Labor and Employment Law Section
Monthly Circuit Updates
February 2017

2nd Circuit

Coutard v. Municipal Credit Union, 848 F.3d 102 (2d Cir. 2017)

Summary judgment vacated in this FMLA case where Plaintiff sought time off to care for his ailing grandfather, who had raised Plaintiff as a child. The FMLA allows for family leave if the plaintiff had that relationship with a grandparent. The employer argued that Plaintiff was not entitled this leave because he did not tell management that his grandfather stood in as in loco parentis after his father had passed away. The Court of Appeals rejected this argument, reasoning that while an employee must provide notice of his need for FMLA leave, the employee is not required to provide all necessary details. “Rather, in the absence of a request for additional information, an employee has provided sufficient notice to his employer if that notice indicates reasonably that the FMLA may apply. In other words, if it thinks the FMLA may apply, the employer has to follow up with the employee to see if the employee in a case like this (involving a grandfather) is covered under the FMLA. Defendant did not so inquire about plaintiff’s relationship with his grandfather, so it was not plaintiff’s fault that he did not provide that information. “We conclude that the district court erred in ruling that Coutard was required, at the time of his request, to provide MCU with all of the information it needed to determine with certainty that his requested leave was within the FMLA.”

Submitted by: Stephen Bergstein

4th Circuit

Crouse v. Town of Moncks Corner, 848 F.3d 576 (4th Cir. 2017)

Two police officers brought § 1983 and other claims against the police chief and their town after they were forced to resign from the police department. The district court granted summary judgment for the police chief on the basis of qualified immunity, and the Fourth Circuit affirmed.

The officers’ supervisor, a lieutenant, responded to a call during which the lieutenant engaged in aggressive conduct toward a resident. When the officers learned of the encounter, they visited the resident at his home and encouraged him to file a complaint against the lieutenant. The resident later reported the incident with the lieutenant and that the officers had encouraged him to file a lawsuit.

The police chief investigated both the excessive force report against the lieutenant and the conduct of the officers. At the conclusion of the investigation, the officers were offered the opportunity to either resign or be terminated. Both officers resigned. They then filed a lawsuit claiming that their forced resignation constituted retaliation in violation of the First Amendment.

A public official is entitled to qualified immunity unless the claimant shows the violation of a clearly established federal statutory or constitutional right. When a governmental employee claims he was disciplined in violation of his First Amendment rights, the court must determine whether the employee was speaking on a matter of public concern or as an employee about a matter of personal interest. The Fourth Circuit held that it was reasonable for the police chief to believe that the officers had acted in their public roles as police officers and, therefore, that their speech was not protected.

The officers argued that they acted as citizens because they visited the resident during their unpaid lunch break and were in plain clothes and an unmarked car. The evidence showed, however, that the resident easily identified the officers as police officers from their guns and badges. The officers remained on call during their lunch hour and were expected to be prepared to do their job during that time. Further, the officers delivered an official town complaint form to the resident during their visit. Based on this evidence, the Fourth Circuit concluded it was reasonable for the police chief to believe that the officers’ speech was not protected. Accordingly, the Court concluded that the police chief was entitled to qualified immunity and affirmed the district court’s grant of summary judgment.

Loftus v. Bobzien, 848 F.3d 278 (4th Cir. 2017)

An assistant county attorney was terminated from that position following her election to the city council. The attorney sued, alleging that her termination violated her First Amendment rights. The district court dismissed the attorney’s complaint, and the Fourth Circuit affirmed.

When the attorney decided to run for city council, her employer expressed concern that the city council position might conflict with her responsibilities under Virginia’s Rules of Professional of Conduct. In light of the potential conflicts, the employer informed the attorney that if she was elected to the city council, she would not be able to continue as assistant county attorney. Following her successful election, the employer terminated the attorney’s employment as assistant county attorney.

On appeal, the attorney argued that the employer violated her First Amendment right to hold public office. The Fourth Circuit disagreed. The Fourth Circuit ruled that public employers may prohibit their employees from participating in certain political activities, including running for and maintaining political office while serving as a public employee.

The Fourth Circuit found it did not matter that the city council position was in a different municipality than the one that employed the attorney. The Court found non-waivable conflicts existed, which challenged the attorney’s ethical duties as a lawyer and imposed significant burdens on the employer as a public “law firm.” The Fourth Circuit also found it did not matter that the city council was non-partisan, because the same conflicts of interest existed.

The Fourth Circuit also rejected the attorney’s argument that her termination violated her First Amendment right to comment on matters of public concern. The Court found that any infringement on such rights was minimal, where the attorney did not allege that she was prevented from conducting a campaign or speaking on issues of public import. Accordingly, the Fourth Circuit affirmed the district court’s dismissal of the attorney’s complaint.

