Sixth Circuit Significantly Alters Burden of Proof for Hostile Work Environment Claims

Yesterday, the Sixth Circuit affirmed the summary judgment dismissal of an age discrimination claim, but reversed dismissal of the companion hostile work environment claim brought by a former police officer.    McNeal v. City of Blue Ash, No. 23-3180 (6^th Cir. 9/23/2024).  The Court agreed that the plaintiff officer could not show that his termination – or the underlying disciplinary actions – were discriminatory or pretextual.  However, he could possibly show a hostile work environment based on the cumulative effect of closer scrutiny and supervision than his younger co-workers received, a denigrating assignment that could be designed for him to fail and his supervisor’s “glee” in imposing disciplinary actions against him.   The Court’s opinion suggests that hostile work environments need not be severe or subjectively hostile when discriminatory employment actions need not be significant in order to be actionable: “Because hostile-work- environment claims arise out of the same statutory language as disparate-treatment claims, Muldrow’s holding that Title VII does not require plaintiffs to show “significant” harm applies to both types of claims. . . Thus, when we consider whether a hostile-work environment was severe or pervasive enough to violate Title VII, we effectively ask whether it left an employee “worse off respecting employment terms or conditions.”

According to the Court’s opinion, the plaintiff worked for 33 years as a police officer and was the oldest officer in the department.  After his supervisor was promoted to his role, the plaintiff claimed that he was subjected to closer scrutiny.  For instance, after he challenged his 2015 performance evaluation, he was assigned to conduct a traffic study which had never been assigned to a patrol officer before and which he lacked qualifications to conduct.  He alleged that it was both retaliatory for his performance evaluation challenge and based on his age.   He then received progressive disciplinary actions over the next two years for infractions, such in April 2016 for failing to turn on his microphone during traffic stops (after he had first been informally counselled when he had been identified as a primary offender of that policy).   In June 2018, the plaintiff and another officer violated a number of policies when responding to a medical emergency, including failing to use lights and sires, failing to notify that they were not using lights and sirens, and speeding without lights and sires, etc.  

When the individual died from the medical emergency, an investigation was conducted into the police response.  The investigation revealed that the plaintiff had previously violated the same policies.  When the investigators checked his prior traffic stops, they discovered that he had not used his audio (which he had received formal disciplinary action for in 2016).  As they checked his prior traffic stops, they discovered that he only turned on his audio in 8 stops that year (out of 38) and that he had never checked his video equipment in his109 shifts so far that year as required by departmental policy.  When he claimed that he generally turned on his audio and checked his equipment, they concluded that he was being intentionally dishonest, which by itself, is a terminable offense.   He was given the option of retiring or submitting to a pre-disciplinary hearing.  He rejected both offers and was terminated.  His grievance was rejected in arbitration.    He then filed suit.    The trial court granted the City and individual defendants summary judgment on all claims. 

The Court agreed that the plaintiff could not show that he was terminated on account of age discrimination.   The ADEA requires that age be the determinative factor in his termination:  that he would not have been fired but for his age.  In this case, assuming that he could show a prima facie case of discrimination, he could not show that his employer lacked a legitimate basis for his termination based on his misconduct and prior disciplinary history.  The plaintiff conceded that he could not disprove the factual basis of any of his prior disciplinary actions or his termination.

The Court rejected his argument that his termination was pretextual because it did not actually motivate the decision to terminate his employment: 

Even if it is true that the Department generally scrutinized the performance of older officers to a greater degree than younger officers, [the plaintiff] has not presented sufficient evidence that the reasons given for his termination—an extensive list of disciplinary infractions that included untruthfulness—were not the true reasons. [He] does not contest, for example, that the Department would be required to disclose his untruthfulness to defendants at trial, rendering him unable to perform an essential job duty. Nor does [he] dispute that the Department was legitimately concerned that his pervasive failure to follow the recording policies jeopardized the Department’s ability to gather evidence and limit its exposure to liability. Because the ADEA requires plaintiffs to show that age is the “but-for” cause of the disciplinary action—not simply a motivating factor—[he] cannot proceed if his termination was at least partly caused by Defendants’ non-discriminatory reasons.  . . .  He does not meet this burden on the second prong.

