September 2017

September 2017 Circuit Update

Second Circuit

NLRB v. Long Island Ass’n for Aids Care, 870 F.3d 82 (2d Cir. 2017).

After the local newspaper reported that the company’s CEO had misappropriated public funds intended for employees, the company had everyone sign a confidentiality statement that precluded them from discussing wages. They also could not talk with the media. When Acosta signed it “under duress,” he was fired. Acosta filed his charge with the National Labor Relations Board, which found in his favor “because ‘an employer unlawfully intrudes into its employees’ Section 7 rights when it prohibits employees, without justification, from discussing among themselves their wages and other terms and conditions of employment.’” Not only had Acosta discussed wages with co-workers, but his comments were protected because the confidentiality statement was facially invalid. The ALJ ordered management to reinstate and compensate Acosta. The Court of Appeals affirms the NLRB on the basis that an employer violates the NLRA when it terminates an employee for refusing to agree to an unlawful confidentiality agreement.

Submitted by:
Stephen Bergstein, Esq.

Fourth Circuit
 
Di Biase v. SPX Corp., __ F.3d __, 2017 WL 4287801 (4th Cir., Sept. 28, 2017).

Retirees and their employer entered into settlement agreements requiring the employer to provide lifetime healthcare coverage. The employer subsequently notified the retirees of a change in coverage from a group plan to health reimbursement accounts (HRA). Before the change occurred, the retirees and their labor union filed a putative class action asserting claims under the LMRA and ERISA, and alleging that the HRA were not “substantially equivalent” to the group plan and, therefore, violated the settlement agreements.

The retirees moved for a preliminary injunction to stop the change to the HRA. By the time briefing closed, the HRA had already been implemented. The district court denied the preliminary injunction motion as moot and, alternatively, because the retirees could not meet the requirements for a preliminary injunction.

On appeal, the Fourth Circuit first concluded that the retirees’ motion for preliminary injunction was not mooted by implementation of the HRA. The Court noted that the status quo was the status before the plan change. The Fourth Circuit held that because the motion was filed before the change, and the retirees sought to restore the status quo that the employer had disturbed by making the change, the motion for preliminary injunction was not moot.

The Fourth Circuit further concluded, however, that the retirees failed to meet the requirements for preliminary injunction. The Court noted that the underlying claims turned on whether the HRA were “substantially equivalent” to the provision in the settlement agreements. The Court concluded that this was a fact-intensive inquiry that required greater development of the record. Accordingly, the retirees could not meet their burden to show a likelihood of success on the merits.

The Court further concluded that the retirees’ arguments that they had to spend time and effort to navigate the new HRA process, in the absence of the injunction, were insufficient to show irreparable harm. As the Court found, the retirees did not present evidence that anyone was unable to secure insurance using the HRA. Finally, the Court concluded that the balance of the equities favored denial of injunctive relief. The Court found that an injunction would require the employer to cancel the HRA, which had been in place for two years, and reinstate the group plan, perhaps only temporarily. The administrative difficulties combined with the lack of any showing of success on the merits, weighed in favor of allowing the case to proceed to a decision on the merits.

Submitted by:
Paul Sun
Emily Erixson

Fifth Circuit

Maurer v. Indep. Town, 870 F.3d 380 (5th Cir. 2017).

When Independence closed its town fire department in 2012, the Tangipahoa Parish Rural Fire Protection District Number 2 (the “District”), a political subdivision of the parish, took over fire protection services for the town and surrounding areas. The District divided its jurisdiction into service areas and contracted with ten volunteer fire departments to provide fire protection services. For Independence, that department was the Independence Volunteer Fire Department (the “Volunteer Department”). In accordance with the new arrangement, Independence terminated its firefighters, and the Volunteer Department hired them at the end of 2012.

Around this same time, plaintiff David Maurer, who previously worked for Independence’s fire department, became fire chief of the Volunteer Department. Maurer served what the Fifth Circuit referred to as a “contentious seven months” before he was terminated, which included numerous disagreements with Dennis Crocker, the administrator for the District and the previous fire chief for Independence. Maurer’s termination followed an investigation by Crocker and a vote for dismissal by the Board of the Volunteer Department. Although the Fifth Circuit noted the record was vague about the details of the process for removing Maurer, there was some evidence that the District was involved as well.

