Thursday, March 7, 2024

Ohio Courts of Appeal Refused Enforcement of Arbitration Clauses

Last month, two Ohio Courts of Appeal ruled against employers attempting to enforce arbitration clauses.   In the first, the Court affirmed the denial of a motion to compel arbitration and held that the trial court was not required to hold a jury trial on the enforceability of the clause.  Costin v. Midwest Vision Partners LLC, 2024-Ohio-463.  The parties had amended the plaintiff’s employment agreement upon his termination of employment and specified which clauses of his former agreement would survive termination of his employment.  The arbitration clause was not one of the provisions that the amended agreement listed as surviving his employment termination. Accordingly, the trial court could grant summary judgment on that issue.   In the second case, the Court reversed and remanded the dispute where the plaintiff’s age discrimination claim had been stayed pending arbitration because the trial court had failed to consider the plaintiff’s argument that the "loser pays" provision of the arbitration clause was unconscionable, contrary to public policy and unenforceable.   Grimm v. Professional Dental Alliance, LLC, 2024-Ohio-637

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Tuesday, March 5, 2024

Sixth Circuit Finds Excellent Customer Service Requirements Doom ADA Claim

 

Last month, the Sixth Circuit affirmed an employer’s summary judgment on claims for disability discrimination and failure to accommodate when, after several options failed, it transferred the plaintiff delivery driver to an open overnight warehouse non-customer facing position after receiving repeated complaints about the plaintiff’s profane and racists outbursts caused by his disability.  Cooper v. Dolgencorp, LLC, No.  23-5397 (6th Cir. Feb. 15, 2024).   The Court noted that the plaintiff stipulated that excellent customer service was an essential job function and that the plaintiff’s own physician indicated that he required an accommodation (i.e., a constant co-worker to handle the customer serving functions on his route).  The Court noted that “the ADA does not require an employer to tolerate an employee’s repeated inadequate job performance for a certain amount of time before it acts.” Further, the plaintiff could not identify any open delivery positions which did not require excellent customer service.   Finally, the Court rejected his constructive discharge claim because the employer granted tried most of his accommodation requests, including medical leave, a seasonal driver-helper and was not deliberately indifferent.  “Although “a complete failure to accommodate, in the face of repeated requests, might suffice as evidence to show the deliberateness necessary for constructive discharge,” . . . that is not the case here.”

According to the Court’s opinion, the plaintiff delivery driver would regularly exhibit ticks and utter profane sexist and racist outbursts while delivery cola and setting up displays inside customer stores.  This lead to complaints about him from the customers and their customers and employees.   His job description required that he provide excellent customer service.   The plaintiff was granted several medical leaves to adjust his medication and to attempt different therapies.  He was also provided with a seasonal helper who could handle the customer-facing roles, but there were still complaints.  His physician indicated that he required a helper in order to perform his customer-facing duties.  Although the plaintiff requested to be transferred to other routes without customer facing duties, there were no vacancies in those routes and one had changed from non-customer facing to customer facing.  As a result, he was offered a vacant overnight warehouse position (with a cut in pay) where he would not have to interact and offend customers.   After working there for a few months, he resigned -- indicating that there were no hard feelings -- because he found another delivery driver job with customer-facing duties where the customers were not offended.    He then filed suit alleging that his warehouse transfer was discriminatory, that he could perform his job without a reasonable accommodation, and that he was constructively discharged. 

The Court agreed that excellent customer service was an essential job function.  First, it was noted in his job description.  Second, the plaintiff stipulated that excellent customer service was an essential job function.

A reasonable jury could not find that [the plaintiff] could provide excellent customer service to [the employer’s] customers in his role as a delivery merchandiser without an accommodation. Of particular importance, [his] own doctor noted that [he] needed an accommodation to perform his job duties. When a plaintiff’s own doctor—not merely the defendant employer— concludes that the plaintiff cannot perform his job without an accommodation, the plaintiff likely cannot establish that he is otherwise qualified to perform the job without an accommodation .  . .  [His] disability, moreover, caused him to vocalize racist and profane words in the presence of others in the stores of [the employer’s] customers. At various times during his employment, [its] customers complained about the language he used while delivering [its]  products. In fact, [he] acknowledges many of the customer complaints made against him in his amended complaint.

His need for a reasonable accommodation was further demonstrated by the medical leaves that he took and his request for a helper to handle the customer-facing aspects of his duties.

