Sixth Circuit: Denial of LTD Benefits, Attorneys Fees and Remand

This morning, the Sixth Circuit Court of Appeals affirmed a trial court decision that the denial of LTD and 401(k) benefits were arbitrary and capricious and that the plaintiff was entitled to attorney fees as a prevailing party under ERISA. However, the remedy for the denial of benefits was not the award of benefits, but rather, remand to the plan administrator to re-evaluate its prior invalid decision. Burge v. Republic Engineered Products, Inc., No. 10-3124 (6th Cir. 8/3/11). The plaintiff injured her wrist in a fall, subsequently became depressed and left work in mid-January 2006. A variety of physicians and psychiatrists issued conflicting decisions about the existence, extent, and scope of her medical and emotional condition. There was some evidence of malingering and exaggeration of symptoms. The employer terminated receipt of LTD on the grounds that there was no evidence of “total disability.” Her position was then eliminated in August 2006. Problem was, the employer’s LTD plan did not require evidence of total disability and there was no discussion in the decision about the plaintiff’s ability to perform any work. Accordingly, the trial court concluded on appeal that even though the plan vested discretion in the plan administrator, the decision had been arbitrary and capricious for relying on requirements that were not contained in the LTD plan, by not following a methodical appeal process, by reverting between the LTD and STD plans, by refusing to consider all evidence of her wrist condition and by considering only her medical status without also considering her ability to perform any gainful employment. The court also awarded attorney fees to the plaintiff as a prevailing party. On appeal, the Sixth Circuit affirmed the trial court on the merits and award of attorney fees, but found that the proper remedy for the benefit claims was to remand to the employer to make a proper decision.

“Generally, when a plan administrator chooses to rely upon the medical opinion of one doctor over that of another in determining whether a claimant is entitled to ERISA benefits, the plan administrator’s decision cannot be said to have been arbitrary and capricious because it would be possible to offer a reasoned explanation, based upon the evidence, for the plan administrator’s decision.” The employer was not required to consider evidence of vocational experts and the plaintiff’s receipt of SSA benefits was only one factor to be considered.

Nonetheless, the employer made an arbitrary decision when it failed to follow a methodical appeal process:

Specifically, Republic (1) failed to follow a stated, methodical appeal process and inconsistently applied and reverted between the STD and LTD Plans; (2) applied a standard of “total disability” that did not appear in the Plan; and (3) failed to consider evidence of Burge’s actual wrist condition. . . . [The employer] never “reasoned from [the plaintiff’s] condition to her ability to perform her occupation. There is no statement or discussion of [plaintiff’s] occupational duties or her ability, or inability, to perform them.”

In Elliot, we held that “medical data, without reasoning, cannot produce a logical judgment about a claimant’s work ability.” Id. at 618. There, as here, we noted that the plan administrator’s two denial letters contained “mere recitation[s] of medical terminology employed by various physicians in their diagnoses of [the claimant’s] condition, without any reasoning as to why those diagnoses would permit her to function in the workplace. A court’s decision that merely said ‘affirmed’ or reversed’ could not be considered ‘reasoned.’ Similarly, [the plan administrator] cannot be said to have given a reasoned denial of the [claimant’s] claim . . . .” Id. at 619. Even assuming that the appropriate definition of disability is that used in the STD Plan, which requires the claimant to be unable to engage in her regular occupation, rather than the LTD Plan, which is broader, none of [the employer's] benefits denial letters analyzed whether [the employee] would be able to perform her regular occupation in light of the restrictions imposed on her by the physicians who examined or treated her and in view of her complaints that [the employer] did not accommodate these restrictions.

A trial court is empowered to either award benefits or to remand to the plan administrator to make a proper determination following a flawed decisionmaking process. In light of the question in this case about the plaintiff’s malingering and exaggeration of symptoms, the Sixth Circuit found remand to be a more appropriate remedy than simply awarding the plaintiff LTD benefits.

Even though the plaintiff ultimately may not be entitled to LTD benefits, she would still be entitled to attorney fees as a prevailing party under ERISA. The trial court was not arbitrary in awarding her fees after ruling on the merits of her claim in that the employer’s underlying decision was flawed.

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.

Labor Law is Messy; Sixth Circuit Reinstates CFAA Claim Against Union, but Upholds Denial of Preliminary Injunction

This morning, the Sixth Circuit affirmed in part and reversed in part a decision involving a labor dispute where the union intentionally crashed the employer's telephone and computer system to protest the discharge of an employee. The Court held that the employer stated a valid claim against the Union under the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030 ("CFAA"), but upheld the denial of a preliminary injunction on the grounds that the employer failed to make all efforts to resolve the labor dispute before filing suit as required by the Norris LaGuardia Act. Pulte Homes, Inc. v. Laborers International Union of North America, No. 09-2245 (6^th Cir. 8/2/11).

According to the allegations in the employer's complaint, following the discharge of a construction employee, the Union began a corporate campaign to organize the employer's workforce and protest the discharge of the employee. The employer alleged that the Union utilized legal and illegal tactics to harm the employer's goodwill with its employees, vendors and customers. The Union filed a ULP with the NLRB alleging that the employee had been fired for wearing a LIUNA tshirt to work and the NLRB ultimately filed suit against the employer. However, the issue in this litigation involved the Union's "bombardment" of the employer's sales office and three of its executives with thousands of phone calls and emails. In particular,

[t]o generate a high volume of calls, LIUNA both hired an auto-dialing service and requested its members to call Pulte. It also encouraged its members, through postings on its website, to "fight back" by using LIUNA's server to send e-mails to specific Pulte executives. Most of the calls and e-mails concerned Pulte's purported unfair labor practices, though some communications included threats and obscene language.

The volume of the communications injured the employer's business by clogging the voicemail system, preventing customers from reaching the sales office, and forcing on employee to turn off her business cell phone. The emails overloaded the server and stalled business operations because the staff could not access business-related emails or send emails to customers or vendors. Four days after the Union's harassment began, the employer's attorney contacted the Union and requested it to stop employees from doing their jobs. When the calls and emails continued, the employer filed a lawsuit alleging violations of state law and the CFAA, which criminalizes certain computer fraud crimes and creates a civil cause of action. The trial court refused to issue a preliminary injunction on the grounds that it lacked jurisdiction under the NLGA to get involved in a labor dispute. It ultimately dismissed the lawsuit on the grounds that the employer failed to state a claim under the CFAA.

 

On appeal, the Sixth Circuit rejected the Union's argument that Garmon preemption deprived it of jurisdiction over the dispute. "An exception to [Garmon's] general rule—the independent-federal-remedy exception—nevertheless allows federal courts to "'decide labor law questions that emerge as collateral issues in suits brought under independent federal remedies.'" The CFAA prohibits conduct that is wholly independent of federal labor laws. "And neither the prospect of LIUNA defending itself here by arguing that its campaign qualifies as protected activity nor the possibility of either party filing prohibited-conduct charges with the NLRB—which LIUNA already has done—removes potential NLRA issues from the collateral-issue category."

 

The Sixth Circuit also rejected Machinist pre-emption – which precludes both state law and NLRB interference of areas which Congress intended to unregulated because it should be decided by the free economic forces -- because it only applied to state law claims and not federal claims.

 

As for the CFAA claims, the Court found a transmission claim to be stated in the complaint, but not a claim for unauthorized access (in that sending emails or placing telephones cannot be unauthorized if there was no password, etc. required). On the other hand, "[t]o state a transmission claim, a plaintiff must allege that the defendant "knowingly cause[d] the transmission of a program, information, code, or command, and as a result of such conduct, intentionally cause[d] damage without authorization, to a protected computer." 18 U.S.C. § 1030(a)(5)(A)." The Sixth Circuit found the employer's inability to access emails and voicemails and to turn off a cell phone constituted sufficient "damage" to come within the statute. "Applying these ordinary usages, we conclude that a transmission that weakens a sound computer system—or, similarly, one that diminishes a plaintiff's ability to use data or a system—causes damage." Likewise, it found the Union's conduct to be "intentional" in that it intended the result which was obtained."

