Veik Scores Nebraska Supreme Court Victory!

Partner Heather Veik successfully defended an employer before the Nebraska Supreme Court against tort claims pursued by an employee following injuries sustained at work.  The employee asserted claims for assault and intentional infliction of emotional distress in district court after she suffered injuries during a training drill at work.  The district court dismissed the employee’s claims, concluding that the Nebraska Workers’ Compensation Act provided the employee her exclusive remedy, therefore barring her from pursuing tort claims in district court.

The Nebraska Supreme Court recently affirmed the dismissal of the employee’s claims, reaffirming that the Nebraska Workers’ Compensation Act provides the employee’s exclusive remedy for her injuries.  According to the Nebraska Supreme Court, when workers’ compensation is an employee’s exclusive remedy the employee cannot assert tort theories of recovery against his or her employer in district court.  This rule applies even when an employee claims that his or her employer acted with specific intent to cause injury.  In its decision, the Nebraska Supreme Court rejected the employee’s request to narrow the exclusivity rule and also rejected the employee’s argument that the dismissal of her claims violated public policy.

Lopez v. Catholic Charities, 315 Neb. 617 (2023)

Conduct, and Not Added Prejudice, is Sufficient to Show Waiver of an Arbitration Clause.

In May 2022, the Supreme Court of the United States (“SCOTUS”) unanimously held that an arbitration contract is to be treated “just as the court would any other [contract].” Morgan v. Sundance, Inc., 596 U.S. ___ at 6 (2022). The decision resolves a circuit split among appellate courts and vacates an Eight Circuit holding that the treatment of arbitration clauses require a bespoke procedural rule not present in the review of other contracts.

Robyn Morgan previously worked for Sundance, Inc. at a Taco Bell franchise in Osceola, Iowa. As a part of Sundance’s application for employment, Morgan submitted to an arbitration clause that would shift a dispute from the courtroom to confidential binding arbitration. Id. at 2.

Morgan sued Sundance in federal court for violating the Fair Labor Standards Act, including nonpayment of overtime wages. Id. She asserted that Sundance would take hours worked from one week and shift them to a different week to avoid paying overtime wages. Id.  In response, Sundance did not assert its right to arbitration initially, and proceeded “as if no arbitration agreement existed.” Id. Sundance pursued dismissal of Morgan’s complaint and was denied. Sundance then filed an answer to Morgan’s complaint. In its answer, Sundance asserted many affirmative defenses (fourteen, to be exact), but arbitration was absent from the list. Morgan and Sundance eventually met for mediation and were unable to come to an agreement. Id.

Approximately eight months after Morgan filed suit (and only after an unsuccessful mediation), Sundance requested to compel arbitration as agreed to in Morgan’s original application for employment. Morgan opposed, suggesting Sundance waived its right to arbitration by proceeding with the litigation in the manner and for the length of time it did. Id.

Lower courts applied Eight Circuit precedent that a party waives a contractual right to arbitration if it knew of the right, acted inconsistently with the right, and the inconsistency prejudiced the other party. Erdman Co. v. Phoenix Land & Acquisition, LLC, 650 F.3d 1115, 1117 (CA8 2011). The District Court found prejudice against Morgan before the Court of Appeals disagreed and reversed, landing Morgan in arbitration. Morgan, 596 U.S. ___ at 3.

SCOTUS granted certiorari specifically to address a circuit split and reject the requirement that waiver of an arbitration clause requires a showing of prejudice. Id. at 4. Noting that outside of arbitration, when a federal court discusses the presence or absence of waiver, there is no requirement that the waiver cause prejudice to the other party. Id. at 5. The Court discussed the history and introduction of the requirement, originally by the Second Circuit in 1968, and suggested federal policy favors arbitration. Further, if the opposing party is not prejudiced, courts should permit the reintroduction of arbitration. Id. at 6.

SCOTUS took issue with the added requirement to show prejudice and likened the requirement to an additional procedural rule, not present in other contracts. Id. Further, the Court read the Federal Arbitration Act as clearly stating no additional or custom procedural rules should be created to either favor or disfavor arbitration as a method of resolution. Id. at 7. For this reason, the requirement to show prejudice when assessing if arbitration has been waived should not be necessary.

With the rejection and vacating of the Eight Circuit’s judgment, SCOTUS sent the case back for review of Sundance’s conduct and whether the conduct is a waiver of the arbitration clause. Id.

