Retaliatory Opposition to Employee’s Application for Unemployment Benefits

 

An interesting split has developed in the federal district courts as to whether an employer’s opposition to a former employee’s application for unemployment benefits, if motivated by a retaliatory animus, is actionable.  The weight of authority, particularly after Burlington N. & Sante Fe R.R. Co. v. White, 126 S. Ct. 2405 (2006), has been to find that such conduct is actionable.  Indeed, as it arises after the termination of the employment relationship – and thus potentially after the execution of the waiver of claims contained in a separation agreement – such claims may be difficult to extinguish.  See Steele v. Schafer, 535 F.3d 689, 696 (D.C. Cir. 2008) (noting in dicta that plaintiff’s claim that employer retaliated by falsely contesting plaintiff’s unemployment benefits “involve[d] conduct that… the Supreme Court has already indicated can support a retaliation claim” in Burlington v. White); Koger v. CT. Woody, No. 3:09-cv-90, 2009 U.S. Dist. LEXIS 77433 (E.D. Va. Aug. 28, 2009) (protection under Title VII extends to both employees and “former employees” and a frivolous denial of unemployment benefits may constitute retaliation); Roa v. LAFE, 955 A.2d 930 (N.J. App. Div. 2008) (employer’s post-termination conduct in terminating medical benefits and opposing request for unemployment stated cause of action); Petrunich v. Sun Bldg. Sys., Inc., 2006 U.S. Dist. LEXIS 69043 (M.D. Pa. Sept. 26, 2006) (“under the standard articulated in [Burlington Northern], the opposition to [a plaintiff’s] claim for unemployment compensation benefits [may be] an adverse employment action because it [could]).

In Williams v. W.D. Sports, N.M., Inc., 497 F.3d 1079 (10th Cir. 2007) the Tenth Circuit addressed a situation in which an employee was terminated after filing a grievance regarding gender discrimination with the Human Rights Division of the New Mexico Department of Labor.  Shortly afterwards, the employee was terminated, and was told by the employer’s President that, if she challenged him, he would “ruin your marriage.”  Subsequently the employer opposed plaintiff’s request for unemployment benefits on the basis that plaintiff was terminated “for cause” due to sexual misconduct, drinking, and theft of company property.  No evidence was provided to substantiate these charges.  During the hearing on plaintiff’s unemployment benefits application, the employer’s attorney allegedly said “[i]f you will drop your Human Rights [discrimination] claim, I won’t fight you on your unemployment.”  Williams was later awarded unemployment benefits.  The district court, in a ruling handed down prior to Burlington Northern, dismissed plaintiff’s claim for retaliation with respect to unemployment benefits, finding that because plaintiff had suffered no delay or cessation of benefits that the employer’s opposition did not constitute an adverse influence.  Williams v. W.D. Sports N.M., Inc., 2005 U.S. Dist. LEXIS 46146 (D.N.M. Feb. 25, 2005).  The Tenth Circuit reversed under the holding of Burlington Northern, holding that a jury could have concluded that the employer’s conduct was sufficiently adverse that it might have dissuaded plaintiff from making or supporting a charge of discrimination.   Williams, 497 F.3d 1079 (10th Cir. 2007); See also Michael R. Lied, Employer’s Challenge to Unemployment Benefits May be Evident of Unlawful Retaliation, Illinois State Bar Assoc., Section on Labor & Employment Law Newsletter (Feb. 8, 2008) (available at: http://www.howardandhoward.com/news/pub.asp?id=94); Daniel M. Combs, Employer’s Stated Willingness Not to Oppose Unemployment Benefits Claim if Employee Dropped Lawsuit Could be Retaliation, Sherman & Howard Client Advisory (Oct. 2008) (available at: http://www.sah.com/docs/news/UnemploymentRetaliationAdvisoryOct2008.pdf).

A minority of courts, including several decisions which predate Burlington Northern, adhere to the view that an employer’s decision to exercise its legal right to oppose unemployment benefits does not constitute prohibited retaliation.  Among those authorities is Judge Mae A. D’Agostino of the Northern District of New York who held, in Burnett v. Trinity Inst. Homer Perkins Ctr., Inc., 2011 U.S. Dist. LEXIS 48999 (N.D.N.Y. May 6, 2011) that “defendant’s decision to exercise its legal rights and oppose plaintiff’s receipt of unemployment benefits… cannot serve as a basis for a retaliation claim.”  See also Powell v. Honda of Am., No. 06-cv-979, 2008 U.S. Dist. LEXIS 56991 (S.D. Ohio July 22, 2008) (refusing as futile for failure to state a claim plaintiff’s request to amend complaint to include cause of action for retaliation for opposition to request for unemployment benefits – the court, relying on pre-Burlington Northern authority, found that opposition was “not retaliatory in nature” because it was “clearly the employer’s right and duty.”); Roman v. Cornell Univ., 53 F. Supp. 2d 223, 245 (N.D.N.Y. 1999) (holding that a retaliation based on opposing plaintiff’s application for unemployment benefits could not survive a motion for summary judgment because it was “not an adverse employment action”); Kowalski v. Kowalski Heat Treating, Co., 920 F. Supp. 799, 805 (N.D. Ohio 1996) (opposition to unemployment benefits was not the sort of adverse action contemplated by Ohio Legislature); Baker v. Summit Unlimited, Inc., 855 F. Supp. 375 (N.D. Ga. 1994) (granting summary judgment for the defendant because it had a right to defend the unemployment action after plaintiff pursued benefits); As noted in Adamchik v. Compservices, Inc., No. 10-949, 2010 U.S. Dist. LEXIS 130133 (W.D. Penn. Dec. 9, 2010), the viability of these decisions, many of which predate Burlington Northern or rely upon pre-Burlington Northern authority to support their conclusions, is an open question.  See also Mohamed v. Sanofi-Aventis Pharms., 2009 U.S. Dist. LEXIS 119871 (S.D.N.Y. Dec. 22, 2009) (“[i]n the wake of Burlington…, there is now a substantial question as to the validity of precedent holding that a post-termination [event] may not be an adverse employment [action]”) (citations omitted).  

