Thursday, March 26, 2015

The Supreme Court’s Young v. UPS Decision Expands the Ability of Pregnant Workers (and Perhaps Other Employees) to Prove Discrimination

The U.S. Supreme Court today issued its long-awaited ruling in Young v. United Parcel Service. The case interprets language in the Pregnancy Discrimination Act, 42 U. S. C §2000e(k), that had divided the lower courts. The case was brought by a woman, Peggy Young, who had become pregnant while working as a driver for UPS after suffering several miscarriages. Her doctor said she could not lift more than 20 pounds during the first 20 weeks of her pregnancy, and could not lift more than 10 pounds thereafter, for the rest of her pregnancy. UPS required drivers like Young to be able to lift parcels weighing up to 70 pounds (and up to 150 pounds with assistance). UPS told Young she could not work while under this lifting restriction. Young therefore stayed home without pay during most of the time she was pregnant and eventually lost her employee medical coverage.

Young brought a lawsuit, claiming that UPS had provided light-duty accommodations to non-pregnant workers who had similar lifting restrictions. Therefore, she alleged that UPS had discriminated against her. UPS responded that the other drivers whom it had accommodated were either: 
(1) drivers who had become disabled on the job,
(2) drivers who had lost their Department of Transportation (DOT) certifications, or
(3) drivers who suffered from a disability covered by the Americans with Disabilities Act of 1990 (ADA) [as a side note, the ADA Amendments Act of 2008, enacted after Young’s case arose, subsequently expanded the ADA to include temporary lifting restrictions like Young’s].
The district court dismissed Young’s claim on summary judgment, agreeing with UPS that Young was not similar to the employees UPS accommodated. The Fourth Circuit Court of Appeals affirmed. The Supreme Court, however, reversed the Fourth Circuit.
The Supreme Court, in an opinion by Justice Breyer, noted that the Pregnancy Discrimination Act contains two important clauses:
(1)   The first clause specifies that Title VII’s ban on sex discrimination applies to discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions.” 
(2)   The second clause says that employers must treat “women affected by pregnancy . . . the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.”
 The Court held that the meaning of the second clause was ambiguous. It could mean, as Young argued, that pregnant women must be afforded “most favored nation” status. That is, if an employer gives special treatment to any group of employees who are “similar in their ability or inability to work” as pregnant women, the employer must give the same treatment to pregnant women. Otherwise, the employer violates the Pregnancy Discrimination Act.
 Justice Alito, in his concurring opinion, gave one example of the consequence of this interpretation:
“Suppose, for example, that an employer had a policy of refusing to provide any accommodation for any employee who was unable to work due to any reason, but that the employer wished to make an exception for several employees who were seriously injured while performing acts of extraordinary heroism on the job, for example, saving the lives of numerous fellow employees during a fire in the workplace. If the ability to perform job tasks was the only characteristic that could be considered, the employer would face the choice of either denying any special treatment for the heroic employees or providing all the same benefits to all pregnant employees.”
The Court rejected this interpretation as implausible.
UPS argued that the second clause should be read to merely clarify that “pregnancy discrimination includes disfavoring pregnant women relative to other workers of similar inability to work.” Under UPS’ interpretation, pregnant women who fall within some broader category (such as, “workers who become disabled off the job”) are not discriminated against if everyone in the larger class (“workers who become disabled off the job”) is treated the same. But, the Court held, this interpretation would render the second clause superfluous, because no one would understand the first clause’s ban on “pregnancy discrimination” to somehow exclude “disfavoring pregnant women relative to other workers of similar inability to work.” Moreover, Congress meant to overturn a decision, General Electric Co. v. Gilbert, 429 U. S. 125 (1976), that involved a facially-neutral policy that provided “non-occupational sickness and accident benefits to all employees.” The Gilbert court ruled that pregnancy was neither a “sickness” nor an “accident,” and thus the employer could exclude pregnancy benefits from its policy. Under UPS’ argument, the Pregnancy Discrimination Act would not have overturned the holding in Gilbert, because the pregnant women in Gilbert were not being disfavored compared to similarly-situated workers.
