I. INTRODUCTION
Over the past several months a number of cases have been decided that warrant a close look by employers. The United States Supreme Court has recently addressed the issues of employer liability for sexual harassment, agreements to arbitrate and the "significant gap" issue under COBRA. In addition, the federal Court of Appeals with jurisdiction over Mid-Atlantic states has decided a number of important cases involving individual liability for supervisors, evidence in retaliation cases, the implications of administrative claims of disability on subsequent discrimination claims, and NLRB bargaining orders. These cases and more are discussed below.
II. SIGNIFICANT CASES
A. Ellerth and Faragher: The Supreme Court's Sex Harassment Decisions
Factual Background
Burlington Industries, Inc. v. Ellerth, 118 S. Ct. 2257 (1998): Kimberly Ellerth worked as a salesperson for Burlington Industries. Ellerth claimed that she was harassed by her immediate supervisor's boss, a mid-level manager, who had authority to hire and promote employees, subject to higher approval, but was not considered a policy-maker. This individual allegedly made repeated boorish and offensive remarks. Ellerth's allegations emphasized three incidents where the manager's comments could be construed as threats to deny tangible job benefits. In particular, when Ellerth gave no encouragement to remarks the manager made about her breasts, he allegedly told her to "loosen up" and warned that he could make her work life "very hard or very easy." He also told Ellerth that she was not "loose enough" during a promotion interview, and reached over and rubbed her knee. In response to a work-related question over the phone, the manager allegedly told Ellerth that he didn't have time for her "unless you want to tell me what you're wearing."
Ellerth did not tell anyone in authority about the manager's conduct, even though she was aware that Burlington had a policy prohibiting sexual harassment and a complaint procedure for reporting such harassment. She resigned from her job, and about three weeks later sent a letter explaining that she quit because of the manager's behavior. Ellerth sued Burlington on the premise that the sexual harassment she endured on the job forced her out of her position, even though she never suffered any tangible detriment to her position and was, in fact, promoted once.
Faragher v. City of Boca Raton, 118 S. Ct. 2275 (1998): Beth Ann Faragher, a lifeguard for the City of Boca Raton from 1985 to 1990, sued her two immediate supervisors and the City, alleging that the supervisors created a sexually hostile atmosphere at work. In particular, she alleged that the supervisors engaged in uninvited offensive touching of her breasts and buttocks, made lewd remarks, and spoke of women in offensive terms. The complaint contained specific allegations that one supervisor said that he would never promote a woman to the rank of lieutenant, and that another had told Faragher, "Date me or clean the toilets for a year." Within earshot of female lifeguards, one supervisor made frequent, vulgar references to women and sexual matters, commented on the bodies of female lifeguards and beachgoers, and at least twice told female lifeguards that he would like to engage in sex with them. The City had a sex harassment policy, but had not distributed the policy to its beach employees. In addition, the undisseminated policy did not contain any provision for bypassing a harassing supervisor in making complaints. Faragher, like Ellerth, had not officially reported the harassment of the two supervisors to the City, although she informally complained to another supervisor.
The Supreme Court's Rulings
The principal issue in both cases is whether the employer is liable for harassment by its supervisors when the employer is unaware of their conduct. The appeals courts dismissed the claims of the employees because the employers did not know about the harassment. The Supreme Court disagreed, and for the first time announced that an employer may be liable for a hostile work environment caused by its supervisors even if the employer was unaware of the harassment.
· The Labels Quid Pro Quo & Hostile Work Environment Are Not Controlling for Establishing Employer Liability
As indicated above, in determining employer liability for harassment, previous case law focused on the type of sex harassment, whether it was quid pro quo or hostile workplace harassment. If the harassment was quid pro quo, employers were, essentially, strictly liable for the harassment. If the harassment was of the hostile work environment type, the employee could prevail only if the harassment were severe and pervasive and, in addition, the employer knew or should have known of the harassment and failed to take prompt remedial action.
The Supreme Court stated that the emphasis of the parties and lower federal courts on the type of harassment -- whether it was quid pro quo or hostile work environment harassment -- was misplaced. The Court held that the category of the harassment does not control whether the employer is liable. As discussed in more detail below, the Court instead focused on whether the harassment involved a tangible employment action.
· Employers May Be Liable for Supervisors' Harassing Conduct
Many previous cases had held that a supervisor engaging in hostile work environment harassment acted out of gender-based animus motivated by personal motives unrelated and antithetical to the employer's interests. Thus, such cases found that, by engaging in such conduct, the supervisor was not acting within the scope of his employment and an employer was not liable for such harassment unless it knew or should have known about the conduct and took no steps to stop it.
The Supreme Court disagreed. As an initial matter, the Court held that an employer may be held liable when the harassment is made possible or facilitated through the supervisor's use of apparent authority. Thus, the Court reasoned, when a person with supervisory authority discriminates in a tangible employment action changing the terms and conditions of a subordinate's employment, his actions necessarily draw upon his superior position. As a general proposition, only a supervisor, or other person empowered by the company to make economic decisions affecting other employees, can cause this sort of injury. The scope of supervisory employment may be treated separately from a co-worker's employment because supervisors have special authority enhancing their capacity to harass. In addition, the supervisor's superior position prevents employees from checking the abusive conduct in the same way that they might deal with abuse from a co-worker. The Court further reasoned that an employer has a greater opportunity to guard against misconduct by supervisors than by co-workers and that employers have a greater incentive to screen, train, and monitor the performance of supervisors.
· Employers Are Strictly Liable for Supervisors' Harassment Culminating in Tangible Employment Actions
When a supervisor's sexual harassment of an employee culminates in a "tangible employment action," the employer is strictly liable for the harassment, regardless of whether the employer knew or should have known of the harassment and regardless of whether the employer took remedial steps to end the harassment after learning of it. The Supreme Court defined a tangible employment action as a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits. Although a tangible employment action may not always involve economic harm, the Court stated that in most cases it inflicts direct economic harm. The Court noted that tangible employment actions are the means by which the supervisor brings the official power of the employer to bear on subordinates.
Although not explicitly defining "supervisor," the Court's decisions suggest that a supervisor is an individual empowered by the employer to effectuate tangible employment actions that impact other employees, such as hiring, firing, promoting, demoting, and making other significant changes in benefits.
· An Employer Is Liable for Supervisors' Harassment That Does Not Culminate In Tangible Employment Action, Subject to an Affirmative Defense
The Supreme Court also expanded the circumstances giving rise to employer liability by holding that an employer is liable for a hostile environment created by a supervisor with immediate (and successively higher authority) over the harassed employee irrespective of the employer's actual knowledge of the conduct.
If no tangible employment action is taken, the employer may raise an affirmative defense to liability. This defense contains two elements. First, the employer must prove that it exercised reasonable care to prevent and promptly correct sexually harassing behavior. For most employers, this usually will require proof that the employer had a written sex harassment policy with an effective complaint procedure that had been communicated to employees. Second, the employer must prove that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer, or to avoid harm otherwise. The Court stated that, generally, an employee's unreasonable failure to use a complaint procedure provided by the employer will protect it against liability.
Beyond establishing this new affirmative defense, the Supreme Court gave only limited guidance on how the defense would be applied or implemented. The Court stated that, while proof that an employer has promulgated an anti-harassment policy with a complaint procedure is not absolutely necessary, the first element of the defense may be addressed by establishing the existence of such a policy. As to the second element of the defense, the Court stated that a demonstration of unreasonable failure to use any complaint procedure provided by the employer would normally suffice.
Applying these rules of law to the cases before them, the Supreme Court noted that Ellerth did not allege that she had been subject to a tangible employment action at the hands of her supervisor, and thus the employer was not strictly liable. Its liability under these circumstances depended on whether it had an effective policy and complaint procedure. Accordingly, the Court returned the case to the lower court to allow the employer the opportunity to present any affirmative defense it might have to liability -- presenting evidence that it had a sex harassment policy and complaint procedure in place and that the employee unreasonably failed to report the harassment.
Similarly, Faragher had established a hostile work environment claim and ordinarily the employer would be given the opportunity to establish an affirmative defense. The Supreme Court held that no such remand was necessary in the Faragher case, however, because the City had not distributed its policy to the lifeguard supervisors, who were unaware of its existence. The failure to disseminate this policy, the Court held, precluded the City from establishing an affirmative defense. Thus, the Court found for the plaintiff in Faragher without remand.
Sexual Harassment After Ellerth and Faragher
The Fourth Circuit Court of Appeals, which has jurisdiction over Maryland and Virginia, recently applied these two Supreme Court decisions in Reinhold v. Commonwealth of Virginia, No. 96-2816 (4th Cir. Aug. 4, 1998). In that case, the plaintiff alleged, among other things, that her supervisor had assigned her extra work and that she had suffered other harm as a result of her rejection of his sexual advances, but she did not allege that she experienced a change in her employment status akin to a demotion or reassignment entailing significantly different job responsibilities. Before the Supreme Court issued the Ellerth and Faragher decisions, the court had held that Reinhold had established all of the necessary elements for a quid pro quo claim, including a tangible job detriment suffered as a result of her rejection of the supervisor's advances, and thus, that her employer was strictly liable for the supervisor's conduct. On rehearing after the decisions were issued, the court held that harm alleged by Reinhold did not rise to the level of a "tangible employment action." As a result, the employer was not automatically liable for the harassment, and the court remanded the case for further proceedings to determine whether the employer could establish an affirmative defense, thereby avoiding liability for the supervisor's conduct.
B. Wright: Union Agreements To Arbitrate Discrimination Claims
Recent court decisions have given significant attention to the issue of the enforceability of agreements to arbitrate employment discrimination claims. Employers increasingly are seeking to promote arbitration as a less expensive and less time-consuming alternative to jury trials for resolving employment disputes -- including statutory employment discrimination disputes such as those that arise under Title VII, the ADEA, and the ADA. In this vein, the issue of whether unions may execute binding agreements to arbitrate such disputes on behalf of their members has been the subject of two noteworthy decisions.
Recently, in Wright v. Universal Maritime Service Corp., 119 S. Ct. 391 (1998), the Supreme Court took on this question. In that case, Caesar Wright, a longshoreman, obtained jobs with a variety of companies through the Longshoreman's union's hiring hall. After injuring his back in a workplace accident, he accepted a $250,000 settlement of his permanent disability claim. He also received Social Security disability benefits. Wright then claimed his injury unexpectedly healed and resumed taking work assignments through the union's hiring hall. One of the companies to which he was assigned soon discovered that he had previously certified that he was permanently and totally disabled. The company refused to hire Wright, claiming he was not qualified to perform longshoreman work. On the advice of his union, Wright retained counsel and sued the company under the ADA.
In response to the suit, the company argued that as a union member, Wright was subject to a collective bargaining agreement, which contained an arbitration clause mandating that he pursue any discrimination claim through arbitration. The District Court dismissed the case because Wright had failed to pursue the arbitration procedure provided by the collective bargaining agreement, and the Fourth Circuit Court of Appeals affirmed that decision. Before the Supreme Court, Wright argued that unions cannot waive employees' rights under discrimination statutes. The EEOC and Justice Department together filed an amicus (friend of the court) brief supporting Wright, and arguing that unions can never waive individual rights.
The Supreme Court observed that Section 301 of the Labor Management Relations Act creates a statutory presumption that arbitrators are in a better position than courts to interpret the terms of a collective bargaining agreement. The Court found, however, that Wright's dispute concerned the meaning of a federal statute, the ADA, not the application or interpretation of any collective bargaining agreement.
Declining to take the hard line position advocated by Wright -- that unions can never waive employees' rights to pursue discrimination claims in federal court -- the Court instead held that in order for a union to waive an employee's rights to a federal judicial forum, the arbitration agreement must be "clear and unmistakable." In Wright's case, the collective bargaining agreement was very general, providing only for arbitration of "matters under dispute," and the remainder of the contract contained no explicit incorporation of statutory anti-discrimination requirements. Accordingly, the Court unanimously ruled that the collective bargaining agreement's general arbitration clause did not require Wright to use the arbitration procedure for the alleged ADA violation. Those seeking guidance from the decision on what an arbitration clause should contain in order to be clear and unmistakable were left waiting until another day -- the Court avoided determining what arbitration clause language would be sufficiently explicit to be enforceable as to discrimination claims.
