Court Report

Oct 1, 2008
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Handbook’s ‘FMLA Benefits’ May Be Binding

Peters v. Gilead Sciences Inc., 7th Cir., No. 06-4290 (July 14, 2008).

The 7th U.S. Circuit Court of Appeals held that an employee can proceed with state law claims for breach of contract or promissory estoppel based on handbook language granting Family and Medical Leave Act (FMLA)-type leave, even though the employer had less than 50 employees.

To be eligible for FMLA leave, an employee must have worked for at least 1,250 hours during the previous 12 months. In addition, the employee must work at a site that has at least 50 employees within a 75-mile radius.

Steven Peters was employed by Gilead Sciences as a pharmaceutical sales representative when he suffered a work-related injury in 2001. He reaggravated the injury in 2002 and underwent corrective surgery. He took what he thought was FMLA leave for 12 days.

After beginning his leave, Peters received a letter from Gilead stating the terms of his “FMLA” leave and informing him of his right to reinstatement after leave. The letter tracked language that was set forth in the employee handbook regarding employees’ entitlement to family and medical leaves.

Although the letter and the handbook both included the FMLA’s 1,250-hour and 12-month language, neither included the 50-employees-within-a-75-mile-radius (“50/75”) language and, in fact, Gilead did not have 50 employees within a 75-mile radius.

Peters returned to his position on Dec. 16, 2002. In March 2003, Peters began to experience an adverse reaction to his medication and took a second leave from March 4 until May 5, 2003. At that time, a letter was sent to him setting forth the terms and conditions of the leave, and again the letter omitted the 50/75 language. However, Peters did not receive this second letter.

In April 2003, Gilead decided to replace Peters with another employee and sent a letter to Peters designating him as a “key” employee.

Peters then filed suit against Gilead, alleging a number of claims, including FMLA and state law claims. Gilead filed a motion for summary judgment. It was granted on all claims except for Peters’ FMLA claim. His state law promissory estoppel claim was not addressed. Instead, the lower court incorrectly allowed Gilead to recharacterize that claim as an “equitable estoppel” response to Gilead’s affirmative defenses. Gilead then filed for and the court granted reconsideration, dismissing the FMLA claim.

On appeal, the 7th Circuit pointed out that the lower court “did not address whether Gilead’s promises were actionable as a contract or under promissory estoppel.” It noted that Peters had filed a state law claim based on his own reliance on Gilead’s representations, in both the handbook and the letters, characterizing his entitlement to leave as based on the FMLA.

Promissory estoppel is applicable when a promise may lack the elements of a binding contract but has induced detrimental reliance on the part of the promisee. In this case, Gilead’s handbook had promised 12 weeks of medical leave and that promise had been repeated in Gilead’s letters to Peters.

Because Peters relied on those representations and had assumed that he would be reinstated to his position, the 7th Circuit remanded the case for consideration of Gilead’s liability under state law.

The 7th U.S. Circuit Court of Appeals held that an employee can proceed with state law claims for breach of contract or promissory estoppel based on handbook language granting Family and Medical Leave Act (FMLA)-type leave, even though the employer had less than 50 employees.

To be eligible for FMLA leave, an employee must have worked for at least 1,250 hours during the previous 12 months. In addition, the employee must work at a site that has at least 50 employees within a 75-mile radius.

Steven Peters was employed by Gilead Sciences as a pharmaceutical sales representative when he suffered a work-related injury in 2001. He reaggravated the injury in 2002 and underwent corrective surgery. He took what he thought was FMLA leave for 12 days.

After beginning his leave, Peters received a letter from Gilead stating the terms of his “FMLA” leave and informing him of his right to reinstatement after leave. The letter tracked language that was set forth in the employee handbook regarding employees’ entitlement to family and medical leaves.

Although the letter and the handbook both included the FMLA’s 1,250-hour and 12-month language, neither included the 50-employees-within-a-75-mile-radius (“50/75”) language and, in fact, Gilead did not have 50 employees within a 75-mile radius.

Peters returned to his position on Dec. 16, 2002. In March 2003, Peters began to experience an adverse reaction to his medication and took a second leave from March 4 until May 5, 2003. At that time, a letter was sent to him setting forth the terms and conditions of the leave, and again the letter omitted the 50/75 language. However, Peters did not receive this second letter.

In April 2003, Gilead decided to replace Peters with another employee and sent a letter to Peters designating him as a “key” employee.

Peters then filed suit against Gilead, alleging a number of claims, including FMLA and state law claims. Gilead filed a motion for summary judgment. It was granted on all claims except for Peters’ FMLA claim. His state law promissory estoppel claim was not addressed.

Instead, the lower court incorrectly allowed Gilead to recharacterize that claim as an “equitable estoppel” response to Gilead’s affirmative defenses. Gilead then filed for and the court granted reconsideration, dismissing the FMLA claim.

On appeal, the 7th Circuit pointed out that the lower court “did not address whether Gilead’s promises were actionable as a contract or under promissory estoppel.” It noted that Peters had filed a state law claim based on his own reliance on Gilead’s representations, in both the handbook and the letters, characterizing his entitlement to leave as based on the FMLA.

Promissory estoppel is applicable when a promise may lack the elements of a binding contract but has induced detrimental reliance on the part of the promisee. In this case, Gilead’s handbook had promised 12 weeks of medical leave and that promise had been repeated in Gilead’s letters to Peters.

