Two Strikes and You’re Out: 7th Circuit Addresses Federal and State Rules on Voluntary Dismissal

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Earlier this week, in Dvorak v. Granite Creek GP Flexcap I, LLC, No. 18-1892, 2018 WL 5801244 (7th Cir. Nov. 6, 2018), the Seventh Circuit addressed the interaction between federal and state rules governing voluntary dismissals of actions. Both Federal Rule of Civil Procedure 41(a) and its corresponding Illinois statute provide a “two strikes” rule: a plaintiff may dismiss an action once without prejudice, but refiling and dismissing again serves as an adjudication on the merits that bars plaintiff from filing any future action based on the same claim.

Dvorak presented a twist: What if a plaintiff files and dismisses a federal suit, then refiles and dismisses in state court, and then files again in federal court? The Seventh Circuit’s ultimate holding—the plaintiff’s third suit was barred and properly dismissed—provides an important lesson for litigants and litigators alike. 

All three suits Dvorak filed arose from an allegedly “mishandled … capital call for a limited partnership.” Dvorak first filed in federal court on the basis of diversity jurisdiction. But he and at least one other partner were both Florida citizens, destroying diversity as a basis for federal jurisdiction. So, he dismissed his initial federal suit with the consent of the defendants and refiled in Illinois state court. In this second suit, the state court dismissed one claim on the merits. Rather than litigate the remaining claims in the state court, Dvorak dismissed the rest of his suit and refiled those claims in the federal court where he had started. This new, third suit omitted the partnership and the claim dismissed by the state court.

The defendants moved to dismiss the third suit on the ground that Dvorak had refiled twice, even though under Illinois law his prior dismissals both counted as strikes. In response, Dvorak argued that his first dismissal did not count as a strike under Illinois law because it was entered with the consent of all parties. The district court rejected Dvorak’s argument, and dismissed the third suit with prejudice. Dvorak appealed.

The Seventh Circuit affirmed the district court’s dismissal order, in an opinion authored by Judge Frank Easterbrook and issued only eight days after oral argument. As an initial matter, the court had to characterize the dismissal of the first federal suit, as that characterization would affect the treatment of the second, state-court dismissal. Looking to the text of Rule 41(a), the court concluded that, regardless of whether Dvorak dismissed unilaterally or by stipulation of the parties, “both situations [are] voluntary dismissals by the plaintiff.” Slip op. at 5. A stipulated dismissal “is not less a voluntary dismissal by the plaintiff just because other parties agree that the suit should end.” Id. The court then held that, under Illinois precedent, the stipulated dismissal in the first federal suit was also voluntary for purposes of the state dismissal statute, 735 Ill. Comp. Stat. 5/13-217. 

Applying the Illinois two-strikes rule, the Seventh Circuit reasoned that, if the dismissal of Dvorak’s first federal suit was one strike and dismissal of the unadjudicated claims in state court was the second strike, then the refiled suit in federal court (Dvorak’s third suit overall) was barred by § 5/13-217. The court was unmoved by Dvorak’s argument that his third suit included two defendants who had not been named parties to the first suit, because the Illinois statute “applies with respect to all persons who could have been named in the initial suits, whether or not they were, provided that the new suit arises from the same transaction (or, equivalently, the same core of operative facts).” Slip op. at 6.

The outcome would be the same if the state suit had been filed and dismissed in Wisconsin, which also has a “two-strikes” statute. Wis. Stat. § 805.04. Section one of that statute explicitly states that

“(u)nless otherwise stated in the notice of dismissal or stipulation, the dismissal is not on the merits, except that a notice of dismissal operates as an adjudication on the merits when filed by a plaintiff who has once dismissed in any court an action based on or including the same claim.”

(emphases added). As the second emphasized phrase demonstrates, Wisconsin clearly addresses the issue of forum. The Wisconsin statute expressly counts prior dismissals “in any court.” Note, however, that the first clause expressly encompasses both dismissals and stipulations, but that the exception references only notices of dismissals only. Does the statutory text leave room to argue that a stipulated dismissal does not count as a strike under the Wisconsin statute? Possibly, but such an argument would now need to overcome Dvorak’s interpretation of Rule 41(a). 

