DGRead 21.08.01

DiMuroGinsberg Persuades Virginia Supreme Court to Reverse ad Dismiss Almost $1Milliion Commercial Transaction Judgement; Rocket Docket Update; Are You Violating the ADA by Reassigning a Disabled Employee to a Vacant Position?; DG/30 Milestone

DiMuroGinsberg Persuades Virginia Supreme Court to Reverse and Dismiss Almost $1Million Commercial Transaction Judgment

Virginia Supreme Court, June 24, 2021

By: Michael Lieberman

In late June, the Virginia Supreme Court issued a blockbuster decision reversing a Fairfax County Circuit Court judge’s award of almost $1 million against two tenants of an office building and five other individuals for purported fraudulent conveyance, voluntary conveyance, and conversion.  In doing so, the Supreme Court provided practitioners with a wide-ranging and in-depth review and discussion of the law of fraudulent conveyances, voluntary conveyance, badges of fraud, in personam judgments and the relationship between debtors and creditors.

The case started with a simple claim by the landlord for a default in rent in the amount of $70,000.00 by the law firms of Grayson & Kubli (“G&K”) and Kubli & Associates (“K&A”) who had been assigned the lease with the Landlord permission.  The ultimate judgment did not end there, however.  Following an eleven-day bench trial, the trial court issued a 51-page Letter Opinion ultimately awarding up to $900,000.00 to the Landlord.  The trial court held all but two Defendants each jointly and severally liable with in personam judgments (personally liable) for the unpaid rent, the landlord’s attorney fees, and sanctions.

The Defendants in the case, which is actually the consolidation of three separate cases, appealed from the trial court’s order.  While the various Appellants had been granted a Writ of Error for numerous assignments of error, the Court agreed that it would limit its holding “to what we consider to be ‘the best and narrowest grounds available,’” leaving the remaining issues for another day. Accordingly, the Supreme Court limited its Opinion to whether the trial court misapplied Virginia law as to voluntary conveyance, fraudulent conveyance and conversion and whether there was a proper factual basis to support the trial court’s Letter Opinion.

Interestingly, the Virginia Supreme Court Opinion contained a lengthy discussion regarding the burden of proof in fraudulent and voluntary conveyance cases, noting that “appellate review often turns, as they do here, on which party had the burden of proof on the factual issue in contest.”   “Under Virginia law, a party asserting a fraudulent conveyance claim must show ‘by clear, cogent and convincing evidence’ that the defendant made a conveyance within the meaning of Code section 55.1-400, meaning that he made it with the “inten[t] to delay, hinder or defraud his creditors” and that the party receiving the conveyance “had notice of the grantor’s fraudulent intent.”  The Court noted that in 2021, while the instant case was on appeal, it had issued the opinion of White v. Llewelyn, 299 Va. ___, 857 S.E.2d 388 which clarified that in fraudulent conveyances cases the burden of persuasion shifts to the defendant if claimant’s prima facie proof includes a “badge of fraud” capable of satisfying the ‘clear, cogent, and convincing’ standard” when viewed in the context of the specific facts of the case.” The Supreme Court then noted that “[i]n the present case, however, the trial court and the parties litigated the case under the burden-of-proof scheme that was rejected in White. That is, in the present case the Parties and the trial Court agreed that the burden of persuasion remained with the landlord once the defendants had satisfied their burden of production to present prima facie evidence that could rebut the asserted badges of fraud. Since the parties agreed to the now incorrect burden of proof of persuasion remaining with the Landlord in the trial court, and then again on appeal in its briefs as well as during oral argument, the Supreme Court held that it “would review the evidence and the trial court’s findings pursuant to the burden-of-proof scheme agreed to by the parties and adopted by the trial court.” The Court stated [w]e will not ex post facto change on appeal the burden of proof applied in a civil case when no party asks us to do so and when the trial court adopted it as the governing standard with both parties’ apparent agreement.”

The Court then turned to certain foundational issues before reviewing each of five “conveyances” which the trial court concluded were fraudulent or voluntarily conveyances or constituted conversion, and for each, the Supreme Court rejected the trial court’s analysis as being legally improper or factually unsupported.  As noted, the Court analyzed these transactions under the burden-of-proof scheme agreed to by the parties and utilized by the trial court leaving the landlord with the ultimate burden of persuasion.

