Recent Court Opinions From NC COA and 4th Circuit

By Joseph S. Murray IV

Not a lot of fun cases over the past couple of months. Most of the cases presented here are about the North Carolina Human Resources Act (HRA) and turn on the minutia of the statutes and regulations. Here are the latest labor and employment cases:

Hunt v. N.C. Dep’t of Pub. Safety, No. COA17-1244 (N.C. Ct. App. June 19, 2018): This case is a reminder that state agencies can run afoul of the details of the HRA and the Administrative Procedures Act too. The genesis of this state employee grievance was whether, in the heat of an argument, Hunt said he quit to another employee, who was not his supervisor. The agency took the position that Hunt did quit, it did not have to consider any grievances on his resignation, and even if it did have to consider his grievance, his grievance was untimely.

The HRA requires an employee to provide his resignation to the “appointing authority.” In this case, that would be “the person or persons who have the power to make personnel decisions.” Since Hunt never told that person he resigned (there was contradictory evidence on whether he even said he quit), the agency’s refusal to allow Hunt to return to work was in effect a discharge. Since the agency discharged Hunt, it had to follow the HRA’s requirement to send Hunt a statement of rights of appeal and consider any appropriate grievance. Since the agency never sent the statement, Hunt’s deadline to appeal the decision was never triggered and his grievance was not barred for not being timely. The court upheld the ALJ’s ruling reinstating Hunt.

Vincoli v. N.C. Dep’t of Public Safety, No. COA17-618 (N.C. Ct. App. July 17, 2018): As the court notes, the procedural background of this case is “extraordinarily complex,” spanning multiple petitions to the Office of Administrative Hearing, contested case hearings, orders, declaratory judgments, civil complaints, and prior appellate appeals. The facts are rather simple: Vincoli opposed his termination, and the denial of his right to grieve his termination, under the 2013 revisions to the HRA. The primary takeaway from this case is if a higher court enters a declaratory judgment in the employee’s favor, the employee needs to go back and appeal the prior ALJ order, not file a new petition for a contested case hearing. The court’s position was that while the prior ALJ ruling was legally incorrect according to the declaratory judgment action, the ruling stands until it is properly appealed. (I told you, lots of technical, dry cases this time.)

Johnson v. E. Carolina Univ., No. COA17-1159 (N.C. Ct. App. July 17, 2018) (unpublished): The HRA provides state employees priority consideration for promotions over non-state employees when the state employee has substantially equal qualifications. The court refused to determine if a probationary state employee is a state employee for purposes of the HRA and instead upheld the finding that Johnson did not have substantially equal qualifications compared with the selected candidate.

Savage v. State of Maryland, No. 17-1636 (4th Cir. July 13, 2018): Savage, a former police officer, met with a state attorney to prepare for a criminal trial. During the meeting, the attorney read aloud letters written by the defendants that contained repeated use of a racial slur. After the officer complained and filed an EEOC charge about the attorney’s reading of the racial slurs, the attorney took several actions that Savage alleged led to his termination. The district court denied Maryland’s motion to dismiss Savage’s Title VII retaliation claim (based on a third-party interference theory since Maryland was not Savage’s employer). The 4th Circuit reversed, finding that when exposure to reports containing repeated racial slurs is part of the “ordinary terms and conditions” of the plaintiff’s job, then those slurs do not rise to the level of a hostile environment. Further, under these specific circumstances, the employee cannot reasonably believe that a Title VII violation has occurred and therefore the employee cannot support a retaliation claim.

Hunter v. Town of Mocksville, No. 17-1374 (4th Cir. July 26, 2018): Sometimes justice moves very slowly. This case began in 2011 when three police officers contacted the Governor’s Office to report alleged misconduct in the Mocksville Police Department and the police chief subsequently fired all three officers. Seven years, two summary judgment orders, two appeals, and one jury trial later, this case is still not over. In this appeal, the 4th Circuit addressed the limits of the Town’s insurance coverage and the district court’s prior summary judgment ruling on the plaintiffs’ 1st Amendment claim against the Town.

