April 2017

APRIL 2017 CIRCUIT UPDATE

First Circuit

Pan Am Railways, Inc. v. United States Department of Labor, ___ F.3d ___, 2017 U.S. App. LEXIS 7047 (1st Cir. April 21, 2017).

The United States Circuit Court of Appeals for the First Circuit upheld a $250,000.00 punitive damages award assessed against Pan Am Railways, Inc., a railroad company. Pan Am unsuccessfully appealed the administrative judge’s award arguing that it was excessive.

The plaintiff, a former train conductor for a subsidiary of Pan Am, had previously warned the company of a dangerous condition present next to a track in railyard, a pile of old railroad ties. Plaintiff thought that the pile was a tripping hazard and reported it to his manager. A few weeks after this report, plaintiff stepped off of a train, tripped over the same pile, and injured his ankle. A week later, Plaintiff received a notice of hearing from his employer, alleging that he had violated a safety rule that required him to before getting off of a train to carefully observe the ground condition and to be assured of firm footing. A month later, after the completion of the hearing, plaintiff received a letter of reprimand for the violation of the same company policy, constituting a disciplinary action. Shortly after, plaintiff retained an attorney who filed an OSHA complaint. The employer believed that the complaint contained a discrepancy between plaintiff’s hearing testimony and the complaint: that complaint alleged that plaintiff “fell hard to the ground,” which plaintiff did not testify to at the hearing. The employer deemed this a “major discrepancy.” Based on the discrepancy, the employer brought a second set of disciplinary charges against the plaintiff. When doing so, the employer did not seek to speak to the plaintiff. The employer sent the plaintiff a second notice of hearing, alleging therein that plaintiff had made false statements to Pan Am and/or a United States government agency. Eventually, the employer determined that the charges had not been sustained and took no action as a result of the second hearing.

OSHA found that the employer had unlawfully retaliated against plaintiff when it brought the second of set charges after the plaintiff had filed the OSHA complaint. An administrative law judge found that plaintiff’s protected activity, the filing of the complaint, was a contributing factor in the employer’s decision to bring the second charge and to hold the second hearing. Consequently, the judge awarded the employee $10,000.00 in damages for emotion distress, in addition to $250,000.00 in punitive damages because the employer had used the disciplinary process as a method to intimidate and discourage the plaintiff and other employees from engaging in protected activity. The employer appealed the award to the Administrative Review Board who found no abuse of discretion in the award of damages.

The First Circuit upheld the awards because it found substantial evidence on the record to support the administrative law judge’s finding that the employer cultivated a corporate culture of intimidation. The administrative law judge had found that ninety nine percent of all of injuries suffered by employees that were reportable to the Federal Railroad Administration resulted in the employer filing a formal charge against the injured employee, yet the employer itself did very little to address the concerns raised by the plaintiff regarding the unsafe conditions at the railyard. In addition, the First Circuit held that the $250,000.00 award was not excessive because the administrative law judge possessed expertise relating to and had great experience with whistleblower cases, making the judge well suited to make the “fact intensive, close calls.” Even though the First Circuit acknowledged that the award seemed high, it did not find any evidence of abuse of discretion to overturn the awards because administrative law judges are afforded wide latitude in deciding how much weight to afford to each relevant fact, to assess witness credibility, and to make factual judgments.

Ortiz-Martínez v. Fresenius Health Partners, PR, LLC, et al., 853 F.3d 599 (1st Cir. 2017).

The United States Circuit Court of Appeals for the First Circuit held that an employee who did not cooperate in the interactive process with her employer after suffering an injury to her hand could not prevail on a failure-to-accommodate disability discrimination suit.

The plaintiff, a social worker at a health care services provider, was required, as part of her responsibilities and duties, to document all interventions and services she provided to patients. She was also required to complete a monthly report for each patient assigned to her care. In 2013, plaintiff injured her hand while at work. She subsequently took a leave of absence from work. In July 2013, plaintiff’s doctors gave her permission to return to work, as long as she continued with her treatments. Upon her return, plaintiff provided her supervisor with a State Insurance Fund form that listed her medical conditions, all related to her hand. The form did not list any specific accommodations sought by the plaintiff to complete her daily tasks. The employer informed plaintiff that it could not accommodate and reinstate the plaintiff, as long plaintiff did not indicate what specific accommodations she sought. Plaintiff failed to respond to the employer’s requests via phone or letters. Nevertheless, the plaintiff filed a complaint for failure-to-accommodate complaint with the EEOC. Shortly after, the employee met with her union representative and a company representative, and the employer again asked for specific details regarding the accommodations sought. Yet again, the plaintiff failed to provide any such information and did not initiate any further communications with the employer. Faced with these facts, the U.S. District Court judge granted the employer’s motion for summary judgment, finding that plaintiff was not disabled under the Americans with Disabilities Act, and that she also caused the breakdown in the interactive process.

