Daily Developments in EEO Law
by Paul Mollica (c) 2005
Wednesday, March 30, 2005
Time for another lesson in “always read the statute.” In Nicolaou v. Horizon Media, Inc., No. 03-9186 (2d Cir. Mar. 28, 2005) (available at the Second Circuit website), the plaintiff sued for retaliation under ERISA § 510. In her capacity as Director of Human Resources and fiduciary for the company’s 401(k) plan, she informed company executives — up through the president — of systemic underpayment of employees. For her whistleblowing, she claimed, the company edged her out of her job and eventually dismissed her.
Although the district court dismissed the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim, the Second Circuit reversed. The district court had analogized to the retaliation section of the FLSA § 215(a)(3) and found that participation in an internal inquiry (as opposed to a regulatory inquiry) was not a protected activity. This was error, the panel majority found. Section 510 by its terms was broader than the FLSA.
“[T]he whistleblower provision of FLSA extends protection against retaliation to any person who ‘has filed any complaint or instituted or caused to be instituted any proceeding under or related to’ FLSA. 29 U.S.C. § 215(a)(3). By contrast, Section 510 of ERISA applies to ‘any inquiry or proceeding relating to’ ERISA. 29 U.S.C. § 1140 (emphasis added). We agree with the Secretary of Labor’s assertion here that ‘[whatever level of formality is implied by the term ‘proceeding” in FLSA, the use of the somewhat less formal term ‘inquiry’ in ERISA is indicative of an intent ‘to ensure protection for those involved in the informal gathering of information.’ Congress manifested such an intent when it chose, in drafting Section 510, to conjoin to the term ‘proceeding,’ found in FLSA Section 15(a)(3), the additional term ‘inquiry,’ which is not constrained in Section 15(a)(3) and which has a distinct definition. . . . The ‘informal gathering of information’ thus falls within the plain meaning of ‘inquiry,’ and we need go no further to conclude that it is protected by Section 510.”
Which goes to show that these small quirks of drafting can sometimes rescue a claim. The concurring judge, incidently, would have found that as a fiduciary, plaintiff was if anything obliged (on pain of personal liability) to proceed with her complaints to management, and that ERISA § 510 coverage kicked in as soon as she began to investigate the alleged misconduct.
Tuesday, March 29, 2005
Though the Federal Rules of Civil Procedure provide for discretionary interlocutory review of class certification decisions, by Rule 23(f), no such avenue exists for appealing certification of opt-in collective actions under the FLSA, the ADEA and the Equal Pay Act. The Fifth Circuit so held in Baldridge vs. SBC Communications Inc, No 04-10819 (5th Cir. Mar. 28, 2005), an appeal from an FLSA collective action taken by the employer. Citing Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978), the panel rejected resort to the collateral order doctrine, because the certification decision does not conclusively determine the disputed question. The court also rejected any analogy to the policies animating Rule 23(f) to allow interlocutory appeals of class certification in cases where the potential “costs and pressures on the defendant to settle” tipped the balance. “Although such policy concerns may be proper for legislative attention, they are irrelevant to the issue of whether the Cohen collateral order exception applies.”
Monday, March 28, 2005
The Eighth Circuit published a per curiam opinion in Torlowei v. Target, No. 04-1635 (8th Cir. Mar. 25, 2005) solely to reinforce its rejection/nullification of Desert Palace v. Costa as a framework for analyzing Title VII cases at summary judgment. The opinion affirms the analysis of the district court (indeed, doesn’t discuss the facts of the case at all), but cites the intervening decision in Griffith v. City of Des Moines, 387 F.3d 733, 735-36 (8th Cir. 2004) and reinforces its holding: “We stressed that Desert Palace is applicable to post-trial jury instructions, and not to the analysis performed at summary judgment. And we concluded that any language in Desert Palace that may seem to point to a change in the McDonnell Douglas framework refers only to the traditional understanding that direct evidence-evidence, circumstantial or otherwise, that shows a strong causal connection between discriminatory animus and the adverse employment action-is another method of defeating a defendant’s summary judgment motion.”
No fan am I of mixed-motives, but the Eighth Circuit’s analysis seems askew to me. If a Rule 56 motion simply asks (at a pre-trial stage) the same question posed by a Rule 50 motion (post-trial), as the Supreme Court reaffirmed in Reeves, why should the mode of analysis differ?
