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Employee Benefit Plan Review – From the Courts – September 2016

September | 2016

Court Permits Plaintiff to Proceed Under a Pseudonym with Complaint Seeking Long-Term Disability Benefits

The plaintiff in this case, who alleged that she suffered from HIV/AIDS, brought a lawsuit under the Employee Retirement Income Security Act (ERISA) to recover benefits she asserted were due to her under a long-term disability insurance benefit plan sponsored by her former employer and insured by Metropolitan Life Insurance Company (MetLife).

In connection with her lawsuit, the plaintiff filed a motion to proceed under a pseudonym.

In its decision granting the motion, the court explained that, ordinarily, pleadings must identify the parties to a lawsuit. Nevertheless, the court continued, a party may preserve his or her anonymity in judicial proceedings in special circumstances where the party’s “need for anonymity” outweighed “prejudice to the opposing party and the public’s interest in knowing the party’s identity.”

The court explained that, in evaluating the need for anonymity, it had to consider:

  1. The severity of the threatened harm;
  2. The reasonableness of the anonymous party’s fears;
  3. The anonymous party’s vulnerability to retaliation; and
  4. The prejudice to the opposing party and whether proceedings could be structured to avoid that prejudice.

Additionally, the court said, it had to decide whether the public’s interest in the case would be best served by requiring that litigants reveal their identities.

The court decided that the matters raised by the plaintiff’s complaint were of a “sufficiently sensitive and personal nature” such that the use of a pseudonym was appropriate to protect the plaintiff from “harassment, injury, ridicule or personal embarrassment.”

The court also ruled that allowing the plaintiff to proceed pseudonymously would not prejudice MetLife, her disability insurer, because MetLife could ascertain the plaintiff’s identity from the complaint, which pleaded her claim number for the purpose of allowing MetLife to identify her. Thus, the court reasoned, allowing the plaintiff to proceed under a fictitious name did “not appear to affect” MetLife’s ability to prepare its defense.

Finally, the court said, the case was a “straightforward application of medical evidence to contract terms,” MetLife’s character and reputation were not at issue, and there was no risk that it would be prejudiced by anonymous attacks on its character.

The court concluded, therefore, that the plaintiff’s legitimate interest in shielding her identity outweighed any potential prejudice to Metlife and that she could continue her lawsuit using a pseudonym. [Doe v. Metropolitan Life Ins. Co., 2016 U.S. Dist. Lexis 64387 (N.D. Cal. May 13, 2016).]

Court Orders Plaintiffs’ Counsel to Pay Sanctions for Improperly Filed FLSA Action

The plaintiffs in this case sued Brannons Sandwich Shop, LLC (BSS) and Ronald Brannon on July 30, 2014, alleging, among other things, that BSS, Brannon, Anemacore, LLC (doing business as “Donatella’s”), and Donatella Arpaia had violated the minimum wage provisions of the federal Fair Labor Standards Act (the FLSA).

In their complaint, the plaintiffs alleged that Brannon was the owner and sole decision maker in charge of BSS. They also alleged that the defendants were “employers” within the meaning of the FLSA, that the defendants’ qualifying annual business revenue exceeded $500,000, and that the defendants were engaged in interstate commerce within the meaning of the FLSA.

In its answer, which it filed on November 3, 2014, BSS asserted that its annual gross revenue was less than $500,000, which meant that BSS was not subject to the requirements of the FLSA. In addition, the defendants asserted that they had produced documents demonstrating that BSS had never done more than $500,000 in business per year.

On June 2, 2015, counsel for BSS and Brannon wrote to the plaintiffs’ counsel inquiring whether they would consent to dismissal based on the documents that had been produced demonstrating that the FLSA did not apply to BSS.

Then, on September 21, 2015, BSS and Brannon invoked the “safe harbor” under Rule 11 of the federal rules of civil procedure and made a formal demand on the plaintiffs that they withdraw the claims against them; the demand was open for a response until October 13, 2015, the expiration of the “safe harbor” period. The plaintiffs, however, did not consent to dismissal of their claims until December 16, 2015, when they wrote to the court to advise that:

Plaintiffs now concede that they cannot establish all of the elements of their FLSA claims against the Brannon Defendants. Specifically, Plaintiffs cannot establish that Brannon did $500,000 in business while it was open.

As a result, the court dismissed with prejudice all of the FLSA claims against BSS and Brannon.

BSS and Brannon asked the court to award them their attorneys’ fees, contending that the plaintiffs never had a good faith basis to believe that BSS and Brannon were subject to the FLSA and, therefore, that they never should have filed their lawsuit against them.

