Decided: July 7, 2016
The Fourth Circuit vacated and remanded the district court’s ruling.
Appellee Gault terminated the Appellant Lawson from her position as a deputy clerk in the Clerk of Court’s Office in Union County, South Carolina. Lawson argued that her termination was in violation of her rights guaranteed under the First Amendment. The district court granted summary judgment in favor of Gault, holding that Lawson’s position was a confidential or policymaking position and she was subject to termination for campaigning against her boss. At issue in this appeal is whether the district court correctly established as a matter of law that Lawson held a position for which political loyalty was required.
In reviewing the circuit court’s decision in favor of summary judgment, the Fourth Circuit applied the same legal standards as the district court while viewing all the facts and reasonable inferences therefrom in the light most favorable to the nonmoving party. In it’s determination, the Fourth Circuit focused on two lines of cases that deal with the limitations on a public employee’s First Amendment rights. The first doctrine, known as the “Elrod-Branti” exception, holds that policymaking employees may be terminated for their political beliefs if their party affiliation is an “appropriate requirement for the effective performance of the public office involved.” The second doctrine provides that public employees are not protected by the First Amendment when, “their speech interests are outweighed by the government’s interest in providing efficient and effective services to the public.”
The district court held that Gault was within his right to fire Lawson under the previously mentioned “Elrod-Branti” exception, because Lawson held a confidential, policymaking position that required political loyalty. The Fourth Circuit disagreed with that holding because in the eyes of the court, Gault had not satisfied the criteria of the “Elrod-Branti” exception calling for a demonstration that Lawson’s position required political loyalty. Additionally, the Fourth Circuit determined that Gault had not demonstrated an entitlement to qualified immunity or Eleventh Amendment immunity. Since Gault did not establish that Lawson was a policymaking employee for whom political association was an appropriate job requirement, the “Elrod-Branti” exception does not apply and thus Gault is not entitled to qualified immunity.
Because the Fourth Circuit determined that, in light of the facts, Gault has not established as a matter of law that Lawson held a position for which political loyalty was required, summary judgment was not appropriate and thus the Fourth Circuit vacated the circuit court’s ruling in favor of summary judgment for the Appellee.
Accordingly, the Court vacated and remanded the district court’s ruling.
Decided: June 8, 2016
The Fourth Circuit determined that the Plaintiffs were employees, and therefore affirmed the judgment of the district court.
Plaintiffs, exotic dancers who worked at Fuego Exotic Dance Club (“Fuego”) and Extasy Exotic Dance Club (“Extasy”), alleged on behalf of themselves and others similarly situated that defendant clubs and Uwa Offiah—the owner and manager of both clubs—misclassified them as independent contractors and accordingly failed to pay them the minimum wage required by the Fair Labor Standards Act (“FLSA”). They sued defendants for both unpaid wages and liquidated damages, and on January 3, 2014 plaintiffs filed a motion for partial summary judgement. The district court granted plaintiffs’ motion in part, finding that plaintiffs were employees, not independent contractors. Reserving various disputes over monetary recovery for the jury, the jury ultimately found in favor of the plaintiffs and awarded them damages for unpaid wages. On the matter of liquidated damages, the court awarded liquidated damages to each of the plaintiffs only for the period prior to September 2011—in September 2011 the defendants consulted an attorney regarding classifying dancers as independent contractors and therefore, after that time defendants reasonably believed the were not violating the FLSA. After denial of motion for judgment as a matter of law and/or for a new trial, defendants appealed.
On appeal, defendants sought review on five questions. The first was whether plaintiffs were employees or independent contractors under the FLSA and related state laws. Applying the same “economic realities” test as the lower court, the Fourth Circuit agreed, based on the totality of the circumstances presented, that plaintiffs were employees covered by the FLSA and analogous state laws. Defendants next questioned whether defendants acted in good faith prior to September 2011, making them not liable for to pay liquidated damages for that time—the trial court had already determined defendant were not liable for liquidated damages after September 2011. When defendant Offiah took over management of Fuego and Extasy in 2007 and 2009, respectively, he changed nothing about the way the clubs had been operating, including the classification of the dancers as independent contractors. It was not until he faced a lawsuit in 2011, that he made an effort to educate himself on the governing law. Thus, the Court held that the district court did not err in rejecting defendants’ good faith defense for the period prior to September 2011. When defendants questioned whether it was an error to bar defendants from presenting evidence of plaintiffs’ income taxes, the Court again agreed with the district courts view that that plaintiffs’ earning were irrelevant. Lastly, when defendants questioned whether the district court erred in formulating its jury instruction and verdict sheet, as well as whether the trial court erred in denying the defendants motion for judgment as a matter of law and/or a new trail, the Fourth Circuit determined that no errors had been made. Thus, the Court affirmed the judgment of the district court.
Aleia M. Hornsby
Decided: May 25, 2016
The Fourth Circuit affirmed the district court decision granting of summary judgment in favor of CSX, in which the district court concluded that Conrad had failed to show that any CSX employee involved in the disciplinary process had also known about his union activities.
Appellee CSX Transportation, Inc. charged one of its employees, Appellant William M. Conrad, with “serious” violations of the company’s safety policy. Alleging he was disciplined in retaliation for his activities as local chairman of the transportation union, Conrad sued in federal district court under the Federal Railroad Safety Act (“FRSA”), 49 U.S.C. § 20109. The district court granted summary judgment in favor of CSX, concluding that Conrad had failed to show that any CSX employee involved in the disciplinary process had also known about his union activities. Conrad appealed the district court’s decision. On appeal, Conrad argued that knowledge of an employee’s protected activities may be imputed to the decision-makers if any supervisory employee at the company knew of the subordinate employee’s protected activity when the decision-maker took the unfavorable personnel action, regardless of whether the person with knowledge played a role in the disciplinary process. The Fourth Circuit disagreed with this argument.
Congress enacted the FRSA to promote safety in every area of railroad operations and reduce railroad-related accidents and incidents. To that end, the FRSA prohibits railroads from discriminating against employees who engage in certain safety-related activities. An an action brought under the FRSA, the plaintiff must project sufficient admissible evidence to establish that: (1) the employee engaged in a protected activity; (2) the employer knew that the employee engaged in the protected activity; (3) the employee suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. If the employee establishes a prima facie claim, then the burden shifts to the employer to demonstrate by clear and convincing evidence that the employer would have taken the same personnel action in the absence of the protected activity. The district court concluded that Conrad could not prove the second prong, that CSX knew that he had engaged in the protected activity. The Fourth Circuit concluded that the “knowledge” relevant for a retaliation claim under the FRSA must be tied to the decision-maker involved in the unfavorable personnel action. As the district court concluded, Conrad failed to show that such knowledge existed here.
Accordingly, the Court affirmed the district court’s decision that Conrad’s claims fail as a matter of law at the prima facie stage.
Katie E. Lowery
Decided: July 6, 2016
The Fourth Circuit vacated the order granting summary judgment on all counts and remanded for further proceedings.
On February 28, 2014, Plaintiff, Monica Guessous (Guessous) filed an action against Fairview Property Investments, LLC (Fairview) for race discrimination, hostile work environment, and retaliation in violation of 42 U.S.C. § 1981 and for discrimination based on religion, national origin, and pregnancy, hostile work environment, and retaliation in violation of 42 U.S.C. § 2000(e). Guessous stated she was repeatedly involved in uncomfortable and often offensive discussions about national conflicts or cultural issues in Islamic countries and issues relating to Muslim terrorists simply because she was from the Middle East and an Arab-American Muslim. After returning to work from maternity leave, Washenko, Guessous’ supervisor, continued to withhold her job duties. Guessous confronted Washenko about having her duties assigned back to her and about his previous comments to her. Shortly, thereafter Guessous was terminated and asked to sign a severance agreement which Guessous refused.
On March 5, 2013, Guessous filed a discrimination charge with the EEOC and filed her civil complaint on February 28, 2014. The district court granted summary judgment in favor of Fairview on December 16, 2014. The district court stated Guessous cited her complaint and to factual allegations instead of pointing to evidence to show a dispute of material fact. The district court concluded the retaliation and discrimination claims should be dismissed because Fairview asserted a nondiscriminatory reason (lack of work) for Guessous’ termination. The district court applied the McDonnell Douglas burden-shifting framework to the discrimination and retaliation claims. The district court stated Washenko’s statements were insufficient to establish a hostile work environment and the conduct attributed to the hostile work environment occurred 300 days prior to Guessous filing her complaint with the EEOC and therefore, it was time barred.
The Fourth Circuit began by analyzing Guessous’ retaliation claims. Guessous must show “‘(i) that [she] engaged in protected activity, (ii) that [her employer] took adverse action against [her], and (iii) that a causal relationship existed between the protected activity and the adverse employment activity.’” The district court concluded that these elements were established and shifted the burden to Fairview to produce a nondiscriminatory reason for the action per McDonnell Douglas’ framework. Fairview asserted it terminated her due to insufficient work to support her position so the burden shifted back to Guessous to show this was to disguise a true retaliatory reason. Two emails from Alexander, inquiring from other companies if they would hire Guessous, was evidence that Fairview was retaliating against Guessous for her earlier conversation about reinstating her job duties. The Court also noted the absence of evidence supporting Fairview’s lack-of-work explanation. The Court reversed the summary judgment order on Guessous’ retaliation claims (Counts III and VI) because a jury could have accepted the lack-of-work explanation or concluded that her “protected activity was the final straw that motivated Guessous’ termination.”
The Court then analyzed Guessous’ claims that Fairview treated her differently based on her race (Count I) and her religion, national origin, and pregnancy (Count IV). In order to show a prima facie case in a discriminatory discharge case, Guessous must show: “‘(1) that [s]he is a member of a protected class; (2) that [s]he suffered from an adverse employment action; (3) that . . . [s]he was performing at a level that met [her] employer’s legitimate expectations; and (4) that the position was filled by a similarly qualified applicant outside the protected class.’” The Court concluded Guessous had established a prima facie case because non-Arab, non-Muslim employees absorbed her duties. To counter Fairview’s justification for her termination she asserted, at the summary judgment level, “‘(1) the decision to terminate her was finalized seventy-five minutes after she engaged in protected activity, (2) no one else was terminated for the reasons provided by Defendant, and (3) she was terminated by her aggressor.’” The district court observed that her position was not filled after her termination. The Court held that the evidence in the record met the summary judgment requirement and a reasonable jury could find the lack-of-work justification was pretext for discrimination.
Next, the Court analyzed Guessous’ hostile work environment claims (Counts II and V). Guessous must show “‘“(1) unwelcome conduct; (2) that is based on the plaintiff’s [protected characteristic]; (3) which is sufficiently severe or pervasive to alter the plaintiff’s conditions of employment and to create an abusive work environment; and (4) which is imputable to the employer.”’” The Court determined the district court erred in barring Guessous’ hostile work environment claim (Count V) due to the statute of limitations because “the work assignments were withdrawn in November 2012, and the termination occurred in March 2013, both constitute[d] facts within the statutory period which contributed to the hostile work environment. . . .” The district court concluded Washenko’s conduct was unwelcome but granted summary judgment based on the second and third elements. The Court stated the district court erred when it took an “overly cramped view of what constitutes race-based conduct; with respect to the third step, the court failed to consider the totality of circumstances, as it must when determining whether unwelcome conduct is severe or pervasive.” Guessous asserted that Washenko’s conduct was motivated by her Arab ethnicity. The Court pointed to Washenko assuming Guessous could interpret for a Persian Iranian employee and his assertion that Middle Easterners were crooks in determining that his conduct was “a hallmark of racially insensitive conduct.” Finally, the Court stated the district court erred in not looking at the totality of circumstances when analyzing the third element. Washenko’s intimidating and intrusive management of Guessous was evidence of a hostile work environment. Therefore, the court reversed the district court’s ruling as to the hostile work environment claims.
Accordingly, the Court vacated the order granting summary judgment on all counts and remanded for further proceedings.
Alicia E. Morris
Decided: April 25, 2016
The Fourth Circuit reversed and remanded the trial court’s decision declining to authorize the Equal Employment Opportunity Commission’s application for subpoena enforcement.
On July 27, 2013, Elmer Escalante—who lacked authorization to work in the United States—and several other Hispanic employees complained to Plaintiff, Maritime Autowash (“Maritime”), of unequal treatment and discrimination targeting Hispanics. That same day, all of them were terminated. Escalante then filed charges with the Equal Employment Opportunity Commission (“EEOC”) for discrimination on the basis of national origin and retaliation as prohibited under Title VII. In response to the charges, Maritime denied all of the allegations of discrimination, claiming that Escalante was terminated for failing to appear for a scheduled work shift. The EEOC then served Maritime with a Request for Information (“RFI”) seeking personnel files, wage records, and other employment data related to Escalante, the other charging parties, and similarly situated employees. Maritime refused to provide records for any Hispanic employee other than Escalante. Due to Maritime’s incomplete RFI, the EEOC issued a subpoena, to which Maritime produced none of the subpoenaed documents. The EEOC then filed an application for subpoena enforcement which the district court denied stating that a “plaintiff is entitled to [Title VII] remedies only upon a successful showing that the applicant was qualified for employment” and that being qualified meant being “authorized for employment in the United States at the time in question.” The EEOC appealed. The only question the Court of Appeals seeks to answer is whether EEOC’s subpoena, designed to investigate Escalante’s Title VII charges, is enforceable. They determined it was.
Maritime argued that someone lacking proper work authorization was never qualified for employment and therefore lacks any cause of action or remedy under Title VII. However, the EEOC argued that, regardless of whether a cause of action or remedies ultimately arise from the investigation, those potential outcomes have no bearing on its subpoena power. The Court agreed to an extent. In addition to the fact that nothing under Title VII explicitly bars undocumented workers from filing complaints, the Court has not required a showing of a viable cause of action or remedy at the subpoena enforcement stage. The EEOC’s authority to investigate is not negated simply because the party under investigation may have a valid defense to a later lawsuit. Yet, the Court recognized that there is a limit to the EEOC’s subpoena power—specifically, the subpoena cannot be unduly burdensome. The Court determined that the EEOC must be allowed to do their job, and thus they instructed that the subpoena be enforced.
Accordingly, the Court reversed and remanded the district court decision.
In his concurrence, Judge Niemeyer questioned whether the EEOC’s application for subpoena enforcement exceeded its substantive jurisdiction. He ultimately concluded that the subpoena should have been enforced because the record plausibly suggested that the employer had engaged in a practice or pattern of discrimination that adversely effected other employees who were authorized to work in the U.S.
Aleia M. Hornsby
Decided: December 23, 2015
The Fourth Circuit denied the Respondent’s motion to review and affirmed the Petitioner’s motion for cross-application of the National Labor Relations Board’s order.
In this appeal, the Fourth Circuit considered the National Labor Relations Board’s (the Board) determination that four individual employees of U.S. Fibers (the employer), who were engaged in pro-union activity before a union election within the company, were not supervisors within the meaning of the National Labor Relations Act (the Act). The Court held that the Board’s decision was supported by substantial evidence, upheld the Board’s conclusion that setting aside the results of the election was not appropriate under the circumstances of the case, denied U.S. Fibers’ petition for review of the Board’s final order, and granted the Board’s cross-application for enforcement of its order.
At issue in this case was the question of whether four U.S. Fibers employees occupied supervisory status in their roles with Respondent, U.S. Fiber. If the employees were deemed to have held supervisory positions as it is defined in the Act, then their participation in the union election would have been grounds for setting aside the results of the election. Although the employees at issue were designated by management as “supervisors,” the Board held that the putative supervisors did not exercise supervisory roles that barred them from participation in the union activities and rejected the employer’s alternative contention that the results of the election should be set aside under the Board’s standard for third-party objectionable conduct.
Following the election and despite the Board’s order, the employer refused to recognize or engage in collective bargaining with the union. In the employer’s view, the results of the election should be set aside due to the employees’ supervisory roles within the company. As a result, the Board filed a complaint against the employer, alleging that the employer had engaged in unfair labor practices under federal law and ultimately ordered the employer to cease and desist its unfair practices and to recognize the bargain with the union, as set forth in the Board’s final order. The employer subsequently filed a petition for review.
In reviewing the Board’s order, the Fourth Circuit outlined its standard of review that allowed for the Board’s order to be set aside only if the Board had “clearly abused its discretion” and made clear that it would defer to the Board’s factual determinations, absent substantial abuse, even if the Fourth Circuit may have reached a different result in the first instance. Furthermore, the Court made clear that the burden of proving supervisory status of the employees under the Act rested on the employer.
In opposition to the Board’s order, the employer relied on four supervisory functions enumerated in the Act that disqualified them from participating in union activities; that is, exercising the authority to assign, reward, discipline, and responsibly direct employees. However, despite the employees in this case possessing some level of each of these enumerated functions, the Act makes clear that putative supervisors’ “exercise of such authority [cannot be of] a merely routine or clerical nature, but requires the use of independent judgment and their authority must be held in the interest of the employer.” For these reasons, the Court dismissed, in turn, each of the employer’s claims for the supervisory nature of the employees’ employment. The Court upheld the Board’s determination that the employees were not exercising their own independent judgments and were acting instead in the interest of the employer or under the employer’s strict instructions.
Furthermore, the Fourth Circuit dismissed the employer’s alternative claim that the election still should be set aside under the standard for objectionable conduct by third-party employees set out under the Act. While the employer contended that the employees in question threatened other employees to the extent of being so “aggravated as to create a general atmosphere of fear and reprisal rendering a free election impossible,” which would have clearly violated the Act, the Court found no evidence to support this contention. Instead, the Court agreed with the Board’s determination that the employees’ challenged statements concerning the potential for employer layoffs did not “meet the rigorous standard for objectionable third-party conduct” as described in the Act.
Accordingly, U.S. Fibers’ contentions were dismissed and the Board’s motion for the application of its orders were affirmed.
Decided: March 4, 2016
The Fourth Circuit affirmed the district court’s ruling.
In July 2007, Plaintiff, Judith Gentry fell at work, injuring her foot and ankle. Gentry then filed for workers’ compensation benefits. In October 2008, Gentry had to have surgery and her doctor concluded that she had a thirty percent permanent physical impairment to her ankle. The insurance carrier offered to settle Gentry’s claim, but Gentry declined. In November 2010, Gentry’s workers’ compensation claim was settled and in December 2010, Gentry was terminated. Defendant stated that Gentry was terminated as part of a restructuring plan to reduce costs. However, Gentry sued Maggie Valley 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, her boss, for tortiously interfering with her employment contract with Maggie Valley. At trial, Gentry was awarded $10,000 for the workers’ compensation claim and $10,000 for Defendant’s tortiously interfering with Gentry’s employment. However, the jury found in favor of the Defendants on all of the other claims. Gentry moved for a new trial, which the district court denied.
On appeal, Gentry argues that the district court incorrectly instructed the jury on the causation standard for disability discrimination claims under the ADA. The district court instructed the jury on a “but-for” standard but Gentry argued that the jury should have been instructed on a motivating factor standard. The Court, relying on Gross v. FBL Financial Services, Inc., concluded that Title VII’s motivating factor standard could not be read into Title I of the ADA and that the district court correctly applied a “but-for” standard. Gross instructed courts to follow closely to the text of employment discrimination statutes. Further, the Court concluded that a “but for” causation standard was required because the legislative history did not suggest that “on the basis of” was intended to mean something other than “but-for” causation.
Also, Gentry challenged the district court’s instructions on the definition of disability. The ADA defined 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.” Gentry disputed the definition of “substantially limits” and the court’s instructions on “regarded as” and “record of” disability. The Court concluded that Gentry did not show that the instruction affected her substantial rights because the jury could have found that her termination was not the result of the impairment to her foot, regardless of how severe. Further, the Court concluded that the trial court did not abuse its discretion in this instruction and that no serious prejudice to Gentry warranted vacating the verdict on her disability discrimination claims. Finally, Gentry argued that the district court improperly shortened the definition of “record of” disability. However, the Court concluded that there was no error because Gentry did not object to the instruction.
Gentry further argued that the district court erred in refusing to admit evidence of Defendants’ liability insurance and indemnification. The jury was instructed that it could award damages for back pay, front pay, emotional pain and suffering, and nominal damages. The jury was also instructed that Gentry had to mitigate her damages using reasonable diligence. Gentry argued that the award was tainted because of the Defendants’ belaboring of their poor financial condition. However, the Court concluded that the evidence was central to their defense that Gentry was terminated as part of a plan to reduce costs. Additionally, the Court concluded that there was no abuse in the refusal to admit evidence of the insurance coverage and indemnification.
Finally, Gentry argued that she was entitled to a new trial on damages because the award was inadequate. To grant a new trial Gentry needed to show that (1) the verdict was against the clear weight of the evidence, or (2) was based upon evidence, which was false, or (3) would result in a miscarriage of justice. The Court concluded that Gentry did not meet this burden because the jury could have inferred that Gentry’s salary would have decreased as part of the plan to reduce costs. The jury could have also found that she did not mitigate her damages when she obtained a part time job. Therefore, the Court affirmed the district court’s denial of Gentry’s motion for a new trial.
Accordingly, the Court affirmed the judgment of the district court.
Alicia E. Morris
Decided: January 11, 2016
In a Title VII case regarding the physical fitness test (PFT) administered to New Agent Trainees (trainees) at the Federal Bureau of Investigation (FBI), the Fourth Circuit held that the district court did not apply the correct legal rule. On that basis, the Fourth Circuit vacated the district court’s grant of summary judgment to Bauer, and remanded the case.
The FBI requires all trainees to pass a PFT twice, once to enter the Academy, and a second time before graduation. The PFT ensures that trainees are able to meet the demands of the Academy. Over the years, the FBI has used different measures of physical fitness. In 2003, the FBI developed the current test, which consists of four elements completed in one test: “one minute of sit-ups; a 300-meter sprint; push-ups to exhaustion; and a 1.5 mile run. The FBI administered the test to the 2003 classes at the Academy as a pilot program to establish standards, and as part of standard creation process, created different minimum standards for men and women based on the physiological differences between the genders. Based on the results of the pilot program, the FBI created a point system to score each of the component events. Trainees achieved one point for meeting the minimum standard, three points for achieving the mean, and four to ten points for above-average performance. To pass the PFT, trainees had to score 12 points, with at least one point in each event. The PFT was implemented in 2004.
In October, 2008, Jay Bauer took the PFT to gain entry to the Academy, and failed. Though he earned 16 points overall, he only completed 25 push-ups, 5 short of the 30 required for men (only 14 push-ups were required for women, and Bauer more than met that number in each of his tests). He retook the test in January, 2009, and passed. He did well at the Academy, but despite attempting the PFT five times, he failed to meet the minimum number of push-ups, and thus failed the exam. The FBI gave him the option to resign and possibly be employed by the FBI in the future, resign permanently, or be fired. Bauer chose to resign with the possibility of future employment. Shortly thereafter, the FBI hired him as an Intelligence Analyst.
In April, 2012, Bauer filed suit against the Attorney General, alleging that the FBI violated two provisions of Title VII which prohibited discrimination by federal employers, and the use of “different cutoff scores on employment tests on the basis of sex.” Bauer and the Attorney General both filed for summary judgment, Bauer alleging that the gender-normed standards of the PFT were facially discriminatory, and the Attorney General claiming that the standards did not discriminate because the burden of compliance with the standards was equal on both sexes. The District Court granted summary judgment to Bauer. The Attorney General appealed, arguing that the district court applied the wrong rule to decide the case.
The Fourth Circuit held that the district court applied the wrong rule to the case. The Fourth Circuit began by noting that there are two different tests which have been developed to decide whether a practice facially discriminates on the basis of sex. Under City of Los Angeles, Dep’t of Water & Power v. Manhart, a practice is discriminatory when, but for a person’s sex, their treatment would have been different. Under Gerdom v. Continental Airlines, Inc., a practice is not discriminatory if it applies an equal burden of compliance to both sexes. The Fourth Circuit noted that the district court here applied the Manhart test. It also noted that in cases similar to the one here, including two involving the FBI’s PFT (both the current and previous PFT), the courts had not found Title VII violations. The Court then reasoned that men and women are physically different, and thus a man and a woman who are equally fit may show different results on a fitness test. Thus, a fitness test would discriminate on the basis of sex if it asked men and women to demonstrate different levels of fitness. On that basis, the Fourth Circuit held that the equally burdensome test of Gerdom was the correct test to apply to the PFT. The Fourth Circuit thus vacated the district court’s grant of summary judgment to Bauer, and remanded the case.
Katherine H. Flynn
Decided: December 23, 2015
GEICO is in the business of supplying insurance for its customers. The plaintiffs are employees or former employees of GEICO that worked in the capacity of security investigators (Investigators). The Investigators work in GEICO’s Claims Department primarily investigating claims that are suspected of being fraudulent. Under the Fair Labor Standards Act (FLSA) employers are required to pay overtime for each hour their employees work in excess of 40 hours per week; however, the Act exempts “any employee employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). GEICO has been classifying its Investigators as exempt from the FLSA’s requirement to pay overtime. This case primarily concerns the validity of that classification and the damages that would be due if GEICO had violated the FLSA.
In FLSA exemption cases, “the question of how [employees] spen[d] their working time…is a question of fact,” but the important question of whether the exemption applies is a question of law. FLSA exemptions are narrowly construed against the employers. Specifically, the Act exempts “any employee employed in a bona fide executive, administrative, or professional capacity.” Congress did not define this phrase but delegated authority to the Labor Department to issue regulations to define these terms. The regulations provide that the administrative exemption covers employees: (1) who are compensated at a rate of not less than $455 per week; (2) whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. The parties stipulated at the district court that the first element has been satisfied. The district court also determined the second element was likely satisfied. However, the district court ruled that the plaintiffs were entitled to partial summary judgment because GEICO failed to establish the third element. Determination of an employee’s primary duty must be based on all the facts of the case, with a major emphasis on the character of the employee’s job as a whole.
The Fourth Circuit determined that the Investigator’s conducting of factual investigations, regardless of how important they were to the employer, was not directly related to the management of general business operations of GEICO. Regardless of how the Investigators’ work product was used or who the Investigators were assisting, whether their work was directly related to management policies or general business operations depend on what their primary duty consists of. The primary duty of the Investigators, conducting factual investigations and reporting the results, is not analogous to the work in the “functional areas” that the regulations identify as exempt. The Fourth Circuit concluded that although the issue presented a very close legal question, GEICO did not show that the Investigator’s primary duty was directly related to GEICO’s management or general business operations. Therefore, the district court properly granted partial summary judgment to the plaintiffs on the issue of whether GEICO improperly classified the plaintiffs as exempt.
Further, the plaintiffs argued in their cross-appeal that the district court erred in granting partial summary judgment to GEICO on the issue of willfulness under the FLSA. Under the Portal-to-Portal Act, the length of the FLSA’s statute of limitations depends on whether the violation was willful. If it willful, then the limitations period is three years, and if it is not willful, the statute of limitations is two years. Negligence is insufficient to establish willfulness. Only employers who either knew or showed reckless disregard for the matter has willfully violated the FLSA. GEICO addressed the determination for exemption several times by bringing in high level officers, and the district court determined the decision to continue to classify the Investigators as exempt was a reasonable one. The Fourth Circuit determined that the district court was correct, and there was no basis upon which a reasonable factfinder could conclude that GEICO’s decision to classify its investigators as exempt was knowingly incorrect or reckless.
Additionally, the plaintiffs argued that the district court erred in the calculation of the compensation they were due for unpaid overtime and the denial of their request for liquidated damages. However, the Fourth Circuit concluded that the district court was correct in its calculation of compensation and its denial for liquidated damages. Lastly, the plaintiffs argue that, in the absence of an award of liquidated damages, the district court erred in declining to award prejudgment interest on the basis that GEICO acted in good faith in treating its Investigators as exempt. Under the FLSA, normally, prejudgment interest is necessary in the absence of liquidated damages, to make the plaintiff whole. Because the prejudgment interest on an FLSA overtime claim is compensatory and not punitive, the fact that the defendant’s decision not to treat the plaintiffs as exempt was reasonable or in good faith is not a valid basis for the denial of the award. Accordingly, regarding the New York Labor Law claims, the Fourth Circuit determined the district court did not have the discretion to decline to award prejudgment interest.
Austin T. Reed
Decided: December 18, 2015
In a case about entitlement to overtime pay under the Fair Labor Standards Act (FLSA) and Maryland Wage and Hour Law (MWHL), the Fourth Circuit found that Nancy Williams was employed as a professional, and thus, Genex Services, LLC (Genex) did not have to pay her overtime. On that basis, the Fourth Circuit upheld the District Court’s grant of summary judgment to Genex.
Williams began working at Genex in 2011 after Genex acquired her former employer. Genex provides “integrated managed care services” to employers and workers’ compensation insurers in an attempt to control the costs of health care and disability, ensure provision of quality health care, and improve workers’ ability to return to work. Williams, who was a registered nurse, and held several professional certifications, worked for Genex as a Field Medical Case Manager (FMCM). In this capacity, she worked with a variety of people, including attorneys, carriers, doctors, and employees to ensure that workers received quality health care, and were able to return to work.
In July, 2013, Williams sued Genex arguing that Genex violated FLSA and MWHL by not paying her overtime. The District Court granted summary judgment to Genex on the basis that Williams was a learned professional, and thus Genex was not required to pay her overtime. The District Court based this finding on the fact that Williams was a registered nurse, and required to be one to hold her position, that she did work requiring specialized knowledge, and that she used this knowledge to serve her clients while also using discretion in performing her job duties. Williams appealed to the Fourth Circuit.
The Fourth Circuit focused its analysis on Williams’s FLSA claim because the definition of professional in the FLSA and MWHL is the same, so if the FLSA claim failed because Williams was a professional, the MWHL claim would as well. The Fourth Circuit then noted that Department of Labor regulations define a professional employee as one who earns at least $455 per week, and whose primary job duty is work that requires advanced knowledge normally achieved through specialized learning, or which requires creativity. Here, Williams, who earned over $80,000 per year in 2012 and 2013, clearly met the salary requirements. The Fourth Circuit found that Williams also met the requirements of a job whose primary duty involved advanced knowledge. They noted that the job description Williams proved on her resume included “‘assessing patient needs,’” creating patient plans, analyzing data, and working with other professionals. Further, Williams routinely used her skills as a registered nurse in performing her job duties including coordinating medical care, teaching employees about their conditions, and suggesting alternate treatments. Williams did much of her work without supervision. On this basis, the Fourth Circuit found that Williams fit within the FLSA’s definition of a professional employee, and thus Genex was not required to pay her overtime. For this reason, the Fourth Circuit affirmed the District Court’s grant of summary judgment to Genex.
Katherine H. Flynn
Decided: December 9, 2015
The Fourth Circuit dismissed the appeal for lack of jurisdiction and remanded the case to the district court.
