The U.S. Court of Appeals for the Third Circuit recently upheld the dismissal of a transgender engineer’s case alleging that her former employer terminated her because of her gender and disability.

According to the Court’s opinion, Janis Stacy worked for Agere Systems, Inc. as an engineer from 1998 until her termination in 2008.  When Agere hired Stacy, she “had a traditional masculine appearance, wore male clothing, and went by the name ‘Jim.’”  In 2002, Stacy was diagnosed with gender identity disorder, “which arises from a profound divergence between an individual's assigned birth sex and the person's inner gender identity,” and underwent psychological counseling and hormonal therapy. 

In 2005, Stacy fully transitioned to her female gender identity. She disclosed her gender identity at work through conversations and group presentations under the supervision of the human resources department. She also had multiple surgeries to change her physical appearance and became known as “Janis.” 

In 2007, Agere merged with LSI Corporation. After the merger, the companies implemented a series of layoffs, eliminating approximately 3,770 positions between April and December 2007. Stacy's boss, Norm Lawrence, was told to cut eight employees from his group.  He determined which job positions and functions would be impacted by the reduction and conducted a skills assessment of employees in those roles.  Stacy was the lead engineer in a three-member group that supported a product line in which the company was no longer going to invest.  Lawrence ranked Stacy the lowest of the three in the following skills – “execution, teamwork, communication, technical versatility, and customer focus.” Accordingly, the company selected Stacy for termination. She testified that Lawrence told her that she was “being freed from [her] negative history” with another boss and with the company. 

After her termination, Stacy file a complaint against Agere and LSI, alleging that her termination was discriminatory on the basis of her sex, disability and gender identity. The District Court granted the companies’ motion for summary judgment, and Stacy appealed. 

On appeal, the only issue before the Third Circuit was whether or not Stacy had demonstrated sufficient evidence from which a jury could conclude that the companies’ reason for her termination was a pretext for unlawful discrimination. The parties agreed that Stacy had established a prima facie case of discrimination and that the companies had sufficiently articulated a legitimate, non-discriminatory reason for her termination. 

On the issue of pretext, Stacy argued that (1) the companies replaced her with an employee from outside her work group; (2) Lawrence selected her for termination prior to conducting the skills assessment; (3) the skills assessment had “serious weaknesses”; (4) Lawrence “chose her group for the purpose of targeting her”; and (5) Lawrence changed his explanation for selecting Stacy over time. 

The Third Circuit rejected Stacy’s arguments.  First, the court noted that the companies did not hire any new employee to replace Stacy, instead moving an employee from elsewhere to cover her role, consistent with its decision to reduce its overall headcount.  The court also found that the various explanations given by Lawrence for Stacy’s termination were all consistent with each other and, thus, did not support a finding of discrimination.  Finally, the court found that Stacy had no evidence to support her remaining allegations. 

While the Third Circuit’s decision is an important victory for employers in what may be an increasingly common type of litigation, employers should continue to ensure that transgender employees do not face discrimination in the workplace.  Even though Title VII of the Civil Rights Act of 1964 does not currently list gender identity as one of its protected categories, the U.S. Equal Employment Opportunity Commission already considers gender identity discrimination to be covered by Title VII’s prohibition against sex discrimination.