Kephart v. Cherokee County, NC ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
REX KEPHART,
Plaintiff-Appellant,
v.
CHEROKEE COUNTY, NORTH
CAROLINA; RICK HONEYCUTT, in his
individual and official capacities as
County Manager; CHARLES LANEY,
in his individual and official
No. 99-1789
capacities as former County
Commissioner; EUGENE MORROW, in
his individual and official capacities
as County Commissioner; GEORGE
POSTELL, in his individual and
official capacities as County
Commissioner,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of North Carolina, at Bryson City.
Lacy H. Thornburg, District Judge.
(CA-98-94-2-T)
Argued: June 8, 2000
Decided: August 4, 2000
Before WILKINS and LUTTIG, Circuit Judges,
and Robert R. BEEZER, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
_________________________________________________________________
Affirmed in part and reversed in part by unpublished opinion. Judge
Wilkins wrote the opinion, in which Judge Luttig and Senior Judge
Beezer joined.
_________________________________________________________________
COUNSEL
ARGUED: Matthew C. Billips, ZIMRING, SMITH & BILLIPS,
P.C., Atlanta, Georgia, for Appellant. James Bernard Spears, Jr.,
HAYNSWORTH, BALDWIN, JOHNSON & GREAVES, L.L.C.,
Greenville, South Carolina, for Appellees. ON BRIEF: Thomas A.
Bright, HAYNSWORTH, BALDWIN, JOHNSON & GREAVES,
L.L.C., Greenville, South Carolina, for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
WILKINS, Circuit Judge:
Rex Kephart appeals two orders of the district court granting sum-
mary judgment to Cherokee County, North Carolina and individual
defendants on Kephart's claims asserting violations of the First and
Fourteenth Amendments, the Family and Medical Leave Act (FMLA)
of 1993, 29 U.S.C.A. §§ 2601-2654 (West 1999), and the Americans
with Disabilities Act (ADA) of 1990, 42 U.S.C.A.§§ 12101-12213
(West 1995 & Supp. 2000). We reverse the grant of summary judg-
ment to Cherokee County on Kephart's FMLA claim, and otherwise
affirm the orders of the district court in all respects.
I.
The facts, viewed in the light most favorable to Kephart, are as fol-
lows. Kephart was hired by the County as the Tax Collector in 1989.
In 1994, he became the Tax Assessor as well. Thereafter, he served
2
as "Tax Administrator," performing the duties of both Tax Collector
and Tax Assessor.
In 1995, the County contracted with COTT Systems, Inc. (COTT)
to perform a revaluation study of real property values in the County.
As part of this study, COTT had prepared a "tax card" for each piece
of property, which contained the valuation for that property. It had
completed the majority of the work necessary for the project by Janu-
ary of 1996.
In 1996, the Cherokee County Commission consisted of Charles
Laney, George Postell, and Eugene Morrow. Both Kephart and mem-
bers of the Commission had expressed concern about problems asso-
ciated with the work COTT was doing. The Commissioners and
Deborah Coarsey, who was the Tax Appraiser at the time, reviewed
the tax cards that COTT had prepared and made notations on some
of the cards suggesting to COTT that changes in the valuations were
in order. Kephart alleges that the Commissioners and Coarsey made
notations on the tax cards for property that belonged to them and to
their relatives for the purpose of decreasing the valuations of those
properties. The Commissioners and Coarsey were not themselves
authorized to make changes in the valuations, but COTT, as a result
of the notations, did review and then change the valuations of some
of the properties.
Kephart complained to Rick Honeycutt, the County Manager, that
by making notations on these cards, the Commissioners were possibly
engaging in criminal activity and in any event their actions had the
appearance of impropriety. After Kephart complained to Honeycutt,
the Commissioners became aware of Kephart's complaints, and he
was angrily confronted by Commissioner Postell. According to Julie
Nix, another County employee, Commission Chairman Laney, while
still angry about Kephart's complaint, "essentially told [Nix] that Rex
Kephart was a problem and that he would not be a problem much lon-
ger." J.A. 293. Kephart claims that he experienced hostility from the
Commissioners and that he was treated as a "pariah." Brief of Appel-
lant at 38 (internal quotation marks omitted).