This new Supreme Court precedent was soon applied by the Fourth Circuit Court of Appeals in Harris v. General Motors Powertrain, 166 F.3d 1209 (4th Cir. 1999). Janet Harris worked for GMP as a production worker, and was a member of United Auto Workers (UAW). Harris was the only woman working in her department, and due to a series of unseemly incidents, filed grievances through UAW alleging sexual harassment. UAW and GMP reached a settlement, but Harris appealed the settlement, and eventually filed a Title VII action against her employer.
The district court dismissed Harris' gender discrimination claims, and she appealed. The Fourth Circuit found that a court is bound to enforce any legally negotiated arbitration clause that obligates the parties to submit Title VII claims to arbitration, including such clauses in collective bargaining agreements. Relying on the Wright decision, however, the Fourth Circuit noted that a union-negotiated waiver of the right to pursue statutory discrimination claims in a judicial forum must be "particularly clear."
Although the GMP-UAW collective bargaining agreement prohibited discrimination, it did not purport to submit any disputes of this nature to arbitration. Accordingly, the Fourth Circuit held that the agreement did not foreclose Harris from asserting her Title VII claims in court.
What guidance do these two decisions provide to employers? Ultimately, these decisions do not give employers, unions, or plaintiffs a much clearer idea of what is permissible in terms of union-negotiated waivers. In order to implement a valid and enforceable union-negotiated agreement to arbitrate, employers should remember that the agreement must be explicit and unmistakable. Even then, the Courts have left open for another day the decision of whether an arbitration clause that clearly includes discrimination claims would be enforceable.
C. Geissal: Forget The Significant Gap
Employers may not deny COBRA health plan continuation coverage to an otherwise eligible beneficiary because he or she is covered under another group health insurance plan at the time of COBRA election. This recent holding of the U. S. Supreme Court in Geissal v. Moore Medical Corporation, Inc., 524 U.S. 74 (U.S. 1998), resolved what had been a growing split among the federal circuits.
In Geissal, the employer, Moore Medical Corporation, discharged James Geissal on July 16, 1993. Geissal suffered from cancer, and during his employment was covered under Moore's group health plan as well by a group health plan through his wife's employer. Shortly after Geissal's discharge, Moore informed him that COBRA regulations gave him the right to elect to continue in Moore's group health plan if he paid the applicable premiums. Geissal elected to do so. Six months later, however, Moore wrote to Geissal, informing him that the company had made a mistake in allowing him to continue his group health insurance coverage. Moore told Geissal that he was not entitled to COBRA benefits because on his date of election he was already covered under his wife's group health plan. In response, Geissal filed suit against Moore and its health plan administrators.
The district court magistrate agreed with the employer, concluding that an employee with coverage under another group health plan on the date he elects COBRA coverage is ineligible for COBRA coverage. The Court of Appeals affirmed the district court's decision. The U.S. Supreme Court, however, reversed, finding that Moore violated COBRA by renouncing its obligation to provide continuing coverage.
In reaching this finding, the Supreme Court looked at the plain language of COBRA &#sect;1162(2)(D)(i). This provision allows an employer to cancel continuation coverage as of "[t]he date on which the qualified beneficiary first becomes, after the date of election . . . covered under any other group health plan." The Court explained that the language of the statute indicated that Congress did not intend to deny COBRA coverage where a beneficiary was already covered by a second group health insurance plan on the date of his or her COBRA election. Rather, the cited provision only disqualifies qualified beneficiaries who become covered by a group health plan after the date of the election.
In rendering its decision, the Supreme Court also rejected an approach adopted by a number of courts, called the "significant gap" theory. Such courts have held that although Congress generally intended to deny COBRA coverage to individuals who are covered by other group health plans on the date of election, COBRA coverage must be permitted where there is a "significant gap" between the coverage offered by the employer's group health plan, and that of the individual's other group health plan. The Supreme Court rejected this approach as suffering from a "sheer absence of statutory support." The Court noted that this approach would require the courts to make policy judgments about the adequacy of various insurance plans, measure them against each other, and determine whether the gap between two insurance plans is significant enough to render a beneficiary eligible for COBRA continuation. The Court held that such an inquiry is inappropriate for the courts in light of the absence of express Congressional authorization.
The Geissal decision clarifies a previously murky area of federal law. Clearly now, an employer who denies COBRA continuation coverage under its health plan to a former employee because he or she is covered under another group health plan at the time of election does so at its own peril. An employer should take note of this decision so that, in the event of serious illness or injury resulting in large medical bills, it will not find itself litigating its denial of COBRA coverage.
D. Gibson: Causation Evidence Required to Establish Retaliation
Recently, in Gibson v. Old Town Trolley, 160 F.3d 177 (4th Cir. 1998), the Fourth Circuit reversed a jury verdict in which a Maryland jury found that an employer had retaliated against a former employee by failing to provide him with an employment reference.
Mr. Gibson was a motor tour operator for Old Town Trolley, a company that operates guided tours through the streets of Washington, D.C. During a seasonal layoff, Mr. Gibson was let go. In the month after his termination he applied for a job with the Fairfax County school system to be a school bus driver and was asked by the school system to obtain references from his former employers. In December 1993, he mailed a county employment reference form to Old Town Trolley and he did not receive a response. In March 1994, he sent Old Town Trolley a second reference form along with a cover letter via fax and certified mail. He addressed the letter to a manager who was no longer with the company, so the letter was forwarded to a company vice president in Florida. Somehow, only the cover letter reached the vice president in Florida. He testified that he interpreted Mr. Gibson's letter to be requesting a narrative reference which the company as a matter of policy does not provide. Accordingly, the vice president did not provide a reference and returned the cover letter to Mr. Gibson informing him that the individual to whom he had addressed his letter was no longer with the company. Even without the completed reference, Mr. Gibson was offered and took the position with the Fairfax County school system.
Soon after his layoff, Mr. Gibson filed a charge of discrimination with the EEOC. Then, after receiving a no cause finding from the Commission, he filed a lawsuit alleging that he was discriminated against on the basis of age and race in his termination and that he had been retaliated against for filing an EEOC charge when Old Town Trolley had failed to complete his reference forms. At trial, a jury found that Mr. Gibson was not discriminated against in his termination. The jury found that he was retaliated against, however, and awarded him $700 in compensatory and $10,000 in punitive damages.
On appeal the Fourth Circuit reversed. It held that no reasonable jury could have found retaliation because there was no causal connection between Mr. Gibson's discrimination charge and Old Town Trolley's failure to complete and return his reference forms. Mr. Gibson attempted to demonstrate a connection on two bases, both of which the Court rejected. First, Mr. Gibson said that he had tried to call someone at the company immediately after he was laid off and that person told him he had been instructed not to talk to him. Mr. Gibson said this proved retaliation. The Court disagreed, holding that, because no charge had yet been filed, it was impossible for this perceived rudeness to have been retaliatory. Furthermore, the Court held that a policy that current employees not talk to terminated former employees is entirely reasonable in today's litigious climate. Similarly, the Court rejected Mr. Gibson's claim that the timing of the unreturned forms establishes retaliation. The Court emphasized that, without evidence of retaliatory intent and knowledge by the actors of the EEOC charge, the simple fact that an action took place after a charge was filed is not sufficient to establish retaliation. Reversing, the Court refused to allow a verdict for the former employee based upon no more than speculation that the charge and the failure to complete the forms were causally related.
This case demonstrates that more than a temporal relationship between a charge of discrimination and an employment action will be required for a Court to find retaliation. However, it does not change the fact that all employers must continue to be highly sensitive to treatment of employees who have filed discrimination charges with federal or state agencies. Any decision to take an adverse action shortly after the filing of a discrimination charge should be carefully reviewed with counsel.
E. Lissau: Supervisors Not Individually Liable Under Title VII
In the recent case of Lissau v. Southern Food Service, Inc., 159 F.3d 177 (4th Cir. 1998), our federal appeals court ruled that supervisors may not be held individually liable for violations of Title VII of the Civil Rights Act of 1964.
The plaintiff, Cynthia Lissau, filed a Title VII lawsuit against her former employer and supervisor alleging that both defendants were liable for a sexually hostile work environment. Specifically, Lissau alleged that her supervisor spoke and acted inappropriately, making provocative statements about her appearance and implying a sexual interest in her, and behaved similarly inappropriately toward other female employees. In addition, the supervisor allegedly touched Lissau on several occasions, including touching her on her thigh.
The District Court granted judgment in favor of both Southern and the supervisor prior to a trial on the merits. The Court held that Lissau's supervisor was entitled to judgment because supervisors are not individually liable under Title VII. The Court also held that the case against Southern should not go to trial because it did not have notice of the supervisor's behavior. Lissau then appealed from this decision.
On appeal, the Fourth Circuit held that Title VII's statutory language and remedial scheme leads to the conclusion that supervisors may not be held individually liable for Title VII violations. Although the Court's 1994 decision of Birkbeck v. Marvel Lighting Corp., left open the potentiality of individual supervisor liability in certain limited circumstances, the Lissau Court foreclosed this possibility.
Title VII defines "employer" to include "any agent" of an employer. However, the Court held that the agent language represented an "unremarkable expression of respondeat superior" which simply allows that actions taken by an employer's agent may create liability for the employer. Moreover, as Title VII specifically exempts small employers from liability, the Court stated that it would be "incongruous" to hold that Title VII does not apply to the owner of a five-person company but does apply to a person who supervises an identical number of employees in a larger company. Given this potential conflict, the Court found that individual liability would not lie against supervisors.
The Court further bolstered its conclusion by reference to Title VII's remedial scheme. Specifically, the Court noted that remedies under Title VII originally were limited to back pay and equitable relief, which were obtainable only from an employer, not a mere individual. Although the 1991 amendments to the statute added compensatory and punitive damages to the list of available remedies, Title VII's sliding scale of liability is dependent upon the size of the employer and does not provide an amount in cases where the plaintiff seeks to hold an individual supervisor liable. The Court found that this linkage between the size of an employer and the amount of available relief clearly indicated a congressional intent to limit plaintiffs' remedies to suits against employers.
With this holding, the Fourth Circuit joined the view held by ten other federal circuits and settled a sharply contested issue with clear implications for employers and their management employees.
F. Johnson: Employer Sent Back To Trial On Sex Discrimination Claims
In Taylor v. Virginia Union University, Virginia Union University, the employer, prevailed in federal district court in a consolidated Title VII sex discrimination, sex harassment and constructive discharge case. In a blow to the employer, however, the Fourth Circuit Court of Appeals has now reversed much of that decision and sent the lawsuit back to the trial court for reconsideration. Taylor v. Virginia Union University, 1999 WL 98647 (4th Cir. 1999).
The case involves two plaintiffs, Lynne Taylor and Keisha Johnson, who were employed as officers with the VUU Police Department. Both women were supervised by VUU's Chief of Police, Eugene Wells. Both filed lawsuits against VUU for sex discrimination and Ms. Johnson also alleged sex harassment and constructive discharge.
Ms. Taylor worked for VUU for just over two years. During the first year of her employment she was evaluated by Mr. Wells as "marginal." Notwithstanding this evaluation, however, she was often asked to serve as Acting Shift Supervisor. During her employment with VUU, Wells selected six officers to attend the Police Academy but refused to select her. He even said to a fellow officer that he would never send a female officer to the Academy. It was undisputed that Police Academy attendance positively impacted promotion opportunities. Ms. Taylor was ultimately terminated by Wells because, while off duty, she was discovered at a fraternity party in an all-male dorm. While she claims that she had not consumed alcoholic beverages at this party, she was nonetheless terminated for violating VUU's policies governing alcoholic beverages and coed visitation.
