BB&K 2013 ANNUAL LABOR & EMPLOYMENT LAW UPDATE 1

DISABILITY AND MEDICAL LEAVE CASES

U.S. SUPREME COURT HOLDS THAT TEACHER/MINISTER MAY NOT SUE CHURCH FOR DISCRIMINATION AND WRONGFUL TERMINATION Plaintiff worked as a teacher for Hosanna-Tabor Evangelical Lutheran Church and School (“Hosanna-Tabor”). She was considered “called,” meaning that she was regarded as having been called to her vocation by God through a congregation. She taught academic and religious classes and led the students in prayer. Plaintiff was diagnosed with narcolepsy and went on disability leave. When Plaintiff advised the school that she was able to return to work, she was told that her position had been filled. After Plaintiff showed up for work, Hosanna-Tabor terminated her. Plaintiff filed a charge with the Equal Employment Opportunity Commission (“EEOC”), alleging that Hosana-Tabor had terminated her employment in violation of the ADA. The EEOC filed suit, alleging that Hosanna-Tabor had fired Plaintiff in retaliation for threatening to file an ADA lawsuit. Hosanna-Tabor moved for summary judgment, arguing that Plaintiff was a minister, and she had been fired for a religious reason - namely, that her threat to sue the Church violated the Church’s belief that Christians should resolve their disputes internally. The District Court agreed that the suit was barred by the ministerial exception and granted summary judgment in Hosanna-Tabor’s favor. The Sixth Circuit Court of Appeals vacated the decision. The Supreme Court granted certiorari. The Supreme Court recognized that the ministerial exception, grounded in the First Amendment, precluding application of employment discrimination legislation to claims concerning the employment relationship between a religious institution and its ministers. By imposing the hiring of an unwanted minister, the state would infringe the Free Exercise Clause, which protected a religious group’s right to shape its own faith and mission through its appointments. According a state the power to determine which individuals would minister to the faithful also violated the Establishment Clause, which prohibited government involvement in such ecclesiastical decisions. The ministerial exception applied to the teacher because the church held her out as a minister, with a role distinct from that of most of its members. Her title as a minister reflected a significant degree of religious training followed by a formal process of commissioning. The teacher held herself out as a minister of the church by accepting the formal call to religious service, according to its terms. She did so in other ways as well. Her job duties reflected a role in conveying the church’s message and carrying out its mission. Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC (2012) 132 S.Ct. 694. NINTH CIRCUIT HOLDS THAT STATE EMPLOYEES CANNOT SUE UNDER SECTION 1983 FOR VIOLATIONS OF TITLE I OF THE AMERI CANS WITH DISABILITIES ACT Plaintiff Josephine Okwu was employed by the California Department of Transportation (“Caltrans”) as an Accounting Officer. Plaintiff suffers from severe psychological disorders, including bipolar disorder, psychosis, and schizoaffective disorder. These disorders led to strife between Plaintiff and Caltrans. Caltrans wanted to terminate Plaintiff’s employment; Plaintiff

