NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted April 29, 2020 *
Decided February 24, 2021
Before †
ILANA DIAMOND ROVNER, Circuit Judge
AMY J. ST. EVE, Circuit Judge
No. 19-2662
JAMESETTA McFARLAND-LAWSON, Appeal from the United States District
Plaintiff-Appellant, Court for the Eastern District of Wisconsin.
v. No. 16-CV-685
MATT AMMON, Acting Secretary of David E. Jones,
the Department of Housing and Urban Magistrate Judge.
Development,
Defendant-Appellee.
*
We have agreed to decide this case without oral argument because the briefs
and record adequately present the facts and legal arguments, and oral argument would
not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
† The Honorable Amy Coney Barrett, Associate Justice of the Supreme Court of
the United States, was a judge of this court and member of the panel when this case was
submitted but did not participate in the decision and judgment. The appeal is resolved
by a quorum of the panel pursuant to 28 U.S.C. § 46(d).
No. 19-2662 Page 2
ORDER
Jamesetta McFarland-Lawson appeals the dismissal of her suit against her former
employer, the United States Department of Housing and Urban Development (HUD),
alleging employment discrimination based on her disability, race, gender, and veteran
status. Because the district court erred in dismissing for lack of jurisdiction and in
resolving a factual dispute at the motion to dismiss stage, we affirm in part, vacate in
part, and remand for further consideration.
This appeal involves a complicated history of several administrative proceedings
alleging employment discrimination against HUD. To assist in untangling this history,
we note at the outset that federal employees must follow certain administrative
procedures when pursuing employment discrimination claims before they can sue in
federal court. See Brown v. Gen. Servs. Admin., 425 U.S. 820, 8332 (1976); Hill v. Potter,
352 F.3d 1142, 1145 (7th Cir. 2003). Under the Civil Service Reform Act of 1978, if the
employee works for an agency covered by a collective bargaining agreement that
permits the filing of grievances alleging discrimination, she may begin the
administrative process by filing either a union grievance or an Equal Employment
Opportunity Commission (EEOC) charge, but not both. 5 U.S.C. § 7121(d); 29 C.F.R.
§ 1614.301(a).
McFarland-Lawson filed her first EEOC charge in March 2012 after HUD, where
she was employed from 2002 to 2014, partially denied her request for numerous
workplace accommodations for her disabilities. McFarland-Lawson asserted that HUD
discriminated against her during the accommodation-negotiation process based on her
race and disability and created a hostile work environment in retaliation for her request.
More than four years later, in May 2016, an EEOC administrative judge decided
partially in McFarland-Lawson’s favor and partially in HUD’s favor, concluding that
HUD engaged in harassment based on disability, created a hostile work environment,
and should have granted additional accommodations. The EEOC’s final order imposed
certain remedial measures for the workplace and awarded McFarland-Lawson $50,000
in compensatory damages, in addition to other remedies.
During the four years that McFarland-Lawson’s first EEOC charge was pending,
a host of other issues arose. In August 2012, during the investigation into her first EEOC
charge, McFarland-Lawson made statements to an EEOC investigator that the
investigator construed as a threat to her coworkers. The investigator reported the
comments to HUD, and HUD placed McFarland-Lawson on paid administrative leave
No. 19-2662 Page 3
until it could determine if she presented a threat to herself or her coworkers. HUD
moved McFarland-Lawson to unpaid indefinite enforced leave in December 2012
because of her ongoing refusal to sign a medical-record release form or, alternatively,
agree to an independent mental health evaluation, to determine whether she could
safely return to work.
On February 4, 2013, a union grievance challenging management’s decision to
place McFarland-Lawson on unpaid indefinite enforced leave was filed. McFarland-
Lawson had not signed it. The March 2013 final agency decision (which HUD supplied
when moving to dismiss this case) stated, in denying the grievance, that McFarland-
Lawson was present at a meeting in late February to discuss resolution of the grievance,
along with the union president, HUD’s regional director, and an employee-relations
specialist. But McFarland-Lawson, who had not mentioned a grievance in her
complaint, asserted in her response and sur-reply to HUD’s motion that she did not ask
the union to file a grievance on her behalf nor attend a meeting to discuss resolution of
the grievance. Either way, the union did not pursue arbitration, the final step in the
administrative process.
McFarland-Lawson remained on unpaid indefinite enforced leave and, in May
2013, she agreed to an independent mental health examination. After the examination
she was approved to return to work on June 12, 2013, but she did not come in on that
date because she was in the custody of the Milwaukee County Sheriff. She appeared for
work on June 17, but two days later, HUD again placed her on paid leave because of
safety concerns related to the details of her arrest the week before.
The next month, July 2013, McFarland-Lawson filed her second EEOC charge,
alleging that HUD subjected her to discrimination based on disability, race, and sex,
and reprisal when: (1) she was told in April 2013 that she must authorize an
independent medical examination or medical record release, thus delaying a
determination on whether she could return to work; and (2) HUD informed her in June
2013 that she was again being placed on leave.
