Executive Summary: On May 30, 2017, on the heels of the Seventh Circuit’s ground-breaking en banc decision in Hively v. Ivy Tech. College holding that sexual orientation is a protected trait under Title VII, a unanimous three-judge panel of that Circuit upheld an injunction requiring a Wisconsin school district to allow a transgender student whose sex assigned at birth was female and who now identifies as male to use the boys’ restroom. In Whitaker v. Kenosha Unified School District No. 1 Board of Education, the Seventh Circuit ruled that under the gender non-conformity/sex stereotyping theory of liability as set out by Price Waterhouse v. Hopkins and its progeny, Title IX of the Education Amendments Act of 1972 and the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution prohibit a school from barring a transgender student from using the bathroom that corresponds to his or her gender identity.

Background: Transgender student (and employee) bathroom access has become a highly publicized legal issue. Title IX, which prohibits discrimination “because of sex” in schools receiving federal funding, does not define the term “sex,” leaving speculation over whether the definition includes “gender identity.” On May 13, 2016, the Obama administration issued a guidance letter (“the Guidance”) to schools opining that Title IX’s definition of sex includes gender identity and directing them to permit all students to use the restroom corresponding with their gender identity or risk losing federal funding. Texas v. United States ensued, in which 13 states and school districts were granted a nationwide temporary injunction by the U.S. District Court for the Northern District of Texas in August 2016, blocking enforcement of the Guidance. The Obama administration appealed to the U.S. Court of Appeals for the Fifth Circuit.

At the same time, the case of G.G. was before the Fourth Circuit. G.G. – like Ash Whitaker – is a transgender boy who was denied use of the boys’ bathroom at his high school. The Fourth Circuit, relying, in part, on the Guidance, ruled in favor of G.G. in holding that Title IX prohibits gender identity discrimination. The U.S. Supreme Court granted certiorari on this issue, and oral argument was sent for March 2017.

However, just a month after President Trump took office, in February 2017, his administration withdrew the Guidance, “in order to further and more completely consider the legal issues involved.” As a result, not only was Texas v. United States mooted, but the Supreme Court dismissed Gloucester County’s appeal, and remanded the case to the Fourth Circuit for further analysis. On June 5, 2017, the Fourth Circuit scheduled oral argument in G.G.’s case for September 2017. Unfortunately, G.G., who graduates from high school this month, will have graduated by the time a decision is rendered in his lawsuit.

The results for Ash Whitaker, however, will hopefully be different. In Whitaker, the Seventh Circuit did not focus its attention on clarifying the meaning of the term “sex” in Title IX, instead approaching the issue as one of sex stereotyping under Price Waterhouse. Ash is a transgender male high school student. Although he is living his life as a boy, is taking hormone replacement therapy and has legally changed his name, the school district refused to allow him access to the boys’ bathroom, instead requiring him to use the girls’ bathroom or gender-neutral bathrooms located at remote and inconvenient locations on the school campus. The school district reasoned that it needed to protect the privacy of its other students, and that absent sex reassignment surgery confirmed by a medical professional – for which he is not medically qualified until his 18th birthday – he could not use the boys’ bathroom.

Ash sought a preliminary injunction in the Eastern District of Wisconsin compelling the school to allow him to use the boys’ bathroom. The district court denied the school’s motion to dismiss and granted the preliminary injunction, ruling, inter alia, that Ash was likely to succeed on the merits of both his Title IX and Equal Protection claims. The school appealed.

On May 30, 2017, with just days left before Ash graduated from high school, the Seventh Circuit, relying heavily on Title VII precedent, and citing to its recent decision in Hively, unanimously upheld the injunction. Rather than follow the path of G.G., however, the Seventh Circuit relied on Price Waterhouse. In Price Waterhouse, the U.S. Supreme Court held that sex stereotyping is a type of sex discrimination actionable under Title VII. The Seventh Circuit specifically rejected the school’s argument that the court was bound by its 1984 decision in Ulane v. Eastern Airlines, Inc. in which it held that the meaning of “sex” in Title VII must be read narrowly and, therefore, does not protect “transsexuals.” Rather, the Seventh Circuit noted that Ulane was decided before Price Waterhouse. The Price Waterhouse decision leaves an avenue for transgender individuals to successfully raise a Title VII claim on a sex-stereotyping theory of liability. The Seventh Circuit concluded that “[b]y definition, a transgender individual does not conform to the sex-based stereotypes of the sex that he or she was assigned at birth.” The Seventh Circuit also specifically rejected the school’s argument that Congressional inaction on the matter is dispositive of the claim, noting that the U.S. Supreme Court has specifically held that Congressional inaction can be caused by many factors and, therefore, “lacks persuasive significance.”

The Seventh Circuit also relied on Price Waterhouse with regard to Ash’s Equal Protection claim. The court held that because sex stereotyping is sex discrimination, the school’s refusal to allow Ash to use the boys’ bathroom is a sex-based decision that requires heightened scrutiny. The court, however, declined to reach the constitutional issue of whether “transgender status” and “gender identity” are “entitled to heightened scrutiny in their own right” because Ash’s case can be resolved on a sex stereotyping theory.

Bottom Line: While Whitaker is a Title IX case, given the Seventh Circuit’s extensive reliance on Title VII cases in its ruling, the decision is easily transferrable to the employment context. Even though Title IX and Title VII do not specifically identify gender identity as a protected class, courts, including the Whitaker court, are consistently extending the Price Waterhouse sex-stereotyping analysis to claims raised by transgender and gender nonconforming individuals.

As the school year comes to an end, summer is the perfect time for school districts and employers to revisit their policies relating to transgender students/employees and bathroom use. Under Whitaker, “separate but equal” (or in some cases, unequal) gender-neutral facilities for transgender individuals may not be sufficient as a matter of law. Schools receiving federal funding and employers should consider policies that allow individuals to use the bathroom that corresponds to their gender identity. Where possible, gender neutral bathrooms should be made available to anyone who would prefer to use a private bathroom.

We will continue to keep you updated on this evolving area of the law. In the meantime, if you have any questions regarding the issue of LGBTQ rights in the workplace, bathroom rights for transgender students or employees, developing policies addressing gender identity and sexual orientation discrimination, or any other labor or employment related issues, please feel free to contact the authors of this Alert, Johanna Zelman, jzelman@fordharrison.com, who is a partner in our Hartford office or Nancy Holt, nholt@fordharrison.com, who is counsel in our Washington, D.C. office. You may also contact the FordHarrison attorney with whom you usually work.