7th Circuit Court of Appeals
Civil – Termination of Employment/Discrimination
Emilio Martino v. Western & Southern Financial Group
An Italian-born naturalized U.S. citizen who sued his former employer for religious discrimination and defamation after he was fired could not prove his claims before the 7th Circuit Court of Appeals.
Emilio Martino worked for Western & Southern Financial Group in northern Indiana for about two months as a sales representative before his employment was terminated. The company has a policy that sales representatives may only work outside jobs that require five or less hours a week and less than $100 in pay. Martino submitted to the company his outside position as a pastor of a small church in Michigan, but because the pay and hours were over what the company allows, W&S told Martino he needed to end his pastoral position.
Shortly after receiving this notice, the company was trying to verify Martino’s eligibility to work in the U.S. He was unable to produce his Social Security card, but had a valid number, and the paperwork would take several weeks. The documentation he did produce could not verify his eligibility and allow him to complete the I-9 process within a reasonable time period, so the company terminated him.
As part of the company policy, W&S sent notification to the state insurance department as to Martino’s termination and the reasons behind it.
Martino filed a lawsuit alleging several claims, including religious discrimination and defamation. The District Court granted summary judgment to the company, and he appealed only the discrimination and defamation claims.
The 7th Circuit affirmed, holding Martino’s evidence doesn’t call into doubt W&S’ explanation for his discharge, nor does it establish a prima facie case of defamation. There is no evidence of pretext, and the situations of other employees he claims were treated more favorably do not support his position. The judges also found the timing of the I-9 compliance pressure does not support that the company’s explanation for his discharge was pretextual.
Regarding his defamation claim, Martino argued that W&S committed defamation by implication when it sent notice to the state insurance department about his termination. In his mind, the statute requires reporting for specific bad acts, and W&S implied that his discharge was the result of one of those acts.
“Nothing in the form and termination letters sent to the state insurance department was false,” Judge Ann Claire Williams wrote. “No evidence in the record suggests that W&S singled Martino out by reporting his discharge to the state. Rather, W&S simply followed the company’s policy of reporting all involuntary terminations.”
Review of Order – Employee Records/Mine Safety
Big Ridge Inc., Jerad Bickett, et al. v. Federal Mine Safety and Health Review Commission, et al.
The 7th Circuit Court of Appeals found that the Federal Mine Safety and Health Administration acted within its statutory and constitutional authority in demanding review of employee medical records to ensure mines were not under-reporting injuries or illnesses.
In October 2010, the MSHA acted on a new and broader interpretation of existing regulations that would allow inspectors to review employee medical and personnel records to check that mines were accurately reporting miner injuries or illnesses. This review would be on top of the requirement that mine operators provide injury and illness reports.
When two mine operators refused to provide the records, MSHA issued citations and fines. The mine operators argued that MSHA isn’t authorized to require them to produce records beyond those that regulations specifically require them to maintain. The Federal Mine Safety and Health Review Commission and an administrative law judge found the document demands and enforcement to be lawful. The mine operators and a group of mine employees sought review by the 7th Circuit. The miners intervened before the commission to raise personal privacy challenges to the documents.
The petitioners argued (1) that MSHA does not have the authority to require mines to comply with the demands under the Mine Safety Act or relevant regulations; (2) that the relevant regulation, 30 C.F.R. § 50.41, is not a reasonable interpretation of the Mine Safety Act and was not properly promulgated; (3) that the document demands infringe the mine operators’ Fourth Amendment right not to be searched without a warrant; (4) that the demands violate the miners’ Fourth Amendment privacy rights in their medical records; (5) that the daily penalties MSHA imposed for failure to comply violate the mine operators’ Fifth Amendment right to due process of law; and (6) that the demands conflict with a variety of other federal and state laws.
In a 57-page opinion authored by Judge David Hamilton, the 7th Circuit denied the petitioners request for review, agreeing with the commission that MSHA acted within its statutory and constitutional authority in demanding information that would allow MSHA to verify the accuracy of the mine operators’ injury reports and in issuing citations and fines when the operators did not comply.
The MSHA’s record demands do not conflict with federal and state laws as the petitioners and amicus National Mining Association argued, Hamilton wrote. The Mine Safety Act preempts state privacy laws in the event of any conflict, and the Americans with Disabilities Act’s and the Family and Medical Leave Act’s confidentiality requirements would not be violated by disclosure to MSHA pursuant to these orders.
