Category Archives: Uncategorized

Sixth Circuit Affirms District Court’s Grant of Summary Judgment For Employer On Plaintiff’s Claim of Associational Discrimination Under ADA; Dispute Regarding Due Date For Plaintiff’s Return to Work From Family Medical Leave Was Immaterial As Plaintiff Admitted She Would Not Have Returned To Work On Date She Asserted She Was Due Back

The Sixth Circuit recently affirmed that a plaintiff’s failure to return to work from a family medical leave on the due date established by her employer justified summary judgment in favor of the employer on the employee’s claim of associational discrimination under the ADA.  The plaintiff’s dispute as to her return date was immaterial, and did not prevent summary judgment for the employer, because plaintiff admitted in deposition that she would not have returned by the date she asserted she was due back at work.  Bimberg v. Elkton-Pigeon- Bay Port Laker Schools, 6th Cir. No. 12-1311, 2013 WL 174289 (Jan. 17, 2013).

Plaintiff Bimberg was a school bus driver who took a family medical leave to care for her terminally ill husband.  Bimberg’s employer initially granted her the FMLA-mandated 12 weeks of unpaid leave.  Therafter, Bimberg’s union representative was able to secure for her leave from the beginning of the approaching new school semester, January 5, 2009, until the end of the school year in early June 2009.  However, Bimberg later determined that she needed to leave before the start of the new semester, and that she would be away for more than 12 weeks.  Ultimately, her employer granted her unpaid leave of one year, from December 18, 2008, through December 18, 2009.

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SEVENTH CIRCUIT RESTRICTS FLSA COLLECTIVE ACTIONS THAT REQUIRE INDIVIDUAL CALCULATION OF DAMAGES

On February 4, 2013, the Seventh Circuit Court of Appeals (includes Indiana, Illinois and Wisconsin) issued an Opinion authored by Judge Richard Posner that is very favorable to employers.  The Court ruled that employees cannot sue for unpaid overtime as a group unless they can propose a rational way to calculate damages without engaging in a specific factual inquiry for each employee.  Espenscheid v. Directsat USA, LLC 2013 U.S. App. Lexis 2409.

In Espenscheid, the District Court initially certified a class of 2,341 plaintiffs who claimed they did not receive overtime wages in violation of the FLSA.    However, the employees were paid on piece rate basis, meaning that many of the employees worked fewer than forty hours and many may have worked substantially more than forty hours.  The Seventh Circuit decertified the class and ruled that the case could not continue as a collective action because there would have to be an individual factual inquiry for each employee regarding his or her damages.  The Court held that the collective action could not go forward because each separate evidentiary hearing would have “swamped” the District Court.

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FMLA Amendments Provide Greater Protection for Military Members and Their Immediate Families

The Family and Medical Leave Act of 1993 (“FMLA”) grants family and medical leave to eligible employees under certain circumstances.  As enacted, the FMLA allows employees of a covered employer to take up to twelve (12) weeks of unpaid, protected leave each year for one or more of the reasons enumerated therein.  

The FMLA was first significantly amended in 2008 with the enactment of the National Defense Authorization Act for Fiscal Year 2008 (“FY 2008 NDAA”). The FY 2008 NDAA created two new categories of leave: “qualifying exigency leave” and “military caregiver leave.”  Under the qualifying exigency leave provision, eligible family members (defined as spouse, parent, son or daughter)  of members of the National Guard and Reserves are entitled to take FMLA leave for qualifying exigencies arising out of the military member’s deployment in support of a contingency operation.   A “qualifying exigency” includes short notice deployment, military events and related activities, childcare and school activities, financial and legal arrangements, counseling, rest and recuperation, post-deployment activities, and additional activities to which both the employer and employee agree.  Additionally, the FY 2008 NDAA amendments provided up to 26 workweeks of military caregiver leave in a single 12-month period for an eligible employee to care for a covered service-member with a serious injury or illness if the employee is the spouse, son, daughter, parent, or next of kin of the covered service-member.  These two leave entitlements are collectively referred to as “military family leave” and were incorporated into the 2008 Final Rule.