The Court rejected his argument that his comments were generally indecipherable because enough of them had been understood by complaining customers.  The Court also rejected his argument that his involuntary sexist and racist comments were not frequent enough to justify the transfer, thus creating

 

a factual dispute remains about the number of complaints customers made against him. It is undisputed, however, that [he] offended [the employer’s] customers at least twice with his use of racist and profane language, and the ADA does not require an employer to tolerate an employee’s repeated inadequate job performance for a certain amount of time before it acts. The specific number of complaints made against [him] is also immaterial because [he] contends that his verbal tics using inappropriate language remained consistent throughout his employment.

The Court also rejected his failure to accommodate claim. The plaintiff failed to identify any open delivery routes without customer facing duties.  While he contended that the Dollywood route had been non-customer facing when he previously drove it, he produced no evidence to dispute that the customer’s system had since changed, making it also a customer-facing route.

“Where the requested accommodation is a job transfer, ‘employers have a duty to locate suitable positions for’ employees with disabilities.”  . . . Still, “this duty does not require employers ‘to create new jobs [or] displace existing employees from their positions . . . to accommodate a disabled individual.’”  . . .  Nor does a reasonable accommodation require employers to eliminate or reallocate an essential job function.  . . . A “reasonable accommodation” under the ADA can include “reassignment to a vacant position.” 42 U.S.C. § 12111(9)(B).

                         . . . .

However, “[a]n employer may reassign an employee to a lower grade and paid position if the employee cannot be accommodated in the current position and a comparable position is not available.”  . . .. And as we explained above, [he] could not perform the delivery merchandiser position without an accommodation, and he failed to propose an objectively reasonable accommodation. Thus, [the employer’s] accommodation, via transfer to a warehouse position, was reasonable.

Finally, the Court rejected his constructive discharge claim.

To establish a claim for constructive discharge, a plaintiff must prove: (1) the employer deliberately created working conditions that a reasonable person would perceive as intolerable, (2) the employer did so to force the employee to quit, and (3) the employee quit.  . . . . Constructive[1]discharge claims require courts to examine “both the employer’s intent and the employee’s objective feelings.”  . . .  [His] claim fails at the second element—he cannot show that [his employer] deliberately created intolerable working conditions with the intention of forcing him to quit.

Each time [he] requested an accommodation from [his employer], the company provided one. For example, after the incident at the Dollar General store in early 2018, [it] adjusted [his] route so that he would not have to service Dollar General stores. And after Cooper submitted a request to be put on a truck with another driver in August 2018, [it] temporarily allowed him to work as a driver helper. Although “a complete failure to accommodate, in the face of repeated requests, might suffice as evidence to show the deliberateness necessary for constructive discharge,”  . . . that is not the case here.

In fact, [he] admits [it] provided him with the warehouse position as an accommodation. Of course, he preferred a different accommodation. But the evidence demonstrates that [it] offered [him] a vacant position that was as close as [it] could get to his delivery merchandiser job. What is more, [he] admitted that when he resigned, he told his supervisor that he held nothing against [the employer].

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

 

Monday, February 12, 2024

Sixth Circuit Revives FLSA Retaliation Claim as a Jury Question After Plaintiff is Fired After Repeated Complaints About Not Getting Paid for Making and Obtaining Repairs

Last week, the Sixth Circuit reversed an employer’s summary judgment on a FLSA retaliation claim.  Caudill v. Hard Drive Express, Inc., No. 23-1145 (6th Cir. 2/7/24).  The employee trucker had complained repeatedly during his employment that the employer failed to pay him for minor repairs that he made on his truck or for time driving it to an authorized repair shop.  On his last day of work, they argued over that and whether he was eligible for PTO before he was fired.  The Court found that there was a dispute over material facts which a jury must resolve about the reason he was fired when he had threatened to go to “the labor board” after the employer referred to uncompensated repairs that the employee had made.   While the employer had argued and the trial court had found that this threat related to unprotected complaints about the PTO policy, the Court found that the employee’s numerous prior complaints about the uncompensated time and repair issue could also have been sufficient to put the employer on notice that he was engaging in conduct protected under the FLSA.

According to the Court’s opinion, the plaintiff trucker had repeatedly complained about not being paid for time spent making and obtaining repairs on his truck. The employer explained that he had failed to turn in receipts for reimbursement and was supposed to have had all repairs made by authorized vendors.  (The plaintiff asserted that he had turned in the original receipts without keeping copies).   On his last day of work, they argued again -- mostly by text message -- about this and his ineligibility for PTO before he was fired. During the text message argument, he threatened to report the employer to the “labor board”  after his boss had pointed out that he had made him many no-interest loans and was offended that he wanted paid for changing filters which he should have been done only by the authorized repair shops.  They also argued about whether he qualified for paid time off when he failed to give 30 days advance notice, etc.  The trial court granted summary judgment to the employer on the grounds that the employee’s complaints about getting paid for repairs were too vague to have put the employer on notice that they were protected by the FLSA and that his complaints about PTO were unprotected by the FLSA.

