Two Unanimous Supreme Court Decisions. Federal Courts Retain Jurisdiction Over Claims Stayed Pending Arbitration.

This morning, the Supreme Court issued two unanimous decisions of interest to employees and employers.  In the first, the Court held that the Federal Aviation Administration Act does not preempt state law negligent hiring claims against truck drivers, trucking companies and brokers where the plaintiff had been injured by a big rig in a traffic accident.   Montgomery v. Caribe Transport II, LLC, No. 24-1238 (5-14-26).   In the second, the Court held that federal courts retain jurisdiction over lawsuits filed alleging federal or diversity questions (like employment discrimination) which were stayed pending arbitration so that the federal court can confirm or vacate the later arbitration decision. Jules v. Balazs Properties, No. 25-83 (5-14-26).   In this case, the arbitrator ruled in favor of the employer and awarded $34.5K in sanctions against the employee.  “[A]federal court that has previously stayed claims in a pending action under §3 of the Federal Arbitration Act (FAA . . .  has jurisdiction to confirm or vacate a resulting arbitral award as to those claims under §9 and §10.  . . .  Because a federal court in this scenario has jurisdiction over the original claims and does not lose that jurisdiction while the case is stayed pending arbitration, it retains jurisdiction to determine whether the arbitral award re solving those claims is valid and should be confirmed.”  In other words, a “court with the power to stay the action under §3 has the further power to confirm [or vacate] any ensuing arbitration award.”

According to the Court’s decision in Jules, the plaintiff worked for the employer hotel and brought a lawsuit alleging employment discrimination under federal and state law after he was fired during the pandemic.  The case was stayed pending arbitration pursuant to an agreement he had previously signed.  The arbitrator ruled in favor of the employer on all claims and issued the employer an award of $34,500 in sanctions (when the plaintiff refused to ultimately participate in the arbitration hearing), which it sought to confirm and enforce in the stayed federal court proceeding.  The plaintiff argued that the federal court no longer had jurisdiction because there was allegedly no longer any federal question or diversity jurisdiction.

After an arbitral award has issued, federal courts may confirm, vacate, or modify such an award under §9, §10, or §11. Un der §9, a court must confirm an award upon request “unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11.” The grounds for vacatur and modification are limited.

 . . .

 . . . For a federal court to have jurisdiction over an arbitral dispute, it is not enough that the dispute implicates the FAA. That is because the FAA is “‘something of an anomaly’ in the realm of federal legislation.”  . . .  Although the FAA is a federal statute that provides federal standards, it “does not itself create [federal] jurisdiction.”  . . .  Instead, given the FAA’s “nonjurisdictional cast,” a federal court must have an “‘independent jurisdictional basis’” for granting FAA relief.  . . . That could come, for example, in the form of diversity jurisdiction if a dispute under the FAA arises between citizens of different States with over $75,000 at issue.  . . . Or a court may have federal-question jurisdiction if an FAA motion implicates a federal issue (other than one under the FAA).

In light of this, the Court will look through the allegations of a petition to compel arbitration to the underlying substantive dispute to determine whether federal jurisdiction exists.  However, when the parties proceeded directly to arbitration (without being ordered to do so by a federal court), the Court will not look through the petitions to vacate or confirm an arbitration award to determine whether federal jurisdiction exists. 

The plaintiff argued that the petition to confirm the award did not meet diversity jurisdiction (because it was less than $75K) and did not raise a federal question.  The Second  Circuit and Supreme Court rejected this argument out of hand.

To start with,  . . , assessing jurisdiction over a §9 or §10 motion in a case originally filed in federal court does not require “looking through” the filed action. Instead, the court may assess its jurisdiction by looking at the suit that is already before it. As Badgerow explained, “[j]urisdiction to decide [a] case includes jurisdiction to decide [a] motion” within that case, and usually “there is no need to ‘look through’ the motion in search of a jurisdictional basis outside the court.”  . . .

Here, the District Court had original jurisdiction, under 28 U. S. C. §1331, over [the plaintiff’s] federal claims. It was this very jurisdiction that authorized the court to adjudicate the arbitrability of [his] claims under the parties’ contract to begin with, before staying litigation pending arbitration. Nothing in the FAA eliminated that jurisdiction while the parties arbitrated.  . . .  So when the parties returned to court after arbitration with §9 and §10 motions, the court had the same “jurisdiction to decide the case,” and thus “jurisdiction to decide th[ose] motion[s],” that it possessed from the start.  . . .  “The court had federal question subject matter jurisdiction and . . . never lost it.” . . .

