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U.S. Supreme Court Update

Set forth below you will find a few quick updates on the cases we are following for the U.S. Supreme Court's current term:

Court Rules In Offer Of Judgment Case

On January 20, 2016, the Supreme Court ruled in the matter of Campbell-Ewald v. Gomez that an unaccepted offer of judgment does not end a lawsuit even if the offer provides full relief for the plaintiff's claims.  Instead, the plaintiff can move forward and seek class certification of his claims. Click here for a refresher on this case.

An offer of judgment is a procedural tool defendants can use to end a lawsuit or increase the plaintiff's risk in continuing the lawsuit.  If the plaintiff accepts the offer, the case is over.  If the plaintiff rejects it and recovers less than the defendant offered, the plaintiff could be required to pay the costs incurred by the defendant after the offer of judgment was made.

In Gomez, the Supreme Court was considering whether a plaintiff who rejected an offer of judgment that provided for full relief of his claims could continue his class action lawsuit.  Employers were hoping the answer would be no, thereby providing them with a means to quickly end class action lawsuits.   The Court ruled that an offer of judgment is like any other settlement offer -- its rejection has no effect on the ability of the lawsuit to continue.  Three Justices disagreed, with Justice Roberts arguing that when full relief has been provided, it should be up the court, not the plaintiff, whether the lawsuit could continue.

The unfortunate result of this ruling is that employers have not gained a defensive measure that would help keep class actions in check.  Nevertheless, the offer of judgment remains a valuable tool for employers to use when appropriate.

Public Sector Union Due

Oral argument in the case of Friedrichs v. California Teachers Association took place on January 11, 2016.  As we discussed previously in the Employer Report, this matter concerns whether public employees who choose not to join a union can be compelled to pay a "fair share" or "agency" fee to cover the union's costs of negotiating a contract that covers all employees - union and non-union.  Legal analysts are predicting that the Supreme Court will rule against the union.  Such a ruling will likely result in a financial hit for public sector unions in states where such fees are permitted, which may also impact the political strength of such unions.

Court Agrees To Hear First Amendment Public Employee Case

The Supreme Court has agreed to hear the matter of Heffernan v. City of Paterson which presents the issue of whether the First Amendment bars the government from demoting a public employee based on a supervisor's perception that the employee supports a political candidate.

Jeffrey Heffernan was a police officer in Paterson, N.J., working as a detective assigned to the office of the chief of police.  The chief of police and Heffernan's immediate supervisor both supported the incumbent mayor during a mayoral election.  A member of the mayor's security detail saw Heffernan holding a campaign yard sign for the mayor's opponent.  Heffernan, who was not eligible to vote in the mayoral election because he did not live in the city, had obtained the sign for his mother because her sign had been stolen.  The next day Heffernan was demoted to patrol officer because of his employer's belief that he supported the challenger's campaign.

Generally, the First Amendment protects a public employee's political and associational activity if the employee is in a non-political, non-policy making position.  Heffernan contends that his demotion violated his First Amendment rights because the employment action was taken due to his purported support of the mayor's opponent.   So far, the courts reviewing his case disagree and have ruled that a First Amendment retaliation claim exists only when the public employer retaliated against an employee who actually exercised his First Amendment rights.

This case was argued before the Court on January 19.

Court Agrees To Hear FLSA Car Dealership Case

The Supreme Court has also agreed to hear the case of Encino Motocars, LLC. v. Hector Navarro, which will determine whether "service advisors" at car dealerships are exempt from the overtime-pay requirements of the Fair Labor Standards Act.

The "service advisors" identify service needs and sell service solutions to the dealership's customers and contend that they are entitled to overtime pay for working more than 40 hours per week.  The employer argues that these employees are exempt from overtime requirements under the exemption that applies to "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles." The Ninth Circuit Court of Appeals, with jurisdiction over Nevada, disagreed with the employer and decided to follow a Department of Labor (DOL) Regulation that limited the exemption only to salesmen who sell vehicles and partsmen and mechanics who service vehicles.

The Court's decision in this case could touch on the level of deference to be given to administrative regulations of agencies like the DOL, which may broaden the case's impact on employers.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.