Sixth Circuit Dismisses Claim When Plaintiff Was Fired Six Weeks After Returning from FMLA Leave

On Monday, the Sixth Circuit Court of Appeals affirmed an employer’s summary judgment on an FMLA retaliation claim when the plaintiff had been terminated after nineteen years of employment only six weeks after he returned from FMLA leave.    Nieves v. Envoy Air, Inc., No. 18-1127 (6^th Cir. 1-14-19). The Court found that the plaintiff failed to show that his termination – for permitting his mother’s boyfriend to use his free flying privileges many years earlier in violation of policy – was causally related to his use of FMLA leave.  The plaintiff had admitted that he should not have identified the flier as his father.  Accordingly, the plaintiff could not prove his prima facie case of showing that his termination was causally related to his recent use of FMLA leave.   Interestingly, there was no discussion of temporal proximity satisfying the plaintiff’s burden of showing causation even though his termination on March 30 was merely six weeks after he returned to work on February 19.

According to the Court’s opinion, the plaintiff had worked in at the counter for nineteen years.  His relatively new supervisor did not like him and blamed him unfairly for a number of issues.  In April 2015, the plaintiff (along with several other employees) was selected by the corporate office for a random audit of his flying privileges to investigate potential abuse.  He was required to send proof of eligibility (i.e., familial or legal relationship) of the individuals listed on his travel log.  He only sent documentation of two people (his wife and one daughter) who were actively using his privileges instead of all of the individual who had used his privileges over the past 19 years (and included other children as well as a half-brother, a friend’s son who stayed with them on an extended basis and his mother’s 20-year boyfriend that he had once listed as father/step-father).   The audit stalled until January 2016 when the plaintiff was hospitalized for approximately a month for kidney failure and took FMLA leave.  Three weeks after he returned to work on February 19, he was interviewed on March 9 by telephone without prior notice about the individuals he failed to document and answered all of the questions truthfully. He was given nine days to produce documentation substantiating the legal/familial relationship with all of the individuals, which he later explained was impossible when some of the documentation had to be obtained from the Dominican Republic.  The corporate office – which was never told about the plaintiff’s FMLA leave -- determined quickly that the plaintiff should be terminated on March 30 because that was the recommended penalty for violation of the travel policy.  On appeal, the decision was upheld because the plaintiff admitted that his mother’s boyfriend should never have been listed as his father on the travel log.

The Court concluded that the plaintiff could not show that his termination was related to his FMLA leave.  It rejected the plaintiff’s argument that the investigator’s note in her files about the plaintiff’s FMLA leave was proof of retaliation because she explained that it was merely a reminder of why she had not yet interviewed him when she got to his file in January 2016.  The note explained his unavailability when she attempted to schedule his interview.  There was nothing in the investigator’s report to corporate about the plaintiff taking FMLA leave.

The Court also dismissed stray comments by his supervisor about him and suggesting that he retire.  Some comments were made more than a year before he took FMLA leave.  The supervisor was not the decisionmaker.  One comment followed the explanation of the plaintiff’s wife that his physician wanted him to do less lifting (which was a big part of his job).

The Court also rejected the allegation that his travel log was given more scrutiny following his FMLA leave because the employer documented each step of the investigation process and explained each of its steps and delays.

There is no discussion in the Court’s decision of the temporal proximity -- six weeks between the end of his FMLA leave in February and his termination on March 30 – being sufficient to infer a causal relation. Because there was no evidence linking the termination for a clear violation of the travel policy to his use of FMLA leave, the Court found that he could not prove his prima facie case and there is no discussion of pretext or honest belief defenses.

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: Court Decides FAA Exemptions for Workers in Interstate Commerce, Not Arbitrator

This morning, the Supreme Court affirmed a Federal Arbitration Act decision and held that a court – not the arbitrator --  should decide whether a §1 exemption for “contracts of employment of . . . workers engaged in foreign or interstate commerce” applied to negate FAA enforcement of the arbitration clause in the plaintiff trucker’s independent contractor agreement.   New Prime, Inc. v. Oliveira, No. 17-340 (1-15-19).   Further, the Court held that the common meaning of “worker” and “contract of employment” at the time the FAA was enacted in 1925 would control its interpretation of those terms instead of the contemporary understanding of those terms in order to protect the reasonable reliance of the public.  In 1925, “employment” was broadly understood to encompass workers and independent contractors and not just employees. 

