Daily Developments in EEO Law
by Paul Mollica (c) 2006
Monday, February 27, 2006
Arbaugh v. Y&H Corp. d/b/a The Moonlight Cafe, No. 04-944 (U.S. S. Ct. Feb. 22, 2006) decides unanimously that the 15-employee minimum for coverage under Title VII is an element of proof, rather than a jurisdictional prerequisite, and reverses a post-judgment dismissal of that case. Transcending the Title VII issue, the Court states that only if Congress "clearly states that a threshold limitation on a statute's scope shall count as jurisdictional" should a court treat it as attending to subject-matter jurisdiction.
So why does the Eleventh Circuit, two days later, issue a decision which presents as a jurisdictional issue as whether, under 42 U.S.C. § 2000e-16(c), a federal employee "failed to exhaust his administrative remedies when he filed his complaint in the district court fewer than 180 days after he had filed an appeal with the Equal Employment Opportunity Commission"? Brown v. Snow, No. 04-15095 (11th Cir. Feb. 24, 2006). That section, under the "bright line" test adopted in Arbaugh, is not expressly jurisdictional. Well, probably because no one at the Eleventh Circuit made the connection in time to remove the opinion from the printer's queue. Also, because in the end it made no difference in the outcome. The court found that the employee satisfied exhaustion, despite filing his complaint 35 days before the minimum 180-day waiting period under this section elapsed. Also because, in the end, the court wound up affirming summary judgment on the merits (Title VII harassment and retaliation) anyway.
Friday, February 24, 2006
Reed v. Mineta, No. 05-1057 (10th Cir. Feb. 23, 2006) addresses the arcane but all-important question of when the period for prejudgment interest begins to run on a back pay award. The ADEA plaintiff prevailed at trial, with an jury advisory award of $248,356 back pay adopted by the district court. The district court at first declined to award prejudgment interest at all, but the Tenth Circuit (on the employee's appeal) originally remanded the case in an unpublished decision for findings.
On remand, the district court awarded $168,469.97 in interest (rate set at 9%), starting from the day of his termination. But on the second appeal by the employer, the agency wins a reversal and remand for yet another run at the remedy. The district court's error -- allowing the interest to run as if the employee won the entire back pay award at the time of his termination. As the panel observed, "[t]he purpose of making discrimination victims whole is limited, however, by recognition that prejudgment interest does not accrue until the victim actually sustains monetary injury. . . .
"The district court calculated prejudgment interest on the entire back pay award starting from the date of Mr. Reed's termination, July 28, 1995. We recognize that Mr. Reed was indeed injured on the date of his termination. He did not, however, actually suffer all $248,356 of monetary injury at that time. Rather, his monetary injuries were incrementally inflicted from the date of his termination through entry of judgment as each pay period passed and Mr. Reed went unpaid. Accordingly, prejudgment interest should have been calculated to coincide therewith. For example, the component of prejudgment interest attributable to the $75,267 in wages lost during 2000 accrues from the date when each portion of that amount would have been due and owing to Mr. Reed in 2000 had he not been the victim of unlawful discrimination. It does not accrue as of July 28, 1995."
It thus commends the following formula: "One method of calculating prejudgment interest here, with the aid of a computerized spreadsheet, is to calculate the future value of each payment (i.e., the amount that Mr. Reed would have been paid bi-weekly) from the date each payment would have been owing to Mr. Reed to the date of judgment and then subtract the original value of each payment. By calculating the future value of a payment and then subtracting the original value of that payment, one is left with only the interest component. The sum of the interest components from each of the foregoing calculations is the total prejudgment interest amount.
"SIGMA Pmt1 [(1+i)n -1] + Pmt2 [(1+i)n-1 -1] + Pmt3 [(1+i)n-2-1] + . . .
"Pmt = Amount Mr. Reed would have been paid (i.e., bi-weekly)
"i = Interest Rate Per Period
"n = Number of Compounding Periods"
The case was again remanded, and I am left to wonder how much taxpayer money was thrown at this appeal to cut the award just a bit more.
Wednesday, February 22, 2006
I find myself today paying praise to a decision reversing an ADEA jury trial verdict for a plaintiff (and remand for a new trial) here in my home circuit: Mattenson v. Baxter Healthcare, No. 04-4270 (7th Cir. Feb. 21, 2006) . The judge, the panel holds, committed a host of errors, including misinstructing the jury, unduly truncating the defense case and admitting attorney work-product which in the jury's hands must have looked suspiciously like an admission of liability.