Maurer filed suit under 42 U.S.C. § 1983 contending that he was entitled, under the 14th Amendment, to notice and an opportunity to respond before being terminated, naming as defendants the District, Crocker, and two members of the District’s Board of Commissioners. The defendants moved for summary judgment on the ground that Maurer had no property interest in his employment and thus no constitutional protections. The District Court agreed, and Maurer appealed.

The Fifth Circuit explained that whether Maurer had a property interest in his employment such that he was entitled to due process protection turned on whether he was in a civil service position under Louisiana law. The Fifth Circuit held that the District Court, in concluding as a matter of law that Maurer’s position was not a civil service position properly considered La. R.S. § 33:2541, but applied the wrong test it examined whether Maurer was an employee of the District under Louisiana’s general test for determining the existence of an employer-employee relationship when it should have used the statutory test under La. R.S. § 33:2541. As explained by the Fifth Circuit, the general test focuses on payment of wages and power of control, as opposed to the statute’s focus on the right to selection, appointment, supervision, and discharge.

Finding that there were factual disputes regarding whether the District had the right to select, appoint, supervise, and discharge the fire chief for the Volunteer Department, the Court concluded that Maurer may have been a civil service employee, in which case he would have had a property interest in continued employment, and thus would have been entitled to due process. Accordingly, the Fifth Circuit reversed the District Court’s grant of summary judgment and remanded for further proceedings.

Adams and Associates, Inc. v. National Labor Relations Board, 871 F.3d 358 (5th Cir. 2017).

Adams and Associates, Inc. (“Adams”) and McConnell, Jones, Lanier & Murphy LLP (“McConnell”) petitioned the Fifth Circuit for review of an order of the National Labor Relations Board (“NLRB”) that held them liable for unfair labor practices in violations of the National Labor Relations Act, 29 U.S.C. § 151, et. seq. (“NLRA”).

Adams and McConnell operate a Job Corps Youth Training Center (the “Center”) in Sacramento, California, under a contract with the Department of Labor (“DOL”). The DOL awarded the primary contract to McConnell to operate the Center with Adams as its subcontractor for residential, wellness, recreation, counseling, and career services. The allegations arose from petitioners’ successorship to the former contractor, Horizons Youth Services, LLC (“Horizons”). When it operated the Center, Horizons had a collective-bargaining agreement with Sacramento Jobs Corps Federation of Teachers, AFT Local 4986, American Federation of Teachers (the “Union”).

The NLRB’s order found that Adams had (i) violated Sections 8(a)(3) and (1) of the NLRA by discriminatorily refusing to hire five incumbent employees in order to avoid an obligation to bargain with the Union and (ii) violated Sections 8(a)(5) and (1) of the NLRA by unilaterally imposing initial terms and conditions of employment on the unit employees and banning the Union president from the Center. The NLRB also found that Adams and McConnell were joint employers, and, therefore, were jointly and severally liable for all violations. The NLRB cross-petitioned for enforcement of its order.

Adams asserted that the NLRB’s findings were not supported by substantial evidence, arguing that the NLRB erred by (i) concluding there was substantial evidence of antiunion animus during the transition period; (ii) concluding that Adams was a ‘perfectly clear’ successor to Horizon’s collective bargaining agreement with the Union; (iii) ordering that Adams recognize the Union as the bargaining representative of employees in the Residential Coordinator position as a remedy; (iv) concluding Adams violated the NLRA by enforcing its site access rule against the Union President; and (v) concluding that Adams and McConnell were joint employers. McConnell contested only the joint employer finding.

The Fifth Circuit, agreeing with the NLRB’s decision that Adams did its best to avoid recognizing the Union when it took over and found McConnell jointly liable, denied Adams and McConnell’s petition for review and granted the NLRB’s cross-petition for enforcement of its order because it found that, based on the record as a whole, substantial evidence supported the NLRB’s findings and conclusions. The Fifth Circuit specifically held that substantial evidence supported the NLRB’s finding that Adams was motivated by antiunion animus when it failed to hire certain union members; Adams’ unilateral imposition of new terms and conditions of employment constituted an unfair labor practice; Adams’ subsequent compliance with NLRA obligation to bargain with Union did not preclude the NLRB from restoring status quo ante as remedy for subcontractor’s initial violation of the NLRA when it unilaterally imposed new terms and conditions of employment; the NLRB’s remedy requiring Adams to recognize and bargain with the Union without a union election with respect to newly created positions was within the NLRA’s broad discretion; Adams violated the NLRA by barring the Union president from access to the Center for collective bargaining sessions; and substantial evidence supported the NLRB’s finding that Adams (subcontractor) and McConnell (primary contractor) were joint employers.
 

