Ohio Supreme Court Applies Tort Cap to $800K Defamation Judgment Against Employer

This morning, a divided Ohio Supreme Court remanded a $1.55M defamation judgment entered against an employer which a jury found had defamed a nurse who had been involved with a union organization effort.  Wayt v. DHSC, L.L.C., Slip Opinion No. 2018-Ohio-4822.  The Court found that the jury’s $800K compensatory damages award was subject to the $250K non-economic damages cap under Ohio Revised Code §2315.18 because its prior precedent had found defamation to be a personal injury.  

According to the Court’s opinion, the plaintiff nurse was fired by her hospital employer for neglecting her duties and falsifying a medical record. The  head of nursing then reported the plaintiff to the Board of Nursing for patient neglect.  The plaintiff was unable to find another nursing job.   In the meantime, a nursing union filed an unfair labor practice charge with the NLRB asserting that the defendant hospital had  violated the NLRA by refusing to bargain with it and had terminated the plaintiff because of her involvement with the union. After an ALJ ruled in favor of the union, the NLRB successfully petitioned a federal court to order the reinstatement of the plaintiff to her former job at the hospital and the hospital to retract the complaint made to the Nursing Board about the plaintiff.  Nonetheless, one of the plaintiff’s co-workers stated to other nursing that the court order did not make the plaintiff a good nurse or mean that she deserved reinstatement. 

The plaintiff filed a defamation action against the hospital.  A jury awarded her $800K in compensatory damages and $750K in punitive damages.  The hospital sought to have the damages reduced under Ohio’s tort reform act, but was denied by both the trial and appellate courts.  The Ohio Supreme Court agreed only to decide the hospital’s appeal of the amount of compensatory damages.  In particular: whether the cap in R.C. 2315.18 that applies to tort actions seeking noneconomic loss as a result of an alleged injury or loss to person or property also applies to defamation.

The Court initially appeared to agree that injuries to reputation are different than personal injuries. 

R.C. 2315.18(A)(7) provides: “ ‘Tort action’ means a civil action for damages for injury or loss to person or property.”  R.C. 2315.18(B)(2) provides that the maximum noneconomic damages that can be awarded to a plaintiff in a tort action is, barring certain exceptions that do not apply here, $ 250,000.

{¶ 17} Property “means real and personal property.”  R.C. 1.59(E).  The term “property” as used in R.C. 2315.18(A)(7) does not include reputation, and neither party argues to the contrary.

The plaintiff asserted that the Ohio Constitution recognizes the four separate types of injuries. Article I, Section 16 of the Ohio Constitution, provides that courts shall be open to redress injuries to “land, goods, person, or reputation.”

That being said, the Court’s majority held that its decision was not resolved by the plain meaning of the statute because

 We have held for 90 years, however, that defamation is an injury to a person.  See Smith v. Buck, 119 Ohio St. 101, 162 N.E. 382 (1928), paragraph two of the syllabus.

                 . . . .

                We hold that under the plain language of R.C. 2315.18(A)(7), defamation is a “civil action for damages for injury or loss to person.”  This holding, as explained above, is in accord with prior decisions of this court and several other courts that were interpreting similar language.  We see no reason to overturn the well-established precedent that defamation is a “personal injury” according to the plain meaning of the term.

                 . . .

                Assuming arguendo only that the court must look to the canons of statutory construction to determine what the legislature intended by using the phrase “injury or loss to person or property,” the result in this case would be the same.  It is well established that the legislature is presumed to have full knowledge of prior judicial decisions. . . . Moreover, the legislature could easily have drafted the statute to prevent the holding from that case from affecting the outcome of this case; the legislature merely needed to add “defamation” to the list of actions enumerated in R.C. 2315.18(A)(7) to which the caps do not apply.

In addition, the Court declined the plaintiff’s invitation to only apply the damages cap to negligence cases.

