Under a recent U.S. Supreme Court decision, lower courts will have to determine when a claim for disability discrimination is barred by an application for disability benefits
By Wayne A. Hersh and Jon G. Miller
Wayne A. Hersh is a partner and Jon G. Miller is an associate at the Irvine office of Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone. They represent management in labor and employment law matters.
Employment litigators have seen an increase in lawsuits allegingdisability discrimination or failure to reasonably accommodate an individual with a disability. In California, the primary statute governing such claims are the Americans with Disabilities Act (ADA)1 and the California Fair Employment and Housing Act (FEHA).2 The ADA does not allow an employer to discriminate against, or fail to provide reasonable accommodation to, a "qualified individual with a disability."3 The FEHA contains similar wording.4
The ADA and FEHA do not open the courthouse door to every person with a disability, however. Only a person who can perform the essential functions of a desired job, with or without reasonable accommodation, can sue under the ADA or FEHA.5 Individuals who are not able to perform the essential functions of a job, even with reasonable accommodation, may be entitled to receive benefits from a variety of governmental and private sources. These resources may include Social Security Disability Insurance (SSDI),6 State Disability Insurance (SDI),7 workers' compensation,8 and private disability insurance.
Recipients of these benefits may represent that they are totally disabled or otherwise incapable of working. Sometimes, these same recipients also sue for disability discrimination. Since the ADA and FEHA require that such plaintiffs possess the ability to perform the essential functions of their job, plaintiffs with claims under these statutes may take positions during litigation that are inconsistent with the stances they took to obtain disability benefits. In these cases, it has been argued, the doctrine of judicial estoppel may apply.9
Judicial estoppel prevents a party from asserting a position in one proceeding that is contrary to a position taken in the same or some earlier proceeding.10 Judicial estoppel is "intended to protect against a litigant from playing 'fast and loose with the courts.'"11 According to a California appellate court, it is wrong to allow a person to advocate one position in a judicial or quasi-judicial proceeding and, when expedient, assert the opposite in another proceeding.12
Judicial estoppel has had particular significance in ADA litigation in which individuals recover workers' compensation benefits based on a total disability and subsequently bring separate civil lawsuits for discrimination and failure to reasonably accommodate.13 Courts have been forced to reconcile these two seemingly contradictory positions.14 Last year, the U.S. Supreme Court, in Cleveland v. Policy Management Systems Corporation,15 stepped forward to resolve the conflict.
Applying Judicial Estoppel
In earlier cases, some federal and state courts seemed to be moving on parallel paths to broadly apply the judicial estoppel doctrine. Two cases are illustrative. In a 1996 Ninth Circuit case, Kennedy v. Applause, Inc.,16 plaintiff Kennedy, a sales representative, suffered from chronic fatigue syndrome. Her doctor signed a note to the employer stating that she was unable to work for about a month. The next day, the plaintiff applied for state disability insurance benefits and was also fired. Kennedy brought suit under the ADA, and in response the employer moved for summary judgment on the ground that Kennedy was not a "qualified individual with a disability."17 Kennedy had made sworn statements on SDI and Social Security Administration (SSA) claim forms that she was completely disabled for all work-related purposes. In her deposition, Kennedy testified that she was able to perform her job.
The district court held that Kennedy's deposition testimony was belied by her claim forms and granted summary judgment for the employer. Holding the plaintiff to the position she had previously taken, the Ninth Circuit affirmed that there was no genuine issue as to whether she could have performed her job with any accommodation.18
A 1997 California Court of Appeal case, Jackson v. County of Los Angeles,19 reached a similar conclusion. Jackson was a safety police officer assigned to County-USC Medical Center. He was injured while restraining a hyperactive patient who was under the influence of PCP. Jackson never requested reasonable accommodation and applied for workers' compensation benefits. The claim was eventually settled with a stipulation restricting Jackson to working only in a stress-free environment-a stipulation that ultimately led to Jackson's being relieved of his duties because there were no safety police officer positions that were free of stress and no accommodations that would permit him to continue in his job at the medical center. The county was unable to find another job for him and placed him on a medical leave of absence.