 

Nonetheless, the employer was not entitled to a preliminary injunction under federal labor law. The NLGA requires, among other things, that an employer prove that it made "every reasonable effort to settle [a labor] dispute . . . by negotiation" before filing suit. Sending one cease-and-desist letter to the Union before filing suit did not come close to meeting that standard. The employer's "settlement efforts—devoid of any attempt to confer with LIUNA's attorneys before filing suit—fail the everyreasonable- effort test and thus prevent resort to injunctive remedies." The employer merely

 

transmitted the cease-and-desist letter on a Sunday, did not specify a time to respond, did not offer LIUNA an opportunity to negotiate, and filed suit less than forty-eight hours after sending the letter without even confirming that LIUNA received the letter. This is not "every reasonable effort" to settle the dispute.

The employer attempted to avoid its obligations under the NLGA on the grounds that it was a non-union employer and LIUNA had never been certified as a representative of its employees. In addition, it pointed to the violent threats and damage sustained by its computer system as creating an exigency. The Court rejected these arguments on the grounds that negotiating with LIUNA under the circumstances would not violate the Wagner Act (since there was no other union to be offended by the employer's negotiations) and the threats were too vague to threaten imminent physical harm.

 

Thus, the case was remanded back to the trial court to determine the Union's liability and potential damages under the CFAA and pendent state law claims.

 

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.

Tough Day for Plaintiff Claims

Today, I learned about three different lawsuits, each of which were rejected by the courts on appeal. Tough day for plaintiffs; good day for employers. These courts rejected a claim by an employee who soiled herself after being denied a restroom break supported by medical documentation, by a police chief who was allegedly reported neglect of a mentally ill patient to his supervisor and by a medical resident who brought an ADA claim after a local hospital refused to reinstate him after he had been terminated for diverting controlled substances for his personal use even though he had completed a drug rehabilitation program.

This morning, the Sixth Circuit released two employment decisions. In the first, the plaintiff brought suit under Title VII for discrimination and for the intention infliction of emotional distress when her supervisor would not permit her to take a restroom break despite her medical condition. Worthy v. Materials Processing, Inc. No. 10-1138 (6th Cir. 7/27/11). The plaintiff had previously reported her medical condition to the HR Department, but it neglected to inform her supervisor that she would require restroom breaks. When the plaintiff told her supervisor that she needed the break because of a medical condition, he refused to relieve her on the production line. Accordingly, she ultimately soiled herself. A union grievance was filed, the HR Manager apologized for not passing on the information and the plaintiff was given two days of paid leave. Dissatisfied, she filed a Charge of Discrimination and, ultimately, a lawsuit. Oddly, there is no mention of the ADA in the Court’s decision. The Court concluded that Title VII only applied to material adverse employment actions, like promotions, hiring, demotions and firing, and not to employment decisions which “do not change [an employee’s] salary, benefits, title, or work hours,” even if they make the employee’s job “significantly more difficult.” It rejected the emotional distress claim on the grounds that the supervisor’s undisputedly petty and cruel behavior was not objectively outrageous and “utterly intolerable in a civilized community.”

In the second opinion released this morning, the Sixth Circuit rejected the ADA claim of a medical resident because his evidence of pretext was based on personal conjecture and speculation. Hall v. Ohio Health Corp., No. 10-3327 (6th Cir. 7/27/2011). The plaintiff had been terminated from two prior residency programs before beginning at Doctor’s Hospital. While there, he had been placed on academic probation and warned about inappropriate behavior (such as engaging in personal conversations when he was supposed to monitoring patients, inattention to detail, self-prescribing pain medication for a foot condition, disappearing during rounds, being unprepared, etc.). Finally, he was caught diverting pain medication to himself (by prescribing the medication to a patient and then taking it for himself). When confronted, he never admitted to having an addiction. Fed up, the Hospital terminated him, but advised him to reapply if he fixed his problems. After completing an addition program, the plaintiff reapplied to OhioHealth, but was rejected. The lawsuit followed. The Court found that the plaintiff could not show that the Hospital’s explanation was pretextual: his long history of unprofessional and unethical behavior, lack of requisite medical knowledge and his prior supervisor’s unwillingness to work with him again. Any evidence that he was rejected solely because of a former addiction was based only on his personal belief instead of evidence.

Finally, the Franklin County Court of Appeals rejected the wrongful discharge claim of a police chief who claimed that he was terminated for reporting an investigation into the neglect of a mental patient to the institution’s executive officer. Boyd v. Ohio Dept. of Mental Health, 2011-Ohio-3596. In particular, the plaintiff was investigating how a mental patient had been sent to a medical appointment without a mandatory police escort, which enabled the patient to escape. The incident had been reviewed by two institutional committees, but he continued to investigate – allegedly without the knowledge or approval of his boss. He claims that he was fired for reporting the investigation to her – allegedly in violation of O.R.C. § 5101.61(E), which “prohibits an employer from "discharg[ing], demot[ing], transfer[ring], prepar[ing] a negative work performance evaluation, or reduc[ing] benefits, pay, or work privileges, or tak[ing] any other action detrimental to an employee or in any way retaliat[ing] against an employee as a result of the employee's having filed a report [to the Ohio Department of Job and Family Services] under this section." Problem was, he never reported anything to ODJFS; he only reported the investigation to his boss. He asserted that his boss had authority to resolve any systematic problems with patient neglect and reports to her should be as protected as reports to ODJFS. However, the Court refused to expand public policy as reflected by the General Assembly in the statute.

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.

Inflammatory Investigation Report Produced in Public Records Request Can Create Liability for Defamation

Last week, the Franklin County Court of Appeals issued a decision concerning the never-ending saga involving the Engineering Department plagiarism scandal at Ohio University. Mehta v. Ohio Univ., 2011-Ohio-3484. In a case brought by a different plaintiff and attorney in federal court, the Sixth Circuit held in 2009 that the plaintiff was entitled to a public name-clearing hearing after the University released a report concerning his culpability which he disputed and which did not present his side of the story. The Mehta case presented a straight-forward claim of defamation based on the same report and circumstances, which the Court of Claims had dismissed following a bench trial on the grounds that the statements were constitutionally protected opinion. The Court of Appeals reversed in part. Troubling for public employers, the Court found that the University could be liable for the defamatory investigative report simply for producing it as required by Ohio law in response to a public records request.

According to the decision, three separate investigations were conducted by the University after a student raised a concern in 2004 about plagiarism. The first investigation concluded that it had no jurisdiction because the allegations concerned former students. The second investigation did little more than categorize the types of plagiarism alleged and make recommendations. The third investigation was conducted by two administrators and is the focus of the litigation. Neither had been trained in what constituted plagiarism. Their draft report contained what the Dean perceived as “inflammatory and inappropriate content.” Although the Provost requested that they tone it down, they refused. Nonetheless, the Provost handed out the draft report to the media during a subsequent press conference about the scandal. Among other things, the draft report referred to “rampant and flagrant plagiarism.” The plaintiff was removed from graduate advising duties, but the Dispatch reported that he had been fired (purportedly because that is what the legal affairs director reported).

The Court of Claims found that the challenged defamatory statements constituted protected opinion and, thus, were not actionable. The Court of Appeals disagreed and found the following statements were capable of proof, rather than mere opinion, and that “a reasonable reader would perceive the specific language as a factual assertion that appellant failed to perform his duties as an advisor”:

• "faculty members who either failed to monitor the writing in their advisees' theses or simply ignored academic honesty, integrity and basically supported academic fraudulence."
• faculty members "blatantly [chose] to ignore their responsibilities by contributing to an atmosphere of negligence toward issues of academic misconduct in their own department."

“Because [the authors] implied that they had first-hand knowledge of facts supporting their conclusions, the statements in the [their] Report are verifiable.” Although it was a close call about whether the Report was the author’s opinion (in light of the self-righteous tone, flamboyant phrases, and impassioned pleas), the Court ultimately concluded that the Report purported to reflect a thorough and factual investigation, not merely a call to action.