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 be changed or 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 Blames Employee’s Physician For Year Delay In Reinstatement Following Stroke and Dismisses Disability Discrimination Claim

On Tuesday, the Sixth Circuit affirmed the summary judgment dismissal of an Ohio disability discrimination claim brought by a current employee who wanted to return to work following rehabilitation of a severe stroke before the company’s physician agreed.  Stanley v. BP Products North America, Inc., No. 18-3303 (6^th Cir. 12-4-18).   Although the plaintiff had been released to return to work without restrictions by his physician’s office in August 2011, the company’s physician disagreed after conducting his own medical assessment and the plaintiff’s physician provided a signed note in November 2011 agreeing with the company’s physician.  The plaintiff did not provide a contrary note from his personal physician releasing him without restrictions until July 2012 and he was returned to work the following month when the company’s physician conducted another assessment and agreed.  The Court rejected the plaintiff’s argument that the employer could be found to have discriminated against him without knowledge that his own physician’s November 2011 was flawed and not based on any medical assessment.  Employers are generally entitled to accept an employee's doctor’s restrictions at face value.

According to the Court’s opinion, the plaintiff suffered a severe stroke in November 2010 and collected short-term disability.  However, after his STD was exhausted and he completed his rehabilitation, his application for long term disability was denied after his personal physician – the villain in this story --  failed to submit some required documentation.  His physician told him that he would release him to return to work if he passed a driving assessment, which he did.  He was then examined by a Certified Nurse Practitioner which found him to be physically fit as of August 2011, but did not conduct a cognitive assessment.  At that point, the employer’s collective bargaining agreement provided that he had to pass a physical examination by the company’s physician.   The Company’s physician agreed with the CNP that the plaintiff had good strength and reflexes, but had issues with balance, fine motor skills, coordination and some cognitive skills.  For instance, he could not stand long on one leg, had difficulty with heel to toe walking and could not subtract 7 from 93.   Concerned, the company’s physician studied the plaintiff’s medical file and determined that his physician had failed to conduct certain necessary tests or to understand the requirements of the plaintiff’s job.  The company’s physician then restricted the plaintiff to office work, for which there were no open positions.

The bargaining agreement then required the two physicians to consult with each other about their disagreement and, if not resolved, select a specialist to resolve the dispute.   The company’s physician faxed information about the issue to the plaintiff’s physician and called him in October and November without success.   Apparently, the plaintiff’s physician never reviewed faxes, or returned calls and delegated these issues to his office staff.  The union then pursued the issue with HR, who called the plaintiff’s physician office to complain about the lack of response, pointing out that the plaintiff was about to have his utilities shut off when he was earning neither wages nor LTD. At that point, the plaintiff’s physician provided a signed note restricting plaintiff’s return to work and suggesting LTD.  The plaintiff was not provided with a copy.  However, he was awarded LTD, which he rejected because he contended that he was able to return to work in August.

In March 2012, the plaintiff’s physician signed a second note saying that he only signed the first note because of information about the plaintiff’s finances and indicated that the plaintiff could immediately return to work without restrictions.  However, this second note was not provided to the employer until July 2012.  There is no indication in the record whether the plaintiff’s physician conducted any medical assessment in either November 2011 or March 2012 and the physician denied recalling signing either note.  The plaintiff was evaluated again by the company’s physician in August (in the presence of an assistant and union representative) and passed all of the physical and cognitive tests.  He was immediately returned to work and remained there when the lawsuit was filed challenging the year delay in reinstating him to work.

The plaintiff argued that the employer should have realized that his physician’s November 2011 note was flawed and not based on any medical assessment or review of his medical file.  However, the Court found that employers are generally entitled to rely on a doctor’s restrictions at face value.  There was no evidence presented that the employer knew – or should have known -- that the plaintiff’s physician was simply providing a note as requested earlier in the day by HR affirming the restrictions so that the plaintiff could collect LTD.

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 be changed or 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: No ADA Duty to Immediately Grant Requested Accommodation

On Friday, the Sixth Circuit Court of Appeals affirmed an employer’s summary judgment dismissing an ADA failure-to-accommodate claim brought by a current employee.  Brumley v. UPS, No. 18-5453 (6^th Cir. Nov. 30, 2018).   The plaintiff could not show that her employer had failed to engage in the ADA accommodation process when she had voluntarily abandoned the interactive process and instead convinced her physician to lift her medical restrictions so that she could return to her former position.  The plaintiff could not satisfy her burden of proof by pointing to her supervisor’s refusal to immediately reinstate her when she submitted permanent medical restrictions because the “ ADA does not obligate employers to make on-the-spot accommodations of the employee’s choosing . . . . An employer’s refusal to provide an accommodation to the position of the employee’s choice immediately upon the employee’s request is not, in and of itself, a failure to accommodate under the ADA.” The plaintiff also could not prove that she had been coerced to abandon the process by her supervisor’s initial refusal because (1) she had later admitted during workers compensation proceedings that the supervisor had told her that the employer attempted to accommodate permanent restrictions and  (2) she been contacted about the interactive process within two weeks  and told that her employer would attempt to find her another position within her medical restrictions.

