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The Blog of William D. Goren, J.D. LL.M.

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ejusdem generis

What is a Service Establishment and the IRS 20 Factor Test

October 30, 2018 by William Goren 1 Comment

Before getting started on the blog of the week, would be hard to not mention what happened in Pittsburgh. At our synagogue over the weekend during family minyan, which is a small service that takes place before people go to community/Hebrew/religious school (I am never sure what to call it), we said mourners Kaddish and lit a yizkor candle for our brethren in Pittsburgh. In my class ( I teach seventh grade), we discussed the story of Samson which focuses on revenge v. justice. That led to a spirited discussion over what penalty might be in order for the shooter. My thoughts and prayers go out to Pittsburgh. Far as I know, it is uncertain what security measures out own synagogue may be taking. I do know that many synagogues all over Atlanta have memorial services/vigils planned, including my own. For some excellent thoughts on anti-Semitism and why you need to watch out for in your workplace, I commend you to Jon Hyman’s blog entry on the subject, which can be found here. I also saw in the Atlanta paper today that since 2016, 54% of hate crimes involve Jewish animus. My original idea before Jon’s blog entry hit me like a ton of bricks was to talk about some sporting events in the last week. For example, congratulations to the Boston Red Sox on winning the World Series. I was able to catch some of the games. Absolutely remarkable how they won three in a row in Los Angeles. Congratulations to Red Sox nation. I think one of the reason people enjoy sports so much, especially spectator sports, is because for the most part they offer an escape. Again, my thoughts and prayers are with Pittsburgh and with the Jewish community all over America. My parents always said that it could happen here, but I never wanted to believe it….

Turning to the blog entry for the week, back in July 2016, I blogged on a 10th Circuit case that held a plasma center was a place of public accommodation under title III. Now, two years later the Fifth Circuit was faced with the exact same issue and decided the opposite. So, we now have a Circuit Court split. As usual, the blog entry is divided into categories and they are: facts; court’s reasoning; Texas Human Resources Code claim; could a blood donor really be an employee; and takeaways. The reader is free to concentrate on any or all of the categories.

I

Facts

If anything, the facts in the case we are blogging on today, Silguero v. CSL Plasma, Inc., are even more egregious than the one we blogged about in July, 2016. Levorsen involved a schizophrenic person wanting to donate blood. Here, one plaintiff used a service dog for anxiety, and the other one had an unsteady gait. What this plasma center does is exactly the same as what we discussed in my July, 2016, blog entry. The only other difference between the two cases is that the plaintiffs also sued under the Texas Human Resources Code, §121.001 et. seq., claiming that they suffered discrimination by a public facility.

