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Keith Anderson is a litigation and labor & employment partner and concentrates his practice on representing financial institutions in the financial services industry, as well as representing employers in employment matters. He has handled multiple litigated matters under the FLSA, ADA, ADEA, FMLA and claims of discrimination and retaliation, as well as counseling employers on compliance and effective employment policies. View articles by Keith

Take Two: Alabama’s City Versus State Minimum Wage Dispute to Get Full Appellate ReviewMinimum wage laws invite controversy, and Alabama’s latest tug-of-war between the state and its largest city is going to get another wider review. You may recall that back in 2015, Birmingham, Alabama, passed a local minimum wage law. On the heels of that move, the Alabama Legislature then passed a state-wide minimum wage law, preempting local city laws. In response to the state’s new law, some Birmingham citizens, along with the NAACP, contended that the law discriminated against minorities and filed suit. After the federal district court dismissed the case, in July 2018 a three-judge panel of the Eleventh Circuit reversed, finding the plaintiffs asserted a plausible 14th Amendment claim. Under that decision, the litigation could go forward. That ruling, however, was recently vacated, and now every judge on the Eleventh Circuit court will weigh in on the matter.

Minimum Wage Controversy

In April 2015, the Birmingham City Council passed a resolution calling on the Alabama Legislature to raise the minimum wage to $10 per hour. The Alabama Legislature declined, so the Birmingham City Council adopted its own ordinance to raise the minimum wage, first to $8.50 per hour and then to $10.10 per hour.

Almost immediately thereafter, a state representative introduced a bill to quash the local ordinance and establish a uniform minimum wage throughout the state. The state has no minimum wage above the current federal minimum wage of $7.25 per hour. The Alabama House passed the bill in February 2016. In the meantime, the Birmingham City ordinance raising the minimum wage to $10.10 per hour went into effect, but only briefly. The next day, the Alabama Senate passed, and then Gov. Bentley signed, the Minimum Wage Act mandating the minimum wage be set at the federal minimum of $7.25 per hour and preempting all local laws. The law preempts all local labor and employment laws that a city or municipality might attempt.

Procedural Background

A few months later, a group of Birmingham residents, along with public interest groups, filed suit against the governor and state attorney general claiming racial discrimination under the 13th, 14th, and 15th Amendments of the U.S. Constitution and Section 2 of the Voting Rights Act. The plaintiffs contended that the state law has both a discriminatory purpose and effect. The state argued in response that the law is facially neutral. The federal district court dismissed all claims in February 2017, and the plaintiffs appealed to the Eleventh Circuit.

The three-judge panel of the Eleventh Circuit affirmed the dismissal of the claims under the 13th and 15th Amendments, as well as under the Voting Rights Act. However, it reversed the district court’s dismissal as to one claim, finding that the plaintiffs stated a plausible claim that the Minimum Wage Act purposely discriminated against Birmingham’s black citizens in violation of the 14th Amendment. In reversing, the panel highlighted that, according to the complaint, the act denied 37 percent of the city’s black wage earners a higher wage, compared to only 27 percent of white workers. Further, according to the complaint, black workers earn, on average, $1.41 less per hour in the city and $2.12 less per hour statewide than white workers. The panel’s ruling found it plausible that the act bore more heavily on black workers and that the plaintiffs had indeed stated a viable claim, deeming the legislative vote to have been “rushed, reactionary, and racially polarized.”

Shortly after the panel’s ruling, the State of Alabama and its attorney general filed a motion to have the matter reheard by the entire Circuit Court. In its motion, the state said the case “raises fundamental questions about the dignity of States, the efficacy of federal-court proceedings, the standard for finding state-sanctioned racism, and the role of courts in shaping public discourse” making it “an exceptionally important [case] that absolutely requires the full Court’s attention.”

Ruling Vacated and To Be Reviewed by Entire Circuit Panel

On January 30, the Eleventh Circuit granted the rehearing request (called “rehearing en banc”), thereby vacating the previous decision. Now the entire Circuit Court (12 judges) will review the claims and the district court’s dismissal. A rehearing of this nature is generally rare and granted only when necessary to maintain uniformity of decisions or for questions of “exceptional importance.” Reading the tea leaves of the decision suggests that the court will alter or revise the panel’s previous ruling in some way, but that is far from certain. Stay tuned for what will be a significant ruling related to Alabama’s minimum wage law and the discrimination allegations. For now, however, the minimum wage in Birmingham is still $7.25 an hour.

You Don’t Get a Bite at the Big Dog: Texas Court Rules that Injured Worker CannotWhat if your employee plaintiff sues you and then demands to take the deposition of your company CEO or some other high-level corporate executive who has no personal knowledge about the facts of the case? No one would be excited about that prospect. Fortunately, a Texas appellate court recently ruled that high-level executives can be put off-limits for deposition unless they have particular, personal knowledge of the events in question. The decision, In re Newport Classic Homes, is an important one for companies (even if they are not in Texas) to remember if they are ever faced with a request for an “apex deposition.”

What is an Apex Deposition?

We all know that depositions are a discovery tool used to get a witness’s testimony under oath. Sometimes a plaintiff seeks a deposition of a company’s CEO or high-ranking executives who have no personal knowledge of the events in question – commonly referred to as “apex depositions.” A company’s CEO may know a lot about the company, but have zero personal knowledge of the events in the lawsuit. Plaintiffs nonetheless sometimes pursue the deposition of a high-ranking individual for a variety of reasons – some legitimate (garnering testimony that could be useful) and others maybe not as legitimate (as harassment or a veiled pressure tactic to compel a settlement). The apex doctrine is intended to direct discovery to those at lower levels with particular, personal knowledge of a dispute, as well as protect high-level executives from harassing and time-consuming depositions.

