Appellate Update

By Joe Murray

Time for our regular case roundup. The 4th Circuit issued several important decisions over the past two months, including clarifying the standard for retaliation claims under the False Claims Act, allowing rumors to support a Title VII claim, and providing two clashing opinions on medical exams of current employees.

United States ex rel. Grant v. United Airlines, Inc., No. 17-2151 (4th Cir. Dec. 26, 2018) (False Claims Act): I’m not an expert on qui tam actions under the False Claims Act, but after reading this opinion several times, I agree with the dissent: this opinion will be used to limit such actions to whistleblowers in “white collar” positions who can actually collect financial and other business records prior to suit.

While reinforcing the significant pleading standards for a qui tam action, the 4th Circuit also clarified the standard for an FCA retaliation claim under the “other efforts to stop 1 or more violations of [the FCA]” prong of 31 U.S.C. § 3730(h). For retaliation claims under this prong, the standard is “objective reasonableness,” not the “distinct possibility” standard. The 4th Circuit went on to outline that “A belief is objectively reasonable when the plaintiff alleges facts sufficient to show that he believed his employer was violating the FCA, that this belief was reasonable, that he took action based on that belief, and that his actions were designed to stop one or more violations of the FCA.”

Billioni v. Bryant, No. 17-1854 (4th Cir. Jan. 2, 2019) (unpublished) (1st Amendment): Despite research that whistleblowers are good for businesses (see, for example, here), many employers terminate them and even seek criminal prosecution. So it should come as no surprise that Billioni, a supervisor at the York County Detention Center, was terminated after he leaked to the media that the sheriff’s official version of a prisoner’s death (self-inflicted wounds) was contradicted by video (officers brutally beating the prisoner). Billioni filed a lawsuit alleging several 1st Amendment claims, of which the district court found only the 1st Amendment retaliatory-discharge claim could proceed to trial. At issue before the 4th Circuit was whether the district court properly applied the McVey to determine if Billioni’s actions were protected.[1]The 4th Circuit found that the district court used an improper standard under the 2nd prong of the McVey test : it used an “actual disruption” standard instead of the correct “reasonable apprehension of disruption” standard. The 4th Circuit remanded the case back to the district court for assessment of Billoini’s claim under the correct standard.

Bordini v. Donald J. Trump For President, Inc., No. COA18-409 (N.C. App. Jan. 2, 2019) (unpublished) (independent contractor, vicarious liability, negligent retention): The director of then-candidate Trump’s campaign in North Carolina put a pistol named “Roscoe” against Bordini’s knee (and apparently the director had pointed Roscoe at others in the past). Bordini filed suit against Donald J. Trump For President, Inc. (“Campaign”) alleging vicarious liability for the director’s actions and liability for negligent retention. The court of appeals found that the evidence showed the director was an independent contractor, working under minimal direction, and so the Campaign could not be held vicariously liable. As for the negligent retention claim, while there was evidence the director had “past erratic behavior with firearms,” there was no evidence the Campaign had actual or constructive notice of this behavior and could not be held liable for negligent retention. The court of appeals upheld summary judgment in favor of the Campaign. Congratulations to section members Philip M. Van Hoy and G. Bryan Adams III on their victory.

Stewart v. Iancu, No. 17-1815 (4th Cir. Jan. 8, 2019) (Title VII and Rehabilitation Act): Do you like the minutia of determining if 180-day deadlines for federal employees under Section 2000e-16(c) are jurisdictional? If so, this opinion is for you. If not, and you want a summary, read Zachary Anstett’s great post summarizing this case.

David v. Winchester Medical Center, No. 18-1141 (4th Cir. Jan. 11, 2019) (unpublished) (Title VII, ADEA, ADA): If an employee rejects a severance agreement, does the employer engage in retaliation by ending settlement negotiations and terminating the employee? No, once the employee rejects the severance agreement, the employer is justified in ending negotiations and proceeding with termination. The 4th Circuit does note a different outcome may occur if an employer took these actions when an employee merely mentions her legal rights

Gray v. NC Dep’t of Pub. Safety, No. COA18-446 (N.C. App. Jan. 15, 2019) (unpublished) (State Human Resources Act): This is not an exemplar of judicial opinion writing—facts are sprinkled randomly throughout the opinion and the discussion can be less than clear. Unless you’re really having a hard time finding an opinion on point for a brief, I don’t recommend reading or citing this opinion. NCDPS terminated Gray, and he appealed his termination through the NCDPS internal grievance process. Concurrently, Gray filed a grievance with NCDPS’s Equal Employment Opportunity Office alleging his termination was the result of a hostile work environment and sex discrimination. After his termination was upheld and his grievance denied, Gray filed for a hearing before an ALJ alleging the workplace harassment led to his termination. After a hearing, the ALJ issued a decision finding that NCDPS had just cause to discipline Gray but not to discharge him and that Gray’s dismissal was the result of his supervisor’s discrimination/harassment. The NCDPS appealed the ALJ’s decision on several grounds that essentially contested the ALJ’s application of facts to the law, the ALJ’s use of discretion, and the findings of facts and conclusions of law. As you’re aware, these are generally not winning arguments, and the court of appeals upheld the ALJ’s decision (although, interestingly, it reversed the ALJ’s decision on the discipline assessed on Gray, which neither party had appealed).