Finally, the Court was persuaded that the University intended the Report to reflect a factual investigation because it was released to the media with a press release. It later rejected the Court of Claims finding that the report was not actionable as a matter of law because it had been produced pursuant to a public records request. While not discussing whether any qualified privilege exists, it rejected any argument that there is a blanket privilege from defamation for public records.

The University then raised qualified privilege issues (i.e., matters of public concern, etc.) which the Court refused to consider on appeal. The Court of Claims never considered those issues when it dismissed on grounds or constitutionally protected opinion. Therefore, the Court of Claims would need to consider the qualified privilege issues when the matter is remanded for further consideration.

With respect to the statement by a University attorney that the plaintiff had been fired, the Court of Claims determined that neither the reporter nor the attorney seemed to have a clear memory of the issue, but the attorney denied that he would have made any statement like that which was not true. Accordingly, the Court found that there was insufficient proof that the statement had been made to the reporter as alleged.

In that this case has been remanded, we can look forward to another opinion in the future on the scope of the claimed qualified privileges.

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

Ohio Supreme Court: Courtesy Faculty Appointment Does Not Confer Sovereign Immunity

This morning, a unanimous Ohio Supreme Court rejected the sovereign immunity defense raised by a physician who held a courtesy clinical appointment by a state medical college and who permitted a medical student to observe the allegedly negligent medical procedure because the state college exercised no control over the physician. Engel v. Univ. of Toledo College of Medicine, Slip Opinion No. 2011-Ohio-3375. The Court focused on the volunteer nature of the clinical appointment, lack of formal employment relationship and fact that the physician was in private practice and had privileges only in a private hospital. Therefore, the plaintiff could not bring a medical malpractice claim against the medical college and was limited to the physician’s private malpractice insurance.

The original malpractice claim was brought in common pleas court against the physician arising out of two allegedly negligent surgeries performed by the physician. The physician held a courtesy clinical faculty appointment at the nearby state medical college and was being observed during the surgeries by a third-year medical student on a one-month rotation. In the malpractice lawsuit, the physician raised the defense of sovereign immunity under Ohio Revised Code § 9.86 because he had been acting as a clinical faculty instructor at the time of the challenged surgeries. While the trial court stayed the common pleas action, the plaintiff then filed a malpractice action in the Court of Claims against the medical college and also sought a declaration of the physician’s immunity. The Court of Claim confirmed the physician’s immunity and this was affirmed by the Franklin County Court of Appeals. The Supreme Court reversed.

Pursuant to O.R.C. § 9.86:

Except for civil actions that arise out of the operation of a motor vehicle and civil actions in which the state is the plaintiff, no officer or employee shall be liable in any civil action that arises under the law of this state for damage or injury caused in the performance of his duties, unless the officer’s or employee’s actions were manifestly outside the scope of his employment or official responsibilities, or unless the officer or employee acted with malicious purpose, in bad faith, or in a wanton or reckless manner.

A court’s analysis is generally focused on whether the defendant is an employee or officer and whether he or she was acting outside the scope of employment, etc. Whether an individual is a state employee is determined by reference to O.R.C. § 109.36, subsection (a) of which provides that a defendant is covered if he is “[a] person who, at the time a cause of action against the person arises, is serving in an elected or appointed office or position with the state or is employed by the state.”

Clearly, the physician was not elected or appointed to an office. However, prior decisions had not examined the employment status of physicians in any detail. The Court declined to announce a specific test for physicians, but stated that it would consider the following factors:
• The contractual relationship between the state and the individual;
• State control over the individual;
• Whether he received any tangible benefits from his courtesy appointment; and
• Whether the individual was paid by the state or affiliated entity.

In this case, the courtesy faculty appointment of the physician was unpaid, and there was no evidence that he had been hired or credentialed by the medical college. The medical college had no control over the private medical practice of the physician. While the courtesy faculty appointment subjected the physician to unspecified rules and policies of the college, he was not permitted to use his academic title in connection with any published research without the explicit and discretionary authority of the college department chair. The physician did not receive any office space or assigned staff or equipment, research projects, clinical privileges or lecturing responsibilities. Therefore, there were insufficient indications of an employment relationship with the state which was necessary to justify immunity.

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 Associational ADA Claim Which Lacked Prima Facie Evidence of Causation

Earlier this month, the Sixth Circuit rejected an ADA associational claim brought by a terminated manager. Stansberry v. Air Wisconsin Airlines Corporation, No. 09-2499 (6^th Cir. 7/6/11). In that case, the plaintiff alleged that he had been terminated on account of his wife being disabled. However, the Court agreed that summary judgment for the employer was appropriate because the plaintiff had not shown any causal link between his termination and his wife's disability. There was no evidence showing that the employer was influenced by her medical expenses, by fear of contagion or his potential distraction. Therefore, the Court need not reach the issue of pretext created by evidence that the employer lied about why the plaintiff had been fired.

The plaintiff was a long-time employee with years of successful performance evaluations. His wife had been ill for a number of years with a serious autoimmune disease (which was not contagious). In Spring 2007, her condition worsened, but the employer's health plan announced that it was refusing to pay for the recommended treatment after July. The plaintiff began appealing that decision. In the meantime, the number of employees for which he was responsible to supervise doubled and the new employees made a number of significant mistakes. In addition, the plaintiff was not getting along well with his immediate supervisor, the regional manager, and he had threatened to resign in June. After the TSA notified the employer in June about several security violations by the new employees (which the plaintiff had failed to report to the regional manager), the employer promised the TSA that disciplinary action would be taken. A termination letter was prepared in advance, but the regional manager says that he had not yet made up his mind whether to fire the plaintiff. Nonetheless, while meeting with the plaintiff near the end of July, the decision was made to fire him. The employer later said it was because of the security violations, failure to adequately supervise, and failure to stay on budget, but the letter only mentioned the security issues. The plaintiff contended that there had been no prior requirement to inform HQ about security breaches – which the employer disputed – but a letter was sent to all supervisors earlier in July explaining this policy after the plaintiff raised the issue.

The plaintiff brought suit for violation of the ADA provision which prohibits discrimination against an individual on account of his or her relationship with a person with a disability. Under this theory, the employer can be liable for discriminating against an employee, but it is not required to provide any reasonable accommodation to the employee on account of the other person's disability. The Sixth Circuit noted that there are three primary theories under this ADA section:

(1) "expense"; (2) "disability by association"; and (3) "distraction." The "expense" theory covers situations where an employee suffers an adverse employment action because of his or her association with a disabled individual covered under the employer's health plan, which is costly to the employer. The "disability by association" theory encompasses two related situations. Either the employer fears that the employee may contract the disability of the person he or she is associated with (for example the employee's partner is infected with HIV and the employer fears the employee may become infected), or the employee is genetically predisposed to develop a disability that his or her relatives have. The "distraction" theory is based on the employee's being somewhat inattentive at work because of the disability of someone with whom he or she is associated.

Surprisingly, the plaintiff did not pursue the expense theory. He also could not prove "disability by association" because the employer had known about the wife's condition for more than a decade. Although he tried to pursue the "distraction" theory, that was not possible in light of the uncontested evidence that the regional manager had been dissatisfied with his performance. The plaintiff had been required to show that "the adverse employment action occurred under a circumstance that raises a reasonable inference that the disability of the relative was a determining factor in the decision." On the contrary, there was no evidence to "suggest that his discharge was based on any unfounded fears that his wife's illness might cause him to be inattentive or distracted in the future." The Court rejected the argument that the employer was concerned that he would become more distracted since his wife's condition had recently worsened because the employer had known about her condition for more than a decade and not fired him.

The Court noted that even if the plaintiff had met his prima facie case, the employer stated a legitimate and non-discriminatory reason for firing him on account of his poor performance. However, the Court then seemed to back track on that. The plaintiff asserted that he could prove the employer's explanation was pretextual because the regional manager lied about the reason for firing him. Conceding that this evidence would generally be enough to establish pretext, the Court then concluded that proving pretext in this case was irrelevant since the plaintiff failed to prove a prima facie case.