Thursday, March 24, 2005
Certain to draw notice in the popular press, the Sixth Circuit for the second time in the space of a year recognized the Title VII rights of transsexuals to be free from sex stereotyping in employment. In Barnes v. City of Cincinnati, No. 03-4110 (6th Cir. Mar. 22, 2005), backed by last year’s decision in Smith v. City of Salem, Ohio, 378 F.3d 566 (6th Cir. 2004), affirmed a jury verdict (and award of $320,511 in back and front pay, and compensatory damages) in a termination case involving a pre-operative male-to-femal transsexual who was flunked out of a probationary program by supervisors who thought him lacking in “command presence” and otherwise unsetious because came to work wearing cosmetics. As with the Salazar case described yesterday, only more overt, the evidence revealed a plan by his superiors to over scrutinize his work and assure his failure. The opinion systematically turned back objections to the sufficiency of evidence, jury instructions, and admission of evidence
Less likely to obtain notice, but certainly interesting to me: $527,888 in attorneys fees, approving a 1.75 multiplier for the “novelty and difficulty” of the case and the extraordinary result. Federal courts seldom ever award such multipliers any more, and even the panel concurred that 1.75 was at the “upper range of what we consider ‘reasonable’.” But it’s the tip of the hat to a duo of lawyers who accomplished the near-impossible, without the benefit of any controlling authority to aid them.
Wednesday, March 23, 2005
Here’s a heartening case for employees who’ve felt that the promotion track was stacked against them. In Salazar v. Washington Metropolitan Area Transit Authority, No. 03-7174 (D.C. Cir. Mar. 22, 2005), the panel majority sent a summary judgment case back for trial based on evidence that the promotion track from non-supervisor to entry-level supervisor had been rigged against a Peruvian-born Latino employee. Salazar, an employee making a fifth try to get promoted to supervisor — Metro Center supervisor — placed a request with the agency that “Gary Lewis, the Superintendent for Plant Equipment Maintenance, . . . not select the members of the interview panel. According to Salazar, Lewis, who had selected the panel members for at least some of Salazar’s prior promotion denials, discriminated against Latinos.”
The agency abided by Salazar’s request in round one of the testing. Salazar passed the first round, but in round two (involving Salazar and four other candidates) a fourth panelist appeared unannounced to interrogate the finalists:
“Expecting an interview with the three men selected by Thomas, Salazar was surprised to find a fourth man, Buddy Jaggie, serving as chair. Salazar’s surprise stemmed not only from Thomas’s promise of just three panelists, but also from the fact that ‘all the panels I had interviewed with in the past years had been made up of three members, not four.’ More significantly, Jaggie, who held the post of Assistant Superintendent for Plant Maintenance, was Lewis’s assistant as well as his close friend. Salazar distrusted Jaggie not just because of Jaggie’s relationship with Lewis but also because,while working towards the Mechanic AA position years ago, Salazar had consistently failed a test administered by Jaggie, passing only after filing a grievance to obtain outside review.”
Indeed, not only did Jaggie appear with the panel, but he prepared the questions, assigned points to the answers and chaired the questioning. Jaggie admitted during discovery that “he was ‘probably’ appointed to the panel by Lewis” and consulted with Lewis about the interview process.
After round two, Salazar slipped to fourth in the ratings overall. The job was not offered to Salazar, although the top scoring candidate himself never became a Metro Center supervisor, but was parceled out to Greenbelt, Maryland to take what apparently was a lesser supervisory job.
The agency advanced as its legitimate, non-discriminatory explanation that “[m]ore qualified candidates were selected for the position through a fairly administered selection process.” But the panel majority isolated record facts that a jury could interpret as probative of discrimination: (1) “the fact that Lewis,” by engineering Jaggie’s presence on the panel, “placed himself squarely at the center of a process designed to exclude him”; (2) that Jaggie decided how to examine and score the candidates; and (3) the successful candidate never received the job at Metro Center. “From this, we think a reasonable jury could infer that Tucker was unsuited for the Metro Center job and that the selection process was geared not to finding the best person for the position, but rather to keeping Salazar from advancing.” Moreover, given that the employer offered no explanation for the anomalies other than the “fair process” argument, the jury could find the explanation pretextual and probative of discrimination.
Overall, the panel majority took seriously the injunction of interpreting disputed facts and inferences in favor of the non-movant, an increasingly rare indulgence in the direction of jury trials and due process.
Tuesday, March 22, 2005
Another arbitration case, this one from the franchise arena, poses the following issue under the Federal Arbitration Act: ” who determines whether an agreement containing an arbitration clause is unconscionable: the arbitrator or the court.” The court’s sides with turning the issue over the arbitrator — a startling development in a circuit that has issued a number of significant unconscionability decisions.
