Fuller versions of this paper will be updated at various times during the year, and updates can be downloaded from www.rickseymourlaw.com. Many of my other CLE papers are also downloadable from this site.
The number of new employment discrimination cases filed in
Federal district courts in 2003 increased 4.7% from the year before:
New EEO Cases Filed in 12 months ending Dec. 31, 2002: 20,040
New EEO Cases Filed in 12 months ending Dec. 31, 2003: 20,972
The striking figure is the increase in civil filings in U.S. District
Courts from calendar 2002 to calendar 2003 was only three tenths of a percentage point.
EEO cases remained a high proportion of civil filings, but the
Federal-question EEO cases were an even higher proportion of Federal-question filings:
EEO Cases in 2003, as % of All Civil Cases: 8.2%, or one out of every 12.3 civil cases
“Federal-question EEO cases in 2003, 12.2%, or one out of every 8.2 Federal- as % of all Federal-question civil cases: question civil cases
The number of EEO cases initially filed as class actions declined a third from 2000 to 2002, has rebounded, but is not yet up to its old figure. Once again, the striking factor is that the number of FLSA collective actions has increased by more than 70% since 2000:
New EEO Class Action Filings in 12 months ending Dec. 31, 2000: 89
New EEO Class Action Filings in 12 months ending Dec. 31, 2001: 77
New EEO Class Action Filings in 12 months ending Dec. 31, 2002: 60
New EEO Class Action Filings in 12 months ending Dec. 31, 2003: 82
New FLSA Collective-Action Filings in 12 months ending Dec. 31, 2000: 71
New FLSA Collective-Action Filings in 12 months ending Dec. 31, 2001: 79
New FLSA Collective-Action Filings in 12 months ending Dec. 31, 2002: 91
New FLSA Collective-Action Filings in 12 months ending Dec. 31, 2003: 121
Trials in civil and criminal cases are vanishing. According to the
Administrative Office of the U.S. Courts, the average U.S. District Judge conducted just 19 trials from Oct. 1, 2002, through Sept. 30, 2003, down from 25 trials in FY 1998. That is for civil and criminal trials combined. Nineteen trials represent 4% of the average 476 matters terminated. These data were downloaded on February 23, 2004, from http://www.uscourts.gov/cgi-bin/cmsd2003.pl.
590 Federal-question EEO cases were decided after oral
argument in the twelve months ending December 31, 2003; this is the category of cases most likely to result in published opinions. EEO cases were 19% of all civil Federal-question cases decided after oral argument, or one in every 5.3 civil Federal-question cases decided after oral argument.
Federal-question fair-employment cases are substantially more
likely than other federal-question civil cases to reach oral argument: 23.8% of EEO federal-question appeals filed during this period made it to oral argument, compared with only 15.6% of all civil Federal-question cases filed during this period.
II. Legislative and Regulatory Action, and Related Judicial Action
A. The Class Action “Fairness” ActNow known as S. 2062, this bill would allow removal of most
state-court class actions and mass tort cases filed after the date of enactment, without regard to jurisdictional amount and based on any diversity. Its provisions are too complex to explain here, but I can provide materials to anyone who e-mails me. It has been described as the top legislative priority for business in 2003 and 2004, and is opposed by a collation of over 70 national civil rights and consumer groups. As this is written, the bill is stalled in the Senate, while the Chamber of Commerce and the tech industry fight about whether the House should accept whatever comes out of the Senate, adhere to its more extreme version, or make its version even more extreme.
B. New Department of Labor FLSA RegulationsAs this is written, the Department of Labor is issuing its final rule,
and Senators have voted to block the parts of the rule that would take away overtime coverage from anyone now entitled to it.
C. Civil Rights Tax Relief ActThanks to the ABA Section of Labor and Employment Law, this is
one of the ABA’s top legislative priorities for 2004. The ABA had 170 members from across the country in Washington for ABA Day on May 5 and 6, to talk about this and other bills with legislators.
The Senate bill providing tax breaks to corporations doing
business internationally contains the part of the CRTRA barring the double taxation of attorneys’ fees.
The Supreme Court has agreed to decide next Term whether
attorneys’ fees under a contingency retainer are taxable to the plaintiff as well as the attorney.
D. Possibility of New Rules on Electronic DiscoveryOn Feb. 20 and 21, 2004, the Standing Committee on Rules of
Practice and Procedure of the U.S. Judicial Conference, the Advisory Committee on the Civil Rules, and the E-Discovery Task Force held a joint meeting at Fordham University Law School in New York, to discuss whether Civil Rules 26, 33, 34, and 37 should be amended to provide specifically for discovery of electronic materials. The proceedings will be reported in the Fordham Law Review.
III. The Constitution and Statutes
A. The First AmendmentLove-Lane v. Martin, 355 F.3d 766, 20 IER Cases 1409 (4th Cir.
2004), vacated in part the grant of summary judgment to the First Amendment defendants, and held protected by the First Amendment the plaintiff former Assistant Principal’s speech complaining that certain disciplinary practices discriminated against African-American schoolchildren. The court also held that the Superintendent was not entitled to qualified immunity.
B. 42 U.S.C. § 1981Foley v. University of Houston System, 355 F.3d 333, 339, 92 FEP
Cases 1839 (5th Cir. 2003), held that § 1981(b) forbids retaliation for complaining about racial discrimination, including filing an EEOC charge. The court also held that § 1981 allows a personal damages suit against individuals who effectively control a plaintiff’s opportunity for promotion, such as defendants Carlton and Prince. Id. at 337–38. Among other activities, these individual defendants had been members of defendant’s Tenure and Promotion Committee and had voted against plaintiff.
(7th Cir. 2003), reversed the dismissal of plaintiff’s § 1981 claim, holding that at-will employees have a contractual relationship with their employers sufficient to support a § 1981 racial discrimination claim as to promotions and pay.
C. Title VII of the Civil Rights Act of 1964
Taylor v. Small , 350 F.3d 1286, 92 FEP Cases 1785, 15 AD Cases 25 (D.C. Cir. 2003), held that Title VII does not protect against weight discrimination.
2. Ticking “Time Bomb” of the Year: Clackamas Gastroenterology Associates
Clackamas Gastroenterology Associates, P. C. v. Wells, __
U.S. __, 123 S. Ct. 1673, 155 L. Ed. 2d 615, 14 AD Cases 289 (2003), involved the definition of “employee” for purposes of meeting the ADA’s jurisdictional requirement that the employer have at least 15 employees in each of 20 calendar weeks. The same language applies to Title VII claims. The Court stated the issue: “The question in this case is whether four physicians actively engaged in medical practice as shareholders and directors of a professional corporation should be counted as ‘employees.’” Id. at 1675. The Court held that the common-law element of control governs resolution of the issue. Id. at 1679. The Court stated that the EEOC’s Guidelines on this subject were not controlling, but were entitled to deference. Id. at 1680 n.9. It continued:
We are persuaded by the EEOC’s focus on the common-
law touchstone of control . . . and specifically by its submission that each of the following six factors is relevant to the inquiry whether a shareholder-director is an employee:
“Whether the organization can hire or fire the individual
or set the rules and regulations of the individual’s work
“Whether and, if so, to what extent the organization
supervises the individual’s work
“Whether the individual reports to someone higher in the
“Whether and, if so, to what extent the individual is
able to influence the organization
“Whether the parties intended that the individual be
an employee, as expressed in written agreements or contracts
“Whether the individual shares in the profits, losses,
and liabilities of the organization.” EEOC Compliance Manual § 605:0009. 10
10 The EEOC asserts that these six factors need not
necessarily be treated as “exhaustive.” Brief for United States et al. as Amici Curiae 9. We agree. The answer to whether a shareholder-director is an employee or an employer cannot be decided in every case by a “‘shorthand formula or magic phrase.’”
Id. at 1080 (footnote and citations omitted). Justice Ginsburg, joined by Justice Breyer, dissented. Id. at 1681–83.
1672 (9th Cir. 2003), held that although the defendant association of stevedoring companies was an employer, it could not be liable for the sexual harassment of the intervenor charging party unless it was also at least the intervenor’s joint or indirect employer. Plaintiff settled her claims against the defendant stevedoring company where she had been harassed, and obtained a verdict and judgment against the PMA for $264,000 in lost wages and $300,000 in compensatory damages. The court relied on its recent decision in Anderson v. Pacific Maritime Ass’n, 336 F.3d 924, 92 FEP Cases 417 (9th Cir. 2003), a racial discrimination case. It stated that “the integrated enterprise ‘test does not determine joint liability as the parties suggest, but instead determines whether a defendant can meet the statutory criteria of an ‘employer’ for Title VII applicability.’” Id. at 1274 (citation omitted). It then described the elements of liability for an indirect employer:
Jones’s contention that PMA interfered with her
employment relationship with MTC and is thus liable as an indirect employer also fails in light of Anderson. . . . We concluded that PMA could not be liable for racially discriminatory conduct because “the hostile work environment did not occur at any facility controlled by PMA, but instead at the docks and waterfront facilities controlled by the member-employers that actually employ and supervise the Plaintiffs and their putative harassers on the job site.” . . .
Liability as an indirect employer requires that the employer
have “some peculiar control over the employee’s relationship with the direct employer” and that the indirect employer engage in “discriminatory ‘interference.’” . . . Because PMA was not “the entity performing the discriminatory act[,]” . . . against Jones, PMA cannot be liable as an indirect employer. As in Anderson, the discriminatory conduct in the instant case took place not at facilities controlled by PMA but rather at facilities controlled by MTC, which actually employed and supervised Jones and the male co-workers who harassed her. Accordingly, “the considerations justifying liability under Title VII no longer apply.” . . . PMA’s involvement in the grievance procedure does not change this conclusion. . . .
Id. at 1274. The court surveyed the standards for joint employers, id. at 1275–77, and held that an entity cannot be a joint employer without the ability to manage the joint employees:
Added to the foregoing is that PMA does not own MTC.
Instead, MTC is an independent company that manages its own business enterprise. The Supreme Court seems to suggest that the sine qua non of determining whether one is an employer is that an “employer can hire and fire employees, can assign tasks to employees and supervise their performance.” . . . Logically, before a person or entity can be a joint employer, it must possess the attributes of an employer to some degree. Numerous courts have considered the key to joint employment to be the right to hire, supervise and fire employees.” . . . Because these standards were not met, the court reversed the judgment.
1761 (9th Cir. Jan. 6, 2004), affirmed the grant of summary judgment to the Title VII religious-discrimination defendant, holding that Title VII did not grant him the right to respond to defendant’s diversity campaign by posting anti-gay religious texts near his cubicle that were large enough to be read by persons in the corridor. Plaintiff admitted that his messages were intended to be hurtful to gay and lesbian employees, and stated that his goal was to confront them so they could repent and be saved. The court upheld the lawfulness of defendant’s diversity campaign:
The campaign’s stated goal—and no evidence suggests that it was pretextual—was to increase tolerance of diversity. Peterson may be correct that the campaign devoted special attention to combating prejudice against homosexuality, but such an emphasis is in no manner unlawful. To the contrary, Hewlett-Packard’s efforts to eradicate discrimination against homosexuals in its workplace were entirely consistent with the goals and objectives of our civil rights statutes generally.
Id. at 603. The court rejected plaintiff’s argument that he had been harassed because of his religious beliefs:
According to Peterson, Hewlett-Packard managers harassed him in order to convince him to change his religious beliefs. However, the evidence that Peterson cites in support of this theory shows that Hewlett-Packard managers acted in precisely the opposite manner. In numerous meetings, Hewlett-Packard managers acknowledged the sincerity of Peterson’s beliefs and insisted that he need not change them. They did not object to Peterson’s expression of his anti-gay views in a letter to the editor that was published in the Idaho Statesman—a letter in which Peterson stated that Hewlett-Packard was “on the rampage to change moral values in Idaho under the guise of diversity,” and that the diversity campaign was a “platform to promote the homosexual agenda.” Nor did the Hewlett-Packard managers prohibit him from parking his car in the company lot even though he had affixed to it a bumper sticker stating, “Sodomy is Not a Family Value.” All that the managers did was explain Hewlett-Packard’s diversity program to Peterson and ask him to treat his co-workers with respect. They simply requested that he remove the posters and not violate the company’s harassment policy—a policy that was uniformly applied to all employees.
Id. at 604 (footnote omitted). The court rejected all of plaintiff’s comparisons to other employee groups because none of them had engaged in conduct intended to be hurtful of other employees. Id. at 604–05. It held that any accommodation of plaintiff’s religious beliefs would have posed an unreasonable burden on defendant and on other employees.
D. Equal Pay Act
Tenkku v. Normandy Bank, 348 F.3d 737, 741, 92 FEP Cases
1509 ( 8th Cir. 2003), affirmed the grant of summary judgment to the Equal Pay Act defendant. The court explained:
Tenkku first argues that her work was substantially equal
to that of her predecessor as cashier, Randy Meyer, who was paid a considerably larger salary. But it is undisputed that Meyer had seven more years of experience at Normandy Bank than Tenkku. More significantly, Normandy Bank submitted uncontroverted evidence that Meyer’s job included numerous functions in addition to that of cashier. When Meyer was terminated, Tenkku assumed his cashier duties, but his other functions were spread among other officers, as one would expect when an employer reduces its payroll by firing an officer deemed expendable. In these circumstances, Tenkku’s conclusory allegation that her total work responsibilities were equivalent to those performed by Meyer is insufficient to survive summary judgment.
The court also rejected her Equal Pay Act claim as to other Vice-Presidents because she had made no effort to compare their respective duties and relied solely on her belief that all Vice-Presidents should have the same duties.
E. The Age Discrimination in Employment ActGeneral Dynamics Land Systems, Inc. v. Cline, __ U.S. __, 124
S. Ct. 1236, 93 FEP Cases 257 (2004), held that the ADEA does not protect relatively young employees in the protected class from discrimination in favor of older employees. The Court upheld a new CBA provision that eliminated retiree health insurance benefits for employees then under 50 but retained the benefit for employees over the age of 50. Justice Souter wrote the opinion. Justice Scalia dissented. Justice Thomas dissented, joined by Justice Kennedy.
Smith v. City of Jackson, 351 F.3d 183, 187–95, 92 FEP Cases
1824 (5th Cir. 2003), cert. granted, 124 S. Ct. 1724 (2004) (No. 03–1160), held that disparate impact claims are not actionable under the ADEA. The Supreme Court will now decide the issue.
Flannery v. Recording Industry Ass’n of America, 354 F.3d 632,
642–43, 93 FEP Cases 65 (7th Cir. 2004), reversed the Rule 12(b)(6) dismissal of the ADEA and ADA plaintiff’s Complaint, holding in part that these statutes allowed plaintiff to complain of the denial of promised consulting work after his termination because it had a nexus to his employment.
F. The Americans with Disabilities Act and Rehabilitation Act
Controllable Attention Deficit Disorder:Wright v. CompUSA,
Inc., 352 F.3d 472, 476, 15 AD Cases 16 (1st Cir. 2003), affirmed in part and reversed in part the grant of summary judgment to the ADA defendant. The court held that plaintiff’s attention deficit disorder was not a disability under the ADA where it was well under control prior to plaintiff’s problems with his supervisor, and where the stress caused by the supervisor exacerbated his symptoms. The court stated: “So, while Wright presented evidence that Caughman’s managerial style created a stressful environment for him that affected his ADD symptoms, he does not present evidence that his ADD generally rendered him unable to perform some usual activity compared to the general population or that he had a continuing inability to handle stressful situations.” (Footnote omitted.)
Work as a Major Life Activity:Sullivan v. The Neiman Marcus
Group, Inc., 358 F.3d 110, 15 AD Cases 321 (1st Cir. 2004), affirmed the grant of summary judgment to the ADA defendant on plaintiff’s claim that his alcoholism affected the major life activity of working. The court discussed difficulties that defining working as a major life activity, and continued:
In our view, one of these difficulties poses a significant Catch-22 dilemma for an ADA claimant such as Sullivan. To be eligible for ADA protection, he must demonstrate that he is a “qualified individual” for the position at issue. . . . By demonstrating that his ability to work is substantially impaired, he may demonstrate that he is unqualified for the job and, therefore, excluded from ADA protection. If he does not introduce such evidence, however, he may fail to show that he was substantially impaired.
(Citations and footnote omitted).
2. “Regarded as” Disabled
Work as a Major Life Activity:Sullivan v. The Neiman Marcus
Group, Inc., 358 F.3d 110, 15 AD Cases 321 (1st Cir. 2004), affirmed the grant of summary judgment to the ADA defendant on plaintiff’s claim that defendant regarded him as disabled from the major life activity of working because of his alcoholism. The court held that there was no evidence that defendant regarded his as disabled from a class of jobs, instead of just the specific position he had held. There was also no evidence that defendant had any particular attitude towards alcoholism, other than its treatment of plaintiff, whom it had fired for drinking on the job.
3. Reasonable Accommodation
Raytheon Co. v. Hernandez, 540 U.S. 44, 124 S. Ct. 513, 157
L. Ed. 2d 357, 14 AD Cases 1825 (2003), vacated and remanded the Ninth Circuit’s decision rejecting defendant’s articulated nondiscriminatory explanation for refusing to re-employ respondent, who had been fired for use of cocaine, after he had assertedly gone through a rehabilitation program and ended his drug dependency. The Court held that the Ninth Circuit impermissibly relied on a disparate-impact rationale to reject the explanation, when the case had been pleaded and presented only as a disparate-treatment case. The Court stated that, once the explanation had been proffered, “the only relevant question before the Court of Appeals, after petitioner presented a neutral explanation for its decision not to rehire respondent, was whether there was sufficient evidence from which a jury could conclude that petitioner did make its employment decision based on respondent’s status as disabled despite petitioner’s proffered explanation.” Id. at 520.
Hedrick v. Western Reserve Care System, 355 F.3d 444, 458,
15 AD Cases 1 (6th Cir. 2004), affirmed the grant of summary judgment to the ADA defendant. The court held that defendant was not required to offer plaintiff a promotion to a salaried non-bargaining unit position as a reasonable accommodation, was not required to displace employees in a particular set of comparable positions, there was no evidence defendant knew that vacancies in those positions would later occur, and that plaintiff’s rejection of another comparable position because of its low pay meant that she could not show she was a qualified person with a disability. The court also held that the ADA did not require that plaintiff be given a preference in hiring. Id. at 459.
Peebles v. Potter, 354 F.3d 761, 768–89, 15 AD Cases 146
(8th Cir. 2004), affirmed the grant of summary judgment to the Rehabilitation Act defendant, holding that defendant had reasonably requested medical certification that employee’s disability had persisted for entire two years plaintiff had been away from work, and that plaintiff’s failure to comply could not be excused as a reasonable accommodation where it was unrelated to the disability. The court stated: “We do not read the Act as requiring the employer to level the playing field beyond those undulations that are related to the person’s disability.” Id. at 769 (citation omitted). Judge Bye concurred. Id. at 770–72.
Allen v. Pacific Bell, 348 F.3d 1113, 14 AD Cases 1833 (9th Cir.
2003), affirmed the grant of summary judgment to the ADA defendant. Plaintiff had been restricted to sedentary work pursuant to a prior accommodation, but contended that his condition had improved and sought a transfer to his former non-sedentary position but refused defendant’s request for medical documentation of his improved condition. The court held that defendant was not required to participate in the interactive process prior to receiving such documentation. Id. at 1114–15. The court also rejected plaintiff’s claim that he was entitled to an alternative accommodation, because it had negotiated an agreement with the Communications Workers of America, his collective bargaining agent, to create “a transfer system that provided disabled employees with super-seniority and multiple options to select an alternative job, and that guaranteed their right to transfer back to their former jobs if their medical condition so permitted,” and he refused to participate in this system. Id. at 1115–16.
4. No Common-Law Damages for ADA Retaliation Claims
Kramer v. Banc of America Securities, LLC, 355 F.3d 961, 964–
66 (7th Cir. 2004), affirmed judgment for the ADA defendant, and held that the Civil Rights Act of 1991 authorized compensatory and punitive damages only for ADA discrimination claims, and not for ADA retaliation claims. The court distinguished appellate affirmances of common-law damage awards in ADA retaliation cases, because those decisions had simply assumed without discussion that such damages were available.
G. FLSA, ADEA, and Equal Pay Act § 216(b) Retaliation Claims: Relief Available
29 U.S.C. § 215(a)(3), is an anti-retaliation provisions applicable
to the Fair Labor Standards Act, the Equal Pay Act, and the ADEA. Sec. 216(b) of the Act was amended in 1977 to state that employers that violate § 215(a)(3) “shall be liable for such legal or equitable relief as may be appropriate to effectuate the purposes of section 215(a)(3) of this title, including without limitation employment, reinstatements, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.” Pub. L. No. 95-151, § 10(a), 91 Stat. 1245, 1252 (1977). 29 U.S.C. § 626(b) provides in part: “Any act prohibited under section 623 of this title shall be deemed to be a prohibited act under section 215 of this title.” Thus, both provisions can apply to retaliation in violation of the ADEA.
_ The Seventh Circuit has held that compensatory damages for
non-economic injuries and punitive damages are available for retaliation in violation of the Equal Pay Act, Soto v. Adams Elevator Equipment Co., 941 F.2d 543, 551, 56 FEP Cases 1270 (7th Cir. 1991), the ADEA, Moskowitz v. Trustees of Purdue University, 5 F.3d 279, 283, 64 FEP Cases 1013 (7th Cir., 1993), and the FLSA, Avitia v. Metropolitan Club of Chicago, Inc., 49 F.3d 1219, 1226, 2 WH Cases 2d 993 (7th Cir. 1995).
Moore v. Freeman, 355 F.3d 558, 563–64, 9 WH Cases 2d 321
(6th Cir. 2004), held that § 216(b) authorizes recovery of damages for emotional distress in FLSA retaliation cases. The court stated at 564:
As noted by the Seventh Circuit, which is the only other
circuit to address at length the question of whether the provision of § 216(b) at issue here provides for damages for emotional distress, the provision allows for “appropriate” relief, and “compensation for emotional distress … [is] appropriate for intentional torts such as retaliatory discharge.” Travis, 921 F.2d at 112. In addition, both the Eighth and Ninth Circuits have allowed damages for emotional distress to stand without directly addressing the issue. SeeBroadus v. O.K. Indus., Inc., 238 F.3d 990, 992 (8th Cir. 2001); Lambert v. Ackerley, 180 F.3d 997, 1011 (9th Cir. 1999). Although the circuits are divided on the question of whether the statute permits punitive damages, compareTravis, 921 F.2d at 111–12, withSnapp, 208 F.3d at 934, consensus on the issue of compensatory damages for mental and emotional distress seems to be developing. We now join our sister circuits in finding that the damages awarded by the jury in this case fall within the ambit of § 216(b).
Cases 2d 1761 (11th Cir. 2000), cert. denied, 532 U.S. 975 (2001), held that punitive damages are not allowed by § 216(b) but stated in dicta that some additional compensatory relief is available in retaliation cases, such as reinstatement or front pay. Id. at 937. Judge Carnes concurred. Id. at 939–40.
2d 968 (11th Cir. 2002), held that injunctive relief is available under the 1977 amendment to § 216(b).
H. Interaction of the NLRA and Civil Rights StatutesBowling Transp., Inc. v. N.L.R.B., 352 F.3d 274, 284, 173 LRRM
2807 (6th Cir. 2003), held that petitioner, which provided on-site services to AK Steel, violated the NLRA by acceding to AK Steel’s demand that employees be fired for engaging in concerted activity not related to the organization of a union. In reaching its decision, the court stated in dicta:
This principle is reinforced by looking to a more egregious example of discrimination. If instead AK Steel had banished Ashby, Hanks, and Horton from its facilities because they were African-American or because they were women, it would hardly be an appropriate defense for Bowling to follow AK Steel’s directive to remove them, even if it were facing complete elimination from the site. Instead, it would have been Bowling’s obligation under the civil rights laws to resist AK Steel’s influence and perhaps file suit against AK Steel for breach of its contract and/or join its employees in a race discrimination suit against AK Steel, as the employer did in Lewis v. Haskell Co., Inc., 108 F.Supp.2d 1288 (M.D. Ala. 2000). [FN12]
FN12. Presumably, such an employer facing this situation
would have a federal cause of action, too, under 42 U.S.C. § 1981 (1991), which prohibits racial discrimination in the making and enforcement of private contracts, Newman v. Fed. Express Corp., 266 F.3d 401, 406 (6th Cir. 2001).
IV. Theories and Proof
A. Intentional DiscriminationHedrick v. Western Reserve Care System, 355 F.3d 444, 454,
15 AD Cases 1 (6th Cir. 2004), affirmed the grant of summary judgment to the ADA defendant, held that plaintiff was required to show that defendant’s sole motive was disability discrimination.
B. The Inferential Model
1. Approaches to Pretext
Brown v. Packaging Corp. of America, 338 F.3d 586, 92 FEP
Cases 522 (6th Cir. 2003), affirmed judgment on a jury verdict for the ADEA defendant. The court observed that the defendant’s asserted true reasons for the plaintiff’s non-selection for Temporary Foreman—his conviction for arson for burning down his own house, and his bringing a nude photograph of his wife into the workplace in violation of the sexual harassment policy—were not given to the plaintiff or to the EEOC, but that this was explained to the jury as the result of the employer’s desire not to embarrass and humiliate the plaintiff.
Tenkku v. Normandy Bank, 348 F.3d 737, 742, 92 FEP Cases
1509 ( 8th Cir. 2003), affirmed the grant of summary judgment to the Title VII defendant. The court held that the independent auditors’ and FDIC bank examiners’ confirmation of plaintiffs’ poor job performance were independent reasons to delay her pay raise.
2003), affirmed the grant of summary judgment to the Title VII defendant, holding that plaintiff had shown the defendant’s explanation for her non-selection for a job to be pretextual, but that she had also shown it was nondiscriminatory, having been intended to shield a white employee from layoff.
2. Need to Show an Application
Smith v. J. Smith Lanier & Co., 352 F.3d 1342, 92 FEP Cases
1729 (11th Cir. 2003), affirmed the grant of summary judgment to the ADEA RIF defendant, holding that plaintiff had not adequately applied for vacant positions by simply stating that she was willing to take any open position, where she knew of the company’s practice of posting vacancies and knew of its policy requiring formal applications.
