Supreme Court Roundup Part Three: Harris v. Quinn

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Category: Constitutional Interpretation, Constitutional Law, First Amendment, Health Care, Labor & Employment Law, Public
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the american twins 2On October 30, I participated in a presentation entitled “Supreme Court Roundup” with Ilya Shapiro of the Cato Institute.  The event was sponsored by the Law School chapters of the Federalist Society and the American Constitution Society.  We discussed three significant cases from the 2013-2014 Supreme Court term: McCutcheon v. FEC, Burwell v. Hobby Lobby and Harris v. Quinn.  It was a spirited discussion, in which Mr. Shapiro and I presented opposing views, but I want to thank Mr. Shapiro for taking the time to visit the Law School and for sharing his perspective with the students.

This is the third and final blog post on the presentation.  Readers can find the first post here, and the second post here.  What follows are my prepared remarks on Harris v. Quinn, and also a brief conclusion regarding the three cases.  Readers interested in Mr. Shapiro’s position on the case can refer to the amicus brief that he filed on behalf of the Cato Institute.

The case of Harris v. Quinn involved an Illinois law that made home health aides state employees under the Illinois Public Labor Relations Act.  As a result of this law, these workers became joint employees of both the private individual who receives the services of the home-health worker and the State of Illinois.  The Service Employees International Union (SEIU) represents home health aides under a contract with the State of Illinois and collects mandatory dues from both union and non-union workers, which are called “agency fees.”  Persons who have a negative view of organized labor object to agency fees because they compel people to pay money to an organization to which they do not belong.  Persons who have a positive view of organized labor support agency fees because they prevent non-union employees from “free riding,” which occurs when non-union employees receive the benefits of union-negotiated employment contracts without contributing to the cost of negotiating them.

Under existing precedent, a government employer who collects agency fees from non-union members does not violate their First Amendment rights because when the government acts as an employer it has a compelling interest in avoiding conflicting demands for wages and employment conditions from competing groups of employees.  Abood v. Detroit Board of Education (1977).  The plaintiffs in the Harris case wanted to use their lawsuit to overturn the Abood decision, thereby allowing any government employees who are not union members to work for the government without paying agency fees to a public employee union.  Read more »

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The NBA, Television Broadcasting Rights, and Collective Bargaining

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Category: Arbitration, Labor & Employment Law, Public, Sports & Law
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Television broadcasting rights in professional sports are a huge chunk of the revenue equation for professional leagues, and it isn’t very hard to see how that is the case. For example, the current NBA TV deal is worth about $930 million annually. In 2016, this deal is set to expire and current reports indicate that an extension is in the works that will pay the NBA over $2 billon annually for the rights to broadcast games on Turner and ESPN networks. When this deal comes to fruition, the revenue generated by the TV deal will dwarf the money coming in from any other source.

While the value of the NBA’s television broadcasting rights are staggering, the most interesting aspect of the new deal is how it will affect the collective bargaining process. In 2011, the NBA suffered through a lockout where owners claimed to be losing hundred of millions of dollars each year. For this reason, the owners argued, the player’s cut of the revenue needed to be scaled back. By the time the lockout ended, the owners had modest success in achieving this particular goal, pinning the player’s share of basketball related income back to between 49% and 51%. The previous basketball related income split was approximately 57–43% in favor of the players.

With the television revenue doubling by 2016, the owners will not have a leg to stand on if they again try to argue that teams are losing money. Considering the amount of money set to be on the table, the players are likely to fight for a bigger chunk. And if the owners aren’t reasonable about it, the league could be looking at another lockout.

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Professor Papke’s Book on Pullman Case Cited in Huffington Post

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Category: Labor & Employment Law, Marquette Law School, Public
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As we all relax today, Labor Day, and enjoy a Monday off of work and school, how many of us have thought about the origins of this day, the day to honor workers?

The Huffington Post explains the origins of Labor Day—arising from a labor strike turned bloody in the 1890s—and references our own Professor David Papke, who in 1999, authored The Pullman Case: The Clash of Labor and Capital in Industrial America.

For more on the meaning of today, with a reference to and quote from Professor Papke, see here.

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US Supreme Court Review: Two Employee Benefit Cases (Dudenhoeffer and Hobby Lobby)

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Category: Business Regulation, Corporate Law, Health Care, Labor & Employment Law, Public, U.S. Supreme Court
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US Supreme Court logo(This is another post in our series, Looking Back at the U.S. Supreme Court’s 2013 Term.) This blog post is the third of three on labor and employment law cases by the United States Supreme Court in the last Term. This post focuses on two employee benefit law/ERISA cases: Fifth Third Bancorp v. Dudenhoeffer and Burwell v. Hobby Lobby Stores, Inc. First, a disclosure: Along with six other law professors, I co-wrote an Amicus Curiae brief in support of the Dudenhoeffer plaintiffs.