            Retaliation is particularly likely to be found where opposition to unemployment benefits is meritless.  For example, in Williams, the President admitted at trial that the grounds asserted during the unemployment hearing did not form the basis for plaintiff’s termination.  Similarly, in Wright v. Life Start Ctrs., Inc., 2000 U.S. Dist. LEXIS 16424 (N.D. Ill. Oct. 19, 2000) the defendant-former employer made false statements during an unemployment hearing which resulted in the initial denial of plaintiff’s unemployment benefits.  The Court, in a pre-Burlington Northern decision, reasoned that this constituted a sufficient adverse action to give rise to a cause of action for retaliation.  Many other courts have reached similar conclusions.  See Betts v. Container Corp., No. 95-1064, 1997 U.S. App. LEXIS 10648 (7th Cir. May 7, 1997) (holding that Robinson v. Shell Oil Co., 117 S. Ct. 843 (1997) made clear that Title VII extends to former employees, and thus that it could apply to opposition to unemployment benefits); Liverpool v. Conway, Inc., 2009 WL 1362965 (E.D.N.Y. May 15, 2009) (refusing to dismiss for failure to state a claim plaintiff’s claim for retaliation based on allegedly meritless opposition to unemployment benefits); Grace v. Starwood Hotels & Resorts Worldwide, Inc., C.A. No. 6-1203, 2008 U.S. Dist. LEXIS 10951 (W.D. Pa. Feb. 14, 2008) (opposing unemployment benefits can constitute retaliation however, here the Court found that defendant-former employer established that its conduct was in accordance with its regular practice and plaintiff failed to meet his burden of proof under McDonnell Douglas).  However, even post-Burlington Northern, if the employer possessed a legitimate reason for terminating Plaintiff, it is unclear whether opposing unemployment benefits can constitute retaliation.  See Spencer v. CSL Plasma, Inc., No. 3:10-cv-00262, 2011 U.S. Dist. LEXIS 102846 (W.D. Ky. Sept. 12, 2011) (while opposition to unemployment benefits can constitute retaliation, if defendant has legitimate, non-discriminatory basis for its actions plaintiff must still meet burden-shifting obligations under McDonnell Douglas); Hatton v. United Parcel Serv., No. 05-97-JBC, 2006 U.S. Dist. LEXIS 47734 (E.D. Ky. July 7, 2006) (no claim for retaliatory denial of unemployment benefits, at least where employee presented no evidence to rebut employer’s contention that opposition was made in good faith).

            One of the remaining questions is whether a non-frivolous opposition to unemployment benefits, animated by retaliatory intent, gives rise to a violation, or whether only challenges to unemployment benefits which are both frivolous and retaliatory in nature are prohibited.  This debate mirrors that which is discussed in our paper on retaliatory counterclaims.

For further information and discussion on this subject, see the following materials:

·        Michael R. Lied, Employer’s Challenge to Unemployment Benefits May be Evident of Unlawful Retaliation, Illinois State Bar Assoc., Section on Labor & Employment Law Newsletter (Feb. 8, 2008) (available at: http://www.howardandhoward.com/news/pub.asp?id=94);

·        Daniel M. Combs, Employer’s Stated Willingness Not to Oppose Unemployment Benefits Claim if Employee Dropped Lawsuit Could be Retaliation, Sherman & Howard Client Advisory (Oct. 2008) (available at: http://www.sah.com/docs/news/UnemploymentRetaliationAdvisoryOct2008.pdf) ;

·        Aaron Clark, Avoid Thoughts of Revenge When Your Employee Leaves, McGrath North Firm Publications (available at: http://www.mcgrathnorth.com/firm_publications_view.asp?pubID=324)

·        Nina Pirrotti, Retaliation After Employment Ends: The Former Employer’s “Parting Shot.”, National Employment Lawyers Association Annual Conference (2012)

·        Stark & Stark, It Ain’t Over, Even After It’s Over: New Jersey Curt Extends Retaliation Claims Under Law Against Discrimination (NJLAD) For Post-Termination Actions, New Jersey Law Blog (Nov. 6, 2008) (available at: http://www.njlawblog.com/2008/11/articles/employment/it-aint-over-even-after-its-over-new-jersey-court-extends-retaliation-claims-under-law-against-discrimination-njlad-for-posttermination-actions/)

 


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