A plaintiff cannot bypass the prima facie showing requirement and must offer some evidence to suggest that the adverse employment action he or she suffered was due in some measure to discriminatory animus before the employer is required to articulate a non-discriminatory reason for the action. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 146-48 (2000) (explaining that "a plaintiff's prima facie case, combined with sufficient evidence to find that the employer's asserted justification is false, may permit the trier of fact to conclude that the employer unlawfully discriminated"). Therefore, even if Mulder had lied about the reason for terminating Stansberry, that does not show that Air Wisconsin terminated Stansberry on account of his wife's disability because Stansberry has offered no evidence to create an inference that he was fired on account of his wife's disability.

Finally, the Court noted that if the plaintiff's poor performance was caused by the distraction from his wife's illness, he still had no remedy under the ADA.

Importantly, while [the plaintiff's] poor performance at work was likely due to his wife's illness, that is irrelevant under this provision of the Act. [The plaintiff] was not entitled to a reasonable accommodation on account of his wife's disability. Cf., e.g., Larimer, 370 F.3d at 700. Therefore, because his discharge was based on actually performing his job unsatisfactorily, and not fears that his wife's disability might prevent him from performing adequately, Air Wisconsin's conduct is not prohibited by this section of the Act. While [the plaintiff's] situation is very unfortunate, he has not offered anything to show that his wife's disability was in any way connected to Air Wisconsin's decision to discharge him. The only connection is that it possibly caused his performance to slip. Therefore, Air Wisconsin's decision to terminate [him] does not run afoul of the 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.

New Ohio Budget Contains A Few Provisions to Interest Employers

Last week, the General Assembly passed a new budget which contained some provisions of interest to public and private employers (aside from the obvious funding issues). Among other things, House Bill 153:
• Amended Ohio Revised Code Chapter 4141 concerning “seasonal employment” provisions in the unemployment compensation chapter;
• Incorporated performance management requirements for schools;
• Re-authorized mandatory and optional cost savings programs for exempt (i.e., non-union) employees in Ohio Revised Code § 124.393 to last until the end of fiscal year 2013, adds new ORC § 124.394 and broadens the provisions’ coverage to include non-union employees of townships and municipal corporations;
• Deleted the health care coverage and quality provisions from ORC § 4113.11 concerning mandatory health insurance cafeteria plans;
• Amended Chapter 4115 concerning prevailing wage requirements;
• Added college preparatory boarding schools to the purview of public collective bargaining provisions in Chapter 4117; and
• Amended provisions regarding the filling of positions within the civil service under Chapter 124.

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: Factual Issue Exists When Employee Fired After Good Performance Review

[Editor's Note: The Supreme Court vacated this decision on November 23, 2011 in light of Dohme. However, the Court of Appeals again reversed the employer's summary judgment on April 19, 2012, meaning this case is likely to return to the Supreme Court].

Earlier this month, the Cuyahoga County Court of Appeals reversed summary judgment in favor of an employer on a claim of wrongful discharge in violation of public policy. Alexander v. Cleveland Clinic Foundation, 2011-Ohio-2924. In that case, a private police officer working for the Foundation says he was attempting to help a pedestrian cross at a crosswalk when a driver ignored his motions to stop and continued through the crosswalk. He smacked the side-view mirror as the car passed – he says to get its attention. However, the driver later complained about the incident and a formal investigation was conducted. The employee had sometime earlier lost his temper with a bus driver who knocked him down in the street and he had been counseled to watch his temper. He had recently received a performance commendation and made a training officer and had received only satisfactory and mostly satisfactory performance evaluation. He was fired – purportedly just for slapping the driver’s mirror as it passed – and not for his overall work record. He claimed that his termination violated Ohio’s public policy requiring an officer to enforce traffic laws. The employer said he was fired for poor customer service skills. The Court’s majority decided that the factual dispute should be left to a jury, although the dissent felt that there was no clear public policy favoring the employee’s claim.

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

Ohio Supreme Court: No Unemployment Compensation for Employees Who Fail to Obtain and Maintain License Required by Job

This morning, a unanimous Ohio Supreme Court held that “When employment is expressly conditioned upon obtaining or maintaining a license or certification and an employee agrees to the condition and is afforded a reasonable opportunity to obtain or maintain the license or certification, an employee’s failure to comply with that condition is just cause for termination for unemployment compensation purposes.” Williams v. Ohio Dep’t of Job & Family Svs, 2011-Ohio-2897. In that case, the claimant applied for a promotion which required her to obtain her LISW certification within 15 months. With her employer’s consent, she postponed taking her first examination for health reasons, failed the examination when she ultimately took it and exhausted the 15 month deadline plus health-related extension before the next opportunity to take the examination 90 days later arose. Accordingly, she was fired. Although she was initially denied unemployment compensation, the Cuyahoga County Court of Appeals reversed the denial on the grounds that two other program managers (hired years earlier) lacked LISW certification.

Under Ohio’s unemployment compensation decisions, the Unemployment Compensation Act “does not exist to protect employees from themselves, but to protect them from economic forces over which they have no control. When an employee is at fault, he is no longer the victim of fortune’s whims, but is instead directly responsible for his own predicament. Fault on the employee’s part separates him from the Act’s intent and the Act’s protection. Thus, fault is essential to the unique chemistry of a just cause termination.”

Fault on an employee’s part is an essential component of a just cause termination. Fault, however, is not limited to willful or heedless disregard of a duty or a violation of an employer’s instructions. Id. at 698. Unsuitability for a position constitutes fault sufficient to support a just-cause discharge. “An employer may properly find an employee unsuitable for the required work, and thus to be at fault, when: (1) the employee does not perform the required work, (2) the employer made known its expectations of the employee at the time of hiring, (3) the expectations were reasonable, and (4) the requirements of the job did not change substantially since the date of the original hiring for that particular position.

The Court found that the claimant was aware of the LISW requirement when she accepted the position and was not treated unfairly. As for the argument that the LISW requirement was not evenly applied, the Court found that the other two employees were not similarly situated since they had been hired years earlier and had more experience. Moreover, the employer demonstrated that the only other program manager hired (before the claimant but after the other two program managers) had been similarly required to obtain her LISW certification as a condition of the promotion.

As the review commission noted, a company is entitled to increase the educational requirements for employment opportunities. Nothing in the record shows that the requirement — to obtain LISW certification within 15 months — was an unreasonable expectation or that other individuals were contemporaneously hired as program managers and were not required to obtain LISW certification. Thus, even if we were to adopt a requirement that any company policy must be fair and fairly applied before a termination for failure to follow that policy is deemed a just-cause determination, there is competent, credible evidence upholding the review commission’s decision that [Claimant’s] termination was for just cause.

The parties’ oral argument is available for viewing on the Supreme Court’s website.

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: First Amendment Petition Clause Does Not Protect Union Grievance or Lawsuit on Personal Concern

The Wal-Mart decision was not the only employment decision issued by the Supreme Court yesterday. The unanimous Court also rejected a § 1983 retaliation claim brought by a disgruntled police chief who asserted that the local city council was retaliating against him for successfully grieving and arbitrating his prior employment termination. Borough of Duryea v. Guarnieri, No. 09-1476. The Court found that the First Amendment right to petition government only creates a private right of action for employees under § 1983 when the petition involves a matter of public concern. It does not protect employees who pursue purely private matters, like the terms of their own employment.

According to the decision, the Chief had been fired and then reinstated after grieving and successfully challenging the decision in arbitration. The Council responded by issuing a number of directives to the Chief to clarify the terms of his employment when he returned. Among other things, he could not work overtime without authorization; the indoor smoking ban applied equally to the police department; and the police car is only to be used for official business. The Chief asserted that the Council was retaliating and, again, was successful in convincing an arbitrator that the directives be modified or withdrawn. The Chief also filed a §1983 lawsuit. The district court instructed the jury that his pursuing a union arbitration was constitutionally protected and it awarded him almost $100K in compensatory and punitive damages for the directives and denial of $358 in overtime. I can't make this stuff up.

