Caution: Just Because You Give an Employee What He Wants Does Not Mean He Won't Sue You For It Later

Employment discrimination lawsuits are filed because something bad happened to an employee that the employee did not want. Usually it’s a termination, a demotion, or discipline. Sometimes it’s harassment. Other times a refusal or failure to hire or promote. It’s always something adverse. That’s why they are called “adverse employment actions”.

So, what happens in an employee applies for a transfer to a new position within the organization   He thinks it will be better for his career. Someone else gets the job, but that person doesn’t work out. Employee gets another opportunity and is moved into the new position.   Unfortunately, the employee is not well suited for job, and ultimately gets terminated.   Now he claims the employer discriminated against him by transferring him to the new position.    He can’t sue can he? He asked for the transfer.   

A recent ruling from the Sixth Circuit seems to stand the whole idea of “adverse employment action” on its head. In Deleon v. Kalamazoo County Road Commission (6th Circuit, January 14, 2014) the Court held a lateral transfer from one department to another qualifies as an adverse employment action, even though the Plaintiff had applied for the job nine months previously.

The Plaintiff, a 53 year old Hispanic male of Mexican descent, was employed by the Kalamazoo County Road Commission. For 13 years he served as an area superintendent, which involved supervising road maintenance activities, road crews, and overseeing repairs.

In 2008, a vacancy arose for the position of Equipment and Facilities Superintendent. Plaintiff applied for the position because he anticipated it would result in a pay increase and would be better for his career and advancement.    He was not offered the job, primarily because of his deficient computer skills. But, the person who took the job left shortly thereafter, and an external candidate offered the position declined it. Thus, nine months after Plaintiff had applied, the job was again open, and he was transferred there. 

Unfortunately for Plaintiff, the deficient computer skills that kept him from getting the job in the first place proved to be his undoing. Plaintiff’s first evaluation in the new position rated him acceptable in most critical areas but he was deficient in technology. He complained that he was unhappy with his new position.   He did not like the fact that the working condition exposed him to loud noises and diesel fumes.   Plaintiff inquired why he had been involuntarily moved from a position where he was performing well to one that was more hazardous. Plaintiff was later hospitalized for what he attributed to work induced stress and eventual mental breakdown. He took eight months of leave under FMLA because of his mental breakdown. By the time he was released to return to work, his employment had been terminated. Plaintiff alleged the transfer was a deliberate attempt to set him up to fail because of his race, national origin, and age.

The trial Court granted Defendant’s Motion for Summary Judgment on the basis that Plaintiff did not suffer an adverse employment action. The Court of Appeals reversed, but with one judge dissenting.    In evaluating whether the transfer was an adverse employment action, the majority discounted the fact that Plaintiff had previously sought the job, concluding that the conditions at the time the transfer actually occurred made it involuntary.   The majority pointed to the fact that Plaintiff did not receive the raise he expected, and was not satisfied with the more hazardous working conditions.   The test, according to the majority, was not whether the employee requested or did not request the transfer, but whether the conditions of the transfer would have been objectively intolerable to a reasonable person.

The dissenting judge disagreed that Plaintiff’s transfer could be considered an involuntary one.   According to the dissent, giving an employee what he wanted, and in what he persisted in seeking when at first he did not succeed, cannot an adverse employment action.  

Unfortunately, rulings like this one contribute to employer cynicism about the employment discrimination laws and tend to undermine what the law seeks to accomplish.   The dissent pointed out this perverse result, noting that an interpretation of the law “that subjects employers to liability coming and going—whether after granting employee requests or denying them-will do more to breed confusion about the law than to advance the goals of a fair and respectful workplace.”     

Another Court Rules Agreement to Arbitrate Employment Disputes is Enforceable

Employers who want to bypass jury trials of employment disputes in favor of arbitration got another boost in a recent case from the Eastern District of Missouri. In Karzon v. AT&T, Inc. (E.D. Mo. 1/7/14), the court ruled that E-mail notification of an arbitration proposal combined with an “opt-put” option was sufficient to bind employees to the company’s arbitration agreement.  

The plaintiff sued AT&T, alleging he was subject to a hostile work environment, unequal discipline, and was unlawfully terminated based upon his national origin. AT&T asked the court to dismiss the lawsuit and order the parties to submit the case to arbitration. In late 2011, AT&T offered its employees the opportunity to arbitrate any employment disputes with the company.   The plaintiff argued he was not required to arbitrate because he never agreed to the arbitration offer.

AT&T notified employees by e-mail it had implemented an arbitration program to resolve disputes between the AT&T Companies and their employees. The e-mail included a link to a web page containing the text of the arbitration agreement. AT&T’s records showed the plaintiff received the e-mail and accessed the associated web page through the link on the same day.

The e-mail to employees stated in bold print “REVIEW REQUIRED” and “Notice Regarding Arbitration Agreement”. The notification told employees they had the option whether to participate in the arbitration program. The program also gave the employees the option whether or not to participate. However, in order not to participate in mandatory arbitration, the employee had to “opt out” using the instructions and website. If the employee did not opt out, the company presumed the employee agreed to arbitration.

The Federal Arbitration Act (FAA) makes arbitration agreements enforceable just as any other contract. Although it has been extensively litigated, courts have held in recent years that even employment agreements containing arbitration provisions are enforceable. The only way an employee can get out of an arbitration provision is by showing the agreement is not enforceable for some other reason. 

In Karzon, plaintiff claimed the arbitration agreement AT&T presented to its employees was not enforceable because it was not in writing. The court rejected that argument, finding the e-mail communication was sufficient to qualify as a writing.

The plaintiff also argued no contract was formed because he never accepted the agreement. The court ruled, however, that under Missouri law an offer may be accepted by conduct, which includes failing to opt out of the agreement as was the case here.

While agreements to arbitrate employment disputes are not common in Iowa, this case nonetheless is a reminder that such an option is available for employers who want to avoid jury trials. To make an arbitration agreement enforceable, however, employers should ensure employees have fair notice and a real opportunity to agree or not agree. . That was accomplished in the Karzon case by making participation in arbitration optional and not mandatory. The second important consideration is making sure the employee consents to be bound by the arbitration agreement. In the Karzon case it was enough for the court that the plaintiff failed to opt out of participation. While some states will require stricter evidence of consent to participate, this case shows that an opt out provision may be a viable alternative.

Of course, whether arbitration is a better option for employers than litigating in court is another question altogether.     That is a subject for another day.

Don't Assume An Applicant Is Not Qualified Because a Doctor Says So...

A federal district court in Michigan recently granted summary judgment for the plaintiff, (you read that correctly), ruling that the employer was liable for disability discrimination as a matter of law. (Lafata v. Dearborn Heights Sch. Dist. No.7 (E.D. Mich. 12/11/2013)).   A plaintiff hardly ever files for summary judgment in an employment case, let alone wins the motion. So what happened here?

The Plaintiff applied for a position as a Plant Engineer with the Defendant School District.   For ten years prior to applying for the job, Plaintiff worked as a building supervisor at a community center. In that job, he was responsible for complete maintenance, inside and outside the building, minor plumbing and electrical work, roof repairs, and all tasks associated with set up and care of the community pool and ice skating rink.   He regularly used ladders and carried objected weighing more than forty pounds.

The School District offered the Plant Engineer position to Plaintiff, conditioned upon a physical exam showing he could perform the essential functions of the job.   The job description for the position was very general, and did not identify specific tasks or physical demands. The physician who did the pre-employment physical diagnosed the Plaintiff with Charcot Marie Tooth syndrome, a genetic disorder that causes muscle deterioration and gradual loss of strength. But, the doctor did not ask any questions about the Plaintiff’s physical symptoms or his work history. The doctor expressed concerns about Plaintiff using a ladder because he could not “purposely dorsi-flex his foot up or down as he might to have to maneuver while climbing on a ladder."   He also said a forty pound lifting restrictions was a “fair number” based upon his estimation of Plaintiff’s strength, which he assessed by watching Plaintiff climb onto the examination table.

The doctor had a telephone conversation with the Assistant to the Assistant Superintendent, during which he verbally told her about his findings and restrictions.    The Assistant shared her notes of the telephone conversation with her boss (the Assistant Superintendent) and the Director of Operations. They decided, without any further information or documentation, to revoke Plaintiff’s conditional job offer. The reason: Plaintiff could not perform the essential functions of the job. They testified decision was “somewhat automatic”, based upon the restriction against ladders and lifting more than forty pounds.   They likened the Plaintiff’s physical restrictions to a an applicant who has a felony history—it disqualified him in and of itself.

The School District lost this case at the summary judgment stage for two reasons.   First, the information it relied upon about the Plaintiff’s restrictions was woefully inadequate.   District personnel took everything the doctor told them at face value, without having any information about the nature and extent of the doctor’s exam or other information the doctor relied upon.   Second, after learning about the restrictions, the District made no effort to dialogue with the Plaintiff about potential reasonable accommodations. If they had simply talked to the Plaintiff, they may have learned more about the limitations of the doctor’s opinion and perhaps could have developed a solution that would have allowed Plaintiff to do the job while also dealing with any of the medical concerns.

Takeaway: employers cannot farm out to medical professionals their obligation to make an individual assessment of an applicant’s ability to perform the essential functions of a job.   While a physician’s opinion is often essential, in and of itself it does not answer the questions about qualifications or reasonable accommodation.  Nor does it relieve the employer of its obligation to engage in the interactive process. 

Employment Discrimination Lawsuit Against Catholic Diocese of Sioux City Tests the Limits of the Ministerial Exception

The CFO of Bishop Heelan Catholic Schools in Sioux City claims he was terminated because he is not Catholic.   He recently sued the Diocese, the school, and the Bishop alleging his termination violated the law against discrimination on the basis of religion. Does he have a case?

Courts in the United States have uniformly recognized a “ministerial” exception to the employment discrimination laws. Basically, that means a church can’t be sued for discrimination because of hiring, firing, and other employment decisions involving its ministers.   The First Amendment trumps the employment laws. 

Like many legal doctrines, however, the ministerial exception is simple in theory but more difficult in practice. The case raises two questions: whether the Sioux City Catholic Schools are covered by the ministerial exception; and whether the CFO qualifies as a “minister”.  

The answer to the first question is almost certainly “yes”.   Courts have ruled that Catholic Colleges are ministers of the Church and are entitled to the Church’s protection against government mandates that burden its religious practice.  The same reasoning applies to elementary and high schools.  The Bishop Heelan School System operates under the authority of the Bishop of the Sioux City Diocese.   That a Catholic School is part of the ministry of the Church cannot reasonably be questioned. 

The answer to the second question is more difficult. In 2012, The U.S. Supreme Court ruled that a teacher at a Lutheran School could not sue for disability discrimination because she qualified as a “minister”. (Hosanna Tabor Lutheran Church v. EEOC).   Unfortunately, the Court did not set forth clear criteria by which the lower courts in future cases could judge who and who is not a minister.   The Court adopted a vague, “we’ll know it when we see it” approach.   Some have interpreted Hosanna-Tabor as giving religious institutions wide discretion in identifying who is a minister.  Others claim courts should engage in a fact intensive inquiry in each case to determine whether an employee is a minister.

Certainly one could make the case an accountant is not a minister. But, because the plaintiff is alleging discrimination on the basis of religion, the inquiry should not end there. There is one more constitutional right at stake that should trump any analysis under the ministerial exception. Namely, the right of freedom of association.   Even the EEOC in the Hosanna-Tabor case agreed that church organizations can defend themselves from claims of discrimination by invoking this right.  It seems absurd to claim the Catholic Church cannot favor Catholics over non-Catholics in hiring and firing decisions, whether that employee is clergy, a teacher, or an accountant.   No religious organization should have to defend itself in court because it favors members of its own faith in employment.  The court should quickly dispose of the plaintiff’s religious discrimination claim. 

Reinstatement of Jury Award After Employer Victory Shows Failure to Mitigate Defense Hard to Prove

The best outcome to a discrimination lawsuit from the employer’s perspective is to win outright—for the judge or jury to find that the employer did not unlawfully discriminate. But, even if you lose, there is a “Plan B” defense—the failure to mitigate damages.   An employee who is terminated (or not hired in the first place) can have his back-pay award reduced or eliminated altogether if he did not make reasonable efforts to get another job. 

But, asserting a failure to mitigate defense and actually proving it are two very different things, as shown in the recent Colorado case, EEOC v. Beverage Distributors, LLC (12/9/13 D. Colo.). The jury awarded the plaintiff over $132,000 in back pay after finding the employer discriminated on the basis of the plaintiff’s disability.   But, the jury then reduced the award by $102,000 because it found the plaintiff failed to mitigate his damages.   Plan B was a success, or so it seemed.

After the judgment entry, EEOC filed a motion asking the court to award the back pay the jury gave without the reduction for failure to mitigation.   EEOC argued the employer did not present evidence as a matter of law to prove failure to mitigate. In an unusual move, the trial judge agreed, vacated the jury’s award, and entered a judgment for the full $132,000 in back pay.

The evidence showed Beverage Distributors rescinded a job offer for a night warehouse loader when it learned the plaintiff was legally blind. The plaintiff found another job within a week at a landscaping company, but the pay was less than he would have earned at Beverage Distributors.   The employer argued the plaintiff should have made more effort to secure a job with pay comparable to the one he would have had.   As evidence, the employer presented expert testimony about various employment statistics in the geographic area. For example, the evidence showed there were 10,000 drivers’ helper or storage-labor jobs; that the unemployment rate in the area was lower than the national average; and that unskilled laborers with plaintiff’s experience typically find a job paying the median wage within a certain number of weeks. 

