Ricco v. Potter

• Court: Court of Appeals for the Sixth Circuit
• Decided: July 27, 2004
• Docket: 03-3294
• Status: Published

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Ricco v. Potter, et al. No. 03-3294 ELECTRONIC CITATION: 2004 FED App. 0242P (6th Cir.) File Name: 04a0242p.06 _________________ COUNSEL UNITED STATES COURT OF APPEALS ARGUED: Jonathan T. Hyman, REMINGER & FOR THE SIXTH CIRCUIT REMINGER CO., Cleveland, Ohio, for Appellant. Annette _________________ G. Butler, ASSISTANT UNITED STATES ATTORNEY, Cleveland, Ohio, for Appellees. ON BRIEF: Jonathan T. DOREEN RICCO, X Hyman, Richard C. Haber, REMINGER & REMINGER CO., Plaintiff-Appellant, - Cleveland, Ohio, for Appellant. Annette G. Butler, - ASSISTANT UNITED STATES ATTORNEY, Cleveland, - No. 03-3294 Ohio, for Appellees. v. - > MOORE, J., delivered the opinion of the court, in which , DUGGAN, D. J., joined. MERRITT, J. (pp. 14-15), delivered JOHN E. POTTER , Postmaster - General, et al., a separate concurring opinion. - Defendants-Appellees. - _________________ - N OPINION Appeal from the United States District Court _________________ for the Northern District of Ohio at Cleveland. No. 02-00496—Donald C. Nugent, District Judge. KAREN NELSON MOORE, Circuit Judge. This appeal from the dismissal of a claim under the Family and Medical Argued: April 23, 2004 Leave Act of 1993 (“FMLA”) raises an important issue of statutory construction. Specifically, this appeal requires us to Decided and Filed: July 27, 2004 interpret the phrase “hours of service” as it is used in the FMLA. We hold that make-whole relief awarded to an Before: MERRITT and MOORE, Circuit Judges; unlawfully terminated employee may include credit towards DUGGAN, District Judge.* the hours-of-service requirement contained in the FMLA’s definition of “eligible employee.” Plaintiff-Appellant, Doreen Ricco (“Ricco”), appeals the district court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) of her claim pursuant to the FMLA against her former employer, Defendant-Appellee, John E. Potter, Postmaster General (“Postmaster”). On appeal, Ricco argues that the district court erred by adopting the reasoning * The Honorable Patrick J. Duggan, United States District Judge for of Plumley v. Southern Container, Inc., 303 F.3d 364, 367 the Eastern District of Michigan, sitting by designation.

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(1st Cir. 2002), in which the First Circuit held that the hours- full credit for years of service for seniority and pension of-service requirement contained in the FMLA’s definition of purposes.” J.A. at 26-27 (Am. Compl. ¶ 10). “eligible employee” includes only hours during which an employee performed actual work, not hours for which an After Ricco returned to work, from May through July 1999, employee was compensated pursuant to an arbitration award. she suffered from depression and migraines after the death of Ricco further argues on appeal that the district court did not her husband, and consequently she required intermittent adequately balance the competing interests of employers and leaves of absence. Due to this serious health condition, Ricco employees and created an incentive for employers unlawfully requested FMLA leave in early May 1999. According to to terminate employees to prevent employees from satisfying Ricco, the Postal Service denied her request for FMLA leave the hours-of-service requirement. because it concluded that she had not met the hours-of-service requirement.2 Ricco alleges that she “had not ‘worked’ 1250 For the following reasons, we REVERSE the district hours in the preceding 12 months solely because she had been court’s judgment granting the Postmaster’s motion to dismiss unlawfully terminated in December 1997 and in violation of under Rule 12(b)(6) and REMAND this case for further the Collective Bargaining Agreement.”3 J.A. at 27 (Am. proceedings consistent with this opinion. Compl. ¶ 15). Ricco further alleges that the Postal Service has previously recognized “that ‘[w]hen an[] employee is I. BACKGROUND awarded back pay, accompanied by equitable remedies (i.e. full back pay with seniority and benefits, or a ‘make whole’ A. Factual Background remedy), the hours the employee would have worked if not for the action which resulted in the back pay period, are In July 1993, the United States Postal Service (“Postal counted as work hours for the 1250 work hour eligibility Service”) hired Ricco to work at its general mail facility in requirement under the Family Medical Leave Act (FMLA).’” Cleveland, Ohio.1 In December 1997, the Postal Service J.A. at 29 (Am. Compl. ¶ 27). issued Ricco “a notice of removal, effectively terminating her employment.” Joint Appendix (“J.A.”) at 26 (Am. Compl. On October 15, 1999, the Postal Service issued Ricco ¶ 7). Ricco timely grieved her December 1997 termination another notice of removal “due to a failure to maintain a and ultimately proceeded to an arbitration hearing on January regular work schedule.” J.A. at 27 (Am. Compl. ¶ 14). Ricco 19, 1999. In a February 8, 1999 award, the arbitrator ordered that Ricco’s termination be converted to a thirty-work-day suspension and that Ricco “be reinstated subject to passing a 2 fitness-for-duty examination and be made whole.” J.A. at 26 To be an “eligible employee” under the Family and Med ical Leave (Am. Compl. ¶¶ 9, 10). Subsequently, Ricco “passed the Act of 1993 (“FMLA”) an employee must have worked for her employer fitness-for[-]duty examination and was returned to work with for at least twelve months and must have completed “at least 1,250 hours of service with such employer during the pervious 12-month period.” 29 U.S.C. § 261 1(2)(A).