The First Circuit upheld the District Judge’s ruling. The court noted that the interactive process required that both the employer and the employee engage in dialogue to reach a possible reasonable accommodation. The court held that the plaintiff failed to do just that. In response to the plaintiff’s argument that the employer’s requests were excessive and unrelated to her work requirements, the court held that these requests were in fact reasonable to determine the type of the needed accommodation. The employer had asked for the amount of weight supported by plaintiff’s hands, the possible types of hand movements, and the frequency and duration of breaks needed throughout the day. The court deemed these questions directly related to accommodations plaintiff needed to complete her duties of daily desk and personal computer work. The court also held that plaintiff was responsible for the breakdown in the interactive process, and plaintiff’s mere utterance of her desire for reinstatements for work did not demonstrate a meaningful engagement with the interactive process. For the foregoing reason, the court upheld he district court’s judgment for the employer.

Submitted by:
Ali Khorsand

Second Circuit

NLRB v. Pier Sixty, LLC, ___ F.3d ___, 2017 U.S. App. LEXIS 6974 (2d Cir. April 21, 2017).

National Labor Relations Act prohibited management from retaliating against an employee who published vulgar comments about his supervisor on Facebook after a confrontational meeting with the supervisor. “Even though Perez’s message was dominated by vulgar attacks on McSweeney and his family, the ‘subject matter’ of the message included workplace concerns—management’s allegedly disrespectful treatment of employees, and the upcoming union election. Pier Sixty had demonstrated its hostility toward employees’ union activities in the period immediately prior to the representation election and proximate to Perez’s post.” In addition, the workplace was rife with this kind of foul language, for which employees are rarely written up. In addition, “the ‘location’ of Perez’s comments (Facebook) was an online forum that is a key medium of communication among coworkers and a tool for organization in the modern era.”

Zarda v. Altitude Express, ___ F.3d ___, 2017 U.S. App. LEXIS 6578 (2d Cir. April 18, 2017).

Gay plaintiff alleged he was fired from his position because of his sexual orientation. The district court held that plaintiff could not proceed with his Title VII suit because the Second Circuit held in 2000 that discrimination on the basis of sexual orientation is not sex discrimination. Citing its recent decision in Chriastianson v. Omnicom, Inc., the Court of Appeals holds that it lacks the authority to overturn a prior precedent without hearing the case en banc. In addition, although the plaintiff lost his sexual orientation claim at trial under state law, that adverse verdict did not preclude plaintiff from pursuing his Title VII claim on appeal, because the jury charge on the state law claim asked whether Zarda could prove “but for” causation. Since the standard under Title VII is whether the plaintiff’s protected characteristic was a motivating factor in his termination, since “motivating factor” is a more plaintiff-friendly standard than “but-for” causation, so this Title VII challenge is not mooted by the adverse state-law verdict in federal court.

Saleem v. Corporate Transportation Group, ___ F.3d ___, 2017 U.S. App. LEXIS 6305 (2d Cir. April 12, 2017).

In this action brought under the Fair Labor Standards Act, plaintiffs, “black-car drivers” who provide ground transportation to the public, claimed that defendants were their employers. The Court of Appeals disagrees, holding that, under the totality of the circumstances, the plaintiffs were independent contractors and “in business for themselves. “Plaintiffs independently determined (1) the manner and extent of their affiliation with CTG; (2) whether to work exclusively for CTG accounts or provide rides for CTG’s rivals’ clients and/or develop business of their own; (3) the degree to which they would invest in their driving businesses; and (4) when, where, and how regularly to provide rides for CTG clients. While none of these facts is determinative on its own, considered as a whole with the goal of discerning the underlying economic reality of the relationship here, the district court correctly determined that Plaintiffs are, as a matter of law, ‘properly classified as independent contractors rather than employees for purposes of the FLSA.’”

Submitted by:
Stephen Bergstein

Third Circuit

Secretary, United States Department of Labor v. Kwasny, et al., 853 F.3d 87 (3d Cir. 2017).

Richard Kwasny was the managing partner of dissolved law firm. Among his responsibilities as managing partner was serving as trustee and fiduciary of the firm’s 401(k) Profit Sharing Plan. Between September 2007 and November 2009, some $41,936.73 was withheld from employee compensation as contributions to the Profit Sharing Plan. However, the withholdings were never deposited into the Plan. Kwasny instead directed that the withholdings be deposited into the law firm’s general account and be used to pay employee wages, outstanding bills, and Kwasny’s own compensation. Contributions were forwarded to the Plan only after these general firm expenses had been paid. As a result, the Profit Sharing Plan sustained losses in the amount of $40,416.30 in contributions that were never paid, in addition to $2,099.06 that was paid late and without interest.

The Secretary of Labor received a substantiated complaint from a Plan member in 2011, which triggered an investigation that led ultimately to a 2014 enforcement action under the Employee Retirement and Income Security Act of 1974, (ERISA). The Secretary sought recovery of the lost funds, removal of Kwasny as trustee, and an injunction barring Kwasny from acting as a plan fiduciary in the future. While the Secretary’s action was pending, a former firm employee named Larry Haft successfully sued the dissolved firm for a money judgment based in part on his 401(k) contributions that had never been deposited.