Seventh Circuit Predicts That Wisconsin Will Adopt Learned Intermediary Doctrine

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The Seventh Circuit recently addressed an open issue under Wisconsin products liability law—do manufacturers of prescription drugs or medical devices satisfy their duty to warn of product risks by informing prescribing physicians (rather than the patients themselves) of those risks?  In In re: Zimmer, NextGen Knee Implant Products Liability Litigation, No. 16-3957 (7th Cir. Mar. 8, 2018), the federal appeals court predicted that the Wisconsin Supreme Court likely would answer “yes” to that question by adopting the “learned intermediary doctrine.”

At issue in this case was a knee implant manufactured by Zimmer NexGen Flex, an entity that has been subject to numerous complaints from patients alleging that their implants are subject to premature loosening.  The claimant in this particular case, Theodore Joas, is a patient who had knee-replacement surgery in Eau Claire in 2008 and filed suit against Zimmer after beginning to feel pain in his new knee in 2011.

Due to the number of similar claims against Zimmer, all litigation involving the Zimmer knee implants, including Mr. Joas’ lawsuit, were transferred to a multidistrict proceeding pending in the Northern District of Illinois.  The judge in the multidistrict proceeding subsequently selected Mr. Joas’ suit as a bellwether—a test case—and scheduled his claim to move forward.

Prior to trial, Zimmer moved for summary judgment on all of Mr. Joas’ claims.  Zimmer argued that the testimony of Joas’ only medical expert must be excluded as unreliable. The doctor’s report applied a differential etiology method that identified the most likely cause of Joas’ injury by eliminating other potential causes. But the medical expert could not affirmatively prove a specific cause for the loosening. The judge excluded the doctor’s opinion under the Daubert standard as lacking any discernable basis for concluding which potential causes were reasonable.  The judge then granted Zimmer’s summary judgment motion, holding that, absent expert medical testimony, the factual record did not support Joas’ causation theories.  Slip. op. at pp. 3-4.

Rather than challenge the Daubert ruling, Joas argued on appeal that, even without his own medical expert's testimony, he could win by proving that Zimmer failed to adequately warn both himself and his doctor of the risks associated with the knee implants. Joas supported his positions with testimony from one of Zimmer’s experts, who opined that it would take two bags of cement to properly bond the knee implant to a patient’s shinbone.  Because his doctor used only one bag, Joas theorized that Zimmer failed to satisfy its duty to warn that two bags of cement were needed to properly bond the implant.  Id. p. 4.

The Seventh Circuit rejected this argument on a number of grounds.  With respect to Zimmer’s duty to warn Joas directly, the Seventh Circuit noted that this was an issue of first impression under Wisconsin law.  The Court noted, however, that the overwhelming majority of courts from other jurisdictions facing this issue have adopted the “learned intermediary doctrine,” which states that medical device manufacturers satisfy their duty to warn of product risks by informing the prescribing physicians of those risks.  The Court predicted that Wisconsin would follow suit. It reasoned that the doctrine recognizes the practical reality that patients cannot obtain such devices without physician intervention and that patients reasonably rely on their physicians to warn them of the risks associated with medical procedures.  Id. pp. 5-8.

The Court also noted that Joas’ argument suffered from a lack of evidence to establish causation.  A warning directly to Joas would not have changed the outcome given that it was his physician (rather than Joas himself) who selected to use the Zimmer brand of knee implant for his procedure.  Any warning directed towards Joas’ surgeon similarly would have failed to make a difference, as the surgeon testified that he performed the surgical cementing technique based on his medical fellowship and residency training and that he did not review Zimmer’s device instructions.  While Joas argued for a “heeding presumption” that would allow for a factfinder to presume that a proper warning would have been read and followed by a medical professional, he cited no Wisconsin authority in support of this argument. The Court determined that such a presumption likely would not be adopted by Wisconsin courts.  Id. pp. 8-13.

While the Seventh Circuit’s decision is not a binding statement of Wisconsin law, Wisconsin courts will likely follow its well-reasoned analysis adopting and applying the “learned intermediary doctrine” to insulate medical device and pharmaceutical manufacturers from claims that they have a duty to warn patients directly.  Patients should also view In re: Zimmer, NextGen Knee Implant Products Liability Litigation as a warning that direct causal evidence likely will be needed to prevail on any liability claims against manufacturers of medical products

 

Seventh Circuit Holds Pharmaceutical Product Liability Claims Preempted By Federal Law

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The Seventh Circuit Court of Appeals held on January 19, 2018, that federal law preempts thousands of product liability claims, brought under the laws of various states, concerning Depo-T (a testosterone drug). Guilbeau v. Pfizer Inc., No. 17-2056 (7th Cir.). The case illuminates the intersection of tort law, federal regulation, and intellectual property.

