July 2017

July 2017 Circuit Updates

First Circuit

McDonald v. Town of Brookline, 863 F.3d 57 (1st Cir. 2017).

After being fired for unjustified absences from work and failing to provide adequate documentation for his use of sick leave, appellant McDonald filed a complaint against his former employer, Town of Brookline, alleging violation of the American with Disabilities Act (“ADA”), 42 U.S.C. § 12103 et seq., claiming discrimination based on his sleep apnea disability, denial reasonable accommodation, and failure of employer to engage in an interactive dialogue as required by the Act. Following a six-day trial, the jury in the District of Massachusetts ruled in favor of the employer. The U.S. Court of Appeals for the First Circuit affirmed the judgment, holding that, first, it did not abuse its discretion in deciding not to adopt employee’s proposed jury instructions, since the instructions given to the jury “adequately explained the law” and “did not confuse or misled the jury” on controlling issues. And, second, that the court’s failure to include a leave of absence as an example of possible accommodations for a disabled employee does not constitute plain error, considering that “McDonald’s attorney was able to argue to the jury that the Town’s failure to respond to the . . . leave request violated its duty to provide a reasonable accommodation, and nothing in the district court’s jury instructions suggested that the jury could not consider” such failure as violation of the ADA.

Farthing v. Coco Beach Resort Mgmt. LLC, ___ F.3d ___, 2017 WL 3097176 (1st Cir. July 21, 2017).

Appellant Farthing sued employer alleging that it breached parties’ employment contract by terminating him after three months of the one-year agreement claiming that he did not have a real estate broker’s license. Farthing had no such license before or after he was employed, and the employment agreement did not require him to have it. The District Court entered summary judgment in favor of the employer holding that the employment agreement was null and void as against public policy because Puerto Rico law requires a person working as a real estate broker to have a license, therefore there was no viable claim against the employer for breach of contract. On appeal, the First Circuit found that there were important disputes of facts as to liability which were material to the question of whether the employment was invalid in whole or in part. Additionally, it found that whether Farthing’s job responsibilities could have been lawfully performed without a broker’s license was still a disputed material fact.

González v. Vélez, ___ F.3d ___, 2017 WL 3124431 (1st Cir. July 24, 2017).

González and Franco sued twelve federal employees in their personal capacity for alleged deprivation on their First, Fourth, Fifth, and Fourteenth Amendment rights, sought damages under the Bivens doctrine, and under RICO, 18 U.S.C. §§ 1961-1968. The District of Puerto Rico dismissed the claim, ruling, inter alia, that “the plaintiffs could not dodge the preclusive effect of the Civil Service Reform Act (“CSRA”), 5 U.S.C. § 1201, and Title VII, 42 U.S.C. §§ 2000e to 2000e-17, by creatively pleading causes of action. In confirming the judgment, the First Circuit held that the CSRA and Title VII, taken together, precluded the plaintiffs’ constitutional tort claims, RICO claims, and that “there are no other arguably non-precluded claims . . . .”.

Submitted By:
José R. González-Nogueras

Second Circuit

Figueroa v. Foster, ___ F.3d ___, 2017 U.S. App. LEXIS 13379 (2d Cir. July 25, 2017).

National Labor Relations Act’s duty of fair representation does not preempt the New York State Human Rights Law prohibition against union discrimination. As the Court frames the issue: “If the NLRA’s duty of fair representation preempts the NYSHRL, then Title VII as administered by the Equal Employment Opportunity Commission will serve as the primary force protecting union members from invidious discrimination by their labor organizations. If, on the other hand, the NLRA’s duty of fair representation does not preempt the NYSHRL, then the NYSHRL as administered by the New York State Division of Human Rights will provide union members with additional protections against invidious discrimination by their labor organizations.” The Second Circuit holds that “There is no evidence that the NLRA’s duty of fair representation was designed or intended to preempt state laws focused on combating invidious discrimination, such as the NYSHRL. Instead, our independent review of the evidence leads us to the opposite conclusion based on the textual and structural relationships between the NLRA, Title VII, and the NYSHRL.”

McLeod v. Jewish Guild for the Blind, ___ F.3d ___, 2017 U.S. App. LEXIS 12943 (2d Cir. July 19, 2017).