The court held this evidence was not enough to allow the jury to find the plaintiff failed to mitigate.   That a certain number of positions existed in the labor market does not allow one to conclude the positions were available to the plaintiff. The court was looking for evidence there were actual openings for jobs paying comparable wages, for which the plaintiff was qualified, within a reasonable commuting distance.   General statistical evidence about the labor market was simply too vague to allow an inference that this particular person could have found a higher paying job.

The lesson for employers: if a plaintiff actually gets another job, it will be difficult to prove failure to mitigate.   General assertions that the plaintiff could or should have tried harder probably won’t cut it. You need evidence of specific job openings, for which the plaintiff is qualified, at particular employers that the plaintiff should have known about, but failed to pursue.   Obtaining this type of evidence that is not speculative is likely to be a challenge.    

Employee Must Request Extension of Leave to Avoid Application of No-Fault Leave Policy

Fixed or no-fault leave policies were once considered easy way to manage attendance and long term leave of absence issues.   Once the employee reaches the maximum number of absences, or is gone the maximum number of weeks on medical leave, the employee is terminated; no questions asked, no exceptions.   The benefit of these kinds of policies is that they remove discretion from the decision makers and therefore result in the same treatment for all employees.

In more recent years, these types of policies have fallen out of favor.   Employers have found that  applying a no-fault policy blindly may conflict with its obligation to engage with an employee to find a reasonable accommodation for a disability.   The EEOC is strongly opposed to no fault policies. Its Enforcement Guidance takes the position that application of a no fault leave policy to an employee with a disability is a per se violation of the law. 

However, as the recent case of Cash v. Siegel-Robert, Inc.(6th Cir. 12/3/2013) shows, there is no reason employers cannot maintain a no fault policy so long as it has some flexibility built in to account for employees with disabilities. 

Siegel-Robert, Inc. (SRI) had a policy that resulted in automatic termination if an employee was unable to work for six months within any 12 month period.   SRI’s policy also allowed employees who used up the six months to request an extension.   The policy said an extension would be considered so long as the request was received before the termination would take effect, and if it was supported by medical documentation showing a return to work on a date certain or within a reasonable period of time. 

Cash was scheduled for back surgery on March 18. Because Cash’s job was physically demanding, his doctor told him he may not be able to work for a full year following surgery. SRI granted Cash job protected leave from March 18 until September 17, pursuant to its policy. 

At the beginning of his leave period, Cash received a copy of SRI’s policy.   Even though Cash knew he may be off work for one year, he did not ask the HR Manager how to obtain an extension of medical leave beyond six months; nor did the HR Manager tell him.   By August 17 Cash thought he could return to work and asked the doctor to release him.   The doctor wrote in the chart that he thought Cash would be able to return to work in a month. A follow-up visit was scheduled on September 14.   For some reason Cash could not keep the September 14 appointment. He rescheduled the appointment for September 21, at which time the doctor gave him a work release with restrictions.

Cash presented the work release to the HR Manager on September 21. “Thanks”, responded the HR Manager, “but unfortunately you were terminated three days ago because your medical leave expired.” SRI did not offer Cash another position or part time employment, nor did he ask whether those were available. He simply left the plant.   Cash ultimately sued SRI claiming that it violated the ADA in failing to accommodate his restrictions and in terminating his employment.   Notably, after Cash filed his lawsuit, the company adopted the practice of notifying employees on long term leave before their leave expired.  

The Court granted SRI summary judgment. The crucial fact was that Cash took no action before the expiration of the no-fault leave period to ask for an extension of his leave. Even though SRI later changed its practice, the Court did not impose on the company an obligation to notify the employee about the expiring leave as the date approached. The Court also ruled that SRI had no obligation to engage with Cash about potential accommodations for his work restrictions because the termination was effective before Cash presented the restrictions to HR.  

An important take-away from the Cash case is that a no-fault system can be used without legal liability, so long as there is a safety valve that permits employees to obtain additional leave time if necessary.   While it was a good idea for SRI to change its practice and notify employees about expiring leave, this case also reinforces the fact that employees themselves have obligations to keep track of and follow the company’s policies with respect to leave.   At least in this court, ignorance was not an excuse.

Court Rules Government Agency Violated Employer's Due Process Rights in Connection with Whistleblower Investigation

Good news for employers—you have due process rights too. So ruled the court in Business Communications, Inc. v. U.S. Dept. of Education  (8th Cir. 12/2/13). 

The Federal Government awarded Business Communications, Inc. (BCI) contracts to install cables in two school districts. The money for the project was provided by the American Recovery and Reinvestment Act (“ARRA” a/k/a the “Stimulus”), which requires contractors to pay employees a “prevailing wage.”   ARRA also has a “whistleblower” provision that protects employees from retaliation because the employee discloses a violation of law, rule or regulation relating to an agency contract funded with stimulus money. After a BCI employee complained to the company that he was being paid less than the prevailing wage, the employee was fired. BCI denied the termination was related to the employee's wage complaint.

ARRA has its own procedure for the investigation and adjudication of “whistleblower” claims.   The agency’s Office of Inspector General (OIG) has 180 days to investigate the complaint. If the OIG finds the complaint is actionable, a report is forwarded to the head of the agency overseeing the contract (Department of Education in this case), the complainant, and the employer. The agency head then has a non-extendable period of 30 days to determine whether there is sufficient basis to conclude reprisal has occurred.   If the head of the agency finds in favor of the employee, the potential remedies include reinstatement, back pay, compensatory damages, and attorney’s fees. 

The statute imposes a fairly low burden of proof on the employee. The complainant must prove the disclosure of information was “a contributing factor” in the reprisal. This burden may be satisfied with evidence showing the employer knew of the disclosure and took adverse action within a reasonably short time period thereafter.   The employer is entitled to rebut the complainant’s evidence, but the standard of proof is much higher than the employee’s. The employer must demonstrate by clear and convincing evidence it would have taken the same action even in the absence of the employee’s disclosure.   In the event of an adverse finding, a party has the right to judicial review, but the review process does not allow for the admission of any new evidence not part of the proceedings below.

In the BCI case, the OIG interviewed many witnesses who provided conflicting evidence about the employer’s motive. The investigator determined the witnesses favoring the employee’s side were more credible and issued a report recommending a finding in favor of the employee. The OIG provided a report to the employer, but with witness names redacted. Almost two weeks later, the OIG provided a new copy of the report with summaries of some of the witness interviews (those who signed releases).   The OIG then gave the employer seven days to respond to this new report.    The employer asked for an extension of time to respond, which the agency refused.

Not surprisingly, the Secretary of Education supported the OIG’s findings, and concluded the employer had failed to present clear and convincing evidence that the termination was not retaliatory. The employer was ordered to reinstate the employee with back pay.   All of which occurred without providing the employer an opportunity to be heard or to cross-examine adverse witnesses.

On judicial review, the Court ruled that the Department of Education's procedures violated BCI’s right to due process by failing to provide any kind of hearing at which it could confront and cross-examine witnesses.  Notably, the DOE acknowledged that ARRA provided no mechanism for a hearing, either before or after the secretary made a decision on the merits of the case.   Nonetheless, the agency claimed BCI was provided adequate due process. First, DOE claimed BCI would have the opportunity to present defenses in the DOE’s court action to enforce its order.   The Court easily rejected that argument, because “[d]ue process cannot be conditioned on requiring BCI to violate an order, exposing itself to statutory sanctions”. Second, DOE claimed BCI had adequate opportunity to be heard by seeking review in the Court of Appeals.   Judicial review is not itself sufficient for due process, the Court concluded, because the employer does not have the right on review to present new evidence or cross-examine witnesses. 

That a federal law would grant rights to employees without commensurate protections for employers to defend themselves should be surprising,   But, even though most federal and state employment laws are not so one-sided as ARRA's whistle-blower protections, employers too often are subject to unfair and arbitrary administrative enforcement of employment laws.  Most employers don’t have the resources or the inclination to resist administrative overreach like occurred in this case.  That is why a ruling like BCI is not only refreshing, but is an important check on unbridled administrative discretion.

U.S. District Court in Iowa Sanctions EEOC...Again

U.S. District Judge Linda Reade has become the scourge of the EEOC.   On August 1 Judge Reade entered an order sanctioning EEOC nearly $4.7 million for attorney’s fees and expenses CRST Van Expedited incurred to defend itself against a largely frivolous complaint alleging that as many as 270 female employees were subject to a pattern and practice of sexual harassment.

This is the second time Judge Reade has ordered sanctions in this case.     She sanctioned EEOC $4.5 million in 2010 after granting summary judgment to CRST on the pattern and practice claim, dismissing 154 of the individual claims because of lack of evidence or the EEOC’s failure to investigate, and dismissing 98 claims as a discovery sanction. 


The Eighth Circuit reversed the attorney fee award in 2012. The court of appeals found that Judge Reade should not have granted summary judgment with respect to claims of two of the individual plaintiffs. The court found there were genuine factual disputes on the two claims and therefore they were entitled to a trial.   Because two plaintiffs remained, the court concluded CRST was not a “prevailing party”, at least not yet.   The court left open the possibility CRST could pursue its fee claim after the final two claims disposed. 


The case was remanded back to Judge Reade to litigate the claims of the two remaining plaintiffs.   After remand, EEOC withdrew its claim on behalf of one of the remaining plaintiffs, and agreed to a $50,000 settlement for the other.   Notably, the settlement agreement did not preclude CRST from pursuing attorneys’ fees and costs.  


CRST claimed it was entitled to recover attorneys’ fees because, with the exception of a single settlement, it prevailed on all the other claims.   EEOC contended, on the other hand, that its recovery on behalf of one of the plaintiffs was enough to defeat CRST’s “prevailing party” status.  Judge Reade concluded a single settlement of $50,000 after claiming as many as 270 plaintiffs were sexual harassment victims, plus the unreasonable pursuit of multiple groundless claims, warranted a finding that CRST was a “prevailing party.”


Although it is likely EEOC will appeal this award, it is refreshing that a judge recognized and appropriately responded to the EEOC’s aggressive tactics and the failure to follow the law it is charged with enforcing.    Unfortunately, EEOC's advantage in resources compared to many private litigants allows them to sometimes get away with these tactics.  Many defendants can't afford to fight these battles and therefore settle even questionable cases simply to avoid going head to head with EEOC.  Hopefully this ruling will cause EEOC to be more circumspect about the claims it pursues, and perhaps may embolden employers to fight back when the agency overreaches.

Summer Employment Law Re-Cap

Hard to believe it's August already.   It has been a busy summer in the employment law world while we have been away, and there is a lot to catch up on for Iowa employers.  For starters, here is a re-cap of three of the summer’s significant court decisions and one notable but not so significant one.   Almost all of these case are good news for employers.   We plan to follow-up in coming posts with more details and analysis.

1.             Who is a "Supervisor", and Why Does it Matter Anyway?    Whether an employee is a supervisor can be important in many different contexts, but the one in Vance v. Ball State University  (U.S. Supreme Court, 6/24/13) involved an employer's liability for race based harassment.    If the alleged harasser is a "supervisor", the employer in many cases is strictly liable for the harm caused by the harassment, regardless whether anyone else in management knew about it.   On the other hand, the employer is not liable if the harasser is not a supervisor, unless management knew or should have known about it.    According to the Supreme Court, a "supervisor" for purposes of determining legal liability for unlawful harassment includes only those employees who have the power to make tangible employment decisions, such as hiring, firing, reassignment, promotion, etc.  The ruling in this case also applies to any other unlawful harassment under Title VII, such as sex, national origin, or religion.   It probably applies to age and disability related harassment as well. 

2.       What is the standard for proving retaliation under Title VII:  In University of Texas Southwestern Medical Center v. Nassar (U.S. Supreme Court, 6/24/13), the Court held the plaintiff must prove the employer would not have taken adverse action against the employee “but for” the employee’s engagement in protected activity.    Before Nassar, some trial courts had applied a lesser burden on plaintiffs, requiring a them to prove only that the protected activity was "a motivating factor" in the employment decision.    There is a big difference a "but-for" standard compared to "a motivating factor."   With the latter, the employee must prove only that the unlawful reason played a part in the decision, whereas the former requires that it be the determining factor. 

3.       Punitive Damages are Not Recoverable under the Iowa Civil Rights Act.   The Iowa Supreme Court so ruled in Ackelson v. Manley Toy Direct, L.L.C.  (Iowa Supreme Court 6/21/13).   Employers should breathe a big sigh a relief with this ruling.

4.       Nelson v. Knight reprise.   Remember this case from last December involving the Fort Dodge dentist who fired one of his assistants because he was attracted to her?   The Iowa Supreme Court granted a motion to re-hear the case, which almost never happens.   The court then issued a new opinion, but the result was the same—no sex discrimination by the dentist.  The difference this time was three justices wrote a separate opinion the purpose of which seemed to be to limit the precedential value of the case going forward.    As we stated after the first opinion, the Nelson case is not likely to have significant impact on discrimination jurisprudence.   It's not clear why the three concurring justice felt compelled to write a separate opinion after re-hearing.   

Court Finds FMLA Interference Even Though Employee Was Not Qualified to Return to Former Job Because of Her Medical Condition

FMLA provides a qualifying employee up twelve weeks of job protected leave. That means the employee is entitled to return to the same position held before the leave, or to an “equivalent position” with equivalent pay, benefits, and other terms and conditions.   FMLA does not require an employer to restore employment if the employee is unable to perform an essential function of the position because of a physical or mental condition, including the continuation of a serious health condition.   But, as the recent case of Dollar v. Smithway Motor Express,Inc. (8th Cir. 3/27/13) demonstrates, and employers should tread with caution when deciding whether to terminate an employee on FMLA leave in these circumstances.