But I am the panel's debt, as a plaintiff's attorney, for straightening out the self-perpetuating error in judicial opinions about "stray remarks," more an epithet than a rule. Writes Judge Posner:
"Language in some judicial opinions suggests that prejudicial remarks are always to be excluded unless they are made by someone who had input into the decision to terminate (or take other challenged adverse employment action against) the plaintiff. . . .The admissibility of 'stray remarks,' as the cases call them, is governed by Rule 403 of the evidence rules, which establishes a standard rather than a rule-and a standard that tilts in favor of admissibility; the probative value of the evidence must not merely be outweighed, it must be substantially outweighed, by its negative consequences, to be excludable. And that will depend on context-the circumstances in which the remarks were made, such as the number of similar remarks, when they were made, and by whom and to whom they were made. Cummings v. Standard Register Co., [265 F.3d 56, 63 (1st Cir. 2001)]; Ercegovich v. Good year Tire & Rubber Co., 154 F.3d 344, 356-57 (6th Cir. 1998)."
The cases cited by the opinion both favored admissibility. I am past the point of believing that a single well-crafted judicial opinion will root out a generation of misdirected chatter on this subject, but it is useful and heartening to see FRE403 invoked as the standard. It would make admissibility of such bigoted remarks by managers the default circumstance.
Tuesday, February 21, 2006
A surprise decision from the Supreme Court on a Title VII case, and doubly sweet because it vindicates employees on a two recurring issues. Ash v. Tyson Foods, Inc., No. 05-379 (U.S. S. Ct. Feb. 21, 2006). Two plaintiffs won a jury trial in Alabama in a racial promotion case, only to have their victory steamrolled -- first by the district court (which granted Rule 50 JMOL and, in the alternative, Rule 59 new trial relief to the employer), then once over lightly by the Eleventh Circuit (which reversed JMOL for one plaintiff, but remanded for a new trial). The Supreme Court grants cert, vacates the judgment and, in a per curiam opinion, fixes the law incrementally.
First, the Court takes on the use of coded slurs. Well, here it was hardly coded (except to the Eleventh Circuit panel) -- the use of the word "boy" to refer a grown, African-American man. Is there anyone left in the U.S.A. who doesn't get this? The panel held that the use of the word "boy," without racial modification, was "not evidence of discrimination." Here's the unanimous Court's rejoinder: "Although it is true the disputed word will not always be evidence of racial animus, it does not follow that the term, standing alone, is always benign. The speaker's meaning may depend on various factors including context, inflection, tone of voice, local custom, and historical usage. Insofar as the Court of Appeals held that modifiers or qualifications are necessary in all instances to render the disputed term probative of bias, the court's decision is erroneous." This is very handy language for employees to recycle in all kinds of situations, including harassment, where the cold words on the transcript page demand resort to an innuendo.
The second issue is the "slaps you in the face" standard that some more conservative courts used for evaluating the relative qualifications of employees in a pretext case. To be evidence of discrimination, this standard demanded that qualifications may be "so widely disparate that no reasonable employer would have made the same decision," and, therefore evidence of pretext, but disparities in qualifications must be "so apparent as virtually to jump off the page and slap you in the face." Deines v. Texas Dep't of Protective & Regulatory Servs., 164 F.3d 277, 280-82 (5th Cir.1999). Several courts, including the Eleventh Circuit, used the same or a similar formula. See, e.g., Jaramillo v. Colorado Judicial Dept., 427 F.3d 1303, 1309 (10th Cir. 2005); Millbrook v. IBP, Inc., 280 F.3d 1169, 1179 (7th Cir.2002); Cofield v. Goldkist, Inc., 267 F.3d 1264, 1268 (11th Cir.2001).
The Supreme Court rejects this articulation, observing that it has several times supported the use of relative qualifications as evidence of pretext (in Patterson, Burdine, and Reeves): "The visual image of words jumping off the page to slap you (presumably a court) in the face is unhelpful and imprecise as an elaboration of the standard for inferring pretext from superior qualifications. . . .This is not the occasion to define more precisely what standard should govern pretext claims based on superior qualifications. Today's decision, furthermore, should not be read to hold that petitioners' evidence necessarily showed pretext. The District Court concluded otherwise. It suffices to say here that some formulation other than the test the Court of Appeals articulated in this case would better ensure that trial courts reach consistent results."