Where pro se litigant in completing EEOC forms checked off the box for Title VII discrimination but not discrimination under the New York Human Rights Law and the New York City Human Rights Law, the district court erred in dismissing the state and city claims. The Court of Appeals has granted pro se litigants leeway in completing forms. In this case, the Court holds that pro se litigants are not likely to know the complexities associated with filing a lawsuit. We do not want form over substance for non-lawyers. Moreover, the Court has held that even counseled litigants do not have to cite the correct law in pleading their cases and that it’s the factual allegations that matter.

Odeon Capital v. Ackerman, ___ F.3d ___, 2017 U.S. App. LEXIS 13129 (2d Cir. July 21, 2017).

Consistent with the principle that losing parties have an uphill battle in challenging arbitration awards in federal court, the Court of Appeals upholds a $1.1 million arbitration award, rejecting the employer’s argument that the award was attained through the plaintiff’s fraud at the hearing. Fraud cannot predicate a federal challenge to an arbitration ruling unless the fraud was material to the arbitration award. The standard is that “the petitioner must demonstrate a nexus between the alleged fraud and the decision made by the arbitrators, although petitioner need not demonstrate that the arbitrators would have reached a different result.” In this case, while the employer claims the plaintiff lied at the hearing about his role in a bond trade, the arbitrators granted him relief only on his unpaid wages/breach of contract claim, not the claim arising from the bond trade claim. Any possible fraud was immaterial to Ackerman’s award.

Woods v. START Treatment & Recovery Ctrs., Inc., ___ F.3d ___, 2017 U.S. LEXIS 13038 (2d Cir. July 19, 2017).

The Court of Appeals holds for the first time that FMLA plaintiffs only have to show their family/medical leave was a motivating factor in their retaliatory dismissal. The Court rejects the more defendant-friendly “but for” causation test that governs other antidiscrimination statutes, including the Age Discrimination in Employment Act and Title VII’s anti-retaliation provisions. The Court of Appeals holds that retaliation claims fall under 29 U.S.C. § 2615(a)(1), also known as the “interference clause,” which provides: “It shall be unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under this subchapter.” The Court holds that “Firing an employee for having exercised her rights under the FMLA is certainly ‘interfere[nce]’ with or ‘restrain[t]’ of those rights.” The retaliation clause — which prohibits reprisals against employees who oppose unlawful employment practices — does not govern the “interference” cases in which the employee suffers retaliation for taking FMLA leave.

Fratello v. Archdiocese of N.Y., 863 F.3d 190 (2d Cir. 2017).

Applying the Supreme Court’s decision in Hosanna-Tabor v. v. EEOC, 565 U.S. 171 (2012), for the first time, the Court of Appeals holds that Title VII’s ministerial exception prohibited the principal at a private religious school from proceeding with her sex discrimination claim. While Fratello’s formal title was not religious in nature, that is not enough for her to avoid the ministerial exception, as other factors under Hosanna-Tabor help the defendants. The school’s principal must be a practicing Catholic, committed to the teachings of the Church, and she must, among other things, exercise leadership to ensure a thriving Catholic school community. The Circuit court also says plaintiff understood that she would be perceived as a religious leader, and she performed important religious functions in that role. While plaintiff was not employed as a “minister,” under the Supreme Court’s recent precedent, she falls within the ministerial exception and cannot proceed with her Title VII lawsuit.

Submitted by:
Stephen Bergstein

Third Circuit

Castleberry, et al. v. STI Group and Chesapeake Energy Corp., 863 F.3d 259 (3d Cir. 2017).

Atron Castleberry and John Brown were African-American employees of STI Group, a staffing-placement agency retained by Chesapeake Energy Corporation, and oil and natural gas company. They worked as a general laborers and were supervised by managers of both companies. They allegedly endured racially hostile conduct during their term of employment. On several occasions allegedly found the anonymous written statement, “don’t be black on the right of way,” on the sign-in sheet when reporting to work. They allegedly were allowed only to clean around the pipelines rather than work on the pipelines despite allegedly having greater experience working on pipelines than their white co-workers. When working on a fence-removal project, a supervisor allegedly told Castleberry and the other workers on the crew that they would be fired if he found that they had “nigger-rigged” the fence. Castleberry and Brown allegedly complained about the supervisor’s language and were fired two weeks later. They were rehired shortly thereafter, but allegedly terminated again for what they were told was “lack of work.”