According to the Court’s opinion, the plaintiff employee suffered a work-related injury and on July 29 her doctor medically restricted her from lifting over 30 pounds, which was apparently an essential job requirement for a sorter.  Her supervisor refused to reinstate her with these permanent medical restrictions and the employer commenced the interactive process in mid-August by requesting additional medical information after she filed a grievance with her union.  After she delayed a month in providing the requested information and the employer delayed a month in scheduling a face-to-face meeting, she ultimately withdrew her accommodation request in mid-October when the employer indicated that it would try to transfer into another position.   Instead, she convinced her physician at the end of October to remove her medical restrictions and she returned to her former position as a sorter by November.   

Even though she had been reinstated, she filed the lawsuit challenging the employer’s refusal to reinstate her to her former position while she had permanent lifting restrictions imposed by her physician.

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 be changed or 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 Holds that ADEA Claims Apply to All Government Entities Regardless of Size

This morning a unanimous Supreme Court ruled that the provisions of the Age Discrimination in Employment Act apply to all governmental employers regardless of size.   Mt. Lemmon Fire District v. Guido,  No. 17-587  (11-6-18).   Thus, a fire department with fewer than 20 employees would be subject to ADEA claims challenging its reduction in force.   The Court found that the amendment of the ADEA adding government subdivision liability was more similar to the amendment of the FLSA, which applies to all governmental employers regardless of size, than to the amendment of Title VII, which only applies to employers – including governments – with more than 15 employees.  This is consistent with how the EEOC has traditionally interpreted the statutes, but is contrary to a 1990 Sixth Circuit holding (governing Ohio).  The Court’s holding was based on the different language used to amend the ADEA to include governments because the phrase “the term also means” typically is interpreted to create an additional, separate category than to modify or clarify a prior term.

According to the Court’s opinion, the defendant fire district laid off its two oldest full-time firefighters as part of a budgetary reduction in force.  The plaintiffs filed suit challenging their termination under the ADEA.  The employer moved to dismiss on the grounds that, with fewer than 20 employee, it was not subject to the ADEA.

When originally enacted, neither Title VII nor the ADEA covered state or local governmental entities.  However, Title VII was amended to include governmental employers in 1972.  The ADEA and the FLSA were amended two years later to include local and state governmental entities.   

Following the amendment, Title VII defined employers to include “persons”: “[t]he term ‘employer’ means a person engaged in an industry affecting commerce who has fifteen or more employees . . . .”  42 U. S. C. §2000e(a)–(b).  In turn, “persons” was defined to include governmental employers: “[t]he term ‘person’ includes one or more individuals, governments, governmental agencies, [and] political subdivisions,”  as well as other specified entities.  Thus, all employers must have 15 or more employees and can include governmental entities.

In contrast, the ADEA defines employers differently:

The term ‘employer’ means a person engaged in an industry affecting commerce who has twenty or more employees . . . .  The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State . . . .

29 U. S. C. §630(b) (emphasis added). Thus, the Court was faced with deciding whether the ADEA’s failure to define “person” as it did in Title VII to include governmental entities meant that governmental entities were not subject to the 20-employee threshold that applied to other persons. “Does “also means” add new categories to the definition of “employer,” or does it merely clarify that States and their political subdivisions are a type of “person” included in §630(b)’s first sentence?”  In other words, does the “term” refer to “employer” or to “person” in the preceding sentence?

In further contrast, the FLSA was amended to define covered employers to include: “any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.”  29 U.S.C. §203(d).   Further, “[p]ublic agency” means the Government of the United States;  the government of a State or political subdivision thereof;  any agency of the United States (including the United States Postal Service and Postal Regulatory Commission), a State, or a political subdivision of a State;  or any interstate governmental agency.”  Id. at §203(x).

