Fox News CEO Accused of Sexual Harassment and Retaliation -- Gretchen Carlson v. Roger Ailes

 Fox News host Gretchen Carlson has filed a  lawsuit in New Jersey Superior Court against  the network's CEO, Roger Ailes.  The unusual thing about the lawsuit is that it is brought  solely against Roger Ailes in his individual capacity rather than against Fox News as her employer.

The gist of the complaint is that Carlson's contract was not renewed in June 2016 as retaliation for complaints she made about the conduct of her male co-host, Steve Doocy, in September of  2009.  The objectionable conduct was that: 

12.  Doocy engaged in a pattern and practice of severe and pervasive sexual harassment of Carlson, including, but not limited to, mocking her during commercial breaks, shunning her off air, refusing to engage with her on air, belittling her contributions to the show, and generally attempting to put her in her place by refusing to accept and treat her as an intelligent and insightful female journalist rather than a blond female prop.

Carlson alleges that as retaliation for her complaining about Doocy Ailes proceeded to sabotage her career over the next seven years and that "In doing these things, Ailes did not act in the interests of Fox News, but instead pursued a highly personal agenda."  

Carlson does not allege that the 76-year old Ailes ever actually propositioned her.  However, in a September 2015 meeting he allegedly told her that "I think you and I should have had a sexual relationship a long time ago."

 

 

  

New Rule: California Appellate Opinions are Now Citable Pending Supreme Court Review

When the United States Supreme Court takes up a case the published Circuit Court opinion from which it arose remains on the books as binding authority unless, and until, it is reversed.

By contrast, under the traditional rule in California a previously published appellate decision was effectively de-published for good once the California Supreme Court elected to take the matter under review.  

Beginning on July 1, 2016, however, California Rules of Court, Rule 8.115 has been modified so that published appellate decisions will now remain citable after review is granted.  

While such opinions are under review, they will remain citable only as persuasive, but not binding authority.  Once the California Supreme Court has completed its review and issued its own opinion, the appellate decision will become binding again as to any point on which it was not overruled or rejected.

Finally, at any time after granting review the California Supreme Court can issue an order directing that some or all points of the appellate decision are binding, while others are not.

It will be especially interesting to see how this last part of the rule is implemented in practice.  It is conceivable that the Supreme Court will use this new authority as a convenient means to partially depublish and thus, in effect, selectively rewrite  lower appellate decisions.  

 

  

Seventh Circuit Holds that Class Action Waivers are Unenforceable under the NLRA -- Lewis v. Epic Systems Corporation

In Lewis v. Epic Systems Corp., the Seventh Circuit held that arbitration agreements that prohibit class or collective actions by employees are illegal and unenforceable under the National Labor Relations Act ("NLRA").  In particular, the May 26, 2016 decision explained that class lawsuits are a form of "protected concerted" activity under NLRA Sections 7 and 8.  Thus, the court reasoned that any purported contractual waiver of these statutorily protected rights is unenforceable:

The [class waiver] provision prohibits any collective, representative, or class legal proceeding. Section 7 provides that “[e]mployees shall have the right to ... engage in ... concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  A collective, representative, or class legal proceeding is just such a “concerted activit[y.”  Under Section 8, any employer action that “interfere[s] with, restrain[s], or coerce[s] employees in the exercise of the rights guaranteed in [Section 7]” constitutes an “unfair labor practice.”  Contracts that stipulate away employees’ Section 7 rights or otherwise require actions unlawful under the NLRA are unenforceable.

(Internal Citations omitted).

The Lewis Court further held that this result is not at odds with the Federal Arbitration Act ("FAA"), as the FAA's "savings clause" only requires enforcement of arbitration agreements which are lawful and otherwise enforceable according to general contract law.

As a general matter, there is no doubt that illegal promises will not be enforced in cases controlled by the federal law.  The FAA incorporates that principle through its saving clause: it confirms that agreements to arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Illegality is one of those grounds. The NLRA prohibits the enforcement of contract provisions like Epic’s, which strip away employees’ rights to engage in “concerted activities.” Because the provision at issue is unlawful under Section 7 of the NLRA, it is illegal, and meets the criteria of the FAA’s saving clause for nonenforcement. Here, the NLRA and FAA work hand in glove.

(Internal punctuation and citations omitted).

In striking down class action waiver agreements Lewis joins with the reasoning adopted by the NLRB itself.  However, it splits with the Fifth and Tenth Circuits, which have held that the pro-arbitration policy of the FAA takes precedence over the right to engage in "protected concerted" activity.  

Unless Lewis is overruled following a grant of en banc review, the circuit split regarding the legality of class action waivers will inevitably end up before the Supreme Court.  However, the Supreme Court's prior pro-waiver decisions have been sharply divided 5-4 decisions authored by the recently departed Justice Scalia.   As a result, time may be running out on employers' most effective technique for avoiding class action liability.  

 

 

Consumer Financial Protection Bureau Issues Proposed Rule to Prohibit Class Action Waivers in Arbitration Agreements

 The federal Consumer Financial Protection Bureau (CFPB) has issued a proposed regulation, 12 C.F.R. part 1040, that would ban the enforcement of class action waivers in most consumer financial contracts.

The new regulation does not apply to employment contracts.  Moreover, the new regulation will only apply prospectively to arbitration agreements formed more than 180 days after the regulation becomes effective.  However, it will inevitably stir up some interesting legal and political issues surrounding the enforcement of class action waivers.  

The new rule amounts to a regulatory reversal of the landmark 2011 U.S. Supreme Court decision in AT&T v. Concepcion, which held that the Federal Arbitration Act ("FAA"), requires states to enforce class action waivers even if they would be illegal under state law.  Indeed, the new regulation would prohibit states from enforcing class action waivers even if they would be legal under state law.

The elephant in the room, however, is whether the CFPB actually has the authority to do any of this.  Section 128(b) of the Dodd-Frank Act purportedly gives the CFPB authority to prohibit arbitration agreements containing class action waivers.  However, the FAA already contains a statutory mandate that private arbitration agreements are to be deemed “valid, irrevocable, and enforceable," and are to be enforced "according to their terms."  

Denying enforcement of class action waiver provisions is arguably a partial repeal of the FAA, at least as it was interpreted in AT&T v. Concepcion.   It is therefore dubious that Congress can constitutionally delegate this legislative function to an administrative agency.