Submitted by: Paul Sun and Emily Erixson

5th Circuit

Fisher v. Lufkin Industries, Inc., 847 F.3d 752 (5th Cir. 2017)

William Fisher, an African American male, was employed by Lufkin Industries, Inc. (“Lufkin”) as a machinist. After his direct supervisor, Steve Saxton, a white male, instructed Fisher to take his breaks when the other employees did, rather than when he wanted to, Fisher replied that he could not take breaks when his machine was running. Fisher’s supervisor responded, “Boy, I don’t know why every time I come over here it’s a hassle!” Fisher complained to Saxon that if he was going to harass him, they needed to get a union steward. Saxton instructed Fisher to come to his office while a union steward was summoned. When no steward appeared, Saxton told Fisher to return on Monday so they could resume the process. After leaving Saxton’s office, Fisher called human resources and left a voicemail stating that Saxton’s use of the term “boy” constituted racial harassment. Human resources directed another manager, Ty Thornton, to conduct an investigation, after which Thornton concluded that although Saxton had called Fisher “boy,” he did not intend it as a racially derogatory term. Saxton’s supervisor, David Jinkins, was asked to speak to Saxton about the matter.

About a month after the incident, a white coworker of Fisher’s, David Rhoden, complained to Jinkins that he did not like the fact that Fisher had reported Saxton for his use of the word “boy” and that he was offended by Fisher’s statements that he would get Saxton fired. At the evidentiary hearing before the Magistrate Judge, Rhoden and Jinkins offered conflicting testimony as to who initially raised the issue of whether Fisher had been selling DVDs, some allegedly pornographic, out of his lunch box. Both agreed that at the instruction of Jinkins, Rhoden bought a DVD from Fisher and brought it to Jinkins. When that DVD turned out to be blank, Rhoden was instructed to try again. This time, Jinkins was able to view the DVD and said he thought it was pornographic.

An investigation was conducted into Fisher’s sale of DVDs after Jinkins and Thornton called in the chief union steward, Kerroy Thomas. Saxton brought Fisher into a conference room where he was questioned before Saxton, Thornton, Jinkins, and Thomas. Fisher said he did not have any DVDs with him that day, but did not admit or deny that he was engaged in such activity, although he did ask why the issue was coming up at that time. The group, with Fisher, investigated his locker and found five DVDs that Fisher claimed had been planted. When asked to allow a search of his car, Fisher initially cooperated, but then said he needed to leave to tend to his ill wife. After Fisher left work, he was suspended by Thornton pending further investigation. Thornton prepared notes regarding the search, which he and Jinkins presented to human resources. At the direction of human resources, Fisher was terminated by a letter signed by Jenkins stating that Fisher was being terminated “‘for a serious violation of company policy.’”

Fisher brought suit against Lufkin alleging that his former employer had violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et. seq., by discharging him in retaliation for his complaint that his direct supervisor, Saxton, had racially harassed him. Following a two day evidentiary hearing, the presiding Magistrate Judge issued a Report and Recommendation recommending that the District Court find the following facts: although the initial complaint by Fisher that his supervisor racially harassed him by addressing him as “boy” was meritless, Lufkin’s subsequent investigation and ultimate discharge of Fisher were motivated by the desire of a coworker and a supervisor to retaliate against him for his protected activity; however, Fisher lied to his supervisors during the investigation and did not fully cooperate in it, and these latter actions by Fisher were sufficient to justify his termination independent of any other proffered reasons.

Fisher filed objections and moved for an extension of time to file additional objections to the report, but the District Court rejected his motion, adopted the Report and Recommendation in full without assigning additional reasons, and dismissed Fisher’s retaliation claim. Fisher appealed the District Court’s decision dismissing his retaliation claim and its refusal to grant an extension of time to file additional objections to the Report and Recommendations. Although Fisher had also filed claims for racial discrimination in violation of Title VII, as well as retaliation and discrimination claims under 42 U.S.C. § 1981, he did not challenge the District Court’s judgement against him on these claims. Lufkin filed a cross-appeal seeking to assess its expert witness’s fee against Fisher.

Although the Magistrate Judge concluded that Jinkins and Roden undertook their investigation into the selling of DVDs against Fisher as retaliation against Fisher for his protected activity in complaining about his alleged racial harassment by Saxton, the Magistrate Judge found that Fisher’s termination was justified independent of any other reasons because he “‘resisted the investigation by leaving before his car could be properly searched and by lying to his supervisors about his activities.’”

Fisher’s primary contention on appeal was that the District Court erred in accepting the Magistrate Judge’s conclusion that Lufkin did not violate Title VII’s anti-retaliation provisions when it terminated him, arguing that he satisfied the causation element of his retaliation claim because the investigation into the DVD sales was launched in response to his harassment complaint. Fisher also argued that his resistance to the investigation could not be used to justify his termination. Lufkin responded that there was no evidence of retaliatory animus on the part of Thornton, who conducted the DVD investigation, or human resources, who ordered the investigation and made the decision to terminate Fisher. Lufkin also argued that there was sufficient evidence to support the District Court’s conclusion that Fisher would have been terminated even in the absence of any retaliatory action against him.