Creative Vision Resources, L.L.C. v. National Labor Relations Board, __ F.3d __, 2017 WL 4230829 (5th Cir., Sept. 25, 2017).

Creative Vision Resources, L.L.C. (“Creative”) succeeded anther company as the staffing provider for garbage trucks in New Orleans. Upon taking over, Creative set its own initial terms and conditions of employment instead of bargaining with the incumbent union (“Union”).

The Union filed an unfair-labor-practice charge against Creative, alleging violations under Section 8(a) of the National Labor Relations Act (“NLRA”). The administrative law judge, inter alia, concluded that Creative was within its right to set initial terms and conditions for employment because it was not a “perfectly clear” successor. On review, the National Labor Relations Board (“NLRB”) reversed, and Creative petitioned the Fifth Circuit for review, while the NLRB sought enforcement of its order.

The Fifth Circuit, finding that Creative was a “perfectly clear” successor, held that Creative violated the NLRA by refusing to recognize and bargain with the Union and by unilaterally imposing initial terms and conditions of employment. Accordingly, the Fifth Circuit denied Creative’s petition and granted the NLRB’s petition to enforce.

Submitted by:
Jennifer McNamara

Sixth Circuit

Watford v. Jefferson Cty. Pub. Sch., 870 F.3d 448, (6th Cir. 2017).

Plaintiff was a teacher for 11 years when she was terminated by her employer, Jefferson County Public Schools (“JCPS”). After her termination, she filed a grievance with Jefferson County Board of Education (“JCBE”) alleging that she was terminated because of her race, sex and age. Shortly thereafter, she filed a Charge of Discrimination with the EEOC.

The Collective Bargaining Agreement (“CBA”) between JCBE and the Jefferson County Teachers Association (“JCTA”) required that the grievance procedure be held in abeyance while the EEOC Charge was pending. Consequently, Plaintiff filed a second EEOC Charge alleging that holding the arbitration in abeyance because she filed the first EEOC Charge constituted unlawful retaliation. She also filed a Charge with the EEOC against the JCTA.

After Plaintiff’s first EEOC Charge was dismissed, the arbitration on her grievance was rescheduled. However, she then filed suit against JCPS in the United States District Court for the Western District of Kentucky. As a result, the arbitration was again held in abeyance. Plaintiff then filed yet another EEOC Charge alleging that this action also constituted retaliation under Title VII.

In the District Court action, Plaintiff filed a motion for partial summary judgment alleging that both JCPS and JCTA retaliated against her by holding the arbitration in abeyance. The District Court denied her motion, finding that there was no adverse employment action when the arbitration was held in abeyance. The Court also granted the cross-motions for summary judgment that were filed by the JCPS and JCTA on the retaliation counts.

On Appeal, the Sixth Circuit found that a provision in a CBA that requires a grievance – which is otherwise supposed to be “rapidly processed” – to be held in abeyance if the employee files charges elsewhere would dissuade a reasonable worker from making or supporting a charge of discrimination. The Court further found that the provision constituted an “employment practice” that interferes with the EEOC’s information-gathering system and, therefore, runs afoul of Title VII and the ADEA. As a result, the District Court’s decision was reversed and remanded for further proceedings.

Mullendore v. City of Belding, No. 16-2198, __ F.3d __, 2017 WL 3614451 (6th Cir., Aug. 23, 2017) (originally unpublished and later released for full text publication).

Plaintiff was hired as the City Manager of the City of Belding, Michigan in April, 2013. Her employment contract was renewed several times, including in November, 2014 when it was approved for a one year extension to expire in April, 2016.

In December, 2014, shortly before she was terminated, a new City Council member sent an email to the remainder of the Council indicating that he wanted the Plaintiff’s employment terminated as a result of political discontent, and that he and would continue to push the issue. Plaintiff came into possession of that email. Shortly thereafter, she sent each member of the City Council a memo entitled “Personal Medical Issue”. She indicated in the memo that she had injured her ankle, needed surgery and would be off work for less than 2 weeks. Thereafter, she would work from home for 12 weeks because she could not climb the steps to get into City Hall. Plaintiff assured the Council that she would be able to “work from home easily.”

