Sixth Circuit Rules on $200,000 Back Pay Issue

On Wednesday, the Sixth Circuit issued its decision in Szeinbach v. The Ohio State University. The case centered on Szeinbach’s claim that she was discriminated against while she was employed as a professor with the Ohio State University College of Pharmacy. Szeinbach alleged that she was the victim of discrimination and retaliation stemming from her support of a fellow colleague’s discrimination claim.

Szeinbach brought suit under Title VII of the Civil Rights Act of 1964. After a three-week trial, the jury awarded Szeinbach damages in the amount of $513,368. The award was comprised of $300,000 for compensatory damages, the statutory maximum under 42 U.S.C. § 1981a(b)(3), and $213,368 for back pay, the amount calculated by Szeinbach’s expert. The expert’s calculation of back pay was based on the amount of money that a comparable employee would have made at other schools across the country. Ohio State moved for, and was granted, a remittitur, reducing the damages award by $213,368 – the value of the back pay. The District Court explained the decision by applying the holding from Kaiser v. Buckeye Youth Center, a case from the Southern District of Ohio which held that an award of back pay could not be based on an amount that an employer other than the discriminating defendant itself would have paid.

On appeal to the Sixth Circuit, the decision to grant Ohio State’s motion for a remittitur was affirmed, with the Court explaining that Szeinbach had failed to establish, with reasonable certainty, that she was entitled to back pay. But the Sixth Circuit rejected the district court’s application of Kaiser, opting to adopt the Fifth Circuit’s interpretation of the proper method for calculating back pay as articulated in Nassar v. Univ. of Texas Sw. Med. Ctr.

The ramification of the Sixth Circuit’s decision in Szeinbach v. The Ohio State University could be significant. After the Sixth Circuit’s holding on Wednesday, plaintiffs alleging discrimination under 42 U.S.C. § 2000e–5(g) of Title VII and seeking back pay, may, in certain circumstances, look to the salaries of other employers to determine the appropriate level of back pay rather than being limited to the salary offered at the discriminating employer. We will keep a close eye on district court activity to see how the ramifications from this case unfold.

Bank’s Public Disclosure of Customer Data Didn’t Violate Right to Financial Privacy Act

The Right to Financial Privacy Act prohibits banks from “provid[ing] to any Government authority access to . . . or the information contained in” customer financial records, except under certain specified conditions, and grants a private right of action to customers to enforce the prohibition.  Last week, in Brackfield  & Assocs. P’ship, et al. v. Branch Banking & Tr. Co., the Sixth Circuit rejected a customer’s attempt to sue its bank under the RFPA where the bank had accidentally made the customer’s records public.

The plaintiff argued that the bank’s accidental inclusion of its records in a public filing made them available to the government (among others) and thereby violated the RFPA.  In an unpublished—and therefore technically non-binding—opinion, the Sixth Circuit rejected this “imaginative statutory argument,” holding that general public disclosure did not constitute “provid[ing]” records to the government and that, in the context of the entire statute, the phrase “access to” was limited to situations where government authorities were actually attempting to obtain customer records. Therefore, the court concluded that plaintiff was not injured-in-fact under the statute and affirmed dismissal.

Notwithstanding the Sixth Circuit’s narrow interpretation of the RFPA in this case, institutions should continue to guard carefully against accidental leaks of customer information to avoid RFPA and other potential liability.

Sixth Circuit Tackles Two Questions of First Impression Under CAFA

On Wednesday, the Sixth Circuit decided two issues of first impression, both of which related to the Class Action Fairness Act (“CAFA”). Graiser v. Visionworks of America, Inc., the plaintiff alleged that the company’s “buy one get one free” advertisement was misleading. The plaintiff waited until six months after its complaint to tell the defendant they were seeking to create a class of all individuals affected by the advertisement.  Within thirty days of that notice, Visionworks calculated potential damages to be over the $5 million threshold requirement for removal under CAFA. Visionworks then removed the case and the plaintiff argued that the 30 day window for removal had expired long before.

The Sixth Circuit identifies two questions of first impression from these facts:  (1) what documents trigger § 1446(b)(3)’s thirty-day clock for removal under CAFA? and (2) whether there are multiple thirty-day removal clocks if there is justification for removal under CAFA? With respect to the first question, the Sixth Circuit took the position adopted by the First, Second, Seventh, and Ninth Circuits that “the thirty-day clock of § 1446(b) begin[s] to run only when the defendant receives a document from the plaintiff from which the defendant can unambiguously ascertain CAFA jurisdiction.” The court noted that this rule leaves open the chance that a defendant could ignore information in their possession that supports removability until it is determined that removal is the favorable option. To avoid this, the court points out that a Plaintiff would need only provide a defendant with a document indicating removability, and the clock would start. The court therefore found that the removal was timely based on the timing of the plaintiffs’ notice, regardless of when the defendant might have learned that removal was possible.