The court ruled in favor of BSS and Brannon, declaring that they could recover their attorneys’ fees and expenses for the period from October 13 through December 16, 2015.

The court found that the plaintiffs’ lawyers had not performed “an objectively reasonable inquiry of one critical allegation in their complaint” – namely, the application of the FLSA to BSS and Brannon based on the $500,000 requirement. The court pointed out that, after the date by which the plaintiffs could accept the formal demand by BSS and Brannon had passed (October 13, 2015) and before the plaintiffs had withdrawn their claims, four depositions had been conducted and the defendants had prepared and had filed a comprehensive pre-motion letter explaining the basis for their motions for summary judgment and sanctions. The court added that since the defendants’ counsel’s first appearance on March 30, 2015, the defendants had been billed a total of $7,500 in fees and $1,141.50 for the defense of the FLSA action on a fixed fee basis for discovery and motions. It noted that the defendants’ counsel had asserted that they also would bill $2,500 for the sanctions motion. Taking all of this into account, the court awarded as a sanction payable to BSS and Brannon the sum of $4,000, covering the period between October 13 and December 16 as well as the time spent on the sanctions motion.

The court concluded that because the absence of “an objectively reasonable inquiry into the factual basis necessary to meet certain statutory elements was” due to the plaintiffs’ counsel, the sanctions award should be borne by the plaintiffs’ counsel and not by the plaintiffs themselves. [Elfoulki v. Brannon Sandwich Shop, LLC, 2016 U.S. Dist. Lexis 81601 (S.D.N.Y. June 22, 2016).]

Ex-Employee’s ADA Suit Fails Given That She Could Not Meet Essential Function of Her Job

In this case, the plaintiff, who suffered from fibromyalgia and degenerative disc and cervical disease, worked as a juvenile detention officer in Pulaski County, Arkansas, from November 24, 2001 to May 21, 2013. Beginning in 2008, the plaintiff obtained an annual certification from her doctor under the Family Medical Leave Act (FMLA) allowing her to exercise unpaid intermittent leave.

By February 2013, her conditions had deteriorated to the point that a pain management specialist who had been treating the plaintiff placed restrictions on her FMLA certification, including “no sitting, standing, bending, and stooping for extended periods” and no lifting of more than 25 pounds.

One of the requirements listed in the job description for the position of juvenile detention officer was the “[a]bility to lift and carry up to 40 [pounds].” Because the plaintiff’s pain management specialist had restricted the plaintiff to lifting no more than 25 pounds, county officials placed her on continuous, rather than on intermittent, FMLA leave. While on FMLA leave, the plaintiff asked her pain management specialist to issue a new FMLA certification without any restrictions, but he refused.

The plaintiff’s FMLA leave expired on May 15, 2013. Before it expired, she asked the county for an additional week of unpaid leave to allow her to obtain an FMLA certification from her rheumatologist. The plaintiff claimed that her rheumatologist would give her an FMLA certification with no lifting restrictions, but she never provided the county with an FMLA certification from that doctor.

On May 21, 2013, the county decided to terminate the plaintiff’s employment because she could not meet the job requirement of lifting 40 pounds. In its termination letter, the county told the plaintiff that her employment was valuable and encouraged her to reapply if a change in circumstances allowed her to return to work.

The plaintiff sued the county, claiming that it had violated her rights under the Americans with Disabilities Act (the ADA). The county moved for summary judgment.

The U.S. District Court for the Eastern District of Arkansas granted the county’s motion. After finding that the plaintiff’s inability to lift up to 40 pounds disqualified her from working as a juvenile detention officer, the district court ruled that she was not a qualified individual under the ADA because she could not perform the essential functions of her position with or without reasonable accommodation. She appealed to the U.S. Court of Appeals for the Eighth Circuit.

The Eighth Circuit affirmed.

In its decision, the circuit court first rejected the plaintiff’s argument that the ability to lift or carry 40 pounds was not an essential function of the position of juvenile detention officer because she did not often have to do that. The circuit court explained that, in determining whether a job function was essential, it considered evidence including what functions the employer thought were essential, written job descriptions, how much time an employee spent on the job performing the function, the consequences of not having the employee perform the function, and whether other employees in similar jobs performed the function.

The Eighth Circuit decided that the county’s argument that the requirement to be able to lift at least 40 pounds was related to one of the “core purposes” of being a juvenile detention officer – the ability to protect juveniles being supervised from harming themselves and others, including detention center staff – was “highly probative.” The written job description and testimony that all other current staff members were able to lift 40 pounds further supported the conclusion that the ability to lift 40 pounds was an essential function of the job of a Pulaski County juvenile detention officer, the circuit court said.