Plaintiffs sued both STI and Chesapeake for discrimination, harassment and retaliation under 42 U.S.C. Sec. 1981. The District Court dismissed their complaint for failure to state a cognizable claim. The allegations of harassment would not, if proven, establish harassing conduct that was “pervasive and regular.” The facts alleged by Castleberry and Brown were insufficient to establish that their termination was racially motivated. And their retaliation claim failed because an objectively reasonable person would not have believe that the supervisor’s conduct was illegal. On appeal, the Third Circuit reversed.

42 U.S.C. Sec. 1981 provides, “All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts … to the full and equal benefit of all laws … as is enjoyed by white citizens….” Employment discrimination claims under Section 1981 are analyzed under the same standards as discrimination claims under Title VII of the Civil Rights Act of 1964.

With respect to the harassment claim, the District Court required that Castleberry and Brown plead harassing conduct that was “pervasive and regular.” The Third Circuit recognized that its precedent on this question was “inconsistent,” noting that its cases had cited a variety of standards on this issue. In certain cases, the Third Circuit had held that a plaintiff must establish that the harassing conduct was “severe or pervasive.” Other cases held that the harassing needed to be “pervasive and regular,” while other cases articulated the correct standard as “severe and pervasive.” In one opinion, the Court articulated the correct standard as “pervasive and regular,” but then applied the “severe or pervasive” standard within that same opinion.

Against that background, the Third Circuit took the opportunity to clarify that the correct standard to apply in harassment cases is whether the harassing conduct is “severe or pervasive.” “The Supreme Court has articulated as much on several occasions.” Thus, severity and pervasiveness are alternative possibilities. “{Some} harassment may be severe enough to contaminate an environment even if not pervasive; other, less objectionable, conduct will contaminate the workplace only if it is pervasive.” Thus, whether an environment is hostile requires looking at the totality of the alleged circumstances, including the frequency of the discriminatory conduct, its severity, whether it is physically threatening or humiliating as opposed to being a merely offensive utterance, and whether the conduct unreasonably interferes with an employee’s work performance.

The Third Circuit then turned to the question whether, under the correct “severe or pervasive standard,” the supervisor’s single use of a racially offense term was adequately “severe” to set forth a cognizable claim. “Although the resolution of that question is context-specific, it is clear that one such instance can suffice to state a claim.” However, “a plaintiff must plead the incident to ‘be extreme to amount to a change in the terms and conditions of employment’ for it to serve as the basis of a harassment claim.”

The Supreme Court’s decision to adopt a “severe or pervasive” standard “lends support that an isolated incident of discrimination (if severe) can suffice to state a claim for harassment… other Circuits have similarly held that an extreme isolated act of discrimination can create a hostile work environment.” Cases in which an isolated incident was found insufficient to establish a hostile work environment do not undermine the conclusion that a single incident, if sufficiently severe, can give rise to a cognizable claim. Nor are cases in which a claim was dismissed on summary judgment after discovery helpful in determining whether a cognizable claim is set forth at the initial pleading stage. In this case, Castleberry and Brown had pled sufficient facts to set forth a plausible claim of hostile work environment harassment. The use of racial epithet in front of Castleberry and his co-workers, accompanied by a threat of termination, if proven true, “constitutes severe conduct that could create a hostile work environment.” Further, the remaining allegations of the complaint “could satisfy the ‘pervasive’ alternative.”

With respect to the disparate treatment claim, the District Court had held that in the absence of additional factual allegations, STI and Chesapeake may have had “perfectly neutral, non-discriminatory reasons” for the adverse employment actions taken against Castleberry and Brown. The Third Circuit rejected that logic. “Whether true or not, Defendants did not provide the Court with any of those potential reasons. That was their burden to carry. And, even had they done so, Plaintiffs still would have been afforded the opportunity to rebut the stated reasons as pretextual following discovery.” The District Court therefore erred in dismissing the disparate treatment claim.

