Smith v. Clark County School District: ADA Plaintiff May Avoid Summary Judgment by Explaining Contradictory Statements In Applications for Disability Benefits

In Smith v. Clark County School District, ___ F.3d ___ (9th Cir. 8/21/13), Jacqlyn Smith worked for a school district, first as a teacher and then as a literary specialist. After aggravating a back injury, Smith applied for medical leave and disability benefits. 

On Smith's application for leave under the Family and Medical Leave Act (FMLA), Smith's doctor stated that Smith was “presently incapacitated” and could not “work at all until released by [a] doctor.” On her application for private disability benefits, Smith stated that her “dates of total disability” ranged from March 31, 2008, to “Not Sure.” On Smith's application for disability retirement under the Nevada Public Employees’ Retirement Systems (PERS), Smith's doctor certified that Smith was “unable to work due to injury or mental or physical illness.” 

At the same time, Smith and the district engaged in negotiations over whether and how she could return to work. Smith contended that she could not work as a teacher, but could work as a literary specialist. The district contended that it could not put her back into a literary specialist position, but offered a teaching position with accommodations. Smith ultimately resigned so that she could receive PERS disability retirement benefits. 

Smith sued the district in federal court, alleging that it violated the Americans with Disabilities Act (ADA) by discriminating against her and not providing reasonable accommodation. The district moved for summary judgment, asserting (1) that Smith was not a “qualified individual” under the ADA because she had represented on her applications for disability benefits that she was permanently disabled; and (2) that the district did not deny Smith a reasonable accommodation. The district court ultimately granted summary judgment, and Smith appealed. 

The Ninth Circuit reversed the judgment. It held that, in deciding whether Smith was a “qualified individual” under the ADA, the district court improperly applied the framework set forth in Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795 (1999), for analyzing the effect of inconsistent statements on applications for disability benefits. Slip op. at 9-11. Relying on Cleveland, the Court first determined that Smith's claims for FMLA leave, private insurance benefits, and PERS disability retirement did not inherently conflict with her ADA claim because they did not account for her ability to work with reasonable accommodation. Slip op. at 11-13. 

However, because Smith had made "certain statements" that "appear to conflict" with her ADA claim, the Court next considered whether Smith had met her burden of explaining these inconsistencies. Slip op. at 13-15. Looking at the facts in the light most favorable to the plaintiff, and considering that "Cleveland’s sufficient-explanation standard is not an exceedingly demanding one," the Court concluded that Smith "gave sufficient explanations for the inconsistencies between her ADA claim and her PERS and FMLA applications to survive summary judgment." Slip op. at 16. 

Smith v. Clark County School District is available here. 

Richey v. AutoNation: Cal. Supremes Grant Review In CFRA Arbitration Matter

In Richey v. AutoNation, Inc. (11/13/12, mod. 12/12/12) (discussed here), the Court of Appeal vacated an arbitration award in favor of an employer in a CFRA action, holding that the arbitrator improperly relied on a defense that the employer held an "honest belief" or "honest suspicion" that the employee had abused his medical leave.

On February 13, 2013, the California Supreme Court granted review.  The issues presented are as follows:

1. Is an employer's honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee's claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code ?? 12945.1, 12945.2)? 
2. Was the decision below to vacate the arbitration award in the employer's favor consistent with the limited judicial review of arbitration awards?

The "complete defense" question brings to mind the Court's recent decision in Harris v. City of Santa Monica, but even if you do not practice in this area, the prevalence of arbitration agreements in employment makes this a very important case.  Richey is Case No. S207536, and the Court's web page for it is here. 

I have added Richey to our Watch List of Pending Cases, and we will present a webinar on it promptly upon the decision being issued.  

Olofsson v. Mission Linen Supply: Court of Appeal Holds That Employer Was Not Estopped to Deny That it Approved CFRA and FMLA Leave

This decision is very fact-specific, but it is interesting regardless.  In Olofsson v. Mission Linen Supply (12/13/12) --- Cal.App.4th ---, the Court of Appeal affirmed a trial court judgment, holding that substantial evidence supported the trial court’s findings that the employer (1) did not misrepresent by deed that the employee’s leave had been approved; and (2) was not silent when it had a duty to speak under the applicable regulations.  

The decision does a good job of laying out the respective obligations of employer and employee under the CFRA and FMLA: 

California’s Moore-Brown-Roberti Family Rights Act (CFRA) and the federal Family and Medical Leave Act (FMLA) compel an employer of Mission Linen’s size to grant a leave of absence to an employee, and preserve that employee’s right to continued employment, if the employee worked 1,250 hours in the year preceding the leave and the leave is for a recognized reason, such as to care for a family member who has a serious health condition.  (Gov. Code, § 12945.2, subds. (a), (b), (c)(3); 29 U.S.C. §§ 2611(2), (4), 2612(a), 2614(a).)  The family leave laws also impose on employers a legal duty to inform employees of the conditions that must be met to qualify for family leave.  (Cal. Code Regs., tit. 2, § 7297.9; 29 U.S.C. § 2619.)  It is undisputed that Mission Linen complied with these posting requirements.   

Under the CFRA, where the employee’s need for leave is foreseeable, the employee must provide the employer with reasonable advance notice of this need.  (Gov. Code, § 12945.2, subd. (h).)  Indeed, the employer may require that employees provide at least 30 days’ advance notice before the CFRA leave is to commence if the need for leave is foreseeable based on planned medical treatment for a serious health condition of a family member.  (Cal. Code Regs., tit. 2, § 7297.4, subd. (a)(2).) Further, if the need for leave is foreseeable due to a planned medical treatment or supervision, the employee must make a reasonable effort to schedule the treatment or supervision to avoid disruption to the employer’s operations, subject to approval of the health care provider.  (Ibid.)  It is undisputed that Olofsson knew that July and August were the busiest months for Mission Linen.   