3 In her amended complaint, Ricco avers that her December 1997 1 termination was “unlawful.” B ecause this is an appe al from the district Because this is an appeal from the district court’s judgment granting court’s judgment granting the Postmaster’s motion to dismiss under Rule the Postmaster’s motion to dismiss under Rule 12(b)(6), we recite the 12(b)(6), we must assume that the arbitrator did, in fact, determine that facts as they are rec ounted in Ricco’s amended com plaint. Ricco’s Decem ber 1 997 termina tion was unlawful. No. 03-3294 Ricco v. Potter, et al. 5 6 Ricco v. Potter, et al. No. 03-3294

timely grieved her October 1999 termination and proceeded 444, 451 (6th Cir. 2003). “In deciding whether to grant a to another arbitration hearing. In a November 19, 2001 Rule 12(b)(6) motion, we ‘must construe the complaint in the award, the arbitrator affirmed Ricco’s dismissal “on the basis light most favorable to the plaintiff, accept all factual that [Ricco] was absent from work [and further] stated that allegations [of the plaintiff] as true, and determine whether ‘this is not the proper forum to litigate any alleged violations the plaintiff undoubtedly can prove no set of facts in support of the FMLA’ and therefore refused to consider whether the of his claims that would entitle him to relief.’” Id. at 451-52 FMLA had been violated.” J.A. at 28 (Am. Compl. ¶ 19). (quoting Allard v. Weitzman (In re DeLorean Motor Co.), 991 Thereafter, Ricco commenced this action in federal court. F.2d 1236, 1240 (6th Cir. 1993)). Moreover, a Rule 12(b)(6) “motion should not be granted ‘unless it appears beyond B. Procedural Background and Jurisdiction doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.’” Id. at 425 On March 14, 2002, Ricco filed a two-count complaint in (quoting Cameron v. Seitz, 38 F.3d 264, 270 (6th Cir. 1994) the district court alleging that the Postmaster terminated her (quotation omitted)). The Postmaster points out that he in violation of the FMLA and Ohio public policy. On timely raised in his answer as an affirmative defense the September 6, 2002, Ricco filed a motion to dismiss Count II expiration of the FMLA’s two-year statute of limitations, but of her complaint, which asserted a claim based upon Ohio that the district court did not rule upon this issue in its public policy, because that claim had been foreclosed by Ohio opinion. The FMLA provides: Supreme Court precedent. At a status conference on October 2, 2002, the Postmaster raised the potential applicability of (1) In general the Plumley decision, and the parties agreed that Ricco would file an amended complaint supplementing her factual Except as provided in paragraph (2), an action may be allegations and that the Postmaster would then file a motion brought under this section not later than 2 years after the to dismiss. Ricco filed her first amended complaint on date of the last event constituting the alleged violation for October 17, 2002, and thereafter the Postmaster filed his which the action is brought. motion to dismiss on October 21, 2002. The district court granted the Postmaster’s motion to dismiss on February 7, (2) Willful violation 2003. Ricco filed a timely notice of appeal. In the case of such action brought for a willful violation The district court had jurisdiction pursuant to 28 U.S.C. of section 2615 of this title, such action may be brought § 1331, as Ricco’s FMLA claim presented a federal question. within 3 years of the date of the last event constituting This court has jurisdiction over the appeal pursuant to the alleged violation for which such action is brought. 28 U.S.C. § 1291. 29 U.S.C. § 2617(c). The Postal Service terminated Ricco, II. ANALYSIS allegedly in violation of the FMLA, on October 15, 1999, and Ricco filed her complaint approximately two and one-half A. Standard of Review and Statute of Limitations years later. Therefore, Ricco’s FMLA claim is time-barred unless she proves that the Postmaster’s violation was willful. We review de novo a district court’s dismissal under Rule 12(b)(6). Marks v. Newcourt Credit Group, Inc., 342 F.3d No. 03-3294 Ricco v. Potter, et al. 7 8 Ricco v. Potter, et al. No. 03-3294