3. Subjective Explanations
Chambers v. Metropolitan Property and Cas. Ins. Co., 351 F.3d
848, 855, 92 FEP Cases 1739 (8th Cir. 2003), affirmed the grant of summary judgment to the ADEA RIF defendant and upheld as not pretextual defendant’s subjective explanation for some positions that plaintiff had too aggressive a style for the position in question, and its subjective determinations of relative qualifications. The court rejected plaintiff’s general attack on the adequacy of subjective explanations, and stated that there was no evidence of fabrication of any explanation:
In this case, Chambers had more years of experience than the younger candidates because he had been working in the insurance business longer, but otherwise, there was no overall objective disparity in the candidates’ qualifications. We cannot say, as in McCullough, that an inference of discrimination arises because the employer chose a clearly less qualified or unqualified individual on the basis of subjective considerations alone. Here, the objective qualifications of the candidates were comparable, and the employer offered a legitimate business consideration to justify the use of the subjective criteria of which personality was a better fit for the job or the existing team. The use of this subjective consideration in this case does not give rise to an inference of discrimination because the plaintiff was unable to cast doubt on the justifications offered by the employer. “[I]t is not the role of this court to sit as a super-personnel department to second guess the wisdom of a business’s personnel decisions.”
Id. at 858.
C. Mixed Motives
1. Desert Palace v. Costa
Desert Palace, Inc. v. Costa, 539 U.S. 90, 123 S. Ct. 2148, 91
FEP Cases 1569 (2003), unanimously affirmed the Ninth Circuit, cited Reeves, and held that § 703(m) of the Civil Rights Act of 1964, added by the Civil Rights Act of 1991, allows plaintiffs to obtain mixed-motives analysis if they show that race, color, national origin, sex, or religion was one of the factors motivating the challenged decision. The Court held that circumstantial evidence is sufficient, and is not disfavored in employment discrimination cases. This decision will make mixed-motives analysis available generally in intentional-discrimination cases, and will eliminate the requirement that plaintiffs show pretext as to each nondiscriminatory reason proffered by a defendant. It will make it harder for defendants to obtain summary judgment, but may give defendants two bites at the apple in the minds of jurors. It is critical for plaintiffs to emphasize deceit, in cases in which defendant has misrepresented its reasons to the plaintiff, to co-workers, to enforcement agencies, or to the courts. The Court did not address the critical question whether defendants as well as plaintiffs can trigger mixed-motives analysis. Plaintiffs will argue that they are the masters of their own cases, and that defendants cannot be allowed to transform their cases into something they did not intend. A lot of litigation lies in store. Finally, Price Waterhouse remains the standard for types of claims not covered by § 703(m).
2. Application of Desert Palace in the District Courts
Dunbar v. Pepsi-Cola General Bottlers of Iowa, Inc., 285 F.
Supp.2d 1180, 92 FEP Cases 1424 (N.D. Iowa 2003), granted in part and denied in part defendant’s motion for summary judgment. The court stated at 1197–98:
Thus, the McDonnell Douglas burden-shifting paradigm
must only be modified in light of Desert Palace, § 2000e-2(m), and only in its final stage, so that it is framed in terms of whether the plaintiff can meet his or her “ultimate burden” to prove intentional discrimination, rather than in terms of whether the plaintiff can prove “pretext.” Under such a modified framework, to prevail after the defendant produces a legitimate, nondiscriminatory reason for its conduct, the plaintiff must prove by the preponderance of the evidence either (1) that the defendant’s reason is not true, but is instead a pretext for discrimination (pretext alternative) . . . or (2) that the defendant’s reason, while true, is only one of the reasons for its conduct, and another “motivating factor” is the plaintiff’s protected characteristic (mixed-motive alternative). . . . The latter showing may be made with either “direct” or “circumstantial” evidence. . . . If the plaintiff prevails under the second alternative, then if the defendant is to limit the remedies available to the plaintiff to injunctive relief, attorney’s fees, and costs—i.e., to escape liability for damages—the burden shifts back to the defendant to prove the affirmative defense stated in § 2000e-5(g)(2)(B), which is that the defendant “would have taken the same action in the absence of the impermissible motivating factor.”
(Citations and footnote omitted; emphases in original.)
Dare v. Wal-Mart Stores, Inc., 267 F.Supp.2d 987, 991–92
(D. Minn. 2003), held that Desert Palace effectively abolished the McDonnell Douglas approach in all cases. The court stated at 991: “The dichotomy produced by the McDonnell Douglas framework is a false one. In practice, few employment decisions are made solely on basis of one rationale to the exclusion of all others. Instead, most employment decisions are the result of the interaction of various factors, legitimate and at times illegitimate, objective and subjective, rational and irrational.” It held that the “same decision” test would work best in all cases. Dare v. Wal-Mart Stores, Inc., 267 F.Supp.2d 987, 991–92 (D. Minn. 2003), held that Desert Palace effectively abolished the McDonnell Douglas approach in all cases. The court stated at 991: “The dichotomy produced by the McDonnell Douglas framework is a false one. In practice, few employment decisions are made solely on basis of one rationale to the exclusion of all others. Instead, most employment decisions are the result of the interaction of various factors, legitimate and at times illegitimate, objective and subjective, rational and irrational.” It held that the “same decision” test would work best in all cases.
Skomsky v. Speedway SuperAmerica, L.L.C., 267 F.Supp.2d
995, 1000, 14 AD Cases 910 (D. Minn. 2003), held that plaintiff pleaded a mixed-motives case by initially pursuing claims under the ADEA as well as under the ADA.
3. Application of Desert Palace Outside of Title VII
Estades-Negroni v. Associates Corp. of North America, 345 F
.3d 25, 14 AD Cases 1478 (1st Cir. 2003), leave to file for rehearing denied, 359 F.3d 1 (1st Cir. 2004), affirmed the grant of summary judgment to the ADEA, ADA, and Puerto Rican law defendant. Without discussion, the court considered Desert Palace in conjunction with plaintiff’s ADEA claim, and held that it made no difference.
Hill v. Lockheed Martin Logistics Management, Inc., 354 F.3d
277, 285 n.2, 93 FEP Cases 1 (4th Cir. 2004) (en banc), petition for cert. filed, 72 USLW 3673 (U.S., April 5, 2004) (No. 03–1443), affirmed the grant of summary judgment to the Title VII and ADEA defendant. The court assumed without deciding that the Price Waterhouse burden-shifting model still applies to ADEA cases, but held the evidence insufficient under either the § 703(m) model or the Price Waterhouse model. Accord, Mereish v. Walker, 359 F.3d 330, 340, 93 FEP Cases 608 (4th Cir. 2004) (“And maintaining the higher evidentiary burden in Price Waterhouse for ADEA claims is not implausible, given that age is often correlated with perfectly legitimate, non- discriminatory employment decisions.”); Trammel v. Simmons First Bank of Searcy, 345 F.3d 611, 615, 92 FEP Cases 1061 (8th Cir. 2003) (“But even if we assume, without deciding, that the holding in Costa applies to ADEA claims, we do not believe that this helps Mr. Trammel because he has presented insufficient evidence to support a finding that his age was a ‘motivating factor’ in the decision to discharge him.”). Judge Michael dissented, joined by Judges Motz, Judge King, and Judge Gregory. Id. at 299–305. The Supreme Court has requested the Solicitor General to state the views of the United States. Order of June 28, 2004.
Hedrick v. Western Reserve Care System, 355 F.3d 444, 454,
15 AD Cases 1 (6th Cir. 2004), affirmed the grant of summary judgment to the ADA defendant, and held that mixed-motives analysis is not available for ADA claims.
Peebles v. Potter, 354 F.3d 761, 767 n.5, 15 AD Cases 146
(8th Cir. 2004), affirmed the grant of summary judgment to the Rehabilitation Act defendant. The court stated that plaintiffs are required by the language of the Act to show that the challenged action was motivated solely by the disability.
D. Actionable ConductTaylor v. Small, 350 F.3d 1286, 92 FEP Cases 1785, 15 AD
Cases 25 (D.C. Cir. 2003), held that delay in completing performance appraisals, and being placed on a Performance Improvement Plan, are not actionable under Title VII.
Stewart v. Ashcroft, 352 F.3d 422, 426–27, 93 FEP Cases 56
(D.C. Cir. 2003), affirmed the grant of summary judgment to defendant, but held that the denial of promotion to a Branch Chief position in the Justice Department was an adverse employment action even though the promotion would not have involved any increase in pay or benefits, because of the denial of additional supervisory and management duties. Judge Henderson concurred in the judgment but disagreed with this holding. Id. at 431–33.
Taylor v. Small, 350 F.3d 1286, 1294, 92 FEP Cases 1785,
15 AD Cases 25 (D.C. Cir. 2003), held that denial of a bonus may be actionable discrimination but that the employer’s pre-suit correction of the problem rendered the denial non-actionable. The court approved the lower court’s statement: “Permitting employers the opportunity to correct workplace wrongs prior to litigation is the objective of the EEO process. If a plaintiff were permitted a right to sue even if his or her employer had corrected the grievance, there would be absolutely no incentive for employers to make adjustments for past conduct during the EEO process.”
1. What is the Right Standard for Actionable Conduct?
Foley v. University of Houston System, 355 F.3d 333, 340–41, 92
FEP Cases 1839 (5th Cir. 2003), held that the following conduct was not actionable for purposes of a § 1981(b) retaliation claim:
Viewing the record in the light most favorable to her, Hutto is complaining of the following employment actions on the part of the Appellants: (1) they schemed to remove her as Chair of the Education Division in August 1996, and to replace her with Cheryl Hines; (2) they tried to undermine an important program within the Division known as the Center for Professional Development and Technology (CPDT), which reflected upon Hutto’s leadership; (3) Haynes and Hines reprimanded her for circulating unauthorized flyers regarding the Administration and Education Program (AED) and generally attempted to undermine that program; and (4) they refused to attend the Phi Kappa Phi initiation ceremony the year that Hutto was the president of the organization. None of these adverse actions qualify as ultimate employment decisions. Her loss of the title of Chair of the Division in August 1996 did not result in any loss of compensation or benefits and she remained on the faculty as a tenured professor. Furthermore, that particular claim is clearly barred by the statute of limitations. The other listed allegations fall far short of ultimate employment decisions.
2. Determinations of Actionable Conduct
Shaver v. Independent Stave Co., 350 F.3d 716, 723–25,
14 AD Cases 1889 (8th Cir. 2003), reversed the grant of summary judgment to the ADA retaliation defendant. Plaintiff had used a former supervisor as a reference in seeking employment from acquaintances. The supervisor told persons seeking a reference on plaintiff “that he could not recommend Mr. Shaver because he had ‘a get rich quick scheme involving suing companies.’” Id. at 723. Plaintiff was not hired but, when he used a different supervisor as a reference, he was hired. The lower court held that plaintiff could not sue on a claim he had manufactured by baiting the supervisor giving the bad references. The court of appeals disagreed:
We are unable to agree with the district court’s view that
claims that are “manufactured” in the sense that the court used the word are not actionable. The ADA states that “[n]o person shall discriminate against any individual because … such individual made a charge … under this chapter.” 42 U.S.C. § 12203(a). A prima facie case under this provision consists of proof of protected activity by the employee, adverse action taken by the employer against the employee, and a causal connection between the protected activity and the adverse action. . . . The district court seems to have added an additional requirement, namely, that the party asserting the claim did not purposefully seek the adverse action. Nothing in the words of the statute or in our cases, however, suggests that the conduct of the aggrieved party, other than the party’s initial protected activity, is relevant. Rather, the law focuses exclusively on the conduct of the alleged retaliator in determining whether the aggrieved plaintiff has a claim.
Id. at 723–24 (citation omitted). The court relied in part on the “tester” cases. Id. at 724. The court continued, id. at 725 (citation omitted):
In any case, there are many reasons why a person might
seek a job interview even though he or she has no intention of taking the job. People may be “testing the waters” to find out what kind of reference they would get, practicing their interviewing skills, investigating a new line of work, or they may have any one of a whole host of other benign reasons for “manufacturing” a job application. . . . For these reasons, we disagree with the district court’s holding that a “manufactured” claim that meets the statutory requirements cannot proceed. The issue of whether Mr. Shaver actually failed to get a job remains relevant on the question of the extent of his damages, but even if the whole situation was “manufactured,” he would still have a claim for nominal damages, and in the proper circumstances, for attorneys’ fees, exemplary damages, and injunctive relief.
Hill v. Lockheed Martin Logistics Management, Inc., 354 F.3d
277, 283, 93 FEP Cases 1 (4th Cir. 2004) (en banc), petition for cert. filed, 72 USLW 3673 (U.S., April 5, 2004) (No. 03–1443), affirmed the grant of summary judgment to the Title VII and ADEA retaliation defendant, holding that plaintiff had failed to show any causal connection between her complaints that Safety Inspector Fultz was biased and her termination. Judge Michael dissented, joined by Judges Motz, Judge King, and Judge Gregory. Id. at 299–305. The Supreme Court has requested the Solicitor General to state the views of the United States. Order of June 28, 2004.
4. Temporal Proximity as Evidence of Causation
Thomas v. Town of Hammonton, 351 F.3d 108, 114, 92 FEP
Cases 1701 (3d Cir. 2003), rejected plaintiff’s claim that her termination violated the First Amendment because she did not show a causal connection between her complaints of sexual harassment and her discharge. The court explained:
The undisputed record evidence reflects that this decision was announced on June 29th at the end of Thomas’s 90-day probationary period. At that point, she had been absent for nine days during the month of June and had failed to call in on June 28th to advise that she would not report for duty. . . . The only evidence regarding the attitude of the Town’s supervisory personnel regarding Thomas at this point in time is the evidence that, despite her not having completed the training course, Chief Ingemi arranged for her to take the 911 operator certification test on June 14th.”
The court observed that the record was not clear as to when the decision maker learned of plaintiff’s Complaint, but it was at least three weeks earlier and the imminent end of the probationary period required action at that time. Id. at 114.
Singletary v. District of Columbia, 351 F.3d 519, 525, 92 FEP
Cases 1799 (D.C. Cir. 2003), reversed in part and affirmed in part the lower court’s judgment after a bench trial to the Title VII and Rehabilitation Act retaliation defendant. The court reversed as clearly erroneous and remanded the lower court’s finding that plaintiff had not shown causation between his protected activity and his denial of promotion, because the lower court had considered only plaintiff’s original filings and had not considered the one-month gap between plaintiff’s filing of a 1993 appeal—showing that his discrimination claims were still alive—and the 1993 denial of promotion. The court described the temporal proximity as “quite close.” The court also held that letters sent by plaintiffs’ counsel were protected activity.
Wright v. CompUSA, Inc., 352 F.3d 472, 477–78, 15 AD Cases
16 (1st Cir. 2003), reversed the grant of summary judgment to the ADA retaliation defendant. The court held that requesting an accommodation is protected activity, and that plaintiff had made a showing of causation sufficient to overcome summary judgment by showing that he was fired immediately after he returned from medical leave and requested an accommodation for his attention deficit disorder, and by showing a genuine dispute whether defendant’s stated ground for the discharge was the actual ground.
Stegall v. Citadel Broadcasting Co., 350 F.3d 1061, 1069–70, 92
FEP Cases 1769 (9th Cir. 2003), reversed the grant of summary judgment to the Title VII retaliation defendant, and relied in part on the short nine-day interval between plaintiff’s complaints of discrimination and her discharge, to show causation for her retaliation claim. Judge Gould dissented on this point, based on his view of the facts of the case. Id. at 1077.
5. Curing Discrimination Before Suit is Filed
Taylor v. Small, 350 F.3d 1286, 92 FEP Cases 1785, 15 AD
Cases 25 (D.C. Cir. 2003), held that, while denial of a bonus because of a delay in providing an employment evaluation may be actionable, the employer may cure this kind of violation prior to suit and thus avoid liability:
We agree with the four other circuits to have addressed
the question: An employer may cure an adverse employment action—at least one of the sort here alleged—before that action is the subject of litigation. See White v. Burlington Northern & Santa Fe Railway Co., 310 F.3d 443, 452 (6th Cir. 2002) (reinstatement that “puts the plaintiff in the same position she would have been in absent the suspension constitutes the ‘ultimate employment decision,’ thereby negating a potentially adverse intermediate employment decision”), reh’g en banc granted and judgment vacated, 321 F.3d 1203 (2003); Pennington v. City of Huntsville, 261 F.3d 1262, 1267-68 (11th Cir. 2001) (no adverse employment action where plaintiff initially denied but shortly thereafter received promotion); Brooks v. San Mateo, 229 F.3d 917, 929-30 (9th Cir. 2000) (retaliatory lowering of performance evaluation not adverse employment action where evaluation was “on appeal” and might have been corrected if plaintiff had not quit her job while appeal was pending); Benningfield v. City of Houston, 157 F.3d 369, 378 (5th Cir. 1998) (“We need not address whether a mere delay in promotion constitutes an adverse employment action because [plaintiff] received the promotion with retroactive pay and seniority”); cf. Page v. Bolger, 645 F.2d 227, 233 (4th Cir. 1981) (en banc) (“there are many interlocutory or mediate decisions having no immediate effect upon employment conditions which were not intended to fall within the direct proscriptions of . . . Title VII”).
F. ComparatorsHill v. Lockheed Martin Logistics Management, Inc., 354 F.3d
277, 295–96, 93 FEP Cases 1 (4th Cir. 2004) (en banc), petition for cert. filed, 72 USLW 3673 (U.S., April 5, 2004) (No. 03–1443), affirmed the grant of summary judgment to the Title VII and ADEA defendant. The court relied in part on the fact that Safety Inspector Fultz, the only person allegedly harboring a discriminatory animus against the plaintiff, had written up male employees and that one of the males had been suspended. Judge Michael dissented, joined by Judges Motz, Judge King, and Judge Gregory. Id. at 299–305. The Supreme Court has requested the Solicitor General to state the views of the United States. Order of June 28, 2004.
Bryant v. Aiken Regional Medical Centers Inc., 333 F.3d 536,
545–46, 92 FEP Cases 233 (4th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1048 (2004), affirmed the judgment for the Title VII and § 1981 plaintiff on a jury verdict, rejecting defendant’s argument that plaintiff’s claim must fail for lack of evidence of a white comparator. The court stated: “Bryant is not required as a matter of law to point to a similarly situated white comparator in order to succeed on a race discrimination claim. . . . We would never hold, for example, that an employer who categorically refused to hire black applicants would be insulated from judicial review because no white applicant had happened to apply for a position during the time frame in question. . . . However helpful a showing of a white comparator may be to proving a discrimination claim, it is not a necessary element of such a claim.” (Citation omitted.) The court also held that the jury was not required to find for defendant because of defendant’s comparators: “But neither employee relied upon by ARMC here was situated similarly to Bryant. One of the applicants was not hired until several months after Bryant filed charges of racial discrimination with the EEOC. The other applicant was only hired for a part- time position. Neither hiring sufficiently rebuts the inference of discrimination to the point that no reasonable jury could have found in Bryant’s favor.” Id. at 546.
Marquez v. Bridgestone/Firestone, Inc., 353 F.3d 1037, 1038, 93
FDEP Cases 92 (8th Cir. 2004) (per curiam), affirmed the grant of summary judgment to defendant on plaintiff’s claims of discriminatory discipline because there was no evidence that she was treated differently than similarly situated employees who were not Laotian. “To show that other employees were similarly situated, Marquez was required to point to individuals who ‘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.’ Clark v. Runyon, 218 F.3d 915, 918 (8th Cir. 2000).”
Joens v. John Morrell & Co., 354 F.3d 938, 941–42, 93 FEP
Cases 72 (8th Cir. 2004), affirmed the grant of summary judgment to the Title VII hostile-environment defendant, holding that plaintiff had not shown any sex-based difference in treatment by a male co-worker who shouted at her to demand more boxes for his department, and not at a male employee under her supervision, where she was the person who ran the box-making machine and decided which type of boxes to make. The court rejected plaintiff’s argument that the co-worker did not yell at the male night-shift box machine operator, because there was no evidence that the co-worker had ever been assigned to the night shift.
G. Comparative Qualifications and Evidence Bearing on Employee Performance
Thomas v. Eastman Kodak Co., 183 F.3d 38, 62–63, 80 FEP
Cases 537 (1st Cir. 1999), cert. denied, 528 U.S. 1161 (2000), reversed the grant of summary judgment to the Title VII racial discrimination defendant, relying substantially on comparative evidence. The court held that the lower court erred when it insisted on some evidence pointing specifically to the unlawful motivation, id. at 56– 58, and stated that “discrimination, rarely explicit and thus rarely the subject of direct evidence, may be proven through the elimination of other plausible non-discriminatory reasons until the most plausible reason remaining is discrimination.” Id. at 61 (citation omitted). The plaintiff was black, and had worked for the defendant for 19 years prior to her layoff in 1993. For the 13 years preceding her layoff, she worked as a Customer Service Representative (“CSR”) in the Wellesley, Massachusetts, office. She received stellar evaluations, and had strong positive feedback from the customers she serviced. All of this came to an end in 1989 when Claire Flannery, a secretary who had previously worked as a CSR, was selected over the plaintiff to fill the new Customer Support Manager position. The plaintiff’s appraisals became far lower, and Flannery did everything conceivable to undermine the plaintiff with management, other staff members, and customers. Because of the ratings, the plaintiff was selected for layoff in 1993. Id. at 43–46. The lower court found that a reasonable jury could determine that the appraisal scores were objectively unfair or were skewed against the plaintiff, i.e., that they were pretextual, and the court of appeals agreed. Id. at 57. The court stated that the drop in the plaintiff’s ratings after Flannery became her supervisor was not due to Flannery’s simply being a tough grader, because Flannery gave very high grades to others. Id. at 62. Nor could the three-point drop be explained by the plaintiff’s promotion to a higher grade in 1989, as Kodak claimed, because one other promotee had a one-point drop and the other had a one-point increase, and because other supervisors denied the existence of Kodak’s claimed rule. Id. The court observed that the scores for “quantity of results” involved an objectively verifiable category, and the plaintiff showed a disparity of treatment. “In 1990, for instance, Thomas received only a 3 for quantity of results—a below average score—for managing 730 machines and 110 installations, while another CSR, also in the K6 grade, received a 5 for quantity in 1991 for managing far fewer machines (504) and fewer installations (81).” Id. at 62–63. The court rejected the company’s explanation for this disparity as relevant to persuading the jury, but not enough to render the comparison meaningless for purposes of summary judgment. Id. at 63.
Koster v. Trans World Airlines, Inc., 181 F.3d 24, 31–32, 80
FEP Cases 343 (1st Cir.), cert. denied, 528 U.S. 1021 (1999), an age discrimination case under Massachusetts law applying the standards of the three-part McDonnell Douglas approach, affirmed the judgment on liability for the plaintiff, based on the jury verdict. The court relied heavily on the plaintiff’s comparative evidence as to Robert Spencer (then 48), who was also selected for the RIF, and Robinanne Stancavage (then 25), who was retained:
After comparing the qualifications of Koster and
Stancavage, there is abundant evidence supporting the conclusion that a reasonable employer would have found Koster significantly more qualified than Stancavage, a twenty-five year old employee with three months of supervisory experience. The jury could also reasonably conclude that Koster fit the selection criteria established by Humpherys and that Stancavage did not. Koster obviously made a long-term commitment to working for TWA, while evidence suggested that Stancavage planned to work for TWA until she returned to school. “[A]n employer’s asserted strong reliance on subjective feelings about candidates may mask discrimination.” . . . That three of the four retained supervisors were in the protected age class is of little importance because Koster need only show that TWA furloughed him because of his age.
Id. at 31–32 (citations omitted).
Carlton v. Mystic Transportation, Inc., 202 F.3d 129, 136, 81
FEP Cases 1449 (2d Cir.), cert. denied, 530 U.S. 1261 (2000), found that the plaintiff had produced adequate evidence of pretext, and reversed the grant of summary judgment to the ADEA RIF defendant. The defendant’s explanation for firing the plaintiff was that a decline in business required a RIF, and that his job performance was poor. The court found problems with the RIF explanation, in part because the plaintiff was replaced three months after the RIF with a person who was 25 years younger, and in part because of their comparative salaries. “And, defendant achieved relatively insignificant savings as a result of Carlton’s termination. While Carlton had received $57,200 per year, Oravets was paid $46,800 per year. All of which suggests that perhaps some other motive—beyond the company’s finances—motivated Carlton’s dismissal.” In addition, the court found evidence of pretext in the company’s failure to produce documentation of the poor performance, particularly in light of objective evidence of good performance and comparative evidence that such documentation should exist if the plaintiff’s performance was truly poor:
We think there is evidence of inconsistency in defendant’s handling of supposedly underperforming employees. For example, when Oravets was terminated from his first term of employment with Mystic in 1993, the employer filled out a pre-printed form that stated that Oravets’ termination was for “insubordination.” No such form exists for Carlton. Again, when Oravets was performing poorly during his prior term of employment, his salary was reduced. If Carlton’s performance had declined, as defendant insists, it seems surprising that there was no contemporaneous proof of that fact.
Id. (citation omitted).
Banks v. Travelers Companies, 180 F.3d 358, 362, 80 FEP
Cases 30 (2d Cir. 1999), affirmed the judgment of liability on a jury verdict in favor of the ADEA plaintiff. The court stated that the decision maker purported to follow “a methodical process of meetings and evaluations,” called a “‘staff adjustment’ process,” to determine whether to lay off the plaintiff or a younger employee, Dvorachek, in January 1994. The court stated that there was evidence from which the jury could have inferred that the process was a sham and that Dvorachek had been preselected. Part of that evidence was the plaintiff’s superior qualifications. “In addition, the jury could have reasonably concluded from Banks’s more extensive work experience and seniority, as well as from an earlier performance evaluation, that she was the better qualified candidate.” (Footnote omitted.)
Corti v. Storage Technology Corp., 304 F.3d 336, 338–39, 89
FEP Cases 1477 (4th Cir. 2002), affirmed the judgment on a jury verdict for plaintiff, in the amount of $410,974.63 in back pay and prejudgment interest, and $100,000 in punitive damages. The court relied in part on evidence that the plaintiff was a top-ranked Financial Services Manager but was nevertheless selected for demotion in the RIF, and ultimate termination, while males who had never even met their quotas without special relief were retained.