The Fifth Circuit disagreed, concluding that Fisher had shown a sufficient causal connection between his protected activity and his termination to warrant reversal. The Fifth Circuit recognized that in Zamora v. City of Houston., 798 F.3d 326, 331 (5th Cir. 2015), it had joined a majority of the circuits in holding that a Title VII retaliation plaintiff is entitled to use the cat’s paw theory of liability if the plaintiff can demonstrate that a person with a retaliatory motive “‘used the decisionmaker to bring about the intended retaliatory action.’” The Fifth Circuit also recognized that that the person with retaliatory motive may be a coworker rather than a supervisor. Based on these principles and the Magistrate Judge’s determination that a desire to retaliate motivated Rhoden to complain about Fisher and Jinkins to launch the investigation into the DVD sales, the Fifth Circuit determined that Fisher had satisfied both prongs of Zamora’s cat’s paw analysis because (1) his supervisors, motivated by retaliatory animus, took acts intended to cause an adverse employment action; and (2) those acts were a but-for cause of his Fisher’s termination.

In rendering its decision, the Fifth Circuit explicitly rejected the Magistrate Judge’s conclusion that Fisher’s lack of cooperation with Lufkin’s investigation severed the causal chain between Fisher’s protected activity which led to retaliation by Rhoden and Jinkins. The Fifth Circuit concluded that the ultimate termination by Lufkin based on a lack of cooperation with a retaliatory motivated investigation, which, according to the Fifth Circuit, was based on a dubious work rule violation, was implausible in light of the record read as a whole, and that the District Court clearly erred in accepting it.

Vaughan v. Anderson Regional Medical Center, ___ F.3d ___, 2017 WL 629265 (5th Cir. Feb. 15, 2017)

This single-issue interlocutory appeal arose out of a wrongful termination lawsuit filed by Susan Vaughan, a nurse supervisor, against Anderson Regional Medical Center (the “Medical Center”). Vaughan alleged that the Medical Center violated the ADEA by discharging her in retaliation for complaining about age-discrimination. In addition to other remedies, Vaughan sought damages for pain and suffering and punitive damages. The District Court dismissed her claims for pain and suffering and punitive damages, presenting the Fifth Circuit with the discrete issue on interlocutory appeal as to whether a plaintiff can be awarded pain and suffering or punitive damages in an ADEA retaliation claim. The Fifth Circuit, denying both Vaughan’s interlocutory appeal and petition for rehearing, firmly responded “no,” affirming the dismissal of her pain and suffering and punitive damages claims.

After the original denial of her interlocutory appeal on December 16, 2017, Vaughan filed a petition for rehearing en banc. The Fifth Circuit treated her petition as a petition for panel rehearing, but, in an order dated February 15, 2017, denied it. The Fifth Circuit withdraw its earlier opinion and substituted a new one in its place, but the substituted opinion, discussed herein, reached the same result.

The Fifth Circuit held that the District Court correctly concluded that under Dean v. Am. Sec. Ins. Co., 559 F.2d 1036 (5th Circ. 1977), plaintiffs alleging ADEA claims do not have a claim for pain and suffering or punitive damages. Vaughan conceded that the Fifth Circuit’s ruling in Dean foreclosed claims for pain and suffering and punitive recoveries with respect to ADEA discrimination claims, but argued that Dean did not control claims for retaliation under the ADEA. The Fifth Circuit disagreed that Dean left any room for such damages in retaliation claims or was otherwise distinguishable, noting that the prior case “held in unqualified terms that ‘neither general damages [i.e., compensatory damages for pain and suffering] nor punitive damages are recoverable in private actions posited upon the ADEA.’” (quoting Dean, 559 F.2d at 1040). Accordingly, the Fifth Circuit held that Dean, absent any suggestion that its holding excluded ADEA retaliation claims, controlled Vaughan’s case.

The Fifth Circuit also rejected Vaughan’s contention that intervening changes in the law undermined Dean’s continued applicability. Vaughan argued that because the Fifth Circuit interprets the FLSA to provide remedies consistent with the ADEA, the 1977 amendments to FLSA retaliation remedies also enlarged the ADEA retaliation remedies. The Fifth Circuit rejected this argument, explaining that Vaughan’s argument failed to recognize that the 1977 FLSA amendments incorporated remedial language substantively identical to passages already provided in the ADEA. The Fifth Circuit explained that “the 1977 FLSA amendments do not disturb [its] holding in Dean, because they added language to the FLSA that [it had] already construed in the context of the ADEA  in Dean.”

The Fifth Circuit then turned to Vaughan’s final points in support of her contention that intervening changes justified a departure from Dean: (1) the EEOC’s interpretation that the ADEA permits pain and suffering and punitive damages and (2) the transfer of ADEA functions previously performed by the Secretary of Labor to the EEOC.

As to the first point, the Fifth Circuit noted that the EEOC’s interpretation depended almost entirely upon a Seventh Circuit case, Moskowitz v. Trustees of Purdue Univ., 5 F.3d 279, 284 (7th Cir. 1993), which had ruled (as Vaughan argued) that the 1977 FLSA amendments enlarged the remedies available under the ADEA. Noting that it had already concluded that Moskowitz’s interpretation was unpersuasive, the Fifth Circuit further explained that even if it found the EEOC’s interpretation based on Moskowitz persuasive, it would not provide a sufficient basis for departing from established precedent because an intervening change in the law must be binding on the Court, not merely a persuasive interpretation. With respect to the second point, the Fifth Circuit ruled that Vaughan had failed to demonstrate that a straightforward substitution of the EEOC in place of certain statutory references to the Secretary of Labor created any significant differences for ADEA plaintiffs.