The Court also rejected the argument that his conduct was insufficient to warrant his termination, mostly because the other responding officer was treated similarly to him and given the same option to voluntary retire or submit to a pre-disciplinary hearing.  For that matter, the plaintiff did not address the dishonesty issue at all in his briefs.

That being said, the standard for proving a hostile work environment is much less than proving discrimination.  However, “allegations of discrete discriminatory acts otherwise actionable as independent disparate-treatment claims do not by themselves constitute harassment supporting a hostile-work-environment claim.” (italics added for emphasis).  Thus, it was conceded that his suspensions and termination could not be considered as evidence of a hostile work environment.   Rather, a hostile-work-environment claim is “based on the cumulative effect of individual acts,” many of which are not actionable on their own.”

an adverse employment action can affect employment terms or conditions on two registers. By definition, an adverse action can cause a change in the terms or conditions of employment. But an adverse action deployed strategically as harassment can also add to a climate of hostility that represents a different change in the terms or conditions of the job. To use the Supreme Court’s words, a discrete discriminatory act may have “occurred” on one day and thus be actionable, but it also may be part of a separate harm that “occurs over a series of days or perhaps years.”  . . . . In the hostile-work-environment context, we exclude adverse actions that operate only on the first register, but consider the ones that operate on the second. (emphasis added). 

In this case, the plaintiff “cited testimony that older officers were regularly subjected to greater scrutiny, and highlighted examples showing that younger officers did not face discipline for their policy violations.”    He also alleged that he was the only officer whose performance was investigated over an entire year (when the investigators reviewed each of his traffic stops).   “We focus on the harassing effect of these incidents to assess whether the ongoing monitoring created a climate of hostility in the aggregate (and combined with other actions), not whether each incident alone changed [his] employment status. Therefore, [his] evidence of higher and disproportionate scrutiny may be used to support his hostile-work-environment claim.”  In addition, a number of officers provided evidence that he was disciplined for infractions that other officers violated with impunity. 

He also cited the traffic study that he had been assigned:

Thus, the evidence supporting a hostile-work-environment claim is not the unfavorable assignment itself but the fact that the Department allegedly engaged in conduct designed to (1) frustrate, demean, and embarrass him in front of his coworkers; (2) justify more disciplinary action against him when he inevitably fell short of the unreasonable expectations; and (3) force him further under the microscope by requiring him to report to two supervisors on his progress weekly. The significance of the traffic study for hostile-work-environment purposes is that the Department allegedly used the assignment strategically in a broader effort to discredit [the plaintiff].

                   . . .

                  The [Supreme] Court has held that a hostile-work-environment claim is “based on the cumulative effect of individual acts” occurring over the span of weeks, months, or years.  . . .  An individual act within a hostile-work-environment claim “may not be actionable on its own,”  . . . —but there is no requirement that the act not be independently actionable. As the Court recently explained, a hostile-work-environment claim “includes every act composing that claim, whether those acts are independently actionable or not.”  . . .  Thus, “even if a claim of discrimination based on a single discriminatory act is time barred, that same act could still be used as part of the basis for a hostile-work-environment claim.”  . . . That conclusion makes good sense. Whether a given act contributes to a hostile work environment does not turn on whether that act might support a separate claim.

To reconcile Ogbonna-McGruder with Morgan and Green, we read Ogbonna-McGruder to bar a plaintiff from including in a hostile-work-environment claim only those discrete acts that result in a separate discriminatory harm to the terms and conditions of employment that does not “contribut[e]” to the alleged environment of harassment. (emphasis added).