The facts of the case were not seriously disputed, and both sides moved for summary judgment. Kwasny sought judgment in his favor based on the affirmative defenses of untimeliness and res judicata. The District Court granted the Secretary’s motion and denied Kwasny’s. On appeal, the Third Circuit affirmed.

The record clearly established that Kwasny violated his obligations as trustee of an ERISA retirement plan, including his obligation to ensure that plan assets are held in a trust account, 29 U.S.C. Sec. 1103; to act solely in the interest of plan participants, 29 U.S.C. Sec. 1104(a)(1)(A); to act prudently, 29 U.S.C. Sec. 1104(a)(1)(B); to not divert plan assets, directly or indirectly, for the benefit or use of a party in interest, 29 U.S.C. Sec. 1106(a)(1); and, to refrain from dealing with plan assets for his own interest. 29 U.S.C. Sec. 1106(a)(2). Funds withheld from employee paychecks but not yet delivered to the benefit plan are subject to ERISA protection. 29 C.F.R. Sec. 2510.3-102. It was irrelevant that Kwasny was not the only trustee of the firm’s 401(k) Profit Sharing Plan because trustee liability is joint and several. He therefore could be held liable for the full amount of Plan losses.

Kwasny’s untimeliness defense, based on the ERISA statute of limitations, was properly rejected by the District Court. Actions alleging breach of fiduciary duties under ERISA must be brought within six years after the date of the last action constituting a part of the breach or violation, or within three years of the earliest date the plaintiff had actual knowledge of the breach or violation. 29 U.S.C. Sec. 1113. “Actual knowledge” requires “a showing that plaintiffs actually knew not only of the events that occurred which constitute the breach or violation but also that those events supported a claim of breach of fiduciary duty or violation under ERISA.” The record evidence revealed that Secretary did not have such actual knowledge of Kwasny’s violations until November 2011. Whether the firm’s employees had actual knowledge of the violations was legally irrelevant because the Secretary, not any of the employees, was the plaintiff. Kwasny’s self-serving, vague declaration that some unnamed representative of the Department of Labor allegedly had examined the law firm’s books at some unstated time in 2010 was insufficient to create a genuine issue of fact as to the Secretary allegedly having “actual knowledge” of the violations in that year.

The District Courts also properly rejected Kwasny’s res judicata defense. Res judicata encompasses both claim preclusion and issue preclusion. Kwasny argued that Haft’s successful litigation precluded the Secretary’s claim against Kwasny. The preclusive effect of state court judgment on a federal claim is determined by the Full Faith and Credit Statute, 28 U.S.C. Sec. 1738, which, in turn, gives the state court judgment the same “full faith and credit” in federal courts that the judgment would bear in the courts of that state. Federal courts thus look to state law to determine the preclusive effect of that state’s prior judgments. Pennsylvania law requires privity between the parties in the previous case and the current suit for claim preclusion to apply. Privity constitutes “mutual or successive relationships to the same right of property, or such an identification of interest of one person with another as to represent the same legal right.”

Citing precedent from the Fourth, Fifth, Seventh and Eleventh Circuits, the Kwasny Court held that the Secretary’s interests in bringing ERISA enforcement actions extend beyond the private interests of the wronged individuals, and include public concerns such as reinforcement of public confidence in the private pension system and supervision of the enforcement of ERISA to ensure the financial stability of the “billions of dollars of assets” held by ERISA plans across the country. “A private litigant cannot represent these interests.” As such, “‘private plaintiffs do not adequately represent, and are not charged with representing, the broader national public interests represented by the Secretary’ in ERISA suits.” Therefore, “in ERISA suits, the Secretary is not in privity with private litigants and is therefore not bound by the results reached in private litigation.”

However, Kwasny is entitled to an offset for any amounts previously paid to Haft that constitute losses arising from Haft’s 401(k) contributions that were never deposited. The case was remanded to determine whether such an offset was appropriate.

Submitted by:
Stephen E. Trimboli

Fifth Circuit

Halle v. Galliano Marine Service, L.L.C., __ F.3d __, 2017 WL 1399697 (5th Cir. April 19, 2017).

Kyle Halle worked for a remotely operated vehicle (ROV) operations entity, as a technician and supervisor performing tasks on an offshore, underwater drilling rig. He performed his work inside a shipping container aboard an ROV support vessel and reported to land-based supervisors. Halle sued for overtime payments under the FLSA. The district court granted defendants motion for summary judgment, on the basis that Halle was exempt from the FLSA’s overtime provisions because he qualified as a “seaman” under the FLSA.

The Fifth Circuit determined that the case presented an issue of first impression: whether ROV Technicians are seamen under the FLSA and reiterated that the definition of “seaman” in the Jones Act is not equivalent to the definition of “seaman” in the FLSA. The Jones Act interprets “seaman” broadly to maximize the scope of the remedial coverage. The “seaman” exemptions under the FLSA are narrow, so as to protect employees broadly. Given these differences, it was error for a court to resolve this FLSA case by resorting to Jones Act caselaw legal standards.

