Law Updates

Fourth Circuit Affirms Dismissal of FMLA Suit Against Government Contractor

Gary Waag v. Sotera Defense Solutions, Inc., No. 15-2521 (U.S. Court of Appeals for the Fourth Circuit). View pdf

(May 22, 2017) Caroline E. Willsey, Associate.

For more information, contact Stephen S. McCloskey

Gary Waag (“Waag”) brought an action against his former employer, Sotera Defense Solutions, Inc. (“Sotera”) alleging violation of the Family and Medical Leave Act (“FMLA”).

In December 2011, Sotera joined Sotera as the “Director of Operations,” a title he had previously held at Potomac Fusion, Inc., which was acquired by Sotera. In early October 2012, Waag’s superior, Dan Haug (“Haug”), and Vice President Kathleen Lossau (“Lossau”) asked Waag to become the Program Manager of the NexGen contract Sotera had won from the U.S. Army.

On October 17, 2012, Waag injured his hand when he fell off the roof of his house. Waag reported his injury to Haug and explained that he would not be able to work until mid-December or early January 2013 due to his injury. In Waag’s absence Lossau and Haug determined that they needed a new Project Manager for the NexGen project and appointed Devin Edwards (‘Edwards”). Shortly thereafter, a federal budget sequestration went into effect meaning funding was no longer available for the NexGen project.

In late December 2012, when Waag returned to work, Haug had Waag work on Sotera’s new Electronic Warfare Program (“EWP”). Waag received an identical salary. In February 2013, a group of employees, including Waag, who were assigned to “less important strategic priorities,” like the EWP, were laid off. Edwards was not among those laid off. Sotera justified this by saying that Edwards was “critical to a number of other significant revenue programs . . . unrelated to NexGen. At the time of the layoffs there was still no funding for the NexGen project and no work was being performed on the project by Edwards or anyone else at Sotera.

Waag filed suit in federal court alleging that Sotera violated his FMLA rights (1) by failing to restore him to “the same position” after his return from medical leave, (2) by failing to restore him to a “bona fide equivalent position,” and (3) by “terminating his employment.” Sotera moved for summary judgment arguing that Waag had no absolute right to reinstatement in the exact same position he was performing before he left on leave and that the new job he was give was “equivalent to his pre-leave position.” Sotera also maintained that Waag would have been terminated due to Sotera’s poor financial condition even if Waag had not taken leave.

The district court granted summary judgment for Sotera under two separate theories. First, the court rejected the argument that Sotera violated Waag’s FMLA rights by terminating him because Waag would have lost his job even if he had not taken medical leave. Second, the district court rejected Waag’s argument that he was terminated in retaliation for taking FMLA leave.

The Fourth Circuit affirmed the district court’s opinion. First, the Fourth Circuit rejected Waag’s argument that Sotera interfered with his FMLA rights by failing to restore Waag to the same position. The FMLA does not require an employer to restore an employee to his previous position no matter what. Rather, FMLA provides that an employee is entitled “(A) to be restored . . . to the position of employment held by the employee when the leave commenced; or (b) to be restored to an equivalent position with equivalent employment benefits, pay and other terms and conditions of employment.” 29 U.S.C. § 2614(a)(1) (emphasis added). The Fourth Circuit reasoned that the text of the FMLA clearly indicates that the employee has the right to be restored to either his original position or an equivalent position.

Next, the Fourth Circuit rejected Waag’s argument that Sotera interfered with his FMLA rights by failing to restore him to an equivalent position. An equivalent position means “one that is virtually identical to the employee’s former position,” with respect to pay, benefits, and “working conditions including privileges, prerequisites and status.” 29 CFR § 825.215(a). The district court determined that there was no genuine dispute of material fact in this regard – Waag’s salary, benefits, bonus eligibility, worksite, title, and supervisor remained exactly the same in both positions, as did the focus of his work, i.e., business development. Waag identified several differences in the tasks he performed in his pre-leave and post-leave positions. The Fourth Circuit, however labeled these tasks as being “de minimis, intangible or unmeasurable aspects of the job” and that no reasonable fact finder could conclude that the jobs were not equivalent. See 29 CFR § 825.215(f).

The Fourth Circuit also addressed Waag’s allegation that the EWP job was a sham position, designed to be eliminated soon after his return from FMLA leave. The district court rejected this argument. Waag challenged it on appeal, contending that it was a triable question of fact. Waag emphasized a provision of the federal regulations which provide “[r]estoration to a job slated for lay-off when the employee’s original position is not would not meet the requirements for an equivalent position.” 29 CFR § 825.216(a)(1). The Fourth Circuit concluded that no reasonable juror would believe that Waag was put in a short-term sham job to cover Sotera’s decision to fire Waag. The undisputed evidence showed that the EWP job was not slated for lay-off at the time Waag returned from leave. Moreover, Waag provided no actual evidence – beyond mere speculation – that the EWP job was a sham.

Finally, the Fourth Circuit rejected Waag’s claim that Sotera terminated him in retaliation for exercising his rights under the FMLA to take medical leave. A prima facie case of retaliation can be established through circumstantial evidence. Waag argued that he established a prima facie case of retaliation by showing close temporal proximity between the protected activity (medical leave) and his employer’s adverse action (termination). The Fourth Circuit agreed that the close temporal proximity – less than six (6) weeks between the two events – may suffice to establish a prima facie case. Even assuming that Waag established a prima facie case of retaliation under the FMLA, he still bore the burden of establishing that Sotera’s proffered explanation was merely pretextual. Here, Sotera offered evidence that government sequestration in October 2012 had a disastrous effect on the defense contracting industry, that Sotera missed is projected revenue for 2012 by $110 million and that drastic personnel cuts were required. Accordingly, the Fourth Circuit concluded that Waag failed to adduce sufficient evidence to create a genuine issue of material fact.

Accordingly, the Fourth Circuit affirmed the district court’s grant of summary judgment in favor of Sotera as to each of Waag’s FMLA claims.