The plaintiff also claimed that most of his prior disciplinary actions were part of this campaign of harassment against him:

even if some of these disciplinary incidents were separately actionable, we would still consider whether the incidents were also weaponized as tools of harassment in the “same actionable hostile work environment practice.”  . . .  Here, there is evidence indicating that the Department imposed discipline as a vehicle to target and belittle [the plaintiff]. Notably, [he] points to testimony that [the Chief] was “grinning from ear to ear,” “smiling,” and “giggling” when discipline was meted out to [him]. . . . .  [The Chief] reportedly asked about [his] reaction to some discipline with excitement and enthusiasm, as though “he [was] getting off, he [was] enjoying the fact that an employee of his [was] being messed with.”

At any rate, these disciplinary incidents would not be independently actionable. Only discipline causing “some harm respecting an identifiable term or condition of employment” is actionable on its own.  . . .  For example, this court previously held that “[a] written reprimand, without evidence that it led to a materially adverse consequence such as lowered pay, demotion, suspension, or the like, is not a materially adverse employment action.”  . . .  Here, [the plaintiff] was disciplined in several ways that likely do not meet the definition of an “adverse employment action,”  . . . , including “documented counseling,” an “oral reprimand,” and a “written reprimand.”  . . .  When considering the facts in the light most favorable to [him], none of these incidents is actionable on its own in a disparate-treatment claim.

The Court also lowered the evidentiary bar on proving “severe” harassment:

Because hostile-work-environment claims arise out of the same statutory language as disparate-treatment claims, Muldrow’s holding that Title VII does not require plaintiffs to show “significant” harm applies to both types of claims.  . . .  Instead, the employer’s discriminatory action—or, as is the case here, the work environment—needs to produce “some harm respecting an identifiable term or condition of employment.”  . . . .  Thus, when we consider whether a hostile-work environment was severe or pervasive enough to violate Title VII, we effectively ask whether it left an employee “worse off respecting employment terms or conditions.” . . .

                   . . . [The plaintiff] is not required to show that the harassment “seriously affect[ed] [his] psychological well being” or caused him to “suffe[r] injury”—only that the environment “would reasonably be perceived . . . as hostile or abusive.”  . . .  Importantly, [he] does not need to show that “each incident of harassment standing alone is sufficient to sustain the cause of action,” but that the incidents, taken together, make out such a case.  . . . . Because the facts here present a close call regarding severity, we decline to do the jury’s job for it: [he] cites enough evidence for a reasonable juror to conclude he was subjected to a hostile work environment.

                   . . . .

Here, a jury could reasonably conclude that McNeal’s conditions of employment were altered. For example, if a jury agrees that McNeal was uniquely targeted for minor policy violations and subject to significant surveillance, he would have had a different level of discretion than other officers.

(emphasis added)

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.

Employer Loses Challenge to NLRB's McClaren Macomb Restrictions on Severance Agreements

Last week, the Sixth Circuit Court of Appeals affirmed enforcement of the NLRB’s order against an employer which had failed to negotiate with the union about the effects of a layoff and presented severance agreements to the laid off employees without first informing or negotiating with the union about the terms of those agreements.  NLRB v. McLaren Macomb, No. 23-1335/1403 (6^th Cir. Sept. 19, 2024).   Because that conduct – by itself – was sufficient to violate sections 8(a)(1) and (5) of the NLRA, the Court declined to consider the employer’s objections to the NLRB’s alternative conclusion that the terms of the severance agreement – concerning confidentiality and non-disparagement – constituted independent 8(a)(1) violations.   Accordingly, the employees were ordered reinstated with backpay. 

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 Questions Whether Agreement to Simple Release of All Claims Was Voluntary When Union Gave Plaintiff Poor Advice and It Failed to Identify "Discrimination" Claims.

