United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-1687
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Sandra D. Fanning, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Arkansas.
John E. Potter, in his official capacity *
as Postmaster General of the United *
States Postal Service, *
*
Appellee. *
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Submitted: March 10, 2010
Filed: August 6, 2010
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Before BYE, ARNOLD, and COLLOTON, Circuit Judges.
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COLLOTON, Circuit Judge.
Sandra Fanning appeals the decision of the district court1 granting summary
judgment for the United States Postal Service (“USPS”), her former employer.
Fanning’s complaint alleged that the USPS breached a settlement agreement entered
into by the parties in 2003 after Fanning suffered an on-the-job injury, that it retaliated
against her for filing administrative complaints of employment discrimination, and
1
The Honorable Susan Webber Wright, United States District Judge for the
Eastern District of Arkansas.
that USPS conspired to commit both of these wrongs. The district court granted
summary judgment on these claims, and it also ruled that Fanning had failed to plead
a claim of discrimination on the basis of race, color, sex, and disability. We affirm.
I.
Fanning began to work for the USPS in 1995. In April 2000, she was assaulted
by another postal employee. In the wake of the assault, Fanning filed an employment
discrimination suit in December 2000, naming as defendants the USPS, the American
Postal Workers Union AFL-CIO, and the postal employee who had assaulted her. The
parties entered into a settlement agreement in November 2003. Fanning also filed
claims with the Office of Workers’ Compensation Program (“OWCP”), a disability
compensation program administered by the Department of Labor, for injuries suffered
as a result of the assault and for post-traumatic stress. OWCP accepted both claims,
over USPS’s objections. Fanning ceased reporting for duty at the USPS after OWCP
accepted her claims. Her last day in pay status as a Postal Service employee was
September 8, 2000.
Fanning has remained on OWCP’s periodic rolls since leaving her position with
the USPS. She receives social security benefits in addition to her OWCP benefits, for
a total monthly income of $5,310.52 and an annual income of $63,726.24. Until she
was administratively separated from the Postal Service in December 2006, Fanning
also received approximately $1200 per year in health benefit refund payments from
the USPS.
Some of the health benefit refund payments were untimely. Based on the delay
in those payments, Fanning filed an administrative complaint, known as an equal
employment opportunity (“EEO”) complaint, with the Postal Service in January 2006,
alleging discrimination on the basis of race, color, sex, and disability, and retaliation
for prior EEO activity. At Fanning’s request, her complaint was transferred to the
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Equal Employment Opportunity Commission for consideration by an Administrative
Judge (“AJ”). See 29 C.F.R. § 1614.108(f). The AJ found that the USPS did not
discriminate against Fanning. Fanning filed a second EEO complaint in April 2007,
again alleging discrimination and retaliation, this time in her administrative separation
from the USPS and the accompanying cancellation of her health insurance. Fanning
requested a final determination by the USPS rather than consideration by an AJ, and
the USPS determined that it had not discriminated against her.
The present lawsuit, filed on December 14, 2007, followed the adverse
resolution of Fanning’s EEO complaints. We review the district court’s grant of
summary judgment de novo, viewing the evidence in the light most favorable to
Fanning. See Genosky v. Minnesota, 244 F.3d 989, 992 (8th Cir. 2001).
II.
A.
Fanning alleges that the USPS breached the 2003 settlement agreement in three
different ways. First, she argues that the USPS violated a provision in which it
“agree[d] not to challenge the legitimacy of Fanning’s currently accepted OWCP
claim or to provide the independent medical examination records and report of Dr.
Diner to the Department of Labor.” (Settlement Agreement ¶ 7) (emphasis added).
She says that the USPS breached this provision when several USPS employees
conducted an e-mail discussion in May and June 2005 about whether Fanning might
be a candidate for vocational rehabilitation. This internal e-mail discussion led to no
official action, and Fanning admitted that it did not affect her OWCP claim. (App.
410). She maintains, however, that it constituted a breach of the agreement because
“the employees certainly wanted to affect [her] claim.”
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We agree with the district court that these e-mails did not breach the agreement.
The key term in the settlement agreement is “challenge.” In this agreement, the term
“challenge” has a specialized meaning, and we must apply that meaning to evaluate
Fanning’s claim of breach. See Les-Bil, Inc. v. Gen. Waterworks Corp., 511 S.W.2d
166, 170 (Ark. 1974).2
The portion of the USPS handbook governing “controversion and challenge”
provides that the USPS may “challenge” a claim for injury compensation by
“disputing any aspect of a claim . . . or disputing the entire claim for either a traumatic
injury, occupational disease or illness, or survivor benefits.” (USPS Handbook EL-
505, Injury Compensation, § 8). Section 8.3 details instructions on how to prepare the
“challenge package,” and emphasizes the importance of ensuring that the package
submitted to OWCP is “carefully prepared and well-documented.” (Id. at 122). There
is no evidence that the USPS ever sent a challenge package to OWCP regarding
Fanning’s claim after the signing of the settlement agreement, and Fanning has
admitted as much. (Id. at 406). Nor is there evidence that anyone at the USPS sent or
otherwise communicated the substance of Fanning’s medical records to the
Department of Labor. The USPS thus did not “challenge” the legitimacy of Fanning’s
OWCP claim or “provide” her medical records to the Department. Accordingly, the
USPS did not violate its obligations under paragraph 7 of the settlement agreement.