So some other standard must be adopted, the blanks to be filled in later. But no more slaps in the face, guys, okay?
Foot note point: This was the first employment discrimination decision in which Chief Justice Roberts and Associate Justice Alito participated. So far, so good.
Monday, February 20, 2006
Courts avoid, on First Amendment grounds, the application of anti-discrimination statutes to religious institutions where the complaining employee performs services akin to ministry, spiritual counseling or faith-propagation. This court-made rule, dubbed the "ministerial exception," is widely accepted, although it recently sustained a dent in Elvig v. Calvin Presbyterian Church, 375 F.3d 951, 94 FEP 206 (9th Cir. 2004) (declining to extend the immunity where the employee claimed to have been sexually harassed). But the constitutional basis of this immunity was undermined by the Supreme Court's decision in Employment Div. v. Smith, 494 U.S. 872 (1990), holding that civil laws of general applicability may be enforced even against religious institutions that claim impairment of free exercise.
In Hankins v. New York Annual Conf. of the United Methodist Church, No. 04-0743 (2d Cir. Feb. 16, 2006), the Second Circuit (at least, the two-judge majority on the panel) blazes a new course, finding the issue -- in an ADEA case -- governed not by the Constitution but by the federal Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. § 2000bb et seq., passed in the wake of Smith. This case, decided upon the complaint, presents the issue in its purest terms. The employee was a minister who was forceably retired under his church's age-70 mandatory retirement policy, He claimed a violation of the ADE and the church moved to dismiss citing the ministerial exception. Judge Winter's opinion for the majority finds the "ministerial exception" an open issue in the circuit.
The continued vitality of the RFRA occupies the bulk of the opinion. While the Supreme Court famously held the act unconstitutional as applied to states by the Supreme Court in City of Boerne v. Flores, 521 U.S. 507 (1997) (on the grounds that it exceeded Congressional authority under section 5 of the Fourteenth Amendment), the panel finds that provisions of RFR applied to the federal government and federal laws remain constitutional and severable from the offending state law provisions. (RFR applies to "all Federal law, and the implementation of that law, whether statutory or otherwise, and whether adopted before or after November 16, 1993." 42 U.S.C. § 2000bb-3(a).) Thus, "[a]s presented in this case, the issue is simply whether Congress had the authority to amend the ADEA to include the RFRA standard." The panel majority holds that it did so, given the wide net of "all Federal law" declared by Congress. (The panel also turns back an Establishment Clause argument against enforcement of RFRA.)
RFRA significantly embraces a qualified -- rather than absolute -- immunity for civil liability for religious practices, holding that an act of Congress may burden religious exercise if "application of the burden to the person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest." Rather than conduct the weighing on RFRA interests itself, however, the panel majority remands the case to the district court for further proceedings
A dissent by Judge Sotomayor fires at the majority's conclusions from several sides. First, she notes that the defendant forfeited any RFRA defense by not raising it in the district court (and, thereafter, by declining to adopt it in supplemental briefing on appeal). Second, she reads RFRA's terms as limited to state action against a church, and not applicable to actions between private parties. Finally, she finds the remand futile, concluding that the ministerial exception survives under federal law, citing NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979) (declining, as a matter of statutory interpretation, to extend the NLRA to a dispute between a church and its school faculty).
Friday, February 17, 2006
A setback for federal employees living in Maryland, Virginia and elsewhere in the Fourth Circuit who have Title VII claims against their agencies: the Court of Appeals ruled en banc and unanimously Thursday in Laber v. Harvey, No. 04-2132 (4th Cir. Feb. 16, 2006) that, under 42 U.S.C. § 2000e-16(c), a federal worker who reaches the end of the EEOC Office of Federal Operations (OFO) administrative process, prevails on liability, but obtains unsatisfactory relief, must either (1) accept the final award as-is, or (2) abandon the award and file a claim in federal district court for de novo proceedings on liability.
