“Yellow-Dog” Arbitration Clauses Headed to High Court?

    Federal labor law makes it illegal for an employer to require a would-be employee to promise not to join a union if hired. These agreements, known as yellow-dog contracts, were a common weapon for anti-union employers in the late 19th and early 20th centuries, but Congress declared them illegal in 1932 in the Norris-LaGuardia Act. Today, they are an historical relic and the term is all but unused.
    The National Labor Relations Act (NLRA), enacted in 1935, fortifies the prohibition by specifying in section 7 that employees have the right “to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” The act’s section 8 makes it an “unfair labor practice” for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights” guaranteed in section 7.
    The National Labor Relations Board (NLRB), the agency charged with enforcing the law, ruled in 2012 that the act’s protection for “concerted activities” also makes it an unfair labor practice for an employer to prevent employees from joining together in class actions against the employer. But many employers are now including in employment contracts clauses that require any disputes to be resolved through arbitration and only individually, not combined with other employees in class actions.
    Business groups are arguing strongly that the NLRB got it wrong because the Federal Arbitration Act (FAA), enacted in 1925, makes arbitration agreements enforceable and that law trumps the NLRA. Federal appeals courts have split on the issue, a split deepened by a ruling by the Ninth U.S. Circuit Court of Appeals last week [Aug. 22]. With five appeals courts now divided 3-2 on the question, an issue affecting blue- and white-collar workers alike nationwide seems all but certain to reach the Supreme Court, perhaps as early as the new term set to open in October.
    Congress enacted the FAA at the behest of business groups who saw arbitration as more efficient and less expensive than litigation for resolving commercial disputes but found courts reluctant to enforce pre-dispute arbitration agreements. The Supreme Court began in the 1980s to view the act as embodying a general federal policy favoring arbitration not only in arms-length arbitration clauses between companies but also in contracts imposed by companies on workers, consumers, investors, and other potential plaintiffs.
    The Roberts Court fortified the pro-arbitration tilt under a line of closely divided decisions written by the late justice Antonin Scalia that enforced class action waivers written into arbitration clauses. Writing for a five-justice majority in American Express Co. v. Italian Colors Restaurant (2013), Scalia blocked a California restaurant from joining with other merchants in an antitrust claim against the big credit card issuer. The restaurant argued, and the federal appeals court in New York agreed, that it could not afford to mount a major antitrust case on its own given a potential recovery of no more than $38,000. In an acerbic dissent, Justice Elena Kagan summarized the “nutshell version” of the ruling as, “Too darn bad.”
    Scalia’s death leaves the court evenly divided between the conservative and liberal blocs on whether to extend the pro-arbitration rulings or limit or even reverse the trend. Before Scalia’s death, labor groups might have been wary about taking this issue to the high court. Now, it is up to business interests to decide whether to appeal the Ninth Circuit’s decision or a ruling to the same effect by the Seventh Circuit in May.
    The Ninth Circuit’s decision, like the Seventh Circuit’s, is a Fair Labor Standards Act case charging the plaintiffs’ employer with failing to pay overtime. The NLRB’s initial decision in 2012 against enforcing class action waivers in employment agreements similarly came in an overtime suit against the national homebuilding company D.R. Horton. “Being required to proceed individually is no proper substitute for proceeding together,” the NLRB majority wrote in the decision.
    On appeal, the Fifth U.S. Circuit Court of Appeals became the first of what are now three appeals courts to reject the NLRB’s position and enforce the class action waivers imposed by employers on their workers. The Second and Eighth Circuits fell in line, but the Seventh Circuit created a split with its May 26 decision in Lewis v. Epic Systems Corp. agreeing with the NLRB’s stance.
    Writing for a 2-1 majority in the Ninth Circuit decision, Chief Judge Sidney Thomas emphasized that “concerted action” is “the basic tenet” of federal labor law. “The NLRA precludes contracts that foreclose the possibility of concerted work-related legal claims,” Thomas wrote in Morris v. Ernst & Young LLP. “An employer may not condition employment on the requirement that an employee sign such a contract.” Thomas, a Clinton appointee, was joined in the ruling by an Obama appointee, Andrew Hurwitz.
    In a dissent, Judge Sandra Segal Ikuta, a Bush43 appointee, accused the majority of ignoring “the thrust” of recent Supreme Court decisions. The ruling, she said, was “breathtaking in its scope and in its error.”
    The anti-union pledges of yesteryear came to be known as yellow-dog contracts when a United Mine Workers official wrote in 1921 that such an agreement “reduces to the level of a yellow dog any man that signs it.” The class action waivers of current day similarly force workers to forgo a right seemingly guaranteed by federal labor law. The future of those provisions may well turn on the future ninth justice, whoever he or she may be.