With respect to retaliation, the District Court found that it had been “unreasonable” for Castleberry and Brown to believe that a single discriminatory remark could amount to unlawful activity. Because that reasoning rested on the District Court’s erroneous application of the “pervasive and regular” standard, its holding with respect to the retaliation claim was likewise in error.

Castleberry and Brown had apparently amended their complaint at the District Court level to assert a disparate impact theory of discrimination. A disparate impact claim alleges that a facially-neutral policy has a disparate impact on a protected class of persons that is not justified by business necessity. The District Court failed to address that claim, but the Third Circuit found this oversight to be “irrelevant because a claim of disparate impact is unavailable under Section 1981.” Section 1981 provides a cause of action for intentional discrimination only. Further, a theory of disparate impact is not supported by the factual allegations. Castleberry and Brown allege “that there is a policy that only African-American males will be assigned to undesirable work, and only they will be fired if they complained about discrimination. Those alleged policies are not facially neutral,” and therefore do not set forth a claim of disparate impact.

Submitted by:
Stephen E. Trimboli

5th Circuit

T-Mobile USA, Inc. v. NLRB,¬¬___F.3d___, 2017 WL 3138612 (5th Cir. July 25, 2017).

Employer petitioned for review of National Labor Relations Board (NLRB) order that certain workplace rules violated the National Labor Relations Act (NLRA) by prohibiting employees from exercising unionizing rights. The Board cross-applied for enforcement.
 
T-Mobile’s employee handbook (1) encouraged employees to “maintain a positive work environment”; (2) prohibited “arguing or fighting,” “failing to treat others with respect,” and “failing to demonstrate appropriate teamwork”; (3) prohibited all photography and audio or video recording in the workplace; and (4) prohibited access to electronic information by non-approved individuals. The Board determined that all four provisions violated the National Labor Relations Act because each discouraged unionizing or other concerted activity protected by the Act.
 
The 5th Circuit held that the Board erred in finding that a reasonable employee would construe policies (1), (2), and (4) to prohibit protected activity. The Court affirmed the Board’s finding that a reasonable employee would construe policy (3) to prohibit protected activity.
 
Section 7 of the NLRA provides that employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.  Section 8(a)(1) of the Act enforces that policy by making an unfair labor practice to interfere with, restrain, or coerce employees in the exercise of the Section 7 rights.
 
To determine whether a workplace rule violates Section 8(a)(1), the Court applied the two-part Lutheran Heritage framework, deciding first whether the rule explicitly restricts activities protected by Section 7, and second, even if the restriction is not explicit, whether the rule violates Section 8(a)(1) where “(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights. The Court reiterated that the Board must give the rule a reasonable reading, not reading particular phrases in isolation, and not presume improper interference with employee rights.  The appropriate inquiry is whether a reasonable employee reading the rules would construe them to prohibit conduct protected by the Act.
 
In this case, where the record does not suggest that the rules have been applied in the context of union or collective activity, the “reasonable employee” is a T-Mobile employee aware of his legal rights but who also interprets work rules as they apply to the everydayness of his job. Context matters in the interpretation. 

The Court found the recording ban encompassed any and all photography or recording on corporate premises at any time without permission from a supervisor. A reasonable employee, generally aware of employee rights, would interpret it to discourage protected concerted activity, such as an off-duty employee photographing a wage schedule posted on a corporate bulletin board.

Granted in part and denied in part.

Patton v. Jacobs Eng’g Grp., Inc., 863 F.3d 419 (5th Cir. 2017).

Timothy Patton brought this American Disabilities Act (ADA) case against his workplaces Jacobs Engineering Group Inc. (Jacobs) and his employers Talascend, LLC (Talascend).

Talascend is a staffing agency furnishing contract employeesJacobs.  Patton was an employee of Talascend and was assigned to work at Jacobs’ facility. Patton had an obvious stutter. Around the time he was hired, Patton told his Talascend recruiter Emily Wimbley about his joint stuttering and anxiety problems.
 
Coworkers at Jacobs harassed Patton regarding his stutter. Coworkers called him names, mocked him, and made loud noises right behind him. Even his supervisor, Greg Guillory, mocked him. Patton complained about this harassment to Guillory and Wimbley, but not to human resources.
 