The Court found the Third Circuit was way out there in permitting this miscarriage of justice (albeit the Third Circuit found no basis for the punitive damages). When a government employee brings a §1983 claim under the First Amendment for retaliation concerning the Free Speech Clause, the employee is required to show that the employee was speaking as a citizen on a matter of public concern:

If an employee does not speak as a citizen, or does not address a matter of public concern, "a federal court is not the appropriate forum in which to review the wisdom of a personnel decision taken by a public agency allegedly in reaction to the employee's behavior." Ibid. Even if an employee does speak as a citizen on a matter of public concern, the employee's speech is not automatically privileged. Courts balance the First Amendment interest of the employee against "the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.

This framework "reconcile[s] the employee's right to engage in speech and the government employer's right to protect its own legitimate interests in performing its mission." . . . There are some rights and freedoms so fundamental to liberty that they cannot be bargained away in a contract for public employment. "Our responsibility is to ensure that citizens are not deprived of [these] fundamental rights by virtue of working for the government." . . . Nevertheless, a citizen who accepts public employment "must accept certain limitations on his or her freedom." . . . The government has a substantial interest in ensuring that all of its operations are efficient and effective. That interest may require broad authority to supervise the conduct of public employees. "When someone who is paid a salary so that she will contribute to an agency's effective operation begins to do or say things that detract from the agency's effective operation, the government employer must have some power to restrain her." . . . Restraints are justified by the consensual nature of the employment relationship and by the unique nature of the government's interest. (citations omitted)

The Court saw no reason that the Petition Clause should be treated differently with respect to public employees where the Chief's claim could just as easily have been brought under the Free Speech clause. While the Free Speech clause protects an individual's right to free speech, the Petition Clause protects a citizen's right to petition the government (including the courts) for redress. While an arbitration proceeding is a form of judicial proceeding, in this case the Chief's grievance related solely to himself and was not otherwise a matter of public concern. That being said, the Free Speech clause and the Petition Clause may not always be treated as equivalent.

The substantial government interests that justify a cautious and restrained approach to the protection of speech by public employees are just as relevant when public employees proceed under the Petition Clause. Petitions, no less than speech, can interfere with the efficient and effective operation of government. A petition may seek to achieve results that "contravene governmental policies or impair the proper performance of governmental functions." Garcetti, 547 U. S., at 419. Government must have authority, in appropriate circumstances, to restrain employees who use petitions to frustrate progress towards the ends they have been hired to achieve. A petition, like other forms of speech, can bring the "mission of the employer and the professionalism of its officers into serious disrepute." Roe, 543 U. S., at 81. A public employee might, for instance, use the courts to pursue personal vendettas or to harass members of the general public. That behavior could cause a serious breakdown in public confidence in the government and its employees. And if speech or petition were directed at or concerned other public employees, it could have a serious and detrimental effect on morale.

When a petition takes the form of a lawsuit against the government employer, it may be particularly disruptive. Unlike speech of other sorts, a lawsuit demands a response. Mounting a defense to even frivolous claims may consume the time and resources of the government employer. Outside the context of public employment, this Court has recognized that the Petition Clause does not protect "objectively baseless" litigation that seeks to "'interfere directly with the business relationships of a competitor.'" . . .

Unrestrained application of the Petition Clause in the context of government employment would subject a wide range of government operations to invasive judicial superintendence. Employees may file grievances on a variety of employment matters, including working conditions, pay, discipline, promotions, leave, vacations, and terminations. See Brief for National School Boards Association as Amicus Curiae 5. Every government action in response could present a potential federal constitutional issue. Judges and juries, asked to determine whether the government's actions were in fact retaliatory, would be required to give scrutiny to both the government's response to the grievance and the government's justification for its actions. This would occasion review of a host of collateral matters typically left to the discretion of public officials. Budget priorities, personnel decisions, and substantive policies might all be laid before the jury. This would raise serious federalism and separation-of-powers concerns. It would also consume the time and attention of public officials, burden the exercise of legitimate authority, and blur the lines of accountability between officials and the public.

This case illustrates these risks and costs. Guarnieri's attorney invited the jury to review myriad details of government decisionmaking. She questioned the council's decision to issue directives in writing, rather than orally, Tr. 66 (Apr. 14, 2008); the council's failure to consult the mayor before issuing the directives, id., at 105 (Apr. 15, 2008); the amount of money spent to employ "Philadelphia lawyers" to defend Guarnieri's legal challenges, id., at 191–193:7–10 (Apr. 14, 2008); 152–153 (Apr. 16, 2008); and the wisdom of the council's decision to spend money to install Global Positioning System devices on police cars, id., at 161–162 (same). Finally, the attorney invited the jury to evaluate the council's decisions in light of an emotional appeal on behalf of Guarnieri's "little dog Hercules, little white fluffy dog and half Shitsu." Id., at 49:13–14 (Apr. 14, 2008). It is precisely to avoid this intrusion into internal governmental affairs that this Court has held that, "while the First Amendment invests public employees with certain rights, it does not empower them to 'constitutionalize the employee grievance.'" Garcetti, supra, at 420 (quoting Connick, 461 U. S., at 154).

If the Petition Clause were to apply even where matters of public concern are not involved, that would be unnecessary, or even disruptive, when there is already protection for the rights of public employees to file grievances and to litigate. The government can and often does adopt statutory and regulatory mechanisms to protect the rights of employees against improper retaliation or discipline, while preserving important government interests. Cf. Garcetti, supra, at 425 (noting a "powerful network of legislative enactments"). Employees who sue under federal and state employment laws often benefit from generous and quite detailed antiretaliation provisions. See, e.g., Pa. Stat. Ann., Tit. 43, §1101.1201(a)(4) (Purdon 2009); §1101.1302.These statutory protections are subject to legislative revision and can be designed for the unique needs of State, local, or Federal Governments, as well as the special circumstances of particular governmental offices and agencies. The Petition Clause is not an instrument for public employees to circumvent these legislative enactments when pursuing claims based on ordinary workplace grievances.

. . . .

Articulation of a separate test for the Petition Clause would aggravate potential harm to the government's interests by compounding the costs of compliance with the Constitution. A different rule for each First Amendment claim would require employers to separate petitions from other speech in order to afford them different treatment; and that, in turn, would add to the complexity and expense of compliance with the Constitution. Identifying petitions might be easy when employees employ formal grievance procedures, but the right to petition is not limited to petitions lodged under formal procedures.

The Court then discussed at length why employees should be treated differently from citizens when petitioning government on matters of purely private concern. In particular, it examined the private petitions brought by American colonists and in the early days of the republic and why these private petitions are distinguishable from employee private petitions when it comes to constitutional protection under §1983.

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: Three Wal-Mart Plaintiffs Brought Wrong Type of Class Action to Recover Back Pay

This morning, the Supreme Court unanimously held that the three class representatives (i.e., named plaintiffs) who brought the nationwide class action against Wal-Mart proceeded under the incorrect Rule of Civil Procedure. Wal-Mart Stores, Inc. v. Dukes, No. 10-277. Because the plaintiffs sought back pay on behalf of each member of the class of 1.5 million women – and the amount of that back pay would differ for each of the 1.5M members of the class – the lawsuit should have been brought – if at all – under Civil Rule 23(b)(3) (which requires notice to the class and option to opt-out) instead of Civil Rule 23(b)(2). However, the Court split 5-4 on whether the plaintiffs satisfied the threshold requirements in Civil Rule 23(a), with the majority finding that there was insufficient proof that the 3 plaintiffs and 120 fact witnesses adequately demonstrated that each subjective employment decision being challenged shared a common question of law or fact with all of the 1.5M class members.

The provisions of Civil Rule 23 which are at issue are in relevant part:

(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable,

(2) there are questions of law or fact common to the class,

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and

(4) the representative parties will fairly and adequately protect the interests of the class.

(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:

. . .

(2) the party opposing he class has acted or refused to act on grounds that apply generally to the class, so that final injunctive or corresponding declaratory relief is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to the class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include: (A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the likely difficulties in managing a class action.