The Court did not dispute that his complaints about PTO were unprotected by the FLSA.  However, it did not find the trucker’s threat to be too vague to prove that he was terminated in retaliation for engaging in protected conduct under the FLSA, which “contains an antiretaliation provision that makes it unlawful “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter.” Id. § 215(a)(3).”  The Court essentially follows the same burdens of proof that exist under the federal discrimination laws.   

While the trial court’s interpretation of the text message exchange between the plaintiff and employer was plausible, it was not the only possible interpretation.

Given the muddled nature of the back-and-forth between the two, the message could support either reading. Additionally, [the plaintiff’s] statement that he was on his way to the labor board came in response to a message from [his boss] complaining that he was asked to reimburse truck maintenance even though he made no-interest loans to drivers . . . .

Because a reasonable jury could find that these messages put Defendants on notice that [plaintiff] intended to report them for their asserted failure to compensate drivers for repairs, summary judgment should not have been granted.

Moreover, his

“prior complaints about reimbursements provide another potential grounding for his FLSA claim. The district court held that the prior complaints did constitute protected activity under the FLSA, as it covers informal and internal complaints. . . . It concluded, however, that these complaints did “not appear to be more than mere grumblings” that failed to satisfy the notice requirement. . . . In reaching this conclusion, the court distinguished [his] earlier complaints from a case in which the plaintiff’s “numerous internal complaints” included one that cited FLSA penalties; it also noted that [he] failed to produce records of unreimbursed expenses.  . . . But as Defendants themselves admitted in their summary judgment motion, “Plaintiff repeatedly complained (commencing in 2017) and threatened to report the company . . . about alleged unpaid services or non-reimbursed, out-of-pocket expenses.”  . . . The district court did not explain why, given those threats, the complaints were too indefinite to place Defendants on notice that [he] was asserting statutory rights.  . . . . And to the extent that [he] must establish that [his employer] in fact failed to reimburse him, he submitted an affidavit stating that he turned in receipts to [his boss] and was not reimbursed. This is competent evidence to overcome summary judgment, even if the lack of corroborating documentation (and conflicting attestations from Defendants) might affect how a jury weighs it.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Thursday, February 8, 2024

Supreme Court Reinstates SOX Jury Verdict With Lower Burden of Proving Employer's Motive Against Whistleblower

 This morning, Supreme Court unanimously found that proof of retaliatory intent is not necessary to prevail on a claim for wrongful discharge brought under §1514A(a) of the Sarbanes-Oxley Act of 2002, and the employee must prove that the protected activity was merely a contributing factor to his or her employment termination.  Murray v. UBS Securities, LLC, No. 22-660 (U.S. 2-8-24).  “Under the whistleblower-protection provision of the Sarbanes-Oxley Act of 2002, no covered employer [publicly-traded companies] may ‘discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of’ protected whistleblowing activity. 18 U. S. C. §1514A(a).”  The protected activity includes reports by employees “what they reasonably believe to be instances of criminal fraud or securities law violations.”     “When a whistleblower invokes this provision, he bears the initial burden of showing that his protected activity ‘was a contributing factor in the unfavorable personnel action alleged in the complaint.’ 49 U. S. C. §42121(b)(2)(B)(iii). The burden then shifts to the employer to show that it ‘would have taken the same unfavorable personnel action in the absence of ‘ the protected activity. §42121(b)(2)(B)(iv).”  The statutory language prohibiting discrimination against the employee does not require proof of retaliatory intent. 

According to the Court’s opinion, the plaintiff was employed as a research strategist who was required by SEC regulations to certify to his employer’s current and prospective customers that his reports were prepared independently and reflected his own views.  He alleged that he was fired after internally reporting in December 2011 and January 2012 that the leaders of two trading desks were improperly pressuring him to skew his reports to support their business strategies and to “clear” his articles with them before publication.  He found their conduct to be both unethical and illegal.  His supervisor, while sympathetic, urged him to not alienate those two individuals and was not helpful when the plaintiff reported that he was improperly being left out/excluded from meetings.   Despite having just given the plaintiff a strong performance evaluation, the manager then recommended him for layoff or to be transferred to a trading desk analyst position where he would not have SEC-certification responsibilities.  When the trading desk rejected him, he was fired in March 2012.  At trial, the employer argued that “market-wide difficulties and a $2-billion loss on a [its] trading desk in London had required the elimination of certain positions,” including his.