Ms. Johnson worked as an officer for just over one year. Chief Wells gave her "satisfactory" and "above average" job performance ratings in all areas of her work. She too was often appointed Acting Shift Supervisor. However, she was not promoted to Corporal like most male officers who were consistently assigned as Acting Shift Supervisor. Chief Wells also refused to select Johnson to attend the Police Academy. Ms. Johnson applied for a promotion to Lieutenant but was not selected, apparently because she had not attended the Police Academy. Ms. Johnson then resigned her employment with VUU.
At trial, the district court granted a judgment as a matter of law in favor of VUU on Ms. Taylor's claims of sex discrimination-that means that the court found that no reasonable jury could find for Ms. Taylor. In Ms. Johnson's case, the Court dismissed her sex harassment claim and sent her sex discrimination and constructive discharge claims to a jury which reached a verdict in favor of VUU. Johnson and Taylor appealed and were successful in reviving all of their claims.
Ms. Johnson contended on appeal that the district court committed reversible error when it sent her sex discrimination and constructive discharge claims to the jury having excluded evidence that Chief Wells often referred to women in derogatory terms and harassed another female employee. The Court of Appeals agreed, holding that derogatory remarks indicative of a discriminatory attitude are generally admissible to prove discriminatory treatment, and evidence of harassment of other women is relevant to Wells' intent and to whether the reason given for the treatment of Ms. Johnson was a pretext for discrimination. Accordingly, the Court reversed and ordered a new trial.
Ms. Johnson also argued on appeal that the district court erred when it dismissed her sex harassment claim for failure to exhaust administrative remedies based upon her failure to make an allegation of sex harassment on her EEOC charge. The Court agreed with Ms. Johnson. The Court noted that she had mentioned incidents of harassment in her pro se affidavit accompanying her charge and held that, reading her charge and affidavit "with utmost liberality," she raised a sex harassment claim before the Commission so she had exhausted her administrative remedies as required. Thus, it reversed the dismissal and remanded her sex harassment claim.
In Ms. Taylor's appeal, she argued that the judgment as a matter of law against her on her sex discrimination claim should be reversed and the Court of Appeals agreed. First, the Court found that Ms. Taylor had presented sufficient evidence to support her claim that she was denied police academy training because of her sex. Specifically, the Court explained that because Chief Wells had sole authority to select officers to attend the Academy, he had said he would never send a female officer to the Academy, and he never did send a woman to the Academy but sent six men during Taylor's tenure, there was sufficient evidence for a jury to disbelieve VUU's reasons for refusing to send Taylor and conclude that discrimination was the real reason. Accordingly, the Court reversed the judgment for VUU and remanded Ms. Taylor's claim.
Similarly, the Court of Appeals reversed the judgment for VUU on Ms. Taylor's failure to promote claim. The Court held that, while VUU contends that Ms. Taylor was not promoted because of her "marginal" performance rating, Ms. Taylor has presented sufficient evidence to establish discriminatory motive on the part of Wells in giving her this rating. Thus, a reasonable jury could have found that Ms. Taylor was in fact qualified for the position and that the reliance on the poor evaluation was a pretext for sex discrimination. Thus, this judgment for VUU was also reversed and remanded.
Finally, the Court of Appeals also reversed the judgment for VUU as to Ms. Taylor's discriminatory discharge claim. The Court found that Ms. Taylor has presented evidence that male employees who had fraternized with students in even more egregious ways had not been disciplined for their misconduct, but that Wells had terminated her. Thus, the Court held, a reasonable jury could find that VUU discharged Taylor because of her sex. Accordingly, it reversed the judgment in favor of VUU and remanded this claim as well.
While the final result in the case is yet to come, this case demonstrates the liabilities that can be faced by an employer who does not monitor the decisions of its managers carefully enough. It is wise for employers to review management decisions on promotion and termination carefully to ensure that employees are treated fairly and consistently. As seen here, failure to make this effort up front can lead to compound liability down the road.
G. King: Disabled Once And For All
May an employee successfully assert in one proceeding that she is disabled, and then in another claim that she is able and competent to work? This question was recently answered with a resounding, "No," by the Fourth Circuit Court of Appeals. King v. Herbert J. Thomas Memorial Hospital, 159 F.3d 192 (4th Cir. 1998).
For twenty-five years, Kermie King worked as a dietary aide for the Thomas Memorial Hospital. In September 1987, she was fired at age 58 because she admitted to repeatedly falsifying her time card. After her discharge, King applied for disability benefits from the Social Security Administration based upon osteoarthritis, a condition for which she had unsuccessfully sought the accommodation of a reduced amount of time standing on her feet during the year before her discharge. SSA awarded her retroactive disability benefits, determining that she had been disabled since one week before her discharge.
King then sued her former employer for age discrimination under West Virginia law, which requires the claimant to demonstrate that she "is able and competent to perform the services required" of her employment. Observing that the SSA disability benefits notice stated that King's award was based upon information and medical documentation that she provided, the lower court found King's age discrimination suit was factually incompatible with the position she took before SSA. The lower court held that King could not take the position before SSA that she was disabled and then take the inconsistent position in her age discrimination claim that she was able and competent.
On appeal, King contended that the SSA disability finding did not reflect her inability to perform her job as a dietary aide, but rather her general unemployability due to her age, limited work skills, education, and incapability due to arthritic feet and legs. Rejecting this argument the Fourth Circuit held that while the factors of age, skills, and education related only to King's general employability, the factor of "incapacity" referred to her ability "to do [her] previous work."
The Court further found that "judicial estoppel," an equitable doctrine that prevents a party who has successfully taken a position in one proceeding from taking the opposite position in a subsequent proceeding, barred King from asserting that she was able and competent. "To allow King to obtain benefits from two sources based on two incompatible positions, simply because the positions aid her claims for renumeration, would reduce the truth to a mere financial convenience and would undermine the integrity of the judicial process," held the Fourth Court.
A number of other courts have similarly considered whether individuals who have applied for or have received SSA disability benefits are barred from claiming that they are qualified individuals with disabilities under the Americans with Disabilities Act. The federal Courts of Appeal are in disagreement on this issue. In order to resolve this disagreement, the U.S. Supreme Court has agreed to decide whether individuals who claim they are disabled for purposes of receiving SSA disability benefits may later claim that they are qualified individuals with disabilities for purposes of the Americans with Disabilities Act.
H. Aka and Vaughan: Fourth and D.C. Circuits Differ on Standard For Proof Of Bias
Since the Supreme Court's 1993 decision in St. Mary's Honor Center v. Hicks, 509 U.S. 502 (1993), the federal courts of appeals have differed on whether an employment discrimination plaintiff can reach a jury if he can call into question the employer's stated reason for the allegedly discriminatory employment decision. The Fourth and D.C. Circuits have each recently issued decisions that set differing standards for the quantum of evidence necessary to reach a jury.
D.C. Circuit
The full federal Court of Appeals for the District of Columbia Circuit has decided by a vote of 7 to 4 that such a plaintiff will not routinely be required to submit evidence in addition to that which rebuts the employer's given explanation for its conduct. Aka v. Washington Hospital Center, 156 F.3d 1284 (D.C. Cir. 1998) (en banc).
The plaintiff Aka, a 56-year-old Nigerian-born man, worked as an operating room orderly for the defendant Washington Hospital Center. His job required frequent lifting and pushing of heavy items. After 19 years of work at WHC, Aka underwent surgery for heart and circulatory difficulties. Approximately six months later, Aka's doctor cleared him to return to work in a position that involved no more than a "light or moderate level of exertion." Because his orderly job did not meet this criterion, he asked to be transferred to another position. WHC declined the request, instructing Aka instead to apply for vacant jobs according to the hospital's job posting procedure. Aka applied for several positions, but obtained none. Ultimately, Aka filed a lawsuit claiming, among other things, that WHC unlawfully discriminated against him on the basis of his disability and his age by denying him certain open positions, including one as a pharmacy technician. In defense of its hiring decisions, WHC claimed that it did not select Aka because another applicant was better qualified. Aka attacked this explanation, presenting evidence showing that he (Aka) was the more qualified candidate.
The court analyzed the issue with reference to the familiar framework established by the U.S. Supreme Court, whereby a plaintiff first must establish a prima facie case of discrimination. Having done so, the burden shifts to the employer to state a legitimate, nondiscriminatory reason for the challenged employment decision. Should the employer present such a reason, the burden reverts to the plaintiff to demonstrate that the employer's reason was not the true reason for the employment decision and that discrimination was. In particular, the Supreme Court in its 1993 Hicks decision stated that "disbelief of the reasons put forward by the defendant . . . may, together with the elements of the prima facie case, suffice to show intentional discrimination."
The D.C. Circuit interpreted this passage to mean that, although evidence presented by an employee which tends to rebut the employer's explanation will not always suffice to permit an inference of discrimination, neither is an employee presumptively required to submit evidence over and above such a rebuttal in order for his or her case to reach a jury. The court added that proof that the employer's explanation for its actions is false, even if not expressly shown to be discriminatory, will be strong evidence of a discriminatory motive. Applying this reasoning to the case before it, the court held that Aka had presented enough evidence to permit a jury to conclude that Aka was considerably more qualified than the individual who was given the job, thus casting doubt on the employer's reason for its decision. Accordingly, the court remanded the case to the trial court to hold a trial on the discrimination claim.
Fourth Circuit
This case contrasts starkly with the decision of the Fourth Circuit, with jurisdiction over Maryland, Virginia, West Virginia and the Carolinas, in Vaughan v. MetraHealth Co., 145 F.3d 197 (4th Cir. 1998), in which that court held that raising a question of fact regarding the truthfulness of the employer's explanation for its employment decision is not sufficient to get to a jury. Rather, in Vaughan, the court held that it is an employee's burden to show not only that the employer's reason was false, but that discrimination was the actual reason.
In Vaughan, Metropolitan Life Insurance Company employed Vaughan and Meetz as provider relations managers in its Richmond, Virginia regional office from 1986 until January 1995. In January 1995, both Vaughan and Meetz became employees of MetraHealth, a joint venture between MetLife and Travelers Group. Formation of the joint venture necessitated reorganization of MetLife's operations. As part of this effort, Paul Cooper, MetraHealth's Vice President of Operations, decided to consolidate the two provider relations manager positions into one. Cooper interviewed Meetz and Vaughan for the position, ultimately choosing Meetz. At the time, Cooper was 50 years old, Meetz was 45, and Vaughan was 57.
Vaughan filed suit against MetraHealth alleging that she was terminated because of her age. MetraHealth successfully moved for summary judgment, the district court finding that Vaughan had not presented sufficient evidence for a reasonable juror to conclude that age discrimination more likely than not explained her discharge.
The Fourth Circuit Court of Appeals assumed for purposes of the appeal that Vaughan had established a prima facie case of age discrimination -- that Vaughan was terminated, that she was a member of the class of individuals protected by the ADEA, and that she was replaced by someone younger. The court noted that the burden then was on MetraHealth to articulate a legitimate, nondiscriminatory reason for rejecting Vaughan. If MetraHealth carried this burden, Vaughan would have to bear the burden of proving that she was the victim of intentional discrimination by demonstrating that MetraHealth's proffered reason for its decision was a mere pretext and that, as between her age and the company's explanation, age was the more likely reason for her discharge.
MetraHealth justified Vaughan's dismissal by relying on its 144-page downsizing policy manual. Vaughan challenged this explanation, pointing out that Cooper admitted he had not read the downsizing manual and in fact had not even seen it until his deposition. Because she had raised a question of fact regarding the truthfulness of MetraHealth's explanation, Vaughan argued that a jury should be permitted to decide whether she had been the victim of unlawful discrimination.
The court disagreed. It noted that, despite showing that MetraHealth may not have been wholly honest in its asserted rationale for the decision, Vaughan had not satisfied her burden to show that MetraHealth's explanation was a pretext for discrimination. To do so, the court stated that Vaughan had to show not only that the reason was false, but that discrimination was the actual reason. The fact that the proffered explanation was unpersuasive, or even clearly contrived, did not establish that age discrimination occurred. At most, Vaughan established that the selection process was too haphazard and subjective. But, as the court stated, "in filling an upper-level management post, some degree of subjectivity is inevitable . . . [and] need not signal an infection with age animus."
