Costs of Summary Judgment

A recent California Court of Appeal case, Reeves v. MV Transportation, provides an illustration of the extent that current summary judgment doctrine operates to supplant the trial process.  The plaintiff in Reeves was a 56 year old attorney (I can identify with this guy already), who was not granted an interview for a staff attorney position with MV Transportation.  Instead MV hired a 40 year old whom Reeves contended was less qualified.  No question that a prima facie case of age discrimination was thereby established.  In such a situation, the employer must identify a non-discriminatory reason for its hiring decision, and the employee must show that the asserted reason is pretextual.  It has always been a little unclear how this burden-shifting process is actually supposed to proceed at trial, but nowadays, it increasingly plays out in the context of a summary judgment motion filed by the employer.   In that context, it becomes the employee's burden to show enough inconsistencies or implausibilities in the employer's declarations or deposition testimony as to allow the court to determine whether a potential fact finder could discredit the employer's asserted reasons for its hiring decision.

It is important to keep in mind that, unless an employer actually admits that it acted for discriminatory reasons (which is not usual), employees in discrimination cases always bear the burden of proving that the employer's claimed justifications for its conduct should not be accepted by the fact finder.  The fact finder has the difficult job of looking behind the employer's explanations to discern its true motives.  Juries happen to be pretty good at this.  Summary judgment, on the other hand, does not seem to be as well-designed a tool for this purpose.  For one reason, the court has no opportunity to assess the demeanor of the witness who is proffering the employer's stated reasons for its decision, and is not allowed to consider such factors in ruling on a summary judgment motion in any event.  Instead the courts require the party opposing summary judgment in effect to accept the employer's testimony, and to introduce evidence or find enough inconsistencies in the record, to allow the court a basis for questioning it.  In other words, while juries can and do discredit witness testimony in their entirety for no better reason than their assessment of the witness's manner or delivery, the court in ruling on summary judgment demands additional proof before discrediting such testimony.  That allows for the possibility that cases can be lost on summary judgment that could have been won at trial.  All of this is not to say that the court reached an incorrect result in this case as compared to the result that may have been reached at trial.  A jury in this case could well have concluded that plaintiff's qualifications were not superior, or that the employer did not act for discriminatory reasons.  But the jury never go that chance in the Reeves case, because the court found the alleged inconsistencies in the record insufficient to question the employer's explanations.

My concern is whether summary judgment is an efficient or appropriate tool to resolve such delicate issues as motivation in discrimination cases.  Courts can justify the increased use of summary judgment in these circumstances as a way of weeding weak cases out of the system, and saving the court the time and trouble of holding trials.  Defendants justify filing such motions on the ground that they may result in dismissal or at least in narrowing the issues for trial, without incurring the cost and risk of trial.  But the courts and the parties filing summary judgment motions may not always fully consider the cost of the motions themselves.  Often they are so voluminous, and require so much evidentiary preparation and court time that they may not save much in comparison with trial.  And the cost of trial is not necessarily the relevant basis of comparison.  In most cases, if summary judgment is denied,  the case is still not going to trial.  Instead, the case is usually going to get settled.  In addition to over-valuing the potential risk of trial (which allows parties filing summary judgment motions to rationalize the enormous expenditure of the motion itself), courts and the parties filing summary judgment motions also do not always factor in the cost of an appeal, which adds many thousands of dollars of attorneys' fees, and years of delay and uncertainty.  They also do not factor the cost imposed on the party who is being denied his day in court, and his opportunity to obtain some compensation for his injuries.  A party such as the plaintiff in the Reeves case suffers his first perceived injustice when he is passed over in favor of a younger, perhaps-less qualified candidate.  Then he suffers a second perceived injustice when he is denied the opportunity to challenge this employment decision in court.   Thus summary judgment may generate considerable dissatisfaction with the system.