The Fifth Circuit therefore concluded that its prior opinion in Dean applies to all private actions posited upon the ADEA, including Vaughan’s ADEA retaliation claim, and, under Dean, a plaintiff suing under the ADEA is not entitled to general compensatory damages for pain and suffering or punitive damages.

Alcoa, Inc. v. NLRB, ___ F.3d ___, 2017 WL 706158 (5th Cir. Feb. 22, 2017)

The NLRB issued an order finding that Alcoa, Inc. (“Alcoa”) and its wholly owned subsidiary, Alcoa Commercial Windows, LLC d/b/a TRACO (“TRACO) (collectively, the “Companies”), violated § 8(a)(1) of the NLRA by denying Alcoa employees access to TRACO facilities for handbilling purposes and engaging in unlawful surveillance of handbillers. The NLRB determined that both entities, Alcoa and TRACO, violated the NLRA because they constituted a “single employer.” The Companies petitioned for review of the NLRB’s determination (1) that they constitute a single employer and (2) that the single-employer doctrine could be used to hold them liable under § 8(a)(1). The NLRB cross-applied for enforcement of its order.

The Fifth Circuit denied the Companies’ petition for review because it determined (1) substantial evidence supported the NLRB’s finding that the Companies qualified as a single employer and (2) it was reasonable to apply the single-employer doctrine to liability under § 8(a)(1).

With respect to single-employer doctrine, the Fifth Circuit noted that the NLRB looks to the following four factors: (1) common ownership; (2) interrelation of operations; (3) common management; and (4) centralized control of labor relations. The Fifth Circuit also explained that while no one of these factors is controlling and employer status depends on the circumstances of the case, the factors of common control over labor relations, common management, and interrelation of operations are more critical than the factor of common ownership, with centralized control of labor relations being of particular significance.

In this case, the parties agreed that the Companies shared common ownership since it was undisputed that TRACO was a wholly-owned subsidiary of Alcoa, and neither party disputed the NLRB’s finding that the Companies did not share common day-to-day management. The only two factors that the parties disagreed upon were interrelation of operations and common control of labor agreements, both of which, in addition to common ownership, formed the basis of the NLRB’s finding that the Companies were a single employer.

As to the interrelation of operations factor, the Fifth Circuit concluded that substantial evidence supported the NLRB’s finding because Alcoa and TRACO held themselves out to the public and their employees as a single business. Additionally, there was some evidence that TRACO received management services from Alcoa for which it did not pay, suggesting that the Companies may not have dealt with one another at arm’s length. The Fifth Circuit also concluded that there was substantial evidence demonstrating common control of labor relations, including the fact that Alcoa was involved in and actually did control certain aspects with respect to the issues of whether and where handbilling would be permitted at TRACO in the current circumstances. Having determined there was substantial evidence showing common control over labor relations as well as interrelation of operations and common ownership, the Fifth Circuit held that the NLRB correctly determined that Alcoa and TRACO constituted a single employer.

The NLRB determined that the Companies had violated § 8(a)(1) of the NLRA by (1) excluding Alcoa employees from the TRACO facility and (2) unlawfully surveilling handbillling activities. As previously noted, the Companies also challenged whether application of the single-employer doctrine could be used to hold them liable under § 8(a)(1). The Fifth Circuit rejected that challenge, holding that applying the single-employer doctrine to the question of liability under § 8(a)(1) is consistent with its purpose to protect employees’ rights to collectively pressure their employer. The Fifth Circuit explained: “When two entities qualify as a single employer, a court, among other things, considers whether the two entities share common control at a ‘policy level’  including over labor relations. If there exists such a degree of common control and interrelation it follows that collective action efforts, like those involved in this case, would help employees exert pressure on that common source of labor policy.” Thus, the Fifth Circuit ruled that applying the single-employer doctrine in the context of the case was consistent with the purpose of § 8(a)(1).

Aside from their objection to the application of the single-employer doctrine to § 8(a)(1) liability, the Companies did not dispute the NLRB’s finding that the Companies violated § 8(a)(1) by denying Alcoa employees access to TRACO facilities. Nor did the Companies challenge the NLRB’s determination that it unlawfully conducted surveillance of union activity in violation of § 8(a)(1) when TRACO’s General Manger positioned himself outside the facility near union handbillers so that he could see which TRACO employees accepted handbills. Accordingly, the Fifth Circuit summarily enforced the NLRB’s order on access and unlawful surveillance.

Starnes v. Wallace, ___ F.3d ___, 2017 WL 744027 (5th Cir. Feb. 24, 2017)

LeAnn Starnes was formerly employed as a Risk Manager at Daybreak Ventures, L.L.C. (“Daybreak”), a company that employs thousands of individuals to work at nursing homes in Texas. Her work as a Risk Manager involved investigating, reviewing, and denying work-related injury claims; working on opposition statements for EEOC discrimination cases; and attending mediation for lawsuits when they when they involved the Risk Management Department.

