Sixth Circuit: Requiring 100% Fit for Duty Precludes Judgment as a Matter of Law for Employer on Perceived Disability Claim

This morning, the Sixth Circuit Court of Appeals in Cincinnati reversed a judgment entered as a matter of law on a perceived disability claim brought under the ADA by a female UPS driver on the grounds that the employer's insistence that she be 100% fit for duty within 30 days of returning to work reflected its judgment that she was physically incapable of performing a wide range of jobs under its light duty program and because it questioned the sincerity of the employer's explanation about the 30-day requirement. Watts v. UPS, No. 08-3779 (6^th Cir. 2010). However, the Court affirmed the dismissal of the plaintiff's sex discrimination claim when the trial court ordered a new trial (where the jury found in favor of the employer) after the jury in the first trial awarded the plaintiff over $200,000 in damages on the sex discrimination claim, but its answers to special interrogatories were contradictory.

According to the Court's opinion, the plaintiff was the only female driver in that county between 1999 and 2004. However, after a work-related injury in 2000, she was off work until 2003. Although there was contradictory evidence, the plaintiff asserted that she was released to return to work with restrictions in Fall 2002, but the employer refused to permit her to return until she was 100% fit for duty within 30 days of reinstatement. It also suggested that she pursue a reasonable accommodation on account of a disability. The employer contended that the seniority provisions of its collective bargaining agreement only permitted light duty assignments of up to 30 days before the assignment became permanent and, thus, employees could only work light duty for 30 days. The plaintiff produced evidence that this 30 day requirement had not been imposed on certain male employees and was not described in the employer's written descriptions of the light duty program. The plaintiff filed a grievance, but it was denied. When the employer refused to reinstate her, she filed Charges with the EEOC that she was being discriminated against on account of her sex and disability. She ultimately filed a lawsuit in federal court, but the trial court entered judgment as a matter of law in favor of the employer on the perceived disability discrimination claim and the jury was not permitted to consider it because the trial court concluded that the plaintiff only proved that the employer considered her temporarily impaired. The jury awarded over $200K in damages to the plaintiff on her sex discrimination claim and answered a special jury interrogatory that she was treated differently than male employees in the light duty program, but denied in other special jury interrogatories that she had proven sex discrimination or pretext in how she was treated. The trial court then ordered a new trial and the second jury ruled in favor of the employer on the plaintiff's sex discrimination claim. The plaintiff then appealed to the Sixth Circuit.

The Sixth Circuit had no difficulty finding sufficient evidence to support the plaintiff's perceived disability discrimination claim under the ADA even though her claim pre-dated the ADA Amendments Act which broadened the scope of the ADA and made alleging such claims easier:

When a defendant flatly bars a plaintiff from working at any job at the defendant's company, that is generally sufficient proof that the employer regards the plaintiff as disabled in the major life activity of working so as to preclude the defendant being awarded judgment as a matter of law.

The Court relied on its prior decisions in Wysong v. Dow Chemical Co., 503 F.3d 441 (6th Cir. 2007) and Henderson v. Ardco, Inc., 247 F.3d 645 (6th Cir. 2001) (where the plant manager told the plaintiff: " You know what company policy is . . . you have to be 100 percent to work here") where the employer refused to permit the plaintiffs to return to work in any capacity or position with any physical or medical restrictions because they were not 100% fit following an injury or illness. Because the employer's light duty program encompassed a wide variety of jobs ("including answering phones, filing, gassing up and washing vehicles,"), its refusal to permit the plaintiff to participate reflected a judgment that she was physically incapable of performing a wide variety of jobs.

In Henderson, this court interpreted an injured employee being told that she had to be "100%" to work there as tending to indicate that the defendant regarded her as disabled in a wide spectrum of jobs sufficient to defeat the defendant's motion for summary judgment. See Henderson, 247 F.3d at 654. Similarly, in Wysong this court interpreted an employer's statement that the plaintiff could not return to work until she had received "a [medical] release to work without restrictions" as evidence that the defendant "perceived Wysong as being unable to work anywhere at the plant, and thus, unable to perform the same broad class of work anywhere else." See Wysong, 503 F.3d at 453. The Kaufmann/Germann statements here – that there was no work for Watts unless she could present a full medical release – present a situation similar to the full-medical-release requirement in Wysong and the 100% rule in Henderson. The jury could have concluded that the statement indicated that UPS perceived Watts as being unable to perform the broad class of jobs available at the UPS Hamilton facility.