This decision signals that the Fourth Circuit will demand that an employee charging unlawful discrimination come forward with affirmative evidence that the employment decision at issue was motivated by discriminatory intent before permitting a jury to hear the case.
The Split
The differences between the D.C. Circuit's and the Fourth Circuit's decisions signal continued dissention over how much evidence of discrimination a plaintiff must produce to be permitted to bring his or her case before a jury, and underscore the degree to which the outcome of a discrimination case depends upon how the court resolves this issue.
I. Egbuna: Unauthorized Alien Precluded From Bringing Title VII Action
Foreign nationals who cannot demonstrate their eligibility to work in the United States under the Immigration Reform and Control Act of 1986 (IRCA) may not maintain an action under Title VII, recently held the Fourth Circuit Court of Appeals. Egbuna v. Time-Life Libraries, Inc., 153 F.3d 184 (4th Cir. 1998).
Obiura Egbuna, a native of Nigeria, was hired by Time-Life Libraries, Inc. (TLLI) in June 1989. At the time of his hire, Egbuna had a valid student work visa. Six months later, however, Egbuna's work visa expired. Fearing deportation, Egbuna never attempted to obtain new work authorization. TLLI failed to note the expiration of Egbuna's work visa and continued his employment until April 1993.
During the course of his employment at TLLI, Egbuna received a complaint from one of his subordinates that he had been sexually harassed by another supervisor. In contravention to company policy, Egbuna failed to report the complaint to the Human Resources Department. When the company eventually investigated the complaint, however, Egbuna corroborated many of the allegations of sexual harassment.
In April 1993, Egbuna decided to return to Nigeria and voluntarily resigned his position at TLLI. Two months later, Egbuna's plans having changed, he approached TLLI about the possibility of re-employment. TLLI declined to rehire Egbuna because of his failure to follow company policy regarding the reporting of sexual harassment complaints. Thereafter, Egbuna filed suit under Title VII alleging that TLLI had refused to hire him because he had participated in proceedings related to the sexual harassment investigation.
The district court granted summary judgment in TLLI's favor on the ground that Egbuna's lack of work authorization at the time that he sought re-employment with TLLI rendered him unqualified for the position. A three-judge panel of the Court of Appeals reversed the district court's decision, concluding that an alien without work authorization is not precluded from establishing a prima facie case of discrimination. Egbuna v. Time-Life Libraries, Inc., 95 F.3d 353 (4th Cir. 1996). That decision was vacated, however, when the Court granted a rehearing of the case en banc.
On rehearing, a full panel of the Court's judges held that because IRCA prohibits the employment of undocumented aliens, Egbuna could not, as a matter of law, establish a prima facie case of discrimination under Title VII. As the Court explained, IRCA requires employers to verify the immigration status of job applicants by examining specified documents. If an applicant cannot present the required documentation, IRCA prohibits employers from hiring the applicant. Thus, the Court reasoned that whether an alien applicant is "qualified" for a position necessarily hinges on his immigration status. If an alien is not legally authorized to work in the United States, he is not "qualified" for the position that he seeks and cannot maintain an action under Title VII, which conditions its remedies on a showing that the applicant was "qualified" for the position. The Court further noted that a ruling in Egbuna's favor "would sanction the formation of a statutorily declared illegal relationship, expose TLLI to civil and criminal penalties, and illogically create an entitlement simply because Egbuna applied for a job despite his illegal presence in this country and despite his having been statutorily disqualified from employment in the United States."
This decision is significant because it resolves a potential conflict between IRCA and Title VII, and protects employers who refuse to hire undocumented aliens in compliance with IRCA from nevertheless being subject to liability under Title VII for that hiring decision.
J. Koslow: Does Experience Equal Age?
The federal district court for the District of Columbia has recently issued a decision that demonstrates the dangers of advertising for a position requesting applicants with a certain number of years of experience. Koslow v. Epstein, Becker & Green, 77 F.E.P. Cases (BNA) 250 (D.D.C 1998).
Steven Koslow was a 53-year-old attorney licensed to practice law in the District of Columbia. He graduated from law school in 1969. During the summer of 1994, Mr. Koslow applied for a position at the law firm of Epstein, Becker & Green, in response to an advertisement requesting applications for its health law anti-trust litigation practice from attorneys between two and six years out of law school. Mr. Koslow was not granted an interview with Epstein, Becker & Green, which hired a 29-year-old applicant who had 28 months of work experience.
Mr. Koslow filed suit against Epstein, Becker & Green alleging that he had been discriminated against because of his age and alleging that the advertisement requesting applicants with a certain number of years of experience violated the Age Discrimination in Employment Act ("ADEA"). In a March 1998 decision, a federal district court for the District of Columbia, rejected Mr. Koslow's argument. Koslow v. Epstein, Becker & Green, 76 Fair Empl. Prac. (BNA) 1164 (D. D.C. 1998). The court noted that under the Supreme Court's decision in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), employers are allowed to base their employment decisions on factors other than age even if those factors are correlated with age. The Supreme Court specifically held, because "an employee's age is analytically distinct from his years of service . . . an employer can take account of one while ignoring the other." Accordingly, the district court dismissed Mr. Koslow's lawsuit, finding that the practice of considering only applicants with a specific number of years of experience was acceptable and not subject to challenge.
Three months later upon consideration of new evidence, the court reinstated Mr. Koslow's lawsuit allowing Mr. Koslow to proceed with discovery. The new evidence demonstrated that the law firm had in fact considered a number of candidates with significantly more than six years of experience, contrary to its previous defense that it did not hire Mr. Koslow because it considered only candidates with a limited number of years of experience.
The court's new ruling did not modify its earlier decision that an employer may properly limit consideration for a position to applicants with a certain number of years of experience. What this decision does say, however, is that employers that routinely request applications from job candidates who have a certain amount of experience should ensure that they do not give consideration to applicants who are outside the experience criteria requested. Failure to do so could potentially expose an employer to a lawsuit from an older applicant rejected because he or she had too many years of experience.
K. Hooters: Fair ADR Is Enforceable ADR
In theory, a jury trial is designed to bring fair and impartial justice to the resolution of a dispute. But in the real world of employee relations, a jury trial can be expensive, time-consuming, and plagued with long delays. Moreover, the results of a jury trial are often disappointing: juries are, at best, unpredictable. In contrast to court litigation, arbitration compares favorably as a means for resolving employment disputes -- including statutory employment disputes such as those that arise under Title VII, the ADEA, and the ADA. Both employees and employers often find arbitration less costly, speedier, and more efficient than litigation. Employers will often find that a more reasonable decision is likely to come from an experienced and knowledgeable arbitrator who understands employment law and the realities of the workplace than from a panel of unknown jurors who might be guided by their own subjective notions of workplace justice. In order to implement a valid and enforceable agreement to arbitrate, however, employers must remember that both the agreement itself and the procedural rules governing the arbitral process must be fair. Further, an employer should not use arbitration as a means to change an employee's substantive rights. To this end, the American Arbitration Association has adopted a "protocol" for the arbitration of statutory disputes arising out of the employment relationship that sets forth clear standards to ensure the fairness of the arbitral process.
A recent case decided by the federal district court in South Carolina illustrates what happens when an employer departs from this protocol. In Hooters of America, Inc. v. Phillips, 1998 U.S. Dist. LEXIS 3962 (D.S.C. 1998), the court refused to compel arbitration of a Title VII sexual harassment claim because the employer failed to provide the employee with a copy of its rules pertaining to arbitration and because those same arbitration rules placed employees at a considerable disadvantage during arbitration proceedings. The restaurant chain "Hooters" decided to implement an ADR program in early 1994 -- a decision prompted, in part, by a desire to limit exposure to sexual harassment litigation. Hooters unveiled its program to approximately twenty "Hooters Girls," including the plaintiff, at its Myrtle Beach, South Carolina facility in November of 1994. The facility's General Manager read aloud the terms of the arbitration agreement to employees. Although the agreement referenced the applicable arbitration rules, which had been drafted by the company's general counsel, Hooters did not distribute the rules or make them available to employees along with the agreement. Hooters informed employees that they could consult an attorney before signing the agreement and instructed employees to "hold" the agreement for five days before executing it. Although employees who refused to sign the agreement would not face termination, Hooters made clear that those employees would forfeit opportunities for future advancement.
The court found Hooter's arbitration rules riddled with both substantive and procedural deficiencies calculated to give Hooters the upper hand during arbitration. For instance, the rules gave Hooters control over the selection of arbitrators by requiring that all arbitrators be chosen from a list of "Approved Arbitrators," compiled and maintained by Hooters, and permitted Hooters to unilaterally modify the rules and bind employees retroactively to such modifications. The rules also imposed severe limitations on the discovery available to employees -- limiting employees to only one deposition, requiring that only the employee disclose the identity of her witnesses, and granting Hooters the sole discretion to preserve an official record of the arbitration or to seek judicial review. The court found most disturbing the fact that the rules also required employees to forego substantive Title VII rights, including the right to back pay and compensatory and punitive damages and the imposition of a higher burden of proof on employees than ordinarily required under Title VII.
In refusing to enforce the arbitration agreement, the court concluded that Hooters had failed to demonstrate the existence of a valid contract. Under the Federal Arbitration Act, the party who seeks arbitration must first show the existence of a valid written agreement for arbitration. According to the common law, in order for a valid agreement to exist the parties must reach a "meeting of the minds" with respect to all essential and material terms of the agreement. While arbitration rules typically do not constitute a "material" term because they are procedural in nature, the court held that the Hooters' rules did because of their impact on an employee's substantive Title VII rights. Because the arbitration agreement itself did not alert the plaintiff to the fact that by signing the agreement her substantive rights would be curtailed, and because Hooters failed to provide the plaintiff with a copy of its rules, the court concluded that no meeting of the minds had taken place. For the same reasons, the court also concluded that Hooters failed to show that the plaintiff's waiver of her substantive statutory rights was "knowing and voluntary." Further, court held that the arbitration agreement was both unconscionable and in violation of public policy. In so ruling, the court pointed to the severe injury the plaintiff would suffer as a result of the unfair, one-sided provisions in the rules and the disparity in bargaining power and sophistication between the two parties.
Although this decision is not currently binding on Maryland courts, it serves as useful guidance to employers about how not to draft an arbitration agreement and arbitration rules. Employers are well advised to consult competent labor counsel before implementing an ADR program.
L. Lowrey: "Pattern And Practice" Discrimination Claim Unavailable To Individual Claimants
The U.S. Court of Appeals for the Fourth Circuit recently has held that individual claimants do not have a non-class cause of action for pattern or practice discrimination under Title VII. In Lowery v. Circuit City Stores, 158 F.3d 742 (4th Cir. 1988), the appellate court largely rejected a jury verdict which had awarded over $275,000 in compensatory and punitive damages to two individual claimants, and nearly $4 million in attorneys' fees and costs.
In its initial incarnation, the case involved claims of racial discrimination brought by eleven African-American current and former employees of Circuit City. The plaintiffs sued individually and on behalf of all African-Americans employed at the Richmond, Virginia headquarters of the company. The claimants alleged that Circuit City engaged in a pattern or practice of racial discrimination and that Circuit City specifically discriminated against plaintiffs Renee Lowery and Lisa Peterson on account of their race.
Although originally certified as a class action, the trial court decertified, meaning abolished, the class because of what it deemed problems of fairness and efficiency. Notwithstanding the decertification of the class action, the district court held that the eleven plaintiffs would be able to produce evidence at trial of an alleged pattern or practice of discrimination. At trial, the majority of the plaintiffs' case focused on an alleged pattern or practice of discrimination resulting from Circuit City's unstructured management practices with regard to promotion.
At the close of the trial, the jury awarded plaintiffs Lowery and Peterson more than $275,000 in compensatory and punitive damages. In addition, the district court imposed a broad permanent injunction which, inter alia, prohibited Circuit City from engaging in any act or practice that discriminated against any African-American employee and required Circuit City to develop within 90 days a program of diversity management. The injunction established specific requirements which the mandated promotion programs must meet, and the trial court retained jurisdiction over the case for at least five years and thereafter for as long as required to carry out its order.