Ricco, in both her initial complaint and her first amended interpretation of the hours-of-service requirement adopted in complaint, averred that the Postmaster and the Postal Service Plumley. Ricco argues that the FLSA merely defines “regular acted negligently, willfully, and maliciously when they rate,” and that although the definition of “regular rate” violated her rights under the FMLA. An employer commits excludes payment for occasional periods where no work is a willful violation of the FMLA when it acts with knowledge performed due to certain causes, unlawful termination should that its conduct is prohibited by the FMLA or with reckless not be so excluded. Because the FMLA and FLSA do not disregard of the FMLA’s requirements; therefore, the define the term “hours of service,” Ricco urges this court to determination of willfulness involves a factual question. See define the term to include those hours that an employee is Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 125- deemed to have worked pursuant to a make-whole award 130 (1985) (defining the standard for a willful violation of the issued by an arbitrator in order to effectuate the FMLA’s Age Discrimination in Employment Act); Hillstrom v. Best purpose of “balanc[ing] the demands of the workplace with Western TLC Hotel, 354 F.3d 27, 33 (1st Cir. 2003); see also the needs of the family,” and to discourage employers from Williams v. Schuller Int’l, Inc., No. 00-3614, 2002 WL unlawfully terminating employees to prevent them from 193929, at *3 (6th Cir. Feb. 5, 2002) (applying Thurston’s meeting the hours-of-service requirement. Appellant’s Br. at standard of willfulness to claims brought under the FMLA). 17. Because a plaintiff’s factual allegations must be taken as true for purposes of deciding a Rule 12(b)(6) motion to dismiss, In response, the Postmaster argues that together the FMLA a plaintiff may withstand such a motion merely by having and the FLSA adequately define the term “hours of service.” alleged that the FMLA violation was willful. See Caucci v. The Postmaster asserts that the legislative history of the Prison Health Servs., Inc., 153 F. Supp. 2d 605, 608-09 (E.D. FMLA, the pertinent provisions of the FLSA, and Supreme Pa. 2001). Court precedent interpreting the FLSA all indicate that the hours-of-service requirement does not include time for which B. Statutory Interpretation an employee was paid but did not work or time spent on unpaid leave. The Postmaster further asserts that interpreting On appeal, Ricco contends that the district court erred by the term “hours of service” to include those hours that an adopting the reasoning in Plumley, arguing that the First employee is deemed to have worked pursuant to a make- Circuit erroneously concluded that the hours-of-service whole award issued by an arbitrator would undermine the requirement contained in the FMLA’s definition of “eligible FMLA’s purpose of allowing “employees to take reasonable employee” means only hours that an employee performed leave . . . in a manner that accommodates the legitimate actual work, not hours for which an employee was interests of the employer.” Appellee’s Br. at 12. compensated pursuant to an arbitration award. In Plumley, the First Circuit looked, as directed by the FMLA, to the Fair The FMLA entitles eligible employees to twelve weeks of Labor Standards Act of 1938 (“FLSA”) for guidance unpaid leave during any twelve-month period for certain regarding the proper interpretation of the hours-of-service statutorily prescribed reasons. 29 U.S.C. § 2612(a)(1). The requirement. Plumley, 303 F.3d at 369-72. FMLA defines the term “eligible employee” as: Ricco points out, however, that neither the FMLA nor the an employee who has been employed — FLSA define the term “hours of service” and argues that neither the FLSA nor its applicable regulations support the No. 03-3294 Ricco v. Potter, et al. 9 10 Ricco v. Potter, et al. No. 03-3294

