D.C. Circuit

United States Department of Justice v. Federal Labor Relations Authority, 875 F.3d 667 (D.C. Cir. 2017).

In United States Department of Justice v. Federal Labor Relations Authority, the D.C. Circuit addressed the application of the “covered-by” doctrine, a principle of labor law providing that “if a union and an employer in a collective-bargaining relationship reach an agreement on a subject during contract negotiations, neither side has a duty to bargain any further over that subject once the parties execute a collective bargaining agreement.”

The employer in the case was a federal correctional complex consisting of four correctional institutions. After a CBA had been entered, the employer informed its union that it intended to consolidate the relief rosters for the four institutions. The relief roster provided a mechanism for temporary assignments to cover for employees on sick or annual leave, and the consolidation meant that employees could be assigned to cover for workers at any of the four institutions, rather than only being assigned within the employee’s home institution. The employer contended that because Article 18(g) of the CBA provided procedures for assigning employees to a relief roster, the subject was covered by the CBA and further bargaining on the issue of consolidation was not required.

The union argued, and the Federal Labor Relations Authority found, that the consolidation was not “covered by” the CBA because the employer and the union did not contemplate the issue of inter-institution assignments at the time of the CBA’s negotiation. The D.C. Circuit rejected this argument, noting that under precedent, the “covered by” doctrine does not require that the parties have contemplated in negotiations every precise scenario that could one day arise. Indeed, the court noted, such a requirement would undermine the contractual stability that a CBA is intended to provide by permitting bargaining to be reopened on any number of subjects. Instead, the doctrine only requires that the parties have reached a negotiated agreement on the subject of the issue. Because the consolidated relief roster fell within the scope of the CBA’s grant of authority for the employer to assign employees to a relief roster, it could not be circumvented “merely because one of the bargaining parties did not anticipate a policy it might produce.” Because the union “could have negotiated for a . . . provision that contained a caveat that assignments changing an officer’s duty station to a different institution . . . would not comply with the article” but did not, no further bargaining was required.

Submitted by:

Jack Blum

 Second Circuit

Wang v. The Hearst Corp., ___ F.3d ___, 2017 WL 6062241 (2d Cir. Dec. 8, 2017).

Students who interned for Hearst magazines were not “employees” for purposes of the Fair Labor Standards Act and were therefore not entitled to salary. The Second Circuit applies seven factors in determining whether interns are entitled to compensation under the FLSA. The principle case on this issue is Glatt v. Fox Searchlight Pictures, 811 F.3d 528 (2d Cir. 2016). While plaintiffs performed tasks relating to their professional pursuits and gained valuable knowledge and skills, they also complained many of their duties were menial and repetitive, did not receive close supervision or guidance and there was little formal training. They mastered most of their tasks within a few weeks but did the same work for the rest of their internships. The Court of Appeals notes that plaintiffs did not expect payment or entitlement to a job, which tilts in defendant’s favor. Moreover, while “training” under the Glatt test “clearly contemplates that training opportunities offered to the intern include products of experiences on the job,” while plaintiffs tacitly assume that professions, trades and arts are or should be just like school, “many useful internships are designed to correct that impression.” Other factors also favor defendant’s position. For one plaintiff, the internship was a graduation requirement, and for another, the internship meshed with her academic major. As for the remaining factors, “practical skill may entail practice, and an intern gains familiarity with an industry by day to day professional experience.” While another factor considers the extent to which an intern’s work complements the work of paid employees or displaces it — the Court notes that “An intern’s work is complementary if it requires some level of oversight or involvement by an employee, who may still bear primary responsibility.” This favor is not dispositive.

Submitted by:

Stephen Bergstein

Fourth Circuit

Westmoreland Coal Company v. Stallard, ___ F.3d ___, 2017 WL 5769516 (4th Cir. Nov. 29, 2017).  

