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Firing poor-performing manager after learning he had cancer supports disability bias claim; more leave not per se unreasonable

By Kathleen Kapusta, J.D.

A Forever 21 district manager fired for poor performance—six of his stores had been identified as bottom performers—shortly after his manager learned he was on medical leave for cancer, established fact issues as to whether he was a qualified individual who could have performed his job with a reasonable accommodation of additional leave. Nor could the retail chain show his request for an extended medical leave was per se unreasonable, said a federal district court in Oregon, denying summary judgment against his state-law disability discrimination claim and granting him leave to amend his complaint to include a claim for punitive damages (Estep v. Forever 21 Retail, Inc. dba Forever 21, November 13, 2018, Beckerman, S.).

Promoted to district manager in 2014, the employee was temporarily tasked a year later with overseeing additional stores. Around that same time period, Forever 21, faced with declining domestic performance, began taking a closer look at underperforming district level managers. By December 2015, the employee was identified as one of 15 “Bottom Performers.” He was also the district manager of six stores identified by the CEO as being in the bottom 100. As a result, Forever 21 contended, his manager decided to terminate the employee around the end of 2015. She took no action, however, at that time.

Medical leave. Also in December 2015, the employee requested two personal days from work because he was not feeling well. In late January 2016, he told his manager he would be on medical leave for an unspecified reason. He was on approved FMLA from January 25 to April 18, and unpaid leave until June 20, when he sought additional “estimated” leave until October (ultimately he could not return to work full-time until January 2017).

Fired. After he had exhausted his leave of absence in June, a senior HR manager informed the employee’s manager that he could be fired. Around that same time, his manager learned he was on medical leave because he had cancer. He was fired shortly thereafter, purportedly as a result of his earlier performance issues. The employee then sued for disability discrimination in violation of ORS Section 659A.112.

Qualified individual. Because he was unable to perform the essential functions of district manager, Forever 21 argued, the employee was not a qualified individual under the statute. While Forever 21 claimed his stores were not meeting company standards and his manager had decided to terminate him in November 2015, which was before he went on leave and before she learned he had cancer, the employee pointed out that before he left on sick leave, he never received a negative performance review or was otherwise notified he was underperforming. Further, as part of a district manager alignment proposal in March 2016, his manager designated the employee as the district manager for two districts.

Despite her apparent intention to retain him as of March 2016, the court observed, his manager “greenlighted” the decision to terminate him after she learned of his cancer diagnosis three months later. In addition, despite its general policy not to provide severance to employees terminated for performance issues, Forever 21 offered him a severance package. Because a reasonable jury could find the employee was a qualified individual who could have performed his job duties with a reasonable accommodation of additional leave, summary judgment was denied on this ground.

Reasonable accommodation. After finding the employee’s multiple requests for leave to treat and recover from cancer were adequate notice of the need for an accommodation of extended leave, the court addressed whether his need for an extended leave of up to one year was per se unreasonable. In arguing that it was not reasonable, Forever 21 cited the Seventh Circuit’s decision in Severson v. Heartland Woodcraft, Inc., which held that “[a]n employee who needs long-term medical leave cannot work and thus is not a ‘qualified individual’ under the [American with Disabilities Act].” Declining to follow Severson, the court explained that under established Ninth Circuit law “an extended unpaid medical leave may be a reasonable accommodation if it does not pose an undue hardship on the employer.” And here, Forever 21 made no showing of an undue hardship if the employee had remained on leave for another six months. Nor was his leave request indefinite, the court pointed out, noting that before he was terminated, he notified Forever 21 that he could return full-time in January 2017.

Pretext. Although Forever 21 offered a legitimate, nondiscriminatory reason for terminating the employee—poor performance— a reasonable juror could find a discriminatory reason for the adverse action said the court, pointing to the same reasons already discussed: temporal proximity; no adverse performance reviews; no notice to the employee of substandard performance; layoff as the stated reason for separation; the severance package provided to him; his manager’s apparent intention to retain him before learning of his cancer diagnosis; and no evidence of a definitive decision to terminate him before she learned of his cancer diagnosis.

Punitive damages. In allowing the employee to amend his complaint to include a claim for punitive damages, the court first found no inexcusable delay. He learned of facts relevant to his punitive damages claim for the first time in April and May of 2018, and he filed his motion for leave to amend on May 24. Nor was the claim futile, said the court, noting that based on the allegations set forth in his amended complaint, a reasonable juror could find Forever 21 acted with malice by terminating him upon learning that he had cancer.