May Circuit Update
Second Circuit
Fernandez v. Zoni Language Ctrs., Inc., ___ F.3d ___, 2017 U.S. App. LEXIS 9178 (2d Cir. May 26, 2017).
Under the Fair Labor Standards Act, bona fide professionals (including teachers) are exempt from the statute’s protections. Plaintiffs claim defendants — who operate private educational facilities — are not entitled to the exemption from the FLSA’s minimum wage and overtime requirements applicable to teachers working as bona fide professionals, because defendants are not “educational establishment[s],” as required for that exemption to apply. The Court of Appeals holds that this facility is an educational establishment. Department of Labor regulations define “educational establishment” as “an elementary or secondary school system, an institution of higher education or other educational institution.” Under a plain language analysis, Zoni Language Centers qualifies under this exemption because its “primary purpose is to provide English-language instruction to students using prescribed books in a traditional classroom environment,’ such that “plaintiffs were engaged in the transmittal of knowledge to students in much the same way as primary and secondary school teachers, except that plaintiffs’ students were adults, not children, and the knowledge conveyed to them focused on a single subject, the English language.” These educational centers also have national certifications and state licensure.
Makinen v. City of New York, 857 F.3d 491 (2d Cir. 2017).
Since the law is not clear on this issue, the Second Circuit certifies to the State Court of Appeals the issue of whether the New York City Human Rights Law’s discrimination provision makes it illegal to discriminate against untreated alcoholics, that is, people who are not in recovery. The City law states that “In the case of alcoholism,” the definition of “disability” only applies “to a person who (1) is recovering or has recovered and (2) currently is free of such abuse.” But under federal and state law, alcoholics are protected from discrimination even if they are not in recovery. The Court of Appeals says that “[n]either statute is limited to recovering or recovered alcoholics.” Since the City law directs courts to interpret that law more broadly than its state and federal counterparts, the question is whether the City law does in fact protect untreated alcoholics from employment discrimination.
Submitted by:
Stephen Bergstein
Third Circuit
United States ex rel. Petras v. Simparel, Inc., 857 F.3d 497 (3d Cir. 2017).
Andre Petras had been the Chief Financial Officer of Simparel, Inc., a company that sells proprietary software to apparel manufacturers. Its original investor was a venture capital firm called L Capital, which had invested $4 million in Simparel in exchange for preferred shares of company stock. Preferred shareholders accrued dividends, but the accrued dividends would actually be paid only if the Simparel Board exercised its discretion to order payment, or if Simparel underwent an involuntary or voluntary liquidation, dissolution or windup.
L Capital, in turn, had received over $90 million in funding from the federal Small Business Administration (SBA) in exchange for the purchase of L Capital securities. L Capital apparently breached its funding agreement with the SBA and, as a result, the SBA was appointed as L Capital’s receiver, effectively causing the SBA to become a preferred shareholder in Simparel.
L Capital’s receivership in no way reflected on Simparel’s operations and did not result in Simparel being liquidated, dissolved or wound up. Petras nonetheless claimed that L Capital being placed in receivership somehow triggered an obligation to pay accrued dividends to the SBA. After his termination from Simparel, Petras filed suit under the federal False Claims Act, 31 U.S.C. Sec. 3729, et seq. (FCA).
Actions under the FCA typically involve fraudulent efforts to obtain money from the federal government. However, the FCA also prohibits fraudulent attempts to reduce or avoid obligations to pay the federal government. So-called “reverse” FCA claims arise when a party “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C. Sec. 3729(a)(1)(G). The FCA also protects employees, contractors and agents from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop” fraudulent acts against the federal government. 31 U.S.C. Sec. 3730(h)(1).
Petras alleged that Simparel and its officers had engaged in what he termed “fraudulent” tactics, to which he allegedly objected, in order to avoid paying the SBA the accrued dividends to which Petras claimed the SBA was entitled. The tactics allegedly included actions designed to conceal Simparel’s supposedly deteriorating financial condition, thus preventing the SBA from placing Simparel into involuntary liquidation and thereby triggering the obligation to pay dividends. Petras also alleged that Simparel and its officers avoided the obligation to pay dividends by diverting customers and technology to related companies. Petras also alleged that his termination constituted unlawful retaliation under the FCA.
The District Court dismissed in turn Petras’ Complaint, First Amended Complaint, and Second Amended Complaint under FRCP 12(b)(6) for failure to state a claim. On appeal, the Third Circuit affirmed.
In order to state a viable claim for relief under FRCP 12(b)(6), a FCA plaintiff must meet the general requirement of presenting factual alegations that state a plausible claim for relief that rises above the level of speculation. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In addition, a FCA plaintiff must also meet the requirements of FRCP 9(b) and plead the circumstances constituting alleged fraud or mistake with a particularity sufficient to place defendants on notice of the precise misconduct with which they are being charged.
Petras’ reverse FCA claim failed for two reasons. First, a governmental entity like the SBA acting in the capacity of a receiver does not automatically qualify as the “government” for FCA purposes. By asserting its contractual right to act as L Capital’s receiver, the SBA had “ ‘stepped into’ L Capital’s private shoes for the sole purpose of winding up the firm.” It did not thereby retain any federal authority, but merely assumed the private-sector powers of L Capital’s shareholders, board of directors, and management. Second, the obligation to pay dividends was contingent on conditions that had not yet occurred. Reverse FCA claims cannot be premised upon contingent obligations that have not yet matured or have otherwise become due and owing. Petras’ factual allegations regarding Simparel’s alleged tactics were too speculative to implicate FCA liability.
In order to prevail on a retaliation claim, it is not sufficient for Petras merely to allege that he had asserted a FCA claim or had threatened a FCA suit. Petras needed to show that he had engaged in protected conduct under the FCA, and that he was discriminated against because of his protected conduct. He was also required to show that at the time of the alleged retaliatory conduct, the defendants were on notice that FCA litigation was a “distinct possibility.” The Third Circuit interprets these standards as extending “whistleblower” protections only to actions taken in furtherance of viable FCA claims. Although a plaintiff need to prove that he or she has a “winning” FCA case, “{i}f there is no way that {a plaintiff’s} conduct of informing {his employer} about the allegedly fraudulent application could reasonably lead to a viable FCA action, then the whistleblower provision provides him no protection,”(citing Dookeran v. Mercy Hospital of Pittsburgh, 281 F.3d 105, 107-8 (3d Cir. 2002)). Because Petras’ reverse FCA claim was not viable, his retaliation claim also failed.
Jones v. Does, 857 F.3d 508 (3d Cir. 2017).
Three certified nursing assistants brought a collective action under the federal Fair Labor Standards Act (FLSA) against their employer, SCO Silver Care Operations, an assisted living facility, as well as under related New Jersey state wage and hour laws. They alleged that Silver Care failed to include certain hourly wage differentials in the calculation of overtime pay, and did not treat their half-hour meal breaks as time worked for the purpose of determining entitlement to overtime compensation.
The nursing assistants also were members of a bargaining unit that was covered by a collective bargaining agreement. The collective bargaining agreement included a grievance procedure culminating in binding arbitration. Silver Care moved to dismiss or to stay the collective action pending arbitration. The District Court denied Silver Care’s motion and its subsequent motion for reconsideration. An order denying a motion to dismiss or stay pending arbitration is immediately appealable under the Federal Arbitration Act, 9 U.S.C. Sec. 16(a)(1), and Silver Care took a such an appeal. The Third Circuit affirmed the District Court by a 2-1 majority.
Generally, a court may compel arbitration of a federal statutory claim only when the federal statute does not bar arbitration, and the arbitration provision at issue clearly and unmistakably waives the employee’s ability to enforce the federal statutory right in court. However, an exception exists when “the plaintiff’s FLSA claim ‘depends on the disputed interpretation of a CBA provision,’ which dispute must ‘first go to arbitration—through the representative union—before {the employee may} vindicate{e} his or her rights in federal court under the FLSA.’” This exception exists to prevent plaintiffs from “circumventing applicable statutes of limitations and contractually binding grievance procedures” contained in collective bargaining agreements. This exception applies when the FLSA claim is “inevitably intertwined with the interpretation or application of {the} collective bargaining agreement.” However, plaintiffs are not required to resolve contractual disputes through arbitration before pursuing FLSA claims in court when the FLSA claim is “completely independent of any interpretation” of the collective bargaining agreement.
The Jones majority found that the plaintiffs’ claims against Silver Care were “completely independent” of the collective bargaining agreement. The FLSA itself determines what forms of compensation are required to be included in the employees’ “regular rate of pay” for the purposes of calculating overtime compensation, regardless of the provisions of any collective bargaining agreement. Thus, it was to the FLSA, and not to the collective bargaining agreement, that one must look to determine whether the hourly wage differentials in dispute should have been included in the plaintiffs’ overtime pay.
