Sixth Circuit: Employer’s Summary Judgment Reversed Where Plaintiff Was Denied Deposition of Kmart Chairman and SVP of Finance

This morning, a divided Sixth Circuit Court of Appeals reversed summary judgment entered in favor of Sears Holding Corporation f/k/a Kmart Holding Corporation on an age discrimination claim brought by the former Senior Vice President of Sales/Division President because he had been denied the opportunity to depose the Chairman of the Board and Senior Vice President of Finance of the company about potentially ageist comments after establishing a prima facie case of age discrimination. Marsico v. Sears Holding Corporation, No. 07-2231 (6^th Cir. 3/26/10). The Court's majority found the denial of the plaintiff's motion to compel discovery to be an abuse of discretion by the trial judge because the alleged comments were equivocal and the plaintiff had shown that he had been replaced by someone who was considerably younger than him. He had been employed by Kmart for 30 years.

In particular, the Court's decision reflects that there had been deposition testimony that the new post-bankruptcy Chairman (who was 41) mentioned to the plaintiff that he had "been around here a long time" and there were some non-specified things that he did not like about store operations. He was also alleged to have said that what was "wrong with these Kmart people, that old way of thinking." Plaintiff was then demoted to a Vice President position for Super Kmart in September 2003, was replaced as SVP by and began reporting to someone who was substantially younger, and, after he make that Super Kmart more profitable than Kmart, his salary was cut. After his demotion, the president offered in November 2004 to help find him another job elsewhere. When plaintiff protested and argued that he could still help the company, the president explained that the Chairman did not "think that someone's that's been around for 30 years can fix Kmart." At the end of that month, Plaintiff was informed that his VP position was being eliminated, but the SVP felt that he could be transferred to Sears after the merger of Kmart and Sears (although the VP of HR told plaintiff he disagreed). The new SVP suggested that he look for another job because no one cared about the sacrifices and contributions he had made for the company in the past. The SVP also allegedly told him that the SVP of Finance also wanted him gone from the company. Plaintiff resigned in February 2005 because of the age discrimination he had suffered and the hostile work environment.

While agreeing that the alleged comments made by the Chairman were not necessarily indicative of discrimination, they were ambiguous enough to justify asking him to clarify and explain them in a deposition because they could indicate discriminatory intent. (The dissent noted that it was inconceivable that comments post-bankruptcy comments about the business savvy of Kmart's former officers could be construed as discriminatory as opposed to describing failed business strategies). In short:

It was through the discovery already conducted that Plaintiff obtained the evidence represented by
witnesses' comments, and given the substance of the comments, there is enough evidence of discriminatory intent such that additional discovery should have been permitted. No one but Lampert and Crowley can testify as to whether the comments cited by Marsico were motivated by age discrimination as indicated by the context and circumstances in which the comments were made. Plaintiff should have been allowed to elicit such testimony and use it in responding to Defendant's motion for summary judgment. Accordingly, we conclude that the district court abused its discretion in denying Plaintiff's motion to compel the depositions and hold that Marsico may depose both Lampert and Crowley.

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.

Deadline for Federal COBRA Subsidy Again Extended

Early in March, Congress passed the Temporary Extension Act of 2010, which among other things, extended unemployment benefits through April 5, 2010 and again extended the federal COBRA subsidy until March 31, 2010. However, the length of time (15 months) for which an individual may receive the COBRA subsidy has not been extended. In addition, the TEA added another provision which provides that individual who experience a COBRA qualifying event of a reduction in working hours (which renders them ineligible for medical insurance even though they remain employed part-time) before March 1, 2010, but are laid off after March 1, 2010 are now eligible for the COBRA subsidy. The Department of Labor has amended the COBRA notifications which employers must send to eligible employees (even though the explanation section of its website still refers to the February 28 date).

The Ohio Department of Insurance has reported that on February 25, 2010, Govenor Strickland also signed a bill to authorize the temporary extension of the period of time which the laid-off employees of small employers (i.e., with less than 20 employees who are not subject to the federal COBRA statute) from 12 months to 15 months for as long as a federal COBRA subsidy is available. The ODOI website also mentions the new March 31, 2010 deadline.

More information about the COBRA subsidy and the notices employers are required to send is available at Employers Must Send Amended COBRA Notices and DOL Publishes Model Notices for COBRA Subsidy Under Stimulus Act to Be Sent by Employers Before April 18.