Succinctly, in 2008, Grayson, the owner of G&K was elected to Congress and wound up his law practice and sold it to K&A, a firm owned solely by his employee, Kubli. The terms of the sale were embodied in a Buy-Out Agreement (and a related K&A Security Agreement) between G&K/AMG and K&A. The trial court concluded that “the buy out agreement lacked mutuality and consideration ab initio [and] were thus not enforceable.” The Supreme Court found “no legal or factual basis for this conclusion.” Instead, the VSC pointed out that “[b]y its own terms, the Buy-Out Agreement reflects a bargained-for exchange with extensive bilateral consideration.”  Specifically, “[i]n return for K&A promising to pay a $2 million purchase price, to assume approximately $2.8 million in debt to Grayson, and to lend various items and services to G&K/AMG in its efforts to wind up its business, G&K/AMG turned over all of its assets, clients and resources to K&A.   G&K/AMG obtained a security interest in its portion of the consideration and the conveyance ultimately amounted to an acquisition of debt by K&A.  Accordingly, “K&A became a debtor to G&K/AMG and to Grayson, who had a perfected security interests in the debt.”

Similarly, the Court found that a Loan Agreement entered into by a different Grayson entity to loan K&A additional monies and granting that entity, GSA, a lien on all of K&A’s assets and the right to confess judgment against K&A, regardless of which entity GSA caused to loan the funds to K&A to be a normal business transaction.  The loan agreement was a business debt upon which interest was charged and GSA intended to make a profit. That constituted sufficient consideration.

Accordingly, the VSC concluded: “[i]n sum there is no clear, cogent and convincing evidence proving that the Buy-Out Agreement and the GSA Loan Agreement were fraudulent shams meant to mask wholly nonexistent transactions or that the debt K&A had expressly assumed was pure fiction.”  Indeed, the trial court treated the underlying debts as valid for purposes of determining K&A had been insolvent. “The trial court could not, without committing legal error, find the debts to be valid and subsisting for purposes of determining that K&A was insolvent (and thus that its conveyance was fraudulent and voluntary) and at the same time find them to be entirely fictional for purposes of determining whether there was consideration to support these instruments.”

The Court then found “equally problematic”, the trial court’s repeated statements to the effect that “it is inferable that Grayson did not set out to defraud creditors” and “only hoped to hedge his bets as to the viability of the new entity, and place the risk of failure onto the shoulders of creditors he so chose.” Later the trial court addressed the factual issue in the context of attorney fees stating that Grayson had no intent to…create a fraudulent scheme where he wouldn’t pay the landlord at all because there were payments made [to the landlord]. Again, the trial court also later stated it was “of the view… that the Defendants did not act with ‘actual malice’ i.e. ill-will, hatred, or spite directed toward the Landlord. But instead under the mistaken belief various transactions were supported by adequate consideration…”

In reversing the cases, five foundational issues were emphasized by the Court. First, the Court surveyed Virginia law pertaining to the doctrines of fraudulent conveyances and voluntary conveyances, noting that the applicable statutes (now Code sections 55.1-400 and 401) presuppose a conveyance by a debtor from the debtor’s estate, noting that “the existence of a transfer from the debtor’s estates is [a] basic requirement.” The statutes seek to balance two competing public policies: the “public interest that debts should be paid” and “the debtor’s freedom to alienate his own property.”

Second, the Court citing La Bella Donna and several other cases makes clear that ‘both statutes contain a specific remedy—a judicial decree declaring the conveyance void as to the transferor’s creditors. This remedy returns the fraudulently conveyed assets to the transferor, but as a general rule, it does not authorize “a court to award an in personam judgment when the transaction is set aside.”  Moreover, the statutes “do not impose liability upon the participants of a fraudulent conveyance.” The default remedy under both statutes is to declare the conveyance void as to the complaining creditor and then “return the fraudulently conveyed assets to the transferor.”  Justice Kelsey reviewed remedies since the Elizabethan age and wrote “[i]n the 236 years since Virginia adopted its first fraudulent conveyance statute… we have continued …[to recognize] a “narrow exception” allowing a chancellor to enter an in personam judgment against a transferee of a fraudulent cash transfer….” But this exception applies to “recipients of fraudulent cash transfers” and does not apply to “other participants or coconspirators” in the fraudulent scheme.  The exception “unw[inds] the transfer of the cash in the grantee’s pockets; it [does] not impose liability upon the grantee by virtue of his participation in the transaction.” Only truly exceptional circumstances would need to exist to impose in personam jurisdiction.