In interpreting the three different definitions of “employer,” the Court based its ruling on a number of factors.  “First and foremost, the ordinary meaning of ‘also means’ is additive rather than clarifying.”    “Also” is generally understood to mean “in addition to” or “besides” or “likewise.”  It can be read to create an additional category of employer.   In other statutes, “also means” is generally interpreted to recognize separate and additional categories from the earlier categories.   The Court had previously held that the ADEA did not violate state government’s Tenth Amendment immunity and noted in that it applied to employers with so many employees and to state and federal governments as though governments were never subject to the numerical threshold.  

Second, reading the statute otherwise would create a “strange” result by requiring a 20-employee threshold for persons and government entities, but not for agents, “a discrete category that, beyond doubt, carries no numerical limitation.”  Why would “agents” be included as a separate category if they were required to also employ 20 employees?

Third, the Court rejected the argument that the ADEA should be interpreted to be consistent with Title VII because the statutes utilized different language to define their coverage.  Rather, the Court found the ADEA language to be more similar to the FLSA, on which some of the ADEA is based.  Governmental employers are covered by the FLSA regardless of size.   For that matter, however, “persons” are also covered by the FLSA regardless of workforce because the FLSA relies on a different threshold for its coverage (i.e., gross volume of sales) that is unrelated to the number of individuals employed.   Nonetheless, the Court did not seem to consider that fact.  

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 be changed or 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. 

When Willful Misconduct Is not Necessarily All Other Intentional Misbehavior

Earlier this month the Montgomery County Court of Appeals affirmed a $655,733.44 jury verdict (in addition to$262, 227 in costs,  interest and attorney fees)  in favor of an executive who it found was terminated in violation of his employment agreement and in bad faith.   Becker v. Direct Energy, LP, 2018-Ohio-4134.   The Court concluded that the trial court’s jury instruction explaining when the defendant company could terminate “for cause” the executive was correct and that there was sufficient evidence to show that the company acted in bad faith.  Thus, when the employment agreement provided that the executive could only be terminated “for cause” if the company “in good faith” believed that he had “engaged in acts of fraud, material dishonesty, or other acts of willful misconduct in the course of his duties hereunder,” the “other acts of willful misconduct” referred to conduct which was similar to “fraud” and “material dishonesty.”    Therefore, the jury could conclude that the plaintiff’s behavior did not constitute willful misconduct that the employer acted in bad faith in terminating him for yelling at and poking a subordinate employee who twice in three weeks had violated significant safety rules when the plaintiff had a long history of excellent performance and no prior disciplinary infractions, when other employees had received far less severe sanctions and when circumstantial evidence showed that his potential severance pay could have been a motivating factor for his termination.

According to the Court’s opinion, the plaintiff’s employment agreement provided that the executive could be terminated for cause or without cause.  However, if he was terminated without cause, he would be entitled to severance pay (including 24 months of salary and 18 months of COBRA payments), or he could resign with three months’ notice (entitling him up to 3 months of pay if the company opted for an earlier separation).  The executive had worked for many years for the company and its predecessors and his performance reviews reflected that his division was one of the most profitable.  The company had also been more focused on employee safety.  

The plaintiff was responsible for conducting random surprise inspections of employees and found an employee, who had been suspended during the prior year for safety issues, engaged in a number of unsafe practices and serious quality issues.  After discussing the issues with the employee, the plaintiff spoke with the employee’s supervisor about taking disciplinary action, but the supervisor never spoke to or terminated the employee.  Two weeks later, the plaintiff spoke with the supervisor about whether that employee was even teachable because the supervisor had not properly handled the situation.   He then decided to inspect that employee’s work again on his way to another meeting and found some of the same safety violations he had previously noted just two weeks earlier.   Stressed because he was running late, the plaintiff lost his temper with the employee.  He poked the employee (who was much larger than him) in the chest and yelled at him in a very unprofessional manner.  Although he apologized, he also believed that the employee should be fired because of his unsafe practices.

The employee called his wife, who worked in HR for another company and told her that he thought that he was going to lose his job.  The next day, he filed several internal complaints about the executive’s unprofessional treatment of him the prior day.  The executive admitted that much of the complaint was true.  While he denied harassing the employee, he was embarrassed by his behavior.  Up to this point, there was no allegation about violence, pushing or physical harm.  HR conducted an investigation and the current and former manager both recommended that the executive receive no more than a written reprimand or warning based on his prior record and level of the offense.   After a conference call with senior management, HR forwarded a copy of the executive’s employment agreement to legal counsel.  During the next conference call, the decision was made to terminate the executive for willful misconduct under his employment agreement.