II

Court’s Reasoning

  1. The key question is the meaning of “or other service establishment,” contained in 42 U.S.C. §12181(7)(F). That particular section denotes laundromats, dry cleaners, banks, barbershops, beauty shops, travel services, shoe repair services, funeral parlors, gas stations, office of an accountant or lawyer, pharmacies, insurance offices, professional offices of the healthcare provider, and hospitals as specific service establishments. After hospitals, a comma appears and then the clause ends with, “other service establishment.”
  2. In a footnote, the Fifth Circuit noted that the Department of Justice filed an amicus brief expressing its view that plasma collection centers are service establishments under title III.
  3. In a footnote, the court noted that while plaintiffs argue that the defendants advertised their collection centers were a service it gives for customers, how a party advertises work performed has no bearing on what Congress meant by the term, “service.”
  4. The word, “service” according to both Marion-Webster Collegiate Dictionary and Webster New World Collegiate Dictionary generally denotes some helpful act or an act giving assistance or advantage to another.
  5. “Helpful,” implies that someone receives help from the act.
  6. The verb “giving,” and the preposition “to,” indicate that the assistance or advantage is conveyed from the act to the individual.
  7. Congress’s use of the word “service,” suggests not only that the establishment perform some action but also that the action helps or benefits the recipient. So, in the case of a “service establishment,” the establishments serve the members of the public who are helped or benefited by the service. Therefore, a “service establishment” is an establishment performing some act or work for an individual benefiting from the act or work. This construction of what is a service establishment, is essentially the same as what the 10th Circuit came up with in Levorsen.
  8. The word “service,” implies that the customer benefits by the act, and no such benefit occurs in the case of a customer donating blood at a plasma center.
  9. The list of public accommodations appearing before the phrase “other service establishment,” does not include any establishment providing a service without a detectable benefit to the customer.
  10. The structure of the ADA itself indicates that an establishment typically does not pay a customer for services it provides.
  11. When it comes to a service provided by a service establishment, customarily, the service flows from the establishment to an individual. In this situation, donors receive no obvious benefit or help that makes the plasma collection center’s act a service. For example, donors do not have the plasma earmarked for themselves or to a specific third party for whom they are concerned. Rather, the plasma becomes the property of the plasma collection center to do with whatever it wants.
  12. The labor furnished when donating blood is not useful to the donor, it is useful to the establishment, and the payment of money to the donor is wholly collateral to the act of plasma collection.
  13. The canon of construction ejusdem generis says that a catchall phrase should be read in light of the preceding list. So, while the ADA itself says that the statute is to be liberally construed, that does not mean a court can come up with a construction that is untethered from its text.
  14. If Congress wanted to cover all establishments, it could have done so by omitting the word service.
  15. Legislative history is of no help to the plaintiffs. In a footnote, the court noted that it was essentially doing what the legislative history called for by trying to figure out what the overall category meant rather than whether particular places were service establishments.
  16. Each of the items listed in 42 U.S.C. §12181(7)(F) involves an establishment acting in some way that benefit individuals. That is: dry cleaners press customer shirts; lawyers file pleadings; hospitals mend patients broken bones, etc. In each of these situations, the establishment performs an action directly benefiting the individual. A plasma collection center does not provide any such benefits to its donors.
  17. While it is true that lawyers may work on a pro bono basis, that doesn’t change the fact that lawyers are working unambiguously to benefit clients, and therefore are performing a service.
  18. While it is true that banks may pay customers through interest on savings, any payment they receive is not a result of the customer’s labor, but rather is the result of the act the bank performs to serve the customer. That is simply not the case with plasma centers where the plasma belongs to the plasma collection center, and the plasma collection center does not manage or oversee the plasma on behalf of the donor.
  19. Paying for plasma donation is governed by other provisions of the ADA. In particular, that is more akin to employment or contract work, not to the provision of services to a customer.
  20. Customers are purchasers of goods and services, while an employee is a person working for an employer for wage or salary. So, whether a person is being paid is relevant because it can indicate whether an individual was a customer or is instead an employee or other hired laborer.
  21. With respect to the ADA, it is title I that applies to employment relationships, while it is title III that applies to places of public accommodations, which includes service establishments.
  22. Interpreting service establishments and title III extremely broadly so that it includes employment and employment like relationships, risks overrunning Congress’s legislative choices in coming up with title I. In fact, it would make title I largely redundant by turning virtually every employer and entrepreneur into a service establishment.
  23. Payment to or by the establishment is highly relevant for determining whether an establishment provides a service to a customer, and is therefore a service establishment.

III

Court’s Reasoning with Respect to the Texas Human Resources Code Claim

  1. The Texas Human Resources Code differs significantly from the ADA. For example, it was enacted before the ADA and was not split into various titles covering distinctly different activities.
  2. The Texas Human Resources Code use a different term to define its scope. For instance, instead of applying to public accommodations, 121.003(a) applies to public facilities. Further, the term, “public facility” per §121.002(5), is defined in an entirely different manner than “public accommodation,” under the ADA.
  3. The Supreme Court of Texas has said that because the differences are so stark, it will not look to federal court interpretations of public accommodations when interpreting the term “public facility,” under the Texas Human Resources Code. So, it simply cannot be assumed that because CSL Plasma is not a place of public accommodation under the ADA, that it isn’t a public facility under the Texas Human Resources Code.
  4. Texas courts have not interpreted the term, “public facility” often, apparently only once in a completely different context.
  5. The Texas Constitution grants the Supreme Court of Texas the power to answer questions of state law certified by a federal appellate court. In deciding whether such certification is proper the following factors are considered: 1) the closeness of the question and the existence of sufficient sources of State law; 2) the degree to which considerations of comity are relevant in light of the particular issue and the case to be decided; and 3) practical limitations of the certification process: significant delay and possible inability to frame the issue so as to produce a helpful response on the part of the State court. When all of these factors are applied, certification is appropriate because: no State law guidance exists, and the federal analogue is not analogous; the answer to just what is a service establishment under Texas law could either impose future liability on many Texas businesses or preclude Texans from relying on an important antidiscrimination statute; and there is no hardship in certifying the question since it is possible to formulate discrete issues for consideration by the Supreme Court of Texas. Finally, neither party presented any reasons not to certify the relevant questions as to the Supreme Court of Texas.
  6. With respect to what questions are certified to the Supreme Court of Texas, they are: 1) is a plasma collection center a “public facility,” under §121.002(5) of the Texas Human Resources Code?; 2) if so, does Texas law allow the plasma collection center to reject a person with a disability based upon the center’s concern for the individual’s health stemming from the disability? Further, what standard applies for determining whether the plasma collection center properly rejected the person rather than committed impermissible discrimination under §121.003(a) of the Texas Human Resources Code. Finally, the Supreme Court of Texas may certainly not confine its reply to the precise questions certified by the Fifth Circuit.