Third, the Opinion contains a lengthy discussion of the debtor-creditor relationship and the fraud necessary to proceed under the fraudulent and voluntary conveyance statutes.  For these conveyances under the statute, transfers are “only void as to antecedent debts, and may be wholly sustained as to those coming into existence after its date.” A subsequent creditor cannot prevail on the mere ground that the transfer was voluntary. Actual fraudulent action or intent must be proved to have taken place at the time of the transfer. To prove this genre of fraud in the subsequent-creditor context, “the burden is upon the subsequent creditor to show that a prospective fraud was contemplated and directed against him.”  That is, the debtor-grantor must make a conveyance “with an intent to put the property out of the reach of debts which the grantor at the time of the conveyance intends to contract, and which he does not intend to pay or has reasonable grounds to believe he may not be able to pay.” The burden of proof “is not an easy one to shoulder,” i.e. where a transfer occurs there could generally not be an intent to defraud a remote future creditor.

Fourth, citing an 1857 case, Justice Kelsey acknowledged that “[i]n Virginia, our courts have gone as far, or farther, than any other, to sustain the owner’s dominion,’ stating that that dominion includes “the power to “prescribe the order in which the creditors are to be paid.”   A debtor’s right to prefer one creditor over another is thoroughly established” by Virginia precedent. Quoting Neff v. Edwards, 148 Va. 61, 627-28 (1927): “A debtor has the right to prefer one creditor to another. Giving such a preference is not fraudulent, though the debtor be insolvent, and the creditor is aware at the time that it will have the effect of defeating the collection of other debts.  This is not hindering or delaying creditors within the meaning of the statute. It does not deprive other creditors of any legal right, for they have no right to a priority.”  In other words, “to prefer one creditor to another “when neither has a lien, “is not in contravention of any rule or law in this State.” “Indeed, [a] preference may be given and received for the express purpose of defeating an execution, for the mere intent to defeat an execution does not of itself constitute fraud…  It does not deprive other creditors of any legal right, for they have not right to priority.” “It necessarily follows that, ‘since a debtor has the right to pay one creditor in preference to another, so he may, without the imputation of fraud, secure one creditor to prevent another from gaining an advantage.’”

Fifth, the Court’s Opinion contains a lengthy discussion regarding consideration to support conveyances.  The Court stated “[f]or over a century, it has been understood “that valuable consideration’ in the statutes against fraudulent conveyances is to be taken… in the widest sense of the law of contracts…. Consideration deemed valuable at law means, in effect, ‘something’ or adequate consideration to support a contract. The Virginia Code’s language creates a standard that requires something of value be exchanged and does not require equivalence.”  “Virginia law has always recognized that paying or securing a legally enforceable antecedent debt is a conveyance supported by consideration.”  Finally, a “Court may find a conveyance fraudulent when an insolvent debtor retains indefinite, exclusive possession of de facto ownership of the conveyed assets, to such an extent that doing so effectively defeats the conveyance “in its entirety” or when an insolvent corporate debtor is under the “complete control” of one of its directors who is himself a stockholder and creditor of the corporation and the corporate debtor prefers that creditor-director….”  Absent the unitary power of complete control, ‘a director may in good faith direct the corporation to pay its debts to him in preference to other creditors.’

With these foundational issues settled, it was clear to the Court that the Landlord in the present case did not carry its agreed-upon burden of persuasion regarding any of the five “conveyances” which the trial court found were fraudulent.

  1. The GSA Loan and Confessed Judgment – the trial court never explained how the loan agreement or confessed judgment qualified as an actionable conveyance under either statute. The trial court’s conclusion that the transfer was cloaked with multiple badges of fraud because they were made between closely related parties and lacked consideration was incorrect both factually and legally. The trial court misapplied the law by anchoring its conclusion so heavily to the relationship between Grayson and his entities… “relationship is not a badge of fraud… The relationship of the parties does not, of and in itself, cast suspicion upon the transaction or create a prima facie presumption against its validity without proof that there was fraud on the part of the grantor, participated in by the grantee.”  “A close relationship is merely something to be “closely scrutinized.”  Here, the GSA Loan Agreement and the confessed judgment were simply the payment of a bona fide, preexisting debt and did not constitute a fraudulent or voluntary conveyance.


  1. The 2011 G&K/AMG Checking-Account Payments- The badges of fraud that the trial court relied upon do not apply here. Grayson, a perfected, secured creditor of G&K/AMG, directed the payments to reduce G&K/AMG’s preexisting debt to him personally, to provide a loan to GLC, and to close down the G&K/AMG account. “In short, the payments were made for adequate consideration in payment of an antecedent debt to a creditor with a perfected security interest.