Patton to experienced severe anxiety and suffered a panic attack while driving.  Patton did not return to work at Jacobs after this incident and ultimately brought this suit, asserting that he was harassed because of his disability.

The 5th Circuit found insufficient evidence to prove either Jacobs’ or Talascend’s knowledge of Patton’s disability. Although Patton’s stutter was obvious and he complained about noise on several occasions. Patton did show that the defendants attributed Patton’s limitation—sensitivity to noise—to a physical or mental impairment. Nor did Patton show that defendants knew Patton sought a quieter work environment because of a medical condition.
 
Patton’s testimony that his stuttering and anxiety problems were joined and that at a previous job he was sensitive to noise were too vague to show that Patton identified his sensitivity to noise as a limitation resulting from a disability. Patton did not tell Jacobs that his disability caused his noise sensitivity, nor was this causal relationship obvious. Patton did not link office noise to an aggravation of his disability, which in turn would give rise to a workplace limitation of which Jacobs should have been aware.

The Court found that the harassment was pervasive, but the hostile work environment claim failed. Talascend’s and Jacobs’ handbooks directed employees who experience harassment to contact the human resources department. However, Patton failed to show that he notified the human resources department or that either defendant failed to take prompt, remedial action addressing the harassment. The 5th Circuit found that Patton unreasonably failed to take advantage of corrective opportunities provided by the employer and the hostile work environment claim failed.

Affirmed.

Submitted by:
Susan Cone Kilgore  

Sixth Circuit

Flight Options, LLC v. Int’l Bhd. of Teamsters, Local 1108, 863 F.3d 529 (6th Cir. 2017).

The Union represented the pilots of two merged airlines, Flight Options and Flexjet. Flight Options had a collective bargaining agreement (CBA) already in place since 2010, while Flexjet’s pilots were recently unionized and not yet a party to the CBA. The Union sought to bring both groups of pilots under a new, joint CBA. The Union argued that the creation of an integrated seniority list (ISL) is exclusively a Union matter, so that the airlines must accept the Union’s ISL. The airlines argued instead that they should have been allowed to participate in negotiating the ISL. The district court entered a preliminary injunction against the airlines, ordering that they accept the Union’s ISL because the 2010 CBA governed the creation of the ISL when Flight Options acquired another carrier.

On appeal, the airlines argued that the dispute was “minor” under the Railway Labor Act (RLA) because it dealt with the interpretation of a particular provision in an existing CBA and was therefore subject to exclusive grievance arbitration. A dispute is found to be “minor” if the action is “arguably justified” by the terms of the parties CBA. On the other hand, the Union argued that the dispute was “major” under the RLA because it seeks to create contractual rights, not enforce them, and is therefore subject to federal-court jurisdiction. The Sixth Circuit affirmed in part, finding that the 2010 CBA did not “arguably justify” the airlines’ claim that they had a right to participate in the Union’s ISL process. Therefore, the dispute was major. The Sixth Circuit also found that the district court enjoined properly the airlines to follow the express terms of the CBA regarding the ISL, but the CBA stated that if the airlines refuse to accept the Union’s ISL, the Union may invoke an expedited arbitration proceeding. As a result, the Sixth Circuit ordered that the injunction be modified as such.

Submitted by:
Jacob M. Hogg

Crosby v. University of Kentucky, 863 F.3d 545 (6th Cir. 2017).

In Crosby v. University of Ketucky, the Plaintiff, a tenured professor at the University’s College of Public Health, sued various University officials under 42 U.S.C. § 1983, alleging that his removal as Chair of the Department of Behavioral Health amounted to an actionable deprivation of his protected property and liberty interests without due process of law. The Plaintiff was hired as a professor at the University in 2004, and was awarded tenure the same year. In 2006, he was appointed to a four-year term as Department Chair. He was then reappointed for two additional four-year terms as Chair in 2010 and 2014. The Plaintiff received consistently favorable review from both students and fellow faculty until 2015. In June 2015, the University’s Office of Institutional Equity and Equal Opportunity (OIEEO) began to investigate reports of the Plaintiff’s inappropriate behavior. The OIEEO met with the Plaintiff in June 2015 to discuss the investigation, but it did not identify the Plaintiff’s accusers. The Plaintiff denied the allegations that were presented to him. One week later, the OIEEO submitted a report of the results of his investigation to the University’s General Counsel.