On Voting, North Carolina Case Is Test for Justices

      John Roberts has a way with words, and he is often at his best when he is direct and concise. The chief justice wrote for the court in May in giving a black Georgia death row inmate a chance for a new trial based on evidence that prosecutors excluded at least two would-be jurors on the basis of race. “Two peremptory strikes on the basis of race,” Roberts wrote, “are two more than the Constitution allows.”       Roberts and the other justices now have to decide how many racially discriminatory voting law changes are more than the federal Voting Rights Act allows, even if only on an interim basis pending a final decision by the Supreme Court itself.
      North Carolina is asking the court to stay —  that is, to put on hold — a decision by the Fourth U.S. Circuit Court of Appeals to block five interconnected changes in voting procedures enacted in 2013 by the state’s Republican-majority legislature and GOP governor. In a mostly unanimous decision, the three-judge appeals court panel found that the state had intentionally adopted changes to restrict voting procedures that black voters used more than white voters did.
      The appeals court issued its decision on July 29 and six days later rejected the state’s request to stay the decision and allow the challenged law to remain in effect through the November election. Now, the state is telling the justices that the appeals court decision is wrong: “unprecedented” in finding intentional discrimination solely on the basis of disparate impact.
      The state argued that the court will probably agree to hear the state’s appeal and that the law should remain in effect. “Forcing the state to change the status quo mere months before the presidential election will cause irreparable injury to the state and its residents,” the state’s lawyers wrote in the application for a stay filed last week [Aug. 22].
      To that argument, the appeals court said, in short, pish-posh, based on the state’s own statements at the earlier oral argument. In its order denying a stay, the appeals court noted that the state’s lawyers “assured us that it would be able to comply with any order we issued by late July.”
      The state told the judges that early voting could be held at the state election office in each county and that election officials could be instructed not to require the photo ID specified in the challenged law. The state also acknowledged that its computer system was equipped to handle same-day registration and out-of-precinct voting. “Because of these assurances,” the court wrote, “we are confident that North Carolina can conduct the 2016 election in compliance with our injunction.”
      The appeals court also had a different view about the potential injury from blocking the challenged law or allowing it to go into effect. “[T]he balance of equities heavily weighs against recalling the mandate or granting a stay,” the court wrote. “Voters disenfranchised by a law enacted with discriminatory intent suffer irreparable harm far greater than any potential harm to the State.” And the court viewed the relevant status quo differently than the state did. “Finally, we observe that our injunction merely returns North Carolina’s voting procedures to the status quo prevailing before the discriminatory law was enacted,” the court wrote.
      The plaintiffs can be expected to hammer these points in their response to the state’s application, due on Thursday [Aug. 25]. For Supreme Court handicappers, the easy prediction is a 4-4 split along conservative-liberal lines. A tie in this case would go to the plaintiffs: North Carolina needs five votes to get a stay. The one wild card could be the liberal justice Stephen G. Breyer, who somewhat surprisingly gave the conservatives a “courtesy” fifth vote earlier this month in staying the Fourth Circuit’s decision favoring a transgender Virginia high school student’s effort to use the bathroom corresponding to his gender identity.
      Breyer explained his decision in that case by noting that the four conservative justices had the votes necessary to grant review of the decision on the merits and that a stay would merely preserve the status quo until the court could decide the case. But election expert Rick Hasen, a law professor at the University of California-Irvine, doubts that Breyer would view an election law case the same way. “There’s no way to redo the election,” Hasen wrote on his invaluable Eletction Law Blog. “With irreparable injury like this, there’s no way Justice Breyer goes along.”
      For Roberts, the case tests his prevailing view in the decision in Shelby County v. Holder to eliminate the Voting Rights Act’s preclearance decision on the ground that things have changed in the South since the law was enacted in 1965. The recent spate of voter ID laws and other vote suppression laws provides an ironic confirmation of sorts: disenfranchising minority voters is now practiced not just in the South but in other states, such as the once-progressive Wisconsin. Still, Texas and North Carolina carried vote suppression further than any of the states to the north.
      Meanwhile, a top Republican official in North Carolina is advising fellow Republicans on local election boards to resist any changes pushed by Democrats. Dallas Woodhouse, the state GOP’s executive director, urged fellow Republicans to support “rules that are fair to our side” (emphasis added). With North Carolina possibly a critical state in the presidential election, the Supreme Court owes the state, and the nation, a decision that is fair not to one side, but to both.