The employee here -- who had claims pending in the OFO -- followed the course laid down in Pecker v. Heckler, 801 F.2d 709 (4th Cir. 1986), and Morris v. Rice, 985 F.2d 143 (4th Cir. 1993). These cases allowed a federal employee to file a civil complaint seeking only a trial de novo on relief, without overturning a favorable liability outcome.
"On June 4, 2003, unhappy with the OFO's decision on his religious discrimination claim and anticipating an unfavorable decision on his age discrimination and retaliation claims, Laber filed a pro se complaint in the district court alleging claims of (1) religious discrimination and (2) age discrimination and retaliation. While Laber alleged as background information that the Army had discriminated against him on the basis of religion, his complaint explicitly refrained from seeking a judicial determination of whether the Army had discriminated against him on that basis. (J.A. at 7 ("Plaintiff is not appealing the finding of [religious] discrimination, but seeks additional relief.").) Because Laber believed that the OFO's finding of religious discrimination settled that issue in his favor, he only sought additional backpay, benefits, and attorney's fees and costs because of the religious discrimination."
But the en banc court swept these two authorities by the boards, holding that "trial de novo" under the statute applied to the entire claim, not just the remedy. The circuit thus joins last year's decisions in Scott v. Johannes, 409 F.3d 466, 95 FRP 1551 (D.C. Cir. 2005); Morris v. Rumsfeld, 420 F.3d 287, 16 AD 1852 (3d Cir. 2005); and Ellis v. England, 432 F.3d 1321, 17 A.D. Cases 703 (11th Cir. 2005), likewise concluding against jurisdiction for relief only.
The only aspect of the decision that drew dissenting views was the court's decision to allow the plaintiff to return to federal district court to amend his complaint post-judgment to add his religious discrimination claim. (The Fourth Circuit affirmed summary judgment on the merits of the age discrimination and retaliation claims.) The majority held under Fed. R. Civ. P. 15(a) that the district court abused its discretion by not allowing the plaintiff to amend, in light of the employee's good faith reliance on Pecker and Morris, his diligence in so moving, the absence of prejudice to the agency, and the absence of futility (because the limitations period argument was waived by the employer). The two dissenting judges found the claim jurisdictionally barred by the employee's decision to initially accept the administrative award.
Wednesday, February 15, 2006
State law often confers rights on employees over and above what federal law provides. In Oklahoma, for instance, the state legislature in 2004 extended the right to carry firearms into the workplace (under lock and key, in a vehicle), after a spate of publicity about private employers who declared no-gun policies on their premises. Unfortunately for this group of plaintiffs, this legislation came a bit too late to do them any good. Bastible v. Weyerhaeuser Company, No. 05-7037 (10th Cir. Feb. 13, 2006).
The appeal concerned three related cases (removed, not unexpectedly, from state court) challenging different employers' rules barring possession of firearms. For instance, Weyerhaeuser banned "the possession or carrying of firearms or other weapons, explicitly or concealed, by anyone within the work environment . . ., including vehicles on company property, is STRICTLY PROHIBITED," including "adjacent parking areas." The employer -- concerned about possible illegal drug use at the plant -- allowed the local sherriff's office to conduct searches in its parking lot, using dogs to sniff for narcotics (although record suggested that guns might have also been a target). During one of these searches, the plaintiff's pistol turned up, leading to his immediate termination. Other employees were snared in the same dragnet, several of whom also became plaintiffs to get their jobs back.
The employees' main prop on appeal was the 2004 amendment to the state's firearms laws, the "Self-Defense Act," providing that "no person, property owner, tenant, employer, or business entity shall be permitted to establish any policy or rule that has the effect of prohibiting any person, except a convicted felon, from transporting and storing firearms in a locked vehicle on any property set aside for any vehicle." Previously, the law had expressly allowed business owners to bar weapons from their facilities. The employees argued that either the 2004 law was retroactive, or else the predecessor law violated Oklahoma's constitutional right to keep and bear arms.
But the Tenth Circuit turned this argument back, contending that standing state judicial pronouncements and legislation clearly supported the employers' ban when the searches took place. "In our view, § 1290.22 of the Self-Defense Act, prior to its amendment in 2004, is an example of the kind of reasonable regulation of firearms contemplated by those statements. Weyco was acting under the authority of that section when it applied its no-firearms policy to plaintiffs' vehicles." (The plaintiffs also advanced a panoply of state tort and constitutional law challenges, all rejected. For good measure, the panel added, "Plaintiffs' briefs are disorganized, rambling and at times virtually incoherent. We have endeavored to derive from those briefs the contours of plaintiffs' arguments.")