Focusing on the second prong of the FLSA seaman test, the Fifth Circuit analyzed whether Halle’s work was primarily offered to aid the vessel as a means of transportation. Noting that the critical issue in analyzing this prong is determining whether the “primary purpose” of the worker’s work is safe navigation of the ship, the Fifth Circuit declined to equate maintenance, repair, or navigation of superficially attached machinery (the ROVs) with maintenance, repair, or navigation of the support vessel.

Reversed and remanded.

Acker v. General Motors, L.L.C., 853 F.3d 784 (5th Cir. 2017).

Lonny Acker was approved for intermittent Family and Medical Leave Act (“FMLA”) leave, but on several occasions, was absent from work and did not follow company policy for requesting FMLA leave. He was disciplined with several weeks of unpaid layoff. He sued for FMLA interference and retaliation and for disability discrimination under the Americans with Disabilities Act (“ADA”) and the Texas Commission on Human Rights Act (“TCHRA”). The district court entered summary judgment for GM.

Acker failed to timely call in his absences from work on multiple dates, as required by GM’s FMLA notice procedures. No unusual circumstances justified Acker’s failure to comply with the procedures.

The Fifth Circuit held that FMLA explicitly permits employers to condition FMLA protected leave upon the employee’s compliance with the employer’s usual notice and procedural requirements, absent unusual circumstances. Where, as here, an employee does not comply with the employer’s usual notice and procedure requirements, FMLA protected leave may be delayed or denied. Acker’s unpaid layoff was neither FMLA interference nor retaliation.

The Fifth Circuit held further, that requesting FMLA leave alone is not a request for an ADA reasonable accommodation. By requesting FMLA leave, Acker was effectively asserting that he had a serious health condition that make him unable to perform the functions of his position. Acker did not demonstrate any dispute of material fact that his untimely phone calls could have sought a reasonable accommodation under the ADA or that GM denied him any accommodation.

Affirmed.

Cabral v. Brennan, 853 F.3d 763 (5th Cir. 2017).

Cabral sued the Postal Service under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967. The district court granted summary judgment for the Postal Service on all but one claim: that the Postal Service had retaliated against Cabral by placing him on unpaid leave. Cabral was placed on two-days unpaid leave after a supervisor asked him to produce a valid driver’s license and he failed to do so. Later, he was reimbursed for any lost pay. Cabral claims that he was placed on leave in retaliation for filing complaints, the Postal Service claims it was because his supervisors believed he was operating his postal vehicle with a suspended driver’s license. Cabral admits that his license had been suspended for a DWI conviction and that he failed to notify his supervisors of the suspension, in violation of Postal Service rules.

Upon a motion for reconsideration, the district court granted dismissal of the remaining claim, holding that Cabral’s two-day suspension did not exact a physical, emotion, or economic toll as required to support a claim for retaliation.

Cabral argued that the district court erred by analyzing the motion for reconsideration under Fed. R. Civ. P. 59(e) rather than Rule 54(b) and for concluding appellant failed to state a claim. The parties and the Fifth Circuit agreed that the district court should have analyzed the motion for reconsideration under Rule 54(b) which allows a court to revise interlocutory orders. The Fifth Circuit first found that the district court’s procedural error was harmless.

The Fifth Circuit held Cabral did not show that his suspension exacted a physical, emotional, or economic toll. Cabral’s conclusory statements attesting to emotional or psychological harm did not provide the requisite proof of harm and therefore, failed to state a claim for retaliation under Title VII.

Because the district court’s procedural error was harmless, and appellant’s two-day suspension did not constitute a materially adverse action, the Fifth Circuit affirmed.

Submitted by:
Susan Cone Kilgore

Sixth Circuit

Phillips v. UAW, et al., 854 F.3d 323 (6th Cir. 2017).

In Phillips, Plaintiff, who was a UAW local president for MGM Casino Detroit, asserted a Title VII claim against the UAW, asserting that she was subjected to offensive conduct by two UAW officials during her term as President. The district court held that that unions, acting as unions, and not acting as employers, are not liable under Title VII for hostile work environment claims, and dismissed Plaintiff’s case. The Court of Appeals analyzed Plaintiff’s complaints, and determined that she could not make out a case of hostile work environment based on her allegations of harassment by the UAW officials, and therefore, in the interest of judicial economy, the Court need not determine whether Title VII applied in this situation.

The dissenting opinion noted that the Eighth Circuit has held that union acting as union can be liable under Title VII in Dowd v. Steelworkers of America, 253 F.3d 1093 (8th Cir. 2001), and, disagreeing with the majority, found that Plaintiff had established a prima facie case of hostile work environment.

Marshall v. The Rawlings Co., 854 F.3d 368 (6th Cir. 2017).