(i) for at least 12 months by the employer with respect to traveling expenses, or other expenses, incurred by an whom leave is requested under section 2612 of this title; employee in the furtherance of his employer’s and interests and properly reimbursable by the employer; and other similar payments to an employee which (ii) for at least 1,250 hours of service with such employer are not made as compensation for his hours of during the previous 12-month period. employment[.] 29 U.S.C. § 2611(2)(A).4 The FMLA does not define the 29 U.S.C. § 207(e) (emphases added). The applicable term “hours of service”; however, it does specify: “For regulations explain: purposes of determining whether an employee meets the hours of service requirement specified in subparagraph This provision of section 7(e)(2) deals with the type of (A)(ii), the legal standards established under section 207 of absences which are infrequent or sporadic or this title shall apply.” Id. at (2)(C). The applicable unpredictable. It has no relation to regular “absences” regulations explain, “The determining factor is the number of such as lunch periods nor to regularly scheduled days of hours an employee has worked for the employer within the rest. . . . meaning of the FLSA.” 29 C.F.R. § 825.110. ... Section 7 of the FLSA does not define the term “hours of service,” but it does provide in its definition of “regular rate” . . . The term “other similar cause” refers to payments standards for determining the rate at which employees must made for periods of absence due to factors like holidays, be compensated for engaging in overtime work.5 FLSA, ch. vacations, sickness, and failure of the employer to 676, § 52 Stat 1060 (1938) (codified as 29 U.S.C. § 207) provide work. Examples of “similar causes” are (“§ 207”). The FLSA specifies that an employee’s “regular absences due to jury service, reporting to a draft board, rate” of compensation does not include, among other things, attending a funeral of a family member, inability to reach the workplace because of weather conditions. Only (2) payments made for occasional periods when no absences of a nonroutine character which are infrequent work is performed due to vacation, holiday, illness, or sporadic or unpredictable are included in the “other failure of the employer to provide sufficient work, similar cause” category. or other similar cause; reasonable payments for 29 C.F.R. § 778.218(b), (d).

4 In Plumley, the First Circuit concluded that these statutes The determinatio n of whether an emp loyee m eets the F MLA’s and regulations indicate that the hours-of-service requirement eligibility requirements is made in reference to the date the employee includes only hours that the employee actually worked, not commences his or her leave, not the day the employer takes an adverse action against the employee. Butler v. Ow ens-B rockway Pla stic Pro ds., hours for which an employee was compensated pursuant to an Inc., 199 F.3d 31 4, 316 (6th Cir. 1999). arbitration award. 303 F.3d at 370-73. No other circuit has addressed this issue. 5 Under the FLSA, an employee must be compensated for overtime work at a rate “not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). No. 03-3294 Ricco v. Potter, et al. 11 12 Ricco v. Potter, et al. No. 03-3294

