Supreme Court hands employers two big wins in Title VII cases

In its end-of-session flurry, the U.S. Supreme Court issued two 5-4 decisions in Title VII cases (harassment, and retaliation) that will be welcome to employers. In both cases the Court rejected the arguments of the U.S. Equal Employment Opportunity Commission, which had filed amicus curiae (“friend of the court”) briefs on the sides of the unsuccessful plaintiffs.

Vance v. Ball State University

The plaintiff worked in the university cafeteria and alleged that a catering specialist racially harassed her. The parties disputed the duties of the catering specialist, but they agreed that she did not have the authority to “hire, fire, demote, promote, transfer, or discipline.” Because of this, the university argued that it could not be liable for the alleged harassment unless the plaintiff could show that the university knew or had reason to know of the harassment and was negligent in failing to stop it. The plaintiff, on the other hand, contended that the university was vicariously liable for the catering specialist’s alleged harassment because she was the plaintiff’s “supervisor.” If the plaintiff was correct and the university was vicariously liable, then the school’s good-faith efforts would have been irrelevant to liability, although they might have been relevant to the amount of damages recoverable.

A federal district court in Indiana granted summary judgment to the university on the ground that it was not vicariously liable because the catering specialist was not the plaintiff’s “supervisor,” and the U.S. Court of Appeals for the Seventh Circuit, which hears appeals from federal district courts in Illinois, Indiana, and Wisconsin, affirmed. The plaintiff petitioned for certiorari, and the Supreme Court agreed to review the Seventh Circuit decision.

In an opinion written by Justice Samuel Alito and joined by Chief Justice Roberts and Justices Kennedy, Scalia, and Thomas, the majority affirmed the Seventh Circuit and held that for vicarious liability to apply in a harassment case under Title VII, the harassing co-worker had to have authority to take “tangible job action” against the plaintiff, which included the authority to “hire, fire, demote, promote, transfer, or discipline.” If the co-worker engaging in the harassment did not have this authority, then a negligence standard applied instead – in other words, the employer would not be liable unless it acted negligently after knowing or having reason to know of the alleged harassment.

By way of background, the vicarious liability standard for supervisor harassment was announced in two Supreme Court decisions from 1998: Burlington Industries, Inc. v. Ellerth, and Faragher v. City of Boca Raton. Under the “Faragher/Ellerth”standard, an employer is liable for supervisor harassment unless it can show that (1) it had remedial measures in place to prevent and address the harassment (such as an effective no-harassment policy, training, and complaint and investigation procedures), and (2) the plaintiff unreasonably failed to avail herself of those remedial measures. However, if the supervisor’s harassment results in what is called a “tangible job detriment,” then the employer is vicariously (strictly) liable no matter how many things it did right.

On the other hand, if the harassment is by a co-worker who is not a supervisor, ordinary negligence principles apply in determining whether the employer is liable.

The plaintiff and the EEOC had both argued that a more flexible standard should be applied in determining whether an individual was a “supervisor,” and would have included individuals who had “the ability to exercise significant direction over another’s daily work.” This is the standard in the EEOC’s Enforcement Guidance: Vicarious Employer Liability for Unlawful Harassment by Supervisors, and it had been adopted by a number of federal circuit courts of appeal. The dissenters on the Supreme Court – Justice Ruth Bader Ginsburg, who wrote the dissent, joined by Justices Breyer, Kagan, and Sotomayor – also advocated for this “flexible” standard.

By rejecting “this nebulous definition” and construing “supervisor” narrowly, the Court majority gave employers an important victory, minimizing the instances in which an employer will be liable for workplace harassment despite good-faith efforts to prevent and address it.

Univ. of Texas Southwestern Medical Center v. Nassar

The plaintiff, Dr. Nassar, was a physician of Middle Eastern descent on the university faculty and also on the staff of Parkland Hospital in Dallas. After determining that his indirect supervisor was prejudiced against Middle Easterners and feeling harassed by her, he began negotiations to resign from his faculty position while continuing to be on staff at the hospital. Although normal policy was for staff physicians to also be faculty members, the hospital offered Dr. Nassar a “pure staff” position. Dr. Nassar then wrote a letter of resignation to his Department Chair at the university, saying that he had been a victim of racial and ethnic harassment by his supervisor. The Chair was angry that the supervisor had been “publicly attacked” in Dr. Nassar’s letter, and he contacted the hospital and said that Dr. Nassar should not be a staff member because he was no longer on the faculty. The hospital withdrew its job offer. Dr. Nassar sued, asserting a number of claims, including Title VII retaliation based on this sequence of events.

A jury found in favor of Dr. Nassar on his retaliation claim, and the university took it to the U.S. Court of Appeals for the Fifth Circuit, which hears appeals from federal district courts in Louisiana, Mississippi, and Texas. The Fifth Circuit affirmed the retaliation verdict, and the university petitioned for certiorari, contending that the lower courts had applied an incorrect standard in determining whether Dr. Nassar had a viable retaliation claim. The Supreme Court agreed to hear the case, and reversed the Fifth Circuit decision.

The key issue before the Supreme Court was whether a plaintiff in a Title VII retaliation case had to prove that “but for” the retaliatory motive he would not have been subjected to adverse employment action (in this case, having a job offer withdrawn). The plaintiff, again joined by the EEOC, argued that he should be required to prove only that retaliation was “a” motivating factor but not necessarily “the” dispositive factor.

In a majority opinion written by Justice Anthony Kennedy and joined by Chief Justice Roberts, and Justices Alito, Scalia, and Thomas, the Court essentially held that the retaliatory motive had to be “the” determining factor. For the most part, the decision was based on the placement of the anti-retaliation provisions in the Title VII statute. Under Title VII as amended by the Civil Rights Act of 1991, a discrimination plaintiff can prevail if he or she can show that a discriminatory motive played “a” role in the employment decision. The employer can then show that it would have taken the same action anyway, and if the employer succeeds, the plaintiff’s relief is limited, but the employer is still considered liable. However, the retaliation provisions are in a different section of Title VII and say essentially that a plaintiff can recover if he or she shows that adverse employment action was taken “because of” the plaintiff’s legally protected activity.

In 2009, the Supreme Court held in Gross v. FBL Financial Services that “because of” language in the Age Discrimination in Employment Act meant that, in age cases, the plaintiff had to prove that “but for” a discriminatory motive, the plaintiff would not have been discriminated against. Applying the Gross standard in this case, the Nassar court held that the same applied to Title VII retaliation claims, although not to Title VII discrimination claims. The Court specifically rejected the EEOC’s interpretation to the contrary in its Compliance Manual, finding that its reasoning was “circular.” The Court vacated this portion of the Fifth Circuit decision and remanded the case.

Again, Justice Ruth Bader Ginsburg, joined by Justices Breyer, Kagan, and Sotomayor, agreed with the plaintiff and the EEOC that the Title VII “discrimination” standard should apply in retaliation cases.

The majority decision is obviously another important victory for employers. As the Court noted, “claims of retaliation are being made with ever-increasing frequency. . . . Indeed, the number of retaliation claims filed with the EEOC has now outstripped those for every type of status-discrimination except race.” Holding plaintiffs to relatively strict burdens of proof will certainly give beleaguered employers some relief.

Perhaps even more importantly, it is encouraging to see the Court majority carefully follow the structure and plain language of Title VII rather than trying to “interpret” it to fit an agenda.