The Central Virginia Legal Aid Society (“CVLAS”) terminated Plaintiff Freddie Lee Goode’s (“Goode”) employment in March of 2013. Goode was 72 years old at the time of his termination and had worked for CVLAS for 25 years. Goode was one of CVLAS’s two Senior Managing Attorneys. Goode reported to Executive Director, Stephen Dickinson (“Dickinson”), a white male. On April 17, 2014 Goode brought a claim against CVLAS for violations of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (“ADEA”). In Goode’s complaint, he alleged that five African American employees, including Goode, were terminated as a result of the CVLAS’s restructuring. CVLA contended that it eliminated Goode’s position because representation for Social Security cases at the litigation stage was a service available through the private bar and that CVLA was going to focus on family law cases. Goode challenged this rationale as pretext. On July 15, 2014, CVLAS filed a motion to dismiss for failure to state a claim under Rule 12(b)(6). The district court granted CVLA’s motion and dismissed the case without prejudice, holding that Goode had failed to state a claim for unlawful discrimination under Title VII, 42 U.S.C. § 1981, and the ADEA.
On appeal, CVLAS argued that the district court’s order granting its motion to dismiss without prejudice was not appealable because Goode could have amended his complaint to cure the pleading deficiencies. The Fourth Circuit agreed and found that it lacked jurisdiction over the appeal. The district court’s dismissal “did not clearly indicate that no amendment could cure the defects in the complaint.” As a result, the order of dismissal was not final, and therefore, not appealable. The Court considered whether a plaintiff could have amended the complaint to satisfy the pleading standards that the district court imposed. In this case, the district court dismissed Goode’s case because he failed to allege sufficient facts to present direct or circumstantial evidence of discrimination or to establish a prima facie case of discrimination. The Court concluded that Good could have amended his complaint to add factual allegations that satisfied the standards under McDonnell Douglas, and that the district court’s order failed to indicate otherwise. Likewise, the Court found that the district court’s order did not prevent Goode from amending his complaint to properly allege a plausible claim of discrimination based on age. The Court ultimately held that the “grounds for dismissal in this case did not clearly preclude amendment.”
Accordingly, the Fourth Circuit dismissed Goode’s appeal for lack of jurisdiction and remanded the case to the district court with instruction to allow Goode to amend his complaint.
Decided: November 24, 2015
The Fourth Circuit affirmed.
Rose Lorenzo (“Lorenzo”) was a “solutions specialist” at Prime Communications (“Prime”) and was then promoted to store manager. She brought an action against Prime alleging that Prime violated the Fair Labor Standards Act (“FLSA”) and the North Carolina Wage and Hour Act, alleging that Prime miscalculated her commissions and bonuses and failed to pay her overtime pay. The district certified her claims, and Prime filed a motion to compel arbitration based on an arbitration provision contained in the Employee Handbook (“Handbook”). The district court denied the motion for arbitration based on lack of evidence that Lorenzo agreed to arbitration, and further refused to change its position when Prime brought a signed acknowledgment form to the court due to language in the form stating that the Handbook didn’t create a contract. Prime filed an interlocutory appeal for the denial of arbitration and filed a petition to appeal the designation of the claims as a class action, with Lorenzo filing a motion to strike the petition. The Fourth Circuit consolidated the two appeals.
The Fourth Circuit began its analysis by looking at the arbitration language in the Handbook and at the form Lorenzo signed. The Court looked to these documents to decide whether or not the parties entered into a contract to arbitrate employment disputes. The Court looked to North Carolina contract law as the controlling law, which states that in a contract, the parties “assent to the same thing in the same sense, and their minds meet.” Although the Court found that the district court erred in not finding that Lorenzo’s acknowledgment that she received the Handbook and her continuation of work after reviewing the arbitration language could have created implied assent, the Court found that that error was not harmful. Because Lorenzo signed the acknowledgment form, which provided that the terms in the Handbook did not create binding commitments, any implied agreement formed by receipt of the Handbook was expressly nullified. As to Prime’s petition to appeal the class action certification, Rule 23(f) authorizes review of interlocutory orders granting or denying class certifications, but only if the petition is filed within 14 days after the order is entered. Prime filed its petition seeking permission to appeal 17 days after the district court entered its order. For these reasons, the Fourth Circuit affirmed the district court’s order denying the motion to compel arbitration, and dismissed Prime’s appeal from the class action certification order.
ASSOCIATED COAL CORP. v. DIR., OFFICE OF WORKERS’ COMPENSATION PROGRAMS, U.S. DEP’T OF LABOR. 14-1923
Decided: November 6, 2015
In a black lung benefits case, the Fourth Circuit found that the Administrative Law Judge’s (ALJ) decision applying the fifteen-year presumption to the claim did not reopen an earlier claim, and thus did not contravene separation of powers. The Fourth Circuit also found that the ALJ did not improperly use the fifteen-year presumption to establish that a condition of entitlement had changed since the earlier claim was denied. On this basis, the Fourth Circuit upheld the finding of the Benefits Review Board (BRB) awarding benefits to Arvis Toler, and denied Eastern Associated Coal Corporation’s (Eastern) petition for review of the BRB’s decision.
Toler worked in Eastern’s West Virginia mines for 27 years, 16 of them underground and exposed to high concentrations of coal dust. From 1966 to 1997, Toler also smoked about a pack of cigarettes per day. In the mid-1980s, Toler began to have shortness of breath, and by 1993, Toler’s health was so bad, he had to leave his coal mining job. Toler’s health, however, continued to decline. By 2000, he used supplemental oxygen, and by 2008, he used oxygen 24 hours per day.
The Congressionally created black lung benefits program provides benefits to coal miners and their dependents for miners who are fully disabled due to pneumoconiosis, a respiratory disease stemming from exposure to coal dust. To obtain benefits, a miner must show that he has pneumoconiosis, that the disease arose from coal mine employment, that he is totally disabled, and that the pneumoconiosis contributes to his total disability. In 1972, Congress amended the Act to provide a presumption of total disability for a coal miner who worked underground for at least 15 years, and had a totally disabling respiratory/pulmonary problem. The presumption was repealed in 1981 for claims filed on or after January 1, 1982, but reenacted in March, 2010 for claims filed after January 1, 2005 and pending on or after March 23, 2010. The reenacted presumption could be rebutted by establishing that the miner did not have legal or clinical pneumoconiosis stemming from coal mine work, or that no part of the total disability was caused by pneumoconiosis.
Toler filed his first black lung benefits claim shortly before leaving Eastern in 1993. The ALJ denied the claim, finding that Toler was totally disabled by pulmonary disease, but that he failed to show it was coal mine work (as opposed to smoking) that had caused the disease. The denial was upheld by the BRB and by the Fourth Circuit. In 2008, Toler filed a second black lung benefits claim. This time, the parties stipulated that Toler was a coal miner, and was totally disabled by pulmonary disease. Applying the 15-year presumption, the ALJ found that the only remaining issue was whether Eastern could show Toler did not have pneumoconiosis. Finding that Eastern failed to do so, the ALJ granted Toler benefits. Eastern appealed to the BRB, which remanded to the ALJ for Eastern to rebut the 15-year presumption. The ALJ again granted Toler’s claim for benefits, finding that Eastern did not rebut the 15-year presumption. Eastern again appealed to the BRB, this time on the basis that in deciding the second claim, the ALJ improperly reopened Toler’s first claim violating finality and res judicata, that the 15-year presumption could not be used as a change of condition of entitlement required to submit a new claim for benefits, and that the ALJ used an improper rebuttal standard. The BRB found against Eastern, and upheld the grant of benefits to Toler. Eastern appealed, arguing that applying the 15-year presumption in the second claim violates separation of powers by reopening the earlier claim, and that the 15-year presumption cannot be used to establish a change in conditions of entitlement necessary to file a second claim.
The Fourth Circuit first held that the presumption could be used to show a change in a condition of entitlement. The Fourth Circuit based this holding on the language of the Act and regulations, the language of the preamble to the 2000 Final Rule, and on deference to the Secretary of Labor. Further, the Fourth Circuit found that Toler submitted new physical evidence with his second claim for benefits.
The Fourth Circuit then held that the application of the presumption to the second claim did not allow Toler to reopen a final decision. The Fourth Circuit based this holding on case precedent holding that a subsequent claim for benefits is not the same as a previous claim. On the basis of these holdings, the Fourth Circuit affirmed the BRB’s grant of benefits to Toler, and denied Eastern’s petition for review.
Katherine H. Flynn
Decided: September 17, 2015
The Fourth Circuit vacated the district court’s judgment and remanded for further proceedings.
Charles Lee was a carman, who inspected railcars to identify potential service-related defects for Norfolk Southern Railroad (“NS”) in Asheville, North Carolina. In July 2011, NS suspended Lee without pay for six months. The parties did not agree on the reason for the suspension. NS claimed that it was because Lee drank a beer on duty and then operated a company owned automobile in violation of a company policy, whereas Lee, an African-American, claimed that the suspension was motivated by his race and in retaliation for federal rail safety whistleblowing.
In his first lawsuit, filed in September 2011, Lee alleged that his suspension constituted racial discrimination in violation of 42 U.S.C. § 1981. Less than two months after filing his first lawsuit, Lee also filed a complaint with the Occupational Safety and Health Administration (“OSHA”) under the Federal Railroad Safety Act’s (“FRSA”) whistleblower provision, 49 U.S.C § 20109. Lee alleged that NS was capping the number of cars he could tag as defective, which was a violation of federal law. When Lee refused to comply with the caps, NS suspended him. On September 21, 2012 OSHA dismissed Lee’s whistleblower complaint after deciding that NS did not commit any FRSA violations. The district court, on December 12, 2012, granted NS summary judgment and only addressed Lee’s Section 1981 claims, not his FRSA whistleblowing claims. Less than a month later, Lee filed a FRSA retaliation lawsuit. On May 20, 2014, the district court granted NS summary judgment on Lee’s FRSA claims holding that his first lawsuit under Section 1981 constituted an election of remedies under FRSA Section 20109(f) and barred Lee’s subsequent FRSA retaliation action.
The Fourth Circuit began its analysis examining the meaning of the disputed FRSA’s Election of Remedies provision. In its current form, the FRSA Election of Remedies provision prohibits an employee from “seek[ing] protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” The district court determined that Lee’s first lawsuit under Section 1981 was an attempt to “seek protection under another provision of law.”
The Fourth Circuit determined that the Election of Remedies provision is unambiguous because it is only susceptible to one reasonable interpretation, that a suspension on the basis of race is not “the same allegedly unlawful act” as a suspension in retaliation for FRSA whistleblowing. The Court held that these acts are distinct causes of action with different elements and burdens of proof. NS argued that its interpretation of the Election of Remedies provision is supported by federal policies prohibit claim splitting. However, the Court rejected this argument noting that nothing in the plain language of the Election of Remedies provision suggests that it should be considered a substitute for a rule against claim-splitting. Therefore, the Court held that the Election of Remedies provision did not apply to Lee’s second whistleblowing lawsuit.
Accordingly, the Fourth Circuit reversed the district court’s order and remanded for further proceedings.
Decided: September 8, 2015
The Fourth Circuit held that the National Labor Relations Board correctly determined that Intertape unlawfully interrogated an employee and unlawfully confiscated union materials from an employee break room; however, the National Labor Relations Board erred in holding that Intertape engaged in unlawful surveillance of union activities. Because of the Fourth Circuit’s decision to eliminate one of the two bases used by the Board to set aside the election, the Fourth Circuit remanded the case for the Board to reconsider its decision to grant a second election.
Intertape runs an adhesive tape manufacturing facility in Columbia, SC. In January of 2012, the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC (“Union”), began a campaign to organize the employees of Intertape. The Union filed its representation petition with the National Labor Relations Board (“Board”) on March 16, 2012. Later, on April 26 and 27, a secret-ballot election was held. The Union lost by a vote of 142 votes against and 97 votes for the Union.
Before and after the election, the Union had filed complaints with the Board alleging unfair labor practices against Intertape. Additionally, the Union filed objections to the completed election, wanting to be declared invalid due to unlawful conduct during the “critical period” from March 16 to April 27. The Board’s General Counsel issued a complaint against Intertape on July 26, 2012.
After a hearing, the administrative law judge (“ALJ”) determined that Intertape had violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by: “(1) interrogating employee Johnnie Thames regarding his views about the union; (2) confiscating union literature from an employee break room; (3) surveilling employees’ union activities by leafleting at the plant gate at the same time that union supporters were leafleting; and (4) threatening employees that selecting the union as its collective-bargaining representative would be futile. Because of claims 2-4, the ALJ recommended a second election be held.
After review, the Board agreed that Intertape had violated Section 8(a)(1) by committing claims 1-3. However, the Board rejected the ALJ’s finding that Intertape threatened employees. Ultimately, the Board set aside the election results and ordered a new election due to the violations regarding confiscation and surveillance.
The Fourth Circuit must affirm the Board’s factual findings if they are supported by substantial evidence on the record. Substantial evidence means a reasonable mind would accept it to be adequate to support a conclusion. Section 8(a)(1) of the NLRA states that it is “an unfair labor practice for an employer…to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7” of the Act. Under Section 7, employees are guaranteed “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Employers violate Section 8(a)(1) when their conduct is considered to be intimidating. But, the expression of views and dissemination of materials is not considered evidence of an unfair labor practice as long as the expressions do not contain threats of reprisal or force or promise of benefit.
The interrogation of employees is a violation of Section 8(a)(1) if it is coercive in nature. The court must consider a variety of factors including “the history of employer hostility to the union, the nature of information sought, the identity of the questioner, and the place and method of questioning.” The Fourth Circuit determined that there was substantial evidence to support the Board’s finding that Thames’ boss, Williams’, questioning of Thames about his Union sentiments was sufficiently coercive and intimidating to qualify as unfair labor practice under the Act.
Regarding the violation of Intertape’s confiscation of literature from the employee break room, an employee cannot confiscate union literature provided to employees in non-work areas during non-work times. However, an employer will not be in violation of the Act for incidental disposals under good housekeeping policies. The distribution of union flyers in Intertape’s break room was not prohibited. Intertape conceded that Williams removed union literature from the break room; however, it asserts that the General Counsel failed to prove that Intertape changed its distribution or housekeeping policies during the critical period or due to union activity. The Fourth Circuit disagreed and held that substantial evidence supports the Board’s determination that Williams’ removal of the union literature from the break room was an unfair trade practice.
Regarding the surveillance violation, a court will consider “the duration of the observation, the employer’s distance from its employees while observing them, and whether the employer engaged in any coercive behavior during its observation.” An employer observing its employees on company property during union activities, without being coercive, is not a violation of the Act. During the periods of simultaneous leafleting, the supervisors did not say anything to the union members, take notes or pictures, nor engage in any threatening or intimidating behavior. Section 8(c) of the Act protects the free speech by both unions and employers. The Fourth Circuit held that there was not substantial evidence to support the Board’s conclusion that Intertape engaged in unlawful surveillance.
Concurring, Judge Wilkinson agreed with Judge Traxler’s “fine opinion.” However, Judge Wilkinson would have held that, “even if the unfair labor practices alleged by the General Counsel had occurred, the Board would have exceeded its remedial discretion by ordering a new election.” The decision of the Board to order a new election failed to respect the choice made by Intertape’s employees.
Austin T. Reed
Decided July 29, 2015
The Fourth Circuit affirmed the district court’s dismissal of the complaint.
This was a case brought by Mohammad Sazzad and Anthony Gomes (“Plaintiffs”) against Ryman Hospitality Properties Inc., and Marriott International, Inc. (the “Defendants”) for violating the tip-credit provision of the Fair Labor Standards Act (FLSA), a collective bargaining agreement, and Maryland’s Wage Payment. The Plaintiffs, who work for the Defendants, alleged that the Defendants took a percentage of their tips in a tip-pooling arrangement and reapportioned it to other workers. When the Plaintiffs asked an official from the union they belonged to if such an arrangement was legal, the official informed them that it was not, and Plaintiffs filed suit in response. Specifically, they alleged that Defendants “violated the FLSA by ‘not paying Plaintiffs all their earned tips,’” and only requested damages in the form of the actual amount of tips taken from them by Defendants. The district court granted the Defendants’ motion to dismiss, and the Plaintiffs appealed.
After stating that they review a motion to dismiss under Rule 12(b)(6) de novo, the Fourth Circuit began their analysis by characterizing the Plaintiffs’ argument as one of statutory interpretation, and look first to the “plain meaning” of the FLSA and the context in which it was enacted. The Court characterized the FLSA as the “minimum wage/maximum hour law.” However, since Plaintiffs were not alleging that they were not paid the minimum wage, Plaintiffs did not have a private right of action under the § 216(b) of the statute, and instead claimed that § 203(m) created a right to “bring a claim for lost ‘tip’ wages.” Because that section of the statute provides that a tip-pool can only be used to increase the minimum wage of employees if employees are told about the tip-pool and are allowed to keep their tips, Plaintiffs argue that their rights were violated when they were not informed about the tip-pool. However, the Court, looking at the section in context with the entire FLSA statute, determined that the statutory requirements of § 203(m) does not apply to employees in the Plaintiffs’ situation who only seek the recovery of their tips not in relation to a minimum wage or overtime claim. Therefore, because the Plaintiffs conceded that their wages did not fall below the statutory minimum, their claim did not fall within the FLSA, and the Fourth Circuit affirmed the district court’s dismissal of their claim.
Decided: July 15, 2015
The Fourth Circuit reversed and remanded.
This case was an appeal from the district court’s grant of summary judgment to Drive Automotive Industries (“Drive”). Butler, who was a temp agent for ResourceMFG and worked at Drive, filed suit after she was terminated from her job at Drive. She claimed that she was fired because she had complained that her manager at Drive was sexually harassing her, and that he requested that she be fired after she made several complaints against him. The district court granted Drive’s motion for summary judgment because it found that Drive was not Butler’s employer under Title VII because it did not exercise enough control over the terms of her employment. Butler appealed this decision, claiming that Drive was an employer under the statute.
The Fourth Circuit began by asserting that it would be reviewing this appeal de novo, and then moved into a discussion of what qualifies as an employer under Title VII. The problem for Butler is that she had two employers, ResourceMFG and Drive, and the first question the Court considered was whether an employee could have multiple employers under Title VII. The Court concluded, after examining the “joint employment doctrine” in other circuits, that it was possible for an employee to have multiple employers, and affirmed the district court’s decision on that point. The Court then looked at whether the district court correctly applied the joint employment doctrine, and looked at the extent to which Drive controlled Butler’s activities as an employee. The Court considered the three tests that other courts use to determine control in a joint employment context: the economic realities test, that Butler wanted to use; the control test, that Drive wanted to use; and the hybrid test. After examining both the control and economic realities tests, the Court decided that the hybrid test, which neither party argued in favor of, was the relevant test to apply. It then set forth its own compilation of factors, drawing on other cases that had used this test, and applied those factors to Butler’s case. Based on that application, the Court concluded that the district court incorrectly determined that Drive did not have substantial control over Butler and therefore did not count as her employer for purposes of Title VII. Because the Court concluded that Drive was an employer under Title VII, it remanded the case back to the district court to review the merits of Butler’s claims.
Decided: June 29, 2015
The Fourth Circuit affirmed the judgment of the district court holding that (1) the district court had appropriate personal and subject matter jurisdiction, (2) venue was correct in Virginia, and (3) the defendant bound itself to make contributions to the Pension Fund.
This appeal stemmed from the district court’s dismissal of the defendant’s motions regarding a lack of personal jurisdiction and a change in venue. Additionally, the district granted the plaintiff’s motion for summary judgment. The Pension Fund (“Fund”) is a multiemployer pension benefit plan maintained under a collective bargaining agreement between the Associated Plumbing, Heating and Cooling Contractors of Jefferson County, Alabama and the affiliated local unions. The Fund is governed by the Employment Retirement Income Security Act of 1974 (“ERISA”). The defendants, Plumbing Services Inc. (“PSI”), are the Alabama corporations engaged as plumbing and pipefitting contractors. On April 8, 1998, PSI’s sole shareholder, Kenneth Julian, entered into a collective bargaining agreement requiring participating employers to make contributions to the Fund for each hour worked by their employees. PSI paid into the fund until March 10, 2011, when Julian decided PSI would stop contributing into the Fund. The Fund informed PSI and its successor entity, PSI Mechanical, Inc., that it owed “withdrawal liability” pursuant to 29 U.S.C. § 1381. This suit occurred after the defendants refused to pay the sum owed.
ERISA was enacted by Congress to promote the “soundness and stability of [employee benefit] plans” in the private industry sector. 29 U.S.C. § 1001(a). ERISA establishes the minimum standards required to protect employee and beneficiary interests. Id. The Multiemployer Pension Plan Amendments Act (“MPPAA”) was passed to further this goal by establishing withdrawal liability. See 29 U.S.C. §§ 1381, 1391. Withdrawal liability exists “to assign to the withdrawing employer a portion of the plan’s unfunded obligations in rough proportion of that employer’s relative participation in the plan over the last 5 to 10 years.” Borden, Inc. v. Bakery & Confectionary Union & Indus. Int’l Pension, 974 F.2d 528, 530 (4th Cir. 1992). Employers owe withdrawal liability when they make a complete or partial withdrawal from the pension plan. 29 U.S.C. § 1381 (a).
The defendants argued that since they were Alabama Corporations, they engaged in business exclusively in Alabama, and did not have sufficient minimum contacts with Virginia, personal jurisdiction was incorrect, and the suit should be dismissed because the correct forum was in the Northern District of Alabama. However, the Fourth Circuit determined that personal jurisdiction and venue was appropriate in the Eastern District of Virginia. The Fund is administered in Alexandria, Virginia, and any action brought under ERISA “may be brought in the district where the plan is administered.” 29 U.S.C. § 1132(e)(2). Furthermore, ERISA provides for nationwide service of process. Id. When a defendant has been validly served pursuant to a federal statute’s nationwide service provision, the district court has personal jurisdiction over the defendant as long as there is no violation of the Fifth Amendment. The Fourth Circuit determined that the defendants were unable to show an extreme inconvenience that would be necessary to constitute a violation of the Fifth Amendment.
Additionally, the defendants argued that the district court did not have appropriate subject matter jurisdiction because the plaintiff’s claim involves an unfair labor practice that should have been brought before the National Labor Relations Board. However, ERISA requires an employer that is under contract to make contributions to a retirement fund in accordance with the collective bargaining agreement. 29 U.S.C. § 1145. Section 1145 allows for the collection of delinquent contributions, including overdue withdrawal liability. Therefore, the Fourth Circuit determined that the district court plainly had subject matter jurisdiction.
Finally, the defendants argued that the grant of summary judgment to the Fund was inappropriate claiming the evidence produced by the Fund was insufficient. However, the Fund supported its motion by providing an affidavit from the administrator of the pension fund, correspondence between the fund and PSI documenting the assessment of withdrawal liability and PSI’s request for review, PSI’s admissions, and several other documents. The Fourth Circuit determined that the evidence presented was more than enough to shift the burden to produce evidence showing a genuine issue for trial to the defendants. Further, the Fourth Circuit held that PSI was an employer subject to ERISA’s arbitration requirement because the Letter of Assent was sufficient to bind PSI to make contributions to the Fund in accordance to the terms of the collective bargaining agreement. Since PSI failed to timely demand arbitration, all the Fund needed to win summary judgment was that it presented PSI proper notice of the assessed withdrawal liability. Therefore, the district court’s grant of summary judgment was appropriate.
Austin T. Reed
Decided: June 15, 2015
The Fourth Circuit affirmed the judgment of the district court determining that there was no merit to the plaintiff’s claims of the defendant violating his rights under the Family and Medical Leave Act of 1993 (FMLA) and the Americans with Disabilities Act of 1990 (ADA).
This appeal stemmed from the district court’s grant of defendant’s motion for summary judgment regarding the plaintiff’s FMLA interference and retaliation claims and the plaintiff’s ADA discrimination and retaliation claims. In January of 2010, Adams, an assistant principal at MacArthur Middle School, was involved in an incident with a student. The student claimed that Adams grabbed her arms, shook her, and held her against the wall. Due to the incident, Child Protective Services (CPS) launched a child abuse investigation and referred the matter to the School Board. In the meantime, Adams was reassigned from MacArthur.
On February 25, Adams was transferred back to MacArthur. However, that same day, Adams went on medical leave upon recommendation from an internal medicine specialist due to the stress and anxiety caused by the incident. On two other instances, Adams attempted to return, but took medical leaves due to stresses from the incident. Adams’ doctor diagnosed him with acute stress disorder and informed the Board that Adams would need to be transferred to another school, due to the likelihood of panic attacks at MacArthur. During Adams’ medical leave, the School Board continued its investigation regarding the incident. On August 4, Adams began working at J. Albert Adams Academy (JAA), a specialized middle school for children with behavioral issues. JAA is a much smaller school with a more favorable staff-to-student ratio. Adams’ salary remained the same for two years and then was reduced less than one percent due to JAA’s smaller size. JAA employees are ineligible for certain discretionary bonuses available at other schools. Adams contends that the Board interfered with his FMLA rights and retaliated against him for taking medical leave, and he contends that the Board discriminated and retaliated against him in violation of the ADA.
Under the FMLA, employees are allowed to take a total of twelve workweeks of leave during a twelve month period if the employee is burdened with “a serious health condition that makes the employee unable to perform” his job. 29 U.S.C. § 2612(a)(1)(D). Also, when returning from FMLA leave, employees are entitled to be restored to their previous position or an equivalent position. An interference occurs under the FMLA when an employee demonstrates that (1) he is entitled to an FMLA benefit; (2) his employer interfered with that benefit; and (3) that interference caused harm. See 29 U.S.C. § 2617(a)(1). Notably, the Fourth Circuit found that Adams was not denied FMLA leave. As a matter of fact, he took three different medical leaves that exceeded the twelve week maximum. Alternatively, Adams argues the Board interfered in a variety of ways that stopped short of actual denial of his leave. However, the Fourth Circuit determined that the actions taken by the School Board, including the requirement of second medical opinions, the investigative procedures, and the verbal reprimands, did not constitute “interference.”
Additionally, Adams claimed that the School Board retaliated against him under the FMLA. However, the Fourth Circuit determined that there was “no retaliatory animus” present. The Board essentially accommodated for Adams’ disability by moving him to JAA, after the request was made to move Adams from MacArthur. The fact that the school deals with children that have behavioral problems is not sufficient due to the smaller number of students and the great reviews that Adams has already received. Further, the Fourth Circuit determined the slight decrease in pay and ineligibility to receive certain bonuses did not constitute retaliation.
The Fourth Circuit also did not find any merit regarding the claims brought by Adams under the ADA. The ADA forbids employers to discriminate or retaliate. In order to have a claim involving discrimination or retaliation, the plaintiff must have suffered an adverse employment action. This standard seeks to differentiate actions that are “significant” from actions that are “trivial.” Here, the Fourth Circuit determined that none of the actions taken by the School Board rose to the level of an adverse employment action. “Dislike of or disagreement with an employer’s decisions does not invariably make those decisions ones that adversely affected some aspect of employment.”
Finally, Adams claimed that the Board failed to reasonably accommodate for his disability by moving him to JAA. However, the Fourth Circuit determined that the Board’s accommodations for Adams’ disability were plainly reasonable. The Board, in its appropriate discretion, weighed the negative of the school being for children with bad behavioral problems with the positives of the small student population and the excellent staff-to-student ratio. Further, Adams never objected to his assignment at JAA, and he has “thrived” there.
Ultimately, the Fourth Circuit held that there were no violations of the FMLA and the ADA, and the decision of the district court was affirmed.
Austin T. Reed
Decided: June 15, 2015
The Fourth Circuit held that genuine issues of material fact remained with respect to (1) whether Reyazuddin could perform the essential functions of a call center employee, (2) whether the County reasonably accommodated her, and (3) whether any failure to accommodate could be excused by undue hardship. Thus, the Fourth Circuit reversed the district court’s grant of summary judgment to the County on Reyazuddin’s claims under section 504 of the Rehabilitation Act of 1973 (“Section 504”). The Fourth Circuit affirmed the district court’s grant of summary judgment to the County on Reyazuddin’s claim under Title II of the Americans with Disabilities Act (“Title II”), finding that Title II does not apply to public employment discrimination.
In 2008, Montgomery County, Maryland (“County”) centralized the phones for 38 offices into one call center. To operate the call center, County used software which could be operated in two modes: high-interactivity, which was not accessible to blind employees, and low-interactivity, which was accessible to blind employees. The County chose to operate entirely in high-interactivity mode.
Reyazuddin, who is blind, had been employed since 2002 in County’s Department of Health and Human Services. Prior to the creation of the call center, Reyazuddin used screen reader software and a Braille embosser to perform her job. Following the conversion to the call center, Reyazuddin was not transferred to the center, but remained with the County doing various non-full-time work, albeit with the same salary and benefits as before. A supervisor recommended her for priority reassignment in another vacant position with the County, and Reyazuddin applied for a call center vacancy, but did not get the position.
Reyazuddin sued County under Section 504, claiming failure to accommodate her by not making the call center software accessible, and discrimination against her by not transferring her to the call center with her co-workers. Reyazuddin also claimed County violated Title II by not hiring her to fill the call center vacancy. Reyazuddin and County both moved for summary judgment. The district court granted County’s motion, finding a genuine issue as to whether Reyazuddin could perform the essential job of call center operator, but finding that County had accommodated her by providing comparable employment. The district court found for County as a matter of law on the defense of undue hardship. On the issue of Reyazuddin not being transferred to the call center, the court found non-transfer was not discriminatory because accommodation would have been an undue hardship. Finally, on the Title II claim, the court found that Reyazuddin presented insufficient evidence that the failure to hire her for the call center vacancy was pretext for discrimination.
On the failure to accommodate claim, the Fourth Circuit found that Reyazuddin qualified as disabled, and County had notice of her disability. The court found, however, that it was unclear whether Reyazzudin could be reasonably accommodated. Though she had the basic skills for a call center job, there were questions as to whether operating the center software in low-interactivity mode was less productive, and as to whether it was essential to a call center job to be able to operate the software in high-interactivity mode. The court also found that there was a genuine question as to whether the non-full-time jobs County pieced together for Reyazuddin were a reasonable accommodation. Finally, the Fourth Circuit found that the district court improperly reduced a multi-factor test for undue hardship to a single factor – cost – and improperly found for County on that basis on undue hardship. On this basis, the Fourth Circuit reversed the district court’s grant of summary judgment to County on the failure to accommodate claim.
On the disparate treatment claim, the Fourth Circuit found that Reyazuddin had a disability, but that there were genuine questions as to whether she was otherwise qualified for the job, and as to whether she suffered an adverse employment action. The Fourth Circuit’s analysis of the second and third points followed its earlier analysis of Reyazuddin’s ability to perform essential job functions, and reasonable accommodation, respectively. Further, following its earlier undue hardship analysis, the court found that a genuine issue existed with respect to whether the County had a legitimate, nondiscriminatory reason for treating Reyazuddin differently. On this basis, the court reversed the district court’s grant of summary judgment to County on the disparate treatment claim.
Finally, the Fourth Circuit found that Title II did not apply to public employment discrimination claims. The court made this finding on the basis of statutory language and structure. For this reason, the court upheld the district court’s grant of summary judgment to the County on Reyazuddin’s Title II claim.
