Daily Developments in EEO Law
by Paul Mollica ©2007
Tuesday, July 31, 2007
I suspect that the 2-1 decision published today in Denhof v. City of Grand Rapids, No. 05-1819 (6th Cir. July 31, 2007), a Title VII and Michigan's Elliot-Larson Civil Rights Act retaliation case, will raise hackles among law enforcement employers. Yet as long as we have it, this precedent will be useful in confronting "honest belief" arguments that employers often make to repel an inference of pretext -- that is, even if an adverse action was based on a false or erroneous assumption, it cannot be pretextual if the employer in "good faith" believed it to be true.
Here, the question was whether two female police officers -- who testified in a state court preliminary injunction hearing on behalf of nine sex discrimination plaintiffs (including themselves) -- proved that the department retaliated against them by removing them from duty on psychological fitness grounds. The two officers won at trial and were awarded $1 million each (later remitted to $350,000), plus front and back pay. But the district court granted judgment as a matter of law to the department, finding that the plaintiffs failed to establish a causal link between the protected activity and the adverse actions (and, alternatively, ordered a new trial and remittitur).
The record, stripped to its basics, was that ten days after the original preliminary injunction hearing occurred (in November 2001), Police Chief Harry Dolan solicited an opinion from a police psychologist (Dr. Glen Peterson) as to whether one of the plaintiffs (Patricia Denhof) was fit for duty. The Chief claimed to have been worried about her trial testimony that she blamed her male co-workers for an attempted break-in at her home (as well as tailing her, tapping her phone and not providing back-up). Denhof testified that she kept a loaded handgun at home and meant to shoot anyone who tried to break in again.
Even before examining Denhof, the doctor recommended a fitness-for-duty exam, writing (on January 11, 2002) that:
"Clearly, the tension between Ofc. Denhof and the department has escalated to such a degree that it is difficult to imagine how she could continue to work in this environment. In that sense, whether the hostility is generated by her own actions or by mean-spirited fellow employees or command staff is almost irrelevant. It is something like a marriage gone bad. We can argue for years about whose fault it is, but at some point we are best off simply separating, for the good of all persons involved."
The same doctor had also made a similar recommendation for the other plaintiff (Renee LeClare) around the same time frame, who had experienced PTSD-type symptoms after an on-duty shooting. The doctor reported both women unfit for duty and both were placed on leave and eventually terminated.
The panel majority held that the jury could have concluded that the fitness-for-duty rationale was pretextual. While the district court found that the Chief's reliance on Dr. Peterson's report manifested "honest belief," a jury could have found that the circumstances surrounding that report were at least suspicious: that the initial request for an opinion followed on the heels of the trial testimony, that the police doctor had already tipped his hand (in the January 11, 2002 letter) that he would find Denhof unfit, that the Chief waited nearly two months to act on his concerns about the officer's fitness (implying that he did not really see them as a threat to the public or other officers), that the Chief could not explain the reasons for his delay, and that the ordinary practice was to suspend officers immediately when concern arose about fitness. Moreover, there was evidence Dr. Peterson refused to meet with the plaintiffs to provide treatment recommendations, that they were originally ordered terminated before any treatment options were made, and the city refused to consider advice by the officer's personal psychologists. (The dissent leaned most heavily, though, on evidence that both officers expressed supposedly irrational fears of persecution, and that a second psychologist besides Dr. Peterson made the same recommendation.) So the jury verdict (with the remittitur) was reinstated, and all other claims of trial error were overruled.
The upshot would be that an investigation apparently crafted to obtain a predestined result, combined with unexplained furtive behavior by the decision maker, may support an inference of pretext, above and beyond any claim of "honest belief." Whatever the eventual outcome, the case also serves as a prime example of how retaliation cases resinate with juries.
Monday, July 30, 2007
I'm celebrating the third year of this blog. Woo-hoo!