The circuit court added that even if the plaintiff had presented a new FMLA certification from her rheumatologist that lifted any restrictions, the county was not required to accept that FMLA certification over the plaintiff’s other physician’s certification. “The ADA does not require an employer to permit an employee to perform a job function that the employee’s physician has forbidden,” the circuit court stated.

The Eighth Circuit concluded that because the plaintiff was unable to perform an essential function of her job at the end of her FMLA leave period, the county had not violated the ADA by terminating her after her FMLA leave had expired. [Scruggs v. Pulaski County, Arkansas, 817 F.3d 1087 (8th Cir. 2016).]

Prevailing Defendant in FLSA Action May Be Entitled to Recover Its Costs, Eighth Circuit Rules

Seven plaintiffs brought suit under the federal Fair Labor Standards Act (FLSA) against Lindsey Management Co., Inc., alleging misclassification as exempt employees. They presented their claims to a jury, which returned a verdict in favor of Lindsey Management.

Thereafter, Lindsey Management asked the court to award it the costs it had incurred in its defense, totaling $22,687.51. The plaintiffs objected and asked the district court to exercise its discretion to deny Lindsey Management’s request.

The district court ruled against Lindsey Management, indicating that the FLSA was remedial in nature and did not specifically provide that defendants should be able to recover their costs of litigation. Lindsey Management appealed to the U.S. Court of Appeals for the Eighth Circuit.

The circuit court decided that the district court had abused its discretion in denying Lindsey Management’s request for costs.

In its decision, the Eighth Circuit explained that the taxing of costs was governed by Federal Rule of Civil Procedure 54(d), which provides: “Unless a federal statute, these rules, or a court order provides otherwise, costs – other than attorney’s fees – should be allowed to the prevailing party.” It added that even if a federal statute did not specifically authorize recovery of costs in a particular case, that federal rule “independently” authorized district courts to award costs to prevailing parties unless a statute or rule precluded it.

The circuit court observed that the FLSA was silent as to awards of costs to prevailing defendants, and reasoned that there was nothing contrary to the federal rule in the FLSA regarding costs. Accordingly, it ruled, Lindsey Management was not precluded from collecting the costs it had incurred.

The circuit court vacated the district court’s holding and remanded the case to the district court for consideration of whether costs should be awarded to Lindsey Management under Rule 54(d)(1). [Lochridge v. Lindsey Management Co., Inc., 2016 U.S. App. Lexis 10000 (8th Cir. June 2, 2016).]

Ex-Employee’s Unexcused Absences Did Not Fall Within FMLA Leave, Sixth Circuit Rules

The plaintiff in this case worked as an Apheresis Specialist at the American Red Cross Blood Services, Tennessee Valley Region. During her employment there, the plaintiff suffered from several illnesses and injuries; she also requested, and was approved for, periods of leave under the Family Medical Leave Act (FMLA). The plaintiff was fired pursuant to the Red Cross’ absenteeism policy after she accrued seven unscheduled absences in a 12 month period.

On September 10, 2010, the plaintiff had outpatient surgery on her right foot; she previously had been approved for continuous-FMLA leave for this foot surgery. Her surgeon released the plaintiff to return to work “with restrictions” on December 31, 2010. All of the plaintiff’s foot-surgery restrictions ended on May 1, 2011.

On April 1, 2012, the American Red Cross outsourced its leave-request processing to Aon Hewitt, a third party administrator operating under the name “American Red Cross Benefits Service Center.” The Red Cross notified employees of this change by email and flyers. The flyers stated that, beginning on April 2, 2012, Aon Hewitt would administer FMLA absences, personal leave, and non-FMLA medical leave, in addition to other absences. Employees were informed that “[t]o initiate a leave request,” they should first “[r]eport any immediate or upcoming absences from work to your manager/supervisor using your department’s attendance procedure,” and then employees should “[c]all [Aon Hewitt] at any time to request leave.”  Employees also were told that they should return any “documentation within the required time frame.”

In April 2012, after Aon Hewitt had assumed responsibility for leave requests, the plaintiff submitted a request to Aon Hewitt for intermittent leave under the FMLA. In support of her request, the plaintiff submitted a letter from a physician who certified that the plaintiff had “an essential tremor, which can affect upper extremities, head, and voice. Sometimes it can affect the ability to perform fine motor movements, which are certainly necessary as a phlebotomist.” The certification provided that the plaintiff’s condition was “chronic,” that she would need to have treatment visits “twice a year,” and that “[w]hen tremulous, [the plaintiff] may have difficulty performing tasks that require fine motor control.”