For the full article including footnotes click here

The Eighth Circuit Court of Appeals Decertifies Class of Domino’s Delivery Drivers for Failure to Satisfy the “Commonality” Requirement

On February 4, 2013, the United States Court of Appeals for the Eighth Circuit decertified a class of approximately 1,600 Minnesota delivery drivers employed by Domino’s Pizza, LLC (“Domino’s”) holding that the certified class did not meet the requirement of commonality. Luiken v. Domino’s Pizza, LLC, 2013 WL 399248 (8th Cir. Feb. 4, 2013).

In Minnesota, Domino’s charged its customers a $1 per-delivery charge (which rose to $1.50 in 2008). The delivery charge was reflected on the customer statement and in 2009 some Domino’s pizza boxes indicated that delivery charges were not paid as tips to Domino’s drivers. Matt Luiken, the class representative, argued that pursuant to state law the delivery charge was a tip that was wrongfully withheld from Domino’s drivers.

Minnesota Law

Under Minnesota law, gratuities received by an employee for personal services rendered by the employee are the employee’s property. Gratuities include obligatory charges which “might reasonably be construed by the guest” as being a payment for personal services rendered by the employee without notice from the employer that the charge is not the employee’s property. Minnesota regulations provide that obligatory charges can be “service charges, tips, gratuities, and/or surcharges,” included on the customer’s statement.

“Context Matters”

In Luiken, plaintiffs contended that Domino’s customers could reasonably construe the delivery charge as a payment for personal services and because Domino’s failed to provide proper notice that the drivers would not receive the money Domino’s was required to pay the delivery charge to its drivers. Plaintiffs admitted that when asked by customers whether the delivery charge was a tip, some drivers voluntarily explained that the charge was not a tip, while other drivers remained silent. Plaintiffs, however, argued that the context of the transactions between the drivers and the customers was irrelevant because the “key” consideration was whether Domino’s provided the proper notice when it was required to do so.

The court rejected plaintiffs interpretation of the law, stating that “context matters” and notice is only relevant if the charge is the type that a customer might reasonably construe as a payment for personal services. Federal Rule of Civil Procedure 23 provides that a party seeking class certification must affirmatively establish that the class meets the requirements of numerosity, commonality, typicality, and fair and adequate representation. “Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury.” Wal-Mart Stores, Inc. v. Dukes, 133 S. Ct. 2541, 2551 (2011). According to the court, the statute and the rule’s use of “the”—which might reasonably be construed by the guest—is a word of limitation that refers to someone specific (the customer). The court reasoned that in some transactions, the customer could not have reasonably believed that the charge was a tip because the customer had been told by the driver that it was not; thus, no notice was required. In other transactions, however, the opposite was true and notice would be required. Ultimately, the court held that as a result of the varied transactions between drivers and customers the class members lacked commonality, and the court would be unable to make a “one-stroke determination” applicable to the class as a whole. Based on this finding, the court reversed class certification and remanded the case to the district court.

A copy of the Eighth Circuit’s opinion can be found here.

The Southern District of Ohio Rules that Veganism can Constitute a “Moral and Ethical Belief” which is “Sincerely Held with the Strength of Traditional Religious Views,” and Thereby Form the Basis for Claims of Religious Discrimination Under Title VII and Ohio Revised Code Chapter 4112

In Chenzira v. Cincinnati Children’s Hospital Medical Center, S.D. Ohio No. 1:11-CV-00917 (Dec. 27, 2012), the plaintiff, Sakile S. Chenzira, was employed by defendant Cincinnati Children’s Hospital Medical Center (“Children’s Hospital”) as a customer service representative for more than a decade.  Nonetheless, Children’s Hospital fired Chenzira when she refused to be vaccinated for the flu.  Chenzira refused to be vaccinated because she is a vegan – a person who does not ingest any animal or animal by-products.

Chenzira brought a three-count complaint against Children’s Hospital, alleging that her discharge constituted (1) religious discrimination in violation of Title VII of the Civil Rights Act of 1964; (2) religious discrimination in violation of Ohio Revised Code Chapter 4112; and (3) tortious wrongful discharge in violation of Ohio public policy.

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Groundbreaking D.C. Circuit Decision: President Obama’s NLRB Appointments Exceeded his Constitutional Authority

In a momentous decision, a three-judge panel of the U.S. Court of Appeals for the District of Columbia unanimously held that President Obama lacked the constitutional authority to appoint three members to the National Labor Relations Board (NLRB) while the Senate was on an intrasession break from December 20, 2011 through January 23, 2012.