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alleged that she had been improperly passed over for promotion and harassed. As part of a negotiated settlement of this conflict, Plaintiff applied for and received disability retirement status from the California Public Employees Retirement System (“CalPERS”). The settlement allowed Plaintiff to seek reinstatement to active employment. Plaintiff did, and a California administrative law judge (“ALJ”) decided that, despite Plaintiff’s praiseworthy “efforts to gain control of her illness,” Plaintiff “remain[ed] substantially incapacitated from the performance of her usual and customary duties” as a Caltrans Accounting Officer. The CalPERS Board of Administration adopted the ALJ’s decision. Plaintiff brought suit under 42 U.S.C.S. section 1983, against several individuals who were all employees of either CalPERS or Caltrans, alleging that the decision not to reinstate her from disability retirement deprived her of a reasonable accommodation under Title I of the ADA and to the equal protection of the laws under the Fourteenth Amendment. The U.S. District Court for the Eastern District of California dismissed the complaint on the grounds that Section 1983 cannot be used as a substitute for ADA claims that are not viable in federal court. Plaintiff appealed. The Ninth Circuit Court of Appeals affirmed, concluding that a state employee may not sue state officers under 42 U.S.C. § 1983 for alleged violations of Title I of the ADA because Congress’s inclusion of a comprehensive remedial scheme in Title I of the ADA precludes Section 1983 claims predicated on alleged violations of ADA Title I substantive rights. The Ninth Circuit also concluded that Plaintiff’s allegations of fact did not state a claim under the Equal Protection Clause because the “class of one” theory, which she invoked, is not available to public employees. Okwu v. McKim (9th Cir. 2012) 682 F.3d 841. NINTH CIRCUIT HOLDS THAT REGULAR ATTENDANCE AT WORK IS AN ESSENTIAL FUNCTION FOR NICU NURSE Defendant Providence St. Vincent (“Providence”) employed Plaintiff Monika Samper as a neo-natal intensive care unit (“NICU”) nurse. Providence’s attendance policy sanctioned five unplanned absences of unlimited duration during a rolling twelve-month period, as well as other permitted absences. Plaintiff had a long history of chronic attendance problems. At the end of 2006, Plaintiff received a verbal warning because of her attendance. In response, Plaintiff sought an accommodation for her fibromyalgia that would have allowed her an unspecified number of unplanned absences from her job. Plaintiff was issued a corrective action notice in March 2008 for seven unplanned absences in the previous twelve-months. After two further unplanned absences in April, Plaintiff was finally discharged for, among other things, seven absences in a twelve-month period and general problems with attendance. Plaintiff filed suit alleging, among other claims, a violation of the ADA due to failure to accommodate. After the court granted summary judgment in Providence’s favor, Plaintiff appealed. The Ninth Circuit Court of Appeals held that regular attendance is an essential function of a neo-natal nursing position. In its analysis, the Court began by noting that understaffing could compromise patient care, then described Providence’s attendance policy and reviewed Plaintiff’s long history of missing time from work for a variety of reasons, including health and personal

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reasons. The Court reasoned that, while regular attendance is not per se an essential function of all jobs, the NICU nurse is one of those jobs that cannot be done from a remote location due to the need for direct patient care. Plaintiff’s performance is predicated on her attendance; reliable, dependable performance requires reliable and dependable attendance. The Court noted that an individual must first establish that they can perform the essential functions of their position with or without a reasonable accommodation and opined that Plaintiff was seeking a reasonable accommodation that exempted her from an essential function. The Court further reasoned that an employer need not provide accommodations that compromise performance quality and concluded that Plaintiff’s request to simply miss work whenever she felt she needed to and for however long as she felt she needed to was, as a matter of law, not reasonable. Samper v. Providence St. Vincent (9th Cir. 2012) 675 F.3d 1233. NINTH CIRCUIT HOLDS THAT MARIJUANA FOR MEDICAL USE IS NOT PROTECTED BY THE AMERICANS WITH DISABILITIES ACT Plaintiffs were severely disabled individuals who had prescriptions for medical marijuana to alleviate chronic pain. The cities of Costa Mesa and Lake Forest enacted ordinances to close marijuana dispensing facilities operating within their boundaries. As a result, Plaintiffs brought suit against Costa Mesa and Lake Forest, alleging that the anticipated closures of the marijuana dispensaries would violate Title II of the Americans with Disabilities Act (“ADA” or “Title II”). The ADA prohibits public entities from denying the benefit of public services to any “qualified individual with a disability.” The plaintiffs alleged that, by interfering with their access to medical marijuana, Costa Mesa and Lake Forest had effectively prevented them from accessing public services in violation of Title II. The court looked to the ADA’s language to determine who is entitled to protection. Under the ADA, the term “individual with a disability” does not include an individual who is currently engaging in illegal use of drugs. The ADA defines “illegal use of drugs,” as “the use of drugs, the possession or distribution of which is unlawful under the Controlled Substances Act.” Although medical marijuana use remains illegal under the federal Controlled Substances Act, the ADA has an exception that applies to “use of a drug taken under supervision of a licensed health care professional, or other uses authorized by the Controlled Substances Act or other provisions of federal law.” Plaintiffs argued that their medical marijuana use fell within the exception for drug use supervised by a licensed health care professional. The Ninth Circuit Court of Appeal disagreed and held that Plaintiffs’ medical marijuana use was not protected by the ADA because the exception to the exclusion for illegal drugs use requires that the drug use must both be “under supervision” and “be authorized by . . . federal law.” Because marijuana use is not authorized by federal law, the Court held that Costa Mesa and Lake Forest’s closure of marijuana dispensaries did not violate the ADA. Although this is not an employment law case, it reinforces public employers’ ability to discipline employees who test positive for medical marijuana. The case strengthens the holding in Ross v. RagingWire Telecomms., Inc. (2008) 42 Cal.4th 920, in which the California Supreme Court held

