Conclusory Allegations Will Not Save FLSA Complaint

 Last week, the Sixth Circuit affirmed the dismissal of a complaint for failing to allege sufficiently detailed facts to state a claim under the FLSA.   Forrester v. American Protection and Security Service, LLC, No. 21-5870 (6^th Cir. 5-13-22).   In it, the plaintiff complained about not being paid when the employer required employees to show up 10-15 minutes prior to their shift and stay as late as 10-15 minutes after their shift in order to ensure unbroken coverage.  However, the plaintiff failed to plead what, if any work, she did during this period of time so that the court could determine whether the 15 minutes before and after her shift were compensable under the FLSA.   The allegations in the complaint stated legal conclusions, to which the defendant employer was not required to admit or deny.  Despite having ample opportunity to do so, the plaintiff never formally attempted to amend her complaint or to submit a proposed amended complaint for the trial court to consider whether the deficiencies had been corrected.  Therefore, the trial court was within its discretion to dismiss the complaint without giving the plaintiff the opportunity to try again.

According to the Court’s opinion, the 10-15 minutes before and after each employee’s shift was to ensure an overlap and adequate coverage during the shift hand-offs.  The employer apparently did not keep records of this time or pay employees for this time.   However, the employer had disciplined employees who failed to report early for their shift.   The plaintiff brought a class action to challenge this practice and recover unpaid overtime and attorney’s fees.

The court observed that employers are not required to pay for every minute that an employee is at work.  The Supreme Court had previously held that the Portal-to-Portal Act does not require employers to pay for or record time an employee spends commuting to and from work or for time going through an employer’s security checkpoint after work.   The security checkpoint was not an integral part of the employees’ principal activity which the employees were employed to perform.  However, in this case, the plaintiff never pleaded any facts from which the court could determine whether any work was actually performed during the 10-15 minutes before and after her shift.   At best, she alleged that there were “shift-change duties,” but did not elaborate what those entailed.   The court was left to guess whether those “shift-change duties” could be eliminated without impairing the plaintiff’s ability to work.  If so, the “shift-change duties” would not be compensable.

Despite being on notice that her complaint may be factually deficient, the plaintiff never formally requested to amend her complaint or to submit an amended complaint which would have provided detailed allegations.  Accordingly, the trial court was within its discretion to dismiss the complaint without giving the plaintiff leave to amend her complaint and try again. 

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.

Some Interesting Arbitration Agreement Legal Issues

 There have been a few interesting arbitration decisions this year.  One is from the Supreme Court and the other from the Sixth Circuit. Both of them rejected the employer's arguments.  

While the Federal Arbitration Act, 9 U.S.C. §1 et seq.  gives federal courts the power to decide disputes over arbitration, the Supreme Court had previously ruled that the FAA does not create federal question jurisdiction.  Accordingly, federal courts – as courts of limited jurisdiction -- must examine and "look through" to the underlying complaint to find federal question or diversity jurisdiction before entertaining petitions to compel arbitration under §4.   In this case, the employee brought federal and state discrimination claims and sought to vacate an adverse arbitration award through state court.  Badgerow v. Walters, No. 20-1143 (3-31-22).  The employer, citing federal question jurisdiction, removed the case to federal court.  Federal courts have the power under §§ 9 and 10 to vacate and confirm arbitration awards.  However, the Court held that the “look-through” authority to find the underlying federal question (or diversity) only applied to petitions brought under §4 and not to petitions to vacate or confirm brought under §§ 9 or 10.   Unlike §§9 and 10, Section 4 specifically explains that petitions may be filed with the federal court which would have jurisdiction “save for [the arbitration] agreement.”  Sections 9 and 10 merely refer to filing the petition in the federal court where the award was made; they do not specifically refer to the question of jurisdiction.  The omission of a reference to jurisdiction in §§9 and 10 was deemed deliberate by Congress.   Moreover, because arbitration awards are creatures of contract and settlement agreements of disputes over federal law are also regular contracts, they are generally creatures of only state law, not the federal law which was implicated by the underlying dispute.   Therefore, an issue over a regular contract dispute does not create a federal question necessary to support federal court jurisdiction over petitions to vacate or confirm under the FAA. 