The Court charted a middle course between these two interpretations. It held that a pregnant worker could make out a circumstantial case of pregnancy discrimination using the McDonnell Douglas framework typically used in Title VII discrimination cases, by showing:
            (1)   that she belongs to the protected class,
(2)   that she sought accommodation,
(3)   that the employer did not accommodate her, and
(4)   that the employer did accommodate others ‘similar in their ability or inability to work.’
The employer may then seek to justify its refusal to accommodate the pregnant worker by relying on “legitimate, non-discriminatory” reasons for denying her an accommodation. But, the Court cautioned, that reason normally cannot consist simply of a claim that it is more expensive or less convenient to accommodate pregnant women. If the employer offers an apparently “legitimate, non-discriminatory” reason for its actions, the plaintiff may seek to show that the employer’s cited reasons are in fact a pretext for discrimination. The plaintiff may create a question of fact for a jury by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s “legitimate, non-discriminatory” reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination.
As is relevant to Young’s case, the Court found evidence that the combined effect of UPS’ exemptions to its “no light duty” policy might have been, as one witness testified, that “the only light duty requested [due to physical] restrictions that became an issue” at UPS “were with women who were pregnant.”  The Fourth Circuit, the Court held, did not consider the combined effects of UPS’ policies, nor did it consider the strength of UPS’ justifications for each when combined. It therefore remanded the case back to the Fourth Circuit for further consideration.
 Justice Alito’s concurrence succinctly noted the weakness of UPS’ justification for accommodating drivers who lost their DOT certification, but not workers who became pregnant:
“[T]he legal obstacle faced by drivers who have lost DOT certification only explains why those drivers could not continue to perform all the tasks required by their ordinary jobs; it does not explain why respondent went further and provided such drivers with a work accommodation. Petitioner’s pregnancy prevented her from continuing her normal work as a driver, just as is the case for a driver who loses DOT certification. But respondent had a policy of accommodating drivers who lost DOT certification but not accommodating pregnant women, like petitioner. The legal obstacle of lost certification cannot explain this difference in treatment.”
While the Court limited its holding to the Pregnancy Discrimination Act, Young potentially allows plaintiffs in a broad array of Title VII discrimination cases to show an employer’s facially-neutral policy was shot through with enough exceptions to render it a pretext for discrimination.  Just because employees were allegedly treated differently due to some existing policy of the employer does not mean the case can be dismissed on summary judgment, unless the employer can also justify whatever exemptions to that policy it made for other employees. It also allows leeway for an employee to overcome summary judgment by showing that the impact of a workplace policy falls so overwhelmingly and unjustifiably on a single group as to give rise to an inference of intentional discrimination.
The experienced attorneys at Bailey & Ehrenberg PLLC handle a wide variety of employment discrimination claims in litigation, and also provide counseling on employment law issues.  We can be contacted via or at 202-331-1331. This article is not intended to constitute legal advice and should not be relied upon for that purpose.