For the second question, the Sixth Circuit adopted the Ninth Circuit reasoning that “a defendant may remove a case from state court within thirty days of ascertaining that the action is removable under CAFA, even if an earlier pleading … revealed an alternative basis for federal jurisdiction.”

With this opinion, the Sixth Circuit joins other circuits to emphasize that CAFA was meant to encourage removal to federal court and to frustrate efforts by plaintiffs to avoid removal under CAFA by filing ambiguous or vague complaints hiding the full scope of their claims.

Supreme Court Affirmation Leaves More Questions than Answers

Two weeks ago, the jurisprudential ramifications of Justice Scalia’s passing were felt. The incomplete Court decided Hawkins v. Community Bank of Raymore, a case from the Eighth Circuit questioning whether a guarantor is an “applicant” as defined in the Equal Credit Opportunity Act. The Eighth Circuit decision in Hawkins, which held that a guarantor is unambiguously not an applicant, is in direct conflict with the Sixth Circuit’s decision in a factually similar case: RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC. However, the Supreme Court, equally divided, affirmed the decision of the Eighth Circuit, a decision that fails to answer the underlying questions regarding the ECOA.

At the core of the Hawkins and Bridgemill cases are a challenge to the ECOA provision that gave standing to “applicants” in the credit process to seek remedy for inappropriate marital status discrimination.  In each case, the plaintiffs were the spouse of individuals who were seeking to get financing from a bank. In each case, the spouse was required guarantee the commercial loan simply because of their status as a spouse, a practice that, the plaintiff argued, constitutes improper marital status discrimination. However, the financial institutions argued that only applicants have standing under the ECOA and that the language of the statute was unambiguous: guarantors are not applicants. The banks’ argument directly challenged prior regulation by the Federal Reserve Board, which found the statute ambiguous regarding the issue drafted regulation that included guarantors as applicants. Central to each case are the questions whether the guarantor is an applicant under the ECOA and whether the Federal Reserve Board had the authority to interpret the statute as saying that guarantors are applicants.

The Eighth Circuit, whose opinion held that the guarantors are not applicants and that, because the ECOA language is unambiguous, the Federal Reserve Board did not have the authority to regulate the issue. Conversely, the Sixth Circuit found that the statutory language was ambiguous and that the Federal Reserve Board was making an appropriate interpretation of the statutory language by deciding that guarantors are applicants. The Sixth Circuit opinion has not been appealed to the Supreme Court.

Because of the nature of the affirmation, the Hawkins affirmation does not carry any precedential value. Additionally, this issue is likely to arise again and the four-four split indicates that any new appointment to the Supreme Court will be the deciding voice of the court. Given the implication of Sixth Circuit jurisprudence, the issue carries significant weight and we will continue to monitor the Supreme Court’s actions.

The Connection between Caseload and Per Curiam Circuit Court Opinions

Nearly two years ago, we commented on the increasing frequency with which federal courts of appeals issue per curiam, and often short and unsigned, opinions. Specifically, we noted that the use of such opinions had increased significantly 2013, year over year. This increase was consistent with the general modern trend toward per curiam opinion.   This post investigates whether that trend has continued.

After a few years of increases, there was a sharp decrease in the number of per curiam opinions in 2015.


In our last post, we wondered whether increasingly common use of per curiam opinions was largely a result of a rising appellate caseload.  We are not surprised, therefore, to find that this sharp decrease in per curiam opinions corresponds to a decrease in the total number of case terminations. However, we were more interested in the relationship between the year-over-year change between total cases terminated and the number of per curiam opinions. Our research indicated that from 2014 to 2015 the total number of opinions fell by 5.8%. However, over the same time, the number of per curiam opinions issued by the circuit courts fell by over 12%. Additionally, the total number of per curiam opinions, as a percentage of terminated cases, decreased from nearly 4% to just over 3%. While this research is far from scientific and the sample size is likely too small to draw any predictive conclusions, our results seems to support for the idea that more terminations means that the judges will engage in a disproportionately higher number of per curiam opinions. Conversely, as we recognized in this research, fewer terminated opinions leave more time for judges to author signed opinions which disproportionately decreases the need for and occurrence of per curiam opinions.