A coal miner was deemed permanently disabled due to lung disease and retired after thirty years in the mines. Twenty years later, he filed for benefits under the Black Lung Benefits Act (“Act”). Doctors testifying before the ALJ disagreed over whether the coal miner’s lung disease was caused by his long-term smoking or his work in the coal mines. The ALJ concluded that the miner suffered from a disabling lung disease and that the miner’s former employer did not overcome the statutory presumption that the disease was caused by coal dust. The Benefits Review Board affirmed, and the employer filed for review by the Fourth Circuit.

The employer first argued that the coal miner’s request for benefits was untimely. Under the Act, miners must file for benefits within three years after a medical determination of total disability due to black lung disease. The regulations include a rebuttable presumption that all claims for black lung benefits are timely. The Fourth Circuit concluded that the record contained sufficient support for the ALJ’s conclusion that no doctor ever communicated to the miner that his disability was due to black lung disease. Accordingly, the miner’s claim was timely as filed.

When a miner has more than fifteen years of below-ground mining experience and medical evidence shows a disabling pulmonary or respiratory condition, there is a rebuttable presumption that the miner is disabled due to black lung disease. To rebut this presumption, an employer must show either that the miner did not have black lung disease or that no part of the disability was caused by the disease. The Fourth Circuit declined to reweigh the medical evidence and noted that the Preamble to the Department of Labor’s regulations addresses smoking as merely an “additive” risk to the clear association between exposure to coal dust and black lung disease. Given the medical evidence in the record, the Fourth Circuit concluded that that there was sufficient evidence to support the ALJ’s conclusions. Accordingly, the Fourth Circuit affirmed the ALJ’s conclusion granting the miner benefits.

Frontier-Kemper Constructors, Inc. v. DOWCP, ___ F.3d ___, 2017 WL 5897323 (4th Cir. Nov. 30, 2017).

An employer disputed its designation as a coal mine operator for purposes of paying benefits under the Black Lung Benefits Act. After the Benefits Review Board concluded that the employer was responsible for benefits, the employer sought review by the Fourth Circuit. The Fourth Circuit affirmed.

The miner seeking benefits worked for the employer’s predecessor, a coal mine construction company, in the early 1970s. The miner then left that company for many years to work elsewhere. During that period, the construction company merged with the employer. In 2005, the miner returned to the merged company, which was the miner’s last place of employment before the miner sought benefits.

To be responsible for paying black lung benefits, an employer must be deemed an “operator.” Prior to 1977, “operator” was defined as “any owner, lessee, or other person who operates, controls, or supervises a coal mine.” In 1977, Congress amended this definition to include “any independent contractor performing services or construction at such mine.” When an operator is acquired or reorganizes, liability for benefits claims transfers to the “successor operator.” Any employment with a prior operator is deemed employment with the successor operator. An operator is only liable if the operator or its successor employed the miner for a cumulative period of at least one year.

The employer argued that it could not be deemed a successor operator because its predecessor did not qualify as an operator under the 1977 definition. The employer further argued that if the time the miner worked at the predecessor was not counted, the miner would not reach the one-year threshold.

The Board concluded that the definition of operator at the time the miner seeks benefits governs. The Fourth Circuit rejected the employer’s argument that applying the expanded definition of “operator” was an impermissible retroactive application of the amended statute and affirmed the Board’s rulings.

Schilling v. Schmidt Baking Company, Inc., ___ F.3d ___, 2017 WL 5711240 (4th Cir. Nov. 17, 2017).

Three truck drivers sued their employer under the Fair Labor Standards Act (FLSA) for failure to pay overtime. The district court dismissed the complaint on the basis that the FLSA exempts professional motor carriers from the overtime requirement. The drivers appealed, and the Fourth Circuit reversed.

The FLSA generally requires employers to pay overtime for work over 40 hours per week. Private motor carriers are exempt from the FLSA overtime requirements under the Motor Carrier Act (MCA) exemption. However, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) amended the MCA to apply only to vehicles weighing 10,001 pounds or more. Under SAFETEA-LU, an employer required to pay overtime is one whose work, in whole or in part, involves the operation of vehicles weighing 10,000 pounds or less.