Monday, February 13, 2006
The Seventh Circuit dresses down a judge who apparently misapprehended Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002), and demanded heightened pleading in a routine Title VII disparate treatment case -- a long-standing bugaboo in this Court of Appeals. Kolupa v. Roselle Park Dist., No. 05-2925 (7th Cir. Feb. 10, 2006).
The panel opinion leads off with this summary: "the district judge dismissed [plaintiff's] complaint under Fed. R. Civ. P. 12(b)(6), ruling that he had not stated a claim on which relief may be granted. 2005 U.S. Dist. LEXIS 13599 (N.D. Ill. Apr. 28, 2005). That disposition reflects a misunderstanding of what a complaint must contain." It observed that "the district court dismissed Kolupa's complaint on the same ground that Swierkiewicz had disapproved."
The panel also criticized the judge for jumbling Rule 12 and Rule 56 standards when he struck exhibits to the complaint:
"The judge did not give any reason for this decision, and it is hard to see one; the documents are not alleged to be 'redundant, immaterial, impertinent, or scandalous matter.' Fed. R. Civ. P. 12(f) .The district judge seems to have assumed that papers attached to a complaint must satisfy the requirements for evidence at the summary-judgment stage. Indeed, the whole course of proceedings in the district court suggests that the judge confused Rule 12(b) with Rule 56. But no matter. The materials are not essential to the complaint's sufficiency. "
The panel wrote that upon a motion for summary judgment, the complaint exhibits (once properly authenticated) may be reconsidered.
Frustrating though the result must have been to the defense, the employee's reward for winning the appeal will be to return to the same judge for further proceedings. It's hard to see in the long run how that can be good news for the plaintiff's team.
Friday, February 10, 2006
Still in D.C.!
The Seventh Circuit dropped a blockbuster opinion years back, EEOC v. Pipefitters Local 597, 334 F.3d 656 (7th Cir. 2003), that tossed out a bench verdict against a union under Title VII for failing to take affirmative steps to clean up race harassment at a worksite.
Yesterday, another panel of the court also reversed a bench verdict in a Title VII race discrimination case against a union. Maalik v. Int'l Union of Elevator Constructors, Local 2, No. 05-2355 (7th Cir. Feb. 9, 2006). But this time, the employee carried home the trophy. Ms. Maalik, a black woman helper, poked along at 70% of the pay of a mechanic. She was unable to get mechanics' permit, though, because none of master mechanics would take a step to train her. Complaints to the union went nowhere. At trial on her Title VII claim, though the judge held that while plaintiff was denied training because she is a black woman, the court entered judgment for the defendant because it believed Pipefitters barred liability against the union for inactivity alone.
But the panel held that in the arena of training, Title VII provides a section specially applicable against unions, section 703(d), 42 U.S.C. §2000e-2(d). Moreover, passivity in the face of the mechanics' intentional discrimination was actionable: "Local 2 may not have abetted the mechanics' discriminatory refusal to train Maalik, but it made a conscious decision to do nothing, thus allowing the discriminators to prevail. It did not use intra-union remedies such as fines, suspension, or expulsion, nor did it grant Maalik a mechanic's permit to make her whole and acknowledge the skills she had been able to accumulate through work as a helper and classroom study. It issued mechanic's permits to white men who were otherwise identically situated while leaving Maalik behind." The panel reversed judgment or ordered entry of a remedy for plaintiff on remand.
For the second day in a row, hooray for the ordinary employee who wins justice on appeal.
Thursday, February 9, 2006
I've been on panels at back-to-back conferences this week in Washington, DC, with two days to go. (I'm on tomorrow at 3 pm at the Georgetown University Law Center for ALI-ABA.) Fortunately, it's also been a slow week in the EEO field.
Here's a nice tidy win for the little guy: Ledbetter v. Alltel Corporate Services, No. 04-4807 (8th Cir. Feb. 7, 2006) . The employer appealed a bench verdict for an African-American employee ($14,421.91 in backpay, $22,000 in compensatory damages, and costs and attorney's fees) who claimed race discrimination.