According to the Court’s opinion, the plaintiff was hired under an “operating agreement” to work as an independent contractor truck driver for the defendant interstate trucking firm.  The operating agreement contained an arbitration clause which provided that the arbitrator should decide questions of arbitrability. The plaintiff filed a class action claiming that he and his fellow drivers had been misclassified as independent contractors and were entitled to minimum and overtime wages.   The defendant company moved to compel arbitration.  The plaintiff argued that he and his fellow drivers were exempt from FAA enforcement under §1, but the company argued that this decision should be made by the arbitrator and, if not, “contracts of employment” referred to common law and statutory employees, not independent contractors like the plaintiff and his fellow drivers.

The Court observed that the FAA only compels arbitration of disputes when the FAA applies.  Among other things, the FAA requires an “agreement in writing” between the parties and applies to disputes which arise from a “written provision in any maritime transaction or a contract evidencing a transaction involving commerce.”  The FAA also specifically exempts certain agreements from enforcement.  Section 1 of the FAA defines the terms “maritime transactions” and commerce,” and then provides:

but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.

This exemption existed because:

Congress had already prescribed alternative employment dispute resolution regimes for many transportation workers.  And it seems Congress “did not wish to unsettle” those arrangements in favor of whatever arbitration procedures the parties’ private contracts might happen to contemplate.

Clearly, a court could not apply the FAA and compel arbitration before deciding for itself whether the FAA even applied:

The parties’ private agreement may be crystal clear and require arbitration of every question under the sun, but that does not necessarily mean the Act authorizes a court to stay litigation and send the parties to an arbitral forum.

This is not a new concept. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395, 402 (1967).

The Court then rejected the defendant company’s argument that “contracts of employment” covered only agreements with common law and statutory employees and not to contacts of employment with workers (like the plaintiff) who might be independent contractors.   The parties agreed that the plaintiff was a worker engaged in interstate commerce and the plaintiff was willing to assume – only for this issue – that he was an independent contractor.   

In deciding whether “contracts of employment” included independent contractor agreements, the Court observed:

“[I]t’s a ‘fundamental canon of statutory construction’ that words generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’” . . . After all, if judges could freely invest old statutory terms with new meanings, we would risk amending legislation outside the “single, finely wrought and exhaustively considered, procedure” the Constitution commands. INS v. Chadha, 462 U. S. 919, 951 (1983).  We would risk, too, upsetting reliance interests in the settled meaning of a statute. . . .

That, we think, holds the key to the case.  To many lawyerly ears today, the term “contracts of employment” might call to mind only agreements between employers and employees (or what the common law sometimes called masters and servants).  Suggestively, at least one recently published law dictionary defines the word “employment” to mean “the relationship between master and servant.” Black’s Law Dictionary 641 (10th ed. 2014).  But this modern intuition isn’t easily squared with evidence of the term’s meaning at the time of the Act’s adoption in 1925.  At that time, a “contract of employment” usually meant nothing more than an agreement to perform work.  As a result, most people then would have understood §1 to exclude not only agreements between employers and employees but also agreements that require independent contractors to perform work.

The Court examined prior law dictionaries and found that “contracts of employment” was not even a term of art or defined term in 1925:

It turns out, too, that the dictionaries of the era consistently afforded the word “employment” a broad construction, broader than may be often found in dictionaries today.  Back then, dictionaries tended to treat “employment” more or less as a synonym for “work.”  Nor did they distinguish between different kinds of work or workers: All work was treated as employment, whether or not the common law criteria for a master-servant relationship happened to be satisfied.

 . . . This Court’s early 20th-century cases used the phrase “contract of employment” to describe work agreements involving independent contractors.  Many state court cases did the same.  So did a variety of federal statutes. . . . We see here no evidence that a “contract of employment” necessarily signaled a formal employer-employee or master-servant relationship.

Further, the §1 of the FAA itself refers to “contracts of employment” with “workers.”  Workers, then as now, refers to a broader class of individual which includes both employees and independent contractors.