Fanning also contends that the USPS breached paragraph 10 of the agreement,
in which it agreed that “[d]uring the time that Fanning’s disability retirement
2
“Settlement agreements are generally construed according to the principles of
contract law.” Myers v. Richland County, 429 F.3d 740, 749 (8th Cir. 2005).
Contract interpretation ordinarily is a matter of state law, see Volt Info. Scis., Inc. v.
Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989), and neither
party contests application of the law of Arkansas, which is the locus of Fanning’s
employment, the State in which she resides, and the forum for this action. Cf.
Progressive N. Ins. Co. v. McDonough, 608 F.3d 388, 390 (8th Cir. 2010).
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application is pending and during the reconsideration, if any, of a decision on
Fanning’s disability retirement application, Fanning will remain in the same
employment status that she is in now, on leave without pay.” (Settlement Agreement
¶ 10). Another provision of the agreement provided that “Fanning will look into
applying for disability retirement and other options available to her.” (Id. ¶ 9).
Fanning concludes from these two provisions that if she chose not to apply for
disability retirement, then she was permitted to remain indefinitely in leave without
pay status. The USPS, she says, breached the agreement by administratively
separating her in 2006.
The USPS understood its obligations differently. After Fanning’s physician
declared her permanently and totally disabled in the summer of 2005, the USPS –
following its standard internal procedure governing employees who have been in leave
without pay status for over a year – began the process of administratively separating
Fanning from its rolls. (See USPS Handbook EL-505, Injury Compensation, § 4.22).
In November 2005, a USPS human resources specialist sent Fanning a letter informing
her that she appeared to be eligible for disability retirement and advising her how to
pursue that option. Fanning took no action. On September 28, 2006, the USPS issued
Fanning a Notice of Administrative Separation, which became effective on December
23, 2006. Fanning applied for disability retirement on December 27, 2007, and her
application was approved on June 12, 2008.
We think the settlement agreement unambiguously resolves this contention
against Fanning. No provision in the agreement required the USPS to keep Fanning
on its payroll indefinitely. The USPS was bound not to change Fanning’s
employment status during the pendency of her application for disability retirement,
and it did not do so. Instead, it followed proper procedures in separating her after she
had been absent from duty for several years and a doctor declared her permanently
disabled. This action did not interfere whatsoever with Fanning’s subsequent (and
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successful) application for disability retirement benefits. The USPS’s administrative
separation of Fanning did not breach the agreement.
Finally, Fanning asserts that the USPS breached the settlement agreement when
it was late in issuing seven of her health benefit refund payments. But Fanning does
not cite any provision of the agreement that governs the timing of these payments or
indeed that addresses the making of these payments at all. The delay in the issuance
of some payments does not constitute a breach.
B.
Fanning also claims that the USPS retaliated against her for engaging in
protected EEO activity, in violation of Title VII. See 42 U.S.C. § 2000e-3(a). The
district court properly analyzed this claim under the burden-shifting framework of
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), but because the record was
fully developed on the motion for summary judgment, we address directly whether
Fanning has presented a genuine issue of fact for trial on the ultimate question of
discrimination vel non. See McCullough v. Univ. of Ark. for Med. Scis., 559 F.3d 855,
861 (8th Cir. 2009). To make a submissible case, Fanning was required to present
sufficient evidence for a jury to find that her participation in protected activity was a
motivating factor in USPS’s decisions to take adverse employment action against her.
See § 2000e-3(a); McCullough, 559 F.3d at 865.
The first retaliatory action that Fanning alleges is the USPS’s attempt at
terminating her OWCP benefits. As discussed, however, there is no evidence that the
USPS took any action to terminate Fanning’s OWCP benefits, and this was an internal
discussion to which Fanning was not privy at the time. Fanning herself acknowledges
that the internal e-mail exchange on which she relies had no effect on her OWCP
claim. We therefore conclude that this theory lacks a materially adverse employment
action on which a retaliation claim might be predicated.
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The second alleged retaliatory action is the USPS’s failure to provide Fanning
with timely benefits. The parties agree that seven of Fanning’s health benefit refund
payments were issued late, but there is no suggestion that any of the payments failed
to reach Fanning altogether. Fanning contends that the delay alone “well might have
dissuaded a reasonable worker from making or supporting a charge of discrimination,”
Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 68 (2006) (internal quotation
omitted), and that the failure of USPS to make timely payments was thus a materially
adverse action that could support a retaliation claim under Title VII.