Here's a case with a certain "wow" factor, a Title VII religious discrimination case won at trial by an employee: Ollis v. HearthStone Homes Inc., No. 06-2852 (8th Cir. July 27, 2007). The plaintiff was a disciple of the Assemblies of God, a charismatic and fundamentalist church, while his employer interwove New Age beliefs into its management training:
"During Ollis's tenure at HearthStone, on certain occasions, HearthStone used Mind Body Energy (MBE) sessions to 'cleanse [the] negative energy' from its employees in order to enhance their work performance. HearthStone encouraged and paid for its employees to attend an MBE course in California which required participants to read The Tibetan Book of Life, discussing Buddhist and Hindu teachings. HearthStone also required its employees to carry a card setting forth the company's core values. HearthStone's core values include spirituality and leaving behind all experiences from past lives, as well as the beliefs that everything in the universe is connected (including animals and past lives) and that uncorrected problems from past lives must be corrected in the present life."
Ollis would make appointments to attend MBEs, only to skip out on them -- with the apparent encouragement of Rachel Langford, a senior sales associate who lead Ollis's sales team. Ollis declared his opposition to compulsory attendance at MBEs to Langford (who refused to pass along his complaints to management), at group meetings and even to the company president John Smith.
President Smith's beliefs were also picked over during trial:
"Smith used muscle testing to make business decisions. Smith equates muscle testing 'to someone who may pray before they make decisions.' On one occasion, HearthStone experienced drainage problems in one of its subdivisions. Smith determined, through muscle testing, Langford's ancestors had perished on that land during the Ice Age and Langford unknowingly was back to defend the land on behalf of her ancestors. HearthStone required Langford to attend MBE coaching sessions to cleanse her negative energy. On another occasion, Smith determined a particular subdivision was carrying negative energy, and some employees participated in a ceremony where the employees stood in a circle holding hands to clear negative energy."
Ollis ran into trouble after his female subordinate made a harassment complaint against him. Ollis even confessed that he had "crossed [the] boundaries" by asking "about her 'freakiest' sexual encounter, how long she had known her spouse before she had sex with him, how many sexual partners she had, and if she wore thong underwear." He was terminated for "poor leadership and lack of judgment"; president Smith testified that he used "muscle testing" to make the decision to fire him.
From a jury-appeal perspective, I would have thought this a difficult and somewhat bizarre case, but the jury was persuaded to find liability against the employer for discrimination and retaliation (though awarding only nominal damages). The court of appeals, affirming judgment, found that the district court did not err in denying HearthStone judgment as a matter of law:
"Testimony at trial indicates (1) Ollis canceled many of his MBE coaching sessions, (2) HearthStone kept a record of Ollis's attendance at these sessions, (3) attendance at the MBE meetings was reasonably perceived as an employment requirement, and (4) Ollis complained about MBE sessions. Based on this evidence, a reasonable jury could determine HearthStone's proffered reasons for Ollis's termination were pretextual. Although the evidence is thin, we find there was a sufficient evidentiary basis for a reasonable jury to find in Ollis's favor on his claim of religious discrimination."
Similar findings supported the additional verdict for retaliation. The court also affirmed award of attorney's fees. (There is no discussion of back pay, front pay or reinstatement, though these would be typical equitable remedies in a termination case.)
Once one gets past the idea of Ollis willingly working for an organization so contrary to his own faith, I have to admire (1) the steady nerve of the employee and his counsel for bringing the suit in the first place; (2) affirmance by the Eighth Circuit, a tough circuit for employees.
Friday, July 13, 2007
The Fifth Circuit takes a notoriously hard view of what acts of employment constitute adverse employment actions for purposes of Title VII discrimination. It adheres to an "ultimate employment action" test, meaning that the action must be akin to hiring, firing, discharging, promoting and pay. In Burlington Northern v. White, 126 S. Ct. 2406 (2006), the Supreme Court rejected the "ultimate employment action" standard for retaliation claims. But what about substantive discrimination claims? Would Burlington Northern prompt reconsideration of this most limiting of liability standards? Apparently not, as McCoy vs. City of Shreveport, No. 06-30453 (5th Cir. July 11, 2007) unapologetically retains the standard for substantive violations under Title VII, and holds that a police officer being placed on paid leave (and having to return her badge and gun) was not "materially adverse."