For the above reasons, the Fourth Circuit reversed the district court’s grant of summary judgment to County on the Section 504 claims, affirmed the district court’s grant of summary judgment to County on the Title II claim, and remanded the case to the district court.
Katherine H. Flynn
Decided: June 8, 2015
The Fourth Circuit held that the Plaintiffs had both statutory and Article III of the U.S. Constitution standing, and that the Plaintiffs claim was not time-barred. Consequently, the Court reversed and remanded the District Court’s dismissal of the Plaintiff’s case.
Plaintiff’s William Pender and David McCorkle, collectively with those similarly situated, elected to transfer their 401(k) account balances to a bank Pension Plan. The Internal Revenue Service (IRS) opened an audit of the Bank’s plans. In 2005, the IRS issued a technical advice memorandum, in which it concluded that the transfers of 401(k) Plan participants’ assets to the Pension Plan violated the Internal Revenue Code. In May 2008, the Bank and the IRS entered into a closing agreement. The Plaintiffs’ alleged a violation of ERISA § 204(g)(1), 29 U.S.C. § 1054(g)(1), which states that an ERISA-plan participant’s “accrued benefit” “may not be decreased by an amendment of the plan, unless specifically provided for in ERISA or regulations promulgated pursuant to ERISA. The Plaintiffs sought the profit the Bank made using their assets. The District Court dismissed the case on the basis that the Plaintiffs lacked standing.
On appeal, the Fourth Circuit found that the Plaintiffs had statutory standing under section 502(a)(3) to bring their claim. Plaintiffs incurred an injury in fact because they “suffered an individual loss.” The Court found that the Plaintiffs also have standing under Article III, because they satisfy the causation and redressability requirements. Additionally, the Court held that the Plaintiffs’ claims were not time-barred by the ten-year limitations period because the first of the transfers took place in 1998 and the Plaintiffs filled suit in 2004, leaving a full four years before the ten year statute of limitations would have run. Accordingly, the Court reversed and remanded the District Court’s order.
Decided: June 2, 2015
The Fourth Circuit granted the petition for review and remanded the case to the Benefits Review Board to enter an order dismissing Eason’s claim for temporary partial disability under the Longshore and Harbor Workers’ Compensation Act (LHWCA) after the Court found that Eason’s
The LHWCA defines “disability” as “incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or any other employment.” Four different categories of disabilities are set forth in the LHWCA: (1) permanent total disability; (2) temporary total disability; (3) permanent partial disability; and (4) temporary partial disability. Placement in each of the four categories dictates the amount of compensation paid to the employee. Eason injured his right need while employed with the Newport News Shipbuilding and Dry Dock Company in Newport News, VA (NNS). His injury and required surgery kept Eason out of work for 9 months. Eason was paid compensation for permanent partial disability in addition to his regular weekly salary during those 9 months, extending until to a year after Eason’s return to work. Months later Eason began experiencing reoccurring pain in his knee and was placed on work restrictions. He was not compensated for this time and was not offered light-duty employment within his restrictions. Eason brought a claim against Huntington Ingalls Industries, Inc. for temporary total disability, or alternatively, temporary partial disability for the second flare up period.
The Fourth Circuit recognized that when dealing with a scheduled disabilities loss program such as the one at issue, “benefits are payable for a specific duration regardless of the actual impact of the disability on the claimant’s prospects of returning to. . . work.” Therefore, “once Eason’s permanent partial disability compensation is set under the schedule, he is not entitled to received additional disability compensation for the same scheduled injury unless the circumstances warrant a reclassification of that disability to permanent total or temporary total.” The Court found no evidence on record supporting a reclassification of Eason’s disability to a permanent total or temporary total disability. Accordingly, the case was remanded to the BRB to enter an order dismissing Eason’s claim for temporary partial disability under the LHWCA.
Decided: May 21, 2015
The Fourth Circuit reversed in part the district court’s ruling to grant the University of Maryland-Eastern Shore (“the University”) summary judgment on Foster’s retaliation claim because a reasonable jury could conclude that the University fired Foster for unlawful reasons.
In 2007, Iris Foster was hired as a campus police officer at the University. Shortly after her hiring, Foster was sexually harassed by Rudolph Jones, her supervisor. Among other things, Jones made lewd comments and inappropriately touched Foster. A month after the harassment began, Foster notified Jones’s superiors about the inappropriate conduct. Although Jones was punished, Foster also claims to have been punished. Foster claims that her probation was extended in retaliation for her complaints. Furthermore, among other things, Foster claims that due to her complaints, her schedule was changed without notice and she was barred from attending a training session while she was on injury leave.
Title VII prohibits an employer from discriminating against an employee on the basis of sex and retaliating against an employee for complaining about prior discrimination or retaliation. The Fourth Circuit held that Nassar does not alter the causation prong of a prima facie case of retaliation. Furthermore, the court held that Foster failed to show that the retaliation was the actual reason for the challenged employment action. Additionally, the court held that Foster made a prima facie case for retaliation due to her evidence regarding (i) Billie’s statement of retaliatory animus; (ii) the temporal proximity between Foster’s final complaint of retaliation and her termination; and (iii) the additional retaliatory acts that preceded her firing. “Foster argued that the University’s proffered non-retaliatory reasons are pretextual because: (i) Foster’s immediate supervisor and the department scheduler both testified that Foster was not inflexible in scheduling; (ii) Wright testified that there was no documentation of Foster’s supposed inflexibility in her personnel file; (iii) Foster’s immediate supervisor testified that Foster had been given permission to edit the office forms and that Wright had initially praised her work; (iv) Foster’s immediate supervisor repeatedly praised her work and discussed promoting her to corporal before she made her sexual harassment complaint; and (v) the University did not initially provide Foster with a reason for her termination.” Based on the foregoing, the Fourth Circuit held that a reasonable jury could conclude that the University’s proffered justifications were deceitful. Accordingly, the Fourth Circuit held that the University is not entitled to summary judgment on Foster’s retaliation claim.
Decided: May 11, 2015
The Fourth Circuit vacated a South Carolina district court’s decertification order of a class of black steel workers who allege endemic racial discrimination at a South Carolina plant owned by Nucor Corporation. The workers’ employment discrimination claims rest upon the two theories of liability under Title VII: disparate treatment in promotions decisions and disparate impact of facially neutral promotions policies and procedures.
According to the Fourth Circuit, the appropriate standard of review for class certifications requires a two-step approach: (1) examining de novo whether the district court’s decision to reconsider the certification of the workers’ class violated Brown v. Board of Education, 347 U.S. 483 (1954) (Brown I), and (2) if no such violation occurred, whether the district court abused its discretion in decertifying the promotions class. While the present case was pending in the Fourth Circuit and in the South Carolina district court, the United States Supreme Court established new law in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the reestablished the requirements for class certification under Rule 23 of the Federal Rules of Civil Procedure. Specifically, in light of the Wal-Mart decision, the district court reexamined the issue of commonality for class certification after the Fourth Circuit ordered certification of the class on remand. On appeal, the standard for review is abuse of discretion.
The commonality element of class certification requires that “there are questions of law or fact common to the class.” According to the district court, the Wal-Mart decision “required decertification of the workers’ promotions class.” To decide the merits of the present case, the Fourth Circuit examined the new and old precedent to determine how Wal-Mart will alter a certification analysis. According to the Court’s analysis, it was bound by precedent in that: (1) the Court could engage in the merits of a claim only to the extent necessary to verify that Rule 23 has been satisfied; (2) plaintiffs may rely on other reliable data sources (such as Census data) when a company has destroyed or discarded the primary evidence in a discrimination case.
The Court observed that the statistical disparity is statistically significant from what would be expected if race were a neutral factor, the surrounding circumstances and anecdotal evidence of discrimination are present in the record, and plaintiffs present two common, class-wide contentions by asserting disparate treatment and disparate impact claims rooted in racial discrimination. Based these facts, the Court held that the district court abused its discretion by reconsidering the certification of workers under Brown I because the extent of the statistical disparity was sufficient to overcome the first prong of the two prong apporach. The Court also found that the district court abused its discretion in decertifying the workers’ promotions class based on the facts presented above and remanded the case to the district court with instructions to certify the class.
The dissent believes that the majority went beyond the bounds of the standard of review for a class certification decision. Decisions involving well-supported factual findings should be left to the district court, according to the dissent.
Decided: April 10, 2015
The Fourth Circuit affirmed the district court’s conclusion that Young did not establish a prima facie case of pregnancy discrimination against her employer, United Parcel Service (“UPS”).
This appeal followed the district court’s decision to grant summary judgment to Young’s employer, UPS, on her claims under Title VII of discrimination on the basis of race, sex, and pregnancy after UPS would not allow her to return to work while she was pregnant. Young requested a leave of absence in July of 2006 to try a round of in vitro fertilization, and the UPS occupational health manager, Carolyn Martin, granted Young’s request. In September, 2006, Young gave her supervisor a doctor’s note, which stated that Young would not be able to lift more than 20 pounds for the first 20 weeks of her pregnancy and no more than 10 pounds thereafter. Martin informed Young that UPS would not permit her to work if Young could not lift 20 pounds. In October of 2006, Young had a check-up with her midwife, Cynthia Shawl, who wrote a letter recommending that Young not lift more than 20 pounds. Based on these lifting limitations, Martin subsequently determined that Young could not return to work until she was no longer pregnant. The Capital Division Manager in the D.C. Building, Myron Williams, affirmed Martin’s decision in November of the same year. Young subsequently went on an extended leave of absence, receiving no pay and losing her medical coverage by the end of the year. Thereafter, Young filed her discrimination claims, and the district court granted summary judgment for UPS. This appeal followed.
On appeal, Young rested her claims on two arguments. First, she argued that UPS violated the Americans with Disabilities Act (ADA) by impermissibly regarding her as disabled. The court determined that Young could not establish that she had a disability as defined in the ADA because she could point to “no more than the objective fact of her pregnancy,” and she could not show that UPS’s occupational health manager, Carolyn Martin, subjectively believed that Young was disabled. Second, Young claimed that UPS violated the Pregnancy Discrimination Act (PDA) by discriminating against her because she was pregnant. The court determined that Young could not show any direct evidence of pregnancy discrimination. Moreover, the court determined that Young could not offer evidence sufficient to make out a prima facie case of discrimination because Young could not establish that other, similarly-situated employees “received more favorable treatment.” Accordingly, the court affirmed the district court’s order.
Decided: October 8, 2014
The Fourth Circuit held that the “recess session” appointment of a National Labor Relations Board (“NLRB”) member was valid under the U.S. Constitution. The Court also held that the General Counsel of the NLRB failed to establish a prima facie case that two Gestamp South Carolina, LLC (“Gestamp”) employees had been discharged in violation of the National Labor Relations Act (“NLRA”). Finally, the Court held that substantial evidence supported an Administrative Law Judge’s (“ALJ”) finding that a Gestamp supervisor had made a threat to one of the discharged employees for attempting to unionize.
David Kingsmore (“Kingsmore”) worked as a “quality inspector” and Reggie Alexander (“Alexander”) worked as a “supply coordinator” for Gestamp until both were fired in late February of 2010. Prior to being fired, Kingsmore had contacted United Steelworkers (“the union”) about unionizing Gestamp’s hourly employees. Alexander eventually joined Kingsmore on a small committee of Gestamp employees to explore unionization. Supervisors for the two employees were aware of the committee, and Kingsmore’s supervisor warned him that he would be “gone” for attempting to unionize. Shortly thereafter, Alexander was fired for falsifying one day on his timesheet. He failed to correct a discrepancy between when the company system automatically signed him in, and the time he actually arrived—a period of thirty-eight minutes. Meanwhile, Kingsmore had been denied access to a nearby BMW facility, which also happened to be his former employer, while making a trip to the facility on behalf of Gestamp. This incident prompted an inquiry in to whether Kingsmore had been truthful when he told Gestamp that his employment at BMW had ended on amicable terms. After Kingsmore was unable to explain why he was banned from the BMW facility, he was fired from Gestamp for “falsification of work history” and failure to present documentation from his previous employer.
First, the Court reasoned that the recess appointment of a NLRB board member was constitutional because it occurred during a two-week Senate recess. The Recess Appointment Clause gives the President power to fill vacancies during a Senate recess. Although the Supreme Court had previously held that a recess of less than ten days was presumptively not long enough, a two-week recess, according to the Court, was adequately long to fall within the Recess Clause.
Next, the Court reasoned that neither Kingsmore nor Alexander had been discharged from Gestamp in violation of the NLRA because neither was able to carry his burden of proving that the Gestamp employee who fired both of them did so with knowledge of their union activity. The Court rejected Kingsmore and Alexander’s assertion that the requisite knowledge of their union activity could be automatically imputed to that Gestamp employee merely because Kingsmore and Alexander’s supervisors were aware of their union activity.
Finally, the Court upheld the ALJ’s ruling that Kingsmore had been threatened for his union activities because there was “substantial evidence” presented to the ALJ that he was threatened, and that a qualified “supervisor” (as defined in the NLRA) made the threat. Gestamp appealed this ruling because the ALJ’s decision was based largely on Kingsmore’s testimony, and the ALJ had already determined that his testimony was “not fully reliable[.]” Further, the ALJ had determined that a Gestamp employee who testified on this issue was credible. However, that Gestamp employee admitted that he did not remember certain facts. Ultimately, the Court found that the ALJ’s decision as a whole was not so inconsistent with the testimony as to warrant reversal.
James Bull Sterling
Decided: September 24, 2014
The Fourth Circuit affirmed the district court’s order granting summary judgment.
Appellant (“Hentosh”), a white female, was a professor at Old Dominion University (“ODU”) from 2006 to 2013 in ODU’s School of Medical Laboratory and Radiation Sciences. The Appellant’s claims related to her belief that ODU had an unwritten policy of discriminating against whites and in favor of minorities. Hentosh alleged that this practice caused ODU to ignore her complains about an Asian professor. Further, after filing a charge of discrimination and retaliation against ODU with the Equal Employment Opportunity Commission (“EEOC”) relating to her complaint against the Asian professor, Hentosh claimed that it led ODU to deny her application for tenure during the ongoing EEOC investigation. The district court granted ODU’s motion to dismiss Hentosh’s discrimination claim, but denied the motion to dismiss her retaliation claim. The district court subsequently granted ODU’s motion for summary judgment on the retaliation claim, and Hentosh timely filed a notice of appeal.
The Fourth Circuit rejected Hentosh’s claim that the district court did not have subject matter jurisdiction over the retaliation claim. The Fourth Circuit stated that Hentosh met the jurisdictional requirement that she exhaust her administrative remedies for her Title VII discrimination claims. Thus, it followed that the district court had jurisdiction over the related Title VII retaliation claim. The Fourth Circuit rejected Hentosh’s argument that her failure to timely file her discrimination claims with the EEOC meant that those claims were never properly before the district court who, therefore, lacked jurisdiction over her related retaliation claims. However, the Court said that because Hentosh relied on an unpublished decision, it was neither controlling nor persuasive because it conflicted with published precedent. Although Hentosh did untimely file her discrimination claims with the EEOC, the Fourth Circuit stated that the district court did have subject matter jurisdiction over the related retaliation claim based on the denial of Hentosh’s tenure application.
Alysja S. Garansi
Decided: August 4, 2014
The Fourth Circuit affirmed the district court’s holding that the RJR Pension Investment Committee (“RJR Pension”) had breached its fiduciary duty of care to Tatum by divesting a pension plan of certain stock, which resulted in a loss to the pension-holders. The Court also reversed the district courts holding, in favor of RJR Pension, which applied the incorrect standard for rebutting loss causation, and remanded to the district court for an opportunity to apply the correct standard. Finally, the Court reversed the district court’s decision to dismiss two committees as defendants, but affirmed the district court’s decision to not allow Tatum to amend his complaint to add the individual pension committee-members as defendants.
In March 1999, RJR Nabisco decided to spin-off its Nabisco business to protect its Nabisco stock from litigation involving RJ Reynolds tobacco products. Under a pension plan that was created on the date of the spin-off, RJR Pension was supposed to keep the Nabisco stock in the pension “frozen” so that members of the plan could maintain their investments. However, a “working group” made up of RJR employees decided to divest the plan of its Nabisco stock in six months. The stock had been declining in value, and when the group sold it, the pension-holders sustained substantial losses. Shortly after the stock was sold it rebounded, and ultimately appreciated in value compared to when the group sold it. Thereafter, Tatum brought a class action lawsuit against the Benefits Committee, Investment Committee, and RJR Pension for breaching their fiduciary duties under the Employee Retirement Income Security Act (“ERISA”).
The Court agreed with the district court that RJR Pension breached its “duty of procedural prudence” under ERISA because it did not act “solely in the interest of” the pension-holders. RJR Pension failed to conduct a thorough investigation before selling the Nabisco stock, but rather decided to sell based on an “unconfirmed assumption” that the pension was required to do so under ERISA. Further, the decision to sell was out of fear that the RJR company might otherwise face legal liability, when the decision should have considered the pension-holder’s best interests.
Next, the Court reasoned that after Tatum was able to show RJR breached its duty, the burden to refute causation shifted to RJR because “this burden-shifting framework comports with the structure and purpose of ERISA[,]” as well as general trust law principles. To carry its burden, RJR Pension had to show that its decision to sell the Nabisco stock was “objectively prudent.” Although the district court correctly shifted the burden, the Court reversed the district courts holding on the causation issue because the district court applied the wrong standard for refuting causation. The district court held that RJR Pension could carry its burden by showing a prudent fiduciary “could” have made the same decision, when the proper inquiry was whether a prudent fiduciary “would” have made the same decision. Failure to apply the more stringent “would” standard was a “real and legally significant” mistake, rather than harmless error.
Finally, the Court reversed the district court’s decision to dismiss the Benefits and Investment Committees as defendants because, although ERISA does not expressly say “committees” may be liable, the Court reasoned that here they were proper defendants as “person[s] who are fiduciaries[.]” However, the Court affirmed the district court’s decision to deny Tatum’s motion for leave to amend his complaint to name the individual committee members as defendants because he deliberately chose not to name the individuals as defendants in both his initial complaint and his first amended complaint.
James Bull Sterling
Decided: May 13, 2014
The Fourth Circuit affirmed the district court’s decision holding that Liberto did not have valid discrimination or retaliation claims under Title VII and 42 U.S.C. §1981, based on an isolated incident of a racial slur used by a fellow employee.
Liberto, an African-American woman, was hired as a day hostess at the Clarion Hotel in early August and was fired in late September, a week after a confrontation with another employee, Clubb, who called Liberto a “porch monkey.” Clubb used this slur twice over two days in regards to the same incident. On the first occasion, Liberto took a short cut through the kitchen to get a drink for a customer. Clubb called after Liberto, but Liberto, did not hear Clubb calling, and kept going. When Clubb caught up with Liberto, she got in Liberto’s face, close enough for Liberto to feel spittle on her face, and used the racial slur. Though Clubb was a day manager, Liberto was unaware that Clubb held any official authority. While Liberto was reporting the incident on the following day, Clubb confronted Liberto about the prior incident, again using the racial slur. Management met to discuss Liberto’s performance, noting that she had substantial performance issues and had failed the hotel’s bartending test. Management then decided to fire Liberto despite her complaint, stating that “there’s not going to be a good time to let her go.” Clubb was not involved in the decision, and management stated in a deposition that the complaint was not considered in making the termination decision.
Liberto filed suit, claiming a violation of Title VII and 42 U.S.C. § 1981 for two counts of racial discrimination and two counts of retaliation. The district court held that the offensive conduct was too isolated to support Liberto’s claims for discrimination and retaliation, excluding “vague” answers to interrogatories given by Liberto, which were not executed on personal knowledge and included hearsay. The court did take Liberto’s testimony about the two confrontations with Clubb as true, but granted summary judgment to the defendants. Liberto appealed.
First, Liberto challenged the exclusion of Liberto’s interrogatory answers from the summary judgment record. The Fourth Circuit found no error in excluding this testimony because the declarant must give information in an affidavit that complies with Federal Rules of Civil Procedure (F.R.C.P.) 56, or give answers to interrogatories based on personal knowledge. To comply with F.R.C.P. Rule 56, the facts forming the basis for a summary judgment must (1) be material, (2) be undisputed, and (3) be admissible in evidence. The facts must demonstrate that the declarant has personal knowledge of the facts and is competent to testify to them. The Court reasoned that Liberto did not rely solely on personal knowledge, but also on the information of others.
Second, Liberto challenged the district court’s holding that the undisputed facts in the summary judgment record did not demonstrate a hostile work environment as a matter of law. Requiring an employee to work in a hostile work environment is a violation of Title VII, which makes it unlawful for an employer to discriminate against an employee based on race, color, religion, sex, or national origin. A hostile work environment exists when “the workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.” A court must, in light of all the circumstances, examine: (1) the frequency of the discriminatory conduct, (2) its severity, (3) whether it is physically threatening or humiliating, or a mere offensive utterance, and (4) whether it unreasonably interferes with an employee’s work performance. Though the racial slur was derogatory and highly offensive, the use of the word twice over a two-day period in regards to a single incident was not, as a matter of law, so severe or pervasive as to create a hostile work environment. Generally, a hostile work environment results “only after an accumulation of discrete instances of harassment.” Jordan v. Alternative Resources Corp., 458 F.3d 332, 339 (4th Cir. 2006). Liberto’s claim failed because there is no Fourth Circuit precedent finding that a hostile work environment is created from a single incident. The Court applied the same principles for a hostile work environment claim under Title VII to Liberto’s claim under 42 U.S.C. § 1981. See Spriggs v. Diamond Auto Glass, 242 F.3d 179 (4th Cir. 2001); Ayissi-Etoh v. Fannie Mae, 712 F.3d 572 (D.C. Cir. 2013); Tawwaab v. Virginia Linen Servs., Inc., 729 F. Supp. 2d 757 (D. Md. 2010).
Finally, Liberto challenged the district court’s dismissal of her retaliation claims under Title VII and 42 U.S.C. § 1981. To prove retaliation, the employee must show an objectively reasonable belief that there was a hostile work environment, and that the employee was terminated because of the complaint. Liberto’s claim failed because her belief was based on one incident over two days with one coworker who was not a supervisor; thus, the Fourth Circuit reasoned that she was much less likely to have had an objectively reasonable belief that conduct complained of was unlawful under Title VII or 42 U.S.C. § 1981. Furthermore having held that no objectively reasonable juror could have found a hostile work environment, the Court determined that Liberto could not have had an objectively reasonable belief that she was working in a hostile work environment. A plaintiff may also allege a hostile work environment if such an environment is likely to be created, but there must be some evidence that the hostile conduct would “ripen” into such an environment. Clubb received a warning following the incident, and there was nothing in the record to indicate that there was some “plan” to create the hostile work environment.
Chief Judge Traxler concurred that Liberto did not prove a hostile environment under Title VII or §1981, but dissented in the grant of summary judgment on Liberto’s retaliation claims. Judge Traxler disagreed with the determination that, as a matter of law, the lack of a hostile work environment necessarily resolved the retaliation claim. According to Traxler, so long as the employee has an objectively reasonable belief that an employment practice is unlawful, then opposition to that activity is protected. Traxler relied upon Judge Kavanaugh’s concurring opinion in Ayissi-Etoh, and emphasized that a single incident could suffice to create a hostile work environment if the incident is sufficiently severe. In Sprigss, the court showed how a racial slur could be more than a “mere offensive utterance,” and the term in this case could be such a term. Traxler distinguished this case from Jordon, where a coworker used a racial slur once in the employee’s presence which was directed at criminals on television, and was not directed at the employee personally or at any other employee. In this case, Clubb aggressively used the racial slur against Liberto personally on more than one occasion, accompanied by the threat of speaking with Clubb’s friend, the hotel owner, in an effort to get Liberto fired.
Verona Sheleena Rios
Decided: April 29, 2014
The Fourth Circuit reversed, and remanded, the district court’s grant of summary judgment for Dal-Tile on the Title VII claims of a sexually and racially hostile work environment, as well as the § 1981 claim for a racially hostile work environment. However, the Court affirmed the district court’s grant of summary judgment for Dal-Tile on the constructive discharge claim and the North Carolina obstruction of justice claim.
Lori Freeman (“Freeman”) began working as a receptionist for Dal-Tile’s predecessor in August 2006, and became a Dal-Tile employee after the merger and acquisition of her employer. In November 2009, Freeman’s position was reclassified as a Customer Service Representative. Throughout her employment, Freeman regularly interacted with Timothy Koester (“Koester”), an independent sales representative for one of Dal-Tile’s customers. During these interactions, Koester was well known for regularly using racially degrading language, detailing his own sexual conquests, sharing photos of naked women with Freeman from his cell phone, making sexually explicit remarks about a co-worker’s daughters, as well as other sexually inappropriate remarks, and passing gas on Freeman’s telephone. Other co-workers testified that Koester engaged in this type of behavior, and Koester confirmed that he made inappropriate sexual comments, and that his racial remarks may have been inappropriate. Koester’s behavior included using the terms n****r and black b***h. Freeman confronted Koester about his language, and that it made her feel uncomfortable, and at various times Freeman’s supervisors were either present, or informed by her of the incidents with Koester, but nothing was done until she reported Koester’s remarks to human resources. After promising to ban Koester from the premises, human resources lifted the ban and simply barred Koester’s communication with Freeman. After taking a medical leave of absence for depression and anxiety, Freeman ultimately resigned from her position because she feared running into Koester.
The Fourth Circuit reviewed the record, facts, and inferences in favor of the nonmoving party, as required by a summary judgment motion. To succeed on a hostile work environment claim, Freeman must demonstrate to a reasonable juror that the harassment was “(1) unwelcome, (2) based on [Freeman’s] gender or race, (3) sufficiently severe or pervasive to alter the conditions of her employment and create an abusive atmosphere, and (4) imputable to [Dal-Tile].” EEOC v. Cent. Wholesalers, Inc., 573 F.3d 167, 175 (4th Cir. 2009) (citing EEOC v. Sunbelt Rentals, Inc., 521 F.3d 306, 313–14 (4th Cir. 2008)). The Court concluded that a reasonable juror could find that a racially or sexually hostile work environment existed from the facts presented.
The Court also formally adopted a negligence standard, and stated that “an employer is liable under Title VII for third parties creating a hostile work environment if the employer knew or should have known of the harassment and failed ‘to take prompt remedial action reasonably calculated to end the harassment.’ Amirmokri v. Baltimore Gas & Elec. Co., 60 F.3d 1126, 1131 (4th Cir. 1995) (quoting Katz v. Dole, 709 F.3d 251, 256 (4th Cir. 1983)) (internal quotation marks omitted) (applying this standard to co-worker harassment).” Here, the Court reasoned that Freeman presented a jury question on whether Dal-Tile’s remedial actions were sufficient, and that a reasonable juror could find Dal-Tile through its agent knew, or should have known, of the harassment. However, the Court agreed that Freeman voluntarily left her position, and therefore affirmed the district court’s grant of summary judgment for her constructive discharge claim. Similarly, the Court found no evidence that Dal-Tile destroyed emails as a barrier to litigation, and affirmed the district court’s holding that no feasible obstruction of justice claim existed.
In Judge Niemeyer’s separate opinion, which concurred in part and dissented in part, he disagreed with the majority’s interpretation of the record, and believed that the employer effectively intervened on Freeman’s behalf. Moreover, Judge Niemeyer believed that the majority greatly increased the scope of Title VII beyond those recognized rulings made by the U.S. Supreme Court.
Samantha R. Wilder
Decided: May 14, 2014
The Fourth Circuit overturned a summary judgment motion in favor of District Attorney (DA) Peter Gilchrist, holding that there was a jury question on whether Gilchrist was entitled to a qualified immunity defense for firing Assistant District Attorney (ADA) Sean Smith in violation of Smith’s First Amendment right to free speech.
In 2010, Smith informed Gilchrist that he had decided to run for the office of the county district court judge. Within the scope of his candidacy for judicial office, and unrelated to his duties as ADA, Smith gave a public interview, in which he expressed concerns about “defensive-driving” courses that were offered to ticketed drivers. Smith stated that he was worried that ticketed drivers were not paying attention during the courses; that police officers were “improperly providing” legal advice to ticketed drivers by giving them information pamphlets with their tickets; and that ticketed drivers were “unwittingly” making decisions detrimental to their legal interests. The DA office had a policy of supporting the program, which reduced its caseload and allowed the office to allocate those resources elsewhere. When Gilchrist heard about Smith’s interview, he and the Deputy DA met with Smith to discuss Smith’s disagreement with the DA office’s policy in regard to the defensive-driving courses. During this meeting, Smith disclosed that he disagreed with other DA office policies as well, but he declined to specify which these were. The next day, Gilchrist fired Smith for insubordination. Smith brought this claim under 42 U.S.C. § 1983 against Gilchrist in his personal capacity for allegedly violating Smith’s First Amendment right to free speech. The District Court ruled that Gilchrist was entitled to qualified immunity as a public official, and Smith appealed.
To overcome Gilchrist’s qualified immunity claim, Smith had to satisfy a two-pronged test: (1) Smith’s allegations must “substantiate [a] violation of a federal statutory or constitutional right”, and (2) the violation must be of a “clearly established right of which a reasonable person would have known.”
The Court used a three-prong test to determine whether Gilchrist violated Smith’s First Amendment right to free speech as a public employee. Smith must have been (1) “‘speaking as a citizen upon a matter of public concern’ rather than ‘as an employee about a matter of personal interest’”; (2) “his ‘interest in speaking upon the matter of public concern [must have] outweighed the government’s interest in providing effective and efficient services to the public’”; and (3) “his ‘speech [must be] a substantial factor’ in the employer’s decision to take action against him.” The Court held that Smith satisfied the first two prongs. First, whether ticketed drivers were attentive during the courses, receiving improper legal advice from police officers, and acting against their best legal interests, were all matters of public concern. Second, Smith’s concerns outweighed the DA office’s interests in providing effective and efficient services because Smith merely expressed concerns over the defensive-driving courses, actions taken by police officers, and ticketed drivers, not DA policy. The Court gave little weight to the possibility that a change in the defensive-driving courses would impact the DA office’s effectiveness and efficiency by increasing its caseload. The Court also gave little weight to Gilchrist’s testimony that he disagreed with the “vision” Smith expressed in his public statements because they related to “critical services” that the DA office had “no legitimate interest in opposing.” Finally, in regard to the third prong, the Court declined to opine on whether Smith’s public statements were a “substantial factor” in Gilchrist’s decision to terminate him.
The Court also held that Smith satisfied the second prong of the qualified immunity test – whether Gilchrist violated a “clearly established” right, and a “reasonable [DA] official” would have known that Smith’s interests outweighed those of the DA office. Any reasonable official would know that Smith had a clearly established right to make the public comments because they were made in Smith’s capacity as a candidate for public office, concerned matters of public concern, and did not negatively impact the DA office. Furthermore, a reasonable DA official would have known Smith’s interests outweighed those of the DA office because there was nothing weighing in favor of the DA office – there was no evidence that the speech would affect the DA office’s efficiency.