Generally, a new drug must undergo a rigorous “new drug application” (NDA) process before the Food and Drug Administration will approve them for public use. The NDA process includes a laborious review to determine a drug’s safety and efficacy. If approved, a drug that has gone through the NDA process is considered a brand name drug and any drug made thereafter of the same composition will be considered a generic drug. The distinction between brand name and generic drugs implicates intellectual property rights, pricing, and obligations with respect to labeling.

If a second drug is considered to be the same as or bioequivalent to a drug approved through the NDA process, that second drug may be reviewed by the FDA under the “abbreviated new drug application” (ANDA) process. A drug approved through the ANDA process is generally considered a generic drug. However, in certain circumstances, a drug approved through the ANDA process is deemed to be the reference-listed drug (that is, the first drug of that physical composition to be approved by the FDA), and is therefore considered a brand name drug.

This case fell into those unusual circumstances. In 1953, Delatestryl (a testosterone replacement drug) was approved as a new drug by the Food and Drug Administration after NDA review. Then, in 1979, Depo-T was found to be the same as Delatestryl and was approved through the ANDA process. However, because Depo-T was slightly different in physical composition to Delatestryl, the FDA deemed it a separate reference-listed drug. Depo-T therefore became the brand-name drug for any later generic versions using its particular formulation.

In 2014, more than a thousand plaintiffs filed suit in several states, alleging that, after taking Depo-T as prescribed, they suffered heart attacks or strokes. The plaintiffs sued Pfizer, Inc. (the drug’s manufacturer), under the theory that the company failed to warn physicians and patients of the drug’s potentially fatal side effects. After those cases were consolidated and the district court concluded that the plaintiffs’ state-law claims were preempted by federal law, the plaintiffs appealed.

The Seventh Circuit held that Depo-T’s classification as a brand name drug was less important than its regulatory approval under the ANDA process. The plaintiffs argued that, because Depo-T is a reference-listed drug, Pfizer had a duty to warn prescribers and patients of any dangers and should, therefore, have updated its labels explaining the risks of heart attack and stroke as those risks were discovered. The court disagreed. Because Depo-T was approved under an ANDA, it was to be treated legally as if it were a generic drug.

Generic drugs are obligated to use a label that matches the one used by the corresponding brand name drug and cannot make changes absent FDA approval. As a result, manufacturers of generic drugs cannot be sued on the theory that their labels fail to contain information not included on the label of the corresponding brand name drug.

The Seventh Circuit cited the Supreme Court’s decision in Pliva, Inc. v. Mensing, 564 U.S. 604 (2011), which held that when federal drug regulations that apply to generic drugs conflict with state law claims, like failure to warn of adverse side effects, the state law is preempted. In other words, because Depo-T’s was approved through the ANDA process and its label conforms with what the FDA required, the state-law failure to warn state law claims against Pfizer are preempted by federal law. The court noted that the unusual fact of Depo-T being a reference listed drug while also having the legal status of a generic does not change the outcome here.

Laura Lamansky is a law student at the University of Wisconsin and a law clerk working under supervision. She will be a full-time lawyer at Stafford Rosenbaum beginning later this year.

U.S. Supreme Court Reiterates That Not All Procedural Time Limits Are Jurisdictional

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The U.S. Supreme Court’s first decision of the current term involves a suit alleging age and sex discrimination in the workplace. But the Court addressed only an important, though technical, issue about deadlines for appellate filings. Hamer v. Neighborhood Housing Services of Chicago, No. 16-658, was argued on October 10. The Supreme Court quickly turned around a unanimous decision on November 8, 2017, authored by Justice Ruth Bader Ginsburg.

Charlaine Hamer brought a federal lawsuit for employment discrimination. The trial court granted summary judgment in favor of the defendants. Under 28 U.S.C. 2107(a) and Federal Rule of Appellate Procedure 4(a)(1)(A), Ms. Hamer had 30 days from the entry of judgment to notice an appeal. But a few days before the 30-day deadline, Ms. Hamer’s attorneys sought both to withdraw from the case due to strategic differences with the client and requested a 60-day extension of the appeal deadline so that Ms. Hamer could find new counsel for her appeal. The trial court granted both motions. Represented by new counsel, Ms. Hamer filed her appeal shortly before the extended deadline.

