Employer Law Report : Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

In a 2-1 decision, a three-judge panel of the Sixth Circuit reversed, holding that “Title VII prohibit[s] employers from taking retaliatory action against employees not directly involved in protected activity but who are so closely related to or associated with those who are directly involved, that it is clear that the protected activity motivated the employer’s action.” The Court included the fiancé of an employee filing an EEOC charge in the newly-expanded protected class. In reaching its decision, the Sixth Circuit acknowledged that the plain language of Title VII does not support associational retaliation claims. The Court nonetheless ignored the text and looked to the “plain purpose of the statute,” reasoning, based on language in U.S. Supreme Court decisions, that the statute is intended to protect against any retaliatory action that might “dissuade[] a reasonable worker from making or supporting a charge of discrimination.” (Quoting the U.S. Supreme Court’s decision in Burlington Northern and Santa Fe Railway Co. v. White, 126 S.Ct. 2405 (2006).) 

The full Sixth Circuit agreed to re-hear the case and vacated the decision of the three-judge panel. The Court reasoned that, because Thompson did not engage in any protected activity of his own (by making a complaint of Title VII discrimination or harassment or by testifying, participating in, or assisting in an investigation of another’s complaint), he could not state a claim for retaliation under Title VII. The en banc Sixth Circuit relied on the plain language of Title VII in finding that actual protected activity is required for a retaliation claim—in contrast to the three-judge panel’s decision that ignored the plain language of the statute. The Court found that not recognizing associational retaliation claims was consistent with the purpose of the statute because the retaliation is still actionable if the retaliated-against person actually engages in protective activity. In addition, the Court distinguished the recent Supreme Court decision in Crawford v. Metro Government of Nashville and Davidson County, which reversed the Sixth Circuit and held that the opposition clause did not require active, consistent behavior, by stating that Crawford involved involuntary testimony while Thompson did not engage in any protected activity at all.

This case should be seen as a victory for all employers. Retaliation is certainly one of the most dangerous and difficult employment law claims to avoid, especially when the complaining employee remains employed after the protected activity. This decision limits the scope of employees who could make a retaliation claim to the employee who actually engaged in protected activity—rather than the employee and the complaining employee’s sibling, parent, spouse, or fiancé. It should be noted that a petition for certiorari has been filed with the Supreme Court.

Within weeks after her last appraisal, Cutcher began a six-week FMLA-approved leave for which she was paid under Kmart’s short-term disability leave policy. Then, just weeks later, Kmart announced a nationwide RIF which included the termination of six associates at the store where Cutcher worked. As part of the nationwide RIF process, the store was instructed to evaluate each associate’s performance based on the same core areas that were evaluated in the annual performance appraisals. The store then averaged the employee’s RIF appraisal score with their most recent performance appraisal score to arrive at the overall score that determined those associates to be terminated. One caveat in the scoring form was that the store had to comment on a significant change in the RIF appraisal score from that in the associate’s most recent performance appraisal. 

Cutcher’s RIF appraisal score was much lower than her most recent performance appraisal, made just one month earlier. As required, the store explained the difference by stating only poor customer and associate relations and “LOA.” Kmart denied that the leave notation formed the basis for Cutcher’s decreased RIF appraisal, but that LOA signified only that her termination had to be delayed until her return from leave, as mandated by Kmart’s national guidelines. Had Cutcher’s rating during the RIF been identical to her appraisal just weeks earlier, she would not have been selected for termination. 

In reversing the district court’s summary judgment ruling in favor of Kmart, The Sixth Circuit held that a disputed issue of material fact remained as to whether Kmart interfered with Cutcher’s FMLA rights and retaliated against her because she took the leave. That is, the Court explained that a reasonable fact finder could conclude that the termination was based on her leave because of the brief time between her annual appraisal and the lower RIF appraisal. Also significant was that Kmart had not documented any of the performance issues that it claimed supported the lower RIF appraisal. In fact, Cutcher had never been disciplined and her evaluators admitted they knew of no change in her performance during the minimal period between the annual and RIF appraisals. Moreover, the Court found that a jury could reject Kmart’s explanation that the change between appraisal resulted from the fact that Cutcher’s supervisor tended to rate associates higher than deserved to avoid confrontation. Lastly, the Court pointed to Kmart’s LOA notation on the RIF form as evidence that could support a finding in Cutcher’s favor. 

So, what lessons can we take from Cutcher v. Kmart? Whether in times of a RIF or simply standard business operations, attention must be paid to how managers evaluate their employees. It will always be the case that certain managers rate high or low as a practice, so if you can’t train the manager to rate in a more realistic manner, then at least document that particular manager’s practice. This will avoid the post-hoc allegation Kmart confronted and also lay the groundwork for later explaining potential differences in appraisals made by others. Furthermore, a termination analysis must be meticulously conducted and documented. Standing alone, a LOA notation on the section of a RIF form identifying the reason for a termination decision begs a court to deny summary judgment.   