There was no dispute at the Court that seeking relief for individualized back pay awards could never be obtained under Civil Rule 23(b)(2). Wal-Mart would have a separate defense for each of the 1.5M class members and the Court of Appeals' proposal to randomly select class members was rejected. The amounts of back pay awarded would vary by class member based on length of employment, job title, location, comparison to wages of male counterparts, etc.

The Court also agreed on other facts: There were only three plaintiffs and anecdotal testimony from only 120 women of alleged discrimination. Wal-Mart's corporate policy prohibited discrimination on the basis of sex, but promotion and compensation decisions were left to the individual store, district and regional managers based on their own discretion. There is no national corporate policy on factors to be utilized in making promotion or compensation decisions and no national oversight of such decisions. The plaintiffs' primary complaint is that the national hands-off policy and corporate culture has effectively resulted in discrimination against women, allegedly in violation of Title VII. The Court also agreed that subjective decisionmaking can be the basis of a disparate impact employment discrimination lawsuit in certain circumstances.

The dissent noted that 70% of Wal-Mart hourly employees are women, but only 33% of management is female.

The plaintiffs' "largely uncontested descriptive statistics" also show that women working in the company's stores "are paid less than men in every region" and "that the salary gap widens over time even for men and women hired into the same jobs at the same time." 222 F. R. D., at 149. The selection of employees for promotion to in-store management "is fairly characterized as a 'tap on the shoulder' process," in which managers have discretion about whose shoulders to tap. Id., at 148. Vacancies are not regularly posted; from among those employees satisfying minimum qualifications, managers choose whom to promote on the basis of their own subjective impressions.

The majority in turn noted that the evidence was misleading because most, or even all, of the alleged discrimination could be coming from only a few stores or a couple of regions and it does not logically follow that every manager (whether male or female) is discriminating against all women as alleged in the lawsuit. No evidence was put on about employment practices in 14 states and only one or two witness was produced to represent alleged discrimination in another 25 states. Moreover, there was only evidence produced about 235 of Wal-Mart's 3,400 stores. "Even if every single one of these accounts is true, that would not demonstrate that the entire company "operate[s] under a general policy of discrimination," Falcon, supra, at 159, n. 15, which is what respondents must show to certify a companywide class." In other words, a lawsuit might have been appropriate in some states and in some regions, but the truth of that does not mean that a national class action is appropriate.

Commonality requires the plaintiff to demonstrate that the class members "have suffered the same injury," Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of class wide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

. . .

To be sure, we have recognized that, "in appropriate cases," giving discretion to lower-level supervisors can be the basis of Title VII liability under a disparate-impact theory—since "an employer's undisciplined system of subjective decision making [can have] precisely the same effects as a system pervaded by impermissible intentional discrimination." Id., at 990–991. But the recognition that this type of Title VII claim "can" exist does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common. To the contrary, left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all. Others may choose to reward various attributes that produce disparate impact—such as scores on general aptitude tests or educational achievements, see Griggs v. Duke Power Co., 401 U. S. 424, 431–432 (1971). And still other managers may be guilty of intentional discrimination that produces a sex based disparity. In such a company, demonstrating the invalidity of one manager's use of discretion will do nothing to demonstrate the invalidity of another's. A party seeking to certify a nationwide class will be unable to show that all the employees' Title VII claims will in fact depend on the answers to common questions.

. . .

Even if [the statistical evidence] established (as it does not) a pay or promotion pattern that differs from the nationwide figures or the regional figures in all of Wal-Mart's 3,400 stores, that would still not demonstrate that commonality of issue exists. Some managers will claim that the availability of women, or qualified women, or interested women, in their stores' area does not mirror the national or regional statistics. And almost all of them will claim to have been applying some sex-neutral, performance-based criteria—whose nature and effects will differ from store to store. . . . Other than the bare existence of delegated discretion, respondents have identified no "specific employment practice"—much less one that ties all their 1.5 million claims together. Merely showing that Wal-Mart's policy of discretion has produced an overall sex-based disparity does not suffice.

While the dissent argued that the majority was confusing Rule 23(a)(2) with 23(b)(3) and that the plaintiffs should be given the opportunity on remand to proceed under Civil Rule 23(b)(3), the majority contended that there was not a single question of common law or fact under Civil Rule 23(a) tying all 1.5M women together because they ""held a multitude of different jobs, at different levels of Wal-Mart's hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed. . . . Some thrived while others did poorly. They have little in common but their sex and this lawsuit."

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.

Franklin County Court of Appeals Affirms $105K in Damages for Same Sex Harassment

Earlier this month, a unanimous Franklin County Court of Appeals affirmed $105,000 in damages for a same sex hostile work environment harassment claim. Tod v. Cincinnati State Technical & Community College, 2011-Ohio-2743. In Tod, the female plaintiff complained about her female manager referring to her "Barbie doll figure," the size of her chest, her figure, as a "bit**" and other similar comments throughout her employment. After 14 months of documenting the problems, she finally reported the problem to human resources and then began to feel retaliated against. She then found another job, but did not report her present employment out of fear of further retaliation. She was then fired from both jobs. The Court rejected the employer's attempt to argue that the harassment was welcomed, not reported in a timely basis, or sufficiently hostile. The Court also rejected the contention that the harassment was not based on sex because the manager's comments were inherently sexual.

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: Union Fundraising is Not Constitutionally Protected Speech

This morning, the Sixth Circuit reversed a trial court which had found that disciplinary action taken against a fire union for fundraising activities was unlawful retaliation. Doherty v. City of Maryville, No. 09-5217. In that case, the IAFF Local Union had signed a contract with a telemarketing firm to sell concert tickets to raise money for union activities. Thinking the calls were coming from the City, several citizens complained about rudeness and threats. The City met with the union officials who signed the contract and warned them that they would be fired if the City received any more complaints. The City did not ask the union to cancel the fundraiser. The union cancelled the telemarketing contract and then renewed the contract, but with a revised script. When the City received additional complaints, it put a letter of reprimand in the union officer’s file. After the union and the officer filed suit for violation of First Amendment rights, the trial court denied the City’s motions for summary judgment and judgment as a matter of law and the jury found against the City. On appeal, the Sixth Circuit concluded the trial court erred in examining the totality of the circumstances (i.e., the content of the telemarketing calls and the intended uses for the funds). Instead, the only conduct at issue was the signing of the telemarketing contract and that conduct was commercial, not protected political, speech. “As a matter of law, the conduct in question — i.e., the act of contracting with a third party to make telemarketing calls — did not touch on a matter of public concern.”

“When a plaintiff is a public employee who is claiming retaliation by his employer (the government) for his speech or his associations, his speech or association is protected only if (1) it touches on a matter of public concern and (2) there is no overriding state interest that would be undermined by the employee’s speech or association.”

The only activity that is relevant in this case is the Plaintiffs’ act of contracting with a third-party telemarketing organization to make fundraising phone calls. In their summary judgment pleadings, the Plaintiffs conceded that they allege retaliation by the City solely because of their involvement with the phone calls. There is absolutely no evidence in the record that the Plaintiffs were targeted because of their membership in the union or because of the union’s other community activities. Rather, all the evidence shows that they were targeted because they were in charge of this particular fundraising activity.
. . .
This was a business transaction, and the conduct had a commercial focus. Furthermore, the subject of the contract, making phone calls, was also commercial in nature. Doherty testified at trial that the purpose of the phone calls was to sell a product—tickets to a concert. The act of signing a business contract does not fall within traditional understandings of matters constituting a public concern

Although courts “evaluate several factors to determine whether speech is a matter of public concern, including “the focus of the speech; the point of the speech in question; to what purpose the employee spoke; the intent of the speech; or the communicative purpose of the speaker,” the Court found the trial court erred:

by examining a much broader array of activity; it looked at everything that the union did in the community, as well as the contract with FireCo and the phone calls that FireCo made. The district court further erred by suggesting that the Plaintiffs may have been disciplined for the positive aspects of the phone calls (as opposed to the threatening and misleading aspects). Local 4053’s activity, other than the act of contracting with FireCo, is irrelevant to the retaliation claim at hand.