Employees who attended a staff meeting indicated that Plaintiff stated that she would not take a medical leave and declined FMLA paperwork. The City’s finance director also testified that she tried to give Plaintiff FMLA paperwork to complete and Plaintiff stated that she did not want to take FMLA leave because she would be working from home after just a few days off.

At the next City Council meeting, a vote was taken to terminate Plaintiff’s employment. She was not in attendance at the meeting and then filed suit alleging violations of the FMLA by the City and the Council members.

The District Court granted the defendants’ motion for summary judgment determining that a reasonable jury could not find that Plaintiff gave notice of her intent to take medical leave. The Court found that her memo was a request for an accommodation, and not a formal request for FMLA leave. The District Court also found that a reasonable fact-finder could not conclude that the defendants’ proffered reason for the termination (political controversy and distraction) was not the real reason.

The Sixth Circuit affirmed the District Court’s rulings. It found that even if there was a genuine issue of fact regarding whether Plaintiff provided sufficient notice of the intent to take FMLA leave, she could not prove that she was terminated because she was on FMLA leave. Defendants articulated a legitimate reason for terminating her employment and she could not establish pretext. Thus, she could not prevail on an interference claim.

Submitted by:
Leigh Schultz

Seventh Circuit

Severson v. Heartland Woodcraft, Inc., __ F.3d __, 2017 WL 4160849 (7th Cir., Sept. 20, 2017).

Plaintiff Raymond Severson (“Severson”) began working for Defendant Heartland Woodcraft, Inc. (“Heartland”), a fabricator of retail display fixtures, in 2006. Severson took a twelve-week medical leave under the Family Medical Leave Act (“FMLA”), 29 U.S.C. § 2601 et seq., to deal with serious back pain, in early June 2013. On the last day of his leave, he underwent back surgery. His medical condition required that he remain off work for an additional two or three months to recuperate from the surgery but, by this point, he had exhausted his FMLA entitlement. Severson asked Heartland to continue his medical leave. Instead, Heartland denied his request and terminated his employment.

Severson brought suit alleging that Heartland had discriminated against him in violation of the Americans with Disabilities Act (the “ADA”), 42 U.S.C. § 12101 et seq., by failing to provide him the reasonable accommodation of, inter alia, an additional three-month leave of absence after he had exhausted his FMLA entitlement. Heartland argued that Severson’s proposed accommodations were unreasonable. The district court agreed and granted summary judgment to Heartland.

On appeal, the Seventh Circuit reaffirmed its reasoning in Byrne v. Avon Prods., Inc., 328 F.3d 379, 381 (7th Cir. 2003), to hold that “[a] multimonth leave of absence is beyond the scope of a reasonable accommodation under the ADA.” The Seventh Circuit anchored its analysis to the definition of a “qualified individual” under the ADA, and explained that, a reasonable accommodation is one that makes it possible for an employee to do his or her job. An extended leave of absence excuses an employee’s inability to work rather than enabling the employee to continue working.

Filing a brief as amicus curiae, the EEOC asserted its position that a medical leave of absence can be a reasonable accommodation where the leave is of a definite duration and likely to enable the employee to perform the essential duties of the job when the employee returns to work. The Seventh Circuit squarely rejected the EEOC’s “untenable argument” as a position that would transform the ADA into a medical leave statute – “in effect, an open-ended extension of the FMLA.”

The Seventh Circuit’s bright-line rule conflicts with the fact-sensitive analysis adopted by some of its sister circuits, which have held that an extended leave can be a reasonable accommodation under certain circumstances.

Frakes v. Peoria Sch. District No. 150, __ F.3d __, 2017 WL 4250079 (7th Cir., Sept. 26, 2017).

Plaintiff Michelle Frakes (“Frakes”) worked as a full-time special education teacher in Peoria since 2002. In early 2012, Frakes received an “unsatisfactory” performance rating, based on her classroom management skills and lack of preparation for Individualized Education Plan (“IEP”) meetings and faculty presentations. Frakes refused to sign her evaluation, contending that it was unfair. She admitted that her performance could use improvement at times but defended her teaching methods. Before a performance remediation plan could be implemented, Frakes was placed on medical leave for the remainder of the 2011-2012 school year, due to a serious health condition. While on medical leave, Frakes was selected for a reduction in force based on her “unsatisfactory” performance rating.

