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Don't HR Alone #26 - FLMA Claim, and Employer Practices Liability ruling

Suspending employee upon return from FMLA leave, firing her after skipped meeting, did not show retaliation — FEDERAL NEWS

Though the timing of adverse actions taken against an administrative assistant was suspicious—as she was suspended for purported misconduct the day she returned from her FMLA leave and fired after she skipped her disciplinary meeting—she was unable to revive her FMLA retaliation claim. She may have disagreed with the decision, but there was no evidence that her supervisors harbored retaliatory animus against her, the Seventh Circuit ruled, in affirming summary judgment against her. The court declined to resolve the question of whether the Administrative Office of the Illinois Courts was her "employer" under the FMLA.

The employee served as an administrative assistant to the chief judge of a state circuit court that covered six counties. The chief judge oversaw the administrative functions of the entire circuit, while the presiding judge of the county court where she worked supervised her day-to-day functions. She took two periods of unpaid FMLA leave during her tenure due to health issues, first from March to May 2011, and later from June to August 2012.

Suspended upon return from leave. The day after she returned from her second leave, the presiding judge gave her a disciplinary letter stating that she was being placed on paid leave pending a disciplinary meeting with the chief judge. The letter described several instances of misconduct, first stating that she engaged in insubordination and conduct "unbecoming a judicial employee" a year earlier when she changed the schedules for the court reporters, which had led to harsh criticism from one judge and controversy among the courthouse staff.

The letter also stated that she engaged in misconduct when, also a year earlier, she disregarded his direction to meet with him about her return to full-time work following her first FMLA leave, and instead contacted the chief judge. Another incident that was described had occurred immediately before her second period of FMLA leave, and involved her alleged mishandling of vault requests. Finally, the letter stated she repeatedly attempted to undermine her supervisor’s authority by making disparaging comments to coworkers.

Fired after skipping disciplinary meeting. The letter invited her to respond to the allegations at a meeting with the chief judge and others. It also said she could respond in writing, but warned that the meeting would proceed with or without her. In response, she advised the chief judge in writing that she would not attend the meeting, while failing to address the accusations against her. After she skipped the meeting, the chief judge discharged her.

She brought this FMLA retaliation claim against the Administrative Office (AO) of the Illinois Courts, describing it as "an agency of state government that has the responsibility of providing administrative assistance to the courts of the State of Illinois." The district court tossed her claim on summary judgment, reasoning that the AO was not her employer under the FMLA and that there was no evidence of retaliation.

No retaliatory intent. On appeal, the principal evidence she relied upon to show retaliatory intent was the undoubtedly suspicious timing. However, suspicious timing alone is rarely enough to show that an employer’s proffered explanation for the adverse action was pretext for retaliation. "The critical question is simply whether the inference of unlawful intent is reasonable (at summary judgment) or correct (at trial)," explained the Seventh Circuit.

The AO presented evidence that she was fired for several facially legitimate reasons: ignoring her supervisor’s instruction not to handle vault requests from court reporters, going over his head about returning to work full time, and creating a new assignment schedule for court reporters without the authority to do so. Though she argued these reasons were "phony," merely disagreeing with them was not enough. She needed to show they were "factually baseless, were not the actual motivation for the discharge in question, or were insufficient to motivate" the firing. This was more challenging where, as here, multiple reasons were given for the firing.

Reasons not false. Significantly, she failed to offer evidence suggesting that any reason was false. She admittedly had no authority to take a coworker into the vault, thus engaged in misconduct in doing so. Moreover, while the other reasons for her discharge could be viewed as mistaken or unfair, the issue was to whether they could reasonably be found to be dishonest. Her mere disagreement about the reasons given for her discharge did not support an inference of pretext, particularly where she declined to participate in the disciplinary process.

Indeed, she did not dispute that the chief judge—who ultimately decided to fire her—honestly believed that each reason listed in the disciplinary letter supported her firing. She also didn’t refute his assertion that he made the decision independently, and only after she declined to participate in disciplinary process. Accordingly, because she failed to point to any facts showing that his explanation was unworthy of belief, she failed to raise a triable issue about pretext.

"Employer" issue. The AO also argued that could not be liable for FMLA retaliation since the chief judge was her employer and made the decision to fire her. The Seventh Circuit declined to rule on this issue since its decision did not depend on it, but noted that the debate seemed to "miss the point: that no matter what person or agency she reported to, the employee was employed by the State of Illinois. It also stated in a footnote that even if the FMLA required such "fine distinctions," it would be inclined to find that the AO was her sole employer since it had admitted to employing her in its answer and never attempted to withdraw that admission.

SOURCE: Tibbs v. Administrative Office of the Illinois Courts, (CA-7), No. 16-1671, June 19, 2017.

