Indiana's Lottery Commission Not Immune from Employment Discrimination Suit: Seventh Circuit

Burrus v. State Lottery Commission of Indiana
No. 08-1142,
U.S. Court of Appeals for the Seventh Circuit, 10/06/2008

Holding: The State Lottery Commission of Indiana, doing business as Hoosier Lottery ("Lottery"), does not enjoy sovereign immunity from employment discrimination suits, so ruled the U.S. Court of Appeals for the Seventh Circuit. Applying court precedent, the Seventh Circuit reasoned that the Lottery is not an arm of the state. In particular, Lottery’s complete lack of fiscal reliance upon the state was evident since its funds are kept in an administrative trust fund separate and apart from the state’s general fund. In addition, Lottery generally controls its own operations, given that the statute creating it expressly states that the Lottery is a body politic and corporate separate from the state. On this basis, the Seventh Circuit affirmed the district court's denial of Lottery's motion to dismiss. More...

CA Court Issues Ruling on Non-Compete Clauses and Other Employment Restraints in Edwards II Case

Edwards II v. Arthur Andersen LLP
No. S147190,
California Supreme Court, 08/07/2008

Holding: In an anticipated opinion, the California State Supreme Court held that a provision in an employment agreement restraining an employee from serving customers or competing with a former employer violates the California Business & Professions Code (CBPC") section 16600, which contains California’s general statutory prohibition for non-competition agreements. In this regard, the Supreme Court rejected the argument of the now-defunct Arthur Andersen, LLP ("Andersen"), the previous employer of plaintiff-appellant Raymond Edwards II, that courts should adopt a narrow-restraint exception to section 16600 and leave it to the Legislature, if it chooses, either to relax the statutory restrictions or adopt additional exceptions to the prohibition-against-restraint rule under section 16600. In addition, the Supreme Court ruled that a contract provision whereby an employee releases “any and all” claims does not encompass non-waivable statutory protections, such as the employee indemnity protection of Labor Code section 2802. On the basis of the foregoing, the Supreme Court affirmed in part and reverse in part the Court of Appeal judgment issued in this suit for intentional interference with prospective economic advantage and anti-competitive business practices under the CBPC. More...

See also related commentary by Jeremy J. Gray, Esq..

Ninth Circuit: Disclosure of an Employee's Private Text Messages to His Employer Unlawful

Quon et al. v. Arch Wireless et al.
No. 07-55282,
U.S. Court of Appeals for the Ninth Circuit, 06/18/2008

Holding: In a decision that provides a lesson on employer's efforts to access their employees' electronic communications, the U.S. Court of Appeals for the Ninth Circuit held that a communications service provider, like Arch Wireless, is not permitted to release the contents of messages stored on its service to a mere subscriber, such as the City of Ontario, but could divulge those messages only to an addressee or intended recipient of those messages. This case arose after defendant-appellee Arch Wireless disclosed the content of the text messages of certain employees in an internal audit conducted by the City, which as the subscriber provided the two-way pagers to its employees. The U.S. District Court for the Central District of California ruled for Arch Wireless and the City, holding that Arch Wireless did not violate the Stored Communications Act of 1986 ("SCA") and that the City and its officials did not violate the Fourth Amendment to the U.S. Constitution, which prohibits unreasonable searches and seizures. On appeal, the Ninth Circuit reversed. In particular, the Ninth Circuit found as a matter of law that Arch Wireless’s unauthorized disclosure of the contents of a City employee's text messages to the City was unlawful under the SCA. Although the Ninth Circuit accepted the jury’s conclusion that the search was intended to determine the limits of employees' use of their pagers, the Ninth Circuit also found that the City could have achieved that purpose by less intrusive means, rendering the seizure and reading of the text messages unreasonable. Accordingly, the Ninth Circuit found that the search violated the employees' Fourth Amendment rights and the plaintiffs’ privacy rights under the California Constitution. More...

See also related commentary by Jeremy J. Gray, Esq..

Ninth Circuit Compels Granite Rock and Local 287 Teamsters to Arbitrate CBA Dispute

Granite Rock Company v. International Brotherhood of Teamsters, et al.
No. 07-16236,
U.S. Court of Appeals for the Ninth Circuit, 10/22/2008

Holding: The U.S. Court of Appeals for the Ninth Circuit dismissed a suit filed by Granite Rock Company ("Granite Rock") against International Brotherhood of Teamsters ("IBT") for allegedly interfering with the company's contract with a local Teamster chapter ("Local 287"). Applying court precedents, the Ninth Circuit concluded that the district court was correct in dismissing Granite Rock’s claim against IBT because a claim for tortious interference cannot be said to “arise under” the new Collective Bargaining Agreement ("CBA") between Granite Rock and Local 287. That agreement did not mention IBT, and did not govern any rights or duties of IBT. Indeed, Granite Rock conceded that the alleged tortious interference could only be a violation of a general tort duty, not a violation of any specific contractual duty. With regard to the breach of CBA claims filed by Granite against Local 287, the Ninth Circuit reversed the district court's order of dismissal, and remanded with instructions to compel arbitration on the entire dispute between Granite Rock and Local 287. The Ninth Circuit reasoned that a party generally may not sue in federal court under a contract that, by its terms, requires arbitration. Here, both parties consented to arbitration. More...