www.rivkinradler.com November 2004   From the Courts   Employee Did Not Allege Valid FLSA Retaliation Claim Based On Concerns About Potential Overtime Violations   By: Brian S. Conneely     [Author Bio: Brian S. Conneely, the "From The Courts" columnist for Employee Benefit Plan Review, is the chair of the Employment and Labor Law Practice Group of Rivkin Radler LLP, a national law firm with offices in Long Island and New York, New York, and in Summit, New Jersey. Mr. Conneely may be reached at brian.conneely@rivkin.com.]   Employee Did Not Allege Valid FLSA Retaliation Claim Based On Concerns About Potential Overtime Violations One of the responsibilities Efrain Claudio-Gotay had as an employee of Becton Dickinson Caribe, Ltd., was to approve invoices for payment for security guards at Becton's plant in Juncos, Puerto Rico. Several weeks after beginning this position, Claudio contended, he examined certain invoices and concluded that the security guards were not being properly compensated for overtime hours worked. Claudio spoke with his superiors about this potential labor violation and wrote a letter to Becton explaining the potential violation. In response to Claudio's letter, Becton held a meeting, with Becton's lawyer in attendance, and determined that the security guards were not employees of Becton and, therefore, Becton was not responsible for ensuring that the guards received overtime pay. The security guards were actually employed by CM Express, an independent contractor. Becton decided that it would inform CM Express of the potential Fair Labor Standards Act (FLSA) violations Claudio had identified. At the conclusion of the meeting, Claudio's supervisors told him that, in the meantime, he should approve the invoices. Claudio refused to do so and was terminated from employment. He then brought suit against Becton, alleging that he had been wrongfully terminated because the FLSA makes it "unlawful for any person to discharge or in any other manner discriminate against any employee because such employee has filed any complaint" related to the Act. The court first examined whether Claudio had engaged in a statutorily protected activity that triggered the protection of the FLSA. The court observed that when Claudio had informed Becton of the potential overtime violations, he did so in furtherance of his job responsibilities and was concerned with protecting Becton, not asserting rights adverse to Becton. The court found that Claudio "never crossed the line from being an employee merely performing his job to an employee lodging a personal complaint," and thus he therefore had not engaged in a "protected activity" for purposes of the FLSA. The court then examined whether Claudio's refusal to sign the invoices triggered the FLSA's protection. It stated that although the FLSA's anti-retaliation provision protects an employee's lawful efforts to secure rights afforded by the FLSA, it does not provide a "shield against legitimate employer actions." In the court's view, Claudio's refusal to sign the invoices occurred after the whistle had been blown and after corrective actions were being taken to remedy any FLSA violations. As the court explained, the FLSA was created to protect an employee who "lodges complaints or supplies information to officials regarding allegedly substandard employment practices and conditions." The court held that Claudio's refusal to sign the invoices did neither. [Claudio-Gotay v. Becton Dickinson Caribe, Ltd., 375 F.3d 99 (1st Cir. 2004).] Comment Court decisions as to protected activity are contradictory and are based on the specific facts and circumstances of each case. For example, in McKenzie v. Renberg's Inc., 94 F.3d 1478 (10th Cir. 1996), the U.S. Court of Appeals for the Tenth Circuit held that a personnel director did not engage in a protected activity by reporting overtime violations because her job responsibilities included "wage and hour issues." However, in EEOC v. HBE Corp., 135 F.3d 543 (8th Cir. 1998), the Eighth Circuit held that a personnel director engaged in a protected activity when he stepped outside his employment role by refusing to fire a black employee because the firing was ordered for patently discriminatory reasons. Companies facing any type of potential whistleblower or retaliation claims should carefully consider the facts and applicable laws and where feasible make decisions based on legitimate, objective, and nondiscriminatory reasons. Pregnant Lawyer's Discrimination Claim Against Law Firm Is Dismissed The plaintiff in this case, a lawyer, brought suit against her former employer, a law firm, alleging that the law firm had reduced her compensation and terminated her employment because she was pregnant. The law firm moved for summary judgment, claiming that it had decided to cut its payroll expenses because it was experiencing financial difficulties and that it had decided to restructure the compensation package of plaintiff and other attorneys before it had learned that the plaintiff was pregnant. The court noted that to establish a prima facie case of