I have represented both employers and employees in discrimination cases, and I do not make these points to advocate a rule that is more favorable to one side or the other.  My point is that current summary judgment doctrine, which in discrimination cases appears to favor the employer, may actually impose some serious costs on the employer, in the form of the summary judgment motion itself, and the resultant appeal.  Those costs could in some cases exceed the costs of trial or settlement.  Yet employers often do not take these costs into consideration because of the allure of possible dismissal of troublesome cases.  From the employee's point of view, current summary judgment doctrine presents a formidable potential obstacle in every case, and one that increases the plaintiff's frustration with the system.  If I were put in charge of reforming the Code of Civil Procedure, my goal would be to simplify the process of getting to trial, while at the same time encouraging settlements, and reducing wasteful discovery and motion practice.  Our current heavy reliance on summary judgment to dispose of cases, as illustrated in a case like the Reeves case, does not seem to serve these ends.

(Thanks to California Labor & Employment Law Blog for bringing this case to my attention.)

Read more...

Arbitrability Up to the Arbitrator

Antonio Jackson sued his employer for discrimination in federal district court in Nevada, but the court granted the employer's motion to compel arbitration and dismissed the case.  The Ninth Circuit reversed in part, holding that the trial court was obligated to determine whether the arbitration agreement was unconscionable as Jackson claimed, rather than leaving that determination up to the arbitrator.  Yesterday, the U.S. Supreme Court, in a 5-4 ruling in Rent-a-Center, West, Inc. v. Jackson held that the district court was correct to enforce an arbitration clause that plainly granted the arbitrator exclusive authority to resolve any disputes about whether the arbitration agreement itself was enforceable.

No question that the arbitration agreement in this case clearly left the determination of arbitrability up to the arbitrator.  But Jackson claimed the arbitration agreement itself was a contract of adhesion, meaning he was compelled to sign it as a condition of employment, and that he had no appreciation of its meaning at the time.  He also claimed that the arbitration agreement was substantively unfair, and should therefore be unenforceable, because it required the parties to arbitrate claims that employees typically bring (e.g., his claim of discrimination), while allowing the parties access to court for claims that employers typically bring (intellectual property and unfair competition claims).  (I successfully challenged a similar arbitration clause on behalf of an employee in Abramson v. Juniper Networks, although that case arose in California state courts.)

Is it fair to bind the employee to a provision requiring that the enforceability of the arbitration agreement itself should be determined by the arbitrator, in the face of the employee's claims that the entire contract is unconscionable and unenforceable?  The Supreme Court decided that the employee could be compelled to submit to the arbitrator's determination of whether the arbitration agreement itself was valid.  What that means as a practical matter is that the employee may still be required to advance the substantial filing and hearing fee for the arbitration (which was another one of the employee's challenges to the fairness of being required to arbitrate), and may even be required to present his entire case on the merits to the arbitrator, before ever receiving a determination from the arbitrator himself as to whether he entered into a valid agreement to arbitrate the dispute.  In addition, the arbitrator's decision on that issue would not be reviewable by any court except on the very narrow grounds available for challenges to arbitration decisions on the merits.  So the Court's decision either precludes the employee from obtaining any remedy at all for the claimed discrimination (if he cannot afford his share of the filing and hearing fees), or it may require him to arbitrate his claims before he can find out whether he was required to submit them to arbitration. 

The dissent, written by the retiring Justice Stevens, called the majority's reasoning "fantastic," and Stevens did not mean that in a good way.  I am not going to labor through that reasoning here, but would only raise the question whether we should be comfortable in general with entrusting arbitrators with threshold questions in which the arbitrator himself has a vested interest in the outcome.  It seems to me that such a rule is bound to make people more distrustful of arbitration, and to lend fuel to efforts in Congress to abolish mandatory, pre-dispute arbitration agreements altogether in consumer cases.

(photo from Mises Institute website)

Read more...

Who is an Employer?

The California Supreme Court last week decided Martinez v. Combs, which clarified the definition of "employer" under California labor law.  Plaintiffs were seasonal agricultural workers who had been hired by a strawberry farming company, now bankrupt.  Lacking a remedy for their wage and hour claims against the owner, plaintiffs also named as defendants the merchants through which the growers sold their strawberries.  Plaintiffs contended that these merchants could be deemed their "employers" because they advanced payments for Munoz's strawberries, and because they "supervised" the plaintiffs to the extent that they sent representatives to the fields to inspect the crops and to instruct the workers in how they should be packed.  (slip opin. at 5-6)

