Lopez v. Commonwealth of Massachusetts, No. 09-1664 (1st Cir. Dec. 3, 2009); Lockett v. Marsh, No. 08-3413 (6th Cir. Dec. 3, 2009)

By Paul Mollica

A Title VII disparate impact suit against Massachusetts is dismissed on appeal, on the ground that the state’s involvement in certifying police officers for local governmental units does not make the state an “employer.” A plaintiff who tried to keep her Ohio state-law employment discrimination case in state court loses out in this(unpublished) Sixth Circuit decision because one of her several counts — though pled under state law — implicated rights preempted by ERISA.

Lopez v. Commonwealth of Massachusetts, No. 09-1664 (1st Cir. Dec. 3, 2009): As the panel summarizes, “Plaintiffs are African-American and Hispanic police officers employed by the cities of Boston, Lawarence, Lowell, Methuen, Springfield, and Worcester, or by the MBTA, who did not achieve the promotions to police sergeant they sought. In 2007, they brought suit under Title VII against two classes of defendants: the state defendants, which included Massachusetts and Dietl, and the MBTA and the cities for whom the plaintiffs work.” Plaintiffs alleged that the state defendants — the Commonwealth itself and a director of the Massachusetts Human Resources Department (HRD) â€” administered exams for those ranks (then utilized by the local police agencies) that screened out minority applicants.

The Commonwealth moved to dismiss on the grounds that as the administrator for the tests, it was not an “employer” as defined by Title VII.  (Because the claim was not for intentional race discrimination, no claim would lie under sections 1981 or 1983 for race discrimination.  Moreover, parallel claims under Massachusetts law failed against the state on the ground that under Pennhurst State Sch. and Hosp. v. Halderman, 465 U.S. 89, 121 (1984), there is no federal court jurisdiction to enforce state law against state governments.)

Although the district court denied the state defendants’ motion in a one-line order, in an interlocutory appeal (occasioned by an assertion of Eleventh Amendment immunity) the First Circuit reverses and orders their dismissal from the case.  In a 43-page opinion, the panel carefully dissects the state-law interrelationship between the Commonwealth and local governments concerning the promotion of peace officers. The HRD provided test administration and grading services for local governments to use for civil service purposes, but did not actually hire or promote such employees. (The case actually concerns the Commonwealth’s past practices; a new law in 2009 terminated the local option of relying upon HRD to develop and administer hiring and promotions examinations for police sergeant.)

The panel enumerates the common-law test for employment (applied under Title VII) and holds that the HRD does not constitute an “employer” under that standard:

“It is clear that plaintiffs are not HRD’s employees, and HRD is therefore not their ’employer’ for Title VII purposes, based on these factors. The agreed stipulation of facts establishes as much. HRD has no control over plaintiffs’ day-to-day job performance and no right to exercise such control. Municipal police officers do not work on HRD’s premises and have no continuing relationship with HRD. Instead, HRD affects plaintiffs only indirectly, and only to the degree that plaintiffs’ local employers decide to involve HRD in various processes. HRD has no right to assign plaintiffs any projects, nor does HRD set the hours of plaintiffs’ employment. Plaintiffs’ work is certainly not part of HRD’s regular business; HRD is a state regulatory body concerned with the administration of the civil service system, whereas plaintiffs, as police officers, are concerned with maintaining public safety. HRD does not provide plaintiffs with any benefits, such as insurance or worker’s compensation, nor does HRD consider plaintiffs its employees for tax purposes. HRD has no role intermination decisions. Finally, neither HRD nor plaintiffs could have reasonably believed that they ever established an employer-employee relationship. As a matter of state law, plaintiffs are clearly described as the employees of ‘appointing authorities,’ whereas HRD is defined as the ‘administrator.’ This definition reflects the Massachusetts legislature’s decision that it is these local entities which are the employers of the local police.”

The panel also rejects an “interference theory” of employment, under which â€œa party that significantly participates in and interferes with an employment relationship may be subject to liability as an employer.” In so doing, the panel acknowledged its outright disapproval of a Ninth Circuit case adopting the standard (Ass’n of Mexican-Am. Educators v. California, 231 F.3d 572 (9th Cir. 2000) (en banc)), and tension with a D.C. Circuit case, as well (Sibley Mem’l Hosp. v. Wilson, 488 F.2d 1338, 1340-41 (D.C. Cir. 1973)). So the case may be poised for good solid cert petition based on circuit-conflict.

Lockett v. Marsh, No. 08-3413 (6th Cir. Dec. 3, 2009):  One of the surest ways to get your employment case removed from state court and quashed is to back into the ERISA preemption fan. So think kind thoughts for Novella Lockett and her counsel, who plead a seven-count complaint and joined at least one non-diverse defendant under Ohio state statutory and common law only to find that one count (in artfully plead) gave the defendant the hook for removal. 

The fateful claim alleged that plaintiff was denied benefits on a non-discriminatory basis under the company’s severance plan.  “The district court ultimately determined that Count VII of Lockett’s complaint, which
purported to assert a claim under Ohio Revised Code § 4112 based on the terms and conditions of employment, was completely preempted by § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), and was removable based on the court’s original federal question jurisdiction.”  That ERISA sub-section provides an action “by a participant or beneficiary [in an ERISA plan] to recover benefits due to [her] under the terms of [her] plan” and “to enforce [her] rights under the terms of the plan.”

As the panel summarized:

“Lockett alleged in Count VII that she was discriminated against because she was offered a lesser severance package than others and because the severance package required her to release. Defendants from any and all of her potential claims for wrongful and illegal treatment. Lockett contends that she was entitled to receive enhanced severance benefits under the Marsh 2004 Restructuring Severance Pay Plan (the “Plan”) irrespective of any release of claims. She therefore asserts that she was denied full participation in the Plan.”

Thae panel affirmed the finding that this claim fell within the sweep of ERISA’s â€œcomplete preemption”:

“In Count VII, Lockett claimed that she had a right to participate in the enhanced severance
benefit option under the Plan and that Marsh wrongfully denied her that option. . . .Lockett’s claim for enhanced severance benefits is not merely one component of her claim of discrimination. It is a stand-alone claim asserting that she was unlawfully denied full participation in the ERISA Plan because she refused to comply with the allegedly illegal terms of the Plan that conditioned receipt of enhanced severance benefits on the signing of a waiver. Count VII of Lockett’s complaint . . . is a claim to recover benefits due under the terms of the Plan, and to enforce her rights under the terms of the Plan. As such, Count VII falls squarely within the civil enforcement provisions of ERISA. Her claim for severance benefits is completely preempted by ERISA and the district court properly exercised subject matter jurisdiction over Count VII on the basis of complete federal preemption.”

The panel kicked the rest of the claim to the curb as well.  It found that the claim did not state a valid claim for benefits, because the employee failed to meet the conditions for accepting the benefits, i.e., to sign a release for severance.  It also held that the claim did not state a claim for retaliation under ERISA § 510, 29 U.S.C. § 1140.  “[W[e conclude that the district court properly found that Lockett’s § 510 interference claim failed because all employees were offered the same Plan, and because Lockett did not produce any evidence to indicate that Marsh had a specific intent to violate her rights under ERISA.”  Finally, the panel affirmed summary judgment of the remaining six counts.