Christine Dollar was on FMLA leave from her job as a driver manager because of depression and anxiety.   She went on leave June 10, and was excused from work until July 9.   In the middle of the leave, approximately June 13 or 14, Smithway told Dollar she could not return to the driver manager position because of her poor attendance before she went on FMLA leave (much of which was apparently related to the depression). If she returned to Smithway, she was told her new position would be as a driver recruiter.    But, on June 21, Smithway told Dollar it needed to fill the driver recruiter position and could not guarantee that position would be available unless she returned to work immediately.   Because her psychiatrist recommended she be off work until July 9, Dollar did not return immediately.   Smithway terminated Dollar on July 6.  

At trial, Smithway’s defense to the FMLA interference claim was that Dollar’s depression made her unqualified to serve as a driver manager (Notably, Dollar agreed she was not qualified to return to the driver manager job). But, she claimed she should have been returned to the driver recruiter position upon returning from leave. Smithway contended it was not required to hold open the driver recruiter position until Dollar returned to work because FMLA imposes no duty to accommodate an employee by holding open an equivalent position. 

The Court skirted the issue whether Smithway was required to hold open the driver recruiter position, and instead found Dollar had already been transferred to the recruiter position at the time of her termination. Therefore, she had the right to “return” to that job (even though it was not a job she had actually performed) upon returning from leave.  

The Dollar case shows once again that bad facts can allow an employee to prevail even when the law is technically on the employer’s side.    Any time an employer is considering termination of an employee while she is on FMLA leave, the case should be thoroughly vetted with counsel in advance.   

Iowa Court of Appeals Rules that ADA Amendments Apply to Iowa Civil Rights Act, Even in the Absence of Legislative Action

A divided panel of the Iowa Court of Appeals recently ruled that the rules of construction in the ADA as amended in 2008 apply to the Iowa Civil RIghts Act when determining what constitutes a disability (Knudsen v. Tiger Tots Community Child Care Center, No. 2-1011, 1/9/13). Although Knudsen is a public accommodation and not an employment case, the opinion is nonetheless very significant.   It shows at least one appellate panel’s willingness to adopt the ADA Amendments by judicial fiat. The Iowa legislature has not amended the ICRA to adopt the changes Congress made to the ADA in 2008 (effective January 1, 2009). 

The plaintiffs in Knudsen are parents of a child with a tree nut allergy. Their child was refused admission to a child care center because the center did not have sufficient staffing levels to deal with the extra care demands of a child with that kind of medical condition.  The trial court granted summary judgment to the defendants because the nut allergy was not a “disability” under the ICRA.

The court reversed the summary judgment because the trial judge had not evaluated whether an episodic condition like a tree nut allergy would substantially limit a major life activity when active.    Notably, coverage for episodic conditions has existed only since the ADAAA became effective January 1, 2009.   But the ICRA has never been amended.   In holding that the ADA amendments apply, the court relied upon several pre-2009 cases holding that a federal analytical framework applied to disability cases under the ICRA. 

Judge Vogel dissented from the majority’s decision. She argued the only reason the pre-2009 cases relied upon the federal disability framework is because of similarities between the ADA and ICRA that then existed. After the 2009 ADA amendments, however, the federal law was no longer similar in many respects.    Judge Vogel concluded that it is not the court’s role to change the definition of disability under the ICRA simply because federal law changed.   That is up to the legislature.

Fortunately, this panel’s opinion is not the end of the story.   A certified question is presently pending before the Iowa Supreme Court on this very issue.   In Stotler v. Delavan, Inc., U.S. District Judge Gritzner asked the Iowa Supreme Court to answer the following question:

In the absence of any applicable amendment to the Iowa Civil Rights Act (ICRA) regarding claims of disability discrimination, will the Iowa courts adopt the structure of the revised federal law enacted by Congress in the 2008 Americans with Disabilities Act Amendment Act (ADAAA), specifically 42 U.S.C. §§ 12101 and 12102, and federal regulations promulgated thereunder, when reviewing disability discrimination claims under the ICRA?

It would be tempting for the Iowa Supreme Court t to simply adopt the ADA Amendments (as the Court of Appeals did in Knudsen).    It would certainly make cases easier to litigate, particularly those that assert claims under both federal and state law.  Hopefully, the court will resist that temptation.   The ADA Amendment substantively changed the nature and extent of that law's coverage.  The Iowa legislature has expressed no intention to expand the scope of the ICRA in a similar manner.  

Not following the federal ADA in this case would also open the door to re-evaluting whether federal precedent should be followed in other types of discrimination claims under the ICRA..  The courts have for years ignored the real substantive differences between federal and state discrimination laws, and it is time to revisit those decisions.

Critics are Unfairly Attacking the Iowa Supreme Court's Sex Discrimination Ruling in Nelson v. Knight

Never has a Iowa Supreme Court’s ruling in an employment dispute generated such strong reaction, not only locally, but internationally.   The case, of course, is Nelson v. Knight, the December 21, 2012 ruling involving the Fort Dodge dentist who was irresistibly attracted to one of his dental assistants. Dr. Knight’s wife, who also worked in his practice, found text messages between the two of them when he left his phone at home.   Most of the texting was benign, but the wife was concerned that if Dr. Knight continued to work with this particular assistant it could lead to a romantic relationship. She demanded the assistant be terminated for the sake of the marriage. Dr. Knight agreed. 

The dental assistant, Melissa Nelson, sued, alleging her firing was illegal sex discrimination under the Iowa Civil Rights Act.    Notably, she did not claim sexual harassment. There was no sexual relationship, no demands for sex, no offensive working environment.   There was no claim Dr. Knight favored male employees compared to female employees. So how did Dr. Knight discriminate against her?  Ms. Nelson’s theory was that Dr. Knight’s attraction to her was in and of itself a form of unlawful sex discrimination.   In other words, if she had been male, Dr. Knight would not have perceived Nelson as a threat to his marriage, and she would not have been fired.

While acknowledging that Nelson’s argument warranted serious consideration, the Iowa Supreme Court ultimately concluded Dr. Knight was not guilty of sex discrimination.   The law recognizes a distinction between an isolated employment decision based upon a particular relationship (or potential relationship), and a decision based upon gender per se, even if the relationship would not have existed if the employee was a hypothetical male. In other words, the Court reasoned, Dr. Knight’s decision to terminate Ms. Nelson was not based upon her gender as such, but was driven completely by his individual feelings regarding a specific person.     There was no evidence Dr. Knight was biased against female employees generally.

This opinion unleashed a firestorm of commentary, most of it critical.    It is notable, however, that virtually all the criticism of the Court’s ruling is based upon the unfairness of the result, and ignores the Court's extensive discussion of applicable precedent and how it applied to the facts of this particular case.   It is true that Ms. Nelson worked for this dentist a long time, and did nothing wrong. It was not the employee’s fault her boss did not exercise self control such that his wife could not trust him. Even the Iowa Supreme Court acknowledged the termination was unfair (and chided the dentist for giving his fired assistant “a rather ungenerous one month’s severance”). 

I am certainly not defending Dr. Knight here. His conduct caused harm to his own family and his employee, and he put himself in the position of having to choose one over the other.   Unfortunately, Ms. Nelson is the person out of a job. But, the anti-discrimination laws don’t prohibit unfair decisions; or harsh ones; or those based upon an employee’s attractiveness or lack thereof, whether male or female.   If there is no harassment, no coercion, and no evidence of bias against female employees, there is no unlawful discrimination.     It is also important to note that, while this ruling obviously touched some sensitive cultural nerves, it is not a decision that is likely to have significant impact on sex discrimination litigation.    The Court expressly limited its ruling to the unique circumstances that existed in this particular situation.   This case involved a family business owner's decision to favor his wife’s request over the interests of a particular female employee.   While perhaps unfair, it was not unreasonable for the Court to conclude the Iowa Civil Rights Act does not make such a decision unlawful. 

For some other thoughtful commentary on this decision, I recommend the following:

Rush, Nigut, at Rush on Business;

Thomas, Crane, San Antonio Employment Law Blog

Eric Meyer, at Employer Handbook Blog

Fox Rothchild's California Employment Law


Don't Forget About the Failure to Exhaust Administrative Remedies Defense: Eighth Circuit Holds that it Still Applies to Retaliation Claims, Overruling Precedent to the Contrary

Title VII requires an employee alleging unlawful discrimination or retaliation to file an administrative charge with the EEOC (or a similar a state or local agency with authority to seek relief) before bringing a suit in court.   EEOC is charged with investigating claims and pursuing conciliation between the employee and employer where appropriate. The purpose of the administrative scheme is to avoid litigation as a first step in the process. It allows a neutral third party to investigate the claim and work toward resolution. Litigation is a last resort for claims that cannot be resolved, or where the employee decides to retain private counsel and pursue the claim him or herself.

The Supreme Court has deemed that EEOC investigation and conciliation is essential to Title VII’s enforcement scheme, and therefore has strictly enforced its requirements.   It is not a mere procedural hoop through which a claimant has to jump. Courts have held that, unless EEOC has the opportunity to investigate and conciliate a particular claim, Title VII’s process would be frustrated.   Thus, for example, an employee may not file an EEOC charge alleging sex discrimination and then sue for sex discrimination and disability discrimination.   EEOC could not have investigated or conciliated the disability discrimination claim because it was not part of the charge, and therefore the employee barred from suing on such a claim.

Despite the strict enforcement of the administrative process, for many years there seemed to be a loophole in the Eighth Circuit for claims in which an employee alleged a retaliatory termination followed closely on the heels of the employee's filing of a discrimination charge. In Wentz v. Maryland Casualty Co., (8th Cir. 1989), Wentz filed an EEOC charge alleging age discrimination, and was terminated one day later. He did not file a second charge alleging retaliation, but nonetheless in a subsequent lawsuit claimed his termination was in retaliation for filing the age discrimination charge.   In evaluating whether Wentz exhausted administrative remedies for the retaliation claim, the test applied was whether the claims in the lawsuit were “like or reasonably related to” charges that were timely filed with EEOC.   In the Wentz case, the court held the retaliation claim should not be dismissed because is “grew out of the discrimination charge filed with the EEOC.” 

The Eighth Circuit closed this loophole in a recent case involving almost identical circumstances. (Richter v. Advance Auto Parts (8th Cir. 8/1/2012)). Richter filed an EEOC charge on August 18, 2009. On the part of the form asking about the basis of the discrimination, she checked “race” and “sex”, but did not check “retaliation”. She informed a regional vice president about the EEOC charge on August 23, and was terminated on August 25.    Richter did not fie another administrative charge nor amend the charge that was filed August 18. Nonetheless, when she filed a lawsuit, she alleged her termination was in retaliation for filing the August 18, 2009 administrative charge.   The district court dismissed the retaliation claim for failure to exhaust administrative remedies, which was affirmed on appeal.

In its opinion in Richter, the court did not expressly state that Wentz was overruled, but in effect that is what occurred.  The Court said it had “considerably narrowed [its] view of what is ‘like or reasonably related’ to the originally filed EEOC allegations.”    Strict application of the statutory text requires an employee to file a charge for each discrete act of discrimination.  In other words, retaliation that occurs after an employee files an EEOC charge is separate and distinct from the discrimination alleged in the charge, and thus requires a new or amended charge.

One judge dissented, arguing that strict application of the exhaustion requirement in these circumstances was a “needless procedural barrier”, and there were policy reasons for following a standard that judges could apply more flexibly.  The majority rejected that view, concluding that strictly following the text was the best guarantee of evenhanded administration of the law. 

Richter is an important reminder to employers and defense counsel that the administrative charge still matters, and the failure to exhaust defense remains potent in the right circumstances.   Some may claim it is unfair for the employer to rely upon a techincal defense that avoids facing the merits of a retaliation claim.  However, given the expense and risks of defending these claims through trial, there is nothing unfair about expecting the employee to follow the law's procedural requirements before suing.


Court Applies "Cat's Paw" Theory to Liquidated Damages under FMLA

Under the FMLA, liquidated damages are a form of “extra” damage a court may award over and above other damages an employee is awarded.   The employer can avoid liquidated damages, however, if it proves the FMLA violation was in good faith, that is, the employer reasonably believed its action did not violate the FMLA.

Marez v. Saint Gobain Containers (8th Cir., 7/31/12), shows that a decision maker’s good faith is not enough to avoid liquidated damages if the plaintiff relies upon the “cat’s paw” theory to prove liability.  Cat’s paw in employment discrimination means an employer can be liable for discrimination even if the decision maker was not biased. It applies if there is evidence a non-decision maker acted with a discriminatory motive and caused the adverse employment action. The most common example is when the decision maker relies upon information or advice given by a biased non-decision maker. 

Marez worked as a production supervisor at Saint Gobain plant that made glass beer bottles.   On January 28, 2008, Marez notified her supervisor that she would require FMLA leave for her husband’s upcoming surgery; Marez did not know the exact date of the surgery but said it would be “soon.” Marez did not notify anyone else at the company about her leave request, nor did her supervisor.   Notably, Marez had been on FMLA leave the previous July and August for several weeks, and there was evidence her supervisor was irritated about her lack of availability during that time. 

Two days later, on January 30, Marez was terminated.   One of the reasons given for the termination was that Marez had falsified paperwork. Specifically, she had reported on a check sheet that a piece of equipment was functioning when in fact it was “flatlining”, or not reporting data.   Marez claimed it was an error and not a deliberate omission. Marez’s supervisor was the one who discovered the paper work was wrong. The supervisor assembled and presented the information about Plaintiff’s paperwork to another member of management. They consulted with the plant manager, and the three of them together made the decision to terminate Plaintiff. 