The employee must “provide at least verbal notice sufficient to make the employer aware that the employee needs CFRA-qualifying leave, and the anticipated timing and duration of the leave.”  (Cal. Code Regs., tit. 2, § 7297.4, subd. (a)(1).)  The employer in turn is charged with responding to the leave request “as soon as practicable and in any event no later than ten calendar days after receiving the request.”  (Id., subd. (a)(6).)  

Additionally, under the CFRA and implementing regulations, an employer may require that an employee’s leave request for a family member’s serious health condition be supported by a certification from the health care provider for that member.  (Gov. Code, § 12945.2, subd. (j)(1); Cal. Code Regs., tit. 2, § 7297.4, subd. (b)(1).)  As well, the employer may require that the employee provide such certification within 15 calendar days of the employer’s request.  (Cal. Code Regs., tit. 2, § 7297.4, subd. (b)(3).)

Slip op. at 1-2.

On June 14, 2004, Lars Olofsson asked his employer for seven weeks off, starting July 12, to care for his mother after surgery. On July 9, after much back-and-forth, Mission Linen rejected the request because Olofsson did not meet the 1,250-hour requirement.  Olofsson sued for wrongful termination in violation of public policy. In a bifurcated trial, the trial court held that Mission Linen was not estopped to deny that it had approved Olofsson's leave.   

The Court of Appeal affirmed, holding that substantial evidence supported the trial court's findings. In particular, the fact that Mission Linen had Olofsson train a replacement driver to assume his duties while he was out did not estop if from denying that it approved the leave.  Slip op. at 7-8. Nor did Mission Linen's failure to approve or deny the leave within ten days of Olofsson's request support an estoppel claim.  Slip op. at 8-12. 

Here Mission Linen first responded by telling Olofsson what he had to do—fill out a form and get medical certification.  Next, Mission Linen responded when Clark told Olofsson that approval had to come from HR, he could not assume the leave had been approved, and could not check the eligibility box himself.  To underscore the point, she whited out his hand-noted approval.  This communication occurred on June 21, when Olofsson turned in the form, prior to the scheduled surgery and within the 10-day window.  In other words, Mission Linen responded that it was processing the application, and until HR said “Yes,” he was not approved for leave.  

Slip op. at 11. 

The opinion is available here.  

Richey v. AutoNation: Court of Appeal Vacates Arbitration Award Based on "Honest Belief Defense" in CFRA Action

Richey v. AutoNation, Inc. (11/13/12, mod. 12/12/12) is interesting for its discussion of CFRA and FMLA rights, as well as its discussion of standards for reviewing arbitration awards.

Avery Richey, a sales manager for defendant, was terminated four weeks before the expiration of his approved CFRA medical leave because his employer believed he was misusing his leave by working part time in a restaurant he owned. Richey sued for violation of the CFRA, and his case went to arbitration under an 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 Richey’s CFRA claim based on the "honest belief" or "honest suspicion" defense. The trial court denied Richey’s motion to vacate the arbitrator’s award and granted AutoNation’s petition to confirm the award. The Court of Appeal reversed: 

The honest belief defense accepted by the arbitrator is incompatible with California statutes, regulations and case law and deprived Richey of his unwaivable statutory right to reinstatement under section 12945.2, subdivision (a). This clear legal error abridged Richey’s statutory rights under CFRA—rights based on, and intended to further, an important public policy. Accordingly, under the principles set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 and Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, the award must be vacated.

Slip op. at 2. 

After discussing a review court's limited authority to vacate an arbitrator's award (Slip op. at 7-10), the Court held that the arbitrator committed clear legal error by relying solely on the employer's belief that Richey had abused his medical leave. Focusing on the employee's reinstatement rights under the CFRA and FMLA (slip op. at 10-13), the Court then held that the arbitrator improperly shifted the burden of proof to Richey by holding for the employer based solely on his finding that Richey’s supervisor held an “honest belief” that Richey had violated company policy barring outside employment. Slip op. at 14-24. 

[Lonicki v. Sutter Health Central (2008) 43 Cal.4th 201] necessarily stands for the proposition that an employer may not, in terminating or failing to reinstate an employee who has been granted CFRA leave, defend a lawsuit from that employee based on its honest belief the employee was abusing his or her leave. Instead, the employer must demonstrate evidentiary facts sufficient to carry the burden of proof imposed by CFRA and FMLA.

Slip op. at 23. 

The Court then held that these errors of law required that the award be vacated. Slip op. at 24-28. 

Here, where the parties have agreed the arbitrator will resolve any claim “solely upon the law” and the purported legal error goes to both express, unwaivable statutory rights (the guarantee of reinstatement) and the proper allocation of the burden of proof, judicial review is essential to ensure the arbitrator has complied with the requirements of CFRA. In this instance, and on these facts, “‘granting finality to [the] arbitrator’s decision would be inconsistent with the protection of [Richey’s] statutory rights.’” 

Slip op. at 25, citing Pearson Dental, supra, 48 Cal.4th at 680. 

The Court of Appeal modified its opinion without changing the result on December 12, 2012. The order modifying and the modified opinion are here.  I assume that the employer will seek review in the California Supreme Court and I will let you know what happens there.