James Bull Sterling
Decided: May 12, 2014
The Fourth Circuit affirmed the district court’s grant of summary judgment by holding that the appellant failed to make a prima facie showing of his Sarbanes-Oxley Act of 2002 (“SOX”), 18 U.S.C. § 1514A, claims because he did not sufficiently prove that the alleged protected activities were a contributing factor to his termination.
Appellant argued that he was unlawfully fired in retaliation for engaging in activities protected under SOX. These activities included: (1) reporting to the Board of Directors (Board) and the federal government about the potentially illegal exports with SAFE Source; (2) objecting to falsified Board meeting minutes; (3) objecting to leaks of information by the Outside Directors to Carrington; and (4) notifying the government of suspected insider trading. The district court granted summary judgment to the Appellees, and held that plaintiffs failed to make a prima facie showing of their SOX claims because they did not sufficiently prove that the alleged protected activities were a contributing factor to their respective terminations. Appellant filed a timely appeal and argued that the district court erred by holding that these activities did not contribute to his termination. Appellant also argued that the district court erred by failing to decide whether Appellees had sufficiently demonstrated that he would have been fired regardless of these activities.
The SOX protects whistleblowers of publicly traded companies by prohibiting employers from retaliating against employees that provide information about potentially illegal conduct. The Court applies a burden-shifting framework to SOX whistleblower claims. The plaintiff must first establish a prima facie case by proving, by a preponderance of the evidence, that: “(1) he engaged in protected activity; (2) the employer knew that he engaged in the protected activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action.” If the employee meets this burden, the defendant must then “rebut the employee’s prima facie case by demonstrating by clear and convincing evidence that the employer would have taken the same personnel action in the absence of the protected activity.” This appeal centers on the fourth prong. The Court found that the appellant failed to satisfy his light burden of showing by a preponderance of evidence, and that the activities tended to affect his termination in at least some way.
First, the Court found that there is no temporal proximity between appellant’s most significant protected activities because his reports regarding SAFE Source occurred roughly twenty months before his termination. The Court reasoned that such a lengthy gap in time weighed against a finding that it is more likely than not that the alleged protected activities played a role in his termination. Second, and most significantly, the Court noted that the appellant took a contradicting action that constituted a legitimate intervening event further undermining a finding that his long-past protected activities played any role in the termination. While the Court mentioned that in SOX cases the contributing factor standard is meant to be broad and forgiving, it also emphasized the history of antagonism between the appellant, his employers, and the above referenced intervening events. Furthermore, the Court opined that, under the particular circumstances here, the standard would be toothless if it held that a preponderance of the evidence showed that the long-past activities affected appellant’s termination.
Decided: May 5, 2014
The Fourth Circuit affirmed the district court’s order compelling the Appellant to arbitrate his federal claims, and held that where the Appellant does not pursue his Dodd-Frank whistleblower claims, neither 7 U.S.C. § 26(n)(2) nor 18 U.S.C. § 1514A(e)(2) override the Federal Arbitration Act’s (FAA) mandate that arbitration agreements are enforceable.
The appellant started his employment at Accenture in 1997, and progressed through several positions over the years. In 2005, the appellant signed an employment contract that automatically renewed each year, and included an arbitration provision stating that all disputes that arose out of appellant’s employment at Accenture would be settled through arbitration. Appellant alleged that the new supervisor he received in 2010 disliked him. In 2011, Accenture terminated appellant’s employment as a cost cutting measure, and replaced him with a younger employee. Appellant then filed suit for age discrimination under the District of Columbia’s Human Rights Act. Accenture moved to compel the appellant to submit to arbitration, and appellant opposed Accenture’s motion to compel, and stated that the arbitration clause was void under the whistleblower provisions of the Dodd-Frank Act. The district court rejected appellant’s argument, and granted defendant’s motion to compel arbitration. However, while the motion to compel was pending, appellant filed another action stating claims under the ADEA, FMLA, and ERISA. Accenture moved to compel arbitration for these claims as well. The district court granted Accenture’s motion, and found that because appellant did not bring a Dodd-Frank whistleblower claim, appellant could not use Dodd-Frank to invalidate a valid arbitration clause. Appellant filed a timely appeal.
The Fourth Circuit found that Congress enacted the FAA in 1925, and stated that arbitration agreements are valid and irrevocable unless equity or law determines otherwise. Further, the Court noted that the FAA embodies the national policy of favoring arbitration, and therefore courts should “rigorously enforce arbitration agreements according to their terms.” Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309 (2013). However, the Court mentioned that the FAA could be overridden by a contrary congressional command. Here, the appellant argued that Dodd-Frank represented a “contrary congressional command” and overrode the valid arbitration clause in his employment contract. Dodd-Frank strengthened whistleblower protections for employees that report illegal or fraudulent activities conducted by their employers. Dodd-Frank includes 7 U.S.C. § 26(n)(2) and 18 U.S.C. § 1514A(e)(2), which prohibit retaliation against a whistleblower employee, and create causes of action and remedies for these employees. Appellant argued that because his employment contract did not carve out Dodd-Frank claims from arbitration, and requires those claims to be arbitrated, that the entire arbitration agreement was invalid or unenforceable. However, the Fourth Circuit stated that where an arbitration clause neglects to exempt Dodd-Frank whistleblower claims from arbitration, it does not follow that non-whistleblowers claims are similarly prohibited from arbitration. Further, the Fourth Circuit found that nothing in Dodd-Frank to indicate that Congress intended to bar the arbitration of every claim simply because the agreement did not exempt Dodd-Frank claims. Thus, the appellant’s argument, in light of Dodd-Frank’s language and context, failed to meet the burden of showing that Dodd-Frank represents a “contrary congressional command” and overrode the validity of arbitration agreements according to the FAA.
-Alysja S. Garansi
Decided: March 31, 2014
The Fourth Circuit held that a provision in Baltimore County (the County), Maryland’s employee retirement benefit plan unlawfully discriminated against older County employees on the basis of age, in violation of the Age Discrimination in Employment Act (ADEA). The Court upheld the district court’s grant of partial summary judgment for the plaintiff’s on the issue of the County’s liability for violating the ADEA, and remanded the case for further proceedings on the issue of damages.
The County’s original plan, the Employee Retirement System (the plan) required that employees contribute a fixed percentage, based on the employees’ age at the time of enrollment, of their annual salaries over the course of their employment. Under the plan, older employees were required to contribute a higher percentage of their salaries than younger employees because their contributions would earn interest for fewer years. Later amendments to the plan provided separate provisions for service-based eligibility that allowed employees to retire after a certain number of years of service irrespective of their age, but didn’t change the contribution rates. Two officers that were enrolled in the plan, Wayne A Lee and Richard J. Bosse, Sr, ages 51 and 64, respectively, filed charges with the Equal Employment Opportunity Commission (EEOC) alleging that the County’s plan, and disparate contribution rates, discriminated against them based on their ages. The EEOC filed suit against the County, on behalf of the two officers, and other similarly situated employees. The EEOC alleged that the plan facially discriminated based on employees’ ages at the time of enrollment by requiring them to pay higher pension contributions than their younger counterparts. In its defense, the County argued that the disparate rates were a permissible objective because of the “time value of money” because the plan was funded entirely by the County. The County also claimed that it was shielded from liability through the plan’s “safe harbor provision.”
The Fourth Circuit relied on the statutory language set forth in 29 U.S.C. §§ 623, 630, and 631. The Court asserted that the ADEA prohibits employers from discriminating against any person “because of” age with all employee benefits. Thus, a plan that treats older employers differently from younger employees violates the ADEA, unless the disparate treatment “is based on reasonable factors other than age.” The County argued that the U.S. Supreme Court’s decision in Kentucky Retirement v. EEOC, 554 U.S. 135 (2008), allowed the County’s pension plan. In that case, the Supreme Court held that Kentucky’s retirement plan, which treated employees differently based on their pension status, did not violate the ADEA because the disparate treatment was not “actually motivated” by an employee’s age. However, the Fourth Circuit noted that unlike Kentucky’s plan, the County’s plan did not consider an employee’s pension status. Rather, the different contribution rates “escalated explicitly in accordance with employee’s ages at the time of enrollment.” The Court rejected the County’s claim that the “time value of money” was a reasonable factor to justify the treatment because the plan required employees to contribute with age-based rates regardless of when they chose to retire. Thus, the Court concluded that the disparate treatment was “because of” age. The Fourth Circuit also concluded that the safe harbor provision was inapplicable because it failed to address employee contribution rates.
– Abigail Forrister
Decided: March 27, 2014
The Fourth Circuit held that the Dickenson-Russell Coal Company (Dickenson Coal) had an unconditional duty—under Part 50 regulations to the Federal Mine Safety and Health Act of 1977, 30 C.F.R. § 50.20(a)—to file an MSHA Mine Accident, Injury, and Illness Report Form 7000-1 (Form 7000-1) within ten work days of Charlie Wood’s (Wood) occupational injury at a Dickenson Coal mine. The Fourth Circuit therefore denied Dickenson Coal’s petition for review.
Dickenson Coal owns and operates a coal mine, the Roaring Fork No. 4 Mine (Roaring Fork), in Virginia. Bates Contracting and Construction, Inc. (Bates), an independent contractor, provided miners to work at Roaring Fork. In May 2009, Wood—a Bates employee—suffered an occupational injury at Roaring Fork. Wood was under Dickenson Coal’s control and supervision on the day of the incident. Three days after the incident, Bates reported Wood’s injury to the Mine Safety and Health Administration (MSHA) by submitting a Form 7000-1; however, Dickenson Coal did not report the injury. In July 2009, the MSHA cited Dickenson Coal for “failure to timely report an occupational injury and file a Form 7000-1,” per the requirements of 30 C.F.R. § 50.20(a). Dickenson Coal then contested the MSHA citation before an Administrative Law Judge (ALJ) appointed by the Federal Mine Safety and Health Review Commission (the Commission). Dickenson Coal contended that Bates was an operator under § 50.20(a); thus, “either Bates or Dickenson Coal could have satisfied the obligation to report Wood’s injury.” The ALJ ruled against Dickenson Coal, finding that Bates was not an operator under the regulatory definition of the term, 30 C.F.R. § 50.2(c)(1), because it was not “operating, controlling, or supervising” activities at Roaring Fork at the time of the injury. Thus, the ALJ found that Bates was not a required reporter under § 50.20(a)—and therefore concluded that Bates’s Form 7000-1 filing was gratuitous and “did not relieve Dickenson [Coal] of its [reporting] obligations under section 50.20(a).” The Commission declined Dickenson Coal’s request for discretionary review, and Dickenson Coal petitioned the Fourth Circuit. On petition for review, Dickenson Coal argued that that ALJ incorrectly applied the regulatory definition of operator in § 50.2(c)(1) rather than the statutory definition of the term, 30 U.S.C. § 802(d)—under which, according to Dickenson Coal, independent contractors clearly qualify as operators. Dickenson Coal asserted that, where an incident involves more than one required reporter, only one of the reporters needs to file a Form 7000-1.
The Fourth Circuit found the language of § 50.20(a) unambiguous; thus, the Fourth Circuit declined to apply Auer deference to the agency’s interpretation of the regulation. Auer v. Robbins, 519 U.S. 452. However, the Fourth Circuit found the ALJ’s decision consistent with the plain language of § 50.20(a): the Fourth Circuit concluded that, even if Bates qualifies as an operator, Bates’s Form 7000-1 filing did not excuse Dickenson Coal from filing its own Form 7000-1—as § 50.20 requires every operator subject to the reporting requirement to report every relevant injury or accident. The Fourth Circuit also rejected Dickenson Coal’s argument that such an interpretation of § 50.20(a) will lead to absurd results, noting that the Secretary of Labor stated plausible reasons for requiring potentially duplicative reports under the regulation.
– Stephen Sutherland
Decided: March 25, 2014
The Fourth Circuit affirmed the district court’s decision ordering the Equal Employment Opportunity Commission (“EEOC”) to pay attorneys’ fees to Propak Logistics, Inc. (“Propak”) because the EEOC acted unreasonably in filing the complaint.
Michael Quintois, a former supervisor at Propak’s Shelby, North Carolina facility, filed a discrimination charge with the EEOC against Propak in January 2003. Quintois alleged that Propak terminated his employment based on his “American” national original after he complained that the company hired only Hispanic workers for certain supervisory positions. Based on Quintois’ discrimination charge, the EEOC initiated an investigation that lasted nearly six years. Among other things, the EEOC designated the matter as a “class case” in September 2004, yet failed to notify Propak of its procedural decision until about four years later in September 2008. In addition, the EEOC failed to contact Propak for about two years, between June 6, 2005 and June 7, 2007. In June 2007, the EEOC contacted Propak to speak with Kathy Ponder, the Propak manager responsible for hiring decisions at the Shelby, North Carolina facility during the period of Quintois’ employment. Propak, however, no longer employed Ponder and her whereabouts were unknown.
The EEOC concluded its investigation and issued a “determination letter,” in September 2008, which stated the EEOC had found reason to conclude that Propak violated Title VII by failing to hire a class of non-Hispanic job applicants because of their race or national origin. In the letter, the EEOC invited Propak to participate in informal conciliation to resolve the matter. In attempting to conciliate the matter, the EEOC proposed certain remedial measures concerning Propak’s facilities in North Carolina and South Carolina. These measures would have required Propak in these locations to offer certain employment opportunities, to provide training for supervisors and managers, and to post certain notices. By this time, however, Propak had closed all its facilities in those states, thereby rendering implementation of such remedial measures impossible. Propak advised the EEOC of this fact.
Nevertheless, the EEOC initiated a lawsuit in August 2009, seeking certain injective relief, including an order requiring Propak to institute policies and programs to benefit non-Hispanic person in order to mitigate the effects of the allegedly unlawful employment practices. The EEOC also sought monetary relief on behalf of the affected class of non-Hispanic employment applicants. In response, Propak filed a motion to dismiss arguing that the doctrine of laches barred the action. The district court denied the motion and ordered the parties to engage in limited discovery on the issue of whether Propak suffered prejudice resulting from the EEOC’s extensive delay in initiating the litigation. At the conclusion of this discovery period, Propak filed a motion for summary judgment, again based on the doctrine of laches. This time, the district court granted Propak’s motion, concluding that the EEOC’s delay in initiating the litigation was unreasonable. The EEOC initially filed an appeal but later sought dismissal, which the Fourth Circuit granted.
Propak later filed a motion seeking attorneys’ fees incurred by Propak after the EEOC filed the complaint. The district court, relying on Supreme Court precedent, granted the motion, concluding that an award of attorneys’ fees was appropriate because the EEOC knew or should have known that its claim “was frivolous, unreasonable, or groundless.” The district court held that the EEOC acted unreasonably in filing the complaint because by the time the EEOC determined to bring the action it was clear that a lawsuit would be moot. And, the district court alternatively held that the EEOC acted unreasonably in continuing the litigation in view of the developing record because it reaffirmed that purported victims and witnesses could not be located and the facilities were closed. This appeal followed.
On appeal, the Fourth Circuit first discussed Title VII’s fee-shifting mechanism, which gives district courts the discretion to award reasonable attorneys’ fees to a prevailing party. The court observed that a heightened standard applies to a prevailing defendant seeking such an award in a Title VII action. For a prevailing defendant to receive such an award, the court must find that the plaintiff’s action was frivolous, unreasonable, or without foundation. The court then conducted a review for an abuse of discretion.
As an initial matter, the court rejected the EEOC’s request that it consider the issue of whether laches is available as an affirmative defense to an action filed by a United States agency because the EEOC abandoned its appeal of the summary judgment order. Next, the court rejected the EEOC’s contention that the district court improperly based its decision awarding attorneys’ fees on the court’s earlier laches ruling. In so doing, the court recognized that, while the district court referenced its previous findings of delay and prejudice from the summary judgment holding, the two holdings were based on different principles of law. Specifically, the summary judgment holding of laches was based on the EEOC’s unjustified delay in bringing the lawsuit, and on the resulting prejudice affecting Propak’s ability to defend itself in the action. In contrast, however, the district court awarded attorneys’ fees on the basis that the EEOC’s lawsuit effectively was moot at its inception. The district court’s fee award, therefore, reflected proper consideration of the Supreme Court’s standard articulated in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), because it assessed whether the EEOC acted unreasonably in initiating the litigation.
Next, the court addressed the EEOC’s attack on the district court’s factual finding that the EEOC could not identify individual members of the class of victims eligible for monetary relief. The Fourth Circuit observed that the record showed that the EEOC made efforts to identify the class of victims. The record, however, lacked any indication that such efforts were successful. Thus, the court found no clear error in this factual finding. Lastly, the court rejected the EEOC’s alternative argument that the district court’s factual finding that the EEOC was unable to identify claimants was an “irrelevant consideration.” In doing so, the court noted that it had previously held that an award of attorneys’ fees to a defendant under the Christiansburg standard was justified in part because the plaintiff sought relief that it knew or should have known was unavailable.
The Fourth Circuit, therefore, concluded that the district court did not abuse its discretion in holding that the EEOC acted unreasonably. Consequently, it did not address the district court’s alternative holding that the EEOC’s continued pursuit of litigation was unreasonable in light of the developing record in the case.
– W. Ryan Nichols
Decided: March 11, 2014
A group of former employees brought suit against Raeford Farms, Inc. d/b/a/ Columbia Farms, Inc. (“Columbia Farms”), a chicken processing plant in Greenville, South Carolina for the payment of unpaid wages and for unlawful retaliation against them after instituting workers’ compensation proceedings. The jury returned a verdict for the employees on the unpaid wages and retaliation claims. On appeal, the Fourth Circuit reversed the district court on the unpaid wages claims, finding that the Labor Management Relations Act (“LMRA”) preempted the employees’ state law claims. Additionally, the Fourth Circuit reversed the district court’s verdict regarding certain retaliation claims, but affirmed as to other employees.
Employees at Columbia Farms received wages under a collective bargaining agreement (“CBA”) negotiated by the United Food and Commercial Workers’ Union (the “Union”). In 2004, Columbia Farms negotiated a change in its “meal and rest policy” in exchange for a one-time raise to the employees’ hourly rate that changed the structure of employees’ breaks. The revised CBA also provided a grievance procedure with respect to any dispute “aris[ing] over the interpretation” of the CBA. The CBA did not specify how employees’ compensable time would be calculated, but Columbia Farms’ practice was to pay its employees based on their “line time,” meaning the time that they actually spent working on the production line. Hence, the employees were not compensated for time spent cleaning up, putting on protective gear, or walking to and from the production line. According to numerous employees, Columbia Farms never informed its employees that their hours were based solely on “line time.” A group of employees brought suit for wages due under the Fair Labor Standards Act (“FLSA”) and the South Carolina Wages Act (“Wages Act”). The FLSA claim was dismissed prior to trial, but the court allowed the Wages Act claims to be heard by the jury, over Columbia Farms’ arguments that the Wages Act was preempted by the LMRA. Columbia Farms’ appealed, arguing that the district court erred by not holding that the LMRA preempted the Wages Act.
On appeal, the Fourth Circuit agreed with Columbia Farms, holding that the LMRA preempted the Wages Act. The LMRA applies where a plaintiff’s entitlement to unpaid wages stems from the application and construction of a CBA. Under the Columbia Farms CBA, the employees were not allowed to have alternate contracts with Columbia Farms outside of the agreed terms of employment contained in the CBA. Thus, the CBA was the only contract that the court had to examine to determine whether employees were owed wages. The employees responded that their claims were not preempted by the LMRA because the Wages Act provides a remedy for failing to properly notify employees that they are to be paid according to line time. The Court disagreed, however, emphasizing that any determination regarding unpaid wages turned on the interpretation and application of the CBA, a remedy reserved exclusively for the LMRA. Furthermore, the employees failed to follow the grievance procedure proscribed by the CBA. Thus, the Fourth Circuit reversed the district court’s decision on the Wages Act claims and dismissed the claims.
Additionally, another group of employees alleged that the Columbia Farms terminated them as retaliation for instituting workers’ compensation proceedings in violation of South Carolina Code Annotated § 41-1-80. At trial, the district court found that Columbia Farms retaliated through its use of the “point system” designed to enforce its attendance policy. Under the point system, employees were terminated if they accumulated more than five “points.” Employees received points for violations of the attendance policy. Of particular importance was Columbia Farms’ application of a point to an employee who missed time with a medical excuse but who failed to provide at least two days notice. The employee would receive just one point for the entire excused absence, in contrast with an average absence for which the employee received one point per day. An employee received no points for workers’ compensation injuries, absences, or approved doctor’s visits when the employee visited the company doctor. Columbia Farms’ supervisors confirmed that they kept a list of employees who frequently visited the plant’s doctor for medical care. Two groups of employees complained about retaliation. The first group received first aid treatment from the plant nurse, sought private treatment when they were denied treatment from the plant doctor, and were terminated when the point that they received for their absence placed them above the five point threshold (“Group I Employees”). A second group of employees sustained workplace injuries, were seen by company doctors, and received accommodations for injuries sustained in their workplace injuries (“Group II Employees”). Columbia Farms terminated the Group II Employees after they were found away from their workstation seeking treatment for their injuries. The court found retaliation for both groups of employees. Columbia Farms appealed, arguing that there was insufficient evidence that the employees “instituted a workers’ compensation proceeding” and that the employees failed to adequately allege a causal connection between the workers’ compensation proceeding and termination.
On appeal, the Fourth Circuit reversed the district court’s retaliation award with respect to the Group I employees, but affirmed with respect to the Group II employees. With respect to the Group I employees, the court explained that the “instituting” of a workers’ compensation proceeding required more than simply receiving treatment for an injury. South Carolina law does not to so far as to require the formal filing of a workers’ compensation claim to give rise to a claim for retaliation, however. For example, an employer’s agreement to pay for medical care or the employer’s receipt of written notice from a health care provider are enough to give rise to a claim for retaliation. No South Carolina courts have held that conduct as insignificant as receiving treatment is sufficient to give rise to an action for retaliation. Furthermore, the Fourth Circuit held that the Group I employees failed to show that their termination “resulted from” instituting workers’ compensation proceedings. Although the employees received “points” for receiving medical treatment, the employees failed to show that the point system was a mechanism for retaliation rather than the uniform application of a company policy.
On the other hand, the Fourth Circuit affirmed the district court’s verdict for the Group II employees. Unlike the Group I employees, the Group II employees fell at work and were treated by the company doctor. In fact, one of the Group II employees even instituted a formal workers’ compensation proceeding. Furthermore, a supervisor at Columbia farms indicated that one of the Group II employees “would likely be terminated as a result of her injury.” Therefore, the Fourth Circuit upheld the district court’s verdict with respect to the Group II employees.
– Wesley B. Lambert
Decided: March 11, 2014
The Fourth Circuit denied Petitioner’s petition for review of the District Director of the Office of Workers’ Compensation Programs’ decision to deny attorney’s fees under 33 U.S.C. § 928(a).
On May 24, 2011, Steven Lincoln (“Lincoln”) filed a claim with the District Director of the Office of Workers’ Compensation Programs (“OWCP”) for benefits under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), alleging that he sustained hearing loss in both ears as a result of his work as a longshoreman. Although Lincoln worked for several different companies over the course of his career, he alleged that he was employed by Ceres Marine Terminals, Inc. (“Ceres”) at the time of his injury. Ceres responded to Lincoln’s claim two days later by filing forms with the OWCP, one of which was a notice of controversion. In the notice, Ceres explained that it was controverting Lincoln’s claim because, while it accepted the fact that his hearing loss was noise-induced, additional information was needed before Ceres could determine the correct disability payment. The OWCP formally served Ceres with notice of Lincoln’s claim on June 14, 2011. Subsequently, on July 7, Ceres paid Lincoln $1,256.84, the equivalent of one week of permanent partial disability pay under the maximum compensation rate. Thereafter, the parties agreed to a settlement compensation order entered by the District Director of the OWCP on October 4. The settlement awarded benefits to Lincoln totaling $23,879.96 in compensation and $4,000 in medical benefits. Ceres did not pay any money to Lincoln between the July 7 disability payment and the October 4 settlement.
Lincoln, thereafter, filed a petition with the OWCP requesting that the Director award him $3,460 in attorney’s fees under Section 928(a) of the LHWCA, which shifts fees from a successful claimant to the employer when the employer declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim. The Director denied the petition, ruling that Ceres was not liable for Lincoln’s attorney’s fees. Lincoln then appealed to the Benefits Review Board (“BRB”), which found that the Director acted within his discretion in denying Lincoln’s petition. This appeal followed.
On appeal to the Fourth Circuit, Lincoln contended that the Director erred in denying his fee petition for three independent reasons: (1) Cere’s July 7 payment was only a partial payment and thus not “any compensation”; (2) the payment did not technically constitute “compensation” for the purposes of Section 928; and (3) Ceres’s notice of controversion automatically triggered fee shifting. The Fourth Circuit quickly addressed these arguments in turn. Addressing Lincoln’s first contention, the court held that the term “any compensation” is unambiguous and plainly encompasses an employer’s partial payment of compensation. As explained by the court, Section 928 provides employers a safe harbor: if it admits liability for the claim by paying some compensation to the claimant and only contests the total amount of the benefits, it is sheltered from fee liability under Section 928(a). Thus, because Ceres provided partial payment within thirty days, Ceres was entitled to the safe harbor provided by Section 928(a).
Next, the court rejected Lincoln’s argument that Ceres’s July 7 payment was not “compensation” in any true sense under Section 928(a) because it was merely an attempt to avoid fee liability. In doing so, the court distinguished the facts in the record from the facts of a case where the employer paid the claimant $1 within the thirty day window. Here, because Ceres based its calculations of the July 7 payment on Lincoln’s alleged disability, the court held that it qualified as “compensation” within the meaning of Section 928(a). Lastly, the Fourth Circuit rejected Lincoln’s argument that, because Ceres filed a notice of controversion prior to the July 7 payment, it irrevocably triggered Section 928(a). In rejecting this contention, the court found that the only explicit trigger contained in Section 928(a) is the payment of “any compensation” within thirty days of receiving official notice of a claim. Because Ceres met this requirement, it was, therefore, entitled to the safe harbor afforded by Section 928(a). Accordingly, the court denied Lincoln’s petition for review.
– W. Ryan Nichols
Decided: January 30, 2014
Plaintiff, Marie McCray worked for the Maryland Transit Administration (“MTA”), a division of the Maryland Department of Transportation (“MDOT”) for nearly forty years before her position was eliminated due to budget cuts. McCray then brought a suit alleging employment discrimination. The district court dismissed McCray’s suit on the grounds of legislative immunity before McCray could conduct any meaningful discovery. The Fourth Circuit disagreed, finding that the termination occurred before the requisite legislative action took place. However, the court held that McCray’s age and disability discrimination claims were nonetheless barred by the doctrine of sovereign immunity.
McCray began working for the MTA in 1971. Her main duty was to generate annual ride usage reports for trains and buses. McCray was diagnosed with diabetes in 1995, but it did not affect her work until 2007 when she unexpectedly fainted at work and had to miss time. After the incident, McCray submitted proof that she was medically able to continue working, but her supervisor continually pressured her about her health. Eventually, the supervisor demanded that she submit to an independent medical examination, which again concluded that she was medically able to continue working. Nevertheless, McCray’s supervisors continued to pressure her about her health. In January 2008, her job was transferred to a consultant and she was left without meaningful work. When McCray requested more responsibility, her requests were denied. In October 2008, McCray was terminated as a part of Maryland’s budget cuts. McCray then filed a complaint with the Equal Employment Opportunity Commission (“EEOC”) asserting discrimination based on age, disability, race, and gender. The MTA moved to dismiss on the grounds of legislative immunity. In response, McCray moved, pursuant to Rule 56(d) of the Federal Rules of Civil Procedure, for more time to conduct discovery to establish a discriminatory motive. The district court dismissed McCray’s suit, finding that any additional discovery would not impact its finding as to legislative immunity. McCray appealed.
On appeal, the MTA argued that sovereign immunity barred McCray’s age and disability discrimination claims. Although the MTA did not assert sovereign immunity at trial, the Fourth Circuit allowed the MTA to present this defense for the first time on appeal because of the jurisdictional nature of sovereign immunity. The court held that while Congress abrogated Sovereign Immunity under Title VII, it had not done so under the ADA or the ADEA; thus, McCray’s claims for age and disability were barred by sovereign immunity, while the gender and race discrimination claims were not.
Next, the Fourth Circuit held that the district court erred by dismissing McCray’s gender and race discrimination claims before allowing McCray to conduct meaningful discovery. MTA argued that McCray’s claims for race and gender discrimination were foreclosed because the state’s decision to cut McCray’s position was entitled to legislative immunity. The Fourth Circuit disagreed, concluding that many of the adverse employment actions that McCray complained of occurred prior to the budget cuts in October of 2008. Therefore, the Fourth Circuit determined that McCray’s Rule 56(d) motion should have been granted and remanded the action for further proceeding.
– Wesley B. Lambert
Decided: January 27, 2014
The Fourth Circuit held that it was without jurisdiction to consider a coal operator’s petition for review following the Federal Mine Safety and Health Review Commission’s (the “Commission”) decision to temporarily reinstate a coal miner.
Russell Ratliff (“Ratliff”) filed a discrimination complaint with the Secretary of Labor (“Secretary”), alleging that Cobra Natural Resources, LLC (“Cobra”) discharged him after he voiced safety concerns with respect to Cobra’s mining operation; thus violating the Mine Safety and Health Act of 1977’s (“the Mine Act”) whistleblower provision. In accordance with the Mine Act, after receiving Ratliff’s discrimination complaint, the Secretary determined it was not “frivolously brought” and applied to the Commission for an order temporarily reinstating Ratliff’s employment. Cobra, however, disagreed with the Secretary’s finding and requested a hearing before an ALJ, contending that Ratliff’s complaint was frivolous and also asserting a tolling defense. A coal operator’s temporary reinstatement obligation can be “tolled” by the occurrence of certain events, such as a subsequent reduction-in-force that would have included the miner.
At the hearing, the ALJ agreed with the Secretary that Ratliff’s discrimination complaint was not frivolously brought and also rejected Cobra’s tolling contention, concluding that Cobra had failed to show that work was not available to Ratliff because of an asserted multi-employee layoff. As a result, Ratliff was immediately reinstated with the same hours of work, rate of pay, and benefits received. Cobra next sought Commission review. The Commission affirmed the ALJ’s decision. Cobra then filed this petition for review, summarily asserting jurisdiction under the collateral order doctrine and contending that the Commission erroneously denied Cobra’s tolling defense.
On appeal, the Fourth Circuit found that it was without jurisdiction to consider Cobra’s petition for review. In doing so, it noted that the Mine Act authorizes “any person adversely affected or aggrieved by an order of the Commission” to seek review in the appropriate court of appeals. Importantly, although the Act uses the term “order” rather than “final order,” the Court recognized that only final Commission orders are entitled to review. Thus, the issue before the Court was whether the Commission’s decision granting temporary reinstatement was immediately appealable by Cobra under the collateral order doctrine.
