Wake Forest Law Review

By M. Allie Clayton

Today, in the civil case of Barton v. Constellium Rolled Products-Ravenswood, LLC., a published opinion, the Fourth Circuit affirmed the District Court in granting summary judgment for the company. The court stated that the governing collective bargaining agreement did not provide for vested retiree health benefits, and thus the former employer was within their power to unilaterally alter its retiree health benefits program.

Facts

A class of retirees and their union, The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industry & Service Workers International Union AFL-CIO/CLC (“The Union”), filed this action. The union had represented the retirees since 1988 and had negotiated collective bargain agreements with their previous employer—Constellium Rolled Products-Ravenswood, LLC (“Constellium”).

The Parties’ Agreement

There was a specific provision of their collective bargaining agreement (“CBA”) that governed group health insurance benefits: Article 15. The 2010 provision of Article 15 stated:

  1. The group insurance benefits shall be set forth in booklets entitled Employees’ Group Insurance Program and Retired Employees’ Group Insurance Program, and such booklets are incorporated herein and made a part of the 2005 Labor Agreement by such reference.
  2. It is understood that this agreement with respect to insurance benefits is an agreement on the basis of benefits and that the benefits shall become effective on July 15, 2010, except as otherwise provided in the applicable booklet, and further that such benefits shall remain in effect for the term of this 2010 Labor Agreement.

In addition to Article 15 and the various booklets incorporated by reference therein (which operated as summary plan description (“SPD”)), Constellium (or its predecessors) and retirees agreed to further parameters governing retiree health benefits that were contained in “Cap Letters.” The cap letters throughout the years governed how Constellium (or its predecessors) would allocate health care spending of employees based on pre- and post-January 2003 retirees. The third cap letter, which took effect on January 1, 2011, was unique in that it took effect after the concurrently-negotiated collective bargaining agreement did.

The Unilateral Change Leading to Litigation

While the parties were negotiating a new CBA in July 2012, Constellium proposed a change to Article 15 that would extend the cap on its contributions to retiree health benefits to those who retired before January 1, 2003, and freeze its Medicare Part B premium reimbursement amount for all hourly retirees at $99.90. The Union refused to bargain about this issue because it asserted that the retiree health benefits had already vested. Constellium notified the Union that it planned to make those changes on January 1, 2013, and made those changes on that day.

Procedural History

After discovery, the parties filed cross-motions for summary judgment. The district court granted the company’s motion and dismissed the case.

The Issue

Did Constellium’s unilateral alteration of those benefits breach its obligations under the CBA?

Reasoning

The Supreme Court in M&G Polymers USA, LLC v. Tackett stated that courts must “interpret collective-bargaining agreements, including those establishing ERISA plans, according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy.” Therefore, as this court was interpreting the collective bargaining agreement with the parties, it was bound by ordinary contract principles. Those ordinary contract principles included the rule that states that in order to find that the retiree health benefits vested, there must be unambiguous evidence that indicates that the parties intended that outcome.

The Fourth Circuit found that the plain language of the CBA and the SPD indicated that the benefits did not vest. They found that there was explicit durational language in the retiree health benefits SPDs. Bolstering that conclusion was the contrast of the retiree health benefits section with a different section of the SPD that stated unambiguously that the pension plans cannot be reduced and they are paid monthly for the participants. Because the language was unambiguous in another section, it clearly demonstrated that the parties knew how to express their intent that certain benefits should vest.

Disposition

Because there were clear temporal limitations on the employee health benefits, the retirees’ and the Union’s arguments that the benefits had already vested cannot be upheld. Therefore, the grant of summary judgment in favor of Constellium by the district court is affirmed.

By Ali Fenno

On November 22, 2016, the Fourth Circuit issued a published opinion in the civil case of UBS Financial Services, Inc. v. Padussis. In UBS Financial, the Fourth Circuit addressed whether an arbitration award of over $900,000 to Gary Padussis (“Padussis”) could be vacated or modified in light of Padussis’s insolvency and UBS Financial Services’ (“UBSFS”) lack of participation in the selection of the arbitrators. In affirming the district court, the Fourth Circuit held that there was no basis for overturning the arbitrators’ award and that UBSFS’s motion should be dismissed in its entirety.

Facts of the Case and Procedural History

Padussis began working for UBSFS in 2009, bringing with him a team of financial advisors and an established list of clients. As part of his initial compensation, UBSFS granted Padussis a $2.7 million loan, for which he signed a promissory note that provided the balance of the loan would become fully due in the event he ended his employment with UBSFS. Also executed by Padussis was a Letter of Understanding describing his compensation and a Financial Advisor Team Agreement that governed the operations of his team. Each agreement entered into by the parties provided that any dispute would be subject to arbitration before the Financial Industry Regulatory Authority (“FINRA”).

Two years later, Padussis resigned from UBSFS on the grounds that it had ruined his team of financial advisors and cost him valuable clients. When he did not pay the $1.6 million remaining balance on the promissory note, USBS initiated arbitration proceedings.  Padussis responded with counterclaims alleging that UBSFS’s interference with his team of financial advisors and clients amounted to tortious conduct and a breach of contractual duties.

Pursuant to the FINRA Code of Arbitration Procedure for Industry Disputes (the “FINRA Code”), the Director of FINRA Dispute Resolution (the “Director”) mailed a list of potential arbitrators to Padussis and USBFS on August 21, 2013. Each party was then supposed to indicate their preferences by striking four arbitrators from the list and ranking the remaining ones. The lists were to be returned to the Director within 20 days of their being sent so he could then select a three-person arbitration panel based on those rankings. Padussis returned his list of preferences within the proscribed time, but USBFS did not, allegedly because it never received the list from the Director.

On September 11, UBSFS received a letter, dated September 3, reminding the parties to return their list of preferences by the September 10 deadline. It then filed a motion to extend the deadline. Padussis opposed the motion, claiming that UBSFS had notified him in mid-August that it was transferring to new counsel and that the list of preferences had not yet been sent. Padussis argued that this transfer of counsel caused confusion over who was sending the list and was the reason the list was never sent.

Although FINRA Rule 13207(c) allows a Director to extend the Code’s deadlines for good cause, FINRA’s Regional Director, acting for the Director as consistent with FINRA Rule 13100(k), denied UBSFS’s motion. The Director affirmed the denial, finding that UBSFS did not have good cause to extend the deadline because the list of arbitrators and a courtesy reminder of the deadline were both timely mailed, and FINRA did not receive any mail returned as undeliverable. Accordingly, FINRA proceeded with the arbitration process and selected a three-person panel of arbitrators based off of Padussis’s list of preferences.

UBSFS challenged the composition of the panel based on his lack of participation in the selection of the arbitrators, but his challenge was denied. Then, on October 27, 2014, the panel issued its final decision, awarding UBSFS $1,683,262 for the balance on the promissory note and Padussis $932,887 for damages UBSFS caused to his business.

However, faced with a statutory lien and the prospect of bankruptcy, Padussis admitted that he could not pay the full $932,887, leaving UBSFS in a position of owing Padussis over $900,000. UBSFS subsequently filed the present action to vacate the award on the grounds that UBSFS did not participate in the arbitrator selection process. It argued in the alternative that the award should be offset because of Padussis’s admission of being unable to pay the award owed to UBSFS.

The district court declined to vacate the arbitration award and to impose an offset, and UBSFS appealed.

Narrow Standard of Review

The Fourth Circuit first established the extremely narrow scope of judicial review of an arbitration award. It noted that an arbitration award should only be modified if it is one of the limited circumstances listed in the Federal Arbitration Act, or if under common law, it “fails to draw its essence from the contract” or “evidence a manifest disregard of the law.” The court emphasized that in reviewing an arbitration award, whether an arbitrator did their job “well, or correctly, or reasonably,” is not the concern. Instead, courts should ask whether the arbitrators exceeded their powers because they did not meet certain thresholds of arbitrability such as not being appointed according to the parties’ agreement. Deference should be given to arbitrators on questions outside those thresholds that regard the merits of the case or procedural questions.

The court found support for this narrow scope in public policies that focus on using arbitration as a tool to avoid the costs and delays of litigation. It noted that parties entering into agreements to arbitration do so in the hope of avoiding “a protracted set of legal proceedings.” Narrowing the judicial review of arbitration awards furthers this intent.