Yesterday, a divided Sixth Circuit reversed an employer’s summary judgment on racial discrimination and retaliation claims.  Moore v. Coca-Cola Bottling Co., No. 23-3775 (6^th Cir. 8/22/24).  The majority agreed that the plaintiff produced enough evidence to demonstrate a factual dispute about whether he was treated differently than white co-workers when he was terminated for testing six times higher than the prohibited threshold while two white co-workers were treated more leniently under comparable circumstances.  The Court refused to enforce the release of claims he signed in a last chance agreement given for insubordination despite his college education and failure to request more time to consider it when the entire meeting lasted about 10 minutes, the union vice-president encouraged him to sign it and the release of “all” claims against the employer arising out of employment did not specifically mention discrimination claims.   The Court remanded for the trial court’s consideration whether placing him on a second chance agreement and requiring random drug testing after he tested positive for marijuana below the employer’s prohibited threshold was discriminatory. The Court also found that the employer waived its affirmative defense to his failure to exhaust administrative remedies by failing to raise with the district court the plaintiff’s failure to file a Charge of Discrimination about the second chance agreement or mention it in a later charge about his suspension and last chance agreement. 

According to the Court’s opinion, the plaintiff had received college degrees in fashion design and hospital administration, but joined the defendant employer in 2015 as a warehouse employee after realizing his hospital career was not going further.   He began filing discrimination complaints with HR starting in August 2016, complaining about unpaid suspensions, etc.  Following an April 2017 accident where he significantly damaged an autonomous vehicle with a forklift he was driving, he was drug tested, but tested below the prohibited threshold in the employer’s policy, which provides for suspensions without pay, random testing for 24 months and immediate termination with another positive test within 60 months under a second chance agreement (SCA).   Although he objected to being placed on a SCA when he tested below the threshold, his supervisor -- who never saw the drug test results --  told him that he would be fired if he refused.  He did not ask for additional time to consider the agreement.

In June 2017, the plaintiff and other employees objected in salty language to a new operations directive.   He was then informed that he was being terminated for insubordination, but the union negotiated a last chance agreement for him the following month.  He met with the union vice president and his supervisor for ten minutes and was told that he would not be reinstated without signing the agreement, which contained a release of all claims against the company and the union.  Again, he did not request more time to review and consider the agreement.  He filed a Charge with the Ohio Civil Rights Commission challenging the termination (when other white employees also used salty language without being terminated), the LCA and his failure to receive backpay from his suspension, but did not mention the SCA.    A year later, he tested positive for marijuana at 6 times the prohibited level and was terminated in July 2018.   While he does not dispute that he tested positive, he challenged being placed on random drug testing under the SCA in the first place.  In May 2019, he filed an EEOC Charge alleging that he was treated differently than white co-workers. 

 

The district court found that the plaintiff had waived his challenge to the SCA and his suspension by signing the release in the LCA.  It also found that he could not show that the employer’s explanation for his termination -- his positive drug test -- was pretextual.   A divided Sixth Circuit reversed.

In the lengthiest part of the decision, the Court focused on the questions raised about whether the release of claims contained in the LCA were voluntary, and thus, enforceable under Title VII.   The majority discounted his college education for lacking legal training and his failure to request any time to consider the LCA because the union officer had told him to sign it if he wanted to be reinstated (and possibly poor legal advice) and the entire meeting lasted only 10 minutes.  It also discounted the fact that he had union representation and was never given an explicit deadline by the employer when he had to sign it.    In considering whether a release is valid and enforceable, courts will consider the following factors:

“(1) [the] plaintiff’s experience, background, and education; (2) the amount of time the plaintiff had to consider whether to sign the waiver, including whether the employee had an opportunity to consult with a lawyer; (3) the clarity of the waiver; (4) consideration for the waiver; as well as (5) the totality of the circumstances.” Id. While weighing these factors, we also “must ‘remain[] alert to ensure that employers do not defeat the policies of . . . Title VII by taking advantage of their superior bargaining position.’”

Interestingly, the majority found that the union’s encouragement to sign the agreement should be held against the employer even though the union was more accurately aligned with the employee.  One has to wonder if merely a friend had similarly given him poor advice would similarly affect the court’s analysis.  In short, it found that a jury should be able to later decide whether his signature should be considered voluntary:

It is unclear from the record whether [the plaintiff] was required to sign the LCA the same day that he was presented with it, or if he was able to request additional time to consider the contract’s terms. Similarly, the record indicates that [he] did not have an attorney present but does not provide any information as to whether [he] would have been permitted to request one prior to his signing the LCA. Most telling is that Arrington, the union representative in the room with [him] when he signed the LCA, told [him] to just sign the LCA and that it was “better to fight with a job than fight without a job.”  . . .  Reasonable jurors could find that Arrington’s statements indicated that [his] discrimination claims would survive his signing the LCA and that they influenced [his] signing the agreement.

