Carl Thom, Jr. v. American Standard, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 12a0016p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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Plaintiff-Appellee/Cross-Appellant, -

CARL L. THOM, JR.,

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Nos. 09-3507/3508

v.

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Defendant-Appellant/Cross-Appellee. -

AMERICAN STANDARD, INC.,

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Appeal from the United States District Court

for the Northern District of Ohio at Toledo.

No. 07-00294—Jack Zouhary, District Judge.

Argued: November 16, 2011

Decided and Filed: January 20, 2012

Before: MERRITT, CLAY, and GRIFFIN, Circuit Judges

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COUNSEL

ARGUED: David A. Campbell III, VORYS, SATER, SEYMOUR AND PEASE LLP,

Cleveland, Ohio, for Appellant. John D. Franklin, FRANKLIN & GREENFIELD, LLC,

Toledo, Ohio, for Appellee. ON BRIEF: David A. Campbell III, Charles F. Billington

III, VORYS, SATER, SEYMOUR AND PEASE LLP, Cleveland, Ohio, G. Ross

Bridgman, VORYS, SATER, SEYMOUR AND PEASE LLP, Columbus, Ohio, for

Appellant. John D. Franklin, FRANKLIN & GREENFIELD, LLC, Toledo, Ohio, for

Appellee.

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OPINION

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MERRITT, Circuit Judge. This is a FMLA employee-discharge case arising

from confusion as to when an employee should return to work after his leave. The

defendant, American Standard, Inc., appeals the district court’s grant of partial summary

judgment in favor of the plaintiff, Carl Thom, Jr., on his claim that American Standard

1

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 2

interfered with his rights under 29 U.S.C. § 2612(a)(1)(D) of the Family and Medical

Leave Act (FMLA) (the “interference” claim).1 American Standard also disputes the

district court’s calculation of Thom’s damages. Thom cross-appeals on the basis that the

district court erred by not granting him the liquidated damages provided for in the

FMLA (the “liquidated damages” claim), which calls for double damages except where

the employer acted in “good faith” in discharging the employee.2 We affirm on the

interference claim and reverse on the liquidated damages claim.

1

§ 2612. Leave requirement

(a) In general

(1) Entitlement to leave

[A]n eligible employee shall be entitled to a total of 12 workweeks of

leave during any 12 month period for one or more of the following:

....

(D) Because of a serious health condition that

makes the employee unable to perform the

functions of the position of such employee.

2

§2617. Enforcement

(a) Civil action by employees

(1) Liability

Any employer who violates section 2615 of this title shall be liable

to any eligible employee affected —

(A) for damages equal to —

(i) the amount of —

(1) any wages, salary,

employment benefits, or other

compensation denied or lost to

such employee by reason of the

violation; or

....

(ii) the interest on the amount described in clause

(i) calculated at the prevailing rate; and

(iii) an additional amount as liquidated damages

equal to the sum of the amount described in clause

(i) and the interest described in clause (ii), except

that if an employer who has violated section 2615

of this title proves to the satisfaction of the court

that the act or omission which violated section

2615 of this title was in good faith, and that the

employer had reasonable grounds for believing

that the act or omission which violated section

2615 of this title was in good faith, and that the

employer had reasonable grounds for believing

that the act or omission was not a violation of

section 2615 of this title, such court may, in the

discretion of the court, reduce the amount of the

liability to the amount and interest determined

under clauses (i) and (ii) respectively.

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 3

I. Facts

Thom worked for American Standard in Tiffin, Ohio, as a molder from July 16,

1969, until he was discharged on June 17, 2005 — a period of approximately 36 years.

Because of a non-work- related shoulder injury that required surgery, Thom requested

leave under the FMLA from April 27, 2005, until June 27, 2005. American Standard

officially granted Thom’s request for this time period in writing, the only company

document setting out a return-to-work date. Dr. Brems performed surgery on Thom’s

shoulder on April 27. Thom’s shoulder healed more quickly than anticipated. After a

follow-up appointment, Dr. Brems wrote a note that cleared Thom for light duty work

beginning on May 31 and set June 13 as the probable date on which Thom could return

for unrestricted work. But when Thom attempted to resume light work on May 31, Amy

Baker, in charge of Human Resources for American Standard, sent him home because

she said that the company did not permit employees with non-work-related injuries to

perform light duty work temporarily after FMLA leave.