Moreover, the Court questioned the legitimacy of the employer's explanation that an employee had to be 100% fit because of the bargaining agreement's seniority provisions because the 30-day rule did not flow from the CBA, was not applied to certain male employees and was not described in the employer's written descriptions of the light duty program. Thus, it concluded that there was evidence that the employer's explanation for not placing the plaintiff in the light duty program was pretexual and a mere disguise for unlawful discrimination.

[Editor's Note: In January 2011, the EEOC announced a $3.2M settlement with Supervalu arising out of the termination of employees following medical leaves of absence under a policy that employees could only return to work if they were medically certified to be 100% fit for duty].

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: Disability Leave and Receipt of Social Security Benefits Do Not Destroy ADEA Claim Following a RIF.

This morning, the Sixth Circuit Court of Appeals in Cincinnati affirmed the dismissal on summary judgment of an age discrimination claim brought by a salesperson who took disability leave shortly after being notified that his position was being eliminated in a reduction in force. Johnson v. Franklin Farmers Cooperative, No. 09-5483 (6^th Cir. 2010). However, it did so for different reasons than the trial court – which had found that the plaintiff failed to show that the employer's explanation was a mere pretext for discrimination. Rather, consistent with similar claims, the Court ultimately agreed that the plaintiff could not show that he had been replaced, or selected for the RIF based on his age, when his duties were reassigned among the remaining employees. However, before reaching this unsurprising conclusion, the Court also rejected several arguments raised by the employer, including: (1) that the plaintiff did not suffer an adverse employment action when he took short-term and long-term disability leave after being notified that his position was being eliminated and (2) that his disability leave and receipt of social security benefits rendered him unqualified for his position. Nonetheless, the Court rejected the trial court's conclusion that the plaintiff had shown that he had been replaced by a younger employee when it found indisputable evidence of a RIF and imposed a higher burden of proof on the plaintiff to show that his age had been a factor in his selection for the RIF. Thus, it affirmed summary judgment for the employer.

The Court rejected the employer's argument that the plaintiff could not show as part of his prima facie case that he suffered an adverse employment action when he applied for short-term disability benefits (and then received LTD and social security benefits) shortly after being notified on September 5 that his position was to be eliminated in the RIF and before the position was actually eliminated on September 30. The employer denied the plaintiff's request that he be permitted to continue working for another 19 months (when he would qualify for full retirement benefits) and the plaintiff testified that he would have continued working if his position had not been eliminated (regardless of the content of his disability benefit applications). "Viewed in a light most favorable to [the plaintiff], the evidence supports [the plaintiff's] assertion that he involuntarily ceased working two weeks before [the employer] would eliminate his job, and that [the employer] brought about a significant change in his employment status. The prima facie showing is not intended to be onerous." Instead, such an argument would be better evaluated, if at all, at the pretext stage of analysis.

The Court also rejected the employer's argument that the plaintiff could not prove as part of his prima facie case that he was qualified for the salesperson job when he had submitted applications stating that he was completely unable to work. However, the Court found that the plaintiff had adequately explained the apparent inconsistency by, among other things, affidavits from co-workers, the employer's General Manager and former customers about how well he performed his job before he began his disability leave.

The Court rejected the trial court's conclusion that the plaintiff had been replaced by a younger employee. According to the Court's opinion, the employer selected three employees for the September 30 RIF because of a budget deficit, but it rehired one of them in November and delayed the termination of the other until he qualified for retirement on December 30. In addition, the General Manager admitted that some of his business decisions were influenced by the existence of the pending litigation because he did not want to have to admit that he actually needed an outside salesperson, like the plaintiff (thus, implying that he was merely waiting for the conclusion of the litigation to formally name the younger employee as the employer's outside salesperson). The plaintiff's duties had been distributed among two younger employees. The Sixth Circuit found that the employer had legitimately conducted a RIF despite the above facts because the retired employee was not replaced and the rehired employee was brought back to replace another departing employee. Thus, the employer's headcount following December 30 was three less than it had been when it announced the RIF on September 5.