 . . .

It is true that, by the time the parties filed the §9 and §10 motions here, the arbitrator had issued an award that marked “a contractual resolution of the parties’ dispute.”  . . .  As [plaintiff] argues, that out-of-court resolution functioned like a release, which could serve as an affirmative defense and be used to “resolve the original claim” filed in court.  . . .  The fact that the arbitral award may “resolve” [his] original claims, however, only underscores why the District Court’s original jurisdiction extends to the parties’ §9 and §10 motions. Those motions required the District Court to assess whether there were grounds to vacate the award.  . . .  They were thus integral to determining whether the award would continue to serve as a valid defense to the original claims that had been stayed, but were still pending, in District Court until the court confirmed the award. . . .

 . . . this Court has held that federal courts have the power to incorporate private settlements into orders of the court when resolving claims that are the subject of those settlements. In Kokkonen v. Guardian Life Ins. Co. of America, 511 U. S. 375 (1994), for example, the Court made clear that a federal “court is authorized to embody [a] settlement contract in its dismissal order” and later “enforc[e]” that “settlement agreement.”  . . .  Similarly, the Court has recognized federal courts’ jurisdiction to embody contracts “arrived at by negotiation between the parties” as consent judgments in certain circumstances.  . . . . Federal courts also routinely resolve disputes over private settlements in class actions, which can be settled “only with the court’s approval.”  . . .  In each scenario, as here, the parties reach a contractual resolution of claims filed in federal court, and the federal court has juris diction to resolve disputes over that private settlement and embody the settlement in a court order resolving the case.

 . . .

Under the rule the Court adopts today, this scheme con tinues to work well: The FAA requires a stay, rather than dismissal, so that a court that has granted a §3 stay can superintend the arbitration to the end, including through confirmation or vacatur. On Jules’s theory, however, things would fall apart. Without an independent jurisdictional ba sis (like complete diversity and more than $75,000 at stake) on the face of a §5, §7, §9, or §10 motion, Jules concedes that a court that grants a mandatory §3 stay has little to do but wait until the arbitration concludes and, finally, dismiss the claims. It would be curious for §3 to mandate keeping cases on federal dockets for essentially no reason at all in the cases where federal interests are likely at their highest: those, like this one, involving live federal questions. More plausibly, a court that grants a §3 stay retains jurisdiction to see the case through and provide the FAA’s “procedural protections” along the way.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Jury Award for Sexual Harassment Where Plaintiff Awarded $179K and Her Attorneys $480K.

Yesterday, the Sixth Circuit affirmed a jury and attorney’s fee award in a sexual harassment case where the jury agreed that the plaintiff had not been fired in retaliation for her complaints, but still awarded her $314 in back pay, awarded her $179K in compensatory damages (for emotional distress) and the trial court awarded her attorneys over $480K in fees (while rejecting the request for $800K in fees).  Griffin v. Copper Cellar Corp., No. 25-5786 (6^th Cir. 5/5/26).   The Court found that the $314 amount was based on the defense’s own arguments and was presumptively entitled to be awarded in a hostile work environment case to make the plaintiff whole.  It found her testimony of emotional distress sufficient to support the compensatory damage award.  Finally, it concluded that her attorneys’ rejection of the offer of unconditional reinstatement and $25K for settlement was ultimately reasonable when it obtained seven times that much at trial.

According to the Court’s opinion, the plaintiff was being grossly and frequently sexually harassed by a restaurant co-worker.  Her employer failed to stop the behavior and was  unsympathetic, even laughing at her.  The employer offered her unconditional reinstatement five weeks later and $25K to resolve her complaint, but it was rejected by her attorneys.  At trial (which had been bifurcated between liability and damages), the employer apparently successfully argued that she had not been fired as alleged and at best would be entitled to no more than $314 in backpay, which is what the jury awarded to her.

