Heyl Royster

 


Heyl Royster

 

Recent Developments In The Courts

1/11/13

Smith v. Bray: Liability Under §1981 Extended to Subordinate That Causes Adverse Employment Action

Courts have long held there is no individual liability under Title VII. To avoid this limitation, plaintiffs have sued decision-makers and employers under 42 U.S.C. §1981. Section 1981 protects the making, performance, modification and termination of contracts and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship. Plaintiffs asserting discrimination claims often rely on both Title VII and §1981. Claims under §1981 and Title VII for race discrimination are generally analyzed in the same manner. One major distinction between the two statutes is that individuals are not liable under Title VII; individuals can, however, be liable under §1981.

In a case of first impression, the Seventh Circuit recently extended liability under §1981 to subordinate employees. In Smith v. Bray, 681 F.3d 888 (7th Cir. 2012), the employer was bankrupt and discharged from any liability. The plaintiff proceeded to sue her immediate supervisor (who settled and was not party to the appeal) and the employer's human resource manager. The issue was whether a non-decisionmaker subordinate could be individually liable.

The court noted that it has imposed liability on an employer under the cat's paw theory when a decision-maker relies on an unlawfully biased recommendation from a subordinate to take an adverse employment action against the plaintiff. The court then reasoned that if an employer can be liable under a cat's paw theory, the subordinate who gave the biased recommendation can also be liable. Thus, according to the court, the "cat's paw theory can support individual liability under §1981 for a subordinate employee who intentionally causes a decision-maker to take adverse action against another employee in retaliation for statutorily protected activity."

Although the court affirmed summary judgment for the human resources manager because there was no evidence or retaliatory motivation, this case notably extends individual liability to subordinate non-decisionmakers.

Cortezano v. Salin Bank & Trust Company: Seventh Circuit Holds Title VII Does Not Protect Against Discrimination Based on a Spouse's Alienage

Kristi Cortezano brought action against Salin Bank, her former employer, alleging that they violated Title VII, specifically accusing the bank of terminating her based on the national origin of her husband, Javier, a Mexican citizen whose presence in the United States was unauthorized. Javier had illegally entered and remained in the United States in 1997, and the two married in 2001. In March of 2007, Salin Bank hired Kristi, and she was promoted to sales manager less than one month later. Around the same time, Javier started his own business, and the couple opened a joint account at the bank. The business soon failed, and Javier returned to Mexico to pursue American citizenship. Kristi requested a two week vacation to be with Javier in Mexico, and in doing so, revealed her husband's status as a former undocumented immigrant to her supervisor at the bank. That supervisor in turn contacted the bank's security officer and told him that Kristi had opened a joint bank account with a known undocumented immigrant. The bank terminated Kristi as a result of their suspicions that she had helped Javier open a bank account using fraudulent documents. The district court granted Salin Bank's motion for summary judgment, finding that the plaintiff failed to establish that her firing was based on an impermissible reason. The plaintiff appealed.

In order to claim employment discrimination under Title VII, the plaintiff first had to show that she belonged to a protected class. She claimed that she was discriminated against because of her marriage to a Mexican national whose residence in the United States was unauthorized. The Seventh Circuit has not yet ruled on whether discrimination based on the race or national origin of a person's spouse is protected under Title VII. Even if this spousal connection is protected under Title VII, the Court held in Cortezano v. Salin Bank & Trust Co., 680 F.3d 936 (7th Cir. 2012) that it was clear that Kristi's termination was based on her husband's undocumented status. The Court found no evidence that the termination had to do with the plaintiff's husband's Mexican heritage. There is, of course, good reason that the bank would want to avoid holding accounts for undocumented immigrants. The bank has legitimate concerns regarding bank fraud, and has the business-oriented concern of becoming known for catering to undocumented immigrants.

Further, the Seventh Circuit held that Title VII does not protect against alienage-based discrimination. The protections for "national origin" might have originally been meant to encompass alienage, but the US Supreme Court has since held otherwise. In Espinoza v. Farah Mfg. Co., 414 U.S. 86, 94 (1973), the Supreme Court held that "national origin" was limited to "the country from which you or your forebears came." The Court ruled that nothing in Title VII "makes it illegal to discriminate on the basis of citizenship or alienage." Congress took steps to limit the scope of the Espinoza holding when it enacted 8 U.S.C. 1324b, but in doing so explicitly excluded unauthorized aliens from this protection. In effect, any discrimination suffered by the plaintiff was the result of her marriage to an unauthorized alien, and Title VII offers no protection against this.