Veer Right Mgmt. Grp., Inc. v. Czarnowski Display Serv. Inc., No. COA18-420 (N.C. App. Jan. 15, 2019) (unpublished) (breach of fiduciary duty): I wrote a post about this case back when it came out.

McClure v. Ports, No. 18-1065 (4th Cir. Jan. 29, 2019) (1st Amendment/Union): This case deals with 1st Amendment rights of unions and union officials when the employer is a governmental entity. Since North Carolina bans public sector unions, this opinion has minimal, if any, relevance in North Carolina. In case you’re still interested, to succeed on a 1st Amendment retaliation claim, the union/representative must show (1) protected speech, (2) adverse action, and (3) causal relationship. There is no adverse action “when legitimate countervailing government interests are sufficiently strong to override the private interest in the challenged action.” (internal quotation mark deleted.)

EEOC v. McLeod Health, Inc., No. 17-2335 (4th Cir. Jan. 31, 2019) (ADA): Andrew J. Henson just posted an excellent summary of this case while contrasting its outcome with the Hannah P. v. Coats case discussed below.

Parker v. Reema Consulting Services, Inc, No. 18-1206 (4th Cir. Feb. 8, 2019) (Title VII): Parker was a great employee; in the almost 18 months she worked at Reema she was promoted 6 times. A male employee who started at the same time as Parker, but who had not been promoted, started a rumor that Parker had slept her way to the top. Rather than quash the rumor and discipline the male employee, the highest-ranking manager also spread the rumor. He then excluded Parker from a meeting, slammed a door in her face, told her that because of the rumor she would not advance further at Reema, and screamed at Parker. Parker filed a sexual harassment complaint with Reema’s HR, with apparently no relief. The male employee who started the rumor then filed a complaint with HR alleging Parker was creating a hostile work environment—Parker was then instructed to have no contact with the male employee. Ultimately, Reema terminated Parker because of the male employee’s complaint, lack of management ability, and insubordination. Parker filed three claims under Title VII: hostile work environment, retaliatory termination, and discriminatory termination. The district court dismissed Parker’s hostile work environment claim because the rumor was not based on gender, the retaliatory termination claim because she did not have an objectively reasonable belief that the rumor was gender based, and the discriminatory termination claim because she failed to exhaust the administrative process.

The 4th Circuit reversed the district court on the hostile work environment and the retaliatory discharge claims. Based on the allegations of the complaint, the court had no problem finding the rumor was based on gender. Repeatedly, Parker—the woman—experienced negative consequences because of the rumor while male employees, such as the person she allegedly slept with and the originator of the rumor, did not. Since Parker alleged a proper hostile work environment claim and she reported the harassment to her employer, the court found she had properly alleged the retaliatory discharge claim.

The 4th Circuit upheld the dismissal of the discriminatory termination claim since Parker’s complaint was broader than the allegations in her EEOC charge. Specifically, in her EEOC charge Parker alleged sex-based termination due to the rumor and harassment. In her complaint, Parker alleged that her termination violated Reema’s three-strikes policy and such policy had been unevenly applied to women and men. Judge Diaz dissented from this portion of the opinion, stating that Parker’s complaint “alleges the same type of discrimination as her charge but adds greater detail: the charge alleges a firing based on the rumor and its aftermath, and the complaint says it also involved a disparately enforced three-strikes policy. Both involve the same parties, the same event, and the same type of discrimination.”

US Dept of Labor v. Fire & Safety Investigation, No. 18-1632 (4th Cir. Feb. 8, 2019) (FLSA): The DOL won summary judgment in this case and obtained $817,902.11 in back wages and $817,902.11 in liquidated damages for the aggrieved employees. Now, you ask, what did Fire & Safety do wrong? It got too creative with its payment scheme. Fire & Safety employees worked a “hitch” schedule: They worked 12 hours per day for 14 days then had 14 days off. Instead of paying the employees by the hour, Fire & Safety paid a fixed sum that supposedly paid employees their full regular rate and overtime rate.

The problem was that if the employee worked less than 168 hours, then the fixed sum was reduced by a “blended rate”—and not the actual hourly rate—for every hour below 168 the employee worked. The blended rate was determined by dividing the fixed sum by 168. For example, if an employee’s hourly rate was $10 then his hitch rate was $2,120 ($800 for the 80 regular hours plus $1,320 for the 88 overtime hours) and his blended rate would be $12.62 per hour ($2,120 divided by 168).

