Making Sense Of The ADAAA’s Impact On State Disability Statutes

The ADA Amendments Act of 2008 ushered in significant changes to the ADA. But one issue that is sure to confront federal and state courts involves the ADAAA’s impact on analogous state statutes. Some states have amended their statutes to conform to the ADAAA. See Molina v. DSI Renal, Inc., 2011 U.S. Dist. LEXIS 139889 (W.D. Tex., Dec. 5, 2011)(noting that Texas Commission on Human Rights Act was amended September 1, 2009 to reflect ADAAA). But in other states, the pre-ADAAA definition of disability remains, and this is where problems are likely to ensue.

In Azzam v. Baptist Healthcare Affiliates, Inc., 2012 U.S. Dist. LEXIS 864 (W.D. Ky, Jan. 5, 2012), a case brought under the Kentucky Civil Rights Act, the court refused to apply the ADAAA to the state statute:

[T]he KCRA retains the ADA’s former definition of disability. Compare KRS § 344.010(4) with 42 U.S.C. § 12102(2) (2006). The Court will not assume that the Kentucky legislature, by drafting language in 1992 that mirrored federal law at the time, see 1992 Ky. Acts 282, § 1, intended to incorporate federal legislative  alterations that occurred in 2008.

The court in Azzam was only presented with a claim under state law, and thus did not have to confront an even more problematic issue. Specifically, how should courts proceed when state-law disability claims are pendant to a federal ADA claim? In such cases, should courts apply a definition of disability that tracks the original ADA for the state-law claim, while applying the ADAAA’s definition to the federal claim? Such a result may seem anomalous, of course, but the logic of a case like Azzam may pull in that direction. The ADAAA has raised a whole new set of questions regarding disability law, and the state/federal parallelism question will likely prove to be among the most difficult.

Is An Employee’s Pre-Eligibility Request For Post-Eligibility Leave Actionable Under The FMLA?

The answer to that rather intriguing question is yes, according to the Eleventh Circuit’s opinion last month in Pereda v. Brookdale Senior Living Cmtys., Inc.,  2012 U.S. App. LEXIS 492 (11th Cir., Jan. 2012). Pereda provided notice in June 2009 that was pregnant, and would be requesting leave after her child was born in November 2009.  Pereda alleged that after learning about her upcoming pregnancy, the employer harassed her, placed her on a performance improvement plan, and eventually fired her.

The district court dismissed Pereda claim on the ground that she was ineligible for FMLA leave at the time she requested it. The Eleventh Circuit, however, reverses. The court first noted that Pereda was ineligible under the FMLA at the time she provided notice of her pregnancy because she had not accrued enough hours as required under the statute and because the triggering event had yet to occur. However, the court ultimately concludes that Pereda’s interference and retaliation claims are covered by the Act. As to the interference claim, the court notes that the 30-day notice requirement in 29 U.S.C. § 2612(e)(1) supports Pereda:

[B]ecause the statute contemplates notice of leave in advance of becoming eligible, i.e., giving birth to a child, the FMLA regulatory scheme must necessarily protect pre-eligible employees such as Pereda, who put their employers on notice of a post-eligibility leave request. An expectant mother who is along in her pregnancy cannot hide that, in due time, she will give birth to a child. By the very nature of the fact that a full-term pregnancy takes nine months to complete, not affording pre-eligible expecting parents any protection would leave them exposed to adverse action by their employer.

The Court further holds that Pereda’s FMLA retaliation claim is likewise not barred:

Under the FMLA an employee need not be currently exercising her rights or currently eligible for FMLA leave in order to be protected from retaliation. The FMLA makes it “unlawful for any employer to interfere with, restrain or deny the exercise of or the attempt to exercise, any right” provided  under the FMLA. 29 U.S.C. § 2615(a)(1). The FMLA also protects employees and prospective employees even if the individual is not currently eligible or entitled to leave. See 29 C.F.R. § 825.220 (prohibiting employers from discriminating against employees or prospective employees who have previously used FMLA leave)

The situation in Pereda (and similar FMLA cases) is the flipside of the “discovery rule” often at issue in employment cases. Instead of discovering an adverse action after it occurred, employees in these cases experience adverse employment actions before they are actionable, at least under a strict reading of the statute. Pereda‘s reading of the statute is reflective of the pragmatic approach that courts have taken in such cases.