Gordon v. Fedex Freight, Inc.: Seventh Circuit Holds Employee Did Not Establish a Retaliatory Discharge Claim

The plaintiff began working as a clerk at FedEx's East Moline, Illinois facility on September 4, 2006, and was terminated on November 11, 2008. On October 14, 2008, she tripped and fell at the facility, injuring her wrist. She reported the injury to her supervisor, and a FedEx employee took her to the hospital. The plaintiff was discharged from the hospital with a bruise, for which the hospital gave her a sling. Her supervisor told her that, despite the hospital's diagnosis, he believed she would be out of work for a long time, but the plaintiff responded that she doubted her recovery would take long. The next day, the plaintiff called her supervisor and told him she planned to seek additional treatment from her family doctor. That same afternoon, her supervisor met with his bosses regarding a system-wide downsizing, and they decided to eliminate the plaintiff's position, the only full-time position eliminated at the East Moline facility. Shortly thereafter, the plaintiff's doctor determined that the plaintiff's wrist was broken in three places. She returned to work on November 11, 2008, at which time she was informed that she was being terminated due to workforce reduction. The plaintiff brought an action for wrongful termination, which FedEx successfully removed to federal court.

The Seventh Circuit in Gordon v. Fedex Freight, Inc., 674 F.3d 769 (7th Cir. 2012) held that, though an at-will employee can be terminated for any, or no, reason, it is unlawful in Illinois to terminate a worker for exercising his or her rights under the Illinois Workers' Compensation Act ("IWCA"). To maintain a claim for retaliatory discharge, an employee must prove "(1) his status as an employee of the defendant before injury; (2) his exercise of a right granted by the Workers' Compensation Act; and (3) a causal relationship between his discharge and the exercise of his right." The only issue in the matter brought by Ms. Gordon is whether she can establish that she exercised a right guaranteed by the IWCA, and that the causal relationship exists between her exercise of that right and her termination.

In Illinois, the Seventh Circuit reasoned, one may exercise rights under the IWCA in several ways. First, they may file a workers' compensation claim. Here, the plaintiff did so only after her termination, and therefore, logically this filing could not have caused, or had any effect on, her termination. However, if it is determined that termination is preemptive, and a workers' compensation claim consequently could not have been filed before termination, the tort may still stand. The district court in this matter held that the plaintiff did not meet her burden because FedEx had decided to terminate her position before they knew the extent of her injuries. Additionally, the plaintiff had never expressed an intent to file a workers' compensation claim. As such, the plaintiff's filing of, or plans to file, a workers' compensation claim could not have precipitated termination. Importantly, IWCA protection is also granted to an employee simply when that employee seeks medical attention. Under Hinthorn v. Roland's of Bloomington, Inc., 519 N.E.2d 909 (1988), seeking medical treatment is the first step in exercising rights under the IWCA, as the Act is intended to ensure availability of medical treatment to injured workers, and to shift the financial burden to employers. Consequently, the plaintiff's superiors at FedEx were necessarily aware of her intentions to seek medical treatment, and she therefore established a causal connection between the plaintiff's protected activities and her termination.

Regarding the causal connection, the Seventh Circuit made clear that Illinois does not employ the McDonnell Douglas burden-shifting framework commonly applied in federal retaliation cases. Instead, the plaintiff must "affirmatively show that the discharge was primarily in retaliation for her exercise of a protected right." The plaintiff must therefore proffer sufficient evidence from which a reasonable jury could infer that the termination was the result of improper motivation. Only after this burden is met is the defendant required to provide a legitimate reason for the termination. In the present matter, FedEx argued that the causal link was based on inadmissible rumor and hearsay, and the Seventh Circuit agreed. Still, the Court made clear that temporal proximity is an important "evidentiary ally" of the plaintiff, but alone it is insufficient to create a genuine issue of material fact.

King v. Acosta Sales and Marketing, Inc.:
the Seventh Circuit Granted Summary Judgment on a Sexual Harassment Claim Because There Was No Actionable Harassment in the 300 Days Before the Discrimination Charge Was Filed

The defendant, a food broker representing producers that sell their goods to supermarkets, hired the plaintiff as a business manager in 2001, a position that she held until her resignation in 2007. The plaintiff subsequently brought an action under Title VII of the Civil Rights Act, alleging that the company "maintained a hostile work environment in which conditions for women were inferior to men, and that Acosta paid women less than men for the same work." She also brought an action under the Equal Pay Act for discriminatory compensatory practices.