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that use of medical marijuana in violation of an employer’s policies can lead to disciplinary action even if the employee has a prescription for such use. James v. City of Costa Mesa (9th Cir. 2012) 684 F.3d 825. FOURTH CIRCUIT HOLDS THAT EMPLOYEE’S INABILITY TO W ORK OVERTIME DUE TO CARDIAC DIFFICULTIES AND TREATMENT WAS NOT A SUBSTANTIAL LIMITATION ON MAJOR LIFE ACTIVITIES Plaintiff Michael R. Boitnott sued his employer, Corning Incorporated (“Corning”) under the ADA claiming the inability to work more than eight hours per day and rotate day/night shifts as a result of his physical impairments that render him disabled under the ADA, and that Corning had violated the ADA by failing to provide him with a “reasonable accommodation.” The District Court granted summary judgment to Corning. Plaintiff appealed. The Fourth Circuit Court of Appeal affirmed, holding that, “an employee under the ADA is not ‘substantially’ limited if he or she can handle a forty hour work week but is incapable of performing overtime due to an impairment.” However, the Court recognized that the determination of whether an employee capable of working forty hours in a week but unable to work overtime is disabled necessitated an individualized inquiry and that in certain circumstances the employee may be disabled. Boitnott v. Corning, Inc. (4th Cir. 2012) 669 F.3d 172. SEVENTH CIRCUIT HOLDS THAT UNDER THE ADA, EMPLOYERS NEED NOT MAKE REASONABLE ACCOMMODATIONS FOR A NON-DISABLED E MPLOYEE RESPONSIBLE FOR CARING FOR A DISABLED PERSON Plaintiff Eunice Magnus, a former employee, sued St. Mark United Methodist Church (“Church”), alleging associational discrimination under the ADA. Plaintiff refused to work weekend days because she took her disabled daughter home on the weekends. One day after Plaintiff arrived an hour late to work because of a medical situation with her disabled daughter, she was terminated. The District Court granted summary judgment in favor of the Church. Plaintiff appealed. The Seventh Circuit Court of Appeal held that an employer can lawfully fire a non-disabled employee whose responsibilities caring for a disabled child preclude her from working weekends because the Church was not required to provide Plaintiff with an accommodation to enable her to perform her job to Church’s satisfaction, and Plaintiff was not entitled to an accommodated schedule. Magnus v. St. Mark United Methodist Church (7th Cir. 2012) 688 F.3d 331.