Dudenhoeffer involves so-called ERISA stock-drop litigation, which has been rampant in the federal courts for a couple of decades now. The basic formula of these cases is that, as part of the employer-sponsored retirement plan (whether an employee stock ownership plan (ESOP) or a participant-directed 401(k) plan), the employer offers its own stock as either the entire pension plan investment or part of the pension plan investment.   When the company goes south and its stock price falls, plan fiduciaries find themselves in a difficult position as far as whether to sell the stock or to hold on to it. This is especially so when the plan fiduciary has conflicting duties as an officer of the company and as a fiduciary of the plan. As a corporate officer, not only is the person supposed to act in the best interests of shareholders to maximize the value of the company, but securities law forbids them to trade stock based on non-public material information. As a fiduciary to the ESOP or 401(k) plan, ERISA gives that same person an obligation to act in the best interest and with the same care as a prudent fiduciary would when making decisions about that employee benefit plan. And in case you are wondering, ERISA Section 408(c)(3) gives employers the ability to assign the same person both officer and plan fiduciary roles or set up so-called “dual-role fiduciaries.” Read more »

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US Supreme Court Review: Two Labor Law Cases (Noel Canning and Harris v. Quinn)

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US Supreme Court OT2013 logo(This is another post in our series, Looking Back at the U.S. Supreme Court’s 2013 Term.) Last month I commenced a series of posts of the United States Supreme Court’s labor and employment law decisions last term by blogging on the Court’s decision in the First Amendment public employee free speech case of Lane v. Franks, No. 13-483 (June 19, 2014).  In two separate blog posts, I will comment on two labor law Court decisions (NLRB v. Noel Canning and Harris v. Quinn) and two employee benefit/ERISA decisions (Burwell v. Hobby Lobby Stores, Inc. and Fifth Third Bancorp v. Dudenhoeffer).  This post discusses the labor law cases.

To begin, National Labor Relations Board v. Noel Canning, 134 S. Ct. 2550 (June 26, 2014), is obviously much more than just an ordinary labor law case.  Yes, it concerns the validity of decisions made by the National Labor Relations Board (NLRB or Board) when it had a quorum based solely on presidential recess appointments from roughly January 2012 through August 2013.  More specifically, on January 4, 2012, President Obama, faced with the prospect of another two-member Board (see below why this is a problem), used his constitutional recess appointment powers to make three intra-recess appointments.  In an effort to prevent any intra-session appointments, the Republican-controlled House of Representatives refused to give its consent to the Democratic-controlled Senate to go into recess.  See U.S. Const. Art. II, sec. 5 (“[n]either House, during the session of Congress, shall, without the consent of the other, adjourn for more than three days . . . .”).  In response, the Senate held very brief, pro forma sessions in which no business was conducted.

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US Supreme Court Review: Lane v. Franks

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US Supreme Court logo(This is another post in our series, Looking Back at the U.S. Supreme Court’s 2013 Term.)

This past year has been another active one for labor and employment law cases at the United States Supreme Court.  Decisions have ranged from public employee free speech to the collection of dues by public-sector unions to the fiduciary duties owed under employee benefits law when a plan fiduciary invests in company stock.   This blog post focuses on the public employee free speech case, Lane v. Franks, No. 13-483 (June 19, 2014), while two subsequent posts will discuss the labor law cases of Harris v. Quinn and NLRB v. Noel Canning, and finally the ERISA case of Fifth Third Bancorp v. DudenhoefferRead more »

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Third Annual ERISA, Employee Benefits, and Social Insurance National Conference

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Category: Labor & Employment Law, Marquette Law School, Public
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This has been a busy semester for the Labor and Employment Law Program at Marquette University Law School.  In addition to the Speaker Series I wrote about yesterday, we are also honored to be hosting the Third Annual ERISA, Employee Benefits and Social Insurance National Conference (program at this link) on March 28, 2014 (this follows  wonderful ERISA conferences at Washington University Law and Michigan Business the two previous years).

To say we have an embarrassment of riches does not quite capture the remarkable array of papers that are to be presented.  When you add a terrific luncheon keynote speaker in the person of Assistant Secretary of Labor for the Employee Benefit Security Administration Phyllis Borzi, the cool factor (even for ERISA) is off the charts.

Panels include papers on ERISA claim and plan issues, the Affordable Care Act and ERISA, the future of public pension plans and other non-ERISA pension plans here and abroad, bankruptcy issues surrounding pensions and other legacy costs, and emerging challenges for social insurance and pension programs.

Should be a great program! Read more »

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New Speaker Series in Labor and Employment Law

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Category: Labor & Employment Law, Public, Speakers at Marquette
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I am excited to announce the kick-off of a new speaker series in labor and employment law, sponsored by the Labor and Employment Law Program at Marquette University Law School.

We are really starting the program off with a bang.

On March 17th, Sam Estreicher (NYU Law) will be debating yours truly on his new labor law reform proposal, “Easy In, Easy Out” (details about that proposal here). You can register here.

On March 27th, in conjunction with the Third Annual ERISA National Conference at Marquette, Assistant Secretary of Labor and head of the Employee Benefit Security Administration (EBSA) Phyllis Borzi will be speaking about the Affordable Care Act. You can register here.

