. 6, 2005.

IBP, Inc. v. Alvarez; Tum v. Barber Foods

In IBP, Inc. v. Alvarez, U.S., No. 21/04-0865, and Tum v. Barber Foods, U.S., No. 02-1679, a consolidated case, the Court will decide: 1) whether walking that occurs between compensable clothes-changing time and the time employees arrive at, or depart from, their actual work stations constitutes non-compensable “walking … to and from the actual place of performance of the principal activity” within the meaning of Section 4(a) of the Portal-to-Portal Act; and 2) whether employees have a right to compensation for time they must spend waiting at required safety equipment distribution stations under the Fair Labor Standards Act (FLSA). Specifically, the FLSA requires employers to compensate employees for all hours worked. However, the Portal-to-Portal Act creates an exception to the FLSA for activities that are before or after the principal employee activity, unless the activity is an integral or indispensable part of the principal activity. In these cases, both employers did not compensate their employees for the time it took the employees to put on protective gear, walk to their work stations, and be ready to work before their paid shifts began. In IBP, Inc., the Ninth Circuit held that such activities were compensable under the FLSA, while the First Circuit, in Tum, held that such activities fell under the Portal-to-Portal Act and were not compensable. Oral argument was heard on Oct. 3, 2005, with new Chief Justice John Roberts presiding.

Wachovia Bank v. Schmidt

In Wachovia Bank v. Schmidt, U.S., No. 03-2061, the Court will consider whether a banking institution is, within the meaning of 28 U.S.C. ' 1348, “located” in a state in which it operates its branch offices for diversity jurisdiction purposes. Specifically, federal law provides that “[a]ll national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.” 28 U.S.C. ' 1348. In Wachovia Bank, the Fourth Circuit held that the district court lacked diversity jurisdiction where the plaintiff was a resident of South Carolina and the defendant, a banking institution, had a branch office in South Carolina. The court reasoned that the term “located” in Section 1348 should be given ordinary meaning, “physical presence,” and therefore, a national banking association would be “located” in any state where it operated a branch office. Oral argument is scheduled for Nov. 28, 2005.

This term, the United States Supreme Court will consider a number of cases that may impact employers and employees. Here is an in-depth rundown.

Arbaugh v. Y& H Corp.

In Arbaugh v. Y&H Corp., U.S., No. 03-30365, the Court will settle a split among the U.S. Appellate Courts and decide whether Section 701(b) of Title VII of the Civil Rights Act of 1964 (which defines “employer” as a person who employs 15 or more employees for at least 20 weeks of the relevant time period) is relevant to federal subject matter jurisdiction or if it is an element of the merits of the case. The Court's ruling will impact the stage of litigation at which courts may hear challenges to the case's Section 701(b) compliance. The Court of Appeals for the Fifth Circuit, where this case arose, held that the employee census is relevant to federal subject matter jurisdiction. In the Second and Seventh Circuits, the courts have held that determination is an element of the merits of the case. Oral argument is scheduled for Nov. 7, 2005.

Buckeye Check Cashing, Inc. v. Cardegna

In Buckeye Check Cashing, Inc. v. Cardegna, U.S., No. 04-1264, the Court will decide whether the Federal Arbitration Act allows a party to avoid arbitration by claiming that the underlying contract containing an arbitration clause (but not the arbitration clause itself) is void for illegality. In Buckeye, the Supreme Court of Florida stated that the court had to resolve whether the underlying contract was valid before compelling arbitration pursuant to an arbitration provision. The court held that if the underlying contract was void under Florida law, the courts could not separately enforce an arbitration provision. Oral argument is scheduled for Nov. 29, 2005.

Domino's Pizza, Inc. v. McDonald

In Domino's Pizza, Inc. v. Mc-Donald, U.S., No. 04-593, the Court considers in the absence of a contractual relationship with the defendant, whether allegations of personal injuries alone are sufficient to confer standing on a plaintiff pursuant to 42 U.S.C. ' 1981. In this case, the president and sole shareholder of JWM Investments sued Domino's Pizza alleging that Domino's Pizza terminated its contract with JWM for race-based reasons. The president and sole shareholder did not have a contract directly with Domino's Pizza. The issue before the Court is whether the plaintiff has standing under Section 1981 to bring this claim. The Ninth Circuit held that the plaintiff had standing because he alleged injuries distinct from that of the corporation. Thus, under the Ninth Circuit's analysis, the plaintiff could seek recovery for injuries that were separate and distinct from contract damages suffered by JWM Investments. Oral argument is scheduled for Dec. 6, 2005.

IBP, Inc. v. Alvarez; Tum v. Barber Foods

In IBP, Inc. v. Alvarez, U.S., No. 21/04-0865, and Tum v. Barber Foods, U.S., No. 02-1679, a consolidated case, the Court will decide: 1) whether walking that occurs between compensable clothes-changing time and the time employees arrive at, or depart from, their actual work stations constitutes non-compensable “walking … to and from the actual place of performance of the principal activity” within the meaning of Section 4(a) of the Portal-to-Portal Act; and 2) whether employees have a right to compensation for time they must spend waiting at required safety equipment distribution stations under the Fair Labor Standards Act (FLSA). Specifically, the FLSA requires employers to compensate employees for all hours worked. However, the Portal-to-Portal Act creates an exception to the FLSA for activities that are before or after the principal employee activity, unless the activity is an integral or indispensable part of the principal activity. In these cases, both employers did not compensate their employees for the time it took the employees to put on protective gear, walk to their work stations, and be ready to work before their paid shifts began. In IBP, Inc., the Ninth Circuit held that such activities were compensable under the FLSA, while the First Circuit, in Tum, held that such activities fell under the Portal-to-Portal Act and were not compensable. Oral argument was heard on Oct. 3, 2005, with new Chief Justice John Roberts presiding.

Wachovia Bank v. Schmidt

In Wachovia Bank v. Schmidt, U.S., No. 03-2061, the Court will consider whether a banking institution is, within the meaning of 28 U.S.C. ' 1348, “located” in a state in which it operates its branch offices for diversity jurisdiction purposes. Specifically, federal law provides that “[a]ll national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.” 28 U.S.C. ' 1348. In Wachovia Bank, the Fourth Circuit held that the district court lacked diversity jurisdiction where the plaintiff was a resident of South Carolina and the defendant, a banking institution, had a branch office in South Carolina. The court reasoned that the term “located” in Section 1348 should be given ordinary meaning, “physical presence,” and therefore, a national banking association would be “located” in any state where it operated a branch office. Oral argument is scheduled for Nov. 28, 2005.