In May 2016, a jury returned a verdict in favor of the officers and awarded them over $4 million in damages. The judge concluded that the Town had governmental immunity from the tort claims beyond the level of insurance the Town had purchased, which the judge determined to be $1 million total. Ultimately, the judge entered a judgment holding the defendants [1] jointly and severally liable for $2 million but setting the maximum liability for the Town at $1 million. The 4th Circuit reversed the district court’s finding that the Town only has $1 million in insurance coverage. Unlike the district court, the 4th Circuit found that the insurance policy and its use of “interrelated” was ambiguous and that such ambiguity required the court to resolve the ambiguity in favor of the plaintiffs. Ultimately, the 4th Circuit determined that the insurance policy provided up to $1 million in coverage per plaintiff ($3 million total).

The 4th Circuit also addressed the district court’s 2013 order awarding the Town summary judgment on the plaintiffs’ 1st Amendment claims. The district court determined in its ruling that the individual defendants didn’t have “final policymaking authority” for the Town. The 4th Circuit reversed the district court’s ruling when it found that one of the individual defendants—the Town manager—“acted with final policymaking authority,” which allowed her actions to be imputed to the Town. Under the Town’s ordinances, the Town manager had unconstrained authority to set personnel policy for the Town. The 4th Circuit remanded the case with instructions to enter judgment in favor of the Plaintiffs on the 1st Amendment claims.

Griffin v. Hartford Life & Accident Ins., No. 17-1251 (4th Cir. July 31, 2018): It’s our quarterly ERISA case. If the long-term disability documents provide Hartford Life “full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of The Policy,” but the Hartford Life employees who made the decision to terminate benefits were paid by the Hartford Fire Insurance Company, then which standard of review should the court apply: abuse of discretion or de novo? Despite Griffin’s argument, the 4th Circuit joins other courts in finding that when the employees are held out (and actually are) employees of the appropriate insurance company, who pays the employees does not affect the determination of the standard of review. Since the employees worked for and held themselves out as employees of Hartford Life, the court had to apply the abuse of discretion standard and Griffin’s claims failed.

Shoemaker v. Alcon Laboratories, Inc., No. 17-1738 (4th Cir. Aug. 6, 2018) (unpublished): While employees are not required to invoke the magic words “FMLA,” they must at least request leave. The court easily upheld summary judgment on Shoemaker’s FMLA interference and retaliation claims.

Hardy v. N.C. Cent. Univ., No. COA17-664 (N.C. Ct. App. Aug. 7, 2018) (unpublished): The bane of employer-side counsel (or maybe just me) is the performance review that shows the employee’s performance is good to very good, but the managers state, and then testify, that the employee was in fact not performing up to standards. NCCU pays the price when it appears the ALJ discounts the testimony of NCCU’s witnesses that contradicts Hardy’s performance reviews. Without this testimony, NCCU can prove at most that Hardy may have “engaged in poor job performance in managing and supervising her employees,” which is not sufficient to justify her demotion. Overall, this case is a classic example of an employer failing to manage an employee, properly document events and reviews, and follow the exacting rules of the HRA.

Jones v. Wells Fargo Co., No. COA18-96 (N.C. Ct. App. Aug. 7, 2018) (unpublished): The court reiterates that claims of negligent infliction of emotional distress against an employer and coworkers are barred by the exclusivity provisions of the Workers’ Compensation Act, unless the employee can show intentional misconduct that is substantially certain to lead to injury. Note for appellate practitioners, Judge Dietz wrote a concurring opinion to specifically state he wants counsels to clean up quotations by removing unnecessary quotation marks, ellipses, brackets, or citations to improve readability.

Henderson v. Bluefield Hospital Co., No. 16-2332 (4th Cir. Aug. 28, 2018): And finally, our quarterly NLRA case. The National Labor Relations Board sought preliminary injunctive relief under §10(j) of the NRLA to preserve its ability to award relief after it adjudicated unfair labor charges against two hospitals. The 4th Circuit upheld the district court’s denial of the injunction since the Board could not prove irreparable harm in the absence of obtaining the preliminary injunction. The 4th Circuit reiterated that the four-part test issued in Winter v. National Resources Defense Council, Inc., 555 U.S. 7 (2008), required the Board to meet each of the factors—if a single factor is completely absent, the Board’s request for injunctive relief will fail. Further, the 4th Circuit went on to state that the Board’s assumption that irreparable harm is “inherent in bad-faith bargaining cases” is not sufficient to prove its case; the Board must bring evidence of irreparable harm, which it failed to do in this case.

[1] There are two individual defendants whom the jury also held liable for the wrongful terminations.