Because Peters relied on those representations and had assumed that he would be reinstated to his position, the 7th Circuit remanded the case for consideration of Gilead’s liability under state law.

Professional Pointer: Employers who do not come within the 50/75 requirement of the FMLA can offer FMLA-like benefits to their employees. However, a decision to offer such benefits should be made consciously and after discussion with legal counsel.

By Maria Greco Danaher, an attorney with the firm of Ogletree Deakins in Pittsburgh.

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Harassment Claim Advances

Aryain v. Wal-Mart Stores Texas LP, 5th Cir., No. 07-20552 (July 8, 2008).

A former Wal-Mart employee in Texas may proceed with her sexual harassment claim based on the conduct of her supervisor, but she failed to show that she was constructively discharged and retaliated against because she complained about his conduct, the 5th U.S. Circuit Court of Appeals held.

Jenna Aryain started work as a cashier in the tire and lube department of a Wal-Mart store in Crosby, Texas, on Feb. 25, 2005. For the next four months, Aryain’s supervisor, Darrel Hayes, allegedly subjected her to appalling daily remarks about her physical looks and made crude sexual advances. Aryain allegedly complained to another supervisor about Hayes’ conduct, as did another female employee, but she said Wal-Mart took no action.

On June 20, 2005, Hayes yelled at Aryain during work. Aryain responded by leaving work for the day. She then told her parents about Hayes’ conduct. Her father called the store manager, Gwendolyn Furr. Aryain met with Furr and Chelly Whiddon, an assistant manager who supervised the infant department, the next day.

During the meeting, Aryain described Hayes’ behavior to the two managers and provided a list of offensive comments he had made to her. Furr interviewed Hayes and other employees but concluded that Aryain’s sexual harassment complaint could not be substantiated.

After Aryain’s father called to request a transfer, Furr moved Aryain to the infant department under Whiddon’s supervision. Aryain alleged that Furr and Whiddon mistreated her by ordering her to break down clothing racks and move them behind the store on a hot day while they watched her on a security camera, denying her break requests, knocking a load of clothes out of her arms, glaring at her and speaking negatively about her. In mid-July, Aryain discovered that she was not scheduled for any work one week, and she submitted a resignation letter complaining about her treatment.

Following her resignation, Aryain brought Title VII claims against Wal-Mart alleging sexual harassment, constructive discharge and retaliation. The district court found in favor of Wal-Mart on all claims.

On appeal, the 5th Circuit affirmed the district court’s finding for Wal-Mart on Aryain’s constructive discharge and retaliation claims. However, the 5th Circuit reversed the district court’s holding on Aryain’s sexual harassment claim.

The court reasoned that a jury could find that Aryain subjectively perceived her working environment in the tire and lube department as hostile or abusive and that the company failed to exercise reasonable care to prevent and correct the supervisor’s behavior. Aryain told Furr that she rated the harassing conduct as a 10 on a scale of 1 to 10, that she was happy to be away from Hayes, that she did not want to work alone with Hayes, that she felt humiliated each time he made a sexually explicit comment and that she would have complained to Furr if her father had not done so first.

Moreover, the court found that a factual dispute exists as to whether Wal-Mart failed to exercise reasonable care in not responding to Hayes’ harassing behavior sooner.

Professional Pointer: A thorough and prompt investigation is crucial in establishing an affirmative defense against an employee’s claim of harassment to show that the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior.

By Jennifer M. Thiel, an attorney with Berens & Tate PC LLO, a Worklaw Network member firm in Omaha, Neb.

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Political Affiliation Claim Fails

Pérez-Sánchez v. Public Building Authority, 1st Cir., No. 07-1869 (June 30, 2008).

A public employee who allegedly was removed from office, stripped of supervisory duties he once exercised, denied a parking space and targeted by other indignities following a shift in political winds lost his claim of political orientation-based conspiracy.

Juan Pérez-Sánchez, a member of Puerto Rico’s New Progressive Party (NPP), spent years working his way up to finally become the acting regional director of Puerto Rico’s Public Building Authority. But after the Popular Democratic Party defeated the NPP in 2001, Pérez-Sánchez alleged that he began to be discriminated against because of his political orientation. He brought an action in 2005 under 42 U.S.C. §1983 for denial of constitutional rights under color of state law and under §1985(3) for conspiracy to deny constitutional rights based on political affiliation.

The district court dismissed individual capacity actions against the particular officials for damages because of defects in serving the complaint; granted summary judgment on claims against the officials in their official capacities under §1983 because the limitations period had expired; and granted summary judgment against the §1985(3) claim, finding that the statute did not reach political orientation-based conspiracies. The court of appeals affirmed.

In affirming dismissal of the individual capacity claims, the 1st U.S. Circuit Court of Appeals reasoned that the person served with the complaint was authorized only to receive service of actions filed in the officials’ official capacity.

As for the §1985(3) claim, the appeals court concluded that the statute did not reach commercial conspiracies and provided no protection based on individuals’ political affiliation or beliefs.

Professional Pointer: As lower courts remain split on whether §1985(3) reaches political orientation-based conspiracies, the U.S. Supreme Court could address this issue.

By John J. Coleman III, an attorney practicing labor and employment law with Burr & Forman LLP in Birmingham, Ala.​


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