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…

 

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

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.

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.

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.

Last week a mother quit her job soon after returning from maternity leave because she claims her employer denied her access to a lactation room for three days (See Des Moines Register story here).    Apparently, the employer had a lactation room on the premises as required by federal law. But, according to a complaint filed with the Iowa Civil Rights Commission, a company nurse told the employee she had to fill out paperwork and then wait three days before she could access the room.

The health care law signed into law on March 23, 2010 contained the requirement that employers provide nursing mothers with reasonable unpaid breaks to express breast milk, and a location other than a bathroom where they can so.    Such breaks must be provided for up to one year after their child’s birth. Employers with fewer than fifty employees are exempt if the requirements “would impose an undue hardship by causing the employer significant difficulty or expense.”

With due respect to the late Paul Harvey, what is most striking about this claim is there must be a “rest of the story” out there.   Most notably, the publicity relating to this event was generated by a complaint filed with the Iowa Civil Rights Commission.  However, the requirements governing breaks and locations for breastfeeding mothers are contained in the federal Fair Labor Standards Act (FLSA).   If an employee is seeking to enforce the FLSA, there is no need to file a complaint with the ICRC.  In fact, that state agency has no jurisdiction over FLSA claims.   Perhaps there are other issues involves with this employee, but these allegations were simply the most sensational and likely to generate publicity.  It did not take too long for this story to circulate on the internet.

The other interesting aspect of the story is the publicity itself.  Normally, Iowa Civil Rights Act complaints are not made public at the time they are filed, unless the filing complainant issues a press release or otherwise takes action to make it public.    This is obviously an important concern for new mothers returning to work, given the large number of comments posted about the story on the Register’s website.  Indeed, the employer , Nationwide Advantage Mortgage, had a spokeperson issue a statement to refute the former employee’s claims.

Sometimes, plaintiff’s attorneys use adverse publicity about a tangential issue as a hammer to persuade an employer to resolve a case quickly rather than defend it on the merits.  Obviously, we don’t know if that is what is going on here, but the newspaper story certainly left many unanswered questions.

 

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.   

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.  

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. 

 

 

On January 27, the Iowa House passed HF 681, known as the "Iowa Worker Adjustment Retraining and Notification Act".   

There is already a Federal WARN Act, which requires most employers with 100 or more employees to provide at least 60 days notice to their employees of a mass layoff or plant shutdown.  Failure to file the WARN Act requirements can result in liability for back pay and benefits for each affected employee, for the time of the violation, up to 60 days.

The proposed Iowa law is more stringent than the federal law is some respects, but more lenient in others.    It is more stringent in that is applies to employers with 25 or more employees.   It is more lenient, however, in that is requires only 30 days notice of a mass layoff or shutdown.   In addition, the penalties under the Iowa law are limited to $100 per day for each day of the violation.   There is no private right of action; the law is enforced by the Department of Work Force Development.

The bill has not passed the Iowa Senate, nor has the Governor stated publicly whether he will sign it.   Organized labor is strongly in favor of the bill.  However, given the difficult economic conditions that still exist in the State, and the Governor up for a tough re-election fight, it remains uncertain whether this bill will become law.  We will keep you posted.