Indiana Tax Court
Tax – Assessed Value
Kooshtard Property VIII, LLC v. Shelby County Assessor
A doubled property value will stand because the property owner did not offer any market-based evidence when challenging the new assessed value, the Indiana Tax Court ruled.
The Tax Court affirmed the Indiana Board of Tax Review’s finding that Kooshtard Property did not make a prima facie case that its land was overassessed.
Kooshtard owned two acres in Shelbyville which were home to a convenience store and gas station. During the 2006 and 2007 tax years, the Shelby County assessing officials applied a multiplier of 100 percent that increased the property’s value from a base rate of $200,000 per acre to $400,000 per acre.
During the IBTR hearing, Kooshtard argued uniformity requires that the 100 percent multiplier be applied to all similar land. Consequently, the property owner contended, the application of the 100 percent multiplier was erroneous because the adjacent properties did not have that multiplier applied.
However, the IBTR rejected that argument as insufficient to raise a prima facie case.
The Tax Court agreed, finding Kooshtard did not present any market-based evidence to support its claim. Instead it offered only conclusory statements and previously rejected arguments, asserting that since the assessor did not apply the same multiplier to a nearby office building, automotive sales/service center and a fast-food restaurant, the multiplier should be removed from the assessment.
Conclusory statements are insufficient to make a prima facie case because they are not probative evidence, the court noted.
Indiana Court of Appeals
Agency Action – Unemployment Insurance/Employer Duty
TPUSA, Inc. v. Unemployment Insurance Appeals of the Indiana Dept. of Workforce Development
Finding that a liability administrative law judge erred in determining that a company that previously operated a call center in Fishers owed more than $125,000 in unemployment insurance contributions, interest and penalties for a year when the company had no Indiana employees, the Indiana Court of Appeals reversed.
TPUSA Inc. appealed the $125,666.33 judgment levied against it by the Indiana Department of Workforce Development and upheld by the LALJ in 2012 concerning unemployment insurance contributions for the 2010 calendar year. Prior to 2010, TPUSA, owned by a Florida company, had a call center in Fishers, but beginning in October 2009 the facility was closed and no longer had anyone employed in Indiana. TPUSA submitted its 2009 fourth-quarter wage report to the DWD showing no employees and no paid wages, but it did not mark the report final. It did not file any quarterly payroll reports with the department for 2010.
In 2011, the DWD went after TPUSA for overdue unemployment insurance contributions for 2010. TPUSA did not initially respond to notices sent to it by DWD, and the DWD estimated that the company’s overdue contributions, plus interest and penalties, totaled more than $125,000. TPUSA later appealed, but the LALJ affirmed the amount.
The Court of Appeals found the DWD acted properly under the Indiana Unemployment Compensation Act because it was unaware that TPUSA ceased operations in Indiana. TPUSA did not mark its last quarter report in 2009 as “final report” and did not notify the DWD it no longer operated in the state. Thus, DWD expected to continue to receive quarterly contribution and wage reports from the company for 2010.
The statute does allow for a reduction of the estimated amount of contribution if the employer makes a showing of “reasonable cause” for failure to timely file the reports.
“We hold that where an employer has ceased business operations in Indiana, no longer pays wages or has any employees in the state, and files accurate reports with the Department indicating such, this may be considered ‘reasonable cause,’ as required by Indiana Code section 22-4-11-4(b), so as to allow for an adjustment (i.e., reduction) in the amount of the estimated contribution,” Senior Judge Betty Barteau wrote.
Instead, the judges found that a $25 fine assessed under I.C. 22-4-19-10 against any company that negligently or willfully fails to submit any report required under the Act to be proper. Because two reports are required to be filed each quarter, TPUSA owes $200.
Civil Plenary – Compensation/Public Works Projects
William Wressell v. R.L. Turner Corporation
The Boone Superior Court will need to take another look at a man’s lawsuit against R.L. Turner Corporation that claimed he was underpaid by the company for labor he provided on two public works projects, the Indiana Court of Appeals ruled.
William Wressell claimed that he performed some tasks as a skilled carpenter or skilled laborer and should have received a higher wage and higher fringe benefits for that work.
Wressell worked for RLTC for nearly a year on two projects. He filed his lawsuit alleging underpayment after receiving authorization from the Office of the Indiana Attorney General to pursue his claims in court.