Similarly, the question whether the half-hour meal period constitutes “hours worked” under the FLSA is to be resolved based on the FLSA and the interpretative regulations promulgated by the Wage and Hour Division of the United States Department of Labor. Silver Care did not argue that the mealtime compensation claim involved a contractual dispute, and recognized that the claim was based on the FLSA definition of “hours worked.” Rather, Silver Care argued that arbitration was necessary to resolve issues regarding the actual length of the meal period, the customs of the parties pertaining to meal period interruptions, and the parties’ actual practices regarding the restrictions to which employees are subject during meal breaks. The Jones majority dismissed these as issues of fact, not of contract intepretation, that did not require arbitration before suit. A court “cannot collapse the factual inquiry and consideration of the {collective bargaining agreement} into one.” In the absence of any dispute over the text of the collective bargaining agreement, as opposed to factual “disputes about what actually happens during {the} meal breaks,” arbitration was not required.
Judge Ambro, in a brief dissent, argued that each of the issues raised by the Jones plaintiffs required an interpretation of the collective bargaining agreement, and would have required arbitration.
Submitted by:
Stephen E. Trimboli
Fourth Circuit
Waag v. Sotera Def. Sol., Inc., 857 F.3d 179 (4th Cir. 2017).
After suffering an injury, an employee of a defense contractor was unable to work for three months. When he returned, the employee was assigned to a similar position, but reported to a different supervisor and worked on different projects than before his injury. Due to federal budget cuts that began while the employee was on leave, the employer saw a drastic decrease in government contract work. The employer was forced to cut its overhead costs via layoffs, and the employee and several others in his group, including his supervisor, were among those laid off.
The employee sued his employer for violating the Family Medical Leave Act (“FMLA”). The employee alleged that his employer failed to restore him to the same position upon his return from medical leave, placed him in a job that was not equivalent to his former position, and terminated his position because he took medical leave. The district court granted summary judgment for the employer, and the Fourth Circuit affirmed.
The employee first argued that the employer failed to return him to his pre-leave position. The Fourth Circuit concluded that nothing in the FMLA requires the employer to hold open the employee’s position or return the employee to the same position following a period of leave; rather, the plain language of the FMLA gives employers the option of restoring the employee either to the employee’s original position or an equivalent position.
And in this case, the Fourth Circuit concluded that the employee’s new position was equivalent within the meaning of the FMLA. An equivalent position is one that is “virtually identical” to the former position in terms of pay, benefits, working conditions, privileges, and status. As the Fourth Circuit explained, the employee’s post-leave position offered the exact same salary, bonus structure, benefits, and terms of employment, the same worksite, the same title, and substantially similar job responsibilities. Based on these facts, the Fourth Circuit ruled there was no genuine dispute that the employee’s post-leave position was equivalent to the former position within the meaning of the FMLA.
Finally, the employee argued that he was terminated for taking medical leave in violation of the FMLA. First, the employee argued that the post-leave position was a “sham” position because the employer knew that job would be eliminated. The Fourth Circuit concluded that the employee could not point to any evidence supporting his contention. The record showed that the employee was working on an bid process to win a contract worth $70 to $80 million dollars at the time his employment was terminated. Although the employer did not win the bid process, the bid was a real project. Moreover, the layoffs affected a broad swath of people within the company, including the vice president, and did not only affect the employee.
Second, the employee argued that he was terminated in retaliation for taking medical leave since his termination occurred so soon after his return. Given the close temporal proximity between the employee’s return to work and his termination, the Fourth Circuit assumed that the employee could make out a prima facie case of retaliation. Applying the McDonnell Douglas burden-shifting framework, the Fourth Circuit concluded that the employer was able show a legitimate reason for the termination, and the employee could not carry his burden to show that the employer’s reason was pretextual. The record showed, for example, that the federal budget cuts had drastic negative effects on the employer’s ability to earn government contracts. The employer missed its budget by $110 million in the year the employee took leave, and the employer was forced to cut its overhead. To that end, the employer made cuts in groups, such as the employee’s group, that were paid out of overhead rather than directly from the government.
The Fourth Circuit, therefore, affirmed the district court’s grant of summary judgment for the employer on all grounds.
Submitted by:
Paul Sun
Emily Erixson
Fifth Circuit
EEOC v. BDO USA, L.L.P., 856 F.3d 356 (5th Cir. 2017).
BDO USA, L.L.P. (“BDO”), a financial and consulting service firm, hired Hang Bower, an Asian-American female Human Resources Manager in 2007, eventually promoting her to Chief Human Resources Officer, its highest HR position. As such, Bower was responsible for investigating discrimination complaints and communicated with both in-house and outside counsel. After resigning from her employment with BDO on January 15, 2014, Bower filed an EEOC charge on July 9, 2014 alleging that BDO violated Title VII and the Equal Pay Act by subjecting her and other female employees to gender discrimination, retaliation, and a hostile work environment. On August 18, 2014, BDO filed a position statement providing additional information, denying the allegations, and arguing that the charge should be dismissed for probable cause.
Between October 2014 and June 2015, the EEOC issued three Requests for Information to BDO, seeking details related to Bower’s individual and class-wide claims. Although BDO filed another position statement in December 2014 that outlined BDO’s investigation policy and rejected Bower’s allegations that the company blocked her attempts to investigate discrimination claims, it objected to providing other information it believed was “‘far beyond the scope of Bower’s individual charge,’” and also alleged that the EEOC was eliciting (and Bower was revealing) attorney-client privileged communications between Bower and BDO’s in-house and outside counsel. In June 2015, BDO stated it could not provide any additional information until the matter was “‘transferred to a new investigator who ha[d] not been tainted by reviewing, or eliciting privileged information.’”
On July 14, 2015, the EEOC issued a subpoena to BDO. In response, BDO provided some, but not all, of the requested information and submitted a 278-entry privilege log listing documents that had been withheld on the grounds of attorney-client privilege. The entries referenced the withheld documents as “confidential” emails, memoranda, and other documents, and included communications between (i) Bower and in-house and outside counsel; (ii) other BDO employees and in-house and outside counsel; (iii) non-attorney employees with counsel courtesy copied; and (iv) non-attorney employees regarding legal advice, but not including any attorneys.
On December 10, 2015, the EEOC filed a subpoena enforcement action in the United States District Court for the Southern District of Texas (the “District Court”). The EEOC alleged that the privilege log contained various deficiencies, including entries lacking sufficient detail and specificity; entries that were incomplete; and entries that appeared to reference communications that were not exchanged with or copied to an attorney, or appeared only to courtesy copy counsel. BDO responded with a request for a protective order enjoining the EEOC from questioning Bower and BDO employees regarding conversations with counsel and requiring the EEOC to return or destroy evidence of witness interviews and other documents that memorialized any privileged conversations.
The Magistrate Judge presiding over the show cause hearing rejected the EEOC’s position that the communications BDO withheld were not protected, specifically stating that the EEOC had not “‘made a sufficient showing’” that the privilege log reflected “‘an improperly claimed privilege.’” Denying both the EEOC’s request to enforce the subpoena and for an in camera review of the documents, the Magistrate Judge stated: “‘I am not going to look through 278 documents. I decline to do that. The privilege log seems adequate.’” The Magistrate Judge granted BDO the protective relief it requested, stating that it was “‘not Ms. Bower’s job to decide what’s attorney-client [privilege]’” and that “‘anything that comes out of [BDO’s] lawyer’s mouth is legal advice.’”
The EEOC filed objections to the Magistrate Judge’s order, submitting a declaration from Bower attesting that many of the communications she exchanged with BDO’s counsel were for the purpose of seeking or imparting business advice (not legal advice) regarding officer investigations and how to carry out her HR duties. Bower also alleged that she had been required by BDO to forward to or courtesy copy in-house counsel on virtually all communications pertaining to employee investigations and to include a false designation in HR-related emails that they were prepared at the request of legal counsel. BDO responded that the EEOC’s objections should be overruled and the District Court did not have discretion to consider Bower’s declaration.
The District Court summarily affirmed the Magistrate Judge’s Order. The EEOC appealed, requesting that (i) the question of whether the attorney-client privilege applied to the documents listed on BDO’s privilege log be remanded to the District Court, and (ii) the protective order be reversed and remanded.
As to the first issue, whether the District Court erred when it accepted BDO’s claim of attorney-client privilege based on the privilege log, the Fifth Circuit held that it was BDO’s burden, not Bower’s, to establish, through its privilege log, a prima facie showing of attorney-client privilege. The Fifth Circuit concluded that BDO’s privilege log in its current form was insufficient to serve its purpose given the factual nature of the case; the HR context in which it took place; and the nature of Bower’s allegations.