Rightful Appointment of Arbitrators

The Fourth Circuit next addressed UBSFS’s claim that the arbitrators were not selected according to the parties’ agreement. It first confirmed that, pursuant to Section 5 of the Federal Arbitration Act, arbitration awards will be vacated where the arbitrators’ appointment violates the parties’ contract. It then noted that here, UBSFS and Padussis agreed that all disputes would be subject to arbitration before FINRA and thus subject to the FINRA Code.

However, the Fourth Circuit rejected UBSFS’s claim that the rules for selecting arbitrators were not followed. The court listed every step FINRA and the Director took in selecting the panel and noted that not a single requirement was skipped. And even though UBSFS did not get to participate in the selection of the arbitrators, the court found that this outcome was explicitly allowed in FINRA Rule 13404(d), which requires a Director to appoint arbitrators without a party’s input when the list of arbitrators is not returned.

Because FINRA clearly followed the FINRA Code’s rules for selecting arbitrators, the Court decided that the issue raised by UBSFS was instead whether FINRA properly applied the rules when it found that UBSFS did not have good cause to extend the deadline for submitting its list of preferences. But the Fourth Circuit concluded that this constituted a procedural question, and relying on the Supreme Court’s decision in Howsam v. Dean Witter Reynolds, Inc., affirmed that such a “procedural question[] which grow[s] out of the dispute and bear[s] on its final disposition [is] presumptively not for the judge, but for the arbitrator, to decide.” The court also noted that the power to determine whether good cause existed was explicitly given to FINRA in FINRA Rule 13412. Furthermore, the court reasoned that arbitrators would be more expert about the issue because it concerned, as stated in Dockser v. Schwartzberg, “the written rules governing the parties’ proceeding.” Accordingly, the Court refused to question FINRA’s decision that there was not good cause for extending the deadline for returning the list of preferences.

Refusal to Reduce the Award

The court next addressed UBSFS’s request for the arbitral award to be offset based on Padussis’s admission of being unable to pay his portion of the award. The court first noted that complying with UBSFS’s request would result in a net profit for UBSFS and thus eliminate any damages he might owe to Padussis. It also found that the offset would constitute a modification of the arbitration award because the agreement explicitly denied “any and all relief not specifically addressed” in the arbitrators’ final decision, which never mentioned the possibility of an offset.

Pursuant to the Federal Arbitration Act, a court may modify an award if it will effectuate the intent of the arbitrators. Here, the court concluded that this modification would not effectuate the intent of the arbitrators because the award never mentioned an offset and there is no other evidence in the record suggesting such an intention. UBSFS contended that the offset of the award would reflect the intent of the arbitrators because it would provide a “simple, fair result” without changing the arbitrators’ valuation decision. But the court rejected this claim, reasoning that UBSFS should have determined the arbitrators’ intent by asking for an offset during the arbitration proceedings. Accordingly, because evidence in the record and the arbitration award did not indicate that the intent of the arbitrators would be effectuated by an offset, the Fourth Circuit chose to not impose an offset on these grounds.

UBSFS last claimed that the offset should be imposed regardless of the arbitrators’ actual intent and that the court should recognize a presumption favoring an offset. The court disagreed, reasoning that such an action would put a “judicial gloss” on the arbitration award. A judicial gloss on this award would be impermissible because the award explicitly limited itself to the relief specifically rendered in the arbitrators’ final decision.

Accordingly, because the intent of the arbitrators would not be effectuated by the offset, and because a presumption of an offset would directly conflict with the arbitrator’s final decision, the court held that granting an offset in this case would be inappropriate.

Conclusion

The Fourth Circuit concluded that UBSFS simply did not want to abide by a result it did not like. Because UBSFS had agreed to arbitration, the dispute was within the scope of that agreement, and the rules for arbitration were selected in the agreement and then followed, the court could find no reason to vacate or modify the award. Accordingly, it affirmed the district court’s decision to deny UBSFS’s motion in its entirety.

By Kelsey Hyde

On October 31, 2016, in the civil case of Masoud Sharif v. United Airlines, Inc., the Fourth Circuit affirmed the decision of the District Court for the Eastern District of Virginia dismissing plaintiff’s claims of unlawful retaliation by his employer. Because plaintiff failed to sufficiently rebut the defendant employer’s reasoning and factual support for their actions against him, the Fourth Circuit found the District Court had correctly granted defendant’s motion for summary judgment and dismissed plaintiff’s claims.

Sharif’s Claims and Subsequent Proceedings

On March 14, 2014, Masoud Sharif and his wife, both employees of United Airlines, Inc. at Dulles Airport in Washington, D.C., embarked on a planned vacation to South Africa. Their trip was scheduled to last until April 4, as a result of their successful bidding and receipt of approximately 20 days off, but, in the midst of those 20 days, Sharif was still assigned to work March 30 to 31 at customer service back in Washington, D.C.  Through the United Airlines “shift-swap” website, he was able to cover one day, but was still scheduled to work March 30.

However, back in 2009, Sharif had been diagnosed with an anxiety disorder, resulting in his qualifying for intermittent leave under the Family and Medical Leave Act (“FMLA”), 29 U.S.C. § 2601, et. seq. (2012), in order to handle his panic attacks. On the morning of March 30, the day of the shift he had unsuccessfully tried to cover, Sharif called from South Africa to take medical leave under the FMLA. Sharif had not made any prior reservations for a return flight to the U.S., but did fly to Italy with his wife the next day, and did eventually depart for Washington on April 3, arriving back just in time for his wife’s shift.

The circumstances of Sharif’s FMLA leave, coincidentally falling on the only day he was scheduled to work in the midst of planned time-off, did not go unnoticed. Instead, this incident, along with another prior instance in September 2013 where Sharif took FMLA leave under similar circumstances, inspired an investigation. Sharif was interviewed by a member of Human Resources and gave a series of inconsistent answers regarding his “unsuccessful efforts” to return home in time for his shift. As a result, senior management was notified that Sharif was untruthful in his answers, and changed his story many times, which, ultimately, led to the conclusion that he never intended to make it back in time to work his shift. Other evidence in employment and travel records also corroborated this conclusion. After being suspended without pay, Sharif was notified that United Airlines planned to terminate him for fraudulently taking FMLA leave and for making dishonest representations during the subsequent investigation. Sharif retired under threat of termination in June 2014.

Challenging Employer Action as Retaliation in Violation of FMLA

            The FMLA includes both a prescriptive element, guaranteeing substantive rights to employees who qualify, and a proscriptive limitation on employers, which makes it unlawful for employers to discharge employees for opposing employment practices that are unlawful under the FMLA. 29 U.S.C. §§ 2615(a)(1), 2615(a)(2). The proscriptive limitation effectively provides plaintiff employees with an avenue to legally dispute retaliation by their employers.

The Fourth Circuit reviewed relevant Supreme Court and Circuit Court decisions to navigate the standards of law and burdens of proof applicable in this case. To succeed on retaliation claims, a plaintiff must show that (1) they engaged in protected activity, (2) the employer took adverse action against them, and (3) this adverse action was casually connected to the protected activity. Yashenko v. Harrah’s NC Casino Co., LLC, 446 F.3d 541, 551 (4th Cir. 2006) (citing Cline v. Wal-Mart, 144 F.3d 294, 301 (4th Cir. 1998)). Thus, employer intent is especially relevant to such claims, and plaintiff can establish such intent by either direct evidence, or under the “burden-shifting framework” introduced by the Supreme Court in McDonnell Douglas Corp. v. Green. 411 U.S. 792, 800-06 (1973).

This burden-shifting framework entails: (a) plaintiff establishing a prima facie case of retaliation; (b) if successful, the burden shifts to the employer to provide some legitimate, non-discriminatory reason for the adverse action to rebut plaintiff’s prima facie case; (c) if successful, the burden shifts back to plaintiff to persuade fact-finders that employer’s explanation in (b) was a “pretext” for discrimination. Id. at 802-04. This third element requires plaintiff to produce sufficient evidence such that a reasonable fact-finder could conclude the employer’s reasons were impermissible.

In addition to these standards specific to the FMLA and retaliation claims, the summary judgment standard further requires that a reasonable jury could find for the non-moving party, in this case Sharif. See Fed. R. Civ. P. 56(a) (2016).