Our research of per curiam opinions also included circuit specific data and revealed significant variation between the frequencies with which the various circuit courts author per curiam opinions. The Fourth Circuit (5%), Fifth Circuit (5%), and Eleventh Circuit (7%) produced the highest percentage of per curiam opinions as a percentage of total cases terminated while the Second Circuit (.15%) had just a handful.  The Sixth Circuit, which uses per curiam opinions in only 3% of its decisions, falls squarely in the middle.


Sixth Circuit Denies IRS Mandamus Petition

On Tuesday, in the most recent clash between the IRS and the tea-party groups that were allegedly targeted for enhanced scrutiny by the IRS, the Sixth Circuit denied the IRS’s writ of mandamus. In In re United States of America, the Sixth Circuit ordered that the IRS comply with the district court’s discovery orders in the case.

Prior to Tuesday’s decision, the case has largely been argued in the context of discovery conferences. The tea-party groups relevant to this case are groups who, because of the use of some words or groups of words on their 501(c) application that were related to their political beliefs, had their 501(c) applications placed on the “Be On the Lookout” listing.  The plaintiffs in the case sought, among other things, to certify a class of organizations allegedly targeted by the IRS because of their political beliefs. To that end, the plaintiffs sought discovery in the form of basic information relevant to class certification, including the names of class members as shown on the IRS’s internal lists so that the plaintiffs could identify fellow members. The district court, over the objection of the IRS, ordered production of the documents requested. The IRS then filed a petition for a writ of mandamus.

The IRS’s defense for refusing to release the information rested on the general rule that “returns and return information shall be confidential” under 26 U.S.C. § 6103(a). The district court had originally held that this rule did not apply because of an exception that allows disclosure of a return that is directly related to the resolution of an issue in the proceeding. The Sixth Circuit disagreed, saying that the exception only applies to “returns,” and the information requested by the plaintiffs was “return information.” However, the Sixth Circuit did agree with the district court’s ultimate conclusion that the information must be disclosed. With respect to applicants whose applications have already been granted, the Sixth Circuit noted, the information is subject to public inspection under the IRS’s procedures. The names of applicants for application that are pending, have been withdrawn, or have been denied, the Sixth Circuit ordered disclosure because the applicants identity is not included in the statutory definition of “return information;” therefore, the information is not confidential under the statute cited by the IRS.

The decision of the Sixth Circuit was based principally on statutory construction of the statutes that govern confidentiality with respect to documents filed with the IRS. While this was a discovery battle, it sets the stage for more significant proceedings in the district court.

The Sixth Circuit Finds That Section One Of The Sherman Act Applies To An Integrated Hospital System

In The Medical Center at Elizabeth Place, LLC v. Atrium Health System, the Sixth Circuit reversed a well-known district court decision that a joint venture between separately owned hospitals was incapable of conspiring under Section One of the Sherman Act.  The Court found that a group of hospitals acting under a Joint Operating Agreement (JOA) as an integrated health network, but maintaining their individual missions and management, were separate entities for purposes of antitrust liability.  In a decision written by Judge Merritt, and joined by Judge Daughtrey, the court held that the hospitals should be considered separate (and therefore capable of colluding) because they “continue to function more or less as independent and competing hospitals” even after entering into the JOA, and because the decision-makers at each hospitals consider themselves to be “competing with each other” and the hospitals retain their assets separately.  The court also relied on evidence that the hospital group had prevented insurance companies from contracting with the plaintiff, and had punished doctors for dealing with the plaintiff.

In a strong dissent, Judge Griffin argued that because the JOA provided for revenue-sharing among the member hospitals, they could not compete with each other as a matter of contract interpretation.  He also argued that the hospitals anti-competitive intentions toward the plaintiff was irrelevant because the important issues “is whether defendants remain in competition with each other, not whether they intend to ward of competition with a third party.”

This decision significantly heightens the potential for antitrust liability for anti-competitive conduct in “virtual mergers” where hospitals enjoy the benefits of a merger without consolidating management or changing asset ownership.

A “Single, Company-wide Time-shaving Policy” Can Consist Of “Multiple Methods” In FLSA Collective Action

Last week, in Monroe v. FTS, USA, a divided panel of the Sixth Circuit affirmed the certification of a class of workers as sufficiently “similarly situated” under the Fair Labor Standards Act, holding that they were subject to “a single, company-wide time-shaving policy,” even though time was shaved via three separate methods. Some managers simply altered class members’ timesheets to reduce hours, some explicitly ordered class members to under-report their hours, and some pressured employees to under-report by “threat of reprimand, loss of work assignments, or termination.”