The jury awarded the plaintiff damages of $206,500 for a FMLA violation, and the court added an additional $206,500 as liquidated damages.   On appeal, Saint Gobain claimed that the trial court should not have awarded liquidated damages because two of the decision makers, the plant manager and another member of the management team, did not know about Plaintiff’s FMLA request at the time of the termination, and therefore reasonably believed Plaintiff’s termination would not violate the FMLA.   In other words, even though Marez could rely upon a “cat’s paw” theory to establish liability under FMLA, Saint Gobain argued it should be not used as a basis for awarding liquidated damages. The Court rejected that argument:

Were we to accept the proposition that the cat’s paw theory applies to determining liability and lost wages but not to liquidated damages, that would have the result of treating less favorably for purposes of damages calculations plaintiffs who utilize the cat’s paw theory than those who do not. We see no basis in the statute for such a result.

The result in Marez is not surprising, given the tendency of courts to extend the cat’s paw theory to all of the laws that govern the employment relationship.    This case should reinforce the importance of thorough investigations of the facts and circumstances before termination decisions are made. That includes getting the employee’s side of the story and whenever possible have a disinterested person investigate the facts. 

Trouble Begets Trouble

Unfortunately, the UI law school is learning this maxim the hard way.  After securing a defense verdict last February in an age discrimination lawsuit an aspiring law professor filed, the same person has sued again. This time, Donald Dobkin alleges the UI refused to hire him because of his age and because of his prior lawsuit. Adding insult to injury, the second suit is based upon information the UI disclosed in discovery during the first lawsuit.  

Dobkin filed his first lawsuit in 2009.   Despite his pending claim, he again applied to the UI during the 2010 hiring cycle, and documents concerning the hiring decisions in 2010 were part of the discovery in the 2009 case. According to Dobkin’s attorney, the faculty committee interviewed a candidate in 2010 that scored 40 points below Dobkin on the law school’s preliminary screening tool that it uses to rank candidates.  In the 2009 case, however, the UI claimed that Dobkin was not interviewed because the law school school interviews only the best candidates as shown by the preliminary screening.   Whoops. 

There was also evidence that a member of the hiring committee considered in deciding not to interview Dobkin that he had a pending discrimination case against the law school. Whoops again.


While a lawsuit contains only allegations, it should present a teachable moment to the professors on the faculty hiring committee.

First, it is important to remember that the stated reason you give for an adverse employment decision must be the real reason, and not appear to be a reason made up after the fact to justify the decision.

Second, when relying upon screening tools, it is important to apply them consistently.   If there is a deviation from a standard practice in the case of a particular candidate, there should be a stated and documented rationale for the deviation.

Lastly, employers must remember that a pending discrimination claim creates an genuine risk of a subsequent retaliation complaint if the pending claims plays a role in an adverse hiring decision.    Decision makers must remember that everything they write or put in a e-mail that refers to the pending claim, even if innocent or innocuous, is potential evidence in the next case.   Even if you win the first case, it does not mean you are forever out of the woods.

Similarly Situated in All Relevant Aspects

Very seldom is there overt evidence an employer discriminated on the basis of race, sex, disability, etc.   Most of the time plaintiff employees have to prove their claim by showing they were treated less favorably than similarly situated employees who were not in the protected class.   For example, if there is evidence the employer imposed lesser discipline on white employees than a black employee for similar conduct, it may be sufficient to create an inference the black employee was treated differently because of race. A hotly contested issue in most discrimination cases— in discovery, at the summary judgment stage, and during trial—involves determining whether the circumstances of these “other” comparator employees are similar enough to the plaintiff’s circumstances to justify using them as evidence of unlawful discrimination.

In a recent Eighth Circuit decision (Davis v. Jefferson Hosp. Assoc.), the Court reaffirmed the long-standing rule that comparing the plaintiff to any other employee outside the protected class is not enough. Rather, he must show the other employees are “similarly situated in all relevant aspects.”    The individuals used for comparison “must have dealt with the same supervisor, have been subject to the same standards, and engaged in the same conduct without any mitigating or distinguishing circumstances.”

The plaintiff in Davis was a staff physician at Jefferson Hospital.   The hospital’s credentialing committee investigated the plaintiff because of complaints of abusive and offensive behavior toward staff and patients, as well as problems with quality of care issues, such as keeping accurate and timely charts and responding to calls for patient assistance.   The credentials committee ultimately recommended the plaintiff’s privileges be revoked after finding his treatment in four patient death cases fell below the standard of care. The hospital’s board voted unanimously to revoke the plaintiff’s privileges, citing three reasons: poor quality of patient care, improper medical documentation, and unprofessional behavior.  

Plaintiff, who is black, sued the hospital for race discrimination. In support of his claim, plaintiff presented evidence that three non-African-American physicians used used profanity and made derogatory comments in front of hospital staff, but were not subject to discipline or a corrective action plan like he was.    Plaintiff also produced affidavits of eleven other persons who testified that white physicians had also behaved inappropriately toward hospital staff but were not disciplined.    The court ruled that this evidence was not enough to generate an inference plaintiff was discriminated against because of his race, because there was no evidence that any of the white physicians in question had record keeping or quality of care issues as did plaintiff.    In other words, while these other physicians had acted unprofessionally without discipline, the fact that they lack similarity in two of the other reasons for plaintiff’s discharge was not enough to prove race was a motivating factor. Case dismissed.

Takeaway from the Davis case:  when terminating an employee or taking other adverse action, it is important to identify and document at the time all the reasons for the action.    That is the best way to determine whether you are treating similarly situated employees in a consistent manner, and avoids the problem of identifying reasons after the fact.

Study Shows Plaintiffs in Employment Cases Win at Trial More Often than Not

Two Des Moines lawyers, Karin Johnson and Angela Morales, recently wrote in The Iowa Lawyer about a study their firm conducted of employment law trials in Iowa.    With the exception of one county (out of 99), there is very little data available to lawyers on trial outcomes in this state, particularly in employment cases.    I commend Karin and Angela for their work, and particularly for sharing some of it with the rest of the bar. I expect the study will be frequently relied upon by lawyers, both plaintiff and defense, in evaluating their cases.

Some of the most interesting information from the study includes the following:

·          The study was based upon 134 bench and jury trials between 2000 and 2011, in both state and federal courts.   Included in the sample were claims involving wrongful discharge, discrimination, and harassment.   More unusual types of claims, such as whistleblower, wage claims, and ERISA ,claims were excluded.

·          It is not clear whether the 134 cases includes each and every employment cases tried in Iowa during the period in question, although the goal of the study was presumably to capture every case.   134 trials jury trial in eleven years is a fairly low incidence of trials, but nonetheless seems consistent with statistics showing most cases get resolved in ways other than by trial.

·          Most interesting was that the plaintiff prevailed 57 percent of the time.

·          Damages awarded ranged from a low of $3,000 to a high of $3 million. If the outlying awards (those over $1 million) were eliminated, the average damage award was $179,000.

·          In those cases where emotional distress damages were awarded, a vast majority of the time (two-thirds) the award was less than $100,000.

·          Punitive damages were awarded in less than half the cases.

·          The study focused on awards by a fact-finder (judge or jury) and did not consider any reductions in awards post-trial, application of damages caps, or reversals on appeal.  Nor did the awards consider other remedies awarded by the judge post-trial, such as front pay or attorney's fees. 

Implicit Bias, Disparate Impact, and Class Actions: Iowa District Court Rules in Favor of the State, but Employers Should Remain Wary.

Earlier this week Iowa District Court Judge Robert Blink granted judgment for the State of Iowa in a high profile class action race discrimination lawsuit.   (Pippen v. State of Iowa, link here). The plaintiffs alleged that 37 departments in the State’s executive branch maintained hiring and promotion practices that had an adverse disparate impact on African Americans. The plaintiffs claimed the State favored white applicants and employees over equally or even better qualified black applicants and employees in hiring and promotion decisions.    The class included approximately 6,000 employees, former employees, and applicants, and sought over $70 million in damages.

Although the State won the case in the trial court, the plaintiffs plan to appeal. More importantly, it appears the plaintiffs' lawyers in Pippen view the case as an opportunity to fundamentally reshape the landscape of discrimination litigation in this state. Indeed, Judge Blink noted in his opinion that one of the stated purposes of the plaintiff class was to “broaden the horizons of Iowa’s legal landscape premised on their belief in our state’s progressive stance on civil rights.”   

There are three novel aspects of the case that warrant close scrutiny during the appellate process because of the potential impact on future discrimination cases: 1) the scope of the class; 2) the nature of the challenged employment practices; and 3) the type of evidence the plaintiffs relief upon, most particularly the concept of so-called “implicit bias.” 

The first unique aspect of the case was its scope: it covered every executive branch department.    Each of the 37 departments exercises its own hiring authority. There are more than 700 diverse job classifications and 2000 supervisors that have authority in the hiring process. The sheer number of different hiring and evaluation processes within each department, and for each job, made the case unwieldy. 

The “glue” the plaintiffs relied upon to tie these various processes together was the State’s statutory merit based employment system. The goal of the merit system is to hire and promote employees solely on the basis of merit and fitness, as ascertained by examinations or other appropriate screening methods.    There is another agency, the Department of Administrative Services (DAS) which oversees the merit employment system for all executive branch departments.   In Wal-Mart v. Dukes, the famous employment class action case the U.S. Supreme Court decided last year, the Court ruled that a proposed class of millions of current and former employees at thousands of Wal-Mart Stores across the United States was too large and disparate to qualify as a class action.   Notably, Judge Blink had already ruled that the plaintiff class in Pippen satisfied the criteria to proceed as a class action, notwithstanding the Wal-Mart decision.

The second novel aspect was the nature of the employment practice the plaintiffs claimed was discriminatory.    Disparate impact is a form of unintentional discrimination.    The plaintiffs are required to prove that a particular employment practice that is racially neutral on its face—say a test--impacts African Americans more adversely than whites.    In this case the “particular” employment practice at issue was not particular at all.   The plaintiffs did not claim a single test, screening mechanism, or interview process had disparate impact.   Rather, they alleged a systemic failure within the executive branch to adequately enforce the state’s merit based employment system.   Specifically, the plaintiffs attacked the fact that lower level managers have discretion to make subjective judgments about an applicant’s qualifications.  In essence, Plaintiffs claim the State should have done more to ensure that individual managers were complying with the policies requiring equal opportunity. Unlike most discrimination cases that are based upon the commission of an act, Pippen was based upon the State’s alleged omissions.

The third and most troubling aspect of the case (from an employer’s perspective) was the type of evidence the plaintiffs relied upon to prove that the discretion afforded to supervisors resulted in a disparate racial outcome. That evidence was the concept of “implicit bias”.    Plaintiffs presented the testimony of Dr. Anthony Greenwald, a psychology professor at the University of Washington.    Dr. Greenwald coined the term “implicit bias”, which the court characterized as “a state of racial inclination which is manifested without the person’s slightest appreciation that they are acting on it.”   Dr. Greenwald apparently claims that even people who do not intend to discriminate are likely to have implicit bis, and “unthinkingly they may discriminate without recognizing they are doing that.”   Dr. Greenwald opined that most groups who have been tested “showed a 70 percent automatic preference for whites over blacks.”    His opinion is apparently based upon a test called the “Implicit Association Test”, a computer based test that requires a subject to associate a verbal or visual stimulus viewed on a monitor with either “pleasant” or “unpleasant” words. 

Judge Blink rejected Dr. Greenwald’s opinion that implicit bias of supervisors tainted most of the subjective discretionary employment decisions in the State’s executive branch.  It is not clear whether the State challenged the admissibility of Dr. Greenwald’s opinions, and given that the trial was to the court and not a jury such challenge may have been fruitless anyway.   But, this is not the last time employers will see attempts to use so-called implicit bias to prove discrimination, both in class actions and otherwise.    Novel expert testimony is often rejected when it is first tried, but if plaintiff's lawyers keep trying, they ultimately may find a court that will admit such evidence.   This type of testimony could be particulary damaging in a jury trial.  If employers can be held liable for discrimination based upon the subconscious thoughts of their managers, that the managers themselves don't know exist, it will turn discrimination litigation completely on its head.  

Implicit bias was really the heart of the plaintiffs’ claim in Pippen, and it will be important for defendants to vigorously oppose the admission of this type of expert testimony in future cases.  Judge Blink’s opinion provides a road map for doing just that.

For additional commentary and analysis of the Pippen case, I recommend the following:

Workplace Class Action Blog

Stephanie Thomas, The Proactive Employer

Nyemaster Blog

Boston Employment Discrimination Blog

Des Moines Register

Eighth Circuit Reverses $4.5 Million Sanction Against EEOC

Two years ago, Judge Linda Reade of the U.S. District Court for the Northern District of Iowa made headlines when she dismissed an EEOC lawsuit on behalf of 270 current and former female long haul drivers of Cedar Rapids based CRST Van Expedited.   What was notable about the decision was not so much the dismissal itself as the order that EEOC pay $4.5 million of the Defendant's attorneys fees.   (See our post about the decision here).

The blockbuster sanction against EEOC ended with a whimper last week, when a three judge panel of the Eighth Circuit reversed the attorney fee award.   

While the attorney fee reversal is no doubt a significant blow to the Defendant, CRST actually prevailed on most aspects of the appeal.   The attorney fee award was reversed because the Court of Appeals also ruled Judge Reade should not have granted summary judgment with respect to claims of two Plaintiffs, and thus was no longer a "prevailing" defendant.  However, the grant of summary judgment was affirmed on the dismissals of 268 other purported plaintiffs. 