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SEVENTH CIRCUIT HOLDS THAT THE ADA MANDATES THAT EM PLOYER APPOINT EMPLOYEES WITH DISABILITIES TO VACANT POSIT IONS FOR WHICH THEY ARE QUALIFIED In a case concerning an issue that the Ninth Circuit has not yet addressed, the Seventh Circuit overruled its precedents, EEOC v. Humiston-Keeling (7th Cir. 2000) 227 F.3d 1024 and Mays v. Principi (7th Cir. 2002) 301 F.3d 866, that held employers had no duty to place employees who were losing their current positions due to disability into vacant positions for which they are otherwise qualified. The court held that this interpretation of the ADA was superseded by the Supreme Court decision, U.S. Airways, Inc. v. Barnett (2002) 535 U.S. 391, and that employers have a duty to transfer. The court further noted that preferences will sometimes prove necessary to achieve the ADA’s basic equal opportunity goal and that merely following a ‘neutral rule’ did not allow United Airlines to claim an ‘automatic exemption’ from the accommodation requirement of the Act. E.E.O.C. v. United Airlines, Inc. (7th Cir. 2012) 693 F.3d 760. EIGHTH CIRCUIT HOLDS THAT THE ABILITY TO WORK A ROT ATING SHIFT MAY BE AN ESSENTIAL FUNCTION OF THE POSITION Plaintiff Terry Kallail was employed by Alliant Energy Corporate Services (“Alliant”) as a Resource Coordinator at the Distribution Dispatch Center (“DDC”). Employees of the DDC monitor the distribution of electricity, gas and steam throughout the service territory, schedule and route resources to respond to routine and emergency work, and handle other emergency situations so as to restore service and maintain system integrity. To provide coverage twenty-four hours per day, seven days per week, Alliant requires Resource Coordinators to work a rotating schedule. Plaintiff had Type I diabetes and is dependent on insulin. Plaintiff also suffered from Peripheral Vascular Disease, which makes walking difficult. The rotating shift was causing Plaintiff to experience erratic changes in blood pressure and blood sugar, so her doctor recommended that Plaintiff only work the day shift. In response, Alliant provided Plaintiff with a list of open positions for which Plaintiff could apply through the normal process and Plaintiff declined. Plaintiff sued alleging disability discrimination in violation of the ADA because Alliant refused to accept her proposal to work a regular eight-hour day shift as a Resources Coordinator. The District Court granted Alliant’s motion for summary judgment, finding that the rotating shift was an essential function of the position. Plaintiff appealed. The Eighth Circuit Court of Appeal affirmed:

Alliant has determined that the rotating shift is essential to the Resource Coordinator position, and lists it as a requirement on the written job description for the position. According to Alliant, the rotating shift provides enhanced experience and training for Resource Coordinators by allowing them to become familiar with all geographic territories in Alliant’s service area, and to receive

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on-the-job training by working with different partners and Senior Resource Coordinators. This enhanced training also allows Alliant to handle emergencies more effectively, because each Resource Coordinator summoned during an emergency will have experience working in all geographic areas and with all personnel. Shift rotation also enhances the non-work life of Resource Coordinators by spreading the less desirable shifts—nights and weekends—among all Resource Coordinators. If Kallail were switched to a straight day shift and not required to work the rotating shift, then other Resource Coordinators would have to work more night and weekend shifts.

Kallail v. Alliant Energy Corporate Services, Inc. (8th Cir. 2012) 691 F.3d 925. CALIFORNIA APPEALS COURT HOLDS THAT A PLAINTIFF CAN NOT RELY ON LABOR CODE SECTION 132A AS BASIS FOR WRONGFUL TERMI NATION CLAIM Plaintiff Michelle Dutra worked for Mercy Medical Center Mt. Shasta (“Mercy”) as a housekeeper. She injured her back at work. Several months later, Plaintiff was terminated for continuing to gossip while on duty after being counseled about it; altering a check that had been issued to her from a discretionary fund provided by a religious order affiliated with the hospital, an action the letter referred to as “check fraud”; and falsifying her timecard and abandoning her post by leaving work without clocking out. Plaintiff sued Mercy for, among other things, wrongful termination in violation of public policy. Plaintiff alleged Mercy discharged her in violation of the public policy codified at Labor Code section 132a, which generally prohibits discharging an employee for filing a workers’ compensation claim. The trial court dismissed the wrongful termination claim prior to trial on the ground the California Workers’ Compensation Appeals Board had exclusive jurisdiction to adjudicate claims under Section 132a. Plaintiff appealed. The Court of Appeal concluded that the trial court correctly dismissed Plaintiff’s wrongful termination cause of action because a violation of Section 132a cannot be the basis of a tort action for wrongful termination. The court noted that Plaintiff may have been able to bring the claim under other causes of action, including retaliation based on disability. Dutra v. Mercy Medical Center Mt. Shasta (2012) 209 Cal.App.4th 750.

