October Term, 2008
January 26, 2008
Today the Supreme Court issued three decisions, described below, of interest to the business community.
Crawford v. Metro. Gov't of Nashville and Davidson County, Tenn., No. 06-1595 (previously discussed in the January 21, 2008 Docket Report).
Title VII of the Civil Rights Act of 1964 prohibits an employer from retaliating against an employee because the employee "has opposed" unlawful workplace race or gender discrimination—commonly known as the "opposition clause"—or because the employee "has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under [Title VII]"—commonly known as the "participation clause." 42 U.S.C. § 2003e-3(a). Today, in Crawford v. Metro Gov't of Nashville and Davidson County, Tenn., No. 06-1595, the Supreme Court held that this protection against retaliation extends to an employee who speaks out about discrimination not on her own initiative, but in answering questions during her employer's internal investigation.
Crawford involves a plaintiff-employee's claim that she was terminated because she reported sexual harassment by her supervisor when questioned by her employer's human resources department during an internal investigation of the supervisor. The district court granted summary judgment in favor of the employer, holding that the "opposition clause" was inapplicable because the plaintiff had not "instigated or initiated any complaint," but had "merely answered questions by investigators in an already-pending internal investigation, initiated by someone else." The district court also held that the "participation clause" was inapplicable because there was no pending EEOC charge. The Sixth Circuit affirmed on the same grounds, reasoning that the "opposition clause" "demands active, consistent 'opposing' activities to warrant * * * protection." 211 Fed. Appx. 373, 376 (6th Cir. 2006).
The Supreme Court unanimously reversed. Writing for the Court, Justice Souter concluded that the meaning of "opposition" is broader than "active, consistent 'opposing' activities" or the actual instigation of a complaint. Slip op. 4-5. The Court held that the plaintiff's statements to her employer were covered by the "opposition clause" because they constituted "an ostensibly disapproving account of sexually obnoxious behavior toward her by a fellow employee." Id. at 4. In so holding, the Court agreed with the Government's position that, "[w]hen an employee communicates to her employer a belief that the employer has engaged in * * * a form of employment discrimination, that communication virtually always constitutes the employee's opposition to the activity." Id. The Court also rejected the employer's arguments that its ruling would discourage employers from conducting internal investigations of workplace discrimination; indeed, the Court concluded that a contrary ruling would discourage employees from truthfully reporting discrimination. See id. at 6-8.
In a brief opinion concurring in the judgment, Justice Alito, joined by Justice Thomas, agreed with the Court's holding and primary reasoning and the Government's position in the case—that an employee's actual communication to an employer of her belief that discrimination has occurred satisfies the "opposition clause." Justice Alito wrote separately, however, to emphasize that the case did not involve and should not be read to address mere "opinions" that were never communicated to the employer but were instead expressed in "informal" or "private" conversations with coworkers. Justice Alito's separate opinion suggesting an important, possible limitation on the scope of the anti-retaliation provision may prove to be significant in future cases.
Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, No. 07-636 (previously discussed in the February 19, 2008 Docket Report).
Retirement plans covered by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., are required to operate in accordance with their governing documents (ERISA
§ 104(a)(1)(D)). By statute, those governing documents must provide that "benefits * * * under the plan may not be assigned or alienated" (ERISA § 206(d)(1)) except pursuant to a qualified domestic relations order ("QDRO") (ERISA § 206(d)(3)). The Supreme Court granted certiorari in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, No. 07-610, to decide whether a decedent's designation of his former wife as the beneficiary of an ERISA plan survives a later divorce agreement, not amounting to a QDRO, that purports to divest the former wife of any of the decedent's retirement benefits. In a decision issued today, the Court held that a beneficiary may waive an interest in ERISA benefits, but only if that waiver comports with the plan's governing documents.
Writing for a unanimous Court, Justice Souter concluded that, when the former wife waived her interest in the decedent's retirement benefits, the waiver did not constitute an assignment or alienation that would be nullified by ERISA § 104(a)(1)(D). To the contrary, the language "assigned or alienated" would be implicated only where some other person acquired a new right. By waiving her interest, a putative beneficiary merely returns the determination of ownership to the decedent (if he designated a contingent beneficiary), to the estate, or to the beneficiary under the laws of intestacy. This understanding is consistent with the treatment of spendthrift trusts at common law and with the limited scope of QDROs, which require the designation of a successor payee.