Other than the attorney fee issue, there are two important takeaways from the Circuit Court’s opinion.   First, the Court of Appeals held the claims of 67 plaintiffs were properly dismissed because EEOC did not investigate their claims or provide CRST the opportunity to conciliate before filing suit.   The Eighth Circuit agreed with Judge Reade that Title VII does not allow EEOC to use the discovery process in a lawsuit to fish for new complainants who had never filed an administrative charge. Unless the employer is given notice of the identity of claimants and provided the opportunity to conciliate with respect to those particular claimants during the administrative phase of the process, no lawsuit will be permitted.  

Second, the court affirmed Judge Reade’s holding that the claims of three plaintiffs were barred because they failed to disclose the existence of their sexual harassment claim when they filed for bankruptcy protection. The Court relied upon the doctrine of judicial estoppel, which holds that judicial acceptance of a party’s position in one proceeding bars that party from taking an inconsistent position in another proceeding. In short, by failing to disclose the existence of the sexual harassment claim in the bankruptcy petition, the plaintiffs could not then claim in another court they had a such claim.  The panel did not, however, extend the bar of judicial estoppel to claims the EEOC was pursuing in its own name, even if based upon conduct of the individual plaintiffs who were subject to judicial estoppel. 

This case is not yet over. The two plaintiffs whose cases were reinstated will now have the opportunity to prove their claims in court.   The decision must still be seen as a victory for CRST, however, because the scope of the case is much more manageable than it was before. 

NAACP's Criticism of Iowa Civil Rights Commission is Misplaced

Two local branches of the NAACP recently issued a report criticizing the Iowa Civil Rights Commission because of the low percentage of “probable cause” findings in discrimination complaints filed with the agency.   Although the report was issued December 31, it was recently publicized in a series of three stories appearing over the course of one week in the Des Moines Register (February 16, February 20, and February 21). 

The upshot of the report is that the ICRC determined there was “probable cause” discrimination occurred in only 1.5% of the non-housing cases filed during the 15 year period from 1996 to 2001.   The vast majority of non-housing cases involve claims of employment discrimination.    The NAACP claimed Iowa’s “probable cause” rate was much lower than neighboring states of Nebraska (6.4%), Minnesota (8.2%) and Illinois (15.7%)(the full text of the report can be found here).    The NAACP said their study revealed a “systematic dismissal of civil rights complaints at an alarming rate”.

The report was predictably followed by threats of litigation, mea culpas, and finger pointing.   ICRC Executive Director Beth Townsend seemed to agree the probable cause rate was too low, but blamed the huge backlog of cases. The Governor blamed previous administrations for allowing a culture to develop at the ICRC where staffers were not focused on their work. 

Unfortunately, both the NAACP’s criticism, and the defenses by government officials, miss the mark.    While there certainly may be problems at the ICRC, one of them is not a shortage of discrimination claims being pursued against Iowa employers.    Nor is there evidence that meritorious claims are being dismissed.  What the report fails to accurately present is the impact of what is known as the “right to sue” letter.    Unlike many states, the Iowa Civil Rights Act allows a complainant to request the right to sue 60 days after filing a complaint, regardless of the status of the agency’s investigation.    Once the “right to sue” is issued, the ICRC closes the case, and the complainant has the right to file a lawsuit in court.   A complainant with a strong case typically would prefer to pursue the case in court, because of the right to a jury trial, and the ability to recover attorney’s fees.

Thus, the reason the ICRC issues so few findings of probable cause has very little to do with the agency itself. Rather, it is because the best cases have already been taken out of the system and are being pursued in court.    What the ICRC is left with are those cases where the complainant is not able to find an attorney to take on the claim, usually because it lacks merit or there is little economic harm.   This represents not a failure of the system, but is precisely how it was designed. 

A more accurate presentation of the impact of discrimination claims would be to treat the issuance of a right to sue letter the same as a finding of probable cause.    Using this approach, the statistics presented in the NAACP report from 2006-2011 show that, on average, 11.8% of claims result in either a probable cause finding or a right to sue.  Rather than the lowest, this is actually the second highest rate among neighboring states.     

The NAACP report appears to be more of an effort to score political points than to address the real issues impacting the enforcement of the discrimination laws.    I suspect most employees and employers would agree that the existing hybrid system of public and private enforcement is more effective than charging a government agency with pursuing all the claims.   If the ICRC cannot handle its existing workload, what would happen if hundreds of additional cases that are now pursued in court would remain within its jurisdiction?   

Political Discrimination Case Involving UI Law School is Making Waves

In my practice I frequently represent counties, municipalities, school districts and other public entities.   Just like their counterparts in the private sector, public employees are protected against discrimination because of race, sex, age, religion, disability, and other protected statuses. However, public employees have one important right their private sector brethren do not share: the right under the First Amendment to be free of discrimination based upon their political speech and associations. 

Most First Amendment employment lawsuits involve claims of retaliatory discharge.   A typical case is the newly elected public official who wants to purge the ranks of employees who supported his political opponent in the election and fill the positions with his political supporters.   While political affiliation is a legitimate consideration for positions that involve policy making, employees holding jobs that do not involve policy functions are protected from retaliation based upon their political beliefs, even if they conflict with those of the boss.

A recent ruling from Eighth Circuit presented the more unusual case of refusal to hire based upon a person’s political beliefs. Indeed, the case was the first time the Eighth Circuit has addressed the question. Even more intriguing is that the plaintiff is a conservative law professor who claims she was blackballed by the predominantly liberal faculty at the University of Iowa College of Law.    The Court’s ruling reinstating the lawsuit that the trial court dismissed on summary judgment has sent shock waves through the legal and higher education communities, as reflected by the widespread national media coverage (WSJ; Fox News; New York Times; Chronicle of Higher Education). 

Teresa Wagner alleged she was not hired as a Legal Analysis, Research, and Writing (LAWR) Instructor because of her conservative political views.    Wagner, who is a graduate of the UI College of Law, had spent several years working with the National Right to Life Committee, a pro life advocacy group, and the Family Research Council, which advocates for conservative social policy.   Unlike the other candidates who applied for the position, Wagner had prior experience teaching Legal Analysis and Writing at another law school.    Wagner received many positive comments from both faculty and students who were involved in the interview process, and several recommended that she be hired.   Ultimately, the Dean chose to hire another applicant who had no prior successful teaching experience, had never practiced law, and had no legal publications, but who presented himself as a political liberal.  

Most interesting about the case was evidence showing that a particular faculty member’s views on abortion may have impacted the decision making.   The Court noted that Professor Randall Bezanson had been the primary, vocal opponent to hiring Wagner.   Bezanson, as it turned out, served as a law clerk to Justice Blackmun during the term Roe v. Wade was written, had written tributes to Justice Blackmun and his abortion jurisprudence, and published legal articles advocating support for abortion rights.   In contrast, part of Wagner’s legal career focused on pro-life advocacy. 

Even though Wagner was not offered the full time LAWR position, she was encourage to apply for adjunct openings in the same department.   The faculty hiring committee recommended her for an adjunct position, but the Dean chose to hire two others instead.   According to one member of the law faculty, the Dean had always followed the faculty’s recommendations in the past when hiring for adjunct positions. The others persons hired for the adjunct positions had no prior law school teaching experience, and one had just graduated from law school. 

The legal question the court addressed was whether the Dean’s decision to offer the LAWR position to another applicant was protected by qualified immunity.   The Court analyzed the claim under the burden shifting approach adopted by the First Circuit.  The Court held Wagner must first show that political affiliation was a “substantial or motivating factor” behind the hiring decision.   At that point, the employer must articulate a non-discriminatory basis for the decision and prove the decision would have been taken without regard to the candidate’s political affiliation.   Next, the Defendant is required to show the constitutional right that was allegedly violated was “clearly established” at the time of the violation.

The Court concluded that the evidence showed there was a genuine factual dispute whether the Dean would have made the same hiring decision in the absence of Wagner’s political beliefs. The Court also found that the right to be considered for a non-policy making and non-confidential position without regard to one’s political beliefs was clearly established. The question is whether Dean Jones, given the information available to her about Wagner’s political beliefs, and the relative qualifications of the other candidates, reasonably could have believed that not hiring Wagner was lawful. 

The Court of Appeals reversed the grant of summary judgment and ordered the case to trial.   Notably, on January 10, 2012, the Dean filed a Petition for re-hearing en banc.   The Court has not yet ruled on the en banc request.   Regardless whether the Court of Appeals agrees to a re-hearing or the case goes to trial, it appears this dispute is far from over.  Stay tuned.

Iowa Supreme Court Stems the Tide of Public Policy Wrongful Discharge Claims (At Least for Now)

Almost twenty-five years ago, the Iowa Supreme Court recognized a new cause of action for the benefit of terminated employees: wrongful discharge in violation of public policy. (See Springer v. Weeks & Leo Co.).   What it means is that an employee cannot be terminated if the employer is motivated by reasons that would frustrate a well-recognized public policy.    Springer involved an employee who was terminated because she sought workers’ compensation benefits for an on-the-job injury.   The rationale is that terminating an employee because of work injury would deter employees from pursuing legitimate workers’ compensation claims, and thereby frustrate the public policy underlying the workers’ compensation laws.

Since Springer, the Iowa Supreme Court has recognized myriad other types of employee conduct that is protected by public policy.    Despite the many court decisions addressing the subject, however, the concept of what is and is not protected by public policy remains vague. Courts can look to the Iowa Constitution, statutes, and regulations as a basis for public policy claims, regardless whether the law or regulation in question was intended to give employees the right to sue.    Given the countless number of laws and regulations that govern this state, public policy “exceptions” have the potential to swallow the general rule of at-will employment.   Some might say that has already occurred.

Another practical concern is that the Court’s approach to these cases has encouraged more litigation. Even an employer that is careful to comply with known employment laws and rules can be sued for wrongful discharge based upon conduct that has not yet been recognized as unlawful.   Most of the time, defendants settle these cases to avoid the costs, risk, and uncertainties associated with litigation, which in turn encourages even more claims. 

Given the trend of expanding public policy claims, the Iowa Supreme Court’s decision last week in Berry v. Liberty Holdings, Inc. was a refreshing exception. Berry claimed he was terminated because he filed a personal injury lawsuit against Premier Concrete Holdings, Inc., which was owned by the same person as his employer, Liberty Holdings, Inc. Berry had been involved in a motor vehicle collision with one of Premiere’s concrete pumping trucks.   He ultimately settled the case with Premiere’s insurance carrier, but soon after was terminated by Liberty Holdings. 

The trial court dismissed the wrongful termination case on the grounds that suing a sister company of your employer was not conduct protected by public policy.    However, in a 2010 decision, the Iowa Court of Appeals reversed the dismissal, holding that Iowa’s Comparative Fault Statute (Chapter 668) “does codify the state’s expressed policy that its citizens may seek legal redress for an injury caused by another’s negligence.”

The employer sought further review in the Iowa Supreme Court, and in a decision issued September 9, 2011, the Court reversed the judgment of the Court of Appeals and dismissed the suit.   The supreme court rejected the court of appeals’ view that Iowa’s Comparative Fault Act contained a policy supporting an employee’s right to seek compensation for injuries. Rather, the court concluded Chapter 668 simply created a framework courts and juries use to allocate fault to one or more parties claimed to have caused a person’s injuries.   

While Berry represents a victory for employers, it does little to stem the tide of more lawsuits based upon violations of public policy. The supreme court was careful to decide the case on narrow grounds.  In a footnote, the court made clear it decided only whether Chapter 668 supported an employee’s protection from discharge if he files a lawsuit.    The court specifically left unanswered the question whether the Iowa Constitution, other statutes, rules, or precedent would support Berry’s wrongful discharge claim. 

Judge's Pregnancy Discrimination Ruling Prompts Debate About Work-Life Balance

Last week a federal judge in the Southern District of New York Judge dismissed the EEOC’s long running sex and pregnancy discrimination lawsuit against financial media company Bloomberg, LP.    EEOC claimed Bloomberg engaged in a “pattern and practice” of discrimination against pregnant women and mothers returning from maternity leave by reducing their pay, demoting them in title, removing responsibilities, and subjecting them to stereotypes about female caregivers.

What is notable about the case is not the judge’s conclusion based upon the evidence, but the fact that she took the unusual step of offering some “concluding remarks” highly critical of the EEOC’s approach to the case.   Judge Preska wrote: “[a]t bottom, the EEOC’s theory of this case is about so-called “work-life balance”…"It amounts to a judgment that Bloomberg, as a company policy, does not provide its employee mothers with a sufficient work-life balance."   But, she noted, despite the fact that it may be desirable, the law does not mandate “work-life balance”. “The law simply requires fair treatment of all employees. It requires holding employees to the same standards.”   In a company like Bloomberg, which explicitly makes all-out dedication to the company its expectation, “making a decision that preferences family over work comes with consequences. But those consequences occur for anyone who takes significant time away from Bloomberg, not just for pregnant women and mothers….”    As a final bombshell, the judge concluded:

Whether one thinks those consequences are intrinsically fair, whether one agrees with the roles traditionally assumed by the different genders in raising children in the United States, or whether one agrees with the monetary value society places on working versus childrearing is not at issue here. Neither is whether Bloomberg is the most “family-friendly” company. The fact remains that the law requires only equal treatment in the workplace. Employment consequences for making choices that elevate non-work activities (for whatever reason) over work activities are not illegal.

Predictably, Judge Preska’s opinion unleashed a firestorm of both support and criticism.  One commentator claimed the judge has “contempt for women with kids who have ambition”, while others recognized the fact that the balance between work and family is ultimately a personal decision that all employees make, regardless of gender. 

Coincidentally, the Bloomberg decision follows closely on the heels of an announcement by the Iowa Attorney General that the State paid $180,000 to settle a sex discrimination lawsuit by employee who alleged she was terminated because of family care obligations.  The plaintiff alleged her boss (also a woman) made unfavorable comments about the work commitment of mothers with children.  The reasons given for the termination was that the plaintiff lacked dedication to her job because she was unwilling to work the necessary long hours.  She claimed she was replaced by a man who worked the number of hours she did without complaint from the supervisor. 