The Court also found that the plaintiff's duties had been assumed by two younger employees, who continued to perform their existing job duties. " An employee is not replaced for purposes of the fourth element of a prima facie case of discrimination when another employee is assigned to perform the plaintiff's duties in addition to other duties, or when the work is redistributed among other existing employees already performing related work."

Because the plaintiff's termination took place in a RIF, the Court imposed a higher burden of proof on him to show that he was impermissibly selected for the RIF on account of his age:

Where . . . there is a reduction in force, a plaintiff must either show that age was a factor in eliminating his position, or, where some employees are shifted to other positions, that he was qualified for another position, he was not given a new position, and that the decision not to place him in a new position was motivated by plaintiff's age. . . . . The purpose of the additional evidence requirement is to ensure, in reduction of force cases, that the plaintiff has presented evidence to show that there is a chance the reduction in force is not the reason for the termination.

Ultimately, the Court concluded that the plaintiff could not meet the higher burden of proof which applies in a RIF. The plaintiff admittedly did not have direct evidence of age discrimination and could not show an inference of age discrimination simply from the fact that two younger employees were retained instead of him. Finally, the General Manager's admission that his business and promotional decisions were influenced by the fact of the litigation was insufficient to carry the plaintiff's burden of proof.

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 Court of Appeals Shows that Violating a Non-Compete and Court Order Can Be More Trouble Than It’s Worth

In my experience, there are few industries where employers are more aggressive in enforcing non-competition agreements than in than beauty salons. This week, the Hamilton County Court of Appeals addressed another case involving a hair stylist who just could not say no to his former clients for the non-competition period and ended up paying a steep price for breaching his former employment agreement. Mitchells Salon & Day Spa, Inc. v. Bustle, 2010-Ohio-1880 (4/30/10).

According to the Court’s opinion, the defendant stylist began working for the employer salon soon after graduating from cosmetology school and before he had developed any clients. He signed an employment agreement with a non-competition clause barring him for one year from providing any hair styling, hair care or related services to any client which he had served at the employer at any point during his employment. After working for the employer salon for more than 12 years, he quit in August 2007 and opened his own salon. The employer became suspicious when most of the stylist’s former clients ceased patronizing the employer’s salon and filed suit in January 2008 to enforce the non-competition clause. The trial court entered a TRO in February 2008 prohibiting him from providing any beauty services to the employer’s former clients. The parties then negotiated an injunction which prohibited the stylist from providing for one year – from the date of the February 2008 injunction –any hair styling, hair care or related services to any of the employer’s clients which the stylist had ever served. He also agreed to send each of his clients a letter prepared by the salon informing them that he could no longer serve them and recommending another stylist currently employed by the salon.

The employer salon even offered these clients a discount or free service if they returned. However, it was apparently not enough to shake their loyalty to the errant hair stylist. (I can certainly relate to this). When most of the former clients did not return, the employer hired a private investigator in September 2008 which apparently confirmed that the hair stylist was continuing to routinely serve former clients of the employer. Accordingly, in December 2008 the employer filed a motion to hold him in contempt of the agreed injunction. During the April 2009 contempt hearing, the stylist admitted that he had violated the non-compete and unintentionally violated the TRO and agreed injunction because he had trouble saying “no” to his former clients. He produced a list of 180 clients whom he had served since August 2007 which had been former clients of his employer, but argued that 63 of them were procured personally by him and not by any advertising or promotional campaign by the employer. In all, he claimed that he had made a profit of approximately $37K by serving former clients of his employer in violation of the non-compete, the TRO and the injunction. In response, the employer produced evidence of 39 additional clients which were not on the stylist’s list which the PI had found on a paper calendar in the stylist’s trash.