Washington Post Article About USERRA Claims Against Federal Government

The Washington Post featured an article yesterday that discussed the sharp increase in cases brought against the federal government under the Uniformed Services Employment and Reemployment Rights Act (USERRA).  The article notes that 18% of USERRA claims in 2011 were brought against federal agencies, while 27% of all claims were brought against public employers (federal, state and municipal). One particular interesting point is that federal agencies violating the Act are only liable for back pay, whereas private employers can be liable for liquidated (i.e. double) damages.

The article briefly touches upon a key issue, which is the Office of Special Counsel’s (OSC) role in pursuing USERRA cases, particularly where other government agencies have elected not to step in.  As the Office’s website points out, it is ordinarily referred USERRA cases when they are brought before the Merit Systems Protection Board (MSPB). The three year “demonstration project”  giving OSC responsibility for investigating many more USERRA complaints against federal agencies thus marks a significant increase in the OSC’s involvement. As the Post article notes, the OSC has already achieved some results, and it will be interesting to see the project’s impact on USERRA enforcement.

The Emerging Case Law on Impairments That Are Episodic or in Remission Under ADAAA

Last week, we discussed the change to the “regarded as” definition under the Americans With Disabilities Act Amendments Act (ADAAA). Another issue courts have begun grappling with under the ADAAA involves impairments that are episodic in nature. Prior to the ADAAA’s enactment, many courts held that episodic conditions did not meet the definition of “disability” under the ADA, particularly given the Supreme Court’s holding in Toyota Motor Mfg., Ky., Inc. v. Williams, 534 U.S. 184, 198 (2002) that “[t]he impairment’s impact must also be permanent or long term.”

The ADAAA effected a major change in this area, as Section 12102(4)(D), defining disability, now states that “[a]n impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.” Courts have only recently begun to confront this revised definition on the merits. The first case applying this language to the merits is Hoffman v. Carefirst of Fort Wayne, Inc., 737 F. Supp. 2d 976, 985 (N.D. Ind. 2010), which held that Stage III Renal Cancer, which was in remission at the time of the employee’s termination, nonetheless constituted a disability.

Following Hoffman, other courts have likewise applied an expansive interpretation of this language. Feldman v. Law Enforcement Assocs. Corp., 779 F. Supp. 2d 472, 483 (E.D.N.C. 2011)(employee’s “flare up” of MS constituted disability); Kinney v. Century Servs. Corp. II, 2011 U.S. Dist. LEXIS 87996 (S.D. Ind., Aug. 9, 2011)(employee’s depression that required inpatient treatment was disability even after employee returned to work); Estate of Murray v. UHS of Fairmount, Inc., 2011 U.S. Dist. LEXIS 130199 (E.D. Pa., Nov. 10, 2011)(depression and anxiety recurring over several years was disability even if has subsided); but cf. Lewis v. Fla. Default Law Group, P.L.,  2011 U.S. Dist. LEXIS 105238 (M.D. Fla., Sept. 16, 2011)(employee’s short bout with flu was not disability even under ADAAA definition).

The emerging case law on impairments that are “episodic or in remission” makes clear that the ADAAA has had a significant effect on in this area, particularly compared to pre-ADAAA cases.

Wal-Mart’s Effect On FLSA Collective Actions Under Section 216(b)

Last week, we discussed Wal-Mart‘s potential impact on the use of statistical evidence. Although the courts have yet to address that issue, a number of courts have addressed a separate issue: whether Wal-Mart has any effect on collective actions under the Fair Labor Standards Act.

FLSA collective actions are not governed by Rule 23, but rather by Section 216(b) of the Act, which allows similarly situated employees to opt-in the collective action, in contrast to Rule 23′s opt-out mechanism. Although the FLSA’s text is silent on the procedure for a collective action, most courts have adopted a two-stage certification process in which the plaintiffs move prior to discovery for notice to similarly situated employees, which results in “conditional certification.” This initial “similarly situated” analysis is less rigorous than Rule 23(a)’s commonality requirement. The employers usually move to decertify the “class” after discovery, arguing that the employees are not truly similarly situated.