Because the truck drivers drove vehicles that weighed more than 10,000 pounds and vehicles that weighed 10,000 pounds or less, the issue on appeal was whether this “mixed fleet” of vehicles triggered the MCA overtime exemption. The Fourth Circuit concluded that the MCA exemption did not apply, and FLSA overtime requirements governed. The Court noted that the statutory language expressly provided for employers whose work involved operation of vehicles weighing 10,000 pounds or less, in part. The drivers operated vehicles weighing 10,000 pounds or less 70% to 90% of the time, which the Court found easily fell within the statutory definition of a covered employer. Therefore, the Fourth Circuit reversed the district court dismissal of the drivers’ FLSA claims.

Penley v. McDowell Cty. Bd. of Educ., ___ F.3d ___, 2017 WL 5711227 (4th Cir. Nov. 28, 2017).

A teacher brought a § 1983 action against several school officials and the county Board of Education (collectively, “employer”), alleging that he was dismissed in retaliation for exercising his First Amendment rights. The district court entered summary judgment for the employer, and the Fourth Circuit affirmed.

The teacher worked on campaigns of certain local politicians. One of the politicians against whom the teacher spoke allegedly told the school superintendent to terminate the teacher. In addition, the politician allegedly threatened the teacher, stating that he would “pay him back” for the work done in opposition to the politician’s campaign.

Following the election, during one of the teacher’s classes, the teacher made a comment to his class about how often men think about sex. One of the students understood the comment to be directed at her, which made her upset. The teacher apologized and asked the student not to report him to the principal. The student did file a report, and the school began an investigation. The investigation revealed that the teacher made sexual comments to other students on social media, and made additional inappropriate comments during classes. Based on the investigation, the superintendent issued a notice of termination. Following an administrative hearing challenging the notice, the teacher was reinstated at a different school. The teacher filed suit claiming that the superintendent and other administrators retaliated against him for his political advocacy.

To hold a local government entity liable for a constitutional violation, the plaintiff must show that the execution of the government’s policy or custom caused the violation. To hold a local government entity liable for a single decision, the decisionmaker must possess final authority to establish municipal policy with respect to the action ordered. Further, a county board of education may only be held liable for officially sanctioned or ordered acts; if the board does not have final review authority over personnel decisions, it cannot be held liable under § 1983 for such decisions.

The Fourth Circuit concluded that the teacher failed to show that the Board participated in or condoned the investigation or notice of termination. The Board did not have final authority to review the decision of the superintendent. The Court further ruled that the Board was not a party to the administrative hearings and, thus, was not on notice of the constitutional violations the teacher alleged. Accordingly the Fourth Circuit concluded that the Board was not subject to liability in this case.

The Fourth Circuit also concluded that the teacher failed to put forth anything more than speculation that the individual defendants took some action in violation of the teacher’s First Amendment rights. Moreover, even assuming that the teacher could put forth a prima facie case of a constitutional violation, the Court concluded that the employer showed that the notice of termination would have issued even absent the protected speech.

Accordingly, the Fourth Circuit affirmed the district court’s grant of summary judgment for the employer.

Submitted by:

Paul Sun
Emily Erixson

Fifth Circuit

EEOC v. BDO USA, L.L.P, ___ F.3d ___, 2017 WL 5494237 (5th Cir. Nov. 16, 2017) (withdrawing and substituting prior panel opinion, 856 F.3d 356 (5th Circ. 2017)).

The Fifth Circuit vacated a District Court judgment denying the EEOC’s request to enforce a subpoena asserting that an employer’s 278-entry privilege log failed to establish applicability of the attorney-client privilege and granting employer’s motion for protective order. In doing so, the Fifth Circuit emphasized that the District Court had failed to apply the proper legal standard for determining whether the attorney-client privilege should apply. Specifically, the Fifth Circuit held that the District Court improperly inverted the burden of proof, requiring the EEOC prove that the employer improperly asserted the attorney-client privilege and by concluding that all communications between a corporation’s employees and its counsel are per se privileged.