  1. The Halldorson Settlement Proceeds—Again the Supreme Court found that the trial court erred both factually and legally. First, there was no proof that $100,000 was ever transferred to Kubli personally. Second, when the proceeds of the Halldorson case were distributed, K&A was “in debt to G&K/AMG for millions of dollars pursuant to the Buy Out Agreement and G&K/AMG in turn, owed Grayson several million dollars.” “The Grayson Debt was perfected and secured…Grayson was ultimately entitled to the proceeds and the fact that he directed his attorney to pay the proceeds [to his company] GLC is irrelevant.” “It was in payment of a valid, secured, preexisting debt and thus was made in exchange for valuable consideration”.


  1. The IDT Legal Fees– The Supreme Court found that the trial court erred in relying upon the badges of fraud in concluding this was a fraudulent conveyance. However, the Court also erred in not dismissing this claim which was not in the Complaint.  The Court stated: “as we have stated many times, the basis of every right of recovery under our system of jurisprudence is a pleading setting forth facts warranting the granting of the relief sought….Pleadings are as essential as proof…The issues in a case are made by the pleadings, and not by the testimony of witnesses or other evidence…” Moreover, “it is well settled that when fraud is relied upon to set aside a conveyance its must be expressly charged…”  Here, the Landlord failed to plead the IDT legal fees in its Complaint or Amended Complaint.


  1. The Asset Take-Back and Debt Write-Off- Again, the Supreme Court held the trial court erred legally and factually. Here, the trial court rejected the testimony of both Grayson and Kubli that Grayson had never forgiven K&A’s debt. The VSC held that in rejecting the testimony the trial court erred.  The Court stated: “we have often said that ‘although a fact-finder must determine the weight and credibility of witnesses, it may not arbitrarily disregard uncontradicted evidence of unimpeached witnesses which is not inherently incredible and not inconsistent with the facts in the record, even though such witnesses are interested in the outcome of the case.” The Court then commented on the meaning of “arbitrary” and “inherently incredible” (so manifestly false that reasonable men ought not to believe it) and concluded that the Court arbitrarily rejected their testimony.  On aside, the Court also made clear that the fact that Grayson may have charged off the K&A loan on a IRS Form 1099-C is not evidence that the loan had been forgiven.  “Put another way, ‘[a] write off is simply an internal recognition by a lender that an account is worthless after attempts at collection have failed….’ When a lending institution ‘writes-off’ a bad debt it is merely indicating it is uncollectible. That is, it is no longer an asset of the institution. A ‘write-off’ does not mean that the institution has forgiven the debt or that the debt is not still owing.” Citing the Fourth Circuit Court of Appeals and rejecting a “small minority” of courts suggesting otherwise ,.. the VSC was clear that a Form 1099-C does not itself operate to legally discharge a debtor’s liability, and does not standing alone, raise a genuine issue of material fact regarding [any liability on the note.]  Accordingly, there was no credible evidence to contradict Grayson and Kubli on this issue and no basis to find that there was a fraudulent transfer of these funds.

Lastly, the Supreme Court found that Grayson was not liable under the tort of conversion relating to the Halldorson settlement proceeds. Citing a 2020 case, the Court stated that “to establish a conversion of intangibles…the plaintiff must have both a property interest in and “be entitled to immediate possession” of the documented intangible property.”  The Landlord’s claim fails because the Landlord did not have an immediate right to possession of these proceeds, much less one that was “clear, definite, undisputed, and obvious… The proceeds were subject to a valid, pre-existing, and superior interest in favor of G&K/AMG, and ultimately in favor of Grayson.  The UCC specifically allowed Grayson to claim the funds pursuant to his perfected security interest.” (Code section 8.9A-607(a)(1),(3).

Appellants Grayson and Kubli and their individual companies were represented by Ben DiMuro and Michael Lieberman of DiMuroGinsberg PC of Alexandria, Virginia.