Jackson sued in state court under the ADA. Invoking judicial estoppel, the superior court granted summary judgment for the county because Jackson had received workers' compensation benefits based on the fact that he could not perform the essential functions of his job.20 The Second District affirmed21 and listed the five elements that a defendant employer must show in state court for judicial estoppel to apply:
- One party has taken two positions.
- The positions were taken in judicial or quasi-judicial administrative proceedings.
- The party was successful in asserting the first position.
- The two positions are totally inconsistent.
- The first position was not taken as a result of ignorance, fraud, or mistake.22
In 1999, the Second District applied judicial estoppel in a FEHA case, Drain v. Betz Laboratories, Inc.23 Drain, a chemical operator, missed work and took leave under his employer's short-term and long-term disability leave programs. Drain also filed for workers' compensation benefits, which were obtained after Drain and his doctor represented that Drain was totally disabled from any occupation. When Drain did not return to work after more than six months of leave, the company fired him, as company policy permitted.
Drain filed a claim under the FEHA. He alleged that the company wrongfully terminated him and harassed him based upon race. Again, the Second District found that the doctrine of judicial estoppel was applicable and affirmed summary judgment for the employer.24 The Drain court reasoned that when an employee seeks disability benefits based upon an inability to perform any job, as opposed to merely being unable to perform a specific job, the employee is judicially estopped from later claiming to be qualified to perform his or her job.25
Other courts, however, took a narrower view of when to apply the doctrine of judicial estoppel. In Prilliman v. United Airlines, Inc.,26 a 1997 California appellate case, a flight officer was diagnosed with HIV, and the condition eventually advanced to AIDS. Prilliman could physically fly commercial jetliners, but once he was diagnosed with HIV, Federal Aviation Administration regulations prohibited him from piloting an aircraft.27 The airline determined that Prilliman's condition rendered him unable to meet FAA physical requirements, grounded him, and placed him on medical disability. An airline administrator advised Prilliman to apply for Social Security benefits to supplement his disability income. Doctors' reports indicated that Prilliman had been placed on permanent total disability. After the airline did not consider Prilliman for any other position, Prilliman sued the airline under the FEHA.
The First District reversed a summary judgment for the employer.28 Among other findings, the Prilliman court declared that there was no evidence that Prilliman made any statements or representations in applying for disability benefits. Therefore, the doctrine of judicial estoppel did not apply.29
Similarly, in Johnson v. State of Oregon,30 the Ninth Circuit in 1998 refused to apply judicial estoppel in an ADA case. Plaintiff Johnson, an employee with Oregon's Vocational Rehabilitation Division, had carpal tunnel syndrome. As Johnson's condition worsened, she went through several rounds of surgery. Her doctor recommended a number of accommodations, but her employer considered these requests unreasonable and terminated Johnson.
Johnson applied for SSDI benefits. Indicating that she could work with accommodation, the SSA determined that Johnson was not disabled and denied benefits. Johnson also applied for private disability insurance benefits-although her doctor, in declaring that she was severely limited, had never indicated that Johnson was unable to perform work. In a letter to the Internal Revenue Service, Johnson offered her inability to work as one reason she filed a late tax return.
The Ninth Circuit reversed a magistrate judge's ruling that Johnson was judicially estopped from claiming that she was a qualified disabled employee.31 The court rejected a per se rule that persons who receive disability benefits are precluded from ADA litigation. Reasoning that the definition of a disability under a benefits program can differ from the ADA's definition, the Johnson court took this narrow view of judicial estoppel out of fear that to do otherwise would require plaintiffs to choose between disability benefits and ADA litigation.32 The Johnson court noted, however, that a plaintiff's prior representations in a disability benefits application could be considered as evidence in evaluating an ADA claim.33
The U.S. Supreme Court Weighs In
In Cleveland v. Policy Management Systems Corporation,34 the U.S. Supreme Court chose to review this contentious issue of contradictory claims in a case involving the ADA and SSDI benefits. The Social Security Act provides that SSDI benefits are payable to any person unable to engage in a gainful activity due to a physical or mental impairment.35 The impairment must be so severe that the person is unable to perform his or her prior work and any other type of work.36
Plaintiff Cleveland suffered a stroke. While out of work, Cleveland applied for SSDI benefits. She returned to work before her application was considered. Noting her return to work, the SSA denied her SSDI application, and Cleveland's employer fired her four days later. Cleveland resubmitted her SSDI application and eventually received benefits retroactive to the date of her stroke.
