September 26, 2016
Via CM/ECF
Gino J. Agnello, Clerk of Court
Clerk’s Office
U.S. Court of Appeals for the Seventh Circuit
Room 2722
219 S. Dearborn St.
Chicago, IL 60604
RE: EEOC v. Flambeau, Inc., No. 16-1402
Dear Mr. Agnello:
The EEOC submits this letter pursuant to the Court’s order to submit a statement by September 26, 2016, addressing this Court’s jurisdiction. Specifically, this Court questioned at oral argument what relief the EEOC could obtain, given that Dale Arnold no longer works at Flambeau, and given that Flambeau discontinued its mandatory wellness program as of the 2014 benefit year. As discussed in detail below, the EEOC maintains that this case is not moot, as the agency could obtain monetary damages and injunctive relief if the EEOC prevails.
Statement of Facts
We recite here only those facts pertaining to this Court’s jurisdiction, i.e., whether this appeal is moot.
Based on the recommendation of the company’s healthcare consultant, Flambeau’s Director of Human Resources, Mark Rieland, recommended that the company make the wellness plan mandatory for the 2012 benefit year. See R.12, ¶¶ 15, 16 (Rieland Aff.). The recommendation was approved by Jason Sauey, the company’s president, and Todd Spencer, the chief administrative officer. R.21, p.9 (Rieland Depo. 15); R.21, p.19 (Rieland Depo. 50-51). Neither Sauey nor Spencer asked whether the wellness plan complied with the ADA. R.21, p.19 (Rieland Depo. pp.50-51). Rieland knew at the time the company made the wellness plan mandatory that the ADA prevented certain medical inquiries and that the EEOC enforced the ADA. R.21, p.25 (Rieland Depo. 78). But Rieland did not personally look to see whether requiring HRAs and biometric exams would comply with the ADA. R.21, p.25 (Rieland Depo. 78-79). Rieland also knew, prior to cancelling Arnold’s insurance, that the ADA required biometrics and HRAs to be voluntary. R.21, p.35 (Rieland Depo. 120-21). Yet Rieland failed to determine what “voluntary” meant prior to canceling Arnold’s insurance and he failed to ask Katie Axelsen (the Benefits and Compensation Specialist) to look into it. Id.
On January 9, 2012, Flambeau sent Arnold an email stating that effective December 31, 2011, his health insurance was cancelled. R.17-4 (1/9/12 letter). On January 18, 2012, Arnold filed a union grievance. R.30-12 (grievance). On January 19, 2012, Rieland sent an email to the company’s outside counsel stating, “We are denying people insurance for not completing their HRA and the union just sent me the link below. Do you think we have a leg to stand on?” R.30-14, p.2 (email). The link was to an article titled “EEOC Says Employers Cannot Require Participation in Health Risk Assessment.” R.25, ¶ 37 (EEOC Resp. to SOF, citing Rieland Depo. 141-43). Rieland knew that, as the article stated, EEOC’s position was that voluntary meant employees could not be penalized for nonparticipation nor required to participate. R.21, p.41 (Rieland Depo. 142).
The outside counsel responded to Rieland that it “was nice talking with you. I think your instincts are correct and you should continue to deny the grievance.” R.30-14, p.2 (email). Rieland responded by stating “FYI – The Grievance has a blacked out section that I can still read that say[s] he contacted Employee Benefits, US Department of Labor.” Id. The outside counsel responded to Rieland that “this is probably a reference to the Employee Benefits Security Administration, (EBSA),” which “probably has no idea of the EEOC’s position with respect to health risk assessments . . . . I think the employee would have gotten a different reaction if he had contacted the EEOC. He is not likely to hear from the EBSA that the Company is wrong.” Id. at p.1; R.25, ¶ 37 (EEOC Resp. to SOF, citing Rieland Depo. 150-51). Rieland went on to deny Arnold’s grievance, and he testified “yes” when asked whether he had “thought it was okay to ignore EEOC’s judgment on this matter?” R.21, p.44 (Rieland Depo. 152) (stating, “I don’t know if ‘ignore’ is the right word, but yes.’”); R.25, ¶37 (EEOC Resp. to SOF).