Thomas v. Texas Department of Criminal Justice, 220 F.3d
389, 393–94, 83 FEP Cases 1081 (5th Cir. 2000), affirmed the judgment of liability on a jury verdict for the Title VII race and gender discrimination plaintiff. The plaintiff was a black woman who was denied promotion to Captain despite meeting all of the requirements for the position and presenting the testimony of correctional officers as to the excellence of her record. The court found plaintiff’s comparative and other evidence sufficient to overcome the defendant’s explanation:
TDCJ argues that Thomas was less qualified because the three white males promoted all had more mid‑level supervisory experience, and gave better answers at the interview. Thomas presented counter evidence showing that one of the officers who was ultimately promoted represented on his application that he had only 18 hours of college credits, and the minimum qualifications stated that 30 hours of college credit were required. One of the other officers who was ultimately promoted stated on his application that he had 38 hours of college credit, and his transcript ultimately showed he had completed only 32 hours. Therefore, although we acknowledge that there was conflicting evidence presented to the jury regarding TDCJ’s failure to promote Thomas, ultimately we conclude that Thomas presented evidence of sufficient force and persuasiveness to allow a reasonable juror to conclude that TDCJ engaged in gender and racial discrimination.
Id. (footnote omitted).
Vance v. Union Planters Corp., 209 F.3d 438, 442, 82 FEP
Cases 1199 (5th Cir. 2000), affirmed the judgment of liability on the jury verdict for the female Title VII gender discrimination plaintiff, who had not been selected for the position of branch bank president. The court relied in part on the fact that the decision maker had pursued a series of male candidates but not the plaintiff, where a number of male candidates had recommended the plaintiff as the best qualified person and where the plaintiff was the only viable candidate. The court held that the jury was entitled to find discrimination where the evidence showed that the decision maker was “less than diligent” in checking the credentials of the male he recruited and selected, and failed to follow up on the plaintiff’s glowing recommendations. Id. at 443. The evidence of gender-biased statements is described in more detail in Chapter 17 (Direct Proof and Stray Remarks), in Part B (Explanations of the Standard Used to Decide If a Statement or Other Evidence is “Direct Proof” or a “Stray Remark”). The court held that the jury was entitled to credit evidence “that Vance’s administrative skills were at least as strong as” the male candidate’s, and was entitled to infer from the selectee’s recent demotion from an administrative job that his administrative skills did not motivate the decision maker to select him. Id. at 444.
Rutherford v. Harris County, 197 F.3d 173, 181–82, 81 FEP
Cases 1775 (5th Cir. 1999), affirmed the judgment on a jury verdict for the Title VII gender discrimination plaintiff on her promotional claim, affirmed the denial of judgment as a matter of law for the defendant, and affirmed the denial of a new trial, based in part on evidence that the plaintiff’s qualifications were superior to those of Remon Green, the male employee who received the promotion to a full-time position as Deputy Constable. The court held that the usual rule—restricting courts from analyzing the comparative qualifications of candidates unless the plaintiff is so clearly superior that the difference in qualifications “‘are so apparent as virtually to jump off the page and slap us in the face’”—did not apply because the defendant never compared the qualifications of the candidates. Id. at 182 n.9. This aspect of the decision is discussed in Chapter 14 (The McDonnell Douglas / Burdine / Hicks Model), Part G, in the section on “Comparative Qualifications of the Plaintiff.” The plaintiff showed the existence of the opening, that seniority strongly influenced promotional decisions, and that she had trained Green on some aspects of the job. The court described the plaintiff’s superior qualifications:
Green was junior in seniority to Rutherford and Tesma
Walker (“Deputy Walker”), both females. At the time he was promoted, he was a civilian employee working as a radio dispatcher. He had significantly less training and field experience in traffic safety than did Rutherford. Rutherford had worked strictly on traffic safety as a reserve deputy. Green did not train in traffic safety. As a radio dispatcher, Green learned radio codes, but this knowledge did not take long to acquire and provided no benefit in working the streets as a traffic safety deputy. Rutherford had become familiar with the streets and addresses in her patrol area. She had also received training in the Intoxilyzer, radar certification, ticketing, accident reconstruction, and field sobriety. She had taught Green how to write tickets. Green had some experience as a reserve deputy in making traffic stops and also had experience patrolling county parks, but so did Rutherford. Most of the classes that Green had taken before becoming a full-time deputy were related to communications, not traffic safety. He had not taken courses in the Intoxilyzer, field sobriety, pedestrian and bicycle accident reconstruction, or radar.
Casarez v. Burlington Northern/Santa Fe Co., 193 F.3d 334,
337–38, 81 FEP Cases 412 (5th Cir. 1999), reh’g denied, 201 F.3d 383, 81 FEP Cases 1246 (5th Cir. 2000), reversed the grant to the defendant of judgment as a matter of law on the plaintiff’s discrimination claim, and held that the defendant’s proffer of false nondiscriminatory explanations, combined with the plaintiff’s “own good work record,” were sufficient for a jury to infer the defendant’s intent to discriminate. The court went on to state that, even if this were not considered enough, the evidence that the plaintiff was treated differently from similarly situated Caucasian Assistant Superintendents “would likewise satisfy the intent inquiry.” Id. at 338. The plaintiff was Assistant Superintendent of the North Texas Division, which made him second-in-command. Id. at 335. He had received excellent evaluations until his supervisor was replaced by Lewis Rees. The court stated: “he was subjected to multiple instances of being treated differently from similarly situated Caucasian assistant superintendents: he was assigned menial tasks, he was forced to work nights, he was not permitted to leave work until he was relieved by someone else, he was not permitted to take time off to visit his ailing mother in El Paso, he was ostracized from the planning committee for Alliance and from the safety committee, and he was transferred to Zacha Junction where he was isolated from his subordinates.” Id.
Bell v. E.P.A., 232 F.3d 546, 551–52, 84 FEP Cases 630 ( 7th Cir.
2000), reversed the grant of summary judgment to the Title VII race and national origin promotional discrimination defendant because the plaintiffs’ qualifications, compared to those of the selectees, and their statistical showing, would have allowed a reasonable factfinder to infer discrimination.
Cases 178, 25 EB Cases 1101 (7th Cir. 2000), reversed the grant of summary judgment to the ADEA RIF defendants, in part because of the plaintiffs’ comparative qualifications. “The record was full of objective evidence—far more than the plaintiffs’ own evaluations of their performances—suggesting that not only were they doing their jobs well, but (more importantly) that in the comparative ratings that are required in a RIF, they could have survived had the criteria been age-neutral. The size of the merit bonuses and raises the companies paid them is one example of such evidence, as is documentation of employees’ job skills, experience and past job performance.”
Thorn v. Sundstrand Aerospace Corp., 207 F.3d 383, 386–87, 82
FEP Cases 550 (7th Cir. 2000), reversed the grant of summary judgment to the ADEA RIF defendant on plaintiff Thorn’s claim. The 61- year-old plaintiff contract administrator, “whose performance evaluations were uniformly glowing,” id. at 386, was selected for discharge in a RIF while much younger employees were retained.
Hocevar v. Purdue Frederick Co., 223 F.3d 721, 726–27, 83
FEP Cases 1196 (8th Cir. 2000), reversed the grant of summary judgment to the defendant on the plaintiff’s retaliation claim. In finding sufficient evidence of causation, Judges Lay and Gibson relied in part on the fact that the decision maker had previously imposed—only on the plaintiff, who was a top producer—the requirement that she call him every day with a special report about her sales calls, and relied in part on a witness statement describing a pattern in which employees who complain eventually are gone from the organization.
Juarez v. ACS Government Solutions Group, Inc., 314 F.3d 1243,
90 FEP Cases 1104 (10th Cir. 2003), affirmed the judgment for the plaintiff in the amounts of $22,500 in back pay and $250,000 in punitive damages for racial and national origin discrimination in a RIF. The court relied in part on comparative evidence: “Appellee presented evidence that ACS had retained non-Hispanic computer operators with less experience and tenure than Appellee and who had lower recent performance evaluations.” Id. at 1245. “Appellee introduced evidence that ACS retained two computer operators that were frequently tardy or absent and one that slept on the job. Appellee also introduced evidence that a retained computer operator was drinking on the job.” Id. at 1246.
Cases 933 (10th Cir. 2000), affirmed the judgment on a jury verdict for the ADEA and Title VII plaintiff as to a promotion to a Program Manager position. The court held that the jury was entitled to infer that plaintiff was more qualified than the person selected, David Koelsch, because plaintiff had 16 years’ experience compared to Koelsch’s two months.
Tyler v. RE/MAX Mountain States, Inc., 232 F.3d 808, 815–16
( 10th Cir. 2000), affirmed the judgment on a jury verdict for the § 1981 and 42 U.S.C. § 3601 plaintiff real estate broker on his claim that defendant discriminatorily failed to accept his application for a franchise. The court held that the jury could reasonably reject as pretextual the defendant’s statement that it was concerned over his lack of sales associates, where it granted a franchise to the Coopers, who had no real estate agents of staff at the time they applied, and “who RE/MAX admitted were similarly situated applicants.” Id. at 815 n.8. Moreover, Mr. Tyler and his daughter were both licensed agents.
(11th Cir. 2000), reversed the grant of summary judgment to the Title VII gender discrimination defendant, holding that the jury could reasonably find discrimination from evidence of the plaintiff’s superior qualifications for the job of Purchasing Agent, evidence that the defendant had falsely denied the existence of a job description prior to the EEOC’s request for the description, and evidence that it had provided the EEOC with a job description that boosted the relative qualifications of the person selected. The court relied in part on plaintiff’s superior qualifications for the position of Purchasing Agent, compared to Jeff Warnock, the person selected. “Durley presented evidence that she was qualified for the position and that Bair considered her to be familiar with 85% of the duties of the Purchasing Agent. Deposition testimony also demonstrated that Warnock had no formal administrative or purchasing experience. Indeed, Durley testified in her deposition that she assisted in training Warnock after Bair retired. A reasonable jury could conclude that Durley was more qualified to handle the administrative and purchasing duties performed by the Purchasing Agent.” Id. at 656. The court held that a jury could also infer that the defendant’s new job description, prepared in response to a request from the EEOC, was not a fair description of the job and was a pretext for discrimination because it assumed that the incumbent would perform shipping and receiving duties, in which Warnock but not Durley had had experience, and a shipping/receiving clerk was hired after Warnock was promoted. Id. at 656–57.
dismissed, 529 U.S. 1095 (2000), affirmed the judgment on a jury verdict for the ADEA plaintiff, holding that the defendant denied the plaintiff vacant supervisory positions for which he was qualified and had applied at the time of the RIF. The court stated: “At the trial, Beaver and three of his co-workers at the mill testified that based on their familiarity with Beaver’s extensive experience throughout the mill, the duties of the available positions, and the experience of the six younger employees who were selected for the vacant positions instead of him, Beaver was more qualified than each of those employees.”
H. StatisticsSmith v. City of Jackson, 351 F.3d 183, 197 n.15, 92 FEP Cases
1824 (5th Cir. 2003), petition for cert. filed (Feb. 11, 2004) (NO. 03–1160), reversed the grant of summary judgment to the ADEA defendant, in part because the lower court did not consider plaintiffs’ statistical evidence. The court stated: “Further, the district court here apparently declined, without discussion, to consider any of the plaintiffs’ evidence that the plan resulted in a disparity of four standard deviations between workers over forty and workers under forty. Such statistical evidence can be relevant to a claim of intentional discrimination.”
Chambers v. Metropolitan Property and Cas. Ins. Co., 351 F.3d
848, 855, 92 FEP Cases 1739 (8th Cir. 2003), affirmed the grant of summary judgment to the ADEA RIF defendant and rejected plaintiff’s statistical showing: “Chambers presented the additional evidence that he was one of fifteen employees terminated in his division as a result of St. Paul’s reduction in force, and thirteen of the fifteen were over the age of 40. This does not raise an inference of discrimination because the entire personal insurance operation was sold, and St. Paul terminated all persons employed in that area, regardless of age. His statistical evidence is meaningless without some analysis of the age of the entire workforce at St. Paul before and after the reduction in force.”
I. Discriminatory Statements
1. Speakers Who Were Not Formal Decision makers
Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 762–63, 77
FEP Cases 1 (1998), stated:
A tangible employment decision requires an official act of the enterprise, a company act. The decision in most cases is documented in official company records, and may be subject to review by higher level supervisors. E.g., Shager v. Upjohn Co., 913 F.2d 398, 405 (C.A.7 1990) (noting that the supervisor did not fire plaintiff; rather, the Career Path Committee did, but the employer was still liable because the Committee functioned as the supervisor’s “cat’s-paw”). The supervisor often must obtain the imprimatur of the enterprise and use its internal processes. See Kotcher v. Rosa & Sullivan Appliance Center, Inc., 957 F.2d 59, 62 (C.A.2 1992) (“From the perspective of the employee, the supervisor and the employer merge into a single entity”).
For these reasons, a tangible employment action taken by
the supervisor becomes for Title VII purposes the act of the employer. Whatever the exact contours of the aided in the agency relation standard, its requirements will always be met when a supervisor takes a tangible employment action against a subordinate.
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133,
152, 82 FEP Cases 1748 (2000), relied on plaintiffs’ evidence that Chesnut was the actual decision maker even though not the formal decision maker.
Hill v. Lockheed Martin Logistics Management, Inc., 354 F.3d
277, 283, 93 FEP Cases 1 (4th Cir. 2004) (en banc), petition for cert. filed, 72 USLW 3673 (U.S., April 5, 2004) (No. 03–1443), affirmed the grant of summary judgment to the Title VII and ADEA defendant. Plaintiff had admittedly broken work rules, but argued that the second and third infractions leading to her discharge were only reported to management because of the sexual bias and retaliatory animus of Safety Inspector Ed Fultz, “as evidenced by his calling her a ‘useless old lady’ who needed to be retired, a ‘troubled old lady,’ and a ‘damn woman, on several occasions while they were working together.” The court stated at 288–89: “In sum, Reeves informs us that the person allegedly acting pursuant to a discriminatory animus need not be the ‘formal decision maker’ to impose liability upon an employer for an adverse employment action, so long as the plaintiff presents sufficient evidence to establish that the subordinate was the one ‘principally responsible’ for, or the ‘actual decision maker’ behind, the action.” (Citation omitted.) The court rejected plaintiff’s argument that the employer should be liable if the biased subordinate “substantially influences” the decision, and it rejected the EEOC’s view that “a subordinate employee substantially influences an employment decision whenever the influence is sufficient to be considered a cause of the employment action, even if the formal decision maker did not simply rubber-stamp the biased subordinate’s recommendation.” Id. at 289 (emphasis in original). The court discussed the “cat’s paw” decisions of some other Circuits. It listed and then limited them:
Second, we note that, in the wake of Shager, our sister
circuits have often applied a “cat’s paw” or “rubber stamp” theory to determine employer liability for the discriminatory acts and motivations of supervisory employees who do not exercise formal decision-making authority. See e.g., Gee v. Principi, 289 F.3d 342, 345-47 (5th Cir. 2002); Christian v. Wal-Mart Stores, Inc., 252 F.3d 862, 876-78 (6th Cir. 2001); Bergene v. Salt River Project Agric. Improvement & Power Dist., 272 F.3d 1136, 1141 (9th Cir. 2001); Abramson v. William Paterson Coll. of New Jersey, 260 F.3d 265, 285-86 (3d Cir. 2001); Wascura v. City of South Miami, 257 F.3d 1238, 1247 (11th Cir. 2001); Rose v. New York City Bd. of Educ., 257 F.3d 156, 162 (2nd Cir. 2001); Rios v. Rossotti, 252 F.3d 375, 381-82 (5th Cir. 2001); English v. Colorado Dep’t of Corr., 248 F.3d 1002, 1011 (10th Cir. 2001); Russell v. McKinney Hosp. Venture, 235 F.3d 219, 226-28 (5th Cir. 2000); Kendrick v. Penske Transp. Servs., Inc., 220 F.3d 1220, 1231 (10th Cir. 2000); Stimpson v. City of Tuscaloosa, 186 F.3d 1328, 1331 (11th Cir.1999); Llampallas v. Mini-Circuits Lab, Inc., 163 F.3d 1236, 1249-50 (11th Cir.1998); Griffin v. Washington Convention Center, 142 F.3d 1308, 1310-11 (D.C.Cir.1998); Ercegovich v. Goodyear Tire & Rubber Co., 154 F.3d 344, 354-55 (6th Cir.1998); Eiland v. Trinity Hosp., 150 F.3d 747, 752 (7th Cir.1998); Willis v. Marion County Auditor’s Office, 118 F.3d 542, 547 (7th Cir.1997); Walden v. Georgia-Pacific Corp., 126 F.3d 506, 514-15 (3d Cir.1997); Long v. Eastfield Coll., 88 F.3d 300, 307 (5th Cir.1996); Stacks v. Southwestern Bell Yellow Pages, Inc., 27 F.3d 1316, 1325 (8th Cir.1994). In support of their positions as to how we should approach the issue, the parties have pointed us to various lines in different cases as being supportive of their view of the parameters of the theory. However, our review of the cases leads us to the conclusion that, while the courts often utilize the same terminology as that employed by the Shager court, they have not always described the theory in consistent ways, and rarely have they done so after a discussion of the agency principles from which the theory emerged and that limit its application.
Id. at 289–90. The court relied on agency principles and stated its holding:
To conclude, Title VII and the ADEA do not limit the
discrimination inquiry to the actions or statements of formal decision makers for the employer. Such a construction of those discrimination statutes would thwart the very purposes of the acts by allowing employers to insulate themselves from liability simply by hiding behind the blind approvals, albeit non-biased, of formal decision makers. . . . However, we decline to endorse a construction of the discrimination statutes that would allow a biased subordinate who has no supervisory or disciplinary authority and who does not make the final or formal employment decision to become a decision maker simply because he had a substantial influence on the ultimate decision or because he has played a role, even a significant one, in the adverse employment decision.
We can discern no precedential or practical basis upon
which to depart from the inquiry as articulated and applied by the Supreme Court in Reeves—and to expand the contours of the acts—by embracing a test that would impute the discriminatory motivations of subordinate employees having no decision-making authority to the employer, and make them agents for purposes of the employment acts, simply because they have influence or even substantial influence in effecting a challenged decision. Regarding adverse employment actions, an employer will be liable not for the improperly motivated person who merely influences the decision, but for the person who in reality makes the decision. This encompasses individuals who may be deemed actual decision makers even though they are not formal decision makers, such as in Reeves, where the husband of the formal decision maker wielded absolute power within the company, and in Shager, where the supervisor’s reports and recommendation were merely rubber-stamped by the formal decision-making committee. In sum, to survive summary judgment, an aggrieved employee who rests a discrimination claim under Title VII or the ADEA upon the discriminatory motivations of a subordinate employee must come forward with sufficient evidence that the subordinate employee possessed such authority as to be viewed as the one principally responsible for the decision or the actual decision maker for the employer.
Id. at 290–91 (citation omitted). The court held that Fultz had no decision-making authority but that, in any event, plaintiff’s opportunity to dispute the basis of her reprimand and failure to do so removed this situation from the “cat’s paw” line of cases. In addition, the court held, plaintiff was actually issued a written reprimand because she had not been candid about her loss of a tool on board an aircraft, a matter raising serious safety concerns. Id. at 292–95. The court held that Fultz’s written discrepancy results leading to her third reprimand also did not make him a supervisor, because the reprimand was issued after an independent examination of these reports by her supervisor, whom she agreed was unbiased. Id. at 295–96. The court rejected plaintiff’s fruit-of-the-poisonous-tree argument:
Nor would it be appropriate to withhold summary judgment
from an employer who has terminated an employee for rules violations, and wholly in the absence of any discriminatory motivation on the part of the decision makers, simply because the violations might not have been known in the absence of a subordinate’s discriminatory animus that brought the infractions to light. Otherwise, an unbiased employer could never discipline or terminate an employee for an undisputed violation of company rules, including such egregious acts as fighting or stealing (or endangering the lives of those who fly on aircraft carelessly attended by a mechanic), so long as the employee could demonstrate that she was “turned in” by a subordinate employee “because of” a discriminatory motivation.
Id. at 296. Judge Michael dissented, joined by Judges Motz, Judge King, and Judge Gregory. Id. at 299–305. The Supreme Court has requested the Solicitor General to state the views of the United States. Order of June 28, 2004.
2. Speakers Who Were Not Aware of the Reasons for the Decision
Brown v. Packaging Corp. of America, 338 F.3d 586, 92 FEP
Cases 522 (6th Cir. 2003), affirmed judgment on a jury verdict for the ADEA defendant. The court rejected plaintiff’s argument that he had direct evidence of discrimination, based on an asserted remark by his supervisor that the reason he did not get a promotion to Temporary Foreman is that the company wanted younger people and engineers to fill the job. The court held that this was not direct evidence of discrimination because there was no basis in the record to establish that the supervisor knew the reason for the decision.
3. Contentions that Biased Remarks Were Isolated
Hedrick v. Western Reserve Care System, 355 F.3d 444, 454,
15 AD Cases 1 (6th Cir. 2004), affirmed the grant of summary judgment to the ADA defendant, and held a single remark to plaintiff’s physician, expressing concern that plaintiff’s osteoarthritis might prevent her from performing the duties of other jobs for which she had interviewed, was not evidence of disability bias.
J. Constructive DischargeSee the discussion of Robinson v. Sappington, 351 F.3d 317,
333–37, 93 FEP Cases 75 (7th Cir. 2003), in the section on “Tangible Employment Actions” below.
1. Types of Harassment Covered
Shaver v. Independent Stave Co., 350 F.3d 716, 719, 14 AD
Cases 1889 (8th Cir. 2003), held that the ADA prohibits harassment because of disability. “Today, for the reasons that follow, we join the other circuits that have decided the issue by holding that such claims are in fact actionable. Cf.Flowers v. Southern Reg’l Physician Servs., Inc., 247 F.3d 229, 232-35 (5th Cir. 2001), Fox v. General Motors Corp., 247 F.3d 169, 175–77 (4th Cir. 2001).”
2. Who is a Supervisor?
Joens v. John Morrell & Co., 354 F.3d 938, 940–41, 93 FEP
Cases 72 (8th Cir. 2004), affirmed the grant of summary judgment to the Title VII hostile-environment defendant, holding that the alleged harasser was not plaintiff’s supervisor. The court canvassed the approaches of different Circuits, stating:
The decisions of the few circuits to address the question are not entirely consistent. The majority hold that, to be a supervisor, the alleged harasser must have had the power (not necessarily exercised) to take tangible employment action against the victim, such as the authority to hire, fire, promote, or reassign to significantly different duties. See Hall v. Bodine Elec. Co., 276 F.3d 345, 355 (7th Cir. 2002); Mikels v. City of Durham, 183 F.3d 323, 333-34 (4th Cir.1999). By contrast, the Second Circuit recently adopted a somewhat broader standard, concluding that an alleged harasser is a supervisor for these purposes if he possessed “authority to direct the employee’s daily work activities,” even if he otherwise lacked the power to take tangible employment action against the victim. Mack v. Otis Elevator Co., 326 F.3d 116, 127 (2d Cir.), cert. denied, __ U.S. __, 124 S. Ct. 562, __ L. Ed. 2d __ (2003).
The court did not resolve the question, but held that the alleged harasser was a co-worker because he was only the foreman of one of the production lines that depended on plaintiff to make their boxes. He was a customer without direct authority to control plaintiff’s activities. He could demand that she allocate more of her production to him, but she had discretion and the allocation did not affect her total work effort. While he could “write her up,” all foremen could do so, there was no evidence that he had ever done so, and the power to discipline plaintiff lay with the Human Resource Department. Id. at 941.
3. What is Actionable Conduct?
a. Not Minor Events or Separately Actionable Events
Joens v. John Morrell & Co., 354 F.3d 938, 941, 93 FEP Cases
72 (8th Cir. 2004), affirmed the grant of summary judgment to the Title VII hostile-environment defendant, holding that plaintiff had not shown a hostile environment by showing merely gender-neutral shouting by a male co-worker at the female plaintiff, a few minutes a day, demanding that she make more boxes for his department, without any evidence that his activity was gender-related.
b. Severity or Pervasiveness
Singletary v. District of Columbia, 351 F.3d 519, 526–28, 92 FEP
Cases 1799 (D.C. Cir. 2003), reversed in part and affirmed in part the lower court’s judgment after a bench trial to the Title VII and Rehabilitation Act retaliation defendant. The court rejected defendant’s argument that plaintiff had not shown enough to constitute a hostile environment, id. at 568:
Nor can we accept the defendants’ further suggestion that no reasonable factfinder could find a hostile work environment here. In addition to the alleged 1993 discriminatory failure to promote and 1993-94 failure to provide him with the tools necessary to accomplish his assignments—the merits of which claims the district court must address on remand—Singletary made a host of allegations that the court ruled did have merit but that it erroneously thought were untimely for a hostile work environment claim. Most significantly, the district court determined that, notwithstanding the availability of appropriate office space, the defendants intentionally assigned Singletary to work in an unheated storage room for over a year and a half as “retaliatory discrimination” for the filing of a discrimination complaint. . . . As the court found:
The room to which plaintiff was assigned was not previously used as an office space, but rather was used as a general storage room. The storage room was without heat or ventilation. It was poorly lit, which posed problems for plaintiff, who is visually challenged. The only entrance to plaintiff’s office was through a clinic to which plaintiff did not have keys. The phone in the room often did not work. The office space contained … brooms [and] boxes of debris…. Defendants clearly intended to relegate plaintiff to this sub- standard office…. [T]he record shows that there were other, more suitable, places in which plaintiff’s office could have been located.
The court added that, on remand, the lower court should determine whether an otherwise time-barred transfer and a time-barred failure to promote may be part of the hostile environment. Id. at 528–29.