Having explained the issue before it, and having noted the limited persuasive effect of sister circuit court decisions on the issue, the Court assessed each requirement of the collateral order doctrine. Analyzing the first requirement: that a putatively appealable order conclusively determine a disputed question, the Court held that, because an order of temporary reinstatement remains subject to modification during the pendency of a coal miner’s discrimination complaint, it fails to satisfy this initial requirement. Next, the Court held that, because the considerations involved in the temporary reinstatement process are deeply enmeshed with the same issues comprising the miner’s underlying discrimination claim, it plainly failed the collateral order doctrine’s “separate” requirement. Lastly, the Court addressed the doctrines third requirement: that the order be “effectively unreviewable on appeal from a final judgment.” Again, the Court held that this requirement was not met because Cobra’s implicated interest was primarily economic in nature. In so holding, the Court noted that a coal operator’s financial interest in avoiding wage payments to a reinstated miner who returns to his job in the coal mines pales in comparison to those interests that have been deemed sufficiently important to give rise to collateral order jurisdiction.
– W. Ryan Nichols
Decided: January 23, 2014
The Fourth Circuit reversed the district court’s determination that a plaintiff did not qualify for protection under the Americans With Disabilities Act (“ADA”) where the plaintiff suffered from only a temporary disability, finding that the 2008 Amendments to the ADA brought temporary disabilities under ADA protection in certain circumstances.
Plaintiff, Carl Summers began working as a senior analyst for the Altarum Institute (“Altarum”) in July 2011 where he conducted research, wrote reports and made presentations for Altarum’s client, the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury (“DCoE”) in Maryland. While on his way to work on October 17, 2011, Summers fell on a train platform, severely injuring both knees. Following the accident, Summers could not place any weight on his legs for six weeks. Additionally, even after surgery and considerable physical therapy, the injury prevented Summers from walking normally for at least seven months. While hospitalized, Summers contacted Altarum’s human resources department about obtaining short-term disability benefits and working from home until he was fully recovered. Altarum’s insurance company approved Summers’ application for short-term disability, but despite suggestions from Summers, never agreed to a plan that would allow Summers return to work. On November 30, 2011, Altarum informed Summers that he was being terminated effective December 1, 2011.
Summers filed a complaint against Altarum asserting that Altarum wrongfully discharged him under the ADA and failed to accommodate his disability. The district court dismissed the complaint for failure to state a claim. The district court dismissed the wrongful discharge claim because Summers was not “disabled” under the ADA because he was expected to heal within one year and he could have worked with the assistance of a wheelchair. Similarly, the court held that Summers did not state a claim for failure to accommodate because he failed to allege that he requested a reasonable accommodation. Summers chose to appeal only the wrongful discharge claim.
To establish a claim for wrongful discharge, a plaintiff must first establish that he or she qualifies as “disabled” under the ADA. One method of establishing a “disability” under the ADA is to prove an “actual disability” where the plaintiff has a “physical or mental impairment that substantially limits one or more major life activities.” Walking qualifies as a “major life activity” under the ADA. The Fourth Circuit noted that Congress broadened the scope of the ADA to construe coverage “to the maximum extent permitted.” The Equal Employment Opportunity Commission (“EEOC”) promulgated regulations explaining that a “substantial limitation” of a major life activity should be “construed broadly in favor of expansive coverage.” Furthermore, the EEOC regulations expressly provide that “effects of an impairment lasting or expecting to last fewer than six months can be substantially limiting for purposes of proving an actual disability.” The regulations go on to explain that “if an individual has a back impairment that results in a 20-pound lifting restriction that lasts for several months, he is substantially limited in the major life activity of lifting, and therefore covered [as having an actual disability].”
Following the EEOC’s guidance in response to the 2008 Amendments to the ADA, the Fourth Circuit held that the district court wrongly concluded that Summers was not disabled. Summers’ inability to walk plainly qualified as a restriction on a major life activity. Moreover, if the EEOC regulations provide that a person unable to life more than twenty pounds for several months is disabled, then surely Summers with two broken legs and injured tendons that render him immobile for seven months qualifies as disabled. Furthermore, Summers’ disability claim was in no way hindered by the fact that he could have worked with the assistance of a wheelchair. “If the fact that a person could work with the help of a wheelchair meant he was not disabled under the [ADA], the ADA would be eviscerated.” Therefore, the district court erred in holding that Summers was not disabled.
Finally, Altarum argued that even if Summers was disabled under the existing definition of “substantially limited” defined by the EEOC, the court should not follow that definition because the EEOC’s definition was an unreasonable interpretation of the ADA. The Fourth Circuit disagreed; noting the numerous congressional directives to impose a broad scope in defining a disability under the 2008 Amendments to the ADA made the EEOC’s interpretation a reasonable one. Therefore, the Fourth Circuit reversed the district court and found that Summers was disabled under the ADA.
– Wesley B. Lambert
Decided: January 7, 2014
The Fourth Circuit held (1) that the United States District Court for the Southern District of West Virginia properly denied Roger and Judy Hoschar’s (collectively, the appellants) motion to remand, as federal jurisdiction was proper due to complete diversity between the parties; and (2) that the district court properly granted summary judgment to Appalachian Power Company (APCO) because—under West Virginia law—there was no genuine issue of material fact regarding APCO’s actual or constructive knowledge of certain health risks associated with accumulations of bird excrement on the precipitators of its coal-fired power plant. The Fourth Circuit therefore affirmed the judgment of the district court.
APCO owns the Philip Sporn power plant (Sporn), located in West Virginia. Sporn, a coal-fired power plant, has five precipitators that “remove granular ash particles (fly ash) from the gasses produced by burning coal.” APCO hired Industrial Contractors, Inc. (ICI) to perform maintenance at Sporn—including welding on the precipitators to prevent fly ash leakage. Roger Hoschar (Mr. Hoschar), a boilermaker employed by ICI, worked exclusively at Sporn from March 2006 to March 2007. Usually, Mr. Hoschar’s duties consisted of hanging from a suspended platform and welding corroded parts of the ducts on the Unit 5 precipitator (Unit 5). Before welding, Mr. Hoschar had to remove debris that had agglomerated in the steel channels—including bird excrement. ICI terminated Mr. Hoschar in March 2007. In March 2009, Mr. Hoschar’s doctor discovered a mass on his right lung; after part of Mr. Hoschar’s lung was removed, a biopsy revealed that the mass was histoplasmosis—“an infectious disease caused by inhaling the spores of a naturally occurring soil-based fungus . . . .” While Mr. Hoschar was performing maintenance at Sporn, the Occupational Safety and Health Administration website contained a page titled “Respiratory Protection: Hazard Recognition”; this page referenced a publication by the National Institute for Occupational Safety and Health (NIOSH) called “Histoplasmosis: Protecting Workers at Risk” (the NIOSH publication). The NIOSH publication asserted that the relevant fungus “seems to grow best in soils having a high nitrogen content, especially those enriched with bird manure or bat droppings” and stated that the fungus “can be carried on the wings, feet, and beaks of birds and infect soil under roosting sites or manure accumulations inside or outside buildings.”
The appellants sued APCO and ICI for negligence in a West Virginia state court. They sought damages for Mr. Hoschar’s histoplasmosis infection, alleging that he contracted the disease after inhaling contaminated dust while removing the bird manure and fly ash from Unit 5’s steel channels. APCO removed the action to federal district court under 28 U.S.C. § 1332, stating that its principal place of business is in Columbus, Ohio, and that there was complete diversity among the parties. The appellants filed a motion to remand the lawsuit to state court, asserting that complete diversity did not exist because APCO’s principal place of business is in Charleston, West Virginia. The district court found that APCO’s principal place of business is in Columbus, Ohio, and therefore denied the appellants’ motion to remand. After the discovery period, ICI and APCO filed separate summary judgment motions, both of which were granted by the district court. The appellants subsequently settled with ICI; however, the appellants also appealed the district court’s denial of their motion to remand to state court, as well as the court’s grant of summary judgment in favor of APCO.
The Fourth Circuit found that—consistent with Hertz Corp. v. Friend, 559 U.S. 77, and Central West Virginia Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101—APCO’s “nerve center” is in Columbus, Ohio. The Fourth Circuit noted that, inter alia, “APCO’s entire Board of Directors is located in Columbus,” as are twenty-two of its twenty-seven corporate officers—including its CEO, CFO, Secretary, and Treasurer; that the corporate officers in Columbus make significant decisions and make corporate policy “such that they direct, control, and coordinate APCO’s activities”; that only five of the twenty-seven corporate officers are based in Charleston; and that the Charleston officers simply conducted “day-to-day operations and public interface” rather than the corporate direction, control, and coordination indicative of a nerve center. The Fourth Circuit rejected the appellants’ asserted difference between “ultimate” control and “actual” control, finding that these two terms are synonymous under Hertz—“provided that ultimate control amounts to directing, controlling, and coordinating the corporation’s activities.” The Fourth Circuit also found that APCO’s references to Charleston as its “headquarters” was merely a misnomer, and that the actual nerve center activities occur in Columbus. With regard to the district court’s grant of APCO’s summary judgment motion, the Fourth Circuit noted that there was no evidence that APCO employees knew the relevant fungus was present at Sporn. Furthermore, with regard to constructive knowledge, the Fourth Circuit noted that APCO did not have reason to be award of the NIOSH publication.
Lastly, though the appellants argued that the question of APCO’s knowledge was inherently a factual determination for the jury, the Fourth Circuit noted that the knowledge determination pertained to “whether a legal duty was owed to Mr. Hoschar in the first place”—and that the appellants failed to present evidence creating a genuine issue of material fact in this regard.
– Stephen Sutherland
Decided: January 3, 2014
The Fourth Circuit concluded that a coal miner’s wife was not entitled to benefits under the Black Lung Benefits Act (“BLBA”) dating back to 1997 because the Elk Run Coal Company did not commit fraud on the court by failing to disclose advantageous evidence to a coal miner at his 1997 BLBA benefits proceedings.
Gary Fox worked as a coal miner at the Elk Run Coal Company (“Elk Run”) in West Virginia for more than 30 years before dying from pneumoconiosis (also known as Black Lung Disease) in 2009. In 1997, x-rays revealed that Fox had an unidentified mass in his right lung. In 1998, a pathologist obtained surgical samples of the mass. Fox filed for benefits under the BLBA, asserting that the mass in his right lung was pneumoconiosis he sustained from working in mines. The Director of the United States Department of Labor’s Office of Workers’ Compensation (“Director”) determined that Fox was entitled to benefits under the BLBA. Elk Run then moved for an evidentiary hearing before an Administrative Law Judge (“ALJ”) to contest the Director’s finding. Elk Run solicited opinions from numerous pathologists, two of which determined that Fox likely suffered from pneumoconiosis. At the evidentiary hearing before the ALJ, Elk Run presented findings of several pathologists, but did not provide the two reports favorable to Fox. Fox appeared pro se at the hearing, only presenting his personal testimony in support of his case. The ALJ denied benefits. Fox did not appeal.
In 2006, Fox retained counsel and filed a new claim under the BLBA. Once again, the Director found that Fox was entitled to benefits under the BLBA and Elk Run requested an evidentiary hearing before an ALJ. This time, Fox’s attorney conducted intensive discovery. Elk Run admitted liability for Fox’s 2006 claims and disclosed numerous documents, including the pathology reports supporting Fox’s 1997 claim. Fox then moved to set aside the previous judgment, arguing that Elk Run committed fraud on the court that justified awarding benefits dating back to Fox’s original 1997 petition for benefits. The ALJ agreed and awarded benefits dating back to January 1997. On appeal, the Benefits Review Board disagreed, finding that Elk Run’s failure to disclose the reports did not rise to the level of fraud on the court. Fox then appealed to the Fourth Circuit.
The Fourth Circuit affirmed, holding that Elk Run’s conduct did not constitute fraud on the court. The court emphasized that fraud on the court was a high bar that required showing conduct on one party’s “deliberately planned and carefully executed scheme that severely undermined the integrity of the judicial process.” Such a finding requires more than ordinary fraud, such as “bribery of a judge or juror, or improper influence exerted on the court by an attorney, in which the integrity of the court and its ability to function impartially is directly impinged.” In the present case, Fox had the opportunity at the first ALJ hearing to cross-examine witnesses and present his own evidence, yet he declined to do so. He did not hire counsel to represent him in the first proceeding, even though the ALJ advised Fox of the desirability of doing so and the BLBA’s allowed for the recovery of attorneys’ fees. In the subsequent proceeding, Fox’s attorney easily discovered the favorable pathology report. While Fox most likely would have won with proper counsel, Elk Run was under no obligation to present unfavorable evidence at the ALJ hearing. Thus, the Fourth Circuit held that Elk Run’s decision not to disclose the unfavorable reports at the first proceeding did not rise to the level of fraud on the court.
– Wesley B. Lambert
Decided: December 10, 2013
The Fourth Circuit held that the United States District Court for the District of Maryland did not err by denying Sheriff Robert N. Jones’s (Jones) motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), in which Jones claimed qualified immunity from a suit brought by James Durham (Durham). The Fourth Circuit therefore affirmed the judgment of the district court.
Durham, who was employed as a deputy sheriff in Somerset County, Maryland Sheriff’s Office (SCSO), used physical force and pepper spray to detain a suspect while assisting a Maryland state trooper on August 21, 2008. After Durham prepared his incident report, multiple SCSO officials tried to force Durham to alter his report and to charge the suspect with assaulting him and resisting arrest. Though Durham did not think it was proper to alter his report, and though he believed he had no basis to charge the suspect, the SCSO officials used various threats and interrogation techniques to convince Durham to comply. Durham eventually filed an internal grievance and requested an outside investigation. The day Durham filed the grievance, Jones demoted him from Deputy First Class to Deputy. Durham was subsequently suspended with pay until further investigation could be made. After Durham learned that the subjects of his grievance were also the officials who would investigate the grievance, Durham sent documents detailing his experiences to, inter alia, the Somerset County State’s Attorney, the Governor of Maryland, the Maryland State Police, and various media outlets. Durham continued to send materials to various officials until Jones issued a “gag order” on September 28, 2008.
In May 2009, Durham was departmentally charged under the Law Enforcement Officers’ Bill of Rights (the LEOBR) with, inter alia, dissemination of departmental information. In July 2009, the LEOBR Trial Board acquitted Durham of all charges except those relating to dissemination of departmental information; the Trial Board recommended a ten-day suspension as punishment. However, Jones subsequently informed Durham that he was considering increasing the sanction. After Durham appeared before Jones for a penalty hearing on September 16, 2009, Durham received notice of his termination.
Durham sued Jones under 42 U.S.C. § 1983, contending that Jones terminated him in retaliation for exercising his First Amendment free speech rights. The district court denied Jones’s Rule 12(b)(6) motion to dismiss on the basis of qualified immunity; the court subsequently denied Jones’s motions for judgment as a matter of law under Rule 50(a) and Rule 50(b), in which Jones also asserted qualified immunity. The jury found in Durham’s favor and awarded him $1,112,200 in damages. Jones appealed, arguing that he did not violate Durham’s First Amendment rights—and that, even if he did violate Durham’s First Amendment rights, these rights were not clearly established.
The Fourth Circuit found that Durham’s speech pertained to a matter of public concern, rejecting the argument that Durham was simply making an internal grievance. The court also found that the SCSO’s interest in preserving an effective law enforcement agency did not outweigh Durham’s First Amendment rights, noting the seriousness of the underlying matter of public concern and the fact that Jones was unable “to show at trial how Durham’s actions had an adverse impact on the proper functioning of the SCSO in some serious manner.” The Fourth Circuit therefore concluded that Jones violated Durham’s free speech rights under the First Amendment. Furthermore, the Fourth Circuit found that Durham’s free speech rights were clearly established in September 2009, noting that the court “[has] been clear that where public employees are speaking out on government misconduct, their speech warrants protection.”
– Stephen Sutherland
Decided: December 6, 2013
The Fourth Circuit held that the National Treasury Employees Union (“NTEU”) could not amend its collective bargaining agreement with the Internal Revenue Service (“IRS”) to provide additional grievance procedures that would allow “probationary employees” to challenge removals alleged to be in violation of statutory rights or procedures. The court found that allowing such procedures would violate the statutory and regulatory framework that Congress created to govern its civil service, create an inequitable circuit split, and overturn precedent.
In the federal government’s civil service, new employees go through a one-year “period of probation.” During this “probationary period” employees are subject to summary dismissal if they do not meet the qualifications of the position. While these probationary employees have some protections from dismissal, they are afforded far fewer protections than non-probationary (i.e. tenured) employees. The Office of Personnel Management (“OPM”) has codified the rules for probationary employees. The rules do not affirmatively grant probationary employees the right to grieve removals alleged to be in violation of statutory rights or procedures. Arguing that this grievance procedure was not specifically foreclosed by the OPM rules, NTEU sought to amend its collective bargaining agreement with the IRS to extend probationary employees’ rights to grieve such removals. The IRS refused, arguing that probationary employees may not grieve such removals as a matter of law, and that allowing such a grievance procedure would be in violation of OPM regulations. NETU appealed to the Federal Labor Relations Authority (“FLRA”), which agreed with the IRS. NETU appealed the FLRA’s decision to the Fourth Circuit.
On appeal, the Fourth Circuit agreed with the FLRA and the IRS. First, the court explained that while probationary employees have many statutory and procedural rights guaranteed by law, Congress did not intend that the same remedies be available to probationary and non-probationary employees. In fact, Congress enumerates far more rights afforded to non-probationary employees regarding removal or demotion. Furthermore, the legislative history of federal Civil Service laws emphasize Congress’ intention to afford fewer procedural protections against removal to probationary employees to allow for summary removal procedures. Second, OPM regulations accurately reflect Congress’ intention for the probationary period for new employees “to determine the fitness of the employee.” While OPM regulations afford a number of protections to probationary employees, including notice and the opportunity for an appeal, those protections are lesser than non-probationary employees. The Fourth Circuit concluded that any decision contrary to OPM regulations would “risk unraveling what, by any measure, is a meticulously crafted statutory and regulatory scheme.” Third, other circuits examining the issue reached the same result. The Fourth Circuit decided that declining to follow other circuits would “create confusion and inequity in the federal civil service” by giving employees different procedural rights depending on the circuit where they work. Finally, administrative precedent also counsels in favor of holding that probationary employees are not permitted under law or regulation to grieve removals. Therefore, the Fourth Circuit upheld the FLRA’s decision to deny additional grievance procedures to probationary employees.
– Wesley B. Lambert
Decided November 12, 2013
The Fourth Circuit vacated the district court’s judgment and remanded for further proceedings. The Court concluded that language in a disability benefit plan provided by an employer was ambiguous and, therefore, does not clearly confer discretionary decision-making authority on the plan administrator, requiring de novo judicial review of the administrator’s denial of the plaintiff’s benefits claims under those plans.
Beth A. Cosey (“Cosey”) was employed as a senior clinical marketing manager for BioMerieux, Inc., a large medical diagnostics company. BioMerieux has a group insurance contract with the Prudential Insurance Company of America (Prudential), which acts as claims administrator for short-term disability (STD) and long-term disability (LTD) benefits under employee welfare benefits plans issued by Prudential. Near the end of May 2007, Cosey did not report for work and submitted a claim for benefits. Prudential provided benefits for about three weeks, after which time BioMerieux terminated Cosey’s employment. BioMerieux then re-hired Cosey, allowing her to work from home and, seven months later, Cosey filed another claim. Prudential paid STD benefits for about seven weeks. Cosey’s consultations with various physicians produced varying medical opinions with regard to her condition and, therefore, her ability to return to work. While Cosey’s primary care physician opined that she could not sustain any occupation, four medical reviewers hired by Prudential concluded that Cosey suffered no impairment. Prudential notified Cosey that it would not authorize further payments unless Cosey submitted additional medical information supporting her continued disability. Cosey did not timely submit additional evidence. When Cosey filed an administrative appeal of Prudential’s termination of her STD benefits, the plan administrator upheld the earlier decision and also declared Cosey ineligible for LTD benefits.
On appeal, the Fourth Circuit examined whether the district court employed the appropriate standard of review in examining the plan administrator’s denial of LTD and STD disability benefits. The LTD benefits plan was subject to the Employee Retirement Income Security Act of 1974, where courts must conduct de novo review of an administrator’s denial of benefits unless the plan grants the administrator discretion to determine a claimant’s eligibility for benefits, in which case the administrator’s decision is reviewed for abuse of discretion. A grant of discretionary authority must be clear. Here, the LTD plan states that benefits only will be paid to a claimant who “submits proof of a continuing disability satisfactory to Prudential.” In Gallagher, the Fourth Circuit observed that plan language requiring a claimant to “submit satisfactory proof of total disability to us” was ambiguous, and could be interpreted as requiring either an objective or a subjective standard for determining whether a claimant’s “proof” was satisfactory.” Therefore, the Fourth Circuit held that the plan language did not clearly convey that the plan administrator had discretionary decision-making authority in deciding benefits claims. Here, the Fourth Circuit joined five sister circuits in holding that this language does not unambiguously confer such discretionary authority. The Court identified three major themes that pervaded the opinions of those courts: (1) the inherent ambiguity in the wording of the phrase “proof satisfactory to us”; (2) the likelihood that such language will fail to provide sufficient notice to employees that their disability claims will be subject to a plan administrator’s discretionary determination; and (3) the responsibility of insurance companies to draft clear plan language.
The STD plan, however, was not governed by the ERISA. The Fourth Circuit had to ascertain the appropriate standard for judicial review of a plan administrator’s benefits determination under the present STD plan. The Court held that the STD plan did not confer discretionary decision-making authority on the plan administrator, and that, therefore, the district court erred in reviewing the plan administrator’s denial of Cosey’s STD benefits claim under an abuse-of-discretion standard. The Court agreed with Cosey that the “satisfactory proof” language in the STD plan is the functional equivalent of the language held ambiguous in Gallagher.
Therefore, the Fourth Circuit agreed with Cosey that the district court’s use of an incorrect standard of review, and the court’s erroneous view that both benefits plans required Cosey to present objective evidence of her disability, mandates reversal of the summary judgment award. Neither the LTD nor the STD plans provided that a claimant’s submission of proof were required to contain an “objective component.” Therefore, the Fourth Circuit held that the district court erred in concluding that Prudential could deny Cosey’s STD and LTD claims on the basis that her proof lacked such objective evidence.
– Sarah Bishop
Decided: October 16, 2013
The Fourth Circuit Court of Appeals reversed the district court’s denial of female employees’ (“Appellants”) motion to amend their complaint, in their sex discrimination and equal pay action against Family Dollar Stores, Inc. (“Family Dollar”).
Appellants were fifty-one named plaintiffs and a putative class consisting of females who are, or have been, store managers. Appellants primarily alleged that they were paid less than male store managers who perform the same job, requiring the same skill, responsibility and effort, under similar working conditions. Appellants had to show that these disparities were caused by centralized control of compensation at the corporate level, rather than the local level, in order to establish they had suffered a “common injury” for class action.
Family Dollar filed a motion to dismiss, arguing that Appellants did not satisfy the commonality requirement for class certification. Appellants moved for leave to file an amended complaint in order to elaborate on the original complaint’s allegations of “centralized control of compensation for store managers at the corporate level.” In the proposed amended complaint, Appellants alleged and challenged four specific company-wide policies that created disparities in store manager compensation. The district court denied Appellants’ motion for leave to amend.
The Court addressed the district court’s two primary reasons for denying Appellants’ request for leave to amend their complaint: (1) the proposed amendment was foreclosed by the Wal-Mart case and (2) the amendment would be prejudicial to Family Dollar.
The Court rejected (1) and held that the Appellants’ proposed amendment was not foreclosed by Wal-Mart. In Wal-Mart, the Supreme Court held that the employees’ allegations regarding manager discretion over employee pay were insufficient to satisfy the commonality requirement for class actions. However, Wal-Mart involved the exercise of discretion by lower-level employees, as opposed to upper-level, top-management personnel. In addition, it was not the subjective discretion itself, but the fact that it was not exercised in a common way with some common direction that prevented class certification in Wal-Mart. Furthermore, Wal-Mart indicated that even where the complaint alleges discretion, if there is also an allegation of a company-wide policy of discrimination, the putative class may still satisfy the commonality requirement for certification. In this case, the Court held that while the original complaint failed the commonality standard set forth in Wal-Mart, the proposed amended complaint did not. The proposed amendment complaint clearly specified four company-wide practices regarding employee pay, which is more in line with Wal-Mart’s requirements of uniform corporate policies or high-level corporate decision-making in a “common way under some common direction.” Furthermore, the discretionary decisions set forth in the proposed amended complaint were made by high-level corporate decision-makers with authority over a broad segment of Family Dollar’s employees, not on an individual store level as in Wal-Mart. And, in any event, our policy favors liberal amendment of complaints.
The Court also rejected (2) and held that the amendment would not be unduly prejudicial to Family Dollar. Although Appellants’ filed their proposed complaint over three years after their original complaint, this delay in filing was mostly due to Family Dollar. On numerous occasions, Family Dollar moved to dismiss the complaint and that had the effect of staying discovery, thereby prolonging the litigation. Furthermore, although Appellants did not seek to amend until briefing on Family Dollar’s motion for summary judgment was almost complete, this was not outside the typical briefing schedule for motions to dismiss or summary judgment. In addition, Appellants do not allege an entirely new theory in the amended complaint, but rather elaborate on one of two allegations that were previously pled in a conclusory fashion. Even if Appellants had sought a completely new legal theory, it would not be barred by judicial estoppel, which applies to inconsistencies based on fact rather than law or legal theory. Appellants’ present factual position in the proposed amended complaint is consistent with the original complaint, and the legal theory remains the same. In any event, the Court has held that “the filing of a supplemental pleading is an appropriate mechanism for curing numerous possible defects in complaint.” And finally, because prejudice can result where a new legal theory is alleged if it would entail additional discovery and evidentiary burdens on the part of the opposing party, this usually occurs where an amendment is offered shortly before or during trial. The parties here were still in discovery, many steps removed from trial.
– Sarah Bishop
Decided: August 26, 2013
The Fourth Circuit held that the Mid-Atlantic Retail Food Industry Joint Labor Management Fund (the “Fund”) was not a “labor organization” subject to the Labor Management Relations Act (“LMRA”), and that a genuine issue of material fact existed as to whether the United Food and Commercial Works Union Local 27 and 400 (“UFCW”) violated the secondary boycott provision of the National Labor Relations Act (“NLRA”). The Fourth Circuit therefore affirmed the decision of the United States District Court for the District of Maryland in part, vacated the decision in part, and remanded the case to the district court.
Waugh Chapel South, LLC and Waugh Chapel South Properties Business Trust (collectively “WCS”) were the commercial real estate developers of the Village at Waugh Chapel South, a shopping center in Anne Arundel County, Maryland. WCS planned to lease a storefront unit to Wegmans Food Markets, Inc. (“Wegmans”). The UFCW and the Fund opposed the project, as Wegmans does not employ organized labor. A union executive allegedly threated to “fight every project you [WCS] develop where Wegmans is a tenant” if Wegmans did not unionize. The unions subsequently brought fourteen legal challenges to the development project, thirteen of which involved surrogate plaintiffs. Ten of the petitions were subsequently withdrawn, two were dismissed, and two were mooted by subsequent developments.
WCS sued the unions under the LMRA, 29 U.S.C. § 187, alleging secondary boycott activity under § 158(b)(4)(ii)(B). The district court granted the Fund’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), concluding that the Fund was not a “labor organization” subject to the LMRA. The district court also did not find any of the unions’ legal challenges to be objectively baseless. The district court therefore dismissed WCS’s secondary boycott allegation under the Noerr-Pennington doctrine. WCS appealed.
The Fourth Circuit noted that, to fall under the NLRA’s definition of a “labor organization,” 29 U.S.C. § 152(5), an employee entity must meet the “dealing with” employers requirement. The Fourth Circuit found that neither the purpose nor the activity of the Fund involved “dealing with” employers: The Fund’s charter prohibits it from participation in union activities, and the Fund’s only interaction with an employer concerned the actual secondary boycott allegations. Furthermore, though the Fund defined itself as a labor organization for purposes of tax liability, the Fourth Circuit concluded that Internal Revenue Code definitions could not be imported to the NLRA. Addressing the unions’ motion to dismiss the secondary boycott allegation as a motion for summary judgment, the Fourth Circuit first reconciled the different standards for the sham litigation exception to the Noerr-Pennington doctrine found in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, and Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc. (“PREI”), 508 U.S. 49. The Fourth Circuit concluded that the strict two-step test from PREI applies to a single instance of alleged sham litigation, whereas the California Motor test applies to a series of legal proceedings. Applying the California Motor test, the Fourth Circuit noted, “the vast majority of the [unions’] legal challenges failed demonstrably.” The Fourth Circuit also noted other indications of bad-faith litigation, including the withdrawal of ten of the suits under suspicious circumstances.
– Stephen Sutherland
Decided: July 31, 2013
The Fourth Circuit affirmed the decision of the Benefits Review Board, awarding benefits to the estate of Dallas Owens.
Before developing a severe breathing disorder, Owens worked in West Virginia coalmines for nearly 30 years, the last ten of which he spent as an electrician for Mingo Logan Coal Company (“Mingo”). In 2003, as his condition worsened, Owens was forced to quit work. Subsequently, in 2008, Owens filed a claim under the Black Lung Benefits Act. Finding that Owens was eligible for benefits, the claims examiner ordered Mingo to pay him $1,048.10 a month. Mingo contested the award and requested a formal hearing. Following a formal hearing, the Administrative Law Judge (“ALJ”) awarded benefits to Owens, finding that the rebuttable presumption that he was totally disabled due to pneumoconiosis arose pursuant to 30 U.S.C. § 921(c)(4) and that Mingo failed to rebut the presumption. The Benefits Review Board (“Board”) affirmed, concluding that the ALJ’s findings were supported by substantial evidence and that the ALJ properly explained her findings. Mingo appealed and, before this appeal was heard, Owens died. Owens’ widow continued to pursue his claim on behalf of his estate.
On appeal, Mingo first argued as a preliminary matter that the Board improperly applied to it the rebuttal limitations of § 921(c)(4)—“The Secretary may rebut such presumption only by establishing that (A) such miner does not, or did not, have pneumoconiosis, or that (B) his respiratory or pulmonary impairment did not arise out of, or in connection with, employment in a coal mine”—even though the plain text shows that those limitations apply only when the “Secretary” seeks to rebut the presumption. Turning to the merits, Mingo contended that the ALJ failed to consider the medical evidence in its entirety and failed to provide an adequate rationale in support of her conclusions.
Addressing Mingo’s first contention, the Fourth Circuit concluded that, although the Board purported to subject Mingo to the rebuttal methods applicable to the Secretary in § 921(c)(4), it concluded in substance that no aspect of the presumption was rebutted. Accordingly, because the court found the record showed that § 921(c)(4)’s two methods of rebuttal did not affect the Board’s disposition of the case, it did not address Mingo’s claim that restricting employers to those methods improperly raised its burden on rebuttal. Next, the court addressed Mingo’s contention that the ALJ failed to consider the evidence in its entirety and to provide an adequate rationale in support of her conclusion. Rejecting this contention, the Fourth Circuit found that the ALJ considered all of the evidence that Mingo offered and gave appropriate consideration to the conflicting opinions. Additionally, where expert opinions were in conflict, the court found that the ALJ judge properly explained her decision to give more weight to certain experts over others based on their qualifications and her judgment.