During his five months without health insurance, Arnold incurred $82.02 in out-of-pocket costs for medicines and tests. R.23, p.38 (Arnold Depo. 132-33). He did not go to his April 2012 follow-up appointment for congestive heart failure because he lacked any health insurance. R.23, p.45 (Arnold Depo. 160) (stating that he felt fine but that he wanted to see the doctor). Arnold understood that he could have paid for the visit out-of-pocket, but he did not do so because it would have cost “lots of money.” Id. On April 26, 2012, Arnold filed his EEOC charge, and on December 12, 2013, the EEOC issued a letter of determination finding a statutory violation. R.28, ¶¶ 40-41 (Flambeau’s Resp. to EEOC’s SOF).
Flambeau discontinued the mandatory wellness plan for the 2014 benefit year. R.30-9, p.29 (Rieland Depo. 220). According to Rieland, the company’s decision was “driven by cost.” R.30-9, p.29 (Rieland Depo. 221). He explained that after the Affordable Care Act, the company had to “cover health checkups,” and Flambeau was “not going to pay for both” the checkup and a mandatory HRA and biometric exam. R.30-9, p.29 (Rieland Depo. 221). He further stated that Flambeau “look[ed] at the cost of the two plans . . . having the mandated HRA and having people go to their doc, at that point in time we just said, look, we’re just going to make it voluntary with the employees.” R.30-9, p.29 (Rieland Depo. 222) (emphasis added). Rieland added that employees had not taken “real ownership in their own health,” as the company had hoped, so Flambeau determined “based upon our costs and the results at that point in time, it just wasn’t worth continuing.” R.30-9, p.29 (Rieland Depo. 223) (emphasis added).
Arnold resigned in March 2014. R.12, ¶ 37 (Rieland Aff.). According to Arnold, he resigned because of “all the stuff that’s happening . . . like this lawsuit,” as well as his health concerns, including burns incurred in a home fire, and his long commute. R.23, pp.14-15 (Arnold Depo. 37-39).
The EEOC’s complaint alleged that Flambeau’s mandatory wellness plan violated the ADA, 42 U.S.C. § 12112(d)(4). R.1. The EEOC alleged that jurisdiction was proper under 28 U.S.C. §§ 451, 1331, 1337, 1343, and 1345. R.1, ¶ 1. The EEOC sought, inter alia, the following relief: (1) a permanent injunction enjoining Flambeau from requiring its employees to undergo unlawful medical examinations or answer unlawful disability-related questions; (2) compensation for past pecuniary losses, including medical expenses, in amounts to be determined at trial; (3) compensatory damages in the form of emotional pain, suffering, inconvenience, and mental anguish, in amounts to be determined at trial; and (4) punitive damages for malicious and reckless conduct, in amounts to be determined at trial. R.1, pp.5-6 (¶¶ A-G). Flambeau’s Answer admitted that the district court had jurisdiction. R.6, ¶ 1; see also R.14 (Flambeau’s Proposed Findings of Fact, ¶ 3) (stating that the court had jurisdiction under 28 U.S.C. §§ 1331, 1345). Flambeau never filed a motion to dismiss for lack of jurisdiction. Although Flambeau’s motion for summary judgment sought a finding that the EEOC is not entitled to damages, R.10, pp.21-15, the court did not rule on the availability of punitive damages. R.38, p.2.
The EEOC’s Answers to Defendant’s First Set of Interrogatories – which are not in the record – respond to Flambeau’s request for information about the amount of damages requested. See Answer # 4 (attached). The EEOC objected to the request as premature, stating that actual requests for damages would be made to the jury at trial based upon the evidence presented. The EEOC further stated that, consistent with the Rule 26 disclosures, the EEOC sought backpay in the form of “out of pocket expenses for medicines as set forth in identified documents”; “emotional pain and suffering from”, inter alia, the termination of his health insurance when he had a newly-diagnosed health crisis and from the threat of discipline for failing to do the wellness plan.