In July 1996, the County split Kephart's position into Tax Collec-
tor and Tax Assessor. Kenny Sawyer, who had previously served as
3
Business and Personal Property Appraiser, was appointed as Tax Col-
lector, and Kephart retained the duties of Tax Assessor.1 Kephart's
pay and benefits did not change. Although the County asserts that it
split Kephart's position in order to reduce his workload, Kephart
asserts that he was given Sawyer's former duties in addition to the
duties of Tax Assessor, as a result of which his workload did not
decrease. Additionally, Kephart asserts that when Sawyer became Tax
Collector, the County hired additional staff to assist Sawyer. When
Kephart, while still serving as Tax Administrator, had requested per-
mission to fill two vacancies in the Tax Assessor's office, Honeycutt
"advised [Kephart] that if he would ``get on the bandwagon,' then he
would be allowed to fill these vacancies." J.A. 14. Finally, Kephart
asserts that he was given the Tax Assessor position rather than the
Tax Collector position because the Tax Collector can only be dis-
charged for cause.
Kephart experienced a recurrence of his rheumatoid arthritis and,
pursuant to his doctor's advice, took 30 days of sick leave beginning
on July 30, 1996. Near the end of this leave period, Kephart requested
further leave, which the County denied. After consulting his attorney,
Kephart requested an additional 90 days of leave, specifically assert-
ing his rights under the FMLA.2 The County then granted the leave
and sent Kephart a United States Department of Labor form. On that
form, the County indicated that it had ascertained that, as Tax Asses-
sor, Kephart was a "key employee," and that it had determined that
restoring Kephart to employment at the conclusion of his leave would
cause substantial and grievous economic harm. The County informed
Kephart:
It has been determined by the Administration that the
position which you hold is of such nature as to require it be
filled with a permanent replacement. The consequences of
this to you is that an equivalent position may not be avail-
able at the time you return from your FMLA leave.
_________________________________________________________________
1 The County offered Kephart the choice of which position he preferred
to retain, but Kephart never responded.
2 Kephart had accrued 400 hours of sick leave. Thus, the additional 90-
day leave he requested consisted of 400 hours of sick leave with the
remainder pursuant to the FMLA.
4
If, at the time you return from leave, there are no equiva-
lent positions available, your employment with Cherokee
County will be terminated.
Id. at 239.
While Kephart was on leave, the County appointed Coarsey as
Interim Tax Assessor. When Kephart informed the County in Decem-
ber 1996 that he had been released by his doctor to return to work and
requested reinstatement to his former position, the County denied his
request, informing him that his position as Tax Assessor had been
filled during his absence and no equivalent position was available.
Therefore, Kephart's employment with the County was terminated.
Kephart filed this action in district court, asserting that the County
and various individuals3 (collectively, "Appellees") had retaliated
against him on account of protected speech in violation of the First
and Fourteenth Amendments; had violated the FMLA by refusing to
reinstate him after his leave; and had violated the ADA by refusing
to accommodate his disability by affording him the full benefit of the
FMLA. The matter was referred to a magistrate judge, and Appellees
subsequently moved for summary judgment on all claims. The magis-
trate judge recommended that the motion be denied with respect to
the First Amendment claim; denied with respect to the FMLA claim
as against the County and granted as against the individuals; and
granted with respect to the ADA claim as against all Appellees. In his
Memorandum and Recommendation, the magistrate judge clearly
informed the parties that it was necessary to timely file written objec-
tions to his recommendations in order to preserve issues for appeal.
Appellees filed objections with the district court; Kephart did not file
any objections.
In its first order, the district court adopted in part and rejected in
part the recommendations of the magistrate judge, granting Appel-
lees' motion for summary judgment as to all claims except the FMLA
_________________________________________________________________
3 Kephart named Rick Honeycutt, County Manager, Charles Laney,
former County Commissioner, Eugene Morrow, County Commissioner,
and George Postell, County Commissioner, each in his individual and
official capacities.
5
claim. On the FMLA claim, the court granted summary judgment for
the individuals but reserved ruling on the FMLA claim against the
County. In its second order, the district court granted summary judg-
ment to the County on the FMLA claim.4 We review the grant of
summary judgment de novo, viewing the disputed facts in the light
most favorable to Kephart. See Figgie Int'l, Inc. v. Destileria Serral-
les, Inc., 190 F.3d 252, 255 (4th Cir. 1999). Summary judgment is
appropriate "if the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c).
II.
A.