Mass. Sup. Ct.: Insurer not required to prosecute affirmative counterclaims on behalf of insured — MAINE — Coverage, liability

The Massachusetts Supreme Court, answering a certified question from the United States Court of Appeals for the First Circuit, has instructed that the scope of an insurer’s duty to "defend" does not encompass a requirement to prosecute affirmative counterclaims on behalf of the insured. Thus, in the case of an employer sued by a former employee for age discrimination, the insurer defending the suit for the employer was not required to pursue a counterclaim for misappropriation of funds against the employee on its behalf, nor was it required to pay the costs of prosecuting such a claim. Judge Gants dissented (Mount Vernon Fire Insurance Company v. Visionaid, Inc., June 22, 2017, Gaziano, F.).

Employee fired, insurer steps in to defend. In September 2011, the employer, a manufacturer of lens cleaning and eye safety products, learned that one of its employees might have misappropriated several hundred thousand dollars of the company’s funds. The employee was fired, and he commenced an action against the employer with the Massachusetts Commission Against Discrimination, alleging that he had been fired based on his age. Because the employer had purchased an employment practices liability insurance policy from the Mount Vernon Fire Insurance Company to cover claims brought against it, the insurer stepped in to appoint counsel to defend the employer before the state commission. Counsel filed an answer that provided three nondiscriminatory reasons for the employee’s discharge, which included the suspected misappropriation of funds. Although the employee offered to dismiss his complaint if the employer would sign a mutual release agreement promising not to pursue him for the alleged misappropriation, the employer would not agree. Thereafter, the employee filed suit in superior court.

Dispute between insurer and insured. Counsel appointed by the insurer’s attorney once again stepped in to defend the employer, but did not file a counterclaim for misappropriation. The employer filed a "reservation of rights" asserting that it was free to hire independent counsel to defend against the wrongful termination claim, and the counterclaim. The insurer filed a complaint for declaratory judgment in the federal district court, seeking a ruling that it was not required to prosecute or pay for the prosecution by a different attorney of the misappropriation counterclaim the employer sought to pursue.

The federal district court issued a judgment that the insurer’s duty to defend did not require it to prosecute the counterclaim, and the employer appealed. Concluding that the appeal raised an issue of state law that had not yet been addressed by the state’s highest court, the federal court certified three questions to the state court pertaining to whether the insurer owed a duty to its insured to prosecute the counterclaim or to fund the prosecution of such a claim.

No ambiguity. With regard to the insurer’s contractual duty to "defend" the employer against any "claim," the Massachusetts Supreme Court concluded that there was no ambiguity. While the term "defend" was not defined, it has a plain, usual, and accepted meaning. In the language of the contract, the court explained, "the essence of what it means to defend is to work to defeat a claim that could create liability against the individual being defended." The policy required the insurer to "defend" the employer "in any claim ‘first made against [it] during the Policy Period,’ and no more." The court also noted that several other jurisdictions had considered similarly worded policies and made similar determinations.

Would increase litigation. Although the employer and the dissent put forward policy arguments in support of the position that the insurer was required to do more, the court could not adopt those suggestions considering the policy’s plain language. To adopt those interpretations, the court explained, would require it "to read in a number of provisions that the parties did not include in the policy" and place additional duties on the insurer. For example, to require that the potential offset value of a counterclaim if that counterclaim is "intertwined" would, the court explained, "result in extensive preliminary litigation to determine what claims are sufficiently intertwined" and whether such litigation "would be brought by ‘any reasonable attorney.’" Parties, of course, were "free to" require such calculations in their written contracts, but that was not done so in this case and to impose "such requirements where none was included explicitly is far beyond interpreting the language of the contract."

The court also rejected the argument that the "in for one, in for all" rule should operate to require the insurer to pursue the counterclaim on behalf of the employer. The rule, which requires insurers who are obligated to defend an insurer on one count to defend them on all counts, "did not change the meaning of the word ‘defend.’" To expand it in the way sought by the employer in this case misalign the interests of the insurer and insured and would, as a result, probably increase the number of counterclaims brought by the insured, which would not have to cover the costs of pursuing those claims. That, in turn, would increase litigation between insurers and the parties they insure.

No duty to pay costs either. The answer to the first certified question informed the court’s answer to the second one because in Massachusetts the duty to defend and the duty to pay defense costs have an identical scope. The court did not reach the third question because of its answer to the first two certified questions.

Dissent. In his dissenting opinion, Judge Gants argued that where the insured’s defense is "intertwined with" a counterclaim, where any reasonable attorney defendant the former would pursue the latter, and where the insured agreed that damages from the counterclaim would offset the award of damages the insurer is required to indemnify, the insurer’s duty should encompass the duty to pursue that counterclaim.

The case is No. 16-11878.

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