The physician estimated the frequency of the plaintiff’s flare ups to be one time per month, lasting approximately one day per episode. According to the plaintiff, her tremor could interfere with her ability to use the small “handheld computers” at work, “[b]ut for the majority of the part, [her] tremor, it did not affect [her] sticking” patients with needles.

Aon Hewitt approved intermittent FMLA leave for the plaintiff’s essential tremor on April 12, 2012. The intermittent leave period extended from April 2, 2012 through October 2, 2012, and Aon Hewitt’s approval letter provided instructions for how to use intermittent leave:

When you are away from work due to your intermittent leave, you are required to contact [Aon Hewitt] to report your absences. Refer to the enclosed How to Report Intermittent Absences for specific instructions. In addition, you must also contact your manager/supervisor to report any absences, consistent with any established policy for reporting absences in your department or unit.

The enclosed “How to Report Intermittent Absences Form” provided specific instructions for reporting absences to Aon Hewitt.

In May 2012, the plaintiff was injured after falling off of a ladder at home. On June 6, 2012, another of the plaintiff’s physicians certified that she needed continuous FMLA leave for this injury, beginning on May 22, 2012 and lasting until June 28, 2012. The plaintiff’s request for FMLA leave during these dates was approved and her continuous leave eventually was extended until July 9, 2012.

The plaintiff also was approved for intermittent FMLA leave “from April 3, 2012 through April 3, 2013” on the basis of a health care certification from another doctor that indicated that he had performed a “pulmonary function test” on April 9, 2012, and that the plaintiff needed intermittent leave due to “Chronic Conditions Requiring Treatment.”

The Red Cross terminated the plaintiff on July 31, 2012 for excessive absenteeism. The termination memorandum provided the following dates of allegedly unscheduled absences, along with the corresponding reason that the plaintiff provided for her absence:

  • October 3, 2011: “[H]urt neck over the weekend” • January 13, 2012: “Left without notice—did not work” • April 24, 2012: “[S]ick” • May 5, 2012: “Sick” • May 21, 2012: “Sick” • July 24, 2012: “Food poisoning” • July 27, 2012: “[O]verslept—not coming in.”

Prior to issuing the memorandum, the Red Cross said, it confirmed that none of the dates listed in the termination memo “were reported as FMLA protected.”

The plaintiff sued the Red Cross in the U.S. District Court for the Middle District of Tennessee, alleging violations of the FMLA, among other things. The district court granted summary judgment in favor of the Red Cross, finding that the Red Cross had not violated the FMLA.

The plaintiff appealed to the U.S. Court of Appeals for the Sixth Circuit, arguing that the Red Cross had interfered with her rights under the FMLA because it had fired her for “excessive absences” despite those absences being “FMLA protected medical leave.” She contended that her May 5 absence was as a result of a heart condition and thus covered under the FMLA, and that her ladder fall on May 21 also was covered by her FMLA leave.

The circuit court affirmed.

In its decision, the Sixth Circuit pointed out that the plaintiff had not visited a hospital on May 5, and that her visit on May 4 was not related to a heart condition. It added that the plaintiff was not entitled to FMLA leave on May 21 and that her FMLA coverage for her ladder fall began on May 22, consistent with her doctor’s FMLA certification form. Moreover, the circuit court added, even if the plaintiff were entitled to FMLA leave for any of these absences, the plaintiff had not called Aon Hewitt “to report any of the listed absences as FMLA leave.”

The circuit court was not persuaded by the plaintiff’s argument that because the Red Cross was on notice that FMLA leave might apply, it had the burden to seek further information from the plaintiff and that she was not required to specify to the Red Cross that her absences were FMLA-related. The circuit court pointed out that “FMLA regulations effective January 16, 2009 . . . explicitly permit[] employers to condition FMLA-protected leave upon an employee’s compliance with the employer’s usual notice and procedural requirements, absent unusual circumstances.”  The Sixth Circuit stated that the plaintiff had not provided any evidence of “unusual circumstances” excusing her from following the Red Cross’ policy, and had not provided any evidence that the policy was selectively enforced or that, if she had called in, she would have needed to use “magic words” to receive FMLA leave. To the contrary, the circuit court found, the plaintiff was on notice that she needed to call Aon Hewitt but she had not done so. Accordingly, it concluded, summary judgment was appropriate in favor of the Red Cross. [Perry v. American Red Cross Blood Services, Tennessee Valley Region, 2016 U.S. App. Lexis 10138 (6th Cir. June 1, 2016).]

Reprinted with permission from the September 2016 issue of the Employee Benefit Plan Review – From the Courts.  All rights reserved.

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