Kephart first contends that the district court erred in granting sum-
mary judgment to Appellees on his First Amendment claim. We dis-
agree. In order to prevail on a First Amendment retaliation claim, a
plaintiff must satisfy a three-prong test:
The employee must first show that he engaged in speech on
a matter of public concern. Second, the claimant must dem-
onstrate that the alleged retaliatory action deprived him of
_________________________________________________________________
4 In its first order, the district court requested further evidence from the
parties regarding whether Kephart was a "key employee" under the
FMLA. The County submitted an affidavit of Randy Wiggins, and
Kephart filed an untimely response. In its second order, the court granted
summary judgment on Kephart's FMLA claim, and Kephart then moved
to strike the Wiggins affidavit and objected to the refusal of the court to
consider his untimely response. The court ruled that Kephart's motion
and objection were moot since the court had not relied on the Wiggins
affidavit in granting summary judgment on the FMLA claim. Kephart
appeals this order in addition to the two orders granting summary judg-
ment to Appellees. However, because this order is neither final nor col-
lateral, it is not appealable under 28 U.S.C.A.§ 1291 (West 1993) or
Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 545-47 (1949).
Nor may we exercise pendent appellate jurisdiction over the order. See
United States v. North Carolina, 180 F.3d 574, 581 n.4 (4th Cir. 1999).
6
some valuable benefit. Finally, the . . . employee must show
a causal relationship between the protected speech and the
retaliatory action, such that "but for" the protected expres-
sion the employer would not have taken the alleged retalia-
tory action.
Holland v. Rimmer, 25 F.3d 1251, 1254 (4th Cir. 1994) (citations &
internal quotation marks omitted); Huang v. Board of Governors, 902
F.2d 1134, 1140 (4th Cir. 1990).
Kephart claims that in retaliation for his protected speech, Appel-
lees denied his request to fill vacancies in the Tax Assessor's office
and denied his request for reinstatement after his FMLA leave.5 The
burden of proof on the causation issue in First Amendment retaliation
cases is allocated as follows: "The initial burden lies with the plain-
tiff, who must show that his protected expression was a ``substantial'
or ``motivating' factor" in the employer's adverse decision. Wagner v.
Wheeler, 13 F.3d 86, 90 (4th Cir. 1993). Only if the plaintiff satisfies
this burden does the burden shift to the employer to show that the pro-
tected speech was not the "but for" cause of the adverse action. See
id. We conclude that Kephart has failed to meet his initial burden of
showing that his allegedly protected speech was a substantial or moti-
vating factor in the allegedly retaliatory actions of Appellees.6
_________________________________________________________________
5 Kephart additionally alleges that Appellees ostracized him and treated
him in a hostile manner; "stripp[ed]" him of the Tax Collector duties,
Brief of Appellant at 37; and initially denied the FMLA leave. These
actions, however, did not "deprive[ ][Kephart] of some valuable bene-
fit." Holland, 25 F.3d at 1254. Kephart continued to receive the same sal-
ary and benefits after his change in position; moreover, Appellees
offered Kephart his choice of the Tax Collector or Tax Assessor posi-
tions, and when Kephart failed to make a choice, the County assigned
him the Tax Assessor position. Kephart was not deprived of a valuable
benefit by the initial denial of his FMLA leave, given that the County
eventually granted the leave.
6 Because we conclude that Kephart has not proffered sufficient evi-
dence to survive summary judgment on the causation prong, we need not
address the issue of whether Kephart engaged in speech on a matter of
public concern.
7
In support of his claim that Appellees retaliated against him
because of his speech, Kephart offers Honeycutt's statement that
Kephart would be permitted to fill the vacancies in his office if he
would "get on the bandwagon," J.A. 14 (internal quotation marks
omitted), and Nix's statement that "Commission Chairman Charles
Laney essentially told me that Rex Kephart was a problem and that
he would not be a problem much longer," id. at 293.7
Kephart indicated in his deposition that Honeycutt's"bandwagon"
statement was made during a conversation in which Kephart dis-
agreed with Honeycutt regarding the configuration of the office. In
fact, Kephart's deposition testimony suggests that Honeycutt and
Kephart had several disagreements regarding how the office was run;
Kephart does not claim that criticisms he made with regard to these
disagreements constituted protected speech. The inference that
Honeycutt's statement referred to Kephart's criticisms related to the
tax cards is too speculative to satisfy Kephart's burden.
We conclude that the passage of time between Laney's statement
and Kephart's termination renders that statement insufficient to sat-
isfy Kephart's burden. The statement was made in early 1996, while
Laney was "still extremely angry over Mr. Kephart's questioning of
his actions," id., yet Kephart was not actually terminated until Decem-
ber 1996. Under these circumstances, we conclude that Laney's state-
ment does not create a genuine issue of fact regarding whether
Kephart's allegedly protected speech was a substantial or motivating
factor in the decision to terminate him.8 Accordingly, we affirm the
_________________________________________________________________
7 Kephart also offers the statements of other employees stating that he
was subject to hostile treatment by the Commissioners and that "[i]t was
common knowledge among the office staff that the County management
wanted to pressure Mr. Kephart out of the office." J.A. 297. We find
these statements less probative of the issue than those of Honeycutt and
Nix.