Under the Supreme Court’s decision in New Process Steel, the NLRB Board must have a quorum of three members to act. On January 4, 2012, while the Senate was in pro forma sessions meeting every three business days, President Obama filled three vacancies on the Board without approval by the Senate. In Noel Canning v. NLRB, petitioner argued, and the court agreed, that the Constitution’s “Recess Appointments Clause” is limited to the “the Recess” period between sessions of the Senate when the Senate is, by definition, not in session. “The Recess” does not include intrasession breaks in the Senate’s business while it is otherwise in a continuing session. The court also held that the President may only make recess appointments to fill vacancies that arise during the intersession recess. This interpretation conflicts with the prior understanding that the President can use the appointment power to fill a vacancy in existence during the Senate recess even though it did not arise at that time.

Please click here for the full article.

Using Arbitration Clauses to Reduce Potential Liability Risk

In the first part of this column, I outlined the advantages and disadvantages of arbitration as an alternative to litigation in court and concluded that neither arbitration nor litigation is preferable in all situations. This second part provides  more specific suggestions on when to use arbitration in certain high-risk, “bet-the-company” situations. Businesses must navigate litigation risks proactively to minimize exposure to large potential liabilities. Arbitration clauses can serve as a key element in such a strategy.

Please click here for the second part of Benesch partner Steven M. Badger‘s article series in Indiana Lawyer.

To Arbitrate or Litigate, That is the Question

In my world of dispute resolution, one of the most basic questions is whether a particular business dispute should be resolved in arbitration or in a court of law. Like many of the questions I am frequently asked by clients, there is no simple answer that fits all occasions and situations.

This first installment of a two-part column, written by Benesch Litigation Group partner Steven Badger, outlines the principal considerations in determining what disputes are best suited  to arbitration. The second part, coming in the Jan. 16 issue of Indiana Lawyer, applies these general principles to provide concrete guidance in the use of arbitration to avoid consumer class actions and in other “bet-the-company” commercial disputes.

Please click here for the full article.

Employee Shift-Switching

When does an employer suffer undue hardship from requesting that other employees switch shifts to accommodate a Sabbath-observant employee?  What kind of shift-switching constitutes reasonable accommodation for such an employee?  The Sixth Circuit recently tackled these questions in Crider v. University of Tennessee, Knoxville, No. 11-5511 (6th Cir. filed Jul. 23, 2012).

Kimberly Crider was a Seventh Day Adventist hired by the University of Tennessee, Knoxville (“UTK”) in May 2008.  Among Crider’s duties was sharing responsibility with two other employees, Rost and Meador, for a 24/7 emergency cell phone that UTK students abroad could contact if they needed.  All three employees with phone duties were expected to carry the phone on some weekends.  Shortly after she was hired, Crider informed her supervisor that she could not carry the phone on Saturdays because doing so violated her Sabbath.  After verbally complaining to progressively higher levels of UTK’s administrative food chain, Crider filed a written request for religious accommodation around the end of May 2008.  UTK’s response? Permitting Crider to carry the phone on fewer Saturdays.

A short while later, Crider found out that she would have phone responsibility on an upcoming Saturday.  Crider proposed a solution to her supervisor: a voluntary schedule of shift exchanges, in which Crider would carry the phone on more days in exchange for Rost and Meador alternating weekend responsibilities.  When the supervisor proposed this to Rost and Meador, they rejected it as “too burdensome,” with Meador threatening to quit rather than carry the phone every other weekend.  Instead of requiring Rost and Meador to comply with the shift-switching, Crider’s supervisor (1) told Rost and Meador “not to do anything different at work” and (2) again approached Crider about weekend phone responsibilities.   Crider once again refused to carry the phone on Saturdays.  Shortly thereafter, on June 20, 2008, UTK terminated Crider because it felt she could not meet the job requirements.  Crider sued for religious discrimination under Title VII, and the District Court granted summary judgment to UTK.  The Sixth Circuit reversed and remanded, holding that summary judgment was inappropriate.

Turning first to whether UTK had reasonably attempted to accommodate Crider, the court held that “offering Crider fewer Saturday shifts is not a reasonable accommodation to religious beliefs which prohibit working on Saturdays.”