Maurer v. Independence Town, 870 F.3d 380 (5th Cir. 2017) (withdrawing and substituting prior panel opinion, 856 F.3d 356 (5th Cir. 2017)).

The Chief Human Resources Officer for BDO USA, L.L.P., Hang Bower, an Asian-American female, resigned her employment, after which she filed an EEOC charge alleging that BDO violated Title VII and the Equal Pay Act by subjecting her and other employees to gender discrimination and a hostile work environment.

As part of its investigation, into Ms. Bower’s charges, the EEOC issued three Requests for Information (“RIFs”), but BDO refused to provide information on the grounds that the EEOC was eliciting  and Ms. Bower was revealing – attorney-client privileged communications between Ms. Bower and BDO’s in-house and outside counsel. Thereafter, the EEOC issued a subpoena to BDO, and BDO provided some, but not all of the requested information and produced a privilege log with 278 entries. In turn, the EEOC filed a subpoena enforcement action in federal district court, asserting that BDO’s privilege log failed to establish that the attorney-client privilege justified the withholding of documents by BDO. The District Court held that the log was sufficient and also granted BDO’s request for a protective order.

In a prior opinion issued in May 2017, 856 F.3d 356, the Fifth Circuit vacated the District Court’s judgment, holding that BDO’s privilege log was insufficient to establish a prima facie showing of attorney-client privilege because the entries were vague and/or incomplete; failed to establish that the communications were made in confidence and there was no breach of confidentiality; and failed to distinguish between legal advice.

The Fifth Circuit, in November 2017, withdrew its prior opinion, substituting an opinion that, while it reaches the same result, focuses on establishing what it defines as “well-settled attorney-client principles,” including its pronouncement that “[t]here is no presumption that a company’s communications with counsel are privileged.” (citation omitted). The Fifth Circuit, noting the “‘broad’” and “‘considerable discretion district courts have in discovery matters, noted it would not analyze the discovery logs, but instead remanded for a determination by the district court, noting that it had erred “when inverting the burden of proof, requiring that the EEOC prove that BDO improperly asserted the attorney-client privilege as to withheld documents, and concluding that all communications between a corporation’s employees and its counsel are per se privileged.” As explained by the Fifth Circuit, “simply describing a lawyer’s advice as ‘legal,’ without more is conclusory and insufficient to carry out the proponent’s burden of establishing attorney-client privilege.” (citation omitted). The Fifth Circuit further noted that it had previously held that where a there exists a mixed discussion of business and legal advice, “courts should consider the ‘context . . . key,’ ultimately seeking to glean the ‘manifest purpose’ of the communication.” (citation omitted).

With respect to the protective order, the Fifth Circuit did not hold that it was unwarranted, but left the decision to the trial court, but with the direction that BDO’s request for protection be considered under the proper legal standards applicable for determining whether the attorney-client privilege is applicable.

Submitted by:

Jennifer McNamara

Sixth Circuit

Stein v. HHGREGG, Inc., 873 F.3d 523 (6th Cir., 2017).

In Stein, a class of retail sales employees sued HHGREGG, Inc., a retailer of electronics and appliances, contending that the employer’s “draw-on commission” policy violated the minimum wage and overtime requirements of the Fair Labor Standards Act. An Ohio District Court dismissed these claims and then appealed it to the Sixth Circuit, which enforced the District Court’s dismissal, in part, while reversing and remanding the lower court, in part, in finding that part of the company’s compensation plan could violate the FLSA.