Both courts found that the blended rate was the actual regular rate and all payments should have been calculated based on the blended rate. The 4th Circuit stated that a blended pay scheme that does not differentiate between regular and overtime hours is an “impermissible replacement[] for traditional overtime pay rates under the FLSA.” Fire & Safety argued that the FLSA’s fixed sum payments for overtime work provisions (29 C.F.R. § 778.309) allowed for the hitch payment scheme. The 4th Circuit easily countered this argument by pointing out that this provision only applied when the employee works a fixed number of hours and that two other circuits had already rejected similar payment schemes following enactment of 29 C.F.R. § 778.309.

Hannah P. v. Coats, No. 17-1943 (4th Cir. Feb. 19, 2019) (Rehabilitation Act, FMLA): Hannah P. was such an excellent intelligence officer that she worked on the Edward Snowden case. As Snowden’s case came to an end, Hannah’s depression worsened, which caused timeliness and attendance issues that affected her performance and that of her team. Ultimately, because of these issues, the Office of the Director of National Intelligence (ODNI) did not hire Hannah into a permanent position when her contract ran out. Andrew Henson’s post I noted earlier highlights some of the analysis of the Rehabilitation Act claims. Hannah also made claims of FMLA interference and retaliation. The 4th Circuit reversed the district court’s summary judgment order on Hannah’s FMLA interference claim. The 4th Circuit found that Hannah’s disclosure of her depression and her psychiatrist’s recommendation of leave was sufficient to trigger ODNI’s obligation to determine if Hannah sought FMLA leave. Further, because ODNI failed to provide information to Hannah on her FMLA options, Hannah could show that she suffered damages of at least $20,000. The court upheld summary judgment on the FMLA retaliation claim for the same reason it upheld summary judgment on the Rehabilitation Act claims: Hannah could not rebut ODNI’s legitimate, nonretaliatory reason for not hiring her for another position.

Brodkin v. Novant Health, Inc., COA18-805 (N.C. App. Feb 19, 2019) (breach of contract, wrongful discharge): After fellow oncologists at Novant raised concerns with Dr. Brodkin’s use of the treatment “induction chemotherapy,” Novant required Dr. Brodkin to limit some of his treatment practices or be fired. Dr. Brodkin refused to limit his treatment practices and filed suit after Novant terminated him, alleging, among other claims, breach of contract and wrongful discharge. The trial court granted summary judgment on all claims, which the court of appeals upheld. Regarding the breach of contract claim, Dr. Brodkin argued that Novant breached the contract because Novant violated a provision that left the treatment and care of patients in his sole discretion. The court of appeals first noted that the employment contract also had a 90-day termination without cause provision. The court then rejected Dr. Brodkin’s argument because Novant had not actually interfered with Dr. Brodkin’s professional judgment, it had simply sought to monitor his future treatment. Since Novant had the power to terminate the contract without cause, it could seek to renegotiate the terms of the agreement: “So long as the party requesting the change has not yet materially breached the contract (as is the case here), requesting an amendment or waiver of an otherwise binding contract term is not a breach.” As for the wrongful discharge claim, the court found that a hospital can terminate “an employee whose medical decisions are, in the hospital’s view, harmful to its patients.” Essentially, even if the physician has the statutory right to use independent judgment in medical treatment, a hospital does not have to continue to employ a physician whose professional judgment it believes is wrong.

Rangarajan v. Johns Hopkins University, No. 17-1834 (4th Cir. Feb. 22, 2019) (litigation): I’m not sure how plaintiff’s counsel didn’t get sanctioned in this case, but he did get the 4th Circuit to state he had “a totally dysfunctional performance.” Pretty sure that’s not making it into the marketing materials. Rangarajan filed 4 separate actions against Johns Hopkins after she was allegedly constructively discharged as a nurse practitioner. In opposition to summary judgment in those cases, Rangarajan (1) submitted a 51-page errata sheet, “which baselessly accused the court reporter of altering hundreds of lines of key testimony”; (2) submitted a 54-page declaration “that sought to fill critical holes in her story” with a more favorable narrative of events; and (3) attached “at least 19 documents to her opposition that had not been produced during discovery.” Several of the 19 new documents revealed that Rangarajan had concealed thousands of e-mails responsive to discovery requests. Based on these and other transgressions, the district court dismissed three[2]of Rangarajan’s lawsuits as discovery sanctions. On appeal, Rangarajan argued her cases should not have been dismissed since the court did not warn her of the potential for dismissal as a sanction and should have imposed a lesser sanction. The 4th Circuit first noted that the district court had placed Rangarajan on notice that dismissal was being considered. But the 4th Circuit went on to state that a warning was not always necessary—while fairness dictates providing notice, it is not mandated by the rules or law. As for the argument that a lesser sanction should have been imposed, the 4th Circuit found that Rangarajan’s actions warranted the dismissal and that no other sanction would have prevented her from engaging in such conduct in the future.


[1]Technically, the case was before the 4th Circuit on the sheriff’s qualified immunity argument, but the 4th Circuit stated it could not assess the qualified immunity argument until the district court properly assessed the 1st Amendment claim.

[2]A fourth was dismissed for failure to prosecute.