-W. Ryan Nichols
Decided: July 31, 2013
The Fourth Circuit Court considered a former employer’s challenges to attorneys’ fees and other related fees awarded under the Black Lung Benefits Act (the BLBA), 30 U.S.C § 901 through 945. The court affirmed the attorneys’ fee awards entered in this case and modified the fees awarded for legal assistant services.
In 2005, the claimant filed a claim for benefits under the BLBA against his former employee, Eastern Associated Coal Corporation (Eastern). The claimant, who was a coal miner for seventeen years, had developed a mass on his right lung that required medical treatment. In 2010, the Administrative Law Judge (ALJ) found that the claimant suffered from complicated coal workers’ pneumoconiosis and awarded him benefits under the BLBA. The law firm representing the claimant later filed a petition for attorneys’ fees from work relating to the proceedings before the ALJ. The firm stated the years of experience and the hourly rates of the various attorneys who had worked on the case. Claimant’s counsel stated that few other firms accept new black lung cases and that few black lung claimants are ultimately awarded benefits. Claimant’s counsel also submitted a list of twenty-one prior fee awards issued in black lung cases handled by claimant’s counsel, as well as the hourly rates for attorneys with varying degrees of experience in the South Atlantic and Middle Atlantic regions. In the petition, claimant’s counsel similarly sought fees for work done by certain legal assistants at an hourly rate of $100. However, although counsel stated that $100 per hour was the firm’s “customary billing rate,” in black lung cases, they did not provide any information regarding market rates for legal assistants, as they did for attorneys’ fees. Eastern raised two challenges to the fee awards: (1) that claimant’s counsel did not provide sufficient market-based evidence of an hourly rate, which was necessary for calculation of an applicable lodestar figure; and (2) that claimant’s counsel requested an excessive number of hours as a result of its practice of quarter-hour billing.
The court noted that an award of attorneys’ fees and related fees under the BLBA will be upheld unless they are “arbitrary, capricious, [or] an abuse of discretion, or contrary to law.” Counsel for a successful black lung claimant is entitled to an award of attorneys’ fees under the BLBA. An award of attorneys’ fees is “mandatory” in such cases. Here, the claimant was successful and the attorney was therefore entitled to reasonable fees. The party seeking attorneys’ fees has the burden of proving reasonableness. The “lodestar” analysis is the starting point for calculating an award of reasonable attorneys’ fees, determined by multiplying “a reasonable hourly rate” by “the number of hours reasonably expended on the litigation.” After the lodestar amount is calculated, however, the court may adjust that figure based on consideration of other factors provided by the Department of Labor for black lung benefits cases. The BLBA also allows for legal assistant fees, which claimant’s counsel also has the burden of proving. The regulations provide that the rate awarded by the BRB for such services “shall be based on what is reasonable and customary in the area where the services were rendered for a person of that particular professional status.”
The court then addressed Eastern’s challenge to the first element of the lodestar amount, the reasonableness of the hourly rates. The court concluded that the agency adjudicators properly determined reasonable hourly rates for claimant’s counsel. Although Eastern challenged the reliability of prior fee awards as evidence of a prevailing market rate, the court’s precedent plainly permits consideration of such documentation. Although prior fee awards do not themselves actually set the market rate, they do provide inferential evidence of the prevailing market rate. However, the court also concluded that the agency adjudicators abused their discretion by determining a prevailing market rate of $100 per hour for the services rendered by the legal assistants. While claimant’s counsel provided evidence of the legal assistants’ training, education, and experience, counsel did not submit any evidence to support a prevailing market rate for the work of those legal assistance, nor the hourly rates that were awarded to legal assistants in those prior cases. Because the court was left only with the evidence of an hourly rate of $50 provided by Eastern, it reduced the hourly rate for the legal assistants from $100 to $50 per hour. The court then addressed Eastern’s challenge to the second element of the lodestar amount, the number of hours reasonably expended. The court found that Eastern failed to cite any contrary authority prohibiting the use of quarter-hour billing in black lung cases. However, the use of quarter-hour billing does not relieve agency adjudicators of their obligation under the lodestar method to ensure that “excessive, redundant, or otherwise unnecessary” fees are not awarded. Even so, the court found that Eastern’s argument that the present fee awards were excessive lacked merit because, essentially, it was grounded on Eastern’s blanket objection that “there was no proof that it took fifteen minutes to perform each and every task alleged.” Such a requirement improperly would escalate a fee applicant’s present burden to show that the rate claimed and the hours worked were reasonable. Further, it would create a disincentive for attorneys to participate in black lung cases.
– Sarah Bishop
Decided: July 17, 2013
The Fourth Circuit denied the National Labor Relations Board’s (the “NLRB”) application for enforcement of two bargaining orders because it found that the Obama Administration’s recess appointments to the NLRB violated the Constitution and, as such, the NLRB’s orders were invalid.
The Fourth Circuit consolidated two cases that involved labor disputes with Enterprise Leasing Company, LLC and Huntington Ingalls, Inc. (the “Companies”). In both cases, the NLRB rejected the Companies’ substantive arguments regarding bargaining agreements with their respective labor unions and ordered both to comply with two bargaining orders issued. The Companies challenged enforcement of the order first on substantive grounds and, in the alternative, arguing that the NLRB did not have a quorum to decide the issue. The basis of their quorum challenge was that the Obama Administration, in appointing three of the current NLRB members on January 4, 2012, violated the Constitution’s Recess Appointments Clause, which provides that the President “shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” The Companies argued that the Administration’s decision to appoint three NLRB members during an “intrasession” recess violated the Recess Appointment Clause. According to the court, Senate recesses can be classified into two categories: “intersession recesses–or, recesses that occur between two sessions of Congress–and intrasession recesses–or recesses that occur within one particular session of Congress.” The NLRB filed an application for enforcement of its orders to the Fourth Circuit.
The Fourth Circuit first addressed the case on statutory grounds. The court held that, under the applicable substantive laws, the NLRB’s orders were valid. The court then turned to the Companies’ constitutional challenge – whether the President’s three recess appointments on January 4, 2012 were valid under the Recess Appointment Clause. The court first pointed out that the Recess Appointment Clause has two important functions. The first is to ensure that the government remains in operation during the times when the Senate would be unable to advise and consent to a nomination. The second, and more important, function was to prevent the President from exercising his appointment power unilaterally, thereby preserving the separation of powers between the Executive and Legislative branches. The court noted that there is a current split of opinion between the circuits regarding what the term “the Recess” means under the Clause. Indeed, the Companies argued that the more narrow definition, adopted by the D.C. and Third Circuits, of “the Recess” limits the President’s recess appointment power to only intersession recesses. On the opposite side, the NLRB argued that the Eleventh Circuit’s definition of a broader reading of the term to allow for intrasession recess appointments. The court then discussed, at length, the different cases giving rise to the difference of opinions among the circuits and rationale for both arguments. After an extensive examination of the text of the Recess Appointment Clause and a recognition of the historical understanding of the clause up until the 1920s, the Fourth Circuit agreed with both the D.C. Circuit and Third Circuit that the Recess Appointment Clause only applies to “intersession” recesses of the Senate and rejected the interpretation of the clause as allowing for intrasession appointments under the “unavailable for business” definition proposed by the NLRB and supported by the Eleventh Circuit. As a result, the President’s January 4, 2012 appointments violated the Constitution and the bargaining orders were invalid because the NLRB did not have a quorum to decide the issues.
– John G. Tamasitis
Decided: July 17, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s judgment entered in favor of Plaintiff Richard Bunn, who slipped and fell on Defendant’s ship, under § 5(b) of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 905 (b) (the “Act”).
On February 16, 2007, longshoreman Richard Bunn (“Bunn”), who worked for the stevedore, CNX Marine Terminals Inc. (“CNX”), slipped on ice and injured himself while loading coal onto Oldendorff’s ship (“the ship”). That night, the CNX shift supervisor informed the chief officer that CNX employees intended to start loading operations, but could not do so until ice had been cleared from the path. The chief officer responded that the ship’s crew would salt and sand the path. Once Bunn was informed that the paths had been cleared, he boarded the ship and began loading coal. When loading hatch number three, Bunn slipped on ice and fell. Bunn’s co-worker told the chief officer that the ship was icy and needed to be salted. The chief officer responded that the salt supply was limited. When Bunn’s co-worker returned to load coal into hatch number three, he noticed that it was still icy. At the close of Bunn’s case, and again at the conclusion of all the evidence, Oldendorff moved for judgment as a matter of law, which the district court denied. The jury found Oldendorff negligent, whereupon Oldendorff renewed its motion and moved alternatively for a new trial, which the court also denied.
On appeal, Oldendorff raised two principal assignments of error: (1) the district court erred in denying the motions for judgment as a matter of law and (2) the district court misinformed the jury about the applicable law, and therefore erred in denying the motion for new trial.
Oldendorff based its appeal of denial on the motion for judgment as a matter of law on the fact that the icy deck was an open and obvious danger, and that Oldendorff only had a responsibility to warn of hidden dangers. The Court of Appeals found that while this was a correct statement of the law, liability did not depend on the duty to warn, as this was a simple case of primary negligence. Section 5(b) of the Act permits a longshoreman to “seek damages in a third-party negligence action against the owner of the vessel on which he was injured.” In Scindia, the Supreme Court outlined the three general duties ship owners owe to longshoremen, one of which is the “turnover duty,” which was at issue in this case. The turnover duty relates to the condition of the ship upon the commencement of stevedoring operations. The turnover duty has two components: (1) the duty to exercise ordinary care under the circumstances to have the ship and its equipment in such condition that an experienced stevedore could carry on its cargo operations with reasonable safety and (2) the duty to warn the stevedore of hazards that are known or should be known by the vessel, are likely to be encountered by the stevedore, and are not known by the stevedore and would not be obvious to or anticipated by him. In other words, the ship owner has a duty to warn only of latent hazards. However, the argument turned not on the openness or obviousness of the danger, but on the circumstances surrounding it. The district court did not dispute the validity of the open and obvious rule or its applicability to ice on the deck under general circumstances. The district court reasoned that while ice on the deck may have been open and obvious, it was not obvious that the ship owner would promise to take care of the hazard, and then not do so. The Court of Appeals found no error in the district court’s reasoning holding that a ship owner may still be liable for promising, but failing, to remedy a dangerous condition and that principle comports with accepted principles of tort law. This liability also comports with a well-settled principle of the turnover duty: the scope of that duty depends on the circumstances of each particular case. When the circumstances include a promise to remedy a dangerous situation, the ship owner may fail to exercise reasonable care if it does not fulfill its promise.
With regards to its second challenge that the district court misinformed the jury about the applicable law, Oldendorff reasoned that the court’s refusal to give the company’s requested open and obvious instruction deprived the jury of a full and accurate understanding of the law. The Fourth Circuit reviewed the trial court’s jury instructions from an abuse-of-discretion standard. The court held that Oldendorff failed to preserve a challenge to the jury instructions, as the company provided no record of an objection to the district court. Oldendorff provided only its requested instructions, and those that the court ultimately gave the jury, which does not preserve error for appeal. Further, the court indicated that even if it were to reach the issue, it would find it meritless, as the district court properly informed the jury of the open and obvious law.
– Sarah Bishop
Decided: July 5, 2013
The Fourth Circuit affirmed the judgment of the Department of Labor (“DOL”) Benefits Review Board (the “Board”) awarding automatic survivors’ benefits to miners’ dependents when the miner, at the time of death, was eligible to receive benefits under the Black Lung Benefits Act (“BLBA”), even though each claimant previously sought such benefits in unsuccessful prior claims.
In 2010, the Patient Protection and Affordable Care Act (“ACA”) reinstated the BLBA’s automatic survivors’ benefits for claims filed after Jan. 1, 2005, that were pending on or after the ACA’s Mar. 23, 2010 enactment date. Accordingly, survivors no longer need to show that the miner’s death was caused by pneumoconiosis (“Black Lung”); they need only show the miner was eligible for BLBA benefits at the time of his death. Respondent survivors in this action both applied for and were denied survivors’ benefits under the BLBA before the ACA amendment. Both Respondents filed subsequent claims after Jan. 1, 2005 which were either pending during the ACA amendment or filed after the amendment. Though neither claimant alleged new factual evidence since the denial of their original claims, Administrative Law Judges granted each survivors’ benefits, and in each case the Board affirmed.
The Fourth Circuit considered de novo whether a final decision denying benefits on a prior claim bars a survivor from receiving benefits through a subsequent claim where there have been no new factual developments. The Fourth Circuit found that the survivors’ subsequent claims do not implicate res judicata because entitlement under the amended BLBA does not require relitigation of the prior findings that the miners’ deaths were not due to Black Lung. The court determined that Congress created a “new condition of entitlement” which in turn created a “new cause of action” for purposes of res judicata. The Fourth Circuit went on to note that res judicata does not bar claims that did not exist at the time of the prior litigation. While acknowledging that new causes of action arise typically due to new factual development, the court stated that changes in the law can create the same effect. The Fourth circuit differentiated the Respondents’ previous and subsequent claims; the former turned on whether the deceased miners died of Black Lung and the latter turned on the entirely unrelated factual issue of whether the deceased miners were eligible for black lung benefits at the time of their deaths.
– E. Leary McKenzie
Date Decided: June 14, 2013
The Fourth Circuit affirmed the district court’s ruling that a rule promulgated by the National Labor Relations Board (the “NLRB”) requiring employers to notify employees of their rights under the National Labor Relations Act (the “NLRA”) exceeded the statutory authority granted by the NLRA. The Fourth Circuit held that the powers granted to the NLRB by the NRLA are primarily reactive and thus, because Congress did not explicitly grant the NLRB authority to promulgate notice-posting rules, the NLRB did not have the authority to promulgate the challenged rule.
On August 30, 2011, the NLRB promulgated a rule comprised of three subparts. Subpart A provides that “all employers subject to the NLRA must post notices to employees, in conspicuous places, informing them of their NLRA rights, together with the [NLRB] contact information and information concerning basic enforcement procedures.” Subpart B makes the failure to post the employee notice an “Unfair Labor Practice” (“ULP”) under the NLRA. Furthermore, under the rule, if the NLRB found that the employer failed to post the required notice, the NLRB could require the employer to post notice and toll of the statute of limitations for any employee ULP complaints. Subpart C allowed the board to “consider a knowing and willful refusal to comply with the requirement to post the employee notice as evidence of unlawful motive” in other proceedings. The NLRB passed the rule primarily based on the finding that “American workers are largely ignorant of their rights under the NLRA,” citing the “changing nature of the American Workforce” and “the overwhelming majority of private sector employees…not represented by unions” as the reasons for the employees’ ignorance of their rights under the NLRA. Before the rule went into effect, the Chamber of Commerce for the United States and for South Carolina (collectively, “Chamber”) filed a complaint in the District Court for the District of South Carolina for injunctive relief against the rule. The district court granted summary judgment to the Chamber.
On appeal, the NLRB first argues that the notice-posting rule should be analyzed under the deferential standard set forth in Mourning v. Family Publications Service, Inc. According to the court in Mourning, the NLRB’s rules should be upheld if they are “reasonably related” to the purposes granted under the NLRA. The Fourth Circuit disagreed, siding with the Chamber that the rule should be analyzed under the more common two-step approach laid out by the Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. The court found that Mourning only applies where “Congress delegated appropriate authority” under the board to make the rule. In this case, the court found that Congress did not specifically grant the NLRB the power to make notice-posting rules, and thus, the deferential standard did not apply.
Second, the NLRB argued that the court should uphold the rule “unless Congress expressly withheld the authority” to make the rule. The Chamber argued, on the other than, that the court should invalidate the rule unless the court found “that Congress intended to delegate to the [NLRB] the power to issue it.” The Fourth Circuit again agreed with the Chamber. The court found that in other contexts, such as the Food and Drug Administration, the court “deemed the question of whether Congress intended to grant authority” the appropriate consideration for determining rulemaking authority. The court further struck down the NLRB’s argument, finding that the NLRB had not been legislatively granted authority to promulgate a notice-posting rule. The court concluded instead that the NLRB’s power was specifically limited by congress to two functions: addressing ULP charges and conducting representation elections.
After resolving these two preliminary issues, the court analyzed the rule under the Chevron framework. First, in addressing the issue of “whether Congress has directly spoken to the issue,” the court applied traditional rules of statutory construction and found that the NLRA was unambiguous in requiring explicit or implicit authority to issue a rule. Thus, the court held that because the NLRA does not charge the NLRB to inform employees of their rights under the NLRA, the NLRB did not have the power to promulgate the notice-posting rule. Furthermore, the court found that the NLRA made clear that the NLRB is a “reactive entity,” and thus, does not have the power to affirmatively require employers to post notice without a finding of an ULP. Second, the court found that the NLRA’s structure does not provide the NLRB with the authority to promulgate notice-posting rules. Most importantly, the court held that the notice-posting rules are not “necessary to carry out” the NLRB’s responsibilities under the NLRA. The Fourth Circuit said that “the [NLRB] may not justify an expansion of its role to include proactive regulation of employers’ conduct by noting its reactive role under the [NLRA].” Third, the court held that the history of the NLRA “provides no countervailing evidence of an intent to bestow the [NLRB] with the power to enact the challenged regulation.” The court found that the history indicates that the NLRB was designed to serve a reactive role, limited to the functions expressly delegated by the NLRA. Finally, the court noted that Congress expressly provided for notice provisions in other labor laws, indicating that Congress would have expressly delegated notice-posting authority to the NLRB if it intended the NLRB to have such authority. Therefore, the court affirmed the district court’s holding that the NLRB did not have the authority to promulgate a notice-posting rule.
– Wesley B. Lambert
Decided: June 4, 2013
The Fourth Circuit affirmed the Administrative Law Judge’s (“ALJ”) decision to award black lung benefits under the Black Lung Benefits Act (the “Act”) to Cochran, a former Westmoreland Coal Company (“Westmoreland”) employee, finding that there was sufficient evidence to find that Cochran suffered from “legal pneumoconiosis.”
Plaintiff, Jarrell Cochran worked for the Westmoreland in West Virginia for at least sixteen years. Cochran also smoked cigarettes, consuming about a pack of cigarettes every week. In February of 2008, Cochran filed a claim for black lung benefits under the Act. The Department of Labor awarded benefits, which were affirmed by the ALJ. Under the Act, former coal miners are able to claim benefits by showing that they suffer from the lung disease called pneumoconiosis. One can prove pneumoconiosis by establishing either “legal” or “clinical” pneumoconiosis. “Legal pneumoconiosis” is broader than “clinical pneumoconiosis” and requires a showing of “any chronic lung disease or impairment…arising out of coal mine employment…includ[ing]…any chronic restrictive or obstructive pulmonary disease.” Westmoreland and Cochran presented competing experts at the hearing before the ALJ. The ALJ ultimately sided with Cochran’s expert, finding that his testimony established that Cochran suffered from legal pneumoconiosis.
On appeal, Westmoreland first argued that the expert’s testimony was insufficient to support the ALJ’s finding of legal pneumoconiosis, claiming that his testimony merely established the possibility that coal mine dust contributed to Cochran’s pneumoconiosis. The Fourth Circuit disagreed, finding that the expert’s testimony established that both coal dust and cigarette smoke were causes of pneumoconiosis, supporting the ALJ’s finding of legal pneumoconiosis. Second, Westmoreland argued that the ALJ erred by improperly discounting the testimony of its competing experts based on the court’s reliance on the Act’s preamble. The Fourth Circuit again affirmed the ALJ’s decision, finding that the preamble of the Act was an appropriate consideration. Furthermore, the Fourth Circuit emphasized that the preamble was only one of a number of factors that the ALJ considered in making his decision. The ALJ most heavily discounted Westmoreland’s experts because they failed to address legal pneumoconiosis in their analysis. The court concluded that at its core, the case was simply a battle of the experts, and after thoughtful and reasoned analysis, the ALJ was justified in finding Cochran’s expert more believable. Finally, Westmoreland argued that the ALJ erred by placing the burden of proof on Westmoreland to “rule out coal mine dust as a cause of Cochran’s respiratory impairment.” The Fourth Circuit disagreed, finding that Westmoreland’s reliance on the ALJ’s statement that “it is not established that coal dust did not aggravate [Cochran’s] asthma” was taken out of context. The court found that it was simply a part of the ALJ’s broader analysis and the ALJ properly placed the burden of proof on Cochran to establish the existence of legal pneumoconiosis. Therefore, the Fourth Circuit affirmed the ALJ’s conclusion that Cochran suffered from legal pneumoconiosis.
– Wesley B. Lambert
Date: May 2, 2013
The Fourth Circuit vacated the decision and order of the Benefits Review Board (“BRB”) awarding permanent partial disability benefits to Marine Repair Services, Inc.’s (“Marine”) former employee under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).
On October 26, 2007, Christopher Fifer suffered a shoulder, arm, and back injuries in an on-the-job car accident when he worked for Marine as a physically repairman of large shipping containers. The job was physically demanding and the injuries he sustained precluded him from being able to work for Marine ever again. Fifer was initially diagnosed with chronic lumbosacral strain, sciatica, and disc protrusion and herniation. His first functional capacity evaluation (“FCE”) in June 2008 found that he did not meet the physical demands of the job he held at Marine. The evaluator concluded that Fifer should limit himself to jobs within “medium” work parameters that would limit him to lifting twenty-five pounds or less on an “occasional basis.” In order to prepare himself to go back to work, Fifer completed a round of work-hardening and was reevaluated in September 2008. That evaluator found that he had ‘full time tolerance with the lower parameters of heavy work, with limitations in bending and material handling.’ He then saw his doctor for a release back to work; however it only resulted in more work restrictions. As a result, Marine would not re-employ him and Fifer went to work for his family’s restaurant where he earned significantly less than he did at Marine. In August 2009 Fifer underwent a second FCE that showed reduced lifting ability, but also showed that he could walk and stand without much hindrance at a slow pace. His restrictions remained the same and Marine would still not hire him back. Significantly, during an October 2009 deposition with the case, Fifer’s doctor clarified that based on the result of Fifer’s most recent FCE, he would have revised the September 2008 restrictions. Marine then discontinued temporary payments in January 2009 and Fifer filed his claim for permanent disability benefits under LHWCA. The administrative law judge (“ALJ) conducted a hearing on October 29, 2009 where Marine presented evidence of alternative employment for Fifer in the geographic area. Marine’s vocational rehabilitation specialist provided three labor market studies he prepared that showed alternative employment opportunities. However, the ALJ concluded that Fifer met his burden establishing a prima facie case of total disability since he could not return to his former position at Marine and that Marine’s studies about alternative employment provided inadequate levels of detail to shift the burden back to Fifer. As a result, the ALJ awarded permanent partial disability benefits to Fifer and the BRB affirmed the decision.
The Fourth Circuit held that Marine did, in fact, present suitable alternative employment options and that the ALJ’s conclusion and the BRB’s affirmation was erroneous. The Fourth Circuit explained that because (1) the ALJ made findings of fact as to Fifer’s physical limitations which were unsupported because they were did not show any evidence that Fifer’s medications interfered with him finding work and (2) ALJ faulted Marine for failing to address the restrictions provided by Fifer’s doctor which were unavailable to Marine when it conducted its evaluation of alternative employment, the ALJ imposed too heavy a legal burden under the LHWCA’s burden-shifting scheme. Therefore, the BRB’s order was vacated and remanded for further consideration.
John G. Tamasitis
Decided: May 30, 2013
The Fourth Circuit affirmed the judgment of the United States District Court for the Western District of North Carolina in its grant of summary judgment to Stephanie Crockett’s (“Crockett”) former employer on her hostile work environment claim under Title VII of the Civil Rights Act of 1963, 42 U.S.C. § 2000e (“Title VII”).
Crockett was employed as a radiologic technologist at Mission Hospital, Inc. (“Mission”) in February 2008 when she was reassigned and Harry Kemp (“Kemp”) became her supervisor; however he was unable to fire her. Kemp remained in that position until his death in March 2010. In December 2009, Crockett was initially counseled for her a lack of initiative based on her work history and concerns expressed by her co-workers. In January 2010, she was cited again for violating an administrative policy that prohibited the use of cellular phones and misrepresenting facts to Mission representatives. Finally, in February 2010, she was given a final warning for the use of a cellular phone while working and not on break. Crockett was required to sign the final warning and the warning provided that any further misconduct would result in termination of her employment. Kemp was not involved in the final warning. Shortly following the final warning, Kemp was allegedly involved in an incident with Crockett that included him accusing her of complaining about her performance evaluation that he authored and making unwanted sexual advances towards her which included physical touching. Crockett did not contact anyone in the Human Resources (HR) department after the incident. Following the incident, Crockett took leave pursuant to the Family Medical Leave Act for approximately one week; during which time she retained an attorney. When she returned to work, she met with HR and was informed that Kemp had reported continued misuse by Crockett of her cell phone and accused her of ‘flashing’ him to persuade him not to report her. At this point, Crockett told HR that Kemp had done something “horrific” to her, but refused to elaborate, stating that her attorney had instructed her not to do so. Crockett was subsequently placed on suspension pending the conclusion of an investigation. Kemp was later approached by HR with Crockett’s allegation, as was Crockett. Crockett, again, refused to provide details. During the second meeting with Crockett, HR provided her with a copy of the company’s sexual harassment policy and information on how to report a claim of harassment. HR continued its investigation and had another meeting with Crockett during which they told her to return to work and that their investigation had failed to validate Kemp’s claims against her. During the process, Crockett filed an Equal Employment Opportunity Commission (“EEOC”) charge against Kemp; however Kemp continue to deny anything inappropriate occurred. Finally, in March 2010, Crockett filed a formal complaint to report the incident with Kemp; however it only referenced her EEOC charge and provided no details of the incident. Later in the month, Crockett met with HR representatives and disclosed she had surreptitiously recording a conversation with Kemp. HR met with Kemp again where he again denied any wrongdoing. Kemp subsequently left work and committed suicide. Following Kemp’s suicide, Crockett played the tape recording she made which also recorded conversations she was having with patients while she was treating them and statements made by her patients. Crockett’s employment was terminated for tape recording interactions with her patients in violation of the Health Insurance Portability and Accountability Act (“HIPAA”). Crocket filed an action against Mission in state court alleging claims for employment discrimination in the form of hostile work environment and retaliatory discharge in violation of Title VII, as well as a state law claim for intentional infliction of emotional distress. Mission removed the action to federal court where Crockett agreed to dismiss the retaliatory discharge and intentional infliction of emotional distress claims. Mission moved for summary judgment on the remaining hostile work environment claim and the district court granted the motion. The district court held that Crockett could not establish that she incurred “tangible employment action” as a result of her claims and that Mission was entitled to an affirmative defense to defeat liability because it exercised reasonable care in dealing with the sexual harassment claims. Crockett appealed.
The Fourth Circuit explained that in order to establish a claim for a hostile work environment based on sexual harassment, the plaintiff must prove “(1) the conduct was unwelcome; (2) it was based on the plaintiff’s sex; (3) it was sufficiently severe or pervasive to alter the plaintiff’s conditions of employment and to create an abusive work environment; and (4) it was imputable on some factual basis to the employer.” If the claim is against the employee’s supervisor, the company is subject to vicarious liability, but if the plaintiff did not “suffer a tangible employment action,” the employer can assert an affirmative defense that can protect it from liability. The district court and the Fourth Circuit focused their decisions on the fourth element of the claim and the fact that Crockett did not suffer a tangible employment action. Such an action requires a significant change in the employee’s employment status, such as ‘hiring, firing, failing to promote, and reassignment with significantly different responsibility, or a decision causing a significant change in benefits.’ Crockett did not argue that her firing constituted tangible employment action because she was fired appropriately for violating HIPAA. Rather, Crockett challenged her seven-day suspension and argued that Kemp’s harassing conduct was not limited to the single incident and his false reporting led to her suspension that altered her condition of employment. The Fourth Circuit agreed with the district court that Crockett was unable to prove her suspension was caused by Kemp’s sexual harassment for three main reasons. First, when she was suspended, Crockett had yet to tell anyone that Kemp had sexually harassed her. Second, at the time of her suspension, Crockett had been given a final warning regarding the use of cell phones. Lastly, though Crockett asserted she had suffered tangible employment action because she had been suspended without pay, she could not prove she suffered any pecuniary loss because she could not prove that she had paid time off available to cover the suspension. In addition, the Fourth Circuit addressed the district court’s finding that Mission could raise an affirmative defense. The Fourth Circuit held taht Mission proved it exercised reasonable care to ‘prevent and correct promptly any sexually harassing behavior’ and Crockett failed to take advantage of any of the preventative or corrective opportunities provided to her. As a result, Mission was able to meets its burden to assert its affirmative defense.
– John G. Tamasitis
Decided May 24, 2013
The Fourth Circuit reversed the district court’s denial of accidental death and dismemberment (“AD & D”) benefits to the insured’s widow through group policies issued by American United Life Insurance Company (“AUL”). By construing the policy language against the drafting party, AUL, the court found that the insured’s drunk-driving death could be considered an “accident” under the policy and, therefore, awarded such benefits to the insured’s widow under the Employee Retirement Income Security Act (“ERISA”).
The insured, Richard Johnson (“Richard”) participated in an employee welfare benefit plan (“the Plan”) that provided him a standard AD & D and life insurance benefits of $25,000 through a policy paid for by Richard’s employer, and a voluntary AD & D and life insurance benefits of $100,000 through a policy paid for by Richard. When Richard died in a drunk-driving accident, his widow Angela Johnson (“Johnson”) received life insurance benefits, but AUL refused to pay AD & D benefits, concluding that Richard’s death was not the result of an “accident” under the Plan. Under the AD & D provision in the policies, AUL pays benefits “[i]f a Person has an accident while insured under the policy which results in a [covered] loss.” The policies do not explicitly define the term “accident,” however; the AD & D provision contains a limitations clause expressly excluding the payment of benefits in various circumstances. Drunk driving is not listed as a specific circumstance for such exclusion. However, drunk driving is expressly set forth as a limitation to the Seat Belt benefit under the employee-paid policy. In any event, AUL concluded that Richard’s drunk-driving death was not accidental due to the fact that he should have foreseen the widely known consequences of drinking excessive amounts of alcohol. As such, AUL issued a denial letter from which Johnson appealed under ERISA.
The Fourth Circuit sought to determine whether Richard’s crash qualified as an “accident” under the AUL policies. The court analyzed the policies as ERISA plans and, as a result, according to contract principles. Where a contract is ambiguous, the rule of contra proferentum requires strict construction of such terms in favor of the insured and in accordance with his or her reasonable expectations. Richard’s policy was ambiguous because the term “accident” was not defined and drunk-driving was not specifically listed in the limitations clause. Therefore, the court chose to construe the policy against the drafter, AUL, who had the ability to eliminate the ambiguity, but failed to do so. The court also addressed the issue of using North Carolina state law to define “accident.” The North Carolina statute defines an accident in terms of an accidental result rather than accidental means. Therefore, an accident can still occur where the insured intentionally acted, yet did not intend the injury that resulted from that act. In this case, the court found that although the insured became voluntarily intoxicated, he did not necessarily intend the car crash. Specifically, the court found that driving with a BAC of .289 is not substantially certain to result in death or severe injury. Therefore, according to principles of construction and the governing statute, the court found Richard’s death to be an “accident” and that AUL owed benefits under the AD & D provisions.