The employer challenged the back pay award of $314 because the jury had determined that the plaintiff had never been fired as alleged.  Thus, if she voluntarily resigned, she was not entitled to any back pay.   The Court did not believe that this challenge was timely, but agreed that timeliness had never been raised by the plaintiff or at the trial court level.  In any event, not only did the defense fail to object to ANY award of back pay prior to the final verdict, it actually suggested in closing arguments that $314 was the most that the jury could award.   The defense also had failed to assert prior to the final verdict that only nominal damages would have been appropriate.   The Court ultimately determined that back pay is always a presumptively appropriate remedy in a hostile work environment case. 

Our cases establish that “successful Title VII plaintiffs are presumptively entitled to back pay” sufficient “to make them whole.”   . . . In deciding on an award of back pay, a jury considers “what the claimant would have received but for [the] discrimination.” . . . . We have, moreover, recently upheld awards of back pay on hostile-work-environment claims in cases that, like this one, lacked an express jury finding of discriminatory or retaliatory dismissal . . .  To be sure, an award of back pay typically flows from a jury’s finding of discriminatory, retaliatory, or constructive discharge.  . . .  But we have never held that such a verdict is required as a foundation for an award of back pay. Here, the district court determined that the evidence introduced was sufficient for the jury to find Copper Cellar’s Title VII violations “responsible for [Griffin] leaving her employment,”  . . .  and, therefore, that the award of back pay reflected “what [Griffin] would have received but for” the hostile work environment. . . .  Such an award would not, under our existing precedent, constitute a clear error of law, and thus the district court did not abuse its discretion.

The Court also rejected the argument that the plaintiff was only entitled to nominal damages because simply “being upset” by the co-worker’s behavior was insufficient to justify such a large award.   The Court cited to the plaintiff’s testimony about how upset she was and her physical and mental manifestations.  “All told, a jury considering and crediting [the plaintiff’s] testimony could reasonably find that [the employer’s] hostile work environment caused her substantially more than nominal harm.”  The Court also could not find the award to be excessive in light of the harassment and isolation she suffered. “Though we are not convinced that only a “particularly sensitive” plaintiff would suffer harm from the treatment [she] described, her exact degree of sensitivity is beside the point where, as here, the record is not “devoid of any evidence of intangible emotional loss to justify a large non-economic award.”

The plaintiff’s attorneys had requested $800K in fees, but were awarded $480K.  The employer argued that they should not have been entitled to fees when they had rejected a settlement offer of $25K and unconditional reinstatement within weeks.  The Court found no abuse of discretion. 

It is true that “a spurned [settlement] offer might warrant a reduc[ed]” fee award, because “[f]ew, if any, reasonable litigants would call a monetary judgment that comes in well under the money offered to settle the case a success.”  . . .  The problem for [the employer] here is that the $179,000 in damages [she] received was not “well under the money offered.” Id. Quite to the contrary, [her] attorneys convinced a jury to award more than seven times what [the employer] was willing to settle for. Therefore, even ignoring that “a rejected settlement offer” is only one among the “broad constellation of factors a trial court may consider” in awarding fees, this is not a case in which “‘a less favorable recovery after trial’” could justify a reduced fee award.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Employee's Election to Challenge IME Abandoned Reasonable Accommodation Interactive Process

 Earlier this month, the Sixth Circuit affirmed an employer’s summary judgment on a Rehabilitation Act failure to accommodate claim because the employee abandoned the interactive process, and had always disputed that she required any accommodation to perform her job duties.  Morgan v. Ohio Dep’t of Rehab. & Corr., No. 25-3722 (6^th Cir. 4-14-26). Employees who are only “regarded as” disabled are not entitled to a reasonable accommodation.  Further, although she had been given the option of seeking a reasonable accommodation, she rejected that option and elected instead to challenge the IME obtained by the employer.  When she submitted such a medical evaluation, she was immediately reinstated. 