Wednesday, July 11, 2007
Gotta love Elkhatib v. Dunkin Donuts, No. 04-4190 (7th Cir. July 10, 2007), a § 1981 case about an Arab franchisee who refused to carry meat products. Mind that the company, which introduced a line of pork-based breakfast offerings, wasn't too fussy about this point. Not only had it tolerated Mr. Elkhatib's principled refusal to sell pork products for 18 years, but it even provided company-printed plastic signs stating "Meat Products Not Available." (He did sell a cheese-and-egg variation.) But in 2002, he got a lawyer letter from the company refusing to relocate or renew any of his agreements with the company, because of his stubborn refusal (in violation of a term in the franchise agreement) to carry the full line of the perfectly yummy breakfast treats.
The Seventh Circuit reversed summary judgment for the company. Lacking direct evidence of racial motivation, the franchisee was nevertheless able to point to the 18-year long accommodation the company had already made, and the failure of the company to take action against three other non-Arab franchisees who -- for various reasons -- said no to selling the same sandwiches. Although the other franchisees refused to carry the pork products for different reasons (respectively, a lease restriction against serving sandwiches, space limitations and demand in the area for a kosher establishment), the circumstances were close enough to warrant an inference of discrimination.
Writes the Seventh Circuit, "The franchises identified as comparators were identical in all relevant respects in that they all failed to carry part or all of the breakfast line of products despite the requirement in their franchise agreement that they do so. That franchise provision is absolute in its terms, and does not indicate that exceptions would be made for certain reasons and not others. Therefore Dunkin Donuts' argument that their reasons for failing to carry the full product line were different than Elkhatib's is unavailing." Add the embarrassing fact that after two-plus decades, the sandwiches still made up only 4% of Dunkin Donuts' sales (apparently getting their rumps kicked by the Egg McMuffin, Croissanwich and other competition), the court holds that there is a triable issue of fact whether the pork dust-up was really what motivated the company to end the contracts.
Tuesday, July 10, 2007
Because employees are not chess pieces for lawyers to move around a board, we cannot expect them to conform their behavior to the legal norms our courts set out for them. So in Nurse "BE" v. Michael Chaparro, M.D., No. 06-12159 (11th Cir. July 6, 2007), we find that employees (in the Eleventh Circuit, anyway) who try to solve harassment problems with supervisors by self-help may lose twice: once by having to endure the behavior, and again when they finally take legal action and lose.
There's a lot of flat-out weirdness in this case, starting with the caption (it is never once explained why the caption is pseudonymous, when the employee is otherwise named in full in the opinion). There's also the capricious jury that returned three times (with inconsistent or aborted verdicts) before finally finding the employer liable for harassment of a nurse by a supervisory doctor.
But the center-stage event is the panel decision -- reversing the district court, and entering judgment as a matter of law for the hospital -- that a nurse who goes to the person designated by the hospital to accept harassment complaints, and complains of five phone calls from a doctor that the nurse found "harassing," has not really invoked the anti-harassment policy for purposes of the Faragher/Ellerth defense. This is because, . . . well, it wasn't really harassment, get it?: "At best, the phone calls, as described by O'Brien, amounted to co-worker congeniality. At worst, they described a persistent but non-threatening suitor, which still does not amount to harassment."
Substantially more important, though, was plaintiff's admission that she told the agent not immediately to report the complaint, because she would handle it on her own. That may be normal behavior for an employee (not wanting to make a mountain out of molehill, trying to survive a bad situation at work), but it is fatal to a harassment case (a fact most famously demonstrated in Hardage v. CBS Broad., Inc., 427 F.3d 1177, 1186 (9th Cir. 2005), in which a female-on-male harassment case cratered when it came to light that the victim told HR he'd handle the problem himself). To be effective, then, employee complaints about harassment must be made at right stage (while the harassment is continuing) with the right staff person, and the employee must never, ever equivocate or try to tough-out the situation.
In some good news for plaintiffs and their attorneys, here's Karraker v. Rent-a-Center, Inc., No. 06-2617 (7th Cir. July 9, 2007), the sequel to Karraker v. Rent-a-Center, 411 F.3d 831 (7th Cir. 2005). The first panel decision vacated summary judgment and ordered entry of judgment for the employee, in an ADA case no less, where the employee unlawfully used the Minnesota Multiphasic Personality Inventory to sort candidates out for promotion. By the time of the remand, though, the employer had stopped using the test, so the only injunctive relief available was for the employer collect and lock-up all of the test results to prevent their dissemination. The lead plaintiff also obtained a $5000 incentive payment.