At trial, the judge instructed the jury that he was “not required to prove that his protected activity was the primary motivating factor in his termination, or that . . . UBS’s articulated reason for his termination was a pretext.”  When the jury sought clarification, the judge instructed that they ““should consider” whether “anyone with th[e] knowledge of [the plaintiff’s] protected activity, because of the protected activity, affect[ed] in any way the decision to terminate [his] employment.”  Recommending a $1M verdict, the “jury found that [the plaintiff] had established his §1514A claim and that [the employer] had failed to prove, by clear and convincing evidence, that it would have fired [him] even if he had not engaged in protected activity.”  The court added $1.7M in attorneys fees and costs to the jury’s recommendation.   On appeal, the Second Circuit concluded that the plaintiff was required to show that the employer possessed a retaliatory intent.  Today, the Supreme Court reversed.

Unlike most federal employment statutes, SOX adopts the “burdens of proof set forth in section 42121(b) of title 49, United States Code”—a provision of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21).” Under that statute, “the whistleblower bears the burden to prove that his protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint.” 49 U. S. C. §42121(b)(2)(B)(i). If the whistleblower makes that showing, the burden shifts to the employer to show “by clear and convincing evidence” that it “would have taken the same unfavorable personnel action in the absence of ” the protected activity. §42121(b)(2)(B)(ii).”  This framework

originated in the Whistleblower Protection Act of 1989 (WPA), 5 U. S. C. §1221(e), which provides legal protection for whistleblowers within the civil service. The framework was meant to relieve whistleblowing employees of the “excessively heavy burden” under then-existing law of showing that their protected activity was a “‘significant’, ‘motivating’, ‘substantial’, or ‘predominant’” factor in the adverse personnel action, and it reflected a determination that “[w]histleblowing should never be a factor that contributes in any way to an adverse personnel action.” Congress then incorporated the easier-to-satisfy “contributing factor” framework into a series of similar whistleblower statutes that protect non[1]civil-service employees in industries where whistleblowing plays an especially important role in protecting the public welfare—including, as noted above, the airline industry (AIR 21) and the securities industry (Sarbanes-Oxley).

The Court then explained that

Section 1514A’s text does not reference or include a “retaliatory intent” requirement, and the provision’s mandatory burden-shifting framework cannot be squared with such a requirement. While a whistleblower bringing a §1514A claim must prove that his protected activity was a contributing factor in the unfavorable personnel action, he need not also prove that his employer acted with “retaliatory intent.”

                . . . .

An animus-like “retaliatory intent” requirement is simply absent from the definition of the word “discriminate.” When an employer treats someone worse—whether by firing them, demoting them, or imposing some other un[1]favorable change in the terms and conditions of employment—“because of ” the employee’s protected whistleblowing activity, the employer violates §1514A. It does not matter whether the employer was motivated by retaliatory animus or was motivated, for example, by the belief that the employee might be happier in a position that did not have SEC reporting requirements.

The Court rejected the employer’s argument that innocent employers will be held liable for adverse employment actions which were not motivated by retaliation or the protected conduct, such as when the employee’s protected conduct results in the biggest client to leave and the employee without any work to do:

The statute’s burden-shifting framework provides that an employer will not be held liable where it “demonstrates, by clear and convincing evidence, that [it] would have taken the same unfavorable personnel action in the absence of ” the protected behavior. 49 U. S. C. §42121(b)(2)(B)(ii). The right way to think about that kind of same-action causation analysis is to “change one thing at a time and see if the out[1]come changes.” Bostock, 590 U. S., at 656. The question is whether the employer would have “retain[ed] an otherwise identical employee” who had not engaged in the protected activity. Id., at 660. As the Federal Circuit has explained in the WPA context, the same-action analysis “does not require . . . that the adverse personnel action be based on facts ‘completely separate and distinct from protected whistleblowing disclosures.’”  . . . In that case, the correct inquiry was whether the employer would have taken the same action if it had learned of the contents of the employee’s protected disclosure through other means.  . . .. In UBS’s hypothetical, the relevant inquiry would be whether the employer still would have fired the employee if the client had left for some other reason. If so, it will have no trouble prevailing under the statute.

