HR and the Courts

Each month, CUPA-HR General Counsel Ira Shepard provides an overview of some labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira:

U.S. Court of Appeals Reverses Dismissal of ERISA Class-Action Lawsuit Against University of Pennsylvania and Orders the Case to Be Reinstated

In a 2-1 decision, the Third Circuit U.S. Court of Appeals (covering Pennsylvania, New Jersey, Delaware and Maryland) has reversed a federal district trial court judge who dismissed the proposed Employee Retirement Income Security Act (ERISA) class-action lawsuit against the University of Pennsylvania. The appeals court ordered that the case be reinstated and proceed forward.

The federal trial court judge and one dissenting appeals court judge took the position that an ERISA plan fiduciary duty fulfills all fiduciary obligations completely by providing “a wide, reasonable and low-cost variety of pension investment alternatives.” The majority ruled that ERISA requires plan fiduciaries to adhere to that standard and in addition to make sure all decisions on investment options and plan management are “prudent.” In this case, the majority ruled that the plaintiffs deserve a trial over the allegations which “plausibly alleged” that the university’s fiduciaries (trustees) failed to perform to the high-prudence standards applicable to all plan fiduciaries (Sweda et al. v. University of Pennsylvania et al. (Case No. 17-3244 3rd Cir, 5/2/19)).

The plaintiffs allege that the University of Pennsylvania plan paid $4.5 to $5.5 million in recordkeeping fees when comparable plans were paying $700,000 to $750,000. In addition, the plaintiffs allege that the plan trustees imprudently selected high-cost investment options with “historically poor performance.” The plaintiffs also allege that the plan trustees failed to properly oversee plan management.

The appeals court ruled, in allowing the plaintiffs to proceed, that ERISA requires fiduciaries to exercise more than “good intentions” and that “a pure heart and empty head are not enough.” Nonetheless, the prudence standard does not require that every decision a fiduciary makes be correct or even the best decision. The standard allows the pension trustees to defend their actions, stating that they fully exercised their duties and made decisions and choices consistent with how a reasonably prudent person would have with regard to plan management, the selection of investment alternatives and the paying of recordkeeping fees.

EEOC Is Suing Less but Collecting More

Midway through fiscal year 2019, the Equal Employment Opportunity Commission (EEOC) reports that it has filed 24 new lawsuits (nine fewer than during the comparable period in 2018). The agency also reports that it has collected more than $21 million in settlements (more than $7 million more than in the comparable period in 2018).

The EEOC reports it has collected more than $4.9 million in two religious discrimination cases and more than $4.3 million in 16 disability discrimination cases. It also reports it has collected more than $5.3 million in six race discrimination cases settled in this period.

As part of the EEOC’s push in the sexual harassment area, it secured $2.9 million in nine settlements. It also collected $2.3 million in four cases involving allegations of pregnancy bias and $3.8 million in six cases involving general allegations of sex discrimination not including harassment or pregnancy bias.

New lawsuits filed by the EEOC in fiscal year 2019 evidence the agency’s concentration on sexual harassment, disability discrimination and retaliation. Employers in the Southwest were more likely to be sued in fiscal 2019 than those in any other region. Regional offices in Charlotte, Indianapolis, Miami and Philadelphia have filed the most new lawsuits thus far this fiscal year.

Supreme Court to Consider Whether LGBTQ Bias Is Sex Discrimination Under Title VII While a Separate Appeal as to Whether LGBTQ Bias is Prohibited as Sex Bias Under Title IX Is Pending

To resolve a split in the circuit courts, the Supreme Court has agreed to consider whether LGBTQ bias is sex discrimination and therefore prohibited by Title VII of the Civil Rights Act. A separate case on whether gender identity is also actionable under Title VII has also been accepted for review (American Express v. Zarda (U.S., No. 17-1633, rev granted 1/18/19) and Bostock v. Clayton County Georgia (U.S. No. 17-1618, rev granted 1/18/19); Harris Funeral Homes v. EEOC (U.S. No. 18-107, rev granted 1/18/19 – considers protection for gender identity)). A separate appeal seeking review of whether Title IX’s sex discrimination provisions are broad enough to include LGBTQ bias is also pending before the Supreme Court.

The question of sexual orientation protection is split between the circuits. The U.S. Court of Appeals for the Seventh Circuit (including Wisconsin, Illinois and Indiana) and the U.S. Court of Appeals for the Second Circuit (including New York, Vermont and Connecticut) have ruled the sexual orientation bias is prohibited by Title VII as sex discrimination. The U.S. Court of Appeals for the Eleventh Circuit (including Alabama, Georgia and Florida) and the U.S. Court of Appeals for the Fifth Circuit (including Texas, Louisiana and Mississippi) have ruled that sex orientation bias is not prohibited by Title VII.

The federal government is split on the issue, with the EEOC having a long history of supporting Title VII’s coverage of LGBTQ bias cases. The Trump administration’s Justice Department has come out against interpreting Title VII to cover LGBTQ bias.

Professor Sues and Seeks Class-Action Status for His Allegations of Gender Reassignment Bias as Public University Refuses to Cover Costs of Surgery

A professor at the University of Arizona has filed a class-action lawsuit against the university as a result of it not covering the cost of his gender reassignment surgery. He is claiming a violation of Title VII of the Civil Rights Act and the equal protection clause of the Fourteenth Amendment because of the university’s public status.

He claims that the cost of this surgery is routinely covered by private university health plans. He also asserts that gender reassignment surgery to treat “gender dysphoria” is medically necessary under all the applicable guidelines of the American Medical Association, the American Psychological Association and other major medical associations. He is suing the State of Arizona, which administers the state plan applicable to University of Arizona professors; the university’s board of regents; and members of the Arizona Department of Administration, which controls the plan (Toomey v. Arizona et al. (D. Ariz. No. 4:19-cv-00035, motion for class certification filed 4/5/19)).

The plaintiff, in his class certification motion, stated that statistically about 850 out of the 136,000 individuals covered by the plan are transgender and should be included in the class. The plaintiff asserts that his academic expertise on transgender issues and personal connection to some of the foremost transgender groups in Arizona make him well suited to represent the class.

Plaintiffs’ Attorneys in NCAA Athletes’ Successful Lawsuit to Eliminate Some Caps on Athletes’ Pay Seek $45 Million in Attorney Fees

The attorneys representing a class of NCAA athletes who were successful in convincing a federal district court judge to invalidate some caps on athletes’ pay are seeking a handsome award of attorney fees against the NCAA. The attorney fee filing came about three weeks after the attorneys received a ruling from a judge in California who held that the NCAA’s compensation guidelines violate federal anti-trust law. If the ruling stands, it will let colleges and universities pay athletes for education-related expenses beyond current caps. The judge’s ruling limits athletes’ new compensation to education-related costs, not for playing a sport.

The $45 million reflects fees of just under $39 million for hours spent on complex anti-trust litigation multiplied by 1.5 for degree of difficulty and risk, according to the fee motion. The attorneys also assert the result was groundbreaking.