Over the past several months a number of cases have been decided that warrant a close look by employers. The United States Supreme Court has recently addressed the issues of employer liability for sexual harassment, agreements to arbitrate and the "significant gap" issue under COBRA. In addition, the federal Court of Appeals with jurisdiction over Mid-Atlantic states has decided a number of important cases involving individual liability for supervisors, evidence in retaliation cases, the implications of administrative claims of disability on subsequent discrimination claims, and NLRB bargaining orders. These cases and more are discussed below.
II. SIGNIFICANT CASES
A. Ellerth and Faragher: The Supreme Court's Sex Harassment Decisions
Factual Background
Burlington Industries, Inc. v. Ellerth, 118 S. Ct. 2257 (1998): Kimberly Ellerth worked as a salesperson for Burlington Industries. Ellerth claimed that she was harassed by her immediate supervisor's boss, a mid-level manager, who had authority to hire and promote employees, subject to higher approval, but was not considered a policy-maker. This individual allegedly made repeated boorish and offensive remarks. Ellerth's allegations emphasized three incidents where the manager's comments could be construed as threats to deny tangible job benefits. In particular, when Ellerth gave no encouragement to remarks the manager made about her breasts, he allegedly told her to "loosen up" and warned that he could make her work life "very hard or very easy." He also told Ellerth that she was not "loose enough" during a promotion interview, and reached over and rubbed her knee. In response to a work-related question over the phone, the manager allegedly told Ellerth that he didn't have time for her "unless you want to tell me what you're wearing."
Ellerth did not tell anyone in authority about the manager's conduct, even though she was aware that Burlington had a policy prohibiting sexual harassment and a complaint procedure for reporting such harassment. She resigned from her job, and about three weeks later sent a letter explaining that she quit because of the manager's behavior. Ellerth sued Burlington on the premise that the sexual harassment she endured on the job forced her out of her position, even though she never suffered any tangible detriment to her position and was, in fact, promoted once.
Faragher v. City of Boca Raton, 118 S. Ct. 2275 (1998): Beth Ann Faragher, a lifeguard for the City of Boca Raton from 1985 to 1990, sued her two immediate supervisors and the City, alleging that the supervisors created a sexually hostile atmosphere at work. In particular, she alleged that the supervisors engaged in uninvited offensive touching of her breasts and buttocks, made lewd remarks, and spoke of women in offensive terms. The complaint contained specific allegations that one supervisor said that he would never promote a woman to the rank of lieutenant, and that another had told Faragher, "Date me or clean the toilets for a year." Within earshot of female lifeguards, one supervisor made frequent, vulgar references to women and sexual matters, commented on the bodies of female lifeguards and beachgoers, and at least twice told female lifeguards that he would like to engage in sex with them. The City had a sex harassment policy, but had not distributed the policy to its beach employees. In addition, the undisseminated policy did not contain any provision for bypassing a harassing supervisor in making complaints. Faragher, like Ellerth, had not officially reported the harassment of the two supervisors to the City, although she informally complained to another supervisor.
The Supreme Court's Rulings
The principal issue in both cases is whether the employer is liable for harassment by its supervisors when the employer is unaware of their conduct. The appeals courts dismissed the claims of the employees because the employers did not know about the harassment. The Supreme Court disagreed, and for the first time announced that an employer may be liable for a hostile work environment caused by its supervisors even if the employer was unaware of the harassment.
· The Labels Quid Pro Quo & Hostile Work Environment Are Not Controlling for Establishing Employer Liability
As indicated above, in determining employer liability for harassment, previous case law focused on the type of sex harassment, whether it was quid pro quo or hostile workplace harassment. If the harassment was quid pro quo, employers were, essentially, strictly liable for the harassment. If the harassment was of the hostile work environment type, the employee could prevail only if the harassment were severe and pervasive and, in addition, the employer knew or should have known of the harassment and failed to take prompt remedial action.
The Supreme Court stated that the emphasis of the parties and lower federal courts on the type of harassment -- whether it was quid pro quo or hostile work environment harassment -- was misplaced. The Court held that the category of the harassment does not control whether the employer is liable. As discussed in more detail below, the Court instead focused on whether the harassment involved a tangible employment action.
· Employers May Be Liable for Supervisors' Harassing Conduct
Many previous cases had held that a supervisor engaging in hostile work environment harassment acted out of gender-based animus motivated by personal motives unrelated and antithetical to the employer's interests. Thus, such cases found that, by engaging in such conduct, the supervisor was not acting within the scope of his employment and an employer was not liable for such harassment unless it knew or should have known about the conduct and took no steps to stop it.
The Supreme Court disagreed. As an initial matter, the Court held that an employer may be held liable when the harassment is made possible or facilitated through the supervisor's use of apparent authority. Thus, the Court reasoned, when a person with supervisory authority discriminates in a tangible employment action changing the terms and conditions of a subordinate's employment, his actions necessarily draw upon his superior position. As a general proposition, only a supervisor, or other person empowered by the company to make economic decisions affecting other employees, can cause this sort of injury. The scope of supervisory employment may be treated separately from a co-worker's employment because supervisors have special authority enhancing their capacity to harass. In addition, the supervisor's superior position prevents employees from checking the abusive conduct in the same way that they might deal with abuse from a co-worker. The Court further reasoned that an employer has a greater opportunity to guard against misconduct by supervisors than by co-workers and that employers have a greater incentive to screen, train, and monitor the performance of supervisors.
· Employers Are Strictly Liable for Supervisors' Harassment Culminating in Tangible Employment Actions
When a supervisor's sexual harassment of an employee culminates in a "tangible employment action," the employer is strictly liable for the harassment, regardless of whether the employer knew or should have known of the harassment and regardless of whether the employer took remedial steps to end the harassment after learning of it. The Supreme Court defined a tangible employment action as a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits. Although a tangible employment action may not always involve economic harm, the Court stated that in most cases it inflicts direct economic harm. The Court noted that tangible employment actions are the means by which the supervisor brings the official power of the employer to bear on subordinates.
Although not explicitly defining "supervisor," the Court's decisions suggest that a supervisor is an individual empowered by the employer to effectuate tangible employment actions that impact other employees, such as hiring, firing, promoting, demoting, and making other significant changes in benefits.
· An Employer Is Liable for Supervisors' Harassment That Does Not Culminate In Tangible Employment Action, Subject to an Affirmative Defense
The Supreme Court also expanded the circumstances giving rise to employer liability by holding that an employer is liable for a hostile environment created by a supervisor with immediate (and successively higher authority) over the harassed employee irrespective of the employer's actual knowledge of the conduct.
If no tangible employment action is taken, the employer may raise an affirmative defense to liability. This defense contains two elements. First, the employer must prove that it exercised reasonable care to prevent and promptly correct sexually harassing behavior. For most employers, this usually will require proof that the employer had a written sex harassment policy with an effective complaint procedure that had been communicated to employees. Second, the employer must prove that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer, or to avoid harm otherwise. The Court stated that, generally, an employee's unreasonable failure to use a complaint procedure provided by the employer will protect it against liability.
Beyond establishing this new affirmative defense, the Supreme Court gave only limited guidance on how the defense would be applied or implemented. The Court stated that, while proof that an employer has promulgated an anti-harassment policy with a complaint procedure is not absolutely necessary, the first element of the defense may be addressed by establishing the existence of such a policy. As to the second element of the defense, the Court stated that a demonstration of unreasonable failure to use any complaint procedure provided by the employer would normally suffice.
Applying these rules of law to the cases before them, the Supreme Court noted that Ellerth did not allege that she had been subject to a tangible employment action at the hands of her supervisor, and thus the employer was not strictly liable. Its liability under these circumstances depended on whether it had an effective policy and complaint procedure. Accordingly, the Court returned the case to the lower court to allow the employer the opportunity to present any affirmative defense it might have to liability -- presenting evidence that it had a sex harassment policy and complaint procedure in place and that the employee unreasonably failed to report the harassment.
Similarly, Faragher had established a hostile work environment claim and ordinarily the employer would be given the opportunity to establish an affirmative defense. The Supreme Court held that no such remand was necessary in the Faragher case, however, because the City had not distributed its policy to the lifeguard supervisors, who were unaware of its existence. The failure to disseminate this policy, the Court held, precluded the City from establishing an affirmative defense. Thus, the Court found for the plaintiff in Faragher without remand.
Sexual Harassment After Ellerth and Faragher
The Fourth Circuit Court of Appeals, which has jurisdiction over Maryland and Virginia, recently applied these two Supreme Court decisions in Reinhold v. Commonwealth of Virginia, No. 96-2816 (4th Cir. Aug. 4, 1998). In that case, the plaintiff alleged, among other things, that her supervisor had assigned her extra work and that she had suffered other harm as a result of her rejection of his sexual advances, but she did not allege that she experienced a change in her employment status akin to a demotion or reassignment entailing significantly different job responsibilities. Before the Supreme Court issued the Ellerth and Faragher decisions, the court had held that Reinhold had established all of the necessary elements for a quid pro quo claim, including a tangible job detriment suffered as a result of her rejection of the supervisor's advances, and thus, that her employer was strictly liable for the supervisor's conduct. On rehearing after the decisions were issued, the court held that harm alleged by Reinhold did not rise to the level of a "tangible employment action." As a result, the employer was not automatically liable for the harassment, and the court remanded the case for further proceedings to determine whether the employer could establish an affirmative defense, thereby avoiding liability for the supervisor's conduct.
B. Wright: Union Agreements To Arbitrate Discrimination Claims
Recent court decisions have given significant attention to the issue of the enforceability of agreements to arbitrate employment discrimination claims. Employers increasingly are seeking to promote arbitration as a less expensive and less time-consuming alternative to jury trials for resolving employment disputes -- including statutory employment discrimination disputes such as those that arise under Title VII, the ADEA, and the ADA. In this vein, the issue of whether unions may execute binding agreements to arbitrate such disputes on behalf of their members has been the subject of two noteworthy decisions.
Recently, in Wright v. Universal Maritime Service Corp., 119 S. Ct. 391 (1998), the Supreme Court took on this question. In that case, Caesar Wright, a longshoreman, obtained jobs with a variety of companies through the Longshoreman's union's hiring hall. After injuring his back in a workplace accident, he accepted a $250,000 settlement of his permanent disability claim. He also received Social Security disability benefits. Wright then claimed his injury unexpectedly healed and resumed taking work assignments through the union's hiring hall. One of the companies to which he was assigned soon discovered that he had previously certified that he was permanently and totally disabled. The company refused to hire Wright, claiming he was not qualified to perform longshoreman work. On the advice of his union, Wright retained counsel and sued the company under the ADA.
In response to the suit, the company argued that as a union member, Wright was subject to a collective bargaining agreement, which contained an arbitration clause mandating that he pursue any discrimination claim through arbitration. The District Court dismissed the case because Wright had failed to pursue the arbitration procedure provided by the collective bargaining agreement, and the Fourth Circuit Court of Appeals affirmed that decision. Before the Supreme Court, Wright argued that unions cannot waive employees' rights under discrimination statutes. The EEOC and Justice Department together filed an amicus (friend of the court) brief supporting Wright, and arguing that unions can never waive individual rights.
The Supreme Court observed that Section 301 of the Labor Management Relations Act creates a statutory presumption that arbitrators are in a better position than courts to interpret the terms of a collective bargaining agreement. The Court found, however, that Wright's dispute concerned the meaning of a federal statute, the ADA, not the application or interpretation of any collective bargaining agreement.
Declining to take the hard line position advocated by Wright -- that unions can never waive employees' rights to pursue discrimination claims in federal court -- the Court instead held that in order for a union to waive an employee's rights to a federal judicial forum, the arbitration agreement must be "clear and unmistakable." In Wright's case, the collective bargaining agreement was very general, providing only for arbitration of "matters under dispute," and the remainder of the contract contained no explicit incorporation of statutory anti-discrimination requirements. Accordingly, the Court unanimously ruled that the collective bargaining agreement's general arbitration clause did not require Wright to use the arbitration procedure for the alleged ADA violation. Those seeking guidance from the decision on what an arbitration clause should contain in order to be clear and unmistakable were left waiting until another day -- the Court avoided determining what arbitration clause language would be sufficiently explicit to be enforceable as to discrimination claims.