The U.S. Court of Appeals for the Seventh Circuit, however, questioned whether it had jurisdiction over Ms. Hamer’s appeal and asked the parties to brief that issue. As the appellate court noted, Federal Rule of Appellate Procedure 4(a)(5)(C) limits extensions of time for noticing an appeal to no more than 30 days after the initial deadline. Federal statute—28 U.S.C. 2107(c)—also addresses extensions, but it does not set an outer limit for their length. Here, the district court had granted Ms. Hamer a 60-day extension.

The difference between the statutory text (which does not limit the length of an extension) and Rule 4(a)(5)(C) (which does) has divided appellate courts. Two circuits had deemed the limitation in Rule 4(a)(5)(C) a mandatory claims-processing rule, which means it must be followed but can be waived or forfeited such that there are circumstances where an appeal could be timely even if filed during an extension longer than the Rule countenances. Three circuits had deemed the limitation jurisdictional, which means they considered it an absolute bar to proceeding with an appeal filed after the outside limit of the rule, regardless of circumstances. In Ms. Hamer’s case, the Seventh Circuit joined the jurisdictional side of this split.

The Supreme Court clarified that the 30-day limitation on extensions in Rule 4(a)(5)(C) is a mandatory claims-processing rule, not a jurisdictional limit. The Court reiterated that limits prescribed by congressionally enacted statutes mark jurisdictional boundaries, whereas those prescribed by judicially crafted rules present mandatory claims-processing rules. Here, because the statute governing the timing of appeals—28 U.S.C. 2107—does not itself limit the length of a potential extension, the 30-day restriction in Rule 4(a)(5)(C) is not jurisdictional.

While 28 U.S.C. 2107 had, prior to 1991, limited extensions of the deadline to notice an appeal to 30 days, the Supreme Court refused to speculate that Congress’s deletion of that limit was inadvertent. See Hamer, slip op. at 7-8. And though a prior Supreme Court decision had stated that “the taking of an appeal within the prescribed time is ‘mandatory and jurisdictional,’” Bowles v. Russell, 551 U.S. 205, 207 (2009) (quoting Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 61 (1982) (per curiam)), the Hamer Court explained that the word “jurisdictional” is now more carefully and precisely used. See Hamer, slip op. at 9-10.

What’s next? Ms. Hamer’s case goes back to the Seventh Circuit. And future appellate litigants and their attorneys should proceed cautiously, recognizing that the rule allowing an extension of up to thirty days to notice an appeal is a mandatory claims-processing rule, not a jurisdictional limitation.

Law clerk Laura Lamansky assisted with researching and writing this blog post.

Multi-Month Medical Leave Not A Reasonable Accommodation Under the ADA

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The Court of Appeals for the Seventh Circuit recently held in Severson v. Heartland Woodcraft, Inc., 2017 U.S. App. LEXIS 181197*, 872 F.3d 476 (7th Cir. 2017) that a leave for medical purposes of two months or more is not a reasonable accommodation under the federal Americans with Disabilities Act (ADA).  In so doing, however, the Court left open the possibility that shorter or intermittent leaves might be, under appropriate circumstances.    

In Severson, the plaintiff took the full 12-week allotment of medical leave under the federal Family and Medical Leave Act (FMLA) due to back pain.  During his leave, he scheduled back surgery for day his FMLA leave expired.  Severson told the employer that he would not be able to work for two-to-three months after the surgery and requested non-FMLA medical leave for the recovery time.  The employer denied the request, given that Severson would be unable to perform any part of his job for several months.    

The court held that the employer’s decision did not violate the ADA.  The ADA, the court explained, is an anti-discrimination statute, not a medical-leave entitlement.  Id. at *3.  According to the court, the ADA is designed to prevent discrimination against a “qualified” individual, defined as a person who, “with or without reasonable accommodation, can perform the essential functions of the employment position.”  Id.  Thus, protection under the ADA is “expressly limited to those measures that will enable the employee to work.  An employee who needs long-term medical leave cannot work and thus is not a ‘qualified individual’ under the ADA.”  Id. (citing Byrne v. Avon Prods., Inc., 328 F.3d 379, 381 (7th Cir. 2003)).  Based on these considerations, the court determined that Severson was not a qualified individual under the ADA because the requested accommodation—a leave of two-to-three months—would not allow him to perform the essential duties of his job and thus was not reasonable.   