8 Kephart argues that the evidence that his speech was a substantial or
motivating factor in the County's refusal to reinstate him after his leave
is more probative than that in Waters v. Churchill, 511 U.S. 661 (1994),
in which the Court held that the employee should have survived sum-
mary judgment. See Waters, 511 U.S. at 681 (plurality opinion). We dis-
agree. It is true that the Court in Waters relied on circumstantial evidence
8
grant of summary judgment in favor of Appellees on the First
Amendment claim.
B.
Next, Kephart maintains that the district court erred in granting
summary judgment to Appellees on his FMLA claim. We agree that
the district court erred in granting summary judgment for the County
on this claim. As to the individual defendants, we do not consider the
issue because by failing to object to the recommendation of the mag-
istrate judge that summary judgment be granted to the individual
defendants, Kephart waived the right to appeal that ruling. See 28
U.S.C.A. § 636(b)(1) (West 1993); Wells v. Shriners Hosp., 109 F.3d
198, 201 (4th Cir. 1997) ("If written objections to a magistrate judge's
recommendations are not filed with the district court within ten days,
a party waives its right to an appeal."). But see Henderson v. Carlson,
812 F.2d 874, 877-79 (3d Cir. 1987) (noting circuit split and refusing
to adopt waiver rule).
The FMLA provides that an eligible employee is entitled to medi-
cal leave for certain enumerated reasons, including"a serious health
condition that makes the employee unable to perform the functions of
the position of such employee." 29 U.S.C.A. § 2612(a)(1)(D). One of
the rights guaranteed to the eligible employee is the right to be "re-
_________________________________________________________________
of a similar nature to that offered by Kephart: The employee had been
critical of a policy implemented by her supervisors,"management had
exhibited some sensitivity about the criticisms," and the employee identi-
fied conduct on the part of management showing it was hostile to her
because of this criticism, id. at 681-82 (plurality opinion). In Waters,
however, the employee had expressed her criticism over a period of
months, and the event that precipitated her termination was a conversa-
tion with another employee that involved allegedly protected speech and
that took place a mere 11 days before her termination. See Churchill v.
Waters, 977 F.2d 1114, 1116-19 (7th Cir. 1992), vacated, 511 U.S. 661(1994). Given the time that elapsed between Kephart's allegedly pro-
tected speech and his termination, we find Kephart's circumstantial evi-
dence too tenuous to support the inference that his criticisms of the
Commissioners' conduct were a substantial or motivating factor in the
refusal by the County to reinstate him.
9
stored" to his position, or an equivalent position with the same terms
and benefits, at the termination of his leave. Id. § 2614(a)(1). An
exemption is provided to the employer, however, in the case of cer-
tain highly paid employees, known as "key employees":
(1) Denial of restoration
An employer may deny restoration . . . to any eligible
employee described in paragraph (2) if--
(A) such denial is necessary to prevent sub-
stantial and grievous economic injury to the opera-
tions of the employer;
(B) the employer notifies the employee of the
intent of the employer to deny restoration on such
basis at the time the employer determines that such
injury would occur; and
(C) in any case in which the leave has com-
menced, the employee elects not to return to
employment after receiving such notice.
(2) Affected employees
An eligible employee described in paragraph (1) is a sala-
ried eligible employee who is among the highest paid 10
percent of the employees employed by the employer within
75 miles of the facility at which the employee is employed.
Id. § 2614(b).
Regulations promulgated by the Department of Labor address the
"substantial and grievous economic injury" standard. Restoration may
be denied only when restoration itself--not the employee's absence--
will cause substantial and grievous economic injury. See 29 C.F.R.
§ 825.218(a) (1999). "If permanent replacement is unavoidable, the
cost of then reinstating the employee can be considered in evaluating
whether substantial and grievous economic injury will occur from res-
10
toration." Id. § 825.218(b). Although there is no precise test for sub-
stantial and grievous economic injury, see id. § 825.218(c), the
standard is "different from and more stringent than the ``undue hard-
ship' test under the ADA," id. § 825.218(d). Finally, if restoration
"threatens the economic viability of the firm" or "causes substantial,
long-term economic injury," then the standard would be met, but
"[m]inor inconveniences and costs that the employer would experi-
ence in the normal course of doing business would certainly not" meet
the standard. Id. § 825.218(c).
Regarding the notice requirement, the regulations explain that an
employer who believes that reinstatement may be denied to an
employee "must give written notice to the employee . . . that he or she
qualifies as a key employee" and "[a]t the same time, the employer
must also fully inform the employee of the potential consequences
with respect to reinstatement and maintenance of health benefits if the
employer should determine that substantial and grievous economic
injury to the employer's operations will result" from reinstatement. Id.
