Two New Published 4th Circuit Opinions

By Joseph S. Murray IV

The 4th Circuit has been active in employment cases during the past couple of weeks, issuing several published and unpublished opinions. The following are the two most recent published opinions: [1]

In EEOC v. Maryland Insurance Administration, No. 16-2408 (4th Cir. Jan. 5, 2018), the 4th Circuit adopted a standard that places a heavy burden on employers seeking summary judgment on an Equal Pay Act claim based on an affirmative defense. The 4th Circuit held that to obtain summary judgment, employers must “submit evidence from which a reasonable factfinder could conclude not simply that the employer’s proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity.” This standard, previously adopted by the 3rd and 10th Circuits, makes obtaining summary judgment virtually impossible if an employer has any discretion on salary decisions, even if the employer uses a comprehensive gender-neutral compensation system.

In Degidio v. Crazy Horse Saloon and Restaurant Inc., No. 17-1145 (4th Cir. Jan. 18, 2018), the 4th Circuit dealt with Crazy Horse’s request to arbitrate collective and class action claims under the FLSA and South Carolina Payment of Wages Act after almost 3 and a half years of litigation. The 4th Circuit easily upheld the district court’s denial of Crazy Horse’s motion to compel arbitration, citing Crazy Horse’s failure to timely seek to compel arbitration and the fact that Crazy Horse obtained the arbitration agreements during the litigation.

Crazy Horse argued it did not have an arbitration agreement with Degidio, and so it could not move to compel arbitration until plaintiffs with arbitration agreements opted in to the litigation. The 4th Circuit quickly dismissed this argument by stating Crazy Horse should have informed the district court it intended to compel arbitration against any opt-in plaintiffs when Degidio moved for class and collective action certification. Further, Crazy Horse’s strategy of litigating the merits of the claim for several years before moving to compel arbitration gave Crazy Horse “two bites at the apple.” The 4th Circuit made clear that arbitration is not a backstop or insurance for an unfavorable ruling from the trial court.

The 4th Circuit also took umbrage with how Crazy Horse procured the arbitration agreements. First, the 4th Circuit asserted the agreements appeared to have misled the entertainers regarding the employee-employer relationship under the FLSA. Second, the court stated Crazy Horse obtained the agreements in a furtive manner that was ripe for duress. Crazy Horse’s counsel or CFO met with the entertainers and presented “lease agreements” that contained the arbitration clauses without supervision from or notice to the court or plaintiff’s counsel. These actions, the court said, “rendered defendant’s conduct indefensible from the get-go.”

[1] Additional opinions: Lacasse v. Didlake, Inc., No. 16-1896 (4th Cir. Jan. 10, 2018) (unpublished) (Title VII and ADA); Penske Logistics LLC v. Freight Drivers and Helpers, No. 16-2115 (4th Cir. Jan. 10, 2018) (unpublished) (ERISA); Greenbrier Hotel Corp. v. Unite Here Health, No. 16-2116 (4th Cir. Jan. 3, 2018) (unpublished) (ERISA); Supinger v. Holcomb, No. 16-1932 (4th Cir. Dec. 4, 2017) (unpublished) (1st Amendment and due process rights of government employees); O’Hara v. NIKA Technologies, Inc., No. 16-1805 (4th Cir. Dec. 22, 2017) (“whistleblower-protection provisions” of the False Claims Act and the American Recovery and Reinvestment Act); Rory Flynn v. SEC, No. 16-2122 (4th Cir. Dec. 7, 2017) (Whistleblower Protection Enhancement Act).