Although the Court upheld the findings of the lower court that these merchants did not exercise sufficient control over the plaintiffs to qualify as their employer, because they were not responsible for the hiring and firing decisions, in the course of doing so the California Supreme Court made clear that it would pay deference to the definitions in the applicable Industrial Welfare Commission's (IWC) wage orders.  (Defendants had argued, in reliance on a prior California Supreme Court decision in Reynolds v. Bement, 36 Cal.4th 1075 (2005), that "employer" should be defined by common law.) In the case of agricultural workers, wage order 14 defines "employ" as "to engage, suffer, or permit to work," and "employer" as a person who "employs or exercises control over the wages, hours, or working conditions of any person."  In this case, the defendants were found not to have engaged or suffered or permitted the plaintiffs to work, because Munoz had exclusive control over hiring and firing decisions, and the defendants had no power to prevent the plaintiffs from working.  (slip opin. at 43)

While the decision went against the employees in this case, the Court's analysis could in different circumstances permit a broader definition of employer than that established by common law, because of the Court's deference to the IWC definitions.  Therefore even greater attention must be paid to the definitions in the applicable wage orders in order to ascertain the potential responsibility of the parties who exercise control over employees' activities.

(photo from Typar Landscape Products website)

Read more...

Economical Litigation

At a conference this week at Pepperdine, Daniel Winslow, a Boston attorney, and the International Institute for Conflict Prevention & Resolution unveiled a model agreement aimed at controlling litigation costs.  The draft agreement includes a mandatory pre-litigation dispute resolution clause, as well as limits on the amount of discovery that can be taken in a commercial dispute, depending on the amount in controversy. 

I find the idea of conducting litigation efficiently to be something of an oxymoron, akin to the idea of conducting war efficiently.  As I've said before, the best way to conduct litigation efficiently is not to litigate, just as the best way to conduct war efficiently is to try diplomacy first.  Once you are involved in a lawsuit, the primary goal is not to make life easy and pleasant for the other side.  The goal in a lawsuit--indeed the attorney's ethical imperative--is to win.  Nevertheless, pre-dispute agreements aimed at controlling costs seem an admirable idea.  If they operate to save parties from self-destructive and unnecessary expenses, they are serving a useful purpose.  Like any set of rules, however, they may incentivize parties to try to achieve the maximum bang for the buck under the rules,  rather than actually to reduce the time and effort expended in a lawsuit.  For example, if you can only serve four interrogatories, a litigator's instinct would be to draft those interrogatories as broadly as possible.  If parties can only take a limited number of depositions, they may be tempted to seek the maximum they are allowed under the rules.  Such rules also present the opposing party with a new opportunity to argue that the rules are being violated or abused. 

Another approach might be to simplify and reduce the number of rules, with the goal of creating fewer tangential issues for parties to argue about.  Since the great revision and simplification of the Federal Rules of Civil Procedure in 1938, rules and their interpretation have seemed only to become more cumbersome and complicated.  A thorough housecleaning of the rules is long overdue, and efforts such as the one discussed this week may represent a step in that direction.

(illustration from about 1540 of trial by combat in Germany: I wonder if the lawyers of that time sat around thinking of ways to conduct litigation more efficiently.)

Read more...

Copyright Registration: conditional, not jurisdictional

On Tuesday, the Supreme Court handed down yet another decision that may be mainly of interest to civil procedure aficionados such as myself.  But since it deals with an issue that causes some confusion in copyright cases, and also because it has some bearing on whether such global agreements in the electronic publishing field can move forward, it probably deserves some attention.  In Reed Elsevier, Inc. v. Muchnick, the District Court had approved the settlement of a class action resolving a dispute between authors and online publishers.  (not to be confused with the Google book settlement, which is a different case)  The named plaintiffs in the case had all registered their copyrights in at least one article that was reproduced electronically without their permission.  The class also included, however, a number of authors who had never registered their works.  Because of these class members' failure to comply with the requirement of Section 411(a) of the Copyright Act that no civil action for copyright infringement may be brought without registration of the copyright, the Second Circuit Court of Appeal on it s own motion refused to approve the settlement of claims of those authors of unregistered works.  (It is interesting that although these authors objected to certain terms of the settlement, none of the parties to the case objected to the courts' ability to hear and determine the case.)