But when it came to awarding $267,000 in fees, the district court balked, finding that the employee was not a prevailing party because the injunctive relief was supposedly so modest. The Seventh Circuit once again reverses, holding (in a 2-1 decision) that the award was more than nominal and entitled the lead plaintiff to prevailing party status: "Destruction of the results of improperly administered tests is a valuable benefit. It is no answer to say that RAC has not disclosed the results. Without the injunction, there would be nothing to prevent the company from either disclosing the results in the future or allowing their dissemination through negligence." The incentive fee, likewise, was held to alter the legal relationship between the parties.
Monday, July 9, 2007
Sometimes an employer is just cruel, and in EEOC v. Convergys Customer Mgt. Group, No. 06-2874 (8th Cir. July 6, 2007), a jury held one such employer -- a customer call-center -- liable for not bending its attendance record even a bit for an employee (Ahmet Yigit Demirelli) confined to a wheelchair with brittle bone disease.
Employee Demirelli -- owing to his disability -- was in constant infraction of the company's tardy policy, which assigned demerits for arriving 3 or more minutes late reporting to work or returning from lunch, with termination after 14 tardies. But the obstacles facing Demirelli were formidable: (1) an insufficiency of handicapped parking spaces; (2) unassigned workstations (requiring Demirelli to wheel himself around the compound to find a vacant spot); and (3) narrow aisles and obstructions throughout the worksite. The employee, when confronted about his record of tardies, asked for "a grace period" after lunch to return to work, which was denied. Instead, Demirelli was fired. On this record, the jury had no apparent difficulty award a judgment to the EEOC for $14,265.22 back pay and $100,000 compensatory relief.
The Eighth Circuit affirms. It rejects an argument that the employee was required to request a specific accommodation, concludes that the employee provided the company all necessary information relevant to his disability, and holds that the employer here was obliged (but failed) to explore possible accommodations. Specifically, the panel holds that the jury could have concluded that a 15-minute grace period was reasonable (it would have simply created another time for the employee to return from lunch) and that the ADA (42 U.S.C. § 12111(9)(B)) especially recognizes "modified work schedules" as a reasonable accommodation. The record also supported emotional distress damages (severe depression and anxiety, leading to isolation, shame and weight gain).
The court also held that the employer was not entitled to a judgment as a matter of law on its affirmative defense of good faith, specifically recognized under 42 U.S.C. § 1981a(a)(3), for working "in consultation with the person with the disability who has informed the [employer] that accommodation is needed, to identify and make a reasonable accommodation . . . ." As the panel concluded: "As we have already concluded that Convergys failed to engage in the interactive process, we also conclude that a reasonable jury could find that Convergys did not act in good faith to make a reasonable accommodation. Prudent management decisions and common courtesy among co-workers may well have avoided this claim in its entirety but it cannot now be avoided by factual assertions reasonably resolved to the contrary by the jury." Finally, the panel rejects entry of remittitur, finding the $100,000 award not grossly excessive.
Friday, July 6, 2007
I deviate from my ordinary coverage of EEO cases to pay tribute to the Fourth Circuit, which this week proved a profile in courage in a decision atypically favorable to employees.
The case was a reissue of Taylor v. Progress Energy, Inc., No. 04-1525 (4th Cir. July 3, 2007). The court's original panel opinion, 415 F.3d 364, 369 (4th Cir. 2005), vacated, No. 04-1525, 2006 U.S. App. LEXIS 15744 (4th Cir. June 14, 2006), held that employees could not release Family and Medical Leave Act (FMLA) rights -- prospectively or retrospectively --without approval by the Department of Labor. This decision was based on the court's interpretation of 29 C.F.R. § 825.220(d) (§ 220(d)), a regulation implementing the FMLA. The regulation reads: "Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA." The original opinion was vacated, and a whole host of amici on both sides of the issue piled on for a rehearing. Most notably, the Department of Labor responded in opposition to the original decision, arguing that its regulatory language applied only to prospective, not retrospective, waivers of substantive rights under the Act. Other corporate groups, the Equal Employment Advisory Council and the U.S. Chamber Of Commerce, supported this view as well.