Argument
“Article III of the Constitution limits federal court jurisdiction to ‘cases’ and ‘controversies.’” Campbell-Ewald Co. v. Gomez, 133 S.Ct. 663, 669 (2016) (citation omitted). An “actual controversy” must therefore exist at “all stages of review.” Id. (internal quotation marks and citation omitted). “A case becomes moot, however, ‘only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.’” Id. (citation omitted); see also Los Angeles Cty. v. Davis, 440 U.S. 625, 631 (1979) (stating that a case becomes moot “when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome”) (internal quotation marks and citation omitted). In an action seeking only injunctive relief this requirement ordinarily means that, once the threat of the act sought to be enjoined dissipates, the suit must be dismissed as moot. See, e.g., Wernsing v. Thompson, 423 F.3d 732, 744-45 (7th Cir. 2005). If, however, a plaintiff also seeks monetary damages, the case is not moot, even if the underlying misconduct that caused the injury has ceased. See id. at 745-46 (holding that “while plaintiffs’ claim for injunctive relief is moot, plaintiffs’ claims for monetary damages and declaratory relief still present a live case or controversy, and therefore we must proceed to consider the substantive merits of plaintiffs’ prior restraint claim”); see also Powell v. McCormack, 395 U.S. 486, 496-98 (1969) (holding that although injunctive relief was moot, a case or controversy still existed because the plaintiff requested declaratory relief and damages).
In this case, EEOC alleged that Flambeau violated the ADA, 42 U.S.C. § 12112(d)(4). The available remedies for a violation of the ADA include those remedies available under Title VII of the Civil Rights Act of 1964. See 42 U.S.C. § 12117(a). Consequently, back pay, compensatory damages, punitive damages, and injunctive relief are available under the ADA. See 42 U.S.C. § 2000e-5(g)(1) (upon finding of intentional discrimination, court may enjoin unlawful employment practice and order affirmative action including reinstatement, back pay, “or any other equitable relief as the court deems appropriate”); 42 U.S.C. § 1981a(a)(2) (compensatory and punitive damages are available under the ADA for intentional discrimination). These damages are available not only for violations of 42 U.S.C. § 12112(a), which prohibits discrimination on the basis of disability, but also for violations of 42 U.S.C. § 12112(d)(4), which prohibits unlawful medical exams and disability-related inquiries against employees and applicants. See, e.g., Bates v. Dura Automotive Sys., Inc., 767 F.3d 566, 582 (6th Cir. 2014) (holding that damages are available for claims brought under 42 U.S.C. § 12112(d)(4)); EEOC v. Grane Healthcare Co., 2 F. Supp. 3d 667, 694-95 (W.D. Penn. 2014) (ruling in pre-employment medical exam case that compensatory and punitive damages are available).
Here, the EEOC sought monetary damages and injunctive relief. If EEOC were to establish that Flambeau violated the ADA, these remedies would be available despite Flambeau’s cessation of its mandatory wellness plan, meaning that this appeal is not moot.
A. This appeal is not moot because monetary damages are available.
The EEOC’s complaint sought damages “in amounts to be determined at trial” in the form of lost health insurance benefits and premiums paid by Arnold for when he had no health insurance; for “medical expenses”; and for his “emotional pain, suffering, inconvenience and mental anguish.” R.1, ¶¶ B-E. These damages would be available at trial should the EEOC prevail on the merits and establish these losses, meaning that this case is not moot, regardless of whether the EEOC can also obtain injunctive relief. See Wernsing, 423 F.3d at 745-46 (a claim for monetary damages presents a live case or controversy, even if injunctive relief claim is moot).