Monday, February 23, 2015

D.C. Circuit Issues ERISA "Shutdown Benefits" Decision in PBGC Litigation Involving Former Steel Producer

The United States Court of Appeals for the District of Columbia Circuit ruled Friday that the Pension Benefit Guaranty Corporation ("PBGC") properly denied "shutdown benefits" to a former employee of a now-defunct steel producer under the employer's terminated pension plan. See Deppenbrook v. PBGC, No. 13-5254 (D.C. .Circ. 2/20/15). The D.C. Circuit affirmed a ruling by the U.S. District Court for the District of Columbia, which had granted summary judgment to the PBGC on the grounds that an employee did not experience a break in service that would entitle him to "shutdown benefits" under the plan ("shutdown benefits" are explained below). According to the appellate court, the 60-day Worker Adjustment Retraining and Notification Act ("WARN Act") notice period doesn't serve as a “waiting period” that would create a constructive termination of employment, resulting in shutdown benefits for anyone still employed on the notice date. Additionally, the court ruled that the "anti-cutback" provisions of the Employee Retirement Income Security Act ("ERISA") apply only to a situation in which the employer retains control over the plan, not to a situation in which the PBGC has exercised its power to involuntarily terminate a plan.
By way of background, Paul Deppenbrook was a former employee of Republic Technologies International LLC's now-defunct facility in Beaver Falls, Pa. Republic filed for bankruptcy in 2001 and issued WARN Act notices to its employees. The notices stated that Republic planned to close the Beaver Falls facility in July 2002. Republic contemporaneously negotiated an agreement with the United Steelworkers of America that allowed eligible employees to receive shutdown benefits. Shutdown benefits are enhanced early retirement benefits for certain workers who are affected by a facility shutdown or business cessation. In the course of the bankruptcy proceedings, the PBGC terminated Republic's four defined benefit plans. The PBGC decided to involuntarily terminate the plans effective June 14, 2002, which was before the accrual of shutdown benefits as the plant wasn't scheduled to close until July, a decision the PBGC said would avoid adding $96 million in unfunded liabilities to the plans. Because disputes arose between, among others, the PBGC and the Steelworkers Union, as to the appropriate termination date for Republic's plans, the PBGC filed suit in the U.S. District Court for the Northern District of Ohio, seeking a judicial determination of the proper termination date. In 2003, that court set the termination date as Aug. 17, 2002, one day after the actual closure of the plant, thus making the employees eligible for shutdown benefits. The U.S. Court of Appeals for the Sixth Circuit reversed and agreed with the PBGC that June 14, 2002, was the appropriate termination date.
Under a subsequent settlement agreement between the PBGC and Republic, the agency administered and insured the traditional defined benefit parts of the plans at issue but turned over the defined contribution portions of the plans to a third-party administrator and disclaimed any insurance for those portions of the plans. As part of the administration of the defined contribution portions, plan participants were required to take some form of distribution of the entire amount contained within their individual accounts. The PBGC then offset the employees' monthly defined benefit payments by the amount distributed from each account. Deppenbrook and a group of employees challenged the PBGC's calculations of these offsets as well as its denial of shutdown benefits. After the PBGC Appeals Board denied their challenge, the employees filed a lawsuit in the U.S. District Court for the Western District of Pennsylvania. That Court ruled in March 2011 that the matter should be transferred to the District of Columbia, which serves as the venue for any post-termination judicial review of PBGC benefit determinations involving a terminated pension plan.
In a June 17, 2013, decision, the United States District Court for the District of Columbia ruled in favor of the PBGC. The court found that the agency's decision to deny shutdown benefits was valid since the employees each continued to work at the plant until Aug. 16, 2002. According to the court, the WARN Act notice, while it preceded the termination date of the plan, failed to provide a constructive termination date for the employment of the affected workers. The court found that the notice only informed the employees that the shutdown of the plant was a possibility and that their actual employment wasn't terminated until the plant actually closed. The court also ruled that the PBGC was within its statutory mandate to refuse to insure the defined contribution portion of the plans.
Deppenbrook appealed the district court's decision to the D.C. Circuit The appellate court rejected Deppenbrook's argument that his shutdown benefits had vested on the date of the WARN Act notice in May 2002. In support of this contention, Deppenbrook had argued that the WARN Act's required 60-day notice period acted as a “waiting period” and that was actually prohibited from being considered for vesting purposes under the definition of a “nonforfeitable benefit” in ERISA Section 4001(a)(8). Finding that the terms of the statute required that such a “waiting period” be included in the terms of the plan or within the provisions of ERISA, the court found that Deppenbrook wasn't entitled to the shutdown benefits. The court further ruled that, even if a waiting period were considered, Deppenbrook didn't actually have a break in service since he was continuously employed at the plant until August 2002 and thus wouldn't have qualified for the benefits anyway.According to the court, the PBGC also was correct in refusing to insure the defined contribution portion of the plans, finding that such an action is prohibited by statute. Finally, the court ruled that the PBGC didn't violate the anti-cutback provisions of ERISA when it forced Deppenbrook to take a distribution from his defined contribution portion. According to the court, those anti-cutback provisions, present in Section 204(g), apply only to a situation in which the employer retains control over the plan, not in which the PBGC has exercised its power to terminate the plan.

DOL to Propose New Fiduciary Rule for Financial Advisors

The United States Department of Labor ("DOL") is re-proposing a rule that would set a fiduciary standard for financial advisers and brokers who give advice about retirement accounts. The proposed rule, RIN 1210-AB32, is intended to address investment advice and the circumstances under which individuals provide sales presentations or provide advice on rollovers from defined contribution plans to individual retirement accounts. A rule to address the problem of “conflicted advice” was first proposed in 2010, but was met with substantial opposition from the financial industry.