RLTC and Wressell both moved for summary judgment. The Boone Superior Court ruled in favor of RLTC.
At issue is the trial court’s striking of certain portions of an affidavit from Monte Moorhead, a field auditor with the Indiana Department of Labor, Wage and Hour Division. The affidavit included statements about how fringe benefits are classified and that employer expenses that are part of its regular overhead costs of doing business or are for the primary benefit of the employer are not treated by the IDOL as employee fringe benefits. The trial court concluded that paragraphs 12-18 on the fringe benefits were irrelevant and legal conclusions.
But the COA disagreed, finding the paragraphs to be “unquestionably relevant,” Judge Cale Bradford wrote. “Whether IDOL considers a certain type of payment to be a fringe benefit strikes us as evidence that would be quite helpful to the factfinder in characterizing that payment, and therefore relevant.”
The judges also held that Moorhead’s averments regarding IDOL policy and whether it treats certain types of payments as fringe benefits do not constitute legal conclusions.
There are genuine issues of material fact regarding Wressell’s job classification on the jobs and whether Wressell was sufficiently paid for fringe benefits, the judges held, so they remanded for further proceedings. The judges also denied RLTC’s request for appellate attorney fees.
Criminal – Lifetime Suspension/Driving Privileges
Joshua McCaine Pillow v. State of Indiana
Inaction by the Bureau of Motor Vehicles to update a man’s driving record to reflect his lifetime suspended license is not enough to nullify a statutory requirement that his lifetime suspension be imposed, the Indiana Court of Appeals ruled.
Joshua McCaine Pillow argued that his conviction for Class C felony operating a motor vehicle after driving privileges had been forfeited for life should be overturned because neither his BMV driving record nor a 2010 judgment convicting him of Class D felony driving as a habitual traffic offender indicated his driving privileges were forfeited for life.
Pillow pleaded guilty in 2010 to Class D felony operating a motor vehicle while suspended as a habitual traffic violator; the agreement provided he would receive a lifetime suspension of driving privileges. He was pulled over in 2011 for driving with his headlights off and arrested for driving as a habitual traffic violator. His conviction on the charge led to a six-year sentence.
Indiana Code 9-30-10-17 says that a person who operates a motor vehicle after his or her driving privileges are forfeited for life under I.C. 9-30-10-16 commits a Class C felony. Pillow’s 2010 conviction falls under Section 16 and says that one who is convicted under that statute “forfeits the privilege of operating a motor vehicle for life.”
“The State was not obliged in the case before us to prove Pillow knew of his lifetime forfeiture. Knowledge of a lifetime forfeiture is not an element of Indiana Code § 9-30-10-17, so proof of knowledge is not necessary to sustain a conviction,” Judge Melissa May wrote.
The judges also held that his recent conviction wasn’t improper because at the time of his offense the BMV hadn’t received notice of the 2010 conviction.
Criminal – Evidence/DNA
Martin Meehan v. State of Indiana
Worried that upholding a man’s conviction based solely on DNA presence on a glove found at a crime scene would create a precedent for criminals to frame someone else, the Indiana Court of Appeals reversed a burglary conviction out of St. Joseph County.
Martin Meehan was convicted of Class C felony burglary and found to be a habitual offender for the burglary of O.J.S. Building Services in South Bend. Police found a glove at the crime scene and testing revealed DNA that matched Meehan. That was the only evidence police had that implicated Meehan. He denied involvement in the burglary.
Judge Terry Crone noted that there has been no case determining whether the presence of a defendant’s DNA on an object left at the crime scene – standing alone – is sufficient to prove he or she committed the offense. The parties offered up related cases, but those don’t support Meehan’s conviction.
“In sum, in all the cases discussed, there was eyewitness or circumstantial evidence that explained how the DNA or fingerprint evidence ended up at the crime scene. In these cases, the totality of the circumstances made it unlikely that there was an innocent explanation for the presence of the DNA or fingerprint evidence at the scene,” Crone wrote.
“In many cases, DNA is compelling evidence of identity. In this case, however, there was no evidence that would support an inference that Meehan’s DNA was found on the glove because he handled it during the burglary, as opposed to some other time.”
The guilty verdict was based on speculation and must be reversed, the judges held.
