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Archive for August, 2009

David Atson was having financial trouble, and his employer, a heating company, gave him an advance of the money he would receive for his two-week vacation.  When it came time for Atson to take his vacation, however, he refused because he did not want to go two weeks without pay.  Atson’s employer fired him, and he sought unemployment benefits.  His request for unemployment benefits was denied.  Atson appealed to the New York labor commissioner, who agreed that his employer’s request for him to take a vacation was a valid reason for firing.  Atson then appealed the labor commissioner’s ruling to a New York appeals court.  The appellate court also agreed that it was a valid reason for firing Atson.  For the full story, click here.

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Borntrager v. Central States Southeast & Southwest Areas Pension Fund, Nos. 08-2008/08-2744.

CRST Flatbed, Inc., CRST Van Expedited, Inc., and six current and former employees of these companies (collectively “CRST”) brought suit against Central States Southeast Areas Pension Fund (“Central States”), a multi-employer employee benefit plan.  CRST alleged that Central States wrongfully expelled them from the plan.

Central States is regulated by the Employee Retirement Income Security Act of 1974 (“ERISA”), as well as the language contained in the Trust Agreement for the plan.  The plan, in part, is funded by contributions of younger employees to help pay the benefits of retired employees.  If these contributions are not received, the plan may become financially unsound.  In that event, Central States may not be able to pay guaranteed benefits.  To avoid this problem, the Trust Agreement includes an “adverse selection” rule, which allows expulsion of the employer and employees if “the Employer is engaged in one or more practices or arrangements that threaten to cause economic harm to, and/or impairment of the actuarial soundness of, the Fund . . .”

Central States determined that CRST was violating the “adverse selection” rule because employee participation had decreased over the past decade.  Some of this decline in participation was related to CRST’s use of outsourced employees, who were ineligible to participate in the plan.  In September 2002, Central States terminated CRST’s participation in the plan.

CRST immediately filed suit in federal court.  The parties eventually filed cross motions for summary judgment.  The trial court granted Central States’ motion, holding that Central States had lawfully exercised its authority under the Trust Agreement to expel CRST.  On appeal, the Eighth Circuit Court of Appeals first noted the following:

Central States’s “determination that the trust documents authorize their [actions] has significant weight, for the trust agreement explicitly provides that ‘any construction [of the agreement’s provisions] adopted by the Trustees in good faith shall be binding upon the Union, Employees and Employers.”

Based on this language, the court held that Central States has authorization to expel an employer once Central States finds the employer is engaged in an employment practice that might threaten the fund’s viability.  Accordingly, the court affirmed.

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In 2007, Stacy Holk purchased two Snapple drinks labeled as “all natural.”  According to a class action she later brought in New Jersey state court against Snapple for deceptive labeling, Holk claimed that the drinks contained high-fructose corn syrup and other artificial ingredients.  Snapple removed the case to federal court, and the trial court later dismissed the case, noting that while Congress did not explicitly preempt state labeling laws with the Federal Food, Drug and Cosmetic Act (“FDCA”) and the Nutrition Labeling and Education Act (“NLEA”), it “impliedly preempted” them and other state labeling laws “would create obstacles to the accomplishment Congress’s objectives.”

On appeal, the Third Circuit Court of Appeals disagreed, holding that the FDCA did not create “exhaustive” regulations of juice products.  The court further noted that, even though the FDA had deemed high-fructose corn syrup as “natural,” the policy statement did not preempt plaintiff’s claims.  Accordingly, the court reversed the dismissal and reinstated the class action suit.

For the full story, click here.

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U.S. v. Metropolitan St. Louis Sewer District, No. 08-3399.

Under the Clean Water Act, when the federal government brings a civil action against a municipality, the state in which the municipality is located must also be joined as a party.  This requirement exists because that state is liable for any judgment against the municipality to the extent the municipality cannot raise revenue to pay the judgment because of state law.

The federal government intended to bring suit against the Metropolitan St. Louis Sewer District (“district”) for allegedly discharging raw sewage from its sewer system.  Because the Clean Water Act required the State of Missouri to be a party to the litigation, Missouri chose to be a plaintiff but did not bring any separate, state claims against the district.  The district then filed counterclaims against Missouri, arguing that it was entitled to indemnity under the provisions of the Clean Water Act.  Missouri moved to dismiss the counterclaims, arguing that it had sovereign immunity.  The trial court denied the motion, noting that Missouri had waived its sovereign immunity by bringing the lawsuit.

On appeal, the Eighth Circuit Court of Appeals agreed with the trial court, noting that Missouri could have easily been added as a defendant instead of a plaintiff.  The court pointed out that Missouri’s liability is unlikely to exceed the liability it already has under the above provisions of the Clean Water Act.

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By a near 2-1 margin, Massachusetts voters passed a measure disqualifying imprisoned felons from voting in certain elections, in part, because of increased prisoner political mobilization over issues related to criminal justice. The state Legislature later extended the law to all state elections. A group of inmates challenged the law, arguing that it (1) violated the Voting Rights Act by disenfranchising minorities and (2) unconstitutionally stripped rights from the inmates who could vote before the provisions took effect. The trial court allowed the Voting Rights Act claim, but dismissed the ex post facto argument. On appeal, the First Circuit Court of Appeals upheld the law, rejecting the claim that it illegally disenfranchises the large number of blacks and Hispanics in prison. For the full story, click here.

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