To be sure, the contributing-factor framework that Congress chose here is not as protective of employers as a motivating-factor framework. That is by design. Congress has employed the contributing-factor framework in contexts where the health, safety, or well-being of the public may well depend on whistleblowers feeling empowered to come forward. This Court cannot override that policy choice by giving employers more protection than the statute itself provides.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Monday, February 5, 2024

Sixth Circuit Rejects Conclusory Allegations in Complaint of Racial and Retaliation Discrimination and Harassment

 Last week, the Sixth Circuit affirmed the dismissal of a racial discrimination, harassment and retaliation claim against a university. Ogbonna-McGruder v. Austin Peay State University, No. 23-5557 (6th Cir. Jan. 30, 2024).   First, the Court found that discrete acts of discrimination rarely constitute a hostile work environment claim.  Second, it found that four acts over more than 30 months were not sufficiently severe or pervasive enough to constitute harassment.  Third, her retaliatory harassment claims failed for the same reasons, even if the burden of proving retaliation is lower than discrimination.  Fourth, her discrimination claims failed because she failed to allege that they were motivated by her race or that she was treated differently than anyone who was similarly situated from her. “[O]ur circuit has repeatedly held that a retaliatory hostile work environment claim must include evidence that the harassment was severe or pervasive.”

According to the Court’s opinion, the plaintiff taught university classes for more than a decade when the university decided to divide her department.  She was unhappy with a number of decisions made about her reassignment, including her classes, her performance evaluations and the location of her office, etc.  When she appealed some of these decisions, she was told that a decision had been wrong, but denied that they were not racially motivated.  She filed an EEOC Charge and later filed suit for discrimination, harassment and retaliation.  The trial court dismissed her complaint for failure to state an actionable claim.

The Court agreed that the plaintiff had failed to sufficiently allege severe or pervasive harassment based on a number of employment actions taken against her over a 30 month period:

First, the district court correctly found that the allegations of discrete acts of discrimination could not be characterized as part of the hostile work environment claim. The Supreme Court has explained that under Title VII, a plaintiff may bring a claim alleging that either (1) an employer engaged in “discrete discriminatory acts” such as “termination, failure to promote, denial of transfer, or refusal to hire”; or (2) the employer’s “repeated conduct” created a hostile work environment. . . . Because the two claims are “different in kind,” we have consistently held that allegations of discrete acts may be alleged as separate claims, and as such “cannot properly be characterized as part of a continuing hostile work environment.” . . .

 . . . . Her allegations that she was denied the opportunity to draft a grant proposal and teach summer courses, received low evaluations, was replaced by a white adjunct professor, and was reassigned to teach public management courses represent discrete acts that could perhaps support separate claims of discrimination or retaliation under Title VII.

 . . .

But even viewing those allegations [of four incidents] as a whole, [Plalintiff] did not sufficiently allege facts from which we may infer that the harassment she experienced was severe or pervasive. Courts consider the totality of circumstances in determining the severity and pervasiveness of alleged harassment, including “the frequency of the discriminatory conduct; its severity; whether it [was] physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interfere[d] with an employee’s performance.”  . . . Notably, the alleged harassment must be both objectively and subjectively severe and pervasive to be actionable. Id. at 21–22. Allegations of “simple teasing, . . . offhand comments, and isolated incidents (unless extremely serious)” do not suffice. . ..

             . . . As an initial matter, those events occurred over a period of approximately two and a half years—that is too infrequent to demonstrate that her workplace was “permeated with” ridicule and insult. . . . And defendants’ comments about her teaching abilities and qualifications, while undoubtedly offensive, are not sufficiently serious to constitute severe harassment.  . . .  Moreover, she did not allege that the harassment was physically threatening. Her conclusory assertions that defendants’ actions “unreasonably interfered with [her] work performance,” without alleging supporting factual allegations, is insufficient for purposes of a motion to dismiss.  . . . Because she failed to plausibly allege severe or pervasive harassment, the district court did not err in dismissing her race-based hostile work environment claim.

While the Court agreed that there was a lower standard of proving retaliation compared to discrimination, this did not save her retaliatory harassment claim because, as discussed above, she failed to allege sufficiently severe or pervasive behavior necessary for the harassment part of her claim.  “[O]ur circuit has repeatedly held that a retaliatory hostile work environment claim must include evidence that the harassment was severe or pervasive.”

When the employer argued that her discrimination claim was untimely -- because the alleged acts took place more than 300 days before her EEOC charge was filed -- she apparently did not make any legal argument to the contrary.  Accordingly, her claim was deemed abandoned on appeal.  Nonetheless, the Court also observed that she failed to allege that any of the discrete acts were motivated by racial animus and to allege that she was treated worse than anyone similarly situated to her.  “]H]er conclusory statement that [the employer] treated her poorly “because of her race” is insufficient for purposes of a motion to dismiss.”

Similarly, when the employer challenged her retaliation claim as untimely, she made no legal arguments in opposition.  Accordingly, her claim was deemed abandoned.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.