Enter Wal-Mart. Although the Court was construing Rule 23, the question of whether collective actions under Section 216(b) are affected has arisen in a number of cases. Most courts confronted with this question have determined (with varying degrees of analysis) that Wal-Martis inapplicable. Davis v. Mostyn Law Firm, P.C., 2012 U.S. Dist. LEXIS 6014 (S.D. Tex., Jan. 19, 2012); Pippins v. KPMG LLP, 2012 U.S. Dist. LEXIS 949 (S.D.N.Y., Jan. 3, 2012); Robinson v. Ryla Teleservices, Inc., 2011 U.S. Dist. LEXIS 147027 (S.D. Ala., Dec. 21, 2011); Ware v. T-Mobile USA, 2011 U.S. Dist. LEXIS 127091 (M.D. Tenn., Nov. 2, 2011); Faust v. Comcast Cable Communs. Mgmt., LLC, 2011 U.S. Dist. LEXIS 125949 (D.Md., Nov. 1, 2011); Alli v. Boston Mkt. Co., 2011 U.S. Dist. LEXIS 101530, 2011 U.S. Dist. LEXIS 101530 (D.Conn., Sept. 8, 2011); Sliger v. Prospect Mortg., LLC, 2011 U.S. Dist. LEXIS 94648 (E.D. Cal., Aug. 24, 2011); Ugas v. H&R Block Enters., LLC, 2011 U.S. Dist. LEXIS 86769 (C.D. Cal., Aug. 4, 2011).

But there have been a few exceptions. In Macgregor v. Farmers Ins. Exchange,  2011 U.S. Dist. LEXIS 80361, *13-14 (D.S.C., July 22, 2011), the district court disclaimed reliance on Wal-Mart, but nonetheless found it “illuminating,” as the lack of a uniform practice and the “decentralized and independent action by supervisors” weighed against a collective action. At least two other courts have relied on Wal-Mart. Ruiz v. Serco, Inc., 2011 U.S. Dist. LEXIS 91215, *18 (W.D.Wisc., Aug. 5, 2011)(Wal-Mart“instructive” even if Rule 23 not applicable); Blaney v. Charlotte-Mecklenburg Hosp. Auth., 2011 U.S. Dist. LEXIS 105302, *33 (W.D.N.C., Sept. 16, 2011)(citing Wal-Mart regarding lack of common policy).

It is likely that the majority of courts will continue to distinguish Wal-Mart in FLSA collective actions, although the picture will become clearer once the courts of appeal begin to weigh in on this issue.

Supreme Court Dismisses Case Presenting Question Of Whether Disparate Impact Is Available Under Fair Housing Act

There has been breaking news in Magner v. Gallagher, which we discussed last year soon after the Supreme Court granted certiorari. According to SCOTUS Blog, the Supreme Court has dismissed the case by agreement of both sides. Although no reason is given for the dismissal, the individuals challenging the City of St. Paul’s enforcement of its housing code, who are the respondents, argued in their merits brief that the writ of certiorari should be dismissed as improvidently granted. The respondents maintained that St. Paul had argued in its petition that the Eighth Circuit had applied the wrong test for disparate impact cases, but abandoned this argument in the merits brief, instead arguing that the Eighth Circuit used the correct test but misapplied it to the facts.

The respondents’ argument may very well have compelled the two sides to agree that dismissal was appropriate, although that is of course speculation at this point. Whatever the reason for the dismissal, a ruling from the court will wait for another day and another case. But given that every federal appellate court to reach this issue has ruled that disparate impact cases are cognizable under the FHA, it may be awhile until the Court revisits this issue.