“Were we to affirm, we would be creating a precedent that would make it relatively easy for criminals to frame other individuals; all they would need to do is obtain an object with someone else’s DNA and leave it at the crime scene,” he wrote.
Domestic Relation – Child Support/College Expenses
Shari (Ellis) Lovold v. Clifford Scott Ellis
The Indiana Court of Appeals was presented with an issue for the first time: whether a child support order should be reduced for the time a child is living on campus when a court has found that the child has repudiated the non-custodial parent, and on that basis refused to enter an educational support order.
Mother Shari Lovold sought contributions from her ex-husband for their son’s college expenses. After interviewing C.E. in camera, the trial court concluded that the teen had repudiated his relationship with his father. After an unpleasant visit in 2004 when C.E. was 11, father Clifford Scott Ellis did not see his son for eight years. C.E. never contacted his father, even after turning 18. The judge found the son’s comments that he did want a relationship with his father to “ring hollow” and be “highly suspect.”
The trial court did not modify Ellis’ child support obligation as Ellis had wanted. He filed a motion to correct error and requested an adjustment because he had been paying his ex-wife $60 – and not the $150 that had been ordered in 2004 – since C.E. started college. He also believed the trial court miscalculated the amount of time C.E. would live at home at 36 weeks instead of 16. The trial court granted mother’s motion to correct error regarding the support and ordered Ellis pay as if C.E. were living at home year round.
The judges affirmed the trial court’s finding that C.E. refused to participate in a relationship with his father. Thus, the trial court didn’t err when it denied Lovold’s request for Ellis to pay toward C.E.’s college expenses.
Repudiation can prevent a parent from paying college expenses, but it is not a defense to an order for child support, the COA pointed out. While a court may order college expenses and child support, living expenses for a child living on campus should be included in the educational support order.
“We hold that living expenses for a child living on campus should similarly not be included in the child support order when, as here, the child has repudiated the parent and the parent is therefore not required to contribute to the child’s post-secondary education. To hold otherwise would render repudiation no longer a complete defense to the payment of college expenses,” Chief Judge Margret Robb wrote.
“We do not adopt a bright-line rule requiring the filing of both a child support obligation worksheet and a post-secondary education support worksheet because no educational support order has been entered. But the trial court must reduce child support for the time the child will be living away from home for college.”
The judges remanded for the trial court to re-calculate the support so Ellis doesn’t pay for the time C.E. lives on campus.
Civil Plenary – Breach of Contract
Vincennes University by the Board of Trustees of Vincennes v. Daniel E. Sparks
The Indiana Court of Appeals concluded that summary judgment should have been granted in favor of Vincennes University on a former basketball coach’s lawsuit alleging breach of contract after the university did not renew his contract for the following year.
Daniel Sparks, who was the school’s athletic director, head men’s basketball coach and a professor in 2003, was stripped of his tenure after he and an assistant coach falsified a basketball recruit’s application. Sparks agreed to forfeit his tenure in lieu of facing disciplinary proceedings. He was subject to a zero-tolerance policy after that and signed to a one-year contract. The school decided not to renew his contract for the 2005-2006 academic year, but that decision was not based on a violation of the zero-tolerance policy.
Sparks sued, with both the university and he filing for summary judgment, and later a directed verdict. The breach of contract claim went before a jury, which ruled in favor of Sparks.
“We conclude that the Agreement unambiguously requires Sparks to forfeit his tenure and that he therefore had no right to continued employment. Even if we were to find the Agreement to be ambiguous, the designated evidence supports the University’s interpretation, which also better harmonizes the provisions of the Agreement. Therefore, we conclude that summary judgment should have been granted for the University,” Judge Terry Crone wrote.
The agreement required Sparks to forfeit his tenure but never made a reference to a term of employment. His own testimony showed that he understood that giving up his tenure meant giving up his job security.
Civil Collections – Services Provided/Dissolved Client
Ruben Pazmino v. Bose McKinney & Evans, LLP
Finding that there are genuine issues of material fact as to whether an employee was acting on his own behalf or on behalf of his company when he sought a law firm’s services, the Indiana Court of Appeals ordered more proceedings on the firm’s complaint for payment.
Bose McKinney & Evans LLP did legal work for Buena Vista Realty Group LLC from February through July 2008 at the request of Ruben Pazmino. The company was administratively dissolved on April 24, 2008. Bose was never paid for its work and filed a lawsuit against Buena Vista and against Pazmino for the services it performed after Buena Vista was dissolved.