§ 825.219(a). Additionally, "an employer who fails to provide such
timely notice will lose its right to deny restoration even if substantial
and grievous economic injury will result from reinstatement." Id.
Finally, the notice to the employee "must explain the basis for the
employer's finding that substantial and grievous economic injury will
result." Id. § 825.219(b).
There is no dispute here that Kephart was entitled to medical leave.
The parties dispute, however, whether the County was justified in
refusing to restore Kephart to his position as Tax Assessor or a com-
parable position when Kephart's FMLA leave ended. Kephart argues
that the County was not entitled to summary judgment on this issue
because it failed to establish that his restoration would result in sub-
stantial and grievous economic injury.9
_________________________________________________________________
9 Kephart also argues that the County was not entitled to summary
judgment because it failed to provide any evidence that he was a "key
employee" covered by the exemption and it did not provide him with the
required notice. Because we conclude that the County did not provide
sufficient evidence that Kephart's restoration would result in substantial
and grievous economic injury, we do not address Kephart's other conten-
tions.
11
The magistrate judge determined that the exemption to the restora-
tion requirement on which the County relies is an affirmative defense
and that the County therefore has the burden of production and per-
suasion to show that the requirements of § 2614(b) were satisfied. Cf.
Cross v. Southwest Recreational Indus., Inc., 17 F. Supp. 2d 1362,
1369-70 (N.D. Ga. 1998) (determining that the limitation in
§ 2614(a)(3) on employees' rights to restoration created an affirma-
tive defense for the employer). We agree. A defendant relying on an
affirmative defense may prevail on its summary judgment motion
"when it has produced credible evidence . . . that would entitle it to
a directed verdict if not controverted at trial." Brinkley v. Harbour
Recreation Club, 180 F.3d 598, 614 (4th Cir. 1999) (internal quota-
tion marks omitted). After the defendant has produced such evidence,
the burden shifts to the plaintiff to come forward with evidence show-
ing there is a genuine issue of material fact. See id.Even assuming the County met its initial burden, there remains a
genuine issue of material fact. The County argues that it needed a Tax
Assessor and was therefore forced to replace Kephart;10 it then could
not restore Kephart to his position because that position was already
filled; and no equivalent position existed so reinstating Kephart to an
equivalent position would therefore have resulted in the expenditure
of unbudgeted funds. However, Honeycutt's deposition testimony
supports the conclusion that in December 1996, when Kephart
requested reinstatement,11 the Board of Commissioners could have
_________________________________________________________________
10 Although the County argues that having no Tax Assessor would have
caused it substantial and grievous economic injury, this is not the correct
inquiry. See 29 C.F.R. § 825.218(a).
11 We note that the relevant time at which the economic injury to the
County must be assessed is clarified by the regulations. After an
employer has notified a key employee that substantial and grievous eco-
nomic injury would result from the employee's reinstatement, "an
employee is still entitled to request reinstatement at the end of the leave
period." 29 C.F.R. § 825.219(d). At that point, "[t]he employer must then
again determine whether there will be substantial and grievous economic
injury from reinstatement, based on the facts at that time." Id. (emphasis
added). Thus, the County must show, based on the facts in December
1996 when Kephart requested reinstatement, that substantial and griev-
ous economic injury would have resulted from Kephart's reinstatement.
12
returned Coarsey--who had only an interim appointment as Tax
Assessor--to her position as Tax Appraiser and reinstated Kephart to
the position of Tax Assessor with no economic injury resulting. We
do not express an opinion on the merits of this claim. Rather, we con-
clude only that there is a triable issue of fact here, and summary judg-
ment for the County was therefore inappropriate.
C.
Finally, Kephart asserts that the district court erred in granting
summary judgment in favor of Appellees on his ADA claim. Because
Kephart failed to object to the recommendation of the magistrate
judge to dismiss this claim, he has waived the right to appeal this rul-
ing. See 28 U.S.C.A. § 636(b)(1); Wells, 109 F.3d at 201. Accord-
ingly, we affirm the order of the district court granting summary
judgment on this claim.
III.
For the reasons set forth above, we conclude that the district court
correctly granted summary judgment to all Appellees on Kephart's
First Amendment and ADA claims and to the individuals on
Kephart's FMLA claim. We conclude that the district court erred in
granting summary judgment to the County on Kephart's FMLA
claim. Accordingly, we affirm in part and reverse in part.
AFFIRMED IN PART AND REVERSED IN PART
13