IV

Could a Donor of Blood Really Be an Employee?

  1. Much is made in this decision about the structure of the ADA and how a person donating plasma resembles an employee more than anything else. Could that person be an employee of the plasma center? There are various tests that can be used to figure out whether a person is an employee. A common one is whether the employer controls when, where, and how to do the job. When I was a general counsel to two different mental health mental retardation authorities in Texas many many moons ago, this was an issue that I dealt with constantly because we utilized a tremendous amount of independent contractors to provide services to the clients of the mental health and mental retardation authority. I always used Revenue Ruling 87-41’s 20 factor test to figure out whether the person was an employee or not. I thought it would make sense to discuss those factors here:
  2. Instructions: is the worker required to comply with other persons instructions about when, where, and how he or she is to work? If so, you have an employee. This factor seems to cut against employee status because the person donating blood can show up to the plasma center whenever they feel like it.
  3. Training: training a worker by requiring an experienced employee to work with the worker, by corresponding with the worker, by requiring the worker to attend meeting, or by using other methods, indicates that the person for whom the services are performed want the services performed in a particular method or manner. This factor cuts against employee status because nothing of this kind is going on when donating plasma.
  4. Integration: integration of the worker services into the business operations generally shows that the worker is subject to direction and control. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, workers performing those services must necessarily be subject to a certain amount of control by the owner of the business. This one is a bit odd in the plasma donation context. Clearly, without the donor, the plasma center has no business at all. On the other hand, in the traditional sense of the term, you would be hard-pressed to say that the plasma center has direction and control over the employee in the way this paragraph would customarily refer to the term.
  5. Services rendered personally: if the services must be rendered personally, normally the person for whom the services are performed are interested in the methods used to accomplish the work as well as in the results. With respect to this factor, services are certainly being rendered personally, but the hiring entity is certainly not interested in the methods used to accomplish the work. They are interested in the results.
  6. Hiring, supervising, and paying assistants: if the person for whom the services are performed hire, supervise, and pay assistants, that factor generally shows control over the workers on the job. This factor is not applicable to the person donating blood at a plasma center and certainly cuts against an employment relationship.
  7. Continuing relationship: a continuing relationship between the worker and the person for whom the services are performed indicates that an employer employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals. This factor works in favor of the employment relationship.
  8. Hours of work: the establishment of set hours of work by the hiring entity from the services are performed as a factor indicating control. This factor cuts against an employment relationship because there are no set hours of work.
  9. Full time required: if the worker must devote substantially full-time to the business that restricts the worker from doing other gainful work. This factor also cuts against an employment relationship as donors of blood are not working full time in that capacity nor could they be.
  10. Doing work on employer’s premises: if the work is performed on the premises of the person or person for whom the services are performed, that factor shows control over the worker, especially if the work could be done elsewhere. Control over the place of work is indicated when the person for whom the services are performed, such as the right to compel the worker to travel a designated route, to canvas a territory within a certain time, or to work at specific places as required. With respect to this factor, the work must be performed on the premises, but it can’t be done elsewhere except at another plasma center. Further, this is not a situation where the donor of blood is having to travel designated routes, canvas a territory, or work at specific places.
  11. Order or sequence set: if a worker must perform services in the order or sequence set by the person for whom the services are performed, that factor shows that the worker is not free to follow the worker’s own pattern of work but must follow the established routines and schedules of the person for whom the services are performed. Taken literally, this factor cuts in favor of the employment relationship.
  12. Oral or written reports: a requirement that the worker submit regular written reports to the person for whom the services are performed indicate a degree of control. This factor cuts against an employment relationship because no written reports or oral reports are occurring.
  13. Payment by hour, week, month: payment by the hour, week, or month generally point to an employer-employee relationship. With respect to this factor, the person is being paid every time they donate blood. So, this factor also cuts against the employment relationship.
  14. Payment of business and/or traveling expenses: if the person for whom the services are performed ordinarily the worker’s business and/or traveling expenses, the worker is ordinarily an employee. That is simply not what is going on here with respect to someone who would donating blood, and therefore, this factor cuts against the employment relationship.
  15. Furnishing of tools and materials: the fact that the person for whom the services are performed furnishes significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship. This factor works in favor of an employment relationship because the donator of the blood is not furnishing any tools or materials him or herself.
  16. Significant investment: if the worker invests in facilities used by the worker in performing services and are not typically maintained by employees, that factor tends to indicate that the worker is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the person for whom the services are performed for such facility and thereby indicate the existence of an employer employee relationship. This factor cuts in favor of an employment relationship.
  17. Realization of profit or loss: a worker who can realize a profit or suffer a loss as a result of the worker’s services is generally an independent contractor, but the worker who cannot is an employee. This factor also cuts in favor of an employment relationship because the person donating blood is receiving a take it or leave fee for the donation.
  18. Working for more than one firm at a time: if a worker performs more than de minimis services for multiple unrelated persons or firms at the same time, that factor generally indicate the worker is an independent contractor. That said, it is possible that such a worker could be an employee of more than one person. This factor doesn’t cut either way.
  19. Making service available to general public: the fact that a worker makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship. This factor cuts in favor of the employment relationship as services are not being made available to the general public.
  20. Right to discharge: the right to discharge a worker is a factor indicating that the worker is an employee in the person possessing the right is an employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer’s instructions. An independent contractor cannot be fired so long as the independent contractor produces a result that meet the contract specifications. Here, a plasma center might refuse to provide its services to a person wanting to donate blood. So, you might argue that the person is being fired, but each time a person wants to donate blood, it starts another relationship. So, my view is that this factor cuts against an employment relationship.
  21. Right to terminate: if the worker had the right to end his or her relationship with the person for whom the services are performed at any time he or she wishes without incurring liability, that factor indicates an employer employee relationship. This factor cuts in favor of an employment relationship as certainly the person donating blood can end the relationship at any time they want for any reason without incurring liability. All they have to do not show up.
  22. When I was doing this all the time, what I would do is add up the factors and see how many were on each side of the ledger. Keep in mind, it is a holistic question and there are situations were even though you have more factors on one side of the ledger than the other, you may still decide for the side of the ledger having fewer amount of factors. Also, in close calls, you’re probably better off erring on the side of an employment relationship. Adding up the factors here, I get 10 factors indicating that an employment relationship does not exist and 10 factors indicating that an employment relationship may well exist. So, now what? Well, the Fifth Circuit opinion gives an opening for plasma donors to argue that they are entitled to title I of the ADA protections. Will this opinion create lots of litigation over whether plasma donors are employees given our analysis of the 20 factors? It might.