Legal Contentions on Appeal

Sharif filed suit against United Airlines for retaliation in violation of the proscriptive provision of FMLA, arguing they threatened to terminate him for taking FMLA leave and that their proffered reasons were a mere pretext for this discriminatory act. The District Court found that Sharif failed to create an issue of triable fact regarding United Airline’s explanation for his threatened discharge as allegedly pretextual, and awarded summary judgment to the defendant employer, dismissing Sharif’s claims. On appeal, Sharif contends that he has produced sufficient evidence of pretext to survive summary judgment.

Plaintiff’s Failed to Create a Triable Issue of Fact 

            Ultimately, the Fourth Circuit was unpersuaded by plaintiff’s argument that United Airlines’ actions were a pretext for impermissible discriminatory conduct under the FMLA. The Court considered the evidence as a whole, in a light most favorable to the plaintiff, yet could not find any cause for dispute over the logic and reasoning of United Airline’s conclusion. On the contrary, they found all evidence supported the nondiscriminatory motivations for their action against Sharif, based on the facts available from Sharif’s employment records, his noted FMLA leave, and the results of the subsequent investigation. Additionally, the Court found that Sharif’s inconsistent narrative throughout the investigation, as well as his failure to provide any documentation or verification of his own version of the events, did not effectively dispute the evidence proffered by United Airlines, or offer any alternative, such that a fact-finder could reasonably rule in favor of him. Thus, he failed to meet his burden to provide sufficient evidence and create a genuine dispute of material fact regarding his employer’s motives as pretext.

Affirming Dismissal and Defending the Purpose of the FMLA

            Based on their analysis of the case under applicable Supreme Court and Fourth Circuit precedent, the Fourth Circuit affirmed the dismissal of plaintiff’s claims. In doing so, the court also highlighted the fundamental importance of the FMLA, allowing employees to take leave for legitimate family needs and medical reasons without threatening job security, and emphasized that fraudulent invocations and dishonest representations for claims under the FMLA greatly compromise this Congressional goal. As such, their decision reflected the importance in providing employers the ability to sanction employees who threaten to abuse this statute and undermine its purpose.

By Sarah Saint

On March 4, 2016, the Fourth Circuit issued a publish opinion in Gentry v. East West Partners Club Management Company, Inc., a civil case in which Plaintiff Judith Gentry (“Gentry”) sued her former employer East West Partners Club Management Company, Inc. (“East West”) and manager Jay Manner (“Manner”) for wrongful termination in violation of the Americans with Disability Act (“ADA”) in addition to other state and federal law claims. On appeal, Gentry challenges the district court’s jury instructions and the damages award. The Fourth Circuit found no reversible error, and thus affirmed the district court’s judgment.

Gentry’s Injury and Termination

Prior to termination, Gentry was an executive housekeeper at the Maggie Valley Club and Resort (“the Club”). East West managed the Club through Manner. In July 2007, Gentry fell at work and injured her left foot and ankle. She received treatment and surgery, and eventually returned to work in January 2009, though still experiencing pain. In January 2010, her doctor determined that, under North Carolina workers’ compensation guidelines, Gentry had a 30 percent permanent physical impairment and may need further surgery.

When the Club’s insurance carrier offered to settle Gentry’s workers’ compensation claim, Gentry declined and expressed concerns that she would be terminated if she accepted. According to the insurance adjuster, Manner was surprised to learn of these fears, describing Gentry as a “great worker” who did “a great job,” and that he intended to make layoffs due to financial difficulties. Manner denied making these statements. Manner, on the other hand, stated that the insurance adjuster felt extorted by Gentry and that she expected Gentry to make another claim against the Club. The insurance adjuster also denied these statements. Nevertheless, Manner relayed his version of the conversation to the officers of the Club and East West. Gentry’s workers’ compensation claim was settled at mediation in November 2010.

In December 2010, Gentry was terminated. The Defendants claim that the termination was part of a restructuring plan to consolidate management positions due to financial difficulties. Gentry was fired along with two other department heads. All but three housekeeping employees had been terminated. Gentry, on the other hand, alleged that one of the executives told her Manner terminated Gentry because of the “issues with [her] ankle.” The Equal Employment Opportunity Commission (“EEOC”) investigator also confirmed that the executive thought Manner terminated Gentry due to her disability. The executive denied ever making such statements.

Procedural History

Gentry sued the Club and East West for (1) disability discrimination under the ADA and North Carolina common law; (2) sex discrimination under Title VII and North Carolina common law; and (3) retaliation against Gentry for pursuing a workers’ compensation claim, in violation of North Carolina common law. Gentry also sued East West and Manner for tortiously interfering with her employment contract with the Club. The jury found for Gentry on the workers’ compensation retaliation claim and the tortious interference claim. The jury found for the Defendants on all other claims.

On appeal, first, Gentry argued that the district court incorrectly instructed the jury on the causation standard and the definition of disability under the ADA. Second, she argued that the district court erred in refusing to admit certain evidence. Third, Gentry argued that she is entitled to a new trial on damages for claims on which she prevailed.

Standard of Review for Jury Instructions

Challenges to jury instructions are reviewed for abuse of discretion. Jury instructions are viewed in their totality to determine if they adequately informed the jury without misleading or confusing the jury or prejudicing one of the parties. Whether jury instructions were correct statements of law are reviewed de novo. Jury instructions will not be set aside unless they seriously prejudice the objecting party.

ADA Causation Standard

Title I of the ADA prohibits employers from “discriminat[ing] against a qualified individual on the basis of disability in regard to . . . the hiring, advancement, or discharge of employees.” 42 U.S.C. § 12112(a). The district court instructed that Gentry had to prove that her disability was the but-for cause of her termination. Gentry argued that this was in error and that the district court should have instructed that Gentry had to prove that her disability was a motivating factor for her termination. The Fourth Circuit determined that the ADA’s text requires a “but-for” causation standard, and thus the district court did not err in applying a “but-for” causation standard to Gentry’s ADA claim.

Title VII allows for employees to establish actionable disability discrimination under the motivating factor causation standard. The Fourth Circuit pointed to the 1991 amendment to the Civil Rights Act of 1964 providing for this, codifying the Price Waterhouse v. Hopkins decision that first established the motivating factor standard for Title VII cases. However, in Gross v. FBL Financial Services, Inc., the Supreme Court determined that the motivating factor causation standard does not apply to the Age Discrimination in Employment Act (“ADEA”) because Congress did not amend the ADEA when it amended Title VII. The Fourth Circuit determined that the ADA, too, does not allow employees to establish actionable disability discrimination under the motivating factor causation standard, following the reasoning in Gross and joining the Sixth and Seventh Circuits. The few cross-references in the ADA to Title VII do not incorporate the motivating factor standard, contrary to Gentry’s contentions. Using the legislative history and the plain language of the ADA, the Fourth Circuit determined that the language of the ADA requires that “on the basis of” unequivocally means but-for causation.

ADA Definition of Disability

The ADA defines disability as “(A) a physical or mental impairment that substantially limits one or more major life activities of [an] individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment.” 42 U.S.C. § 12102(1).

The district court instructed the jury that an impairment substantially limits a major life activity “if it prevents or significantly restricts a person from performing the activity.” However, EEOC regulations now provide that an impairment does not need to prevent or significantly restrict a major life activity in order to be substantially limiting.

Because Gentry did not initially object to the district court’s instruction, the standard of review is plain error, which requires Gentry to establish that the district court erred, that the error was plain, and that the error probably affected the outcome of the trial. The Fourth Circuit determined that Gentry failed to establish that the error probably affected the outcome of the trial, and thus affirmed the district court’s definition of disability jury instructions. Gentry could not prove that the jury believed her injury was less severe than the jury instruction required. Instead, there was substantial evidence Gentry was terminated for other reasons. In so concluding, the Fourth Circuit considered that Gentry was terminated more than three years after her injury, that no one complained of her ability to do her job, and that her only evidence that she was terminated due to her disability was the disputed statements of Manner.

The district court also instructed the jury that a “regarded as” disability is actionable if “a perception that [Gentry] was disabled, was the ‘but for’ reason that [Defendants] . . . terminate[d] her employment.” The Fourth Circuit  could not see how Gentry was prejudiced by the jury instruction because the jury would have been instructed to find for Gentry if they believed Manner’s alleged statements. Accordingly, the Fourth Circuit found no abuse of discretion and no serious prejudice to Gentry that would warrant vacating the verdict.