The holding impacts simple strategic sequencing principles of pretrial procedure. Specifically, to lean on a valid and binding arbitration agreement as a type of fallback or “wait-and-see” option while exploring alternative procedural remedies now comes with increased risk. Arbitration as an option should likely be acknowledged as present, even acted upon, if a party wishes to not risk their conduct presenting as a waiver of an existing contractual right to arbitration.

Steve Lydick, E|S law clerk, assisted in preparing this article.

If you have questions about arbitration clauses in employment contracts, contact Heather Veik or any of the E|S employment attorneys at 402-397-2200.

ADA Claimant Must Connect Reasonable Accommodation to Medical Condition

The Eighth Circuit Court of Appeals recently held there was no failure to accommodate when an employee did not state that a requested change was connected to a medical condition.   In Powley v. Rail Crew Xpress, LLC, 25 F.4th 610 (8th Cir. 2022), the plaintiff, Leah Powley (“Powley”), was hired in July 2015 as a driver for the defendant, Rail Crew Xpress, LLC (“RCX”), a transportation company that contracts with railroads to transport their crews.  Within three years of her hiring, Powley requested six accommodations for various medical and familial reasons.  With each request, she submitted a doctor’s note identifying potential disabilities, including headaches and back pain, along with doctor-recommended restrictions.  RCX granted each requested accommodation.  During this time, RCX even promoted Powley to the position of part-time dispatcher, referred to within the company as a “starter.” In this position Powley scheduled and coordinated drivers to move crews from one location to another.    

After holding the position of starter for approximately 3 months, during which time RCX granted Powley multiple accommodations per doctor’s notes, Powley asked to return to her driver position informing one of her supervisors that the noise level in the office was interfering with her ability to perform her duties.  She informed another supervisor that the noise gave her a headache.  She also submitted a doctor’s note that stated only, “Patient may work 12 ½ hours per day.  Must have 11 hrs between shifts.”  25 F.4th at 612.  The company rejected the request, citing a policy that once an employee is promoted to a starter they cannot return to a driver position.

Thereafter, Powley reported to work and was upset that a dry-erase board tracking drivers and vehicles had been moved to a location that made it difficult for her to write on.  She asked the other dispatchers to rearrange the space and when they told her to talk to a superior, she announced “I’m done. I have to leave.”  25 F.4th 612.  The next day she emailed RCX stating she was unable to work as a starter because the office noise interfered with her ability to perform her duties.  She also reiterated her frustration with the dry-erase board placement and again asked to return as a driver. Significantly, she did not mention back pain or headaches in the e-mail. RCX treated this as a resignation.

Powley sued RCX alleging that it failed to accommodate her disabilities and retaliated against her for requesting an accommodation in violation of the Americans with Disabilities Act (“ADA”) and Nebraska Fair Employment Practices Act.  RCX moved for summary judgment (dismissal without a trial) and the trial court granted that motion, dismissing Powley’s claims.  She appealed the ruling to the Eighth Circuit. The Eighth Circuit affirmed the dismissal, holding that Powley had not actually sought a reasonable accommodation for an alleged disability under the ADA.

The Eighth Circuit observed that under the ADA the initial burden to request an accommodation is on the employee.  While the request does not need to be in writing and there are no necessary “magic words,” the employee must make it clear that he/she wants assistance for a disability.  The Eighth Circuit stated, “where there is no conceivable request for an accommodation, there is no failure to accommodate.”  613 F.4th at 613.  The Eighth Circuit found that Powley did not satisfy the burden for a failure to accommodate claim.  In its opinion, the Eighth Circuit noted that Powley sought and received numerous reasonable accommodations for her back pain, observing that each of those requests were accompanied by a doctor’s note or some indication that the request was due to back pain.  Her last request, however, neither attached a doctor’s note nor connected her request with back pain.  Therefore, she did not show that request was based on an alleged disability. 

This case illustrates the importance of the rationale an employee provides for a requested accommodation and documentation supporting such request. When the employee was able to provide a doctor’s note with the request for accommodation, the employer granted the accommodation. When she did not provide a doctor’s note or connect the request for accommodation to a medical condition that potentially qualified as a disability, the employer had no duty to provide an accommodation. Although it did not directly impact the decision, the employer’s history of providing accommodations when properly connected to potential disabilities likely helped the employer’s position on the disputed issue. Therefore, employers should carefully review requests to ensure they are for disabilities or alleged disabilities and treat such requests accordingly. If you have questions about when an employee must be accommodated for a condition, Heather Veik and E|S employment attorneys can be reached at 402-397-2200.