Under these unusual circumstances, the Supreme Court held that although Section 411(a) creates a condition to an infringement action, that requirement is not jurisdictional.  That means the court had the power to determine the claims of authors of unregistered works, even though these authors had not satisfied what appears to be an essential condition of bringing suit.  This result can be justified as a matter of statutory construction.  It can also be justified as a practical resolution of a dispute that all of the parties wanted the federal courts to resolve.  Does it make a difference for a copyright-holder considering an infringement action whether the registration requirement is jurisdictional or is just a condition of filing suit?  Probably not, unless the copyright holder can figure out some other way to piggy-back his infringement claims into a federal court action, as the non-registering authors did in this case. 

As for what Muchnick thinks of the case named after him, go here.

Read more...

Supreme Court rejects "place of operations" test.

Today the U.S. Supreme Court decided Hertz Corp. v. Friend, 9-0, which overrules the Ninth Circuit's decision that Hertz Corporation should be deemed a citizen of the State of California because its California operations are larger than those of any other state.  (My commentary on the Ninth Circuit case is here.)  Since I saw some commentary elsewhere wondering whether this is another example of the corporatist federal courts once again making it more difficult for the little guy to sue, I feel the need to point out that this decision has limited impact, and does not seem based on any intent to prevent people from suing corporations.  (Otherwise the case would likely not have been decided by a 9-0 margin.)

All the decision does do is allow corporations like Hertz to remove cases to federal court even in states where the bulk of their operations are found.  Every corporation is deemed a citizen of at most two states, its place of incorporation and its principal place of business.  Now it is clear that principal place of business is the place where the corporation's activities are directed, and not necessarily the place where the bulk of those activities are conducted. That might seem unfair in some cases, but it does seem to accord with the common sense view of what a corporate headquarters is. This case does not change the fact that those are the only two states where corporations cannot remove state law-based cases brought by citizens of those states. Corporations could, both before and after this decision, remove diversity cases in the other 48 or 49 (depending on whether a corporation is headquartered in the same state as it is incorporated) states.  The Hertz decision only impairs the ability of plaintiffs in states where corporations maintain their largest share of operations--which might have been deemed the corporate headquarters under the Ninth Circuit's rejected test--to maintain their actions in state court.

So while Hertz gets to remove cases in California to federal court, and thus escapes the terrible fate of being forced to defend actions by California citizens in California state courts, Hertz will still have to face the citizens of New Jersey in state court, since no diversity of citizenship will be present in cases brought in New Jersey, where Hertz maintains what the federal courts now must uniformly define as its principal place of business. Since I spend a lot of time practicing in the California state courts, and have a lot of respect for California state judges, I can't say that Hertz will really be better off trading the Golden State's courts for the state courts of the Garden State. Or is it possible that Hertz took this case all the way up to the Supreme Court merely to establish its pride in its New Jersey headquarters?

(photo of Hertz headquarters in Park Ridge, New Jersey, from American Companies.com)

Read more...

Pages

It has taken me years, but I finally have this website functioning more or less the way I have been envisioning it for some time.  That is because Blogger finally allows you to set up pages that allow bloggers to post static messages such as "About Me," "Contact," etc.  These are perfect for setting up pages for biographical information, and information about various practice areas.  Of course I could have changed a while ago to a more sophisticated blogging platform, but Blogger has the advantage of being pretty easy to use.  There were also some work-arounds I could have tried, but never did.  I waited until Blogger set it up for me.  So even though I don't know much about the programming necessary to set up a website--my 14 year old kid probably knows more HTML code than I do--I have been able through trial and error and experience to figure out how to create a pretty decent-looking site, if I do say so myself.  So thank you Google and Blogger.

Comments, and especially compliments, are welcome.  The site could probably still use a little tweaking here and there.

Read more...

Office for Rent

We have a large window office available in our four lawyer suite.  It is a prime location right across the street from the downtown LA public library.  On the 17th floor of a prestigious, Class A office building.  Large shared conference room, kitchen and storage available.  Use of copier, postage meter, internet, phone service (VOIP service available), and secretarial services at cost.  Furnished (as shown in picture below) or empty. You would be sharing space with three talented and very amiable attorneys.  Rent is negotiable.  Please forward this post to anyone you know who may be interested (just click on the little envelope below the picture).

Read more...