Finally, the district court instructed the jury regarding the “record of” disability, to which Gentry also objected. However, because Gentry did not object to the instructions at trial and did not explain how the language affected her case, the Fourth Circuit could not find that the district court erred or otherwise abused its discretion.

State Law Claims and Damages Awards

For the state law claims, the district court instructed the jury that it could award damages for back pay, front pay, emotional pain and suffering, and nominal damages; and that Gentry had to mitigate her damages by seeking and accepting similar employment and that it could reduce the damages award based on what she could have earned. The jury awarded Gentry $10,000 against East West for workers compensation retaliation and $5,000 against East West and Manner each for tortious interference. Gentry argued on appeal that the trial court erred in denying her motion to introduce evidence of East West’s insurance coverage and indemnification and in denying her motion for a new trial on damages.

Gentry argued that the damages award was minimized by the Defendants’ belaboring of their poor financial conditions and the impression that a large award would be overly burdensome. Further, she argued that she should have been allowed to dispel this impression by presenting evidence of East West’s liability insurance and its indemnification agreement with the Club.

Evidentiary rulings are reviewed for abuse of discretion. Rulings will only be overturned if they are arbitrary and irrational. The Fourth Circuit found no such basis for overturning the district court’s decision.

The Defendants’ evidence of their financial status was relevant in their defense that they did not terminate Gentry because of her disability but rather because of their financial situation. Further, Gentry did not sufficiently show how the evidence of the financial troubles would show that the Defendants could not pay a damages award. Finally, the district court instructed the jury to award Gentry “fair compensation” and did not reference the Defendants’ ability to pay.

Gentry also argued that she is entitled to a new trial on damages because the damage award was inadequate and that the jury found that Gentry failed to mitigate her damages against the clear weight of the evidence.

Motions for new trial are reviewed for abuse of discretion, which is a high standard because the district court is in the position to hear from the witnesses and has a perspective an appellate court can not match. The crucial inquiry is whether an error occurred in the conduct of the trial that was so grievous as to have rendered the trial unfair. Gentry did not meet this substantial burden because she could not assert with certainty the reasons for the jury’s decision on damages. Further, she could not assert that the clear weight of the evidence showed that she properly mitigated her damages. Accordingly, the Fourth Circuit affirmed the district court’s denial of Gentry’s motion for a new trial.

Conclusion

The Fourth Circuit affirmed the judgment of the district court on all the issues Gentry raised on appeal.

DSC03525-B

By Paige Topper

On December 23, 2015, in the civil case of Calderon v. GEICO General Insurance Co., a published opinion, the Fourth Circuit affirmed a district court’s decision classifying the employee position of Investigator in an insurance company as non-exempt from the Fair Labor Standards Act’s (“FLSA”) provision regarding overtime pay.

Administrative Exemption Under FLSA

Under the FLSA, employers are generally required to pay overtime to employees for each hour worked in excess of a 40-hour week. However, there are exemptions to this general rule. The exemption at issue in this case is § 213(a)(1), which exempts “any employee employed in a bona fide executive, administrative, or professional capacity.” Here, the plaintiffs argued that they did not fall within this exemption and thus were entitled to overtime pay while the defendant, GEICO, claimed that the employees were in fact exempt from receiving overtime pay because their title of “Investigators” falls under this provision.

GEICO’s Special Investigation Unit

The heart of this case lies in the distinction between GEICO’s Claims Adjusters and its Investigators working in GEICO’s Special Investigations Unit (“SIU”). Claims Adjusters had the primary job of adjusting insurance claims by investigating, assessing, and resolving the claims. This position required the employees to determine how much GEICO will pay on a claim and then negotiate a settlement if necessary.

On the other hand, Investigators within the SIU, while still a part of GEICO’s Claims Department, principally focused on identifying claims that are potentially fraudulent. Investigators had a set list of procedures for determining whether a claim is fraudulent. Among these procedures, Investigators had to submit interim reports and a final report to their Supervisor for review.

GEICO Classified Investigators as Exempt Under the FLSA

GEICO has continuously classified its Investigators as exempt under the FLSA provision requiring the employer to pay overtime. Specifically, the company examined the Investigators’ classification in 2004 in light of a court decision that GEICO had misclassified a different position as exempt. At that time, the Senior Vice President and the Senior Vice President of Human Resources concluded that despite the court’s decision as applied to Auto Damage Adjusters (which was later reversed) the Investigators were still properly exempt. In 2007, GEICO reviewed the applicability of exemptions for its various employee classifications. GEICO again concluded that the Investigators were properly exempt under the administrative exemption of the FLSA.

In 2010 the named plaintiff, Samuel Calderon, filed suit against GEICO alleging that GEICO improperly classified the Investigator position as exempt from overtime pay under the FLSA. The current case is a class action including all individuals who were or had been employed by GEICO as Investigators within three years of the filing of this action. An additional class action claim was added for unpaid overtime pay under New York’s Labor Law.

This was the second time the Fourth Circuit heard this case. Initially, the district court granted plaintiffs’ motion for partial summary judgment and denied GEICO’s motion for summary judgment, finding that as a matter of law GEICO’s classification of Investigators did not fall within the FLSA’s administrative function exemption. Then the parties filed cross-motions for summary judgment on several remedy issues. The district court determined that because GEICO acted in good faith and not willfully the statute of limitations for plaintiffs’ claims was only two years. Furthermore, the district court held that the plaintiffs were not entitled to liquidated damages or prejudgment interest.

Upon appeal, the Fourth Circuit concluded that it lacked jurisdiction because there was no final judgment, as the district court had not found all the facts necessary to compute the amount of damages awarded to the plaintiffs. Therefore, on remand the district court determined the amount of damages entitled to each plaintiff and entered judgment in favor of the plaintiffs. Both parties appealed again raising the same issues as their original appeals.

GEICO’s Classification of Investigators was Incorrect

GEICO argued that the district court erred in finding that Investigators were not exempt from the FLSA. However, the Fourth Circuit indicated that FLSA exemptions are to be narrowly construed against employers. The Fourth Circuit turned to the regulations to identify whether the plaintiffs were covered under the administrative exemption. The regulations indicate that the exemption covers employees (1) who are paid $455 a week or more, (2) whose primary duty is the performance of office work that is directly related to the management of general business operations of the employer, and (3) whose primary duty includes the exercise of discretion and independent judgment with respect to significant matters.

The Court determined that plaintiffs were entitled to summary judgment because their positions as Investigators were not directly related to the management of GEICO’s general business. Specifically, the Fourth Circuit explained that the directly related element is met when an employee performs work directly related to assisting with the running or servicing of the business. Here, the Investigators’ primary responsibility was too far removed from GEICO’s management or general business operations to satisfy the second element. The Investigators had no supervisory responsibility and they did not recommend or develop GEICO’s business policies with regards to the claims under investigation. The Fourth Circuit concluded that although the Investigators work was important to GEICO, the directly related element hinges on the nature of the work and not the outcome of that work.

The Fourth Circuit looked to both FLSA regulations and Department of Labor opinion letters to support its conclusion. Furthermore, the Court found unpersuasive GEICO’s argument that Investigators nevertheless performed some of the same duties that Claims Adjusters perform and were thus exempt. The Court countered this argument by pointing out that the title of Claims Adjuster alone does not warrant an exemption—the directly related element must be determined on a case-by-case basis. Second, while the Court acknowledged that the Investigator position may have duties that support GEICO’s claims-adjusting process, this has to do with the ultimate consequence of the position rather than the nature of the work, which is the true focus for the directly related element.

Plaintiffs’ Arguments over Remedies

Next, the Fourth Circuit addressed the plaintiffs’ various complaints regarding the remedies awarded to them. First, the plaintiffs argued that the district court erred in determining that GEICO did not act willfully under the FLSA. Whether a party acted willfully in violation of the FLSA impacts the statute of limitations. If the violations were not willful then the limitations period is two years, but if the violations were willful then the period is extended to three years. The Fourth Circuit concluded that due to the close and complex nature of the elements at issue in this case, GEICO did not act willfully in deciding to exempt Investigators from overtime pay.

Second, the plaintiffs alleged that the district court erred in its calculation of compensation to be awarded to the plaintiffs. Specifically, the plaintiffs claimed that there was no agreement between them and GEICO to receive straight-time pay for all hours worked in a given workweek. The Fourth Circuit determined that although the plaintiffs did not always work the same number of hours in a day, they received fixed salaries for the many years that the plaintiffs worked for GEICO. Therefore, an agreement for straight-time pay had been established.