Under the company’s compensation plan, retail sales employees are paid entirely on a commission basis. Under the plan, draw payments are advanced whenever their commissions fall below the minimum wage rate for that week. These draw payments were then deducted from future commissions which were more than the minimum wage for that week. In addition, if employees terminated their employment for any reason, and owed any amounts, the policy provided that they were to be immediately repaid to the employer upon termination. The employees sued contending that this “draw-on compensation” policy violated the FLSA by requiring them to replace the draw from future commissions, which they argued was an illegal kickback to the employer and violated the minimum wage provisions of the FLSA in that the wage payments were not “free and clear” and also violated the FLSA by obligating repayment of draws paid immediately upon termination, which made payment of minimum wage not free and clear. Furthermore, they contended that the pay plan also violated the overtime requirements of the FLSA because they were not paid one and one-half times the regular rate when they worked over 40 hours. Finally, they asserted that they were required to work “off the clock” and forced to attend meetings in which no commissions were expected to be earned and that such also violated the minimum wage and overtime provisions of the FLSA. The District Court dismissed all of these claims, finding that the employer was exempt from the overtime requirements of the FLSA and that nothing in the draw-on policy violated the minimum wage requirements with respect to allowing deductions from future commissions. With respect to the provision of the policy that required the repayment immediately upon termination, while the District Court questioned the legality of the policy, it noted that there was no evidence such had been enforced upon termination. Thus, it dismissed this claim as well.

On appeal, the Sixth Circuit affirmed and reversed the Court, in part. First, it found that the employer was not exempt from overtime requirements under the retail sales exemption because it could not show that employees’’ regular rate of hourly pay was more than one and one-half times the hourly rate every week. Rather, if weeks where employees’ commission was not enough to cover minimum wage and a draw-on was advanced, the regular rate of pay was simply equal to minimum wage. Second, the Sixth Circuit found that there was nothing unlawful about the provision of the policy that required draw-ons to be deducted from future commissions and that such was not a kickback prohibited by the FLSA, and thus affirmed the District Court’s dismissal of the case. However, on the argument that the plan’s requirement that employees who are terminated for any reason had to immediately repay any unpaid draw-ons, the Sixth Circuit reversed the District Court’s dismissal and found that such could state a violation of the FLSA because, by requiring repayment of draw-ons upon termination, the wage payment was not “free and clear.” The fact that this part of the policy had not been enforced against any employee who terminated employment was of no consequence to the Court because the Court found that being in the policy could have an impact on how employees behave and then belief that there was an outstanding debt they owed that could be collected any time.

Finally, the Sixth Circuit recognized a potential claim for minimum wage on overtime violations based on employees’ contentions that they were forced to work off the clock and reversed the District Court, reinstating those claims as well.

Submitted by:

Amy J. Zdravecky

Seventh Circuit

Golla v. Office of the Chief Judge of Cook County., Illinois, 875 F.3d 404 (7th Cir. 2017).

Francis Joseph Golla brought a Title VII race discrimination action against his former employer, the Office of the Chief Judge of Cook County, Illinois (the “Office”), also naming Cook County itself as a defendant for indemnification purposes. Golla, a white male, alleged that the Office, where he performed administrative duties in the Social Services Department (the “Department”), discriminated against him on the basis of his race by paying him less than Deotis Taylor, an African American male who shared the same duties in the Department. After reiterating the simplified approach to evaluating discrimination cases set forth in Ortiz v. Werner Enterprises, Inc., 834 F.3d 760 (7th Cir. 2016), the Seventh Circuit held that Golla had not presented sufficient evidence from which a reasonable factfinder could conclude that he received lower pay than Taylor because of his race. Most significantly, Golla and Taylor’s respective pay grades were set years before they transferred to the Department. In Golla’s case, his pay was established based on a settlement agreement he reached with the Office; in Taylor’s, based on his earlier position as a Jury Room Manager. Without any evidence to show that the two employees’ African American supervisor, Vanessa Whitehead, or anyone else in the Department was a decision maker regarding compensation, the Court found that Golla could not prove that the pay disparity was due to anything other than his and Taylor’s pay grades established long ago. The Court further noted that Golla could not point to any evidence of a systemic pattern of reverse race discrimination, and in fact, there were both white and African American employees with similar duties as Golla who were paid less than him. Furthermore, Golla’s allegation that Whitehead told him, “all my life people have been standing in my way, and they all looked just like you,” without more, amounted merely to an ambiguous remark that did not point directly to race. Accordingly, since Golla had “presented no evidence, beyond the fact that he is white and Taylor is African-American, to demonstrate that race contributed to disparity in their pay,” the Seventh Circuit affirmed the district court’s grant of summary judgment to defendants.