Even though the waiver was not nullified by ERISA §104(a)(1)(D), the Court held that the plan administrator was entitled to dishonor the waiver under the terms of the plan. Notwithstanding the divorce, the decedent never removed his former wife as the beneficiary of his retirement plan. The Court found this controlling and rejected any efforts to require further inquiry by plan administrators. "[B]y giving a plan participant a clear set of instructions for making his own instructions clear," the Court said, "ERISA forecloses any justification for enquiries into nice expressions of intent, in favor of the virtues of adhering to an uncomplicated rule: 'simple administration, avoid[ing] double liability, and ensur[ing] that beneficiaries get what's coming quickly, without the folderol essential under less-certain rules." Slip op. 15 (quoting Fox Valley & Vicinity Const. Workers Pension Fund v. Brown, 897 F.2d 275, 283 (7th Cir. 1990) (Easterbrook, J., dissenting)). The Court's decision reinforces "the bright-line requirement to follow plan documents in distributing benefits." Id. at 17.
United States v. Eurodif S.A., No. 07-1059 (previously discussed in the April 21, 2008 Docket Report).
To protect domestic industry against unfair foreign competition, the Department of Commerce is empowered under 19 U.S.C. § 1673 to impose "antidumping" duties when "a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value." In United States v. Eurodif, S.A., No. 07-1059, the Supreme Court granted certiorari to decide whether "foreign merchandise" is "sold" under the statute when a purchaser in the United States provides raw materials to a foreign entity that processes them for a fee, and then delivers the transformed product to the United States. In a decision issued today, the Court held that the Commerce Department acted within its authority when it determined that there is a sale of foreign merchandise in that circumstance.
The Commerce Department concluded that European companies were selling low-enriched uranium (LEU), a component used in nuclear-power generation, at less than fair value. U.S. utilities acquire LEU either by purchasing it for cash or by delivering a quantity of natural uranium to an enricher, paying for "separative work units" (SWUs)—a measurement of the effort required to transform natural uranium to LEU—and receiving in exchange a quantity of LEU. Concluding that the enrichment is the "most significant manufacturing operation" in the production of LEU, the Commerce Department determined that LEU was merchandise subject to the antidumping statute, whether acquired through direct purchase or through SWU transactions. The Commerce Department rejected the suggestion of a group of U.S. utility companies that SWU transactions were merely the purchase of services, reasoning that a process that "results in the substantial transformation of the input product" is not a "service" in the context of international trade. Eurodif S.A., a French enricher, challenged the determination in the Court of International Trade, which concluded that, because the enricher never obtains full ownership of the uranium in an SWU transaction, its transfer of the LEU back to the utility cannot constitute a "sale." The Court of Appeals for the Federal Circuit affirmed.
In a unanimous opinion by Justice Souter, the Supreme Court reversed. It observed that § 1673 "is not limited by its terms to cash-only sales." Slip op. 11. And because "public law is not constrained by private fiction," it concluded that the Commerce Department was not bound to accept the parties' contractual characterization of their transaction as a service. Id. at 11-12. The Court noted that "the exchange of cash combined with a commodity for a product that uses that very commodity as a constituent material," such as the SWU transactions in question, "does not fall neatly into the category of contracts for services or the category of contracts for the sale of goods." Id. at 12. But it suggested that, where the constituent material in question is "untracked and fungible, ownership is usually seen as transferred, and the transaction is less likely to be a sale of services." Id. at 14. Because the Commerce Department's determination did not contradict unambiguous statutory language or represent an unreasonable resolution of ambiguous language, the Court upheld its "eminently reasonable" approach under the principles of Chevron U.S.A. Inc. v. Natural Resource Defense Council, Inc., 467 U.S. 837 (1984). Slip op. 10, 16.
Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at firstname.lastname@example.org or +1 202 263 3324).