Finally, on April 8th, Professor Takashi Araki, former Dean and Professor of Law at the University of Tokyo Law School and Visiting Professor this semester at Harvard Law School, will be coming to speak about contemporary topics in Japanese employment law.  You can register here.

All events are scheduled at noon and include lunch. Read more »

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Unanimous Supreme Court in Heimeshoff Permits Contractually-Based SOLs in ERISA Denial of Benefit Cases

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CourtThis morning, the United States Supreme Court issued its decision in Heimeshoff v. Hartford Life & Accidental Life Ins. Co., concerning statute of limitation accrual issues for benefit claims under Section 502(a)(1)(B) of ERISA.

The Court unanimously held that Hartford’s Long Term Disability Plan’s requirement that any suit to recover benefits be filed within three years after “proof of loss” is due is enforceable.  More specifically, “[a]bsent a controlling statute to the contrary, a participant and a plan may agree by contract to a particular limita­tions period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.”  Causes of action for benefits under ERISA do not start to accrue until a final internal appeal decision.  Because Heimeshoff failed to file a claim for long-term disability ben­efits with Hartford within the contractual SOL period, the Court concluded her claim was rightfully denied by Hartford.

While ERISA does not provide a statute of limitations for denial of benefit claims, many plan administrators have in place a contractual 3-year limitations period like Hartford’s.  Read more »

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6th Circuit: ERISA Remedy for Wrongful Denial of Benefits May Include Disgorgement Remedy Under Section 502(a)(3)

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gavelThanks to Mark DeBofsky for bringing to my attention a potentially game-changing ERISA legal remedies case, Rochow v. Life Insurance Co. of North America (6th Cir. Dec. 6, 2013).

Without seeking to lay out the byzantine world of ERISA remedial law, the important question in the case is whether a plaintiff can maintain both a Section 502(a)(1)(B) claim for benefits and Section 502(a)(3) claim for breach of fiduciary at the same time.  If so, the question remains whether disgorgement of profits is cognizable remedy under Section 502(a)(3) against the insurance company for failure to pay the benefits on a timely basis.

It seems like this is the important holding by the 2-1 majority: “[W]e hold that disgorgement is an appropriate equitable remedy under § 502(a)(3) and can provide a separate remedy on top of a benefit recovery.”  This is a welcome development for ERISA plaintiffs and their attorneys, as ERISA’s remedial scheme has been narrowly construed over the years to prevent plaintiffs from receiving full recovery for their losses.

The debate going forward is whether the Supreme Court’s Varity case allows this outcome. Read more »

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Zelinsky: Use of HSAs and HRAs as Compromise to ACA Contraceptive Mandate Dispute

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Category: First Amendment, Health Care, Labor & Employment Law, Public, Religion & Law
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stethoscopeEd Zelinsky (Cardozo) has an interesting post on his OUP blog discussing a possible compromise in the on-going dispute between for-profit religious corporations, like Hobby Lobby, and the Obama administration’s Affordable Care Act’s (ACA’s) contraceptive coverage mandate.

Here’s a taste:

This entire controversy is unnecessary. The tax law contains devices for reconciling the religious concerns of employers like Hobby Lobby with the policy of expanding medical coverage: health savings accounts (HSAs) and health reimbursement arrangements (HRAs). The current regulatory exemption from the contraception mandate should be amended to include for-profit employers and to exempt from the federal contraception mandate employers (both non-profit and profit-making) who maintain HSAs or HRAs for their respective employees. Compromise along these lines would respect the genuinely-held views of religious minorities while implementing the federal policy of broadening access to health care.

An HSA/HRA compromise would eliminate the complicity of religious employers in the provision of contraception methods to which they object while enabling such employers’ employees to obtain on a pre-tax basis any medicines or devices such employees want, including contraception to which their employers object. Employers’ payments into their employees’ HSAs and HRAs would be the equivalent of the cash wages paid to such employees, wages which the employees are free to spend as they choose.

Personally, I do not see a RFRA or free exercise problem with ACA’s mandate because it is not a law that targets religion or otherwise substantially burdens religious rights of individuals. Read more »

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Much ERISA Fun at the Supreme Court Today: Heimeshoff and Benefit SOL Accrual Issues

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Supreme_CourtOK, hold onto your seats for some flat-out ERISA law excitement. This morning, the United States Supreme Court heard oral argument in Heimeshoff v. Hartford Life & Accidental Insurance Co. [Briefs at SCOTUSblog], concerning statute of limitation accrual issues for benefit claims under Section 502(a)(1)(B) of ERISA.

RossRunkel.com, as always, gets to the heart of the matter (which is really impressive when you consider it is ERISA after all):

Heimeshoff’s disability policy, administered by Hartford, says that a court suit for wrongful denial of benefits has to be filed within three years of when the claimant files a proof of loss with the plan administrator.

That can be tough, given the fact that it’s possible for the three-year period to begin to run before the claimant has gone through the administrative procedure that must be followed before bring a suit. I suppose it’s even possible in some cases that the three years would run out before the claimant got a final denial. Read more »

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