Ledbetter, the survivor of a telecom shakeout, assumed the title of "Acting" Manager of document services. Understandably, he was anxious to know when he would get the permanent title and compensation for the extra work that he took on with the new job. The process took 22 months, and was not retroactive to his promotion date. Meanwhile, white managers at the company pulled down better salaries. The judge found that Ledbetter suffered delay of his reclassification and a raise, in violation of Title VII and section 1981.
As is often the case, the employer's counsel indiscriminately threw every argument it could imagine into the appeal brief. Characteristically, it argued that the employee didn't suffer an "adverse employment action," but the panel found no clear error on this finding:
"While ACS argues that Ledbetter suffered no material disadvantage as 'acting' manager, the district court found that he undertook new responsibilities without additional pay, which constituted an adverse employment action. Moreover, the district court credited Ledbetter's testimony that he readily assumed the management position, did a good job, and was continually embarrassed by the delay in reclassification and a salary increase. As the district court is in the best position to make such credibility determinations, and the record supports the finding that Ledbetter assumed additional responsibilities without receiving a raise, the district court's findings are not clearly erroneous."
While the record did not reflect racial hostility per se, it did show that the company -- which went by the book when it assigned titles and salaries to other managers -- forgot its own internal procedures when it came to Ledbetter. The panel affirmed the merits, the admission of contested evidence, the calculation of back pay and the award of compensatory damages. And I can only hope that Ledbetter's counsel gets a decent fee award on remand for defending what appears to have been a futile appeal.
Monday, February 6, 2006
A seemingly ordinary, per curiam affirmance of an employer's victory in a harassment trial becomes a laboratory for one of President Bush's more controversial judicial selections, Judge Janice Rogers Brown. In Lutkewitte v. Gonzales, No. 04-5058 (D.C. Cir. Feb. 3, 2006), the panel majority (Judge Tatel and Senior Judge Edwards, both Democratic appointees under the Clinton and Carter Administrations respectively) rejects a female FBI employee's argument that the jury was misinstructed on the Faragher/Ellerth affirmative defense. The panel avoids a disputed issue of law, while Judge Brown addresses it head-on.
The plaintiff contended that strict employer liability attaches under a "tangible employment action" theory -- without the benefit of the affirmative defense -- whenever an employee submits to sexual propositioning to obtain job-related benefits. The panel rejoined that whatever the merits of such a suggestion (and it cites Holly D. v. Cal. Tech., 339 F.3d 1158, 1174 (9th Cir. 2003), and Jin v. Metro. Life Ins. Co., 310 F.3d 84, 98 (2d Cir. 2002), in support)), Lutkewitte herself offered only her own subjective impression that her next-in-command conditioned benefits on sex.
Moreover, the only solid benefits plaintiff identified were a new take-home vehicle and expanded staff/responsibilities, neither of which the panel found to be "tangible" or (in any event) to have been furnished quid quo pro in response to submission to sex. Without support in the record, the majority concluded, it was unnecessary to consider the legal premise underlying her argument (citing to a separate opinion by the recently-departed Judge John Roberts, PDK Labs., Inc. v. DEA , 362 F.3d 786, 809-10 (D.C. Cir. 2004) (Roberts, J., concurring)).
Judge Janice Rogers Brown, in a concurrence running 22 pages (twice the pages taken up by the panel opinion), proposes a more radical solution: that advantages conferred upon an employee in return for sex can never be "tangible employment actions" for purposes of Faragher/Ellerth. Citing the Supreme Court's more recent decision in Pennsylvania State Police v. Suders, 542 U.S. 129 (2004), she writes:
"Hence, whether an employment action is 'tangible' must be determined from the perspective of the employer, as the tangibility-that is, the constructive notice-is what justifies imposing strict liability. If an action is not tangible from the employer's point of view, the employer has no reason to suspect that its authority is at risk of being misused; it has not, in other words, been given a "heads-up" that it should investigate the supervisor's behavior. In a constructive discharge case, such as Suders, no tangible employment action takes place when an employee is harassed into quitting. The harassment is certainly tangible from the employee's point of view; if it were not so, she would not resign. Even so, the circumstances do not justify imposing strict liability, as the employer's authority was not used to perform any action that was tangible from the employer's point of view. The employer may well be liable for the harassment that led to the resignation, but only if it fails to prove that it acted reasonably to prevent or correct harm and that the employee unreasonably failed to avoid harm. To hold otherwise would undermine the Faragher/Ellerth Court's goals in establishing the affirmative defense: avoiding automatic employer liability (consistent with Meritor) without the danger of frequent judgment calls and difficult issues of proof. Faragher, 524 U.S. at 804-05."