Lee-Crespo v. Schering-Plough Del Caribe Inc., 354 F.3d 34,
46, 93 FEP Cases 47 (1st Cir. 2003), affirmed the grant of summary judgment to the Title VII same-sex sexual harassment defendant. The court held that the asserted harassment was neither severe nor pervasive. “Here, the complained of conduct was episodic, but not so frequent as to become pervasive; was never severe; was never physically threatening (though occasionally discomforting or mildly humiliating); and significantly, was never, according to the record, an impediment to Lee-Crespo’s work performance.” The court also held that “a supervisor’s unprofessional managerial approach and accompanying efforts to assert her authority are not the focus of the discrimination laws.” Id. at 46–47.
(7th Cir. 2003), reversed the grant of summary judgment to the Title VII defendants, and held that plaintiff had met the objective test for sexual harassment:
First, we note that there were several overtly sexual
comments made by Judge Sappington to Ms. Robinson including Judge Sappington’s offer to purchase Ms. Robinson a sexual device . . .; Judge Sappington’s comment that the attorneys were only speaking to her because she was wearing revealing clothing . . . and the twice-repeated comment that Judge Sappington would like Ms. Robinson to “sit on his face” . . . . In addition to these comments, there is strong evidence that Judge Sappington took an inappropriate interest in Ms. Robinson’s relationships with men, first inquiring as to the status of her marriage and later, on two occasions, expressing outrage at the possibility of her romantic involvement with anyone else.
Second, we believe that much of Judge Sappington’s
conduct reasonably could be construed as intimidating and threatening. Judge Sappington monitored Ms. Robinson’s actions both within the courthouse and after hours, going so far as to fly an aircraft over the farm of Ms. Robinson’s mother when he knew Ms. Robinson was visiting there. Judge Sappington exhibited anger when he believed other men showed interest in Ms. Robinson. He also subjected Ms. Robinson to hearing the details of a gruesome murder and suggested that she might face a similar fate. Finally, on one occasion, Judge Sappington grabbed Ms. Robinson’s face and told her point-blank that, if she “shacked up” with anyone else, he would kill her.
Finally, Ms. Robinson was the recipient of other gestures
that, although innocuous in themselves, when put in the larger context, served as constant reminders of Judge Sappington’s interest in her and in exercising control over her. Specifically, Judge Sappington called her beautiful, a “blonde Demi Moore” or a golden goddess on a daily basis. He took her to lunch and became angry if Ms. Robinson did not eat lunch with him. Additionally, for a period of several weeks, he shook Ms. Robinson’s hand on a daily basis to experience physical contact with her.
The court also relied on the fact that, as Judge Sappington’s secretary and court clerk, plaintiff had to work closely with him. Id. at 331.
Shaver v. Independent Stave Co., 350 F.3d 716, 720–23, 14 AD
Cases 1889 (8th Cir. 2003), held that the ADA plaintiff had not shown an actionably hostile environment although other employees routinely called him “platehead” because of the plate in his skull, and did so because defendant wrongly disclosed information from his medical records to co-workers. The court rejected defendant’s fine distinction between being called this nickname because of the plate in his skull, and being called this nickname because of his impairment. “We think that this distinction may be too fine for us, but in any case the meaning of the statements (that is, what inference to draw from the words used) is properly a matter for the jury. There is certainly nothing in the record to suggest that those who called Mr. Shaver ‘platehead’ made the distinction suggested by Salem. The distinction itself, moreover, may well be meaningless: Even if one calls a person ‘pegleg’ because he has a peg leg rather than because he has trouble walking, it is nevertheless the case that the nickname was chosen because the person was disabled.” Id. at 721. The court relied in part on the fact that nicknames were common in the workplace. The court held that the wrongful disclosure of plaintiff’s medical records could not be considered part of the harassment and thus make it actionable. Id. at 723. The court also refused to consider plaintiffs’ denials of promotion part of the hostile environment on which he was suing, because it was not clear that he had personal knowledge of the matters to which he testified at trial. Id.
Eich v. Board of Regents for Central Missouri State University,
350 F.3d 752, 759, 92 FEP Cases 1812 (8th Cir. 2003), reversed the grant of JMAL in favor of the Title VII sexual harassment defendant. The court held that plaintiff had presented sufficient evidence of severity and pervasiveness to support the jury verdict:
In the present case, we emphasize the sexual touching and sexual innuendos made in Eich’s presence over a continuous period of time. Her attempts to rebuff this harassment by reporting to her superiors was to no avail. We hold the facts as presented by this record, continuing over a period of seven years and involving numerous touchings and sexual innuendos, were sufficient for the jury to conclude that Deborah Eich was subjected to sexual harassment sufficiently severe or pervasive to establish a hostile work environment.
The court continued at 761:
In the present case, as the detailed facts clearly demonstrate, Eich experienced more than the mere touching of the hand. On several occasions, Drake brushed up against her breasts, and frequently ran his fingers through her hair, rubbed her shoulders, and ran his finger up her spine. On more than one occasion he stood behind Eich and simulated a sexual act while Eich was bent over during handcuff training sessions. In the presence of Eich, the same officer simulated sexual acts with a nightstick by sliding the stick in and out of his hands and constantly rendered sexual innuendos directed to her and other female employees in the Department. Eich testified that Gillespie rubbed his hand up and down her leg, brushed up against her when they spoke, and pressed his groin into her shoulder while standing behind her.
It stated: “Judgment as a matter of law is proper only when there is a complete absence of probative facts to support the conclusion reached so that no reasonable juror could have found for the nonmoving party.” Id.
4. Tangible Employment Actions
Lee-Crespo v. Schering-Plough Del Caribe Inc., 354 F.3d 34, 93
FEP Cases 47 (1st Cir. 2003), affirmed the grant of summary judgment to the Title VII same-sex sexual harassment defendant. The court assumed without deciding that denial of a transfer could be a tangible employment action, but held there was no proof that the alleged harassing supervisor had had any role in the denial of the transfer request. To the contrary, she had expressed her hope that plaintiff would transfer. Id. at 44. “A reassignment could constitute a tangible employment action, particularly if it caused a loss of income. But again, there must be a causal link between the tangible employment action and the alleged harassment and harasser.” Id. No such link was shown, and the reassignment was in direct response to plaintiff’s request for a new supervisor. The court held that plaintiff’s claim of constructive discharge was undercut by defendant’s swift action in transferring her once she complained. Id. at 45–46. “Among other things, the evaluation of a constructive discharge claim takes into account how the employer responded to the plaintiff’s complaints and whether it was likely that the harassment would continue.” Id. at 45.
Pennsylvania State Police v. Suders, __ U.S. __, 124 S. Ct. 2342,
159 L.Ed.2d 204, 93 FEP Cases 1473 (2004), held that an employer does not have the benefit of the affirmative defense under Faragher and Ellerth when a constructive discharge is caused by a tangible employment action.
Robinson v. Sappington, 351 F.3d 317, 333–36, 93 FEP Cases
75 (7th Cir. 2003), reversed the grant of summary judgment to the Title VII defendants, surveyed the law of the Circuits, and held that a constructive discharge prompted by official actions of plaintiff’s supervisor is a tangible employment action for purposes of Faragher and Ellerth. The court stated at 335–36:
The common thread in Caridad and Reed is a concern
that equating constructive discharge with other types of tangible employment actions will impose liability on employers when the offending employee has not been empowered by the employer to take the actions at issue. However, there can be, as noted by the Second Circuit, a striking difference between actions taken by coworkers and actions taken by supervisors; unlike a coworker, a “supervisor has been empowered by the company as a distinct class of agent to make economic decisions affecting other employees under his or her control.” Caridad, 191 F.3d at 294 (internal citations omitted). Additionally, economic sanctions imposed by a supervisor typically are “ratified or approved by the employer.” Id. For these reasons, we believe that it is appropriate to draw a distinction between a constructive discharge caused by co-employees and a constructive discharge caused by supervisors. Specifically, in circumstances where “official actions by the supervisor … make[s] employment intolerable,” Reed, 333 F.3d at 33, we believe a constructive discharge may be considered a tangible employment action. As demonstrated below, we believe this to be such a case.
(Emphasis in original.) The court held that there was a genuine dispute of material fact as to the intolerable nature of the working environment because, when plaintiff was involuntarily transferred back to work for Judge Sappington, he was cold, uncommunicative, and hostile. “As well, there is evidence in the record to support the inference that Judge Sappington had no intention of ceasing his harassment toward Ms. Robinson; he continued to monitor her actions and to exhibit romantic interest in her.” Id. at 336. The court relied on the fact that the supervising judge “believed that the only way to protect Ms. Robinson from future harassment by Judge Sappington was to transfer her,” but told her that the transferee judge would make her life “hell” for six months and suggested that she resign. Id. at 336–37. The court held that a reasonable jury could find that she was constructively discharged and that this was a tangible employment action. Id.
75 (7th Cir. 2003), reversed the grant of summary judgment to the Title VII defendants, and stated in dicta that a reasonable jury might find the defendants’ adoption without promulgation of an anti-harassment policy inadequate to meet the requirements of the Faragher / Ellerth affirmative defense: “ A jury certainly could conclude that the meager action of adopting, but not promulgating, a sexual harassment policy failed to inform employees of their right to be free from such behavior as well as of the steps the employees could take to remedy any offending behavior. The fact that Ms. Robinson understood that, if she had general workplace complaints, she should report those to Janice Shonkwiler does not absolve her employer of the responsibility to take reasonable steps to protect her from sexual harassment.”
L. Disparate ImpactAllen v. City of Chicago, 351 F.3d 306 (7th Cir. 2003), affirmed
the grant of summary judgment to defendants on the plaintiff African-American and Hispanic police officers’ challenge to the 1998 selection process for promotion to Sergeant. Plaintiffs did not challenge the validity of the procedure, but urged that an alternative procedure would have had substantially equal validity but less disparate impact. The promotional process consisted of two means of selection. The assessment procedure had a disparate impact, but the merit-based selection process, based on nominations by supervisors, had no disparate impact. Defendants had limited merit-based selections to no more than 30% of total promotions. Plaintiffs sought to increase the percentage of promotions that were merit-based selection process. The court criticized their suggestion of more than one increased percentage as interfering with the defendants’ ability to adopt a specific alternative. Id. at 312–13. However, it held that increasing the proportion of promotions based on nominations would cause problems with the nomination procedure, and that plaintiff had not made the required showing of substantially equal validity. Id at 314–15. Nor was there evidence that an increased level of merit-based promotions would have had less adverse impact. Finally, the court rejected plaintiff’s suggestion that defendants drop the qualifying examination that was a prerequisite to the merit-based promotions. There was no evidence that the nominators could assess the same factors as the qualifying examination. Id. at 316–17.
M. Affirmative ActionPetit v. City of Chicago, 352 F.3d 1111, 92 FEP Cases 1731
(7th Cir. 2003), was a reverse-discrimination case challenging the defendant’s racial standardization of test scores in the 1985–88 promotional examinations for Sergeant. The standardization resulted in the promotion of more blacks and Hispanics than would otherwise have occurred. The court held that the standardization did not violate the Equal Protection Clause. The court held that there was a compelling need for more minority supervisors in the Police Department in order to gain public trust and cooperation, particularly among groups that had previously been discriminated against by the Police Department. Id., at 1113–15. The test had not been validated, and a prior court order meant that the City could not use the test unless it had been validated. The clustering of candidates at some score levels meant that it was difficult to distinguish meaningfully among them. Id. at 1116–17. The defendant then chose to standardize the test racially. “As Mr. Joyce explains it, standardization is a recognized statistical method of removing differences between the scores of two or more groups of test-takers. If, for instance, two different groups have different mean scores, and there is no objective reason to assume the two groups should have scored differently, standardization is an acceptable method of equalizing the scores. The process was an attempt to produce results that reflected the score a candidate would have received if the test had not had an adverse racial impact. The standardized scores were then used to place the candidates in rank order.” Id. at 1117. The court stated: “Given the margin of error and the fact that the test was not validated, these candidates, both before and after standardization, were fairly uniformly qualified for promotion.” The court held that the procedure was narrowly tailored: “The ultimate result was that of the 82 plaintiffs to this action, some had their promotions delayed and approximately 50 were not promoted. While we do not minimize the loss that those who were not promoted suffered, we find that the procedures met the Grutter standard for minimizing harm to members of any racial group.” Id.
1. Reconsideration by the EEOC
Martin v. Alamo Community College District, 353 F.3d 409,
413, 15 AD Cases 160 (5th Cir. 2003), vacated the dismissal of plaintiff’s ADA lawsuit and held that the EEOC validly revoked plaintiff’s first Notice of Right to Sue when it issued its notice of reconsideration on the same day on which plaintiff filed suit. Under 29 C.F.R. § 1601.19(b), the revocation of a Notice of Right to Sue, as distinct from the revocation of the letter of determination, occurs only when the notice is issued prior to the expiration of the 90-day period and prior to suit. The court stated at 413 n.3: “Because some offices register the hour and minute of pleading receipts and others do not, and because mail is deposited at different times during the day, the rule is more nearly uniform and more easily manageable when time is calculated by the day.”
(10th Cir. 2003), reversed the lower court’s dismissal for untimeliness of the Federal-sector plaintiff’s Title VII and Rehabilitation Act claims. Distinguishing private-sector cases, the court held that the regulations governing a Federal-sector plaintiff’s claim allow suit to be brought within ninety days of final action by the EEOC, including its disposition of a timely request for reconsideration.
2. Existence of Continuing Violations
a. Discriminatory Pay
Hildebrandt v. Illinois Dept. of Natural Resources, 347 F.3d 1014,
92 FEP Cases 1441 (7th Cir. 2003), reversed the grant of summary judgment to the Title VII disparate-pay defendant and remanded the issue, holding that plaintiff had established a prima facie case of pay discrimination allowing her to seek recovery for the paychecks she received during the 300 days preceding her charge.
Cases 1460 (7th Cir. 2003), vacated the grant of summary judgment to the Title VII defendant. Plaintiff alleged that he was discriminatorily denied a 45-cent per hour pay increase in 1997, but did not file an EEOC charge until November 2000. He explained that he had not noticed earlier that he had not received the raise. The court distinguished cases in which a time-barred denial of promotion or discrete plan or system had depressed a plaintiff’s pay rate. It held that plaintiff was entitled to sue as to the paychecks he had received during the 300-day period preceding his EEOC charge, because each paycheck was a discrete instance of discrimination. Id. at 1013.
b. Hostile Environment
Singletary v. District of Columbia, 351 F.3d 519, 526–28,
92 FEP Cases 1799 (D.C. Cir. 2003), reversed in part and affirmed in part the lower court’s judgment after a bench trial to the Title VII and Rehabilitation Act retaliation defendant. The court held that plaintiff had timely challenged a hostile environment that had lasted for six years as of the filing of his EEOC charge, and that harassing actions had continued to within 300 days of the filing of the charge. These included the failure to give plaintiff an official job description, meaningful assignments, or the tools needed to perform his job. The court held that these actions were part of the hostile environment although the lower court had considered them time-barred instances of failure to accommodate his disability.
Boyler v. Cordant Technologies, Inc., 316 F.3d 1137, 90 FEP
Cases 1249 (10th Cir. 2003), reversed the grant of summary judgment to the defendant, holding in light of Morgan that the plaintiff’s claims of a racially and sexually hostile environment going back to 1982 were timely raised in her 1997 charge.
(6th Cir. 2003), affirmed the dismissal of the Complaint because plaintiff did not timely contact the Postal Service’s EEO Counselor. The court stated that the factors to consider in determining whether a plaintiff is entitled to equitable tolling are: “(1) whether the plaintiff had actual notice of the time restraint; (2) whether she had constructive notice of the time restraint; (3) the degree of diligence exerted in pursuing her rights; (4) the degree of prejudice to the defendant; and (5) the reasonableness of plaintiff’s ignorance of the time constraint.” (Citation omitted.) The court held that plaintiff did not qualify under these factors.
4. 42 U.S.C. § 1981 and the Four-Year Limitations Period of 28 U.S.C. § 1658
Candace Gorman won Jones v. R.R. Donnelley & Sons Co.,
__ U.S. __, 124 S. Ct. 1836, 93 FEP Cases 993 (2004), which held that the default four-year limitations period in 28 U.S.C. § 1658 applies to claims under 42 U.S.C. § 1981 that could only be brought because of the Civil Rights Act of 1991. Claims of discrimination in contract formation will still be subject to borrowed State statutes of limitations.
In States like Wisconsin, which have State periods of limitations
longer than four years, plaintiffs should argue that the ruling should be limited to prospective application. Goodman v. Lukens Steel Co., 482 U.S. 656, 662–63, 44 FEP Cases 1 (1987), held that, where there is clear Circuit precedent for a specific period of limitations longer than the one the Supreme Court ultimately adopts, the change should not be retroactive. Id. at 662–63.
In jurisdictions with shorter periods of limitations, retroactivity
should be the norm, and plaintiffs should seek reconsideration of prior adverse rulings, if the case is still active or can be revived.
The question whether particular conduct is related to the
formation of a contract or is post-formation is not always simple. Plaintiffs’ victories in the years between Patterson and the Civil Rights Act of 1991 may now come to haunt them.
Some promotions have been held to involve such new and
distinct duties that § 1981 applied to them before the 1991 Act. Odima v. Westin Tucson Hotel, 53 F.3d 1484, 1494–95, 67 FEP Cases 1222 (9th Cir. 1995), for example, held that the pre-amendment § 1981 applied to a promotion to a job with supervisory duties, although the promotional job was still hourly. Police Association of New Orleans v. City of New Orleans, 100 F.3d 1159, 1170–71, 72 FEP Cases 1642 (5th Cir. 1996), held that under Patterson, the promotion from police officer to police Sergeant is covered by § 1981. Kim v. Nash Finch Co., 123 F.3d 1046, 1054–55, 75 FEP Cases 1741 (8th Cir. 1997), held that the pre-Act version of § 1981 applied to a November 1990 promotion from warehouse leadman to warehouse foreman.
However, Patterson v. McLean Credit Union, 39 F.3d 515, 519,
66 FEP Cases 360 (4th Cir. 1994), held that a promotion from the position of Account Junior to Account Intermediate would not have involved a new and distinct relationship when the white employee who received such a promotion remained at the same desk, under the same supervision, without any supervisory responsibility, still receiving hourly pay although 89 cents an hour more, and still engaging in filing and other clerical duties. There is no difference of record in pension or insurance benefits, and there was no change in any level of responsibility. National Association of Government Employees v. City Public Service Board, 40 F.3d 698, 713, 67 FEP Cases 1013 (5th Cir. 1994), held that §1981 did not cover denials of promotion involving “no more than an orderly increase in salary, skill level, and responsibilities. Laborers are distinguished from workers in the better-paying manual occupations at CPS, including the foreman and supervisor positions to which Plaintiffs specifically allege they are denied access, by level of training and experience.” (Footnote omitted.) Jones v. Merchants National Bank & Trust Co., 42 F.3d 1054, 1059, 66 FEP Cases 865 (7th Cir. 1994), held that the 1989 denial of plaintiff’s promotion from the position of Accountant to the status of an officer of the bank was not actionable under §1981 as it existed prior to the 1991 Act. A bank official had stated in her affidavit that promotion to an entry-level officer position “does not necessarily entail a salary increase, supervisory duties, added duties, or management responsibility.”
Plaintiffs’ lawyers might do well to find out the positions
defendant took immediately after Patterson, as to whether or not a particular promotional level involved a new and distinct contract. In an appropriate case, and assuming no intervening material change in the relevant aspects of the job, a defendant may be estopped to take a different position after Jones.
Rodriguez-Garcia v. Municipality of Caguas, 354 F.3d 91,99
(1st Cir. 2004), vacated the grant of summary judgment on timeliness grounds to defendants. Plaintiff had originally filed suit in a Puerto Rican court challenging her involuntary transfer on grounds of Puerto Rican law, later amended her Complaint after expiration of the statute of limitations to assert that the transfer was motivated by political discrimination, then filed a Complaint in Federal court asserting her Federal constitutional and Puerto Rican rights and voluntarily dismissed her claim in the Commonwealth court. The First Circuit held that under Puerto Rican law her amended Complaint in the Puerto Rican court related back to her original filing, that this was consistent with the policy of Federal law, and that the period of limitations on her Federal-law claims was thus tolled, so that her Federal-court Complaint was timely. The court stated: “In determining whether plaintiffs have asserted identical legal claims, we look to the substantive rights asserted, not the procedural vehicles involved.”
6. Efforts to Avoid the Bar
Palmer v. Occidental Chemical Corp., 356 F.3d 235, 236–38
(2d Cir. 2004), affirmed the grant of summary judgment to defendant on plaintiffs’ Title VII claim that defendant’s otherwise time-barred alleged hiring discrimination deprived them of the benefits of interracial association with other employees selected without racial discrimination. Holding that there was no evidence of any such timely-challenged discrimination, the court stated it was unnecessary to determine whether Title VII allowed claims based on a theory like that in housing discrimination cases such as Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205 (1972).
7. Unequivocal Communication of the Adverse Action
Flannery v. Recording Industry Ass’n of America, 354 F.3d 632,
93 FEP Cases 65 (7th Cir. 2004), reversed the Rule 12(b)(6) dismissal of the ADEA and ADA plaintiff’s Complaint, holding that the timeliness of plaintiff’s EEOC charge must be determined by when the defendant unequivocally communicated its intent to terminate him, and plaintiff had adequately pleaded a timely claim under this standard.
1. Defective Notice of Appeal
Moore v. Freeman, 355 F.3d 558, 565, 9 WH Cases 2d 321
(6th Cir. 2004), an FLSA retaliation case, rejected plaintiff’s appeal from the denial of liquidated damages because plaintiff’s Notice of Appeal stated that plaintiff was appealing from the order awarding attorneys’ fees, and did not mention the earlier order denying liquidated damages.
Petit v. City of Chicago, 352 F.3d 1111, 1113, 92 FEP Cases
1731 (7th Cir. 2003), affirmed the dismissal of 244 of the reverse-discrimination plaintiffs for lack of standing, because they would not have been promoted to Police Sergeant in the absence of the challenged race-conscious program.
Rodriguez-Garcia v. Municipality of Caguas, 354 F.3d 91, 100
(1st Cir. 2004), vacated the grant of summary judgment on timeliness grounds to defendants, and held that the newly added defendants waived their statute-of-limitations defense by failing to give it more than a passing mention in the motion for summary judgment, and failing to mention it at all in their appellate brief.
Local Union No. 38, Sheet Metal Workers’ Int’l. Ass’n, AFL-CIO v.
Pelella, 350 F.3d 73, 173 LRRM 2673, 173 LRRM 2843 (2d Cir. 2003), held that the plaintiff union waived its right to appeal the award of $28,000 in punitive damages to the defendant union member on his employer-financed LMRDA counterclaim where it failed to object to the instruction below, and failed to make or provide a record showing that its points were raised below.
(7th Cir. 2003), reversed the dismissal of plaintiff’s § 1981 claim, holding that plaintiff did not waive his contention that § 1981 protects at-will employees by failing to ask for reconsideration and by failing to bring the favorable decisions in other Circuits to the attention of the lower court.
4. Collateral Order Doctrine
Espinal-Dominguez v. Com. of Puerto Rico, 352 F.3d 490
(1st Cir. 2003), held that the collateral-order doctrine did not allow the Title VII defendant to take an interlocutory appeal of the lower court’s denial of its motion to dismiss the case on the ground that it had Eleventh Amendment immunity from one of the requested remedies, compensatory damages. The court stated: “We conclude that where, as here, a State asserts only that a singular remedy, compensatory damages, is precluded by the Eleventh Amendment, yet acknowledges that it is subject to the plaintiff’s federal court suit with respect to other remedies arising as part of the same cause of action, that acknowledgment defeats any claim of entitlement to an interlocutory appeal. In such circumstances, the State must await final judgment before testing on appeal the question of what remedies may be available.” Id. at 499.
C. Judicial EstoppelFlannery v. Recording Industry Ass’n of America, 354 F.3d 632,
638, 93 FEP Cases 65 (7th Cir. 2004), reversed the Rule 12(b)(6) dismissal of the ADEA and ADA plaintiff’s Complaint, holding that statements in plaintiff’s EEOC charge that were arguably inconsistent with those in the Complaint to which it was attached and Amended Complaint did not stop him from making the assertion in his Complaints and were only evidentiary admissions that could be used to impeach him at trial. The court stated that “this court has long held that, when a document contradicts a complaint to which it is attached, the document’s facts or allegations trump those in the complaint. . . . This principle is a sister doctrine of our rule applied in the summary judgment context that a party cannot create a genuine issue of material fact by contradicting prior sworn testimony.” It continued: “These doctrines, however, must be applied with caution. As we said in Bank of Illinois, “[a] definite distinction must be made between discrepancies which create transparent shams and discrepancies which create an issue of credibility or go to the weight of the evidence.” . . . Credibility and weight are issues of fact for the jury, and we must be careful not to usurp the jury’s role. . . . For this reason, these doctrines are only triggered upon a threshold determination of a ‘contradiction,’ which only exists when the statements are ‘inherently inconsistent,’ . . . not when the later statement merely clarifies an earlier statement which is ambiguous or confusing on a particular issue.” (Footnote and citations omitted.) The court noted that neither the EEOC nor notice pleading required “a detailed elaboration of the events underlying the plaintiff’s claim,” id. at 639, and stated: “The statements at issue could be read differently and infer an inconsistency, but the mere necessity of making that inference confirms that the inconsistency is not inherent.” Id. at 640.
1. Duffield and EEOC v. Luce, Forward
EEOC v. Luce, Forward, Hamilton & Scripps, 345 F.3d 742, 92
FEP Cases 1121 (9th Cir. 2003) (en banc), overruled the holding of Duffield v. Robertson Stephens & Co., 144 F.3d 1182, 76 FEP Cases 1450 (9th Cir.), cert. denied, 525 U.S. 982 (1998), that § 118 of the Civil Rights Act of 1991 barred mandatory predispute arbitration “agreements.” The Ninth Circuit had been the only Circuit so holding.
2. Costs of Arbitration
Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S.
79, 90–91, 84 FEP Cases 769 (2000), held that a consumer arbitration agreement was enforceable notwithstanding the fact that it imposed on consumers an unliquidated and uncapped exposure to pay arbitral costs. “It may well be that the existence of large arbitration costs could preclude a litigant such as Randolph from effectively vindicating her federal statutory rights in the arbitral forum. But the record does not show that Randolph will bear such costs if she goes to arbitration. Indeed, it contains hardly any information on the matter. . . . The record reveals only the arbitration agreement’s silence on the subject, and that fact alone is plainly insufficient to render it unenforceable. The ‘risk’ that Randolph will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement. (Footnote omitted.)