. . .

The Plaintiffs argue that because the phone calls aimed to raise money for the union’s broad activities, some of which are matters of public concern, the act of contracting with a telemarketer to make those phone calls is also a matter of public concern. Even if we were to ignore the attenuated nature of the link between the contract and potential issues of public concern, the fact that the purpose of the FireCo contract was to raise money for union activities does not change the nature of the contract itself. “[A]n employee’s speech, activity, or association, merely because it is union related, does not touch on a matter of public concern as a matter of law.” . . . Similarly, FireCo’s passing references during the calls to some of the union’s protected activities do not transform the nature of the calls (much less the contract to make the calls). We have held that “the proper inquiry is not what might be incidentally conveyed by the speech, and that passing or fleeting references to an arguably public matter do not elevate the speech to a matter of public concern where the focus or point of the speech advances only a private interest.”

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

Ohio Supreme Court Recognizes Retaliatory Discharge Claim Before Employee Files Worker’s Compensation Claim

This morning, a majority of the Ohio Supreme Court agreed that an employee who reports a workplace accident to management is protected from retaliatory discharge by Ohio Revised Code § 4123.90 as soon as the report is made even though he has not yet formally initiated a worker's compensation claim or testified in a worker's compensation proceeding. Sutton v. Tomco Machining, Inc., Slip Opinion No. 2011-Ohio-2723. "Ohio recognizes a common-law tort claim for wrongful discharge in violation of public policy when an injured employee suffers retaliatory employment action after injury on the job but before the employee files a workers' compensation claim or institutes or pursues a workers' compensation proceeding." In Sutton, the employee was injured while disassembling a chop saw as part of his job and immediately reported the accident and injury to the employer's president. Within an hour, he was discharged without any explanation (although he was assured that it was not because of his performance, compliance with rules or work ethic).

A few months after being terminated, the employee filed suit alleging both a statutory violation of O.R.C. §4123.90 and a tort for wrongful discharge in violation of public policy. He alleged that he was terminated immediately after the accident in order to prevent him from claiming employment status when he initiated a formal worker's compensation claim. The employer moved dismiss/judgment on the pleadings, which was granted by the trial court. The Court of Appeals affirmed in part and reversed in part. It concluded that there was no valid statutory claim because the employee had been fired before he initiated a worker's compensation claim. However, it also concluded that his termination was in violation of the public policy reflected in the same statute. In confronting this issue, the Supreme Court noted:

R.C. 4123.90 provides: "No employer shall discharge, demote, reassign, or take any punitive action against any employee because the employee filed a claim or instituted, pursued or testified in any proceedings under the workers' compensation act for an injury or occupational disease which occurred in the course of and arising out of his employment with that employer."

{¶ 14} R.C. 4123.90 does not expressly prohibit retaliation against injured employees who have not yet filed, instituted, or pursued a workers' compensation claim. But it does expressly prohibit retaliation against injured workers who have filed, instituted, or pursued a workers' compensation claim. Essentially, a gap exists in the language of the statute for conduct that occurs between the time immediately following injury and the time in which a claim is filed, instituted, or pursued. Sutton's firing occurred in that gap. The parties disagree as to whether the public policy underlying R.C. 4123.90 justifies the creation of an exception to the
employment-at-will doctrine to protect such employees.

Interestingly, the Court had previously rejected a similar claim before it recognized the wrongful discharge in violation of public policy exception to the employment at will doctrine:

Although we have never before directly addressed whether the public policy underlying R.C. 4123.90 protects such employees, we have addressed whether the statute itself protected a similarly situated employee. In Bryant v. Dayton Casket Co. (1982), 69 Ohio St.2d 367, 23 O.O.3d 341, 433 N.E.2d 142, we addressed whether an employee's expression of an intent to pursue a workers' compensation claim was sufficient to satisfy R.C. 4123.90's requirement that an employee "institute" or "pursue" a proceeding and whether the employee was therefore protected by the statute against retaliation. Id. at 370. The relevant facts are that the employee, Bryant, cut his finger with a saw during his second day of employment with Dayton Casket Company, informed someone within the company of the injury, and was thereafter fired. Id. at 368. At the time of his dismissal, no workers' compensation proceedings had actually been pursued or instituted. Id. at 369. The employee sued and alleged that his firing was in retaliation for his pursuit of a workers' compensation claim. Id. at 368. He argued that his informing someone within the company of the injury was sufficient to satisfy the R.C. 4123.90 requirement that he pursue a claim. Id. at 370. We held that a mere expression of an intention to pursue a claim is not "pursuit" of a claim and, therefore, Bryant was not protected from retaliatory firing under the statute. (emphasis added).

However, since the 1982 decision, the Court now recognizes exceptions to the employment at will doctrine, and also found room to fix gaps in legislation when it determined that the gap was not intended to create an absurd result:

We find that the General Assembly did not intend to leave a gap in protection during which time employers are permitted to retaliate against employees who might pursue workers' compensation benefits. The alternative interpretation—that the legislature intentionally left the gap—is at odds with the basic purpose of the antiretaliation provision, which is "to enable employees to freely exercise their rights without fear of retribution from their employers." Coolidge v. Riverdale Local School Dist., 100 Ohio St.3d 141, 2003-Ohio-5357, 797 N.E.2d 61, ¶ 43. The General Assembly certainly did not intend to create the foot race cautioned against in Roseborough, 10 Ohio St.3d at 143, 462 N.E.2d 384, which would effectively authorize retaliatory employment action and render any purported protection under the antiretaliation provision wholly illusory. Therefore, it is not the public policy of Ohio to permit retaliatory employment action against injured employees in the time between injury and filing, instituting, or pursuing workers' compensation claims. Rather, R.C. 4123.90 expresses a clear public policy prohibiting retaliatory employment action against injured employees, including injured employees who have not filed, instituted, or pursued a workers' compensation claim. (emphasis added).

That being said, the Court declined to permit employees who are unlawfully discharged in violation of the public policy reflected in O.R.C. §4123.90 to recover the same unlimited damages available to other wrongful discharge plaintiffs. Instead, the Court decided that because the General Assembly intended to limit the monetary recovery of successful plaintiffs under O.R.C. §4123.90, that public policy tort plaintiffs should similarly be restricted: "Accordingly, we hold that Ohio's public policy as established by the legislature is to limit remedies for retaliatory employment actions against injured employees to those listed in R.C. 4123.90." Otherwise, plaintiffs who were fired before they brought worker's compensation claims would recover more than plaintiffs who were fired after they initiated worker's compensation claims even though, ultimately, both plaintiffs were relying on O.R.C. §4123.90 as the basis for their recoveries.

It would be nonsensical to acknowledge a tort in violation of public policy but fail to tailor the remedies in conformance with that public policy. We therefore hold that the remedies available for wrongful discharge in violation of the public policy against retaliatory employment actions as expressed in R.C. 4123.90 are limited to those listed in R.C. 4123.90.

For these reasons, we recognize a common-law tort claim for wrongful discharge in violation of public policy when an injured employee suffers retaliatory employment action after an injury but before he or she files, institutes, or pursues a workers' compensation claim. To establish causation, a plaintiff who alleges wrongful discharge in violation of public policy as expressed in R.C. 4123.90 must prove that the adverse employment action was retaliatory, which requires proof of a nexus between the adverse employment action and the potential workers' compensation claim. We further hold that the remedies available for the tort are limited to those provided by R.C. 4123.90.

Three justices dissented.

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.

It’s Baaaackkk! Dohme Again Makes it to Oral Arguments Before Ohio Supreme Court

Yesterday was déjà vu all over again at the Ohio Supreme Court as the Dohme case had its second appearance before the Court in oral argument. As previously reported here in February 2008, “the Ohio Supreme Court heard oral argument about whether public policy wrongful discharge claims should be recognized when the employee did not “blow the whistle” to either a government agency or management about safety concerns, but rather, complained to a private sector insurance auditor about his paranoia of being set up to be fired in a document of fire alarm inspections.”

