Stiefel v. Bechtel Corp., No. 09-55764 (9th Cir. Nov. 1, 2010); Kepas v. eBay Inc., No. 09-4200 (10th Cir. Nov. 2, 2010)

| Oct 31, 2010 | Daily Developments in EEO Law |

It has long been recognized in EEO law that an employee is not required to make a futile gesture to have an otherwise hostile-employer hire, rehire, promote or otherwise confer some benefit in order to bring a claim. The plaintiff invokes this doctrine in the present case, where he was informed not to bother attending roll calls for reemployment until he obtained a medical release with no work restrictions, arguably in violation of the ADA. Can he prevail in this case? Under the particular facts of this case, the Ninth Circuit says “no.” In an unpublished opinion, the Tenth Circuit upholds (over a dissent) eBay’s mandatory arbitration clause.

Stiefel v. Bechtel Corp., No. 09-55764 (9th Cir. Nov. 1, 2010): Plaintiff, who injured a hand, claimed that his employer refused to accommodate him, fired him and barred him from reemployment in violation of the ADA. Regarding the failure to rehire, the panel summarized as follows:

“Stiefel points to statements by Bechtel employees that he would not be allowed to return to work without a full medical release. Stiefel acknowledges that Bechtel accommodated other disabled employees but maintains that Bechtel has discriminated against him because of his disability by refusing to rehire him and accommodate his disability by offering him a light-duty position. Stiefel further asserts that Bechtel’s alleged refusal to rehire him was motivated out of a desire to retaliate against him for having requested accommodation.

The plaintiff thus avoided attending the union roll-calls, where laid-off employees could be reinstated.

The district court granted summary judgment on the employee’s pre-termination and termination claims on the ground that Stiefel failed to file a charge with the EEOC within 30 days after receiving a right-to-sue letter from the California Department of Fair Employment and Housing. It granted summary judgment, as well, on the failure-to-rehire claim, holding the failure to reapply for work meant that he could not state a prima facie claim for discrimination.

On the former ruling, the Ninth Circuit reverses, holding that “when a plaintiff files a disability discrimination complaint with a state agency acting, with respect to ADA complaints, as an agent of the EEOC, and
receives a right-to-sue letter from the state agency, thereby becoming entitled to an EEOC right-to-sue letter, the plaintiff need not file a separate complaint with the EEOC nor receive an EEOC right-to-sue letter in order to file suit.”

But on the post-termination failure to hire, the Ninth Circuit affirms summary judgment, finding that record did not support futility. In contrast to the classic futility circumstance – a sign declaring “No Disabled Hired Here” -the panel holds that “Stiefel’s ‘futile gesture’ argument fails because it was not supported by his own sworn deposition testimony. Stiefel testified that he was kept away from the hiring hall by personal obligations and schedule conflicts. He confirmed this twice under direct questioning. He said nothing about not attending the meetings because of a belief that it would have been futile.”

Kepas v. eBay Inc., No. 09-4200 (10th Cir. Nov. 2, 2010): The eBay arbitration agreement with its employees presents three salient provisions at issue in this appeal: it elects a California choice of law; the parties “agree that any claims that either party has that arise out of the Employee Proprietary Information and Inventions Agreement are specifically excluded from this Agreement”; and it allows the “costs of arbitration” to be awarded as a remedy. The plaintiff here filed a complaint in Utah making Title VII, ADEA and various common-law claims. The district court compelled arbitration.

The panel majority affirms. First, it agrees with plaintiff (following California law) that “the Arbitration Agreement impermissibly imposes a significant risk of [arbitration] costs on employees,” yet it also holds that the cost-shifting provision is severable from the agreement. Second, it agrees that the standardized, take-it-or-leave it quality of the Agreement makes it an adhesion contract that is procedurally unconscionable, yet it ultimately finds that the agreement is substantively fair and enforceable. (It also, correspondingly, rejects a challenge to the forum selection clause.

Finally, the panel majority finds that the exclusion of intellectual property claims from the agreement did not destroy mutuality.

“As the exclusion from arbitration applies to all claims ‘arising out of’ the Employee Proprietary
Information and Inventions Agreement, the employee would be able to pursue litigation for all conduct arising from the same transaction or occurrence that the employer can litigate. For example, per the Arbitration Agreement, an employee terminated for stealing trade secrets could litigate an accompanying wrongful termination claim, as this claim would arise out of the Employee Proprietary Information and Inventions Agreement . . . .

“Kepas contends that the Arbitration Agreement lacks mutuality by requiring employees to arbitrate the claims that they are likely to pursue, while eBay can litigate its likely claims. As the party challenging the agreement, Kepas has the burden to adequately support this contention. See Arguelles-Romero v. Superior Court, 109 Cal. Rptr. 3d 289, 305 (Cal. Ct. App. 2010) (specifying that “[i]t is the plaintiff’s burden to introduce sufficient evidence to establish unconscionability.”). However, Kepas fails to identify the types of claims excluded from arbitration pursuant to the Employee Proprietary Information and Inventions Agreement. Instead, Kepas merely asserts that these claims are more likely to be brought by the employer.”

The dissent by Judge Lucero differs on two issues. It would find the IP-lawsuit carve-out unconscionable as lacking in mutuality, because it overwhelming favors the employer: “The fact that an employer is a technology company and that some employees might advance intellectual property claims does not render an intellectual property carve-out mutual.” It disapproves of the severance remedy for the illegal cost-shifting clause. Invalidation of the Arbitration Agreement in its entirety vindicates California’s policy objective of deterring employers from ‘routinely inserting such a deliberately illegal clause into the arbitration agreement it mandates for its employees.’ Armendariz v. Found. Health Psychcare Serv., Inc., 6 P.3d 669, 697 n.13 (Cal. 2000).”

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