The report stated that the investigator observed “a disproportionate number of negative remarks…regarding [the Plaintiff’s] behavior…,” such as being “volatile,” “explosive,” “disrespectful,” “very condescending,” and “out of control.” The report recommended that the Plaintiff be removed from his Chair position. In July 2015, the University’s administration agreed with the report and terminated the Plaintiff’s Chair appointment. The Plaintiff demanded an evidentiary hearing before an impartial Faculty Hearing Panel, among other administrative proceedings under “Governing Regulations” cited by the Plaintiff. Instead, the University offered the Plaintiff an appellate process involving two senior faculty members to make an independent assessment of the Plaintiff’s department. The Plaintiff rejected that proposal, and proceeded with his lawsuit against the University and several administrators. The U.S. District Court for the Eastern District of Kentucky granted the University’s motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6).

The Sixth Circuit affirmed. Noting that Sixth Circuit case law establishes that “tenured university professors do not have a constitutionally protected property interest in administrative posts,” the Court explained that a property interest can arise where the administrative position itself is a tenure-track appointment or where a professor has received an express guarantee that he will not be removed from the position except for cause. According to the Court, neither circumstance existed in this case. It rejected the Plaintiff’s argument that the University’s governing regulation establishing the four-year appointment – but without mentioning removal – was an express guarantee creating a property interest in the Chair position. The Sixth Circuit also rejected the Plaintiff’s argument that he had been deprived of a liberty interest in his reputation and good name. Specifically, the Court concluded that the Plaintiff did not suffer an actionable adverse action because he remained employed as a tenured professor, and he has not been foreclosed from his chosen profession despite that the stigmatizing allegations against him may have made him less attractive to other employers.

Submitted by:
Scott R. Eldridge

Seventh Circuit

Int’l Union of Operating Eng’rs Local 139 et al. v. Schimel, 863 F.3d 674 (7th Cir. 2017).

After the Seventh Circuit issued its decision upholding Indiana’s right-to-work law in Sweeney v. Pence, 767 F.3d 654 (7th Cir. 2014), Wisconsin passed a similar law stating no person may require an individual to, among other things, become or maintain a membership in a labor organization or pay expenses “of any kind” to a labor organization. The International Union of Operating Engineers Locals 139 and 420 (“IUOE”) filed suit against various Wisconsin officials seeking to void provision of the act that prohibited forming union-security agreements.

The IUOE argued that Sweeney was wrongly decided by the district court and that the Seventh Circuit should overturn the decision. The Court reiterated that overturning prior precedent required “a compelling reason.” While the Court acknowledged the IUOE’s reliance on Judge Wood’s “strong dissent” and the close vote on rehearing Sweeney en banc, the Court confirmed those considerations are not compelling reasons to overturn a recent decision. IUOE was also unable to identify intervening development in statutory or court precedent.

The IUOE also argued Wisconsin’s law amounted to a taking in violation of the Fifth Amendment. The district court had held that while such claims are generally unripe when, as here, the union did not first seek just compensation in state courts, IUOE’s claim was nevertheless ripe because IUOE had made a pre-enforcement facial challenge to the law. The district court dismissed the takings claim with prejudice. Wisconsin cross-appealed, seeking the Seventh Circuit’s ruling that the challenge was not ripe and dismissal should have been without prejudice.

The Court noted that there are two exceptions to the requirement of first seeking just compensation in state courts: a pre-enforcement facial challenge and for situations in which relief is not available in state court. IUOE argued it met both exceptions. Wisconsin argued that because IUOE’s complaint used the term “as applied,” it did not make a facial challenge and therefore the exception was not met. However, the Seventh Circuit noted IUOE’s complaint read “[a]s applied to unions covered by the NLRA, [Wisconsin’s Right to Work Law] effect an unconstitutional taking.” The Court explained that phrasing did not preclude relief for parties beyond those in the dispute, making the challenge a facial one and meeting the requirements for the exception.