These two cases illustrate the increasing trend of family care discrimination claims.  Indeed, EEOC has made such claims an important part of its enforcement agenda.   Bloomberg is an important reminder, however, that equal treatment does not impose on employers the obligation to accommodate an employee's personal life choices.  At the same time employers must ensure they avoid making decisions based upon gender stereotypes, and hold all employees, regardless of gender, to the same standards. 


Wal-Mart v. Dukes May Bar Class Action Race Discrimination Suit Against the State of Iowa

Wal-Mart v. Dukes, decided by the U.S. Supreme Court in June, could derail a class action race discrimination case against the State of Iowa that has been pending since 2007 (See our posts here and here on the Wal-Mart case).    The Iowa case involves 32 named plaintiffs who claim the State maintained hiring and promotion practices that discriminated against African American applicants and employees.   The suit was certified as a class action in 2010 to include class all African Americans who sought appointment to or held a merit based position in the Executive branch since July 1, 2003.   The class claims could potentially involve up to 6,000 persons in addition to the named plaintiffs. 

The court held a hearing last week concerning the potential application of the Dukes case.  The holding in Dukes that potentially applies to the Iowa case involves the question of “commonality”. That is, are the circumstances of the class members sufficiently common that their discrimination claims can be addressed as a group rather than individually.   In Dukes, the Court held that claims of 1.6 million female employees alleging gender discrimination at thousands of Wal-Mart stores across the United States could not, as a practical matter, be adjudicated as a class.   The essential question in a discrimination claim—“why was I disfavored”-involved too many individual circumstances. 

According to coverage of the hearing in the Des Moines Register,  the Iowa Plaintiffs are trying to overcome the Dukes decision by showing the State of Iowa’s hiring and promotion practices were centralized and applied to each African American applicant and employee.   At Wal-Mart, on the other hand, the evidence showed the hiring and promotion decisions occurred at the store level and therefore were highly decentralized.   The Plaintiffs’ evidence against the State of Iowa relies to a great extent on statistics purporting to show African Americans were less likely to survive an initial round of applicant screening, less likely to be interviewed, and less likely to be hired.

Another important difference in the Iowa case is that it is pending in Iowa state court rather than federal court.   Although similar, Iowa courts and federal courts have two different sets of rules governing these types of proceedings. 

The Dukes case is a powerful weapon for employers defending class actions, and it will be interesting to see whether it will allow the State to avoid a trial in this case.

Wal-Mart v. Dukes: What Impact?

Yesterday the U.S. Supreme Court issued an opinion Wal-Mart v. Dukes, an important case addressing issues involving both employment law and class actions.    There has been an incredible amount of coverage and analysis of this opinion in both regular and legal media outlets and blogs (including our own summary in the DRI Publication, The Court Reporter).   Rather than repeating any of it here, the following are a few of the sources where you can find both good background information as well as helpful analysis about the potential impact of this case from both a business and legal perspective: 

What Does Wal-Mart Ruling Mean for Class Actions: from WSJ Law Blog

Supreme Court Rejects Class Action Against Wal-Mart:  Connecticut Employment Law Blog

Justices Curbs Class Actions, from

Supreme Court Erects Major Barriers to Class Actions...: National Law Journal's

Seven Key Points for Employers from the Wal-Mart v. Dukes Opinion: from Ohio Employer's Law Blog;

What Wal-Mart's High Court Win Means for Employers, Large and Small, from The Employer Handbook Blog




Employment Law Myths

Robin Shea at Employment and Labor Insider had a great post a couple of days ago on common misconceptions about employment laws that trip up employers.

It is surprising how often employers think the law allows freedom to act without risk of bad consequences when precisely the opposite is true.  I call them “employment law myths”.     

Robin's post lists her top five misconceptions, and invites others to contribute theirs.  Here are three of the most common myths I see on a regular basis: 

1) Employment “at will”.     In theory, this is still the law in Iowa.  The reality is that exceptions to employment at will have become so numerous that they swallow the rule.  Discrimination because of race, gender, disability, age, etc., retaliation, and violation of public policy are some of the typical exceptions, but there are others. 

2)  Probationary Employment.  Many employers designate the first 3-6 months of employment as a "probationary period", and sometimes think they can terminate an employee at any time for any reason during that period without consequence (see employment at will, above).

3)  Employees are Prohibited from Discussing Compensation.  There is a little law called the National Labor Relations Act (NLRA).   Most of us think about the NLRA only in connection with unions, but it applies to non-union employers as well.  Among other things, the NLRA allows employees to engage in “protected” and “concerted" activity, which includes communicating information about wages and benefits.    Although an employer can't be sued in court for violating this law, there is an administrative complaint procedure under the NLRA that can be almost as cumbersome.

The best advice before making termination decision or taking other serious action aganist an employee: pause, take a deep breath, and consider consulting with your lawyer first. 

Supreme Court Expands (Again) the Universe of Employees Protected From Retaliation

In a unanimous decision yesterday, the U.S. Supreme Court expanded the universe of employees who might be protected from retaliation under Title VII and other federal employment laws.

A retaliation claim is based upon an employer’s adverse action taken in response to an employee’s “protected activity”. Typically, protected activity includes things such as making a complaint of discrimination or harassment, or giving information in connection with a harassment investigation. Any adverse action against an employee (or even a former employee) because he engaged in “protected activity” subjects an employer to liability for damages and attorney’s fees.  

In Thompson v. North American Stainless, LP, the Supreme Court held that Title VII’s anti-retaliation protection extends to the fiancée of an employee who filed a charge of discrimination with the EEOC. Even though the fiancée himself engaged in no “protected activity”, the Court reasoned the company’s conduct could well dissuade a reasonable employee from herself filing a charge. In other words, if an employee knew her fiancée would be fired in response to her EEOC charge, she might not file the charge. 

The practical challenge this case presents for employers is identifying the zone of persons who might be affiliated with a complainant.   While acknowledging this difficulty, the Court nonetheless declined to establish a bright line to determine which relationships are protected and which are not. Justice Scalia, writing for a unanimous Court, stated:

We must also decline to identify a fixed class of relationships for which third-party reprisals are unlawful. We expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.

Two immediate takeaways from this case:

First, when going down the road of termination, employers need to inquire whether there is anyone affiliated with the employee to be terminated who has filed a charge of discrimination.  Who is affiliated? Certainly a spouse or other close family member; definitely a fiancée. After that, who knows?

Second, just because there is some affiliation does not mean the termination should not occur.   The terminated employee is still required to prove a connection between his termination and the protected activity of the other employee with whom he is affiliated.

For other commentary on this decision, I recommend the following:

Daniel Schwartz's Connecticut Employment Law Blog

Eric Meyer, at The Employer Handbook

IIyse Schuman at Washington DC Employment Law Update

Russell Cawyer, Texas Employment Law Update


Should the Decision to Terminate an Employee Who Uses the "N-word" Depend Upon the Employee's Race?

A federal judge in the Eastern District of Pennsylvania recently waded into this thorny subject. The case is Burlington v. News Corp., in which a white television reporter for the Fox affiliate in Philadelphia alleges he was terminated for using the “n-word”.  The suit claims black employees who also had uttered the word were not even disciplined.

It all started during a discussion of another reporter’s coverage of a “symbolic burial” of the n-word, conducted by the Philadelphia NAACP Youth Council. The other reporter said the participants in the burial used the “n-word” “at least a hundred times or more during the course of the proceedings.” In response, the plaintiff asked, “does this mean we can finally use the word n_____”. Plaintiff said he was not intending to be offensive or provocative, but only want to suggest that using the actual word in the story would give the story more credence.  

Despite the context, other employees were offended and complained to management.   One person who was offended and complained, even though she had not been present at the newsroom meeting, was the plaintiff’s co-anchor, who was African American. The event apparently caused tension between the plaintiff and his co-anchor, which affected their on-air chemistry.   To complicate matters further, someone leaked to other media outlets that plaintiff had used the “n-word”, and stories were published about it in the local papers. 

The plaintiff presented evidence that three different black employees had used the “n-word” in the past, but had not been subject even to discipline.   The employer’s defense for treating plaintiff differently was the statements by the black employees had not incited complaints or resulted in negative publicity. Plaintiff contended the complaints and resulting publicity were the result of race discrimination that ultimately influenced management’s decision to terminate him. 

Ultimately, the court denied the employer’s request to dismiss the lawsuit, holding that the jury should decide the question whether the plaintiff was treated differently because of his race. In its conclusion, the court stated:

This case presents unique issues regarding an employer's liability under Title VII for cultural assumptions about a word that is considered by many to be the most offensive in the English language. Plaintiff portrays himself as a victim of political correctness run amok, while Defendants portray themselves as employers who made the only choice they could in response to an employee who repeatedly uttered "the most noxious racial epithet in the contemporary American lexicon…resulting in problems in the workplace and significant adverse publicity.” Whether Plaintiff was a victim of discrimination or his own poor judgment is for a jury to decide….

Setting aside the troubling cultural and social implications this case presents, the management of Fox 29 faced a difficult and tenuous legal decision. Regardless of how they handled the case, there was no good outcome. If they terminated the white reporter, as they did, they face a race discrimination lawsuit. If they don’t discipline or terminate, they face a potential complaint from other employees for allowing a racially hostile work environment to exist.  

In these situations, often the best approach is to make what you think is the least worst decision…and get ready for the inevitable fallout.   The real lesson, however, is that employers need to be proactive in ensuring that the use of offensive language is always subject to discipline, regardless of the person's race.

For additional discussion of this case, I recommend the following:

Jon Hyman, at Ohio Employer’s Law Blog

Peter Thompson, at Maine Employment Law Blog

Jottings by an Employer’s Lawyer 

Recent 8th Circuit Case Likely to Encourage Continued Migration of Age Discrimination Claims to State Court

We have discussed in this blog before the migration of discrimination claims to Iowa state courts rather than federal courts.   The trend is driven by a number of factors, including the recognition in 2005 of the right to a jury trial under the Iowa Civil Rights Act (ICRA) and the greater propensity of federal courts to grant summary judgment.

Another important factor in a plaintiff’s decision to choose state or federal court will be the type of discrimination alleged.    For example, as a result of the ADA Amendments, disability claims are more likely to end up in federal court.   Just the opposite is true, however, with respect to age discrimination claims. The Eighth Circuit’s recent decision in Clark v. Matthews International Corporation confirms that assessment.

The Plaintiff in Clark alleged age discrimination under both the federal Age Discrimination in Employment Act (ADEA) and the Missouri Human Rights Act (MHRA).   The trial court granted summary judgment to the employer on both claims. The Eighth Circuit affirmed the grant of summary judgment on the ADEA claim, but reversed on the MHRA claim.   The Court found the plaintiff’s evidence was not sufficient to generate a genuine dispute under the ADEA’s “but for” standard. However, the court declined to rule as a matter of law on the MHRA claim.    Under the MHRA, a plaintiff must prove age was a “contributing factor” in the decision, which the court concluded was less demanding than the ADEA’s standard.

The evidence in question included the following:

  • Plaintiff’s supervisor asked him if he was “just trying to make it to retirement.”
  • The same supervisor suggested to another employee that he could “always become a Wal-Mart greeter.”
  • The company sent unsolicited mailings from the AARP to employees when they turned 56 years old

The test under the ICRA is whether age was “a motivating factor” in the employment decision. This is similar to the standard under the Missouri law, and certainly less demanding that the “but for” test under the ADEA.   If Clark is any indication, it will not take much less evidence to survive summary judgment for an ICRA claim than an ADEA claim.  


Whatever Happened to...Jack Gross?

Remember Jack Gross? Back in 2003 he claimed a demotion from his management job at West Des Moines based FBL Financial Services constituted age discrimination.   A federal jury in the Southern District of Iowa agreed and awarded him $47,000 in damages. From there his case had a remarkable journey: first stopping in St. Louis at the Eighth Circuit, then to Washington, D.C. and the U.S. Supreme Court, back to St. Louis for another stop at the Eighth Circuit, and ultimately back to Des Moines for another jury trial. In the meantime, Gross became moderately famous, testifying before Congress about his case and inspiring legislation to change the law.

About two weeks ago Gross presented his case to a second jury. This time, however, Gross ran out of luck.  The jury found in favor of FBL Financial Services.  

Why the long journey with all the stops along the way? Because of two phrases: “a motivating factor” and “but for”.    In the first trial, the court instructed the jury that, under the federal Age Discrimination in Employment Act (ADEA), they must find for Gross if his age was “a motivating factor” in the demotion decision.   The Supreme Court ruled that was the wrong instruction. In the second trial, the jury was instructed to find for Gross on his ADEA claim if FBL would have not demoted him “but for” his age. 

Did a few words in the jury instructions result in a different outcome in the second trial?  While it is impossible to know for certain, there probably is more to it than that.   What has generally gone unreported about the Gross case is that he also claimed his demotion violated the Iowa Civil Rights Act.    In both the first and second trials, the jury was instructed they must find for Gross on the ICRA claim if his age was "a motivating factor" in the decision.    Thus, the same question was presented to both juries, but with a different result.

The case may not be over yet.   It appears grounds may exist to appeal this decision as well.   In particular, the instruction incorporated a version of the “same decision” defense for the ICRA claim.  In other words, not only did Gross have to prove his age was “a motivating factor”, but also had to prove “the adverse action would not have otherwise occurred.”    As we have discussed  here previously, it is far from clear that the "same decision" defense is available under the ICRA. 

We will be watching to see what happens...