Employer Takeaway

Severson provides definitive guidance to employers in the Seventh Circuit with respect to employee requests for medical leave for two or more months, but only if the leave is not mandated by a medical leave statute like the federal FMLA or any state law counterparts.  While Severson also suggests that even a leave of more than a couple of weeks may not be a reasonable accommodation, employers should still proceed with caution in responding to requests for leave of less than two months because the reasonableness of the leave will turn on the particular circumstances of each request.  Employers also should keep in mind that Severson does not permit employers to deny extended leave mandated by another statute.  In such cases, of course, employers must provide the leave whether or not it would be considered a reasonable accommodation under the ADA. 

For additional guidance or questions related to employers’ responsibilities under the ADA, contact Meg Vergeront at (608) 256-0226.    

Seventh Circuit Clarifies Applicability of Economic Loss Doctrine to Liability Insurance Coverage

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The Seventh Circuit recently clarified the potential impact of Wisconsin’s Economic Loss Doctrine on the availability of liability insurance coverage for commercial insureds facing defective product claims.  See Haley et al. v. Kolbe & Kolbe Millwork Co. et al., Nos. 16-3563 & 16-3648 (7th Cir. 2017).  In holding that coverage was available for the defective residential windows claims at issue in this case, the Seventh Circuit concluded that Wisconsin common law requires a case-by-case analysis to determine liability insurance coverage for underlying claims subject to the Economic Loss Doctrine, thus rejecting the more broad proposition that any claim subject to the doctrine is per se not covered.

The Economic Loss Doctrine is a common law rule that has been adopted by the Wisconsin courts to allocate monetary risks arising from the purchase of commercial goods between buyers and sellers.  The rule eliminates a purchaser’s access to tort-based causes of actions to recover purely economic losses from the manufacturer of a defective product.  Injuries to people or third-party property continue to be redressable in tort, but purely economic claims (i.e., loss of economic value of the product itself and/or consequential monetary loss arising from the product’s failure to function as expected) can be compensated only under contract law. 

Wisconsin courts also have expanded the Economic Loss Doctrine by adopting the integrated-system rule. Under that rule, when a defective product has been incorporated with other products to function cohesively as an “integrated system,” the Economic Loss Doctrine applies to preclude tort-based claims for damage to any other component of that system.  See, e.g., Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 249-53 (1999).

In March 2016, the Wisconsin Supreme Court applied the Economic Loss Doctrine and the correlating integrated-system rule to hold that no liability insurance coverage was available for defective product claims brought against a pharmaceutical supplement supplier.  See Wis. Pharmacal Co. v. Neb. Cultures of Cal., Inc., 367 Wis. 2d 221 (2016).  In that case, Pharmacal was sued for producing defective daily supplement tablets; the tablets as a whole were alleged to be defective because they contained an incorrect probiotic bacterial species. Pharmacal had obtained that probiotic species from a downstream supplier and combined it with other ingredients when formulating the defective tablets.

Pharmacal’s liability insurance policies included standard coverage for damage to other property, but excluded coverage for damage to Pharmacal’s own property.  The Pharmacal Court, citing the Economic Loss Doctrine and the integrated-system rule, concluded that no coverage was available.  The Court reasoned that, although only one ingredient used in the supplement tablets was defective, the ingredients were combined into an inseparable integrated system.  As a result, damage to any component of the tablets was considered damage to Pharmacal’s own property.

Based on the Pharmacal decision, Kolbe & Kolbe Millwork’s insurers argued that they had no obligation to defend the defective windows claims at issue. They started from the proposition that in prior decisions Wisconsin courts have applied the Economic Loss Doctrine to defective windows claims, holding that windows form an integrated system with the other structural components of a house.  They then argued that, just as Pharmacal’s insurer had no duty to cover damage to an integrated system, they had no duty to cover the alleged damages to any component of the plaintiffs’ homes.

The Seventh Circuit rejected the broad proposition that Pharmacal required an integrated system analysis under all circumstances.  In doing so, the Court noted that whether insurance coverage exists depends instead on the nature of the underlying plaintiff’s alleged loss.  In contrast to the claims at issue in Pharmacal, where the plaintiff sought to replace the supplement tablets entirely because the defective ingredient was indistinguishable from the non-defective ingredients, here the class-action plaintiff homeowners were seeking repairs to identifiable components of the houses other than the defective windows themselves.  The Seventh Circuit accordingly concluded that the resulting damage to the drywall, wood framing, and brick surrounding the defective windows constituted damage to “other property” under the policy language, thus triggering the insurers’ coverage obligations notwithstanding that the claims were subject to Wisconsin’s Economic Loss Doctrine.