1. Back Pay Losses and Compensatory Damages
EEOC would seek at trial back pay losses for Arnold’s out-of-pocket medical expenses. See generally Lindemann, Grossman, & Weirich, Employment Discrimination Law § 41-12 (5th ed. 2012) (stating that medical insurance can be a form of back pay); Kossman v. Calumet County, 800 F.2d 697, 704 (7th Cir. 1986) (in ADEA discharge case, stating that backpay award should include any medical expenses incurred due to loss of health insurance), overruled in part on other grounds, Coston v. Plitt Theatres, Inc., 860 F.2d 834 (7th Cir. 1988). Arnold testified that he incurred $82.02 in out-of-pocket medical expenses, R.23, p.38 (Arnold Depo. 132-33), and it is not clear that he was ever reimbursed for those expenses after he re-enrolled in the health insurance plan. At a minimum, then, the record shows that Arnold incurred some out-of-pocket expenses, which the EEOC could recover at trial.
The EEOC would also be entitled at trial to recover damages for Mr. Arnonld’s “emotional pain, suffering, inconvenience [and] mental anguish.” 42 U.S.C. § 1981a(b)(3). Arnold could testify at trial to the discomfort or inconvenience of having to undergo an unlawful exam (which included a blood draw) and to having to answer disability-related inquiries in order to enroll in the company’s health insurance plan. See Grane Healthcare, 2 F. Supp. 3d at 694 (“It is at least arguable that the ‘inconvenience’ of undergoing an unlawful medical examination can constitute an ‘injury’ sufficient to render an offending employer liable in damages” under 42 U.S.C. § 1981a(b)(3)). Arnold could also testify at trial to any “emotional pain, suffering,” and “mental anguish” he experienced from having to go without health insurance for five months, which came immediately after his hospitalization for congestive heart failure. He testified that he forwent a follow-up doctor appointment in April 2012 because he would have had to pay for it out-of-pocket, and he testified that one of the reasons he resigned was “this lawsuit,” which a jury could find was a reference to the stress surrounding the termination of his health insurance and his subsequent complaint to the EEOC about it.
The fact that the EEOC did not quantify Arnold’s emotional distress damages does not preclude the agency from seeking damages at trial. See generally Williams v. Trader Publ’g Co., 218 F.3d 481, 486 n.3 (5th Cir. 2000) (“Since compensatory damages for emotional distress are necessarily vague and are generally considered a fact issue for the jury, they may not be amenable to the kind of calculation disclosure contemplated by Rule 26(a)(1)(C).”). Likewise, while Arnold did not see a therapist and was not diagnosed with depression or anxiety, this Court has recognized that a plaintiff’s testimony can itself suffice to establish emotional distress. Pickett v. Sheridan Health Care Ctr., 610 F.3d 434, 446 (7th Cir. 2010) (rejecting argument that the plaintiff was not entitled to damages because she lacked medical evidence of her emotional distress and instead offered only her testimony).
2. Punitive Damages
A jury could find that EEOC is entitled to an award of punitive damages, even if no compensatory damages are awarded to Arnold. See Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1009-10 (7th Cir. 1998) (punitive damages are available in the absence of compensatory damages); Grane Healthcare, 2 F. Supp. 3d at 698 (holding the same in pre-employment medical exam case). The ADA authorizes punitive damages where the complaining party shows that the employer discriminated “with malice or with reckless indifference to” his “federally protected rights.” 42 U.S.C. § 1981a(b)(1). “The terms ‘malice’ or ‘reckless indifference’ pertain to the employer’s knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535 (1999). As discussed above, the record includes evidence that Rieland – Flambeau’s Director of Human Resources – was aware that the ADA forbids involuntary medical exams and disability-related inquiries but nevertheless adopted the mandatory wellness plan and then terminated Arnold’s health insurance when he failed to complete the exam and HRA. Further, the record reflects that when Rieland asked outside counsel about Arnold’s grievance and the lawfulness of cutting off insurance, the outside counsel suggested that the EEOC would view Flambeau’s actions as a violation of the statute and that Rieland thought it was fine to ignore the EEOC’s views.
B. This appeal is not moot because EEOC could also obtain injunctive relief, despite Flambeau’s cessation of the wellness plan.
The EEOC also sought to enjoin Flambeau from requiring employees to undergo unlawful medical exams or to answer disability-related questions. R.1, ¶ A. While this Court suggested that Flambeau’s cessation of the mandatory wellness plan mooted this appeal, the case law and the record do not support a mootness ruling.