In January 2014, while both EEOC charges were still pending, HUD issued
McFarland-Lawson a proposal to remove her from her job, charging her with conduct
unbecoming a federal employee, lack of candor, and disruptive conduct. In April 2014,
HUD found all three charges substantiated and removed McFarland-Lawson from
federal employment. She appealed to the Merit Systems Protection Board (the “removal
appeal”). Nearly a year later, she added two claims to her second EEOC charge (which
No. 19-2662 Page 4
had been pending for over a year): that HUD discriminated against her by: (1) initiating
an unrequested 2012 investigation into a hostile work environment, based on a
confidential conversation that was disclosed to her supervisor; and (2) disclosing her
confidential medical records to a judge without her permission at an unemployment
benefits hearing in September 2014.
Several months later, in April 2015, McFarland-Lawson then amended the
removal appeal, adding her complaint about the disclosure of her medical records at an
unemployment hearing. In September 2015, McFarland-Lawson and HUD settled the
removal appeal. In exchange for $35,000, she agreed, in part, to waive her right to
litigate, in any forum, any claims arising from the removal appeal or any matter that
“could have been raised” therein. But the settlement also stated that she did not release
or waive the claims in her two EEOC charges.
Finally, in March 2016, HUD issued a final agency decision on McFarland-
Lawson’s second EEOC charge finding no discrimination or harassment. She appealed
but terminated her appeal to the EEOC by filing the instant case in June 2016.
See 29 C.F.R. § 1614.409. McFarland-Lawson’s operative complaint raised claims under
the Americans with Disabilities Act, Title VII of the Civil Rights Act, and Section 503 of
the Rehabilitation Act, and broadly alleged that the adverse employment actions taken
against her since 2011 were because of discrimination based on her disability, race,
gender, and veteran status. She also raised several state-law claims.
HUD moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of
subject-matter jurisdiction or Rule 12(b)(6) for failure to state a claim. It argued that
McFarland-Lawson could pursue only the claims raised in her second EEOC charge but
that those had either been previously grieved, fully adjudicated in her first EEOC
charge, or settled in her removal appeal; otherwise, they had not been administratively
exhausted. McFarland-Lawson responded that HUD improperly sought to argue factual
issues in its motion to dismiss; she contended that the removal appeal did not preclude
any claims because the settlement explicitly preserved her right to pursue her second
EEOC charge and that she did not initiate the union grievance nor participate in the
meeting between the union and management.
At a hearing on March 20, 2019, the magistrate judge, presiding with the parties’
consent under 28 U.S.C. § 636(c), orally granted HUD’s motion to dismiss. He first
concluded, with McFarland-Lawson’s assent, that any claims brought in the first EEOC
charge were not properly before the court. He then determined that any claim relating
No. 19-2662 Page 5
to McFarland-Lawson’s unpaid indefinite enforced leave was foreclosed by the union
grievance, which was not fully exhausted (because there was no arbitration after it was
denied). The remainder of McFarland-Lawson’s allegations, the magistrate judge
concluded, were either not part of her second EEOC charge or were resolved in the
removal appeal. Having dismissed the federal claims, he declined to exercise
supplemental jurisdiction over the state-law claims. The magistrate judge concluded by
promising a written order and judgment “by the end of the week.”
More than a month later, no written order or judgment under Federal Rule of
Civil Procedure 58 had issued, so McFarland-Lawson filed a preemptive motion to alter
or amend the judgment under Rule 59(e). She cited new evidence—namely, an affidavit
from the union president stating that McFarland-Lawson never filed a union grievance.
HUD responded, in part contending that the new evidence was perjured by attempting
to establish with its own affidavit that the agency decision denying the grievance—
which memorialized that McFarland-Lawson participated in a meeting—was genuine.
HUD also included an affidavit from its regional manager attesting that he had
overseen the meeting to discuss the grievance and McFarland-Lawson attended it.
On July 17, 2019, without acknowledging the pending Rule 59(e) motion or
HUD’s response, and without addressing the factual dispute over the meeting, the
magistrate judge entered a written order and judgment finalizing its oral ruling. The
order briefly summarized the hearing and granted HUD’s motion to dismiss for lack of
jurisdiction “for the reasons stated in the defendant’s brief and on the record.”
McFarland-Lawson timely appealed the judgment. See FED. R. APP. P. 4(a)(1)(B)(iii).
Although the magistrate judge did not acknowledge the Rule 59(e) motion, our
jurisdiction is secure because the court’s final judgment is an implicit denial of the
motion. See Dunn v. Truck World, Inc., 929 F.2d 311, 313 (7th Cir. 1991).
We now turn to this appeal. McFarland-Lawson primarily argues that the district
court erred in concluding that she had filed, but not exhausted, a union grievance about
claims in her federal complaint, and thus also erred in concluding it lacked jurisdiction
over the claims in the grievance. She again asserts that the union filed a grievance
without her knowledge or her approval and that she did not participate in any meeting
to resolve it. Further, McFarland-Lawson points out that HUD has never produced a
signed grievance form submitted by her, as required for an employee to elect the
grievance process on their own behalf under the terms of the collective bargaining
agreement. Instead, the record contains only a written grievance submitted by the union
and the final agency decision.