Alexander v. Anthony Intern., L.P., 341 F.3d 256, 268–70,
20 IER Cases 466 (3d Cir. 2003), held that an arbitration agreement was unconscionable and unenforceable. Plaintiffs were two refinery workers who claimed wrongful discharge. The court held that the purported agreement, which required the losing party to pay the arbitral fees, imposed unreasonable costs on plaintiffs.
Like the plaintiff in Spinetti, Alexander and Freeman
submitted evidence as to the rates of the prospective arbitrators, ranging from $800.00 a day to $1000.00 a day. Plaintiffs admittedly did not provide any detailed information about their own financial status. They, however, needed the job at the St. Croix refinery, and Alexander also apparently had to support three children in college. As discharged refinery workers, they clearly could not meet this financial burden even if the arbitration did not last the seven days they predicted. See, e.g., Giordano v. Pep Boys–Manny, Moe & Jack, Inc., 2001 WL 484360, at *6 (E.D. Pa. Mar.29, 2001) (“However, nothing in Green Tree requires courts to undertake detailed analyses of the household budgets of low-level employees to conclude that arbitration costs in the thousands of dollars deter the vindication of employees’ claims in arbitral fora.”). Plaintiffs thereby are effectively denied recompense for Anthony Crane’s alleged misconduct, resulting in an unfair advantage for their former employer. Anthony Crane does assert that plaintiffs did not allege any inability to pay until their motion to vacate and that it was never given the opportunity to offer to pay the arbitrator’s fees and expenses. Even if such an offer to pay constitutes a relevant consideration, the employer possessed numerous opportunities following the submission of this motion to indicate that it would not seek reimbursement from the plaintiffs. But it neither made such an offer nor presented any evidence to challenge plaintiffs’ own submissions regarding the arbitrators’ rates. . . . We therefore must find that the “loser pays” provision is unconscionable as to these particular plaintiffs.
Id. at 269–70 (citations and footnotes omitted). The court questioned in dicta whether the arbitration cost analysis in Green Tree “actually applies to a ‘loser pays’ provision.” Id. at 270 n.11.
Spinetti v. Service Corp. Int’l, 324 F.3d 212, 91 FEP Cases 745
(3d Cir. 2003), held that the provision in the arbitration agreement for fees and expenses was unconscionable, but that the provision did not go the essence of the agreement and was therefore severable. The agreement provided “(1) that each party pay its own costs and attorney’s fees, regardless of the outcome of the arbitration; and (2) that each party pay one-half of the compensation to be paid to the arbitrator(s), as well as one-half of any other costs relating to the administration of the arbitration proceeding.” Id. at 214–15. The court held that this was prohibitively expensive under Green Tree Financial Corp. v. Randolph. It explained:
Spinetti was required to pay an initial, non-refundable filing
fee of $500 to the American Arbitration Association, an additional filing fee of $2,750, a case-filing fee of $1,000, an additional charge of $150 for each day of the hearing and half the cost of an arbitrator. Evidence disclosed that a mid-range arbitrator in Western Pennsylvania charges approximately $250 an hour with a $2,000-per-day minimum.
Although Spinetti was earning $63,000 a year when
employed by SCI, she was unemployed for six months following her termination. When she found new employment she says she was earning less than $300 per week while her monthly expenses for food and rent totaled approximately $2,000. To cover the deficit between income and expenses, Spinetti had taken cash advances from her credit cards. On the basis of this record, the district court determined “that Spinetti has adequately demonstrated that the costs associated with arbitrating her claims are prohibitive.”
Id. at 217.
Musnick v. King Motor Co. of Fort Lauderdale, 325 F.3d 1255,
91 FEP Cases 771 (11th Cir. 2003), reversed the denial of arbitration and held that a “loser pays” provision in the arbitration agreement does not automatically make the arbitration agreement unenforceable. Relying on Randolph, the court held that the issue must be decided on a case-by-case basis, with respect to the to which costs an employee will likely be subjected. The court summarized current case law:
Since Green Tree, all but one of the other Circuits that
have reconsidered this issue have applied a similar case-by-case approach. See Thompson v. Irwin Home Equity Corp., 300 F.3d 88 (1st Cir. 2002) (adhering to case-by-case approach predating Green Tree); Blair v. Scott Specialty Gases, 283 F.3d 595, 610 (3d Cir. 2002) (“[T]he mere existence of a fee- splitting provision in an agreement [does not] satisfy the claimant’s burden to prove the likelihood of incurring prohibitive costs”); Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 n. 6 (5th Cir. 2002) (adhering to case-by-case approach predating Green Tree); Bradford v. Rockwell Semiconductor Systems, Inc., 238 F.3d 549, 556 (4th Cir. 2001) (“appropriate inquiry is one that evaluates whether the arbitral forum in a particular case is an adequate and accessible substitute to litigation, i.e., a case-by-case analysis that focuses, among other things, upon the claimant’s ability to pay the arbitration fees and costs, the expected cost differential between arbitration and litigation in court, and whether that cost differential is so substantial as to deter the bringing of claims”); Burden v. Check into Cash, LLC, 267 F.3d 483, 492 (6th Cir. 2001) (Green Tree requires party resisting arbitration to show likelihood of prohibitive expenses); Gannon v. Circuit City Stores, Inc., 262 F.3d 677, 683 (8th Cir. 2001) (on remand, district court should consider the plaintiff’s arguments in light of Green Tree which requires her to show the likelihood of incurring prohibitive expenses in arbitration); LaPrade v. Kidder, Peabody & Co., Inc., 246 F.3d 702, 708 (D.C.Cir. 2001) (upholding arbitration award requiring the plaintiff to pay a portion of the fees and costs, noting that the plaintiff had failed to establish her burden under Green Tree that the award had prevented her from attempting to vindicate her rights). In all of these cases, the Court of Appeals either enforced the arbitration agreement, or remanded the case for further fact-finding regarding plaintiff’s claim of prohibitive costs.
Id. at 1259 (footnote referring to the exception of the Ninth Circuit in Adams omitted). The court declined to rule on the validity of the “loser pays” provision, holding that the issue was for the arbitrator in the first instance, and that if the arbitrator enforces the provision against the plaintiff, the issue would be ripe for resolution by the lower court. Id. at 1261.
3. Arbitration Agreements and Class Actions
The enforceability of arbitration clauses not allowing for class
actions is currently one of the hottest issues in arbitration.
Green Tree Financial Corp. v. Bazzle, __ U.S. __, 123 S. Ct.
2402, 91 FEP Cases 1832 (2003), involved Green Tree’s effort to set aside a classwide arbitration award against it. The arbitration agreement was silent, and the plurality held that the intrinsic evidence in the agreement left the matter open to doubt. Justice Stevens concurred in the judgment expressly to provide the fifth vote, stating that Justice Breyer’s opinion is close to his own views, id. at 2408–09, but also stating: “Arguably the interpretation of the parties’ agreement should have been made in the first instance by the arbitrator, rather than the court.” Id. at 2408. As a result, it was for the arbitrator to determine whether the agreement permitted classwide arbitration. The plurality distinguished “gateway issues” that parties would ordinarily expect to be resolved by the courts, “such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy.” The plurality and Justice Stevens did not discuss whether the agreement would be enforceable if it banned classwide arbitration. The holding is not stable.
Following Green Tree, the Fifth Circuit has remanded a failure-
to-pay insurance case for an arbitral decision whether the agreement, silent as to class actions, allows class claims to be arbitrated. Pedcor Management Co., Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc., 343 F.3d 355, 31 EB Cases 1244 (5th Cir. 2003). The court stated: “In light of Green Tree, however, the American Arbitration Association is beginning to provide some assistance in organizing consolidated or class arbitrations.” Id. at 360.
Enforcing Arbitration “Agreements” Barring Class Treatment:
Johnson v. West Suburban Bank, 225 F.3d 366, 377 (3d Cir. 2000) (TILA), cert. denied, 531 U.S. 1145 (2001); Adkins v. Labor Ready, Inc., 303 F.3d 496, 503, 8 WH Cases 2d 7 (4th Cir. 2002) (FLSA collective action); Livingston v. Associates Finance, Inc., 339 F.3d 553, 558–59 (7th Cir. 2003) (cursory discussion); Boomer v. AT&T, 309 F.3d 404 (7th Cir. 2002) (Communications act preempts State-law challenge to arbitration agreement); Randolph v. Green Tree Financial Corp.—Alabama, 244 F.3d 814 (11th Cir. 2001) (on remand) (TILA and ECOA).
Refusing to Enforce Arbitration “Agreements” Barring Class
Treatment:Ting v. AT&T, 319 F.3d 1126 (9th Cir.) (consumer case; “agreement” held unconscionable under California law), cert. denied, __ U.S. __, 124 S. Ct. 53, 157 L. Ed. 2d 24 (2003). A number of State Supreme Courts have held such agreements unconscionable.
4. Arbitration “Agreements” Conflicting with EEO Statutes
Hadnot v. Bay, Ltd., 344 F.3d 474, 478, 92 FEP Cases 1090
(5th Cir. 2003), held that an arbitration agreement was valid even though it barred awards of punitive damages, the clause barring punitive damages was unenforceable in a Title VII case, and that it must be severed from the agreement. The court rejected plaintiff’s argument that the clause made the entire agreement unenforceable.
Cases 2d 11 (8th Cir. 2003), held that plaintiffs’ FLSA claims were subject to arbitration notwithstanding that the arbitration agreement contained a one-year period of limitations, required cost-sharing, specified a California venue, and did not provide for collective actions. The court stated that these matters were for the arbitrator to resolve, and that contractual terms were to be overridden by the statutory terms:
When an agreement to arbitrate encompasses statutory claims, the arbitrator has the authority to enforce substantive statutory rights, even if those rights are in conflict with contractual limitations in the agreement that would otherwise apply. 3
3 Here, the Arbitration Agreement expressly requires the arbitrator to apply applicable federal and state law, authorizes the arbitrator to conclude that any part of the agreement is void or voidable, and provides for the severability of any unenforceable terms.
5. Unconscionability and Choice of Law
Cap Gemini Ernst & Young, U.S., L.L.C. v. Nackel, 346 F.3d 360,
364 (2d Cir. 2003), vacated an order compelling arbitration of a claim pending in California state court. After the former employee had filed suit in Los Angeles Superior Court, defendant commenced an arbitration in New York, and successfully sued the former employee in the U.S. District Court for the Southern District of New York to compel arbitration. Although the former employee had worked in California and asserted California-law claims, the choice-of-law provision in the purported agreement stated that New York law, excluding its conflict-of-laws provisions, would control. He asserted that the choice-of-law question was dispositive, because under California law the purported agreement would be unconscionable and unenforceable. The court stated: “While the FAA expresses a strong federal policy in favor of arbitration, the purpose of Congress in enacting the FAA ‘was to make arbitration agreements as enforceable as other contracts, but not more so.’” (Citations omitted.) The court remanded the case to the district court for a more searching examination of the choice-of-law provision. It explained:
As “[a] federal court sitting in diversity jurisdiction,” the District Court is obligated to “apply the law of the forum state” in analyzing preliminary choice-of-law questions. . . . While it is undisputed that Nackel’s employment agreement contains a choice-of-law clause providing that the agreement shall be construed in accordance with New York law, the parties’ contract does not automatically settle the choice-of-law question. For although, “New York courts generally defer to the choice of law made by the parties to a contract . . . New York law allows a court to disregard the parties’ choice when ‘the most significant contacts’ with the matter in dispute are in another state.” . . .
While the choice of New York law would be reasonable,
and hence enforceable, if Cap Gemini’s “principal place of business” were in New York, creating significant contacts to the state . . . the record in this case merely reveals that Cap Gemini’s “headquarters” are in New York. Without any further explanation of the extent of Cap Gemini’s presence in New York, and as the District Court made no findings as to whether a real conflict exists between New York and California law, we must vacate the District Court’s order and remand for further findings on the choice-of-law question.
Id. at 315–16 (citations and footnote omitted).
Alexander v. Anthony Intern., L.P., 341 F.3d 256, 264, 20 IER
Cases 466 (3d Cir. 2003), a wrongful discharge case, held that an arbitration agreement was unconscionable and unenforceable. The court held that a court must determine whether a purported agreement to arbitrate is valid before compelling arbitration, and that an examination of unconscionability is part of the determination whether there is a generally applicable defense to the asserted contract. Applying Virgin Islands law and the Restatement of Contracts, the court held that plaintiffs had to show both procedural and substantive unconscionability. The court held that plaintiffs established procedural unconscionability by showing that defendant had far greater bargaining power and presented them with the purported agreement on a take-it-or-leave-it basis. Id. at 265–66. The court held that a provision limiting the time to bring a claim may be valid if it is reasonable, but that defendant’s thirty-day period “is clearly unreasonable and unduly favorable to Anthony Crane,” particularly when compared with the two-year period for tort claims and six-year period for contract claims. Id. at 266. “In addition to providing an apparently insufficient time to bring a well-supported claim, such an obligation prevents an employee from invoking the continuing violation and tolling doctrines.” Id. at 267. The court noted that defendant did not impose such a burden on itself with respect to its claims against employees, and held the provision substantively unconscionable. Id. “The arbitration agreement also substantially limits the relief available to plaintiffs. Reinstatement and narrowly defined “net pecuniary damages” constitute the only available forms of relief for a successful employee. The parties also bear their own costs and expenses, including attorney’s fees.” Id. The court held that this, and the cost-imposing provision described above, were substantively unconscionable. Id. at 269–70. The court rejected defendant’s request to sever the unconscionable provisions. It stated that “unconscionability permeates the agreement between plaintiffs and Anthony Crane and thoroughly taints its central purpose of requiring the arbitration of employment disputes.” Id. at 270 (citation omitted). The court explained at 270:
Plaintiffs in this case were given no real choice but to accept arbitration on Anthony Crane’s terms. In addition to facing a burdensome requirement to pay the arbitrator’s fees and costs if unsuccessful, an employee must comply with an unreasonable time limitation, lose any right to attorney’s fees, and give up the chance to receive any relief beyond either reinstatement or “net pecuniary damages.” These draconian terms unreasonably favor Anthony Crane to the severe disadvantage of plaintiffs and other St. Croix employees. The cumulative effect of so much illegality prevents us from enforcing the arbitration agreement. Because the sickness has infected the trunk, we must cut down the entire tree.
Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 91 FEP Cases
1426 (9th Cir. 2003), cert. denied, __ U.S. __, 2004 WL 110851, 72 USLW 3309, 72 USLW 3484, 72 USLW 3487 (Jan. 6, 2004) (NO. 03–604), held that the defendant’s arbitration agreement was procedurally and substantively unconscionable. Citing California decisions, the court stated: “Unconscionability refers to ‘an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.’” Id. at 1170. The court held that Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000), was fully consistent with the FAA. 328 F.3d at 1170 n.3. The court held that the Circuit City agreement at issue was the same agreement at issue in Adams, and was therefore procedurally unconscionable. Id. at 1171–72. The court held that it was irrelevant that plaintiff had had three days within which to consider the agreement. Id. at 1172. Here, unlike Najd v. Circuit City, there was no meaningful opportunity to opt out. There was also no meaningful opportunity to negotiate the terms of the agreement; the defendant had presented it to the plaintiff on an “adhere-or-reject” basis. Id. The court also found that the test of substantive unconscionability was met:
Several substantive terms of Circuit City’s arbitration
agreement are one-sided. The provisions concerning coverage of claims, the statute of limitations, the prohibition of class actions, the filing fee, cost-splitting, remedies, and Circuit City’s unilateral power to modify or terminate the arbitration agreement all operate to benefit the employer inordinately at the employee’s expense. Because these one-sided provisions grossly favor Circuit City, we conclude that, under California law, these terms are substantively unconscionable, and address each term in turn.
Id. at 1172–73. The court found troubling the fact that the agreement covered only employment-related claims, i.e., those an employee is likely to bring against Circuit City, and did not cover the claims the company might bring against an employee. Id. at 1173–75.
By contrast, Stephan v. Goldinger, 325 F.3d 874, 876–77
(7th Cir.), cert. denied sub nom.Stephan v. Refco, Inc., __ U.S. __, 124 S. Ct. 227, 157 L. Ed. 2d 138 (2003), held that the two-year limitations period in the Commodities Exchange Act could validly be shortened to one year in an arbitration agreement. Judge Posner held that there was no indication in the Act of an intent to benefit plaintiffs with respect to the limitations period, a factor that could distinguish this case from discrimination and harassment cases.
(11th Cir. 2003), reversed the denial of defendant’s motion to compel arbitration of her Title VII, ADEA, and other claims. The court held that plaintiff could not avoid arbitration merely because the purported agreement provided that plaintiff would recover fees only if she won the arbitration completely. Ignoring Waffle House, the court held that the denial of fees was only speculative, and that plaintiff should seek relief from a court after the arbitration, “if she feels that her available remedies were hindered.”
9. Unilateral Power to Pick the Panel from Which Arbitrators Are Chosen
(6th Cir. 2004) (per curiam), reversed an order compelling arbitration under defendant’s Termination Appeal Process. The court stated:
Once an arbitration hearing is requested, the TAP grants Meijer the right to unilaterally select a pool of at least five potential arbitrators, each of whom must be: (1) an attorney, (2) unemployed by and unaffiliated with the company, (3) generally recognized as a neutral and experienced labor and employment arbitrator, and (4) listed on the rosters of the Federal Mediation and Conciliation Service (FMCS) or the AAA, as well as other arbitration rosters.
The court held that defendant’s exclusive control over selection of the pool of arbitrators made the agreement substantively unconscionable with respect to the enforcement of Title VII claims. Id. at 492–94. The court explained:
The risk of bias inherent in Meijer’s procedure is demonstrated by the fact that Meijer uses the same panel of five to seven arbitrators in each arbitration hearing in which it participates in the state of Michigan. We find Meijer’s exclusive control over the pool of potential arbitrators particularly problematic because Meijer could easily have adopted a procedure in which an unbiased third-party, such as the AAA or FMCS, selected the pool of potential arbitrators.
Id. at 494. The court remanded the case for the lower court to determine if the agreement can be enforced without the arbitrator-selection provision. Id. at 495–96.
E. Bars to Actions
1. Collateral Estoppel / Issue Preclusion
Acevedo-Garcia v. Monroig, 351 F.3d 547, 572–77 (1st Cir.
2003), involved claims of political discrimination and deprivation of due process brought by 82 former municipal employees. The lower court severed the plaintiffs’ claims unto four groups, and tried the first 20 claims, entered judgment for those plaintiffs, and ordered that non-mutual offensive collateral estoppel would apply to the second through fourth trials on specified issues. The court of appeals identified some issues that had not been litigated in the first trial, questioned how much saving of judicial and party resources would occur if the remainder of the issues also had to be tried, vacated the order, and remanded the matter with instructions for the lower court and the parties to re-examine the issue.
the judgment on a jury verdict for plaintiffs, holding that the lower court committed non-harmless error in instructing the jury that it was bound by an arbitral award on charges against the plaintiff police officers, where the officers’ burden in the arbitration was less exacting than their burden in the litigation.
F. Other ADR QuestionsClark v. Riverview Fire Protection District, 354 F.3d 752, 92 FEP
Cases 1793 (8th Cir. 2004), affirmed the grant of summary judgment to the Title VII defendant, holding that Missouri law governed the question whether plaintiff’s release of all claims was effective, and that plaintiff had not made the required showing that defendant had engaged in threats or wrongdoing that deprived the plaintiff of the free exercise of will with respect to signing the release.
Nicklin v. Henderson, 352 F.3d 1077 (6th Cir. 2003), affirmed the
lower court’s refusal to enforce the EEOC’s decision reversing the Postal Service’s denial of plaintiff’s Rehabilitation Act claim, because of an intervening settlement of the claim. The court first stated the factors underlying the determination, in discrimination cases, whether a settlement was entered knowingly and voluntarily: “(1) Nicklin’s experience, background, and education; (2) the amount of time Nicklin had to consider the release, including whether he had the opportunity to consult with a lawyer; (3) the clarity of the release; (4) the consideration for the release; and (5) the totality of the circumstances.” Id. at 1080. The court held that the settlement met these factors. The court rejected plaintiff’s argument of fraud or mistake, based on his belief that it applied only to his Florida transfer request and not that it applied to his Kentucky transfer request, because he negotiated the terms for several days, had successfully excluded his workers’ compensation claim, and had agreed to language releasing all other claims. At most, plaintiff had made a unilateral mistake and this was not enough to set aside the settlement. Id. at 1081. There was no evidence of any affirmative statement by defendant mischaracterizing the agreement. The court accepted plaintiff’s argument that defendant had waived the bar of settlement at the administrative level by failing to mention it, but noted that the settlement not only released pending claims but barred plaintiff from filing any court actions on the released claims. When he filed his judicial Complaint seeking enforcement of the EEOC’s ruling, he violated that separate bar, and defendant had not waived that separate bar. Id. at 1082.
G. Class Actions
1. Class Actions Seeking Common-Law Damages
Jones v. Ford Motor Credit Co., 358 F.3d 205 (2d Cir. 2004),
vacated the denial of permissive supplemental jurisdiction over defendant’s counterclaims against members of a putative class complaining of racial discrimination under the Equal Credit Opportunity Act. The court held that supplemental jurisdiction was available for such counterclaims, but that the decision whether to exercise such jurisdiction should be deferred until after the lower court decided whether to certify the class, since the certification of a large class may affect the determination. The court stated at 215–16:
Moreover, if the Court certifies the class action, its substantial predomination analysis under subsection 1367(c)(2) should take into account the methods by which the class action might be managed in order to prevent the state law counterclaims from predominating. By bifurcating the litigation, certifying a limited class (perhaps only in-state plaintiffs), or utilizing other management tools, the District Court might be able to structure the litigation in such a way as to prevent the state law claims from predominating over the federal basis of the action, while maintaining the advantages inherent in providing a forum in which all of the litigants’ claims can be litigated.
In re Monumental Life Insurance Co., 365 F.3d 408 (5th Cir.
2003), reversed the denial of class certification seeking common-law damages for racially discriminatory pricing and terms in insurance policies sold over a long period of time by 280 largely predecessor companies. There, plaintiffs sought injunctive relief for restitution in the form of a constructive trust, which the court defined as equitable monetary relief comparable to a Title VII back pay award. Plaintiffs had originally pleaded a class broader that would have included African-Americans who were given substandard policies because of covert, pretextual discrimination. Their class certification motion sought to exclude such persons, and include only those blacks who were given explicitly discriminatory policies under racially dual rates and plans. “In other words, one must look to the certification motion for an adequate description of the proposed class.” Id. at 414. The court held that this was not an adequate reason to deny certification:
Holding plaintiffs to the plain language of the class
definition would be overly formalistic. In the first place, the district court, in denying certification, apparently did not consider the pretextual claims as part of the proposed class. Though referring to the “mass of policies involved” and the “differing underwriting practices among some 280 companies,” the court stated that in calculating damages, individualized hearings were necessary to account for the idiosyncrasies of each policy. At no point did the court suggest that individualized hearings were necessary to determine liability, as would be necessary if pretextual underwriting claims were part of the class.
Second, holding plaintiffs to the plain language of their
definition would ignore the ongoing refinement and give-and-take inherent in class action litigation, particularly in the formation of a workable class definition. District courts are permitted to limit or modify class definitions to provide the necessary precision. If the class is certified on remand, we trust that the plaintiffs or district court will amend the definition accordingly.
Id. (footnote omitted). “Defendants also argue that the definition terms ‘own, or owned,’ ‘industrial life insurance policy,’ ‘substandard plan,’ and ‘substandard rate’ are ambiguous, further complicating identification of class members. This argument, too, is overly formalistic.” Id. (citation omitted). The court held that the predominance of one form of relief must be determined objectively, without regard to the subjective determinations of counsel and the class representatives. Id. at 415. The court observed that, where Rule 23(b)(2) class certification is sought because of a demand for injunctive relief, the class as a whole must be able to benefit from the injunctive relief. “Here, by contrast, defendants’ and plaintiffs’ experts estimate that between one million and 4.5 million of 5.6 million issued policies remain in-force. Although the exact number of class members continuing to pay discriminatory premiums is unknown, the proportion is sufficient, absent contrary evidence from defendants, that the class as a whole is deemed properly to be seeking injunctive relief.” Id. at 416. The court rejected defendant’s argument that plaintiffs had conceded the inapplicability of Rule 23(b)(2) certification by suggesting that class members be given notice and an opportunity to opt out. “This ignores the discretion given a district court to order notice and opt-out rights when certifying a rule 23(b)(2) class.” Id. The court held that notice and an opportunity to opt out are required whenever monetary damages are sought, id. at 416–17, but stated in addition: “The type of notice afforded to rule 23(b)(2) class members seeking monetary relief will not always be ‘equivalent to that required in (b)(3) actions.’” Id. at 417 n.13. Turning to predominance, the court stated:
Allison ‘s statement that monetary relief may predominate
where notice and opt-out are necessary reflects only the inescapable fact that such safeguards are most appropriate where individual issues diminish class cohesiveness. Then, conflicts among class members and issues of adequate representation are most likely to surface. Rule 23(b)(3) is the default vehicle for certification, but only because notice and opt-out rights are mandatory components. A district court is empowered by rule 23(d)(2) to provide notice and opt-out for any class action, so rule 23(b)(2) certification should not be denied on the mistaken assumption that a rule 23(b)(3) class is the only means by which to protect class members. 15
All of this further demonstrates the futility of the district court’s
and dissent’s inquiry as to whether the “prime goal” of the class is injunctive or monetary relief. The rule 23(b)(2) predominance requirement, by focusing on uniform relief flowing from defendants’ liability, “serves essentially the same functions as the procedural safeguards and efficiency and manageability standards mandated in (b)(3) class actions.” Allison, 151 F.3d at 414–15. Therefore, to deny certification on the basis that the damage claims would be better brought as a rule 23(b)(3) class serves no function other than to elevate form over substance. 16 Indeed, interests of judicial economy are best served by resolving plaintiffs’ claims for injunctive and monetary relief together.