Assuming the Seventh Circuit has interpreted the Pharmacal decision correctly, Kolbe & Kolbe Millwork serves as a significant clarification regarding the impact of the Economic Loss Doctrine on liability insurance coverage under Wisconsin law.  As a result, commercial insureds facing product defect claims alleging damages to distinguishable components of integrated systems should be able to assert the Economic Loss Doctrine as an absolute defense to any tort-based causes of action without in turn eliminating their liability insurers’ obligation to defend the litigation.

From a practical standpoint, it is also noteworthy that in this case the Western District of Wisconsin federal court denied the insurers’ request to stay the underlying product defect lawsuit when they intervened to litigate the related insurance coverage issues for the matter.  As a result, the insurers were forced to continue to pay to defend Kolbe & Kolbe Millwork in the ongoing defective windows litigation while simultaneously seeking a ruling that they were not obligated to do so under their liability insurance policies.

Going forward, therefore, insurers may be better off litigating any defense coverage disputes for underlying product defect claims in Wisconsin state courts, where it is standard practice for courts to stay the underlying litigation pending resolution of an insured’s defense obligations and where an insurer may have more success in arguing that the Seventh Circuit inappropriately narrowed the Wisconsin Supreme Court’s holding in Pharmacal.

Discharged Police Officer Has No Constitutional Entitlement to Pay During Pendency of His Appeal

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As we reported in November 2016, the Wisconsin Court of Appeals upheld a decision by the Milwaukee City Board of Fire and Police Commissioners (“Board”) to terminate the employment of Milwaukee Police Department (“MPD”) Officer Daniel Vidmar for falsifying a document to take possession of an unclaimed dirt bike from MPD inventory. While Officer Vidmar did not seek Wisconsin Supreme Court review of that decision, the court of appeals’ decision ended only one of Officer Vidmar’s legal challenges arising out his termination.

In a parallel federal case asserting due process and state law wage claims, the U.S. Court of Appeals for the Seventh Circuit recently slammed the door on another of Vidmar’s related challenges to his termination. Milwaukee Police Ass’n v. Flynn, No. 16-3743, 2017 WL 2962017 (7th Cir. July 12, 2017). The federal claims advanced by Vidmar and other discharged officers alleged they were denied due process when the City of Milwaukee terminated their pay and benefits upon discharge, even though they had not yet exhausted their right to challenge their terminations by appeals to the Board.

The Seventh Circuit concluded that the discharged officers had no entitlement to pay during the pendency of their appeals. As the court framed its holding, under Wisconsin law the former officers had no “property interest” in their employment once they were discharged for cause. 2017 WL 2962017 at *7. The court rejected the officers’ assertion that the chief’s “authority is limited to suspending a member’s police powers pending a trial before the Board,” concluding that the argument was “directly contradicted by the language of the statute.” Id. at *4. Instead, the court construed the statute to provide that the chief’s decision to terminate the officers was a final employment action, subject to the officers’ right to appeal the decision to the Board. As the court described it, the statute clearly provides that the officers’ property interest in their employment “is lost at the first juncture,” that is, with the chief’s decision to terminate for cause, while the discharged officer had the “opportunity to reclaim his property interest in employment on appeal after a trial.” Id. at *5.

Although not cited by the court, Wis. Stat. § 62.50(22) would have entitled the discharged officers to back pay if they had successfully challenged their discharge. This access to back pay plainly factors into the court’s statement about the officers’ opportunity to “reclaim” their property interests. Additionally, as the court noted, under Wis. Stat. § 62.50(18) an officer suspended for a period of time without pay is entitled to continue to be paid until exhaustion of the appeal. However, this provision does not apply to discharged officers.

The Seventh Circuit’s decision addresses Wis. Stat. § 62.50, which applies only to the City of Milwaukee Board. However, the statutory language of Wis. Stat. § 62.13, which governs all other municipal Boards of Police and Fire Commissioners, appears indistinguishable. Wis. Stat. § 62.13(5)(h), just like Wis. Stat. § 62.50(18), provides that an officer may not be deprived of compensation while suspended pending disposition of charges but does not address discharged officers. The latter are entitled to have all lost pay restored only if the charges are not sustained. Wis. Stat. § 62.13(5)(e). Therefore, the Seventh Circuit’s decision should not be viewed as peculiar to the City of Milwaukee.