Third, the plaintiffs contended that the district court erred in its denial of plaintiffs’ request for liquidated damages. Although the FLSA provides for an award of liquidated damages, a district court may refuse the award if the employer showed that it acted in good faith. The Fourth Circuit found that, again because the issue was very close and GEICO reviewed the classification on multiple occasions, the district court was allowed to refuse to award liquidated damages.

Finally, the plaintiffs argued that the district court abused its discretion in declining to award prejudgment interest. On this final issue, the Fourth Circuit agreed with the plaintiffs, noting that under the FLSA prejudgment interest is typically necessary, in the absence of liquidated damages, in order to make the plaintiff(s) whole.

Fourth Circuit Affirmed in Part and Denied in Part

As a result of statutory interpretation and supporting authorities, such as the opinion letters, the Fourth Circuit concluded that GEICO misclassified Investigators as exempt under the FLSA for overtime pay and thus affirmed the district court’s grant of plaintiffs’ motion for partial summary judgment. The Fourth Circuit further affirmed the district court’s decisions on the statute of limitations, the calculation of compensation, and the denial of liquidated damages. The Court reversed and remanded on the last issue of awarding prejudgment interest to the plaintiffs.

By Amanda Whorton

On December 18, 2015, the Fourth Circuit issued a published opinion in the civil case Williams v. Genex Services. The court affirmed the district court’s award of summary judgment to the defendant, Genex Services, LLC (“Genex”), in holding that Nancy Williams (“Williams”) was exempt from the mandatory overtime provisions of the Fair Labor Standards Act (“FLSA”).

Williams’ Job Duties

Genex provides services to clients that focus on controlling health care and disability costs, as well as ensuring that workers have access to quality health care. Genex makes sure that injured workers return to work as quickly and as cost-effectively as possible.

Williams works as a Field Medical Case Manager for Genex and began working there in 2011. She is paid a salary by Genex and for 2012 and 2013, that salary was over $80,000. As part of Williams’ job, she must be a licensed Registered Nurse (“RN”).

Williams develops individual care plans for injured workers, reviews their medical records, and interviews them about their conditions. She coordinates injured workers’ medical care and communicates with various groups to assess whether these workers are receiving appropriate care. Williams makes recommendations concerning alternate forms of treatment and provides commentary and suggestions on the injured workers’ conditions. She has two supervisors, but rarely has contact with them.

The FLSA Requires That Employers Pay Overtime Compensation

The FLSA requires that employers pay overtime compensation to employees who work more than 40 hours during a seven-day period, unless the employer falls under one of the FLSA’s exemptions. One of these exemptions is the “learned professional” exemption. The relevant Department of Labor regulation states that for an employee to fall under this exemption, the employee’s primary duty must be the performance of work “requiring advanced knowledge . . . in a field of science or learning,” that is “customarily acquired by a prolonged course of specialized intellectual instruction.”

The District Court Granted Defendant’s Motion for Summary Judgment

Genex filed a motion for summary judgment, which the district court granted because it agreed that Williams was a learned professional and therefore fell under the FLSA exemption. Williams argued that her duties consisted only of clerical, nondiscretionary, and routine work, but the district court rejected that argument. The district court concluded that Williams performed work requiring advanced knowledge, as she advised injured workers on their medical conditions and made her own commentary and suggestions. She was not closely supervised and had a great degree of discretion in performing her duties. The district court further reasoned that because Williams was a licensed RN, she performed work in a field of science that is customarily acquired by a prolonged course of specialized intellectual instruction.

The Fourth Circuit Affirmed

The Fourth Circuit affirmed the district court’s grant of summary judgment to Genex in holding that Williams’ position was properly classified under the “learned professional” exemption in the FLSA. The Fourth Circuit reasoned that Williams regularly had to use her skills, training, and knowledge as a RN to perform her duties, she exercised her own discretion on a daily basis, and was not closely supervised. Therefore, Williams fell under the “learned professional” exemption and was not subject to overtime compensation.

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By Eric Benedict

On August 10, 2015, the Fourth Circuit Court of Appeals issued its published opinion in the civil case DeMasters v. Carilion Clinic. In DeMasters, the Fourth Circuit had to decide how to properly frame an employee’s conduct to determine whether it constituted ‘protected activity’ under Title VII of the Civil Rights Act of 1964 (“Title VII”). Additionally the Court had to decide if the “manager rule” from the Fair Labor Standards Act (“FLSA”) barred relief in the context of Title VII. The Fourth Circuit reversed the District Courts rulings that DeMasters did not engage in protected activity and that the “manager rule” precluded the suit.

DeMasters Conduct in the  Employee Assistance Program

Carilion, a large healthcare organization, employed Neil DeMasters (“DeMasters”) through its “Employee Assistance Program” (“EAP”). In his role as an EAP, DeMasters met with an employee (“Doe”) who believed he was the subject of workplace sexual harassment by his manager. While the manager was promptly terminated for the harassment, Doe began to face harassment from other employees sympathetic to the Manager. DeMasters approached the Human Resources department at Carilion and criticized its handling of the subsequent harassment. Ultimately, Carilion settled a Title VII suit filed by Doe.   

In the wake of the Title VII settlement, DeMasters was contacted by his employer to inquire into the role DeMasters had played in Doe’s path to litigation. DeMasters admitted that he thought Carilion handled the harassment poorly. Carilion ultimately terminated DeMasters, citing among other things, DeMasters’ failure to take a “pro-employer” position and “fail[ure] to perform or act in a manner that is consistent with the best interests of Carilion Clinic.”

DeMasters’ Title VII Opposition Clause Retaliation Claim

After his termination, DeMasters filed a Title VII Retaliation suit in federal court alleging that he was terminated in violation of Title VII’s opposition clause. To establish a prima facie case under Title VII’s opposition clause, the employee must show, “(1) that [he] engaged in a protected activity…(2) that [his] employer took an adverse employment action…(3) that there was a causal link between the two events.” While the defendant conceded that DeMasters was terminated, satisfying the second element, it argued that DeMasters did not engage in protected activity and that therefore there was no causal link. The District Court agreed with Carilion and dismissed DeMasters’ complaint. The District Court reasoned that, “no individual activity in which DeMasters engaged by itself constituted protected oppositional conduct and that the so-called ‘manager rule,’” precluded relief.

The Fourth Circuit Evaluates Demasters’ Conduct as a Whole

The Fourth Circuit concluded that the court must, “examine the course of a plaintiff’s conduct through a panoramic lens, viewing the individual scene in their broader context and judging the pictures as a whole.” After reviewing the record, the court found that the course of DeMasters’ conduct, from reaching out to the HR department to sharing his opinion with Carilion’s HR manager, was sufficient to satisfy the first prong of the prima facie case.  The court reasoned that, “Neither the text nor the purpose of Title VII is served by this method of parsing a continuous course of oppositional conduct into individual acts and assessing those acts in isolation.”

The “Manager Rule” does not Apply to Title VII Retaliation Claims

Carilion also argued that the “manager rule” would prevent DeMasters from seeking protection. The “manager rule” is derived from  Fair Labor Standards Act litigation. The rule requires an employee to “step outside his or her role of representing the company” before their activity can be protected. Here, DeMasters would have to step outside his role as an EAP before his conduct could be considered protected. The District Court decided that DeMasters’ conduct “could not qualify for protection under Title VII because, as an EAP consultant, he had a duty to counsel Doe and to relay his complaints to Carilion’s HR Department.” Citing the differences between the two statutes and the importance of encouraging employees to voice their concerns, the Fourth Circuit rejected this approach, holding that “[n]othing in the language of Title VII indicates that the statutory protection accorded an employee’s oppositional conduct turns on the employee’s job description….” The court also explained that a contrary rule would leave those most equipped to help employees with their concerns, in this case EAPs, without protection.  The court concluded that the manager rule does not apply to Title VII, and therefore did not preclude DeMasters’ suit.

The Fourth Circuit Reverses the District Court

Ultimately, the Fourth Circuit found that DeMasters could establish a prima facie case based on the entirety of his activity and that the manager rule does not apply to Title VII. The court, therefore, reversed the United States District Court for the Western District of Virginia and remanded the case to allow the suit to move forward.

