In a groundbreaking decision in Hively v. Ivy Tech Community College of Indiana, the United States Court of Appeals for the Seventh Circuit, sitting en banc, held that discrimination based on sexual orientation is a form of sex discrimination and thus prohibited by Title VII of the Civil Rights Act of 1964. Title VII makes it unlawful for employers to discriminate on the basis of a person’s “race, color, religion, sex or national origin . . .” In an 8-3 decision by Judge Diane Wood, the Seventh Circuit overruled its own prior decision and precedent and broke with every other federal appellate court that has ruled on this issue.

The Seventh Circuit expressly acknowledged that it lacked the power to “amend” Title VII to include discrimination based on sexual orientation but rather was deciding whether “actions taken on the basis of sexual orientation are a subset of actions taken on the basis of sex.” In the majority opinion, Judge Wood first analogized Hively’s case to gender nonconformity cases:

[A] policy that discriminates on the basis of sexual orientation does not affect every woman, or every man, but it is based on assumptions about the proper behavior for someone of a given sex. The discriminatory behavior does not exist without taking the victim’s biological sex (either as observed at birth or as modified, in the case of transsexuals) into account. Any discomfort, disapproval, or job decision based on the fact that the complainant – woman or man – dresses differently, speaks differently, or dates or marries a same-sex partner, is a reaction purely and simply based on sex. That means it falls within Title VII’s prohibition against sex discrimination, if it affects employment in one of the specified ways.

The majority opinion also advanced an alternative “associational theory,” based on a line of cases following Loving v. Virginia, a Supreme Court case invalidating a law prohibiting interracial marriage. A series of circuit court decisions hold that employers violate Title VII if they take action against an employee because he or she associates with a person of another race, and the Seventh Circuit noted that in those situations the employee suffered discrimination because of his or her own race:

Changing the race of one partner made a difference in determining the legality of the conduct, and so the law rested on ‘distinctions drawn according to race,’ which were unjustifiable and racially discriminatory. So too, here. If we were to change the sex of one partner in a lesbian relationship, the outcome would be different. This reveals that the discrimination rests on distinctions drawn according to sex. (internal citations omitted)

Judge Posner concurred in the result but suggested an “alternative” more “straightforward” approach premised upon acknowledging that today we understand the word “sex” in Title VII differently “because we live in a different era, a different culture.” Judge Flaum authored yet a separate concurring opinion joined by Judge Ripple.

The Hively decision is consistent with the Equal Employment Opportunity Commission’s position, that Title VII’s prohibition on sex discrimination forbids employment discrimination on the basis of sexual orientation or gender identity. The Supreme Court has not yet weighed in on this issue, and although Hively creates a circuit split, Supreme Court review of Hively is unlikely. An Ivy Tech official reportedly told The New York Times that the company “respects and appreciates” the decision and has no plans to appeal but will defend itself at the trial court on the merits.

The Eleventh Circuit in Evans v. Georgia Regional Hospital and the Second Circuit in Christiansen v. Omnicom Group, however, recently declined to recognize sexual orientation claims under Title VII in cases that still may find their way to the Supreme Court . In fact, in declining to recognize sexual orientation as a protected class, the Second Circuit panel acknowledged that it did so because it lacked power to revisit an earlier decision barring sexual orientation based discrimination claims under Title VII. However, the Court still reversed the district court’s dismissal of plaintiff’s case, holding that although there is no recognized cause of action under Title VII for discrimination based on sexual orientation, plaintiff stated a cognizable claim for gender stereotyping under Title VII. Two judges in a concurring opinion also suggested that “in the context of an appropriate case [the] Court should consider reexamining the holding that sexual orientation discrimination claims are not cognizable under Title VII.” That appropriate case may actually come in the form of Christiansen itself because the plaintiff has asked for en banc review.

Whether the Supreme Court would follow the Seventh Circuit is uncertain at best. Given the Senate’s recent confirmation of Justice Neal M. Gorsuch, the Supreme Court as currently composed seems unlikely to favor the expansion of Title VII.

From The Insider Blog:  White Collar Defense & Securities Enforcement.