The Court affirmed the decision of the district court both that Sweeney compelled a decision finding Wisconsin’s law valid, and its finding that IUOE’s challenge to the statute was a facial challenge.

Carson v. Lake County, Indiana, ___ F.3d ___, 2017 U.S. App. LEXIS 13494 (7th Cir. July 26, 2017).
As a result of the recession, Lake County, Indiana had a large cash shortfall and was operating under a deficit by 2009. This was compounded by a shortfall in the county’s coffers used to fund employee healthcare costs. The county offered an early retirement incentive to employees 65, with one package providing five years of supplemental health coverage (secondary to Medicare) while allowing those employees to come back on a part-time basis as at-will employees.

In 2013, the provider of the secondary coverage informed the county that the employees who accepted the package would no longer be eligible if they remained employees. In that case, the county’s costs would skyrocket. In response, the county notified all rehired retirees who were covered by Medicare and the supplemental package coverage they would be separated from employment. A group of the rehired retirees sued, claiming the county discriminated against them on the basis of their age in violation of the Age Discrimination in Employment Act (ADEA) and the Fourteenth Amendment.

Plaintiffs argued that the county’s termination decision was discriminatory on its face since all part-time employees who were terminated were age 65 or older. The Seventh Circuit agreed with the district court’s determination that while age was a “characteristic common to all terminated employees” it was “not the impetus for the County’s decision.” The Court explained that the other characteristics common to all plaintiffs included their participation in the particular supplemental insurance coverage that was now untenable should they remain employed. The county “terminated them because they were enrolled in a retiree-only insurance plan in which current employees could not participate.”

The Plaintiffs argued that Medicare eligibility (a necessary condition for participation in the supplemental coverage) was a proxy for age. The Court rejected that argument, noting that the county only fired the employees enrolled in the problematic coverage, “leaving unaffected a large number of employees age 65 or older, who had not enrolled in the supplement.”

The Court rejected Plaintiffs’ disparate impact theory as well. Plaintiffs would have to show a facially neutral employment practice caused a significantly disproportionate adverse impact based on age. The Court noted the ease with which the county could demonstrate a “reasonable factor[] other than age” as the County’s decision was motivated not by the age of the workers, but because they wanted to preserve the supplemental insurance plan (and comply with federal laws).

The Court also rejected the Fourteenth Amendment claim. The Plaintiffs failed to show a suitable comparator group. Moreover, the decision by the county would be subject to rational basis scrutiny. The county’s decision to terminate in light of the monetary and legal issues caused by the continued employment of the rehired retirees with supplemental coverage would have met that low bar.

Submitted by:
Mark Plantan

Eighth Circuit

McGuire v. Indep. Sch. Dist. No. 833, ___ F.3d ___, 2017 WL 3122019 (8th Cir. July 24, 2017).

From 2012 to 2014, Nathan C. McGuire was the head varsity girls’ basketball coach at Woodbury High School, a public school within Independent School District No. 833 (the District) in Woodbury, Minnesota. During the 2012 – 2013 basketball season, McGuire received complaints from two students’ parents and another complaint from another student’s parents the next year. All the parents continued to seek McGuire’s removal as head girls’ basketball coach. On January 8, 2014, the District informed McGuire he was being placed on paid, non-disciplinary leave pending the outcome of an investigation into allegations against him, and that he would not be permitted to perform his coaching duties until further notice. The District retained a law firm to conduct the investigation, and an attorney interviewed players, coaches, parents, and McGuire.

McGuire’s administrative leave continued until his current contract expired on March 22, 2014. On March 14, 2014, McGuire received a letter from the principal notifying him that the School Board approved the non-renewal of his contract. The letter stated the decision “is based on the results of a recent investigation and is not based solely on parent complaints.” It provides several reasons for non-renewal, including that McGuire failed to meet the administration’s expectations, that the administration wanted a different direction for the Basketball program and that the McGuire’s style differed from what the administration wanted. On May 8, 2014, McGuire made a statement before the School Board, explaining that he felt the reasons for non-renewal were unjustified, unsupported, and based solely on parent complaints. Over the objection of one board member, the School Board did not take any action on McGuire’s contract.