Although Moore holds associate’s and bachelor’s degrees, his education does not provide him with any type of legal, managerial, or contractual background that would be relevant to interpreting the LCA’s terms in a manner essentially at odds with what the union representative told Moore. . . .

The Court also questioned whether the simple language releasing all claims against the employer and union relating to his employment arising prior to that date was sufficiently clear when the simple sentence did not explicitly mention discrimination or statutory claims.

In other cases where we have found that such provisions are straightforward in their terms, the contracts have explicitly stated that the employee was waiving the right to bring a discrimination suit,  . . . or that an individual must “arbitrate any legal dispute relating to their employment . . . , including all state and federal statutory claims,”  . . . . The LCA that [the plaintiff] signed is not precise in explaining what was meant by “any and all liability of any kind whatsoever relating to his employment with” CCBC, and [he] lacks a background that would help him to interpret this term.  Most important in [his] case is [the union officer’s] statement in the context of signing the LCA that it was “better to fight with a job than fight without a job.”

 . . . . As discussed above, particularly important in this case are the facts that (1) the union representative effectively suggested that [the plaintiff] would be able to seek legal recourse notwithstanding [his] signing of the agreement; (2) the agreement was not clear with respect to what rights [he] was waiving; and (3) [the employer] was in a better bargaining position. In other words, consistent with our caselaw, [his] education and experience are not “dispositive,” but rather are considered in the full context of the other waiver factors.  . . . Indeed, the union representative’s comments alone suggest that the waiver was not likely knowing and voluntary: it is natural for an employee to trust that their representative’s representations concerning that employee’s rights are fair and accurate.

The Court also rejected the employer’s accurate argument that the plaintiff had failed to exhaust his administrative remedies because he never filed a Charge of Discrimination challenging the SCA because the employer never raised this argument in its summary judgment motion before the trial court.  The failure to exhaust administrative remedies is an affirmative defense.

In addition, the Court found that the plaintiff had produced sufficient evidence for the jury to consider whether the justification for terminating him -- the admitted positive drug test -- was pretextual because it was insufficient to motivate his discharge when other employees were not terminated under similar circumstances.  He alleged that he was targeted for drug testing six times -- more than any other employee -- even though two of his co-workers “were permitted to come to work under the influence of alcohol or drugs and were not likewise penalized.”   He alleged that one co-worker “was likewise on an SCA, but was not tested during this time, nor was [that employee] fired after he had a positive drug test while on a SCA” following an accident.  Instead, the white co-worker wasn’t fired for more than a year after he failed a third drug test.

A two-strikes policy for firing Black employees and a three-strikes policy for firing white employees would plainly constitute disparate treatment and raise pretext concerns. At this stage, all that we look for is similarly situated comparators who “were not fired” despite engaging in “substantially identical conduct to that which the employer contends motivated its discharge of the plaintiff.”

Because the trial court did not consider pre-LCA events, the Court remanded for further consideration the plaintiff’s argument that that he was placed on random drug testing under the SCA even though it was not factual that he failed the first drug test. 

Finally, the Court had no difficulty in finding adequate evidence for the jury to consider about the retaliation claim.  The plaintiff had filed many internal discrimination grievances with HR, which were known to his manager.  He submitted one complaint a mere week before the final random drug test that resulted in his termination. “Given the temporal proximity between Moore filing his EEO grievances and the adverse employment action taken against him, Moore has shown “sufficient temporal proximity to establish a causal connection.”

 

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.