·     The Sixth Circuit held that the arbitration agreements of the individual employee class plaintiffs – which explicitly applied to ERISA claims -- did not apply to an ERISA plan on whose behalf the employees brought an ERISA breach of fiduciary duty action against the employer.  Hawkins v. Cintas Corp., No. 21-3156 (6^th Cir. 4-27-22).  The plaintiffs alleged that the employer had breached its fiduciary duty to the Plan by failing to include passively-managed fund options in the Plan and charging the Plan excessive fees. “Section 502(a)(2) suits are ‘brought in a representative capacity on behalf of the plan as a whole.’”  The Court distinguished the arbitration clause which covered only “claims” and not the plaintiffs’ “rights” to bring a fiduciary duty claim on behalf of the ERISA Plan. “Had Plaintiffs brought a claim under § 503(a)(1)(B), or a claim that should have been brought under that section, then it might be the kind of individual claim subject to arbitration under an individual participant’s employment agreement.” Further, the Court refused to impute to the Plan the employer’s agreement to arbitrate. There was no evidence that the Plan itself had agreed to arbitrate its claims or to permit the plaintiffs to agree on its behalf.  “In the absence of a sufficient manifestation of the Plan’s consent to arbitrate these claims, we hold that the Plan has not consented to arbitration.”

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.

Requesting a Reasonable Accommodation is Not a Protected Activity Under Ohio Retaliation Law

The Crawford County Court of Appeals last month affirmed an employer’s summary judgment on claims asserting that the plaintiff had been terminated for requesting a reasonable accommodation.  Hall v. Crawford County Job and Family Services, No., 2022-Ohio-1358.  The Court held that requesting a reasonable accommodation is not a protected activity under Ohio law which can support a retaliation claim.  Rather, denying a reasonable accommodation may be unlawful discrimination, but the request itself is not a protected activity for purposes of a retaliation claim.  Further, the Court found that the plaintiff had voluntarily disclosed her disability to her employer and it was justified in requesting a fitness-for-duty examination when she claimed her disability adversely affected her job performance and submitted an FMLA request. 

According to the Court’s opinion, the plaintiff voluntarily disclosed to her supervisor that she suffered from MS which sometimes made her mind foggy and could impair her job performance.    She brought it up again during a March 20 pre-disciplinary conference and was recommended to apply for FMLA leave.  Although she said she objected and did not require it, she submitted FMLA paperwork on March 26, which did not mention her MS diagnosis.  She was also requested to submit to a fitness-for-duty examination.   She was given a three-day suspension and ultimately terminated.  She filed suit, claiming retaliation and improper medical inquiries.  The trial court found that she had been provided with a reasonable accommodation, could not prove causation, etc.

The plaintiff alleged that the employer’s request for a fitness for duty examination was an improper medical inquiry.  However, the court found that the plaintiff voluntarily disclosed her MS disability and claimed that it could be impairing her job performance.  Moreover, once she had requested FMLA leave and a reasonable accommodation, the employer was entitled to request information about the nature and extent of her alleged disability.

The plaintiff alleged that she was terminated in retaliation for requesting a reasonable accommodation.    The court found that requesting a reasonable accommodation is not a protected activity under Ohio Revised Code Chapter 4112 which could support a retaliation claim.  While terminating an employee for requesting a reasonable accommodation might be unlawful discrimination, it does not fit within the types of activities that constitute protected conduct under Ohio law, such as opposing discrimination, testifying, participating in an investigation, etc.

The plaintiff denied that she had attempted to pursue a failure-to-accommodate claim, and objected the trial court granting summary judgment to the employer as though she had done so.  The appellate court refused to address this argument. 

