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Summaries of Supreme Court of the United States 2008-2009 Term Decisions [June 2009]

Supreme Court of the United States 2008-2009 Term

On June 30, 2009, the Supreme Court completed the October, 2008 term. In total the Court issued seven decisions which impact the area of labor and employment. In addition to the seven substantive cases, the Term has produced some interesting statistics.

How Likely Is A Case To Be Accepted By the Supreme Court?

There were a total of 79 decisions rendered by the Court: 75 on the merits after oral argument and 4 summary reversals. In 60 out of 75 cases the Court reversed the Circuit Court. That is 75% of the cases heard were reversed.

The Court took in 16 cases from the 9th Circuit (California). That was more than from any other Circuit. This was followed by the Second Circuit (east coast states) with 9 cases. The Court heard 5 cases from the Sixth Circuit, which includes Ohio. The Court reversed all 5 cases. One of the Term's most significant employment cases was among the cases from the Sixth Circuit. Crawford v. Metropolitan Government of Nashville, 129 S. Ct. 846 (2009) looks at Title VII's anti-retaliation clause.

Title VII prohibits retaliation if an employee or applicant opposes a practice made unlawful by Title VII (opposition clause) or participates in an investigation of practices made unlawful (participation clause). Reversing the Sixth Circuit, the Court held that employees who are interviewed during an employer's investigation of a charge of sexual harassment are assisting in an investigation and are entitled to the protection of Section 704(a) of Title VII's non-retaliation provision.

ASHCROFT V. IQBAL, 129 S. Ct. 1937 (2009)

Topic: Civil Procedure

Holding:

Iqbal's complaint against high-ranking U.S. government officials (Ashcroft and Mueller) failed to plead sufficient facts to state a claim for purposeful and unlawful discrimination. The Court announces a new "plausibility" standard, in which a claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

Ramifications:

Although this case is not substantively deal with employment issues its holding will have a significant impact on many areas of law potentially very bad for plaintiffs. This decision requires plaintiffs to come forward with concrete facts at the outset, and it instructs lower court judges to dismiss lawsuits that strike them as implausible. This is a stark shift from Federal Rule of Civil Procedure 8(a)(2), requiring only a "short and plain statement of the claim showing that the pleader is entitled to relief." In addition, under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), "detailed factual allegations" are not required in pleading. In contrast, following this decision, federal judges can now assess at the very start of litigation, whether a plaintiff's accusations are true and plausible. This decision has the potential to lead to increasingly subjective judgments at increasingly early stages in litigation, leaving the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

AT&T CORP. v. HULTEEN et al., 129 S. Ct. 1962 (2009)

Topic: Pregnancy Discrimination Act and Retroactivity

Summary:

AT&T calculated the pensions of its employees based on their amount of service time with the company, minus any un-credited leave. Employees who took "disability" leave were given full credit, while employees who took maternity leave were not. When the Pregnancy Discrimination Act (PDA) was passed in 1978, AT&T amended its seniority system accordingly by giving employees full credit for maternity leave. Because Section 703(h) of Title VII affords immunity to any "bona fide" seniority system, the Court reversed the Ninth Circuit to hold that the system did not have to apply retroactively to time accrued before the system was amended to comply with the PDA.

Holding:

A system of calculating pension benefits, giving less credit for pregnancy leave than medical leave, in general, does not violate the PDA when applied to cases occurring prior to the PDA's inception. Because differential treatment of pregnancy leave was not gender-based discrimination when these employees took their leaves, and AT&T therefore couldn't have intended discrimination where it didn't exist, AT&T's plan is insulated from challenge under Section 703(h).

Ramifications:

Bad for the large number of women who took pregnancy leave between 1964 and 1978, and for plaintiffs seeking the future stability and solvency of pension plans and other corporate benefits.

GROSS V. FBL FINANCIAL SERVICES, INC., 129 S. Ct. 2343 (2009)

Topic: ADEA Burden-Shifting

Holding:

A plaintiff bringing an ADEA disparate-treatment claim must prove, by a preponderance of the evidence, that age was the "but-for" cause of the challenged adverse employment action. The burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age (unlike in Title VII mixed-motive cases), even when a plaintiff has produced some evidence that age was one motivating factor in that decision. Hence, the burden of persuasion is the same in alleged mixed-motives cases as in any other ADEA disparate-treatment action.