Notably, the Seventh Circuit decision does not mark the end of Vidmar’s collateral attacks on his discharge. Presently pending before the Wisconsin Court of Appeals is Milwaukee Police Association v. City of Milwaukee, No. 2016AP1573, an appeal by Vidmar and his collective bargaining unit from a judgment dismissing their challenge to the Board’s compliance with political affiliation and training requirements set by Wis. Stat. § 62.50(1)(h) and Milwaukee City Ordinance § 314. Among other things, in that matter Vidmar seeks judgment declaring that his discharge was “unlawful” because the City’s appointment of Board members did not meet these requirements. So the Vidmar discharge matter has not yet officially reached the end of the road.

If you have any questions about the PFC disciplinary process, contact a member of Stafford Rosenbaum LLP’s Government Law Team members.

Seventh Circuit Expands Title VII Coverage to Include Sexual Orientation Claims

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The Court of Appeals for the Seventh Circuit recently held in Hively v. Ivy Tech Community College, 853 F.3d 339 (7th Cir. 2017), that Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation. In doing so, it overruled its own longstanding precedent and put itself in conflict with most other circuits.

The plaintiff in Hively was a former part-time professor at Ivy Tech Community College. She filed a suit under Title VII, claiming that Ivy Tech denied her application for full-time employment, and ultimately declined to renew her part-time contract, because she was openly gay. Title VII makes it unlawful for private sector and state and local government employers with at least 15 employees to discriminate on the basis of, among other things, a person’s sex. 42 U.S.C. § 2000e-2(a). Title VII does not list sexual orientation as a protected classification.

At the time Hively filed her suit, the Equal Employment Opportunity Commission (EEOC) and a majority of the federal appellate circuits were at odds as to whether Title VII’s prohibition on sex discrimination should be expended to reach sexual orientation discrimination. The EEOC took—and still takes—the position that Title VII should be read to include sexual orientation as a protected classification. At the time of the suit, however, 10 of the 12 federal appellate geographic circuits, including the Seventh Circuit, had ruled to the contrary. Relying on Seventh Circuit precedent, the district court granted Ivy Tech’s motion to dismiss Hively’s sexual orientation discrimination claim. Hively appealed.

A three-judge panel of the Seventh Circuit noted that the line between a gender non-conformity claim—a claim that is covered by Title VII—and a sexual orientation claim is hard to discern. Hively v. Ivy Tech Cmty. Coll., 830 F.3d 698 (7th Cir. 2016). Ultimately, however, the court followed precedent. It upheld the district court’s dismissal on the ground that Title VII does not apply to sexual orientation discrimination claims. Id. at 718.

The panel’s ruling, however, was not the final word. The Seventh Circuit elected to rehear the case en banc, meaning that all eleven judges on the court would rehear it. After consideration, the court rejected its prior rulings. Hively, 853 F.3d 339. Specifically, the court concluded that Hively’s claim was no different from successful gender non-conformity claims brought by women  who alleged discrimination resulted from their “failure to conform to the female stereotype (at least as understood in a place such as modern America, which views heterosexuality as the norm and other forms of sexuality as exceptional).” It explained that the line between a gender nonconformity claim and one based on sexual orientation “does not exist at all.” Thus, the court concluded that Title VII’s prohibition on sex discrimination included discrimination claims based on sexual orientation. The court, however, did not determine the merits of Hively’s claim, but sent the case back to the district court for further proceedings consistent with its ruling.

Given the split among circuits, it is likely that Congress or the Supreme Court will step in to address the issue. Stay tuned.

If you have questions on this case or on other employment related matters, contact Meg Vergeront at (608) 256-0226.

Seventh Circuit: Self-Serving Statements Best Served with a Side of Factual Support

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Whitaker v. Wisconsin Department of Health Services, 849 F.3d 681 (7th Cir. 2017), recently served up a refresher on the role of self-serving affidavits in summary judgment proceedings. In Whitaker, the plaintiff alleged that she was fired by a state agency as a result of intentional discrimination based upon her disability. Whitaker suffered from chronic back pain and was granted repeated and consecutive leaves over the course of several months. After the third consecutive request for leave, her employer granted another leave, provided a date to return to work, and informed the plaintiff her leave was otherwise exhausted for the year. After Whitaker failed to return to work on the designated date, the agency fired her.

Whitaker brought suit under the federal Rehabilitation Act, claiming she was illegally terminated due to her disability. The Wisconsin Department of Health Services sought summary judgment on multiple, independent grounds. The district court granted summary judgment for the agency, finding that Whitaker failed to provide evidence that she could perform the essential functions of her position, a pre-requisite of a valid claim.