The employer wanted to be paid for the entire lost profit of $74.1K caused by the stylist’s resignation (i.e., by taking the entire profit he had generated during his last year of employment less the cost of his commission and products) and did not limit itself to the profit lost by the 219 clients served in violation of the non-compete agreement. It also asked to be reimbursed for the $52.6K cost of the PI firm hired to uncover and prove his duplicity and $15.8K in legal fees. The trial court found the stylist in contempt, ordered the stylist to reimburse his former employer only $139K (of the requested $142.5K) and again ordered him to cease serving the clients of his former employer for one year from the date of the contempt order – i.e., until April 2010.

On appeal, the Court affirmed the contempt order. It rejected the stylist’s objections to the salon’s calculation of lost profits on the grounds that he was not provided with the underlying original documents. There is no discussion of the fact that the salon could not have lost all of the profit from his resignation when it still continued to serve and profit from some of his former clients. There is also no discussion of the fact that many – if not most -- of the disputed customers would likely refuse to return to the salon under any circumstances after learning that the salon was more interested in its profits than the condition and style of their hair. However, the court found the salon’s estimate was reasonable in light of the fact that the stylist’s list of the employer’s former clients was materially incomplete in leaving off 39 names.

The court also rejected the stylist’s objection to being required to both pay $139K and cease serving the employer’s former clients for a year. A double penalty is not something that would have been enforced if it had merely been an obligation of the contract. He felt that this was a double punishment and he should only have to pay or cease serving the clients; not both. However, the court of appeals saw it differently:

This is exactly what the trial court did here. The trial court required [the stylist] to disgorge his profits and then ordered [the stylist] to comply with the noncompete clause, which was incorporated into the trial court's agreed entry, for the period of time that [the stylist] had disobeyed the TRO and the agreed entry. These sanctions essentially put the parties in the position they would have been in if [the stylist] had abided by his original agreement for a period of one year not to serve clients to whom he had provided hairstyling services while employed at [the salon]. The extension of the agreed entry for an additional 11 months compensates [the salon] for its future loss of profits. The whole point of the noncompete clause was to give [the salon] the opportunity to retain a client base that it had built through its investment of time, money, and training. The extension gives [the salon] the benefit of its bargain. Accordingly, we cannot say that the trial court abused its discretion in ordering [the stylist] to disgorge his profits and in extending the agreed entry for an additional 11 months. The fourth assignment of error is overruled.

Thus, if the stylist had complied with his non-compete, he would have been free to serve anyone and everyone beginning in August 2008 and would not have owed anything to his former employer. Instead, by continuing to violate the non-compete after agreeing to an injunction, he was barred from serving his former clients until April 2010 and required to pay his former employer over $139K. While it is true that an employer cannot have both an injunction and damages as a matter of contract law, the court refused to permit him to benefit from violating both his contract and a court order. Therefore, he was ordered to comply with his contract, to disgorge any profit he made from violating the contract and court order and to compensate the employer for having to enforce the agreement.

Interestingly, one of the appellate judges indicated that he had sympathy for the stylist’s double penalty argument and would have preferred that the employer elect between the two remedies, but could not undo the injunction period once it had already been completed. In other words, the injunction expired before the court of appeals issued its decision.

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.

Montgomery County Appellate Court Rejects Perceived Disability Discrimination Claim Based on Prior Accommodations

Last week, the Montgomery County Court of Appeals in Dayton affirmed summary judgment for a public school, although on different grounds than the judgment granted by the trial court. In short, the Court of Appeals ruled that the Political Subdivision and Tort Liability Act (PSTLA) did not apply to bar claims for employment discrimination, but that the plaintiff failed to properly plead or prove a prima facie case for disability discrimination based on her alleged multi-chemical sensitivity allergies. Ogilbee v. Board of Education of Dayton Public Schools, 2010-Ohio-1913, 23432.