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.

Sixth Circuit: ADA Applies to Teachers in Church Sponsored Schools.

[Editor's Note: The Supreme Court heard oral arguments on this case on October 5, 2011].

This morning, the Sixth Circuit reversed a judgment which had been entered in favor of a Lutheran church and its elementary school on an ADA discrimination claim brought by a former teacher. EEOC v. Hosanna-Tabor Evangelical Lutheran Church and School, No. 09-1134 (6th Cir. 3/10/10). The District Court had granted the School summary judgment on the retaliation claim on the grounds that the teacher fell within the ministerial exception to the ADA and he would not inquire into why she had been fired. The Sixth Circuit reversed on the grounds that the primary duties of teacher showed that she was not a ministerial employee.

According to the Court’s opinion, the teacher spent about 45 minutes of each class day in religious activities with her students. After she developed narcolepsy and took an approximately 7-month leave of absence, the School refused to reinstate her in part because of a concern for the safety of her students and because it had already made arrangements with a substitute teacher. Indeed, it decided on its own that she was physically unable to return and offered to pay a portion of her medical insurance for the next ten months if she resigned even though her doctor had released her to return to work without restrictions. Because she appeared for work the day after her physician released her and made clear that she would sue the School after she was told that she would likely be fired, the School indicated that she would be terminated for being disruptive and insubordinate and that she had damaged her relationship beyond repair by threatening to sue the School. When her attorney explained how the School’s actions violated the ADA and that she would file a Charge with the EEOC if the matter were not resolved, the School fired her. Two years later, the EEOC filed suit on her behalf against the School.

The ministerial exception permits “preference in employment to individuals of a particular religion” and to “require that all applicants and employees conform to the religious tenants of such organization.” 42 U.S.C. § 12113(d). However, although based on the First Amendment, this exception is very narrow and is not meant to obviate the ADA. According to legislative history, “However, a religious organization may not discriminate against an individual who satisfies the permitted religious criteria because that individual is disabled. The religious entity, in other words, is required to consider qualified individuals with disabilities who satisfy the permitted religious criteria on an equal basis with qualified individuals without disabilities who similarly satisfy the religious criteria.”

“The question of whether a teacher at a sectarian school classifies as a ministerial employee is one of first impression for this Court. However, the overwhelming majority of courts that have considered the issue have held that parochial school teachers such as Perich, who teach primarily secular subjects, do not classify as ministerial employees for purposes of the exception.” In general, “an employee is considered a minister if “the employee’s primary duties consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” In this case, the teacher’s “employment duties were identical when she was a contract teacher and a “called” teacher and that she taught math, language arts, social studies, science, gym, art, and music using secular textbooks.” Her duties were also virtually identical to those of the teachers who were not entitled ministers. That she teaches at a religious school does not necessarily convert a teacher to a ministerial employee. That the School “has a generally religious character–as do all religious schools by definition–and characterizes its staff members as “fine Christian role models” does not transform [her] primary responsibilities in the classroom into religious activities.”

Similarly, it did not matter that she had specialized religious training and a religious title. “The governing primary duties analysis requires a court to objectively examine an employee’s actual job function, not her title, in determining whether she is properly classified as a minister. In this case, it is clear from the record that Perich’s primary duties were secular, not only because she spent the overwhelming majority of her day teaching secular subjects using secular textbooks, but also because nothing in the record indicates that the Lutheran church relied on Perich as the primary means to indoctrinate its faithful into its theology.”

While the Court did not want to intrude on church theology, it noted that the School’s employee manual included an EEO policy and that the focus of the court would be on the plaintiff’s disability and whether the School violated the ADA, not church theology (except as whether church theology was a genuine defense). In this case, however, the School did not identify church doctrine as a reason for firing the teacher in her termination letter.

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.

Ohio Supreme Court Dismisses Criminal Indictment Based on Prosecutorial Misuse of Information From Garrity Statement.

This morning the Ohio Supreme Court issued a decision dismissing a criminal indictment against a police officer because the prosecutors reviewed the information gathered from a Garrity statement obtained during an internal investigation even though no information from the statement was presented to the grand jury or during any trial. State v. Jackson, Slip Opinion No. 2010-Ohio-621. In short, the Court held that no one involved in an internal investigation (which involves obtaining a Garrity statement) may testify before the grand jury and neither the grand jury prosecutor nor the trial prosecutor may review the Garrity statement in preparation for trial even if no evidence or witnesses obtained from the Garrity statement is presented to a jury.