On June 14, Amy Baker contacted Thom by phone because he failed to come to

work on June 13. Thom responded that he was experiencing increased pain in his

shoulder and would return to work on June 27, the end date of his approved leave.

Although Thom promised to get a doctor’s note extending his time table for recovery,

he was unable to secure a timely appointment with Dr. Brems. He did schedule an

appointment with his primary care physician, Dr. Vela, for the morning of June 17 and

left a message with Baker notifying her of his progress. After the appointment, Thom

went directly to work with a doctor’s note requesting an extension of his leave until July

18. By the time he reached work, however, American Standard had already terminated

his employment. American Standard had counted every day from June 13 to 17 as an

unexcused absence; and, as a result, Thom had exceeded the absences allowed by the

company. The district court granted partial summary judgment to Thom on the

interference claim and reserved the question of damages for trial. The parties, however,

waived their rights to a jury trial and submitted the question of damages to the judge.

The district court awarded Thom $99,960 in attorney fees, $2,732.90 in costs, and

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 4

$104,354.85 in back pay. The court below further ordered that American Standard

change Thom’s termination date from June 17, 2005, to December 31, 2007, so that

Thom would be eligible for his expected pension and retiree health benefits for both

himself and his spouse. If this change was impossible, the court required American

Standard to pay Thom a monthly annuity covering the difference between his expected

pension and the pension that he actually received because of his early termination (a

difference of 36%). The district court denied Thom statutory liquidated damages

because it found that, despite violating the FMLA, American Standard acted both in

“good faith” and with reasonable grounds for its actions when it discharged Thom.

II. Standard of Review

The district court decided most of the issues now on appeal at summary

judgment; this court reviews those decisions de novo. Int’l Union v. Cummins, Inc., 434

F.3d 478, 483 (6th Cir. 2006). A district court should “grant summary judgment if the

movant shows that there is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). On the issue of damages,

for which the district court acted as the fact finder, this court reviews any questions of

fact for clear error. Grand Traverse Band of Ottawa and Chippewa Indians v. Dir.,

Mich. Dep’t of Natural Res., 141 F.3d 635, 638 (6th Cir. 1998). Finally, this court

reviews the district court’s decision to deny Thom statutory liquidated damages for

“abuse of discretion . . . exercised consistently with the strong presumption under the

[FMLA] statute in favor of doubling [the damages].” Elwell v. Univ. Hosps. Home Care

Servs., 276 F.3d 832, 840 (6th Cir. 2002) (internal quotations omitted).

III. Thom’s Interference Claim

American Standard asks this court to reverse the district court’s partial grant of

summary judgment in favor of Thom on his claim of FMLA interference and to either

enter judgment in American Standard’s favor or remand the claim for a jury trial. See

Thom v. Am. Standard, 562 F. Supp. 2d 949, 955 (N.D. Ohio 2008). In support of his

claim, Thom asserts that American Standard failed to adequately notify him of its

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 5

method for calculating FMLA leave because it did not inform him in writing or

otherwise that company policy was to use a “rolling” method of leave calculation.

A. Notice of American Standard’s FMLA Calculation Method

The FMLA stipulates that, “an eligible employee shall be entitled to a total of 12

work weeks of leave during any 12-month period . . . because of a serious health

condition that makes the employee unable to perform the functions of the position of

such employee.” 29 U.S.C. § 2612(a)(D). Employers, for their part, are “permitted to

choose any one of . . . [four] methods for determining the ‘12-month period’ in which

the 12 weeks of leave entitlement . . . occurs.” 29 C.F.R. § 825.200(b). Two of these

four methods, namely, the “rolling” method and the “calendar” method, are pertinent to

this case. The “rolling” method calculates an employee’s leave year “backward from the

date an employee uses any FMLA leave.” Id. Using this method, Thom’s leave would

have expired on June 13. Appellant’s First Br. 32 (b/c we cite to this below). By

contrast, under the “calendar” method, which renders an employee eligible for 12 weeks

of FMLA leave each calendar year, Thom’s allowed leave would have extended

theoretically through July 14. American Standard terminated Thom for unexcused

absences on June 17. Thus, Thom needs the “calendar” method to apply. At no time

throughout the FMLA process did the Company mention to Thom that his leave time

would be governed by a “rolling” 12-month period. The only written document he

received from the company stated that his leave would expire on June 27. He was only

notified that American Standard had accelerated his return-to-work date on June 14,

after it had already elapsed the day before. The first time Thom was given actual notice

that the Company was using a “rolling” method requiring him to return to work on an

earlier date was after he filed his lawsuit in this case when the defense lawyers raised

the rolling method as a defense.