Brotherhood of Locomotive Engineers v. Union Pacific Railroad Company, ___ F.3d ___, 2017 WL 5507732 (7th Cir. Nov. 17, 2017).

The Railway Labor Act (“RLA”), 45 U.S.C. §§ 151-88, and the seminal cases interpreting it fundamentally demand “a strong preference for arbitration, as opposed to judicial resolution of disputes.” As such, “major” disputes concerning the formation or amendment of a Collective Bargaining Agreement (“CBA”) must be decided by a court, but courts lack jurisdiction over “minor” disputes over the interpretation or application of an existing CBA, which must be sent to arbitration before the National Railroad Adjustment Board. Given the RLA’s preference for avoiding commercial interruptions in the railroad or airline industry, “there is a large thumb on the scale in favor of minor,” and the railroad need only present “an argument that is neither obviously insubstantial or frivolous, nor made in bad faith.”

This dispute between plaintiff, the Brotherhood of Locomotive Engineers (the “Union”) and defendant Union Pacific Railroad Company (the “Railroad”) arose when the Railroad modified a set of disciplinary rules after polling Union members about their preferences, but not bargaining with the Union itself. Although the Union argued that this unilateral action qualified as a major dispute, it could not credibly dispute that the Railroad had made multiple, unilateral changes to the prior disciplinary policy that had been in effect. Therefore, even though the Union had not acquiesced to those earlier changes, the Railroad had articulated a non frivolous argument that it had the actual authority to modify the disciplinary policies, based on past practices.

The Court further sided with the Railroad over the Union’s argument that the modified disciplinary policy presented a major dispute because it conflicted with terms regarding discipline in a separate CBA, since the Railroad again offered a “better than frivolous” argument that the two were not necessarily incompatible. Finally, the Court closed the door on the Union’s last attempt to keeping the dispute in court: the Union’s argument that the Railroad’s polling of its members violated one of the RLA provisions that permit a court to retain jurisdiction aside from major disputes. In rejecting the Union’s argument, the Court recognized that although “direct dealing” may qualify as such a violation conferring federal jurisdiction, such jurisdiction “is limited to exceptional circumstances” and is generally “confined to cases in which arbitration is an ineffective or unavailable remedy or the carrier has been alleged to have intended to weaken the union.” Lacking any such concerns in light of the Railroad’s grounds to believe that no bargaining was required for it to modify the disciplinary rules, the Court also foreclosed jurisdiction on this basis. Therefore, although emphasizing that it no way intended to endorse the Railroad’s positions, the Seventh Circuit agreed with the district court that the Railroad met the low bar to demonstrate a minor dispute, which must be sent to arbitration.

 

United States Equal Employment Opportunity Commission v. AutoZone, Inc., 875 F.3d 860 (Mem.) (7th Cir. 2017).

In its decision in EEOC v. AutoZone, Inc., 860 F.3d 564 (7th Cir. 2017), the Seventh Circuit affirmed summary judgment for defendant, holding that even crediting the employee’s assertion that he was transferred to another store to create a “predominately Hispanic” location, he had not shown that the transfer resulted in “reduction in pay, benefits, or job responsibilities” nor that the transfer’s effect was to “alter his conditions of employment in a detrimental way” in violation of subsection (a)(2) of Title VII, 42 U.S.C. § 2000e-2(a)(2). The panel voted unanimously to deny a petition for rehearing, and a majority of judges in active service on the Seventh Circuit then voted to deny rehearing en banc.