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DGRead 21.07.01

Taking Advantage of ARPA/FFCRA Tax Credits: What HR Should Know; Dealing with COVID-19 Related Leave Requests and the New 100% COBRA Entitlement; Virginians Will Be Lighting Their Joints on July 1; DG/30 Milestone

Virginia’s New Overtime Law Has Real Teeth

By: Jonathan R. Mook

Virginia’s wave of employee friendly legislation continues.  Last year, the General Assembly greatly expanded the scope of the Commonwealth’s employment discrimination laws and began the process of hiking Virginia’s minimum wage toward a $15 per hour target.  This year, the General Assembly turned its attention to overtime protections for Virginia’s workers by enacting the Virginia Overtime Wage Act, which becomes effective July 1, 2021.  The new wage law specifically requires employers to pay 1½ times an employee’s regular rate of pay for hours worked in excess of 40 in a work week.  It also incorporates special protections for employees seeking to enforce their overtime rights.

Importantly, these protections provide for greater penalties on employers who fail to pay the proper amount of overtime and strengthen the procedures that employees may use to enforce their rights.  Thus, employers who commit overtime wage violations will now be subject to liquidated (or double) damages without being able to rely on the federal Fair Labor Standards Act (FLSA) “good faith” with “reasonable grounds” defense.  Moreover, the new Virginia law allows employees to recover treble damages where an employer is found to have committed a “knowing” violation of the law.  Such a violation is one where the employer had actual knowledge that it was not paying overtime wages and acted in deliberate ignorance or reckless disregard of its overtime obligations.

On the procedural front, the Virginia Overtime Wage Act contains a longer statute of limitations than the FLSA by establishing a three-year limitations period for overtime claims and allowing an employee to recover overtime for up to three years.  The FLSA, by contrast, has a two-years limitation period, which may be extended to three years only for willful violations by the employer.

Finally, although Virginia normally does not allow class or collective actions, the Virginia Overtime Wage Act contains an explicit authorization for employees to collectively sue their employer for violating the statute.  This new authorization of collective actions for overtime suits under Virginia law serves to emphasize the importance for all Virginia employers to understand and comply with their wage hour obligations.  The last thing that an employer wants to contend with is a collective action by its employees seeking three-year’s worth of overtime pay with the amount being trebled for “knowing” violations.

We at DiMuroGinsberg are here to assist you in understanding and complying with your legal obligations.  If you have any questions pertaining to the Virginia Overtime Act or other matters pertaining to Virginia’s employment laws, please contact DiMuroGinsberg partner, Jonathan R. Mook at jmook@dimuro.com.

Virginians Will Be Lighting Their Joints on July 1

By M. Jarrard Wright, DiMuroGinsberg P.C.

Starting July 1, Virginia will be the first state in the southern United States to allow the use of recreational marijuana. That’s because on April 21, at the close of this year’s General Assembly session, Governor Ralph Northam signed a historic marijuana legalization bill allowing adults to possess small amounts of pot. Although the original bill that passed the General Assembly wouldn’t have taken effect for a few years, pressure from civil rights and other advocacy groups led to amendments late in the legislative process, which advanced the effective date to July 1. While the date is fast approaching, the regulatory and logistical issues are complicated and will likely take years to address fully.

What the New law Says

Virginia’s new law permits adults over the age of 21 to possess up to an ounce of marijuana and allows for the home cultivation of four plants. Adult possession of more than an ounce is subject to a $25 civil penalty, while possession of more than a pound remains a criminal felony. Children and teenagers may not possess marijuana or access plants grown at home. In addition, the new law establishes a process to expunge past criminal convictions, which many civil rights groups supported.

While the decriminalization of marijuana will be complete within a month, the regulatory process for the purchase and sale of pot will take much longer. A new agency called the Virginia Cannabis Control Authority will oversee and regulate the commercial market for marijuana, and retail sales aren’t expected to begin until January 2024.

Importantly, the General Assembly will be required to reenact the legislation’s retail sales provisions next year. Accordingly, the regulatory requirements for opening a marijuana dispensary for general public retail sales remain to be seen.

Uncertainty for Employers

Also unknown is the new marijuana law’s ultimate impact on the employee-employer relationship. As currently enacted, the law doesn’t address whether employers will be able to (1) maintain a “marijuana free” workplace or (2) mandate testing for the drug’s use. Currently, you may maintain drug testing policies for marijuana. Current Virginia law generally gives you wide latitude in setting policies to test and to fire employees for legal drug use outside of working hours.

Likewise, the new state law doesn’t change either the federal laws criminalizing marijuana or the drug-free workplace requirements of the Federal Acquisition Regulations (FAR), mandated for federal government contractors and subcontractors.

Accordingly, for the moment, the status quo remains. Virginia employers still have the authority to implement drug testing and retention policies related to marijuana usage.