In Marshall, in a matter of first impression, the Court of Appeals found that the “cat’s paw theory,” a situation where a biased supervisor, who lacks decision-making power uses the formal decision-maker as a “dupe” in a scheme to trigger a discriminatory employment action, was applicable in a case arising under the Family and Medical Leave Act. The plaintiff asserted that her direct supervisors made negative comments about her FMLA leave, and took adverse actions against her based on her FMLA leave. They also recommending that she be demoted, and eventually recommended that she be terminated. The Court first held that the “cats’ paw” theory applied in FMLA cases, noting that the Supreme Court and other federal courts had routinely applied the theory in discrimination cases. The Court then found that the theory survived more than one layer of supervision, where the ultimate decision-maker did not engage in their own investigation of the underlying issues supporting the adverse decisions, but merely relied on information from the biased supervisor. Finding that there were contested issues of fact of whether the supervisors unlawfully biased the decision maker’s termination decision, the Court reversed the lower court grant of summary judgment as to plaintiff’s FMLA retaliation and ADA discrimination claims. The Court upheld the dismissal of plaintiff’s FMLA interference and intentional infliction of emotional distress claims, finding that plaintiff had not established evidence to support either claim.

Reese v. CNH Industrial, __ F.3d. __, 2017 WL 1404390 (6th Cir. April 20, 2017).

On April 20, 2017, the Sixth Circuit issued three decisions concerning whether retirees were entitled to lifetime healthcare benefits. In Cole, the Court issued a superseding opinion overturning its 2008 decision finding that Meritor retirees had the right to lifetime healthcare benefits. Finding that the Yard-Man line of cases which the Court had relied on in its 2008 decision had been abrogated by the Supreme Court, the Sixth Circuit reviewed the case under the Supreme Court’s Tackett decision, which held that “when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life.” In the Supreme Court’s subsequent Tackett III, decision, the Supreme Court held that the collective bargaining agreements relating to retiree healthcare benefits should be read according to ordinary contract principles, and “when the contract is ambiguous, a court may consider extrinsic evidence to determine the intentions of the parties.” Using these guidelines, the Sixth Circuit found the language of the parties’ collective bargaining agreement, stating that retiree healthcare benefits “shall be continued” was unambiguous, and only vested healthcare benefits for retirees for the life of the collective bargaining agreement.

In Kelsey-Hayes, the Court again relied on the principles from the Tackett cases, finding that the agreement was ambiguous as to lifetime benefits. The Court found that the parties’ extensive bargaining history contained sufficient evidence to determine that the parties’ intended and understood the language to provide lifetime healthcare benefits for retirees. Similarly in Reese, the Court found that extrinsic evidence, including the fact that the company calculated the costs of retiree benefits based on the employee’s expected life span and the fact that the company representatives told employees that retirees would have healthcare benefits for their lifetime, supported a finding that the employees had vested lifetime benefits. The Court in Reese remanded the case to the district court to determine whether the company made a “reasonable” modification to the benefits when it changed the healthcare plans applicable to the retirees.

Submitted by:
Charles T. Oxender

Seventh Circuit

Hirmiz v. New Harrison Hotel Corp., __ F.3d. __, 2017 U.S. App. LEXIS 5978 (7th Cir. Apr. 6, 2017).

Plaintiff brought claims against his former employer under the Americans with Disabilities Act (ADA), alleging that Defendant failed to accommodate his sensitivity to electromagnetic voltage and retaliated against him for filing a complaint with the Occupational Safety and Health Administration (OSHA) alleging that he had been exposed to unacceptably high levels of electromagnetic voltage in his job as a front-desk clerk.

Writing for the three-judge panel, Circuit Judge Richard Posner questioned whether sensitivity to electromagnetic voltage “is a physical disorder or a psychological one,” citing an article from the Washington Post titled, “Are ‘WiFi Allergies’ a Real Thing?” Ultimately, the panel agreed with the district court that, in any event, Plaintiff had failed to produce any evidence demonstrating that his condition was limiting enough to qualify as a “disability” under the ADA. (The Seventh Circuit rejected Plaintiff’s attempt to produce new evidence of his medical condition on appeal.) The undisputed record before the district court also showed that Plaintiff failed to request any accommodation while employed by Defendant.

In upholding the district court’s grant of summary judgment in favor of Defendant, the Seventh Circuit also found no causal connection between Plaintiff’s OSHA complaint and his subsequent termination, noting the record showed that Plaintiff had been terminated for sleeping on the job.

Hively v. Ivy Tech Community College of Indiana, 853 F.3d 339 (7th Cir. 2017).

Plaintiff, who is openly lesbian, worked as a part-time adjunct professor for Defendant from 2000-2014. Plaintiff applied for several full-time positions in this time period, but was never selected for employment, and her contract for part-time work eventually expired without being renewed. Plaintiff subsequently sued Defendant, alleging that she had been discriminated against based on her sexual orientation in violation of Title VII.