This new Supreme Court precedent was soon applied by the Fourth Circuit Court of Appeals in Harris v. General Motors Powertrain, 166 F.3d 1209 (4th Cir. 1999). Janet Harris worked for GMP as a production worker, and was a member of United Auto Workers (UAW). Harris was the only woman working in her department, and due to a series of unseemly incidents, filed grievances through UAW alleging sexual harassment. UAW and GMP reached a settlement, but Harris appealed the settlement, and eventually filed a Title VII action against her employer.
The district court dismissed Harris' gender discrimination claims, and she appealed. The Fourth Circuit found that a court is bound to enforce any legally negotiated arbitration clause that obligates the parties to submit Title VII claims to arbitration, including such clauses in collective bargaining agreements. Relying on the Wright decision, however, the Fourth Circuit noted that a union-negotiated waiver of the right to pursue statutory discrimination claims in a judicial forum must be "particularly clear."
Although the GMP-UAW collective bargaining agreement prohibited discrimination, it did not purport to submit any disputes of this nature to arbitration. Accordingly, the Fourth Circuit held that the agreement did not foreclose Harris from asserting her Title VII claims in court.
What guidance do these two decisions provide to employers? Ultimately, these decisions do not give employers, unions, or plaintiffs a much clearer idea of what is permissible in terms of union-negotiated waivers. In order to implement a valid and enforceable union-negotiated agreement to arbitrate, employers should remember that the agreement must be explicit and unmistakable. Even then, the Courts have left open for another day the decision of whether an arbitration clause that clearly includes discrimination claims would be enforceable.
C. Geissal: Forget The Significant Gap
Employers may not deny COBRA health plan continuation coverage to an otherwise eligible beneficiary because he or she is covered under another group health insurance plan at the time of COBRA election. This recent holding of the U. S. Supreme Court in Geissal v. Moore Medical Corporation, Inc., 524 U.S. 74 (U.S. 1998), resolved what had been a growing split among the federal circuits.
In Geissal, the employer, Moore Medical Corporation, discharged James Geissal on July 16, 1993. Geissal suffered from cancer, and during his employment was covered under Moore's group health plan as well by a group health plan through his wife's employer. Shortly after Geissal's discharge, Moore informed him that COBRA regulations gave him the right to elect to continue in Moore's group health plan if he paid the applicable premiums. Geissal elected to do so. Six months later, however, Moore wrote to Geissal, informing him that the company had made a mistake in allowing him to continue his group health insurance coverage. Moore told Geissal that he was not entitled to COBRA benefits because on his date of election he was already covered under his wife's group health plan. In response, Geissal filed suit against Moore and its health plan administrators.
The district court magistrate agreed with the employer, concluding that an employee with coverage under another group health plan on the date he elects COBRA coverage is ineligible for COBRA coverage. The Court of Appeals affirmed the district court's decision. The U.S. Supreme Court, however, reversed, finding that Moore violated COBRA by renouncing its obligation to provide continuing coverage.
In reaching this finding, the Supreme Court looked at the plain language of COBRA &#sect;1162(2)(D)(i). This provision allows an employer to cancel continuation coverage as of "[t]he date on which the qualified beneficiary first becomes, after the date of election . . . covered under any other group health plan." The Court explained that the language of the statute indicated that Congress did not intend to deny COBRA coverage where a beneficiary was already covered by a second group health insurance plan on the date of his or her COBRA election. Rather, the cited provision only disqualifies qualified beneficiaries who become covered by a group health plan after the date of the election.
In rendering its decision, the Supreme Court also rejected an approach adopted by a number of courts, called the "significant gap" theory. Such courts have held that although Congress generally intended to deny COBRA coverage to individuals who are covered by other group health plans on the date of election, COBRA coverage must be permitted where there is a "significant gap" between the coverage offered by the employer's group health plan, and that of the individual's other group health plan. The Supreme Court rejected this approach as suffering from a "sheer absence of statutory support." The Court noted that this approach would require the courts to make policy judgments about the adequacy of various insurance plans, measure them against each other, and determine whether the gap between two insurance plans is significant enough to render a beneficiary eligible for COBRA continuation. The Court held that such an inquiry is inappropriate for the courts in light of the absence of express Congressional authorization.
The Geissal decision clarifies a previously murky area of federal law. Clearly now, an employer who denies COBRA continuation coverage under its health plan to a former employee because he or she is covered under another group health plan at the time of election does so at its own peril. An employer should take note of this decision so that, in the event of serious illness or injury resulting in large medical bills, it will not find itself litigating its denial of COBRA coverage.
D. Gibson: Causation Evidence Required to Establish Retaliation
Recently, in Gibson v. Old Town Trolley, 160 F.3d 177 (4th Cir. 1998), the Fourth Circuit reversed a jury verdict in which a Maryland jury found that an employer had retaliated against a former employee by failing to provide him with an employment reference.
Mr. Gibson was a motor tour operator for Old Town Trolley, a company that operates guided tours through the streets of Washington, D.C. During a seasonal layoff, Mr. Gibson was let go. In the month after his termination he applied for a job with the Fairfax County school system to be a school bus driver and was asked by the school system to obtain references from his former employers. In December 1993, he mailed a county employment reference form to Old Town Trolley and he did not receive a response. In March 1994, he sent Old Town Trolley a second reference form along with a cover letter via fax and certified mail. He addressed the letter to a manager who was no longer with the company, so the letter was forwarded to a company vice president in Florida. Somehow, only the cover letter reached the vice president in Florida. He testified that he interpreted Mr. Gibson's letter to be requesting a narrative reference which the company as a matter of policy does not provide. Accordingly, the vice president did not provide a reference and returned the cover letter to Mr. Gibson informing him that the individual to whom he had addressed his letter was no longer with the company. Even without the completed reference, Mr. Gibson was offered and took the position with the Fairfax County school system.
Soon after his layoff, Mr. Gibson filed a charge of discrimination with the EEOC. Then, after receiving a no cause finding from the Commission, he filed a lawsuit alleging that he was discriminated against on the basis of age and race in his termination and that he had been retaliated against for filing an EEOC charge when Old Town Trolley had failed to complete his reference forms. At trial, a jury found that Mr. Gibson was not discriminated against in his termination. The jury found that he was retaliated against, however, and awarded him $700 in compensatory and $10,000 in punitive damages.
On appeal the Fourth Circuit reversed. It held that no reasonable jury could have found retaliation because there was no causal connection between Mr. Gibson's discrimination charge and Old Town Trolley's failure to complete and return his reference forms. Mr. Gibson attempted to demonstrate a connection on two bases, both of which the Court rejected. First, Mr. Gibson said that he had tried to call someone at the company immediately after he was laid off and that person told him he had been instructed not to talk to him. Mr. Gibson said this proved retaliation. The Court disagreed, holding that, because no charge had yet been filed, it was impossible for this perceived rudeness to have been retaliatory. Furthermore, the Court held that a policy that current employees not talk to terminated former employees is entirely reasonable in today's litigious climate. Similarly, the Court rejected Mr. Gibson's claim that the timing of the unreturned forms establishes retaliation. The Court emphasized that, without evidence of retaliatory intent and knowledge by the actors of the EEOC charge, the simple fact that an action took place after a charge was filed is not sufficient to establish retaliation. Reversing, the Court refused to allow a verdict for the former employee based upon no more than speculation that the charge and the failure to complete the forms were causally related.
This case demonstrates that more than a temporal relationship between a charge of discrimination and an employment action will be required for a Court to find retaliation. However, it does not change the fact that all employers must continue to be highly sensitive to treatment of employees who have filed discrimination charges with federal or state agencies. Any decision to take an adverse action shortly after the filing of a discrimination charge should be carefully reviewed with counsel.
E. Lissau: Supervisors Not Individually Liable Under Title VII
In the recent case of Lissau v. Southern Food Service, Inc., 159 F.3d 177 (4th Cir. 1998), our federal appeals court ruled that supervisors may not be held individually liable for violations of Title VII of the Civil Rights Act of 1964.
The plaintiff, Cynthia Lissau, filed a Title VII lawsuit against her former employer and supervisor alleging that both defendants were liable for a sexually hostile work environment. Specifically, Lissau alleged that her supervisor spoke and acted inappropriately, making provocative statements about her appearance and implying a sexual interest in her, and behaved similarly inappropriately toward other female employees. In addition, the supervisor allegedly touched Lissau on several occasions, including touching her on her thigh.
The District Court granted judgment in favor of both Southern and the supervisor prior to a trial on the merits. The Court held that Lissau's supervisor was entitled to judgment because supervisors are not individually liable under Title VII. The Court also held that the case against Southern should not go to trial because it did not have notice of the supervisor's behavior. Lissau then appealed from this decision.
On appeal, the Fourth Circuit held that Title VII's statutory language and remedial scheme leads to the conclusion that supervisors may not be held individually liable for Title VII violations. Although the Court's 1994 decision of Birkbeck v. Marvel Lighting Corp., left open the potentiality of individual supervisor liability in certain limited circumstances, the Lissau Court foreclosed this possibility.
Title VII defines "employer" to include "any agent" of an employer. However, the Court held that the agent language represented an "unremarkable expression of respondeat superior" which simply allows that actions taken by an employer's agent may create liability for the employer. Moreover, as Title VII specifically exempts small employers from liability, the Court stated that it would be "incongruous" to hold that Title VII does not apply to the owner of a five-person company but does apply to a person who supervises an identical number of employees in a larger company. Given this potential conflict, the Court found that individual liability would not lie against supervisors.
The Court further bolstered its conclusion by reference to Title VII's remedial scheme. Specifically, the Court noted that remedies under Title VII originally were limited to back pay and equitable relief, which were obtainable only from an employer, not a mere individual. Although the 1991 amendments to the statute added compensatory and punitive damages to the list of available remedies, Title VII's sliding scale of liability is dependent upon the size of the employer and does not provide an amount in cases where the plaintiff seeks to hold an individual supervisor liable. The Court found that this linkage between the size of an employer and the amount of available relief clearly indicated a congressional intent to limit plaintiffs' remedies to suits against employers.
With this holding, the Fourth Circuit joined the view held by ten other federal circuits and settled a sharply contested issue with clear implications for employers and their management employees.
F. Johnson: Employer Sent Back To Trial On Sex Discrimination Claims
In Taylor v. Virginia Union University, Virginia Union University, the employer, prevailed in federal district court in a consolidated Title VII sex discrimination, sex harassment and constructive discharge case. In a blow to the employer, however, the Fourth Circuit Court of Appeals has now reversed much of that decision and sent the lawsuit back to the trial court for reconsideration. Taylor v. Virginia Union University, 1999 WL 98647 (4th Cir. 1999).
The case involves two plaintiffs, Lynne Taylor and Keisha Johnson, who were employed as officers with the VUU Police Department. Both women were supervised by VUU's Chief of Police, Eugene Wells. Both filed lawsuits against VUU for sex discrimination and Ms. Johnson also alleged sex harassment and constructive discharge.
Ms. Taylor worked for VUU for just over two years. During the first year of her employment she was evaluated by Mr. Wells as "marginal." Notwithstanding this evaluation, however, she was often asked to serve as Acting Shift Supervisor. During her employment with VUU, Wells selected six officers to attend the Police Academy but refused to select her. He even said to a fellow officer that he would never send a female officer to the Academy. It was undisputed that Police Academy attendance positively impacted promotion opportunities. Ms. Taylor was ultimately terminated by Wells because, while off duty, she was discovered at a fraternity party in an all-male dorm. While she claims that she had not consumed alcoholic beverages at this party, she was nonetheless terminated for violating VUU's policies governing alcoholic beverages and coed visitation.
