July 1994

Workplace Labor Update - The Supreme Court Addresses Retroactivity – July 1994

3 min

The Supreme Court has held that certain provisions of the Civil Rights Act of 1991 ("1991 CRA") authorizing compensatory and punitive damages against employers in Title VII discrimination suits will not be applied retroactively. As a result of the Court's decision in Landgraf v. USI Film Products, 114 S. Ct. 1483 (1994), the remedies available to plaintiffs, whose claims rely on events occurring prior to the enactment of the 1991 CRA on November 21, 1991, will be limited to traditional Title VII relief -- including reinstatement and backpay.

Landgraf worked at USI Film Products in Tyler, Texas as a machine operator. After experiencing sexual harassment from a co-worker in the form of inappropriate remarks and physical contact, she complained to her supervisor, who did nothing. Although her subsequent complaints to the human relations department resulted in the reprimand and transfer of the offending party, Landgraf quit shortly after the transfer. She then filed a charge with the EEOC, which ultimately determined that USI had adequately remedied any violation of Title VII that Landgraf might have endured. Landgraf then sued in federal court. After a bench trial, the judge found that Landgraf had been severely harassed and had suffered mental anguish, but that she had not been justified in quitting. Thus, the court ruled that Landgraf was not entitled to backpay or other relief under Title VII.

Unsatisfied, Landgraf appealed to the Fifth Circuit Court of Appeals, which has jurisdiction over federal courts located in Texas. While her appeal was pending, President Bush signed the 1991 CRA into law. Because it provided for a jury trial and compensatory and punitive damages, Landgraf argued that her case should be returned to the lower court so that she could exercise her new found right to have a jury hear her case. Determining that it would be unfair to require the employer to re-try the case because of a subsequent and fortuitous change enacted by Congress after the fact, the Court of Appeals affirmed the trial court and refused to return the case for further proceedings. Landgraf appealed to the Supreme Court.

The Court rejected Landgraf's argument that the text of the 1991 CRA required it to be applied retroactively to conduct which occurred before its enactment. The Court noted that the 1991 CRA failed to include express provisions requiring retroactive application. Finding no clear directive from Congress, the Court was required to weigh the policies at stake in light of the relatively complicated legal principles which govern retroactivity.

Justice Stevens, who wrote the opinion for the Court, began by noting that there is a strong and historic presumption against retroactivity. On the other hand, Justice Stevens recognized that retroactive laws may often have benign and legitimate purposes, and that Congress may enact retroactive legislation within broad constitutional limits. Nonetheless, because of the tremendous stakes involved for employers and employees with regard to the imposition of significant monetary damages for past conduct, the Court refused to apply the compensatory and punitive damage aspects of the 1991 CRA retroactively, affirming the decision disposing of Landgraf's claim. The Court stated that when a statute would impair existing rights, increase liability for past conduct, or impose new duties with respect to transactions already completed, the law will not be applied retroactively unless Congress clearly expresses its intent to the contrary.

Similarly, in a second case, Rivers v. Roadway Express, Inc ., 114 S.Ct. 1510 (1994), the Supreme Court rejected the contention that employers could be retroactively liable under another aspect of the 1991 CRA that expands employer liability for discrimination in the making and enforcement of contracts under 42 U.S.C. 1981. Taken together, Landgraf and Rivers suggest that most other provisions of the 1991 CRA will not be given retroactive effect.