According to the Court’s opinion, the plaintiff suffered from recurring TIAs.  The only accommodation that she sought was intermittent FMLA leave, requiring her to be hospitalized whenever she had a TIA episode.  After almost a decade of renewed FMLA requests, the employer placed her on paid administrative leave pending an Independent Medical Evaluation with a psychologist concerning repeated aggressive, hostile and unprofessional behavior.  The IME concluded that she was not qualified to perform her current job, would require modified duties and further medical evaluation.  The employer then gave the plaintiff four\ options: (1) disability leave; (2) FMLA leave, (3) an ADA accommodation or (4) challenge the IME.  The plaintiff disputed that she was disabled and opted to challenge the IME.  However, she only submitted two days later a return to work without restrictions statement from her treating Nurse Practitioner.    The employer clarified that she required a physician analysis of the IME and ceased her paid administrative leave.   More than a month later, she submitted a medical statement disagreeing with the IME and releasing her to return to work without restrictions.  The employer then immediately reinstated her, but she filed suit at the end of the month, claiming that she had been discriminated against on account of her disability by an alleged failure to provide an accommodation or engage in the interactive process. 

The trial and appellate courts had no trouble disposing of the failure to accommodate claim.  First, she had always denied that she required an accommodation to perform her job duties and was not entitled to an accommodation in a “regarded as” disability claim.     On the contrary, she produced a release to return to work without restrictions.    

If [her] claim is that [the employer] “regarded” her as having a disability that she did not have, her failure-to-accommodate claim is likewise barred. This circuit has held that the fact that an employee does not have a disability obviates an employer’s obligation to provide an accommodation.  . . .  Applying this precedent, if [her] claim is that [the employer] wrongly perceived or had a mistaken belief that she had a disability and treated her adversely, [it] could not at the same time have an obligation to accommodate a disability that she did not have.

Moreover, even if she had an actual disability, any failure of the interactive process was due to her decision to abandon the interactive process and challenge the IME instead of seeking further evaluation or modification of job duties, etc.    She had been given the option of seeking a reasonable accommodation and she had rejected it. 

The Court did not address her loss of paid time off while challenging the employer’s IME because of the alleged “regarded as” disability claim.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney

New Federal Government Initiatives Affect Legal Enforcement

While making changes in employment laws has not been a priority for the Trump Administration in 2026, that does not mean that there is nothing new to watch.  First, ICE announced last month that certain clerical errors in completing I-9 forms which formerly could be corrected in the future now constitute substantive violations which could result in substantial fines. Second, OSHA announced last week an increased enforcement of workplace heat hazards, starting immediately.  Finally, affirmative action requirements for veterans and the disabled remains fully in place due to the underlying statutes, but the Trump Administration has again proposed moving enforcement from OFCCP (which would be defunded) to the Office of Civil Rights. 

Last month, ICE issued enforcement guidance for employers explaining how ICE conducts I-9 form inspections and the ramifications for employers with sloppy records and/or failure to correct technical and other failures.    It is happily well written.  It confirms that employers have 3 days to produce I-9 forms requested by ICE.  “An employer may receive a monetary fine for all substantive violations and uncorrected technical or procedural failures.”  Following an inspection, the employer will receive one of three types of notices which reflect the outcome of the audit.   It also includes a list of “substantive paperwork violations,” (i.e., missing or incomplete fields) which now include the failure to fully complete certain areas of the I-9 form, such as the employee’s date of birth, the date the employee signed the form, incomplete information about the translator (if any), date of hire, date of employer certification, etc.  It also lists examples of technical failures and a description of how fines are calculated.

Last week, OSHA updated its National Emphasis Program for indoor and outdoor heat hazard prevention which provides additional guidance to avoid citations and expands the list of targeted industries.  This will be particularly important during heat waves.    Among other things, OSHA will conduct random inspections of targeted industries during heat waves to ensure compliance.  This initiative began in 2022.  The OSHA new release explained “OSHA identified industries with high rates of heat-related illness and industries with employers that have received heat-related citations or hazard alert letters.” The target lists includes farming, various manufacturers, sawmills, metal production and processing foundries, grocery and related product merchant wholesalers, department stores, air transportation, general freight trucking, couriers, messengers, and delivery services, warehouses, landscapers, community food and housing, automotive repair and maintenance, construction, greenhouses and nurseries, and restaurants.