15 One of the dissent’s two reasons for finding class
certification inappropriate concerns our supposed “suggestion” that notice and opt-out rights are necessary. In Allison, 151 F.3d at 414, however, we explained that “[t]he fact that the predomination requirement serves to protect the rights of class members . . . does not imply . . . that the availability of monetary relief in a(b)(2) class action depends solely or directly on whether class members are entitled to notice or opt-out rights.” As mentioned, this court’s precedent requires that notice be provided where a rule 23(b)(2) class seeks damages, see supra note 13 and accompanying text, so it is circular for the dissent to argue notice as a basis for denying certification. Our direction to the district court to consider the possibility of opt-out rights speaks nothing as to whether such rights are necessary or even desirable.
16 Our view that the rule 23(b)(2) and (b)(3) devices may
work in tandem is strengthened by the roots of subdivision (b)(2), which was added “to Rule 23 in 1966 primarily to facilitate the bringing of class actions in the civil rights area.” 7A Charles A. Wright et al., Federal Practice and Procedure § 1775, at 470 (2d ed. 1986). Before its adoption, the rules made no explicit reference to class actions involving injunctive or declaratory relief, and “there was some uncertainty whether a class action seeking one of those remedies was an appropriate device for vindicating civil rights.” Id. at 470–71. Rule 23(b)(2) was adopted to facilitate the use of injunctive relief, not to compartmentalize claims for damages under rule 23(b)(3).
Id. at 417–18. The court’s approach to individualized defenses to equitable monetary relief is much closer to traditional Rule 23 principles than that taken in the dicta in Allison v. Citgo Petroleum Co. 151 F.3d 402 (5th Cir.), reh’g denied, 151 F.3d 434 (5th Cir. 1998). In Monumental Life Insurance, the lower court identified the individualized factors:
Applying Allison ‘s predominance test, the district court
determined that the requested monetary relief does not flow from liability to the class as a whole. The court stated that “many and a variety of hearings would be required to determined personalized harm to each individual plaintiff because of the mass of policies involved, differing underwriting practices among some 280 companies, differing built-in benefits, account dividends, and age at policy issuance.”
365 F.3d 408, 418. The court of appeals first distinguished between back pay and compensatory damages, holding that the individual calculations required for back pay are generally “‘less complicated factual determinations and fewer individual issues.’” Id. at 418 (citation omitted). “In Allison, 151 F.3d at 415, we recognized that, for this reason, backpay generally does not predominate over injunctive or declaratory relief.” 365 F.3d 408, 418. Plaintiffs here sought the creation of a restitutionary trust, not back pay. The court cautioned:
It would be mistaken to presume that because backpay—a
remedy readily calculable on a classwide basis—is compatible with a rule 23(b)(2) class, any other remedy designated as equitable may automatically piggyback a claim for injunctive relief. To be sure, equitable monetary remedies are less likely to predominate over a class’s claim for injunctive relief, but this has more to do with the uniform character of the relief rather than with its label. Therefore, rather than decide whether plaintiffs’ claim for restitution is legal or equitable in nature, we apply Allison and examine whether the claim predominates over the request for injunctive relief.
Id., at 418. The court emphasized the complexity of the remedies sought in the case, and rejected this complexity as a reason for denying class certification:
This is not a case in which class members are entitled to
a one-size-fits-all refund; assuming liability is established, individual damages will depend on the idiosyncrasies of the particular dual rate or dual plan policy. For example, the age at which a class member purchased a dual rate policy will have an impact on how long the insured paid premiums and consequently on the amount of damages. Some policies contain built-in benefits covering occurrences outside of death, such as loss of limb; others pay periodic dividends. As we have observed, some defendants, beginning in 1988, voluntarily adjusted premiums and benefits for some policies sold on a race-distinct basis.
Plaintiffs propose using standardized formulas or
restitution grids to calculate individual class members’ damages. Defendants counter that “thousands” of grids must be constructed to account for the myriad of policy variations. That may be so, but the monetary predominance test does not contain a sweat-of-the-brow exception. Rather, we are guided by its command that damage calculation “should neither introduce new and substantial legal or factual issues, nor entail complex individualized determinations.” Allison, 151 F.3d at 415.
In the list of policy variables cited by defendants and the
district court, none requires the gathering of subjective evidence. 18 This is not, for example, like Allison, a title VII case in which class members’ claims for compensatory and punitive damages necessarily “implicate[ ] the subjective differences of each plaintiff’s circumstances.” Id. at 417. Rather, assuming that unlawful discrimination is found, class members automatically will be entitled to the difference between what a black and a white paid for the same policy. Not coincidentally, such damages flow from liability in much the same manner that an award of backpay results from a finding of employment discrimination. Pettway, 494 F.2d at 256–58.
We are well aware that, as Allison qualifies, 151 F.3d at
415, the calculation of monetary damages should not “entail complex individualized determinations.” Although it is arguable that the construction of thousands of restitution grids, though based on objective data, involves the sort of complex data manipulations forbidden by Allison, we read Allison to the contrary. The policy variables are identifiable on a classwide basis and, when sorted, are capable of determining damages for individual policyowners; none of these variables is unique to particular plaintiffs. [FN19] The prevalence of variables common to the class makes damage computation “virtually a mechanical task.” . . .. 20
Finally, defendants’ records contain the information necessary to determine disparities between, on the one hand, dual rate and dual plan policies, and on the other hand, plans sold to whites. Damage calculations do not require the manipulation of data kept outside defendants’ normal course of business. Defendants’ complaints to the contrary are belied by the fact that, since 1988, many policies have been adjusted to account for racial disparity.
18 Had plaintiffs not limited their proposed class to
dual rate and dual plan policies, individual hearings would be necessary to determine whether pretextual underwriting practices were used to force the respective class members into substandard plans. In that instance, we agree with the district court that the large number of defendants and underwriting practices would be relevant to finding the predominance of monetary damages.
19 In this sense, the instant case is unlike
O’Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 744-45 (5th Cir. 2003), in which we found monetary damages predominant in a proposed rule 23(b)(3) class alleging violations of Texas’s statute prohibiting the unauthorized practice of law. Non-lawyers were alleged to have used “legal skill or knowledge” in the preparation of mortgage closing documents. Whether certain practices by the non-lawyers violated the statute was determinable on a classwide basis; we explained, however, that monetary damages predominated, because the extent of these practices varied by transaction, and plaintiffs were entitled to a refund only for those practices that violated the statute. Therefore, each transaction had to be dissected to determine the extent of liability and damages.
20 One is left wondering in what circumstances
(if any) the dissent would permit monetary damages in a rule 23(b)(2) class. Remarkably, the dissent makes no attempt to explain its view that insurance policy factors such as premium rate, issue age, and benefits paid are based on “intangible, subjective differences.” Allison, 151 F.3d at 415. Instead, Allison ‘s statement that damages be “capable of computation by means of objective standards” is ideal for refund-type cases such as this, in which damages are calculable using factors developed and maintained in the course of defendants’ business. Id. The dissent evidently would limit damages in rule 23(b)(2) classes to instances in which there is no variance among the “specific characteristics of each policy and policyholder,” a standard that necessarily would require that each class members’ damages be identical. It is safe to say that the dissent’s novel approach is unsupported by caselaw.
Id. at 418–20. The court then turned to individual questions about the period of limitations. “As noted, defendants have not sold dual plan or dual rate policies since the 1970’s; some class members purchased their policies as far back as the 1940’s. The district court denied certification also on the basis that individualized hearings are necessary to determine expiration of the statute of limitations for particular sets of policies.” Id. at 420. The court held that, although individual issues can preclude class certification, it was no bar here:
Although, under §§ 1981 and 1982, state law governs the
substantive limitations period, federal law determines when the period accrues. . . . It commences when the plaintiff either has actual knowledge of the violation or has knowledge of facts that, in the exercise of due diligence, would have led to actual knowledge. State law may further toll the running of limitations. . . .
Doubtless most class members, the majority of whom are
poor and uneducated, remain unaware of defendants’ discriminatory practices. Of the thirteen representative plaintiffs, defendants point to only one, Jo Ella Brown, whose claim may have expired because of actual knowledge of defendants’ practices.
To hold that each class member must be deposed as to
precisely when, if at all, he learned of defendants’ practices would be tantamount to adopting a per se rule that civil rights cases involving deception or concealment cannot be certified outside a two- or three-year period. Such a result would foreclose use of the class action device for a broad subset of claims, a result inconsistent with the efficiency aims of rule 23. Though individual class members whose claims are shown to fall outside the relevant statute of limitations are barred from recovery, this does not establish that individual issues predominate, particularly in the face of defendants’ common scheme of fraudulent concealment.
Id. at 420–21 (citations and footnotes omitted). Judge Clement dissented. Id. at 421–23.
Allen v. International Truck and Engine Corp., 358 F.3d 469
(7th Cir. 2004) (Easterbrook, J.), granted the Title VII plaintiffs’ Rule 23(f) petition for interlocutory review of the denial of class certification for about 350 present and former black employees of defendant’s Indianapolis plant on their claims for injunctive relief and damages for racial harassment, summarily reversed the denial of Rule 23(b)(2) certification on the claims for injunctive relief, and remanded the case with directions to reconsider the extent to which the employees’ damages claims could also benefit from class certification. The lower court found that the Rule 23(a) requirements were met, and that the injunctive claim met the requirements of Rule 23(b)(2). However, it found that individual exposures to harassment could vary greatly, making the claims dissimilar, that the claims for damages involved high enough stakes that employees may prefer to prosecute such claims on their own, that individual issues predominated over common issues. The lower court held that the Seventh Amendment created problems for the certification of an injunctive class, and that handling both classwide injunctive claims and the 27 plaintiffs’ damages claims would impose too much of a burden on the court system. The court of appeals did not understand this reasoning, and held that “the district court committed an error best handled by a swift remand.” It explained:
It is hard to see why management of a class certified under
Rule 23(b)(2) for prospective relief alone would be any more difficult than management of a suit with 27 individual plaintiffs seeking both legal and equitable relief. In either event, a jury trial must be held, and factual matters bearing on both damages and injunctive relief must be presented to that body. Even if the judge were to hold 27 separate damages trials, each of the 27 plaintiffs would be entitled to present evidence about the plant-wide environment in order to show entitlement to an injunction. The district judge did not explain how even one trial, with 27 plaintiffs, could be easier to manage than a class proceeding; and if the judge contemplated 27 trials, then a class proceeding looks even better by comparison. What is more, handling equitable issues on a class-wide basis would solve a problem sure to bedevil individual proceedings: How is it feasible to draft and enforce an injunction that will bear on these 27 plaintiffs alone, and not on the other 323 black employees? Unless it is possible to prepare such relief—and we do not see how it could be, or why a court should try—then the equitable aspects of the litigation are class-wide whether the judge certifies a class action or not. (The need for, if not inevitability of, class-wide treatment when injunctive relief is at stake is what Rule 23(b)(2) is about.) Formal certification has two benefits over the informal approach: first, class certification obliges counsel (and the representative plaintiffs) to proceed as fiduciaries for all 350 employees, rather than try to maximize the outcome for these 27 at the potential expense of the other 323; second, certification will entitle counsel to attorneys’ fees representing the gains (if any) achieved by all employees, and not just the named plaintiffs.
Id. at 471. The Seventh Circuit also disagreed with the lower court’s perception of Seventh Amendment problems:
Certifying a class for injunctive purposes, while handling
damages claims individually, does not transgress the seventh amendment. Just as in a single- person (or 27-person) suit, a jury will resolve common factual disputes, and its resolution will control when the judge takes up the request for an injunction. International Truck will enjoy its jury-trial right either way; and once one jury (in individual or class litigation) has resolved a factual dispute, principles of issue preclusion can bind the defendant to that outcome in future litigation consistently with the seventh amendment. . . . The other 323 employees’ right to jury trial can be protected in either or both of two ways: By offering them the opportunity to opt out, or by denying them (in any later damages proceedings) both the benefits and the detriments of issue and claim preclusion. . . . Thus a class proceeding for equitable relief vindicates the seventh amendment as fully as do individual trials, is no more complex than individual trials, yet produces benefits compared with the one-person-at-a-time paradigm. The district court erred in concluding that seventh-amendment concerns foreclose certification of a class under Rule 23(b)(2).
Id. at 471–72 (citations omitted). The court then held that a new look at class treatment of the damages claims was warranted:
Whether full class treatment of damages issues would be
manageable is too fact-sensitive, and too much of a judgment call, to warrant interlocutory review in this court. But because this litigation will proceed as a class action for equitable relief, it would be prudent for the district court to reconsider whether at least some of the issues bearing on damages—such as the existence of plant-wide racial animosity, which collectively “constitute[s] one unlawful employment practice” . . .—could be treated on a class basis (with opt-out rights under Rule 23(b)(3) or a hybrid Rule 23(b)(2) certification) even if some other issues, such as assessment of damages for each worker, must be handled individually. . . . (The employer’s contention that even partial class certification is inappropriate because workers may have liked being called “nigger” and “jungle bunny,” chuckled when other workers posted cartoons of black men being lynched and displayed nooses in the workplace, or at least not minded such things, strains credulity. Still, questions about subjective reactions also could be isolated for individual treatment if evidence demonstrates that insults and threats rolled off the backs of some workers.)
Id. at 472 (citations omitted).
Molski v. Gleich, 318 F.3d 937 (9th Cir. 2003), reversed the grant
of final approval to a settlement of class claims under the ADA and California law. The Rule 23(b)(2) class of mobility-impaired individuals alleged denial of access to public accommodations and discrimination. “Under the consent decree, ARCO agreed to undertake certain accessibility enhancements at its locations, pay monetary damages to Molski and the class counsel’s fees, and make donations to eight disability rights organizations. In exchange, the class members agreed to release all claims for statutory damages and certain actual damages.” Id. at 941. The court of appeals described the injunctive relief, and added: “In addition to the injunctive relief, the consent decree provides that ARCO will pay named plaintiff Molski $5,000 to settle his individual claims. It also provides that ARCO will pay class counsel Potter $50,000 for the services performed in connection with the case. In addition, ARCO is required to make donations, totaling $195,000, to eight different disability organizations in California. The decree does not provide for specific, individualized relief for each class member.” Id. at 944 (footnote added). The court held certification of a settlement-only class must be supported by findings sufficient to support deference. Id. at 946. It held that use of a mandatory class, without notice or an opportunity to opt out, is appropriate only where monetary relief is secondary to injunctive relief. Id. at 947. The court found that the damages released were not incidental, but rejected Allison and held that this did not automatically mean that the damages issues predominated. Id. at 949–50. “As discussed by the Second Circuit in Robinson, adoption of a bright-line rule distinguishing between incidental and nonincidental damages for the purposes of determining predominance would nullify the discretion vested in the district courts through Rule 23. . . . In addition, such a bright-line rule holds troubling implications for the viability of future civil rights actions, particularly those under the Civil Rights Act of 1991.” Id. at 950 (citations omitted). The court held that injunctive relief was predominant. Id. However, the court held that the damages and treble damages were sufficiently substantial to trigger minimum due process requirements such as the right to opt out. Id. at 950–51. The court described the available options:
The due process concerns raised by the release of treble
damages could have been addressed in several manners: (1) the District Court could have certified the class under Rule 23(b)(3); (2) the District Court could have bifurcated the claims and certified the class under Rule 23(b)(2) and (b)(3); or (3) the District Court could have certified the class under Rule 23(b)(2), giving the class members the right to opt-out under its discretionary authority as provided in Rule 23(d)(2).
Id. at 951 n.16.
Staton v. Boeing Co., 327 F.3d 938 ( 9th Cir. 2003), replaced
the former opinion at 313 F.3d 447, 90 FEP Cases 641 ( 9th Cir. 2002). The court reversed the grant of final approval to a settlement for several reasons. One reason was the court’s concern about the adequacy of injunctive relief:
In this case, we are somewhat uneasy, reading the
settlement as a whole, about whether in reaching the settlement, class counsel adequately pursued the interests of the class as a whole. Provisions giving rise to this unease include the extent of Boeing’s release from liability, which includes any breach of contract action by any class member; the stipulation that the prohibition on race discrimination cannot be enforced in individual cases; the numerous instances in which Boeing is permitted to develop its own remedial schemes (and, in some instances, unilaterally to abandon such schemes as infeasible), with an obligation only to consult with class counsel but with no obligation to submit to any enforcement or dispute resolution mechanism if the schemes are unsatisfactory; the limited role for the consultant Boeing is required to hire; and the incorporation in the agreement of promotion and complaint programs Boeing had already developed and implemented, with no obligation on the part of the Company to continue those programs in their present form or alternatively to substitute programs of the same efficacy.
Id. at 961 (footnote omitted). The court held that these problems would not be enough, by themselves, to reject the settlement. Id. at 962. “At the same time, the questionable factors we have noted do suggest the possibility that class counsel and the IIRs could have agreed to relatively weak prospective relief because of other inducements offered to them in the course of the negotiations. We therefore scrutinize with particular care the aspects of the proposed settlement that provide monetary benefits directly to class counsel and to the IIRs: the attorneys’ fees and damages distribution provisions.” Id. at 963 (footnote omitted). An important reason for the court’s concern was that there was inadequate explanation of the disparities in monetary relief among class members, and between named plaintiffs and class members:
The class receives a total monetary award of $7.3 million.
Out of the approximately 15,000-member class, a group of 264 individuals—less than two percent of the class—made up of the named plaintiffs and other class members identified by class counsel as having actively participated in the litigation (together, the “individually identified recipients” or “IIRs”) is to receive $3.77 million, more than half the monetary award. The $3.77 million will be distributed among the IIRs in amounts established by class counsel, who credit the assistance of an independent claims adjuster for consultation on many, but not all, of the claims. There is ample evidence in the record that before retaining this claims adjuster class counsel extensively discussed specific award amounts with some IIRs. Moreover, the record indicates that class counsel made the final decisions concerning many of these designated payments.
The individual awards for the IIRs range from $5,000 to
$50,000, with most of the class representatives receiving higher awards than the other IIRs, and average approximately $16,500. Based on our examination of records relating to the Wichita-based IIRs, the individuals singled out for IIR settlement payments are for the most part the same people who signed individual retainers with class counsel that obligated them to pay monthly fees.
The remaining $3.53 million of monetary relief is to be
distributed to the rest of the class (the “unnamed class members”). To receive an award, unnamed class members must submit a claim form to an independent claims arbitrator (hired by class counsel and approved by the district court), who will verify the validity of the claims against Boeing’s records and designate awards according to a detailed point system laid out in the decree and applicable only to the unnamed class members. Some 3,400 class members filed claims, so the average payment each unnamed class member would receive is approximately $1,000.
Id. at 948 (footnote omitted). The court summarized this part of its holding, id. at 946:
Finally, the decree sets up a two-tiered structure for the
distribution of monetary damages, awarding each class representative and certain other identified class members an amount of damages on average sixteen times greater than the amount each unnamed class member would receive. At least one person not a member of the class was provided a damages award. The record before us does not reveal sufficient justification either for the large differential in the amounts of damage awards or for the payment of damages to a nonmember of the class. On this ground as well, the district court abused its discretion in approving the settlement.
Judge Trott dissented. Id. at 979.
De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 8 WH Cases 2d
1729 (3d Cir. 2003), reversed as an abuse of discretion the lower court’s exercise of supplemental jurisdiction over the Rule 23 class claims under the Pennsylvania Wage Payment and Collection Law in addition to its FLSA collective action, and reversed as an abuse of discretion its decision not to re-open the opt-in period where 444 employees had opted into the case initially, but 800 notices had been returned as undeliverable and the company had hired 700 new employees after the expiration of the opt-in period. Id. at 312–13. Molski v. Gleich, 318 F.3d 937, 951–53 (9th Cir. 2003), reversed the grant of final approval to a settlement of class claims under the ADA and California law. The court held that the content and dissemination of the notice were inadequate. The content was inadequate and misleading because the notice stated that the personal-injury claims of class members would not be affected, and the settlement would have released all such claims except those involving physical injury. “The District Court ordered three forms of notice: (1) posting of the notice at all ARCO stations, (2) mailing of the notice to disability rights organizations, and (3) publication of the notice in four major California newspapers.” Id. at 951. The court of appeals held that this publication was inadequate, id. at 952–53 (citations and footnote omitted):
Because the notice requirements differ, Appellants’ contentions
regarding the adequacy of the notice are fundamentally tied to our last discussion of whether the District Court abused its discretion by certifying the mandatory class. As concluded above, the District Court abused its discretion by certifying a non-opt-out class because substantial damages were released. Because the class members had the right to opt-out, they also had the right to the best notice practicable. . . . Yet, the District Court failed to do so. Notice could have been given through individual mailings to disabled drivers, using the names maintained by the Department of Motor Vehicles. . . . Because no individualized efforts were undertaken, we hold that the notice provided to the class was inadequate and failed to comport with the requirements of due process.
3. Effect of Mooting the Collective-Action Plaintiffs’Claims Prior to Opt-Ins
Cameron-Grant v. Maxim Healthcare Services, Inc., 347 F.3d
1240, 9 WH Cases 2d 1 (11th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 2096, 158 L. Ed. 2d 710 (2004), affirmed the lower court’s denial of a motion to send an opt-in notice to the members of the provisionally-certified FLSA collective action. During the pendency of the motion, all of the claims of the named plaintiffs were settled or dismissed. The court held that, unlike Rule 23 class actions, an FLSA collective action representative has no surviving right to represent the class, and the case does not become a collective action until opt-ins are filed. As a result, the disposition of all claims of the named plaintiffs mooted their case.
4. Required Steps to Protect the Class After Decertification
Birmingham Steel Corp. v. Tennessee Valley Authority, 353 :
F.3d 1331, 1339–40 (11th Cir. 2003), involved a class of industrial consumers of TVA electricity who were suing because of alleged overcharges. When the steel company went bankrupt, TVA obtained the decertification of the class because of inadequate representation. Relying on Culver v. City of Milwaukee, 277 F.3d 908, 914–15, 87 FEP Cases 1464 (7th Cir. 2002), the court described the steps required to protect the class
A district court that is about to decertify a class on the
ground of inadequate representation by the named plaintiff will, except in extraordinary circumstances, not be required to take on itself the responsibility of notifying the class members of the imminent decertification in order to allow these members an opportunity to intervene or substitute themselves as the class representative; this is the job of class counsel or the class representative. Accordingly, on remand, the district court will not be required to notify the class of its impending decertification. Yet, we are also persuaded by the reasoning in Culver that, once a district court has decertified a class, it must ensure that notification of this action be sent to the class members, in order that the latter can be alerted that the statute of limitations has begun to run again on their individual claims.
Id. at 1339. The court also held that the lower court abused its discretion in failing to allow a reasonable time for class counsel to find a substitute class representative, despite class counsel’s pessimism that he would be able to do so. Id. at 1142. The court vacated the decertification of the class, ordered that class counsel be given a reasonable time to locate a new class representative, and spelled out the action that must be taken if that effort failed and the class was again decertified: “If the court eventually decertifies the action, however, it must cause notice to be sent to the class in order that the latter will be made aware that the statute of limitations, tolled during the class action, has begun running upon the decertification of the class.” Id. at 1143 n.12 (citation omitted).
Ayers v. Thompson, 358 F.3d 356 (5th Cir. 2004), affirmed the
grant of final approval to a settlement of class claims involving removal of the vestiges of racial segregation of Mississippi’s institutions of higher education. The court rejected objectors’ argument that final approval could not be granted if a substantial proportion of the class members and of the named plaintiffs opposed the settlement. It found that the record did not support the argument, and stated: “Our jurisprudence, however, makes clear that a settlement can be approved despite opposition from class members, including named plaintiffs.” Id. at 373 (citations omitted). The court rejected the objection that $2.5 million in attorneys’ fees were negotiated simultaneously with the settlement. Id. at 374–75. The court affirmed the lower court’s refusal to allow some of the objecting class members to opt out of the Rule 23(b)(2) settlement, pointing out that the case had sought only injunctive and declaratory relief. Id. at 375–76.
the grant of final approval to a settlement of class claims under the ADA and California law. The court stated: “Here, the class members lost their rights to pursue any claims (excepting those for physical injury); the class representative received monetary relief of $5,000; and the class counsel was paid $50,000. The corporation was required to make tax-deductible donations to third parties and simply meet its legal obligations (or perhaps even less than that required) under the ADA.” The court held that the use of cy pres awards to third parties in lieu of damages was inappropriate, but did not hold that such awards could never be made. “In this case, there is no evidence that proof of individual claims would be burdensome or that distribution of damages would be costly. Moreover, the cy pres award circumvents individualized proof requirements and alters the substantive rights at issue in this case. Thus, the use of the cy pres award was inappropriate.” Id. at 955. The court held that plaintiff and class counsel did not adequately represent the class, and reversed the certification. Id. at 955–56.
H. Rule 12(b)(6) MotionsIssa v. Comp USA, 354 F.3d 1174, 1177–78, 92 FEP Cases
1795 (10th Cir. 2003), reversed the grant of defendant’s Rule 12(b)(6) motion against the pro se Title VII plaintiff. The court held that plaintiff’s failure to respond to the motion did not relieve the lower court from the obligation to examine the motion on the merits, and to grant the motion only if it was clear that the Complaint did not state a claim and that any amendment would be futile.
I. Discovery of Electronic EvidenceZubulake v. UBS Warburg LLC, 217 F.R.D. 309, 91 FEP Cases
1574 (S.D. N.Y. May 13, 2003), a Title VII sex discrimination case, ordered the defendant to produce in discovery e-mails that had been deleted and that now resided only on 94 back-up tapes, at its own expense, estimated to be about $175,000. The court noted that requiring plaintiff to pay the expenses of such discovery could often make the discovery inaccessible regardless of its relevance:
Courts must remember that cost-shifting may effectively
end discovery, especially when private parties are engaged in litigation with large corporations. As large companies increasingly move to entirely paper-free environments, the frequent use of cost-shifting will have the effect of crippling discovery in discrimination and retaliation cases. This will both undermine the “strong public policy favor[ing] resolving disputes on their merits,” and may ultimately deter the filing of potentially meritorious claims.”
