1st Circuit: Judges Question Fairness of Treasury Regulation

On Oct. 6, a 1st Circuit panel in Tasker v. DHL Retirement Savings Plan ruled against a retiree whose benefits plummeted when his employer changed its company retirement plan.

Jeffrey Tasker worked for Airborne Express, which DHL acquired around the time of his retirement in 2004. When DHL amended its retirement plan, Tasker couldn’t transfer his account balance in the defined contribution retirement plan.

Tasker claimed his monthly annuity was estimated at $4,163.92 in March 2004, and he opted for payments to begin in October 2008; DHL’s retirement account trustee company notified him in April 2008 that his monthly benefits had been nearly halved to $2,200.

In the ruling, the panel questioned the fairness of a Treasury regulation under which DHL eliminated the transfer option, but it concluded that DHL did not violate the anti-cutback rule under the Employee Retirement Income Security Act (ERISA) and affirmed the district court’s dismissal.

Senior Judge Bruce Selya wrote that the case required the panel “to deny relief to a plaintiff for whom we have considerable sympathy. … On general notions of fairness, the plaintiff deserves better.”

5th Circuit: Immigrant Workers Lose Katrina-Related Case

A 5th Circuit panel ruled Oct. 1 in Castellanos-Contreras v. Decatur that a group of immigrant workers was not entitled to reimbursement for their recruitment, transportation and visa expenses.

New Orleans-based Decatur Hotels claimed that because the local workforce was depleted after Hurricane Katrina, the company recruited immigrants through subcontracted agencies to work at its boutique hotels.

The 290 guest workers came to the U.S. legally on 10-month H-2B visas. Each paid the agencies between $3,000 and $5,000 for job placement, visas and travel costs. However, their work hours did not reflect those promised in their contracts, and H-2B prohibited them from having outside jobs, thus keeping them in debt.

The workers filed a complaint under the Fair Labor Standards Act (FLSA); Decatur moved to dismiss the case, but the district court denied the motion. On appeal, a 5th Circuit panel held that the FLSA doesn’t require employers to reimburse foreign workers for the expenses in question. The 5th Circuit granted a petition to rehear the case en banc, and again ruled in Decatur’s favor.

9th Circuit: Reporters Not Exempt Under FLSA

Certain newspaper reporters are nonexempt employees entitled to overtime pay, the 9th Circuit affirmed Sept. 27 in Wang v. Chinese Daily News Inc.

Reporters for a Chinese-language daily newspaper in San Francisco claimed they should receive overtime pay because they qualified as nonexempt employees under the Fair Labor Standards Act (FLSA). The newspaper contended that the reporters were exempt creative professionals.

According to the FLSA, exempt creative professionals produce “work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, mechanical or physical work.” Because the reporters did not conduct investigative interviews, analyze news or write editorials, the district court ruled that they were not engaging in creative work and therefore not exempt. It awarded them $7.7 million in damages.

The newspaper appealed, but the 9th Circuit affirmed the damages award and judgment.

11th Circuit: Panel Abandons Class Action Ruling

On Oct. 15, an 11th Circuit panel reversed itself on a ruling that would have deprived federal courts in the circuit of jurisdiction over most consumer class actions.

In Cappuccitti v. DirecTV, Inc., decided in July, an 11th Circuit panel upheld a district court ruling that the Class Action Fairness Act of 2005 (CAFA) did not provide federal courts jurisdiction over a class action unless one of the plaintiff’s claims totaled at least $75,000. According to the panel, without a minimum claim amount, “plaintiffs could bring five-dollar claims by alleging gargantuan class sizes to meet the $5,000,000 aggregate amount requirement.”

However, most plaintiffs in consumer class actions have relatively modest claims; Renato Cappuccitti’s claim against DirecTV amounted to between $175 and $480.

The panel opinion would have eliminated a federal forum for pending class actions in the 11th Circuit.

Both parties petitioned for a rehearing. The panel granted the rehearing and abandoned its prior opinion, stating that “subsequent reflection has led us to conclude that our interpretation [of CAFA] was incorrect.”