 

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By Kayleigh Butterfield

On July 29, 2015, the Fourth Circuit issued its published opinion in the civil case, Jahir v. Ryman Hospitality Properties, Inc. In Jahir, the Fourth Circuit affirmed the district court’s dismissal of plaintiffs’ FLSA claim seeking lost tips from Ryman Hospitality Properties, Inc. and Marriott International, Inc. (collectively, Defendants).

Alleged Facts and District Court’s Dismissal

Plaintiffs Mohammad Sazzad Jahir and Anthony Gomes worked as servers for hotels and restaurants owned by Defendants. Plaintiffs were also members of the UNITE HERE, Local 25 union.

According to the facts alleged in Plaintiffs’ complaint, Defendants took a portion of Plaintiffs’ tips every day and redistributed them to bartenders, server assistants, busboys, and food runners, all of whom would not normally receive tips. Plaintiffs did not voluntarily agree to such a tip-pooling arrangement, and eventually asked a union official if the arrangement was legal. The official told Plaintiffs that it was not.

Plaintiffs then filed a complaint alleging that Defendants’ tip-pooling arrangement violated the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(m), the 2009 Collective Bargaining Agreement between UNITE HERE and Defendants, and the Maryland Wage Payment and Collection Law. The district court granted the Defendants’ Rule 12(b)(6) motion to dismiss each claim. Plaintiffs appealed only the dismissal of the FLSA claim, which the Fourth Circuit reviews de novo.

Background of the FLSA

The FLSA is known as the “minimum wage/maximum hour law.” It is intended to protect covered employees from low wages and oppressive working hours. Section 203(m) addresses “tip credits,” and allows employers to credit against the minimum wage they must pay employees by classifying tips as “wages.”

Section 203(m) Does Not Apply to Plaintiffs’ Claim

The Fourth Circuit examined the plain language of § 203 and determined that it does not apply to the Plaintiffs’ situation. Plaintiffs conceded that they were paid a full minimum wage without including tips. However, they argued that § 203(m) required Defendants to inform them of FLSA’s tip-credit provision and the tip-pooling arrangement before redistributing the tips. The Fourth Circuit rejected Plaintiffs’ argument by reading the plain language of § 203(m) in the broader context of the FLSA as a whole, which clearly aims to establish fair minimum and overtime wage laws. The Fourth Circuit concluded that § 203(m) did not apply where employees are paid a full minimum wage without tip.

Dismissal Affirmed

For the foregoing reasons, the Fourth Circuit affirmed the district court’s dismissal of Plaintiffs’ claims. Judge Harris concurred, stating that plaintiffs have no cause of private action under any FLSA section except § 216(b), which is not what Plaintiffs’ brought this action under.

POLICE 10

By Sarah Saint

On June 15, 2015, the Fourth Circuit issued a published opinion in the civil case of Hunter v. Town of Mocksville, North Carolina. Plaintiffs Keith L. Hunter (“Hunter”), Rick A. Donathan (“Donathan”), and Jerry D. Medlin (“Medlin”)—officers of the Mocksville Police Department (“MPD”) in Mocksville, North Carolina—were concerned about corruption in the MPD and reached out to the North Carolina Governor’s Office as public citizens. Public employees still have First Amendment rights when they speak as “citizen[s] on a matter of public concern.” Lane v. Franks, 134 S. Ct. 2369, 2378 (2014) (quotation marks and citation omitted). Accordingly, Plaintiffs enjoy First Amendment protection in their outreach. The Fourth Circuit affirmed the district court’s denial of summary judgment to Defendants Robert W. Cook (“Cook”), Administrative Chief of Police of the MPD, and Christine W. Bralley (“Bralley”), Town Manager of the Town of Mocksville.

Misconduct in the MPD

Plaintiffs Hunter, Donathan, and Medlin became concerned with Defendant Cook’s behavior and leadership as police chief. Plaintiffs saw him excessively drink alcohol in public and in uniform, which they felt reflected poorly on the police department. They also believed Cook drove a police car with blue lights flashing and behaving as a law enforcement officer when he had never been certified, in violation of the law. Further, Plaintiffs suspected Cook misused public funds for personal gain, racially discriminated, and “fixed” tickets for his friends.

Plaintiffs reported their concerns to Defendant Bralley but saw no improvement and worried about retaliation. Deputy police chief Daniel Matthews (“Matthews”) criticized Donathan regarding his concerns he raised with Bralley, and Cook demoted Medlin.

In November 2011, Cook reorganized the department, giving Matthews a promotion to second-in-command and demoting Hunter, one of only two African-Americans in the MPD. Hunter subsequently filed a grievance but his concerns were dismissed. Donathan was promoted and instructed to “adhere to the ‘politics’ of the MPD.” The next month, the three Plaintiffs and two other officers met privately to discuss their concerns and decided to seek outside investigation as private citizens.

Plaintiffs met with the National Association for the Advancement of Colored People (“NAACP)”, which advised them to contact a state agency. Hunter purchased a disposable phone so they could report their citizen complaints separately from their affiliation with the MPD. They then contacted the North Carolina Attorney General with the disposable phone. The Attorney General referred them to local individuals closely aligned with Cook, and the Plaintiffs felt they could not contact them. Plaintiffs called the North Carolina Governor’s Office with the disposable phone and expressed their concerns with no identifying details. Donathan later identified the MPD to the Governor’s Office, and the Governor’s Office offered to report their concerns to the State Bureau of Investigation (“SBI”).

The next week Medlin saw a local SBI agent at the MPD and noted the SBI agent had a close relationship with Cook and Mathews. The agent called the disposable phone, but the Plaintiffs did not return the call and disposed of the disposable phone because they felt they could not trust the agent. The phone was found, and the agent contacted the Davie County Sheriff’s Office to see if the phone belonged to anyone at the Sheriff’s Office. The Sheriff’s Office contacted the MPD and asked to run the number through MPD records. Bralley set up an online Sprint account and saw that both Donathan and Medlin had called and received calls from the disposable phone using their MPD-issued mobile phones.

MPD Fired Plaintiffs in Retaliation

Cook fired all three Plaintiffs for “conduct unbecoming a Officer” at the end of December 2011, the first time he had fired anyone at MPD, even though officers had used illegal drugs and engaged in criminal activity during his tenure. Later, in a memo to the town attorney, Cook mentioned Plaintiff’s call to the Governor and SBI and claimed the Plaintiffs conspired to discredit Cook, Bralley and others.

District Court Denied Summary Judgment to Defendants

In April 2012, Plaintiffs brought suit against Cook, Bralley, and the Town of Mocksville alleging their First Amendment rights were violated because they were fired for speaking out about corruption at the MPD. After filing an answer and engaging in discovery, Defendants moved for summary judgment. In October 2013, the district court granted summary judgment to all Defendants on the Section 1983 claims but denied summary judgment on the state law wrongful discharge and constitutional claims. The district court granted a motion for reconsideration and reversed course as to Cook and Bralley, holding that they were not entitled to qualified immunity.

District Court Rightfully Rejected Defendants’ Motion for Summary Judgment on Qualified Immunity Grounds

Qualified immunity shields government officials “who commit constitutional violations but who, in light of clearly established law, could reasonably believe that their actions were lawful.” Henry v. Purnell, 652 F.3d 524, 531 (4th Cir. 2011) (en banc).

The Fourth Circuit rejected the Defendants’ argument that Cook and Bralley are entitled to qualified immunity—arguing that no constitutional violation occurred because Plaintiffs spoke as public employees and not citizens, so the First Amendment does not protect Plaintiffs from retaliation. Courts must balance the interests of the public employee as a citizen with the right to speak out with the state’s interest in controlling the operation of the agencies. This balancing test has two steps. The first step asks whether the public employee spoke as a citizen on a matter of public concern. If the answer is no, the employee does not have First Amendment protections. If the answer is yes, the next step asks whether the public employee’s interest in speaking out about the matter of public concern outweighs the government’s interest. The first step is the primary concern of this appeal. To determine whether the public employee spoke as a citizen, the court must consider the employee’s daily professional activities.

The Defendants contend that reporting crimes is the daily professional activities of police officers like the Plaintiffs. However, the Court found calling the Governor’s Office and reporting concerns about the MPD are not part of officers’ daily professional activities. Accordingly, the Fourth Circuit found that the Plaintiffs were acting as private citizens, not public employees, speaking out on matters of public concern. Defendants asserted no countervailing state interest.

