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Sereboff v. Mid Atlantic: Will ERISA plan get reimbursement from plan participants
March 25, 2006 by Ross Runkel at LawMemo
Where I come from an insurance company should get reimbursed when its pay-out gets replaced by a judgment from a third-party tortfeasor. But that's because I don't write statutes that distinguish between equitable relief and legal relief. Congress did just that in ERISA, so we have a split among the circuits on this.
The US Supreme Court will figure it all out in Sereboff v. Mid Atlantic Medical Services, which will be argued on March 28, 2006. Go here for briefs and the lower court opinion.
An ERISA Plan paid about $75,000 to two participants (the Sereboffs) to cover medical expenses connected to accident-related injuries. The Sereboffs recovered $750,000 in a settlement with a third-party tortfeasor, and placed those funds into an investment account. The Plan then sued the Sereboffs to get reimbursed for the benefits it had paid. The Plan sued under ERISA Section 502(a)(3) which allows a Plan to recover "other equitable relief."
The Sereboffs argued that the Plan could not recover because it was seeking "legal" rather than "equitable" relief, citing Great-West Life v. Knudson, 534 US 204 (2002). The Knudson facts were similar except that under the terms of the settlement the proceeds went into a trust for the medical care of one of the Knudsons.
The 4th Circuit held that the Plan was seeking "equitable" relief within the meaning of Great-West Life v. Knudson, and allowed the suit to go forward. The US Supreme Court will be reviewing the 4th Circuit decision.
One million dollars for a hangman's noose
March 22, 2006 by Ross Runkel at LawMemo
"It is shocking that such egregious racial harassment still occurs in the 21st century workplace, more than 40 years after passage of the landmark Civil Rights Act." Quoting EEOC’s Houston District Director.
EEOC got a $1 million settlement of a racial harassment case. The allegations were:
A black employee was subjected to a barrage of racial epithets, culminating in an incident where white co-workers placed a noose around his neck in the company bathroom and choked him. The employer did not stop its employees, including managers, from harassing the employee on the basis of his race (black) and subjecting him to a racially hostile work environment - including verbal and physical abuse.
More details: EEOC press release.
Racial slurs but no smoking gun
March 20, 2006 by Ross Runkel at LawMemo
Subtitle: Let the judges rather than the jury weigh the evidence.
Sub-subtitle: So long Ash v. Tyson Foods.
Wal-Mart fired Myron Canady. Well, actually, Canady's supervisor's boss' boss fired him.
Canady, an African-American, claimed that race was a factor, and sued under Title VII. He pointed to what looked like a smoking gun: His supervisor had used many of the classic and most offensive racial slurs. "Nigga" and "lawn jockey." He called himself a "slave driver" and said all African-Americans look alike, and said Canady's skin color seemed to wipe off onto towels.
Wal-Mart said Canady was fired because he was insubordinate. He yelled at his supervisor's boss in front of customers and other employees.
On summary judgment motion, a key issue is whether Canady has evidence that insubordination was a pretext, and that race was the true reason.
You might think that the supervisor's continued use of racial comments would do it pretty nicely, especially after the US Supreme Court's decision in Ash v. Tyson Foods (US Supreme Court 02/21/2006) which unanimously chastised the 11th Circuit for ignoring use of the word "boy." Looks a bit like a smoking gun.
Not in the 8th Circuit under these facts. The court seemed to think the wrong guy was holding the smoking gun. The supervisor who made the comments was not the one who made the discharge decision (it was his boss' boss), and the comments were not made in the context of that decision.
Canady also claimed he was subjected to a racially hostile work environment in violation of Title VII.
On this point, the court seemed to think the gun wasn't all that smoky. The supervisor apologized for his "Nigga" comment and did not repeat it. The "slave driver" comment was, in context, not a sign of racial bias but merely descriptive of the supervisor's reputation.
Read all about it: Canady v. Wal-Mart Stores (8th Cir 03/17/2006) (by 2-1 vote).
Can this be? I have to agree with the dissent: There was enough evidence to send the case to a jury to decide what the facts really were.
As for harassment, there was a lot of extremely offensive racial commentary coming from the supervisor during a seven month period.
As for the discharge, the majority runs roughshod over Ash v. Tyson Foods. The dissent points out that reasonable jurors could infer that the supervisor was involved in the discharge decision and could infer that the employer's proffered reason was a pretext. Also, the dissent points out that Canady's affidavit denied any disrespect for Wal-Mart management and denied knowingly engaging in insubordination.
My view: The majority weighed the evidence, rather than letting a jury do that. Summary judgment is not the place for a judge to decide contested issues of fact.
Do I smell a certiorari petition?