Cleveland then filed suit under the ADA, alleging that her former employer terminated her without reasonably accommodating her disability. A district court granted the employer's motion for summary judgment on the ground that, by applying for and receiving SSDI benefits, the plaintiff conceded that she was totally disabled and thus, the court concluded, she could not perform the essential functions of her job even with "reasonable accommodation."37
The Fifth Circuit affirmed the summary judgment, but its rationale differed from that of the district court. Rejecting a per se rule that would disqualify applicants for disability benefits from ADA claims, the court reasoned that it was "at least theoretically conceivable that under some limited and highly unusual set of circumstances the two claims would not necessarily be mutually exclusive."38 Stating that the application for benefits created a "rebuttable presumption" that the claimant or recipient is judicially estopped from asserting that he or she is a "qualified individual with a disability,"39 the court found that the plaintiff had failed to rebut this presumption.
The Supreme Court granted certiorari, citing a disagreement among the circuits on this issue, and then vacated the Fifth Circuit's holding.40
Justice Breyer, writing for a unanimous Court, focused on the differing purposes of the Social Security Act and the ADA. The Social Security Act provides money to every insured individual who is unable to engage in gainful employment due to a physical or mental impairment that can be expected to last at least 12 months.41 The ADA seeks to eliminate employment discrimination against disabled persons and to provide them equal opportunities when they can perform their jobs with reasonable accommodation.42 The Court acknowledged that an appearance of conflict arises when a person asserts in one forum that he or she cannot work while claiming in another forum that he or she is capable of working with reasonable accommodation.
The Court, however, refused to apply a special presumption that would judicially estop ADA claims because there are many situations in which an SSDI claim and an ADA claim could exist side by side.43 The SSA's standardized test-which is designed to administer a national system involving millions of claims-does not analyze whether a person is able to perform a job with reasonable accommodation.44 Further, SSDI benefits are sometimes paid to persons who are attempting to reenter the work force.45 In rejecting the argument that employees should be judicially estopped from ADA claims because they asserted an inconsistent position in unsuccessfully applying for SSDI benefits, the Court emphasized that the judiciary allows parties to pursue alternative claims and defenses as a matter of course.46
A quick read of the Cleveland decision might suggest that employees may now obtain disability insurance benefits by asserting that they are unable to work and then successfully suing for disability discrimination under the ADA or FEHA. The Court's ruling, however, makes clear that this is not the case and directs courts to scrutinize such claims carefully.47
A plaintiff who sues for disability discrimination bears the burden of proving that he or she is a "qualified individual with a disability."48 The Court acknowledged that a statement in a prior application for disability insurance benefits that an employee is unable to work appears to negate this essential element of a plaintiff's ADA claim.49 But Cleveland holds that while a plaintiff cannot ignore this apparent contradiction, the plaintiff can survive summary judgment by explaining it.50 The explanation must be sufficient to warrant a reasonable juror's conclusion that, assuming the truth of the plaintiff's belief in the earlier statement that he or she was unable to work, the plaintiff could nonetheless perform the essential functions of his or her job with or without reasonable accommodation.51
Although Cleveland involved SSDI, its rationale will likely be considered when a defense is raised based upon an employee's statements in applying for other public and private disability insurance programs. Nevertheless, the Court gave little guidance on what standards courts are to use when determining whether a plaintiff has sufficiently explained the contradictory statements involved in these types of cases.52 This will be a hotly debated issue in the future.
Preventing Conflicting Claims
Cases such as Cleveland and its predecessors demonstrate the difficulties that an employer can face. Some employees may represent that they are totally disabled and unable to perform any job in order to qualify for disability benefits. They may then sue for disability discrimination-and even demand that their employer not only reimburse them for any lost back pay but also rehire them at full pay.