V

Takeaways:

  1. Revenue Ruling 87-41 isn’t the only test out there. The Department of Labor has its own tests. Fascinating that when I applied Revenue Ruling 87-41 tests to this situation, I wound up with roughly an even split. That means, plasma centers may want to have their legal counsel evaluate as to what their tax liability is with respect to paying donors. They may also want to have legal counsel evaluate whether the donors are employees for other purposes. Finally, they may be dealing with title I liability when they deny donors with disabilities the right to donate their blood.
  2. Silguero and Levorsen are in direct conflict with each other and cannot be reconciled. This means it is teed up for the Supreme Court. How will the Supreme Court decide? That is anybody’s guess. As I have mentioned numerous times before, persons with disabilities have been very successful at the Supreme Court outside of the employment context. There are now new Justices on the Supreme Court. Impossible to say how Justice Kavanagh might analyze it. With respect to Justice Gorsuch, also very difficult to say. I do think he as well as Justice Kavanagh may be receptive to eujesdim generis, but as we discussed in this blog entry, Justice Gorsuch is not afraid to use common sense when deciding things. Swing vote is likely to be Justice Roberts with Justice Gorsuch a wild card. Also, it bears noting that the Department of Justice filed an amicus brief in the Fifth Circuit case stating that plasma centers are places of public accommodations. If they maintain that at the Supreme Court level, that may be very persuasive.
  3. While when I applied the 20 factor test, I got an even split, intuitively it would seem that the donor of blood plasma would not be an employee. If they are indeed an employee, that opens up a tremendous can of worms, even more so than the can of worms the Fifth Circuit said it would open if it agreed with Levorsen.
  4. Not covered in the decision was whether even assuming a plasma center is a place of public accommodation, could there be health and safety regulations that would allow the plasma center to prohibit certain people with disabilities from donating? That may or may not be the case.
  5. If a plasma center is not a place of public accommodation and the person donating blood is not an employee, do they have any recourse for disability discrimination? Well, chances are the plasma center takes federal funds. If so, this blog entry might be of help.
  6. Never forget about your own State law.

