COA: State workers’ mandatory health-care charge unconstitutional

A statute requiring public employees to contribute three percent of their pay to finance state retiree health-care benefits is unconstitutional, the Michigan Court of Appeals has ruled.

In AFSCME Council 25, et al. v. State Employees Retirement System, et al., the court upheld a lower court ruling that struck down MCL 38.35.

The state and unions representing state workers negotiated a three percent pay raise, which the state Civil Service Commission (CSC) approved.

The statute negated the raise by requiring state workers to contribute the amount of the raise to fund health care benefits for state retirees.

Court of Appeals Judge Karen M. Fort Hood, joined by Judges Jane M. Beckering and Cynthia Diane Stephens, ruled that the CSC has plenary authority over state workers’ pay.

Fort Hood explained that Michigan’s Constitution has an express mechanism to override the commission.

[A]n increase in the rate of compensation authorized by the commission may be rejected or reduced by the Legislature “by a two-thirds vote of the members elected to and serving in each house” provided the vote occurs within 60 calendar days of the transmitted increase. Mich Const 1963, art 11, § 5, ¶ 7.

The Legislature tried but failed to override the CSC in this manner, and then enacted the statute.

But, Fort Hood ruled, by enacting the statute:

the Legislature acted to reduce the compensation of classified civil servants by three percent without an accompanying agreement with the unions or the [commission].

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MSC will review pension tax law

The Michigan Supreme Court has granted Gov. Rick Snyder’s request for an advisory opinion on the constitutionality of reducing or eliminating tax exemptions for pension incomes.

The MSC will hearing arguments on the constitutionality of 2011 PA 38 on Sept. 7.

The questions submitted for the MSC’s review are:

  • (1) whether reducing or eliminating the statutory exemption for public-pension incomes as described in MCL 206.30, as amended, impairs accrued financial benefits of a “pension plan [or] retirement system of the state [or] its political subdivisions’ under Const 1963, art 9, § 24;
  • (2) whether reducing or eliminating the statutory tax exemption for pension incomes, as described in MCL 206.30, as amended, impairs a contract obligation in violation of Const 1963, art 1, § 10 or the US Const, art I, § 10(1);
  • (3) whether determining eligibility for income-tax exemptions on the basis of total household resources, or age and total household resources, as described in MCL 206.30(7) and (9), as amended, creates a graduated income tax in violation of Const 1963, art 9, § 7; and
  • (4) whether determining eligibility for income-tax exemptions on the basis of date of birth, as described in MCL 206.30(9), as amended, violates equal protection of the law under Const 1963, art 1, § 2 or the Fourteenth Amendment of the United States Constitution.

The Attorney General will submit separate briefs arguing for and against the legislation’s constitutionality.

Another 6th Circuit judge wants en banc review of ADA standard

Judge Jane B. Stranch has joined the growing group of judges who are itching to have the entire Sixth Circuit revisit a disability law decision that goes against the bulk of authority in other circuits.

The Sixth Circuit is in the distinct minority of jurisdictions that require plaintiffs suing under the Americans with Disabilities Act (ADA) to show that their disability was the “sole reason” they were fired from their jobs. See “6th Circuit: Go ahead, take another crack at this

Most other circuits use a “motivating factor” standard.

Since 1996, when a 6th Circuit panel issued the “sole reason” standard in Monette v. Electronic Data Systems Corp., 90 F.3d 1173 (6th Cir. 1996), other panels have had to fall in line because one panel can’t overrule another.

Some judges have openly suggested that Monette was incorrectly decided. Judge Richard Allen Griffin, concurring in Lewis v. Humboldt Acquisition Corp., is one of them.

And Judge Gilbert Merritt, who wrote the majority opinion in Lewis, broadly hinted that plaintiff’s counsel should seek en banc rehearing of the case.

Indeed we should, said Stranch, concurring in Whitfield v. State of Tennessee, et al. Stranch said that the “sole reason” standard was borrowed from the federal Rehabilitation Act, which:

prohibits discrimination against an individual “solely by reason of his or her disability,” 29 U.S.C. § 794(a)[.]

[T]he ADA prohibits discrimination’on the basis of’ the individual’s disability, 42 U.S.C. § 12112(a). While the text of the RA mandates the sole motivation standard, no derivation of the word “sole” appears in any liability provision of the ADA. …

I take this opportunity to lend my voice to the others that have urged the en banc court to reconsider our initial importation of the sole motivation standard from the RA into the ADA. I do not find our position justifiable in light of the tenets of statutory construction.

Michael L. Weinman of Jackson, Tenn., the plaintiff’s attorney in Lewis, says he will pursue an en banc hearing.

6th Circuit: Go ahead, take another crack at this

In the vast majority of the United States federal district courts, plaintiffs suing under the Americans with Disabilities Act must show that their disability was a “motivating factor” for being fired from their jobs.

But the bar is set much higher in Michigan, Ohio, Tennessee and Kentucky. The Sixth Circuit has ruled in Monette v. Electronic Data Systems Corp., 90 F.3d 1173 (6th Cir. 1996), that a plaintiff’s disability must be the “sole reason.”