The Fifth Circuit identified three types of deficiencies that prevented the court from determining whether the privilege should be applied: (i) entries that were vague and/or incomplete; (ii) entries that failed to distinguish between legal advice and business advice; and (iii) entries that failed to establish that the communications were made in confidence and that confidentiality was not breached. Thus, the Fifth Circuit held that BDO did not prove its prima facie case of attorney-client privilege as to all of the log entries, noting that the attorney-client privilege is the exception to Rule 26’s broad disclosure requirements for relevant information and that it must therefore be applied narrowly and with particularity.
After vacating the District Court’s judgment and remanding for a determination applying correct legal standards, the Fifth Circuit, while acknowledging it was within the District Court’s discretion how to proceed on remand, noted that in camera review will likely be necessary given the facts and circumstances of the case.
Regarding the second issue, the EEOC argued that the Magistrate Judge’s decision to grant the protective order was grounded in the same legal error as the order denying the EEOC’s application for subpoena enforcement, an overly-broad definition of the attorney-client privilege. The Fifth Circuit agreed, citing to certain statements made by the Magistrate Judge, including the following comment: “‘I’m telling you that if it’s communications from or to an attorney, it’s privileged.’” The Fifth Circuit noted that it was remanding so that the District Court could consider BDO’s request under the proper attorney-client privilege standard, but it was not holding that a protective order was unwarranted.
Salas v. GE Oil & Gas, 857 F.3d 278 (5th Cir. 2017).
When Gaspar Salas accepted employment at Dressor, Inc. (“Dressor”), the predecessor to GE Oil & Gas (“GE”), he agreed to arbitrate all disputes with Dressor. After GE acquired Dresser, GE introduced its own arbitration resolution program, and GE advised Salas that if he continued to work at GE past November 1, 2013, he would agree to participate and abide by the arbitration program. Although Salas continued to work past this date, he later brought suit in the District Court for the Southern District of Texas (“District Court”) against GE for discrimination and retaliation in violation of Title VII. After GE moved to compel arbitration, the District Court granted GE’s motion and dismissed Salas’s claims without prejudice.
The parties did not move forward with arbitration, each party blaming the other for the delay. Salas filed a motion in the District Court to compel arbitration. GE opposed the motion as redundant. After a telephone conference on the motion, the District Court issued an order reopening the case; withdrawing its earlier order compelling arbitration; and noting in the order that the parties had failed to arbitrate (the “Order”). After the court denied GE’s motion for reconsideration, GE appealed.
On appeal, Salas and GE contested (i) whether the District Court had subject matter jurisdiction to issue its Order withdrawing the earlier order to compel arbitration, and (ii) whether the Fifth Circuit had jurisdiction over the Order.
The Fifth Circuit addressed appellate jurisdiction first, agreeing with GE that it had appellate jurisdiction under the Federal Arbitration Act (“FAA”), which permits an appeal from an order “‘denying an application [] to compel arbitration.’” (quoting 9 U.S.C. § 16(a)(1)(C)). Although the Court’s Order, issued after a telephone conference on Salas’s motion to compel arbitration, did not specifically mention Salas’s motion, the Order withdrew the District Court’s prior order granting GE’s motion to compel arbitration and reopened the case. Accordingly, the Fifth Circuit held it had appellate jurisdiction to review the Order effectively denying GE’s motion to compel arbitration.
GE additionally argued that the District Court lacked subject matter jurisdiction to reopen the case because it had already fully dismissed the case, and, thus could no longer exercise jurisdiction other than to enforce an arbitration award. In response, Salas argued that GE waived its right to arbitration.
Acknowledging that it had already held that a District Court may retain ancillary jurisdiction (beyond merely enforcing the arbitration award) even after compelling arbitration and dismissing the case, the Fifth Circuit concluded that “the fact that the district court [had already] fully dismissed [the] case [was] not necessarily fatal to the court’s exercise of jurisdiction.”
The Fifth Circuit, noted, however, that the FAA limits “‘jurisdiction by the courts to intervene into the arbitral process prior to the issuance of an award.’” (quoting Gulf Guar. Life Ins. v. Conn. Gen. Life Ins., 304 F.3d 476, 486 (5th Cir. 2002)). Accordingly, even if some default occurs in the arbitration process, a court may not intervene “‘beyond the determination as to whether an agreement to arbitrate exists and enforcement of that agreement.’” (quoting Gulf Guar., 304 F.3d at 487). The Fifth Circuit held that the District Court’s Order did not fall within the narrow scope of this ancillary jurisdiction because it neither determined whether the parties’ agreement to arbitrate was valid nor enforced that agreement. According to the Fifth Circuit, the District Court’s determination that the parties had “failed” to arbitrate and withdrawal of its prior order compelling arbitration was not permitted under the FAA.
Although the Fifth Circuit agreed that Salas’s argument that GE had waived its right to arbitration did relate to whether an agreement to arbitrate existed, the District Court had failed to address that issue. In any event, the Fifth Circuit concluded that Salas’s argument was meritless because GE had not invoked the judicial process in the case, and, therefore, had not waived its right to arbitration.
In summation, the Fifth Circuit concluded that the District Court lacked jurisdiction to withdraw its order compelling arbitration and reopening the case. The Fifth Circuit vacated the District Court’s Order reopening the case and instructed that the District Court’s jurisdiction on remand was limited to (i) determining whether an agreement to arbitrate still exists and (ii) enforcing that agreement.
EEOC v. EmCare, Inc., 857 F.3d 678 (5th Cir. 2017).
After a six-day trial, a jury found that EmCare, Inc. (“EmCare”) terminated three employees, Luke Trahan, Yvonne Shaw, and Gloria Stokes, in retaliation for complaining of sexual harassment arising from frequent and persistent sexual remarks and gestures of Jim McKinney, the CEO of Anesthesia Care, which had recently been acquired by EmCare. The District Court for the Northern District of Texas (“District Court”) denied EmCare’s renewed motion for judgment as a matter of law and motion for a new trial. Having settled with plaintiffs Shaw and Stokes, EmCare appealed the jury award of $167,000 in back pay for Trahan.
Trahan worked for EmCare’s AnesthesiaCare division from November 2008 through August 7, 2009. Although he was hired as a physician recruiter, Trahan was quickly promoted to recruiting manager heading the credentials and billing enrollment teams. For the first few months of his employment, Trahan was supervised by Jim McKinney. Later, in April 2009, EmCare’s COO, Sean Richardson, became Trahan’s supervisor.
At trial, numerous witnesses testified that McKinney constantly commented on women’s bodies, made groping gestures, sought intimate hugs, and made inappropriate comments about his employees’ wives. Plaintiffs Trahan and Shaw testified that Karen Thornton, EmCare’s vice president for human relations and head of AnesthesiaCare’s human resources office, and Lewis Johnson, AnesthesiaCare’s HR manager, were occasionally present for McKinney’s comments but never reprimanded McKinney. Additionally, all three plaintiffs, Trahan, Shaw, and Stokes, testified that they had complained to Thornton and/or Johnson about McKinney’s behavior, but they never heard of any investigative or remedial action taken by EmCare. Trahan also testified that every time he complained to HR about McKinney, McKinney “would tell him shortly thereafter that he ‘needed to shape up and do things better’” but would not point out any deficiencies when Trahan asked for specifics.
In June 2009, AnesthesiaCare hosted a Bring Your Child to Work Day (“BYCTW Day”). Plaintiff Shaw, a senior credentialing coordinator, testified that when she introduced her daughter to McKinney, he stated: “‘[T]here is no way she is 15 with breasts like that.’” Shaw, accompanied by Trahan and another employee, Ken Thomas, complained to HR. Johnson, AnesthesiaCare’s HR manager, told them to submit a formal complaint, which Trahan did that day.
In July, Thornton, EmCare’s vice president for human relations and head of AnesthesiaCare’s human resources office, suggested that Trahan’s and Shaw’s units be audited. The audit report regarding Trahan’s performance was essentially positive, particularly as it compared to another recruiter who did not get fired, and Trahan never received any feedback from his superiors about the audit.
On August 7, 2009, six weeks after BYCTW Day and four days after the audit report, EmCare fired all three employees who had complained on BYCTW Day: Trahan, Shaw, and Thompson.
Trahan was told he was being terminated during a meeting with Richardson and Thornton. Richardson testified that it was his decision to terminate Trahan, but acknowledged that he discussed the decision with both Thornton and McKinney beforehand. Thornton entered Trahan’s termination into the computer database, which she only did when there was a “‘backlog or if [she] was personally involved in the transaction.’”
After the EEOC filed suit in District Court, EmCare did not seek dismissal or summary judgment, but proceeded to the six-day jury trial which resulted in the jury award of $167,000 in back pay for Trahan.