A law school classmate, Todd Penny, again argued the case for the employer. According to the 2007 opinion of the Montgomery County Court of Appeals, the employer’s insurance company was conducting a risk assessment in connection with developing a price quote. As had been done in the past, the employer informed staff about the inspection and directed that only certain designated employees were to communicate with the insurance company employee. (It later explained that this was to ensure that the insurance company only received information from staff who were up to date with accurate information). There was some confusion about one of the employer’s staff not coming to work that day, however, and the plaintiff ultimately greeted the insurance representative and spoke to him about a missing report which he believed would be blamed on him. The employer pointed out that the plaintiff never mentioned any safety concerns to the insurance company employee. During oral argument, it was explained that the plaintiff then told another employee at the employer that he had told the insurance employee about the missing report so that he could not be blamed for its disappearance. The plaintiff was then terminated for violating a work directive.

The Court of Appeals concluded that even though the plaintiff did not specifically mention a concern with workplace place safety to the insurance representative, the issue raised related to workplace safety. It also found inherently suspicious the employer’s direction to limit communication with the insurance representative. However, Justice O’Connor was troubled by this “leap” and suggested that it might be suspicious if only the plaintiff had been directed to not communicate with the insurance representative.

The plaintiff’s attorney attempted to argue that evidence of causation cannot be limited to simply this single conversation with the insurance representative, but argued that the Court should look back at the plaintiff’s history – going back to 2001 -- of being perceived as a safety troublemaker. Justice Lanzinger then asked how long an employee should be protected after engaging in protected whistleblowing. In response, his attorney admitted that it would typically be no more than 6 months, but that it would be longer in this case in light of the protracted disputes over fire safety at the plant.

In short, the employer argued that this case should be dismissed on summary judgment because (1) the plaintiff never mentioned a concern with workplace safety to the insurance representative (but only a concern with workplace paranoia) and (2) never complained to a government agency or internal management about any safety concerns. Otherwise, the possibility exists that an employee would be able to claim whistleblower protection just by mentioning an issue to a spouse, neighbor, drinking buddy, etc. This time around, the Court did not seem to entertain the same acceptance of the plaintiff’s case.

As mentioned, the case was previously argued before the Supreme Court, which remanded it for lack of a final and appealable order (in that the plaintiff had attempted to create an appealable order by voluntarily dismissing without prejudice a overtime wage claim). On remand, the plaintiff dismissed that claim with prejudice and the trial court reinstated his prior summary judgment in favor of the employer. Without writing a new opinion, the Court of Appeals, again, reversed and the employer, again, appealed to the Supreme Court.

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.

Unanimous Supreme Court Limits Recovery of Attorney Fees to be Paid to Prevailing Party Defendant Who Defended Frivolous Claims

Yesterday, a unanimous United States Supreme Court held that prevailing defendants who are entitled under 42 U.S.C. § 1988 to recover attorney fees which were incurred in successfully defending against frivolous claims are only entitled to recover fees if they prove that they would not have incurred the fees "but for" the frivolous claim. Fox v. Vice, No. 10-114 (2011). "[A] court may grant reasonable fees to the defendant in this circumstance, but only for costs that the defendant would not have incurred but for the frivolous claims." In other words, "[t]he dispositive question is not whether attorney costs at all relate to a non-frivolous claim, but whether the costs would have been incurred in the absence of the frivolous allegation." The Court admonished trial courts that fee disputes should not result in second major litigation because the goal is only to obtain "rough justice," not auditing perfection. Therefore, it is unlikely that the defendant who prevailed in getting every federal claim dismissed will be entitled to attorney fees if the same evidence and legal work was necessary to defend against non-frivolous state law claims over which the court refused to extend jurisdiction. Because §1988 also permits prevailing defendants to recover attorney fees for frivolous federal employment claims, this decision is of interest to employers.

In the Fox case, the dispute involved purported dirty tricks during an election for police chief. The plaintiff still won the election despite the criminal and tortuous behavior (which ultimately resulted in his opponent's conviction for extortion), but later filed suit for, among other things, defamation and violation of 42 U.S.C. §1983 against his opponent and the town. This lawsuit was removed to federal court, the §1983 claim was dismissed on summary judgment and the court declined to exercise jurisdiction over the state law claims (which could then be litigated in state court with the evidence gained during federal court discovery). The opponent then moved to for attorney fees under §1988 for prevailing on the federal §1983 claim. The Court awarded approximately $48,000 in fees to the defendant. The Court of Appeals affirmed.

The "American Rule" generally provides that each party pays its own attorney. However, Congress has abrogated that rule on occasion with attorney fee shifting statutes, including §1988. This statute permits prevailing parties, usually plaintiffs, to recover attorney fees when prevailing on federal claims. Plaintiffs recover on the theory that they are acting as private attorney generals to vindicate federal civil rights and prevailing "plaintiffs may receive fees under §1988 even if they are not victorious on every claim." Nonetheless, they may not recover fees incurred while pursuing unsuccessful claims. In turn, prevailing defendants are also entitled to attorney fees, but on more limited grounds. "Accordingly, §1988 authorizes a district court to award attorney's fees to a defendant "upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation." Because litigation is often messy and involves both frivolous and valid claims, it is possible that both parties could be entitled to reimbursement for attorney fees at the conclusion.

The issue in this case involves time spent defending five depositions that were taken where the evidence related to both the federal and the non-frivolous state law claims. The Court sought to avoid a windfall to the defendant merely because there was one frivolous claim brought in the suit. Therefore, it adopted a "but-for" test:

the "but-for" standard we require may in some cases allow compensation to a defendant for attorney work relating to both frivolous and non-frivolous claims. Suppose, for example, that a plaintiff asserts one frivolous and one non-frivolous claim, but that only the frivolous allegation can legally result in a damages award. If an attorney performs work useful to defending against both, but did so only because of the defendant's monetary exposure on the frivolous charge, a court may decide to shift fees. Or similarly, imagine that the frivolous claim enables removal of the case to federal court, which in turn drives up litigation expenses. Here too, our standard would permit awarding fees for work relevant to both claims in order to reflect the increased costs (if any) of the federal forum. And frivolous claims may increase the cost of defending a suit in ways that are not reflected in the number of hours billed. If a defendant could prove, for example, that a frivolous claim involved a specialized area that reasonably caused him to hire more expensive counsel for the entire case, then the court may reimburse the defendant for the increased marginal cost. As all these examples show, the dispositive question is not whether attorney costs at all relate to a non-frivolous claim, but whether the costs would have been incurred in the absence of the frivolous allegation. The answers to those inquiries will usually track each other, but when they diverge, it is the second that matters.

Thus, the case was remanded to determine whether the prevailing defendant was entitled to attorney fees where the frivolous and non-frivolous claims overlapped and were interrelated.

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

EEOC Settles Class Action Reverse Race Discrimination Lawsuit for $246.5K

On Friday, the EEOC announced that it was settling a class action reverse race discrimination lawsuit brought in federal court in Indianapolis, Indiana against a discount clothing retailer for $246.5K. According to the press release, "Dots' Merrillville, Ind., clothing store denied jobs on a systemic basis to white applicants since at least April 1, 2007. During that time, the EEOC contended, Dots regularly hired black entry-level applicants for sales positions, but excluded white applicants who were equally or better qualified." In addition,

The consent decree settling the suit provides that the settlement proceeds will be distributed to 32 class members. The decree also requires Dots to notify class members of open sales positions for a period of 18 months and to offer them interviews if they are still interested in employment with the company. Dots agreed to cease any further discrimination against white applicants and not to retaliate against applicants or employees who exercise their rights to complain about discrimination or assist in an investigation or discrimination-related proceeding. Dots will post a notice of non-discrimination at each of its facilities in Indiana and Illinois under its District 11 and train its managers and employees involved in the hiring process. Dots will also report on all hiring at its Merrillville location for a three-year period and will submit reports to EEOC detailing its compliance with the decree

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.