It is true that neither the FMLA nor the FLSA defines the have worked but for her unlawful prior termination by her term “hours of service,” but the FMLA specifies that an employer. employee’s “hours of service” are to be calculated according to the standards contained in § 207. Examination of § 207 We note that back-pay awards often include payment for leads to the conclusion that the only plausibly applicable overtime work that an employee would have performed but standards are those contained in the definition of the term for her employer’s violation of employment laws. See, e.g., “regular rate.” In response to public comment, the United States v. City of Warren, 138 F.3d 1083, 1097 (6th Department of Labor stated that the legislative history of the Cir. 1998) (upholding an award of lost overtime granted to FMLA indicates that “the minimum hours of service prevailing plaintiffs in a Title VII case); EEOC v. Ky. State requirement is meant to be construed in a manner consistent Police Dep’t, 80 F.3d 1086, 1100 (6th Cir.) (upholding an with the legal principles established for determining hours of award of lost overtime payments granted to prevailing work for payment of overtime compensation.” Summary of plaintiffs in an Age Discrimination in Employment Act case), Comments, 60 Fed. Reg. 2186 (January 6, 1995). It is also cert. denied, 519 U.S. 963 (1996). Such back-pay awards true, however, that § 207 limits additional unenumerated involve two calculations — (1) determining the number of exclusions from the determination of an employee’s “regular overtime hours the employee likely would have worked but rate” to “other similar causes,” and that time that an employee for her unlawful termination; and (2) determining the does not work due to vacation or illness is conceptually employee’s likely rate of overtime pay. While the dissimilar from time that an employee does not work due to calculations contained in § 207 are necessary to determine the unlawful termination. employee’s likely rate of overtime pay, they have nothing to do with the determination of how many hours the employee We conclude that time that an employee would have likely would have worked but for her unlawful termination. worked but for her unlawful termination is not an “other When calculating a back-pay award, the determination of how similar cause” within the meaning of § 207. Such hours are many hours the employee likely would have worked but for different from occasional hours of absence due to vacation, her unlawful termination is typically based upon the holiday, illness, and the employer’s failure to provide work, employee’s work history. Similarly, when calculating the etc., in that they are hours that the employee wanted to work credit towards the hours-of-service requirement due as part of but was unlawfully prevented by the employer from working. a make-whole award, the determination of how many hours Section 207 does not clearly prevent such hours from the employee likely would have worked but for her unlawful counting, and the purpose of the FMLA’s hours-of-service termination should also be based upon her employment requirement is properly served by including these hours. In history. such cases, the employer’s unlawful conduct has prevented the employee from satisfying the hours-of-service The goal of a make-whole award is to put the employee in requirement. Moreover, denying employees credit towards the same position that she would have been in had her the hours-of-service requirement for hours that they would employer not engaged in the unlawful conduct; this includes have worked, but for their unlawful termination, rewards giving the employee credit towards the FMLA’s hours-of- employers for their unlawful conduct. We conclude that service requirement for hours that the employee would have neither the FMLA nor the FLSA addresses directly the worked but for her unlawful termination. The district court situation in this case involving hours that an employee would must determine in the first instance the number of hours that Ricco would have worked but for her unlawful termination in No. 03-3294 Ricco v. Potter, et al. 13 14 Ricco v. Potter, et al. No. 03-3294

order to ascertain Ricco’s eligibility under the hours-of- ____________________ service requirement for FMLA leave. CONCURRENCE III. CONCLUSION ____________________ For the foregoing reasons, we REVERSE the district MERRITT, Circuit Judge, concurring. The defendant- court’s order granting the Postmaster’s motion to dismiss employer in this case discharged plaintiff wrongfully, pursuant to Rule 12(b)(6) and REMAND this case for further preventing her continued work, according to a now-final, proceedings consistent with this opinion. arbitration award, and thereby prevented her from qualifying for benefits under the Family Medical Leave Act. I concur in the Court’s opinion and simply add the idea that a contrary decision would contravene fundamental general principles of restitution and equitable remedies of long standing by allowing the employer to profit from its own infringement of the plaintiff’s right to the statutory benefits derived from her own labor. The remedies provided by the Family Medical Leave Act and the Fair Labor Standard Act are make-whole, equitable remedies, as the Court’s opinion suggests. The Restatement of Restitution in its introductory note sets out the underlying principle: The principles expressed in this Chapter represent not only a large body of contemporary, “positive’ law but also a view of justice traceable to Roman law and beyond. The central idea is the conjunction of unjust enrichment on the one side and loss of grievance on the other. Rules of liability in restitution depend in part on the wrongful acquisition of gain and in part on harm or loss wrongfully imposed. In some cases the fact that a person has acquired a gain by wrongdoing is the principal reason for requiring him to make restitution. No. 03-3294 Ricco v. Potter, et al. 15

The first section of the Restatement then provides: § 1. The General Principle: Unjust Enrichment A person who receives a benefit by reason of an infringement of another person’s interest, or of loss suffered by the other, owes restitution to him in the manner and amount necessary to prevent unjust enrichment. American Law Institute, Restatement of the Law 2d, Tent. Draft 1, pp. 7-8 (April 5, 1983). See also Lightly v. Qouston, 127 Eng. Rep. 774 (C.P. 1808) in which Lord Mansfield applied the restitution concept to the appropriation of the right of an employee of his labor, upholding an action in the form of assumpsit for work and labor wrongly prevented by the defendant. See Palmer, Law of Restitution § 2.1, n. 5 (1978), discussing the Lightly case in a modern context. This same fundamental principle of restitution should be applied in this case where the employer wrongfully prevented the labor of the employee thereby through its action denying the employee the benefit of family medical leave. To leave the status quo in place would unjustly enrich the employer at the expense of the employee.