The Fourth Circuit also rejected the Defendants’ argument that Cook and Bralley are entitled to qualified immunity because the rights were not clearly established at the time. The dispositive inquiry is whether it would be clear to a reasonable officer that his conduct was unlawful. Here, it was clearly established in the Fourth Circuit that an employee’s speech about serious government misconduct is protected under the First Amendment. Therefore, the district court rightfully denied qualified immunity to Cook and Bralley on the bases that no violation occurred and that the law was not clearly established. Accordingly, the Fourth Circuit affirmed the judgments of the district court.

Dissent

Judge Niemeyer dissented because he would grant qualified immunity to Cook and Bralley. It was not clear to Cook and Bralley at the time the officers were fired that they had complained as citizens and not as employees. It was not clear as a matter of law that police officers complaining to the Governor’s Office about departmental corruption is speech by a citizen and not an employee. Had they complained as employees, they would not have First Amendment protections and retaliatory firing would have been lawful. Officials should not be held liable for “bad guesses in grey areas.” Maciariello v. Sumner, 973 F.2d 295, 298 (4th Cir. 1992). To the dissent, Cook and Bralley made a bad guess in a grey area and accordingly should not be held liable.

 

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By Sarah Walton

On June 15, 2015, the Fourth Circuit issued a published opinion in the civil case of Reyazuddin v. Montgomery Cnty., Maryland. The Fourth Circuit held that genuine disputes of material fact precluded summary judgment for Montgomery County on the plaintiff’s failure to accommodate and disparate treatment claims. The court affirmed the district court’s grant of summary judgment to Montgomery County on the plaintiff’s Title II claim.

Origins of the Dispute

Plaintiff Yasmin Reyazuddin (“Reyazuddin”) worked for Montgomery County’s Department of Health and Human Services. Reyazuddin, who is blind, assisted individuals who were looking for information about the department’s services. In October 2009, Montgomery County informed Reyazuddin’s unit that they would be moving to a new worksite. The new worksite did not have the technology necessary for Reyazuddin to perform all aspects of her job. Reyazuddin expressed this concern to her supervisor and subsequently left for vacation. When Reyazuddin returned, her coworkers had already transferred to the new location. Reyazuddin was eventually transferred to the Montgomery County Aging and Disability Unit, but her managers were unable to give her steady work. Ultimately, Reyazuddin’s manager informed her that she would not receive a transfer to the new worksite because the required software was too expensive. When Montgomery County announced that it was hiring an employee at the new worksite, Reyazuddin submitted her application. Ultimately, Montgomery County hired another applicant.

The District Court Granted Summary Judgment for Montgomery County

Reyazuddin filed a complaint against Montgomery County, which alleged that Montgomery County violated Section 504 of the Rehabilitation Act when it: (1) failed to accommodate her disability at the new worksite, and (2) discriminated against her when it refused to transfer her to the new worksite. Reyazuddin also alleged that Montgomery County violated Title II of the Americans with Disabilities Act (“ADA”) by failing to hire her for the vacant position. On the parties’ cross-motions for summary judgment, the district court granted Montgomery County’s motion on all of Reyazuddin’s claims.

The Fourth Circuit Reversed on the Failure to Accommodate Claim

The parties disagreed about the following aspects of Reyazuddin’s failure to accommodate claim: (1) whether Reyazuddin proposed a reasonable accommodation that would allow her to perform the essential functions of her job, (2) whether Reyazuddin’s current employment at the Aging and Disability Unit was comparable to her prior responsibilities, and (3) whether the proposed accommodation constituted an undue hardship on Montgomery County.

The Fourth Circuit rejected Montgomery County’s argument that Reyazuddin’s proposed accommodation would not allow her to perform the essential functions of her job. The court relied on testimony indicating that Reyazuddin could perform the position’s essential functions with an accommodation. Further, the Fourth Circuit determined that Reyazuddin’s current employment arrangements did not provide enough work for a full-time position, which made it incomparable to Reyazuddin’s prior position. As a result, the court determined that there were genuine issues of material fact regarding Reyazuddin’s proposed accommodation and Montgomery County’s comparable accommodations.

The Fourth Circuit also rejected the district court’s reasoning that the cost of installing the necessary computer software created an undue hardship on Montgomery County. The court reasoned that the cost of alternate computer software should have been balanced against other factors to determine whether it constituted an undue hardship. Consequently, the Fourth Circuit reversed the district court’s grant of summary judgment to Montgomery County on the failure to accommodate claim.

The Fourth Circuit Reversed on the Disparate Treatment Claim

The district court concluded that because Reyazuddin’s accommodation was an undue hardship on Montgomery County, they had a nondiscriminatory reason for failing to transfer her to the new worksite. The Fourth Circuit reasoned that because the district court did not properly balance the factors for the undue hardship test, it could not rely upon the undue hardship analysis for the disparate treatment claim. As a result, the Fourth Circuit held that there were genuine issues of material fact on this claim and reversed the district court’s ruling.

The Fourth Circuit Affirmed the District Court’s Determination on the Title II Claim

The Fourth Circuit noted that there was a circuit split on whether plaintiffs could bring a claim under Title II for discrimination in public employment. Ultimately, the Fourth Circuit adopted the majority view and held that Title II applied to an entity’s services to the public, rather than to its interactions with employees. As a result, plaintiffs who work in the public sector cannot bring a claim for discrimination under Title II. Consequently, the Fourth Circuit affirmed the district court’s holding on the Title II claim.

The Fourth Circuit Affirmed in Part, Reverses in Part, and Remands for Further Proceedings

The Fourth Circuit reversed the district court’s grant of summary judgment to Montgomery County on the failure to accommodate and disparate treatment claims and affirmed the district court’s decision on the Title II claim.

 

 

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By: Mikhail Petrov

On July 1, 2015, in the civil case of Pryor v. United Air Lines, Inc., the Fourth Circuit issued a published opinion vacating the decision of the United States District Court for the Eastern District of Virginia and remanding the case for further proceedings. The case concerned the question of when an employer may be held liable for a hostile work environment created by an anonymous actor. The Fourth Circuit determined that Plaintiff, United Airlines Employee Renee Pryor (“Pryor”), presented enough evidence that a reasonable jury could find that her Employer, Defendant United Airlines, Inc. (“United”), had not done enough to protect her from racially motivated death threats. The Fourth Circuit found that the District Court failed to view the evidence of the case in light most favorable to Pryor.

The Racial Threats

Pryor, an African-American employee of United Airlines was stationed at Dulles International Airport. In January 2011, Pryor discovered a note in her company mailbox declaring that the holder was “licensed to hunt and kill N***** during the open search thereof in the US.” The note was titled “N***** Tag – Federal N***** Hunting License.” There was also a hand drawn image of a person hanging from a pole. The mailbox was located in a secure area only accessible to United employees and others with company authorization.

Pryor was shaken and afraid. She went to her supervisor, but he said he was “sorry” and there was “not much” United could do as there were no security cameras in the mail room. He gave Pryor a form to fill out and said he would alert security and the base manager. He did not, however, file with United’s Employee Service Center (“ESC”) as prescribed in United’s Harassment and Discrimination (“H&D”) policy. Pryor’s supervisor went on to notify the base manager, who notified another manager, who in turn, notified the next one. No United manager filed with the ESC as prescribed by the H&D policy. Management also knew that this was not the first racist incident that happened at United. A year before the note in Pryor’s mailbox, rumors surfaced that African-American flight attendants moonlighted as prostitutes during layovers in Kuwait. Additionally, racist apartment advertisements were left in the flight attendants’ break room. Management never fully investigated who was behind these incidents.

Later, Pryor herself reported a complaint to the ESC. Additionally, she contacted the police, something no one at United had done. When the police did arrive, Pryor’s managers were reluctant to speak about the incident, even after the police explained that a racial note was a race crime in Virginia. It took United management two and a half months to send out a must read email regarding the racial harassment.

On October 21, 2011, Pryor and many other African-American employees at Dulles received a nearly identical racist note in their mailboxes. Pryor went to a supervisor, who in turn ignored her. Pryor then went to the police and filed a report. Additionally, Pryor herself notified the ESC and corporate security. Afterwards, the director of human resources at Dulles agreed to conduct an investigation. Although the director was aided in his investigation by the police, the anonymous harasser was not found.

