August 2017

August 2017 Circuit Update

First Circuit

Bustillo-Formoso v. Million Air San Juan Corp., ___F.3d___, 2017 U.S. App. LEXIS 14679 (1st Cir. August 9, 2017).

The United States Circuit Court of Appeals for the First Circuit upheld United States District Court for the District of Puerto Rico’s grant of summary judgment to employer in age and disability discrimination suit.

The plaintiff, Pedro Bustillo-Formoso, worked as an airplane pilot for the defendant Million Air San Juan Corporation. Plaintiff filed charges of discrimination against his employer alleging that Million Air had discriminated against him because of his age. In one such charge, Plaintiff sought compensation for “damages, sufferings, and mental anguishes for [him] and [his] family.” Subsequently, Million Air grounded the plaintiff and did not allow him to fly airplanes. Million Air did so because of safety concerns raised by the plaintiff’s allegation of “damages, sufferings, and mental anguishes.” Million Air continued to pay the plaintiff during this time period. Million Air referred plaintiff to a doctor for a mental examination. Million Air conditioned plaintiff’s return to flying upon his obtainment of a medical certification showing that he was still “fit to fly.”

Plaintiff met with the doctor but refused to be examined because the doctor did not agree to plaintiff’s proposed limitations on the examination. One such limitation was that the doctor would not report any mental health findings to Million Air. The doctor did not comply with these demands. Million Air subsequently terminated plaintiff’s employment for his failure to submit to the test.

Plaintiff filed suit in the United States District Court for the District of Puerto Rico alleging violations of the ADEA and the ADA and the corresponding Puerto Rico statutes. The judge granted the employer’s motion for summary judgment.

On appeal, plaintiff contended that Million Air’s request for him to see the doctor was in fact retaliation for his filing of charges and pretext for his termination. The First Circuit held that because plaintiff had not proffered any facts supporting the retaliation claim at the District Court, and had done nothing more than put forth conclusory allegations, he could not have defeated summary judgment.

Submitted by:
Ali Khorsand

Second Circuit

Schultz v. Shearith, ___F.3d ___, 2017 U.S. App. LEXIS 14764 (2d Cir. Aug. 10, 2017).

Management fired plaintiff one day after she returned from her honeymoon, when she was visibly pregnant. The termination was effective August 14, 2015. After plaintiff’s lawyer contacted defendant, defendant reinstated plaintiff’s position. The Court of Appeals holds that plaintiff’s brief “termination” was an adverse action under Title VII. The Court writes, “Our Court … has not yet decided whether a notice of termination, which is rescinded before the termination is implemented, qualifies as an adverse employment action.” Holding that plaintiff may proceed with her case, the Court draws from Supreme Court authority on when to calculate the statute of limitations in wrongful discharge claims. In Delaware State College v. Ricks, 449 US 250 (1980), the Court said the statute of limitations starts to run when the plaintiff learns about his termination, i.e., when management notifies him about it, even if the termination actually takes effect at a later point in time. The Court writes, “The Supreme Court’s conclusion that a discrimination claim accrues upon notice of termination, rather than upon the implementation of that decision, necessarily implies that the notification of termination qualifies as an adverse employment action.”

Submitted by:
Stephen Bergstein, Esq.

Fifth Circuit

Convergys Corp. v. NLRB, 866 F.3d 635 (5th Cir. 2017).

An employee of Convergys who had signed class and collective action waiver brought an FLSA collective action against Convergys. In response, Convergys filed a motion to strike the allegations, after which the employee filed a charge with the NLRB asserting that Convergys interfered with the exercise of employee rights by seeking to enforce the waiver. Convergys settled the FLSA case, and the employee sought to withdraw the NLRB charge. The Board, however, issued a complaint alleging that Convergys violated the NLRA by requiring job applicants to sign class and collective action waivers and by seeking to enforce those waivers.

Relying on the NLRB’s D.R. Horton case, an Administrative Law Judge recommended a finding that Convergys violated Section 8(a) of the NLRA. Although that decision was undermined by the Fifth Circuit’s denial of enforcement in D.R. Horton v. NLRB, 737 F.3d 344 (5th Cir. 2013), the Board nonetheless adopted the ALJ’s decision and ordered Convergys to cease and desist enforcing the waivers. Convergys sought review of the Board’s determination on the basis that it conflicts with Fifth Circuit precedent.

Citing prior decisions, the Fifth Circuit again held that the use of class or collective actions is a procedural, not substantive, right, and for that reason, rejected the Board’s position that Section 7 guarantees a right to participate in class or collective actions: “Because our decision in Horton was based on our interpretation of Section 7 and our reasoning was not limited to interpretation and application of the FAA, the Board’s argument that Horton was limited to the arbitration context is unpersuasive.” The Fifth Circuit also noted that the Supreme Court may soon resolve this issue in NLRB v. Murphy Oil USA, Inc., cert. granted, 137 S. Ct. 809 (2017), but until the Supreme Court holds otherwise, it must apply binding precedent.