In December, McGuire brought suit against the District, the superintendent, the human resources director, and the parent defendants (collectively, the District defendants). McGuire alleged that the District and its employees violated McGuire’s procedural due process rights under 42 U.S.C. §1983. The District defendants moved for judgment on the pleadings, arguing that McGuire did not have a constitutionally protected property interest in the renewal of his coaching interest. The district court granted the motion, dismissed the due process rights claim with prejudice. McGuire appealed.

McGuire argued that Minnesota Statute §122A.33 created a property interest in the renewal of his contract when the sole basis for non-renewal was the existence of parent complaints. However, a state statute creating a constitutionally protected interest must 1) contain particularized substantive standards that guide a decision maker; and 2) limit the decision maker’s discretion by using mandatory language, which mandates the outcome to be reached upon a finding that the relevant criteria have been met. §122A.33 Subdivision 3 reads: “The existence of parent complaints must not be the sole reason for a board not to renew a coaching contract.” Assuming this standard is substantive, the Court reasoned, §122A.33 in its entirety still leaves the School Board sound discretion because the School Board could decline to renew the contract for a different reason, or no reason at all. Therefore, no property interest exists. The Court determined that McGuire’s procedural due process claims necessarily fail.

Judge Colloton concurred. Judge Colloton noted the broadest recognition of a constitutionally protected property interest in the employment context involved a state statute with criteria that “significantly guide[d] decisionmakers’ discretion,” which §122A.33 does not. Further, although a school board is forbidden to decline renewal of a coaching contract based solely on the existence of parental complaints, it may act based on the substance of those complaints, or for any other reason.

Submitted by:
Frances E. Baillon
Haijing She

D.C. Circuit

Bellagio, LLC v. National Labor Relations Board,___F.3d___, 2017 WL 3027221 (D.C. Cir. July 18, 2017).

In Bellagio, LLC v. National Labor Relations Board, the D.C. Circuit considered whether casino surveillance technicians are “guards” for purposes of the NLRA. Section 9(b)(3) of the NLRA defines “guards” as employees who “enforce against employees and other persons rules to protect property of the employer or to protect the safety of persons on the employer’s premises.” The NLRA provides that guard employees may not be part of a bargaining unit or represented by the same labor union as non-guard employees. The purpose of this limitation is to prevent conflicts of interest in which a guard might be unwilling to enforce the employer’s rule against a member of the guard’s own union.

The surveillance technicians in question were responsible for various technical and maintenance tasks regarding the casino employer’s video surveillance system. When games were moved on the casino floor, the technicians were responsible for adjusting video coverage so that all of the information required by Nevada state law was captured for each wager. The technicians also oversee the computer system that manages video surveillance and maintain the casino’s electronic access system that permits authorized employees to enter sensitive areas. When other employees are suspected of misconduct, the technicians participate in investigations by installing a new covert camera or refocusing an existing camera to monitor the targeted employee. However, the technicians do not carry weapons or handcuffs, do not patrol for misconduct, and are not physically involved in security situations. Nor do the technicians themselves monitor the casino’s video surveillance system to detect wrongdoing.

After the NLRB ruled that the technicians were not guards, and therefore could be represented by a union that also had non-guard employees as members, the employer challenged that ruling by refusing to bargain with the union. Although the guard determination is a factual question, the D.C. Circuit nonetheless found the NLRB’s determination that the technicians were not guards to be unsupported by substantial evidence in four respects. First, the NLRB failed to consider that the casino’s security officers and surveillance operators, undoubtedly guards, could not perform their jobs without the technicians. Because the thousands of cameras in the casino cannot be contemporaneously monitored, the technicians’ role in ensuring that footage was properly stored and archived was essential to the security process. Second, the court ruled that the NLRB failed to consider the peculiar circumstances of a casino employer, analogous to a financial institution, for which security is critical and surveillance is the main guarantor of security. Third, the NLRB did not account for the technicians’ role in controlling employee access to physical areas of the casino, which the court noted had been found by prior NLRB decisions to be relevant to guard status. Finally, the court faulted the NLRB for failing to give weight to the guards’ role in investigating other employees suspected of misconduct, noting that the conflict of interest potential in such investigations was the motivation for the NLRA’s guard provisions.

Submitted by:
Jack Blum