However, Chief Judge Wood, joined by Circuit Judges Rover and Hamilton, penned a notable dissent from the full panel’s decision to deny rehearing en banc. Framing the majority’s decision as permitting a business to sort employees to different stores based on race under Title VII “so long as the ‘separate’ facilities really are ‘equal,’” the dissenting judges directly referenced the Supreme Court’s landmark decision in Brown v. Board of Education, 347 U.S. 483 (1954). More specifically, the dissent cited Brown, as well as Parents Involved in Community Schools v. Seattle School District No. 1, 551 U.S. 701 (2007), for the proposition that “even well-meaning racial classifications are inherently suspect,” and deliberate segregation based on race inherently risks imposing harmful effects on those subjected to it.

Additionally, the dissenters argued that holding defendant liable under the set of facts alleged by the EEOC would do no violence to the plain language of § 2000e-2(a)(2), which prohibits employment actions that “deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee.” Emphasizing that it was appropriate to evaluate effects on employees other than the charging party since the suit was brought by the EEOC, the dissenters reasoned that “the ability to work at a particular store or in a particular geographic area is itself a job opportunity within the plain meaning of the statute.” Forcefully concluding their dissent, Judges Wood, Rover and Hamilton again invoked Brown’s abrogation of the “separate-but-equal” principle.

Lauderdale v. Illinois Department of Human Services, ___ F.3d ___, 2017 WL 5898504 (7th Cir. Nov. 30, 2017).

Plaintiff Marybeth Lauderdale, former superintendent of the Illinois School for the Deaf (“ISD”), was hired for a newly-created combined role as superintendent of ISD and the School for the Visually Impaired (“ISVI”), of which Reggie Clinton was the former superintendent. Despite essentially taking on the responsibility of both roles, Lauderdale was paid less than what Clinton received as superintendent of ISVI, although her salary was approximately 21% more than what she was paid as superintendent of ISD.

In light of this discrepancy in pay, Lauderdale brought claims against the Illinois Department of Human Services (the “Department”) and various officials on an individual basis under the Equal Pay Act, Title VII and 42 U.S.C. § 1983. Evaluating plaintiff’s Equal Pay Act claim first, the Court found that although plaintiff had made out a prima facie case of unequal pay for equal work, the Department had carried out its burden of proving that neutral factors other than sex explained the pay disparity primarily for three reasons: (1) the record contained “compelling evidence” that the Department believed its discretion regarding plaintiff’s salary was constrained by a pay plan set forth in the Illinois Administrative Code; (2) plaintiff’s prior salary was “significantly lower” than Clinton’s, and she did not claim that the unequal wage history was due to sex discrimination; and (3) the record reflected that the Department was “genuinely concerned” about the state’s struggling budget when it offered plaintiff her salary.

The Court next turned to plaintiff’s Title VII and § 1983 claims, both of which, in contrast to the Equal Pay Act, preserve the ultimate burden of proof with the plaintiff. Again finding that Lauderdale had carried out her initial prima facie burden, the Court nevertheless held that she could not prove that the Department’s reasons for paying her less than Clinton were pretexual, particularly given that there were multiple emails indicating concern about budget constraints and also that the maximum salary provided in the job posting for the position did not reflect any actual budgeted amount for the position. Finally, agreeing with the district court that plaintiff offered no evidence in support of holding any officials individually liable, the Court affirmed the lower court’s grant of summary judgment in defendants’ favor.

Submitted by:

Kendell Coates

Eleventh Circuit

Slater v. United States Steel Corp., 871 F.3d 1174 (11th Cir. 2017) (en banc).

On Sept. 18, 2017, the Eleventh Circuit redefined the standard in the Circuit for the application of the equitable doctrine of judicial estoppel. The Court reaffirmed precedent that when a plaintiff takes inconsistent positions by pursuing in district court a civil claim that she failed to disclose as an asset in his bankruptcy proceedings, a district court may apply judicial estoppel to bar the plaintiff’s civil claim if it finds that the plaintiff intended to make a mockery of the judicial system. New, though, the Court held that when determining whether a plaintiff who failed to disclose a civil lawsuit in bankruptcy filings intended to make a mockery of the judicial system, a district court should consider all the facts and circumstances of the case.