The Deepening Circuit Split On Whether The FMLA Permits Individual Liability Against Supervisors For Public Agencies

The Third Circuit last week addressed an issue that seems esoteric, but could very well end up before the Supreme Court.  Haybarger v. Lawrence County Adult Prob. & Parole presented the question of whether supervisors at public agencies are subject to individual liability under the Family and Medical Leave Act. The court, noting that “employer” is defined as “any person who acts, directly or indirectly, in the interest of an employer,” held that the FMLA “plainly contemplates that liability for FMLA violations may be imposed upon an individual person who would not otherwise be regarded as the plaintiff’s “employer.” The court also cited in support an earlier Third Circuit opinion under the FLSA in which a real estate management company was held to be employer. The court noted that FLSA precedent is relevant given Congress’s decision in enacting the FMLA to make the definition of employer “materially identical to that of the FLSA.”

Haybarger deepens a clear circuit split. The Fifth Circuit in Modica v. Taylor, 465 F.3d 174 (5th Cir. 2006) and the Eighth Circuit in Darby v. Bratch, 287 F.3d 673 (8th Cir. 2002) have reached a similar conclusion regarding individual liability.  The Sixth and Eleventh Circuits, however, have ruled otherwise. Mitchell v. Chapman, 343 F.3d 811 (6th Cir. 2003);  Wascura v. Carver, 169 F.3d 683 (11th Cir. 1999). The court went deep in the weeds of the FMLA’s text, and agreed with the Fifth Circuit’s  reasoning in Modica:

[A]s the Fifth Circuit observes, the FMLA indicates a relationship between § 2611(4)(A)’s modifiers by stating that the term “employer” “means” its definition in § 2611(4)(A)(i) and then “includes” the provisions in § 2611(4)(A)(ii)-(iv). Id. at 185. Therefore, an “employer” “means any person engaged in commerce or in any industry or activity affecting commerce who employs 50 or more employees” and “includes” both “any person who acts, directly or indirectly, in the interest of an employer” and public agencies. Id. Because the definition of “employer” includes public agencies, and Congress provided that an employer may include individuals, it plainly follows that an individual supervisor at a public agency may be subject to liability. Id.

Next, as the Fifth Circuit notes, § 2611(4)(B)’s “public agency” provision is not superfluous when we interpret § 2611(4)(A)(iii)’s inclusion of public agencies as relating to § 2611(4)(A)(i)’s definition of an employer because § 2611(4)(B) creates a presumption that public agencies engage in commerce. See Modica, 465 F.3d at 186. Section 2611(4)(B) thus “relieves plaintiffs of the burden of proving that a public agency is engaged in commerce.” Id. (citing Hewett, 421 F.Supp.2d at 820).

Finally, we agree with the Fifth Circuit’s reasoning that the FMLA’s similarity to the FLSA indicates that Congress intended for courts to treat the FMLA the same as the FLSA, rather than treating only specific provisions alike. See id. Because the FLSA explicitly provides that an employer includes “any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency,” we agree that the FMLA similarly permits individual liability against supervisors at public agencies. Id. (quoting 29 U.S.C. § 203(d)).

It remains to be seen whether the defendant supervisor files a cert petition with the Supreme Court. But given the clear circuit split, this issue seems like a worthy contender for the Court’s review at some point.

The Meaning of “Employee” in Section 1514(A)(a) of Sarbanes-Oxley and Its Implications For Mutual Funds

The First Circuit ruled last Friday in Lawson v. FMR that Section 1514(A)(a) of Sarbanes-Oxley, which prohibits retaliation against employees of publicly traded companies, did not extend to contractors or subcontractors of those companies. The majority relied upon canons of statutory construction in reaching its result, and refused to give any deference to the views of DOL and SEC. The ruling, perhaps unsurprisingly, has attracted considerable attention (see here and here).

Although Lawson‘s practical implications remain to be seen, one immediate question is its effect on mutual funds. The DOL, in its amicus brief, pointed out that:

Investment companies, including all mutual funds, are covered by section 806. However, nearly all mutual funds function without any employees of their own, relying instead on third parties, primarily investment advisers. See Harris Assocs., L.P., 130 S. Ct. at 1422 (“A separate entity called an investment adviser creates the mutual fund, which may have no employees of its own”). (citations omitted); Daily Income Fund, 464 U.S. at 536 (“Unlike most corporations, [a mutual fund] is typically created and managed by a pre-existing external organization known as an investment adviser”). (citation omitted).     The employees of a mutual fund’s advisers therefore are particularly knowledgeable about a publicly-traded fund’s operations and whether they involve corporate fraud.