discrimination, a plaintiff must show (1) that he or she is a member of a protected class, (2) that he or she is qualified for the position in question, (3) that he or she suffered an adverse employment action such as a demotion evidenced by a decrease in wage or salary or a material loss of benefits, and (4) that the adverse employment action occurred under circumstances giving rise to an inference of discrimination. The court also noted that if a plaintiff establishes a prima facie case, the defendant can still rebut the plaintiff's showing by articulating a legitimate, non-discriminatory reason for the employment action in question. Upon defendant's articulation of such a reason, the court stated that the presumption of discrimination arising with the establishment of the prima facie case "drops from the picture," and the plaintiff must present evidence that the proffered reason is "a mere pretext for actual discrimination." In this case, the law firm claimed that the plaintiff could not demonstrate an inference of discrimination such as would satisfy her initial burden of establishing a prima facie case. The court agreed with the law firm. It found that the record did not support an inference of discrimination concerning the circumstances surrounding the plaintiff's departure from the law firm. In the court's view, there was "ample evidence" that the decision to restructure the plaintiff's compensation had been "motivated by financial constraints impacting" the law firm as a whole, and that these financial constraints affected a number of employees, many of whom were subjected to similar restructuring of their compensation packages. Because the court found that these circumstances did not support an inference of discrimination, it concluded that the plaintiff had not established a prima facie case of discrimination and her complaint had to be dismissed. [Chisari v. Leeds, Morelli & Brown, P.C., 2004 U.S. Dist. Lexis 13272 (S.D.N.Y. July 16, 2004).] Comment: Restructuring compensation packages can result in discrimination claims even in law firms. However, where, as here, an employer does not treat similarly situated employees differently, the plaintiff may not be able to establish a prima facie case. Minister's Claim For Damages Based On Church's Failure To Accommodate His Disabilities Is Dismissed A pastor and minister of the Vista de la Montana United Methodist Church in Tucson, Arizona, Andrew E. Werft, alleged that despite having Attention Deficit Disorder, dyslexia, and certain heart problems, he was able to perform his ministerial duties with minor accommodations. He further alleged that the church had refused to make any accommodations and instead had "forced him to resign from his pastoral position." Werft filed suit alleging that the church had discriminated against him by failing to accommodate his needs. Specifically, Werft claimed that he was forced to resign from his position and that the church's actions amounted to a breach of contract and violation of Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, and the Arizona Civil Rights Act. Werft sought reinstatement and damages. The church moved to dismiss, reasoning that the First Amendment precluded civil court review of the church's ministerial employment decisions. The district court granted the church's motion, and Werft appealed. The Ninth Circuit Court of Appeals emphasized that the First Amendment protects the power of religious organizations to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine. One such protected matter of self-governance, the circuit court continued, is a religious institution's freedom to choose its clergy. The Ninth Circuit then stated that if Werft's claims were allowed to proceed, the church would necessarily be required to provide a religious justification for its failure to accommodate, and this was an area into which the First Amendment "forbids us to tread." Thus, the circuit court determined that Werft's claims, grounded in the church's failure to accommodate his disabilities while he was still employed, were a part of the employment relationship between church and minister, and that the district court therefore had properly dismissed those claims. [Werft v. Desert Southwest Annual Conference of the United Methodist Church, 377 F.3d 1099 (9th Cir. 2004).] Comment Federal employment laws do not apply to all positions with every employer. This case illustrates one of the exceptions, for certain positions within religious organizations. Gastric-Bypass Surgery Covered For "Morbidly Obese" Plan Participant The plaintiff in this case suffered from "morbid obesity," a significant medical condition that increases the likelihood of developing diseases such as heart disease, diabetes, hypertension, pulmonary complications, certain obesity-related cancers, degenerative joint disease and hepatobiliary disease and also typically results in shortened life expectancy and poor quality of life. The plaintiff decided to undergo gastric-bypass surgery and requested a pre-procedure determination from the group health plan that the