On appeal of the judgment in favor of Trahan, EmCare argued that the EEOC failed to present sufficient evidence of a causal link between Trahan’s protected activity and termination because there was no evidence Richardson, the individual who testified he decided to terminate Trahan, was aware of Trahan’s protected activity (his complaints about McKinney). As outlined by the Fifth Circuit, EmCare advanced two claims on appeal: (i) there was no evidence that Richardson knew about Trahan’s complaints and (iii) there was no evidence that anyone other than Richardson decided to fire Trahan.
Citing Thomas v. Tex Dep’t of Criminal Justice, 220 F.3d, 389, 394 (5th Cir. 2000), the Fifth Circuit reiterated that a plaintiff bringing a retaliation claim must establish (i) he engaged in activity protected by Title VII; (ii) the employer took adverse employment action against the him; and (iii) a causal connection exists between that protected activity and the adverse employment action. Since EmCare acknowledged that Trahan engaged in protected activity and was terminated, the only issue on appeal was whether the EEOC presented legally sufficient evidence of a causal link between Trahan’s complaints and his termination.
The Fifth Circuit specifically rejected EmCare’s contention that any evidence of Richardson’s knowledge was mere speculation, determining, as an initial matter, that there was an abundance of conflicting testimony over critical issues, entitling the jury to discredit Richard’s and Thornton’s version of events. The Fifth Circuit cited the following conflicting accounts as examples: whether Thornton and Richardson ever personally observed McKinney make sexually offensive comments; whether Trahan and Shaw ever complained to HR about McKinney’s behavior; and whether the audit of Trahan’s unit produced any legitimate grounds to fire him.
Accordingly, the Fifth Circuit determined that the jury was entitled to find that Richardson and Thornton had both witnessed inappropriate behavior in the workplace and taken no action; that Trahan and other employees complained to HR numerous times; and that the justification for firing Trahan was pretextual. The Fifth Circuit also noted that the jury could have logically inferred that since Richardson and Thornton had discussed Trahan’s performance before and after the audit, the jury could have logically inferred that Thornton told Richardson about Trahan’s complaints. In light of the contradictory statements, as well as the circumstances surrounding Trahan’s termination, the Fifth Circuit held that the evidence was sufficient for the jury to find that Richard was, in fact, aware of Trahan’s complaints.
The Fifth Circuit also determined there was sufficient evidence for the jury to find that both Richardson and Thornton made the decision to fire Trahan, noting that the audit used to justify Trahan’s firing was Thornton’s idea to perform shortly after the complaints made by Trahan and others regarding McKinney’s comment on BYCTW Day. Additionally, Thornton was present when Trahan was fired and was the person who entered his termination into the system. The Fifth Circuit therefore concluded that “[a]ny inference by the jury that Thornton was a decisionmaker or caused the decision to be made would not have been speculative.”
Because the jury could have logically inferred either that Richardson knew of Trahan’s complaints or that Thornton was involved in the decision to fire Trahan, the Fifth Circuit held that the EEOC presented sufficient evidence of causation and affirmed the jury verdict in favor of the EEOC and awarding Trahan back-pay damages.
Renegade Swish, L.L.C. v. Wright, 857 F.3d 692 (5th Cir. 2017).
Renegade Swish, L. L.C. (“Renegade Swish”) employed Emily Wright between 2012 and 2015. In June 2015, Renegade Swish sued Wright in state court for breach of employment agreement-related claims. Wright counterclaimed based on unpaid bonuses and violations of the Fair Labor Standards Act (“FLSA”). Soon after, Renegade Swish nonsuited its claims without prejudice and moved to realign the parties in the state court.
Before the state court decided the motion to realign, Renegade Swish noticed its removal to the District Court for the Northern District of Texas (“District Court”), asserting that removal was proper because civil claims pending in the lawsuit raised a federal question. Renegade Swish argued that its removal was proper under Sadeghian v. City of Aubrey, Texas, 2001 WL 215931 (N.D. Tex. Mar. 1. 2001) because the case “‘illustrates that removal by a counter-defendant, after non-suiting its initial claim is proper when the counterclaim asserted raises a federal question.’” Renegade Swish also requested that the parties be realigned in its notice of removal, and, after removal, formally moved the District Court to realign the parties.
Citing the Supreme Court case Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002), Wright moved for remand and attorney’s fees, arguing that Renegade Swish “‘lacked an objectively reasonable basis for seeking removal’” and requested costs pursuant to 28 U.S.C. § 1447(c). As the Fifth Circuit noted later in its opinion, the Supreme Court, in Holmes, had already rejected the argument that a counterclaim could provide the basis for “arising under” jurisdiction because “‘[a]llowing a counterclaim to establish ‘arising under’ jurisdiction would . . . contravene the longstanding policies underlying our precedents.’” (quoting Holmes, 535 U.S. at 831).
Rejecting Renegade Swish’s argument that it was the “functional defendant,” the District Court denied Renegade Swish’s motion to realign; granted Wright’s motion to remand, and awarded Wright costs and attorney’s fees. The District Court, citing Holmes, concluded that “‘Wright’s FLSA counterclaim against Renegade Swish cannot serve as the basis for federal-question jurisdiction,’” noting that Holmes effectively overruled Sadeghian.
In moving for partial reconsideration, Renegade Swish did not challenge the remand order, but did seek reconsideration of the award of costs and attorney’s fees, arguing that it had an “objectively reasonable” basis to remove because (i) there was a split in district court authority; (ii) Holmes did not definitively resolve the conflict; and (iii) there were no credible allegations of forum shopping or increased litigation costs.
In a one-page order, the District Court granted Renegade Swish’s motion to reconsider, reasoning that “‘in light of the split of district-court authority as to whether removal under the circumstances involved in this case was proper, Renegade Swish had an objectively reasonable basis for attempting to remove [the] action from state court.’” The District Court also noted that to the extent that it had concluded that Holmes had effectively overruled Sadeghian, it believed that it may have “‘painted with too broad a brush,’” and, thus, vacated the portion of its previous order assessing costs and attorney’s fees against Renegade Swish. Wright appealed.
On appeal, the only question presented to the Fifth Circuit was whether Renegade Swish had an “objectively reasonable” basis for removal such that awarding fees to Wright was improper. Although Wright did not dispute the Fifth Circuit’s determination that the standard for reviewing the District Court’s decision not to award costs and attorney’s fees was for abuse of discretion, Wright argued that de novo review was appropriate because she appealed an order decided pursuant to Rule 59(e) on a point of law. While noting that there was both some merit to Wright’s argument and some uncertainty in its doctrine regarding the standard of review on the objective reasonableness of removal, it concluded there was no need to resolve that uncertainty because even assuming arguendo that its review was for abuse of discretion (a deferential standard that favored Renegade Swish), Renegade Swish lacked an objectively reasonable basis to remove.
In support of its decision, the Fifth Circuit noted that when Renegade Swish removed the case in September 2015, the Supreme Court had established that a defendant’s counterclaim could not furnish federal-question jurisdiction. After its discussion of Holmes, the Fifth Circuit noted that the Supreme Court had reaffirmed the principles stated therein in Vaden v. Discover Bank, 556 U.S. 49 (2009), which held that there was no federal-question jurisdiction when a plaintiff’s claims were based on state law and a defendant’s counterclaims were preempted by federal law. Noting that its own jurisprudence was in agreement with the Supreme Court cases, the Fifth Circuit held that “[i]n the face of such precedent Renegade Swish lacked an objectively reasonable basis to seek removal.”
The Fifth Circuit also rejected Renegade Swish’s district court split argument because Renegade Swish had not identified an actual district court split as to whether removal is proper on the basis of federal counterclaims after a plaintiff nonsuits its claims. Further, the Fifth Circuit noted that the case relied upon by Renegade Swish, Sadeghian, predated Holmes and Vaden, which effectively overruled the decision.
Holding that Renegade Swift did not have an objectively reasonable basis for removal, the Fifth Circuit vacated that part of the order and remanded for consideration as to whether costs and attorney’s fees were warranted.
Coker v. Whittington, ___ F.3d ___, 2017 WL 2240300 (5th Cir. May 23, 2017).
In Coker v. Whittington, two former deputies sued the Bossier Parish Sheriff’s Office and the Sheriff and Deputy Sheriff in their personal and official capacities in the District Court for the Western District of Louisiana (the “District Court”) on the grounds that their removal from their deputy positions for moving in with each other’s wife before divorcing their current wives violated their First Amendment right to associate. In addition to damages, the deputies sought reinstatement to their prior positions.
As noted by the Fifth Circuit, the material facts presented on summary judgment were undisputed. When the Deputy Sheriff learned in late October 2014 that the deputies had each taken up residence in the other’s house, exchanging spouses without having divorced their current wives, they were placed on administrative leave for violating the Sheriff’s Code of Conduct, which includes the following standards:
Conduct yourselves at all times in such a manner as to reflect the high standards of the Bossier Sheriff’s Office . . . [and] Do not engage in any illegal, immoral, or indecent conduct, nor engage in any legitimate act which, when performed in view of the public, would reflect unfavorabl[y] upon the Bossier Sheriff’s Office.