Sometime in late October or early November of 2010, another Daybreak employee, Ludy Estrada, complained to Starnes that Daybreak was not paying her husband, Vincent Estrada, a maintenance worker, for his travel time or overtime. Starnes referred Ms. Estrada to the Director of Human Resources, Andy Shelton, because she believed FLSA claims were handled exclusively by his department. After Ms. Estrada expressed concern that she might lose her job if she made a report, Starnes met with Shelton on Ms. Estrada’s behalf, telling Starnes that Daybreak was violating the law with regard to paying Mr. Estrada.

Before January 1, 2011, Daybreak’s President, Mike Rich, discussed Mr. Estrada’s situation with Starnes who again stated that it looked to her like Daybreak was breaking the law. While the exact sequence of events was disputed, around this time Daybreak began requiring employees to sign job descriptions. Starnes signed a job description that stated she was required, as part of her job, to report allegations and findings related to violations of Federal and State law. Although she signed the job description on March 11, 2011, it was dated several months earlier, October 25, 2010. The job description also differed from an earlier job analysis she had in place, which described the amount of time Starnes spent on duties, none of which involved reporting violations of law.

In November 2011, Ms. Estrada became frustrated that her husband’s claim remained unresolved, and she went to Shelton, the HR Director, and demanded that her husband be paid. At the request of Shelton, Ms. Estrada put her request in writing for presentation to Daybreak’s President, Rich. On December 9, 2011, Rich called Ms. Estrada into his office, during which a heated discussion ensued. Rich stated that he believed Starnes “was to blame” for the problems with Mr. Estrada’s wage claim, but agreed to resolve Mr. Estrada’s claim and assured Ms. Estrada that she would not lose her job. During the last week of 2011, Daybreak settled its disputed with Mr. Estrada for $40,000.

Just ten days later, on January 6, 2012, Daybreak laid off five employees, including Starnes and Ms. Estrada citing financial difficulties. But one of the five employees, Rich’s own son, had already accepted another position before being terminated, and the remaining two employees were rehired in different positions within Daybreak.

Starnes and Ms. Estrada, the only two employees left without a job, filed suit for retaliation under both the FLSA and § 260A.014(b) of the Texas Health and Safety Code, which regulates nursing homes.

The District Court granted Daybreak’s 12(b)(6) motion dismissing the state law claim and their damages for emotional distress and punitive damages on the grounds that they were not available under the FLSA retaliation provisions.

Although the District Court denied summary judgment as to Ms. Estrada’s retaliation claim, it dismissed Starnes’ retaliation claim on the grounds that she had failed to establish a prima facie case for the following reasons: (1) she did not engage in protected activity because she did not act outside her duties in reporting the wage dispute and (2) she could not establish causation because more than a year had elapsed between the time she reported the illegal activity and her termination. Ms. Estrada settled with Daybreak, and Starnes appealed the District Court’s rulings, except as to punitive damages.

On appeal, the Fifth Circuit reversed the summary judgment dismissing Starnes’s FLSA retaliation claim. First, the Fifth Circuit held that there was a genuine issue of material fact as to whether reporting FLSA violations was part of Starns’ job duties. The Fifth Circuit held that the District Court should not have relied on the new job description to conclude that Starnes was acting within her duties in reporting her contention that Daybreak was violating the law with respect to Mr. Estrada’s pay. The Fifth Circuit noted that there was no evidence regarding when the job description  which changed her job to requiring her to report violations of law  was delivered to Starnes. Starnes did not sign the job description until March 2011, several months after her initial report. Moreover, Starnes had not dealt with pay issues within her job when she reported the issue, and her conduct, in reporting it to HR, reflected her belief that it was not within her job description. Thus, the Fifth Circuit concluded there was a factual dispute regarding whether Starnes was stepping outside her ordinary role as Risk Manager.

The Fifth Circuit also disagreed as to the second reason why the District Court found Starnes cold not establish a prima facie case: its conclusion that she could not establish a causal connection because of the passage of time  more than a year  between her protected activity and causation. According to the Fifth Circuit, that reasoning would apply if proximity in time alone were being used to establish causation, but it distinguished this case from others because the evidence of pretext that it had found to deny the motion for summary judgment with respect to Ms. Estrada (that only she and Starnes were permanently let go) helped to establish the “less stringent” causation element of the prima facie case. If a jury could disbelieve that Daybreak fired Ms. Estrada and Starnes for cost-cutting reasons, then that would be proof of a retaliatory motive. Further, Starnes’s termination occurred just ten days after Daybreak paid $40,000 to resolve the problem Starnes had raised and within a month of the heated meeting between Rich and Ms. Estrada, during which Rich had blamed Starnes for the pay dispute. Accordingly, the Fifth Circuit found that Starnes had established the causal link required to establish a prima facie case.

Regarding the dismissal of Starnes’ claim for emotional damages under the FLSA, the Court also reversed, noting that while the appeal was pending, it had issued an opinion that emotional distress damages are available to plaintiffs claiming retaliation under the FLSA. See Pineda v. JTCH Apartments, L.L.C., 843 F.3d 1062 (5th Cir. 2016).

The Fifth Circuit, however, affirmed the dismissal of Starnes’ claim under 2050A.014(b) of the Texas Health and Safety Code, agreeing with the District Court that the statute did not provide protection to employees reporting FLSA violations.

