Santana-Diaz v. Metropolitan Life Insurance Co., No. 15-1273 (1st Cir. Mar. 14, 2016); Arizona ex rel. Horne v. The Geo Group, No. 13-16081 (9th Cir. Mar. 14, 2016)

| Mar 15, 2016 | Daily Developments in EEO Law |

Here are two employment cases about second-chances. A plan participant who filed an ERISA claim too late under a contractual limitations period is rescued by a decision that the plan violated its duty by not telling the participant about the shortened deadline. The EEOC wins a second opportunity to advance claims on behalf of a class of female victims of harassment, in the wake of Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (2015).

Santana-Diaz v. Metropolitan Life Insurance Co., No. 15-1273 (1st Cir. Mar. 14, 2016): The Supreme Court held several terms ago in Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604, 610 (2013), that an ERISA plan could include contractual limitations period, “even one that starts to run before the cause of action accrues, as long as the period is reasonable.”

In this case, a participant in a long-term disability plan – sponsored by Shell Chemical in Puerto Rico and managed by MetLife – filed a year-and-a-half too late on a claim for benefits under the policy’s three-year limitations period. As the panel opinion notes, “both MetLife’s November 24, 2010 initial denial of benefits letter and its August 19, 2011 final denial letter informed Santana-Díaz that he could bring a civil action, but neither letter included a time limit for doing so or mentioned at all that the right to bring suit was subject to a limitations period.”

In reviewing the case, the panel finds unpersuasive Santana-Díaz’s arguments that the limitations period did not accrue until he exhausted administrative appeals under the plan. It holds that the plan itself specified that the limitations period “commenced when proof of disability was due.”

Yet the panel holds that a final resolution of the accrual issue was unnecessary, because the final denial letter did not comply with 29 C.F.R. § 2560.503-1(g)(1)(iv) and thus invalidated the shorter, contractual limitations period. That regulation provides that notice of a denial of benefits must be in writing (paper or electronic) and must include a “description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action.”

MetLife argued that the reference to “time limits” meant only internal administrative review, not civil actions. But the panel rejects this, holding that “interpreting the regulation that way … would require us effectively to erase the word ‘including’ from the sentence and to replace it with ‘and’.”

The panel holds that its interpretation, requiring a statement of the limitations period for a civil action, comports “with ERISA’s overall purpose as a remedial statute” because participants “are obviously more likely to read information stated in the final denial letter, as opposed to included (or possibly buried) somewhere in the plan documents.” It also notes that the same approach was followed by the Third and Sixth Circuits.

Finally, it holds that where the denial-of-benefits letter fails to comply (and the administrator fails to provide the limitations dates in another timely way), it “can never be in substantial compliance with the ERISA regulations, and the violation is per se prejudicial to the claimant.” Thus, the consequence of the regulatory failure is to abrogate the contractual limitations period altogether. Because the borrowed forum limitations period in Puerto Rico was fifteen years for breach of contract, the case was timely.

Arizona ex rel. Horne v. The Geo Group, No. 13-16081 (9th Cir. Mar. 14, 2016): This case comes in the wake of last term’s Mach Mining, which set the standard for how the EEOC can prove its compliance with its statutory duty to adjudicate. This case, brought by the EEOC and the Arizona Civil Rights Division (“Division”) on behalf of Alice Hancock, raises such issues and also addresses whether an employee must meet the charge-filing requirement for post-charge events.

Ms. Hancock was a prison guard for a private-contract facility who alleged in an EEOC charge that she was sexually assaulted by a sergeant. The Division, subject to its worksharing agreement with the EEOC, investigated the charge and discovered five witnesses to and victims of alleged harassment. It “issued a Reasonable Cause Determination substantiating Hancock’s allegations of discrimination and harassment based on her sex and retaliation,” and extended the determination to “a class of female employees.” The EEOC adopted the Determination.

The EEOC and the Division made a written demand (with a proposal of systemic relief and damages), and conducted a conciliation session. The employer Geo offered only to settle Ms. Hancock’s claim. The conciliation failed and the agencies filed civil complaints under Title VII and the Arizona Civil Rights Act, seeking to represented classes of women at two Geo facilities.

The district court dismissed 15 women from the case who were not identified during the pre-filing investigation, for failure to conciliate; the claims of the five women who were identified (including Ms. Hancock) were returned to the agencies for conciliation, and then were eventually dismissed on summary judgment or settled.

On appeal, the panel reverses in substantial part. It holds that the agencies, in accord with Mach Mining (decided while the appeal was pending), furnished the employer with detailed allegations, a written settlement proposal, and a formal conciliation. In any event, the district court erred by dismissing the claims of the 15 women rather than returning them for conciliation (as they did with the five others).

The panel also holds that the agency had no obligation to conciliate individually for each claimant, and could instead negotiate on behalf of an identified class. “If the EEOC and the Division were required to pursue individual conciliation on behalf of every aggrieved employee, they would be effectively barred from seeking relief on behalf of any unnamed class members they had yet to identify when they filed their suit.” Further, “conciliation requirements do not change depending on whether the EEOC brings a claim under §2000e-5 (a § 706 claim) or §2000e-6 (a § 707 pattern-or-practice claim).”

Moreover, the panel holds that the district court erred in holding that the 300-day period for violations reached back from the Reasonable Cause Determination, rather than the filing of the original charge. “Nothing in the text of the statute supports the district court’s imputation of the employee’s time limit into the EEOC’s duty to notify the employer of the results of its investigation.” There was no unfairness to the employer, because the original charge gave it notice that the sexual assault was not an “isolated act,” because it also alleged that the company took no remedial steps and indeed fired the claimant on false charges.

The panel finally holds, with respect to the class, “that in an EEOC class action, an aggrieved employee is not required to file a new charge of discrimination if her claim is already encompassed within the Reasonable Cause Determination or if the claim is ‘like or reasonably related’ to the initial charge.” And, as to one claimant who lost on summary judgment, the panel remands holding that There was a genuine dispute of material fact whether the repeated comments and gestures (spanking, bumping, sexually-charged talk) created a severe or pervasive hostile work environment.

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