Along the way, Judge Brown dismantles the aforementioned Second and Ninth Circuit authority (which she would hold superseded by Faragher, Ellerth and Suders), and an EEOC guidance on the same subject. Beneath this impressive display of process, something of a philosophy of the law emerges in the closing leg of the opinion:
"In order for our sexual harassment law to deter and redress misconduct, victims must report harassing behavior as promptly as possible. To find that a tangible employment action was created by an employee's acting contrary to this policy- submitting to the conduct rather than exposing it-does not conform to the Supreme Court's stated policy goals, let alone the legal framework the Court formulated. The law is a limited tool, and it cannot right every wrong. Empowering employees to report unlawful behavior is far preferable to allowing abusive situations to spiral out of control and attempting to patch up the damage afterwards."
Thursday, February 2, 2006
A dandy split in the Circuits yawns over when a non-signatory may be bound by an arbitration agreement. In Comer v. Salomon Smith Barney, No. 03-16560 (9th Cir. Feb. 1, 2006) (Kozinski, J.), the Ninth Circuit backs away from the Third Circuit's let-it-all-hang out approach, and denies an arbitration demand against a plan participant based on a clause running between the plan trustees and their investment advisor (a co-fiduciary).
The opening paragraph sets up the problem nicely:
"Kevin Comer was a participant in two ERISA plans operated by Micor, Inc. The plan trustees retrained Salomon Smith Barney, Inc. (Smith Barney) to provide investment advice. The relationship between Smith Barney and the trustees is governed by investment management agreements. The agreements contain arbitration clauses, pursuant to which 'all claims or controversies' between the trustees and Smith Barney 'concerning or arising from' any of the trustees' accounts managed by Smith Barney must be submitted to binding arbitration."
Comer sues Smith Barney for breach of fiduciary duty for loading his benefit plans up with dot.com stocks during the bubble. Smith Barney invokes the arbitration clause. The district court declines enforcement on the ground that Comer is not a party to the agreement. The Ninth Circuit affirms.
Smith Barney tries two alternative theories for tagging Comer with the arbitration clause. The first is equitable estoppel, but the panel opinion held that it didn't lie on the facts, because Comer didn't "knowingly exploit the agreement":
"Prior to his suit, Comer was simply a participant in trusts managed by others for his benefit. He did not seek to enforce the terms of the management agreements, nor otherwise to take advantage of them. Nor did he do so by bringing this lawsuit, which he bases entirely on ERISA, and not on the investment management agreements."
The second theory was that Comer was a third-party beneficiary of the agreement containing the arbitration clause. The Third Circuit accepted this argument in E.I. DuPont de Nemours & Co.v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 195 (3d Cir. 2001). But the Ninth Circuit, citing EEOC v. Waffle House, 534 U.S. 279 (2002), demurred. Waffle House held that the EEOC was not bound by a private employee's own approval of an arbitration agreement with his employer:
"Smith Barney tries in vain to distinguish Waffle House by arguing that, whereas Comer is suing in an entirely derivative capacity, the EEOC was suing in a non-derivative capacity. We agree that the EEOC in Waffle House was not suing in a wholly derivative capacity. . . . But that doesn't help Smith Barney because our own precedents hold that an ERISA claimant also sues in anon-derivative capacity."