According to the Court, the plaintiff clerical assistant alleged that she suffered from multi-chemical sensitivity, which was an allergy to certain perfumes and fragrances which gave her migraine headaches and restricted her ability to breath, sleep, concentrate and walk. Her union refused to assist her when she claimed that her allergies were exacerbated by a new work assignment because it was a "personal problem." She asked HR to be relocated to an empty office or other space or even another building, but these suggestions were rejected as unreasonable. Instead, the school gave her an air purifier and a fan and arranged for a contractor to rearrange her work space. According to the School, she refused to use them without explanation. After she filed a Charge of Discrimination, the School entered into a negotiated settlement agreement and transferred her to another position in another building. The School again attempted to accommodate her by permitting her to annually explain to her co-workers her need for them to not wear perfume, but she believed that after a year that some staff purposely "doused" themselves in perfume and the principal began acting on her complaints less and less. By 2006, the principal would no longer permit her to make her annual announcement. When she arrived at work with a note from her physician indicating that she needed to work in a space free from perfumes and strong odors because they exacerbate her migraine headaches and she had exhausted her paid leave, the School responded shortly thereafter by placing her on a one-year unpaid medical leave of absence because her requested accommodation was unreasonable in that she worked "in a reception area at a public school with over 800 students, 100+ employees, and the public who visit the school on a daily basis. There is no way that a scent-free environment can be guaranteed." When the School refused to reinstate her the following year when there had been no change in her medical condition, she filed a lawsuit in state court alleging disability discrimination and harassment. The trial court found that the School had PSTLA immunity.

Generally, under the PSTLA, "political subdivisions are not liable in damages for injury, death, or loss caused by them in connection with the execution of their functions. See R.C. 2744.02(A)(1). The PSTLA however does not apply to claims by an employee that relate to any matter that "arises out of the employment relationship." R.C. 2744.09(B)." Mysteriously, the trial court concluded that an employment discrimination claim does not arise out of the employment relationship and is more akin to an intentional court. In light of contrary authority to the contrary, the appellate court had no difficulty finding otherwise.

As for her disability discrimination claim, the court construed her argument as applying on to a perceived disability claim and concluded that the plaintiff failed to prove that the School's HR Director perceived her allergy and migraine headaches to substantially limit any major life activities, including working. In particular, the Court rejected her argument that the School must have perceived her as disabled because it made several attempts to accommodate her allergy:

While lay people may think of an allergy as a disability, a "disability" in this context is, as we discussed above, a technical term with a very specific meaning. Also, [Plaintiff] makes much of the fact that [the HR Director], and others, tried, unsuccessfully, to accommodate her allergy, which she argues shows he thought she was disabled. But simply because an employer tries to make an employee's working-environment more comfortable by attempting to accommodate a particular physical characteristic does not mean that he thinks the employee has a "disability." As the statute makes clear, not every physical or mental impairment qualifies as a "disability." From the evidence, it appears that [the HR Director] considered [Plaintiff] to have an allergy, and he did all he thought reasonable to accommodate the allergy. No evidence suggests that [the HR Director] treated the allergy as severely limited her ability to work. [Plaintiff's] naked assertions about [the HR Director's] thoughts and motivations are not sufficient; she "'must do more than simply show that there is some metaphysical doubt as to the material facts.'"

The Court does not explain how the School's placement of the plaintiff on a one-year unpaid medical leave was merely a reaction to a non-disabling allergy or how such action by the School was insufficient evidence that it perceived her as substantially limited by her allergy. It also does not explain why there was not enough of a factual dispute for a jury to consider. Perhaps the plaintiff never made the argument in her brief. In any event, the court granted summary judgment for 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.

Sixth Circuit: Job Applicants Did Not Knowingly Waive Limitations Period or Judicial Review of Claims

This morning, the Sixth Circuit issued an opinion reversing summary judgment in favor of an employer which had required all job applicants to agree to a six month statute of limitations for all employment claims and to waive their right to file a lawsuit (in favor of non-union labor-management internal grievance review board). Alonso v. Huron Valley Ambulance, Inc., No. 09-1812 (6^th Cir. 2010). The Court determined that the plaintiffs' signatures on the forms were not knowing and voluntary sufficient to waive their statutory rights under the circumstances of the case. Surprisingly, the Court did not address the substantive or procedural safeguards which existed or were lacking in the employer's dispute resolution process. Instead, it focused almost exclusively on how the information was haphazardly presented to the plaintiff employees during the application process. In particular, the plaintiffs were not given enough detail about the process until more than a month after they were hired (and had signed the agreements) and were never given the opportunity to revoke the agreements.