A Tale of Two FCRA Reports

This week, the Sixth Circuit addressed the Fair Credit Reporting Act in two different opinions.  In the first, the Court found that Experian violated the FCRA when it failed to investigate or clarify a consumer report about outstanding child support obligations after the consumer provided it with evidence from the court that he owed no outstanding child support obligations.  Berry v. Experian Information Solutions, Inc., No. 23-1961 (6^th Cir. Aug 19, 2024).    In the second, the Court found that the job applicant could not sue an employer for failing to provide him with a copy of his complete consumer report after it provided him with a copy of the partial (and accurate) report when he could not identify how he would have acted differently or been able to cure his prior failure to self-disclose a conviction. Merck v. Walmart, Inc., No. 23-3698 (6^th Cir. Aug. 20, 2024). 

In Berry, the plaintiff paid his wife directly instead of through the state agency, which recorded a deficiency.  When they reconciled, he obtained a court order that abated the non-existent support debt.  However, he was denied student loans because Experian reported information from the still-inaccurate state government database.  He sent copies of the court orders to Experian, which continued to rely on the state database and did not update its report.  He sued alleging that Experian negligently or willfully continued to report inaccurate information in violation of the FCRA.  The district court granted Experian judgment on the pleadings because it was required to report the state agency’s findings.  However, the Sixth Circuit reversed “[b]ecause [the plaintiff] sufficiently pleaded that Experian did not adopt reasonable procedures to ensure maximum possible accuracy and did not reasonably reinvestigate [his] consumer report after he challenged its accuracy.”  Consumer Reporting Agencies

must “adopt reasonable procedures” for reporting, see id. at § 1681(b), that “assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b). If a consumer disputes a report’s accuracy, the CRA must “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the [consumer’s] file.” 15 U.S.C. § 1681i(a)(1)(A). If a CRA negligently or willfully violates the accuracy mandate, the consumer may bring suit. Id. at § 1681n (allowing private right of action for willful noncompliance); § 1681o (same for negligent noncompliance). Relevant here, the FCRA states:

Notwithstanding any other provision of this subchapter, a consumer reporting agency shall include in any consumer report furnished by the agency in accordance with section 1681b of this title, any information on the failure of the consumer to pay overdue support which— (1) is provided—

(A) to the consumer reporting agency by a State or local child support enforcement agency; or

(B) to the consumer reporting agency and verified by any local, State, or Federal Government agency.

15 U.S.C. § 1681s-1.

The Court found that to prevail on a claim that the CRA failed to have reasonable procedures to assure maximum possible accuracy, the plaintiff must plead and prove that the information is inaccurate.

An inaccuracy in a consumer report occurs when “a CRA report[s] either ‘patently incorrect’ information about [the consumer] or information that was ‘misleading in such a way and to such an extent that it [could have been] expected to have an adverse effect [on the consumer].’” . . .  In other words, a consumer can demonstrate an inaccuracy where a report was materially misleading or incomplete, even if it was technically accurate. Consequently, “accuracy” under the FCRA encompasses truthfulness and completeness.

Because the FCRA is designed to promote accuracy, “false impressions can be just as damaging as false information.” . . . For example, in Twumasi, the plaintiff Uber driver was fired after the CRA reported to Uber that the plaintiff had been involved in three car accidents.  .. .  While the Ohio Bureau of Motor Vehicles (BMV) furnished information to the CRA that did demonstrate that the plaintiff had been involved in three accidents, the BMV did not include a police report and court document adjudging him not at fault for two of the accidents.  . . . Although the plaintiff submitted this counter-evidence of his lack of fault to the CRA, the CRA did not change his consumer report.

Similarly, in this case, “Experian’s [alleged] omission of the court orders and its failure to inquire further resulted in a consumer report that was “‘misleading in such a way . . . that it [could have been] expected to have an adverse effect . . .’”

That being said, a dispute ensued about whether Experian was required to remove the state report or merely supplement or clarify it with the court order.  The Court agreed that Experian need not remove the allegedly erroneous state agency report.  The dissent/concurrence indicated that the plaintiff had waived the supplement theory argument, thus losing the appeal.  However, the majority remanded the case back to the district court to consider the supplement theory.    In practice, this means that the plaintiff may still not have been able to obtain student loans with ambiguous information and he should focus his efforts on clearing his credit with the state agency.  