Thus, as with any termination decision, attention to important details and careful documentation can protect the employer from an adverse decision like that in Cutcher v. Kmart.

The Sixth Circuit restated the familiar rule from its Yard-Man line of cases that although there is no presumption that negotiated benefits vest, there is an “inference” that “it is unlikely that [welfare benefits] would be ‘left to the contingencies of future negotiations’” so long as there is either explicit contractual language or, in the event of ambiguity, extrinsic evidence of an intent to vest healthcare benefits. The Sixth Circuit found that the language in this case was sufficient to vest the healthcare benefits and make it unlawful for CNH to terminate the benefits. 

The Sixth Circuit next acknowledged that if a summary plan description contained unqualified reservation-of-rights language, to the effect that the employer had a unilateral right to terminate coverage, and if the union failed to grieve or object to such language, then such reservation-of-rights language “prevent[s] retiree benefits from vesting” even if the summary plan description was distributed after the effective date of the CBA. But in this case, while the summary plan description stated that the employer had the unilateral right to terminate benefits, it also stated that the CBA language controlled in the event of a conflict. Accordingly, the employer was prevented from making any unilateral changes in benefits.
 

However, because the CBA was silent as to changes in benefit offerings and because benefit levels and offerings for retirees had changed from CBA to CBA, the Sixth Circuit held that CNH was permitted to make reasonable changes to these benefits. The Sixth Circuit remanded to the district court for findings on the extent to which the CBA allows for reasonable modifications to the scope of healthcare benefits for retirees.
 

In Schreiber v. Philips Display Components Co., No. 07-2440 (6th Cir. Sept. 2, 2009), the Sixth Circuit held that language in the CBA providing that retirees “are entitled to purchase health insurance coverage on the same terms and at the same employee contribution levels as in effect for active employees” and “group insurance in force upon the signature date of this Collective Bargaining Agreement shall remain in full force and effect until September 28, 2003” was ambiguous as to whether the retiree benefits were limited to the duration of the CBA. Therefore, the Sixth Circuit ordered the court to review the plan document and other extrinsic evidence regarding the intent of the parties as to whether the durational limit applied to the retiree benefits, or just to the CBA itself.
 

These decisions provide a reminder to employers that agreeing to less than precise language about retiree health benefits in a collective bargaining agreement may result in obligations long into the future. In addition, these cases raise interesting questions about the extent to which carefully designed plan documents and summary plan descriptions may establish the right to amend and terminate retiree health benefits, notwithstanding ambiguous collective bargaining agreement provisions.

The plaintiffs’ lawyers produced the documents submitted by Ms. Niswander to CIC’s attorneys. CIC believed that Ms. Niswander’s conduct in delivering the documents to her attorneys violated the company’s Privacy Policy and its Code of Conduct, each of which prohibited the disclosure of confidential information, including personal information about policyholders. CIC decided to terminate Ms. Niswander because of her disclosure of the documents to her attorneys.

Ms. Niswander then filed a separate suit against CIC, alleging retaliation under the EPA and Title VII. She argued that she could not be terminated for delivering the documents to her attorneys in the class action because the documents were requested by her attorneys, who needed them in order to respond to CIC’s discovery requests. CIC argued that because the confidential documents were not relevant to the EPA claims at issue in the class action, her breach of the company’s policies was a legitimate ground for her termination.

The district court granted CIC’s motion for summary judgment. Ms. Niswander then appealed the decision to the Sixth Circuit Court of Appeals, which recently affirmed the judgment. The court noted that the anti-retaliation provisions of Title VII prohibit an employer from discriminating against an employee because the employee engaged in a protected activity. Thus, in order to prove a claim of retaliation, a plaintiff must first show that he or she engaged in a protected activity. 

The court first had to decide whether Ms. Niswander’s delivery of the documents to her lawyers constituted either participation in the class action lawsuit or opposition to unlawful conduct by CIC. If it were either participation or opposition under Title VII, the court stated that a balancing test would then have to be applied to determine whether her disclosure was a protected activity for which she could not be fired.

The court found that her disclosure did not constitute participation in the underlying lawsuit, noting that while providing relevant documents during the discovery process might constitute participation, the provision of irrelevant, confidential information cannot be viewed as participating in the proceeding. The court then looked at whether Ms. Niswander's delivery of the documents constituted opposition to unlawful conduct by CIC. Finding that it could be viewed as opposition, the court applied a balancing test to weigh the employer’s need to protect its confidential business and client information against the employee’s need to be properly safeguarded against retaliatory actions. The court noted that the ultimate question under the balancing test is whether the employee’s dissemination of confidential documents was reasonable under the circumstances. The court looked at the following six factors:

1. how the documents were obtained;
2. to whom the documents were produced;
3. the content of the documents, both in terms of the need to keep the information        confidential and its relevance to the employee’s claim of unlawful conduct;
4. why the documents were produced;
5. the scope of the employer’s privacy policy; and
6. the ability of the employee to preserve the evidence in a manner that did not violate  the employer’s privacy policy.