Both Pazmino and the firm moved for summary judgment. The trial court entered judgment in favor of Bose and ordered Pazmino to pay total judgment of $11,174.20. On appeal, Pazmino claimed he was only an employee of Buena Vista and not personally liable for the LLC’s obligations. Bose, on the other hand, is trying to hold Pazmino responsible for his own act of personally requesting services after Buena Vista dissolved.
Neither Bose nor Pazmino established as a matter of law that either party was entitled to summary judgment, as Bose hasn’t shown Pazmino secured its services on his own behalf and Pazmino hasn’t shown that he was just an employee and not an interested party in Buena Vista.
The Court of Appeals went on to address additional legal arguments raised by Bose: that Pazmino is personally liable for requesting services not associated with winding up the LLC and that Pazmino was not statutorily authorized to wind up or bind Buena Vista post-dissolution.
The judges held that regardless of the nature of the work performed by Bose, Buena Vista continued to exist as a principal that could be bound by the acts of its agents. They also believed that the reference to personal liability of members in Indiana Code 23-18-9-3(b)(2) is intended to clarify that, even upon dissolution, an LLC, not its members, remains responsible for the LLC’s obligations.
“Thus, where Pazmino acted within the scope of the authority conferred by Buena Vista, Bose’s remedy is with Buena Vista, not Pazmino,” Judge Michael Barnes wrote.
The case is remanded for further proceedings.
Domestic Relation – Joint Custody/Division of Assets
Phillip J. Troyer v. Tracy L. Troyer
A lengthy divorce proceeding involving two Fort Wayne attorneys that raised numerous issues on appeal was mostly affirmed, but a dissenting judge cautioned that joint custody was not in the interest of the feuding parents’ daughter.
Phillip J. and Tracy L. Troyer’s divorce involved more than four days of hearings in Allen Superior Court, and the final decree contained extensive findings including joint custody of the couple’s child and equal division of marital assets.
The husband appealed and wife cross-appealed, and the Court of Appeals majority ruled as follows: “(1) the trial court did not abuse its discretion in valuing and dividing the marital estate; (2) the trial court exceeded its statutory authority in retroactively increasing Husband’s child support and healthcare expenses; (3) the trial court did not abuse its discretion in denying Husband’s petition for attorney fees; (4) the trial court did fail to rule on Husband’s request for Wife to reimburse him for her share of (the child’s) private school expenses; (5) the trial court did not abuse its discretion in awarding the parties joint legal custody of K.T.; and (6) Husband’s appeal is neither frivolous nor in bad faith, and therefore Wife is not entitled to attorney fees pursuant to Appellate Rule 66(E).”
“We reverse the trial court’s retroactive modification of Husband’s child support and healthcare expenses and remand with instructions to amend the Final Decree accordingly,” Judge Terry Crone wrote in the majority opinion joined by Judge Elaine Brown. “On remand, the trial court shall also amend the Final Decree to include an order directing Wife to reimburse Husband for her share of K.T.’s private school expenses pursuant to the Provisional Order. In all other respects, we affirm the trial court.”
Judge James Kirsch sided with the majority in all aspects except for the custody ruling. Kirsch said the court was correct in ruling that the child’s best interests would be served by parents working together in a unified manner.
“There is nothing in the record before us, however, that reveals that the trial court’s statement was supported by the evidence or was a realistic expectation. Rather, the record repeatedly demonstrates that these parents cannot currently work together in such a manner,” Kirsch wrote.
“Here, the trial court: determined, and Husband agreed, that no parenting time should be currently allocated to Husband because that would ‘endanger’ (the child’s) physical health or significantly impair her emotional development; ‘seriously considered’ ordering parents to participate in classes for ‘high conflict parents’ and in individual and joint counseling; considered therapeutic parenting time; and appointed a Parenting Coordinator to provide support, assistance, and guidance. Given these very real and very serious concerns, it was error to order joint custody,” Kirsch wrote.
“Moreover, following the dissolution, Husband filed a grievance with the Indiana Supreme Court Disciplinary Commission against Wife ensuring that the adversarial nature of his relationship with the Wife will be continued,” he wrote in his two-page dissent. “I would reverse the trial court’s decision to grant parents joint legal custody.”•