American Standard now claims that it has always used the “rolling” method for

calculating FMLA leave and that Thom should have known this fact. Id. at 38. It further

contends that because two key officers in Thom’s union provided affidavits during the

lawsuit stating that American Standard historically maintained a policy of applying the

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 6

“rolling” method, their knowledge is imputed to Thom “through simple agency law.”

Id. In rejecting American Standard’s constructive notice arguments, the district court

concluded that an employer is required to take affirmative steps to inform employees of

its selected method for calculating leave. See Thom, 562 F. Supp. 2d at 953 (citing

Bachelder v. Am. West Airlines, Inc., 259 F.3d 1112, 1117 (9th Cir. 2001); Austin v. Fuel

Sys., Inc., 379 F. Supp. 884, 894 (W.D. Mich. 2004)). We agree that employers should

inform their employees in writing of which method they will use to calculate the FMLA

leave year. This standard is consistent with the principles of fairness and general clarity,

and applying it, American Standard’s notice to Thom fell decidedly short. Although

American Standard did internally amend its FMLA leave policy in March 2005 to

indicate that it would now calculate employee leave according to the “rolling” method,

it did not give Thom actual notice of this changed policy or in any way tell him that his

official leave date would expire earlier than June 27, the date the company had approved.

Consequently, Thom was entitled to rely on the calendar method and the date of June 27

that the company had given in writing. Neither Amy Baxter nor anyone else from her

department or elsewhere advised him of any change. See 29 C.F.R. § 825.200(e).3

Despite the fact that the Company approved June 27 as Thom’s date, American

Standard relies heavily on McMillan v. LTV Steel, Inc., 555 F.3d 218 (6th Cir. 2009), for

the proposition that notice of an employer’s method for calculating FMLA leave is

sufficient when it is imputed from a union to its members. In MacMillan, this court held

that a laid-off steelworker received adequate notice of a bankruptcy stipulation regarding

his pension plan because “notice to [his union] constituted notice to [him].” Id. at 231.

However, even conceding that imputed notice of an employer’s calculation method may

sometimes be adequate, it was not in this case. American Standard officially approved

Thom’s leave through June 27 — ten workdays in excess of his permitted leave under

3

Even if American Standard’s 2005 policy could be applied to his leave, Thom was nonetheless

entitled to application of the “calendar” method. An employer that “subsequently select[s] an option” must

“provide[] . . . 60-day notice to all employees of the option the employer intends to implement.” Id.

American Standard’s 2005 policy became effective on March 1, 2005, triggering a 60-day notice window

through April 29, 2005. Thom, 562 F. Supp. 2d at 955-56. Thom began his protected leave on April 27,

2005, two days before this notice period expired. Id. at 956. He was therefore entitled to “use the option

providing the most beneficial outcome” to him. 29 C.F.R. § 825.200(e).

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 7

the “rolling” method. Certainly, actual notice of a particular return-to-work date trumps

constructive notice of another. See Butte v. Superior Copper Co. v. Clark-Mont. Realty

Co., 249 U.S. 12, 27 (1919) (reasoning that “constructive notice . . . is the law’s

substitute for actual notice”) (emphasis supplied). Thom testified that he was ready and

would have returned to work by June 27. The district court rejected the Company’s

“constructive” notice argument and accepted June 27 as his return-to-work date. We

agree that this conclusion is the only reasonable solution to the problem. The

Company’s post-lawsuit defenses that the rolling method should be used to fix the date

or that any date earlier than June 27 should be used are unreasonable.

B. Damages

American Standard’s arguments that the district court should have denied Thom

damages for the loss of his pension and for back pay are also unreasonable. Having

discharged him unlawfully, the company caused him to lose his pension benefits and his

pay until he could secure another job.

1. Pension Benefits. — The company bases its denial on the fact that it sold the

plant where Thom worked on November 1, 2007, two years after firing Thom, at which

time it “terminated all of its union employees.” It argues that all pension benefits

thereafter were “provided by the new employer,” so that Thom “would have been

terminated November 1, 2007” and would have had to collect his pension from his new

employer. The district court rejected this causation claim out of hand because it

obviously ignores the fact that it was the unlawful discharge that caused the loss of

pension benefits to which Thom would have otherwise been entitled when they accrued

in December 2007. The district court also said that the sale of the plant on November

1 was irrelevant to the causation issue.