The deputies had also violated a provision that required them to inform their direct supervisors within 24 hours of a change of address.
The deputies were informed that each must cease living with a woman not his spouse, and, if they refused to do so by November 24, 2014, then they would be considered to have terminated their employment voluntarily. The deadline passed, their living situations did not change, and they filed suit shortly thereafter.
The District Court granted the defendants’ motion for summary judgment holding that the Code of Conduct policies invoked against the deputies were supported by the rational grounds of preserving a cohesive police force and upholding the public trust and reputation of the Sheriff’s Department. The Fifth Circuit agreed, noting that there are no decisions to the contrary suggesting that deputies, as public employees of law enforcement agencies, have constitutional rights to “associate” with each other’s spouses before formal divorce. The Fifth Circuit also distinguished Lawrence v. Texas, 539 U.S. 558 (2003), which expanded substantive constitutional rights related to personal sexual choices, because it did not mandate a change in policies relevant to public employment, where it was more recently reaffirmed that public employees necessarily shed some of their constitutional rights as a legitimate exchange for the privilege of their positions. (citing Garcetti v. Ceballos, 547 U.S. 410, 426 (2006)).
The Fifth Circuit also agreed with the District Court’s conclusion that the Code of Conduct was not unconstitutionally vague as written or enforced because it did not offend the fair notice requirements of due process, especially with regard to discipline that was not itself unconstitutional.
Accordingly, the Fifth Circuit affirmed the District Court’s decision to grant summary judgment in defendants’ favor, finding no reversible error of fact or law and further noting that the involvement of law enforcement officers “in relations that openly and ‘notoriously’ violate the legally sanctioned relationships of marriage and family is likely to besmirch the reputation of the Sheriff’s Department and hinder its ability to maintain public credibility.”
The Fifth Circuit also rejected any notion that the Supreme Court’s recent decision in Obergefell v. Hodges altered applicable law, noting that the case is “expressly premised on the unique and special bond created by the formal marital relationship and children of that relationship” and “does not create ‘rights’ based on relationships that mock marriage, and no court has so held.”
As an aside, the Fifth Circuit noted that even if such rights in favor of the deputies had existed (which they did not), the Chief Deputy and Sheriff would have qualified immunity in their individual capacities because “‘no clearly established law’” prevented warning the deputies that the consequences of their personal relationships would be dismissal from the force.
Dewan v. M-I, L.L.C., ___ F.3d ___, 2017 WL 2324703 (5th Cir. May 30, 2017).
In a putative class-action, two oilfield workers, plaintiffs Mathew Dewan and William Casey, sued their former employer, defendant M-I, L.L.C (“M-I”), for unpaid wages in violation of the Fair Labor Standards Act (“FLSA”). The District Court for the Southern District of Texas (the “District Court”) granted M-I’s motion for summary judgment on the grounds that plaintiffs fell within the FLSA’s administrative exemption, and plaintiffs timely appealed.
M-I is an oilfield service company specializing in engineering drilling-fluid systems and additives designed to improve performance for oil and gas well drilling operations. M-I had employed plaintiffs as Drilling Fluid Specialists or “mud engineers.” M-I employees in this position work at customer locations to manage the drilling-fluid system and interact directly with the customers by providing advice and other support. A mud engineer works to ensure the properties of the drilling fluid, also known as drilling mud, are within designed specifications as set forth in the mud plan, which is created by a project engineer at M-I’s headquarters and is based on historical drilling in the area. To ensure the drilling mud is performing adequately and within its designated parameters, mud engineers test the mud and make recommendations regarding proposed changes, which, according to plaintiff Dewan, were largely accepted without further inquiry. Plaintiffs were typically the only M-I employees or mud engineers on site.
For the administrative exemption to apply, the employee must be one (i) who is “[c]ompensated on a salary or fee basis at a rate of not less than $455 per week;” (ii) “[w]hose primary duty is the performance of office or non-manual work directly related the management or general business operations of the employer or the employer’s customers;” and (iii) “[w]hose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200. There was no dispute that compensation was met with respect to the plaintiffs, but, according to the Fifth Circuit, the second and third factors required “a fact-finder to analyze the facts to determine the employee’s primary duty, how the work directly relates to certain parts of the employer’s business, and whether the duty involves some discretion and independence.”
In deciding to reverse the District Court’s granting of summary judgment in M-I’s favor on the administrative exemption, the Fifth Circuit emphasized that factual issues regarding the second and third factors of the exemption could not “be resolved without making inferences from the evidence that are subject to genuine dispute” and that “[t]hose interpretations cannot be said on [the] record to be resolvable on summary judgment.” The Fifth Circuit then proceeded to address each factor individually to demonstrate the extent of fact-finding still needed on remand.
With respect to the second factor, whether the plaintiff’s “primary duty” is work “directly related” to the “management or general business operations of the employer or the employer’s customers,” the Fifth Circuit focused on definitions and examples provided by the regulations, including the fact that “[e]xamples of work ‘directly related to management or general business operations’ include such functional areas as human resources, marketing, quality control, and safety and health.” (citing 29 C.F.R. § 541.201(b)). The Fifth Circuit also emphasized that under its prior jurisprudence, “the relevant distinction ‘is between those employees whose primary duty is administering the business affairs of the enterprise [and] those whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.’” (quoting Dalheim v. KDFW-TV, 918 F.2d 1220, 1230 (5th Cir. 1990)).
Under this framework, the Fifth Circuit noted that evidence regarding the work performed by plaintiffs could be interpreted differently from the District Court’s conclusion that such work was “directly related” to M-I’s “management or general business operations.” Specifically, the Fifth Circuit noted that “[s]upplying the drilling-fluid systems seems more related to producing the commodities than the administrating of M-I’s business” and that “[m]ud engineers . . . neither assured compliance with health and safety standards nor engaged in tasks likely to qualify as the ‘general administrative work applicable to the running of any business.’” (citing Davis v. J.P. Morgan Chase & Co., 587 F.3d 529, 535 (2d Cir. 2009)).
As to the third factor, whether the employee’s primary duty includes “exercise of discretion and independent judgment with respect to matters of significance,” the Fifth Circuit noted that while the District Court determined that both plaintiffs acted with limited supervision and made independent choices, a reasonable jury could give weight to the plaintiffs’ testimony that they didn’t have authority to change what was in the mud program but could simply make recommendations and receive approval to make changes. Although the Fifth Circuit recognized that recommendations for change and occasional review by higher-level employees does not prevent a finding that discretion and independent judgment are being exercised, the Fifth Circuit concluded that the “limited factual record” could reasonably be interpreted to provide two different understandings of the scope of the plaintiffs’ discretionary authority and independent judgment, and that the ultimate determination should be made by the jury.
Noting that “[w]hen summary judgment is sought on an affirmative defense . . . , the movant ‘must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor,’” the Fifth Circuit reversed the District Court’s order granting summary judgment on the grounds that “[h]owever close the determination may be, M-I has not established its affirmative defense beyond peradventure.” (citations omitted).
Submitted by:
Jennifer McNamara
Seventh Circuit
Brown v. Milwaukee Bd. of Sch. Dirs., 855 F.3d 818 (7th Cir. 2017).
Sherlyn Brown was an Assistant Principal with Milwaukee Public Schools. In 2006, she began experiencing knee pain due to severe arthritis, and her doctor recommended that Brown be reassigned to a position with limited mobility requirements. Although Brown’s position as Assistant Principal ordinarily involved breaking up fights and physically intervening with students, as part of its effort to accommodate Brown, the school district excused her from these responsibilities.
Despite these measures, in 2009, shortly after a knee replacement surgery, Brown severely injured her knee while restraining an unruly student. After another surgery and a dialogue regarding Brown’s limitations, her doctor informed the school district that Brown “should not be in the vicinity of potentially unruly students” and that this restriction would be in place for at least three years. The school district’s employment specialist therefore informed Brown that she could not continue serving as Assistant Principal—a position that required her to interact with students—and worked with Brown to identify a suitable alternative position.
The school district understood Brown’s restrictions to require that she avoid direct contact with students. As Circuit Judge David Hamilton, writing for the three-judge panel, noted, “[e]ssentially all students are potentially unruly.” The court found that the school district “was always clear about its understanding of her restriction” and that Brown “never challenged that understanding.” On several occasions, the school district’s employment specialist sought to clarify Brown’s restrictions and either “did not receive any [clarification] or was again told that she could not be near students.”
This restriction severely limited the school district’s ability to reassign Brown to a suitable position. Of the five positions Brown requested, four required direct student contact—which the school district believed exceeded Brown’s limitations. The fifth position, which did not require direct student contact, would have come with a significant pay raise and greater responsibilities. The school district asserted, and Brown did not contest, that Brown was not the most qualified applicant for this position.