The DOL’s citation to Harris Assocs. is particularly interesting, as the issue there involved the level of fiduciary duty owed by investment advisers to shareholders for “receipt of compensation for services.” These investment advisers – at least those within the First Circuit’s jurisdiction – may be surprised to learn that despite this duty, they themselves are not covered by whistleblower law.  It will be interesting to see what effect, if any, Lawson has in this regard.

Wal-Mart’s Effect On the Use of Statistical Evidence

Last June’s opinion in Wal-Mart v. Dukes, 131 S.Ct. 2541 (2011) has generated an ever-growing body of commentary regarding its meaning and its potential reach. Both the commentary and the emerging case law has focused primarily on Wal-Mart‘s effect on class certification under Rule 23. But one issue lurking in the background is whether (and how) Wal-Mart may affect the substantive law regarding the use of statistical evidence.  The class attempted to make a pattern or practice showing under Teamsters v. U.S., 431 U.S. 324 (1977) whereby statistical analyses were buttressed by anecdotal evidence. The Court, however, faulted the class’s statistical evidence, as disparities at the national or even regional level do not necessarily raise an inference of discrimination at the individual store level. Second, the court ruled that the anecdotal evidence was insufficient both in number (120 affidavits for a class of 1.5 million) and in geographic representation.

Although the Court was analyzing the class’s statistical proof within the confines of Rule 23′s commonality requirement, the ruling could conceivably affect the type of statistical evidence required in pattern or practice cases. For example, the Court ruled that the anecdotal evidence was insufficient compared to the showing in Teamsters itself. But the Court had earlier held, in Hazelwood School Dist. v. United States, 433 U.S. 299, 307 (1977), that “[w]here gross statistical disparities can be shown, they alone may in a proper case constitute prima facie proof  of a pattern or practice of discrimination.” Indeed, in Bazemore v. Friday, 478 U.S. 385 (1986), the class and the government established a pattern or practice through the use of statistical evidence, and multiple regression analyses in particular.

There does not yet appear to be any case focusing on Wal-Mart‘s effect, if any, on Teamsters, Hazelwood and Bazemore. But this issue will inevitably be raised in future cases, and bears watching.

 

 

Supreme Court To Decide Important Question Involving “Mixed Cases” Before MSPB

“Mixed cases” – that is, cases involving both personnel decisions appealable to the Merit Systems Protection Board (MSPB) and discrimination claims under civil rights statutes – have long been a source of confusion. The Supreme Court recently granted cert in Kloeckner v. Solis to decide one particularly vexing issue in mixed cases; namely, whether a federal district court or the Federal Circuit retains jurisdiction when the MSPB rejects a discrimination claim without reaching the merits.

A majority of circuit courts have followed the Federal Circuit’s lead in Ballentine v. Merit Systems Protection Board, 738 F.2d 1244 (Fed. Cir. 1984), which held that until the MSPB had reached the merits of the discrimination claim, “procedural or threshold matters” can only be appealed to the court itself. The Eighth Circuit followed this approach in Kloeckner. But the Second and Tenth Circuits have rejected Ballentine, holding that 5 U.S.C. § 7702 and 7703, which govern mixed claims, do not require the MSPB to first reach the discrimination claim on the merits.

Although merits briefs have not yet been filed, the petition for certiorari argues that the language of Section 7703(b)(2), which provides that “[c]ases of discrimination…shall be filed” under the enumerated statutes, allows parties to file suit in federal court regardless of whether theMSPB’s ruling was on the merits. The petition also notes that the majority view “has the uniquely counterproductive effect of deterring federal employees from seeking relief under the MSPB,” as federal courts provide for de novo review, unlike the Federal Circuit.

Kloeckner is not listed on the Court’s argument calendar for April, so that a decision will likely have to wait until next term. But the Court will eventually provide an answer to this decades-long source of confusion, which will undoubtedly be a relief for practitioners and judges.