Businesses Win Twice as U.S. High Court Rejects Lawsuits

Photographer: Andrew Harrer/Bloomberg

The U.S. Supreme Court today gave airlines greater immunity from lawsuits when they report potential security threats, throwing out a jury verdict won by an Air Wisconsin pilot. Close

The U.S. Supreme Court today gave airlines greater immunity from lawsuits when they... Read More

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Photographer: Andrew Harrer/Bloomberg

The U.S. Supreme Court today gave airlines greater immunity from lawsuits when they report potential security threats, throwing out a jury verdict won by an Air Wisconsin pilot.

Companies won two unanimous U.S. Supreme Court rulings, averting what they said might have been billions of dollars in new liability.

The court today gave airlines greater immunity from lawsuits when they report potential security threats, throwing out a jury verdict won by an Air Wisconsin pilot. The justices also ruled for U.S. Steel Corp. (X) by saying companies in many cases don’t have to pay workers for time spent putting on and taking off safety gear.

In the airline case, the court said companies can’t be sued when they report threats to the Transportation Security Administration as long as the information the carriers provide is “materially true.”

“Congress wanted to ensure that air carriers and their employees would not hesitate to provide the TSA with the information it needed,” Justice Sonia Sotomayor wrote for the court. The decision overturned a lower court ruling that airlines said would have left them legally vulnerable.

The justices threw out a $1.4 million award won by the pilot, William L. Hoeper. He sued the airline for telling federal officials as he was preparing to board a flight that he was “unstable” and possibly armed.

Three of the nine justices -- Antonin Scalia, Clarence Thomas and Elena Kagan -- dissented from that part of the ruling. They said the high court should have let the lower courts decide whether the airline’s report met the “materially true” standard.

Administration Backing

Closely held Air Wisconsin Airlines Corp. flies for US Airways Group Inc., which joined with AMR Corp. in December to create American Airlines Group Inc.

President Barack Obama’s administration backed the industry in the case. The case tested the 2001 Aviation and Transportation Security Act, a law enacted two months after the Sept. 11 terrorist attacks.

Vaughn Jennings, a spokesman for Washington trade group Airlines for America, said in an e-mail that the court “recognized the importance of immunizing prompt reports by airlines of suspicious activity and potential security threats.”

Hoeper’s attorney, Scott McGath, didn’t respond to a request for comment.

In the wage case, the justices said the U.S. Steel employees are bound by their collective bargaining agreement, which says they get paid only for time at their work stations. The workers argued that a federal wage-and-hour law entitled them to additional wages no matter what the union agreement said.

Grocery Manufacturers

Corporate trade groups said a ruling in the workers’ favor would have been costly. The Grocery Manufacturers Association, whose 300-plus members include Coca Cola Co. and Kraft Foods Group Inc. (KRFT), said a Supreme Court defeat would have forced companies to pay millions of employees more than $1,500 each.

Pittsburgh-based U.S. Steel was being sued by workers at its Gary, Indiana, facility. The workers said they spend as much as an hour before and after their shifts donning protective gear, including flame-retardant clothing and steel-toed boots, and then traveling to their work stations.

The union that represents 4,500 workers at the Gary facility, the United Steelworkers of America, wasn’t involved in the case. Since 1947, the union’s contracts with U.S. Steel have said workers don’t get paid for changing time.

The case turned on a provision in the federal law that says a collective bargaining agreement governs whether workers get paid for time spent “changing clothes.” The workers said their gear isn’t “clothes” because its primary function is to protect against workplace hazards.

Justice Scalia

Writing for the court, Scalia rejected that interpretation. “We see no basis for the proposition that the unmodified term ‘clothes’ somehow omits protective clothing,” he wrote.

The case is Sandifer v. United States Steel, 12-417. The airline case is Air Wisconsin v. Hoeper, 12-315.

Earlier this month, the court gave multinational companies a stronger shield against lawsuits, throwing out a case against Daimler AG over a company unit’s alleged collaboration in torture and killings in Argentina. The justices said the parent company didn’t have enough ties to California to give courts there the authority to hear the case.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Patrick Oster at poster@bloomberg.net

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