In Nagrampa v. MailCoups Inc., No. 03-15955 (9th Cir. Mar 21, 2005), a franchisor obtained an order compelling arbitration, over the franchisee’s objection that the arbitration clause (part of an overall franchise agreement) was an adhesion contract. Rather than launch into the merits, the court begins by observing that under Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967), “where an agreement includes an arbitration clause, a party’s claim that it has been fraudulently induced to enter into that agreement must be referred to an arbitrator unless the claim pertains specifically to the making of the arbitration clause.”
In an uncharacteristically brief opinion (for this circuit, anyway), the panel opinion (signed by Judge O’Scannlain) then surveyed several of its recent precedents, and distinguished them — finding either that the opinions did not consider the issue of arbitrability, or else involved stand-alone arbitration agreements. It also cited authority from the Second, Fifth and Sixth Circuits which consigned unconscionability to the arbitrator.
Given that this is the Ninth Circuit, I suspect that this may not be the last word on the issue.
Monday, March 21, 2005
Happy Spring 2005! In Marie v. Allied Home Mortgage Corp., No. 04-1403 (1st Cir. Mar. 16, 2005) , the First Circuit considers who decides — between the arbitrator and the court — whether an employer enforcing a mandatory arbitration policy has waived access to that forum by delaying its demand. There is presently a split in the circuits on this issue, with the Eighth Circuit vesting the duty in the arbitrator, and the Fifth Circuit in the court.
Applying the standards laid down in Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002), and Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003). the First Circuit joins the Fifth and holds that the decision belongs to the court. The panel found that the Supreme Court roughly divided responsibility along substantive-procedural lines, with the former being the province of the court. Thus while the issue of how to interpret the running of a contractual limitations period fell on the procedural side of the line (and thus to the arbitrator), the waiver issue (the court deems) tends closer to the question of what controversies the parties intended to submit to arbitration.
Reaching the merits, the court finds that the employer’s failure to make a demand until after the completion of EEOC and state administrative proceedings, and the filing of a civil action, did not waive arbitration: “an employer cannot waive its right to arbitration by failing to raise the arbitration defense with the EEOC or by failing to initiate arbitration during the pendency of the EEOC proceedings. The employer’s failure to initiate arbitration during the pendency of such proceedings merely reflects a desire to avoid inefficiency and is not action inconsistent with a desire to arbitrate.”
Wednesday, March 16, 2005
If a written notice of termination is later withdrawn, could its very filing (even temporarily) still constitute an adverse employment action under Title VII and the ADEA? Possibly, holds Ezell v. Potter, No. 03-4099 (7th Cir. Mar. 16, 2005). The Seventh Circuit vacated summary judgment in a case where the Postal Service served a “Letter of Removal” on an employee, who it supposedly believed had committed an overtime violation. The employee grieved the punishment, won reinstatement and had the letter knocked down to a “Letter of Warning.”
On summary judgment and appeal, the Postal Service contended that the original “Letter of Removal” was not an “adverse employment action,” because “it was withdrawn before it ever took effect as a result of Ezell’s challenge to his termination through the union grievance procedure.” But the Seventh Circuit disagreed:
“The Removal Letter, however, did constitute an adverse employment action even though it was later withdrawn. See Molnar v. Booth, 229 F.3d 593, 600-01 (7th Cir. 2000). In Molnar, we found that a career-ending negative evaluation was an adverse employment action even though the evaluation was reversed six months later and the plaintiff’s career was put back on track. Molnar, 229 F.3d at 600. We reasoned that to hold otherwise would allow harassing supervisors to demote employees who rejected their advances with impunity, so long as they later reversed the demotion and restored the employees to their former positions. Molnar, 229 F.3d at 600-01. We noted that the short duration of the adverse action was naturally relevant to the degree of damage the plaintiff suffered, and that principle would apply here as well. The Removal Letter damaged Ezell from the time it was issued until it was reversed through the union grievance process. Ezell’s damages may be relatively modest but the Removal Letter constituted an adverse employment action.”
The court also took issue with the district court’s starchy treatment of pretext analysis under McDonnell Douglas. The defendant argued that when plaintiff compared himself to “similarly situated” employees accused of misconduct, he was required to identify employees who committed the same infraction he was charged with (manipulating the time records), and not other kinds of misconduct. (Plaintiff’s comparators had been accused of a different — though serious — offense, misplacing mail.) But the panel held that “other employees must have engaged in similar — not identical — conduct to qualify as similarly situated.”