In Merck, the plaintiff “applied to work at Walmart, [but] he forgot to disclose an old misdemeanor conviction.”  He was given a job offer conditioned on passing a background check.  “Before an employer can take any adverse action against a prospective employee based on a negative consumer report, the Fair Credit Reporting Act requires that the employer provide him with a copy of the report.”  The plaintiff was provided with “an incomplete version of the report that listed his misdemeanor and indicated he was “not competitive” for a job at Walmart” -- because of the failure to previously disclose the conviction.   He was provided with information to dispute the accuracy of the report, but did not do so. Unlike the plaintiff, Walmart was also informed that he had not self- disclosed the conviction. He alleged that he would have at least questioned the matter if had known it was the failure to self-disclose instead of the prior conviction that caused him to lose the job.     The Court found that he lacked sufficient injury from the incomplete report to sue Walmart when he did not identify how he would have changed the result and the undisputed evidence showed that he could not change the result. 

Walmart acknowledged that if [the plaintiff] had initially disclosed the misdemeanor, he would have been scored a “Competitive” applicant. But a Walmart employee also testified that, because the background report contained accurate information about his conviction, his only option under then-effective Walmart policy was to reapply—in other words, he could not have changed the outcome by explaining the mistake. And although [the plaintiff] argues that there is “uncertainty” about Walmart’s exercise of its “final hiring authority,” see Reply Br. 22, he doesn’t point to any specific evidence in the record suggesting Walmart would have acted contrary to its policy had he been able to explain his mistake.

In fact, he applied several more times and did not even receive an interview, let alone a job offer.   Walmart only kept applications for 60 days and no local store employees knew about his failure to self-disclose, which had only been reported to corporate HR.  He also sued the CRA for disclosing an old conviction that was more than seven years old and settled with it.   

He then sued Walmart in a class action almost 4 years after he had first applied on the basis that it violated the FCRA by failing to provide him and all other job applicants a full copy of the consumer report upon which it relied.  The district court dismissed on the grounds that the alleged informational injury was not actionable because “(1) the report was not inaccurate, and (2) Walmart testified that it would not have hired Merck even if he had been able to explain that he had mistakenly omitted the misdemeanor from his paperwork.”  In short, he failed to show that he suffered an injury the statute or constitution are designed to remedy.  “Under constitutional standing doctrine, an “injury in fact” is an “invasion of a legally protected interest which is (a) concrete and particularized and (b) “actual or imminent, not conjectural or hypothetical.”  The Constitution “requires a concrete injury even in the context of a statutory violation.” In other words, “plaintiffs do not have standing to assert “bare procedural violation[s], divorced from any concrete harm.”

“[T]o have standing for an informational injury, a plaintiff must allege those two elements: (1) adverse effects that (2) result from the denial of information.”  After discussing a number of analogous cases, “this boils down to a fine line between an injury involving merely the denial of information subject to mandatory disclosure by statute—insufficient for standing—and a denial of information that causes “downstream consequences”—sufficiently concrete to establish standing.”

 . . . . The denied information must specifically relate to some negative outcome that the plaintiff suffered because he was unable to use that information to his benefit. So, to show standing at summary judgment, [the plaintiff] must point to specific evidence tending to prove that he has an interest in using the withheld information—the fact that he wasn’t hired because he failed to disclose his conviction—for some purpose beyond his statutory right to receive it.  . . .  In other words, his interest in using the withheld information must extend beyond simply suing to vindicate that interest.

In this case, the plaintiff did not and could not show that being informed about the code given to Walmart -- but not to him -- about his failure to self-disclose his prior conviction would have changed the result to his benefit.   