And that’s the reason, Judge Gilbert S. Merritt wrote in Lewis v. Humboldt Acquisition Corp., a federal district court in Tennesse correctly rejected an ADA plaintiff’s proposed jury instructions, which contained the more generous “motivating factor” language.

But in doing so, there was a clear invitation to Lewis’ attorney, Michael L. Weinman of Jackson, Tenn., to move for an en banc hearing.

One panel of the Sixth Circuit can’t overrule another, Gilbert explained, citing Salmi v. Sec’y of Health & Human Servs., 774 F.2d 685 (6th Cir. 1985), and 6th Cir. R. 206(c).

Gilbert noted that Salmi had tied the hands of four other panels previously asked to overrule Monette’s “sole reason” standard. In a footnote, Gilbert explained how to get past that:

To avoid the inefficiency of appealing to a panel that could not grant her the remedy that she seeks, Lewis could have filed a petition requesting that her appeal initially be heard en banc, rather than by this panel. See Fed. R. App. P. 35. Although en banc hearings are “not favored,” they may be ordered when “the proceeding involves a question of exceptional importance.” Fed. R. App. P. 35(a)(2).

One such example is a case in which a panel decision “conflicts with the authoritative decisions of other United States Courts of Appeals that have addressed the issue.” Fed. R. App. P. 35(b)(1)(B). Of course, after this panel issues its opinion, Lewis may still move for rehearing en banc. See Fed. R. App. P. 40.

I asked Weinman if he was going to file the en banc motion.

“I sure am,” he said, adding that if that didn’t work in his favor, “this may be my shot at the Supreme Court.”

Weinman has tried the case twice. The first jury hung. The second deliberated “for several hours,” he said. Then, the jury sent out a note asking whether Lewis’ disability had to be the sole reason she was fired. The jury no-caused his client after getting the answer.

It’s a fairly safe bet the motion will be granted. Judge Richard Allen Griffin, concurring in Lewis, wrote:

[O]ur precedent on this issue of exceptional importance is misguided and contrary to the overwhelming authority of our sister circuits. Accordingly, the question appears appropriate for rehearing en banc. See Fed. R. App. P. 35(b)(1)(B).

We lifted the “sole reason” requirement from the Rehabilitation Act’s “solely by reason of her or his disability” language, see 29 U.S.C. § 794(a), and imported it into the ADA, reasoning in a footnote in Maddox v. University of Tennessee, 62 F.3d 843 (6th Cir. 1995), that “[t]he analysis of claims under the Americans with Disabilities Act
roughly parallels those brought under the Rehabilitation Act.” Monette, 90 F.3d at 1177- 78 (citing Maddox, 62 F.3d at 846 n.2).

As a super-majority of our sister circuits have held, however, the plain language of the ADA does not support application of the Rehabilitation Act’s “sole reason” standard.

The “super-majority” breaks down like this: there are 12 regional circuits; 10 have considered the issue; eight have adopted the “motivating factor” standard. The Sixth and Tenth Circuits use the “sole reason” standard.

We’ll keep an eye on this one.

6th Circuit: No jury trials in WARN Act cases

Laid-off workers suing their employers under the federal Worker Adjustment and Retraining Notification Act of 1988 (WARN Act), 29 U.S.C. §§ 2101-2109, can’t try their claims to a jury.

The Sixth Circuit is the first federal appellate court to rule on the issue. Several district courts had addressed the issue with mixed results.

The WARN Act opens an employer to damages in the form of back pay and benefits if the employer doesn’t give enough advance warning of large-scale layoffs or plant closing.

At first blush, this sounds like Seventh Amendment stuff — money damages in an action at law — for which there is an undeniable right to a jury trial.

But is it? One test to determine whether a remedy is legal (say hello to the jury) or equitable (say hello to the judge) is to compare the statute to 18th-century actions brought in English courts before the merger of law and equity.

Judge Ralph B. Guy analyzed it this way:

It is undisputed that no action for failing to give advance notice of an employment loss was known to 18th-century England. …

[W]e do not see an analogy between the issue to be tried in an employee’s WARN Act claim and an action
for breach of contract — a recognized pre-merger action at law … .

Nor are the WARN Act claims analogous to a personal injury or tort action, which would be “a prototypical example of an action at law.” …

[A] better comparison might be to a breach of an employer’s fiduciary duty, which is an action recognized as equitable in nature. …

[The WARN Act] places the entire damage award — the liability for back pay and benefits — within the district court’s discretion.

It’s true that money is the usual remedy for a suit at law but money can also change hands as a form of equitable relief, such as restitution. The bottom line from the Sixth Circuit:

We are persuaded that the statutory remedies available to aggrieved employees provide equitable restitutionary relief for which there is no constitutional right to a jury trial.

The case is Bledsoe, et al. v. Emery Worldwide Airlines, et al.

Educators file class action suit

Five members of the Michigan Education Association have filed a class-action suit, which “seeks to overturn a provision that requires school employees who don’t retire this summer to start paying an extra 3 percent of their compensation into a fund for retiree health care …” according to the Associated Press.

However, according to the story, the “suit doesn’t challenge a provision that gives slightly higher pension benefits to school employees who retire this summer.”