When Brown’s three-year leave expired, the school district—having concluded that Brown could not perform the essential functions of any vacant positions for which she was qualified—terminated her employment. Brown sued, alleging that the school district had violated the ADA by refusing to accommodate her disability and then terminating her.
On appeal, the Seventh Circuit affirmed the district court’s summary judgment in favor of the employer. The court held that the school district is not liable under the ADA for failing to assign Brown to a position that would violate her work restrictions.
Furthermore, the court continued, the school district was not required to promote Brown in order to satisfy its obligations under the ADA. This statement has significance, for the court did not analyze whether the employee was qualified for the higher-level position; instead, it treated disparity between Brown’s original position and the higher-level position as proof that the promotion was not a reasonable accommodation.
However, the court concluded on a cautionary note, “This is an unusual case, and our holding is correspondingly narrow.” The court noted three circumstances in which the case may have come out differently: if the school district—rather than Brown’s doctor—had determined that she could not interact with students; if the school district had failed to adequately communicate its interpretation of Brown’s restrictions; or if the school district had failed to request clarification of Brown’s restrictions. However, where—as here—the employer’s effort to engage in the interactive process is thwarted by the employee’s failure to “hold up her end” of that process, the employer is not liable under the ADA.
Vega v. New Forest Home Cemetery, LLC, 856 F.3d 1130 (7th Cir. 2017).
Plaintiff brought claims against his former employer under the FLSA, asserting pendent state law claims for violation of the Illinois Wage Payment and Collection Act and for breach of contract. Plaintiff alleged that he was owed compensation for roughly 54 hours of work he performed in the two weeks prior to his termination and that his employer did not tender a final paycheck for those wages.
Writing for the three-judge panel, Circuit Judge Ilana Rovner reversed the district court’s summary judgment in favor of the employer. The decision emphasized that Plaintiff’s statutory rights are distinct from the contractual rights he possesses under the CBA and must be analyzed separately when determining whether he may enforce them in court.
Judge Rovner noted that if Plaintiff’s claim had relied on a substantive right under the CBA, there is “no question” that he would have had to exhaust his contractual remedies (or prove an exception to exhaustion) before seeking relief in court. However, because the claim rested on a statutory right, the CBA’s grievance provisions would apply only if the agreement contained language that clearly and unmistakably required him to resolve the statutory claims in the matter required by the CBA.
Analyzing the language of the CBA, the court found that the agreement did not contain clear and unmistakable language that required Plaintiff to resolve his FLSA claim via its grievance procedure. The court noted that the grievance procedures could be read to apply only to claims arising out of the CBA itself, especially given the fact that the agreement did not reference the FLSA and contained only one fleeting reference to another federal statute. As a result, the court concluded, Plaintiff did not have to exhaust his contractual remedies before suing to enforce his rights under the FLSA.
Whitaker v. Kenosha Unified Sch. Dist., ___ F.3d ___, 2017 U.S. App. LEXIS 9362 (7th Cir. May 30, 2017).
The case was brought by a transgender student, Ashton Whitaker (Ash), against Kenosha Unified School District and its superintendent. The plaintiff alleged that the school district’s unwritten bathroom policy—which requires students to use the bathroom of the sex that is marked on their birth certificates—violates Title IX of the Education Amendments Act of 1972 and the Fourteenth Amendment’s Equal Protection Clause. The district court denied the school district’s motion to dismiss and granted Ash’s preliminary injunction motion, and the school district appealed. While the case arises under Title IX, the court noted that it “has looked to Title VII when construing Title IX,” and the decision contains extensive analysis of the court’s sex stereotyping jurisprudence under Title VII. Because the decision clarifies the Circuit’s stance on whether transgender discrimination is cognizable under Title VII, Ash’s Title IX claim (though not his Equal Protection claim) is reviewed below. (It is important to note that because the court was reviewing the grant of a preliminary injunction, it did not decide Ash’s case on the merits: instead, the court addressed whether Ash is likely to prevail on the merits of his claim.) Ashton Whitaker is a transgender boy entering his senior year at George Nelson Tremper High School in the Kenosha Unified School District. While his birth certificate designates him “female,” he has openly identified as a boy since the 2013-2014 school year. His suit alleges that the school district’s bathroom policy—which requires that Ash use either the girls’ restrooms or one of the three gender-neutral bathroom—is impermissible sex discrimination under Title IX. Chief Judge Diane Wood, writing for the three-judge panel, began by analyzing the plain language of the statute. The court determined that because Title IX does not contain the term “biological” and does not define “sex” in either the statute or the regulations, the plain language of Title IX does not resolve Ash’s claim. The court therefore turned to Supreme Court and Seventh Circuit case law to interpret the meaning of the term. The court held that Seventh Circuit case law does not pose a barrier to Ash’s Title IX claim. At the outset, Judge Wood declined to follow Ulane v. Eastern Airlines, Inc., 742 F.2d 1081 (7th Cir. 1984), in which the Seventh Circuit narrowly interpreted the term “sex” in Title VII in a way that “exclude[d] transsexuals” from its aegis. The court held that the reasoning in Ulane does not foreclose Ash and other transgender plaintiffs from bringing claims based on the theory of sex-stereotyping articulated in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), which the Supreme Court did not decide until four years after Ulane. The court explained that the Supreme Court’s decision in Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998), provided additional support for “an expansive view of Title VII,” one that encompasses the sex-stereotyping theory articulated in Price Waterhouse. As evidence of the vitality of the sex-stereotyping theory, the court cited a number of post-Price Waterhouse decisions in the Circuit courts, each of which recognized the validity of sex-stereotyping claims under Title VII. Finally, the court referenced its recent decision Hiveley v. Ivy Tech Cmty. Coll. of Ind., 853 F.3d 339 (7th Cir. 2017), in which the Seventh Circuit, sitting en banc, held that a homosexual plaintiff can state a Title VII claim of sex discrimination based on a sex-stereotyping theory.
The court then evaluated whether the plaintiff, Ashton Whitaker, may be able to successfully posit a sex-stereotyping claim. The court concluded that he could, suggesting that on a practical level, discrimination against transgender individuals is sex-stereotyping, since “[b]y definition, a transgender individual does not conform to the sex-based stereotypes of the sex that he or she was assigned at birth.” As support, the court cited decisions from the Eleventh and Sixth Circuits—and six district courts—that permitted a transgender plaintiff to sustain a claim under Title VII by asserting a sex-stereotyping theory. The court also noted that the First Circuit and the Ninth Circuit have recognized sex-stereotyping claims by transgender plaintiffs under other federal statutes.
The court noted that although Congress has had the opportunity to amend Title IX to include transgender status as a protected characteristic, it has not done so. Nevertheless, as in Hiveley, the court declined to draw any inference about Congress’s intent based on its failure or refusal to amend the relevant statute, concluding, “Congressional inaction is not determinative.”
The court rejected the school district’s argument that “requiring a biological female to use the women’s bathroom is not sex-stereotyping” as “too narrow.” The decision suggests that this type of bathroom policy inherently runs afoul of Title IX because “[a] policy that requires an individual to use a bathroom that does not conform with his or her gender identity punishes that individual for his or her gender non-conformance, which in turn violates Title IX.” The court also held that “[p]roviding a gender-neutral alternative is not sufficient to relieve the School District from liability, as it is the policy itself that violates the act.” While the court later analyzed the facts specific to Ashton’s claim, that analysis was not necessary to its holding.
The court thus announced a doctrinal, rather than fact-intensive, approach to the question of whether discrimination against the transgender plaintiff was discrimination on the basis of sex. By incorporating an extensive analysis of Title VII jurisprudence and foregoing an analysis of the differing language between Title VII and Title IX, the court implied that its approach would be consistent between the two statutes.
Submitted by:
Haley Madel
Eighth Circuit
Williams v. Tucker, 857 F.3d 765 (8th Cir. 2017).
Linda Jenkins worked two part-time positions for Macon County Missouri: road deputy and courthouse bailiff. In 2003, the County hired Jenkins as a full time bailiff, making Jenkins eligible for health coverage and other employee benefits. In 2011, Frederick Tucker ran against Phillip Prewitt in a campaign for circuit judge. Jenkins placed a campaign yard sign on her property to support Prewitt in the election. After Tucker won the election, he allegedly told Jenkins that he “want[ed] somebody that supports [him]” working in the courthouse. Tucker approved a series of budgetary changes for the court that required Jenkins to leave her full time bailiff position. Jenkins could either work as a part-time bailiff, a full-time road deputy, or retire. Jenkins chose to work as a part-time bailiff, causing her to lose her health insurance coverage, as well as social security and retirement benefits.