Filed Under: General Tagged With: 42 U.S.C. §12181, ADA, ejusdem generis, employee, IRS 20 factor test, justice gorsuch, Justice Kavanaugh, justice Roberts, Levorsen v. Octapharma Plasma, other service establishment, place of public accommodation, plasma collection center, public facility, revenue ruling 87-41, service, service establishment, Silguero v. CSL Plasma Inc., Texas human resources code, Texas human resources code §121.002, Texas human resources code §121.003, title I, title III

Just What Is a Service Establishment Anyway?

July 18, 2016 by William Goren 2 Comments

Just what is a service establishment under title III of the ADA? A published case from the 10th Circuit that came down on July 12, 2016,  Levorsen v. Octapharma Plasma, Inc., deals with this question. As is usual, the blog entry is divided into categories: facts, 42 U.S.C. § 12181(7)(F); majority reasoning; reasoning of dissent; and takeaways. The reader is free to focus on any or all of the categories.

I

Facts

Plaintiff suffers from various psychiatric disorders, including borderline schizophrenia. For years, he had donated plasma in exchange for money in an effort to supplement his limited income. In May 2013, he attempted to do that at a Salt Lake City branch of Octapharma Plasma, Inc. (hereafter, defendant). The defendant operates in multiple places. At these places, the defendant collects donors’ plasma using a process called plasmapheresis. During that process, it draws and mechanically processes the donor’s blood, separating and reserving the plasma before returning the red blood cells to the donor. It pays it donors for this plasma, then sells it to pharmaceutical companies. When an employee of the defendant learned that the plaintiff suffers from borderline schizophrenia, the employee became concerned that he might have a schizophrenic episode while donating and dislodge the collecting needle, possibly injuring himself or someone else. The employee then advised the plaintiff that he was ineligible to donate plasma. Even though the plaintiff provided the defendant with a signed form from his psychiatrist, who both indicated that he was medically suitable to donate plasma twice a week, the defendant maintained its refusal to allow him to donate. He then brought suit under title III of the ADA. The defendant defended on the grounds that it was not a service establishment under 42 U.S.C. 12181(7)(F), and therefore, it was not subject to coverage under the ADA.

II

42 U.S.C. § 12181(7)(F)

42 U.S.C. § 12181(7)(F) states that one of the places of public accommodations includes:

“a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment.” (Emphasis mine).

III

Majority Reasoning (Moritz, Briscoe)

In reversing and remanding the decision of the District Court, which held that the defendant was not operating a service establishment, the majority, in an opinion by Judge Moritz, reasoned as follows:

  1. The court cited to the definition of a service establishment noted in II above;
  2. The examples listed for service establishment are not exclusive but instead are illustrative;
  3. Courts must construe the section liberally to afford individuals with disabilities access to the same establishments available to those without disabilities;
  4. Turning to Webster’s third new international dictionary, the court said that the dictionary defines a service as “conduct or performance that assists or benefits someone or something,” or “useful labor that does not produce a tangible commodity.” Therefore, a service establishment is a place or business of a public or private institution that, by its conduct or performance, is assisting or benefiting someone or something or providing useful labor without producing a tangible good for a customer or client. In other words, a service establishment is an establishment that provides a service;
  5. Giving the term “service establishment,” its ordinary meaning does not result in an ambiguity nor does it result in an irrational one. Rather, it results in a broad definition entirely consistent with the aim of title III to afford individuals with disabilities access to the same establishments available to those without disabilities;
  6. Even if giving the term “service establishment,” its ordinary meaning resulted in the definition that was ambiguous or irrational, employing the canons of statutory interpretation, ejusdem generis and noscitur a sociis (which would lead to the conclusion that only places providing compensation to customers should be considered a service establishment), doesn’t help anything because another rule of statutory interpretation argues against reading a direction of compensation requirement into the statute when it doesn’t appear. To decide otherwise, only serves to manufacture ambiguity when none exists;
  7. Even assuming ambiguity does exist, legislative history supports the decision to refrain from concluding that an entity is a service establishment only if it is similar to the enumerated examples in the section. More specifically, a House Report explained that a person alleging discrimination does not have to prove that the entity being charged with discrimination is similar to the examples listed in the definition, but only has to show that the entity falls within the overall category. Further, Congress changed the language in this section from “other similar service establishment,” to “other service establishment,” presumably to make clear that a particular business need not be similar to the examples in order to constitute a service establishment (a presumption consistent with legislative history);
  8. The defendant is a place of business that assists or benefits those who wish to provide plasma for medical use, whether it be for altruistic reasons or pecuniary gain, by supplying the trained personnel and medical equipment necessary to accomplish that goal. While the defendant may ultimately produce a tangible good for pharmaceutical companies in the form of plasma, it doesn’t produce a tangible good for individuals like the plaintiff seeking the use of plasma procurement services. Rather, the defendant simply assists those individuals in accomplishing their goal of providing plasma;
  9. The argument that finding the defendant is running a service establishment contradicts regulations from the FDA doesn’t wash because this decision is not a decision on the merits, but rather one holding that it is subject to title III of the ADA in the first place.

III

Reasoning of the Dissent (Holmes)

  1. The District Court correctly ruled that service establishments offer certain services in exchange for monetary compensation i.e. a fee;
  2. Every establishment listed in the section shares certain unifying traits by: 1) offering the public a service in the form of: a) expertise (eg. barbers, beautician, shoe repair craftsman, drycleaner, funeral parlors, lawyer, accountant, insurance offices, pharmacists, healthcare providers, and hospitals); or b) specialized equipment (eg. laundromats and gas station); 2) for use in achieving some desired end in exchange for monetary compensation;
  3. Plasma donation center do not receive a fee from members of the public in exchange for any services they provide;
  4. To the extent that plasma donation centers provide services to the public, they do not do so for the public’s use in achieving the desired end. Rather, they provide them for the plasma centers use in achieving a desired end-collecting plasma for sale to pharmaceutical companies. Therefore, plasma donation centers are fundamentally unlike service establishments listed in the section and should not be deemed to fall within the scope of that section;
  5. Since the statute is clear, legislative intent should not be looked at;
  6. The meaning of statutory language depends upon context and using the applicable canons of statutory construction (see below). Therefore, it doesn’t make sense to break out the terms “service,” and “establishment,” in the way the majority did in order to come up with a definition of the term, “service establishment;”
  7. It was proper to apply to statutory canons of construction, as the lower court did, to reach the proper result. The first, ejusdem generis, means that when a general term follows a specific one, the general should be understood as a reference to subjects akin to the one with specific enumeration. The second, noscitur a sociis, means that a word is known by the company it keeps;
  8. Canons of statutory construction are aids in construing statutory language itself and not a tool to be relied upon only in the face of ambiguity;
  9. Saying that there is no need to resort to legislative history if the literal language of the statute controls, is not the same thing as giving a court the right to ignore canons of statutory construction;
  10. The fact that legislation has a remedial purpose does not give the judiciary license in interpreting a provision to disregard entirely the plain meaning of the word used by Congress;
  11. The Department of Justice has made it clear that the statutorily enumerated examples are representative and illustrative of what constitutes a service establishment i.e. the examples possess qualities common to all service establishments;
  12. From looking at the categories in the section, it is more appropriate and natural to think of service establishments as providing a service rather than a good even though the delivery of the goods may be incidental to the furnishing of the service. Accordingly, service establishments under this section offer services to the public in exchange for a fee, i.e. monetary compensation;
  13. Every establishment listed in the section provides the public a service in the form of expertise or specialized equipment. Further, the list of services are intended for the public’s use in achieving a desired end, such as a haircut, clean clothes, legal advice etc.;
  14. Using the principles of statutory construction, the term “service establishment,” is a statutory term with a distinct meaning from the dictionary definitions of its component words;
  15. Utilizing the statutory canons of constructions leads to the conclusion that for a place of public accommodation to be a service establishment, the entity must offer the public a service in the form of expertise or specialized equipment for use in achieving some desired end of the public in exchange for compensation. The plasma centers do not meet this definition because they do not receive a fee from members of the public in exchange for any services that they furnish. Instead, they give members of the public a fee for tendering to them the commodity in the form of plasma or for performing a service of donating plasma;
  16. Unlike the service establishments found in the section, the defendant did not receive money from the plaintiff in exchange for services, but rather it paid the plaintiff instead;
  17. Plasma centers do not provide services for the public’s use in achieving the desired end, rather they provide them for the plasma centers use in achieving the desired end. Every service establishment listed in the section offers members of the public a service for use in achieving an end desired by them and not an end desired by the service establishment;
  18. The statute contemplates the service establishment provide the service to the public in exchange for a fee that it receives, but it does not contemplate that a member of the public will receive from the service establishment both the service and the fee. That is, under this section, the fee cannot be the desired end the public is seeking to achieve from the plasma donation center because the statute contemplates that the service establishment receive the fee in exchange for providing the desired end;
  19. Plasma donation centers resemble manufacturers much more than they do the kind of entities customarily providing services to the public under this section. That is, they manufacture a product, plasma. That product is derived from a raw commodity, whole blood, given by donors in exchange for a fee. Thus, plasma donation centers are more like paper mills, a manufacturer, than the other typical business providing services to the public under this section. Further, federal statutes clearly regard plasma donation centers as manufacturers as does the Food and Drug Administration. So, plasma centers may be manufacturers, but they are not service establishments.