Ramifications:

This decision is certainly good news for employers defending ADEA claims and will present a real challenge to plaintiff employees attempting to establish such a claim. The majority uses language that implies an even greater degree of difficulty to prove causation under the ADEA than historically assumed by all of the U.S. Courts of Appeals. However, the saving grace of the Court's decision is that it invites Congress to challenge and amend the ADEA, as it has done previously with the Pregnancy Discrimination Act of 1979, Civil Rights Act of 1991, ADAAA of 2008, the Lilly Ledbetter Fair Pay Act of 2009, and quite possibly the Arbitration Fairness Act (now in the pipelines). In the long run, plaintiff employees may invariably wind up better off in the exchange.

KENNEDY V. DUPONT SAVINGS, 129 S. Ct. 865 (2009)

Topic: ERISA

Summary:

Kari Kennedy, the administrator of her father William's estate, was trying to recover for the estate some $402,000 that had been paid to Liv Kennedy, the divorced wife, because the ex-spouse had joined in a divorce decree in 1994 giving up all right to any of William's pension or other work-related benefits. William Kennedy was covered by the savings and investment plan for employees of the DuPont Co. Liv Kennedy had been named the beneficiary of William's investment plan assets, should he die. After the divorce in 1994, William did not remove his former wife as the beneficiary. The plan documents provided an easy way for him to do so, but he did not. Following the plan, the administrator sent the money to Liv. (Liv Kennedy died in 2007, but that did not settle the issue over the proceeds paid to her.) The husband's estate sued, claiming that Liv surrendered her rights under the divorce decree. Ultimately, the estate lost in the Fifth Circuit Court. Liv Kennedy's forfeiture at divorce, the Circuit Court ruled, would have amounted to an illegal diversion of benefits to someone else, in violation of ERISA's provision against such diversion (or "alienation"). A state court divorce decree, the Circuit Court said, is technically not the kind of paper diversion of plan assets that ERISA allows because it was not a "qualified domestic relations order," in the phrasing of ERISA. Other Circuit Courts, however, had ruled that a divorce decree could amount to a waiver of benefits, even if it wasn't a domestic relations order of a kind specified by ERISA.

Holding:

ERISA plan administrator held properly to have paid benefits to covered decedent's former spouse, who waived benefits in divorce decree, since decedent did not change beneficiary and spouse did not expressly disclaim benefits in accordance with plan terms.

Ramifications:

The victory for ex-spouses in Liv Kennedy's situation, though, may not be complete. The Court said explicitly in footnote 10 that it was leaving open the question of whether the estate could have sued to recover the benefits from Liv after she received them. The footnote mentioned prior rulings that seemed to say that a prior contractual agreement to forfeit funds may be enforceable after the distribution without violating ERISA; once the money is paid out, it loses its ERISA protection, those rulings had indicated.

LOCKE V. KARASS, 129 S. Ct. 798 (2009)

Topic: Labor union litigation expenses; First Amendment

Holding:

The First Amendment permits a local unit of a labor union to charge workers who are not members fees to help cover lawsuit expenses of the union at the national level, so long as: 1) the expenses are "appropriately related to collective bargaining;" and 2) the arrangement is reciprocal--that is, the local's payment to the national affiliate is for "services that may ultimately inure to the benefit of the members of the local union by virtue of their membership in the parent organization."

Ramifications:

The outcome of this case effects the financial obligations of nonmembers of unions, as well as the ability of unions to fund litigation through pooling arrangements with affiliates.