The decision cemented a split between the Sixth and Seventh circuits on what it means to be “similarly situated” under the FLSA.  Under Rule 23, class members are not similarly situated when “individualized questions predominate[],” and the Seventh Circuit applies this same standard to FLSA collective actions. However,  the Sixth Circuit has held that “Congress could have but did not import the Rule 23 predominance requirement into the FLSA.”  Although the majority also distinguished the recent Seventh Circuit case, Espenscheid v. DirectSat USA, on factual and procedural grounds, it specified that the “controlling distinction” was the difference in standards.

Dissenting from the affirmation of class certification, Judge Sutton argued that the different methods used to shave time were different theories of liability requiring different proof, and that, even under the Sixth Circuit’s statutory interpretation, two or three subclasses should have been certified instead of a single class.

Unlike Espenscheid, which challenged a pretrial certification, the appeal in Monroe came after a full trial and verdict. That, as well as the Sixth Circuit’s acknowledgment of a circuit split, make Monroe a viable contender for SCOTUS review. It will be interesting to see whether defendants pursue that option.

Sixth Circuit Tackles Administrative Exemption under the FLSA

The FLSA provides that administrative employees are exempt from overtime pay. The FLSA described an administrative employee as one who 1) is paid a salary of at least $455 per week; 2) primarily performs work related to management; and 3) performs duties which primarily require the exercise of discretion and independent judgement. In Lutz v. Huntington Bancshares, Inc., et al., the plaintiffs filed a class action asserting that their position as residential-loan underwriters while employed by Huntington Bank was not an administrative position; therefore, the plaintiffs were entitled to overtime pay from Huntington Bank.

The district court granted Huntington Bank’s motion for summary judgment, agreeing that the residential-loan underwriters performed duties related to the general business operations of the Bank, and they exercised discretion and independent judgment when performing those duties. The Sixth Circuit, which cited two early, precedential decisions on the topic Renfro v. Ind. Mich. Power Co., 370 F.3d 512 (6th Cir. 2004) and Foster v. Nationwide Mut. Ins. Co., 710 F.3d 640, 642 (6th Cir. 2013)), upheld the district court’s ruling in a divided 2-1 decision.

Most notably, the Sixth Circuit reiterated that, when determining whether an employee primarily preforms work related to management, Sixth Circuit precedent dictates that the appropriate inquiry is whether the employee helps to run or service a business; if the answer is yes, the employee is administrative. This approach differs from the approach adopted by the Second Circuit where, if an employee’s duties merely touch upon a production activity (as the Second Circuit has said that residential-loan underwriters’ duties do), then the employee is not exempt from receiving overtime pay. Wednesday’s decision demonstrates the Sixth Circuit’s commitment to its interpretation of the overtime pay exemption provision of the FLSA, but the split here could attract attention by the Supreme Court. .

In dissent, Judge White argued that the defendants had failed to demonstrate that the residential-loan underwriters exercise discretion and independent judgement with respect to matters of significance as a part of their duties. Judge White notes that the administrative exemption is “to be narrowly construed against the employer seeking to assert it.” As such, the “explicit and detailed manual and guidelines” which directed nearly all of the actions of the residential-loan underwriters created a genuine issue of material fact with respect to the third element of the administrative exemption.

Sixth Circuit Strikes Down Ohio Political False-Statements Laws

Last week, in Susan B. Anthony List v. Driehaus, the Sixth Circuit applied United States v. Alvarez to strike down Ohio’s political false-statements laws. The provisions in question prohibited knowingly or recklessly making false statements with the intent of affecting the outcome of an election.  The statute specifically identified certain types of false statements as prohibited—for example, statements regarding a candidate’s criminal record or voting record—but also broadly prohibited any “false statement concerning a candidate . . . [and] designed to promote the election, nomination, or defeat of the candidate.”

In addition to describing three ways in which the laws were overinclusive substantively, the Sixth Circuit also found that they did not offer adequate procedural safeguards: no guarantee that complaints would reach final resolution before an election and no procedure to weed out frivolous complaints.  It will be interesting to see whether Ohio’s General Assembly revises its laws in accordance with the Sixth Circuit’s interpretation of Alvarez. In any event, brace yourself for the inevitable onslaught of election-based claims that often arise at the Sixth Circuit in an election year!