Id. at 317–18 (footnote omitted). The court stated that the production of electronic discovery can be cheaper than the production of paper discovery:
Many courts have automatically assumed that an undue
burden or expense may arise simply because electronic evidence is involved. This makes no sense. Electronic evidence is frequently cheaper and easier to produce than paper evidence because it can be searched automatically, key words can be run for privilege checks, and the production can be made in electronic form obviating the need for mass photocopying.
Id. at 318 (footnotes omitted). Finally, the court announced a new seven-factor test to determine who should pay for the discovery of electronic records:
Set forth below is a new seven-factor test based on the
modifications to Rowe discussed in the preceding sections.
1. The extent to which the request is specifically tailored to discover relevant information;
2. The availability of such information from other sources;
3. The total cost of production, compared to the amount in controversy;
4. The total cost of production, compared to the resources available to each party;
5. The relative ability of each party to control costs and its incentive to do so;
6. The importance of the issues at stake in the litigation; and
7. The relative benefits to the parties of obtaining the information.
Id. at 322. The court elaborated:
Whenever a court applies a multi-factor test, there is a
temptation to treat the factors as a check-list, resolving the issue in favor of whichever column has the most checks. But “we do not just add up the factors.” When evaluating cost-shifting, the central question must be, does the request impose an “undue burden or expense” on the responding party? Put another way, “how important is the sought-after evidence in comparison to the cost of production?” The seven-factor test articulated above provide some guidance in answering this question, but the test cannot be mechanically applied at the risk of losing sight of its purpose.
Id. at 322–23.
J. Summary Judgment
1. Ineffective Oppositions
Taylor v. Small, 350 F.3d 1286, 1295, 92 FEP Cases 1785,
15 AD Cases 25 (D.C. Cir. 2003), affirmed the grant of summary judgment to defendant. The court upheld the lower court’s refusal to consider various documents, and stated: “Because mention of these purported requests and denials appear only in Taylor’s memorandum in opposition to the Smithsonian’s motion for summary judgment, and not in her complaint or other verified pleading, the district court properly concluded it was not obliged to deal with them at all.”
Crossley v. Georgia-Pacific Corp., 355 F.3d 1112, 1113–14
(8th Cir. 2004), affirmed the grant of summary judgment to the Title VII defendant and stated:
In his response to Georgia-Pacific’s motion, Crossley attached the full transcripts from six depositions and argued that his retaliation claim could be understood only upon a full reading of the depositions. Merely attaching six complete depositions to his response and inviting the district judge to read them in their entirety, without designating which specific facts contained therein created a genuine issue as to pretext or established a reasonable inference of retaliation, did not meet the Rule 56 specificity requirement. See Jaurequi, 173 F.3d at 1085 (“[A] district court is not ‘obligated to wade through and search the entire record for some specific facts which might support the nonmoving party’s claim.’”) (internal citation omitted); Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.1998) (“‘Rule 56 does not impose upon the district court a duty to sift through the record in search of evidence to support a party’s opposition to summary judgment.’”) (internal citation omitted); c.f. United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991) (“Judges are not like pigs, hunting for truffles buried in briefs.”).
K. Batson Challenges to Peremptory Strikes of Jurors
Holloway v. Horn, 355 F.3d 707 (3d Cir. 2004), granted the
African-American criminal defendant’s Batson challenge. The court stated: “The most striking factor in this case is the prosecutor’s pattern of strikes. Holloway moved for a mistrial after the prosecutor had used seven of eight peremptory strikes against African-Americans; the Commonwealth ultimately used eleven of twelve strikes in that manner.” Id. at 722. The court continued: “Although we are troubled by the lack of race- neutrality in each of the prosecutor’s explanations, and perhaps more troubled by the lack of any explanation at all for eight of his eleven strikes, the explanation given as to venireperson John Hackley, Sr., was plainly insupportable under Batson and warrants relief.” The prosecutor explained that “Hackley ‘is a black juror, black male juror approximately the same age as the defendant.’” Id. at 724. The court assumed that the prosecutor was just noting Hackley’s race for the record, but noted that white jurors of the same age and gender had been seated.
L. Evidentiary Rulings
See the discussion of Flannery v. Recording Industry Ass’n of
America, 354 F.3d 632, 93 FEP Cases 65 (7th Cir. 2004), in the section above on “Judicial Admissions.”
Abuan v. Level 3 Communications, Inc., 353 F.3d 1158, 1170–
72, 93 FEP Cases 94 (10th Cir. 2003), affirmed the judgment for the ADEA plaintiff. The court upheld the lower court’s admission of a statement, by a corporate Vice-President (and former supervisor of the plaintiff), at a luncheon commemorating the Vice-President’s resignation, that one of the reasons he was resigning was the company’s unethical treatment of the plaintiff. The court held that the statement was admissible under Fed. R. Evid. 801(d)(2)(D) because it was the statement of an official of the defendant, as to a matter within the scope of his authority to speak, made while he was an official and had such authority.
3. Reprimand of Supervisor for Imposing Insufficient Discipline
2003), affirmed the denial of a new trial in plaintiff’s assault and battery case against John Joseph, a co-worker at the FAA, for allegedly attempting to rape her in her home, harassing her at work, and pinching her buttocks at work. When the FAA finally investigated plaintiff’s complaints, the following occurred:
FAA supervisor Willie Moore interviewed Joseph and, at the end of the interview, told Joseph to stay away from Sellers. Afterward, a letter officially reprimanding Moore for inadequately handling the matter (hereinafter “the Moore reprimand letter”) was placed in Moore’s personnel file. The Moore reprimand letter states as one of the grounds for reprimand: “Failure to assess the proper penalty when the facts are known and disciplinary action is warranted (including acts of sexual harassment or other types of prohibited discrimination).”
At trial, over the objections of both Joseph and the Secretary,
Sellers was permitted to introduce the Moore reprimand letter into evidence during her case-in-chief. Four days after the Moore reprimand letter was introduced, Joseph requested that the letter be stricken from the record or, alternatively, that a limiting instruction be given. The district court denied both requests.
Id. at 709. Joseph argued that the letter was too prejudicial to be admitted under the F.R.E. 703 balancing test, that the lower court improperly commented on the letter (see below), and that “was hearsay evidence offered for the truth of the statement that acts of sexual harassment had occurred.” Id. at 710–11. The court disagreed, stating that the letter “was relevant to show, not that sexual harassment had actually taken place, but that the FAA did not take adequate steps to respond to the problem and that Sellers found the pinching incident to be offensive (an issue which Joseph contested at trial).” Id. at 711.
4. Exclusion of Evidence Not Produced in Discovery
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020, 1027–
28, 92 FEP Cases 641 (9th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1602 (2004), affirmed the § 1981 jury verdict for $360,000 in compensatory damages and $2,600,000 in punitive damages, $86,000 in lost wages on the on the breach of contract claim, and a remitted $86,000 in double damages for willful withholding of wages and benefits under Washington law. The court held that the trial court did not abuse its discretion in refusing to admit an unsigned, undated antidiscrimination policy produced for the first time at trial and facially applicable only to a related company, where there was no evidence that any employee of defendant had ever seen it. The court held that failure to produce the document in discovery was by itself an adequate basis for its exclusion, and that defendant’s excuse that “‘there was a rash of discovery’” was inadequate. Alternatively, the court held that the lack of foundation was an adequate basis for its exclusion.
5. Exclusion of Witness Not Listed in Pretrial Order
(8th Cir. 2003), affirmed the denial of a new trial in plaintiff’s assault and battery case against John Joseph, a co-worker at the FAA, for allegedly attempting to rape her in her home, harassing her at work, and pinching her buttocks at work. The court held that the lower court did not abuse its discretion in barring the testimony of a witness Joseph wanted to call, who had not been listed in the pretrial order. “Joseph also argues that, even though Warren was not on his pretrial witness list, the prospect of her testimony could not have surprised Sellers because Warren’s name was on both Sellers’s and the Secretary’s pretrial witness lists. In any event, Joseph suggests, the more appropriate remedy would have been to grant a continuance, not to exclude Warren’s testimony entirely.” Rejecting all of these arguments, the court stated:
In the present case, Joseph provided no justification for
failing to include Warren on his pretrial witness list, nor did he suggest any reason why Sellers should have expected Warren to testify on his behalf. Had Warren been identified on Joseph’s witness list, Sellers might have taken additional steps to prepare for her testimony, including, for example, taking her deposition. Warren’s anticipated testimony, as described at trial by Joseph’s attorney (i.e., that Sellers had looked for Joseph and perhaps that the two had been seen together), even if true, would not necessarily disprove or even undermine Sellers’s allegations against Joseph. Finally, as to the suggestion that a continuance would have been appropriate, it does not appear that Joseph ever asked for a continuance. Even if he had, the district court could properly have denied the request. The issue arose late in the trial, at a point where a continuance would undoubtedly have been disruptive to the proceedings and everyone involved. The district court did not abuse its discretion in refusing to allow Warren to testify on Joseph’s behalf.
Id. at 712.
M. Judge’s Comments and InvolvementAcevedo-Garcia v. Monroig, 351 F.3d 547, 561–62 (1st Cir.
2003), rejected defendants’ objections to the lower court’s comments on the evidence, and questioning of witnesses, in the presence of the jury, in large part because the trial had been long and contentious. The court explained (citations omitted):
Defendants allege that at various junctures during the trial
the district court inaccurately and prejudicially commented on the evidence, truncated the defendants’ cross-examination of several plaintiffs, and chastised defense witnesses in front of the jury. As we have previously observed, it is well settled that the trial judge “has a perfect right—albeit a right that should be exercised with care—to participate actively in the trial proper.” . . .
. . . Defendants also fail to demonstrate “serious prejudice”
arising from the court’s participation during plaintiffs’ case in chief. This was a lengthy and contentious trial featuring dozens of witnesses, numerous sidebar conferences, and a myriad of other procedural delays arising, inter alia, from the inartful labeling and introduction of exhibits, translation difficulties, and a continuing stream of objections from both parties. Under these challenging circumstances, the court’s efforts to accelerate the pace of the trial with infrequent commentary on the evidence and the occasional prodding of witnesses were amply justified and well within its discretion.
2003), affirmed the denial of a new trial in plaintiff’s assault and battery case against John Joseph, a co-worker at the FAA, for allegedly attempting to rape her in her home, harassing her at work, and pinching her buttocks at work. When the court admitted the Moore reprimand letter discussed above, it stated: “Mr. Moore obviously made a finding that there was a basis for a claim . . . .” Joseph argued that this comment was improper because “Mr. Moore’s informal investigation lacked the most fundamental protections provided by the Administrative Procedure Act, the Due Process clause, and fundamental fairness.” Id. at 710–11. The court rejected his claim, stating: “As to the district court’s comment that Moore ‘obviously made a finding that there was a basis for a claim,’ we disagree that the jury reasonably could have inferred from it that Moore had conducted a formal investigation. In any case, the district court instructed the jury several times that its comments were not evidence and should never be taken as an indication of what the verdict should be.” Id. at 711.
N. Instructions and Verdict FormsAcevedo-Garcia v. Monroig, 351 F.3d 547, 567–71 (1st Cir.
2003), rejected defendants’ argument that the jury’s award of $6,956,400 in damages included a duplicative award. The court agreed with defendants that the instructions and verdict form could have been understood by the jury as calling for duplicative awards, but also agreed with plaintiffs that the language was ambiguous and that the jury could have made one award and simply allocated it between the political discrimination and due process causes of action. The court held that defendants’ failure to raise a timely objection to cure the problem meant that they were limited to plain-error review, and that they could not show the prejudice required for relief under the rule. The court explained: “But ‘prejudice,’ as that term is incorporated into the plain error test, requires a strong causal link between the harm to the aggrieved party and the legal error. At best, defendants can only demonstrate the possibility that faulty jury instructions resulted in a duplicative damage award.” Id. at 570 (emphasis in original).
(8th Cir. 2003), upheld the lower court’s decision to submit plaintiff’s assault claim against her co-worker, and her battery claim against her co-worker, to the jury as two separate counts even though the claims arose from the flow of events during the same incident of alleged attempted rape. However, the court held that there could be only one recovery for the incident. The jury had awarded $50,000 in compensatory damages and $50,000 in punitive damages on each count, for a total of $200,000, and the court ordered that the damages for this incident be reduced to $100,000 to avoid a double recovery.
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020, 1027–
28, 92 FEP Cases 641 (9th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1602 (2004), affirmed the § 1981 jury verdict for $360,000 in compensatory damages and $2,600,000 in punitive damages, $86,000 in lost wages on the on the breach of contract claim, and a remitted $86,000 in double damages for willful withholding of wages and benefits under Washington law. The instructions and verdict form allowed the defendant President of a related company, Harry Lees, to be held jointly and severally liable with defendant on the breach of contract claim. Lees raised no objection until after the verdict had been received. The court held that this amounted to a complete waiver. The court also held that the trial court did not abuse its discretion in declining to instruct the jury on the definitions of “substantial factor” and “motivating factor,” because these are common terms that should be readily understandable by the jury. Id. at 1029. The court extensively discussed the difference between general verdicts (making legal conclusions) and special verdicts (finding facts), stated that it could find no examples of cases in which a new trial had been ordered because of inconsistencies in general verdicts (“We have found no Supreme Court or Ninth Circuit cases in which an appellate court has directed the trial court to grant a new trial due to inconsistencies between general verdicts, and Ninth Circuit precedent dictates that we cannot do so,” id. at 1035), and held that the asserted inconsistencies here did not merit a new trial, particularly when they could have been avoided by a timely objection. Id. at 1029–39. The court described the efforts that must be made to avoid overturning a verdict because of inconsistencies:
The appellants bear a high burden to establish an
irreconcilable inconsistency. The Seventh Amendment to the Constitution guarantees that “no fact tried by a jury shall be otherwise re-examined in any Court of the United States” except “according to the rules of the common law.” We must accept any reasonable interpretation of the jury’s actions, reconciling the jury’s findings “by exegesis if necessary,” Gallick v. Baltimore & O. R.R. Co., 372 U.S. 108, 119, 83 S. Ct. 659, 9 L. Ed. 2d 618 (1963); “a search for one possible view of the case which will make the jury’s finding inconsistent results in a collision with the Seventh Amendment.” Atl. & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364, 82 S.Ct. 780, 7 L.Ed.2d 798 (1962).
Id. at 1038.
Abuan v. Level 3 Communications, Inc., 353 F.3d 1158, 1172–
74, 93 FEP Cases 94 (10th Cir. 2003), affirmed the judgment for the ADEA and Title VII plaintiff. Defendant complained on appeal that the lower court erred in refusing to issue two instructions it had not presented at the instruction conference, and sought to avoid “plain error” review by arguing that it would have been futile to have offered these instructions because the lower court had previously rejected its position in denying summary judgment. The court of appeals held that defendant’s summary-judgment papers did not provide adequate notice to the court that it was seeking these instructions at trial on the merits, and the lower court’s denial of summary judgment did not indicate that seeking such instructions at trial would have been futile. The court held that review for plain error was therefore appropriate, and that failure to give the instructions was not plain error.
O. Injunctive ReliefAbuan v. Level 3 Communications, Inc., 353 F.3d 1158, 1180
–81, 93 FEP Cases 94 (10th Cir. 2003), affirmed the lower court’s ongoing injunction restraining defendant from retaliating against any of the trial witnesses. The lower court had initially restrained the defendant from retaliating against witnesses when one witness testified defendant had told her that the transcript of her testimony would go straight to the CEO. The court relied in part on defendant’s hostile litigation behavior. It explained, id. at 1181:
We see no abuse of discretion in the court’s decision to
leave the order in place. The jury found that Level 3 had retaliated against Mr. Abuan for pursuing his discrimination claims, and testimony by other Level 3 employees supported the reasonable inference that the company had retaliated against them for conduct that Level 3 viewed as contrary to its interest. In giving their testimony, witnesses may have relied on the assurance provided by the order that they would not suffer adverse employment consequences. Although Level 3 contends the order is inappropriate because the trial witnesses would have an adequate remedy at law and because the order deprives Level 3 of the benefits of conciliation, these arguments ring hollow given the unnecessarily protracted and hostile litigation in this case and the undisputed fact that Level 3 chose not to participate in conciliation after Mr. Abuan filed his Title VII charge. Accordingly, we see no ground for disturbing the district court’s decision to maintain the order.
P. Back Pay and Front Pay
1. Back Pay
Acevedo-Garcia v. Monroig, 351 F.3d 547, 571 (1st Cir. 2003),
rejected defendants’ argument that the jury’s awards for back pay were excessive because they exceeded the amounts of lost earnings that had been proven. The court explained:
As a threshold matter, the magnitude of the claimed discrepancy is sufficiently small (ranging from $2,607.94 to $10,900.00) to preclude a finding that the verdict was “grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.” . . . Furthermore, the jury was entitled to consider any secondary economic injuries flowing from the plaintiffs’ loss of earnings and employment benefits. . . . For example, nearly every claimant testified that they relied entirely on their monthly earnings to cover the expenses of running their household, meet their mortgage obligations, pay their children’s tuition, etc. As a consequence of losing their jobs, plaintiffs were forced to seek additional bank loans, dip into their savings, and make other costly financial adjustments to cover these expenses.
FEP Cases 94 (10th Cir. 2003), affirmed the two-year front-pay award for the ADEA and Title VII plaintiff, relying in part on the tone of the parties’ court filings as showing too great a level of animosity for reinstatement to be feasible. “The facts surrounding Level 3’s treatment of Mr. Abuan, together with its litigation strategy, are persuasive examples of animosity on Level 3’s part resulting from Mr. Abuan’s prosecution of this litigation.” The court added: “Even an unconditional and comparable job offer does not prevent the award of front pay in lieu of reinstatement when hostility renders reinstatement inappropriate.” The court held that the lower court abused its discretion in basing plaintiff’s rate of pay for front-pay purposes on his salary at time of layoff, and that the jury’s back pay award showed that that salary was depressed because of defendant’s discriminatory demotions of plaintiff. The court explained, id. at 1179:
We believe the court abused its discretion in failing to adjust
Mr. Abuan’s front pay to reflect the effects of Level 3’s illegal conduct on his failure to receive promotions. The jury’s award of back pay clearly reveals its finding that Mr. Abuan had suffered a loss in salary as a result of Level 3’s retaliation. The fact that his salary at the time of trial was above that of others in positions comparable to the job he held then is irrelevant if the evidence indicates he would have been in a higher position absent Level 3’s retaliation.
2003), involved claims of political discrimination and deprivation of due process brought by 82 former municipal employees. The lower court severed the plaintiffs into four groups, and tried the first 20 plaintiffs, and entered judgment on an award of $6,356,400 in compensatory damages “against a municipality whose entire annual budget in 1996-97 was only $4,529,327,” with the claims of 62 plaintiffs left to be tried. Id. at 570. The court upheld the award as not excessive. Id. at 571–72.
Bryant v. Aiken Regional Medical Centers Inc., 333 F.3d 536,
546–47, 92 FEP Cases 233 (4th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1048 (2004), affirmed the Title VII and § 1981 award of $50,000 in compensatory damages for emotional distress. The court held that plaintiff’s own testimony provided an adequate basis for the award: “We have held that a plaintiff’s testimony, standing alone, can support an award of compensatory damages for emotional distress. . . . Such testimony must ‘establish that the plaintiff suffered demonstrable emotional distress, which must be sufficiently articulated.’ . . . The testimony cannot rely on ‘conclusory statements that the plaintiff suffered emotional distress’ or the mere fact that the plaintiff was wronged. . . . Rather, it must indicate with specificity ‘how [the plaintiff’s] alleged distress manifested itself.’ . . . The plaintiff must also ‘show a causal connection between the violation and her emotional distress.’” (Citations omitted.) The court held that plaintiff’s testimony was adequate, and that it was not undermined by her decision to rely on faith and prayer instead of seeking professional therapy:
Bryant was sufficiently specific about the emotional trauma
she suffered as a result of ARMC’s actions. She explained that she was “embarrassed, frustrated, and angry,” “very disgusted,” and that she “didn’t feel very good about coming to work.” She also testified that this distress inflicted a series of specific physical ailments on her: “frequent headaches, insomnia, irregular menstrual cycles, nausea, [and] vomiting.” ARMC argues that we should discount her testimony because she did not seek medical attention for the physical symptoms she was suffering. But Bryant testified that she had always been taught to believe that “anything can be handled through prayer and faith” and to “rely on [her family] for strength.” She therefore chose to address “the signs and symptoms of what stress could do to a person” through “prayer and faith” and “through talking with [her] family.” That was an understandable way for Bryant to respond to the situation in which she found herself. It is also worth noting, as the district court observed, that Bryant “was herself a medical professional whose opinion as to her own condition the jury was entitled to consider.”
We further reject ARMC’s suggestion that the degree of
Bryant’s distress was unreasonable. She was working multiple jobs and trying to better herself by pursuing further education in her field. As ARMC’s former director of surgical services testified, Bryant was known even outside ARMC as a capable employee. But in applying for jobs that she qualified for, she was stonewalled for almost one year. Her emotional distress was a reasonable reaction to this mystifying frustration of her professional career.
Id. at 547.
Moore v. Freeman, 355 F.3d 558, 564, 9 WH Cases 2d 321
(6th Cir. 2004), an FLSA retaliation case, affirmed an award of $40,000 in emotional-distress damages, stating: “Though the award could be reasonably described as fulsome, we cannot say that it is clearly excessive. The plaintiff in this case submitted evidence that the stress of losing his job demoralized him, strained his relationships with his wife and children, and negatively affected his sleeping habits and appetite.”
(8th Cir. 2003), upheld the award of $15,000 in compensatory damages from defendant co-worker John Joseph to plaintiff for an incident in which he had pinched her buttocks, and upheld the award of $50,000 in compensatory damages and $50,000 in punitive damages for plaintiff’s assault and battery tort claims for his alleged attempt to rape her.
Eich v. Board of Regents for Central Missouri State University,
350 F.3d 752, 762–64, 92 FEP Cases 1812 (8th Cir. 2003), held that the award of $200,000 in non-economic damages was proper, and reversed the lower court’s order that plaintiff accept a remittitur to $10,000 or that there be a retrial. The court set forth plaintiff’s testimony, and held that the $200,000 award did not shock the conscience, at 763–64:
It’s very frustrating to know that that behavior I was subjected to would be allowed to happen for so long, so many times and nothing be done to correct it. They didn’t care anything about what I contributed to the university. They put in my job performance or my job performance reviews I am a valuable employee of the university but when I turned to them for help it was like I was nothing. There is just no way to really describe everything that I have been through, the volume, the intense situations, the rejection of my requests for help. There is just, there is really no words to describe how completely and totally devastating everything that has happened to me has been. It’s completely destroyed everything.
Judge Smith concurred in part and dissented in part. Id. at 764–67.
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020, 1040, 92
FEP Cases 641 (9th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1602 (2004), affirmed the § 1981 jury verdict for $360,000 in compensatory damages and $2,600,000 in punitive damages, $86,000 in lost wages on the on the breach of contract claim, and a remitted $86,000 in double damages for willful withholding of wages and benefits under Washington law. The verdict form for compensatory damages did not distinguish between economic and non-economic damages, and defendant challenged the award for emotional distress. The court rejected defendants’ contention that the jury could not award damages for a discretionary annual $25,000 bonus:
We hold that the jury reasonably could have awarded bonuses for these years; the evidence in the record demonstrates that in 1998, the year before he was terminated, Zhang exceeded his performance goal and had the highest sales of any American Gem employee. The jury reasonably could have concluded that Zhang would have continued his outstanding work performance, entitling him to bonuses in each of the following four years and an additional $100,000 in economic damages. Thus the jury could have awarded up to $236,845 in economic damages, leaving only $123,155 in compensation for emotional distress.
In any event, the court held, the damages for emotional distress would be proper regardless of whether they amounted to $223,155 or $123,155. The court rejected defendants’ argument that emotional distress must be supported by objective evidence and held that a plaintiff’s unsupported testimony alone can be sufficient. In the case at bar, plaintiff’s testimony was enough to support substantial damages:
Zhang’s testimony alone is enough to substantiate the
jury’s award of emotional distress damages. Zhang testified that the job at American Gem was “my dream, working in this country,” and that when he was terminated, he was “troubled,” and “couldn’t believe” it. He testified that when American Gem sent letters to his suppliers stating that he had been terminated, the Chinese version of the letters made it seem like “I was either criminal or something very bad.” He stated that the termination “very, very hurt my dignity and reputation,” because the letters went to suppliers in Dalian, China, his hometown, and “people think there must be something wrong, because Wei is doing something wrong in the States.” He testified that people from China called him, concerned about the letters, and that American Gem “ruined my future business…. Because doing business in China, your reputation and your credibility is the key.” Despite the fact that his testimony was hampered by language and translation problems, the jury obviously could have gleaned that he was greatly hurt and humiliated by his termination and the manner in which it was carried out. Under Passantino, this testimony is more than sufficient to support a substantial compensatory damage award for emotional distress. The award of compensatory damages was not “grossly excessive or monstrous.” . . . The district court committed no error, let alone a clear abuse of discretion, in denying the motion for a new trial on this basis.
Id. at 1040–41 (citation omitted).
R. Punitive Damages
Bryant v. Aiken Regional Medical Centers Inc., 333 F.3d 536,
548–49, 92 FEP Cases 233 (4th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1048 (2004), reversed the Title VII and § 1981 award of $210,000 in punitive damages. The court held that defendant had made a good-faith attempt to comply with the law:
. . . ARMC had an extensively implemented organization-wide Equal Employment Opportunity Policy. That policy, a version of which was included in the employee handbook, stated that “all persons are entitled to equal employment opportunity regardless of race” and that “it is and shall continue to be our policy to provide promotion and advancement opportunities in a non- discriminatory fashion.” ARMC also created a grievance policy encouraging employees to bring forward claims of harassment, discrimination, or general dissatisfaction, and employees were explicitly informed that they would not be retaliated against for making a complaint. There was also a carefully developed diversity training program that included formal training classes and group exercises for hospital employees. And ARMC voluntarily monitored departmental demographics as part of an ongoing effort to keep the employee base reflective of the pool of potential employees in the area. These widespread anti-discrimination efforts, the existence of which appellee does not dispute, preclude the award of punitive damages in this case.