What's Ahead in Discrimination Litigation for 2011?

One of the best ways to predict this year's trends in discrimination litigation is to examine last year’s charge statistics from the EEOC and the Iowa Civil Rights Commission.    Any person who claims a violation of the state or federal anti-discrimination laws must first file an administrative charge with one or the other of these agencies.    While each agency has its own procedures, generally they will issue a “right to sue” letter after conducting a preliminary investigation of the complaint. Last year’s administrative charges become this year’s lawsuits.

In fiscal year 2010, EEOC received a record 99,922  charges, a 7% increase over 2009.   Despite the increase in charges, EEOC reports that its case inventory has decreased, which means more charges are actually being investigated, settled, or otherwise disposed.    

Other evidence that EEOC is becoming more aggressive is its emphasis on what it calls “systemic enforcement.”   As part of its systemic initiative, EEOC identifies common employer practices that impact a large number of persons in the workforce.   In 2010, 465 systemic investigations were undertaken, and the agency filed 20 class action lawsuits involving systemic type claims, the most ever. One of EEOC's focus in this area involves employer’s use of credit histories as part of the application process, which EEOC claims can have a racially discriminatory impact. 

EEOC is also focusing of the area of disability discrimination.  The final regulations interpreting the ADA Amendments Act are expected to be published shortly.    As more disability charges continue to be filed and processed, employers can expect more disability discrimination claims to end up in court.

The silver lining in all these statistics comes from the Iowa Civil Rights Commission, which actually saw a decrease in the number of employment discrimination charges between 2009 and 2010.   It must be noted, however, that the ICRC is itself becoming more aggressive in its investigation and settlement of discrimination charges.  In 2009-10, the total value of mediated settlements with ICRC total $606,486, an increase of 62% over the prior year. 

For additional information and analysis on these issues, I recommend the following:

From Washington D.C. Employment Law Update: Year End Roundup of EEOC Developments, and Upcoming EEOC Regulatory Agenda. 

From Overlawyered: The New (and very activist) Obama EEOC

The DOL's Lawyer Referral Arrangement with ABA Not Likely to Help Employers or Employees

On the Friday before Thanksgiving, Vice-President Biden announced at a Middle Class Task Force event the creation of a collaboration between the U.S. Department of Labor and the American Bar Association.   According to the press release associated with the event, the purpose the collaboration is to “help workers resolve complaints received by DOL’s wage and hour division.

Beginning December 13, 2010, people with unresolved complaints under the Fair Labor Standards Act (FLSA) or Family and Medical Leave Act (FMLA) will be sent a letter explaining their rights, and providing a toll-fee number that will connect them with an ABA approved lawyer referral service in their area. These are complaints that the Department of Labor is otherwise charged with investigating but apparently cannot because of what the Secretary of Labor described as the Department’s “limited capacity.”

While this collaboration may be good for the business of lawyers, it is doubtful it will be good for anyone else, most especially the business community and the middle class employees the program purports to help.   The unspoken assumption of programs like this one is that lots of employers are violating employment laws and short changing their employees.   Indeed, Labor Secretary Solis’ statement that “our nation’s workers deserve full and fair compensation” implies that they are not.  

Contrary to the assumptions underlying this program, in my experience and that of other employer side lawyers I know, the lion’s share of companies are conscientious about complying with the employment laws. The high cost of defending employee claims and the risk of an adverse outcome, regardless of the merits of the suit, give employers an economic incentive to comply with the law.   Nor is the federal government and the ABA encouraging more employment litigation likely increase the income of middle class employees. In fact, it may have the opposite result, as more and more resources are devoted to defending and settling these cases rather than increasing wages and benefits of employees generally.    In a 2008 study by Estreicher and Yost, the median gross settlement in 179 collective or class action employment lawsuits studied was $8,500,000.   This does not include the thousands of individual claims and settlements every year. 

Remarkably, the ABA touts this program as an opportunity to improve the image of lawyers. I don’t know who the ABA thinks this will impress, but it is not likely to be the business community or the majority of the general public who are cynical about lawyers.  If the Department of Labor believes employer compliance with FLSA and FMLA is lacking, there are more constructive ways to address the problem than increasing their litigation risk.

For a thoughtful view on the other side of this issue, see Dan Schwartz’s post at the Connecticut Employment Law Blog.

Iowa Jury Finds for Plaintiff in Gender Sterotyping Case

A jury in the U.S. District Court, Southern District of Iowa recently returned a verdict in excess of $50,000 to a female plaintiff alleging sex discrimination based upon gender stereotypes.   The plaintiff, who was a night auditor at a hotel, claimed she was terminated because she was more masculine than a typical female employee. She described herself as “slightly more masculine”; she preferred to wear loose fitting clothing as well as men’s button down shirts and slacks.   

There was evidence a manager for the employer made statements that its front desk staff should be “pretty” and have a “Midwestern” girl look. 

The trial court had previously granted summary judgment to the defendant on the grounds that the plaintiff presented no evidence she was treated differently than similarly situated male employees. However, the Eighth Circuit reversed and remanded for a new trial, holding that it was wrong to require a sex discrimination plaintiff to rely solely upon evidence showing the treatment of similarly situated male employees. (See our post here discussing the Eighth Circuit opinion).  

Notably, the jury found for the plaintiff only on her claim of retaliation, not gender discrimination.   Thus, even though the case was remanded to the trial court because of the gender discrimination claim, that is not how the plaintiff established liability.   We noted in our previous post that the Eighth Circuit’s decision expanded the boundaries of gender discrimination liability for employers. Even though the jury did not find gender discrimination, the fact that the plaintiff prevailed on any ground is likely to encourage more gender stereotyping claims of this type.

Supreme Court to Hear Three Employment Cases This Term.

Last week the U.S. Supreme Court kicked off its 2010-2011 term.   There are at least three cases this term of interest to employment lawyers. The Delaware Employment Law Blog had three excellent postings (here, here, and here) analyzing the cases in some detail. All three cases address important questions concerning the scope of an employer’s liability under the anti-discrimination laws. 

The first case is from the Seventh Circuit, Kasten v. Saint-Gobain Performance Plastics Corp.  Kasten addresses whether an employee’s verbal complaints to his superiors about issues with a time clock is protected activity under the Fair Labor Standards Act, so as to protect the employee from retaliation.  The Circuit Court held that verbal complaints were not enough to protect an employee from retaliation; they had to be written.

The second case, Staub v. Proctor Hospital,(also from the Seventh Circuit) will decide the viability of the so-called “cat’s paw” theory of liability.  “Cat’s paw” applies when there is no evidence the decision maker had discriminatory motives, but others in the organization did. The issue involves the extent to which those with discriminatory motives influenced the decision maker. 

The third case is Thompson v. North American Stainless, from the Sixth Circuit.  The issue in Thompson involves so called "associational retaliation".  That is, to what extent is an employee is protected from retaliation not because of his own protected activity, but the protected activity of others. Specifically, the case involved an engaged couple who worked for the same employer.  The male employee claimed he was fired because his fiancee filed an EEOC charge alleging she was discriminated against.   The Sixth Circuit affirmed the trial court's grant of summary judgment to the employer, holding that the male employee was not protected because his fiancee filed a charge of discrimination.

The opinions will most likely be issued in 2011.

Eighth Circuit Once Again Reviews Age Discrimination Burden of Proof--This Time Under ICRA

Age discrimination cases tried in the Southern District of Iowa continue to generate controversy over how juries should be instructed about the plaintiff’s burden of proof.   First it was Gross v. FBL Financial Services, Inc., tried in the Southern District and ultimately decided by the U.S. Supreme Court in June 2009.  Then it was the Eighth Circuit's remand decision in Gross, and now a third case from the Eighth Circuit (via the Southern District of Iowa), Newberry v. Burlington Basket Co., issued September 28, 2010.

Even though Newberry was tried in federal court, the issue involved the proper jury instructions for age discrimination claims under the Iowa Civil Rights Act (ICRA).   The plaintiff alleged her termination violated both the federal Age Discrimination in Employment Act (ADEA) as well as the ICRA.   As is typical in cases alleging violations of both federal and state law, the federal court assumed jurisdiction over the state law claims as well as the federal claims. 

The trial court in Newberry instructed the jury the plaintiff had the burden to prove her age was “a determining factor” in the employer’s decision to terminate her.   After a verdict for the plaintiff, the employer appealed on the ground that the instruction was not consistent with the new standard of proof the U.S. Supreme Court articulated in Gross (coincidentally, the verdict was returned the day the Gross decision was issued).    In Gross, the Court held that a plaintiff alleging discrimination under the ADEA must prove that age was the "but-for" reason for the employment action, a more rigorous test than "a determining factor." 

Despite the erroneous instruction under the ADEA, the Eighth Circuit affirmed the jury verdict because, the court concluded, the "a determining factor" instruction was proper under the ICRA.  The Circuit Court relied upon the Iowa Supreme Court's decision in DeBoom v. Raining Rose, which expressly adopted the Eighth Circuit's model jury instruction for sex discrimination claims under Title VII for such claims arising under the ICRA.  The model jury instruction provides that liability is imposed if sex was "a motivating factor" in the employment decision ("a motivating factor" was deemed to be substantially equivalent to "a determining factor").  Because prohibitions on age and sex discrimination are both contained in the ICRA (unlike federal law, where prohibitions against age and sex discrimination are contained in two different laws), the court held that DeBoom also controlled the instructions for an age claim under ICRA.   

Notably, the court in Newberry was presented with what seemed to be precisely the same question it was presented with in the Gross remand, but reached a different result.  The plaintiff is Gross also asked the court to affirm his jury verdict because the "a motivating factor" instruction complied with the ICRA, even though it was error under the ADEA based upon the Supreme Court's ruling.  However, Judge Colloton, who also wrote the opinion in Newberry, rejected the plaintiff's request and granted a new trial. 

Why the different result?  It appears the difference lies in the fact that the Gross jury was also instructed on a version of the "same decision" defense.   The "same decision" defense requires the employer to prove it would have made the "same decision" even with the presence of unlawful discrimination.  Before the U.S. Supreme Court's decision in Gross, this was part of the so-called "mixed motive" instruction.  Newberry, on the other hand, was tried and instructed as a "pretext" case, so no burden was placed upon the employer to prove the same decision defense.   

Unfortunately, Newberry raises more questions than it provides answers.  One certainty lawyers can take from Newberry is that, so long as the case is a "pretext" case and is being tried in federal court, "a motivating factor" is the proper instruction under the ICRA for any type of protected characteristic.   But, many other questions remain.  What happens in a "mixed motives" case?  Does the same decision defense apply, as Iowa Appellate court precedent seems to suggest?  Or, like age claims under the ADEA, is the same decision defense no longer available?   Moreover, the different standards that apply to age claims under the ADEA and ICRA will make it very difficult to instruct the jury if both claims are presented.

The source of the confusion is that, until now, courts have always treated claims under the ICRA and federal law as if they were identical.   While that made it easier to try cases and instruct juries, it overlooks many important differences in statutory language between the ICRA and its federal counterparts.  For example, unlike Title VII, the ICRA contains no same decision defense.  Moreover, the ICRA, like the ADEA, prohibits discrimination "because of" a protected characteristic, which seems to be a higher burden that the "a motivating factor" jury instruction the Iowa Supreme Court has approved.  Judge Colloton alluded to this inconsistency in the Newberry opinion, but noted he was bound to apply the Iowa Supreme Court’s then existing interpretation of state law.  Perhaps these recent cases will provide an opportunity for the Iowa Supreme Court to look more closely at the statutory language of the ICRA and develop jury instructions that are more consistent with what the law actually says.  In the meantime, there is bound to be further litigation on these issues in the years to come.   

Should Employers Try More Cases Before Juries?

According to a post in the WSJ Law Blog, jury trials of civil cases in the federal system has virtually disappeared.   In 1962 11.5% of federal civil cases were tried, compared to only 1.2% in 2009.

The subject of the vanishing jury trial has been discussed among lawyers for at least the past decade, if not longer.  While we know of no statistics that analyze the percentage of employment claims that are tried to a jury, anecdotal evidence and experience show the numbers are similarly low.   Why is that so? And more importantly, should employers be concerned about the low number of employment lawsuits that actually make it to trial?

It is important to note that jury trials in employment cases are a relatively new phenomenon.   Prior to the 1991 amendments to Title VII, most courts held there was no right to a jury trial under that law (which bars discrimination on the basis of race, sex, religion, national origin).   The ADA was enacted in 1990.   Jury trials were available for age discrimination claims before the 1990s, but simply were not common. Jury trials for claims alleging violations of the Iowa Civil Rights Act have been available only since 2005.

I believe there are essentially two reasons most employment cases are not tried: the expense of defending a case through trial, and the risk of losing, particularly the risk of a sizable award of plaintiff attorney’s fees even if the damages are low.    Management side lawyers would prefer to see more cases tried, not only because that is our business, but because defense verdicts really have a deterrent effect on the filing of marginal cases.   One of the reasons there are so many employment claims is because almost all of them result in the payment of settlement money to a plaintiff.   Trying more cases might even be more economical in the long run.  

U.S. District Court in Iowa Imposes $4.5 Million Sanction against EEOC

On February 9, 2010, U.S. District Judge Linda Reade ordered the Equal Employment Opportunity Commission (link courtesy of Ross Runkel) to pay Cedar Rapids based CRST Van Expedited $4.5 million in attorney’s fees and costs it incurred to defend itself against a meritless sexual harassment lawsuit.

The action started in 2005 when a CRST employee filed an EEOC charge alleging sexual harassment. The Agency never completed its investigation, and the employee herself did not pursue an action in court. Nonetheless, in 2007, the EEOC filed suit in the Northern District of Iowa on behalf of the woman and other unspecified female employees. Ultimately, the EEOC identified 270 women it claimed were victims of sexual harassment at the company.

