Last year was a relatively slow year for employment law cases decided by the U.S. Supreme Court. Two noteworthy cases were Lewis v. City of Chicago, 130 S. Ct. 2191, No. 08-974 (May 24, 2010), and Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, No. 09-497 (June 21, 2010). Lewis was a Title VII disparate impact case involving a timely charge issue; Jackson was a Section 1981 case involving a mandatory arbitration agreement.
Lewis v. City of Chicago
The issue before the Supreme Court in Lewis was whether a plaintiff who does not file a timely EEOC charge challenging the adoption of an employer's practice that may have a racially disparate impact (that is, have a disproportionately adverse effect on racial minorities) nevertheless may assert a disparate impact claim in a timely EEOC charge challenging the employer's later application of that practice. The Supreme Court held (unanimously) in the affirmative, reversing the decision of the U.S. Court of Appeals for the Seventh Circuit. See the opinion here (written by Justice Scalia).
The basic facts of Lewis are straightforward: In July 1995, the City of Chicago administered a civil service test to over 26,000 applicants seeking to serve in the Chicago Fire Department. After the tests were scored, the applicants were grouped into three categories: (1) those who scored 89/100 or above (deemed "well qualified"); (2) those who scored between 65 and 88 (deemed "qualified"); and (3) those who scored 64 or below (deemed to have failed). Beginning in May 1996 and for the next six years, the City randomly selected Fire Department candidates (who had to meet additional qualifications) from the first group, until it exhausted those candidates, and then randomly selected candidates from the second group.
Significantly, the City conceded that the original grouping procedure had a "severe disparate impact against African-Americans." In other words, that the procedure resulted in disproportionately few black applicants in the top group, which was not justified by business necessity. (Importantly, disparate impact claims do not require, or necessarily imply, that the employer was prejudiced or biased against a particular group, only that the employer's otherwise neutral practice had an unlawfully adverse effect on a particular group.)
In March 1997, the plaintiff (who was in the second group and not selected to be a firefighter) filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission (EEOC). Such a charge is a prerequisite to bringing a Title VII claim in court and must be filed within 300 days of the alleged discriminatory event. The City argued that, because the plaintiff's charge was filed more than 300 days after the City announced the grouping procedure, his lawsuit was untimely and should be dismissed. The district court ruled for the plaintiff, but on appeal the Seventh Circuit agreed with the employer and dismissed the lawsuit. The Seventh Circuit reasoned that the only discriminatory act had been the grouping procedure, and that the subsequent hiring decisions were a mere "automatic consequence" of that act, not fresh acts of discrimination. On further appeal, the Supreme Court rejected the Seventh Circuit's reasoning and held that the plaintiff's lawsuit was timely with respect to each time the City selected candidates from the original list starting in October 1996.
The key portion of the Supreme Court's decision is where the Court explains that Title VII prohibits the "use" of "employment practices" that have a disparate impact on protected groups. The Court found that each time the City selected candidates from the original list, it "used" an allegedly discriminatory "employment practice" within the meaning of the statute. Accordingly, the plaintiff's lawsuit was timely. The Court rejected the City's argument (which had been adopted by the Seventh Circuit) that the only unlawful act was the original grouping procedure, explaining: "Under the City's reading, if an employer adopts an unlawful practice and no timely charge is brought, it can continue using the practice indefinitely, with impunity, despite ongoing disparate impact." On the contrary, the Court ruled that each time the City made employment decisions based on the original list was an actionable event. However, the Court did not decide whether or not the plaintiff had proved that the selection process, in fact, imposed an unlawfully adverse impact on black candidates.
For useful commentary on the Lewis case, see here, here, and here.
Rent-A-Center v. Jackson
The issue in Jackson was, who decides whether a mandatory arbitration agreement is enforceable, the court or the arbitrator? The general rule is that the court decides, unless the agreement contains a "clear and unmistakable" statement that this question is for the arbitrator. In Jackson, the plaintiff argued that this rule did not apply to the arbitration agreement he had signed when he went to work for Rent-A-Center, because the agreement itself was unconscionable (that is, so unbalanced and unfair as to be unlawful and unenforceable). The Supreme Court, in a divided 5-4 decision, rejected the plaintiff's argument and held that the question of the enforceability of the arbitration agreement was to be decided by the arbitrator, as expressly provided in the agreement iself. See the opinion here (written by Justice Scalia).
The majority and dissenting opinions in Jackson discuss and debate various issues surrounding the enforceability of mandatory arbitration agreements in employment. But the take-away point from the case is simple: where an arbitration agreement expressly provides that the arbitrator, not the court, is to decide all issues pertaining to the enforceability of the agreement, then the terms of the agreement will be followed (i.e., the arbitrator will decide), despite any claims by the employee that the overall agreement itself is void or voidable on recognized contract law grounds. These are arguments for the arbitrator to resolve, not the court. The only time the court will resolve the issue is if the employee specifically challenges the express delegation of authority to the arbitrator to decide questions of enforceability. Because the plaintiff in Jackson did not make any such specific challenge, his position was rejected and the dispute was to be arbitrated.
Note: A series of Supreme Court decisions over the past two decades has made it almost impossible for employees to avoid arbitration when they enter into mandatory arbitration agreements as a condition of employment. Consequently, employees, and their counsel, should consider very carefully whether a legal battle over the applicability of an arbitration clause is worth the time and money it will require to litigate (and probably lose) in court.
For useful commentary on the Jackson case, see here, here, and here.