Supreme Court Update

MetLife v. Glenn, No. 06-923, 461 F.3d 660 (6th Cir. 2006)

The Solicitor General recently filed an invitation-brief (available at http://www.usdoj.gov/osg/briefs/2007/2pet/6invit/2006-0923.pet.ami.inv.pdf) in support of the petition for cert. in this case, which presents the recurring ERISA issue as to the standard of review that the trial court's should utilize in ERISA benefit cases when the plan administrator is the employer, and thus evaluates whether or not to pay claims out of its own pocket. The first question that the Solicitor recommended the Court grant cert. on is whether or not that constitutes a conflict of interest that must be considered in determining the standard of judicial review. The Solicitor also recommended to the Court that it order the parties to brief how the Courts should weigh such conflicts of interest in reviewing discretionary benefit determinations made by such a "dual-role administrator."

The Fourth Circuit in Carolina Care Plan, Inc. v. McKenzie, 467 F.3d 383, 386-87 (4th Cir. 2006), cert. dismissed, Nos. 06-1182 & 06-1436 (July 30, 2007) held that a plan administrator that also pays plan benefits operates under a conflict of interest that must be taken into account on judicial review of a benefit determination. And, the 4th Circuit in Doe v. Group Hospitalization & Med. Servs., 3 F.3d 80, 87 (4th Cir. 1993) applied abuse-of-discretion review in such cases on a "sliding scale," whereby the plan administrator's decision is reviewed for reasonableness, and the particular degree of deference under Firestone to be afforded depends on the seriousness of the conflict of interest.

Employee Manuals - Disclaimers Of Contractual Intent

The D.C. Court of Appeals over the past decade has issued a series of decisions, finding that the particular language of the employee handbook and the language of the employer's disclaimer of contractual intent read together, raised a question for the jury as to whether or not the disclaimer effectively trumped any contract argument or not. See, e.g, Dantley v. Howard Univ., 801 A.2d 962 (D.C. 2002); Strass v. Kaiser Found. Health Plan of Mid-Atlantic, 744 A.2d 1000 (D.C. 2000); U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731 (D.C. Cir. 1998); and Sisco v. GSA Nat'l Capital Fed. Credit Union, 689 A.2d 53 (D.C. 1997).

Over the holidays, I tripped over a 2006 opinion by Judge Lamberth, which draws a brighter line as to when this is a jury issue and when the employer gets summary judgment on this issue. See Youngblood v. Vistronix, Inc., 2006 U.S. Dist. LEXIS 51460 (D.D.C., July 27, 2006).

In Youngblood, the manual used permissive language, that is, repeatedly the word "may". For example, the manual in the disciplinary portion stated that the "employee may be notified" "Vistronix may take disciplinary steps" and "Vistronix may terminate the employee". Judge Lamberth held that such permissive language in conjunction with a disclaimer which stated as follows: "These guidelines do not constitute a contract or promise. Any individual employee can be terminated, at any time, with or without cause and without notice." Additionally, the employer had the employee Youngblood sign a receipt that affirmed his status as an at-will employee and that disclaimed any implied contract. Judge Lamberth contrasted this with Strass, where the handbook used mandatory language, that is, the word "shell".

Then, Judge Lamberth drew the bright line, saying that in Youngblood, there was "no logical incongruity between Vistronix's disclaimer and the language contained elsewhere in the handbook, or in the parties' bargain." In contrast, the disclaimer in Strass is "rationally at odds with some aspect of the parties' bargain, [and] the ambiguity as to the parties' intention raises a question of fact for a jury."

I commend Judge Lamberth's opinion as it seems to harmonize these cases that some of us have read too liberally as suggesting a jury question when there is not one.

Paid Sick and Safe Days Act of 2007

My thanks to Karen Minatelli of District of Columbia Employment Justice Center for being able to provide me with the revised version of this proposed District of Columbia legislation. On the D.C. City Council's website, you can find the original version of the bill, but not the revised version that was voted on by committee this past December.

The legislation provides that an employer of six or more employees shall provide for each employee not less than one hour of paid leave for every 26 hours worked, up to a maximum of 10 days within this minimum standard, per year.

An employer of less than 6 employees shall provide not less than one hour of paid leave for every 52 hours worked, up to a maximum of five days within this minimum standard, per year.

Paid leave so accrued may be used by the employee for an absence resulting for, among other reasons, an absence if the employee or the employee's family is a victim of stalking, domestic violence or sexual violence, provided the paid leave is directly related to social or legal services pertaining to the stalking, domestic violence or social violence. The legislation then lists several covered instances including time to relocate and time to take legal action.

Enforcement action is to be taken pursuant to the terms of the District of Columbia's Family and Medical Leave Act of 1990.

San Francisco, in a 2006 initiative supported by 61% of the electorate requires that employers of more than 10 employees give 9 days sick leave and employers of less provide 5 days of paid leave.

International Employment Law - Corporate Social Responsibility

Over the holidays I read a relatively new book on the toy industry. For those who are interested in where the overwhelming percentage of toys in the U.S. come from, and most particularly, the circumstances under which they are manufactured, I highly recommend chapter 8 entitled "Santa's Sweatshop" of Eric Clark's The Real Toy Story: Inside The Ruthless Battle For America's Youngest Consumers (2007 Free Press).

If you are interested in this issue and want to continue to monitor developments, I recommend China Labor Watch/National Labor Committee (http://www.chinalaborwatch.org/).

It will be interesting to see what effect China's new Employment Contract Law, which went into effect January 1st, will have on the practices described in Mr. Clark's book. For more on the new law, see http://www.chinalawblog.com/2007/11/chinas_new_labor_law_its_a_hug.html.

Federal Legislative Update

Senator Kohl (D - WI) has introduced last year S.1577, the Patient Safety and Abuse Prevention Act. The legislation would require long-term care facilities and providers to conduct criminal history background checks before hiring a direct patient access employee. This requirement would not go into effect until January 1, 2011. It provides immunity from liability for such employers in denying employment if the employer reasonably and in good faith relies upon credible information about such applicant provided by a criminal history background check. The legislation prohibits the hiring of an applicant who has disqualifying information disclosed in the background check. A quick read does not readily indicate whether compliance with the proposed legislation's procedures would trump a negligent hiring or negligent retention claim.

Proposed Legislation Prohibiting Discrimination Against Transgendered Persons

For those who have been following this issue, there is a provocative op-ed in last Friday's Wall Street Journal at W13 authored by the Journal's deputy Taste Editor, Naomi Schaefer Riley entitled Crossing Over (available at http://www.opinionjournal.com/taste/?id=110011050).