Ms. Johnson worked as an officer for just over one year. Chief Wells gave her "satisfactory" and "above average" job performance ratings in all areas of her work. She too was often appointed Acting Shift Supervisor. However, she was not promoted to Corporal like most male officers who were consistently assigned as Acting Shift Supervisor. Chief Wells also refused to select Johnson to attend the Police Academy. Ms. Johnson applied for a promotion to Lieutenant but was not selected, apparently because she had not attended the Police Academy. Ms. Johnson then resigned her employment with VUU.
At trial, the district court granted a judgment as a matter of law in favor of VUU on Ms. Taylor's claims of sex discrimination-that means that the court found that no reasonable jury could find for Ms. Taylor. In Ms. Johnson's case, the Court dismissed her sex harassment claim and sent her sex discrimination and constructive discharge claims to a jury which reached a verdict in favor of VUU. Johnson and Taylor appealed and were successful in reviving all of their claims.
Ms. Johnson contended on appeal that the district court committed reversible error when it sent her sex discrimination and constructive discharge claims to the jury having excluded evidence that Chief Wells often referred to women in derogatory terms and harassed another female employee. The Court of Appeals agreed, holding that derogatory remarks indicative of a discriminatory attitude are generally admissible to prove discriminatory treatment, and evidence of harassment of other women is relevant to Wells' intent and to whether the reason given for the treatment of Ms. Johnson was a pretext for discrimination. Accordingly, the Court reversed and ordered a new trial.
Ms. Johnson also argued on appeal that the district court erred when it dismissed her sex harassment claim for failure to exhaust administrative remedies based upon her failure to make an allegation of sex harassment on her EEOC charge. The Court agreed with Ms. Johnson. The Court noted that she had mentioned incidents of harassment in her pro se affidavit accompanying her charge and held that, reading her charge and affidavit "with utmost liberality," she raised a sex harassment claim before the Commission so she had exhausted her administrative remedies as required. Thus, it reversed the dismissal and remanded her sex harassment claim.
In Ms. Taylor's appeal, she argued that the judgment as a matter of law against her on her sex discrimination claim should be reversed and the Court of Appeals agreed. First, the Court found that Ms. Taylor had presented sufficient evidence to support her claim that she was denied police academy training because of her sex. Specifically, the Court explained that because Chief Wells had sole authority to select officers to attend the Academy, he had said he would never send a female officer to the Academy, and he never did send a woman to the Academy but sent six men during Taylor's tenure, there was sufficient evidence for a jury to disbelieve VUU's reasons for refusing to send Taylor and conclude that discrimination was the real reason. Accordingly, the Court reversed the judgment for VUU and remanded Ms. Taylor's claim.
Similarly, the Court of Appeals reversed the judgment for VUU on Ms. Taylor's failure to promote claim. The Court held that, while VUU contends that Ms. Taylor was not promoted because of her "marginal" performance rating, Ms. Taylor has presented sufficient evidence to establish discriminatory motive on the part of Wells in giving her this rating. Thus, a reasonable jury could have found that Ms. Taylor was in fact qualified for the position and that the reliance on the poor evaluation was a pretext for sex discrimination. Thus, this judgment for VUU was also reversed and remanded.
Finally, the Court of Appeals also reversed the judgment for VUU as to Ms. Taylor's discriminatory discharge claim. The Court found that Ms. Taylor has presented evidence that male employees who had fraternized with students in even more egregious ways had not been disciplined for their misconduct, but that Wells had terminated her. Thus, the Court held, a reasonable jury could find that VUU discharged Taylor because of her sex. Accordingly, it reversed the judgment in favor of VUU and remanded this claim as well.
While the final result in the case is yet to come, this case demonstrates the liabilities that can be faced by an employer who does not monitor the decisions of its managers carefully enough. It is wise for employers to review management decisions on promotion and termination carefully to ensure that employees are treated fairly and consistently. As seen here, failure to make this effort up front can lead to compound liability down the road.
G. King: Disabled Once And For All
May an employee successfully assert in one proceeding that she is disabled, and then in another claim that she is able and competent to work? This question was recently answered with a resounding, "No," by the Fourth Circuit Court of Appeals. King v. Herbert J. Thomas Memorial Hospital, 159 F.3d 192 (4th Cir. 1998).
For twenty-five years, Kermie King worked as a dietary aide for the Thomas Memorial Hospital. In September 1987, she was fired at age 58 because she admitted to repeatedly falsifying her time card. After her discharge, King applied for disability benefits from the Social Security Administration based upon osteoarthritis, a condition for which she had unsuccessfully sought the accommodation of a reduced amount of time standing on her feet during the year before her discharge. SSA awarded her retroactive disability benefits, determining that she had been disabled since one week before her discharge.
King then sued her former employer for age discrimination under West Virginia law, which requires the claimant to demonstrate that she "is able and competent to perform the services required" of her employment. Observing that the SSA disability benefits notice stated that King's award was based upon information and medical documentation that she provided, the lower court found King's age discrimination suit was factually incompatible with the position she took before SSA. The lower court held that King could not take the position before SSA that she was disabled and then take the inconsistent position in her age discrimination claim that she was able and competent.
On appeal, King contended that the SSA disability finding did not reflect her inability to perform her job as a dietary aide, but rather her general unemployability due to her age, limited work skills, education, and incapability due to arthritic feet and legs. Rejecting this argument the Fourth Circuit held that while the factors of age, skills, and education related only to King's general employability, the factor of "incapacity" referred to her ability "to do [her] previous work."
The Court further found that "judicial estoppel," an equitable doctrine that prevents a party who has successfully taken a position in one proceeding from taking the opposite position in a subsequent proceeding, barred King from asserting that she was able and competent. "To allow King to obtain benefits from two sources based on two incompatible positions, simply because the positions aid her claims for renumeration, would reduce the truth to a mere financial convenience and would undermine the integrity of the judicial process," held the Fourth Court.
A number of other courts have similarly considered whether individuals who have applied for or have received SSA disability benefits are barred from claiming that they are qualified individuals with disabilities under the Americans with Disabilities Act. The federal Courts of Appeal are in disagreement on this issue. In order to resolve this disagreement, the U.S. Supreme Court has agreed to decide whether individuals who claim they are disabled for purposes of receiving SSA disability benefits may later claim that they are qualified individuals with disabilities for purposes of the Americans with Disabilities Act.
H. Aka and Vaughan: Fourth and D.C. Circuits Differ on Standard For Proof Of Bias
Since the Supreme Court's 1993 decision in St. Mary's Honor Center v. Hicks, 509 U.S. 502 (1993), the federal courts of appeals have differed on whether an employment discrimination plaintiff can reach a jury if he can call into question the employer's stated reason for the allegedly discriminatory employment decision. The Fourth and D.C. Circuits have each recently issued decisions that set differing standards for the quantum of evidence necessary to reach a jury.
D.C. Circuit
The full federal Court of Appeals for the District of Columbia Circuit has decided by a vote of 7 to 4 that such a plaintiff will not routinely be required to submit evidence in addition to that which rebuts the employer's given explanation for its conduct. Aka v. Washington Hospital Center, 156 F.3d 1284 (D.C. Cir. 1998) (en banc).
The plaintiff Aka, a 56-year-old Nigerian-born man, worked as an operating room orderly for the defendant Washington Hospital Center. His job required frequent lifting and pushing of heavy items. After 19 years of work at WHC, Aka underwent surgery for heart and circulatory difficulties. Approximately six months later, Aka's doctor cleared him to return to work in a position that involved no more than a "light or moderate level of exertion." Because his orderly job did not meet this criterion, he asked to be transferred to another position. WHC declined the request, instructing Aka instead to apply for vacant jobs according to the hospital's job posting procedure. Aka applied for several positions, but obtained none. Ultimately, Aka filed a lawsuit claiming, among other things, that WHC unlawfully discriminated against him on the basis of his disability and his age by denying him certain open positions, including one as a pharmacy technician. In defense of its hiring decisions, WHC claimed that it did not select Aka because another applicant was better qualified. Aka attacked this explanation, presenting evidence showing that he (Aka) was the more qualified candidate.
The court analyzed the issue with reference to the familiar framework established by the U.S. Supreme Court, whereby a plaintiff first must establish a prima facie case of discrimination. Having done so, the burden shifts to the employer to state a legitimate, nondiscriminatory reason for the challenged employment decision. Should the employer present such a reason, the burden reverts to the plaintiff to demonstrate that the employer's reason was not the true reason for the employment decision and that discrimination was. In particular, the Supreme Court in its 1993 Hicks decision stated that "disbelief of the reasons put forward by the defendant . . . may, together with the elements of the prima facie case, suffice to show intentional discrimination."
The D.C. Circuit interpreted this passage to mean that, although evidence presented by an employee which tends to rebut the employer's explanation will not always suffice to permit an inference of discrimination, neither is an employee presumptively required to submit evidence over and above such a rebuttal in order for his or her case to reach a jury. The court added that proof that the employer's explanation for its actions is false, even if not expressly shown to be discriminatory, will be strong evidence of a discriminatory motive. Applying this reasoning to the case before it, the court held that Aka had presented enough evidence to permit a jury to conclude that Aka was considerably more qualified than the individual who was given the job, thus casting doubt on the employer's reason for its decision. Accordingly, the court remanded the case to the trial court to hold a trial on the discrimination claim.
Fourth Circuit
This case contrasts starkly with the decision of the Fourth Circuit, with jurisdiction over Maryland, Virginia, West Virginia and the Carolinas, in Vaughan v. MetraHealth Co., 145 F.3d 197 (4th Cir. 1998), in which that court held that raising a question of fact regarding the truthfulness of the employer's explanation for its employment decision is not sufficient to get to a jury. Rather, in Vaughan, the court held that it is an employee's burden to show not only that the employer's reason was false, but that discrimination was the actual reason.
In Vaughan, Metropolitan Life Insurance Company employed Vaughan and Meetz as provider relations managers in its Richmond, Virginia regional office from 1986 until January 1995. In January 1995, both Vaughan and Meetz became employees of MetraHealth, a joint venture between MetLife and Travelers Group. Formation of the joint venture necessitated reorganization of MetLife's operations. As part of this effort, Paul Cooper, MetraHealth's Vice President of Operations, decided to consolidate the two provider relations manager positions into one. Cooper interviewed Meetz and Vaughan for the position, ultimately choosing Meetz. At the time, Cooper was 50 years old, Meetz was 45, and Vaughan was 57.
Vaughan filed suit against MetraHealth alleging that she was terminated because of her age. MetraHealth successfully moved for summary judgment, the district court finding that Vaughan had not presented sufficient evidence for a reasonable juror to conclude that age discrimination more likely than not explained her discharge.
The Fourth Circuit Court of Appeals assumed for purposes of the appeal that Vaughan had established a prima facie case of age discrimination -- that Vaughan was terminated, that she was a member of the class of individuals protected by the ADEA, and that she was replaced by someone younger. The court noted that the burden then was on MetraHealth to articulate a legitimate, nondiscriminatory reason for rejecting Vaughan. If MetraHealth carried this burden, Vaughan would have to bear the burden of proving that she was the victim of intentional discrimination by demonstrating that MetraHealth's proffered reason for its decision was a mere pretext and that, as between her age and the company's explanation, age was the more likely reason for her discharge.
MetraHealth justified Vaughan's dismissal by relying on its 144-page downsizing policy manual. Vaughan challenged this explanation, pointing out that Cooper admitted he had not read the downsizing manual and in fact had not even seen it until his deposition. Because she had raised a question of fact regarding the truthfulness of MetraHealth's explanation, Vaughan argued that a jury should be permitted to decide whether she had been the victim of unlawful discrimination.
The court disagreed. It noted that, despite showing that MetraHealth may not have been wholly honest in its asserted rationale for the decision, Vaughan had not satisfied her burden to show that MetraHealth's explanation was a pretext for discrimination. To do so, the court stated that Vaughan had to show not only that the reason was false, but that discrimination was the actual reason. The fact that the proffered explanation was unpersuasive, or even clearly contrived, did not establish that age discrimination occurred. At most, Vaughan established that the selection process was too haphazard and subjective. But, as the court stated, "in filling an upper-level management post, some degree of subjectivity is inevitable . . . [and] need not signal an infection with age animus."