An employer can take a series of steps that can help prevent the filing of disability discrimination claims subsequent to an employee seeking benefits for an occupational or nonoccupational disability.
- The employer should first assess the employee's ability to perform the essential functions of his or her job.
- The employer should then ask if the employee can perform the essential functions of the job with or without reasonable accommodation. If the employee agrees to release personal medical information, employers should proceed to ask the employee's doctor-and, possibly, a company doctor-if the employee can perform these essential job functions with or without reasonable accommodation.
- While not required to create new jobs, the employer should assess whether the employee is capable of performing in another capacity in the company. If the employer has no job for the employee, the employer may consider a mutual agreement with the employee to arrange outplacement services in exchange for a release of liability.
- If the employee is capable of working in another capacity, an employer may be able to place the employee elsewhere. If the employee is capable of working in another job in the company, an employer should assess what, if any, job restrictions exist.
- If the employee is on leave, the employer should require the employee to provide monthly updates in writing concerning his or her ability to return to work.
Employers or insurers with disability insurance programs may intend that benefits only be paid when an employee is completely unable to work with or without reasonable accommodation. They should consider whether their claim forms adequately address this issue. For instance, a benefits application could ask claimants if they can perform the essential functions of their job with or without reasonable accommodation. Claimants should also be asked if they can perform any job. Employers must and should affirmatively attempt to reasonably accommodate the employee. If the employee is unable or unwilling to accept a reasonable accommodation, this may provide a defense in subsequent litigation.
Employer and Employee Litigation Strategies
Attorneys representing management in disability discrimination cases should use the discovery process to determine whether a plaintiff has a reasonable explanation for claiming that he or she previously could not work in order to recover insurance benefits but can currently work as the lawsuit suggests. For example, defense counsel should ask deposition questions that are designed to determine if and whether the employee was capable of working. The plaintiff should be asked specifically what functions he or she could perform and when. Defense counsel should obtain information concerning the employee's SDI, SSDI, workers' compensation, and private disability benefits. Records of physicians who treated the plaintiff are also important.
If the employee cannot reasonably explain the contradiction, defendants should bring a motion for summary judgment. Even if summary judgment is denied, this issue can be raised again in trial or by way of nonsuit, directed verdict, or posttrial motions. Attorneys representing employees should be mindful of the Cleveland ruling in any discrimination case under the ADA or FEHA. Counsel who are considering taking a case for an employee should ask their client if he or she has applied for disability payments. The attorney should determine if the employee, or the employee's doctor, obtained benefits by representing that the employee was unable to work in any function. If it is not too late, attorneys should counsel employees that certain statements during the disability benefits process may eventually preclude them from bringing a disability discrimination lawsuit.
Employees also should take great care to accurately characterize their condition in applying for disability or workers' compensation benefits. For example, a claimant may get carried away in overstating the scope of a disability claim. A false or exaggerated statement may damage the plaintiff's ability to get to trial by rendering the plaintiff unable to explain a contradiction at the time of summary judgment.
The Underlying Issues
While the Supreme Court's opinion in Cleveland has gone a long way in resolving the conflicting opinions of the lower courts, there is certainly room for the legislature to clarify the underlying issues even further. Cleveland refers to a dichotomy between the purposes of the ADA and SSDI.53 Like SSDI, many state disability insurance and unemployment insurance programs do not assess whether a disabled individual is able to work with reasonable accommodation. The purposes of the ADA and the FEHA are to integrate the disabled into the work force. This public policy might be better served by integrating disability programs with unemployment benefits programs.
Government agencies should determine if a disabled person is able to work with reasonable accommodation. Those who are treated as part of the work force could be assisted in looking for work. Disability benefits could then be reduced and eventually eliminated as the employee makes the transition back into the work force. Similarly, if a person is able to work with reasonable accommodation, public funds that would have gone straight to disability payments could be used to help offset the costs to employers and employees of making the necessary accommodations.