plan was obligated to pay the associated expenses. The plan denied the request on the ground that the surgery was not medically necessary. The plaintiff brought suit. The court found that, as an initial matter, the contemplated gastric-bypass surgery "clearly meets" the plan's definition of a "Covered Expense." As the court explained, the plan covers surgery and enumerated related expenses to the extent medically necessary. And, the court continued, "the cognizable facts reveal no genuine dispute that this surgery is medically necessary in [the plaintiff's] case." The only remaining question, the court stated, was whether the defendants had reasonably construed exclusion 11 of the plan to preclude coverage. Exclusion 11 denied coverage for "any expense for weight reduction, nutritional or dietary counseling (except to the extent provided herein)." The court stated that this exclusion "reasonably would be construed to bar coverage of a Weight Watchers membership intended to help the beneficiary lose twenty pounds but [is] not reasonably construed to bar coverage of medically necessary and appropriate gastric-bypass surgery." However, the court decided, the surgery was not intended "for weight reduction." The court noted that the plaintiff's physician prescribed gastric-bypass surgeries not to reduce weight for the sake of weight reduction but rather to reduce or eliminate associated morbidities, which he believed would occur in the plaintiff's case. [Lowell v. Drummond, Woodsum & MacMahon Employee Medical Plan, 2004 U.S. Dist. Lexis 13059 (D. Maine, July 13, 2004).] Comment: The court in this case focused on the particular language of the plan in reaching its decision. Different employer plans, and different facts, might result in different results. Moreover, any ambiguity is likely to be construed against the drafter of the plan. The starting point for coverage issues is the specific terms of the plan. Then, the inquiry turns to the facts and medical evidence as applied to those terms. "Illegal Act" Exclusion In Health Plan Did Not Exclude Coverage For Injuries Received After Driving Motorcycle While Intoxicated James Bekos was injured after he finished riding his motorcycle, got off, began pushing it, and then fell over it. A passerby called emergency services and police officers responded to the accident scene. An officer placed Bekos under arrest for driving while under the influence of intoxicants; a lab test revealed a blood alcohol content of 0.25 percent. As a result of the injuries sustained in the accident, Bekos incurred medical bills totaling over $10,000. Bekos made demand on the Providence Health Plan to pay those charges, but Providence denied Bekos's claim based on the plan's "illegal act" exclusion, which excluded coverage for services and supplies that "[r]elate to any condition sustained as a result of engagement in an illegal occupation, the commission or attempted commission of an assault or other illegal act, a civil revolution or riot, duty as a member of the armed forces of any state or country, or a war or act of war which is declared or undeclared." Providence contended that Bekos's injuries, which related to driving a motorcycle with a blood alcohol content of 0.25 percent, were excluded from coverage under the plan as an "illegal act." Bekos brought suit. The court found that although Bekos was not riding his motorcycle at the time he was injured, the fact that he was pushing it qualified as "driving" for purposes of applicable Oregon law. Therefore, the court ruled, by pushing his motorcycle while intoxicated, Bekos had violated Oregon law. However, the court then ruled that the term "other illegal act" as used in the plan was ambiguous because it was capable of more than one meaning. At one end of the spectrum, the court said, the phrase might include only injuries received during the course of the commission or attempted commission of felonies of which the beneficiary was eventually convicted. At the other end of the spectrum, the court continued, the phrase plausibly could reach "such a broad array of activity as to be rendered applicable in situations involving minor traffic offenses or violation of any number of regulations, with or without a conviction, or even a citation." Concluding that the phrase "other illegal act" was capable of more than one meaning, the court ruled that the phrase was ambiguous and Bekos thus was entitled to have that ambiguity resolved in his favor. [Bekos v. Providence Health Plan, 2004 U.S. Dist. Lexis 14009 (D. Ore., July 16, 2004).] Comment The court in this case decided to interpret the phrase "other illegal act" narrowly to exclude Bekos's arrest for DUI and to award judgment in favor of Bekos. It is not certain whether other courts would reach the same result, especially given the strong federal and state policies against DUI. Nevertheless, the drafting of the plan enabled the court to avoid the exclusion as a result of the ambiguous language in the plan. Once again, plan exclusions should be drafted as clearly and unambiguously as possible. - top -