2. State Farm Auto Insurance Co. v. Campbell
State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123
S. Ct. 1513, 155 L. Ed. 2d 585 (2003), reversed in a 6-3 decision the award of $145 million in punitive damages for bad-faith failure to defend an accident claim, where plaintiffs’ post-remittitur award for compensatory was only $1 million. The Court held that the award was excessive and violated the Due Process Clause. Discussing its concerns with punitive damage awards, the Court stated:
Our concerns are heightened when the decision maker is presented . . . with evidence that has little bearing as to the amount of punitive damages that should be awarded. Vague instructions, or those that merely inform the jury to avoid “passion or prejudice” . . . do little to aid the decision maker in its task of assigning appropriate weight to evidence that is relevant and evidence that is tangential or only inflammatory.
Id. at 1520. The Court elaborated on the three standards it had set forth in BMW v. Gore, 517 U.S. 559 (1996).
The first factor is the degree of reprehensibility of the
defendant’s conduct. The Court found that defendant’s alteration of records to make its insureds appear less culpable, and its false pretrial assurances to its insureds that their assets would be safe if the case went to trial (contrasting with its post-trial statement that they should put their house up for sale), and the evidence of a pattern of such conduct, justified an award of punitive damages even after taking into account the amount of the compensatory damages. Id. at 1521. However, this is only economic harm. The Court took sharp exception to plaintiffs’ reliance on evidence that this conduct was part of a nationwide pattern, and that this case was an occasion to punish State Farm for the nationwide pattern, particularly in light of the fact that “much of the out-of-state conduct was lawful where it occurred.” Id. at 1522. There was no specific instruction that the evidence could be considered only for background purposes:
Lawful out-of-state conduct may be probative when it demonstrates the deliberateness and culpability of the defendant’s action in the State where it is tortious, but that conduct must have a nexus to the specific harm suffered by the plaintiff. A jury must be instructed, furthermore, that it may not use evidence of out-of-state conduct to punish a defendant for action that was lawful in the jurisdiction where it occurred.
Id. at 1522–23 (citation omitted). The Court held that there was no link between the award and the injury for which the award was made, and that the absence of such a link created the risk that multiple awards of punitive damages might be made for the same conduct:
For a more fundamental reason, however, the
Utah courts erred in relying upon this and other evidence: The courts awarded punitive damages to punish and deter conduct that bore no relation to the Campbells’ harm. A defendant’s dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages. A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business. Due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties’ hypothetical claims against a defendant under the guise of the reprehensibility analysis, but we have no doubt the Utah Supreme Court did that here. 65 P.3d at 1149 (“Even if the harm to the Campbells can be appropriately characterized as minimal, the trial court’s assessment of the situation is on target: ‘The harm is minor to the individual but massive in the aggregate’ “). Punishment on these bases creates the possibility of multiple punitive damages awards for the same conduct; for in the usual case nonparties are not bound by the judgment some other plaintiff obtains. Gore, supra, at 593, 116 S.Ct. 1589 (BREYER, J., concurring) (“Larger damages might also ‘double count’ by including in the punitive damages award some of the compensatory, or punitive, damages that subsequent plaintiffs would also recover”).
Id. at 1523. The Court held that, for the same reasons, the award could not be justified on the ground that the defendant was a recidivist. While recidivism justifies a higher award, and while recidivism need not be shown by identical situations, “the Utah court erred here because evidence pertaining to claims that had nothing to do with a third-party lawsuit was introduced at length.” The Court said that these problems were exacerbated by the introduction of “even more tangential” evidence on the personal life of an employee and on the corruption of employees by the practices challenged. Id. “In this case, because the Campbells have shown no conduct by State Farm similar to that which harmed them, the conduct that harmed them is the only conduct relevant to the reprehensibility analysis.” Id. at 1524.
The second Gore factor is the ratio between harm or potential
harm to the plaintiff and the punitive damages award. The Court refused to apply a bright-line rule, but stated:
Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. . . . The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing for sanctions of double, treble, or quadruple damages to deter and punish. . . . While these ratios are not binding, they are instructive. They demonstrate what should be obvious: Single-digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1 . . . or, in this case, of 145 to 1.
Id. at 1524 (citations omitted). The Court stated that there may be exceptions justifying higher awards:
Nonetheless, because there are no rigid benchmarks that a
punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where “a particularly egregious act has resulted in only a small amount of economic damages.” Ibid.; see also ibid. (positing that a higher ratio might be necessary where “the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine”). The converse is also true, however. When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. The precise award in any case, of course, must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff.
In sum, courts must ensure that the measure of
punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered. In the context of this case, we have no doubt that there is a presumption against an award that has a 145-to-1 ratio. The compensatory award in this case was substantial; the Campbells were awarded $1 million for a year and a half of emotional distress. This was complete compensation. The harm arose from a transaction in the economic realm, not from some physical assault or trauma; there were no physical injuries; and State Farm paid the excess verdict before the complaint was filed, so the Campbells suffered only minor economic injuries for the 18-month period in which State Farm refused to resolve the claim against them. The compensatory damages for the injury suffered her, moreover, likely were based on a component which was duplicated in the punitive award. Much of the distress was caused by the outrage and humiliation the Campbells suffered at the actions of their insurer; and it is a major role of punitive damages to condemn such conduct. Compensatory damages, however, already contain this punitive element. See Restatement (Second) of Torts § 908, Comment c, p. 466 (1977) (“In many cases in which compensatory damages include an amount for emotional distress, such as humiliation or indignation aroused by the defendant’s act, there is no clear line of demarcation between punishment and compensation and a verdict for a specified amount frequently includes elements of both”).
Id. at 1524–25. The Court held that the defendant’s wealth does not justify deviation from these standards.
The third Gore standard is the relationship between the punitive
damages award and civil penalties authorized or imposed in comparable cases. The Court stated that a criminal penalty shows that the state regards the conduct as serious, but that it has less utility than other factors in determining the amount of the award. Id. at 1526.
3. Punitive-Damage Amounts After State Farm: Civil Rights Cases
cert. denied, __ U.S. __, 72 WL 717202, 72 USLW 3428, 72 USLW 3629, 72 USLW 3632 (U.S. April 5, 2004) (No. 03–898), a § 1983 case challenging adverse employment actions motivated by political discrimination, the court relied on Campbell to uphold the jury’s award of $250,000 in punitive damages “given the reprehensibility of defendants’ conduct and the resultant injuries inflicted on Rivera and his family,” although the employee plaintiff received only $26,400 in economic damages and $125,000 in compensatory damages.
Williams v. Kaufman County, 352 F.3d 994, 1016 (5th Cir. 2003),
a case involving illegal strip searches of individuals without individualized probable cause, affirmed an award of $100 in nominal damages and $15,000 in punitive damages for each plaintiff. The court stated that the ratio between compensatory and punitive damages is less important in § 1983 civil rights cases than in other cases, and stated that ratios between punitive and compensatory damages do not apply to cases in which nominal damages are awarded.
Lincoln v. Case, 340 F.3d 283, 293 (5th Cir. 2003), a Fair
Housing act case, affirmed the reduction of a punitive-damage award of $100,000 to $55,000 (the amount of the maximum civil penalty for first-time findings of violations) where the award of compensatory damages was only $500. The court rejected the argument that the $500 award was for nominal damages, and held that it was make-whole relief. The court’s discussion of reprehensibility emphasized that greater punitive damages are appropriate where there is a pattern of wrongdoing, or where the defendant falsely stated the apartment was unavailable, or where the defendant has taken advantage “of someone who is relatively unsophisticated or financially vulnerable.” (Citation omitted.) False statements to employees are very common, but under Weaver may constitute the “trickery or deceit” that will justify a higher award of punitive damages. As to the ratio, the court squarely rejected the argument that that 10 to 1 is the highest permissible ratio.
Case argues that any ratio of compensatory damages to punitive damages greater than 10:1 requires remittitur. We disagree. In Watson, this Court stated that “[t]here is no particular disparity between punitive and actual damages that will automatically result in our declaring a punitive damages award unconstitutional.” . . . Although the Supreme Court recently reminded lower courts of appeal that “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process,” it once again declined to impose “a bright- line ratio which a punitive damages award cannot exceed.” Campbell, 123 S. Ct. at 1524. As we explained in Watson, the ratio merely gives the Court “an idea whether the size of the award is suspect.”
(Citations omitted.) The court thought that higher ratios may be more common in housing than in employment cases, because the actual injuries can be low in a housing case.
Bell v. Clackamas County, 341 F.3d 858, 867–68, 92 FEP Cases
879 (9th Cir. 2003), reversed the trial court’s reduction of 42 U.S.C. § 1981 and § 1983 punitive-damage awards against defendant deputies who were fellow employees of the plaintiff, and who had retaliated against him for his complaints of racial discrimination. The court remanded the punitive damages with instructions that the trial court evaluate the individual reprehensibility of each individual defendant’s conduct, and that it consider evidence of each defendant’s financial net worth to the extent that the deputy would not be reimbursed by the County for the punitive damage award against him.
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020, 1043–
44, 92 FEP Cases 641 (9th Cir. 2003), cert. denied, __ U.S. __, 124 S. Ct. 1602 (2004), an individual Title VII and § 1981 case involving anti-Asian discrimination, affirmed the award of $2.6 million in punitive damages, $360,000 in compensatory damages for emotional distress, and $193,000 in lost wages and wages unlawfully withheld. The court observed that intentional racial discrimination was far more reprehensible than the mere economic harm involved in BMW v. Gore and Campbell. It added: “Racial discrimination often results in large punitive damage awards.” Id. at 1043 (citations omitted). The court found that the seven-to-one ratio was permissible. Id. at 1044. The court refused to consider the $300,000 punitive-damages cap in the Civil Rights Act of 1991 as a civil penalty limiting the permissible size of the punitive-damages award under § 1981 because Congress had refused to cap such damages under § 1981. It held that the ratio between the $2.6 million punitive-damages award and the $300,000 cap was reasonable. Id. at 1044–45.
2003), cert. dismissed, 124 S. Ct. 1168 (2004), affirmed an award of $500,000 in compensatory damages and $ 2 million in punitive damages to each plaintiff Caucasian librarian harmed by racial discrimination in violation of § 1983. As to reprehensibility, the court stated:
Appellants’ wrongdoing was more than mere accident.
There was evidence that, in the face of repeated warnings, Appellants intentionally discriminated against the Librarians on the basis of race and used trickery and deceit to cover it up under the guise of a “reorganization.” Furthermore, Appellants intentionally discriminated against the Librarians with full knowledge of recent cases of employment discrimination brought by Caucasian employees against other Fulton County officials which resulted in jury verdicts for the plaintiffs or settlements. A reasonable jury could have concluded from the evidence that Appellants knew that transferring the Librarians on the basis of race was illegal, were warned not to make the transfers, and knew that other Fulton County officials had been caught and punished for making employment decisions on the basis of race; yet Appellants intentionally discriminated against the Librarians and concocted the “reorganization” plan to hide their discriminatory motives. Repeatedly, courts have found intentional discrimination to be reprehensible conduct under Gore ‘s first guidepost.
Id. at 1361 (citation omitted). The court found the 4:1 ratio to be permissible notwithstanding the large compensatory-damage awards, in light of the reprehensibility of the conduct. It rejected the argument that the $300,000 damages cap for Title VII claims should limit the damages awarded under § 1983. The court emphasized that Congress had refused to apply the same caps to § 1983 claims despite the opportunity to do so. “Furthermore, although the punitive damages awarded here are more than the damages available under Title VII for analogous conduct, the difference is not enough, by itself, to suggest that the punitive damages award violates due process.” Id. at 1362.
4. Punitive-Damage Amounts After State Farm: Other Cases
DiSorbo v. Hoy, 343 F.3d 172 (2d Cir. 2003), reversed a
$400,000 compensatory-damage award to the female plaintiff for her serious injuries, holding that $250,000 would be adequate, and reversed the $1.275 million punitive-damages award and held that a reasonable amount would be $75,000 based on other awards, because only one police officer beat the plaintiff woman, and he stopped beating and choking her when she was about to lose her vision.
Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 678
(7th Cir. 2003) (Posner, J.), upheld an award of $186,000 apiece, and $5,000 in compensatory damages apiece, to two plaintiffs bitten by bedbugs. The court held that one of the factors supporting the award was the zealous nature of the defense. It explained:
And still today one function of punitive-damages awards is to relieve the pressures on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes. An example is deliberately spitting in a person’s face, a criminal assault but because minor readily deterrable by the levying of what amounts to a civil fine through a suit for damages for the tort of battery. Compensatory damages would not do the trick in such a case, and this for three reasons: because they are difficult to determine in the case of acts that inflict largely dignitary harms; because in the spitting case they would be too slight to give the victim an incentive to sue, and he might decide instead to respond with violence—and an age-old purpose of the law of torts is to provide a substitute for violent retaliation against wrongful injury—and because to limit the plaintiff to compensatory damages would enable the defendant to commit the offensive act with impunity provided that he was willing to pay, and again there would be a danger that his act would incite a breach of the peace by his victim.
When punitive damages are sought for billion-dollar oil
spills and other huge economic injuries, the considerations that we have just canvassed fade. As the Court emphasized in Campbell, the fact that the plaintiffs in that case had been awarded very substantial compensatory damages—$1 million for a dispute over insurance coverage—greatly reduced the need for giving them a huge award of punitive damages ($145 million) as well in order to provide an effective remedy. Our case is closer to the spitting case. The defendant’s behavior was outrageous but the compensable harm done was slight and at the same time difficult to quantify because a large element of it was emotional. And the defendant may well have profited from its misconduct because by concealing the infestation it was able to keep renting rooms. Refunds were frequent but may have cost less than the cost of closing the hotel for a thorough fumigation. The hotel’s attempt to pass off the bedbugs as ticks, which some guests might ignorantly have thought less unhealthful, may have postponed the instituting of litigation to rectify the hotel’s misconduct. The award of punitive damages in this case thus serves the additional purpose of limiting the defendant’s ability to profit from its fraud by escaping detection and (private) prosecution. If a tortfeasor is “caught” only half the time he commits torts, then when he is caught he should be punished twice as heavily in order to make up for the times he gets away.
Finally, if the total stakes in the case were capped at
$50,000 (2 x [$5,000 + $20,000]), the plaintiffs might well have had difficulty financing this lawsuit. It is here that the defendant’s aggregate net worth of $1.6 billion becomes relevant. A defendant’s wealth is not a sufficient basis for awarding punitive damages. . . . That would be discriminatory and would violate the rule of law, as we explained earlier, by making punishment depend on status rather than conduct. Where wealth in the sense of resources enters is in enabling the defendant to mount an extremely aggressive defense against suits such as this and by doing so to make litigating against it very costly, which in turn may make it difficult for the plaintiffs to find a lawyer willing to handle their case, involving as it does only modest stakes, for the usual 33–40 percent contingent fee.
In other words, the defendant is investing in developing a
reputation intended to deter plaintiffs. It is difficult otherwise to explain the great stubbornness with which it has defended this case, making a host of frivolous evidentiary arguments despite the very modest stakes even when the punitive damages awarded by the jury are included.
As a detail (the parties having made nothing of the point), we
note that “net worth” is not the correct measure of a corporation’s resources. It is an accounting artifact that reflects the allocation of ownership between equity and debt claimants. A firm financed largely by equity investors has a large “net worth” (= the value of the equity claims), while the identical firm financed largely by debt may have only a small net worth because accountants treat debt as a liability.
Id. at 676–78 (citations omitted).
5. Waiver of Challenge to Amount
Local Union No. 38, Sheet Metal Workers’ Intern. Ass’n, AFL-
CIO v. Pelella, 350 F.3d 73, 89–90, 173 LRRM 2673, 173 LRRM 2843 (2nd Cir. 2003), held that the LMRDA defendant waived its right to challenge an award of $25,000 in punitive damages, where only $1 was awarded in nominal damages, because the union had not raised the issue in the lower court. The court held that it made no difference that State Farm was not decided until the appeal, because State Farm discussed precedents predating the judgment as well as later precedents.
S. The Damages Caps in the 1991 ActAbuan v. Level 3 Communications, Inc., 353 F.3d 1158, 1170, 93
FEP Cases 94 (10th Cir. 2003), affirmed the judgment for the ADEA and Title VII plaintiff. The court rejected defendant’s argument that allowing liquidated damages under the ADEA, on top of a full $300,000 recovery for compensatory damages under Title VII, violated the 1991 Act’s caps on damages.
T. Fees and ExpensesScarborough v. Principi, __ U.S. __, 124 S. Ct. 1856, 1870, 93
FEP Cases 1096 (2004), held that a timely filed EAJA fee application may be amended, out of time, to allege ‘that the position of the United States was not substantially justified,’” and that the amendment relates back to the original filing. Justice Thomas, joined by Justice Scalia, dissented. Id. at 1871–73.
Moore v. Freeman, 355 F.3d 558, 566, 9 WH Cases 2d 321 (6th
Cir. 2004), an FLSA retaliation case, reversed the lower court’s five-sixths reduction in plaintiff’s fee request, stating:
In this case, the district court did not believe the plaintiff had
adequately separated work conducted on successful claims from work conducted on unsuccessful claims. However, the district court did not provide a clear explanation of the hours it excluded because the plaintiff did not specify the claims to which they related. Instead, it simply reduced the amount of attorney’s fees Moore requested by five-sixths, without considering the extent to which the claims were interrelated or discussing how successful Moore was in the context of the case overall. In doing so, the district court abused its discretion.
Staton v. Boeing Co., 327 F.3d 938 ( 9th Cir. 2003), replaced the former opinion at 313 F.3d 447, 90 FEP Cases 641 ( 9th Cir. 2002). The court reversed the grant of final approval to a settlement for several reasons. One reason was the court’s concern about the settlement’s provisions on attorneys’ fees. The court stated at 945–46:
The parties negotiated the amount of attorneys’ fees as
part of the settlement between the class and the Company. They included as a term of the proposed decree the amount of attorneys’ fees that class counsel would receive. The action falls under the terms of two fee-shifting statutes. By negotiating fees as an integral part of the settlement rather than applying to the district court to award fees from the fund created, Boeing and class counsel employed a procedure permissible if fees can be justified as statutory fees payable by the defendant.
Boeing and class counsel did not, however, seek to justify
the attorneys’ fees on this basis but instead made a hybrid argument: They maintained that the award is an appropriate percentage of a putative “common fund” created by the decree even though common funds, as opposed to statutory fee-shifting agreements, usually do not isolate attorneys’ fees from the class award before an application is made to the court. The district court approved the fee on that common fund basis.
The incorporation of an amount of fees calculated as if
there were a common fund as an integral part of the settlement agreement allows too much leeway for lawyers representing a class to spurn a fair, adequate and reasonable settlement for their clients in favor of inflated attorneys’ fees. We hold, therefore, that the parties to a class action may not include in a settlement agreement an amount of attorneys’ fees measured as a percentage of an actual or putative common fund created for the benefit of the class. Instead, in order to obtain fees justified on a common fund basis, the class’s lawyers must ordinarily petition the court for an award of fees, separate from and subsequent to settlement.
To assess the reasonableness of the attorneys’ fees
awarded by the decree, the district court compared the amount of the fees to the amount of the putative common fund and determined what percentage of this fund the fee amount constituted. This comparison is a permissible procedure when a court is determining the reasonableness of fees taken from a genuine common fund. In conducting the comparison, however, the district court included in the value of the putative fund the parties’ inexact, and quite probably inflated, estimate of the value of the proposed injunctive relief. Such relief should generally be excluded from the value of a common fund when calculating the appropriate attorneys’ fees award, as the benefit of that relief to the class members is most often not sufficiently measurable. The fact that counsel obtained injunctive relief in addition to monetary relief for their clients is, however, a relevant circumstance to consider in determining what percentage of the fund is reasonable as fees. We hold further, therefore, that parties ordinarily may not include an estimated value of undifferentiated injunctive relief in the amount of an actual or putative common fund for purposes of determining an award of attorneys’ fees.
The court held that “there is no preclusion on recovery of common fund fees where a fee-shifting statute applies.” Id. at 966. It cited the following authority:
See Brytus v. Spang & Co., 203 F.3d 238, 246-247 (3d Cir.
2000) (holding that common fund funds can be appropriate in both settled and litigated cases where statutory fees are available); Cook v. Niedert, 142 F.3d 1004 (7th Cir. 1998) (approving fees measured by common fund rather than statutory principles where statutory fees were available); Florin v. Nationsbank, 34 F.3d 560, 564 (7th Cir. 1994) (common fund principles “properly control a case which is initiated under a statute with a fee shifting provision, but is settled with the creation of a common fund.”); Skelton v. General Motors Corp., 860 F.2d 250, 256 (7th Cir. 1988) (“[W]hen a settlement fund is created in exchange for release of the defendant’s liability both for damages and for statutory attorneys’ fees, equitable fund principles must govern the court’s award of the attorneys’ fees.”); 1 Mary Francis Derfner and Arthur D. Wolf, Court Awarded Attorney Fees, ¶ 2.05 at 2-81 (2001) ( “[T]he mere fact that a fee-shifting statute is implicated in the action does not ensure that fees will be awarded under that statute…. [F]ees may be taxed against the [settlement] fund under the common fund doctrine.” (citing Skelton and Florin )).
Id. at 966 n.18. The court explained the nature of such a recovery: “In contrast to fee-shifting statutes, which enable a prevailing party to recover attorneys’ fees from the vanquished party, the common fund doctrine permits the court to award attorneys’ fees from monetary payments that the prevailing party recovered in the lawsuit. Put another way, in common fund cases, a variant of the usual rule applies and the winning party pays his or her own attorneys’ fees; in fee-shifting cases, the usual rule is rejected and the losing party covers the bill.” Id. at 967. The court noted that a risk multiplier is allowed in common-fund fee awards, and stated that the Ninth Circuit has generally determined that a reasonable fee would constitute 25% of a common fund. Id. at 968. It explained the operation of a common-fund recovery in a fee-shifting case:
Application of the common fund doctrine to class action
settlements does not compromise the purposes underlying fee-shifting statutes. In settlement negotiations, the defendant’s determination of the amount it will pay into a common fund will necessarily be informed by the magnitude of its potential liability for fees under the fee-shifting statute, as those fees will have to be paid after successful litigation and could be treated at that point as part of a common fund against which the attorneys’ fees are measured. Conversely, the prevailing party will expect that part of any aggregate fund will go toward attorneys’ fees and so can insist as a condition of settlement that the defendants contribute a higher amount to the settlement than if the defendants were to pay the fees separately under a fee-shifting statute.
Id. at 968–69 (footnote omitted). However, “if the parties invoke common fund principles, they must follow common fund procedures and standards, designed to protect class members when common fund fees are awarded.” Id. at 969. The court elaborated:
We hold, therefore, that in a class action involving both a
statutory fee-shifting provision and an actual or putative common fund, the parties may negotiate and settle the amount of statutory fees along with the merits of the case, as permitted by Evans. In the course of judicial review, the amount of such attorneys’ fees can be approved if they meet the reasonableness standard when measured against statutory fee principles. Alternatively, the parties may negotiate and agree to the value of a common fund (which will ordinarily include an amount representing an estimated hypothetical award of statutory fees) and provide that, subsequently, class counsel will apply to the court for an award from the fund, using common fund fee principles. In those circumstances, the agreement as a whole does not stand or fall on the amount of fees. Instead, after the court determines the reasonable amount of attorneys’ fees, all the remaining value of the fund belongs to the class rather than reverting to the defendant.
Id. at 972. Judge Trott dissented. Id. at 979.
U. SanctionsTenkku v. Normandy Bank, 348 F.3d 737, 742, 92 FEP Cases
1509 ( 8th Cir. 2003), affirmed the award of $1,305.56 in discovery sanctions against plaintiff, and in favor of the third party FDIC for pursuing a frivolous motion to compel the FDIC’s production of a full copy of its report instead of the redacted copy containing the FDIC’s criticism of her job performance. The court noted that plaintiff could not identify any relevant evidence not in the redacted version, and stated that her own motion for sanctions a day after demanding the full copy was an example of a pattern of abusive behavior. It held that no hearing was necessary. The court modified the order to direct the sanction against plaintiffs’ counsel, not the plaintiff.
V. TaxesThe Supreme Court has granted certiorari in two cases, C.I.R. v.
Banks, No. 03-892, and C.I.R.v. Banaitas, No. 03-907, to decide whether attorney’s fees under a contingency retainer are taxable to the plaintiff as well as the attorney.
I. Special Problems Involving State and Local Governmental Employers
A. First Amendment: Need to Specify the Protected Speech
Foley v. University of Houston System, 355 F.3d 333, 342, 92
FEP Cases 1839 (5th Cir. 2003), rejected plaintiff Hutto’s First Amendment claim because she failed to specify the speech she contended was protected, thus depriving the court of the ability to consider its “content, context, and form.”
B. Eleventh Amendment ImmunityMartin v. Alamo Community College District, 353 F.3d 409,
413–14, 15 AD Cases 160 (5th Cir. 2003), vacated the dismissal of plaintiff’s ADA lawsuit and held that defendant waived its right to argue Eleventh Amendment immunity by briefing the question inadequately on appeal.
C. Fourteenth AmendmentThomas v. Town of Hammonton, 351 F.3d 108, 113, 92 FEP
Cases 1701 (3rd Cir. 2003), rejected plaintiff’s claim that her termination from her at-will position violated the Fourteenth Amendment because it occurred without the procedural protections of notice and a hearing provided by state law. The court held that granting such protections does not create a property interest in an at-will employee.
II. Special Problems with the Federal Government as Employer
Taylor v. Small, 350 F.3d 1286, 92 FEP Cases 1785, 15 AD
Cases 25 (D.C. Cir. 2003), held that a Federal employee who is not a beneficiary of a Federal program may not sue under § 504 of the Rehabilitation Act.
2004), reversed the dismissal as time-barred of plaintiff’s Federal-sector ADEA claim. The court held that when a federal employee exercises the option under 29 U.S.C. §§ 633a(c) and (d) to bypass the administrative process and sue directly, the FLSA limitations period applies to the claim. The court disagreed with the Eleventh Circuit’s decision in Edwards v. Shalala, 64 F.3d 601, 606 (11th Cir. 1995), that the ninety-day Title VII limitations period should be used.
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