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 Rejects Title VII Discrimination and Retaliation Claim Where Plaintiff Received Three Promotions in Year before Termination

 Last month, the Sixth Circuit Court of Appeals affirmed an employer’s summary judgment on a Title VII sexual orientation and retaliation claim where the plaintiff had been fired for misconduct a year after being hired and receiving several promotions and raises.  Boshaw v. Midland Brewing Co., No. 21-1365 (6^th Cir. 4/26/22).  The Court found it speculative that his sexual orientation was held against him when he received three promotions within 8 months of being hired when he never hid his sexual orientation on his Instagram account and reposted it on his Facebook account after his first promotion.  It is not illegal to discriminate against or request an employee to change their “spiky” hairstyle or hide visible body piercings.   Further, the passage of three months between his protected activity and his termination was “a firm indicator of a lack of a causal link.”  Finally, he could not plead or prove a hostile work environment based on a few isolated and discrete discriminatory actions.

According to the Court’s opinion, the plaintiff had been initially hired as a server.  His manager told him that he would be considered for promotion if he would “act a little more masculine,” change his spiky hair style and remove his visible body piercings.  While the plaintiff deleted his Facebook status, combed over his hair and removed the piercings, he did not change his Instagram page which pictured his male partner, children or gay hashtags.  Within a couple of months, he received three promotions to the second highest position in the restaurant.   In the meantime, he re-posted his Facebook relationship status.   The plaintiff had a positive relationship with his manager, calling her “the best boss ever” and thanking her for his career.  When he was almost lured away by a competing restaurant, he was given a raise.  When he told the owner about his manager’s prior comments about his needing to act more masculine, the owner promised to “make it right” with him and between him and his manager.

However, the plaintiff’s employment was not without problems.  One of the employees – with blue hair – was receiving customer complaints about blue hair in their food and plaintiff did not handle the complaints well.  He also sometimes overstepped his authority and failed to communicate problems with management.   The final straw came when he refused to attend a mandatory meeting, telling a subordinate that he was going to get out of it because he was not going to pay for childcare for the meeting, which was a waste of time.   He then failed to show up for his shift that same evening.   He had confirmed his schedule the day before and with an employee that same day.   He also failed to return a call from his manager.  He was fired the next day.

While his manager’s comments about his masculinity might have constituted evidence of animus, there was no evidence that the comments resulted in a delay or denial of any promotions or any adverse employment action.  The plaintiff never disguised his sexual orientation on his Instagram account and reposted his gay status on his Facebook page after his first promotion and before his second and third promotions.  The plaintiff’s subjective belief that his manager possessed discriminatory animus was insufficient to survive summary judgment.

In other words, [the plaintiff] was promoted despite his open and obvious noncompliance with the supposed condition on his social media postings. To the extent [he] argues that the fact he was promoted only after he changed his hairstyle from “spiky” to “combed over” is evidence of gender stereotyping, we know of no such stereotype, and [he] fails to identify one.

In all, [he] secured three promotions in eight months, rising from an entry-level server to front-of-house operations manager. All things considered, [his] rapid rise shows that Midland did not delay or deny his promotions because of sex discrimination. No rational trier of fact could find otherwise.

The Court also rejected the plaintiff’s retaliation claim where he alleged that his manager subjected him to “hyper scrutiny” after he informed the owner about her prior comments concerning his sexual orientation.  Each of the instances he identified were grounds for legitimate criticism:  his handling of the blue hair in customer food, exceeding his authority with vendors and employees, bringing the wrong resume to a job interview, etc.   Moreover, more than three months had passed between when he reported her comments and when he was fired, weakening any possible temporal proximity.  The Court described this as “a firm indicator of a lack of a causal link” between his protected activity and the adverse employment action.  Finally, he failed to produce evidence that any employees were similarly situated to his position or misconduct.

In any event, there was no evidence that the employer’s explanation for his termination was pretextual.   The plaintiff admitted that he believed the owner “honestly believed” he missed a mandatory meeting and shift.  His manager did not learn until after the termination that the plaintiff may have believed that his absence had been excused.  “This evidence satisfies the “honest belief rule,” which precludes a finding of pretext when an employer’s nondiscriminatory reason for terminating an employee is later proven false, so long as the employer can show that it honestly believed the reason was true when making the termination decision.”