Supreme Court re-argument on employee speech
March 19, 2006 by Ross Runkel at LawMemo
A rare event: The US Supreme Court will hear a second argument in Garcetti v. Ceballos - a significant employee free speech case.
This case was argued on October 12, 2005, and the Court ordered that it be re-argued on March 21, 2006. The main intervening event was the retirement of Justice O'Connor and the appointment of Justice Alito. The conventional wisdom is that the Court was split 4-4, and needs Justice Alito's vote to break the tie.
Richard Ceballos, a deputy district attorney, sued his employer (the County) and his supervisors claiming they retaliated against him in violation of the 1st amendment.
Ceballos wrote a memorandum to his supervisor in which he claimed that a deputy sheriff had lied in an application for a search warrant. Ceballos claimed that he was demoted in retaliation for this. The trial court granted summary judgment for the individual defendants on the ground of qualified immunity. The 9th Circuit reversed. The US Supreme Court granted certiorari to review the 9th Circuit decision.
The 9th Circuit concluded that the individual defendants were not entitled to qualified immunity because "the law was clearly established that Ceballos' speech addressed a matter of public concern and that his interest in the speech outweighed the public employer's interest in avoiding inefficiency and disruption."
A concurring 9th Circuit judge argued that the 9th Circuit's jurisprudence in this area of law is wrong. He would hold that public employees are not protected by the 1st amendment when their speech is uttered in the course of carrying out their employment obligations. That is because Connick v. Myers, 461 US 138 (1982), requires that the public employee be speaking "as a citizen," which the judge says Ceballos was not.
- Decision below: Ceballos v. Garcetti (9th Cir 03/22/2004)
- Supreme Court briefs and transcript of first argument
Non-employment action can be retaliation
March 14, 2006 by Ross Runkel at LawMemo
I want to dramatize how different Title VII's retaliation section is from its main section.
Section 703(a)(1) (the main section):
- prohibits discrimination because of an individual's race, color, religion, sex, or national origin.
- says the employer must not "discriminate against any individual with respect to [the individual's] compensation, terms, conditions, or privileges of employment."
Section 704 (the retaliation section):
- prohibits discrimination because an individual has --
- "opposed any practice made an unlawful employment practice by" Title VII
- "made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under" Title VII.
- or -
- says the employer must not "discriminate against" the individual. Period.
The purposes of 703 and 704 are different. Section 704 is designed to protect the process, to protect courts from employer interference, to protect the EEOC from employer interference, and to protect employees who oppose illegality. That is totally different from 703, which is designed to protect employees against job changes because of race, sex, etc.
The kinds of discrimination prohibited are different. Section 703 applies only to discrimination with respect to job-related things. Section 704 prohibits discrimination, period.
Some lawyers say 704 should be read as if it had the extra 703 language in it. Perhaps Congress had a slip of the pen, and really meant to include a dozen or so words. (Some slip!) Perhaps "discrimination" in 704 was simply "shorthand" for discrimination in 703. I don't think so.
It looks to me like Congress knew exactly what it was doing in Section 704. Two things:
- Purpose: Protecting the litigation and enforcement process from employer interference.
- Method: Prohibiting all forms of discrimination against employees who oppose illegal practices or participate in Title VII proceedings.
This means the forms of discrimination forbidden by Section 704 are unhooked from the limitations of Section 703.
- The discrimination need not be a tangible employment action like a discharge or refusal to hire or a demotion. Why? Because the discrimination doesn't have to be "with respect to" terms and conditions of employment.
- The discrimination need not be "severe or pervasive." Why? Because that requirement was designed to screen out 703 cases in which there was little effect on employment conditions.
- The discrimination can involve something totally disconnected from the job. Why? Because 704 reaches all discrimination, and does not have the 703 limitation of "with respect to" terms and conditions of employment.
One case in point. Rochon v. Gonzales (DC Cir 02/28/2006). The court said the employee "was not required to demonstrate his employer's retaliatory act was related to his employment." Rochon was an FBI agent who filed a formal EEO complaint and later claimed his employer discriminated against him because of that (so far, a classic retaliation claim).
The big deal in the Rochon case was the alleged retaliatory act. He claimed that the FBI received death threats against him and his wife from a prison inmate. Standard procedure is for the FBI to investigate and take protective steps. Rochon claims the FBI did not do this.
The DC Circuit correctly held that the employee had a claim even though the employer's retaliatory act was not related to his employment.
The US Supreme Court will have a chance to clarify some of this in Burlington Northern v. White, which is now pending. However, that case does not include an issue on non-employment retaliatory actions.
Another $2 million for harassment
March 13, 2006 by Ross Runkel at LawMemo
EEOC is on a roll. A $2 million consent decree against Cracker Barrel on a claim of sexual and racial harassment and retaliation. The money will be split by 51 employees. More details in the EEOC press release.