– Sarah Bishop
Decided: May 6, 2013
The Fourth Circuit affirmed the United States District Court for the Middle District of North Carolina.
Baldwin began working for the City of Greensboro (the “City”) as the Solid Waste Division Manager in February of 2001. In August of 2002, he informed his supervisors, Covington and Johnson, that at some point in the near future he would be called up to active duty with the United States Coast Guard. After revealing this information, Baldwin alleged that his employment relationship changed and he “began receiving harassment” from Covington. Further, he claimed that, after informing Johnson of the alleged harassment, he was informed that he would be subject to a reduction-in-force (“RIF”), to be effective upon his reporting to active duty. Baldwin was activated by the military soon thereafter and on January 23, he and Johnson signed an agreement, in which Baldwin agreed to receive various benefits in lieu of continued employment with the City following his release from active duty. Notably, the agreement further stated, “Mr. Baldwin agrees that this arrangement was made at his request and waives his right to any claims against the City of Greensboro.” On July 13, 2006 Baldwin filed a claim with the Department of Labor (“DOL”) under the Uniform Services Employment and Reemployment Rights Act of 1994 (“USERRA”). The DOL investigated his case until March of 2007, at which point the case was closed at Baldwin’s request. Subsequently, the DOL reopened his file in December of 2008 and again Baldwin asked the DOL to close his file in January of 2009. Thereafter, Baldwin filed his first complaint with the district court on September 29, 2009 alleging USERRA violations. An amended complaint was filed on February 1, 2011. On May 7, 2012, the district court granted the City’s motion for summary judgment and dismissed the case because the statute of limitations had run.
On appeal, Baldwin argued that the four-year statute of limitations set forth in 28 U.S.C. § 1658(a) did not apply to his claims because (1) USERRA did not “arise under” an act of Congress enacted after December 1, 1990 as it simply clarified the Veteran’s Reemployment Rights Act of 1974 (the “VRRA”); (2) USERRA falls into the “otherwise provided by law” exception to § 1658(a); and (3) the Veterans Benefit and Improvement Act of 2008 (“VBIA”), which eliminated the statute of limitations for USERRA claims, should apply retroactively to bar all time limitations on his claims. Rejecting Baldwin’s first contention, the Fourth Circuit found that, because USERRA established additional rights and liabilities that did not exist under the VRRA, Baldwin’s USERRA claims did “arise under” a post-1990 congressional enactment. Next, the court found that the exception to § 1658(a) did not apply as “Congress expressed no desire for USERRA claims to be immune from § 1658(a)’s limitations period.” Finally, the court addressed Baldwin’s argument that VBIA should apply retroactively to bar all time limitations on his claims, declining to do so because of the presumption against retroactivity and the fact that there was no congressional intent to revive otherwise stale claims by extending the VBIA’s elimination of the statute of limitations on Baldwin’s USERRA claims.
Having decided that the four-year statute of limitations did apply to Baldwin’s claims, the court turned to his argument that the limitations time was tolled—both legally and equitably—such that he timely filed his USERRA claims. In rejecting this argument, the court first observed that Baldwin’s action accrued on January 23, 2003 and noted that, absent tolling; the statute of limitations would have expired on January 23, 2007. Because the court found that, as a result of legal tolling, Baldwin’s claims would have expired on March 24, 2008 and that the record lacked any evidence to warrant equitable tolling, his claims were barred as he did not file his claim until September 29, 2009.
-W. Ryan Nichols
Decided: April 11, 2013
The Fourth Circuit affirmed the decision of the district court and held that (1) the employees’ union had adequately consented to the notice of removal of the action to federal court; (2) that temporary employees who brought the action failed to state a claim for relief; and (3) the district court did not err granting a motion to strike the temporary employees’ motion for reconsideration.
Five current or former Temporary Employees of the Board of Education of Prince George’s County, Maryland (the “School Board”) filed a class action complaint in state court against the School Board and the employees’ labor union (the “Union) asserting employee-compensation claims. The Temporary Employees claimed that, even though a collective bargaining agreement (“CBA”) excluded “temporary employees” from the “bargaining unit,” they nonetheless should have been entitled to benefits of an arbitration award. The arbitration award at issue was based on a grievance filed by the Union against the School Board. The Union asserted that the School Board’s practice of hiring temporary or substitute employees and retaining them in the same position for more than 60 days was in violation of the CBA. The arbitrator decided the School Board’s conduct did, in fact, violate the CBA and issued a decision that directed, inter alia, the Union and School Board to reach a settlement agreement. Under the settlement agreement, the School Board agreed to pay over $1 million in back-pay and agreed to hire an additional number of full-time “bargaining unit employees.” The Temporary Employees subsequently filed a class action seeking a declaratory judgment that the arbitration award applied to their class as well as the permanent employees. They also claimed that the Union “breached its duty of fair representation by fraudulently misleading” the Temporary Employees about the arbitration decision and accepting a payoff from the School Board. The Temporary Employees also asserted that, based on being employed by the School Board for more than 60 days in the same position, should be considered third-party beneficiaries under the CBA and therefore entitled to the same compensation and benefits as full time employees.
The School Board filed a notice of removal, pursuant to 28 U.S.C. § 1441, in which they stated that the Union had been consulted and consented to the removal of the action to federal court. Shortly after the case was removed, the Union filed a motion to dismiss the complaint for failure to state a claim. The Temporary Employees opposed the motion to dismiss and filed a motion to remand the case back to state court. They argued that the Union’s should have been required to file its own notice of removal and, as a result, the removal was “defective.” The motion to remand was denied by the district court and it also dismissed all claims under Rule 12(b)(6). The Temporary Employees then filed notice of appeal and, several weeks later, filed a motion in the district court requesting reconsideration on the order dismissing the complaint. The School Board filed a motion to strike the motion for reconsideration on the grounds that it was untimely. The district court granted the School Board’s motion to strike. On appeal, the Temporary Employees asserted, inter alia, (1) that the Union’s consent to removal was inadequate; (2) that the district court incorrectly concluded the Union did not owe the temporary employees a duty of fair representation and they were not entitled to the arbitration award; (3) that the district court erred in dismissing the claim for breach of the CBA under the “third-party beneficiary theory”; and (4) that the district court abused its discretion by striking its motion for reconsideration.
First, the Fourth Circuit tackled the challenge to the removal petition. The court noted that it had not yet addressed the precise issue of what constituted adequate notice of removal for multiple defendants. The Temporary Employees asserted that because the Union had not signed the notice of removal nor did it file its own notice in a timely manner or provide written consent to the School Board’s notice, the removal was defective and should be remanded back to state court. The court admitted that the text of 28 U.S.C. § 1446, which provides the requirements for removal, “does not address how a case involving multiple defendants is to be removed or how the defendants must coordinate removal, if coordination is required.” Based on Supreme Court precedent, the only requirement was that of “unanimous consent” which requires all defendants to consent to removal. However, binding precedent had yet to specify, “how [multiple] defendants are to give their ‘consent’ to removal.” According to the court, some circuits have adopted a “formal approach” that requires a signature from all defendants to constitute a proper petition for removal. Other circuits have adopted a “less formal process” which is akin to what the defendants in this case did. The Fourth Circuit adopted the “less formal process” and concluded that, “a notice of removal signed and filed by an attorney for one defendant representing unambiguously that the other defendants consent to the removal satisfies the requirement of unanimous consent for purposes of removal.” Next the Fourth Circuit took up the Temporary Employees’ allegation that the Union breached its “duty of fair representation.” The Fourth Circuit affirmed the district court’s decision to dismiss the claim because it agreed with the lower court that the Union owed no duty to the Temporary Employees because the arbitrator’s decision limited the award only to “permanent employees” and expressly rejected including temporary employees who were not identified in the CBA as being part of the “bargaining unit.” In addition, the Fourth Circuit upheld the district court’s dismissal of the Temporary Employees’ “third-party beneficiaries” theory. The court again relied on the expressed language in the CBA that excluded Temporary Employees from the bargaining unit and, as a result, rejected the theory as against the plain language of the CBA. Finally, the Fourth Circuit agreed with the district court and affirmed its decision to grant the School Board’s motion to strike the motion to reconsider the court’s order dismissing the complaint. Though the district court did not provide any rationale for its decision on this issue, the Fourth Circuit surmised that it could have been decided based upon the fact that the Temporary Employees’ motion was filed after the 28-day period as governed by Rule 59(e) and, “more importantly,” the Temporary Employees did not advance a new argument that would require the district court to alter its judgment.
– John G. Tamasitis
Decided: March 21, 2013
The Fourth Circuit Court of Appeals affirmed the judgment of the district court in dismissing Trail’s complaint for failure to state a claim under the Labor-Management Reporting and Disclosure Act (LMRDA).
Melissa Trail was employed by General Dynamics until she was suspended on March 26, 2009. Trail belonged to Local 2850 of UAW/United Defense Workers of America (“Local 2850”). Trail was suspended after the plant’s unionized employees went on strike, and Trail was charged with felony identity theft for taking part in publishing the salaries and Social Security numbers of the facility’s salaried employees. Although the charges were ultimately dismissed against Trail, she was fired on September 15, 2009. After Trail was suspended, but before she was fired, Trail witnessed the Union’s President and Vice President viewing pornographic images on a work computer. After this incident, Trail claims that the company began to retaliate against her. As a result of this retaliation Trail brought an action claiming the company violated the LMRDA. The district court concluded that Trail failed to state a claim and granted the defendants’ motion to dismiss.
Trail argued on appeal that it is not necessary that she allege that she was formally “discipline[d]” within the meaning of the Act in order to have a viable retaliation claim under LMRDA. The court of appeals stated that in this instance the district court did go too far in curtailing an employee’s free-speech rights under the Act. In deciding whether or not a union member’s speech falls within the Act, the court adopted the test set forth in the Eighth Circuit which analogizes the rights of union members to the First Amendment rights of government employees. In order for the speech to be protected it must be of “union concern.” The court held here that Trail did not speak on a matter of union concern when she reported the alleged pornography incident, therefore affirming the judgment of the district court.
Decided: March 15, 2013
Karen Balas appealed the district court’s denial of relief on her claims of discrimination, retaliation, and hostile work environment, brought under Title VII of the Civil Rights Act of 1964 (“Title VII”), as well as her claims of wrongful discharge, assault, and battery, brought under Virginia state law, against Huntington Ingalls Industries, Inc., (“Huntington Ingalls”) the successor to Balas’s former employer, Northrup Grumman Corporation. For the following reasons, the Fourth Circuit affirmed the district court’s decision.
This case began after Balas was fired for falsifying some of her time records while employed by Northrup Grumman. Shortly after she was fired, Balas began the administrative process with the Equal Employment Opportunity Commission (the “EEOC”), which ultimately concluded with the EEOC’s dismissal of her charge and its issuance of her right to sue letter. Balas subsequently filed a pro se action in the district court, alleging the Title VII and state law claims listed above. In response, Huntington Ingalls filed a motion for judgment on the pleadings, and the district court granted this motion in part.
On appeal, the Fourth Circuit first addressed “Balas’s argument that the district court erred in considering only her amended EEOC charge, and not the contents of her intake questionnaire or the two letters she submitted to the EEOC.” The Court noted that Balas’s argument depends on Fourth Circuit precedent establishing “the fact that federal courts lack subject matter jurisdiction over Title VII claims for which a plaintiff has failed to exhaust administrative remedies,” and it reviewed this subject matter jurisdiction claim de novo. After reviewing the procedural steps undertaken by Balas at the EEOC, the Court noted that “[i]n any subsequent lawsuit alleging unlawful employment practices under Title VII, a federal court may only consider those allegations included in the EEOC charge.” (citation omitted). Following this directive, the Court stated that it was “not at liberty to read into administrative charges allegations they do not contain” and agreed with the district court in concluding that “[t]he intake questionnaire and the letters Balas submitted to the EEOC cannot be read as part of her formal discrimination charge without contravening the purposes of Title VII.” Accordingly, the Court affirmed the district court’s refusal to consider any allegations not included in Balas’s EEOC charge.
Next, the Court considered the district court’s denial of leave for Balas to amend her complaint. While acknowledging Rule 15(a)’s (Fed. R. Civ. Pro.) instruction that “[l]eave to amend a pleading should be freely given ‘when justice so requires,’” the Court agreed with the district court’s determination that “Balas’s proposed amendments would be futile.” Therefore, citing to Fourth Circuit precedent holding that “[l]eave to amend a pleading should be denied only when … the amendment would be futile,” the Court found that the district court did not abuse its discretion in denying Balas’s leave to amend her complaint.
Third, the Court looked at “Balas’s Title VII claim of retaliatory discharge” and reviewed the district court’s summary judgment grant in favor of Huntingon Ingalls de novo. The Court began by listing the elements required to be satisfied in order to establish a prima facie case of retaliation. Ultimately, the Court found that Balas could not establish her claim because she failed to present evidence showing the requisite causal connection between her employment termination and her alleged protected actions (i.e., her alleged complaints of discrimination to her former supervisor). Therefore, the Court affirmed the district court’s grant of summary judgment to Huntington Ingalls on the retaliatory discharge claim.
Finally, the Court considered the district court’s grant of summary judgment in favor of Hungtington Ingalls on the assault and battery claims. With respect to the battery claim, the Court found that Balas had failed to raise a genuine question of material fact “as to whether the hug [the alleged battery] was objectively offensive.” Therefore, the Court found that Balas’s claim failed to satisfy the state law’s requirement that the alleged act be objectively offensive in order to be considered battery. With respect to the assault claim, the Court found that “Balas presented no evidence that the hug was harmful or offensive, or that [her supervisor] intended the hug to involve any contact beyond the hug itself or intended to make Balas think that it would.” Therefore, the Court found that Balas had failed to establish the necessary elements of an assault claim and affirmed the district court’s summary judgment grant as to the assault and battery claims.
– Allison Hite
Decided: March 6, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s judgment awarding Francine Helton retroactive pension plan payments for a time period where she was eligible for benefits, but was unaware that she was eligible. Francine Helton worked for AT&T from 1980 until 1997; she left AT&T to begin a restaurant and for a period of time was on an unpaid leave of absence before finally resigning on May 30, 1997. In August 1997, AT&T amended its pension plan and allowed certain participants to elect benefits at age fifty-five without benefit reduction; Helton was in this category and eligible to receive benefits in October 2001 when she turned fifty-five. Two letters were mailed to plan recipients notifying them of the change, but Helton never received any communication about the change. When Helton was approaching her sixty-fifth birthday, she contacted the pension plan about her benefits and was mailed some information. Helton discovered, through this information, that she was eligible to receive benefits immediately even though she was not sixty-five. Helton requested payments back-dated to when she was fifty-five but her request was denied. Helton appealed the decision to the AT&T Employee Benefits Committee and her appeal was denied; she then filed suit under ERISA. After a bench trial, the district court awarded her back benefits in the amount of $121,563.90 plus interest.
AT&T appealed challenging the district court’s findings of fact and conclusions of law underlying the judgment. AT&T alleged that court erred in relying on evidence outside the administrative record; it erred in holding that AT&T’s denial of Helton’s claim was not reasonable; it should have remanded the case to AT&T for reconsideration after finding that AT&T abused its discretion in denying Helton’s claim; and it was precluded under the terms of the plan from awarding Helton retroactive benefits. First, AT&T claimed that the court was barred from considering evidence outside the administrative record. The Fourth Circuit distinguished the precedent relied on by AT&T and stated the proper inquiry is whether the evidence was known by the plan administrator at the time of the decision. Second, the Fourth Circuit examined AT&T’s claim that the court erred in holding Helton’s claim was not reasonable by looking at the eight Booth factors and determined that AT&T did abuse its discretion in denying Helton’s claim. Third, AT&T did not raise the issue of remand at trial, and therefore, this issue was reviewed under a plain error standard. The Court concluded that because remand is not required, this did not constitute plain error or a miscarriage of justice. Finally, the Court concluded that AT&T was not precluded from awarding retroactive benefits under the plan. The Court also considered AT&T’s claim that the court incorrectly held that AT&T violated the reporting and disclosure requirements of ERISA by not properly notifying Helton. Though there was conflicting evidence on this issue, the holding was properly supported by various testimony and therefore did not constitute an abuse of discretion.
-Jennifer B. Routh
Decided: March 4, 2013
In this case, the Fourth Circuit held that the Employee Retirement Income Security Act of 1974 (ERISA) does not preempt the enforceability of a state law waiver that was entered into by a beneficiary of certain retirement and life insurance plans. The ex-husband of the decedent claimed that he was the rightful owner of the proceeds from the decedent’s ERISA plans because, although the decedent and he had obtained a divorce decree and marital settlement agreement, the decedent had failed to remove him as the named beneficiary of the plans. Despite this oversight on the decedent’s behalf, the terms of the marital settlement agreement provided that the ex-husband waived any interest in the wife’s retirement plan and that he released and relinquished any future rights as a beneficiary under the decedent’s life insurance policy. The court stated that the ERISA provision which commands the plan administrator to “distribute benefits to the beneficiary named in the plan” did not preempt the enforcement of the ex-husband’s wavier to the decedent’s property. Thus, the court concluded that the ERISA plan administrator was to pay out the proceeds to the ex-husband as beneficiary, but that in accordance with a prior state court order, the ex-husband was to waive his rights and distribute the money back to the decedent’s estate.
-John C. Bruton, III
Decided: January 14, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of all claims against Bank of America brought by representatives of a putative class of plaintiffs. The plaintiffs were participants in a Pension Plan and 401(k) plan and brought breach of fiduciary duty claims against the bank under ERISA.
The plans in question were two ERISA benefit plans sponsored by Bank of America: a Pension Plan and a 401(k) Plan. The Pension plan is a defined benefits plan where a participant’s benefits are based on compensation and investment credits. The 401(k) Plan is a defined contribution plan where participants contribute pre-tax earnings and the Ban matches the contribution. Plaintiffs alleged that the Bank and individual members of the Bank’s Corporate Benefits Committee breached their fiduciary duties under ERISA by selecting and maintaining Bank-affiliated mutual funds in the investment menu for the Plans.
Plaintiffs originally made claims regarding breach of fiduciary duties and engaging in prohibited transactions regarding both plans in their Second Amended Complaint. The district court accepted the magistrate’s recommendation that the claims with regard to the Pension Plan be dismissed due to lack of Article III standing due to the failure by plaintiffs to allege an injury in fact. In their Third Amended Complaint, plaintiff’s asserted numerous claims on behalf of the 401(k) Plan on the part of two classes: the “Removal Class” (consisting of 401(k) Plan participants who invested in certain mutual funds between August 7, 2000, and December 31, 2007) and the “Selection Class” (consisting of 401(k) Plan participants who invested in certain mutual funds between July 1, 2000 and December 31, 2007). The claims dealt with standards for removing and including Bank sponsored mutual funds. The Bank moved for summary judgment on the issue of limitations and the district court agreed, stating that the only transaction that caused injury occurred more than 6 years before the case was filed, thus time-barring the claim under ERISA. The court refused to allow the plaintiffs to file a Fourth Amended Complaint and dismissed the claims with prejudice. The plaintiffs’’ appeal followed.
The Fourth Circuit agreed that the plaintiffs did not have Article II standing with regards to the Pension plan because even though ERISA requires claims to be filed on behalf of the plan as a whole, plaintiffs have to show a direct injury and not just the risk that a plan will be underfunded. Furthermore, the plaintiffs do not have standing as assignees, since no contractual assignment was involved, under trust law, or due to a deprivation of statutory rights. In regards to the limitations issue, ERISA requires all claims to be brought within 6 years, or 3 years if the plaintiff had actual knowledge of the breach. This period begins immediately upon the last action which constituted a part of the breach or violation. Here, the section of the Bank sponsored funds was the last action which constituted a part of the breach. The failure of the Bank or the CBC to remove the funds does not qualify as a transaction under ERISA. Therefore, the omission or failure to act by the bank cannot be an action to start or re-start the limitations period. With regards to the selection class, who were not able to participate in the bank sponsored funds until August of 2000, the original selection of the funds in 1999 constituted the breach. Finally, the Court held that the district court did not abuse its discretion by dismissing the case with prejudice because it was apparent that the district court dismissed with prejudice because plaintiffs did not move to amend the Third Amended Complain, and because plaintiffs had already filed four complaints in this matter.
–Jonathan M. Riddle
Decided on: January 9, 2013
Kimberly Laing appealed the district court’s award of summary judgment to Federal Express Corporation (“FedEx”). The Fourth Circuit held that the district court’s summary judgment award was proper because Laing did not present direct evidence of discrimination, nor did she satisfy the McDonnell Douglas burden-shifting standard. Accordingly, the Fourth Circuit affirmed the district court’s award of summary judgment in favor of FedEx.
Kimberly Laing fell while making deliveries for FedEx and suffered significant knee damage. Laing provided her supervisor a note from a specialist ordering surgery. The supervisor later noted that Laing might have been falsifying delivery records in order to artificially enhance performance. Laing applied for leave under the FMLA, which FedEx granted. When Laing returned, her supervisor placed her on an investigatory suspension with full pay. After the investigation concluded, FedEx terminated Laing’s employment because Laing had falsified her records. Laing filed suit and argued that FedEx terminated her employment in violation of the FMLA in retaliation for her decision to take medical leave and by failing to restore her to an equivalent position upon her return from leave. The district court granted summary judgment to FedEx, stating that Laing established a prima facie case of discrimination, but failed to show that FedEx’s reasons for termination were pretextual.
On appeal, Laing contends she presented direct evidence of discrimination in the form of comments made to her by various supervisors. However, the statements did not suggest a discriminatory attitude, but rather constituted informal, lighthearted communication between coworkers. Next, the Fourth Circuit turned to the McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), burden-shifting framework, wherein the plaintiff must establish a prima facie case of discrimination to shift the burden to the employer to articulate a nondiscriminatory reason for its action. The plaintiff is then entitled to prove that the employer’s explanation “was in fact pretext.” Id. at 802–04. Laing established a prima facie showing of discrimination, but FedEx met its burden in articulating a “legitimate, nondiscriminatory reason for” suspending Laing, because FedEx discharged her for falsifying records. Id. at 802. Laing did not satisfy the burden of proving that FedEx’s reason for terminating her was pretextual, primarily because she did not produce evidence that a similarly situated employee was given more favorable treatment. Accordingly, the Fourth Circuit affirmed the district court’s award of summary judgment in favor of FedEx. Laing also argued that FedEx denied her right under the FMLA to be restored to her original position before taking leave. The Fourth Circuit also affirmed the district court’s grant of summary judgment as to this claim, noting that the FMLA does not afford an “absolute right to restoration.” Yashenko v. Harrah’s N.C. Casino Co., 466 F.3d 541, 549 (4th Cir. 2006).
Decided: January 9, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s grant of summary judgment to United Parcel Service (UPS), Young’s employer, regarding claims of discrimination under the Americans with Disabilities Act (ADA) and Pregnancy Discrimination Act (PDA) when Young was unable to continue working during her pregnancy.
Peggy Young started working for UPS in 1999 and started driving a delivery truck in 2002. She held a part-time, early morning driver position by 2006 and throughout the relevant time period. In 2006, Young was granted a leave of absence to try a third round of in vitro fertilization after two failed attempts. When Young became pregnant, her doctor provided a note stipulating that she should not lift more than twenty pounds for the first twenty weeks of pregnancy and not more than ten pounds thereafter. Martin, UPS’s occupational health manager, informed Young that UPS policy would not permit her to continue working with a twenty-pound lifting restriction because the job requires being able to lift up to seventy pounds. Martin also concluded that Young was ineligible for a light duty assignment. Young used the remainder of the leave provided by the Family Medical Leave Act and went on an extended leave of absence receiving no pay and losing her medical coverage. Sometime after she gave birth she returned to work.
Young sought damages for sex and race discrimination under Title VII and for disability discrimination under the ADA. She voluntarily dismissed her race discrimination claim. UPS moved for summary judgment after eighteen months of discovery, and the district court granted its motion. Young claimed that UPS impermissibly regarded her as disabled in violation of the ADA, and she contended that UPS discriminated against her in violation of the PDA. A “regarded as” disabled claim under the ADA “includes the circumstance when the employer ‘mistakenly believes that an actual, non-limiting impairment substantially limits one or more life activities.’” Young alleged that UPS considered her pregnancy-related work limitations as a disability. However, because UPS did have objective evidence that she was unable to perform some of her central job functions and the “relatively manageable” weight restriction and short duration, the court concluded there was no evidence that Young’s pregnancy or lifting restrictions constituted a disability within the ADA.
Young’s claim under the PDA stemmed from a UPS policy which entitled workers who were injured on-the-job, disabled within the meaning of the ADA, or who lost their DOT certification to light duty work, but did not allow pregnant workers to qualify for light duty work. Young, and an amicus brief from the ACLU, argued that the PDA requires employers to treat all employees the same and that Young should have been entitled to light duty work because it was made available to other workers. The court rejected this claim reasoning that interpreting the PDA would require employers to provide accommodation or light duty work to a pregnant worker whose restrictions arise from her pregnancy while denying any such accommodation to an employee unable to lift as a result of an off-the-job injury. The court concluded that this result was contrary to the legislative intent of the PDA and held that when a policy treats pregnant and nonpregnant workers alike, the employer has complied with the PDA.
The court also concluded that Young failed to make out a prima facie case under the McDonnell Douglas burden shifting framework. Young met the first three elements by showing that she was a member of the protected class, raised a genuine issue of material fact regarding her satisfactory job performance, and she suffered an adverse employment action when she could not continue work. However, she failed to produce evidence that similarly-situated employees outside the protected class received more favorable treatment. The court reasoned that a pregnant worker is not similar in ability or inability to work to an employee who is disabled under the ADA or prevented from driving a truck because the worker lost his or her DOT certification. Therefore, according to the court, while the UPS policy may be characterized as “insufficiently charitable,” Young cannot establish a claim for discriminatory animus directed at a protected class of employees.
-Jennifer B. Routh
Decided: December 14, 2012
Ashland Facility Operations, LLC, a nursing facility near Richmond, Virginia, petitioned the Fourth Circuit to review an order by the National Labor Relations Board that required Ashland Facility to negotiate with a newly unionized group of Ashland Facility employees. The NLRB’s order came on the heels of a contentious union representation election, in which Ashland Facility claimed that the election results had been tainted by “unlawful appeals to racial prejudice.” An administrative law judge rejected the nursing facility’s objections and certified the union “as the exclusive bargaining representative” for the employees. The ALJ’s order was later affirmed by the NRLB; however, Ashland Facility refused to bargain with the union regarding its employees’ terms and conditions of employment. Consequently, the union filed a complaint with the NLRB alleging that Ashland Facility’s intransigence was a violation of the National Labor Relations Act. The NRLB ruled in favor of the union and ordered the nursing facility to negotiate.
Petitioning the Fourth Circuit for review, Ashland Facility argued that during the campaign period the Virginia NAACP was acting as an apparent agent of the union. Because of this agency status, Ashland Facility argued, the alleged inflammatory statements made by the Virginia NAACP’s executive director should have been closely scrutinized by the NLRB in certifying the election results. The Fourth Circuit first determined that there was sufficient evidence to support the NLRB’s finding that the NAACP chapter was not an agent for the union. In addition, the court held that the executive director’s comments could not be deemed racially inflammatory so as to subject the election to a heightened standard of scrutiny. According to the court, the statements could not be considered “inflammatory” because they were not designed solely to “inflame the racial feelings of voters,” but instead were “made in the context of raising legitimate concerns about the working conditions” at Ashland Facility. Whatever the effect of the executive director’s statements, the court stated, the nursing facility failed to demonstrate that their employees did not decide freely how to vote in the union representation election. And finally, the Fourth Circuit held that even if the comments were sufficiently inflammatory to invalidate the election, the comments were made prior to the “critical period”—the time between the filing of the representation petition and the election—and thus likely carried no influence over the vote. Therefore, the court denied Ashland Facility’s petition and ordered the enforcement of the NLRB ruling.
-John C. Bruton, III
Decided: December 7, 2012
The Fourth Circuit Court of Appeals affirmed the district court’s award of summary judgment in favor of the American Red Cross Greenbrier Valley Chapter, vacated the district court’s ruling that the Greenbrier Valley Chapter is an employer under the ADA, and dismissed the cross-appeal filed by the Greenbrier Valley Chapter.
Reynolds worked for the Greenbrier Valley Chapter of the American Red Cross in Lewisberg, West Virginia; he first worked as a volunteer starting in 1994 and then, in 2004, he was paid for teaching health/safety, first aid, and CPR classes. Eventually, he became a part-time employee in 2005. During Reynolds’ first week as an employee, he was instructed to help move a baby grand piano from the home of a donor to his boss’ personal residence. Reynolds complained of his back hurting and was later examined in the emergency room. When Reynolds returned to work, his doctor gave him a note stating he could only lift weights up to 15 pounds, but despite this restriction, Reynolds continued to lift things in excess of 15 pounds. Reynolds told his boss twice that he wanted to file a workers’ compensation claim, but was told he would be dismissed if he did so and that the Red Cross would fight the claim. In January 2007, Reynolds was terminated due to budget restrictions. Reynolds filed an action claiming that he was fired because of his alleged disability, he was retaliated against for engaging in protected activities under the Americans with Disabilities Act (“ADA”), and his employer shared confidential medical information about his alleged disability.
To survive summary judgment on his claim under the ADA, Reynolds needed to produce evidence sufficient to show that he was a qualified individual with a disability, he was discharged, he was fulfilling his employer’s legitimate expectations at the time of his discharge, and the circumstances of his discharge raise a reasonable inference of unlawful discrimination. Reynolds claim failed at step one because he failed to produce evidence that he was disabled. First, the court determined that the 2008 amendments to the ADA were not applicable in Reynolds case because the amendments were not intended to be retroactive. Then, applying the law in effect at the time of the alleged conduct, the court held that Reynolds did not show that his injuries prevented or severely restricted him from doing things important to most people’s daily lives. Further, Reynolds did not demonstrate that he had a “record of” a physical impairment, nor could he satisfy the third possible definition of disability which is he was “regarded as” having a physical impairment. Reynolds claim for retaliation failed because he did not produce any evidence linking his alleged protected conduct and his termination. Finally, his confidentiality claim failed because he did not produce any evidence to support the claim.
The district court determined that the Greenbrier Valley Chapter of the Red Cross was an employer under the ADA, and the Chapter appealed this finding. The Fourth Circuit dismissed this appeal because it was rendered moot. By the court affirming the district court’s grant of summary judgment, any resolution regarding whether the Chapter is an employer would have no impact on the outcome of this matter.