Relying on circuit precedent holding that Title VII does not prohibit discrimination based on sexual orientation, the district court dismissed Plaintiff’s lawsuit for failure to state a claim. This decision was upheld by a three-judge appellate panel, before a majority of the judges in regular active service voted to rehear the case en banc.

Chief Judge Diane Wood authored the majority opinion, and began by acknowledging the lack of explicit precedent from the U.S. Supreme Court regarding the proper interpretation of the scope of Title VII’s ban on sex discrimination in the context of claims alleging sexual orientation discrimination. Judge Wood framed the question before the court as one of statutory interpretation, requiring the Seventh Circuit to determine “whether actions taken on the basis of sexual orientation are a subset of actions taken on the basis of sex.”

At the outset, Judge Wood rejected the proposition that it is possible to draw any reasonable inferences about Congress’s intent based on its failure to amend Title VII over the years or its explicit use of the term “sexual orientation” in other contexts, noting that legislative history “is notoriously malleable.” Judge Wood further explained the majority’s view that the fact Congress “may not have anticipated a particular application of the law” does not limit the statute’s reach, citing Supreme Court precedent holding that Title VII’s prohibition on sex-based discrimination covers sexual harassment in the workplace, same-sex harassment in the workplace, discrimination based on actuarial assumptions about a person’s longevity, and discrimination based on a person’s failure to conform to a certain set of gender stereotypes.

Accepting the alleged facts as true, the majority determined that Plaintiff had set forth a “paradigmatic” claim of sex discrimination, because it was apparent she would have been treated differently if she was a man and everything else had remained the same (i.e., if Plaintiff was a man with a female partner). The majority further noted that lesbianism is the “ultimate case of failure to conform to the female stereotype,” based on heterosexual prevailing norms.

The majority further held that the “associational theory” of discrimination articulated in Loving v. Virginia, 388 U.S. 1 (1967), further supported Plaintiff’s claim of sex-based discrimination, insofar as she was being discriminated against because of the protected characteristic (sex) of the person with whom she associates.

Finally, the majority noted the backdrop of Supreme Court decisions outside the context of employment holding that discrimination on the basis of sexual orientation violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment, concluding, “The logic of the Supreme Court’s decisions, as well as the common-sense reality that it is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex, persuade us that the time has come to overrule our previous cases that have endeavored to find and observe that line.”

Circuit Judge Richard Posner wrote separately in support of a more “straightforward” approach, acknowledging the need to “update” the interpretation of Title VII to infuse the statute with “vitality and significance” in the modern era. Citing a long history of “judicial interpretative updating” in the context of the Sherman Antitrust Act, the First Amendment’s freedom of speech protections, the Second Amendment’s protections of the right to bear arms, the Fourth Amendment’s protections against unreasonable searches, and the Eight Amendment’s protections against cruel and unusual punishment, Judge Posner concluded that “Congress in the 1960s did not foresee the sexual revolution of the 2000s,” requiring courts to step-in and bring the statute up-to-date in line with the current understanding of the full spectrum of sex-based discrimination.

Circuit Judge Joel Flaum also wrote separately, concluding that discrimination based on an individual’s sexual orientation is “necessarily, in part, discrimination based on their sex.” Judge Flaum’s concurrence relied on the defining characteristic of homosexuality (i.e. same-sex attraction), noting that as a matter of logic this characteristic cannot be taken into account without also accounting for the person’s sex.

Circuit Judge Diane Sykes authored the dissenting opinion, cautioning that the result of the majority and concurring opinions was “a statutory amendment courtesy of unelected judges.” Judge Sykes was explicit in stating, “We are not authorized to infuse the text with a new or unconventional meaning or to update it to respond to changed social, economic, or political conditions.” The dissent concludes that this case begins and (for the most part) ends with the statutory text, and that no reasonable person would have understood in 1964 that Title VII’s prohibition on discrimination “because of sex” also banned discrimination because of sexual orientation.

The dissent goes on to note the distinctions between homophobia and sexism, explaining that they are “separate kinds of prejudice that classify people in distinct ways based on different immutable characteristics.” Emphasizing Plaintiff’s claim that she was discriminated against on the basis of her sexual orientation – not on the basis of her sex – Judge Sykes rejected the majority’s use of the comparative method of proof (an evidentiary test) as an interpretive tool. Judge Sykes further accused the majority of “opportunistically framing the comparison” by simultaneously changing two variables – Plaintiff’s sex and her sexual orientation. To truly test for sex-based discrimination, according to the dissent, the proper question is whether Defendant treated gay men differently than lesbians.

The dissent rejected the majority’s reliance on race-association cases, noting that sexual-orientation discrimination is not intended to promote or perpetuate the supremacy of one sex over the other, unlike the miscegenation laws made unlawful by the Supreme Court’s decision in Loving. The dissent also rejected the majority’s argument based on failure to conform to sex stereotypes, noting that heterosexuality is neither a female or male stereotype, but is instead a stereotype based on a “dominant sexual orientation” regardless of an individual’s sex. The dissent further criticized the majority’s reliance on Supreme Court precedent in the context of Equal Protection cases, noting that the Supreme Court applies different levels of equal-protection scrutiny to sexual-orientation discrimination claims and to sex discrimination claims, in implied recognition of the differences between the two types of claims.

