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Nicholson v. Hyannis Air Service, Inc., No. 08-15959 (9th Cir. Sept. 8, 2009); Jackson v. Rent-A-Center West, Inc., No. 07-16164 (9th Cir. Sept. 9, 2009)

| Sep 8, 2009 | Daily Developments in EEO Law |

The Ninth Circuit hands down two decisions in two days favoring employees. In the first, the panel analyzes in a Title VII sex discrimination case how to apply the McDonnell Douglas prima facie case when the employee is said to fall short of subjective goals. In the second, over a dissent, the panel holds in a § 1981 discrimination and retaliation case that the district court — rather than the arbitrator — ought to determine whether an employment arbitration agreement is unconscionable and therefore unenforceable.

Nicholson v. Hyannis Air Service, Inc., No. 08-15959 (9th Cir. Sept. 8, 2009): Seven men and one woman (Nicholson) were chosen for training to assume new duties piloting passengers from Guam to the Micronesian islands (the “ATR 42” program).

The airline perceived trouble in Nicholson’s performance — not necessarily with her ability to fly the plane, but to cooperate with others.  The issue was something called crew resource management (“CRM”), which is said to consist “of the communication and cooperation skills that enable the pilots and crew of an airplane to work together to maximize the safety and efficiency of a flight.”  Though she was rated highly in training, Nicholson experienced trouble when the routes began flying:

“After the pilots began to fly the new routes between Guam and its neighbors, however, Nicholson’s supervisors and the other pilots reported that she exhibited problems with her communication and cooperation skills. Cape Air’s Director of Training David O’Connor asserted that Nicholson had a ‘machismo’ attitude, was dismissive of input from others, and refused to provide assistance requested by her co-pilots. The four captains in the Guam program also reported to Price that Nicholson’s CRM skills were inadequate.”

Nicholson had previously had a liaison with one of the male pilots (White), complicating matters all the more:

“Price responded to the reports of Nicholson’s CRM deficiencies by formulating a plan to observe her CRM skills inflight. Before Price could begin his observation, however, White removed her from an August 31, 2004 flight. White was scheduled to fly a number of flights with Nicholson that day, but he claimed that the tension in the cockpit during their first flight of the day made the cockpit unsafe. White permitted Nicholson to fly the plane back to Guam, then removed her from the plane before their next flight. White acknowledged at his deposition that he had concerns about flying with Nicholson because of their prior sexual relationship, and further admitted that, in deciding whether to remove Nicholson from the flight, he had been unsure whether his negative interactions with Nicholson were related to their prior relationship.”

Matters spiraled, and Nicholson was eventually removed from ATR 42 and placed on probation. Nicholson contended that she was not given the same opportunities to correct her performance as male pilots, and that she was removed because she was the only woman in the program.

Although the district court granted summary judgment in the ensuing Title VII sex discrimination case, the panel reverses and remands, finding that the lower court misanalyzed the prima facie case. The primary error was that the district court assessed Nicholson’s alleged CRM deficiencies under the rubric of meeting the employer’s “legitimate expectations.” As the panel holds:

“Because Nicholson is correct that CRM skills are a subjective qualification that cannot be considered in evaluating a plaintiff ‘s qualifications at the first step of McDonnell Douglas, the district court erred in finding that Nicholson was not qualified. . . .

“The evaluation of a pilot’s communication and cooperation skills requires a subjective evaluation of the pilot’s attitude, manner, tone, and other similar traits – evaluations that are inherently subjective. Here, . . . if such subjective criteria are considered in evaluating a plaintiff ‘s qualifications at step one of the McDonnell Douglas inquiry, the entire burden shifting scheme collapses into a single inquiry into the truth of a subjective claim regarding Nicholson’s alleged inadequacies. . . .

“Cape Air argues that the subjective/objective distinction should not apply to CRM skills because ‘CRM for an ATR 42 pilot is an elemental and necessary qualification’ and a
pilot may ‘put lives in danger for failing to exhibit proper communication skills.’ However, the distinction . . . does not turn on the importance of a particular qualification to the job. It turns instead on the subjective or objective nature of the matter in question.”

The panel finds that the plaintiff also presented a genuine issue of material fact about whether similarly situated men were treated better. The court found that allowing male pilots to re-test on technical flying skills, while not offering a comparable opportunity to Nicholson to correct her CRM, is prima facie evidence of sex discrimination:

“[A]lthough CRM skills are different from the other skills required of pilots, any distinction between CRM skills and technical piloting skills is not material for purposes of determining whether the male pilots were ‘similarly situated’ to Nicholson. The CRM skills allegedly lacking in Nicholson and the technical piloting skills lacking in the male pilots each were skills required of pilots and necessary for safe flying, and Cape Air treated both sets of skills as ones that could be acquired and improved upon through training. Because any distinctions were not material, the male pilots were similarly situated.”

Finally, the panel finds a genuine issue of material fact on pretext:

“In this case, Cape Air’s failure to treat Nicholson in the same manner that it treated similarly deficient male pilots provides some evidence that Cape Air disciplined her because of her sex and not because of her alleged CRM deficiencies. So, too, do the sex-related remarks, such as the complaint that Nicholson had a ‘machismo’ attitude; the captain’s concern about flying with her because of a prior sexual relationship; and the removal of her from a flight by that same captain, who expressed concern about whether his work problems with her were related to that earlier relationship.”

Jackson v. Rent-A-Center West, Inc., No. 07-16164 (9th Cir. Sept. 9, 2009): The employee filed his race discrimination case in federal court. The arbitration agreement at issue in this case included the following language — “The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable.”

Jackson pursued an argument in court that the arbitration clause was unconscionable substantively (lack of mutuality, unfair discovery provisions, arbitrator’s fee split between the parties) and procedurally (take-it-or-leave it). The district court held that the above-quoted clause consigned the enforceability issue to the arbitrator, and thus compelled arbitration.  It also held that, in any event, Jackson did not demonstrate that the agreement was substantively unconscionable.

The panel majority reverses. The Supreme Court recently held in Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), that a challenge to the enforceability of an entire contract presumptively belongs to the arbitrator, while a challenge to the enforceability of the arbitration provision itself belongs to the court. In this case, the entire contract was a stand-alone arbitration agreement. “Jackson’s merits dispute with the Employer does not arise out of a contract between them, but is rather based in federal statutory discrimination
law. Jackson challenges the free-standing Agreement to Arbitrate he signed, contending that the Agreement is unconscionable and that he cannot be compelled to arbitrate his statutory discrimination claims.”

Hence, the otherwise unambiguous language in the agreement that purports to assign the enforceability issue to the arbitrator is itself subject to judicial unconscionability review: 

“[We hold that where a party specifically challenges arbitration provisions as unconscionable and hence invalid, whether the arbitration provisions are unconscionable is an issue for the court to determine, applying the relevant state contract law principles. This rule applies even where the agreement’s express terms delegate that determination to the arbitrator. We hold that where, as here, an arbitration agreement delegates the question of the arbitration agreement’s validity to the arbitrator, a dispute as to whether the agreement to arbitrate arbitrability is itself enforceable is nonetheless for the court to decide as a threshold matter.”

While the panel affirms the district court’s holding that the fee-sharing provision itself was not substantively unconscionable, it remands the balance of the case for further review.  The dissent, by Judge Hall, would find that “to the extent the district court has a role to play here, it should certainly be a more limited one than the majority envisions, perhaps permitting courts to remain attuned to ‘well-supported’ claims of unconscionability or the potential that arbitration might be illusory, while still resolving ‘any doubts’ as to what the parties agreed in favor of arbitration.”

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