Friday, February 20, 2015

Same Sex Spouse Lacked Standing to Pursue COBRA Claims

A federal court in New Jersey ruled Wednesday that a nurse's same-sex spouse can't sue the nurse's former employer for failing to provide notice of continued health-care coverage under COBRA. See Sacchi v. Luciani, 2015 BL 41040, No. 3:14-cv-03130-FLW-LHG (D.N.J. 2/18/15). According to the court, the nurse's spouse, John Sacchi, lacked standing to assert claims under the Employee Retirement Income Security Act ("ERISA") because the nurse, Stephen J. Simoni, never named him as a beneficiary under his employer-sponsored health plan. By way of background, Sacchi alleged that he had “but for” standing under ERISA, because he was “eligible to join the plan” and would've done so “but for Defendants' wrongful conduct.” In dismissing Sacchi's suit, the court said it rejected this “novel, but meritless, theory of standing.” In so ruling, the court distinguished a 1993 decision of the U.S. Court of Appeals for the Third Circuit, Bixler v. Central Penn. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir. 1993), which recognized a “narrow" exception to ERISA standing for individuals who lost their status as plan beneficiaries as a result of wrongdoing by the plan administrator. According to the court, the Bixler plaintiff differed from Sacchi because she had been validly designated as a beneficiary of the relevant plan. “Plaintiff's theory of standing is made of whole cloth: ERISA simply does not permit any person to sue because he/she could be an eligible beneficiary—without having been so designated by the plan participant in the first instance."
Blogger's comment - while this may seem like an unfair or inequitable result, it does appear to be in conformity with the state of the law. As an aside, the same-sex spouse likely would have been found to have standing to pursue a claim for pension benefits, because ERISA has specific provisions that address spousal rights to pension benefits and that essentially automatically designate spouses as beneficiaries absent some waiver. But the right to sue for a failure to provide a COBRA notice falls outside the pension framework, as COBRA benefits are welfare benefits.

Thursday, February 19, 2015

Former Executive Denied Long Term Disability Benefits After Falling Down Steps of Private Plane

The United States Court of Appeals for the Sixth Circuit recently held that a former hospital executive who sustained injuries deplaning his private aircraft isn't entitled to disability benefits, because his injuries occurred after he left employment. See Sanford v. Life Ins. Co. of N. Am. (6th Cir., No. 14-5332, unpublished 2/13/15). The Sixth Circuit ruled that Life Insurance Co. of North America ("LINA") validly denied the executive's claims for both short- and long-term disability benefits after finding that the executive's allegedly disabling injuries occurred five days after he retired from LifePoint Hospitals Inc. The executive argued that he nevertheless remained in “Active Service” under the terms of the plan, because LifePoint continued to pay him for the four weeks of paid time off he had accrued. Even so, LINA didn't act arbitrarily or capriciously in finding that the executive failed to satisfy the plan's definition of “Active Service,” because it was reasonable for LINA to conclude that the executive was retired rather than on a vacation day at the time of his injury. According to the Court, under this theory, the executive “could not ‘vacation' from his job responsibilities because, having retired, he had no job responsibilities whatsoever.”

Long Term Disability Benefits Denied to Surgeon After Segway Accident

A federal judge in California recently determined that a surgeon who was injured in a segway accident waived his claim to long term disability benefits in a settlement agreement with his former employer.  See Gonda v. The Permanente Med Grp., Inc. (N.D. Cal., No. 3:11-cv-01363-SC, 2/17/15). In addition to finding that the settlement agreement expressly waived claims under the Employee Retirement Income Security Act, the U.S. District Court for the Northern District of California also found that California law—rather than federal common law—governed the agreement, despite noting a lack of clarity on this point from the U.S. Court of Appeals for the Ninth Circuit. By way of background, Dr. Thomas A. Gonda Jr.—who suffered from alcohol and substance abuse problems after his Segway accident—lost his job as a surgeon and received long-term disability benefits from Life Insurance Co. of North America ("LINA") for three years. LINA terminated benefits after Gonda completed a substance abuse treatment program and became certified as an addictions counselor, and he challenged that termination in federal court. According to the District Court, Gonda's lawsuit was barred by the settlement agreement he entered into with his former employer in the course of a wrongful termination lawsuit. The settlement agreement released all Gonda's claims against his former employer and its agent, and the agreement specifically mentioned claims brought under ERISA. Significantly, the court found that the settlement agreement specifically released claims against the employer's long-term disability plan, despite not mentioning the plan by name. On that point, the court found that the language releasing claims against the employer was broad enough to extend to the employer's disability plan. Gonda argued that a later agreement in which LINA—who wasn't a party to either lawsuit—agreed to consider his administrative appeals despite the settlement agreement superseded the waiver. The District Court disagreed, noting that it was “unclear” how LINA's willingness to hear the appeals could affect the employer's contractual rights. According to the District Court, “[w]illingness to continue internal administrative appeals does not equate to a waiver of Defendants' contractual right to be released from Dr. Gonda's claims against them."