The Court rejected the defendant company’s argument that “contracts of employment” must necessarily only cover employees because the words “employment” and “employee,” while derived from a common root did not develop simultaneously and have different understandings and legal meaning with “employment” traditionally having a broader meaning than employee.  While “contracts of employment” clearly included contracts with employees, they could also include contracts with workers or independent contractors who were not employees.

The  Court refused to enforce the purpose of the FAA over the statutory mandates or to utilize the Court’s inherent authority to compel alternative dispute resolution.

Justice Ginsburg agreed with the  Court’s decision and rationale, but not surprisingly, also asserted that Congress could design legislation that should change with the times: sometimes, “[w]ords in statutes can enlarge or contract their scope as other changes, in law or in the world, require their application to new instances or make old applications anachronistic.”

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 Requires SERB ULPs to be Filed Within 90 Days of Earliest Notice

At the end of last month, the Ohio Supreme Court affirmed SERB’s dismissal of unfair labor practice charges filed against the City of Columbus on the grounds that they were untimely.   State ex rel. Murray v. State Emp. Relations Bd., Slip Opinion No. 2018-Ohio-5131.  A unanimous court concluded that the plaintiff should have realized by the time of filing his federal lawsuit that he had grounds to file an unfair labor practice charge over the more than two-year delay in scheduling an arbitration hearing on his termination and rejected his argument that he had filed his lawsuit only to preserve the federal two-year limitations period and had been lead to believe that his union and the city were still discussing scheduling his arbitration.  Accordingly, SERB did not abuse its discretion in dismissing as untimely the ULPs filed more than 120 days after the lawsuit had been initiated.  A divided Court affirmed the dismissal of two later ULPs filed within 90 days of when a settlement agreement between the city and union was signed and provided to the plaintiff claiming to have resolved his grievance 14 months earlier.  The city and union had told the federal court in June 2011 that the grievance had been resolved in July 2010, but did not sign or provide the agreement until September 2011.  The majority found that SERB did not abuse its discretion in finding that the plaintiff should have filed within 90 days of June 23 when he learned about the secret resolution.

According to the Court’s opinion, the plaintiff had been fired from the police department on September 4, 2008 and filed a timely grievance.  The union sought arbitration on September 10 and then the matter sat, as they often do, for almost two years. A year and 360 days after his termination (presumably to beat the limitations period), the plaintiff filed suit on September 4 alleging that he had been denied due process by his termination and delayed arbitration.  An arbitration hearing was then scheduled, according to the plaintiff, and cancelled.   More than 120 days after he filed his federal lawsuit, on January 18, 2011, the plaintiff filed two unfair labor practice charges with SERB against the city and the union, alleging that they collaborated to deny him an arbitration hearing.  However, in June 2011, the city and the union told the federal court that they had settled the plaintiff’s grievance almost a year earlier in July 2010 and sent him a copy of the settlement in September 2011 that was not even signed until September 29, 2011.  The plaintiff filed two more ULPs against the city and the union accusing them of falsifying evidence to deprive him of an arbitration hearing.  SERB dismissed all of the plaintiff’s ULPs on the grounds that they were filed more after the 90 day limitations period had run.

SERB may not hold hearings on ULPs that are filed more than 90 days after the challenge practice occurred. “The ninety-day time period does not commence until the charging party knew or should have known of the conduct which constituted the improper conduct and actual damage ensued.”  Timeliness determinations are not reviewable on direct appeal, but a mandamus will issue if SERB abused its discretion.  In this case, while the plaintiff contended that negotiations over the scheduling of his arbitration hearing continued until December 2010, the Court concluded that he should have realized that he had grounds to file an ULP by the time he filed his federal lawsuit – challenging his termination and the delay in scheduling the arbitration – on September 3.  Because he did not file his initial ULPs until more than 90 days after he initiated his federal lawsuit, his ULPs were untimely.   His ULPs alleging falsification of evidence filed in December 2011 were found to be untimely because they were filed more than 90 days after his attorney had been notified in federal court in June 2011 that the union and city had resolved his grievance among themselves in July 2010, even though they did not ultimately provide him with a copy of the settlement until September 29, 2011.

