Time Bar on NC Discharge Claims Not Retroactive: Judge

Law360, New York (February 6, 2017, 6:02 PM EST) — A North Carolina federal judge concluded Friday that the state’s recent reduction of the statute of limitations for certain wrongful discharge claims, which stemmed from the now-infamous law limiting transgender individuals’ access to public facilities, can’t retroactively be used to kill a claim that would have been timely absent the change.

U.S. Magistrate Judge David S. Cayer made the determination as part of an order recommending to U.S. District Judge Robert J. Conrad that Champion Residential Services Inc., a heating and air conditioning company that operates as Morris Jenkins, be denied its bid to dismiss part of an age and gender discrimination suit brought by former employee Anne Gannon.

Law 360 - Josh Van KampenGannon had initially filed her suit in September 2016 in state court, with the case being removed to federal court several months later. In her complaint, which said that Morris Jenkins blatantly disrespected women, minorities and older workers, she alleged that the company fired her in July 2014 after more than a dozen years at the company because she purportedly showed a lack of respect during a meeting, even though the real reason behind her termination was the company’s preference for younger employees.

Her three-count suit accused Morris Jenkins of violating the North Carolina Equal Employment Practices Act, the Age Discrimination in Employment Act and Title VII.

But last month, Morris Jenkins filed a motion to dismiss the NCEEPA claim, arguing that Gannon far exceeded the time limit to file her suit, which the company said expired a year after her July 1, 2014, firing under a freshly passed revision to state law.

The statute of limitations for the type of claim Gannon filed — a public policy wrongful discharge claim under the NCEEPA — has recently played a supporting role in the ongoing drama over the state’s controversial passage of H.B. 2.

While that law gained national notoriety for its requirement that people use public bathrooms that match the gender listed on their birth certificates, one of the law’s lesser-known provisions eliminated a longstanding cause of action for wrongful discharge under the NCEEPA, according to court documents.

Facing intense criticism for passing the law, Republican lawmakers in the state eventually agreed to modify the portions of H.B. 2 that dealt with discriminatory termination. In July, the state’s General Assembly passed H.B. 169, which restored the ability to sue for wrongful discharge under the state’s Equal Employment Practices Act on the basis of race, gender and other characteristics. But that modification, which was later signed into law by Republican former Gov. Pat McCrory, gave workers one year to bring such claims, which was two years less than the previous time limit.

In its motion to dismiss, Morris Jenkins argued that the statute of limitations passed in H.B. 169 applied retroactively, meaning that Gannon’s wrongful discharge claim was too late under the revised law.

In an opposition motion, Gannon argued that Morris Jenkins’ argument was merely an attempt to catch her “in an impossible Catch-22.”

“According to Morris Jenkins, [Gannon] should have seen H.B. 2 coming and brought her claim much earlier than the then-applicable three-year statute of limitations,” Gannon’s attorneys argued. “Morris Jenkins should not be allowed to exploit confusion bred by H.B. 2 to escape liability for age and gender discrimination.”

In such cases where a limitations period is amended, Gannon argued that plaintiffs’ statutes of limitations become the shorter of either the new statute of limitations — running from the date of the change in law — or the unexpired remainder of the previous statute of limitations. In either case, Gannon would have until July 2017 to timely filed her claim, according to her brief.

In his ruling, Judge Cayer said that when a statute of limitations is shortened by a legislative amendment, a reasonable time is given for an action to be filed before the new law works as a bar to any claims.

The judge defined “reasonable time” as the amount of time that had yet to expire prior to an amendment’s passage, as long as that balance doesn’t exceed the time allowed by the new statute.

“Applying these legal principles, plaintiff’s wrongful discharge claim was timely filed,” Judge Cayer said. “When the statute of limitations was amended on July 18, 2016, nearly one year remained on the original three-year period. Plaintiff filed suit just over two months later on Sept. 26, 2016.”

The recommendation gives Morris Jenkins until Feb. 17 to appeal with U.S. District Judge Robert J. Conrad Jr.

An attorney for Gannon declined comment. Counsel for Morris Jenkins was not immediately available for comment.

Gannon is represented by Joshua R. Van Kampen, Kevin Murphy and Sean F. Herrmann of Van Kampen Law PC.

Morris Jenkins is represented by Stacy K. Wood and Shalanna L. Pirtle of Parker Poe Adams & Bernstein LLP.

The case is Gannon v. Champion Residential Services Inc., case number 3:16-cv-756, in the U.S. District Court for the Western District of North Carolina.

–Editing by Breda Lund.