Submitted by: Jennifer McNamara

6th Circuit

Ohio Edison Co. v. Nat’l Labor Relations Bd., 847 F.3d 806 (6th Cir. 2017)

The Company implemented several significant cuts that affected its employees. One of these was a change to the Company’s employee-recognition program which made it so employees would receive a service award every ten years instead of five. During a meeting in which the Company announced these changes to the union, a union representative expressed general dissatisfaction with the cuts without mentioning any of the specific changes. The union representative subsequently filed an unfair labor practice charge against the Company, arguing that the Company violated its duty to bargain in good faith by making unilateral changes to the various programs. The Board found that the union representative’s comments during the meeting amounted to a request to bargain about the employee-recognition program. On appeal, the Sixth Circuit reversed, finding that the comments merely expressed disapproval and the threat to file a charge was not a request to bargain. It looked to the surrounding circumstances of the representative’s complaint during the meeting, finding that the Company announced several changes which had more substantial effects on employees and that the change to the employee-recognition program amounted to less than four dollars per member per year. Moreover, the parties never bargained over this program since its inception four decades ago. As a result, the Court held that a reasonable person could not find that the comments were clearly a request to bargain.

Ohio v. United States, ___ F.3d ___, 2017 WL 656276 (6th Cir. Feb. 17, 2017)

The State of Ohio and several state instrumentalities brought this action against the United States, arguing that the Affordable Care Act Transitional Reinsurance Program’s mandatory payment scheme applied only to private employers. The Program is an attempt to combat volatility in the individual marketplace by collecting payments from group health plan issuers and distributing those payments to health insurance issuers who cover high-risk individuals. The District Court granted the United States’ motion for summary judgment, finding that the Program applies to state and local government employees and the application of the Program against the State does not violate the Tenth Amendment. On appeal, the Sixth Circuit affirmed. It rejected the State’s argument that the phrase “group health plans” in the statute does not encompass plans offered to state employees by noting that the Act adopted the Public Health Service Act’s definition of the phrase which includes state and local government employers, and provisions in ERISA also support this reading. Moreover, the Court found that it was not improper to define “group health plans” through cross-referencing the other statutes mentioned above which indicate Congress’s “plain statement” that the Program applies to State employers.

Submitted by: Jacob M. Hogg

7th Circuit

Columbia Coll. Chi. v. NLRB, 847 F.3d 547 (7th Cir. 2017)

Since 1998, the Part-Time Faculty Association (“PFAC”) has served as the exclusive collective-bargaining representative for part-time faculty at Columbia. Although the CBA agreed to by PFAC and Columbia in 2006 expired in August 31, 2010, the parties agreed to keep it in place while they bargained for a successor agreement. Months after beginning negotiations for the successor CBA, Columbia unilaterally decided to reduce the number of credit hours assigned to ten courses in its School of Fine and Performing Arts. This decision, scheduled to take effect in the 2011-2012 academic year, would reduce the pay of part-time faculty members whose pay depended on the number of credit hours they taught.

After learning of the credit hour reductions that Columbia had made, PFAC demanded to bargain over the effects of the changes. In response, Columbia notified PFAC that it did not believe it had an obligation to bargain with PFAC because a management rights clause in the 2006 CBA permitted it to make unilateral decisions about its educational, fiscal, and employment policies.

On August 28, 2012, the NLRB lodged a complaint against Columbia alleging, among other things, that Columbia’s failure to bargain over the effects of the credit hour reduction violated the NLRA. On March 24, 2015, the NLRB issued its decision and order agreeing with the ALJ’s recommended decision that Columbia had failed to engage in effects bargaining. In doing so, the NLRB applied the “clear and unmistakable waiver” standard consistently adopted by the Board, rather than the “contract-coverage” test endorsed by the Seventh Circuit.

On February 1, 2017, the Seventh Circuit struck down the NLRB’s decision after finding that the Board’s application of the “clear and unmistakable waiver” standard conflicted with Seventh Circuit precedent applying the “contract-coverage” analysis. As explained by the Court, the “contract-coverage” analysis requires an adjudicating body to determine, using normal principles of contract interpretation, whether the CBA fully defines the parties’ rights as to what would otherwise be a mandatory subject of bargaining. If it does, the court should apply the terms of the agreement to the facts of the case in deciding whether the employer has fulfilled its contractual obligations. If the bargaining representative argues that the employer was obligated to bargain over the effects of the employer’s decision, the court should look to see whether the governing agreement or the parties’ bargaining history indicates intent to treat effects bargaining separately from bargaining over the decision itself.

Applying the “contract-coverage” test to the facts at issue, the Court noted that the 2006 CBA gave Columbia “sole discretion” to, among other things, “modify . . . all aspects of educational policies and practices,” including the “modification [or] altercation . . . of any course.” The Court then held that because reducing the number of credit hours for a course constitutes a modification or alteration of that course, the management rights clause fully defined the parties’ rights with respect to credit hour changes. Further, the Court held that PFAC failed to point to contractual language or bargaining history evidencing that the parties intended to treat effects bargaining separately from Columbia’s decision-making rights. As such, the Court held that Columbia was not under any obligation to bargain with PFAC over the effects of the credit hour reductions.