RICCI V. DESTEFANO, 129 S. Ct. 2658 (2009)

Topic: Title VII Disparate Impact and Race-Blind Merit Selection Procedures

Summary:

White and Hispanic candidates for promotion in the New Haven, CT fire department sued various city officials in the United States District Court for the District of Connecticut when the New Haven Civil Service Board (CSB) failed to certify two exams needed for the plaintiffs' promotion to Lieutenant and Captain. The CSB did not certify because the results of the test would have promoted a disproportionate number of white candidates in comparison to minority candidates. Fourteen of the top 15 candidates for the promotions were white, based on scores. The plaintiffs argued that their rights under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e, and the 14th Amendment Equal Protection Clause were violated. The federal district court granted the defendants' motion for summary judgment. On appeal, the United States Court of Appeals for the Second Circuit affirmed.

Holding:

Reversed and Remanded. Before an employer can engage in intentional discrimination for the purpose of avoiding an unintentional, "disparate impact" on a protected trait (race, color, religion, national origin), the employer must have a "strong basis in evidence" that it will be subject to disparate impact liability if it fails to take the race-conscious, discriminatory action. Because New Haven failed to demonstrate such strong basis in evidence, the City's action in discarding the tests violated Title VII.

Ramifications:

The Court's decision provides issues for employers to consider when using promotion examinations. First, an employer must consider the process it will use to devise a relevant and fair system for awarding promotions. Second, it is imperative that employers take care to ensure that the system is job-related and defensible. And third, employers should look to alternative methods, with an eye toward evaluating the examination's appropriateness to the workplace and the impact it might have on minority candidates.

14 PENN PLAZA v. PYETT, 129 S. Ct. 1456 (2009)

Topic: Arbitration

Summary:

The National Labor Relations Act, makes the Service Employees International Union, (Union) the exclusive bargaining representative of employees within the building-services industry in New York City The Union has exclusive authority to bargain on behalf of its members over their rates of pay, wages, hours of employment, or other conditions of employment, and engages in industry-wide collective bargaining with a multiemployer bargaining association for the New York City real-estate industry. The agreement between the Union and the employers iis embodied in their Collective Bargaining Agreement (CBA). The CBA requires union members to submit all claims of employment discrimination to binding arbitration under the CBA's grievance and dispute resolution procedures. One employer sought to reassign employees to other jobs.

The Union requested arbitration under the CBA, but the Union declined to pursue an age discrimination claim on the ground that its consent to the new security contract precluded it from objecting to the employers' assignments as discriminatory. The employees filed suit. The trial court denied the employers' motion to compel arbitration of employee's age discrimination claims. The Second Circuit agreed and affirmed. The Supreme Court reversed, holding in favor of the employer.

Holding:

A provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. The holding, in effect, overrules the portion of a 1974 Supreme Court case called Alexander v. Gardner-Denver Co., 415 U.S. 36 which precludes a union waiver of individual recourse to the courts for enforcement of statutory rights.

Ramifications:

This is bad for plaintiffs. Individuals will now be forced to participate in arbitrations where the forum and the arbitrator are selected and controlled by the union and the employer. Individual and minority statutory rights will now be dependent upon, and super-ceded by, majority interests protected in collective bargaining. The result may be an increase in duty of fair representation claims against unions, an additional hurdle for Plaintiff's pursuing employment claims.

Bruce B. Elfvin Key Role in Large Verdict for Firefighters Challenging Akron's Promotional Exams [December 2008]

Howe, et al. v. City of Akron, 5:06 CV 2779 (N.D. Ohio)

The Verdicts

On December 23, 2008, a unanimous jury of six (6) females and one (1) male returned a series of verdicts in favor of 23 Akron firefighters for a total of $1.891 million. The verdicts came following a three week jury trial in federal district court in Akron, Ohio before Judge John Adams. The verdicts were based upon the jury's determinations that the promotional process adopted by Akron, had an adverse impact on the basis of race (African-American - at the Lieutenant level and Caucasian - at the Captain level), and on the basis of age (40 and over) at the Lieutenant's level. The 23 Plaintiffs receiving verdicts were all candidates for promotion to Lieutenant or Captain in the Akron Fire Department. Lieutenant William Howe was the lead Plaintiff in the case, and was represented at trial by Dennis Thompson and Christy Bishop of Thompson & Bishop, and Bruce B. Elfvin of Elfvin & Besser.