Monday, March 14, 2005
Judge Posner of the Seventh Circuit has once again laid pen to paper to explain to everyone the method for proving causation in a retaliation case. In Hasan v. U.S. Department of Labor, No. 04-3030 (7th Cir. Mar. 14, 2005) , the Seventh Circuit corralled three otherwise unrelated claims (two employment cases and one prisoner case) and set out the following explanation of what the law means by a “motivating factor”:
“But what exactly is a “motivating factor”? The cases, beginning with Mt. Healthy, tend to treat the term as if it were self-evident. Perhaps it is, but some amplification may be helpful.
“A motivating factor is a factor that weighs in the defendant’s decision to take the action complained of-in other words, it is a consideration present to his mind that favors, that pushes him toward, the action. See Boyd v. Illinois State Police, 384 F.3d 888, 895 (7th Cir. 2004); Ostad v. Oregon Health Sciences University, 327 F.3d 876, 884-85 (9th Cir. 2003); Merkle v. Upper Dublin School Dist., 211 F.3d 782, 795 (3d Cir. 2000). It is a, not necessarily the, reason that he takes the action. Its precise weight in his decision is not important.
“We can distinguish three cases: (1) The improper reason, such as the plaintiff’s having exercised his right of free speech, weighed so heavily in the defendant’s mind that he would have punished the plaintiff even if there was no legitimate reason to do so. (2) The improper reason may have tipped the balance: the defendant had a legitimate reason to punish the plaintiff, but it was too weak a one to have triggered the action; it was the additional, improper reason that made the difference. (3) The improper reason may have been present to the defendant’s mind as something favoring the action he took, but have weighed so lightly in comparison with other factors that it exerted no influence at all on his decision.
“In any of these cases, once having demonstrated the presence of an improper motive the plaintiff will have made out his prima facie case of causation; that is Mt. Healthy. In the second case, the defendant has no rebuttal: the plaintiff has proved that had it not been for the improper motive, the defendant would not have taken the action against the plaintiff. In the third case, the defendant has a good rebuttal: he would for sure have acted even if he had not had the improper motive. In the first case, the defendant may have a good rebuttal, for he may be able to show that he had a legitimate reason for the action that was so compelling that it would have caused him to take the same action even if he had not harbored the improper motive. Nieves v. Board of Education, 297 F.3d 690, 693 (7th Cir. 2002); Gooden v. Neal, 17 F.3d 925 (7th Cir. 1994); Pennington v. City of Huntsville, 261 F.3d 1262, 1268-69 (11th Cir. 2001); Matima v. Celli, 228 F.3d 68, 80-81 (2d Cir. 2000). If he can prove this, he is not liable despite his impure heart.”
Unsurprisingly, all three plaintiffs/petitioners lost.
Friday, March 11, 2005
Lay people commonly assume that it violates federal law for an employer to inquire into plans to have children and for child care. Here comes another case to explode that myth: Kocak v. Community Health Partners of Ohio, No. 03-4650 (6th Cir. Mar. 11, 2005). Plaintiff, a nurse, tried to return to work after suffering complications with her pregnancy. The summary judgment record included evidence that “(1) that [manager] Finnegan told her at some point that [manager] Meyer did not want to hire her because of the scheduling difficulties attending her prior pregnancy; and (2) that Finnegan asked her whether she was pregnant or intended on having more children.”
The court cleared up a misunderstanding — caused by some prior dicta in the circuit case law — about the Pregnancy Discrimination Act (rejecting an argument that an employee must actually be pregnant to fall within the Act’s ambit). But it went on to hold that the employer’s inquiries were not direct evidence of discriminatory intent (the questions were prudent, given plaintiff’s past attendance deficiencies), and that (in any case) the employer had made an overwhelming not rehire the employee (co-workers found her “difficult to work with, unreliable, and not a ‘team worker'”).
Wednesday, March 9, 2005
In Clark v. UPS, Inc., No. 03-6393 (6th Cir. Mar. 9, 2005), the panel majority does a convincing job of showing just how far the Faragher/Ellerth decisions have transformed the law of the workplace.
This hostile work environment case was decided on summary judgment. The allegations by two women (Clark and Knoop) that their manager (Brock) harassed them are distressingly familiar (e.g., idiotic sexual jokes and taunts, gesturing, grabbing). And while the company maintained a formal anti-harassment policy, a 800 complaint number and a promise of confidentiality, the women did not avail themselves of that procedure. One of the women, though, complained often to other supervisors, who in turn (even as witness to some of the events) expressed indifference. The district court found that the company established its Faragher/Ellerth defense as a matter of law.