Trump’s proposed budget again intends to defund OFCCP entirely, which will require amendments to the underlying statutes for Section 503 and VEVRAA, as well as the applicable regulations, which assign enforcement to OFCCP.  This was also proposed in last year’s budget, but was not adopted by Congress.   Employers should remember that although Executive Order 11246 (women and minorities) was rescinded in January 2025, the affirmative action obligations for the disabled and veterans remain fully in place.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Franklin County Appeals Court Affirms Employer’s Summary Judgment on Sex, Race, Harassment and FMLA Retaliation Claims

Last month, the Franklin County Appeals Court affirmed an employer’s summary judgment on FMLA retaliation and sex and race discrimination allegations following the plaintiff’s demotion. Fields-Arnold v. Cent. State Univ. Bd. of Trustees, 2026-Ohio-826. The Court found that the plaintiff waived certain arguments about direct evidence, race discrimination and hostile work environment by failing to provide any substantive argument before the trial or appeals courts.  The plaintiff also failed to show replacement outside the protected class or to show that the employer’s explanation for her demotion was pretextual, dooming her sex discrimination and FMLA retaliation claims.  While she was not given a specific reason at the time of her demotion, she admitted that her job performance had previously been criticized and she failed to dispute the reasons given in the employer’s summary judgment motion.

According to the Court’s opinion, the plaintiff was encouraged by the university president to apply for a certain promotion, which she eventually received.  However, in their first post-promotion meeting, their relationship soured when she requested a higher salary than offered.  Although she prevailed in receiving a $5K increase, the president allegedly said that she talked too much and reminded him of his wife.   He later criticized her performance in a few meetings and she was demoted back to her prior position a few months later.  In the meantime, she had applied for and, after submitting additional documentation, FMLA leave. She was replaced by a white female and resigned the following year after filing this lawsuit.   The court of claims granted summary judgment on all claims to the employer.

The Court found that she had abandoned her race discrimination claim by failing to make any substantive arguments in her appellate brief when challenging the trial court’s rejection of this claim for failing to show pretext.  Indeed, she apparently only used the word “race” three times in her entire brief.

Similarly, it rejected any claims of direct evidence of sex discrimination because she never raised this argument in opposing the summary judgment brief at the trial court level.  Moreover, the three alleged comments were not directly related to the issue of her demotion, and thus, were not direct evidence since it still required an inference as to the speaker’s intent. 

[His] comments, while disrespectful and perhaps based on stereotypes, do not satisfy the requirements to constitute direct evidence of discrimination. “ ‘Direct evidence is proof which speaks directly to the issue, requiring no support by other evidence.’ ”  . . .  It “ ‘does not require a factfinder to draw any inferences in order to conclude that the challenged employment action was motivated at least in part by prejudice against members of the protected group.’ ”

In addition, she failed to identify anyone outside her protected age or sex class who was similarly situated, failed to meet the employer’s performance expectations and was treated better than her. 

The Court also rejected her appeal dismissing her hostile work environment when the trial court found that three alleged comments over a four month period were insufficiently pervasive or hostile.   As with her direct evidence argument, she failed to even mention “hostile work environment” when opposing the employer’s summary judgment motion at the trial court. 

As for her FMLA retaliation claim, the trial court had found that it failed because she received all of the FMLA leave she requested and her demotion did not deter her from seeking additional FMLA leave.  The Court’s majority reversed that determination, but found she still could not prevail because she failed to present evidence showing that the university’s dissatisfaction with her performance was pretext for retaliation. She admitted that the university president had criticized her performance to her face several times and did not try to show that those and other criticisms lacked a factual basis or were insufficient to motivate her demotion, etc.   Therefore, the fact that she was not told at the time of her demotion the specific performance reasons for it, she had previously been informed about dissatisfaction with her performance and failed to show those and other criticisms were pretextual.

Even if an employer approves an employee’s FMLA requests, the employer could still go on to impose an adverse employment action against the employee for exercising her rights under the FMLA. . . .  And that is exactly what [plaintiff] alleged in her complaint—that she was demoted because she took FMLA leave. We find the court of claims erred in concluding [she] “failed to identify an adverse employment action that was taken against her because she used FMLA leave.”

. . . .

Although [Plaintiff] did not receive specific examples of her unsatisfactory performance at or around the time of the demotion  . . . , she was aware of Dr. Thomas’s dissatisfaction before the demotion occurred. In her deposition, [she]recounted two meetings where [he] criticized her performance. . . .

While [her] deposition testimony reflects her general belief that she satisfied the job duties as listed in the job description  . . . , she did not contest the specific assertions [he] made about her purportedly unsatisfactory work. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.