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U.S. SUPREME COURT HOLDS THAT A STATE’S SOVEREIGN I MMUNITY BARS A STATE EMPLOYEE FROM SUING FOR DAMAGES UNDER THE FAM ILY AND MEDICAL LEAVE ACT OF 1993 Plaintiff Daniel Coleman was employed by the Maryland Court of Appeals. He filed suit for damages in federal court, alleging that the Court of Appeals violated the Family and Medical Leave Act of 1993 (“FMLA”) by refusing to provide him with self-care leave. The Federal District Court dismissed the suit on sovereign immunity grounds. The Court of Appeals affirmed, holding that the self-care provision of FMLA does not apply to the states because Congress did not properly abrogate the states’ Eleventh Amendment immunity. The Fourth Circuit reasoned that the self-care provision of FMLA was not directed at an identified pattern of gender-based discrimination and was not congruent and proportional to any pattern of sex-based discrimination on the part of states. Petitioner appealed. The Supreme Court of the United States held that a state’s sovereign immunity bars a state employee from suing for damages under the FMLA. Coleman v. Court of Appeals of Maryland (2012) 132 S.Ct. 1327. SIXTH CIRCUIT HOLDS THAT EMPLOYER HAD HONEST BELIEF THAT EMPLOYEE COMMITTED DISABILITY FRAUD IN TAKING FMLA LEAVE AND, THEREFORE, TERMINATION FOR SUCH FRAUD WAS NOT PRETE XT FOR FMLA RETALIATION Plaintiff Tom Seeger was employed by Cincinnati Bell Telephone Co., LLC (“CBT”). Plaintiff took FMLA leave and concurrent paid leave under CBT’s own disability plan to treat and recover from a herniated disc in his back. CBT terminated Plaintiff for disability fraud after several of Plaintiff’s co-workers saw him at the Oktoberfest in downtown Cincinnati during his FMLA leave period. The district court granted summary judgment for CBT because the essence of Plaintiff’s claim was retaliation, not interference, with his substantive FMLA rights. He had received all of the FMLA leave to which he was entitled. CBT did not shortchange his leave time, deny reinstatement, or otherwise interfere with his substantive FMLA rights. The district court also found that CBT had articulated a legitimate, nondiscriminatory reason for terminating Plaintiff — disability fraud — and Plaintiff, in turn, failed to show that this reason was pretextual in nature. Specifically, the district court held that Plaintiff failed to refute CBT’s evidence that it had an “honest belief” in its nondiscriminatory basis for Plaintiff’s termination. Plaintiff appealed. The Sixth Circuit Court of Appeal affirmed the district court’s decision, finding that the district court had not erred in confining its analysis of the employee’s FMLA claim to the retaliation theory and that CBT had articulated a legitimate, nondiscriminatory reason for discharging the employee because it made a reasonably informed and considered decision before it terminated Plaintiff and Plaintiff failed to show that its decision-making process was unworthy of credence.