The Sixth Circuit reversed as to one plaintiff’s (Clark’s) claim. (The case proceeded under the Kentucky Civil Rights Act, but the analysis was identical to Title VII.) The panel majority opinion (signed by Judge Cole) found genuine issues of material fact presented by the first prong of the affirmative defense (that the company took reasonable steps to prevent and correct harassment). While the court found that the UPS policy was (at least on paper) a reasonable policy, there was a real question whether the supervisors dropped the ball in enforcing it. The court stated the following four factors for an effective policy:
“an effective policy should at least: (1) require supervisors to report incidents of sexual harassment, see Varner v. Nat’l Supermarkets, Inc., 94 F.3d 1209, 1214 (8th Cir. 1996); (2) permit both informal and formal complaints of harassment to be made, Wilson v. Tulsa Junior Coll., 164 F.3d 534, 541 (10th Cir. 1998); (3) provide a mechanism for bypassing a harassing supervisor when making a complaint, Faragher, 524 U.S. at 808; and (4) and provide for training regarding the policy, Wilson , 164 F.3d at 541.”
Here’s how the court assayed the record:
“The effectiveness of an employer’s sexual harassment policy depends upon the effectiveness of those who are designated to implement it. As an initial matter, appellees argue that the supervisors who witnessed Brock’s behavior had no duty to take corrective or preventative action even if they did witness harassment by Brock, because none of them was his superior. The appellees argue that the low- to mid-level supervisors who witnessed the interactions between Brock, Clark, and Knoop had no duty to convey their knowledge to UPS, because these supervisors were not high enough in the company hierarchy and had no authority to control Brock. This argument might have merit but for the fact that UPS itself has, through its sexual harassment policy, placed a duty on all supervisors and managers to ‘report incidents of sexual harassment to the appropriate management people.'”
The panel majority then found that Clark (though not Knoop) established a triable issue of fact about a hostile work environment, finding that 17 incidents (including a hand-grabbing incident and Brock tossing a vibrating pager into Clark’s lap, with a lewd comment) were enough.
Monday, March 7, 2005
Although it would seem like playing with fire to me, a Title VII litigant may apparently allege a claim of retaliation that occurs after a lawsuit is filed in a separate action — even after unsuccessfully moving to amend the complaint in the first action — without suffering claim preclusion. At least, that is the holding of the Second Circuit in Legnani v. Alitalia Linee Aeree Italiane, S. P. A. (Alitalia Airlines), No. 03-9022 (2d Cir. Mar. 4, 2005) (available on Second Circuit website). The only conditions would appear to be (1) that the retaliatory act occur after the first case was filed, and (2) that the judge in the first case not rule on the merits of the retaliation claim. Held the court, ” Legnani did not have an obligation to avail herself of the opportunity in her first action to pursue a remedy for the alleged retaliatory discharge, because her retaliatory discharge claim arose entirely out of conduct postdating the filing of her first action.”
Friday, March 4, 2005
The Ninth Circuit today reverses summary judgment in a case brought under 42 U.S.C. § 12112(d) (and its California state counterpart) requiring that only employees who receive bona fide job offers be subject to a second-stage medical screening. The EEOC Guideline on this section explains that the requirement allows applicants to determine whether they were “rejected because of disability, or because of insufficient skills or experience or a bad report from a reference.” Moreover, this two-stage structure allows applicants who intend to keep their medical conditions private be allowed to do so until a solid offer is made.
In Leonel v. American Airlines, Inc., No. 03-15890 (9th Cir. Mar. 4, 2005), the defendant (according to the summary judgment record) made what it termed “conditional offers” to three candidates who were HIV positive. As the Ninth Circuit noted, though, it blundered under this section of the ADA.
“American’s offers to the appellants here were by their terms contingent not just on the appellants successfully completing the medical component of the hiring process but also on the completion of a critical non-medical component: undergoing background checks, including employment verification and criminal history checks. . . . Thus the offers were not real, the medical examination process was premature and American cannot penalize the appellants for failing to disclose their HIV-positive status – unless the company can establish that it could not reasonably have completed the background checks before subjecting the appellants to medical examinations and questioning. It has not done so.”
The case was remanded to determine whether the defendant could “demonstrate it could not reasonably have [completed the background checks] before initiating the medical examination process.”