IV

Takeaways:

  1. This case is the first of its kind at the Circuit Court level. Both opinions have their strengths and weaknesses, and as a result, I would certainly expect the Circuits to eventually split on this question. Will the Supreme Court take the case before a split in the Circuits presents itself? They don’t usually do that, but it does happen on occasion. Which way would the Supreme Court go? If Justice Scalia was on the Court, there is little doubt in my mind that the dissenting view would prevail. However, he is no longer on the Court, and we have an election coming up. So, it is impossible to predict which way this case will ultimately go. Considering the dissent and how it is written, one wonders whether four Justices would even agree to hear the case as I could see this case being an even split. That is, a reasoning based on canons of statutory construction will, in my opinion, have a great deal of appeal to many Justices on the Supreme Court. That said, perhaps four would agree to hear the case and gamble on what the next Justice would do. Such a gamble would be a huge one because a case turning on interpretation of a statute with statutory canons of construction/legislative history being the critical factors does not fit neatly into a liberal-conservative dynamic.
  2. Since canons of statutory construction have a great deal of appeal to jurists, one wonders if the 10th circuit will not grant a rehearing en banc, assuming one is sought.
  3. How this case ultimately resolves itself depends upon whether legislative history combined with the statutory construction that you don’t read words into a statute that are not there prevails or whether the two canons of statutory construction that are the underpinning of the dissent prevails. It could go either way.
  4. If the case goes forward, direct threat will be a factor. However, the Department of Justice regulations for title II and title III (28 C.F.R. § § 35.139, 208 respectively), unlike the EEOC regulations, do not include threat to self as one of the possibilities.
  5. The manufacturing part of the dissenting opinion leads one to wonder if the dissent isn’t essentially claiming that the plasma centers are a commercial facility per 42 U.S.C. § 12181(2) . Commercial facilities are subject to new construction and alteration requirements but they are not subject to the auxiliary aids and nondiscrimination provisions (see here at discussion of 28 C.F.R. § 36.104).
  6.  Interestingly enough, under either the majority or dissenting opinion, software as a service, which I discuss here, would be a service establishment.

Filed Under: ADA, Final Federal Regulations, Title III Tagged With: 10th circuit, 28 C.F.R. § 35.139, 28 C.F.R. § 36.208, 42 U.S.C. § 12181(7)(F), ADA, canons of statutory construction, commercial facilities, direct threat, ejusdem generis, Levorsen v. Octapharma Plasma Inc., noscitur a sociis, plasma donation, plasma donation center, service establishment, Software as a service, title III

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