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The Court further noted that an employee on FMLA leave may be terminated for violating the more stringent requirements of a concurrent paid leave policy, as long as that policy is reasonable and “neither conflicts with nor diminishes the protections guaranteed by the FMLA.” Seeger v. Cincinnati Bell Telephone Co. (6th Cir. 2012) 681 F.3d 274. SEVENTH CIRCUIT HOLDS THAT FMLA LEAVE REQUIRES AN E MPLOYER TO ADJUST PERFORMANCE STANDARDS Plaintiff Jeff Pagel was an employee of TIN Inc. (“TIN”). He worked as the equivalent to an outside sales person. Plaintiff took two leaves of absence due to a serious medical condition. TIN thereafter terminated Plaintiff for poor performance. Plaintiff brought suit alleging TIN violated FMLA by interfering with his right to take leave and retaliating against him for exercising that right. The district court granted summary judgment in favor of the employer, reasoning that the employer fired the employee for poor performance rather than for taking leave. Plaintiff argued that his employer interfered with his employment by failing to make a reasonable adjustment to its employment expectations to account for his FMLA-protected leave, and then terminating him when he failed to meet those unadjusted expectations. Plaintiff appealed the decision. The Seventh Circuit summarized the case thusly:

Pagel argues that TIN interfered with his employment by failing to make a reasonable adjustment to its employment expectations to account for his FMLA protected leave, and then terminating him when he failed to meet those unadjusted expectations. The FMLA does not require an employer to adjust its performance standards for the time an employee is actually on the job, but it can require that performance standards be adjusted to avoid penalizing an employee for being absent during FMLA-protected leave.

At summary judgment, Plaintiff had presented evidence showing that he was terminated in part for not meeting sales expectations, even though he had missed a number of days for FMLA treatment. He also presented evidence showing that his supervisor relied on inaccurate data in finding that Plaintiff did not meet some of TIN’s reporting requirements. TIN subsequently admitted to some of these inaccuracies. Based on this evidence, the Seventh Circuit Court of Appeals reversed, finding that Plaintiff presented enough evidence to meet his initial burden and that, although TIN raised other independent grounds for termination, the employee offered sufficient evidence to survive summary judgment. The Court therefore reversed the summary judgment and remanded for further proceedings. Pagel v. Tin Inc. (7th Cir. 2012) 695 F.3d 622. CALIFORNIA APPEALS COURT HOLDS THAT THERE IS NO HON EST BELIEF DEFENSE FOR CFRA VIOLATIONS Plaintiff Avery Richey was a sales manager at Power Toyota of Cerritos. He was terminated from his job four weeks before the expiration of his approved medical leave under the Moore-

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Brown-Roberti Family Rights Act (CFRA) because his employer believed Plaintiff was misusing his leave by working part time in a restaurant he owned. Plaintiff sued Power Toyota’s parent companies, AutoNation, Inc., Webb Automotive Group, Inc., Mr. Wheels, Inc., and his direct supervisor, Rudy Sandoval (collectively “AutoNation”), alleging his rights under CFRA had been violated. Plaintiff’s claims were submitted to arbitration under the terms of a mandatory employment arbitration agreement that provided, in part, “[r]esolution of the dispute shall be based solely upon the law governing the claims and defenses set forth in the pleadings.” The arbitrator denied Plaintiff’s CFRA claim based on the so-called honest belief or honest suspicion defense. The trial court denied Plaintiff’s motion to vacate the arbitrator’s decision and granted AutoNation’s petition to confirm the award. The Court of Appeal held in an unpublished decision that it was clear legal error for the arbitrator to rely on the honest belief defense because it is incompatible with California statutes, regulations and case law and deprived Richey of his unwaivable statutory right to reinstatement under Government Code section 12945.2, subdivision (a). Thus, an employer cannot, in terminating or failing to reinstate an employee who had been granted leave under the CFRA, defend a lawsuit from that employee based on its honest belief the employee was abusing the leave. Instead, an employer must demonstrate evidentiary facts sufficient to carry the burden of proof imposed by CFRA and federal law. An employer also cannot not simply rely on an imprecisely worded and inconsistently applied company policy to terminate an employee on CFRA leave without adequately investigating and developing sufficient facts to establish that the employee actually engaged in misconduct warranting dismissal. Richey v. AutoNation, Inc. (November 23, 2012, B234711) 2012 Cal.App.LEXIS 1177.