Finally, the Court agreed that the plaintiff failed to plead or prove a hostile work environment claim with a few discrete and isolated acts of possible discrimination.  This was insufficient when  “a hostile work environment claim requires a plaintiff to demonstrate a “workplace . . . permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.”

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. 

Supreme Court Finds Implied Right of Action Under Rehab Act Does Not Include Recovery of Emotional Distress Damages

 

This morning, the Supreme Court ruled 6-3 that private actions brought against private entities under the Rehabilitation Act of 1973 and the Affordable Care Act are limited to recovering damages which are available generally in breach of contract actions between private parties.  Cummings v. Premier Rehab Keller PLLC, No. 20-219 (4-28-22).  In that case, a legally blind and deaf patient requested that a physical therapy practice provide an ASL interpreter for her sessions.  The practice refused and offered alternative accommodations.  The patient sought treatment elsewhere and brought suit against the practice -- not under the ADA’s public accommodation provisions -- but under the Rehab Act and ACA, which apply to the defendant practice because it receives reimbursement from the federal government through Medicare and Medicaid.  The Supreme Court had previously held such actions are governed by the Constitution’s Spending Clause and can only support damages that are generally available for breach of contract actions, which do not include punitive damages.  In this case, the plaintiff only sought recovery for emotional distress, which is also not generally available in breach of contract actions.

As Justice Roberts explained:

Congress has broad power under the Spending Clause of the Constitution to set the terms on which it disburses federal funds. “[L]egislation enacted pursuant to the spending power is much in the nature of a contract: in return for federal funds, the [recipients] agree to comply with federally imposed conditions.”  . . . .. Exercising this authority, Congress has passed a number of statutes prohibiting recipients of federal financial assistance from discriminating based on certain protected characteristics. We have held that these statutes may be enforced through implied rights of action, and that private plaintiffs may secure injunctive or monetary relief in such suits. . . . Punitive damages, on the other hand, are not available.  . . . . The question presented in this case is whether another special form of damages—damages for emotional  distress—may be recovered.

                . . .

Unlike ordinary legislation, which “imposes congressional policy” on regulated parties “involuntarily,” Spending Clause legislation operates based on consent: “in return for federal funds, the [recipients] agree to comply with federally imposed conditions.”  . . . For that reason, the “legitimacy of Congress’ power” to enact Spending Clause legislation rests not on its sovereign authority to enact binding laws, but on “whether the [recipient] voluntarily and knowingly accepts the terms of th[at] ‘contract.’”

             . . . Recipients cannot “knowingly accept” the deal with the Federal Government unless they “would clearly understand . . . the obligations” that would come along with doing so. . . .

  . .. After all, when considering whether to accept federal funds, a prospective recipient would surely wonder not only what rules it must follow, but also what sort of penalties might be on the table. . . . A particular remedy is thus “appropriate relief ” in a private Spending Clause action “only if the funding recipient is on notice that, by accepting federal funding, it exposes itself to liability of that nature.” . . . Only then can we be confident that the recipient “exercise[d its] choice knowingly, cognizant of the consequences of [its] participation” in the federal program. . . .

                .  . .

            Because the statutes at issue are silent as to available remedies, it is not obvious how to decide whether funding recipients would have had the requisite “clear notice regarding the liability at issue in this case.”
 . . .. 

As one commentator concluded after “[s]urveying all of the cases dealing with emotional distress recovery in contract actions” over a decade after the Restatement’s publication, “a majority rule does not exist” on the question. D. Whaley, Paying for the Agony: The Recovery of Emotional Distress Damages in Contract Actions, 26 Suffolk U. L. Rev. 935, 946 (1992)  . . . . [Editor’s Note:  happy to see the Supreme Court cite to an article by one of my favorite OSU law professors].

The Court concluded that emotional distress damages may not be recovered for the same reasons it had ruled that punitive damages are not available.  

Affirmative Action employers would be interested in this decision because they are subject to affirmative action obligations through the Rehabilitation Act.

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.