2. Back Pay. — American Standard also argues that Thom did not mitigate his

back pay damages because he spent five months after discharge obtaining a “GED,” a

General Education Degree, because his only job skills arose from his 36-year tenure as

a molder with American Standard. When he received his GED, he received a job at

approximately $10 an hour, $8 an hour less than his former job with American Standard.

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 8

The Company argues against paying him wages for the period he worked for his GED

and for the difference between the pay of the job American Standard discharged him

from and his new job. Again, we agree with the district court’s rejection of this

argument that apparently seeks to deny Thom any back pay after his unlawful discharge.

The district court reasoned as follows:

Plaintiff worked with and applied for jobs through the Ohio Department

of Job and Family Services Veteran Administrator. However, given

Plaintiff’s limited skill set and the rural nature of his community,

Plaintiff had limited job prospects. He found employment at Taiho in

April 2006, working in a substantially equivalent position as he did with

Defendant but receiving a significantly reduced salary. Thus, unlike the

employees in the cases Defendant cites, Plaintiff did not voluntarily

abandon his job search when he began work at Taiho, but rather took the

best employment opportunity given the limitations of his skill set and

location. Difficulty finding work is not the equivalent of stopping to

look for work.

In the alternative, Defendant asks this Court to cut off Plaintiff’s

back pay on November 1, 2007, which is when Defendant sold its

operations, including its plant in Tiffin, Ohio, and terminated all its union

employees . . . .

Here again, however, Defendant’s argument is not well taken

because it fails to account for the fact that the new owners rehired all

employees similarly situated to Plaintiff. In Gaddy v. Abex Corp., 884

F.2d 312, 319 (7th Cir. 1989), the Seventh Circuit found that despite the

plant’s asset sale, plaintiff’s back pay “need not be terminated as of the

sale of the plant, since Gaddy could have continued her employment”

with the plant’s new owner. The court in Gaddy noted that “[a]lthough

the sale of a plant often results in the restructuring and the effective

elimination of former positions, here the evidence reveals that the

remaining two employees in [plaintiff’s] department continued their

employment in the same positions with [the new owner] following the

sale of the plant.” Id.

Likewise, employees similarly situated to Plaintiff were rehired

after the November 1007 asset sale. Thus, the asset sale does not sever

Plaintiff’s back pay.

Thom v. Am. Standard, Inc., 2009 WL 961182, at *3-4 (N.D. Ohio April 8, 2009). Thus,

we agree with the district court that, like the discharge, American Standard’s denial of

his pension and back pay were unreasonable.

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 9

IV. Liquidated Damages

The district court found that American Standard acted unreasonably but met the

test of good faith. We do not agree because the company’s after-the-fact reliance on the

rolling method — its primary justification in the district court and on appeal — was a

pretextual reason never raised in Thom’s case before the discharge and only raised by

American Standard once the case was in litigation. The June 27 date agreed to in writing

by American Standard is completely inconsistent with the rolling method and with

counsel’s present reliance on the rolling method as a justification for discharge.

Pretextual reasons for discharge manufactured after the fact in order to justify an earlier

wrong are not consistent with good faith. The rolling calendar pretext is an ostensible

motive given after-the-fact as a cover for the real reason for firing this 36-year employee

— whatever those economic motives may have been. See Wilkerson v. Auto Zone, 152

F. App’x 444, 448, 2005 WL 2616016 (6th Cir. 2005) (“Auto Zone’s stated reason for

the [FMLA] discharge violation of the attendance policy was a pretext” justifying

liquidated damages). Pretextual excuses are equivalent to reasons “not held in good

faith.” See, e.g., Thornley v. Penton Pub., Inc., 104 F.3d 26, 30 (2d Cir. 1997) (“the jury

is certainly entitled to reject the standards [for terminating employees] claimed by the

employer on the grounds that these standards were pretextual — i.e., they were not held

in good faith.”).

To avoid paying liquidated damages under 29 U.S.C. § 2617(a)(1)(A)(iii), the

burden was on American Standard to prove both parts of the statutory exception. See

Arban v. West Pub. Corp., 345 F.3d 390, 408 (6th Cir. 2003). There is a strong

presumption in favor of awarding liquidated damages that are double the amount of any

compensatory damages. Thus, “[a]lthough in the final analysis, we review a district

court’s decision on liquidated damages for abuse of discretion, that discretion must be

exercised consistently with the strong presumption under the statute in favor of

doubling.” Elwell, 276 F.3d at 840 (emphasis added).