The dissent concluded, “It’s understandable that the court is impatient to protect lesbians and gay men from workplace discrimination without waiting for Congress to act,” but that judicial restraint requires the Seventh Circuit to take this approach and uphold the plain language of the statute as drafted – which does not include discrimination based on sexual orientation.

Turner v. Hirschbach Motor Lines, __ F.3d __, 2017 U.S. App. LEXIS 7116 (7th Cir. Apr. 24, 2017).

Plaintiff applied for a job as a truck driver with Defendant, but was not hired after his routine drug test came back positive for marijuana use. Plaintiff subsequently sued Defendant, alleging claims of race discrimination under Title VII and Section 1981, as well as civil conspiracy under Illinois common law.

The Seventh Circuit accepted as true for purposes of summary judgment that Defendant’s safety officer informed Plaintiff he had the right to request a “split test” after his initial test came back positive (i.e., to have the second half of his sample tested by a different laboratory), that the safety officer unilaterally cancelled the split test by falsely reporting that Plaintiff had changed his mind about it, and that the safety officer’s actions were based on racial animus. Because the safety officer was not the decision-maker with respect to hiring, however, Plaintiff was required to rely on the “cat’s paw” theory of liability to prove his discrimination claims.

Pursuant to Seventh Circuit precedent, the “cat’s paw” theory of liability requires the plaintiff to show that the decision-maker was in fact the unwitting dupe of a biased actor. Thus, Plaintiff’s burden at summary judgment was to offer evidence showing that the safety officer’s racial animus and discriminatory conduct – cancelling the split test – was a proximate cause of the adverse hiring decision. Because there was no evidence that the initial drug test was unreliable or produced a false positive, that the split test would have come back negative and would have cleared Plaintiff, or that the decision-maker knew Plaintiff had requested a split test, the Seventh Circuit held there was insufficient evidence to permit Plaintiff’s claims to go to a jury, as no jury could reasonably infer that the hiring decision was proximately caused by the safety officer’s racial bias. On the contrary, the undisputed evidence showed that the hiring decision was based solely on Plaintiff’s positive test result.

The Seventh Circuit further found no evidence that the decision-maker violated Department of Transportation regulations, or that she treated similarly situated applicants of other races more favorably after they tested positive for marijuana use.

Finally, the Seventh Circuit upheld summary judgment on Plaintiff’s civil conspiracy claim, noting there was no evidence of an agreement between Defendant and the independent medical review officer to cancel the split test against Plaintiff’s wishes.

Submitted by:
Amy D. Rettberg

Eighth Circuit

Dindinger v. Allsteel, Inc., 853 F.3d 414 (8th Cir. 2017).

Three female plaintiffs sued their employer alleging it paid them less than their male colleagues performing equal work. All three brought claims under the Equal Pay Act, and two brought wage discrimination claims under the Iowa Civil Rights Act (ICRA).

The factual circumstances among each plaintiff were similar. Each alleged that they were paid less than male employees performing equal work in the same position. Allsteel presented evidence that the work the plaintiffs performed was not equal to their male counterparts, and that pay disparities were due to factors other than sex such as prior education, outside experience, and seniority.

Allsteel also sought to present evidence that economic conditions warranted the pay disparities. It introduced evidence of negative effects of the 2008 recession, which required layoffs and restructured job responsibilities. At the close of trial, the district court instructed the jury that Allsteel could establish an affirmative defense if it proved that some factor other than sex justified the pay differences. However, the district court also instructed the jury that Allsteel may not rely on economic conditions to establish the affirmative defense.

The jury found in favor of the plaintiffs, and Allsteel moved for a new trial. Allsteel argued that district court improperly instructed the jury on its affirmative defenses. The district court denied the motion, and Allsteel appealed.

The district court’s rationale for its instructions was that an economic-conditions defense in EPA cases was inconsistent with the Supreme Court’s decision in Corning Glass Works v. Brennan. The Supreme Court in Corning Glass held that economic conditions are not a defense where the defendant argues that “men would not work at the low rates paid women” and market forces therefore required lower wages for women. Allsteel argued that the district court erred by applying Corning Glass to the facts of this case, pointing to several other district court cases it argued were more analogous. For example, in Brokaw v. Weiser Security, an employer was allowed to establish an affirmative defense where it paid a newly hired female manager less than a male predecessor because its revenue had declined between the two hires.

The Eighth Circuit did not decide the question of whether economic conditions could serve as a legitimate factor justifying a sex-based pay differential. The court found that Allsteel did not provide sufficient evidence to establish such a defense in the first place. Although Allsteel presented evidence that it experienced economic hardship, it did not show that any cost-saving measures caused the plaintiffs to be paid less than male employees. Therefore, the Eighth Circuit affirmed the district court’s jury instructions.