-Jennifer B. Routh
U.S. Food Service, Inc. v. Truck Drivers & Helpers Local Union No. 355 Health & Welfare Fund, No. 12-1108
Decided: November 30, 2012
The Fourth Circuit Court of Appeals reversed the district court’s ruling that employer contribution funds in an Employment Retirement Savings Income Act (“ERISA”) health plan should be returned due to a mistake of fact or law. The district court ruled that the plan administrator’s determination that the funds were not due to a mistake was incorrect, but the Fourth Circuit held that the administrator’s decision was within its discretion and remanded the case.
ERISA provides that benefits of a health plan “shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.” However, ERISA permits return of an employer contribution only after the plan administrator determines that an employer’s contribution was due to a mistake of law or fact. The plan in question stems from a collective bargaining agreement (“CBA”) between Teamsters Local No. 355 and United Food Services (“USF”). USF makes contributions to the unions ERSIA health and welfare fund for the benefit of its employees. The contributions are based on the “straight time-hour” rate of hours worked by an employee with a maximum of 50 hours per week. USF and its predecessors have been a party to this fund since 1957 and the contribution agreement has not changed since then. Benefits Administration Company (“BAC”) manages the day-to-day operations of the fund, and only allows for return of USF contributions based on a mistake as provided for by ERISA. In March of 2008, USF discovered that from January 2006 until March of 2008, USF had contributed funds paid at the overtime rate. USF interpreted the CBA to require “straight time-hour” payments, which did not include the overtime rate. In March of 2008, USF halted the allegedly mistaken contributions and requested a return of the overpayments. The administrator interpreted the CBA to mean USF must pay at the applicable contribution rate up to 50 hours a week, even if that included an overtime rate. USF filed suit in the district court, and the district court agreed with USF that the “clear and unambiguous” language of the SBA only required contributions at the regular hourly rate. Furthermore, the district court granted the return of funds to USF.
The Fourth Circuit looked to the two ERISA provisions and held that the mechanism for return of mistaken funds gave the plan administrator broad discretion to determine if funds should be returned. The Court stated that Congress wanted to strike a balance between a system that was too restrictive or too lax to both encourage contribution and protect the financial stability of funds. Because of this, the Court agreed with other circuits that held an administrator’s decision should be evaluated for abuse of discretion, which is synonymous with deference. Therefore, it is the plan administrator, not the reviewing court, which determines first whether a given contribution was made by mistake and whether it should be returned to the contributing employer. Because the CBA language has not changed in 50 years, and because the administrator focused on course of dealing between the two parties, the administrator’s decision was not an abuse of discretion.
-Jonathan M. Riddle
Decided: August 20, 2012
Westmoreland Coal Company petitioned the Court of Appeals for review after the Benefits Review Board reversed an administrative law judge’s denial of Mae Ann Sharpe’s claim for survivor benefits from her husband under the Black Lung Benefits Act, 30 U.S.C. § 932.
William A. Sharpe, a coal miner, was awarded total disability benefits in 1993, and received those benefits until he died in 2000. A week after Mr. Sharpe’s death, his widow, Mae Ann Sharpe, made a claim for survivor’s benefits. Within two months of Mrs. Sharpe’s claim being filed, Westmoreland Coal Company, Mr. Sharpe’s employer, filed a modification request seeking reconsideration of Mr. Sharpe’s 1993 award of benefits. In 2004, an administrative law judge (ALJ) agreed to modify the 1993 award, retroactively denying Mr. Sharpe’s living miner’s claim and rejecting Mrs. Sharpe’s survivor’s claim. The Benefits Review Board (BRB) affirmed the ALJ’s decision in 2005. Mrs. Sharpe petitioned for review and the Court of Appeals vacated and remanded the case for further proceedings, because the ALJ had failed to exercise the discretion accorded to him with respect to the Modification Request. On remand, the ALJ again denied Mr. Sharpe’s living miner’s claim and Mrs. Sharpe’s survivor’s claim, and the BRB reversed.
In reversing the ALJ, the BRB concluded that retroactively denying Mr. Sharpe’s living miner’s benefits award in order to prevent Mrs. Sharpe’s survivor claim would not render justice under the Black Lung Benefits Act. The Court of Appeals upheld the BRB’s decision ruling that the ALJ abused his discretion in granting the employer’s modification request, explaining that unlike the BRB’s previous ruling in Sharpe I, the BRB was mindful of the deferential standard of review. Since the BRB properly concluded that the ALJ was guided by erroneous legal principles and abused his discretion in granting Westmoreland’s modification request, the Court of Appeals held that the BRB was correct to reverse ALJ’s ruling outright, rather than vacating and remanding for further proceedings. The Court of Appeals further held that the Board appropriately applied the doctrine of offensive nonmutual collateral estoppel to prove the elements of Mrs. Sharpe’s survivor’s claim based on its prior ruling in Collins v. Pond Creek Mining Co. The Court of Appeals ultimately denied Westmoreland’s petition for review and affirmed the BRB decision denying modification of Mr. Sharpe’s living miner’s benefits award and granting survivor’s benefits to Mrs. Sharpe.
Judge Agee wrote in dissent, arguing that the majority erred by improperly substituting the judgment of the appellate court, in this case the BRB, for that of the ALJ. Judge Agee further explained that BRB did not adhere to its statutory standard of review that findings of fact in the decision under its review should be conclusive if supported by substantial evidence in the record considered as a whole. Since BRB did not give proper deference to the ALJ’s decision, Judge Agee argued that Westmoreland’s petition for review should be granted, reversing the BRB’s decision and affirming the ALJ’s decision denying Mrs. Sharpe’s survivor benefits.
Decided: July 25, 2012
Plaintiffs brought multiple class action claims against Bank of America Corporation (BOA) for alleged violations of certain provisions of the Employment Retirement Income Security Act of 1974 (ERISA). The district court issued an order dismissing these class action claims. The court of appeals agreed with the lower court that the plaintiffs failed to state a claim upon which relief may be granted, and affirmed the district court’s judgment.
The plaintiffs and the class they represent are current and former employees of BOA, and participants in BOA’s pension plan. The thrust of plaintiffs’ claims is “that the Bank of America Pension Plan (‘the Plan’) employed a normal retirement age (‘NRA’) that violated ERISA in calculating lump sum distributions and further ran afoul of ERISA’s prohibition of ‘backloading’ in the calculation of benefit accrual.”
On appeal, the plaintiffs largely abandoned their claim regarding the NRA as used to calculate lump sum distributions, and the court agreed that the Plan’s NRA complies with ERISA in that respect. The court of appeals then addressed the plaintiffs’ second contention, that the Plan’s NRA violates ERISA’s backloading provisions. The court found this argument to lack merit since ERISA’s backloading rules do not apply once a plan participant reaches the NRA. In other words, “if the anti-backloading rules only restrict benefit accrual calculations prior to NRA, Plaintiffs cannot plausibly claim that a benefit calculation after NRA runs afoul of the backloading provisions of ERISA.”
The court also briefly addressed the plaintiffs’ claim that the Plan’s Summary Plan Description (SPD) affirmatively misled participants by describing an NRA different from that actually utilized by the Plan. While the court of appeals found that the district court’s holding with regard to this claim was erroneous, it affirmed the lower court’s judgment on other grounds, ultimately finding that the SPD adequately informed Plan participants of the manner in which benefits are calculated.
In summary, the court of appeals agreed with the district court that the plaintiffs failed to state a claim upon which relief may be granted with respect to the Plan’s NRA as used to calculate benefit accrual or the alleged violations of the backloading provisions, and affirmed the district court’s judgment.
– Kassandra Moore
Decided: July 9, 2012
In this case, the Fourth Circuit affirmed summary judgment for the Defendant superintendents of a correctional facility on a claim that they had violated certain employees’ First Amendment rights. The court held that the superintendents had not violated the employees’ rights by terminating their employment in alleged retaliation for filing discrimination complaints because the Plaintiffs’ speech did not involve a matter of public concern.
The Plaintiffs, James Brooks and Donald Hamlette, were corrections officers at a Virginia Department of Corrections (“VDOC”) facility who were fired after Brooks discussed with the VDOC’s Equal Employment Opportunity (“EEO”) that he was being singled out for unfair workplace treatment and Hamlette, a minority, filed a complaint with the EEO that he was being discriminated against on the basis of his race and religion. Shortly after they were fired, the VDOC Department of Employment Dispute Resolution reinstated both employees and awarded them back pay. The Plaintiffs subsequently brought a 42 U.S.C. § 1983 claim against the Defendants, alleging that the VDOC superintendents had violated their First Amendment right to free speech by firing them in retaliation for making their employment discrimination claims.
The District Court for the Western District of Virginia granted summary judgment for the Defendants, and on appeal the Fourth Circuit upheld that order. The court looked to its decision in Stroman v. Colleton County School District, 981 F.2d 152 (4th Cir. 1992) which provided that “personal grievances such as complaints about conditions of employment…do not constitute speech about matters of public concern that are protected by the First Amendment.” Applying this precedent, the court found that the speech that the Plaintiffs alleged had been curtailed was not a matter of public concern but pertained only to personal grievances with an employer. Thus, the First Amendment could not be invoked to protect the Plaintiffs’ complaints regarding employment favoritism. The court concluded by stating that it was not offering any view on the merits of any other claims the Plaintiffs may have, but rather, that the First Amendment was not violated in this employee-grievance dispute between these two parties.
-John C. Bruton, III
Decided: July 5, 2012
Debbie McCravy appealed the district court’s holding that her remedies under ERISA § 1132(a)(3) were limited to premiums improperly withheld by MetLife. As a Bank of America employee, McCravy participated in the company’s life insurance and accidental death and dismemberment plan issued by MetLife. McCravy elected to buy coverage for her daughter as an eligible dependent child under the plan and paid premiums that were accepted by MetLife from before her daughter’s 19th birthday until she was murdered at the age of 25. McCravy then filed a claim for benefits as the beneficiary of her daughter’s policy that was denied by MetLife because her daughter was 25 at the time of her death and no longer qualified as an eligible dependent child. MetLife attempted to refund the premiums they had accepted, but McCravy refused to accept the check.
McCravy then filed suit in federal court alleging breach of fiduciary duty and seeking recovery under § 1132(a)(3), which allows participants and beneficiaries “to obtain other appropriate equitable relief” to redress violations of ERISA or ERISA plans. The district court ruled that McCravy could recover under § 1132(a)(3), but that her recovery was limited as a matter of law to the life insurance premiums wrongfully withheld from MetLife for the coverage that McCravy never actually had on her daughter’s life. McCravy then moved for summary judgment regarding the wrongfully retained premiums and reserved her right to appeal the district court’s limitation of her recovery under § 1132(a)(3). After the district court entered a final order, McCravy appealed and the Fourth Circuit filed an order affirming the district court. The same day, the Supreme Court of the United States filed Amara, 131 S. Ct. 1866, extending the equitable remedies available under § 1132(a)(3) to encompass remedies traditionally available in courts of equity, expressly including “make-whole” relief such as estoppel and surcharge.
On the basis of Amara, the Fourth Circuit granted McCravy’s petition for panel rehearing. Upon rehearing, the Fourth Circuit held that after Amara, McCravy was entitled to seek “make-whole relief” under § 1132(a)(3), and that her recovery was not limited as a matter of law to refunds of her premium. Furthermore, the remedy of equitable estoppel was available to McCravy under § 1132(a)(3) to prevent MetLife from denying her right to convert coverage for her daughter. The Fourth Circuit vacated the district court’s summary judgment order and remanded the case for further proceedings to determine McCravy’s breach of fiduciary duty claim.
Decided: July 5, 2012
A group of hourly-wage employees of Perdue Farms, Inc. (Perdue) filed a civil conspiracy action under 18 U.S.C. § 1962(d) of the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiffs alleged that corporate managers of Perdue, human resources staff, and plant managers conspired to hire aliens not authorized to work in the United States to reduce labor costs, which caused the depression of wages paid to hourly-wage employees. Defendants individually violated 8 U.S.C. § 1324 in “bringing in and harboring certain aliens,” specifically knowingly hiring ten or more unauthorized aliens. Each of the defendants allegedly hired hundreds of such workers with actual knowledge that they were unauthorized for employment. The complaint alleged that the defendants violated 18 U.S.C. § 1546(b)(1)-(3) by using false identification documents and fraudulently attesting to the validity of such in the completion of government forms. The district court dismissed the action with prejudice, holding that plaintiffs failed to allege a civil conspiracy claim on which relief could be granted. The plaintiffs filed a timely appeal.
A district court’s dismissal of an action under Rule 12(b)(6) is reviewed de novo. Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), require that complaints in civil actions be alleged with greater specificity. First, a court must accept as true all factual allegations contained in a complaint, but does not have to accord such deference to legal conclusions. The recital of elements of a cause of action supported only by conclusory statements is not sufficient to survive a 12(b)(6) motion. Second, to survive such a motion, a complaint must state a “plausible claim for relief.” Iqbal, 556 U.S. at 678. This requires that the complaint allege sufficient facts to establish the elements of the claim, crossing “the line from conceivable to plausible.” Twombly, 550 U.S. at 570.
The district court concluded that the plaintiffs’ amended complaint contained deficiencies that were fatal to the prosecution of the action. First, the complaint failed to plead with sufficient particularity the existence of a conspiracy among the defendants. Second, the amended complaint lacked sufficient facts supporting either alleged RICO predicate act. Finally, the court concluded that the entire theory on which the amended complaint was based was barred by intracorporate immunity.
The plaintiffs alleged that the defendants violated 18 U.S.C. 1962(d) by conspiring to violate 18 U.S.C. § 1962(c), which prohibits conducing the affairs of an enterprise through a pattern of racketeering activity. An act of racketeering under RICO is referred to as a “predicate act.” While private litigants may recover from racketeering injuries under 18 U.S.C. 1964(c), their injuries must flow from the predicate acts. Because the plaintiffs only allege two predicate acts, their failure to plead sufficient facts to establish the elements of either would require dismissal.
The first predicate act alleged is the knowing act of hiring multiple unauthorized aliens. This predicate act has been analyzed in similar contexts by two other circuits: Edwards v. Prime, Inc., 602 F.3d 1276 (11th Cir. 2010), and Commercial Cleaning Servs., L.L.C. v. Colin Serv. Sys., Inc., 271 F.3d 374 (2d Cir. 2011). These cases explain that, in order to satisfy the illegal hiring requirements, a defendant must hire ten or more aliens within a 12-month period with actual knowledge that they are not authorized to work in the United States. Edwards, 602 F.3d at 1292–93. Additionally, the defendants must have actual knowledge that the unauthorized aliens were brought into the country in violation of 8 U.S.C. § 1324(a). Id. at 1293; Commercial Cleaning Servs., 271 F.3d at 387. The second element is crucial and distinguishes 8 U.S.C. § 1324(a)(3), the RICO predicate, from 8 U.S.C. § 1324(a)(1), which penalizes hiring unauthorized aliens without knowledge that they were brought into the country illegally. The district court found that plaintiffs failed to identify any employee known to be an unauthorized alien and made only conclusory allegations regarding how they unauthorized aliens were brought into the United States. While the plaintiffs did not need to identify particular unauthorized aliens, plaintiffs failed to provide factual support concerning whether the defendants had actual knowledge of the unauthorized aliens’ entry into the United States. Only two allegations bear on illegal entrance into the United States: that the defendants had actual knowledge that the workers “had been brought into the country with the assistance of others on their illicit journey across the U.S.-Mexico border” and that a specific hiring clerk worked directly with coyotes and runners to obtain employment for illegal aliens. These allegations are insufficient to establish a violation of the illegal hiring predicate.
Plaintiffs argued that the use of “judicial experience and common sense,” as authorized by Iqbal, 556 U.S. at 679, would lead to the conclusion that the aliens were brought into the United States within the meaning of 8 U.S.C. § 1324(a)(3)(B)(ii) because it is not plausible that they walked across the border and to a Perdue location on their own. Once aliens arrive in the United States, any assistance they received from other parties is immaterial to the illegal hiring predicate. While judicial experience and common sense may suggest that unauthorized aliens did not travel to Maryland or elsewhere entirely on foot, it is not obvious that such aliens allegedly employed at Perdue’s facilities were brought into the United States by others. Accordingly, the facts do not sufficiently allege a violation of the illegal hiring predicate.
The second predicate act alleged the fraudulent use and false attestation of documents in violation of 18 U.S.C. § 1546(b). The district court concluded the allegations were insufficient for two reasons: the plaintiffs failed to identify any single unauthorized employee and failed to state sufficient facts to support their claims. As mentioned above, the plaintiffs’ failure to identify any of the unauthorized aliens involved is not fatal to their amended complaint. However, because plaintiffs have not alleged facts establishing that they suffered an injury proximately caused by the defendants’ violation of the false attestation predicate, their claim also fails with regard to this predicate act. While a mere violation of 18 U.S.C. § 1962(d) is all that is required to establish criminal liability, a plaintiff may recover in an action for civil conspiracy only upon establishing injury caused by an act that is itself tortious. Beck v. Prupis, 529 U.S. 494, 501–02, 501 n. 6 (2000). In this case, the plaintiffs had to allege facts establishing that a violation of the false attestation predicate proximately caused the plaintiffs’ injury. Based on this requirement, the defendants’ acts did not cause the injury alleged by the plaintiffs because the wage depression alleged is not directly linked to any violation of the false attestation predicate.
The compensable injury resulting from a violation of 18 U.S.C. § 1962(c) is the harm caused by the predicate acts, which must be the “but for” and proximate causes of the injury. The fraudulent use of identification documents and false attestations are crimes against the government of the United Sates and do not directly impact plaintiffs’ wage levels.
Accordingly, the plaintiffs failed to allege a plausible violation of either RICO predicate act, thus the plaintiffs failed to establish a claim supporting their allegation under 18 U.S.C. § 1962(d) of a conspiracy to violate 18 U.S.C. § 1962(c). The district court’s judgment is affirmed.
Decided: June 21, 2012
On appeal to the Fourth Circuit, Gwyniece Hutchins challenged the district court’s determination that federal law required her to reimburse the Department of Labor (“DOL”) for compensation that she received after she was awarded a monetary judgment in a state court proceeding against the Town of Ninety Six, South Carolina (the “Town”) for the same underlying injury. The Fourth Circuit affirmed the district court’s decision in favor of the Town, and against Hutchins.
This case arose out of an injury Hutchins sustained while carrying out her duties as a U.S. Postal Service employee. In August 2004, Hutchins stepped on an improperly fitted manhole cover maintained by the Town, the manhole flipped up, and Hutchens fell into the manhole and sustained serious injuries. Hutchins was awarded lost wages and medical benefits under the Federal Employees’ Compensation Act (“FECA”) and later accepted a judgment of $275,000 in a state court action that she brought against the Town. The DOL, the federal agency that awarded Hutchins’ benefits under FECA, then asserted a claim to recover a portion of this judgment, but Hutchins argued that the Town was not a “person,” and therefore allowing the Town’s claim would be unconstitutional pursuant to 5 U.S.C. §§ 8131, 8132. The DOL’s Office of Workers’ Compensation (“OWC”) rejected Hutchins’ arguments and determined that the DOL was entitled to reimbursement based on Hutchins’ state court judgment. Hutchins paid the amount requested by DOL but appealed the OWC’s decision to the Employees’ Compensation Appeals Board, which affirmed the OWC’s decision. Hutchins then filed the claim underlying this case in the U.S. District Court for the District of South Carolina.
After Hutchins filed her complaint pursuant to the Administrative Procedures Act, both Hutchins and the DOL filed cross-motions for summary judgment, and the district court granted the DOL’s motion, finding that Hutchins was required to reimburse the DOL. The district court denied Hutchins’ motion, and Hutchins appealed the decision to the Fourth Circuit.
On appeal, Hutchins first argued that because the Town is not a “person” as used in 5 U.S.C. § 8132, the statute does not require her to reimburse the DOL. In the alternative, Hutchins argued that if the Town, as a political subdivision, is determined to be a “person,” then § 8131 is unlawful. The Fourth Circuit began by analyzing the text of § 8132, the statute that requires a person who receives compensation for an injury to reimburse the U.S. for any compensation paid under FECA for the same injury. The Court determined the issue to be “whether the Town qualifies as a ‘person other than the United States,’ such that Hutchins is liable to reimburse the [DOL] out of her state court judgment.”
The Court first interpreted § 8132 and found that its language makes it clear that “person” includes political bodies, such as the Town. To further support this finding, the Court also looked to the Dictionary Act’s definitions of “person,” as well as to Supreme Court precedent indicating that “person” includes municipal corporations unless a more limited use is indicated by the context of the statute. Next, the Court declined to address Hutchins’ second argument that if “person” is construed broadly, the statute would allow the DOL to sue states, and such action would violate the Constitutional principles of federalism. The Court found that such circumstances were not present in Hutchins’ case. In sum, the Court found that “the statutory language and Supreme Court precedent indicate that a municipality such as the Town constitutes a ‘person’ for purposes of reimbursement under 5 U.S.C. § 8132,” and held that the district court correctly determined that Hutchins’ recovery from the Town for her injuries was properly subject to refund under FECA.
– Allison Hite
Decided: June 19, 2012
The Plaintiff in this case, Carolyn Snydor, appeals the district court’s dismissal of her discrimination claim. In January 2009, Snydor, a public health nurse in Fairfax County, underwent surgery on her left foot. She returned to work in March and was then terminated by Fairfax County in November because her medical restrictions following surgery limited her “capacity to perform the full clinical duties of a public health nurse.” Following her termination, Snydor filed an administrative charge with the Equal Employment Opportunity Commission alleging that the County had discriminated against her on the basis of her disability in violation of the Americans with Disabilities Act. In her charge, Snydor stated she had “requested a reasonable accommodation” from her manager, but was denied relief. She also completed an EEOC intake questionnaire, where she described her disability as limited walking ability and explained that she must use an electric wheelchair when moving for any length of time. Her questionnaire stated that she had requested “to be assigned as Nurse of the Day and to be in the clinic doing lighter duty work” and that in response, her supervisor said “she did not want me around the patients in the clinic because of [her] wheelchair.”
The EEOC issued Snydor a right-to-sue notice and she filed a complaint against the County in federal court. The County moved for summary judgment following discover, and the district court denied the motion finding that it remained in dispute whether Snydor could have served as a public health nurse while in a wheelchair. The County then filed a motion in limine seek to exclude the evidence that Snydor had requested to work in the clinic in her wheelchair, asserting that the sole accommodation she informed the EEOC she had requested was light duty work, never stating that she would have been able to perform her duties in a wheelchair. The district court agreed that Snydor did not file her proposed accommodation with the EEOC and dismissed the case sua sponte because of her failure to exhaust administrative appeals.
The ADA includes the requirement that a plaintiff must exhaust her administrative remedies by filing a charge with the EEOC before pursuing a suit in federal court. This requirement ensures that the employer is put on notice of the alleged violations and gives it a chance to address the discrimination prior to litigation, often allowing the injured party to obtain relief much sooner than in the courts. The goals of notice and opportunity for an agency response would be undermined by allowing a plaintiff to raise claims in litigation that did not appear in her EEOC charge, thus a plaintiff fails to exhaust their administrative remedies where the charges reference different time frames, actors, and discriminatory conduct than the central allegations in her suit. Examples are where a charge alleges only racial discrimination but the complaint includes sex discrimination, or where a charge alleges only retaliation but the complaint alleges racial discrimination as well. However, the exhaustion requirement is not meant to be construed so strictly as to bar suit where a plaintiff’s claims are reasonably related to her EEOC charge and can be expected to follow from a reasonable administrative investigation.
On appeal, the Fourth Circuit found it clear that Snydor’s charge claimed what her suit claimed – she had been discriminated against based on her disability by being denied a reasonable accommodation. Holding that the requirement for exhaustion is whether the plaintiff’s administrative and judicial claims are reasonably related, not precisely the same, the court found sufficient similarities between the two to find that Snydor satisfied the requirement. The type of prohibited action she alleged, discrimination on the basis of disability by failing to provide a reasonable accommodation, remained consistent throughout. She did not attempt to raise new disabilities for the first time in court, and mentioned several times in her EEOC questionnaire the issue of her wheelchair. Furthermore, a wheelchair is a logical accommodation for her difficulties in walking, one that could be expected to follow from a reasonable administrative investigation by the EEOC and that should not have caused the County to be caught off guard when it was raised. The Fourth Circuit further concluded that sending Snydor back to the beginning of the process would undermine the congressional preference for agency resolution in the area, reversing the district court’s holding and remanding the case for further proceedings.
Decided: January 28, 2012
Appellant Kathy Minor appealed from the district court’s dismissal of her claim under the Fair Labor Standards Act’s anti-retaliation provision, 29 U.S.C. § 215(a)(3). The district court dismissed Minor’s action on the grounds that complaints made within a company are unprotected by the anti-retaliation provision, and that therefore because Minor reported the alleged Fair Labor Standards Act violations internally to her employer, her complaint failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). The Fourth Circuit reversed, holding that complaints made within a company may constitute protected activity within the meaning of the statute.
-Sara I. Salehi
Decided: January 28, 2012
The Equal Employment Opportunity Commission (EEOC) brought a Title VII action against Great Steaks, Inc. accusing Great Steaks of subjecting female employees to a sexually hostile work environment. The jury rendered a verdict in Great Steaks’ favor. Great Steaks moved for an award of attorneys’ fees based on Title VII’s fee-shifting provision at 42 U.S.C. § 2000e-5(k); the Equal Access to Justice Act’s (EAJA) mandatory fee provision, 28 U.S.C. § 2412(d); and 28 U.S.C. § 1927. The district court denied Great Steaks’ motion for attorneys’ fees, and the Fourth Circuit affirmed. To obtain attorneys’ fees under Title VII’s fee-shifting provision, Great Steaks would have to show that the EEOC’s case was frivolous, unreasonable, or groundless. The Fourth Circuit held that the district court acted within its discretion in determining that the EEOC’s case was not frivolous, unreasonable, or groundless; and that inconsistencies in a former employee’s allegations and a contradictory affidavit from her co-worker simply created factual issues for a jury to resolve, and did not make her allegations frivolous, unreasonable, or groundless. The EAJA was unavailable to Great Steaks because Title VII contains its own fee-shifting provision. Therefore, any defendant who prevails against the EEOC in actions brought under Title VII may not invoke the EAJA’s mandatory fee provision. Finally, the court again held that the district court did not abuse its discretion under 28 U.S.C. § 1927 in failing to award attorneys’ fees.
-Sara I. Salehi
Decided: January 11, 2012
Appellee United Mine Workers of America, International Union entered into a limited job-preference agreement with Peabody Coal Company, which also bound Peabody Coal’s parent company and the parent company’s subsidiaries. The Union submitted a grievance to an arbitrator, who determined that the dispute was arbitrable but deferred a ruling on the merits. Peabody Holding responded by seeking a declaratory judgment in federal court that the dispute is not arbitrable. The district court entered judgment in favor of the Union and held that the arbitrator correctly determined that the dispute was arbitrable, and, in the alternative, the dispute was arbitrable even if the arbitrator lacked authority to decide the arbitrability question. The Fourth Circuit Court of Appeals found that the court, not the arbitrator, must decide the initial question of arbitrability. However, the court held that Peabody Holding did not rebut the presumption in favor of arbitrability, and therefore, the parties must proceed to arbitration.
-Sara I. Salehi
Decided Dec. 7, 2011
The Black Lung Benefits Act (“BLBA”) as amended by the Patient Protection and Affordable Care Act provides that an eligible survivor of a miner who was receiving benefits at the time of his death is automatically entitled to survivors’ benefits without having to establish that the miner’s death was due to pneumoconiosis. The Benefits Review Board (“BRB”) ruled that under the BLBA, Respondent Elsie Stacy, a widow of a miner, was entitled to survivors’ benefits. Petitioner West Virginia Coal Workers’ Pneumoconiosis Fund challenges the PPACA’s restoration of this provision.
The Fourth Circuit Court of Appeals found no merit in Petitioner’s arguments, and affirmed. Petitioner first contended that retroactive application of the automatic survivorship provision to claims filed after January 1, 2005 violates substantive due process because Congress did not provide any legitimate purpose for making the legislative retroactive and arbitrarily chose January 1, 2005 as the operative filing date. The court noted that a conclusion that retroactive application of the BLBA provision violates substantive due process would invite the invalidation of all retroactive acts and therefore rejected this claim. Petitioner also argued that the retroactive application of the BLBA provision constitutes an unlawful taking of its property under the Fifth Amendment. However, the BLBA merely requires Petitioner to pay money and does not infringe any specific, identifiable property interest, therefore the takings clause is inapplicable. Petitioner further asserted that the reinstatement of the BLBA provision should not apply to Respondent’s claim because the operative filing date for determining eligibility is the date the miner’s claim was filed, not the date the survivor’s claim was filed. However, the court deferred to the Director of the BRB’s interpretation of the provision, noting that this interpretation was supported by the plain language of the statute and, unlike Petitioner’s interpretation, maintained consistency with the rest of the statute. Petitioner’s final argument was that the reinstated provision in the BLBA conflicted with other provisions in the statute. However, because the reinstated provision is the most recent amendment to the BLBA, it overrides any conflicting language in the statute. Therefore, the court affirmed judgment of the BRB for Respondent.
-Sara I. Salehi
Decided: Dec. 1, 2011
Current Trustees of a retirement plan sued the Former Trustees for mismanaging Plan funds by failing to research alternative investment strategies or review the current strategy to ensure it was the best method to meet the needs of the Plan and its members. The Current Trustees put up an expert witness who testified that had the funds been invested a different way, the Plan could have netted nearly $500,000 more than it did in reality. The Former Trustees’ expert contended that the market is unpredictable and the strategy was reasonable given the Trustees’ goals. At the end of a three-day bench trial, the district judge granted judgment for the Current Trustees, observing that the Plan’s investment strategy had essentially been in place since 1991 with little or no effort to seek alternative investment approaches or diversification. Having determined liability, the judge then awarded damages based on the Current Trustees’ model but only using years 2003-2005 to accumulate losses.
The Fourth Circuit vacated. First, the court noted that a finding of breach of fiduciary duty also requires an independent showing that the alleged misconduct (e.g. failing to investigate alternative investment opportunities or diversify the portfolio) caused an actual loss to the Plan. Imprudent decisions that would have been made by prudent investors will not lead to personal liability for the Trustees. Next, if upon remand the district court once again finds liability, that court must reconsider and give reasons for its measure of damages as opposed to picking three years from 2003-2005 seemingly “out of the air.”
Finally, because the circuit court had vacated liability and damages, it necessarily vacated the award of attorneys’ fees. The court adopted a two-staged determination of attorneys’ fees. The court held that the decision as to whether the prevailing party is eligible for attorneys’ fees should be evaluated under the recent Supreme Court decision in Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149 (2010) but that the decision whether to thereafter make an award should continue to use the five factors laid out in Quesinberry v. Life Ins. Co. of N. Am., 987 F. 2d 1017, 1029 (4th Cir. 2003) (en banc) (listing the factors as “(1) degree of opposing parties’ culpability or bad faith; (2) ability of opposing parties to satisfy an award of attorneys’ fees; (3) whether an award of attorneys’ fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys’ fees sought to benefit all participants and beneficiaries of a plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties’ positions.”).
-C. Alexander Cable