Against this tide of power and influence, the panel holds fast and (in a 2-1 decision) reaffirms its prior conclusions that (1) "rights under FMLA" encompasses all rights of employees, including the right to file a civil action; (2) "nothing in the text of section 220(d) . . . permits a distinction between prospective and retrospective waivers"; and (3) under labor standards laws, such as the FLSA, "private settlements of . . . claims undermine Congress's objective of imposing uniform minimum standards." It also holds that a contrary decision in Dougherty v. TEVA Pharms. USA, Inc., No. 05-2336, 2007 U.S. Dist. LEXIS 27200 (E.D. Pa. Apr. 11, 2007), was in error, and that the DOLs inconsistent litigation positions -- in this and other cases -- ran contrary to the plain language of the regulation and warrants no deference.
Thursday, July 5, 2007
The Seventh Circuit affirms judgment of a matter of law in a Title VII termination case, Hossack v. Floor Covering Assoc. of Joliet, No. 04-3990 (7th Cir. July 5, 2007). The female plaintiff carried on an extramarital affair with a co-worker, which lead to her husband issuing threats of violence against the workplace. The employer weighs the option of reassigning the male co-worker (named Cladis) to a different worksite, but concludes he is too valuable too lose. So the company places pressure on the female half of the pair to quit. When this doesn't work, according to the jury's special verdict, the employer terminates her. Does this amount to sex discrimination? While the jury ruled in her favor, the district court and then the court of appeals held there is insufficient evidence of pretext: "Even though the jury had an adequate basis to reject the defendant's contention that Hossack resigned and find that she was fired, it is uncontroverted in the record that Hossack was terminated because management feared her husband's threats and that he might very well cause workplace disruption in the future, while Cladis was not discharged because he was the top earning salesman at the Joliet store and, thus, was more important to the organization."
Tuesday, July 3, 2007
The original panel in Murphy v. IRS, 460 F.3d 79 (D.C. Cir. 2006) -- Chief Judge Ginsburg, and Judges Rogers and Brown -- found a way to crawfish out of its original, radical and now-vacated decision declaring Title VII compensatory damages non-taxable under the Sixteenth Amendment.
The new opinion, Murphy v. IRS, No. 05-5139 (D.C. Cir. July 3, 2007), picks up where the first opinion left off. The panel adheres to its original analysis that Murphy's compensatory damages are not excluded under IRC § 104(a)(2), which since a 1996 amendment has excluded from income damages received only "on account of personal physical injuries or physical sickness." Although the taxpayer's injuries had some physical facets (such as tooth-grinding and physical stress), the court holds that the ALJ's award to Murphy was for emotional distress and injury to reputation, and not "on account of" physical injury within the scope of § 104(a)(2).
The panel also holds that IRC § 61(a) on its face authorizes taxation of "gross income" defined as "all economic gains not otherwise exempted." Although this language is broad enough to cover non-exempt emotional distress damages under Title VII, the panel had originally held that this section exceeded the reach of the Sixteenth Amendment -- which authorizes taxation of "incomes" alone -- on the ory that restoration of losses of "human capital" did not constitute "incomes."
The court departs from its original decision, though, in looking beyond the Sixteenth Amendment for constitutional authority to support the levy against Murphy. Even if a compensatory award is not "income" as defined by the Sixteenth Amendment (i.e. an accession to wealth), Art. I, sec. 8 separately authorizes Congress to "lay and collect taxes, duties, imposts and excises," provided that such "duties, imposts and excises shall be uniform throughout the United States." Yet Art. I, sec. 9 also provides that "[n]o capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration therein before directed to be taken." The panel traverses these provisions for several pages, weighing the parties' and amici's arguments about whether the tax on Murphy's award should be considered a "direct tax."
Ultimately, though, the court avoids the "direct tax" thicket and opts for defining the tax as a constitutionally-acceptable "excise" tax, comparable to a gift tax: "A gift is the functional equivalent of a below-market sale; it therefore stands to reason that if . . . a gift tax, or a tax upon a below-market sale, is a tax laid not upon ownership but upon the exercise of a power 'incident to ownership,' then a tax upon the sale of property at fair market value is similarly laid upon an incidental power and not upon ownership, and hence is an excise. Therefore, even if we were to accept Murphy's argument that the human capital concept is reflected in the Sixteenth Amendment, a tax upon the involuntary conversion of that capital would still be an excise and not subject to the requirement of apportionment."