Dissenting, Justice O’Connor disagreed that the limitations period could have run on the falsification ULPs when the falsified evidence was not even created or provided to the plaintiff until less than 90 days before he filed those ULPs.   He likely would have been unable to prove his case until he received a copy of the supposed agreement.  She believed that SERB abused its discretion by speculating when the ULP actually occurred.

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 Affirms Fee Award to Employer in Non-Compete Case Without Prevailing on Final Judgment

Yesterday, the Sixth Circuit Court of Appeals affirmed an award of $72, 183 in attorney’s fees to an employer which successfully obtained a preliminary injunction against former employees who had begun working for a competitor in violation of their non-competition agreements.  Kelly Services, Inc. v. De Steno, No. 18-1118 (6^th Cir. 1-10-19).   The Court rejected the employees' arguments that they should not be liable for the fees without a judgment on whether their agreements were enforceable and without a jury trial on the amount of fees.   Their agreements awarded the employer fees incurred in enforcing the agreement and did NOT require the employer to actually prevail before obtaining a fee award.    In other words, the employer was entitled to attorney’s fees regardless of whether the non-compete clauses were actually enforceable and regardless of whether it ultimately prevailed on the merits.  The Court affirmed, but noted that the reasonableness of the fees might depend on the reasonableness of the enforcement efforts.  In any event, it would be “highly impractical” to ask a jury to rule on attorney’s fees earned in a pending action, so a jury trial was not required under the Seventh Amendment.

According to the Court’s opinion, the defendant employees each signed a non-competition agreement which precluded them from working for a competitor for one year after leaving employment with the plaintiff employer. Their contracts also contained a provision which provided in relevant part that:

I further agree to pay any and all legal fees, including without limitation, all attorneys’ fees, court costs, and any other related fees and/or costs incurred by the Company in enforcing this Agreement.

When the employer learned that they were working for a competitor in violation of their non-competition agreements, it filed suit for breach of contract and breach of the duty of loyalty and sought damages, including attorney’s fees.  A preliminary injunction hearing was held and the employees preliminarily enjoined from working for competitor in violation of their non-compete agreements.   The Court did not lift the preliminary injunction until approximately four months after the one-year period in the non-compete had passed.  The parties subsequently both moved for summary judgment.  The employees argued, among other things, that the non-compete agreements were not enforceable and they were entitled to a jury trial under the Seventh Amendment to determine their financial liability for, and the reasonability of, the attorney’s fees.  The employer argued that it had already obtained all of the relief that it sought (i.e., to keep the employees from working for the first year after their employment for a competitor)  and were, thus, automatically entitled to an award of attorneys’ fees for obtaining enforcement of the agreement.  Indeed, the employer asserted that the contracts did not require the employer to prevail on the merits in order to be entitled to attorneys’ fees when seeking to enforce the agreement.  The trial court ruled in favor of the employer and rejected the request for a jury trial on the amount of fees.

The contracts by their terms do not require a final determination of liability in favor of [the employer] as a condition for the award of fees.  Unlike numerous similar agreements, these contracts do not employ the words “prevailing party,” nor by their literal language do they require a final determination of liability.  In fact, as the district court correctly noted, defendants argued below that these provisions were not prevailing party provisions.  . . .

In reasoning that a final determination of contract breach was not required, the district court may have stated too freely that the contract required former employees to pay attorneys’ fees “if [the employer] merely sought to enforce the contracts.”  De Steno, 2017 WL 4786105, at *2.  One can imagine cases where efforts to “seek enforcement” could for instance be unreasonable, made with little or no basis, or made for purposes of oppression or harassment, or could be simply unsuccessful.  A court might read the words “reasonable . . . fees . . . involved in enforcing” and “fees . . . incurred . . . in enforcing this Agreement” not to extend to such situations.  We do not address the possibility of such a limited interpretation, however, because the record is clear that none of these situations is present in this case.  The district court entered a preliminary injunction that resulted in substantial relief, based on a determination that [the employer] had shown a strong likelihood of success on the merits.  Indeed, defendants withdrew their appeal from the grant of that relief. . . .