The court dismissed or granted summary judgment to CRST on all but 67 of the women involved, because of a lack of evidence to support the claims. Later, the court dismissed the claims involving the remaining 67 women.    The reason for the dismissals: the court found the EEOC conducted no investigation of the circumstances involving the 67 before filing the suit on their behalf, and did not make a finding there was reasonable cause to believe discrimination occurred. The EEOC’s failure to investigate, the court concluded, prejudiced CRST because it denied them the opportunity to conciliate and foreclosed the possibility that some of the claims might be settled before the necessity of defending a federal lawsuit.  According to Judge Reade, "the EEOC's actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unecessary burden on CRST and the court."   She characterized the EEOC's litigation strategy as "sue first, ask questions later."     

Judge Reade’s order was striking not only in the amount of the award but in the fact that it sanctioned a federal agency because of the burden it imposed on a private company to defend itself against claims that did not really exist.   Any company that has been the target of an EEOC lawsuit is likely to cheer Judge Reade’s attorney fee award.   It seems only fair that the Agency should be subject to the same standards as a private litigant when brining a lawsuit; that is, it should be required to have a good faith belief, based upon a reasonable investigation, that its claims are supported by the facts and law.  

Not everyone agrees, however, that the sanction imposed is a good thing. Marcia McCormick at Workplace Prof Blog wonders what alternatives were available to the EEOC. She seems to take the position that the EEOC should have the right to litigate harassment claims of persons who never filed a charge and whose circumstances were never investigated.  

Jon Hyman at Ohio Employer’s Law Blog cheers the result, but warns that this sanction could be a mixed blessing for employers.    He believes it will cause the EEOC to conduct more in-depth investigations of its claims, which could in the end impose more administrative burdens than is commonly the case now.   

A very interesting case that likely is not yet over.  The EEOC believes the decision was wrong and intends to appeal. 



Summary Judgment: Myths and Realities

"Is Summary Judgment in Employment Cases a Myth"?  So ask attorneys Teresa Ride Bult and Kate Summers in an excellent article published last month in Law 360

The authors contend it is becoming more difficult for employers to win on summary judgment, particularly in state court.   Nonetheless, they believe the benefits of filing a summary judgment still outweigh the cost.  The work that goes into a summary judgment will have to be done anyway as part of trial preparation.  Even if all claims are not dismissed, summary judgment can weed out some of the weaker claims, making the case simpler to try.  Finally, a motion for summary judgment forces plaintiffs to tip their hand about their theory of the case and the evidence they rely upon. 

I agree that the summary judgment is an important weapon in the defense lawyer's arsenal in an employment case.   We recently wrote about the chances of an employer winning at trial--and the statistics were not heartening.   On the other hand, a study of the federal courts published last year shows that summary judgment is granted to defendants in discrimination cases more than in any other type of civil case in the federal system.  Locally, anecdotal evidence suggests that summary judgments are granted in a very high percentage of cases in federal court s in Iowa.   The Eighth Circuit also has a reputation for being very "defendant friendly" in employment cases.   Almost all of the employment cases the Eighth Circuit decides are appeals of summary judgments, and most of the time the trial court's ruling is affirmed.  

Of course, it is a different story altogether in State Court in Iowa.   An employer's motion for summary judgment in State Court is denied more often than not.  So much so that many plaintiff's lawyers assert claims only under the Iowa Civil Rights Act so as to avoid having the case removed to federal court.  I attribute the difference in outcome to a couple of factors.  First, state court judges, particularly those in more rural areas, are not as familiar  with employment discrimination law.   Second, state court judges have less access to law clerks compared to their federal counterparts, and it is thus much more difficult to digest factually complex motions for summary judgment and conduct the intense legal research that is often required.   My cynical side says that summary judgments are sometimes denied because judges know the case is likely to be settled anyway, and it is not likely to ever reach the desk of an appellate court.

So, should employers file a motion for summary judgment in employment cases?  The following statement of attorneys Bult and Summers is a fairly good summary of my opinion on the subject:

Employment litigation can sometimes feel like pure, unadulterated blackmail, and the bleak news presented in this article about the state of summary judgment dismissals provides only adds to the arsenal in the war against employers.

But the reality is in employment litigation, a good offense is the best defense.

An employer who has proper policies and procedures in place, makes reasoned and fair decisions, and who makes significant efforts to follow the law will be a much better position to defend against employment litigation and will have a much better shot at being “that case” that even a state court judge will dismiss on summary judgment.

While it is true that even frivolous lawsuits will make it to court, an employer must then analyze how to contain its costs and minimize its risks.

2009: The Year in Review

This is the time of year for reflection--when we look back on what happened during the past year, and look ahead to the coming year.  There are many commentaries and opinions on what was good and bad about 2009, but there is no doubt it was an eventful year for those of us in the labor and employment law world.    In this post we give a month-by-month account of the significant employment law events of 2009:

January:   To usher in the new year, on January 1, the ADA Amendments Act became effective.  On January 26, the U.S. Supreme Court issued a ruling in Crawford v. Metro Metro Government of Nashville, which held that an employee who answered questions as part of an internal harassmenti nvestigation was protected from retaliation under Title VII's "opposition" clause.  On January 29,  President Obama signed into law the Lilly Ledbetter Fair Pay Act.  The Ledbetter Act was the first law the President signed after his inaugeration.  

February:  The president signed into law the American Recovery and Reinvestment Act of 2009 (a/k/a the "Stimulus").    Important to employers and employees, the law provided a 65% premium subsidy for nine months to employees involuntarily terminated from their jobs since September 1, 2008.  

March:   On March 10 the Employee Free Choice Act (EFCA) was introduced in both houses of Congress.   The proposed EFCA contained the most signicant changes to labor law since the NLRA was enacted in the 1930s.  While the law was and is a top priority for labor unions to get enacted, so far its most controversial provisions, inlcuding elimination of secret ballot elections,  mandatory arbitration, and increased penalties for unfair labor practices make the proposed law unpopular with business interests.

April: The U.S. Supreme Court issues its second labor and employment decision this year: Penn Plaza, LLC v. Pyett.   The Court held that “a collective-bargaining agreement that clearly and unmistakably requires a union member to arbitrate ADEA claims is enforceable as a matter of federal law.”  On April 24, the EEOC issued a "Best Practices" document relating to employees with caregiving responsibilities.    The Iowa Supreme Court issued its decision in the case of Varnum v. Brien, which held that Iowa's law that permitted marrigage licenses to be issued only to a man and a woman violated the Iowa Constitution.

May:  On May 1 Governor Culver signed the Iowa version of the Ledbetter Fair Pay Act.  This law amended to the Iowa Civil Rights Act to incorporate provisions of both the Ledbetter Act and the Equal Pay Act.    The H1N1 pandemic was in the news, and the EEOC issued guidelines to help employers comply with the anti-discrimination laws while helping stop the spread of the disease.   Sonia Sotamayor was nominated to replace the retiring Justice Souter on the U.S. Supreme Court.

June:  The U.S. Supreme Court issued two important employment law decisions this month: Gross v. FBL Financial Services, Inc. and Ricci v. DeStefano.    While there is some disagreement, our view is that both decisions were favorable for employers.

July:   The phenomenon of social networking and its impact on the workplace is becoming the issue de jour.    Al Franken is confirmed as the winner of the Senate election in Minnesota, which gives the Democrats a 60th seat and filibuster proof majority.  However, the proposed EFCA law still goes nowhere.  With the economy still in the doldrums, the Department of Labor issues a document addressing frequently asked questions relating to furloughs.

August:  It's the dog days of summer, which means the Iowa State Fair, and controversy over allegations of religious discrimination.

September:  The Iowa Supreme Court issues a ruling in DeBoom v. Raining Rose, Inc. one of the court's most important employment discrimination decisions.   The EEOC released proposed regulations on the ADA Amendments.  In wage and hour news, convenience store chain Casey's General Stores paid $11 million to settle FLSA claims of thousands of current and former employees.

October: President Obama signs into law modifications to FMLA relating to military caregiver leave and qualifying exigency leave relating to military service.

November: The Genetic Non-Discrimination Act becomes effective November 21.  Data from both the Iowa Civil Rights Commission and EEOC show officially what many of us observed in our practices: an uptick in discrimination claims this year.  On November 30, the Eighth Circuit issues an opinion in the remand of Gross v. FBL Financial.   Despite Gross' arguments that his jury verdict under the Iowa Civil Rights Act should stand, the court sent the case back to the Southern District of Iowa for a new trial.

December:  The U.S. Department of Labor issued an "Employment Law Guide" which covers topics such as wage and hour, occupational safety, and employee benefits, among others.   The EEOC and Department of Labor release their regulatory agendas for 2010.   Finally, President Obama signs a law that will extend the COBRA subsidy another two months, until February 28, 2010.

Best wishes for the rest of 2009 and a happy and prosperous 2010!

Gross v. FBL Remand: Eighth Circuit Considers Additional Issues

On November 30, 2009, the U.S. Court of Appeals for the Eighth Circuit issued an opinion on the remand of  Gross v. FBL Financial Group, Inc.   We have discussed the Gross case in several previous posts (here, here, and here).  The case has particular local interest because it was tried in the Southern District of Iowa, appealed to the U.S. Court of Appeals for the Eighth Circuit, and ultimately to the U.S. Supreme Court. 

In a decision that surprised many in the employment law community, the Supreme Court  held that an age discrimination plaintiff always has the burden of proving that age was the "but for" cause of the adverse employment action, regardless whether the employer had a "mixed motive", and regardless whether there is "direct evidence" of discrimination.  Under Gross,  the burden of persuasion never shifts to the defendant.  The trial judge's instructions were in error, the Court concluded, because FBL was required to prove it would have made the same decision regardless of Gross' age.  The case was remanded for a new trial.

Despite the Supreme Court's ruling, Gross argued to the Eighth Circuit on remand that his original jury verdict should stand because the jury was correctly instructed under the Iowa Civil Rights Act (ICRA).  Notably, this was the first time the ICRA issue had come up in the case.  The reason: between the date of the U.S. Supreme Court's decision in Gross and the Eighth Circuit's remand opinion, the Iowa Supreme Court issued an opinion in the case of DeBoom v. Raining Rose, Inc.   One of the significant issues decided in DeBoom was that an employer is liable under the ICRA if the jury finds unlawful discrimination was "a motivating factor" in the employment decision.   Gross argued that it did not matter under the ICRA whether the burden shifted to FBL to prove the "same decision" defense, because liability attaches once the jury concludes discrimination was "a motivating factor."

We predicted back in September that DeBoom would have a significant impact on the litigation of age discrimination cases in Iowa, because the standard under the ICRA was different than under the ADEA.   We did not realize at the time, however, that the issue would come up in the Gross case itself.  

Interestingly, Judge Colloton, writing for the Court, did not agree with Gross' contention that the jury was instructed consistent with the Iowa Civil Rights Act, and thus remanded for a trial on both the ICRA and ADEA claims.  Why? The primary reason was that DeBoom was a "pretext" case, and not a "mixed motive" case.   In mixed motive cases, the Eighth Circuit concluded that Iowa precedent requires the same approach as the Eighth Circuit did pre-Gross.  That is, the defendant has the burden of proving the same decision defense only if there is direct evidence of discrimination.  Thus, the jury instruction was still in error, despite DeBoom

This matter is far from settled,and will likely result in further litigation in the Iowa Courts for years to come.   It is not clear the Iowa Supreme Court intended the DeBoom case to be as limiting as the Eighth Circuit purported to make it.



What are My Chances of Winning?


Understandably, this is the most important question a client will ask his lawyer when deciding whether to settle a lawsuit or defend the case at trial.   It is also one of the most difficult things for lawyers to predict.   That's why jury verdict research is so valuable, and why this post at Manpower Employment Blawg is a must read for employers and HR professionals.    It turns out that 2009 was not a very good year at the courthouse for employers defending employment related lawsuits.  Here is a summary of the some of the jury verdict data:

  • The median jury award in discrimination cases rose 16%, from $208,000 to $241,119.
  • Employers won 39% of the time (or lost 61% of the time, depending upon your perspective).   In age cases, employers were successful only 33% of the time, and in disability cases, 52% of the time.
  • Age discrimination claims resulted in the largest verdicts, followed by disability, sex, and race.
  • Employers are generally better off in federal court: they won 43% of the time there, versus 37% of cases in state court. The median award was also lower in federal court ($164,925 vs. $270,000). Federal Court is also more favorable for employers because of the relatively high percentage of cases for which summary judgment is granted.
  • The median settlement amount for all cases: $90,000, 20% higher than last year.  




E-mail as Evidence Isn't Everything

One of the biggest worries of lawyers defending against employee lawsuits is the stray statement in an e-mail that can be blown up or taken out of context.    We are constantly warning clients that, before they click "send",  they should think about how an e-mail will look to a jury. 

However, the recent acquittal of two former Bear Stearns executives accused of securities fraud provides an important lesson on the limitations of e-mail as evidence.   The government's case against the Wall Street executives relied heavily on statements they made in e-mails.   It seems the strategy backfired, and the e-mail turned out not to be the holy grail the prosecutors thought it would be.  According to one lawyer,  the "texting, twittering, Blackberry toting jurors of today understand that an e-mail capturing a concern, doubt or momentary distress does not reflect thought over time, much less a vetted public statement,  "Skilled lawyers can help pull some of the sting out of the most seemingly damning emails, it seems, by working hard to place them into a broader context."  

While it is still a good idea to think twice before clicking "send", it it good to know that common sense and context is capable of overcoming a damaging e-mail statement.