At Supreme Court, Jurors' Voices Silenced

     Twelve Virginians sat in a federal court jury box for six weeks in the late summer of 2014 and then voted unanimously to convict the state’s former governor and his wife of political corruption. Nineteen months later, eight Supreme Court justices heard lawyers for former governor Bob McDonnell argue that McDonnell had done nothing illegal when he accepted extravagant gifts, favors, and sweetheart loans from a businessman seeking the governor’s help for his company.
     On the eve of those arguments on April 29, three of the jurors reaffirmed their verdicts in interviews with a reporter for the Associated Press. “Politics as usual — that’s a lousy excuse,” juror Daniel R. Hottle told the AP’s Larry O’Dell. Two other jurors told O’Dell they stood by their verdicts. The other nine declined to be interviewed.
     Just as the jurors were unanimous, the eight justices were unanimous in voting to reverse McDonnell’s convictions. The idea of “politics as usual” that Hottle rejected turns out, in the court’s view, to be an essential part of American democracy. “The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns,” Chief Justice John G. Roberts Jr. wrote. A free lunch or campaign contribution, Roberts said, does not transform constituent service into illegal quid pro quo graft.
     Trial by jury is guaranteed in the Constitution in Article III, which establishes the federal judiciary, and in the Sixth and Seventh Amendments of the Bill of Rights. Yet the court’s decision in McDonnell v. United States is the latest evidence that for all the lip service given to the jury system, juries are an endangered species today in federal and state courts alike.
     Plea bargaining in criminal cases and settlements or arbitration in civil cases are the preferred way of doing business in courthouses all around the country today. Eliminating jury trials saves time, money, uncertainty, and emotional wear and tear. The Supreme Court bears some but not most of the blame for the trend. Yet the McDonnell case shows that the court has created and applied a body of law that relegates the jury to a second-fiddle role even in those few cases that actually go to trial.
     The court concluded that McDonnell’s role in setting up meetings or hosting events for Williams did not amount to “official acts” as defined in the federal anti-bribery law. The jury listened to the evidence, applied it to the law that the judge gave them, and came to a different conclusion than Roberts did later. But Roberts had a precedent to cite.
     Two decades earlier, a federal jury had convicted a California agricultural trade association under the same law for giving some $5,000 worth of gifts to the secretary of agriculture. The Supreme Court found no connection between the gifts and any “official acts.” Making “token gifts” to public officials, Justice Antonin Scalia wrote in Sun-Diamond Growers Association v. United States (1999), would produce a “peculiar result.”
     Two juries, two decades apart, rejected “pay for play” politics, but not the Supreme Court. These are not isolated cases. To the contrary, the court has been an active participant for decades in reducing the role and power of the jury in American law, as University of Illinois law professor Suja Thomas explains in her alarm-raising book The Missing American Jury. The court has adopted rules of criminal and civil procedure that give judges the power to take cases away from juries or to throw out jury verdicts based on the judges’ view of evidence.
     The court has blessed plea bargaining and left the process largely unregulated, shifting the power to define and punish crimes from juries to the executive branch. In civil cases, the Rehnquist and Roberts Courts have given businesses and employers free rein to divert legal disputes from the courts into arbitration: a largely secretive process with no role for lay jurors.
     The court has also neutered juries in civil suits against government employees, in particular police officers, through the expansive use of a legal doctrine known as “qualified immunity.” A police officer cannot be found liable for violating an individual’s rights, this doctrine holds, unless the right was firmly established beforehand. Under this doctrine, police officers accused of unlawful searches or excessive force are often spared trial or any verdicts thrown out afterward.
     Consider the somewhat different case that a wrongfully convicted defendant, John Thompson, brought against New Orleans’ famed district attorney Harry Connick Sr. for violating his rights. Connick’s prosecutors had failed to disclose “exculpatory evidence” as required under Supreme Court precedent. Thompson sued Connick, and a jury awarded him $14 million for his 14 years of wrongful imprisonment. But the Supreme Court threw out the verdict. The 5-4 majority in Connick v. Thompson (2011) disagreed with Connick’s juror-constituents in holding him responsible for the conceded rights violation.
     Jury trials may be more expensive than plea bargained or negotiated justice, but the Supreme Court in these cases shows that the neutering of the jury is not so much about efficiency as it is about power. As Professor Thomas points out, juries were created as the voice of the community, but jurors’ voices matter less and less these days. Thus, McDonnell juror Kathleen Carmody found the Supreme Court’s decision “very disappointing.” McDonnell was “absolutely guilty,” Carmody told a local television reporter. Thomas was disappointed too. The decision, she wrote in an op-ed for Law360, removed the jury as a check on government power, an “especially important role” in these times.