This follows announcements of a $1.3 million verdict and a $90,000 settlement discussed here.
EEOC goes after sexual harassment
March 11, 2006 by Ross Runkel at LawMemo
EEOC seems serious in its quest to rid the workplace of sexual harassment. Two recent cases yielded a verdict for $1.34 million and a settlement for $90,000.
$1.34 million.
EEOC sued Associated Security Enforcement on behalf of four women, charging sexual harassment and retaliation. For the unpleasant details of the sexual harassment, go read the EEOC press release.
A jury awarded $35,000 each to two women and $25,000 each to the other two to compensate them for the emotional pain and suffering. The jury also awarded a total of $17,000 for back pay for two women.
Punitive damages: The jury also assessed punitive damages of $300,000 each for all four women. Total punitive damages: $1,200,000.
$90,000.
EEOC sued Pand Enterprises (doing business as a McDonald's restaurant franchise) on behalf of a class of teenage male employees claiming sexual harassment by a male supervisor.
The case settled for $90,000 plus a consent decree requiring training and other preventive efforts. EEOC press release.
US Supreme Court unanimously upholds Solomon Amendment
March 06, 2006 by Ross Runkel at LawMemo
The United States Supreme Court held unanimously that the Solomon Amendment is constitutional. Rumsfeld v. Forum For Academic and Institutional Rights (US Supreme Court 03/06/2006).
(1) The Court held that the Solomon Amendment provides that in order for a law school and its university to receive federal funding, the law school must offer military recruiters the same access to its campus and students that it provides to the nonmilitary recruiter receiving the most favorable access.
(2) The Court held that the Solomon Amendment is constitutional. Although there are limits to Congress' ability to place conditions on the receipt of federal funds, a funding condition cannot be unconstitutional if it could be imposed directly. This condition was one that Congress could have imposed directly without violating the 1st amendment.
The Solomon Amendment regulates conduct, not speech. (a) Although law schools must send emails and distribute fliers if they provide that service to other recruiters, these elements of speech are incidental to the statute's regulation of conduct, and cannot be compared to forcing students to pledge allegiance to the flag or forcing a Jehovah's Witness to display a motto on his license plate. (b) Schools are not "speaking" when they host interviews and receptions on campus. Nothing about recruiting suggests that law schools agree with the recruiters' speech. Law schools are not restricted as to what they can say about the military's policies. (c) This case is not like the flag burning cases because the conduct here is not so inherently expressive, and even if this were expressive conduct the Solomon Amendment would be constitutional under the flag burning cases.
The Solomon Amendment does not violate the law schools' freedom of expressive association. The statute does not require the schools to accept members it does not desire (distinguishing the case where a statute required the Boy Scouts to accept a homosexual scoutmaster). Recruiters are not part of the school. Students and faculty are free to voice their disapproval of the military's message.
Opinion by Chief Justice Roberts. Justice Alito did not participate.
Burden of proof in disparate impact case
March 04, 2006 by Ross Runkel at LawMemo
Circuit court are split 3-1 on whether it is the plaintiff (employees) or defendant (employer) who has the burden of proof on the issue of the availability of a less discriminatory alternative employment practice in a disparate impact case.
The latest entry is IBEW v. Mississippi Power & Light (5th Cir 03/02/2006), holding that the burden is on the plaintiff.
Basic facts:
- The union demonstrated that the employer had an employment practice that had a disparate racial impact on African-American employees. The employment practice was the method setting cutoff scores on a validated standardized test.
- The employer demonstrated that its practice was both "job related" and "consistent with business necessity."
- Neither party made a showing that there was or was not an alternative selection device that would have a lesser racial impact and also serve the employer's legitimate interest.
The statute is part of the Civil Rights Act of 1991: 42 USC Section 2000e-2(k)(A)(ii):
An unlawful employment practice based on disparate impact is established ... only if --(i) a complaining party demonstrates that a respondent uses a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin and the respondent fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity; or
(ii) the complaining party makes the demonstration described in subparagraph (C) with respect to an alternative employment practice and the respondent refuses to adopt such alternative employment practice.
My view: The burden of proof is on the plaintiff.
The statute gives the plaintiff two ways to go, separated by the word "or." The plaintiff failed under subsection (i) because the employer did shoulder its burden of proving that the practice was "job related for the position in question and consistent with business necessity."
Therefore, the case moved to subsection (ii), which leaves no doubt that the burden is on the plaintiff. How could the language be more plain?
The circuit courts are split on this issue. The 3rd and 11th Circuits have held that the burden is on the plaintiff. The 8th Circuit has held that the burden is on the defendant.
Read more about this case, the circuit court split, and the possibility of this issue going to the US Supreme Court at Michael Fox's Jottings By An Employer's Lawyer.
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