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Monday, July 14, 2008

Ind. Decisions - 7th Circuit issues one today, reversing Judge Tinder

In Steven Peters v. Gildead Sciences (SD Ind., Judge Tinder), a 14-page opinion, Judge Stykes writes:

Steven Peters suffered a shoulder injury while he was employed by Gilead Sciences, Inc. He took a relatively short medical leave to have corrective surgery, and when his condition did not improve after returning to work, he took another leave. During his second absence, Gilead filled his position with another employee, and when Peters returned to work, Gilead offered him a different position. He declined and Gilead terminated his employment.

Peters filed suit against Gilead, alleging (as relevant here) a violation of the Family and Medical Leave Act (“FMLA”), 29 U.S.C. §§ 2601 et seq., and a claim for promissory estoppel under Indiana law. Gilead moved for summary judgment on the FMLA claim, arguing that Peters was ineligible for FMLA leave based on a provision in the Act that excludes employees at worksites at which less that 50 employees are employed “if the total number of employees employed by that employer within 75 miles of that worksite is less than 50.” 29 U.S.C. § 2611(2)(B)(ii). It was undisputed that Gilead employed less than 50 employees within 75 miles of Peters’ worksite, making him statutorily ineligible for FMLA leave. It was also undisputed that if Peters was eligible for FMLA leave, Gilead had miscalculated the 12-week duration of his leave and replaced him before it expired.

Relying on language in Dormeyer v. Comerica Bank-Illinois, 223 F.3d 579, 582 (7th Cir. 2000), Peters argued that Gilead was equitably estopped from asserting the FMLA’s 50/75 exclusion based on representations made in Gilead’s employee handbook and in letters it sent to Peters regarding his entitlement to 12 weeks of medical leave. The district court concluded Peters had not established the elements of equitable estoppel and granted summary judgment for Gilead.

We reverse. While Dormeyer suggested that FMLA eligibility might, “in an appropriate case,” arise by estoppel, the issue need not have been addressed in this case. Peters alleged a state-law claim for promissory estoppel—an equitable contract remedy that permits enforcement of a promise that induces actual and reasonable reliance on the part of the plaintiff, at least to the extent of the plaintiff’s reliance damages. The doctrine is available when a promise lacks the elements of contract; a threshold question is whether the promise created an enforceable contract.

The medical-leave representations contained in Gilead’s employee handbook (repeated in its letters to Peters) may have created an enforceable contract under Indiana law, giving Peters a contractual right to the equivalent of FMLA leave (that is, 12 weeks) regardless of his statutory ineligibility. If the representations in the handbook are not contractually enforceable, Indiana’s promissoryestoppel cause of action allows enforcement of Gilead’s promises to the extent of the reliance harm Peters suffered. Accordingly, we need not decide whether this is an “appropriate case” to apply FMLA eligibility-by-estoppel, a possibility assumed but not decided in Dormeyer.

Posted by Marcia Oddi on July 14, 2008 01:38 PM
Posted to Ind. (7th Cir.) Decisions