But Judge Kozinski fires off this shot (in n.10) at the close of the opinion:
"We note in passing that Waffle House made a number of categorical statements that cannot be taken at face value. For example, the Court's statement that '[i]t goes without saying that a contract cannot bind a nonparty,' Waffle House, 534 U.S. at 294, and its statement that '[t]he [Federal Arbitration Act] directs courts to place arbitration agreements on equal footing with other contracts, but it "does not require parties to arbitrate when they have not agreed to do so,"' id. at 293 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989)), would, if taken literally, jettison hundreds of years of common law under which nonparties can be contractually liable under ordinary contract and agency principles. See pp. 1238-39 supra. We thus join many of our sister circuits who, in the wake of Waffle House, have recognized that contract and agency principles continue to bind nonsignatories to arbitration agreements. See, e.g., CD Partners, LLC v. Grizzle, 424 F.3d 795, 799 (8th Cir. 2005); Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005); Wash. Mut. Fin. Group, LLC, 364 F.3d at 267; Intergen N.V. v. Grina, 344 F.3d 134, 145 (1st Cir. 2003); Merrill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125, 129 (2d Cir. 2003) (per curiam); Javitch v. First Union Sec., Inc., 315 F.3d 619, 629 (6th Cir. 2003). But cf. Miles v. Naval Aviation Museum Found., Inc., 289 F.3d 715, 720 (11th Cir. 2002) (holding that, under Waffle House, nonsignatory could not be bound by contractual exculpation clause)."
Judge Kozinski, known widely as the actual author of his own panel opinions, picks his words wisely. Litigants are warned that, in the Ninth Circuit, employees may be still be bitten by arbitration agreements that they did not execute.
Wednesday, February 1, 2006
On the very morning of his confirmation to the Supreme Court, the Third Circuit issues a Judge Alito opinion which (as with yesterday's decision in Armstrong) reverses a judgment for an employer in an EEO case: Jensen v. Potter, No. 04-4078 (3d Cir. Jan. 31, 2006) .
A female Postal Service employee (Jensen) complains to the postmaster about an incident where the supervisor (named Waters) sexually propositioned her. This leads to an investigation, an involuntary transfer and the supervisor's eventual discharge. This, in turn, triggers a binge of offensive comments by a fellow letter-carrier (Stickler) unhappy with Jensen's complaint: "Shortly after Waters's transfer to the Ashley office, Sickler called Jensen 'the [obscenity] who got [Waters] in trouble;' he also stated that when a new supervisor came Jensen would have to get off her 'fat [obscenity].'" Comments in this vein continued two to three times a week for nineteen months.
The Court reverses summary judgment against Jensen, finding that such comments reflected Stickler's intent:
"More important, these statements may provide a window into Sickler's thinking throughout the 19-month barrage of offensive comments. If Sickler's conduct were viewed in isolation, his motives would be unclear, but his earlier statements provide a reasonable basis for thinking that the later abuse resulted from latent hostility to Jensen's whistleblowing. Thus, the record as a whole supports a finding that all of Sickler's harassment was based on a retaliatory animus."
The court also noted an assault by another letter-carrier (Jones) involving a U-Cart and acts of vandalism. Despite that many of the acts were "facially neutral," the panel found that a fact finder could infer retaliatory intent:
"First, before the Waters incident, Jensen and Jones were friends; shortly after it, Jones menaced her with heavy equipment. This temporal proximity between the protected activity and Jones's changed behavior is probative of a retaliatory intent. See Abramson, 260 F.3d at 288. Second, the record contains evidence that Jones expressed disagreement with the decision to remove Waters. This statement, when combined with the sudden shift in behavior, permits an inference that Jones's newfound hostility resulted from Jensen's protected activity."
Finally, the court also remands for trial the plaintiff's parallel claim of sex harassment for the same incidents:
"As an abstract matter, retaliation against a person based on the person's complaint about sexual harassment is not necessarily discrimination based on the person's sex. If the individuals carrying out the harassment would have carried out a similar campaign regardless of the sex of the person making the complaint, the harassment, while actionable as illegal retaliation, would not also be actionable as discrimination based on sex. In reality, however, when a woman who complains about sexual harassment is thereafter subjected to harassment based on that complaint, a claim that the harassment constituted sex discrimination (because a man who made such a complaint would not have been subjected to similar harassment) will almost always present a question that must be presented to the trier of fact. In such a situation, the evidence will almost always be sufficient to give rise to a reasonable inference that the harassment would not have occurred if the person making the complaint were a man. The difficult task of determining whether to draw such an inference a particular case is best left to trial."
The opinion does a certain amount of mop-up of Third Circuit law in the process. First, the panel is forced to take sides in a festering circuit split over whether co-worker retaliatory harassment may be recognized under Title VII. The court joins the majority of circuits (against the Eighth and the Fifth) and holds that it does. Second, it corrects some prior decisions that held that actionable harassment must be "pervasive and regular," admitting that the correct formula under Faragher and Harris is "severe or pervasive."