On Voting, Courts Stepping Up to Responsibilities

      Eight decades ago, the Supreme Court declared in its now famous Footnote Four in United States v. Carolene Products Co. (1938) that three types of laws warrant special scrutiny when challenged in court. Courts should look more carefully than usual, the footnote instructs, at laws that run afoul of specific constitutional prohibitions, laws that distort the political process, or laws that disadvantage “discrete and insular” minorities.
      Three years ago, the North Carolina legislature passed a broad overhaul of election procedures that fit into two of those three categories. Newly freed from the requirement to preclear any election law changes with federal authorities, the Republican-controlled legislature passed a law to make it harder for African Americans to vote and thus to hurt Democrats in a state with racially polarized voting.
      A federal appeals court has now struck down major provision of the North Carolina law after finding that the legislature intentionally discriminated against minority voters in violation of the federal Voting Rights Act. Given the specific language of that law, Footnote Four’s admonitions were not essential to the decision. But the footnote is worth recalling now to emphasize that courts play an essential role in safeguarding democracy even when they may appear to be undermining it.
      The ruling by the Fourth U.S. Circuit Court of Appeals in North Carolina State Conference of the NAACP v. McCrory (July 29) details the damning evidence that North Carolina legislators were deliberately trying to suppress the black vote when they overhauled voting procedures in 2013. Writing for a unanimous panel of three Democratic appointees, Judge Diana Motz acknowledged that the GOP-controlled legislature and Republican governor Pat McCrory had the right to reconsider election law changes approved under previous Democratic administrations.
      “Elections have consequences,” Motz wrote, but “winning an election does not empower anyone in any party to engage in purposeful racial discrimination.” She and her colleagues saw through the state’s argument that legislators were acting only to eliminate some administrative problems resulting from the earlier changes.
      Tellingly, the North Carolina began its review of voting procedures by asking for racial data about the use of some of the voting practices that they were considering revising. In an earlier time, the legislature had made voting easier by approving such procedures as early voting, same-day registration, provisional out-of-precinct voting, and preregistration for 16- and 17-year olds.
      To no one’s surprise surely, the legislature learned that the state’s African Americans made more use of these voting procedures than the state’s white voters. Most concretely, the data showed that somewhat more than 60 percent of African Americans used early voting in 2008 and 2012 (60 percent and 64 percent respectively)  but fewer than half of white voters (44 percent and 49 percent respectively).
      The data also showed that African Americans were more likely to take advantage of same-day registration and more likely to cast provisional ballots based on voting at the wrong precinct. Black teenagers were more likely than white teenagers to preregister to vote at age 18 when applying for driver’s licenses after reaching age 16. And African Americans were disproportionately less likely than whites to have the kind of photo ID that the legislators decided to require for voting.
      Besides the new photo ID requirement, the law reduced early voting from 17 days to 10 days and completely eliminated three other practices: same-day registration, out-of-precinct voting, and preregistration. The change in early voting significantly eliminated one of the two Sundays that black churches had used in so-called “souls to the polls” voting drives. Black churches have long been the center of voter mobilization efforts in African American communities throughout the South.
      The changes in the law target African Americans “with almost surgical precision,” Motz wrote. The evidence of discriminatory intent, she said, was “as close to a smoking gun as we are likely to see in modern times.”
      The Fourth Circuit’s ruling came four days after the Fifth Circuit appeals court had ruled somewhat similarly against a strict voter ID law that Texas had enacted in the same year as North Carolina’s law. In an en banc ruling, the generally conservative appeals court voted 9-6 to find that the Texas law violated the Voting Rights Act because it had disproportionate effects on black and Latino voters.
      By coincidental timing, a federal judge in Wisconsin struck down voting law changes on the same day as the Fourth Circuit’s ruling in the North Carolina case. In a 119-page decision, Judge James Peterson said that provisions limiting early voting, eliminating weekend voting, and limiting absentee ballot voting to one location were unconstitutional because they intentionally discriminated on the basis of race.
      One weekend later, a federal judge in North Dakota also struck down parts of that state’s voter ID law. Judge Daniel Hovland ruled on Aug. 2 that the law unfairly burdened Native Americans by requiring a photo ID with a street address because many Indians on tribal reservations use post office boxes to get their mail.
      The seeming rush of rulings resembles the sudden spate of federal court decisions two years ago rejecting bans on same-sex marriages. The weak and unsubstantiated arguments about voting fraud and administrative burdens fall apart under the kind of scrutiny the Supreme Court instructed in Footnote Four. The integrity of the political process, it turns out, is too important to be left to politicians. Courts are now stepping up to their role in safeguarding that most precious of rights: the right to vote.