The Background

The case grew out of the City of Akron's development of promotional exams to fill vacant positions in the Akron Fire Department. In December 2004, the City of Akron conducted promotional examinations developed by an outside company (E.B. Jacobs) to determine which firefighters would be promoted to the ranks of Lieutenant and Captain for its Fire Department. However, the jury found that the tests themselves were not sufficiently job related, skewing the results and leaving many qualified firefighters without a deserved promotion.

Claims of adverse impact were brought under the Age Discrimination in Employment Act ("ADEA"), Title VII of the Civil Rights Act of 1964, as well as Ohio Revised Code Chapter 4112. The complaint sought both equitable and legal relief in the form of declaratory relief, promotion or front pay, back pay, and compensatory damages. The Howe jury returned one of the first, if not the first, age discrimination adverse impact verdicts in the country. Throughout the trial, Akron questioned whether claims for disparate or adverse impact, brought under Title VII, were proper issues to be tried to a jury.

Issues of Note

Prior to the Civil Rights Act of 1991, all relief under Title VII was considered equitable and attained exclusively through bench trials. In a harbinger of how to treat the legal issues tried to a jury and equitable, non-jury Title VII issues in the same case, the Sixth Circuit in Gutzwiller v. Fenik, 860 F.2d 1317 (6th Cir. 1988), held that a trial court is bound by all of the factual findings of a jury, and any subsidiary finding necessary to support the verdict, when deciding the non-jury issues. Three years later, in 1991, Congress amended Title VII and other civil rights legislation. While expanding the right to jury trials, the 1991 Act contained an exception for disparate impact claims under Title VII. There is no similar prohibition under Ohio Revised Code's Chapter 4112. Questions have remained about how the Court's are to resolve the carve-out of adverse impact for a Title VII disparate impact claim within multi-issue claims in the same litigation.

What's Ahead

Howe was decided by the jury on December 23, 2008. Now, the Judge must make findings of fact and conclusions of law under Title VII. This will once again raise the application of Gutzwiller to any disparate impact claims, which overlap with the Plaintiffs' other claims. In Howe, the jury's findings and responses to interrogatories and any subsidiary facts necessary to those findings and verdicts will bind the Court's entry of findings of fact and conclusions of law on the non-jury portions of the Title VII claims.

We'd like to thank our law clerk, Geoff McCarrell, for authoring this article.

THE "CAT'S PAW" THEORY TO PROVE LIABILITY
IN
EMPLOYMENT DISCRIMINATION LITIGATION

By: Sarah Zinsmeister, Law Clerk Sarah is a 2nd year law student at Cleveland State. She is currently employed as a law clerk by Elfvin & Besser. The firm extends its appreciation to Sarah for her work on this article.

Title VII of the Civil Rights Act of 1964 prohibits employers with 15 or more employees from discriminating on the basis of race, religion, color, sex, or national origin. The Federal Age Discrimination in Employment Act (ADEA) extends this protection from intentional discrimination to workers over forty years of age. To satisfy the burden of proof, an employee filing a complaint under either Act must provide evidence of the discrimination. At all times, plaintiff retains the burden. The employee may use direct or circumstantial evidence to establish the necessary elements under the four prong test adopted by the Supreme Court in McDonnell Douglass v. Green. The employee must show she was: 1) a member of the protected class, 2) qualified for the position sought, 3) rejected, and 4) after this rejection, the position remained open, and the employer continued to accept applications.

If successful, the burden of production shifts to the employer, who must articulate a legitimate, non-discriminatory reason for the adverse job action. Once this is achieved, the burden then shifts back to the employee, who must "produce sufficient evidence from which a jury may reasonably reject the employer's explanation" as a mere pretext for discrimination. This is done by showing that the proffered reasons "1) had no basis in fact, 2) did not motivate the discharge, or 3) were insufficient to motivate the discharge."

Principles of agency law are evident in Title VII and the ADEA, as they both similarly define "employer" to include "agent." Title VII and the ADEA have borrowed from common law and apply the doctrine of respondeat superior (Latin for: "Let the master answer"). Under this theory, an employer is liable for intentional torts committed by its employees in furtherance of their employment. In Burlington Industry, Inc. v. Ellerth, the Supreme Court held that an employer can be liable for the discriminatory actions of subordinates, only if the subordinate acted as an agent of the employer.