Injunctive relief may be awarded under the ADA even in the absence of ongoing discrimination. Specifically, the statute provides that once a court concludes that a defendant “has intentionally engaged in or is intentionally engaging in an unlawful employment practice . . . , the court may enjoin the respondent from engaging in such unlawful employment practice, and order such affirmative action as may be appropriate . . . .” 42 U.S.C. § 2000e-5(g)(1) (emphasis added). Thus, the mere fact that Flambeau is not currently requiring its employees to undergo medical exams and to answer HRAs does not, under the plain language of the statute, preclude the EEOC from seeking injunctive relief. And because the EEOC acts in the public interest, which means the agency has a duty to ensure that other employees at Flambeau are not discriminated against, the agency has an interest in securing injunctive relief regardless of Arnold’s retirement from the company. See EEOC v. Waffle House, Inc., 534 U.S. 279, 291 (2002) (stating that “[t]he statute clearly makes the EEOC the master of its own case and confers on the agency the authority to evaluate the strength of the public interest at stake,” and holding that EEOC may pursue victim-specific relief, in addition to injunctive relief, despite the charging party’s arbitration agreement).
Generally, the voluntary cessation of illegal conduct does not moot a case. Los Angeles County, 440 U.S. at 631; see also Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 189 (2000) (“It is well settled that a defendant’s voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice.”) (internal quotation marks and citation omitted). “If it did, the courts would be compelled to leave the defendant . . . free to return to his old ways.” Friends of the Earth, 528 U.S. at 189 (internal quotation marks, citations, and brackets omitted); Ciarpaglini v. Norwood, 817 F.3d 541, 544 (7th Cir. 2016) (“Courts are understandably skeptical when a defendant seeks dismissal of an injunctive claim as moot on the ground that it has changed its practice while reserving the right to go back to its old ways after the lawsuit is dismissed.”). The party seeking to establish mootness based upon voluntary cessation bears a “‘heavy’” burden. Los Angeles County, 440 U.S. at 631 (quoting United States v. W.T. Grant Co., 345 U.S. 629, 632-33 (1953)). To meet this heavy burden, the moving party must show both that (1) “it can be said with assurance that ‘there is no reasonable expectation . . .’ that the alleged violation will recur”; and “(2) “interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.” Id. (quoting W.T. Grant, 345 U.S. at 633); see also Friends of the Earth, 528 U.S. at 189 (“‘A case might become moot if subsequent events made it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.’”) (quoting United States v. Concentrated Phosphate Export Ass’n, 393 U.S. 199, 203 (1968)); Ciarpaglini, 817 F.3d at 545 (“[A] defendant seeking dismissal based on its voluntary change of practice or policy must clear a high bar,” as it must show that it is “‘absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.’”) (quoting Concentrated Phosphate, 393 U.S. at 203).
Here, Flambeau has not met its heavy burden of establishing mootness based on its voluntary cessation of the mandatory wellness plan. First, Flambeau has not shown that it is “absolutely clear” that reinstatement of its mandatory wellness plan cannot “reasonably be expected to recur.” Concentrated Phosphate, 393 U.S. at 203. Flambeau’s stated reason for discontinuing its mandatory wellness plan was that it had not saved the company any money. The Supreme Court has held, however, that a defendant’s statement “that it would be uneconomical for [it] to engage in any further” conduct, “standing alone, cannot suffice to satisfy the heavy burden of persuasion which [the Supreme Court has] held rests upon those” seeking to establish mootness. Id. (in antitrust case, holding that appellees’ statement that it would be “uneconomical for them to engage in any further joint operations” did not establish mootness); see also Norman-Bloodsaw v. Lawrence Berkeley Lab., 135 F.3d 1260, 1274 (9th Cir. 1998) (holding that defendants failed to meet their “heavy burden” of establishing that they would never again require or permit employee medical exams where they discontinued syphilis testing because it was of limited usefulness and/or cost-effectiveness, discontinued sickle cell testing because it was redundant to testing now done at birth, and opted to make pregnancy testing optional). Accordingly, Flambeau’s decision to halt the mandatory wellness plan for economic reasons does not establish, for mootness purposes, that its unlawful conduct cannot reasonably be expected to recur.