According the Court’s opinion, a police officer had been placed on administrative leave and then was involved in a bar fight, where one of the patrons informed the responding patrol officer that the suspended/fighting officer had possessed a firearm inside the tavern (in violation of Ohio law). The suspended/fighting officer was then investigated by Internal Affairs. Under Garrity v. New Jersey (1967), 385 U.S. 493, as a public employee, he could not be compelled to cooperate with the internal investigation in violation of his Fifth Amendment right against self-incrimination by being told to choose between his maintaining his employment and incriminating himself. Rather, he was given a “Garrity” warning: nothing he said during the internal investigation would be used in a criminal prosecution, but failing to respond completely and truthfully to the questions could lead to disciplinary action. After receiving the warning, he answered the questions of the Internal Affairs investigating officer and identified a witness who was otherwise unknown to the police.

The Prosecutor’s Office then presented evidence to the grand jury about the officer’s unlawful possession of a firearm in a tavern. This evidence did not include any admissions or other information from the accused officer, including any evidence about the new witness. It did, however, include testimony from the Internal Affairs investigating officer limited to whether an officer should carry a firearm while on administrative leave and to the fact that he had interviewed the officer as part of an internal investigation. He did not disclose any information obtained from the officer during the Internal Affairs investigation (although the grand jury could conceivably presume the content of the statement from the fact that the officer was being prosecuted following the interview).

A new prosecutor was assigned to handle the trial and somehow both the grand jury and trial prosecutors came into possession of the officer’s Garrity statement before the commencement of a criminal trial. In fact, it was unclear whether the grand jury prosecutor came into possession of the statement before the grand jury returned the indictment. When the officer learned this, he moved to dismiss the indictment on the grounds that the government had improperly used his Garrity statement to assist his criminal prosecution. The trial court agreed, but the Court of Appeals reversed. The appellate court determined that the trial preparation of the prosecuting attorney should not benefit from a review of the Garrity statement, but that the indictment had not been tainted because the Internal Affairs officer did not reveal any information from the Garrity statement to the grand jury. Thus, the proper remedy was to purse the prosecutor’s file of the Garrity statement, reassign the case and recommence the process from the time of the indictment. The Supreme Court reversed and held:

In a criminal proceeding against a public employee, the state may not make direct or derivative use of the employee’s statement that was compelled under
threat of the employee’s removal from office (“Garrity statement”) — The state makes derivative use of a Garrity statement when the prosecutor presents to the grand jury testimony from a witness to a Garrity statement — The state makes derivative use of a Garrity statement when the prosecutor reviews a Garrity statement in preparation for trial — When the state fails to prove that it did not make any use of a Garrity statement in obtaining an indictment, the indictment must be dismissed.

Rather, the Court concluded that the prosecution must be able to prove that its evidence was independently derived of the Garrity statement:

[T]he Kastigar court established a two-prong test that the
prosecution must satisfy where a witness makes the claim that his or her immunized testimony was used: (1) the government must deny any use of the accused’s own immunized testimony against him or her in a criminal case; and (2) the government must affirmatively prove that all of the evidence to be used at trial is derived from sources wholly independent of immunized testimony.” (Emphasis sic.) State v. Conrad (1990), 50 Ohio St.3d 1, 4, 552 N.E.2d 214.

Thus, in this case, the prosecution violated Garrity by utilizing a witness from the internal investigation: ”The state makes derivative use of a Garrity statement when the prosecutor presents to the grand jury testimony from a witness to the statement.” No harm which results from a broken Garrity promise can be harmless. Thus, the only proper remedy is dismissal of the indictment. “When the state fails to prove that it did not make any use of a Garrity statement in obtaining an indictment, the indictment must be dismissed.” On the other hand, if the misuse had only occurred after the indictment had been obtained, the proper remedy would be limited to suppressing the improper evidence during the criminal trial (even if the trial prosecutor had knowledge of the Garrity statement).

Although Court recognized that this will create a hardship for small departments and entities (which might not have enough qualified personnel to both conduct the internal investigation and the criminal investigation), it suggested delaying the internal investigation until after the conclusion of the criminal investigation (which would then permit the accused employee to continue working and drawing a public salary following a legal breach). The Court did not suggest, but should be consider, retaining another entity or department to conduct the internal investigation.