Faidley v. United Parcel Service of America, Inc., 853 F.3d 447 (8th Cir. 2017).

Jerry Faidley worked for UPS as a package delivery driver. He injured his back on two separate occasions and underwent hip surgery. Because of his injuries, his doctor restricted his work day to eight hours.

UPS learned of Faidley’s work restriction in 2012. UPS required delivery drivers to be able to work nine and a half hours per day. Because of this requirement, Faidley’s manager told him that his UPS career was over if his restriction was permanent.

Faidley went on unpaid leave and sought a disability accommodation, proposing that he continue working as a delivery driver for only eight hours a day or at a less physical position. One such position was as a feeder driver, which involves driving trailers between UPS locations. However, no feeder driver positions were available at the time, and UPS did not offer one to Faidley. Instead, UPS offered Faidley a part-time position that would have reduced his seniority. Faidley declined, and sued under the ADA and Iowa Civil Rights Act (ICRA).

Months later, Faidley’s doctor issued a new work restriction with no hourly limit, but at any job other than a delivery driver. Faidley took a new position at UPS in early 2013 as a combined pre loader and loader, in which he loaded packages onto delivery trucks and semi-trailers. The position proved too physically demanding, causing Faidley significant pain. His doctor then limited him to working four hours per day for five weeks. UPS refused to allow Faidley to work a reduced schedule because he had already used his available time in its temporary alternative work program.

Faidley later received another set of work restrictions. UPS reinitiated the accommodation process, but no full-time positions fit his restrictions. UPS offered a part-time position, which Faidley declined. Faidley retired later that year. He sued UPS for a second time under ICRA for disability discrimination and retaliation. The U.S. District Court for the District of Southern Iowa consolidated his two actions and granted summary judgment for UPS.

On appeal, the Eighth Circuit treated Faidley’s claims as two distinct actions. With respect to the 2012 claim, the court concluded that Faidley had established a genuine issue of material fact concerning whether he was able to perform essential job functions as a feeder driver. The court pointed to an accommodation worksheet in which one of Faidley’s supervisors wrote that Faidley “preliminarily appear[ed] capable of performing the essential job functions” of the feeder driver role. The court rejected UPS’s argument that it should not consider the feeder driver position because it was not available during the accommodation process. It adopted the EEOC’s guidance considered as available “positions that the employer reasonably anticipates will become vacant in the fairly immediate future.” Because Faidley presented evidence that UPS expected feeder driver positions to become available, the Eighth Circuit reversed the district’s court grant of summary judgment. The court also concluded that Faidley had presented a genuine issue of material fact as to whether he suffered an adverse employment action, reasoning that Faidley was effectively forced to reduce his working hours significantly.

The Eighth Circuit affirmed the district court with respect to Faidley’s 2013 claim. The court decided that Faidley had not presented evidence that he was qualified to perform the essential functions of any available job or that UPS failed to engage him in the accommodation process required by the ADA.

Concurring in part and dissenting in part, Judge Kelly would have treated the case as a single disability discrimination claim, and remanded it in its entirety rather than only the 2012 claim.

Judge Montgomery, sitting by designation from the U.S. District Court for the District of Minnesota, also concurred in part and dissented in part. Judge Montgomery would have affirmed the district court’s ruling in its entirety because Faidley, regarding his 2012 claim, failed to demonstrate that he was capable of working the required nine and a half hours per day.

McLeod v. General Mills, Inc., ___ F.3d ___, 2017 WL 1363797 (Apr. 14, 2017).

In June 2012, General Mills laid off about 850 employees. General Mills offered the laid-off employees severance packages in exchange for signing release agreements. These agreements included a release of General Mills from all claims relating to the employees’ terminations, including ADEA claims. It also included an arbitration clause for claims covered by the agreement. Thirty-three former employees sued General Mills, alleging that their age was a factor in selecting them for lay-offs. General Mills moved to compel arbitration of all claims pursuant to the release agreement. The U.S. District Court for the District of Minnesota denied the motion, and General Mills appealed.

The Federal Arbitration Act (FAA) requires the party asserting the validity of a waiver prove that such waiver was “knowing and voluntary.” The plaintiffs argued that the waivers at issue in this case were neither. The Eighth Circuit nonetheless decided to enforce the agreement.

The court ruled that General Mills was not “asserting the validity of a waiver” as contemplated by the FAA. Citing the Supreme Court’s decision 14 Penn Plaza LLC v. Pyett, the court concluded that “waiver” in the FAA context refers only to the waiver of substantive ADEA rights, not the right to a jury trial or to proceed in a class action. Because the release agreement did not necessarily constitute a waiver of substantive ADEA rights, the court upheld its arbitration clause.

The court did not decide whether General Mills could assert the validity of the agreement’s waiver provision at arbitration. However, it reversed and remanded with instructions to compel arbitration.

Submitted by:
Frances E. Baillon and Tyler J. Adams