This is especially true because, as far as EEOC is aware, Flambeau has never made even the “minimal representation” that it will not ever again make its wellness plan mandatory. Sheely v. MRI Radiology Network, P.A., 505 F.3d 1173, 1186 (11th Cir. 2007) (holding that plaintiff’s claims for injunctive and declaratory relief under Title III of the ADA and the Rehabilitation Act were not mooted by the defendant’s voluntary cessation of the unlawful conduct where the defendant did not even make the “minimal representation” that it would not revive the challenged policy). Nor has Flambeau ever admitted that its wellness plan, which its Human Resources Director recommended to the company president and chief administrative officer, was unlawful. See id. at 1185 (in ruling that defendant’s voluntary cessation of unlawful conduct did not moot ADA claim, noting that the defendant never admitted wrongdoing and that the challenged conduct arose from a years-long policy created by the owner); see also Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 43 (1944) (controversy remains where defendant “has consistently urged the validity of the [practice] and would presumably be free to resume [it] were not some effective restraint made”); Milwaukee Police Ass’n v. Jones, 192 F.3d 742, 746 (7th Cir. 1999) (holding case was not moot where city only temporarily rescinded challenged policy and never conceded that it was unconstitutional); EEOC v. Fed. Express Corp., 558 F.3d 842, 848 (9th Cir. 2009) (voluntary cessation exception did not apply where employer had produced the information requested by EEOC’s subpoena but offered “no assurance that it will not challenge another administrative subpoena” arising from the same charge). Additionally, Rieland, who recommended the plan become mandatory, evidently remains at the company. See R.12, ¶ 1 (Rieland Aff.); see generally EEOC v. Ilona of Hungary, Inc., 108 F.3d 1569, 1579 (7th Cir. 1997) (“We also agree that injunctive relief is justified in a case like this where the individuals who were found to have discriminated remain the defendant’s primary decision-makers.”).
Flambeau also cannot meet its burden of establishing that interim relief or events have eradicated the effects of the alleged violation. Los Angeles County, 440 U.S. at 631. Arnold is still entitled to monetary relief from the violation, as discussed above. Although the EEOC has promulgated a new regulation at 29 C.F.R. § 1630.14, which states that the insurance safe harbor does not apply to wellness plans and makes clear that Flambeau’s mandatory wellness plan is not voluntary, Flambeau has not conceded that the regulation is binding on the company.
Finally, if this Court were to determine that a factual question remains as to whether Flambeau satisfied its burden of establishing mootness, then the EEOC submits that the case should be remanded to the district court for limited fact-finding. See, e.g., Ciarpaglini, 817 F.3d at 546 (remanding for limited fact-finding as to the “narrow issue of mootness”).
Sincerely yours,
s/ Anne Noel Occhialino
Anne Noel Occhialino
Attorney
EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION
(202) 663-4724
CERTIFICATE OF SERVICE
I, Anne Noel Occhialino, hereby certify that on September 26, 2016, I electronically filed the foregoing letter with the Court via the appellate CM/ECF system and that I served the foregoing letter electronically on counsel below via the appellate CM/ECF system.
Counsel for the Defendant
Stephen A. Di Tullio
John C. Gardner
DeWitt Ross & Stevens
Two E. Mifflin St., Ste. 600
Madison, WI 53703
(608) 255-8891
s/Anne Noel Occhialino
ANNE NOEL OCCHIALINO
Attorney
Equal Employment
Opportunity Commission
Office of General Counsel
131 M St. N.E., 5th Fl.
Washington, D.C. 20507
(202) 663-4724 (phone)
(202) 663-7090 (fax)
Annenoel.Occhialino@eeoc.gov
Attachment
EEOC’s Answers to Defendant’s First Set of Interrogatories