On March 9, 2012, Pryor filed with the EEOC alleging that United failed to investigate the prostitution rumors and racist notes left in the mailboxes, and that the failure constituted discrimination. Pryor alleged that United created a hostile work environment based on the speculation regarding the prostitution ring and the two notes received. The district court granted summary judgment in favor of United because, although the racist notes were sufficiently severe, the conduct could not be imputed to United.

The Rule of the Case

Pryor alleged that she was subject to a racially hostile work environment in violation of the Civil Rights Act of 1866, 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e. The elements an employee must prove are the same under either provision. To survive summary judgment, Pryor must show that a reasonable jury could find the conduct alleged was (1) unwelcome; (2) based on her race; (3) sufficiently severe or pervasive to alter the condition of her employment and to create an abusive work environment; and (4) imputable to her employer. Okoli v. City of Baltimore, 648 F.3d 216, 220. (4th Cir. 2011). Elements (1) and (2) are not in dispute. The Fourth Circuit agreed with the district court that element (3) is met. Therefore, the Fourth Circuit re-examined the district court’s decision on element (4) of whether the harassment is imputable on the employer.

The Reasoning of the Fourth Circuit

The question in this case is whether United is liable for the anonymous harassing conduct. On one hand, employers are not strictly liable for acts of harassment that occur in the workplace. Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 72 (1986) (employer not strictly liable for workplace harassment). On the other hand, the employer maintains a responsibility to reasonably carry out those dual duties of investigation and protection. Thus, the rule is that an employer may be liable for a hostile environment created by third parties “if it knew or should have known about the harassment and failed to take effective action to stop it … by responding with remedial action reasonably calculated to end the harassment.” EEOC v. Sunbelt Rentals, Inc., 521 F.3d 306, 319 (4th Cir. 2008) (employer charged with investigation of harassment and protection of employee). In a case of an anonymous harasser, the threats may heighten what is required of the employer, particularly when the harassment occurs in a closed space accessible only to those that the company authorizes.

Here, Pryor agrees that United’s response to the second threat was adequate. However, it is the first threat that is in question here. United agreed that the threat to Pryor was death, and therefore very serious. The only question is whether United’s response to the first threat was reasonably calculated to end the harassment. A reasonable jury could find that United was neither prompt nor reasonably calculated to end the harassment. In answering the first threat, United did not call the police, report the matter to the ESC, inform corporate security, install cameras, provide Pryor with additional security, or conduct forensics on the note. In short, the Fourth Circuit concluded that a reasonable jury could find that United did little to deter future acts of harassment, particularly because additional acts of harassment did happen. The district court erred by granting summary judgement on this element.

The Fourth Circuit Remanded for Further Proceedings

The Fourth Circuit vacated the district court’s grant of summary judgment to United and remanded it for further proceeding consistent with this opinion. The Court found that a reasonable jury could conclude that the response United chose was neither prompt nor reasonably calculated. Therefore, the creation of an abusive work environment could be imputable to the employer, United Airlines.

By Anthony Biraglia

In a published opinion released on June 15, 2015, the Fourth Circuit affirmed a Maryland district court’s dismissal of a complaint for failure to state a claim and grant of summary judgment in the civil case of Adams v. Anne Arundel County Public Schools. Plaintiff Andrew Adams (“Adams”) alleged that Defendant Anne Arundel County Public Schools (“the School District”), and more specifically the Board of Education (“the Board”), violated his rights under the Family and Medical Leave Act of 1993 (“FMLA”), the Americans With Disabilities Act (“ADA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), and Maryland state law. The district court dismissed the state law and Title VII claims, and granted summary judgment to the School District on both the FMLA and ADA claims. Adams appealed the summary judgment decision. The Court found no merit to Adams’s allegations that Board (1) interfered with his medical leaves, (2) retaliated against him for those leaves, (3) discriminated and retaliated against him on the basis of his disability, and (4) failed to accommodate his condition, and thus it affirmed the district court’s ruling.

Incident with Student, Medical Leaves, and Reassignment

Adams, an assistant middle school principal in the School District, was involved in a physical altercation with a student on January 19, 2010, that resulted in investigations by both Child Protective Services (“CPS”) and the Board. Adams was temporarily reassigned until a February 24, 2010, meeting with Board investigators, after which he was placed back at his original school. Although Adams, asserting he was shown a document at the February 24 meeting clearing him of all charges, believed the Board’s investigation was over at this point, the Board denied that it had shown him such a document and continued its investigation. On April 12, The Board notified Adams of a May 6, 2010, pre-disciplinary conference, which was delayed four days to allow Adams’s attorney to attend. Two weeks later, he was issued a formal reprimand, and the Board took no further disciplinary action.

Upon reassignment to his original school on February 25, 2010, Adams went on the first of three medical leaves. This leave came at the advice of an internal medicine specialist who diagnosed Adams with stress, anxiety, and high blood pressure resulting from the January 19 incident. After returning to school on March 3, 2010, Adams again went on leave after being “berated” by the principal and suffering a panic attack. Adams claimed he was berated again, this time in front of other staff, when he returned on March 8., 2010. Two weeks later he began his third leave, when a psychiatrist diagnosed him with acute stress disorder. Both Adams’s psychiatrist and the Board’s psychiatrist recommended that Adams be assigned to a lower-stress environment when he returned to work.

After being cleared to work on July 28, 2010, Adams was reassigned to a significantly smaller school for children with behavioral issues. Pursuant to a union contract, his pay remained the same for the first two years at the new school, and was subsequently reduced by less than one percent based on his position at a smaller school. Adams was also disqualified from some discretionary bonuses for administrators at larger schools. By all accounts, Adams “excelled” at the new school.

Adams Files Suit

Adams originally filed this lawsuit in Maryland state court, and the School District removed to federal court (presumably on the basis of federal question jurisdiction). The district court, after allowing Adams to amend his original complaint, dismissed the Title VII and state law claims. After discovery, the district court granted summary judgment to the School District on both the FMLA and ADA claims.

Adams appealed the grant of summary judgment on the FMLA and ADA claims. The Fourth Circuit reviews summary judgment motions de novo, viewing all facts in the light most favorable to the non-moving party.

The Board Did Not Interfere with Adams FMLA Rights or Retaliate Against Him for Exercising Those Rights

An interference claim under the FMLA consists of three elements. The employee must demonstrate that (1) she is entitled to an FMLA benefit, (2) her employer interfered with the provision of that benefit, and (3) the interference caused harm. The Court noted that interference claims generally arise when an employee is denied FMLA benefits, which was not the case with Adams. However, discouraging an employee from taking FMLA leave through adverse employment actions can also constitute interference. The Court dismissed Adams’s contentions that unnecessary medical examinations (which were in fact authorized by the FMLA), the pre-disciplinary conference, and the verbal and written reprimands he received constituted actionable interference under the FMLA. In the Court’s view, none of these actions were adverse employment actions within the context of the statute.

The Court also found that the Board’s actions toward Adams were not retaliatory. Both actions that Adams alleged were retaliatory, namely reopening the investigation and transferring him to a smaller school, were simply not retaliatory in the Court’s view. The Court observed that the investigation was never closed, and thus could not have been reopened to retaliate against Adams, and that the transfer was actually recommended by Adams’s own doctors. In fact, the Court opined, the Board made efforts to accommodate Adams rather than retaliate against him.

The Board Did Not Discriminate or Retaliate Against Adams Based on His Disability

Adams’s claims under the ADA arose out of the same operative facts as his claims under the FMLA. Specifically, Adams alleged that the verbal attacks by the principal, the continued investigation, the written reprimands, and the medical examinations constituted ADA violations by the Board, and the transfer to a smaller school was failure to reasonably accommodate his disability.

An element of both the discrimination and retaliation aspects of Adams’s ADA claim is that the plaintiff must have suffered an adverse employment action, which the Fourth Circuit defined as “some direct or indirect impact on an individual’s employment as opposed to harms immaterially related to them.” The Board’s actions of which Adams complained did not, in the eyes of the Court, rise to the level of adverse employment actions. As the Court pointed out in its analysis of the FMLA claim, the decision to transfer Adams to a different school (which was the Board’s only action that had any material affect on Adams’s employment), was made at the behest of Adams’s own doctors.

Affirmed

Because Adams failed to create a triable issue of fact on both his FMLA and ADA claims, the Fourth Circuit affirmed the district court’s decision to grant summary judgment to the School District.