Fourth Circuit Affirms Verdict Against Pfizer for Alleged Retaliation

March 23, 2009

The Fourth U.S. Circuit Court of Appeals is the federal appellate court for Maryland, North Carolina, South Carolina, Virginia, and West Virginia. Although Fourth Circuit precedent isn’t binding on Wisconsin employers, one of the court’s most recent decisions is informative regarding potential pitfalls of the Family and Medical Leave Act (FMLA) and employees who may be eligible for its protections. In the case, the employer took an adverse action against an employee soon after it was put on notice of a potential leave request that may have been covered under the FMLA.

What is striking about the case is that the employee never made a formal FMLA leave request. However, the court found that simply putting an employer on notice of a request for leave that may be covered by the FMLA is sufficient to trigger protected activity under the Act. While the case involved a number of different legal issues on appeal, this article discusses only the retaliation aspect of the decision.

James Dotson worked at Pfizer for approximately 15 years. He was terminated shortly after he and his wife returned from Russia with their newly adopted child. Before he was terminated, Dotson was a regional account manager. His immediate supervisor was Chris Kennedy, who reported to the regional manager, Patrick McElerney.

As part of his training as a sales representative, Dotson was instructed in the proper handling of product sample packs called “starters.” Sales reps provide starters to doctors, who give them to their patients to get them “started” on a drug for which a prescription will later be written.

The Food and Drug Administration regulates the use of starters, while the Prescription Drug Marketing Act (PDMA) covers their distribution. The PDMA requires Pfizer to track and account for any starters given to physicians. Pfizer uses electronic tracking and “starter activity forms” to fulfill its responsibilities under the statute. The Act also requires pharmaceutical companies to report any improper diversion of starters or intentional falsification of starter forms.

Violations of the Act can result in sanctions ranging from fines and the loss of drug distribution rights to imprisonment for certain criminal violations. Under its “starters” policies, Pfizer can discharge employees for violations. However, at the time Dotson was fired, the company failed to provide specific details of its standards for discharge.

In early 2003, Dotson and his family began working with an adoption agency to adopt a child from Russia. Dotson spoke with Pfizer HR rep Amy Burnell about taking leave during the adoption process. Testimony differed about what Burnell told Dotson regarding the applicability of FMLA benefits and his intention to use accrued vacation time. Apparently, she referred him to another HR officer, whom Dotson never contacted.

Dotson used accrued vacation time to take his first trip to Russia. Both parties agree that around that time, his relationship with Kennedy was deteriorating. Dotson ultimately found out he was eligible to adopt. When he learned it was customary to bring gifts for the orphanage, he decided to obtain a case of Zithromax (an antibiotic) starters to present as a gift to the orphanage in Russia.

During a performance review shortly after his first trip, Dotson’s two immediate supervisors informed him that they were unhappy with his job performance and expressed concern about his use of the Zithromax. Dotson later contacted the regional HR director, Ann Hodges, to discuss the negative performance review. Hodges said she was also concerned about his handling of starters. After speaking with Hodges, Dotson left with his wife for a second trip to Russia. Pfizer then began an evaluation of his actions.

As part of the evaluation, McElerney related a summary of Dotson’s actions to Steve Harper, a Pfizer vice president, who believed that the use of the Zithromax could be viewed as prohibited quid pro quo with the Russian orphanage. Harper determined that Dotson’s conduct warranted discharge, and an executive group within the company’s management concurred. Dotson was terminated on November 11, 2003 – less than three weeks after he and his wife returned from Russia with their adopted child.

District court proceeding
In September 2004, Dotson filed an FMLA retaliation claim. To prevail, he had to introduce evidence linking the adverse employment action taken against him to a “protected activity,” which he claimed was his request for adoption-related leave.

Dotson claimed that his termination was based on false reasons and showed that Pfizer retaliated against him because of his leave request. Specifically, he claimed that the starter issue was used as a pretext to fire him and that the policy against his use of the starters was unknown to anyone outside the group responsible for his termination.

Dotson contended that Pfizer management knew about his trip to Russia and of his intentions to give the starter packages to the orphanage. Despite that knowledge, the company didn’t instruct him to do otherwise. He also argued that the two employees who helped him obtain the starters weren’t disciplined and that Pfizer didn’t report his alleged PDMA violation until 2005.

The jury found that Pfizer interfered with Dotson’s FMLA rights when it discharged him. It awarded him $331,429.25 on his retaliation claim. The district court awarded an additional $375,000 in liquidated damages as well as attorneys’ fees and costs.

Fourth Circuit’s decision
On appeal, Pfizer argued that because Dotson didn’t formally request FMLA leave, a rational jury couldn’t hold it liable for retaliating against him for exercising his FMLA rights. It also argued that he had no evidence of any retaliatory animus by the individuals who decided to fire him and that there was no evidence that the firing was based on false reasons.

The court of appeals found that the request for leave constituted protected activity. It emphasized that Dotson gave Pfizer adequate notice of his need for leave during the adoption process. After he provided that information, the burden shifted to Pfizer to determine whether he was requesting FMLA leave. The court found that Pfizer never inquired whether his adoption-related leave was protected under the FMLA. The court rejected the company’s argument that Dotson couldn’t have engaged in protected activity because he never asked for FMLA leave. According to the court:

Pfizer’s legal argument would allow it to use its own failure to determine whether leave should be designated as FMLA-protected to block liability for retaliation. We decline to allow an employer to take advantage of its own lapse in such a way.

The court concluded that Dotson produced sufficient evidence for a jury to find both retaliatory animus and pretext. It found that Pfizer’s starter policies weren’t so clearly drawn that Dotson’s handling of the product was obviously wrong. More importantly, none of the Pfizer employees who knew in advance about his plan to donate the Zithromax starters – including Kennedy, his direct supervisor, and McElerney, a member of the executive group that made the termination decision – took any action to stop him from following through with his intentions.

The court emphasized that neither Kennedy nor McElerney was disciplined for failing to stop Dotson. It also noted that the two other employees directly involved in obtaining the starters were not disciplined. Finally, the court pointed to McElerney’s frustration at Dotson for missing a deadline because of an adoption-related trip to Russia. The court held that that given the timing of Dotson’s termination, a jury could find that the decision to terminate was based on false reasons. Dotson v. Pfizer, Inc., No. 07-1920 (4th Cir., March 4, 2009).

Bottom line
This case underscores the challenges you face when an employee engages in conduct that ultimately may be construed as protected activity. Compounding matters, it’s quite possible that no one in Pfizer management involved in the decision to terminate Dotson knew that he had sought to exercise rights that might be covered under the FMLA. In essence, the Fourth Circuit punished Pfizer because it allegedly failed to properly evaluate Dotson’s request for leave.

The Seventh Circuit (Wisconsin’s federal appellate court) may have viewed Dotson’s conduct differently. It might have determined that he didn’t engage in protected activity or that there was insufficient evidence to show that the decisionmakers knew he had engaged in protected activity.

In any event, you must proceed with extreme caution with respect to all adverse employment actions and make your best effort to ensure that your reasons are consistent and can stand up to scrutiny when a court or jury acts as the Monday morning quarterback. When in doubt, consult employment counsel before making termination decisions.

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