Moving next to the undue hardship question, the court first resolved an apparent conflict between the Supreme Court’s ruling in Trans World Airlines, Inc. v. Hardison, et. al., 432 U.S. 63 (1977), and the Sixth Circuit’s earlier ruling in Draper v. United States Pipe and Foundry Co., 527 F.2d 515 (6th Cir. 1975).  Specifically, the court held that Hardison did not overrule Draper because “[b]oth require the employer to show an undue hardship on its business, but also recognize that an accommodation’s effect on a co-worker may lead to an undue hardship on the employer.”  Here, UTK failed to prove it suffered an undue burden because it did not show that Meador’s threat to quit was anything more than “grumbling.”  However, because Meador’s threat might have been more than “grumbling,” a dispute of material fact existed, and summary judgment was inappropriate.

Lastly, the court found that instructing Rost and Meador “not to do anything different at work” might have constituted frustration of Crider’s accommodation.  However, the instruction’s meaning was unclear, raising another dispute of material fact to defeat summary judgment.

U.S. Supreme Court Rules Pharmaceutical Sales Representatives are Not Entitled to Overtime Wages

In a big victory for drug companies, the U.S. Supreme Court has ruled that pharmaceutical sales representatives are not entitled to overtime wages under the Fair Labor Standards Act.

The justices split, 5-4, in favor of deciding that the roughly 90,000 pharmaceutical sales reps working in the industry are “outside salesmen” and exempt from the federal wage and hour law.

The ruling is significant for drug companies, which have been facing a number of class action lawsuits filed by pharmaceutical sales reps who want back wages for working more than 40 hours in a week.

It remains to be seen how far reaching the ruling in Christopher v. SmithKline Beecham Corp. will be, given that it specifically dealt with the classification of pharmaceutical sales reps. Many sales jobs are already exempt from the FLSA under the “outside salesman” regulation and not entitled to time and a half for working more than 40 hours.

The court noted that pharmaceutical sales reps are different than typical salespeople in that they operate in a “unique regulatory environment” where they do not actually sell medication but only try to persuade physicians to write prescriptions for their products in appropriate cases.

Still, Justice Samuel Alito wrote in a footnote, “When an entire industry is constrained by law or regulation from selling its products in the ordinary manner, an employee who functions in all relevant respects as an outside salesman should not be excluded from that category based on technicalities.”

The plaintiffs in the case, Michael Christopher and Frank Buchanan, argued that they and other pharmaceutical sales reps they represent in the class-action lawsuit should not be considered “outside salesmen” because they only facilitated sales that were made by others.

They pointed out that “prescription drugs are not actually sold until distributors and retail pharmacies order the drugs from other employees,” which the plaintiffs said were the “true salesmen in the industry.”

The four dissenting justices agreed with this interpretation, with Justice Stephen Breyer a pharmaceutical sales rep’s job “is more naturally characterized as involving ‘promotional activities designed to stimulate sales . . . made by someone else.’”

But the majority dismissed the argument, writing that if “taken to the extreme,” it would require FLSA coverage for “a car salesman who receives a commitment to buy (a car) but then asks his or her assistant to enter the order into the computer.”

Alito wrote that a pharmaceutical sales reps’ “end goal was not merely to make physicians aware of the medically appropriate uses of a particular drug. Rather, it was to convince physicians actually to prescribe the drug in appropriate cases.”

The ruling hinged on the Supreme Court’s decision not to follow the U.S. Department of Labor’s  recent interpretation that pharmaceutical sales reps are not “outside salesmen” under the FLSA.

The court noted that it was only adopted in court filings related to the case and “plainly lacks the hallmarks of thorough consideration.”

“To defer to the agency’s interpretation in this circumstance would seriously undermine the principle that agencies should provide regulated parties ‘fair warning . . . ,’” Justice Alito wrote.

Rather, the Court relied on the statute itself as well as long-standing DOL regulations in reaching its conclusion. The Court noted that the FLSA emphasizes a “functional, rather than a formal, inquiry” in deciding whether an employee should be exempt.

The Court wrote that pharmaceutical sales reps are hired for their sales experience, are trained to close each sales call by obtaining a non-binding commitment, are allowed to work away from the office with minimal supervision, and are rewarded with incentive compensation.

“It follows that (plaintiffs) made sales for the purpose of the FLSA and therefore are exempt outside salesmen within the meaning of the DOL’s regulations,” Alito concluded.

For more information, please contact Patrick Peters at ppeters@beneschlaw.com or (216) 363-4434 or Joseph Gross at jgross@beneschlaw.com or (216) 363-4163.