Jenkins sued Tucker and the county sheriff under 42 U.S.C. § 1983, alleging that they retaliated against her for supporting Prewitt in the circuit judge election. Both defendants moved for summary judgement on the basis of qualified immunity. The district court granted summary judgment for the sheriff, but denied summary judgment for Tucker on the basis that his post-election statement to Jenkins about wanting “somebody who supports [him]” was direct evidence of a retaliatory motive. Tucker appealed.
State officials are entitled to summary judgment on the basis of qualified immunity, unless the facts show a violation of a clearly established constitutional right. A prima facie case of retaliation requires a plaintiff to show that (1) she engaged in protected activity; (2) she suffered an adverse employment action; and (3) there was a causal connection between the protected activity and the adverse employment action. Because the parties did not dispute that Jenkins engaged in protected activity, the judgment turned on whether Jenkins suffered an adverse employment action. Jenkins argued that an adverse employment action occurred when the County required her to choose from three undesirable employment options (part-time work as a bailiff, full-time work as a road deputy, or retirement), all of which would materially change the terms of her original employment as a full-time bailiff. Tucker, however, argued that Jenkins had the option to serve as a full-time road deputy, which would constitute a lateral transfer with no material change to her employment. The 8th Circuit rejected Tucker’s argument, finding that the road deputy position was not purely lateral, because it was a less prestigious position and required major changes to Jenkins’ working conditions.
The Court also rejected Tucker’s argument that any adverse employment action was not connected to Jenkins’ protected activity. Tucker contended that there was no link between him and the adverse action, because the city commissioners had independent decision making authority over the budget that determined Jenkins’ employment options. The 8th Circuit, nevertheless, found that there was sufficient evidence indicating that Tucker was involved in the budget reduction decisions. Even more, the adverse employment action occurred less than one month after Tucker told Jenkins that he wanted staff that supported him. This, according to the court, was sufficient evidence of a causal connection to give rise to an inference of unlawful retaliation.
The 8th Circuit ultimately concluded that Jenkins established a prima facie case of retaliation. And because it is clearly established that employers cannot retaliate against employees for exercising their First Amendment rights, retaliation is a “clearly established” constitutional right that is not subject to the defense of qualified immunity. The court, therefore, upheld the district court’s decision to deny Tucker’s motion for summary judgment.
Stone v. McGraw Hill Financial, Inc., 856 F.3d 1168 (8th Cir. 2017).
McGraw-Hill Global Education Holdings, LLC, hired Micah Stone as a sales representative in February 2007 in the company’s Miami office. McGraw-Hill promoted Stone to the position of Learning Solutions Consultant (LSC) in Saint Louis, Missouri, where he received a starting salary of $85,000. Stone was dissatisfied with his salary, because he alleged that he was initially promised a $95,000 salary. During the transition into the new position, Stone performed both his old and new job duties. McGraw-Hill denied Stone’s request for a “Spot Bonus” to compensate him for performing both jobs. Stone reported the alleged salary reduction and requirement to work both positions to McGraw-Hill’s Human Resources department.
McGraw-Hill received complaints about Stone’s performance as an LSC, alleging that Stone was arrogant, offensive, and routinely late to meetings. On January 15, 2012, McGraw-Hill shared these complaints with Stone and encouraged him to refine his communication skills and professionalism. On March 8, 2012, McGraw-Hill issued a warning to Stone for problematic communications and working relationships. The warning also set forth a performance improvement plan for Stone. Stone, however, denied that his performance was deficient and argued that his assignments were overly burdensome as compared to other LSCs. Stone also alleged that his boss told a colleague that he wished that he “never hired [Stone’s] black ass” and purposefully interfered with his relationships with the sales representatives.
McGraw-Hill fired Stone on April 26, 2012, based on his “poor performance.” Stone sued McGraw-Hill, alleging that he was unfairly compensated, subjected to a hostile work environment, and wrongfully discharged on account of his race in violation of Title VII of the Civil Rights Act of 1964 and the Missouri Human Rights Act. The district court granted McGraw-Hill’s motion for summary judgement on all claims.
On appeal, the 8th Circuit rejected Stone’s wage discrimination claim. Stone, the court reasoned, failed to show that he was “similar situated in all relevant respects” with LSCs outside of his protected class who received higher compensation. Although there were five white LSCs who reported to Stone’s supervisor, only two received higher pay. And those two employees had more extensive experience in sales and educational consulting than Stone. The court also held that Stone failed to establish a prima facie case of wage discrimination in relation to McGraw-Hill’s denial of Stone’s request for a “Spot Bonus,” because he did not identify a similarly situated employee who was treated differently than he was—leaving the court without a comparator to establish discriminatory conduct.
The court went on to reject Stone’s hostile work environment claim. A Title VII race-based hostile work environment claim requires a plaintiff to show: (1) that he is a member of a protected group; (2) he was subjected to unwelcome race-based harassment; (3) the harassment was because of his membership in a protected group; and (4) the harassment affected a term, condition, or privilege of employment. The 8th Circuit found that Stone failed to show that the alleged harassment was motivated by race, rather than mere inter-departmental personality conflicts. Furthermore, the court held that the one race-based comment that Stone overheard was neither sufficiently severe nor pervasive to support a hostile work environment claim.
Lastly, the 8th Circuit, like the district court, found that Stone failed to establish a prima facie case for discriminatory discharge. Specifically, Stone did not meet his burden to show that McGraw-Hill’s proffered basis for terminating him—namely, his performance deficiencies—were pretext for discrimination. Even if Stone’s work performance was not deficient, the court reasoned, Stone did not present evidence to support a conclusion that the alleged performance deficiencies were pretext to discharge him on account of his race. As such, the 8th Circuit affirmed the district court’s decision and upheld McGraw-Hill’s motion for summary judgment.
Tovar v. Essentia Health, 857 F.3d 771 (8th Cir. 2017).
Essentia Health and Innovis Health, LLC (“Essentia”) employed Brittany Tovar as a nurse practitioner from 2010–2016. Tovar’s benefits package included health insurance from Essentia’s Health Employee Medical Plan, which HealthPartners, Inc. and HealthPartners Administrators, Inc. administered.
Tovar’s son was a beneficiary of Tovar’s health insurance plan. In 2014, Tovar’s son was diagnosed with gender dysphoria, a condition where an individual’s gender identity differs from their gender assignment at birth. The doctor provided Tovar’s son with a series of treatments, including gender reassignment surgery. When Tovar sought coverage for her son’s treatment, she discovered that the plan had a categorical exclusion for “[s]ervices and/or surgery for gender reassignment.” Because of the plan’s categorical exclusion, Tovar’s son had to forgo prescribed treatment, including the gender reassignment surgery. This caused Tovar “anger, disappointment, and sleepless nights,” made it “difficult for her to focus on her work,” and produced migraines.
In January 2016, Tovar sued Essentia for sex discrimination in violation of Title VII of the Civil Rights Act of 1964 and the Minnesota Human Rights Act and charged HealthPartners, Inc. with discrimination in violation of the Affordable Care Act. The district court granted the defendants’ motions to dismiss, finding that Tovar did not have statutory standing to bring a claim under Title VII or MHRA and lacked Article III standing to file suit under the ACA. Tovar appealed.
Statutory standing under Title VII or the MHRA turns on whether the plaintiff falls within the class of plaintiffs that Congress authorized to sue under the relevant statute. To determine whether Tovar was authorized to sue on her own behalf concerning her employer’s refusal to cover her son’s medical treatment, the 8th Circuit relied on statutory interpretation of the MHRA and Title VII, which prohibit discrimination “against any individual with respect to his…employment, because of such individual’s race, color, religion, sex, or national origin.” For purposes of the appeal, the 8th Circuit assumed that sex-based discrimination under Title VII and the MHRA encompassed protections for transgender individuals. The plain language, the court concluded, indicated that “the statute prohibits employers from discriminating against employees on the basis of their protected characteristics”—not the characteristics of members of the employee’s family. Because Tovar alleged discrimination on the basis of her son’s sex, rather than discrimination on the basis of her sex, the 8th Circuit held that she was not entitled to recover under Title VII or the MHRA.
The court also considered whether Tovar had Article III standing under the Affordable Care Act. To have Article III standing, the plaintiff must show (1) an injury, (2) a causal connection between the injury and the challenged conduct, and (3) a likelihood that a favorable decision will redress the injury. Although the district court found that Tovar’s alleged injury was not sufficiently traceable to the defendants in order to establish a causal connection between the injury and the health care plan’s categorical exclusion, the 8th Circuit found otherwise. Because the allegedly discriminatory terms of the health care plan originated with the provider, not the employer, Tovar’s injuries are sufficiently traceable to the provider. The 8th Circuit also found that having to pay the out of pocket expenses for her son’s medical treatment was a cognizable injury under Article III. The 8th Circuit, therefore, remanded the case to the district court to consider defendant’s alternative argument concerning Tovar’s alleged failure to state a claim.