In a lengthy dissent, Judge Higginbotham agreed with the Board that Horton should be limited to the arbitration context. In a concurring opinion, Judge Higginson agreed that enforcing a class or collective action waiver violated the NLRA, but felt constrained by the “rule of orderliness” to follow binding precedent and therefore concurred in the judgment only.

Hills v. Entergy Operations, Inc., 866 F.3d 610 (5th Cir. 2017).

Nineteen “security shift supervisors” employed at Entergy’s nuclear power plant near Killona, Louisiana, filed this FLSA collective action seeking back pay on the basis that they were misclassified as exempt from overtime pay. All of the job offers were premised on the positions being exempt from the FLSA’s overtime guarantee.

The parties filed cross-motions for summary judgment, with the employees claiming they were wrongfully classified as exempt and Entergy claiming they were properly classified as exempt pursuant to the administrative exemption. The district court denied both motions, finding a genuine dispute over whether plaintiff’s positions met the administrative exemption standard. The court also, however, determined the fluctuating workweek method for calculating backpay would apply in the event that misclassification were found. The court found then found that, assuming the employees were misclassified, their regular pay would be calculated pursuant to the fluctuating workweek method which resulted in a below zero recovery for certain plaintiffs. Accordingly, the court dismissed those plaintiffs’ claims.

The dismissed plaintiffs appealed. The Court rejected the trial court’s conclusion that, because the parties agreed to alternatively working 36 hours one week and 48 hours the next, they agreed to a “fluctuating workweek.” Declining to follow a virtually identical case in the Fourth Circuit, the Fifth Circuit held that a biweekly alternating, but fixed, schedule is not “fluctuating” as that term is used in the “fluctuating workweek method.” Noting that Fifth Circuit precedent requires the employee bear the burden of showing that the fluctuating workweek method is not applicable, the Fifth Circuit found that the evidence created a fact issue on the applicable method of calculating regular rate. Because fact issues precluded summary judgment on whether the fluctuating workweek method applied here, the Court reversed and remanded for the trier of fact to resolve that issue. The Court noted that, if the trier of fact accepts Entergy’s evidence to conclude that plaintiffs agreed to have their salaries compensate an unlimited amount of hours each week, then the fluctuating workweek method will apply. If, however, they accept Plaintiffs evidence that the parties only agreed to an alternative fixed schedule, then the regular rate of pay must be computed with reference to that limited agreement.

Meadows v. Latshaw Drilling Co., 866 F.3d 307 (5th Cir. 2017).

Latshaw is a drilling company that contracts with third party operators to drill wells on land leased to the operators. Latshaw would assemble a crew and drilling rig and move it to the project location at the operator’s expense. Two crews would alternate 14-day hitches living on the rig during which half of each crew worked alternating 12-hours shifts. Each rig typically had 22-28 employees assigned to it, with a drilling superintendent overseeing approximately 5 rigs frequently visiting more than one rig in a day. Latshaw also had a corporate office in Oklahoma and three yards, but rig employees were not assigned to, and did not work out of, the corporate office or yards. When a project was completed, the rig would either move to a new location or return to a yard where it was stored or “stacked.”

Before oil prices began to drop, Latshaw had 39 rigs in service. With the downturn in the oil industry, fewer operators requested Latshaw’s services. Latshaw stacked 29 of its rigs and laid off 398 employees over a 6-month period. Plaintiff filed suit alleging that the terminations constituted a “plant closing or mass layoff” under the WARN Act, and that Latshaw failed to give the required advance notice of the terminations. Plaintiffs argued four theories to satisfy the WARN Act’s “single site of employment” requirement: (1) drilling rigs were collectively a single site of employment; (2) the corporate office constituted a single site of employment; (3) employees worked at a single site of employment in connection with a truly unusual organizational situation; and (4) each drilling rig operated at/from/through the relevant single site of employment for plaintiffs and plaintiffs constituted an operation until within such single site of employment.

Plaintiffs moved for class certification, and Latshaw moved for summary judgment one the basis that each drilling rig, each yard, and the corporate offices were separate sites of employment and may not be treated collectively as one single site of employment under the WARN Act. As each site had less than 50 employees, neither a plant closing nor mass layoff could have occurred. Before ruling on the class certification motion, the trial court granted Latshaw’s summary judgment. The court found that plaintiff had failed to create a fact issue as to whether there had been an employment loss for at least 50 people at a single site of employment. Recognizing that the WARN Act allows aggregation of geographically distinct facilities into a single site of employment only if (1) the separate facilities are in reasonable geographic proximity of one another; (2) are used for the same purpose and (3) share the same staff and equipment, the court determined that Plaintiff had failed to present evidence to establish that any drilling rigs were in reasonable geographic proximity. Accordingly, the Fifth Circuit affirmed summary judgment dismissing the case.

Submitted by:
Donna Phillips Currault