Long-Haul COVID-19 Illness May Qualify as a Disability Under the Americans with Disabilities Act

Although most people with COVID-19 recover within weeks, some continue to experience symptoms months or longer following initial infection or may experience new or recurring symptoms at a later time. This condition is referred to as “long COVID” and those who suffer from this condition are often referred to as “long-haulers.” 

Due to the rise of long COVID as a significant health issue, the Office for Civil Rights of the Department of Health and Human Services (“HHS”) and the Civil Rights Division of the Department of Justice (“DOJ”) collaborated to develop guidance about whether individuals suffering from long COVID are considered to have a disability entitling them to protection under Titles II and III of the Americans with Disabilities Act (“ADA”) (which apply to governments and public accommodations), the Rehabilitation Act, and the Patient Protection and Affordable Care Act (“ACA”), all of which protect individuals with disabilities from discrimination. While the guidance is not directly applicable under Title I of the ADA, which governs private employers, it is nonetheless instructive and provides best practices for private employers. 

According to the Centers for Disease Control and Prevention (“CDC”), people with long COVID have a range of new or ongoing symptoms that can last weeks or months after infection with the virus that causes COVID-19 and that can worsen with physical or mental activity. Examples of symptoms of long COVID include but are not limited to: 

·  Difficulty breathing or shortness of breath

·  Tiredness or fatigue

·  Difficulty thinking or concentrating (sometimes referred to as “brain fog”)

·  Cough

·  Chest or stomach pain

·  Headache

·  Fast-beating or pounding heart (also known as heart palpitations)

·  Joint or muscle pain

·  Sleep problems

·  Fever

·  Dizziness on standing (lightheadedness)

·  Mood changes

·  Change in smell or taste 

Long COVID may qualify as a disability under the ADA, the Rehabilitation Act, and the ACA if the symptoms or condition constitute a “physical or mental” impairment that “substantially limits” one or more major life activities. 

Major life activities are a broad category, including things such as caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, writing, communicating, interacting with others, and working. The term also includes the operation of a major bodily function, such as the functions of the immune system, cardiovascular system, neurological system, circulatory system, or the operation of an organ. The impairment does not need to prevent or significantly restrict an individual from performing a major life activity to “substantially limit” the major life activity and the limitations do not need to be severe, permanent, or long-term to qualify as a disability. Indeed, in a joint statement issued July 26, 2021, the DOJ and HHS said “substantially limits” should be interpreted broadly and should not demand extensive analysis, and provided the following examples of situations in which a COVID-19 long-hauler might be substantially limited in a major life activity: 

·         A person with long COVID who has lung damage that causes shortness of breath, fatigue, and related effects is substantially limited in respiratory function, among other major life activities. 

• A person with long COVID who has symptoms of intestinal pain, vomiting, and nausea that have lingered for months is substantially limited in gastrointestinal function, among other major life activities.

• A person with long COVID who experiences memory lapses and “brain fog” is substantially limited in brain function, concentrating, and/or thinking. 

However, long COVID is not always a disability. An individualized assessment is necessary to determine whether a person’s long COVID condition or any of its symptoms substantially limits a major life activity. When long COVID does qualify as a disability, those suffering from long COVID are entitled to protections and certain accommodations under the above laws, which may include leave, part-time work and/or job restructuring. People with severe COVID-19 symptoms that last for months may also be covered by the Family and Medical Leave Act (“FMLA”) in addition to the ADA, while those who recover quickly may not be covered by the ADA but might be protected by the FMLA. 

If you are an employee or employer seeking guidance on whether long COVID qualifies as a disability, and the scope of the laws’ coverage and application, the employment attorneys at Erickson | Sederstrom can assist you.

U.S. Supreme Court Takes Broad View of Qualified Immunity for Police Officers

       The United States Supreme Court recently held that a police officer who shot a woman holding a knife outside her home was entitled to qualified immunity because his actions did not violate clearly established statutory or constitutional rights that a reasonable person would have known. Kisela v. Hughes, 584 U.S. ___, 138 S. Ct. 1148 (2018).

       In May 2010, Andrew Kisela and other officers responded to a 911 call that a woman carrying a knife was acting erratically. Officers spotted Sharon Chadwick in the driveway of a nearby house. Then, Amy Hughes, matching the 911 description of the woman acting erratically, emerged from the house carrying a large knife. Hughes stopped near Chadwick, at which time the officers drew their guns. After officers told Hughes to drop the knife twice, Kisela shot Hughes four times. Less than one minute passed from the time the officers first saw Chadwick to when Kisela shot Hughes.

