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Rehab Act plaintiff not required to exhaust remedies against private company receiving federal funds

By Lorene D. Park, J.D.

Reversing the dismissal of a second lawsuit filed by an employee asserting Rehabilitation Act claims against a private company that she claimed fired her due to her disability, the Seventh Circuit explained that a plaintiff seeking relief against a private recipient of federal funds is not required to exhaust the administrative remedies provided under the Act (Williams v Milwaukee Health Services, Inc, October 10, 2013, Posner, R). The appeals court also cautioned the lower court that it should have construed her second suit as a clumsy attempt by a pro se plaintiff to amend her first and that the mere pendency of other state court actions may not be grounds for dismissal upon remand.

The employee, who was a dental assistant, filed suit against her former employer, a private recipient of federal funding, alleging that it discriminated against her by requiring her to complete certain tasks that she could not do because of a disability that limits her strength and mobility, and then firing her because of her disability. She previously had filed suit based on the same allegations but did not specify a specific statute upon which she was basing her claim. This second suit asserted violations of the Rehab Act. Dismissing her second suit, the trial court concluded that she failed to exhaust her administrative remedies.

No exhaustion required. Reversing, a Seventh Circuit panel explained that a “seeker of relief under the Rehabilitation Act against a recipient of federal money is not required to exhaust the administrative remedies that the Act provides.” Indeed, an employee of a private company “isn’t even required by the Act to file an administrative charge or complaint — and anyway, having to file is not the same thing as having to exhaust administrative remedies. Exhaustion requires pressing the charge to an administrative resolution,” the court averred.

Guidance for lower court. The appeals court acknowledged that the situation was complicated by the fact that the complaint the lower court dismissed was from this second suit, which arose from the same facts as the first suit. The difference between the two was that the first suit did not mention the Rehab Act (or any other statute) and this second suit did. While the lower court, upon dismissing this suit, invited the employee to amend her first suit (and remarked disapprovingly that the second suit was duplicative), it then denied her motion to amend the first suit to add the Rehab Act because it had just rejected that claim for failure to exhaust administrative remedies. The lower court also noted that she had filed three similar suits in state court, raising a concern to the appeals court that, on remand, the court would dismiss this suit as vexatious litigation.

In the appellate court’s view, however, the employee’s second suit was really “just a clumsy attempt” by a pro se litigant to amend her first complaint and the judge should have interpreted it accordingly. As to her state court suits, they may have been duplicative but such “duplication is, in the first instance anyway, the business of the state court in which she filed them, rather than of the federal courts.” Their mere pendency was not a good reason for dismissing a federal suit that may have merit when the defendant hasn’t even raised the issue. The appeals court further noted that the state court actions had now been dismissed. It left the possible preclusive effect of those dismissals for the lower court to consider on remand.