Leasor Beware: distinctions between design and lease under the Fair Housing Act's statute of limitations

A university student, who used a wheelchair because of a neuromuscular condition, filed suit against a university and others asserting that the apartment he leased was not properly accessible. The design for the building at issue was completed in 2000. Student signed a lease in December, 2005 and filed suit a year later asserting claims under the Fair Housing Act, the Americans With Disabilities Act (“ADA”), and the Rehabilitation Act of 1973 (“§ 504”). The university and others moved to dismiss the complaint as untimely. The court’s decision found the complaint was timely because the lease was a new occurrence.

The Fair Housing Act provides that a person has two years to file suit “after the occurrence or the termination of an alleged discriminatory housing practice. . . .” 42 U.S.C. § 3613(a)(1)(A). The question for the court was the meaning of “occurrence or the termination.” After addressing a few other court decisions, including the only two apparent federal appeals court decisions approaching the issue, the court concluded that two important distinctions lie in the Fair Housing Act. First, there is the “occurrence” of designing and completing the building itself, and second, there is the continuing operation and management of the building. 

As to the design portion of potential liability, the statute of limitations begins to run once the building is completed. Accordingly, the court found, the architects were previously properly dismissed from the case. As to the continuing operation and management of the building, the court concluded that each new lease of an apartment is a new “occurrence.” Unlike the architects and builders, the owners and managers continue to remain in control of the building and are in a position to correct design defects.  

The court also applied the same reasoning to, and reached the same conclusions under, the ADA and 504 claims. The court further expressly pointed out the a public university has a continuing obligation to assure that its buildings are accessible. 

The decision’s logic appears solid. Accordingly, leasor’s beware – and be sure your buildings are up to code.

The rules of evidence and employment and school investigations

A recent case  from the U.S. Court of Appeals for the Fifth Circuit gives a good lesson on how to document sexual harassment investigations. The lesson is also instructive on how a report can be used as evidence in all sorts of investigations in an education setting.

The case facts are not remarkable (the boorish behavior is seen repeatedly in sexual harassment cases). One employee uttered a number of improper comments, sometimes emphasized by physical gestures. Such actions ultimately lead to his termination. But before then, the employer investigated and interviewed a number of employees, all of whom confirmed the conduct in question, which lead employer to decide to fire employee. An appeal followed, a second investigation ensued and confirmed the first investigation and termination decision. Employee appealed to court.

Among other things, employee said the trial court was wrong to use the investigation reports, claiming they were hearsay evidence. Hearsay, under the rules of evidence, is an out of court statement used to prove the truth of the matter asserted and is not admissible. 

The court first held that employee statements to the investigators were not hearsay. Although it would appear otherwise, those statements fall into the too-often overlooked “not used to prove the truth of the matter asserted” part of the hearsay definition. In this case, the issue was not whether the conduct actually occurred; rather, the issue is the employer's reasons for terminating employee. “Because [the reports] were offered to prove what was said to [the investigators], and thus what [the investigators] relied on in making the decision to fire [employee], the statements were not offered to prove the truth of the matter asserted.”

Next, although the court found the reports themselves were hearsay, they were admissible under the business records exception of Rule 803(6). This exception sets forth criteria the reports must fit in order to be admitted as evidence notwithstanding hearsay. Among the criteria are that a report be made at or close to the events by a person with knowledge, kept in the regular course of business, and that making such reports is a regular business practice. Because the reports met the criteria, they were admissible as evidence, which ultimately lead to a decision in favor of the employer.

Bear in mind, and as the court notes, if reports are prepared in anticipation of litigation, they may not be admitted. But in matters of sexual harassment, employer policy will require such an investigation regardless of possible litigation. Beyond the employment setting where such processes are in place, education institutions may consider developing investigation practices for other matters, from parent complaints about special education implementation to investigations of security breaches and more. 

Of course, such practices should be developed with advice of counsel to weigh the pros and cons of such investigations and records.

No "core function" exception for Pennsylvania public CBA's

As 2007 came to an end, the Pennsylvania Supreme Court also put an end to the "core function" exception to labor arbitration decisions under the state’s Public Employee Relations Act. Westmoreland Inter. Unit No. 7 v. Westmoreland Inter. Unit No. 7 Classroom Ass’t Educ. Sup. Pers. Assoc. (majority opinion). The court did, however, find that a limited public policy exception can apply. But such public policy, said the court, “must be well-defined, dominant, and ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests.” 

The case involves finer legal points about how and to what degree courts are supposed to review labor arbitration decisions. But the facts are interesting, so we can start there.

The case involved a public school classroom aide who used a friend's Fentanyl patch while at work. The patch caused some significant adverse reactions that resulted in a school lock-down, police and EMS involvement, and subsequent hospital stay. The employer terminated the aide contending her use of the controlled substance was immoral conduct justifying termination. Significantly, in 23 years of employment with the school, this was her only adverse act.

The union filed a grievance on her behalf. Although the collective bargaining agreement (“CBA”) incorporated the Pennsylvania School Code’s immorality provision, the union alleged that the employer did not have “just cause” under the CBA to terminate her. The arbitrator agreed. He found the conduct to be foolish and irresponsible, but did not rise to the level of immorality and ordered her reinstated with certain conditions. 

The school appealed. The trial court reversed relying on the “core function” exception. Normally, judicial review of a labor arbitration decision is very limited (as said by the Pennsylvania Supreme Court, judges must respect the arbitrator’s decision if “the interpretation can in any rational way be derived from the [CBA], viewed in light of its language, its context, and any other indicia of the parties’ intention. . . .”). The court will usually simply decide whether the arbitrator’s decision is based on the essence of the CBA, the so-called essence test. If so, the decision is to be affirmed. Previously, as an exception to this standard, if the decision impacted on the employer’s core function and would deprive the employer of its ability to perform that core function, a court may change the decision. For example, the employer could not bargain away via the CBA the right to fire an employee who steals from the employer. In the Westmoreland case, the trial court found the arbitration decision adversely impacted the school’s core function of educating children.

On further appeal, the intermediate appellate court by a 2-to-1 vote affirmed the trial court, although the majority made further errors in the legal-technical issues about judicial review that lead to later criticism in the Pennsylvania Supreme Court. The dissenting judge would have reversed noting, first, the school did not prove its core function was impacted, and second, that using the core function exception risked swallowing the essence test (being the tail wagging the dog, so to say). 

The Pennsylvania Supreme Court first re-affirmed that the essence test is the appropriate means of reviewing labor arbitration decisions. This requires initial court review to assure the issue is properly subject to the CBA’s arbitration process, and second, deferential review of the arbitrator’s decision as noted above. Judges are not to review the substantive merits of the case and now, after the Westmoreland decision, the only exception to all this is the public policy exception.

The case suggests that an employer might be able to by-pass the CBA process by rejecting a grievance as non-arbitral as a matter of public policy (I think that conduct, which directly caused the lock-down described in the decision and the interruption to elementary students at the school, violates public policy).  The issue whether the conduct in question violated public policy would likely get presented to a court or administrative agency in the first instance, essentially giving a merits-review to the conduct in question. The court may agree or disagree. And while it is an interesting academic exercise for a Blog, the pros and cons of such a strategy need to worked out with counsel on a case-by-case basis in the real world.