American Standard claimed in the district court and now on appeal that it

terminated Thom in good faith because it thought that he had exhausted his FMLA leave

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 10

under its long-used “rolling” method of calculation. We have already pointed out the

flaws in this argument. The “rolling” method was not even formally adopted into the

company’s published policies until March 2005. American Standard’s consistent, long-

term use of the “rolling” method is also belied by its approval of Thom’s request for

leave until June 27 — a date inconsistent with this method of calculation. And even if

the “rolling” method had been a fully implemented company policy throughout 2005,

American Standard could not have reasonably relied on it in Thom’s case since, when

it approved his leave request, it departed from this policy. American Standard cannot

demonstrate good faith by pointing to its reliance on a policy that Thom did not know

about and was not used in Thom’s case. American Standard articulated this justification

only when counsel for the company asserted it as a defense after the lawsuit was in

progress.

To establish good faith under the FMLA, a defendant must show that “it honestly

intended to ascertain the dictates of the FMLA and to act in conformance with it.” Hite

v. Vermeer Mfg. Co., 446 F.3d 858, 868 (8th Cir. 2006). American Standard makes no

such showing. On June 14, 2005, Thom informed American Standard that he still felt

his return date was June 27 — the date his employer initially approved. Confusion

existed even among American Standard’s own employees about when Thom was

scheduled to return. In early June — well after Dr. Brems’ updated note supposedly

informed American Standard of the June 13 return date — Baker informed another

Human Resources employee that she still considered June 27 to be the relevant date.

R. 32 Baker Dep. 125. Despite this understanding, American Standard continued to

invoke the calculation method most prejudicial to Thom. It did so even after Thom

informed Baker that he was actively working to resolve the return-to-work question by

obtaining a doctor’s note. When Dr. Brems learned that Thom had been discharged, he

wrote a letter to American Standard explaining that any confusion as to Thom’s leave

was not Thom’s fault and asking that Thom’s job be restored. The record contains no

response from American Standard and no effort to investigate further or correct its error.

The letter is as follows:

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 11

August 22, 2005

Mr. Carl J. Thom

1000 E Township Rd. 122

Tiffin, OH 44883

Mr. Carl J. Thom

CC # 23167166

To Whom It May Concern:

....

It was only through circumstances of my absence, that can be well

documented, that the situation unfortunately arose. I would add that Mr.

Thom has been a model patient of mine, with very significant work ethic,

working diligently on his stretching exercises. I have no doubt that

having worked for better than 30 years with your company, that the same

demonstration of his work ethic would likely be present. It would

therefore again seem shameful that he could lose his job over a

scheduling issue that had its bases in my office and not with Mr. Thom

himself.

Mr. Thom’s intraoperative surgical findings clearly documented a near

complete rupture of his biceps tendon and significant inflammation and

partial tearing of his rotator cuff mechanism. Although I did see him

early in June of 2005, at which time he reported good progress, it was my

thought at that time for him to return to work on a given date.

Unfortunately, his recovery then slowed and he had further concerns

about possibly a re-tearing or re-injuring his rotator cuff. It was only

with that framework that he was concerned about returning to work and

did not do so because he could not get a hold of me for my authorization.

I would certainly hope that in an effort to provide the best care possible,

that you give deep consideration to re-hiring Mr. Thom as a loyal and

hardworking employee that I am sure he is. At this point in time Mr.

Thom can return to work, certainly although he will have some pain as

he tries to improve his range of motion and also works through the

inflammatory process, I think he can safely return to work without

further injury to himself or risk to you or your corporation.

....

Sincerely,

/s/

John Brems, M.D.

Nos. 09-3507/3508 Thom v. Am. Standard, Inc. Page 12

JB/dm

D: 08/22/2005

T: 08/24/2005

R. 32 Baker Dep. Ex. 122. In this case, after-the-fact reliance on the “rolling” method

of calculation should not grant American Standard immunity from liquidated damages,

and the company’s obdurate refusal to correct an obvious mistake that constituted a

wrongful discharge of this 36-year employee reinforces the case for liquidated damages.

Accordingly, this Court affirms the judgment of the district court on the

interference claim under 29 U.S.C. § 2612 including damages and reverses the judgment

of the district court on the liquidated damages claim under 29 U.S.C. § 2617(a) and

remands for the doubling of damages in accordance with this opinion.