No. 19-2662 Page 6
This argument first requires us to consider whether failure to properly follow the
administrative procedures required of federal employees, including exhaustion, is a
jurisdictional defect. We conclude that it is not. The proper basis for dismissing a
federal employee’s employment discrimination claim that has not been properly
exhausted is for failure to state a claim upon which relief can be granted, not lack of
subject-matter jurisdiction. See Richards v. Kiernan, 461 F.3d 880, 886 (7th Cir. 2006)
(federal employee’s Bivens claim should be dismissed under 12(b)(6), not 12(b)(1),
because the claim was precluded by comprehensive structure of the Civil Service
Reform Act); Hill, 352 F.3d at 1145 (“failure to exhaust is not a jurisdictional defect”);
see also Fort Bend Cty. v. Davis, 139 S. Ct. 1843, 1850–51 (2019) (Title VII administrative
charge-filing requirement is a mandatory, but non-jurisdictional, prerequisite to suit).
We might affirm the dismissal as one for failure to state a claim, see Massey v.
Helman, 196 F.3d 727, 738 (7th Cir. 1999), but that approach presents another problem:
the magistrate judge went far beyond the pleadings in finding dismissal appropriate.
Specifically, he concluded that McFarland-Lawson first challenged the delays in her
return from unpaid indefinite enforced leave with a union grievance, foreclosing her
ability to pursue related claims in her second EEOC charge, and to pursue that claim in
the district court, because the union never exhausted the administrative process. But
McFarland-Lawson did not mention the grievance in her pleadings. HUD raised the
issue in its motion to dismiss, attaching the grievance and final agency decision. Agency
determinations are subject to judicial notice, see Fornalik v. Perryman, 223 F.3d 523, 529
(7th Cir. 2000), and thus may be considered on a 12(b)(6) motion to dismiss. Williamson
v. Curran, 714 F.3d 432, 436 (7th Cir. 2013). But here, McFarland-Lawson stated that she
did not know of or participate in the grievance process in her responsive briefs, thus
contesting the conclusion HUD urged the court to draw from the records.
This factual dispute has legal significance. The union had an independent right
to file a grievance on McFarland-Lawson’s behalf and could do so without her request
or approval. 5 U.S.C. § 7121(b)(1)(C)(i). Contrary to HUD’s position, the mere fact that
someone initiated a union grievance does not automatically equate to an “election” of the
grievance procedure by McFarland-Lawson. See Kendrick v. Dep’t of Veterans Affairs,
74 M.S.P.B. 178, 181 (1997). If the union filed a grievance automatically over the unpaid
enforced leave, or otherwise without McFarland-Lawson’s assent, she could still
independently pursue an EEOC charge on the same issues unless she became aware of
the grievance and ratified it by failing to disavow it when given the opportunity.
See id. at 182–83; Morales v. Merit Sys. Prot. Bd., 823 F.2d 536, 538–39 (Fed. Cir. 1987).
No. 19-2662 Page 7
Rather than addressing this factual dispute, the magistrate judge accepted
HUD’s assertion that pursuit of the union grievance, regardless of McFarland-Lawson’s
knowledge or involvement, meant she had elected that as her remedy. This conclusion
failed to construe the briefs and complaint in the non-movant’s favor and decided a
factual dispute that should not have been resolved on a motion to dismiss. See Air Line
Pilots Ass'n, Int'l v. Dep't of Aviation of City of Chi., 45 F.3d 1144, 1154 (7th Cir. 1995).
Thus, to dismiss this portion of McFarland-Lawson’s complaint, the magistrate
judge was required to treat the motion to dismiss as one for summary judgment.
See FED. R. CIV. P. 12(d). But even if the magistrate judge intended to so construe the
motion, that would have been error because he did not give notice to the parties and
did not give McFarland-Lawson an opportunity to present evidence or her own
affidavit in support of her position. See id.; Air Line Pilots Ass'n, Int'l, 45 F.3d at 1154 n.6.
Because the district court erred by treating failure to exhaust as a jurisdictional
issue and in resolving a factual dispute about whether McFarland-Lawson filed (but did
not exhaust) a grievance over delays in her ability to return from unpaid indefinite
enforced leave, we VACATE that portion of the dismissal and REMAND for further
proceedings. For the sake of clarity moving forward, the claim we remand is the second
claim listed on the first page of the March 10, 2016, final agency decision denying
McFarland-Lawson’s second EEOC charge (alleging discrimination when “On April 4,
2013, she learned that she needed to authorize an extension of an independent medical
examination and review of her medical files, thus delaying a determination of when she
would be allowed to return to work.”). Because McFarland-Lawson abandons all other
claims on appeal, see Jones v. Union Pacific R. Co., 302 F.3d 735, 741 (7th Cir. 2002), and
no other portion of the magistrate judge’s decision involved improper resolution of a
factual dispute, we otherwise AFFIRM the dismissal of the complaint.