In light of this holding, the Court vacated the NLRB’s award of bargaining expenses to PFAC and remanded to the NLRB to decide whether such a remedy is still warranted without considering the effects bargaining behavior. On remand, the NLRB may still grant certain bargaining expenses to PFAC based on its unchallenged finding that Columbia had failed to bargain in good faith with respect to the successor CBA.

Bird v. Berryhill, 847 F.3d 911 (7th Cir. 2017)

In 2005, while serving in the Army National Guard, Bird injured a tendon in his right shoulder and was operated on in 2006. Bird claimed that since then, he had been unable to engage in gainful work because of migraine headaches, posttraumatic stress syndrome, tendonitis, and lower-back pain. Despite contradictory opinions from treating Veterans Affairs doctors – some cleared Bird for work, while others declared him unemployable – the Department of Veterans Affairs gave Bird a 70% service-connected disability rating but paid him at the 100% rate because they found him unemployable.

The Social Security Administration, however, denied Bird’s application for disability insurance benefits. In doing so, the ALJ assigned no weight to the VA’s disability rating. Instead, the ALJ agreed with the assessment of a state-agency physician that reviewed Bird’s medical records and testified that his impairments were not disabling.

After Bird sought judicial review of his benefits denial arguing that the ALJ erred in discrediting the VA’s disability determination, the Commissioner asked the district court to remand the case to the ALJ. Bird, however, objected to a remand because he wanted the district court to direct the agency to award him benefits without requiring further proceedings. The district court rejected Bird’s request for immediate benefits, reasoning that the medical evidence was not so one-sided as to compel a conclusion that he was disabled.

In his brief on appeal challenging the district court’s decision to remand his case, Bird argued that the VA’s conclusion that he is 70% disabled and therefore unemployable conclusively established that he is disabled. The Seventh Circuit dismissed this argument, finding that the VA’s rating process cannot conclusively establish disability because it is pro-claimant, while the SSA’s process is neutral. Further, the Court reasoned that the grounds for the VA’s decision were not available to the ALJ, nor were the results of Bird’s X-ray and MRI. Thus, remanding the case to the ALJ for consideration of such evidence is appropriate.

The Court closed its opinion by noting that a new regulation as of March 27, 2017 will provide that the SSA must not try to analyze other agency decisions, such as the VA disability ratings, although it may consider the decision’s supporting evidence.

Submitted by: Kyle Mueller

8th Circuit

Blackorby v. BNSF Railway Co., ___ F.3d ___, 2017 WL 744037 (8th Cir. Feb. 27, 2017)

Edward Blackorby worked on a steel gang for BNSF Railway Company (BNSF). One day, Blackorby felt eye pains and told a union foreman that he thought something entered his eye while working outside. Blackorby went to the doctor, who removed a small metallic object from Blackorby’s eye. Blackorby immediately called a BNSF manager to tell him about the injury, but did not file a formal injury report. The manager asked Blackorby to take a BNSF manager with him to his follow-up appointment. When Blackorby told the BNSF manager that his eye was going to be okay, the manager discouraged Blackorby from filing a formal report. Blackorby, nevertheless, 6 days after the initial injury, decided to file a formal injury report.

BNSF investigated whether Blackorby violated BNSF Maintenance of Way Operating Rules, which required employees to immediately report workplace injuries and complete the appropriate paperwork. Following the investigation and subsequent hearing, BNSF concluded that Blackorby violated the injury reporting rules, because he did not immediately report his injury. BNSF issued a Level S (Serious) 30-Day Record Suspension and one-year probationary period. Although this sentence did not result in any financial injury to Blackorby, they caused Blackorby significant emotional distress. Blackorby appealed BNSF’s decision, filed a complaint with the Occupational Health and Safety Administration, and commenced a civil action for violations of the employee protection provision of the Federal Railroad Safety Act (FRSA).

At trial, the district court instructed the jury that Blackorby did not have to “show that the defendant had a retaliatory motive.” The court also rejected BNSF’s proposed jury instruction to inform the jury that emotional distress damages “must be supported by competent evidence of genuine injury.” Instead, the court instructed the jury that damages must “fairly and justly compensate plaintiff for any damages…sustained as a direct result of the defendant’s decision to discipline plaintiff.” The jury awarded Blackorby $58,280 in emotional distress damages. BNSF appealed, arguing that the district court abused its discretion when it (1) instructed the jury that Blackorby did not need to prove intentional retaliation to establish employer liability under the FRSA, and (2) rejected BNSF’s proposed emotional damages instructions.

To establish a prima facie case under the employee protection provision of the FRSA, an employee must show: (1) he engaged in protected activity; (2) the railroad carrier knew that he engaged in protected activity; (3) he suffered adverse action; and (4) the circumstances raise an inference that the protected activity was a “contributing factor” to the adverse action.

Blackorby relied on Araujo v. New Jersey Transit Rail Operations, Inc., 708 F.3d 152 (3d Cir. 2013) to argue that the term “contributing factor” is a term of art that means “any factor which, alone or in connection with other factors, tends to affect in any way the outcome of [the employer’s] decision.” In response, BNSF argued that the 8th Circuit rejected Araujo’s interpretation of the term “contributing factor” in Kuduk v. BNSF Railway Co., 768 F.3d 786 (8th Cir. 2014), where the court held that “the contributing factor that an employee must prove is intentional retaliation prompted by the employee engaging in protected activity.” The 8th Circuit affirmed Kuduk and held that “the district court abused its discretion when it instructed the jury that Blackorby did not need to establish intentional retaliation.”