What’s on The Horizon

That said, the law in this area is likely to develop rapidly over the next year and continue to evolve during the years to come. On the federal level, the pressure on Congress to decriminalize marijuana is growing, which could affect federal government contracting requirements in the future. On the state level, the General Assembly will likely be faced in the not-too-distant future with having to address the employment issues arising from the new marijuana law.

A model for the state legislation probably will be the recently enacted medical cannabis oil law, which also takes effect on July 1. That law prohibits Virginia employers from discharging or disciplining employees for the lawful use of medical cannabis oil outside the workplace “pursuant to a valid written certification issued by a practitioner for the treatment or to eliminate the symptoms of the employee’s diagnosed condition or disease.”

Under the medical cannabis oil law, you still can prohibit the use of cannabis oil products during work hours and at the workplace. In addition, federal contractors and subcontractors can continue to comply with the federal government requirements for maintaining a drug-free workplace.

The medical cannabis oil law also allows you to impose sanctions on employees who are under the influence of cannabis at work. That said, the fact that traces of cannabis can remain in the human body for weeks means it will be difficult for many employers to determine whether an employee is impaired simply by using a drug test alone.

While medical cannabis oil and recreational marijuana are different in terms of their nature and effect, there likely will be a strong push in the General Assembly to treat them similarly and impose limits on an employer’s ability to discipline or discharge an employee for recreational pot use during nonwork hours and outside the workplace.

What Should You Do?

On July 1, it will be business as usual for Virginia employers, but it may not stay that way for long. Therefore, you should continue to monitor the changing social and regulatory environment and consult with legal counsel to make your policies stay compliant as the law develops. While the historic, first-in-the-South recreational marijuana legalization will take place soon, the regulatory and business impacts are just beginning, with no clear endpoint in sight.

Jarrad Wrightis a partner at DiMuroGinsberg P.C.in Alexandria. You can reach him at mjwright@dimuro.com.

DGRead 21.06.15

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Tenth Circuit Joins Other Courts on Failure to Accommodate Claims

By: Jonathan R. Mook

One of the defining features of the Americans with Disabilities Act (“ADA”) is the obligation of an employer to take affirmative steps to provide “reasonable accommodation” to individuals with disabilities in order to enable them to perform the essential functions of the job.

In this regard, the ADA defines discrimination as “not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee.”
For most courts, to state a reasonable accommodation claim, a plaintiff need merely show that with reasonable accommodation, she could have performed the essential functions of the job, that the employer had notice of the plaintiff’s disability, and that the employer failed to provide the accommodation. There is no need for a plaintiff to make an additional, separate showing that she suffered an adverse job action as a result of the employer’s failure to accommodate.

The only circuit court to deviate from this view has been the Tenth Circuit, which, in a 2018 three-judge panel opinion in Exby-Stolley v. Bd. Of Cty. Comm’rs, held that a plaintiff must establish an additional element: that he or she suffered an adverse employment action as a result of the failure to accommodate. The panel opinion prompted a vigorous dissent by one circuit court judge, which led the plaintiff to seek en banc review by all of the judges on the Tenth Circuit.

The circuit court accepted review, and in a closely divided seven-to-six decision, the Tenth Circuit, sitting en banc, reversed the 2018 panel decision and sent the case back to the district court for a jury trial to decide the plaintiff’s failure to accommodate claim. In doing so, the appeals court followed the reasoning of its sister circuit courts and held that to pursue a failure to accommodate claim, a plaintiff is not required to show that she suffered an adverse employment action.

Although some commentators have expressed concern that the Tenth Circuit’s en banc decision in Exby-Stolley will open the flood gates for ADA reasonable accommodation claims, the impact of the decision may not be as dire as has been painted. Most ADA claims arise when a disabled employee requests an accommodation to perform the essential functions of the job, the request is denied, and the employee is later terminated or demoted because the employee cannot satisfy the job requirements. Thus, in addition to an employer’s failure to accommodate, the employer also has taken an adverse job action (such as termination or demotion). Accordingly, only time will tell how the Tenth Circuit’s decision in Exby-Stolley will impact the development of ADA law.

If you would like a copy of Jonathan’s article entitled, “Tenth Circuit Joins Other Courts on Failure to Accommodate Claims,” which appears in the March, 2021 issue of Bender’s Labor & Employment Bulletin, please contact Jonathan at jmook@dimuro.com.

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