The Seventh Circuit established the rule of vicarious liability under the ADA in Shager v. Upjohn Co. In Shager, the employee alleged that his termination was improper under the ADEA, because it was based on mere pretext for age discrimination. Shager's immediate supervisor, Lehnst "not only set [him] up to fail by assigning him an unpromising [sales] territory," but also recommended to the Career Path Committee ("CPC") that Shager be fired. However, in order to find the company liable and maintain the action, Shager had to establish that the person who actually terminated him (in this case, the CPC,) did so because of a discriminatory animus. If proven, it follows that the company would then be liable for the acts of its subordinate under respondeat superior.

The court reasoned that there was sufficient evidence for Shager to meet his burden with respect to the actions of his immediate supervisor, Lehnst. However, the court noted that although Lehnst recommended that Shager be terminated, he was in fact actually fired by the CPC, which presumably "was not... deliberately violating the Act when it fired Shager on Lehnst's recommendation." Thus, if the CPC terminated Shager for reasons "untainted by any prejudice of Lehnst's against older workers, the causal link between that prejudice and Shager's discharge is severed, and Shager cannot maintain this suit even if Upjohn Co. is fully liable for Lehnst's wrongdoing."

To get around this obstacle, the court recognized that Shager would be able to maintain the suit if he could show that the CPC acted as a mere "rubber stamp," or Lehnst's "cat's paw," which allowed him to carry out his discriminatory goals. The "cat's paw" is a reference to the fable "The Monkey and the Cat" in which a monkey persuades an "unsuspecting feline" to fetch chestnuts from a fire. The cat burns its paw in the process, while the monkey enjoys the fruits of the cat's labor. This situation occurs in the workplace when a biased subordinate adversely influences an uninformed or neutral decisionmaker, resulting in a discriminatory employment action against a member of a protected class. The theory argues that because the discriminatory animus of the subordinate "tainted" the decision maker's decision to terminate, the subordinate's prejudice should be imputed onto the formal decisionmaker, which acted merely as a "cat's paw" for the termination. The employer is then found liable for the discrimination as well, even though the ultimate decisionmaker did not have a discriminatory agenda.

However, the cat's paw theory is not without limits. The court in Shager noted that if the employer was able to establish that the ultimate decisionmaker was not merely a cat's paw, but instead acted on its own, then the employer would escape liability. This defense was refined in Rozskowiak v. Village of Arlington Heights. There, the court held that because the prejudiced subordinate was part of a group of seven who advised the ultimate decisionmaker in a consensus, the cat's paw theory was not applicable. Thus, the biased subordinate must be the "singular influence" on the decisionmaker in order to impute liability. The court in Brewer v. Board of Trustees of University of Illinois further established that the decisionmaker cannot be "wholly dependent on a single source of information" and must conduct "her own investigation into the facts relevant to the decision" in order to properly escape liability.

The issue of whether the ultimate decisionmaker relied solely on the subordinate, or conducted their own independent investigation before terminating, has also been defined over time. In Willis v. Marion County Auditor's Department, the court held that the decisionmaker had sufficiently made her own independent decision to terminate. There, the employee alleged that disciplinary actions taken against her for violation of the County policy were the result of her supervisor's racial discrimination. The ultimate decision maker was aware that she filed a discrimination claim. The employee then alleged that her final violation of County policy occurred only after her supervisor "planted" unprocessed invoices in her file in retaliation to filing discrimination charges. Because the decisionmaker knew of the discrimination charges, she allowed the employee an opportunity to substantiate her claim before reaching the conclusion that she had indeed violated County policy, and should be terminated. The court held that both the objectivity of the violations, and the opportunity for the employee to provide more information, were sufficient to establish that the ultimate decisionmaker acted independently when making the termination decision.

Although introduced into the legal system relatively recently, the cat's paw theory has been established as a viable theory and is a helpful tool for plaintiff's lawyers in employment litigation.