1 Americans with Disabilities Act of 1990, 42 U.S.C.A. §§12101-12213 (1995).
2 California Fair Employment and Housing Act (codified at Gov't Code §§12900-12996) (1992).
3 See 42 U.S.C.A. §§12111, 12112(a), (b) (1995).
4 See, e.g., Gov't Code §12940(a)(1).
5 Kennedy v. Applause, Inc., 90 F. 3d 1477, 1481 (9th Cir. 1996); 42 U.S.C.A. §12111(8); Gov't Code §12940(a)(1).
6 42 U.S.C.A. §423.
7 Unemp. Ins. Code §§2601-3272.
8 Lab. Code §§3200-6002.
9 See Jackson v. County of Los Angeles, 60 Cal. App. 4th. 171, 180-81 (1997); Prilliman v. United Air Lines, Inc., 53 Cal. App. 4th 935, 956 (1997).
10 Jackson, 60 Cal. App. 4th at 181.
11 Id. at 181 (citing Russell v. Rolfs, 893 F. 2d 1033, 1037 (9th Cir. 1990)).
12 Id. (citing Eric A. Schreiber, Comment, The Judiciary Says, You Can't Have It Both Ways: Judicial Estoppel-A Doctrine Precluding Inconsistent Positions, 30 Loyola L.A. L. Rev. 323, 327 (1996)).
13 Rissetto v. Plumbers and Steamfitters Local 343, 94 F. 3d 597, 605-06 (9th Cir. 1996).
14 Drain v. Betz Lab. Inc., 69 Cal. App. 4th 950, 956 (1999).
15 Cleveland v. Policy Management Sys. Corp., ___ U.S. ___, 119 S. Ct. 1597 (1999).
16 Kennedy v. Applause, Inc., 90 F. 3d 1477 (9th Cir. 1996).
17 Id. at 1480.
18 Id. at 1481-82.
19 Jackson v. County of Los Angeles, 60 Cal. App. 4th 171 (1997).
20 Id. at 178.
21 Id. at 175.
22 Id. at 183.
23 Drain v. Betz Lab., Inc., 69 Cal. App. 4th 950 (1999).
24 Id. at 960-61.
25 Id. at 958-59.
26 Prilliman v. United Airlines, Inc., 53 Cal. App. 4th 935 (1997).
27 Id. at 941.
28 Id. at 964.
29 Id. at 963.
30 Johnson v. State of Oregon, 141 F. 3d 1361 (9th Cir. 1998).
31 Id. at 1371.
32 Id. at 1366-68.
34 Cleveland v. Policy Management Sys. Corp., ___ U.S. ___, 119 S. Ct. 1597 (1999).
35 42 U.S.C.A. §423(a)(1).
36 42 U.S.C.A. §423(d)(2)(A).
37 Cleveland, 119 S. Ct. at 1600.
39 Id. at 1601.
40 Id. at 1604.
41 Id. at 1601.
42 Id.; 42 U.S.C.A. §§12101(a)(8), (9) (1990).
43 Cleveland, 119 S. Ct. at 1602. An ADA plaintiff's claim that the plaintiff can perform his or her job with reasonable accommodation may prove consistent with an SSDI claim that the plaintiff could not perform his or her job, or any other, without it. Id. at 1602.
44 Id. at 1601.
45 Id. at 1603.
47 Id. at 1604.
48 Id. at 1603; 42 U.S.C. §12111(8).
49 Cleveland, 119 S. Ct. at 1603.
50 Id. at 1603-04.
51 Id. at 1604.
Although these cases for the most part involve purely factual contradictions (as to which we do not necessarily endorse these cases, but leave the law as we found it), we believe that a similar insistance upon explanation is warranted here, where the conflict involves a legal conclusion. When faced with a plaintiff's previous sworn statement asserting "total disability" or the like, the court should require an explanation of any apparent inconsistency with the necessary elements of an ADA claim. To defeat summary judgment, the explanation must be sufficient to warrant a reasonable juror's concluding that, assuming the truth of, or the plaintiff's good faith belief in, the earlier statement, the plaintiff could nonetheless "perform the essential functions" of her job with or without "reasonable accommodation."
53 Id. at 1601-02.