The Court rejected the Seventh Amendment argument on the grounds that calculating attorney’s fees for the pending case is an equitable power better left to a judge, as previously explained by the Second Circuit:

Accordingly, although plaintiff had the right to a jury decision on whether defendants should recover attorneys’ fees, plaintiff did not have the right to a jury decision on a reasonable amount of attorneys’ fees. Unlike the client in Simler v. Conner, [372 U.S. 221 (1963),] no party here claimed that the contract directed the amount of attorneys’ fees to be awarded by specifying a percentage of an ascertainable sum. Therefore, the district court, in its equitable role, should have determined a reasonable fee.

The Court found it would be “highly impractical” to require a jury to determine a reasonable amount of attorney’s fees.  The trial would become a trial about the cost of the trial itself.  It would also be impractical to require a jury to “look behind the curtain” and determine the proper cost of pretrial motions, etc. before the trial was even complete.  Therfore, it distinguished prior cases where juries ruled on the amount of attorneys’ fees to be awarded concerning disputes which had already been concluded (as in indemnification cases).  In this case, the Court also found that summary judgment was properly granted to the employer on the liability question, so it did not need to be submitted to a jury.

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.

Franklin County Appellate Court Finds Employer Legally Conditioned Rehiring Offer on Release of Claims and Dismissal of Litigation

Late last month, the Franklin County Court of Appeals unanimously upheld a jury instruction and verdict rejecting the age discrimination and retaliation claims of the plaintiff employee against his former managers and officers at his bankrupt former employer.  Bresler v. Rock, 2018-Ohio-5138.  The plaintiff had been laid off with most other employees for financial reasons in May 2014, but was not recalled like his older co-worker in August 2014.  Instead, he was terminated and then filed suit in November 2014 alleging age discrimination and seeking an injunction against retaliation.  Even though the plaintiff had never applied for employment, the employer offered the next month and the following March to rehire him subject to signing a release of all claims and dismissal of the lawsuit.  After he rejected the offers, a younger woman was hired instead for his former position when his older co-worker retired.    The Court rejected the plaintiff’s attempt to amend his Complaint at trial to add a retaliation claim and the jury ruled in favor of the defendants on the age discrimination claims.  The Court found that there was nothing illegal or improper about the employer conditioning the plaintiff’s rehire on a release of claims when the employer had no obligation to rehire the plaintiff at all.

Although the employee did not appeal the denial of the Court’s refusal to permit an amendment of his complaint to include a retaliation claim, he did appeal the trial court’s instruction to the jury at the 2016 trial:

It is not an adverse employment action for an employer to require an employee to dismiss a lawsuit or withdraw claims as part of a condition of being rehired.  Employees and employers may lawfully negotiate settlements that include the waiver or release of age discrimination claims.

The employee argued that it is retaliatory to refuse to hire an employee on the basis of him filing a charge of discrimination or filing a lawsuit.   The Court reviewed federal law on retaliation and found that when an employer has no obligation to rehire an employee, it is not retaliation to offer rehiring conditioned on releasing discrimination claims and dismissing litigation.  Moreover, employers and employees are permitted to negotiate settlements of disputes that include waivers and releases of claims.  Among other things, refusing to pay severance pay to an employee in the absence of a release of claims is rarely found to be retaliatory.

The Court distinguished retaliation cases where the employee had otherwise been entitled to a certain benefit before the employer withheld it following the filing of a charge or lawsuit.  Because the plaintiff had been terminated and had never sought reinstatement or rehiring before the employer offered to resolve the dispute by rehiring him, he could not show that he had been retaliated against by the employer’s offer:

. . . . Ohio and Sixth Circuit case law supports the proposition that employers may offer re-employment and back pay conditioned upon settlement and release of claims.  Here, similar to the facts in Graves, the company was under "no obligation" to rehire appellant following the RIF.  Graves.  As the company had "no duty" to offer employment to appellant, "its failure to make such an offer would not have been an adverse employment action."  Id.

The Court also found that the Complaint’s request for injunctive relief was not a claim for relief for retaliation.  Indeed, the facts which the plaintiff claimed to support such a retaliation claim did not even occur until after the Complaint was filed and the plaintiff did not seek to amend his Complaint to include a retaliation claim until after the close of his evidence at trial several years later.   Requests for injunctive relief are remedies, not causes of action.  Accordingly, the Complaint did not give the defendants fair notice that a retaliation claim was being litigated during the discovery phase or prior to trial. 

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.