       Hughes sued Kisela under 42 U.S.C. § 1983, alleging Kisela used excessive force in violation of the Fourth Amendment, which the Court did not decide. Instead, it held Kisela was entitled to qualified immunity, even if a Fourth Amendment violation did occur.

       The Court explained that, “although existing case law does not have to be directly on point…existing precedent must have placed the statutory or constitutional question at issue beyond debate” to deny a police officer qualified immunity. Excessive force, particularly, “is an area of the law in which the result depends very much on the facts of each case, and thus police officers are entitled to qualified immunity unless existing precedent squarely governs the specific facts at issue.” Thus, an officer does not violate a clearly established right unless “the right’s contours were sufficiently definite that any reasonable official in the defendant’s shoes would have understood that he was violating it.”  The Court held the facts in Kisela were “far from an obvious case in which any competent officer would have known that shooting Hughes to protect Chadwick would violate the Fourth Amendment.”

       This decision is in line with other recent Supreme Court decision on excessive use of force by police officers.  Claimants asserting excessive use of force claims against police officers must overcome strong deference in favor of the police officers in order to prevail on their claims.

ERISA: A Plan Sponsor’s liability for an underfunded plan.

The 8th Circuit recently held that a defined benefit pension plan participant’s claim against a Plan Sponsor cannot move forward if an underfunded plan becomes overfunded during the course of litigation.  In Thole v. US Bank, National Association, et el, No. 16-1928 (October 12, 2017),  the 8th Circuit held that a defined benefit pension plan participant who alleges a breach of fiduciary duty and prohibited transaction claims under ERISA is unable to assert their claims if the plan subsequently becomes overfunded, even if the overfunding occurs after litigation has been filed.  

In Thole, the Plaintiffs were retirees of U.S. Bank and participants in the U.S. Bank Pension Plan (“the Plan”).  U.S. Bancorp was the Plan’s sponsor, while U.S. Bank was the Plan’s trustee.  Pursuant to the Plan document, the Compensation Committee and Investment Committee had authority to manage the Plan’s assets. The Compensation Committee was composed of U.S. Bancorp directors and officers.  The Compensation Committee designated a subsidiary of U.S. Bank as the Investment Manager with full discretionary investment authority over the Plan’s assets.

Plaintiffs brought an action against U.S. Bank, N.A., U.S. Bancorp, and multiple U.S. Bancorp directors challenging the defendants’ management of the Plan.  The Plaintiffs alleged that the defendants violated the Employee Retirement Income Security Act of 1974 (ERISA) by breaching their fiduciary obligations and causing the Plan to engage in prohibited transactions.  The Plaintiffs asserted that the ERISA violations caused significant losses to the Plan’s assets in 2008 and resulted in the Plan being underfunded.  Plaintiffs challenged the management of the Plan from September 30, 2007 to December 31, 2010. 

Plaintiffs alleged that the Investment Manager had invested the entire portfolio in equities managed by the Investment Manager.   Plaintiffs further alleged that because defendants put all the Plan’s assets in a single higher-risk asset class, the Plan suffered a loss of $1.1 billion.  The status of the Plan as underfunded at the commencement of litigation was not in dispute.  

Following the commencement of litigation U.S. Bank made voluntary contributions to the Plan in the amount of $311 million dollars.  These additional voluntary contributions resulted in the Plan becoming overfunded, with more money in the plan than was needed to meet its obligations. Defendants moved to dismiss the case asserting that Plaintiffs could no longer prove they had suffered any financial loss. The District Court dismissed the action, concluding that because the Plan was now overfunded, the Plaintiffs lacked a concrete interest in any monetary relief that the court might award to the Plan if the plaintiffs prevailed on the merits. On Appeal the 8th Circuit Court of Appeals affirmed the District Court’s decision.

In addition to the monetary relief sought by Plaintiffs, the Court also determined that the Plaintiffs’ injunctive relief claim against the Investment Manager could not move forward.  While ERISA provides that a plan participant or beneficiary may bring a civil action to enjoin any act that violates any provision of the Act or terms of the plan the Court held that plaintiffs must make a showing of actual or imminent injury to the Plan itself, and because the Plaintiffs could not show injury as the plan was overfunded injunctive relief was not appropriate. 

The Court’s holding allows a Plan sponsor to make additional contributions to a Plan even after litigation has commenced, increasing the burden on a Plaintiff to prove injury in such an action.