The Seventh Circuit in King v. Acosta Sales and Marketing, Inc., 678 F.3d 470 (7th Cir. 2012) held that the evidence presented by the plaintiff failed to establish a pattern of hostility that continued into the three hundred day period that immediately preceded her bringing of an action before the Equal Employment Opportunity Commission ("EEOC"). Her supervisor's behavior before that time period was, to say the least, offensive- he showed her pornographic materials, gave her inappropriate presents, and called her degrading names of a sexual nature. According to the Seventh Circuit, the plaintiff's treatment was "markedly better" during the three hundred days immediately preceding her filing of an action with the EEOC. During that time, a supervisor "made a pass at her" and used derogatory nicknames for the plaintiff and her female coworker. This more recent behavior, the Seventh Circuit found, "may have been unpleasant, but none of it was severe." This distinction is significant because, as the U.S. Supreme Court held in Harris v. Forklift Systems, Inc., 510 U.S. 17, 21 (1993), the prohibition against sexual harassment "forbids only behavior so objectively offensive as to alter the 'conditions' of the victim's employment."

The Seventh Circuit's analysis of compensatory discrimination was markedly different. "Even a dollar's difference based on sex violates both Title VII and the Equal Pay Act," the Court's opinion noted. The data entered into evidence was startling, as all male business managers made more than every single female business managers except one. That woman's salary reached just $60,000 after six years on the job, a salary benchmark matched by male colleagues either on their first day of work, or after just a couple of years with the company.

The defendant argued that male business managers were paid more than female business managers because they were better educated and had more experience than their female counterparts. The Seventh Circuit held that this explanation was unsatisfactory under the Equal Pay Act, which requires that an employee demonstrate that "a difference in pay for 'equal work on jobs the performance of which requires skill, effort, and responsibility, and which are performed under similar working conditions.' An employer asserting that the difference is the result of a 'factor other than sex' must present this contention as an affirmative defense." As a result, the Seventh Circuit held that, under the Equal Pay Act action, the defendant must prove in the district court that education and experience account for the discrepancy. Under Title VII, the Seventh Circuit held that the action would need to be tried as the result of the plaintiff's proffer of sufficient evidence that would allow a trier of fact to conclude that the defendant's explanations are "smokescreens."

Nitro-Lift Technologies, LLC v. Howard: the United States Supreme Court Reaffirms the Federal Arbitration Acts National Policy Favoring Arbitration

The United States Supreme Court has released a new decision interpreting the Federal Arbitration Act, once again reaffirming the Act's national policy favoring arbitration. The Court noted that it is a "matter of great importance, therefore, that state Supreme Courts adhere to a correct interpretation of the legislation." In Nitro-Lift Technologies, LLC v. Howard, 133 S.Ct. 500 (2012), the Court found that the Oklahoma Supreme Court, in declaring a noncompetition agreement in two employment contracts null and void rather than leaving that determination to the arbitrator, ignored a basic tenant of the Act's substantive arbitration law and, therefore, the decision was vacated. In this case, the dispute arose from a contract between Nitro-Lift and two of its former employees, Eddie Lee Howard and Shane Schneider. Howard and Schneider entered into a confidentiality and noncompetition agreement with Nitro-Lift that required any dispute, difference, or unresolved question between the company and the employee to be settled by arbitration with a single arbitrator who was to be mutually agreeable. After working for Nitro-Lift on wells in Oklahoma, Texas, and Arkansas, Howard and Schneider quit and began working for one of Nitro-Lift's competitors. Claiming that they had breached their noncompetition agreements, Nitro-Lift served them with a demand for arbitration. Howard and Schneider responded by filing suit in Oklahoma District Court asking that the noncompetition agreements be deemed null and void and for the enforcement to be enjoined. The District Court dismissed the complaint finding that the clauses were valid. Ultimately the matter came before the Oklahoma Supreme Court who ordered the parties to show cause why the matter should not be resolved by application of an Oklahoma statute which limits the enforceability of noncompetition agreements. The United States Supreme Court ruled that the trial court found the contract contained a valid arbitration clause and the Oklahoma Supreme Court did not hold otherwise but it, nonetheless, assumed the arbitrator's role by declaring the noncompetition agreements null and void despite the fact that they should be abiding by the FAA as the "Supreme Law of the Land."