Friday, February 13, 2015

More Soup Please - Shelter Employee's Title VII Retaliation Claim Revived

Noting there was much that was “odd” about the case, and “too many loose ends” to have warranted summary judgment, the United States Court of Appeals for the Seventh Circuit revived a discharged employee’s Title VII retaliation claim against a social service agency that fired him weeks earlier, but didn’t actually pull the trigger until the day after receiving his EEOC charge, his second against the agency. See Ledbetter v. Good Samaritan Ministries (February 6, 2015).
By way of background, the employee worked at an emergency shelter for a nonprofit agency that ran the shelter, a soup kitchen, and other services for the needy. A shelter resident complained to the agency’s executive director that she had been frightened by the employee, who had reprimanded her for not completing assigned chores and then threatened to evict her. The executive director, along with the employee’s direct supervisor, spoke to him about the incident and warned that future misbehavior could result in disciplinary action. Riled, the employee denied the resident’s allegations and filed a charge of race discrimination and retaliation with the EEOC; he then filed a Title VII suit, which was eventually dismissed. Meanwhile, though, four days after he filed suit, another supervisor complained to the executive director about an incident in which he’d been “frightened and humiliated” by the employee. Again, the executive director and immediate supervisor spoke to the employee and issued a warning about his intimidating conduct. They contended that after that meeting, the employee falsely accused staff members and members of the agency’s board of directors of lying and of trying to get him fired (accusations the employee denied). They also claimed that, nine days after the latest reprimand (on October 14), the pair had a meeting at which they decided to fire him. However, the day before he had been admonished a second time, the employee had gone to the EEOC once again; he filed a second charge contending he was being discriminated against based on his race and his previous EEOC charge. The agency officials learned of the second charge on October 19, and the next day he was fired, prompting a second lawsuit alleging retaliation. The agency insisted that the discharge decision was made five days earlier and for wholly unrelated reasons, and it was able to convince the district court as much.

According to the Court of Appeals, the problem was, the employer dawdled; they didn’t fire the employee when they claimed they made the decision to do so. “We can’t know how long they would have dawdled—but it is a possible inference that they fired him on the twentieth rather than later (or maybe never) because the filing of his second EEOC charge, which they learned about the day before, was the last straw,” Judge Posner speculated for the court. “An EEOC charge is often a preliminary to a suit. His first EEOC charge had eventuated in a suit; the second was likely to as well; how many more would there be?” Particularly in light of the suspicious timing, the appeals court deemed it quite plausible that, were it not for his filing of the second charge, the agency’s (ostensibly) sharpened ax might never have fallen. Moreover, the employer submitted a supplementary memorandum identifying the date of that fateful meeting as “on or about” October 14, yet the defense hinged on the meeting having taken place on that date. And the appeals court presumed that the officials would have had precise knowledge of the date. Making matters worse, in interrogatories, one of the officials said he didn’t remember the specific date that the meeting took place. Also unconvincing, in the court’s eyes, was the employer’s assertion that the supervisor would have executed the firing earlier, but he had been working 12-hour shifts at his other job and so was prevented from meeting with the doomed employee. The supervisor offered no supporting evidence to back up his work schedule claim and, at any rate, the court pointed out that there were other opportunities to effectuate the termination in the days following the alleged meeting, and other agency officials who could have done so.

There were still other problems with the case that made the appeals court “wonder what was really going on”: The two officials who decided to fire the employee each submitted one-page affidavits that look to have simply “parroted” language inserted by lawyers—and which appeared to have run afoul of Rule 56’s requirement that the affidavit of a lay witness be based on the witness’s personal knowledge. Personal knowledge was crucial in this particular case, the court observed, because while the pair contended that they fired the employee for making false accusations, they had no personal knowledge of such false accusations, and their allegation that he made them was hearsay. Even the reference to “false allegations,” set forth as well in the employer’s memorandum in support of summary judgment, troubled the court. The “allegations” may well have been referring to the employee’s first or second EEOC charge, for all the court knew, in which case the firing decision would have been retaliatory. In addition, the employee alleged that when he was finally summoned to meet with his supervisor, he was asked, before being fired, whether he had filed a second EEOC charge, and he acknowledged that he had indeed. As the court saw it, the implication was that, had he said “no,” the supervisor might have delayed his discharge until he could verify whether the denial was truthful. And if so, then the firing was retaliatory. Finally, in response to the employee’s second EEOC charge, the agency lawyer wrote to the EEOC that the employee was terminated “on October 20” and “subsequent to his display of defiant and insubordinate behavior towards his immediate supervisor.” That conflicted with the stated basis for discharge: false accusations and mistreatment of coworkers and residents occurring prior to October 14. And the letter to the EEOC did not state that the decision to terminate was made on October 14—yet another indication, in the court’s view, “that the defendants may have concocted that date.” Accordingly, the Seventh Circuit reversed the grant of summary judgment in the employer’s favor.