On appeal, the Seventh Circuit affirmed.  The court explained that while Whitaker was disabled within the meaning of the statute, regular attendance was an “essential function” of her employment and she failed to provide evidence regarding the effectiveness of her course of treatment or the medical likelihood of her recovery. Because the medical notes provided by Whitaker stated nothing other than “medical leave,” Whitaker needed to rely upon her own affidavit to survive summary judgment on this issue.

Here, the Seventh Circuit reiterated that “self-serving” statements like a party affidavit can and will be used as “perfectly admissible evidence through which a party tries to present its side of the story at summary judgment.” Id. at 686. Thus, Whitaker’s affidavit declaring she would have been able to return to work if only granted additional leave before her termination could have been a “legitimate method” to challenge summary judgment. Id. at 685. However, the Seventh Circuit found Whitaker’s affidavit failed to provide a sufficient evidentiary foundation for this statement—namely, evidence that medication improved her condition, or the medical likelihood that she would be able to return to work on a regular basis.

The take-away?  Self-serving assertions on the ultimate issue in a case can be acceptable, but must include an evidentiary basis for those assertions.

SNOOPING ON YOUR SPOUSE MAY VIOLATE FEDERAL PRIVACY LAWS - And Complicate Your Divorce

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In the midst of an acrimonious divorce, Paula Epstein surreptitiously placed an auto-forwarding “rule” on her husband’s email account that automatically—and unbeknownst to him—forwarded a copy of every email he received to her. Through this arrangement, Paula discovered emails between her husband (Barry) and several women. She then accused him of infidelity as part of the divorce action.  Due to the accusations, Barry’s attorney sent a document request to Paula for all communications related to Barry’s alleged adultery. When Paula’s attorney produced the intercepted emails in response, Barry realized that Paula had somehow gained access to his email account. Barry filed a federal law suit alleging that Paula and her attorney had violated the Wiretap Act, 18 U.S.C. § 2511. The litigation resulted in the Seventh Circuit’s recent decision, Epstein v. Epstein and Frank, No. 15-2076 (7th Cir. Dec. 14, 2016).

The Wiretap Act makes it unlawful to intentionally intercept any wire, oral, or electronic communication. The Act also prohibits the intentional disclosure or use of the contents of an unlawfully intercepted communication. Barry argued that Paula had violated the Act by intercepting the emails and that her attorney, Jay Frank, intended to use the unlawfully intercepted emails as part of the divorce litigation. Both Paula and Frank moved to dismiss the action, arguing that only intercepting an email contemporaneously with transmission violates the Act. (If the interception is not contemporaneous, the transmittal is governed by the Stored Communications Act.) The trial court agreed and dismissed the action.

The Seventh Circuit affirmed the ruling as to Frank but held that the claim should not have been dismissed as to Paula. The court found that Frank did not unlawfully disclose the communications because the disclosure resulted from Barry’s discovery requests in the divorce litigation. Essentially, Barry consented to the disclosure by making the request. Barry also could not identify any way Frank made actual use of the emails in the divorce litigation. As such, his mere possession or likely intent to use the intercepted emails did not violate Act.

With respect to Paula, by contrast, the court held that the claim should proceed so that the parties could determine whether the emails were intercepted contemporaneously.  Though there appeared to be gaps between when the emails were received by Barry and then intercepted by Paula, the appellate court held that more information was needed about the auto-forwarding rule to conclude that the interceptions could not possibly be contemporaneous. Barry’s claim against Paula was sent back to the trial court to resolve those outstanding questions.

Judge Posner wrote a separate, concurring opinion that questions whether the Wiretap Act should even apply. In Judge Posner’s view, federal law should not necessarily protect all types of privacy, including the concealment of criminal activity (adultery remains a criminal offense in Illinois where Barry resides). Thus, Judge Posner argues, the Wiretap Act should not apply to communications intercepted to obtain evidence of a crime, even for a crime that is almost never subject to prosecution.

Barry’s federal suit turned on the definition of contemporaneous and how specific email servers work, rather than the substance of the communications as emphasized by Judge Posner. In contrast, family court cases are often more focused on the substantive facts than specific interpretation of detailed statutory definitions. However, whether the interception of the emails or the bad acts of either party will have an effect on the outcome of the divorce has yet to be seen. As of the date of publication of the Seventh Circuit opinion, the divorce case has been pending for more than five years and remains unresolved.

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