The executive was informed of his termination and asked to remain until the end of the month. The script prepared for his termination indicated that he was not to be permitted to resign (even though the company’s practice had always been to permit employees to resign at any time for any reason) and that the remaining employees would be told that he was passing the torch, instead of being terminated.  The plaintiff filed suit for breach of contract, breach of the duty of good faith and fair dealing, and defamation.  

On appeal, the Court rejected the employer’s arguments that the court should have ruled in its favor as a matter of law on the grounds that the plaintiff materially breached the employment agreement.  The court found this to involve an issue of fact, which was resolved against the employer at trial.

The Court also agreed that “willful misconduct” under the employment agreement was ambiguous.  Under the doctrine of ejusdem generis, because “the agreement used the term “or other acts of willful misconduct,” it  can be read, under an established principle of construction, to indicate that willful misconduct was intended to relate back and be confined to the same general nature as the previous, more specific terms, which were fraud and material dishonesty.”  Indeed, the former executive who had hired the plaintiff testified (without objection) that this is what he meant when that term was inserted into the employment agreement.  In addition, “[t]here is no dispute about the  fact that [the defendant’s] legal counsel prepared the agreement, and Ohio law is settled that  ambiguities in contracts are construed strictly against the drafter.”  The employer could have avoided the ambiguity by defining the term “other acts of willful misconduct”  or deleted “other,” which had referred back to the earlier specific acts.

The Court also rejected the employer’s argument that there was no evidence (i.e., admissions) that the plaintiff had been fired in order to avoid paying his severance pay because circumstantial evidence may support a verdict as well as direct evidence.  The jury had ample circumstantial evidence that the employer had acted in bad faith.  The HR employees had not initially recommended more than a written warning for the plaintiff’s misconduct.  After this, she then learned that the plaintiff’s most recent performance evaluation had been “exceeds expectations,”  and she provided his employment agreement to counsel.  Consideration of the employment agreement could support a plausible inference that the severance pay factored into the decision, particularly because none of the witnesses recalled any discussion as to whether violation of the harassment/workplace violence policies would similarly constitute willful misconduct under the agreement or whether there were any grounds to terminate him for cause under the agreement.  The employer also prepared a script for the termination meeting which did not permit the plaintiff to voluntarily retire and which gave a false reason for his separation.  The actual decisionmaker was not called to testify as to the basis for their decisions.  There was also testimony that the employer did not have a zero tolerance workplace violence policy and comparisons to other similar situations show that the plaintiff was treated much more harshly for a first time disciplinary infraction.

As for the jury instructions, the Court found that the trial court’s instruction were proper:  “the terms fraud or material dishonesty may be instructive regarding the seriousness  required for behavior * * * to constitute an other act of willful misconduct.”  Moreover,

As indicated above, the agreement provides that the termination must be made in, quote, “good faith.”  Thus, a second issue is whether [the defendant’s] termination of [the plaintiff] on the basis that his conduct was an act of willful misconduct, breached [its] obligation to exercise good faith and fair dealing in interpreting the agreement to justify terminating [his] employment.

The jury was also instructed that “it could not find for [the plaintiff] regarding a breach of good faith and fair dealing unless it found that [the employer’s] action in terminating [him] from his position for cause

“was not an act of honesty in interpreting and applying the language in the Employment Agreement, but was instead an act of dishonesty in applying the definition of cause for an ulterior purpose or motive, and not a truthful interpretation or application of the definition of “cause” as contemplated by the parties.

As for the award of attorney’s fees, they generally are not awarded in the absence of punitive damages or statute.  However, the Court recognized an exception for when “a prevailing party may be awarded attorney fees after demonstrating the unsuccessful litigant’s bad faith.”  In this case, “[b]ad faith can involve conduct during litigation, but can also involve conduct giving rise to a party’s claim.”  “The jury did not just find that [the employer] had breached the duty of good faith and fair dealing; it specifically found that [it] had acted to take advantage of [the plaintiff].”  The jury unanimously agreed that the employer had acted in bad faith when responding to one of the jury interrogatories:

Do you find that Plaintiff proved by the preponderance of the evidence that Defendant’s decision to terminate him “for cause” was made in bad faith to take advantage of Plaintiff and improperly deny him the benefits he would have received if he had been terminated “without cause” under the contract? 

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 be changed or 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.