Frakes brought an anti-interference claim under Section 504, alleging that her “unsatisfactory” evaluation and the termination of her employment interfered with her ability to aid her students in exercising their rights under Section 504. The district court granted summary judgment in favor of Peoria.

On appeal, the Seventh Circuit affirmed, holding that Frakes’ teaching method, while catered to disabled students, was not a “protected activity” under Section 504. Frakes submitted no evidence to indicate that she was asserting rights of disabled students or challenging disability discrimination when she contested her “unsatisfactory” rating.

Monroe v. Indiana Dep’t of Transp., 871 F.3d 495 (7th Cir. 2017).

Plaintiff Jeff Monroe (“Monroe”) worked for the Indiana Department of Transportation (“INDOT”) for more than twenty years. In January 2013, seven or eight of Monroe’s subordinates complained about Monroe’s treatment of them. Specifically, they stated that Monroe screamed at them, treated them with no respect, threatened to terminate them, and publicly ridiculed one employee who had a hearing impairment.

The Company’s internal investigation substantiated the allegations made against Monroe. During interviews, both current and former employees provided negative comments about Monroe’s supervisory skills. At least seven employees gave written statements complaining about Monroe. When Monroe was advised about the ongoing investigation, he disclosed that he had been given a preliminary diagnosis of PTSD. It was unclear to INDOT whether or not Monroe’s PTSD diagnosis was legitimate, as Monroe did not produce any documentation in support. INDOT subsequently decided to terminate Monroe’s employment.

Monroe filed suit, alleging disability discrimination under the Americans with Disabilities Act (“ADA”) and Section 504 of the Rehabilitation Act (“Section 504”). The district court granted defendants’ motion for summary judgment. On appeal, the Seventh Circuit affirmed, holding that Monroe had failed to proffer evidence establishing that INDOT’s stated reason for his discharge was pretext for discrimination on the basis of his PTSD. Moreover, the Court stated that even if INDOT had taken Monroe’s PTSD into consideration when making the termination decision, Monroe still could not establish pretext. Employers may terminate an employee for inappropriate behavior, even when that behavior is caused by the employer’s disability.

E.T. Prods., LLC v. D.E. Miller Holdings, Inc., __ F.3d __, 2017 WL 4159615, (7th Cir., Sept. 20, 2017).

In January 2011, Miller sold E.T. Products to a group of investors. As part of the deal, he signed a noncompetition agreement (the “noncompete”). The noncompete forbade Miller from rendering services for, or otherwise assisting, any competitor. About a year later, Miller sold Petroleum Solutions to John Kuhns. Miller trained Kuhns on lubricant blending and provided consulting services.

In late 2012, the companies cut ties. E.T. Products stopped using Petroleum Solutions as its distributor. Petroleum Solutions found a new supplier of fuel-additive products and also began blending its own products. When Miller learned that Petroleum Solutions was no longer a distributor for E.T. Products, he withdrew all assistance from Kuhns based on the provisions in his noncompete. However, Miller continued to lease Kuhns the land on which the business operated.

E.T. Products sued Miller for breach of the noncompete when he failed to revoke the property lease to Kuhns. E.T. Products also alleged that Miller violated the noncompete by providing assistance to Kuhns during the time that Petroleum Solutions was its distributor. The district court granted summary judgment to Miller.

On appeal, the Seventh Circuit affirmed, applying Indiana law to hold that the noncompete was enforceable but that Miller did not breach. The Court found the North American geographic territory of the noncompete reasonable, even though the company did not do business in all states at the time of the sale, because the investors purchasing the company intended to, and did in fact, expand sales across the continent.

The Court went on to hold, however, that Petroleum Solutions was E.T. Products’ distributor, not competitor, during the time Miller rendered assistance to Kuhn. As such, Miller did not violate the noncompete based on his assistance efforts during this time period. The Court also rejected E.T. Products’ argument that a failure to revoke a lease to a competitor violated the noncompete, as one that would produce an “absurd result”.

Submitted by:
Stephanie L. Mills-Gallan