This decision signals that the Fourth Circuit will demand that an employee charging unlawful discrimination come forward with affirmative evidence that the employment decision at issue was motivated by discriminatory intent before permitting a jury to hear the case.
The Split
The differences between the D.C. Circuit's and the Fourth Circuit's decisions signal continued dissention over how much evidence of discrimination a plaintiff must produce to be permitted to bring his or her case before a jury, and underscore the degree to which the outcome of a discrimination case depends upon how the court resolves this issue.
I. Egbuna: Unauthorized Alien Precluded From Bringing Title VII Action
Foreign nationals who cannot demonstrate their eligibility to work in the United States under the Immigration Reform and Control Act of 1986 (IRCA) may not maintain an action under Title VII, recently held the Fourth Circuit Court of Appeals. Egbuna v. Time-Life Libraries, Inc., 153 F.3d 184 (4th Cir. 1998).
Obiura Egbuna, a native of Nigeria, was hired by Time-Life Libraries, Inc. (TLLI) in June 1989. At the time of his hire, Egbuna had a valid student work visa. Six months later, however, Egbuna's work visa expired. Fearing deportation, Egbuna never attempted to obtain new work authorization. TLLI failed to note the expiration of Egbuna's work visa and continued his employment until April 1993.
During the course of his employment at TLLI, Egbuna received a complaint from one of his subordinates that he had been sexually harassed by another supervisor. In contravention to company policy, Egbuna failed to report the complaint to the Human Resources Department. When the company eventually investigated the complaint, however, Egbuna corroborated many of the allegations of sexual harassment.
In April 1993, Egbuna decided to return to Nigeria and voluntarily resigned his position at TLLI. Two months later, Egbuna's plans having changed, he approached TLLI about the possibility of re-employment. TLLI declined to rehire Egbuna because of his failure to follow company policy regarding the reporting of sexual harassment complaints. Thereafter, Egbuna filed suit under Title VII alleging that TLLI had refused to hire him because he had participated in proceedings related to the sexual harassment investigation.
The district court granted summary judgment in TLLI's favor on the ground that Egbuna's lack of work authorization at the time that he sought re-employment with TLLI rendered him unqualified for the position. A three-judge panel of the Court of Appeals reversed the district court's decision, concluding that an alien without work authorization is not precluded from establishing a prima facie case of discrimination. Egbuna v. Time-Life Libraries, Inc., 95 F.3d 353 (4th Cir. 1996). That decision was vacated, however, when the Court granted a rehearing of the case en banc.
On rehearing, a full panel of the Court's judges held that because IRCA prohibits the employment of undocumented aliens, Egbuna could not, as a matter of law, establish a prima facie case of discrimination under Title VII. As the Court explained, IRCA requires employers to verify the immigration status of job applicants by examining specified documents. If an applicant cannot present the required documentation, IRCA prohibits employers from hiring the applicant. Thus, the Court reasoned that whether an alien applicant is "qualified" for a position necessarily hinges on his immigration status. If an alien is not legally authorized to work in the United States, he is not "qualified" for the position that he seeks and cannot maintain an action under Title VII, which conditions its remedies on a showing that the applicant was "qualified" for the position. The Court further noted that a ruling in Egbuna's favor "would sanction the formation of a statutorily declared illegal relationship, expose TLLI to civil and criminal penalties, and illogically create an entitlement simply because Egbuna applied for a job despite his illegal presence in this country and despite his having been statutorily disqualified from employment in the United States."
This decision is significant because it resolves a potential conflict between IRCA and Title VII, and protects employers who refuse to hire undocumented aliens in compliance with IRCA from nevertheless being subject to liability under Title VII for that hiring decision.
J. Koslow: Does Experience Equal Age?
The federal district court for the District of Columbia has recently issued a decision that demonstrates the dangers of advertising for a position requesting applicants with a certain number of years of experience. Koslow v. Epstein, Becker & Green, 77 F.E.P. Cases (BNA) 250 (D.D.C 1998).
Steven Koslow was a 53-year-old attorney licensed to practice law in the District of Columbia. He graduated from law school in 1969. During the summer of 1994, Mr. Koslow applied for a position at the law firm of Epstein, Becker & Green, in response to an advertisement requesting applications for its health law anti-trust litigation practice from attorneys between two and six years out of law school. Mr. Koslow was not granted an interview with Epstein, Becker & Green, which hired a 29-year-old applicant who had 28 months of work experience.
Mr. Koslow filed suit against Epstein, Becker & Green alleging that he had been discriminated against because of his age and alleging that the advertisement requesting applicants with a certain number of years of experience violated the Age Discrimination in Employment Act ("ADEA"). In a March 1998 decision, a federal district court for the District of Columbia, rejected Mr. Koslow's argument. Koslow v. Epstein, Becker & Green, 76 Fair Empl. Prac. (BNA) 1164 (D. D.C. 1998). The court noted that under the Supreme Court's decision in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), employers are allowed to base their employment decisions on factors other than age even if those factors are correlated with age. The Supreme Court specifically held, because "an employee's age is analytically distinct from his years of service . . . an employer can take account of one while ignoring the other." Accordingly, the district court dismissed Mr. Koslow's lawsuit, finding that the practice of considering only applicants with a specific number of years of experience was acceptable and not subject to challenge.
Three months later upon consideration of new evidence, the court reinstated Mr. Koslow's lawsuit allowing Mr. Koslow to proceed with discovery. The new evidence demonstrated that the law firm had in fact considered a number of candidates with significantly more than six years of experience, contrary to its previous defense that it did not hire Mr. Koslow because it considered only candidates with a limited number of years of experience.
The court's new ruling did not modify its earlier decision that an employer may properly limit consideration for a position to applicants with a certain number of years of experience. What this decision does say, however, is that employers that routinely request applications from job candidates who have a certain amount of experience should ensure that they do not give consideration to applicants who are outside the experience criteria requested. Failure to do so could potentially expose an employer to a lawsuit from an older applicant rejected because he or she had too many years of experience.
K. Hooters: Fair ADR Is Enforceable ADR
In theory, a jury trial is designed to bring fair and impartial justice to the resolution of a dispute. But in the real world of employee relations, a jury trial can be expensive, time-consuming, and plagued with long delays. Moreover, the results of a jury trial are often disappointing: juries are, at best, unpredictable. In contrast to court litigation, arbitration compares favorably as a means for resolving employment disputes -- including statutory employment disputes such as those that arise under Title VII, the ADEA, and the ADA. Both employees and employers often find arbitration less costly, speedier, and more efficient than litigation. Employers will often find that a more reasonable decision is likely to come from an experienced and knowledgeable arbitrator who understands employment law and the realities of the workplace than from a panel of unknown jurors who might be guided by their own subjective notions of workplace justice. In order to implement a valid and enforceable agreement to arbitrate, however, employers must remember that both the agreement itself and the procedural rules governing the arbitral process must be fair. Further, an employer should not use arbitration as a means to change an employee's substantive rights. To this end, the American Arbitration Association has adopted a "protocol" for the arbitration of statutory disputes arising out of the employment relationship that sets forth clear standards to ensure the fairness of the arbitral process.
A recent case decided by the federal district court in South Carolina illustrates what happens when an employer departs from this protocol. In Hooters of America, Inc. v. Phillips, 1998 U.S. Dist. LEXIS 3962 (D.S.C. 1998), the court refused to compel arbitration of a Title VII sexual harassment claim because the employer failed to provide the employee with a copy of its rules pertaining to arbitration and because those same arbitration rules placed employees at a considerable disadvantage during arbitration proceedings. The restaurant chain "Hooters" decided to implement an ADR program in early 1994 -- a decision prompted, in part, by a desire to limit exposure to sexual harassment litigation. Hooters unveiled its program to approximately twenty "Hooters Girls," including the plaintiff, at its Myrtle Beach, South Carolina facility in November of 1994. The facility's General Manager read aloud the terms of the arbitration agreement to employees. Although the agreement referenced the applicable arbitration rules, which had been drafted by the company's general counsel, Hooters did not distribute the rules or make them available to employees along with the agreement. Hooters informed employees that they could consult an attorney before signing the agreement and instructed employees to "hold" the agreement for five days before executing it. Although employees who refused to sign the agreement would not face termination, Hooters made clear that those employees would forfeit opportunities for future advancement.
The court found Hooter's arbitration rules riddled with both substantive and procedural deficiencies calculated to give Hooters the upper hand during arbitration. For instance, the rules gave Hooters control over the selection of arbitrators by requiring that all arbitrators be chosen from a list of "Approved Arbitrators," compiled and maintained by Hooters, and permitted Hooters to unilaterally modify the rules and bind employees retroactively to such modifications. The rules also imposed severe limitations on the discovery available to employees -- limiting employees to only one deposition, requiring that only the employee disclose the identity of her witnesses, and granting Hooters the sole discretion to preserve an official record of the arbitration or to seek judicial review. The court found most disturbing the fact that the rules also required employees to forego substantive Title VII rights, including the right to back pay and compensatory and punitive damages and the imposition of a higher burden of proof on employees than ordinarily required under Title VII.
In refusing to enforce the arbitration agreement, the court concluded that Hooters had failed to demonstrate the existence of a valid contract. Under the Federal Arbitration Act, the party who seeks arbitration must first show the existence of a valid written agreement for arbitration. According to the common law, in order for a valid agreement to exist the parties must reach a "meeting of the minds" with respect to all essential and material terms of the agreement. While arbitration rules typically do not constitute a "material" term because they are procedural in nature, the court held that the Hooters' rules did because of their impact on an employee's substantive Title VII rights. Because the arbitration agreement itself did not alert the plaintiff to the fact that by signing the agreement her substantive rights would be curtailed, and because Hooters failed to provide the plaintiff with a copy of its rules, the court concluded that no meeting of the minds had taken place. For the same reasons, the court also concluded that Hooters failed to show that the plaintiff's waiver of her substantive statutory rights was "knowing and voluntary." Further, court held that the arbitration agreement was both unconscionable and in violation of public policy. In so ruling, the court pointed to the severe injury the plaintiff would suffer as a result of the unfair, one-sided provisions in the rules and the disparity in bargaining power and sophistication between the two parties.
Although this decision is not currently binding on Maryland courts, it serves as useful guidance to employers about how not to draft an arbitration agreement and arbitration rules. Employers are well advised to consult competent labor counsel before implementing an ADR program.
L. Lowrey: "Pattern And Practice" Discrimination Claim Unavailable To Individual Claimants
The U.S. Court of Appeals for the Fourth Circuit recently has held that individual claimants do not have a non-class cause of action for pattern or practice discrimination under Title VII. In Lowery v. Circuit City Stores, 158 F.3d 742 (4th Cir. 1988), the appellate court largely rejected a jury verdict which had awarded over $275,000 in compensatory and punitive damages to two individual claimants, and nearly $4 million in attorneys' fees and costs.
In its initial incarnation, the case involved claims of racial discrimination brought by eleven African-American current and former employees of Circuit City. The plaintiffs sued individually and on behalf of all African-Americans employed at the Richmond, Virginia headquarters of the company. The claimants alleged that Circuit City engaged in a pattern or practice of racial discrimination and that Circuit City specifically discriminated against plaintiffs Renee Lowery and Lisa Peterson on account of their race.
Although originally certified as a class action, the trial court decertified, meaning abolished, the class because of what it deemed problems of fairness and efficiency. Notwithstanding the decertification of the class action, the district court held that the eleven plaintiffs would be able to produce evidence at trial of an alleged pattern or practice of discrimination. At trial, the majority of the plaintiffs' case focused on an alleged pattern or practice of discrimination resulting from Circuit City's unstructured management practices with regard to promotion.
At the close of the trial, the jury awarded plaintiffs Lowery and Peterson more than $275,000 in compensatory and punitive damages. In addition, the district court imposed a broad permanent injunction which, inter alia, prohibited Circuit City from engaging in any act or practice that discriminated against any African-American employee and required Circuit City to develop within 90 days a program of diversity management. The injunction established specific requirements which the mandated promotion programs must meet, and the trial court retained jurisdiction over the case for at least five years and thereafter for as long as required to carry out its order.