According to the Court's opinion, all employees were required to sign job applications which contained the following provisions:

The last page of the application contained a section preceded by the phrase, "PLEASE READ THE FOLLOWING BEFORE SIGNING." The section contained, among other things, notice of an internal grievance procedure for employment related disputes, and a six-month limitations period for any employment-related claims. The internal grievance procedure provision provided:

Any dispute arising out of or in connection with any aspect of my employment by the Company, or termination thereof, including by way of example but not limitation, disputes concerning alleged civil rights violations, breach of contract or tort, shall be exclusively subject to review by the Grievance Review Board. Any decision of the Review Board shall be binding to both parties, and enforceable in circuit court.

Additionally, the statute of limitations provision provided:

I further recognize that if employed by the Company, I agree, in partial consideration for my employment, that I shall not commence any action or other legal proceeding relating to my employment or termination thereof more than six months after the termination of my employment and agree to waive any statute of limitations to the contrary.

Once employees were hired, they were given a procedural manual during orientation. The manual describes the four-step grievance process and directs them to an internal policy, which, among other things, provides that "The Grievance Review Board's decision will be final and binding on both the employee and the company."

One of the plaintiffs was ultimately terminated for allegedly falsifying military leave and taking (prescription) drugs which put him in an altered mental state. He utilized the grievance process and then after his termination was upheld, he filed a lawsuit under USERRA, OSHA's whistleblower statute and an unnamed federal statute prohibiting retaliation for filing EEOC Charges. His wife (and co-worker) did not utilize the grievance procedure, but filed a similar lawsuit alleging harassment, and retaliation.

Although the plaintiffs challenged the employer's dispute resolution process on a number of grounds (including USERRA's absence of limitations period and waiver provisions), the Court only addressed whether the plaintiffs' waiver was knowing and intelligent:

Here, Appellants were educated and gave no indication that they did not understand the waivers they were signing, and they successfully used the grievance process on multiple occasions prior to contending that they did not knowingly and intelligently waive their right to a judicial forum. The waiver, however, did not include any information regarding the Grievance Review Board or the procedures that would be used in place of a judicial proceeding. The initial waiver, signed as part of the four-page employment application, read:

Any dispute arising out of or in connection with any aspect of my employment by the Company, or termination thereof, including by way of example but not limitation, disputes concerning alleged civil rights violations, breach of contract or tort, shall be exclusively subject to review by the Grievance Review Board. Any decision of theReview Board shall be binding to both parties, and enforceable in the circuit court.

Plaintiffs alleged "that they were not given any further information regarding the Grievance Review Board until they received an Employee Handbook at Orientation, nearly a month after they were hired. The Employee Handbook outlined the Grievance Review Board procedures in general terms as a four-step process. The Handbook instructed employees to reference Administrative Policy #415, which was located online. That Policy, in turn, provided a detailed explanation of how the Grievance Review Board operated."

At the time the [plaintiffs] signed waivers of their rights to a judicial forum, they had no idea what the Grievance Review Board process entailed. They were never informed of their right to revoke their waiver. They were not given any documentation regarding the process until almost a month after they began their employment with HVA. Even then, the document they were given described the process in general terms, and pointed them to a website where they could find additional, more detailed information. They cannot be said to have knowingly and voluntarily waived their right to a judicial forum when they were not informed of the alternative procedures until a month after they began working for HVA. Cf. Seawright, 507 F.3d at 971 (explaining extensive efforts taken by defendant employer to inform employees of new dispute resolution procedures before requiring employees to waive all rights to a judicial forum).

The court rejected the provisions shortening the statute of limitations on the same grounds.

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.