We are not convinced that an objectively reasonable employee would find the
occasional delay in receipt of less than two percent of her monthly income to be a
serious hardship that would dissuade her from making a charge of discrimination. Cf.
id. at 72-73 (holding that an employee who was suspended for 37 days without pay
suffered a materially adverse employment action, because “the physical and emotional
hardship” of the period during which she was not receiving a paycheck might well
deter a reasonable employee from pursuing a discrimination complaint). Fanning was
receiving payments from OWCP and Social Security Disability, totaling $5,310.52 per
month and $63,726.24 per year. The quarterly $300 health benefit refund payments
provided only a very small amount of additional income, and brief delays in receipt
do not rise to level of a materially adverse action.
Finally, Fanning contends that her administrative separation from the USPS was
a retaliatory action. To establish a retaliation claim, however, Fanning must
demonstrate that there is a causal connection between the materially adverse
employment action by USPS and Fanning’s protected conduct. Higgins v. Gonzales,
481 F.3d 578, 589 (8th Cir. 2007). Fanning has offered no evidence that the USPS’s
decision to separate her administratively was connected to her previous EEO filings.
USPS policy provides for the administrative separation of employees absent
from duty for one year because of illness, unless there is a likelihood that the
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employee will recover within a reasonable amount of time. “[W]hen medical
documentation supports permanent total disability, i.e., the employee will never be
able to return to work in any capacity,” then agency policy calls for administrative
separation. (See USPS Handbook EL-505, Injury Compensation, § 4.22). By the time
that Fanning’s separation became effective on December 23, 2006, she had been on
leave without pay for over six years, and her physician had advised at least four times
that she was permanently and totally disabled and would never be able to return to
work. There was an obvious legitimate, non-discriminatory reason for the
administrative separation, and Fanning has not presented evidence to demonstrate that
this reason was a pretext for unlawful retaliation. The district court properly
dismissed the retaliation claim.
C.
Fanning next argues that the district court erred in finding that she failed to
properly plead a claim of discrimination on the grounds of race, color, sex, and
disability. She does not dispute that her complaint filed in the district court lacked an
allegation of discrimination, but she argues that the assertions of discrimination in her
EEO complaints were sufficient to bring those claims before the district court as well.
She also argues that because both parties addressed the issue of discrimination in their
briefs on the motion for summary judgment in the district court, her complaint was
constructively amended to include that claim.
A pleading must contain “a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This is not a demanding
standard, but “[a] pleading incorporating allegations from other documents must
clarify which statements are to be incorporated.” Shelter Mut. Ins. Co. v. Pub. Water
Supply Dist. No. 7, 747 F.2d 1195, 1198 (8th Cir. 1984). Merely attaching documents
filed in a different proceeding, alleging claims that are mentioned nowhere in the
complaint, does not pass muster. Nor is this case suitable for application of Rule
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15(b)(2), which provides for an issue not raised in the pleadings to be tried by the
parties’ express or implied consent. The parties did not squarely address the claim in
their summary judgment briefs. Cf. Whitaker v. T.J. Snow Co., 151 F.3d 661, 663-64
(7th Cir. 1998). To the contrary, the USPS addressed Fanning’s discrimination claim
only to argue that she had withdrawn that claim by failing to plead it, and to request
that if the district court permitted her to amend her complaint to include this claim,
then the USPS should be allowed to submit supplemental briefing. (App. 57-59).
There was no consent by the USPS to treat the discrimination claims as if they were
actually pleaded.
Finally, Fanning argues that the district court erred in dismissing her claim that
the USPS conspired to deprive her of OWCP benefits. We are at a loss to understand
how the USPS could conspire with itself or with its employees, see Faulkner v. Ark.
Children’s Hosp., 69 S.W.3d 393, 407 (Ark. 2002); Dodson v. Allstate Ins. Co., 47
S.W.3d 866, 876 (Ark. 2001), but we pretermit discussion of the merits, because we
agree with the district court that Fanning failed to exhaust her administrative remedies.
She did not include this conspiracy claim in her administrative complaints. See
McAdams v. Reno, 64 F.3d 1137, 1141 (8th Cir. 1995).
The exhaustion requirement may be satisfied if the civil claim “grows out of or
is like or reasonably related to the substance of the allegations in the administrative
charge,” Dorsey v. Pinnacle Automation Co., 278 F.3d 830, 838 (8th Cir. 2002)
(internal quotation omitted), but the civil suit can be only “as broad as the scope of
any investigation that reasonably could have been expected to result from the initial
charge of discrimination.” Stuart v. Gen. Motors Corp., 217 F.3d 621, 631 (8th Cir.
2000). Fanning’s administrative complaints alleged that USPS discriminated by
delaying the payment of her health benefit refund and by administratively separating
her from employment. Even if we interpret Fanning’s complaints “with the utmost
liberality,” Cobb v. Stringer, 850 F.2d 356, 359 (8th Cir. 1988), we do not see how the
EEOC could reasonably be expected to undertake investigation and conciliation of a
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claim based on deprivation of OWCP benefits when Fanning referred only to health
benefits and administrative separation in her administrative complaints. We therefore
conclude that the conspiracy claim was not exhausted.
* * *
The judgment of the district court is affirmed.
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