First, and perhaps most importantly, Walmart argues that its policy meant that it would not have reconsidered its initial decision not to hire him based on his failure to disclose the misdemeanor. And Walmart’s argument is supported by the record.  . . .  More to the point, [he] fails to carry his burden to identify any evidence in the record suggesting otherwise. On appeal, he argues there’s “uncertainty” about whether his first application could have “gone differently” had he known about the true basis for his rejection.  . . .  But that’s not enough. He needed to identify specific evidence that he could have used the denied information to create some material benefit (or avoid some adverse consequence) to himself—and, given the record, he could not have used the information about the self-disclosure code to change anything about the result of his first application.  . . .  So he fails to show he suffered any downstream consequences from Walmart withholding the “R3” code during his first application and rejection.

Similarly, [he] points to nothing in the record indicating that he would have used the withheld information to do anything differently during his second and third applications to work at Walmart. Very helpful to [his] case would have been evidence that Walmart in some way relied on [his] lack of an explanation to reject his later applications outright before allowing him to fill out a new criminal history addendum. Indeed, if there were some evidence to that effect, [he] likely would have a forceful argument that the withheld information materially affected the outcome of those applications. After all, in any later calls to Walmart, he could have attempted to correct that misimpression.

But during discovery, [he] apparently couldn’t uncover any evidence that Walmart rejected his later applications because of his failure to disclose the misdemeanor. And the evidence that we do have suggests that [his] first application had no bearing on the later ones. A Walmart employee testified that Walmart retained employment application information for only sixty days. Walmart also points to a policy indicating that the self-disclosure code was “used by” human resources “only and is not relevant to the hiring manager” at the store “or the candidate.”  . . .  Walmart argues that store employees would not have known what these codes meant. And [he] points to no record evidence refuting that. So it seems that even if [he] had known about the true basis of his first rejection, the record before us suggests he couldn’t have used that information to improve his chances for his second and third applications at Walmart. If his first application had no bearing on his later ones, we simply can’t say why he didn’t get interviewed the second and third time around. [his] burden was to show the reason related to the withheld information. He has not met that burden.

Finally, [he] argues that he has a general interest in understanding “why his job application had gone wrong at Walmart” because he was searching for other employment at the time.  . . .  Abstractly, this interest is compelling. But again, [he] fails to point to any evidence in the record that he could have used the denied information to do anything differently. He might be in a different position if he introduced proof that he declined to apply to other positions because he worried that his misdemeanor might bar him from being hired or spent more time unemployed than he otherwise would have if he had known that the true issue was merely his failure to disclose. But he cannot point to any supporting evidence in the record. Other than a passing reference to feeling like a “failure” after his rejection from Walmart,  he identifies nothing to suggest any material harm that resulted from the denial of information. Indeed, he applied for one other job after being rejected. He disclosed to the employer that he had a misdemeanor conviction. He got the job. And he timed the start of his job so that he had no gap in employment.

[He] makes no mention of anything that he could—or would—have done differently to find employment had he known the true basis of his Walmart rejections. Logically, it seems that he did exactly what he should have done, had he known about the self-disclosure code—disclose the conviction to the new employer before being hired. And he got hired. As above, [he] fails to identify any evidence in the record that he could have used the withheld information to do anything differently during his job search.  . . . So he has not suffered any downstream consequences to his broader job search, either.

The Court also rejected his argument that he was injured from denial of procedural due process. “A private employer—even in a contract with one of its employees—cannot alone create the kind of “legitimate claim of entitlement” to a property interest that the state has the power to confer.”

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.

Federal Judge Rules FTC Regulation Banning Non-Compete Agreements "shall not be enforced . . . . on September 4, 2024, or thereafter."

 Yesterday, Judge Ada Brown in the Northern District of Texas struck down the FTC's new regulation banning non-compete agreements, which was set to become final in two weeks on September 4, 2024.  Ryan LLC v. FTC, Case No. 3:24-cv-00986 (N.D. Tx Aug 20, 2024).   While the FTC plans to appeal, employers have some breathing room waiting for next steps.  The Court had previously preliminarily enjoined the rule only against the parties to the litigation.  

The Court's Order states in relevant part as follows:

    The Court sets aside the Non-Compete Rule, 16 C.F.R. § 910.1–.6, and the Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. This is a final and appealable judgment. See Fed. R. Civ. P. 54. All relief not expressly granted is denied.

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.