The court also finds the tax "uniform," as prescribed by Art. I., sec. 8: "The tax laid upon an award of damages for a nonphysical personal injury operates with 'the same force and effect' throughout the United States and therefore satisfies the requirement of uniformity."
Monday, July 2, 2007
The D.C. Circuit confirmed last Friday in Fogg v. Gonzales, No. 5439 (D.C. Cir. June 29, 2007) what it previously suggested in Porter v. Natsios, 414 F.3d 13, 95 FEP 1872 (D.C. Cir. 2005) -- namely, that Title VII now recognizes two separate theories of liability for individual disparate treatment cases, single- and mixed-motives.
When Congress amended Title VII with the omnibus Civil Rights Act of 1991, it endeavored to partially overrule and partially codify the decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), on mixed-motives by adding section 107, retitled in part as 42 U.S.C. § 2000e-2(m). This section provides that "an unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice, even though other factors also motivated the practice" (mixed motive). As a companion to this section, Congress established an affirmative defense under 42 U.S.C. § 2000e-5(g)(2)(B), that an employer that proved that the "same decision" would have been reached in the "absence of the impermissible motivating factor," could avoid all legal remedies as well as a presumption of an award of attorneys fees.
The question presented in this case was whether this section impliedly repealed to original operative section of Title VII, 42 U.S.C. § 2000e-2(a) -- "[i]t shall be an unlawful employment practice for an employer . . . to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin" (single motive) -- for which no "same decision" defense lies. The reason it made a difference here was that the agency lost a trial, and wished the judge to rule on its "same decision" defense on post-trial motions. The district court balked because it held that the case was tried on a single-motive theory and the defense was therefore forfeited.
While the U.S. Marshals Service argued that 2000e-2(m) now constitutes the sole basis for liability, the D.C. Circuit (at least a two-judge majority) disagreed:
"The Government attempts to avoid the interpretive norm against implied repeals by describing the change wrought by the addition of § 2000e-2(m) as converting § 2000e-2(a) from a standard of liability to a definition, but the effect is the same in that an option previously open to plaintiffs would be foreclosed without the Congress having spoken to the issue. Therefore, we cannot infer from the addition of § 2000e-2(m) the implicit repeal of § 2000e-2(a) as a standard for establishing liability in preference to the more straightforward inference that § 2000e- 2(m) adds an additional way of establishing liability."
Thus, it would appear the employee at trial holds the key to the car: either try the case as mixed-motives (with the attendant risk of getting no damages) or single-motive.
* * * *
While many fired employees think that their former employers have blackballed them in the industry, seldom do they sue over their suspicions. But in McPherson v. O'Reilly Automotive, Inc., No. 06-3846 (8th Cir. July 2, 2007), the aggrieved employee joined a claim of termination under the ADA with a claim of disclosing confidential medical information under 42 U.S.C. § 12112(d)(3)-(4). Notably, under this section it is neither required that the employee be disabled, nor that the employer so regard him or her.
Unfortunately for the employee, his evidence amounted to two inferences that together (according to the Eighth Circuit) did not raise a genuine issue of material fact for trial. The first was that he was simply unable to secure work elsewhere. The other was that his employment counsellor, Colleen Prewett, with one phone call to O'Reilly Automotive was told that McPherson was fired because he was "completely disabled." The record problem on the latter point, though, was that was unclear what Ms. Prewitt might have told O'Reilly to extract this admission: ". . . Colleen Prewett could not remember whether she identified herself when she called O'Reilly. Since she thought she 'may not have been forthcoming' about her identity, McPherson argues that O'Reilly may have disclosed confidential information without knowing Prewett was his employment counselor. . . . Although Prewett suspected she 'may not have been forthcoming,' she also admitted that it was her habit to identify herself when making such calls. Because McPherson bears the burden of proof on his claim, he is under an affirmative obligation to come forward with evidence in support of his claim, and Prewett's testimony does not satisfy this obligation. It would be speculative to conclude from it that O'Reilly gave out confidential information to prospective employers and that this led to McPherson's inability to get a new job." [Citation omitted].