Background

Newport Classic Homes was a general contractor on a project, and Marcus Hiles was its CEO. The injured plaintiff worked for a subcontractor on the project and suffered a workplace injury. He sued Newport, alleging that it had contractual and actual control of the worksite. The plaintiff sought to depose Hiles, which triggered Newport’s motion to prevent the deposition and the plaintiff’s motion to compel. Hiles stated that he did not have any unique or superior knowledge of any facts or evidence surrounding the construction project or the incident. In fact, Hiles said the only information he would have was what others at Newport told him. The trial court, however, granted the request to depose Hiles, leading Newport to seek an immediate review of that order.

Court of Appeals Says No

The Texas State Court of Appeals reversed the trial court and found that Hiles did not have the particular personal knowledge necessary to warrant a deposition. The court stated that the plaintiff’s justification was “nothing more than the simple, obvious recognition that the highest-ranking corporate officer of any corporation has the ultimate responsibility for all corporate decisions.” Examining a previous Texas Supreme Court ruling about the issue of when to permit the deposition of a corporate president or high-level corporate official, the court concluded that the “unique or superior knowledge” threshold requires a showing “beyond mere relevance … that a high-level executive is the only person with personal knowledge of the information sought” or possesses such knowledge in greater quality or quantity than anyone else. To be sure, “some knowledge” is not enough as it would make the apex discovery indistinguishable from the scope of general discovery. Nor is knowledge of company policies sufficient. The court examined the deposition of another Newport employee that described what Hiles would know and concluded that the CEO simply did not have “unique or superior personal knowledge” to justify his deposition and that the plaintiff could obtain all necessary discovery through less intrusive means.

Takeaways

The opinion serves as a strong arrow in the quiver for a defendant to avoid having their high-level executives deposed. Each jurisdiction (and each individual judge) varies on the interpretation of the apex deposition principle, but most jurisdictions have developed law requiring some type of unique and special knowledge similar to the Texas court. Apex deposition requests could be encountered in litigation involving a discrimination claim or a workplace injury claim, and a defending company should carefully evaluate whether the requested deponent has the unique and superior personal knowledge to really warrant being deposed. Unless a plaintiff can show that type of particular knowledge, the deposition should be seen as nothing more than improper harassment.

Combining Classrooms and Class Actions: Trump Proposes Combining Labor and Education DepartmentsCould the Department of Labor (DOL) and Department of Education (DOE) possibly merge in the near future? President Trump thinks so and recently announced his desire to combine the two departments into a single federal agency to be called the Department of Education and the Workforce. According to a White House Statement, the new agency would be “charged with meeting the needs of American students and workers from education and skill development to workplace protection to retirement security.” The proposed restructuring would provide for four sub-agencies: K-12, Higher Education/Workforce Development, Enforcement, and Research/Evaluation.

Current Status

DOE is the smallest cabinet agency with just under 4,000 employees and a $68 billion budget, and oversees federal student loans, distributes K-12 education funding, and enforces civil rights laws at colleges. DOL, by contrast, has about 15,000 employees and a $13 billion budget to support its broad agenda of training programs, enforcement of wage and safety laws, and the Bureau of Labor Statistics.

The proposal is part of a larger plan by the administration to reorganize and reduce the size of federal government agencies. Other combinations of sections of federal agencies have been discussed by the OMB, which itself may have a shrinking role.

Reactions to the Proposal

Not surprisingly, reaction to the proposed combination has been mixed. Current administration members support it. Secretary of Education Betsy DeVos promoted the idea to help break down “artificial barriers” between education and career development. Mick Mulvaney, director of the federal OMB, spoke in favor of the plan to reduce the size of the federal government which he described as “bloated, opaque, bureaucratic, and inefficient.”

Opponents say it would be a bad idea. Chris Lu, a former Deputy Secretary of Labor under President Obama, pointed out that only parts of the two agencies deal with worker training because most of DOL consists of enforcement agencies such as OSHA, MSHA, Wage & Hour, and OFCCP that were created to protect workers. The National Employment Law Project (a union-backed think tank) denounced the proposal as a “half-baked idea” that would only betray the workers for whom President Trump pledged to advocate.

Members of the business community may welcome entities such as OSHA and MSHA falling under the DOE, which has a more educational (and less enforcement-oriented) focus.

Likely to Happen?

Odds of the combination actually coming to fruition seem unlikely. Congress has to approve a major reorganization of cabinet departments, which means 60 votes in the Senate. POLITICO (a Washington, D.C. political news outlet) surmised that the plan “would pose a heavy political and legislative lift” as previous attempts to eliminate the DOE have failed in Congress. President Obama had his own reorganization plan in 2012 that never went anywhere. Seth Harris, Deputy Secretary of Labor under President Obama, predicted that the merger will not happen.

From a high level, some of the mandates of these two agencies overlap. One pursues education to enter the labor force while the other focuses on the workforce (with some training programs). The proposed merger faces many obstacles before the finer details are even discussed, such as what (and who) gets cut. If nothing else, the announced plan has attracted attention, and it is worth keeping an eye on. Having DOL sections combined and altered with a focus on education (rather than just on enforcement) would certainly be a game changer for many employers.