Vitolo v. Guzman

Dockets: 21-5517, 21-5528 

Opinion Date: May 27, 2021

Judge: Thapar 

Areas of Law: Business Law, Civil Rights, Government & Administrative Law, Public Benefits

The American Rescue Plan Act of 2021 allocated $29 billion for grants to help restaurant owners. The Small Business Administration (SBA) processed applications and distributed funds on a first-come, first-served basis. During the first 21 days, it gave grants only to priority applicants--restaurants at least 51% owned and controlled by women, veterans, or the “socially and economically disadvantaged,” defined by reference to the Small Business Act, which refers to those who have been “subjected to racial or ethnic prejudice” or “cultural bias” based solely on immutable characteristics, 15 U.S.C. 637(a)(5). A person is considered “economically disadvantaged” if he is socially disadvantaged and he faces “diminished capital and credit opportunities” compared to non-socially disadvantaged people who operate in the same industry. Under a pre-pandemic regulation, the SBA presumes certain applicants are socially disadvantaged including: “Black Americans,” “Hispanic Americans,” “Asian Pacific Americans,” “Native Americans,” and “Subcontinent Asian Americans.” After reviewing evidence, the SBA will consider an applicant a victim of “individual social disadvantage” based on specific findings. Vitolo (white) and his wife (Hispanic) own a restaurant and submitted an application. Vitolo sued, seeking a preliminary injunction to prohibit the government from disbursing grants based on race or sex. The Sixth Circuit ordered the government to fund the plaintiffs’ application, if approved, before all later-filed applications, without regard to processing time or the applicants’ race or sex. The government failed to provide an exceedingly persuasive justification that would allow the classification to stand. The government may continue the preference for veteran-owned restaurants.

Carhartt, Inc. v. Innovative Textiles, Inc.

Docket: 20-1826 

Opinion Date: May 27, 2021

Judge: McKEAGUE 

Areas of Law: Business Law, Commercial Law, Contracts

In 2009, Carhartt contracted with Innovative to create a flame-resistant fleece fabric for use in its line of flame-resistant garments. The fabric that Innovative developed for Carhartt, “Style 2015," contained a modacrylic fiber, “Protex-C.” Innovative agreed that it would conduct flame-resistance testing on the Style 2015 fabric before shipping it to Carhartt, using the industry-standard test, ASTM D6413. Carhartt sent Innovative emails in 2008, 2010, 2011, 2012, and 2013 stating that Carhartt would do “regular, random testing on the product that is received.” Carhartt performed visual inspections but did not conduct flame-resistance testing until 2016. The Style 2015 fabric failed the D6413 test. Carhartt notified Innovative, which then conducted its own testing and concluded that Style 2015 fabrics dating back to 2014 did not pass flame-resistance testing. In 2013, Innovative stopped using Protex-C and began using a different modacrylic fiber without notice to Carhartt. The district court granted Innovative summary judgment on Carhartt’s negligence, fraud, misrepresentation, false advertising claims. breach of contract and warranty claims. The court reasoned that Carhartt did not notify Innovative of the suspected breach within a reasonable amount of time after Carhartt should have discovered the defect, as required by Michigan’s Uniform Commercial Code. The Sixth Circuit reversed. Reasonable minds could differ as to whether Carhartt should have discovered the breach sooner by performing regular, destructive fire-resistance testing on the fabric.

Jackson v. Genesee County Road Commission

Docket: 20-1334 

Opinion Date: May 27, 2021

Judge: Gibbons 

Areas of Law: Civil Rights, Labor & Employment Law

Jackson, an African American woman, was GCRC's Human Resources Director. Daly, GCRC’s chief administrative officer, was Jackson’s supervisor. There were pending internal discrimination complaints when Jackson started, including a complaint by African American employees about Bennett. Jackson ultimately negotiated a severance agreement with Bennett. A second issue involved McClane’s complaints about Williams, GCRC’s finance director, who subsequently resigned. Jackson was also responsible for approving Equal Employment Opportunity Plans submitted by vendors and contractors. Jackson realized that several vendors’ EEOPs had expired and became concerned that some GCRC directors were conducting business with vendors before their EEOPs were approved. Jackson implemented several changes in GCRC’s EEOP approval process. Several employees, vendors, board members, and union representatives complained to Daly about Jackson’s “abrasiveness” and communication style. Other employees reported having good experiences with Jackson. Daly fired Jackson without giving a reason other than she was an at-will employee. Jackson filed a retaliation claim under Title VII of the Civil Rights Act and Michigan’s Elliot-Larsen Civil Rights Act. The district court granted GCRC summary judgment. The Sixth Circuit reversed. Jackson engaged in protected activity and there remains a genuine factual dispute as to causation. Jackson’s actions could reasonably be viewed as steps to ensure there was no discrimination in hiring both within GCRC and among its vendors, and were protected activity under Title VII. A reasonable juror could find that Jackson has established a prima facie case of causation through circumstantial evidence including the temporal proximity between Jackson’s protected activity and termination.