The 8th Circuit found, however, that the district court did not abuse its discretion when it rejected BNSF’s jury instructions concerning emotional distress damages. The court reasoned that although BNSF’s jury instructions correctly stated the law, they could still mislead the jury. The 8th Circuit remanded the case to the district court for Blockorby to prove intentional retaliation.

Duren v. URS Corp., ___ F.3d ___, 2017 WL 677491 (8th Cir. Feb. 21, 2017)

URS Corporation employed Dexter Duren as an Information Systems Administrator and DeArthur Grice as the Information Technology Department Manager. In 2007, Duren sued URS’s predecessor for racially discriminatory failures to promote. In 2009, Grice served as a witness in Duren’s trial, where the court entered judgment for Duren. Later that year, Grice recommended that Duren receive the IT Department’s 2009 “Top Contributor Award.” Other coworkers, however, favored a white female, and because the parties could not reach a consensus, no one received the award that year. That same year, URS reclassified job titles for its IT employees, moving Grice from Grade 16 to Grade 15. Although the reclassification did not affect his pay, Grice filed an internal complaint and URS reclassified him at Grade 17. Grice alleged that URS reclassified his job title on account of his race and participation in Duren’s prior lawsuit; Duren alleges that URS denied him the 2009 Top Contributor Award on account of his race and in retaliation for his prior successful lawsuit. The United States District Court for the Eastern District of Arkansas found for URS on all charges. Duren and Grice appealed.

The district court dismissed Duren’s race discrimination claim, because (1) URS did not treat a similarly situated white employee differently, because no one received the 2009 Top Contributor Award, and (2) denial of the award was not a materially adverse action to establish a prima facie race discrimination claim. Further, the district court rejected Duren’s retaliation claim, because he “failed to offer evidence connecting the denial of the award to his prior lawsuit.” On appeal, Duren argued (1) that denial of the Top Contributor Award—which made the employee eligible for, but not entitled to, pay raises—constituted denial of an “employment opportunity,” and (2) the proximity between the denial of the award and Duren’s prior lawsuit establishes a triable claim of unlawful retaliation. The 8th Circuit rejected Duren’s arguments, affirmed the district court’s reasoning, and dismissed Duren’s claims.

The 8th Circuit also relied on the district court’s reasoning to dismiss Grice’s discrimination and retaliation claims. Specifically, the 8th Circuit affirmed the district court’s finding that URS’s title reclassification, which did not result in any pay difference, did not constitute an adverse employment action. Accordingly, the 8th Circuit dismissed Grice’s claims and affirmed the district court’s decision on all counts.

Submitted by: Frances E. Baillon and Seth H. Garfinkel

D.C. Circuit

National Labor Relations Board v. Tito Contractors, Inc., 847 F.3d 724 (D.C. Cir. 2017)

In National Labor Relations Board v. Tito Contractors, Inc., the D.C. Circuit reviewed the National Labor Relations Board’s determination that an employer’s entire non-managerial workforce was an appropriate bargaining unit, finding that the NLRB’s cursory analysis was not supported by substantial evidence because it ignored undisputed evidence submitted by the employer showing major differences among the different portions of its workforce.

The case began when a union petitioned to represent all of the non-managerial employees of a general contractor employer. The employer challenged the proposed bargaining unit on the grounds that certain groups of its employees lacked a sufficient community of interest. At a hearing, the employer presented an “offer of proof” that its operations were divided into two halves: a labor side and a recycling side. Employees on the labor side performed a variety of functions including painting, masonry, tile installation, snow removal, and carpentry, under various contracts with the employer’s customers. Employees on the recycling side worked under three separate contracts to operate different municipal recycling plants. The conditions of employment and the actual functions performed varied considerably from plant to plant as each operation was subject to a different contract between the employer and the municipality. The hearing officer applied a presumption that an employer-wide bargaining unit was appropriate, and the NLRB denied review. The union ultimately prevailed in a representation election and the employer refused to recognize it, leading to litigation.

The D.C. Circuit found the employer’s challenge to the unitary bargaining unit well founded as the NLRB’s decision was not supported by substantial evidence. The court explained that the NLRB’s decision did not discuss or address at least 3 types of evidence that contradicted the NLRB’s conclusion (based solely on the application of a presumption) that a community of interest existed among all of the employer’s employees. First, the NLRB did not address the assertion that the employer’s business consisted of two discrete parts, and that the employees in each part performed different duties, at different locations, and subject to the supervision of different clients. Second, the NLRB did not consider the lack of interchange among the different types of employees, as employees in different locations did not communicate or deal with each other in the course of their duties. Finally, the court noted the evidence of significant differences among the employees’ wages, hours, and working conditions at each work location. Because all of these unaddressed facts undermined the NLRB’s conclusion, the court remanded the case to the NLRB for further proceedings.

Submitted by: Jack Blum