Sandra Slater sued her employer U. S. Steel alleging race and sex discrimination in violation of Title VII, 42 U.S.C. § 2000e et seq. and 42 U.S.C. § 1981, and retaliation in violation of Title VII and § 1981. U.S. Steel moved for summary judgment, which the district court granted in part and denied in part. About a month after the district court’s ruling on the summary judgment motion, Slater, represented by separate bankruptcy counsel, filed a petition for Chapter 7 bankruptcy. She did not disclose her lawsuit against U. S. Steel in her bankruptcy petition or the schedules filed with the petition. The bankruptcy trustee issued a Report of No Distribution, finding there was no property available for distribution from the estate over and above that exempted by law. Without objections, thirty days later the estate became presumptively fully administered. The next day U. S. Steel again moved for summary judgment in the employment discrimination case, asserting that judicial estoppel barred Slater’s claims. Slater testified by declaration that she did not intentionally misrepresent facts to the bankruptcy court, and she misunderstood the question in the bankruptcy documents regarding suits and administrative proceedings to which the debtor is or was a party. She amended her bankruptcy petition and schedules, and later petitioned the bankruptcy court to convert her case from a Chapter 7 to a Chapter 13. Her proposed Chapter 13 plan was confirmed. When she failed to pay the trustee under the terms of the plan, the bankruptcy court dismissed her case. Her debts were never discharged in bankruptcy. The district court granted U. S. Steel’s motion for summary judgment, applying the doctrine of judicial estoppel to bar the claims. Slater appealed, and a panel of the Eleventh Circuit affirmed the district court’s grant of summary judgment. In a concurring opinion, Judge Tjoflat urged the Court to review en banc precedent permitting the inference that a plaintiff who omitted a civil claim as an asset in bankruptcy filings necessarily intended to make a mockery of the judicial system.

On petition for rehearing, the Court held:

. . .[W]e begin by reaffirming that a district court may apply judicial estoppel when a two-part test is satisfied: the plaintiff (1) took a position under oath in the bankruptcy proceeding that was inconsistent with the plaintiff’s pursuit of the civil lawsuit and (2) intended to make a mockery of the judicial system.

…We hold that to determine whether a plaintiff’s inconsistent statements were calculated to make a mockery of the judicial system, a court should look to all the facts and circumstance of the particular case. When the plaintiff’s inconsistent statement comes in the form of an omission in bankruptcy disclosures, the court may consider such facts as the plaintiff’s level of sophistication, whether and under what circumstances the plaintiff corrected the disclosures, whether the plaintiff told his bankruptcy attorney about the civil claims before filing the bankruptcy disclosures, whether the trustee or creditors were aware of the civil lawsuit or claims before the plaintiff amended the disclosures, whether the plaintiff identified other lawsuits to which he was party, and any findings or actions by the bankruptcy after the omission was discovered.

Slater, 871 F.3d at 1180, 1185. The Court remanded the appeal to the panel to consider whether the district court abused its discretion in applying judicial estoppel and to resolve any other remaining issues.

In a concurring opinion, Judge Carnes emphasized that a district court is not required to accept the plaintiff’s denial of intent to defraud:

If district courts were required to accept a plaintiff’s testimony that she did not intend to defraud her creditors by omitting a claim from her bankruptcy schedules, judicial estoppel never would be applied in these circumstances. The possibility that the doctrine could apply to claims not disclosed in bankruptcy proceedings would be purely academic and serve no deterrent purpose. And if debtors were freed from any threat of judicial estoppel, the losers would be both honest creditors and the integrity of the judicial process, which means we all would lose.

That is why the one sentence contained in footnote 12 is so important. It means that in deciding whether a plaintiff intended to mislead when she omitted a claim from her bankruptcy schedules, or failed to update a schedule to include the claim, the district court is not required to accept the plaintiff’s denial of her intent. And that is true even if her denial is made under oath and not contradicted by other evidence. The district court has the authority and responsibility to find the facts and not to blindly accept testimony.

Slater, 871 F.3d at 1190-1191 (Carnes, concurring).

Submitted by:

Patricia T. Paul