McLeod v. General Mills, Inc., 856 F.3d 1160 (8th Cir. 2017).
General Mills terminated 850 employees in 2012. In exchange for a severance package, the terminated employees signed release agreements that released General Mills from claims related to their termination, including those under the Age Discrimination and Employment Act. The release agreement also called for individual arbitration for any and all related claims. Thirty-three terminated employees who signed the release agreements later sued General Mills alleging (1) that their ADEA claim waivers were unenforceable, because they were not made “knowingly and voluntarily,” as required by statute, and (2) that the company discriminated against them in violation of the ADEA. The district court dismissed General Mills’ motion to dismiss and compel arbitration.
The Federal Arbitration Act requires courts to enforce arbitration agreements unless there is a contrary congressional command. The employees argue that the ADEA, which provides that a “party asserting the validity of a waiver [of ADEA claims] shall have the burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary,” serves as a contrary congressional command affording individuals rights to a jury trial and class action. The 8th Circuit, however, determined that a jury trial was not a right under the statute and that the right to bring a class action was waivable in a valid arbitration agreement. The court found that the district court erred and should have granted General Mills’ motion to dismiss the employees’ ADEA claims.
The former employees also argued that the question of whether they signed the release agreements “knowingly and voluntarily” may not be subjected to arbitration. The 8th Circuit again rejected the employees’ argument, finding that their claim did not present an Article III case or controversy. Specifically, the court reasoned that a case or controversy does not exist when plaintiffs seek declaratory judgment as to the validity of a defense that a defendant “may, or may not raise” in future proceedings. The court, therefore, concluded that the district court did not have jurisdiction over the former employees’ request for declaratory judgment concerning the validity of their release agreements.
The 8th Circuit reversed the district court’s decision and remanded the case for the district court to (1) dismiss the employees’ declaratory judgment claim for lack of jurisdiction and (2) grant General Mills’ motion to compel arbitration.
Submitted by:
Frances E. Baillon
D.C. Circuit
Charles v. D.C. Dep’t of Youth Rehab. Services, ___ F. App’x ___, 2017 WL 2350275 (D.C. Cir. May 26, 2017).
In Charles v. District of Columbia Department of Youth Rehabilitation Services, the D.C. Circuit affirmed in an unpublished opinion the district court’s dismissal of a Title VII and ADEA claim for failure to exhaust administrative remedies.
The plaintiff was a temporary worker who had been refused permanent positions for which she had requested promotions or submitted applications. In September 2012, the plaintiff received notice that her temporary appointment would not be renewed, and the plaintiff’s last day of work came in October 2012. However, the plaintiff did not file her administrative charge within 300 days of the notification that her appointment would not be renewed. The district court therefore dismissed her complaint for failure to exhaust administrative remedies.
The plaintiff attempted to avoid this bar by arguing that subsequent denials of employment had occurred after the 300 day cutoff that formed a continuing violation that would allow her to pursue the otherwise untimely employment actions. The D.C. Circuit rejected his argument on the grounds that the subsequent denials were not raised before the district court or in the plaintiff’s complaint, and that in any event a failure to hire cannot qualify as part of a continuing violation because it is a concrete, discrete act.
Ruisi v. NLRB, 856 F.3d 1031 (D.C. Cir. 2017).
In Ruisi v. National Labor Relations Board, the D.C. Circuit upheld an NLRB decision that a union did not violate its duty of fair representation by refusing to provide members with their anniversary dates in response to phone inquiries and instead requiring that the members submit written requests for the information.
The petitioners in the case were two employees who had signed authorizations for union dues to be deducted from their pay, but wished to revoke those authorizations. The collective bargaining agreement between the union and the petitioners’ employer provided that revocation could be accomplished by a written request submitted within 15 days of the anniversary of the date on which the employee signed the authorization. When one of the petitioners called the union to request their anniversary dates, the union informed her that such information would not be provided over the phone and the petitioner would have to submit a written request. When the petitioner ultimately received her anniversary date, her revocation request was untimely.
The court found that the union’s refusal to provide anniversary dates over the phone was not a violation of the duty of fair representation. In doing so, the court emphasized that union members bear a heavy burden to show that the union acted arbitrarily, discriminatorily, or in bad faith in order to establish violations of the fair representation duty. First, the court found that the union’s policy was not arbitrary because it was reasonable and based on relevant considerations. The court credited the union’s position that its refusal to divulge anniversary dates except in response to written requests was justified based on legitimate concerns regarding member privacy and providing accurate information. The court rejected the application of prior NLRB precedent regarding union refusals to provide information because in those cases the unions had refused to share the information entirely; here, by contrast, the union simply required that information requests be submitted in writing. The court further found that there was no evidence of bad faith or discrimination in the record.
Oak Harbor Freight Lines, Inc. v. NLRB, 855 F.3d 436 (D.C. Cir. 2017).
In Oak Harbor Freight Lines, Inc. v. National Labor Relations Board, the NLRB rejected both a union’s and an employer’s challenges to different aspects of an NLRB decision and enforced the decision in full.
The case arose from difficult negotiations following the expiration of a collective bargaining agreement. After over a year of negotiations, the union went on strike and the employer ceased making contributions to four health benefit and pension trusts that had been established under the collective bargaining agreement. When some union members agreed to resume working for the employer prior to the conclusion of the strike, the employer and union reached an agreement under which the employer would pay those employees’ pension contributions into escrow and cover the employees under its medical plan. Ultimately, the union ended its strike and, when the remainder of the union employees returned to work, the employer imposed the same arrangement on them without first bargaining with the union.
The court first upheld the NLRB’s finding that the employer did not commit an unfair labor practice by unilaterally ceasing contributions to three of the four trusts, but did commit an unfair labor practice with respect to the fourth trust. For the first three trusts, provisions in the subscription agreements between the employer, union, and trust permitted contributions to be discontinued upon five days notice after the expiration of the collective bargaining agreement. The D.C. Circuit held that these contractual provisions constituted a waiver of the union’s right to bargain over the employer’s cancellation of its contributions. The court rejected the union’s arguments that the subscription agreements were merely ministerial and were entered into without specific bargaining, finding that those factors did not overcome the clear intention expressed by the subscription agreements to allow the employer to unilaterally cease contributions. With respect to the fourth trust, however, the employer submitted no proof that a subscription agreement with a similar cancellation clause existed, and therefore did not meet its burden to establish the union’s waiver.
The court also upheld the NLRB’s finding that the employer committed an unfair labor practice by unilaterally imposing its medical plan upon employees after the strike ended. The court explained that the earlier agreement reached during the strike was only a temporary measure that was not intended to extend beyond the strike’s conclusion. The court also upheld the NLRB’s finding that the employer demonstrated no economic exigency that required it to take unilateral action without bargaining.
Wilkes-Barre Hosp. Co. v. NLRB, 857 F.3d 364 (D.C. Cir. 2017).
In Wilkes-Barre Hospital Company, LLC v. National Labor Relations Board, the D.C. Circuit upheld the NLRB’s determination that an employer committed an unfair labor practice by unilaterally discontinuing wage increases provided for in the collective bargaining agreement with its union after the agreement’s expiration.
The hospital employer and its nurses were parties to a collective bargaining agreement which provided for two types of raises. The first type – across the board raises – provided all of the nurses with a predetermined raise on three specific dates in 2011, 2012, and 2013. The second type of raise – longevity-based raises – provided the nurses with an additional raise as they reached certain levels of experience. When the collective bargaining agreement expired, the hospital unilaterally discontinued giving any raises.
The court noted that upon the expiration of a collective bargaining agreement, an employer must negotiate with a union and cannot make unilateral changes to the terms and conditions of employment unless negotiations reach an impasse or the union has waived its right to bargain on the subject of the change. Instead, the employer must maintain the status quo and honor the terms and conditions of the expired collective bargaining agreement.
The employer argued that the status quo did not include the longevity-based raises because such raises were paid in conjunction with the across the board raises, which unquestionably were applicable only during the term of the collective bargaining agreement because they were tied to specific dates during the term. The NLRB and D.C. Circuit disagreed, finding the two types of raises to be distinct rights and that the longevity-based raises could continue after the last date on which the collective bargaining agreement provided for across the board raises. A provision of the collective bargaining agreement stating that the wage increases applied during the term of the agreement was also unavailing. The court noted that in addition to contractual rights, the nurses had a separate statutory right to the continuation of the status quo which could not be defeated by general contractual language.
The court also rejected several secondary arguments raised by the employer. First, the court explained that the union’s failure to file an unfair labor practice charge based on the employer’s past non-payment of longevity-based raises after the expiration of a prior collective bargaining agreement did not rise to the level of an established practice that would justify the employer’s action. The court also rejected the employer’s argument that the union waived its right to bargain over the raises, finding that waiver cannot be implied from silence in the collective bargaining agreement.
Submitted by:
Jack Blum