The Court further explained:

Although the issue of liability for turning over a compelled statement is not before us, we note that a public employer can ensure that it does not violate the defendant’s right against self-incrimination only by refraining from providing a compelled statement to the prosecutor when a criminal proceeding ensues. A bright-line prohibition against providing a compelled statement to a prosecutor is both workable and practical. First, because a prosecutor is not permitted to make any use of a compelled statement, denying the prosecutor the opportunity to view the statement will not hinder the prosecutor’s ability to prepare for trial. Second, when a defendant cannot allege that the prosecutor has made use of the statement, there is no need to conduct a time-consuming Kastigar hearing. Finally, when there is no threat that a prosecutor will eventually see the contents of a compelled statement, public employees will be more willing to comply with internal investigations.

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.

EEOC Proposes New ADEA Rule to Address “Reasonable Factor Other Than Age”

Last week, the EEOC began soliciting comments on a proposed rule defining the “reasonable factor other than age” defense available to employers under the Age Discrimination in Employment Act. Both the ADEA and Title VII contain a “business necessity” defense, but only the ADEA also has a defense for RFOA. Interestingly, the Equal Pay Act also has a defense for “factor other than sex,” but does not limit the defense to “reasonable” factors. In addition, even though Congress narrowed the “business necessity” defense in Title VII in 1991 following the Wards Cove Packing v. Atonia, 490 U.S. 692 (1989) decision, it did not similarly amend the ADEA (probably because there had been an open question whether disparate impact liability even existed before 2005). The EEOC concluded that a new rule was necessary following the Supreme Court decision in Smith v. City of Jackson, 544 U.S. 228 (2005), which found that the scope of an employer’s potential “disparate-impact liability under the ADEA is narrower than under Title VII'' because of the additional RFOA defense. In particular, the Court found that the employer could legitimately adopt a pay plan which did not benefit older employees to the same extent as younger employees if the employer had a reasonable basis – such as recruitment and retention of employees -- for doing so which was not based on the age of the employees. Moreover, the Supreme Court also held that employers bear both the burden of production and persuasion under the RFOA affirmative defense. Meacham v. Knolls Atomic Power Lab, 128 S. Ct. 2395 (2008).

The new rule will be located at 29 CFR §1625.7(b) and will provide as follows:

Whether a differentiation is based on reasonable factors other than age (``RFOA'') must be decided on the basis of all the particular facts and circumstances surrounding each individual situation.
(1) Reasonable. A reasonable factor is one that is objectively reasonable when viewed from the position of a reasonable employer (i.e., a prudent employer mindful of its responsibilities under the ADEA) under like circumstances. To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer. Factors relevant to determining whether an employment practice is reasonable include but are not limited to, the following:
(i) Whether the employment practice and the manner of its implementation are common business practices;
(ii) The extent to which the factor is related to the employer's stated business goal;
(iii) The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
(iv) The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
(v) The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
(vi) Whether other options were available and the reasons the employer selected the option it did.\1\
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\1\ This does not mean that an employer must adopt an employment practice that has the least severe impact on members of the protected age group. ``Unlike the business necessity test, which asks whether there are other ways for the employer to achieve its goals that do not result in a disparate impact on a protected class,
the reasonableness inquiry includes no such requirement.'' Smith v. City of Jackson, 544 U.S. 228, 243 (2005). Instead, this simply means that the availability of other options is one of the factors relevant to whether the practice was a reasonable one. ``If the actor can advance or protect his interest as adequately by other conduct which involves less risk of harm to others, the risk contained in his conduct is clearly unreasonable.'' Restatement (Second) of Torts 292, cmt. c (1965).
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(2) Factors Other Than Age. When an employment practice has a significant disparate impact on older individuals, the RFOA defense applies only if the practice is not based on age. In the typical disparate impact case, the practice is based on an objective non-age factor and the only question is whether the practice is reasonable. When disparate impact results from giving supervisors unchecked discretion to engage in subjective decision making, however, the impact may, in fact, be based on age because the supervisors to whom decision making was delegated may have acted on the bases of conscious or unconscious age-based stereotypes. Factors relevant to determining whether a factor is ``other than age'' include, but are not limited to, the following:
(i) The extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
(ii) The extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
(iii) The extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.

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.